Building your Direct to Customer Channel in 10 Steps
Hi everyone Andrew here.
How do I decide what to sell through D2C?
It just makes sense to launch with a world beating product rather than a ‘me too’ product. Of course, by adding a D2C element to your offering, that alone can make it Best in the World.
If so, then how do either of you migrate profitably to a D2C model or is there a way to co-exist. Maybe you need to find a different offering if the D2C channel would destroy your indirect channel revenue.
Digital is at the heart of a D2C model and not all offerings can be executed digitally (almost all do however). So what technologies are you going to use to make this work effectively?
Where in the world do I start with D2C?
Once you are digital, you are global – in theory. However, how you present your offering will depend on where your prospects are located. Small companies and retail clients will be more locally oriented than large corporate who may be national, or possibly internationally, oriented. If you have a really strong 3rd party sales channel that you rely on in one geography, it makes sense to start the D2C in another geography.
Google translate does a pretty good job of translating websites so that people can understand what you are saying but small errors have a huge and damaging impact on trust. And it is not just your website, it is all your communications – chat line, manuals, order forms, testimonials, etc. Unless you can afford native quality language for all these tools, don’t do it.
What do you do when a client has a technical problem? In some markets, the market sets the service level expectation. In others, you may be able set it yourself. Whatever the expectation, you have to meet it - the client doesn’t care what your sales and distribution model is.
Payments can be a challenge. Service fees and currency exchange fees can be very high. Moving cash from some countries is particularly difficult, so you will want to avoid promoting in those countries. Find a provider who can manage this efficiently and safely. And who will inspire confidence in your prospects. Retail clients will want to use payment methods such as credit/debit cards or Paypal. Many corporate clients can do the same, but others will need an invoice to either pay by cheque (mailed) or by wire transfer. Know your client to be sure and accommodate their constraints.Depending on the size and associated risk you are taking, will you require a deposit? Will you offer payment terms or financing? Can your payment engine handle this?
How should I price my D2C products?
It is not unusual to triple your gross margin dollars when you move to D2C. However, you will need to spend some of that executing the functions formerly done by your 3rd party sales channel. That said, it will give you significant price flexibility. You can give some of that value to your clients in lower pricing, longer warrantee, faster service etc. Be aware that your existing channel will see this new pricing, so be sure to show that what you are offering is a different value proposition from what they are offering.
How do I attract buyers?
You can hammer away with spam emails hoping to connect with a possible buyer but that is a very poor investment. The better way is to demonstrate your expertise in the problem, need or desire that your prospects are trying to resolve – become a ‘Thought Leader’. You can exhibit this thought leadership on your website, association websites, webinars, publications (e-books, hardcopy books, magazines) guest blogging sites and so on. The more you do this, the better your website becomes known as the place to go for answers to questions prospects are searching for. The focus is on informing not on selling.
How do I engage with prospects?
Now that you have people visiting your website or seeing your content in other social media you need to start interacting with them. This can be done by asking people to click through to see more content, working their way through a FAQ, by offering downloads of checklists, product selection matrices, manuals, and the like. At this point, visitors are going to determining if they trust you enough to do business with you. If you are selling a low-risk product, then the trust requirement is low. Risk can be financial, reputation or business. Too many owners hide behind a company name. To create trust, buyers need to know ‘who’ the company is. That’s you. What do you believe, what are you ambitions for the company? What are your motivations? This trust should also be supported with end user reviews, case studies and testimonials.
How do I actually close the deal?
Some sales can be completed completely on-line but other sales (typically higher-risk purchases) require consultation. So, you must provide a way to connect live with real experts – through an arranged video meeting, a chat line or even a phone call. These experts should not be there to sell – but there to help the prospect buy. Be sure your experts have local knowledge so they can understand and empathize with the client’s needs and how you can satisfy them. This is particularly important in international sales.
How do I manage delivery in a D2C environment?
One click ordering and same day delivery are now the baseline for customer expectations. Be sure to set the right expectations in your engagement process (and do your best to beat them). Clients expect visibility into every step of the delivery process (and the manufacturing process if it is a custom product). If delivery is not included, clients expect you to be able to tell them exactly what it will cost. Use logistics providers who can seamlessly provide this information.
How do I ensure my products are used properly?
Once the product has been delivered, create a process to reach out offering to help with set up, installation, integration etc. This can be an email or a call. Provide a dedicated support line or chat line where customers can ask for help. Depending on the value of the product, you can provide dedicated 7/24 call response. Also create a practical FAQ (not a selling FAQ, but a how to get the most value from your purchase FAQ).
Can I manage technical support remotely?
When the client has warrantee or repair questions be sure they have access to highly responsive experts. For more complex products, consider using smart phone video (eg Facetime) to help a client diagnose problems or potentially augmented Reality (AR) to allow the client to better understand their issue. If possible, create a library of videos showing every aspect of product use, maintenance, and repair.Be ready to offer free replacement parts or even products (this is a good way to invest the extra gross margin from D2C) and it really goes a long way to making the client happy and build the brand. Consider logistics firms such as Amazon to locally stock and deliver repair parts.
What is a D2C community?
Many people see ‘community’ as a sales opportunity. It is, but it can be much more. A huge advantage of D2C is that you can really connect with your customers. That connection is not only between you and your customers, but it can also be between customers. You should create on-line events, chat groups - places where people can share their likes and dislikes and innovative ways to get value from your products. This will increase customer loyalty, help you to better explain the value you provide and serve as a great place to test ideas and get new ideas for product improvements.
Traditional third-party sales channels that focus on information and logistics have been eclipsed by buyer behaviour and technology. To survive, they need to find new ways to add value. If you use a distribution channels like this, have a close look at the value they provide and decide whether a D2C approach may be better for you. It requires a new way of thinking, new skills and investment. The good thing is that you can use the 10 steps above to ease into it without betting the farm.
Nothing would please me more than having you share your ideas with me or challenge my thinking. Feel free to email me at [email protected]
See you next time,