The migration of traditional brands and manufacturers to a direct sales model is an irreversible trend, which varies based on many factors such as industry type, retail environment, and the competitive landscape. That said, over the last five years, we have seen a tremendous shift in product and service distribution models, which has dramatically changed the required skill set of today's competent digital marketing executive.
Let's skip how and why the decision was made to sell direct-to-consumer and assume that it was based on sound market research and a clear company vision. The marching orders are in place, and you need to drive sales through a direct response model without upsetting the delicate ecosystem of the traditional dealer network, or taking a lion's share of resources from the brand strategy.
First, let me point out that there is no formula that applies to all situations. I've had clients implement an aggressive direct marketing strategy that heavily skews lead generation in their favor without reduced dealer support. Conversely, others have only dipped a toe in the water, only to create a viral mutiny that leaves the company with a sales disaster. I have found the following key principles to be the best guidelines for keeping the balance with your retailers, while enjoying a double margin and continuing to build your brand online.
Open a relationship with the sales department. If your traditional distribution is like most, 80 percent of your product is sold through 20 percent of your reseller base. Interview your best dealers. Be open about your intentions, but be ready to offer sound feedback regarding your company's decision to sell direct. Listen to their concerns and offer to keep a level playing field. This not only reduces the impact of their reactions, it offers insight to your marketing plan.
- Impulse buy -- If your products, or certain product categories, tend to be "impulse online buys," you have an opportunity to capitalize on a more aggressive direct marketing strategy. Dealers are protective of the big sale and know that customers are spending more time price-shopping on high-ticket items.
- Sell on service -- Consumers trust brands. With a proper ecommerce platform and operational support in place, you can rely on this concept to attract direct sales and repeat purchases. Consumers have confidence in a brand's website through security, privacy, available inventory, and service after the sale. After all, your brand is on the line.
- Avoid discounts -- Dealers compete on pricing, selection, and service. Carefully select your price point, and stick to it. By removing the most sensitive component, we level the playing field and build dealer trust.
- Let the customer decide -- A simple change in the prominence of the "buy now" button, in relation to "find a dealer," can make all the difference in the world to that retail buyer. Keep it fair and balanced.
- Offer dealer conversion tools -- Among others, product-to-product links are a great tactic that can increase conversion for your top dealers who get leads through the website. This is a great way to reward the dealer for commitment to the brand.
Let's face it, even with a sound manufacturers advertised price policy, customers will find your product for a better price than you offer it. Don't try to beat the retailer at his game. More often than not, you'll lose the sale and the relationship. Focus on the customer experience. You'd be surprised by how much and how often a customer will sacrifice a little money for time and peace of mind.
- User experience -- You are a brand marketer, but you need to start thinking like a retailer. The fewer clicks-to-purchase, the higher your conversion rate. Study the important conversion tactics such as user reviews, and use a skilled information architect who knows how to optimize the buy-flow.
- Don't flub the buy-flow -- Whether the product is sold direct or through a dealer, it's critical to offer a seamless buy-flow model. Much like a proper shopping cart experience, a handoff to the dealer should be seamless through a proper concept shop or product-to-product links. Nothing makes me cringe more than seeing a customer handed off to a retailer, just to be greeted by an ad for a discount offered by a competitor. If the retailer isn't willing to support the referral properly, they're likely not one of your best reseller partners.
- Track inventory -- Make no mistake about it, while this may not seem like a marketing function, promoting and selling your product is about being in the right place at the right time. If you have the best selection of inventory, you should offer a similar experience through the dealer sale. Implement a real-time inventory gateway, offered only to dealers who stock product. This is a better experience for the customer and more incentive for the retailer to stock your product. Only with a proper inventory sync gateway does the direct sale compete with retailers who are offering less support through stocked product.
Balance ecommerce with brand strategy
Many will argue that a robust ecommerce model can degrade the brand experience. Depending on how you view it, they might be right. Ebay and Amazon are great brand experiences but not for the same reason Apple is. You can achieve this without romancing the product and vice versa. If you fall somewhere in between, put faith in the collaborative effort between your creative director and user experience designer. Through a proper digital process, you can drive the sale and keep your customers in love with your brand.
- Alter the message -- No need to blow it up, just alter it. There's no reason why the game has to change completely. You're still promoting your product or service. Just consider that you're not only asking the consumer to learn more, you're also asking for the sale.
- Alter the medium -- Some tactics are better suited for the sale. Without abandoning your brand advertising, find the right mix of impressions-based advertising and direct-response marketing. Good analytics will measure ROI and recommend optimization on the fly.
- Own the customer -- OK, the sale is nice, but the customer is more important. Research shows that the lifetime value of a well cared-for customer is the key to strong ROI. Email marketing is your best friend here.
Budgets and ROI
You don't need me to tell you that good analytics are paramount to campaign accountability. This is especially true with an ecommerce model when budgets are on the chopping block. If you can show that an initiative is making the company money, you have a pretty good argument for more funding.
- Budget allocation -- The direct sale tends to produce a higher margin for the manufacturer. By allocating an appropriate percent of the total marketing budget to a direct response strategy, you can build an ROI model that "self-funds" the initiative. If your competitor's model hasn't matured in this manner, this is a market advantage. In some cases you might even consider using some of this margin to support dealer sales programs, or a cause marketing campaign to help support the brand side of the marketing strategy.
- Analytics -- Find a good analyst, period. Yes, Google is free, but if you don't set up a campaign with the proper key performance indicators, properly tag the digital properties, or effectively report ROI, you've missed the most important part. Besides, it makes you look good in front of your boss.
Ultimately, you're still selling your brand. Developing a strong voice and message around your products is mission critical. If you can strike the right balance between brand strategy and ecommerce you'll find harmony with your customers and retailers.
Rob McCready is senior partner and director of client services at Blue Collar Interactive.
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