To Sell or Not to Sell Direct to Customers
Whether or not manufacturers should sell direct to customers is no longer in question… choosing the right products and the right customers can help them ride this trend with success
As eCommerce solutions have evolved, the idea that manufacturers can and should sell direct to customers has loomed large on the industry horizon. Many large manufacturers attempted “website stores” many years ago, but often decided it wasn’t worth the potential damage to their channel relationships. Other manufacturers simply haven’t had the logistics needed to handle direct business. Complex orders, shipping to multiple locations, and fluid warehousing requirements are capabilities their distributors have provided for years.
And yet online B2B eCommerce solutions solve many of those issues, and third party services can handle the storage and delivery part of the equation. But the most disruptive influence in 2018 might just be the manufacturers’ customers themselves.
Customers’ demand for self-service buying cycles
Business customers now want the same kind of self-service experience in their professional lives that they have in their personal lives as consumers. According to a study from ThinkJar, a think tank focused on customer strategy, 78% of B2B customers expect to get an answer from self-service systems. Customers’ increasing need to move rapidly and the desire for independence within the buying cycle has created new demands on manufacturers. This includes not only the desire for more knowledge, but the need for significantly more efficiency in every process, from price transparency to shipping.
The increasing need for data to stay competitive
And manufacturers are responding. Today’s unified commerce environments require that manufacturers capture as much data on their customers as possible. Shortened product cycles, cloud-based solutions and even comments on social media make product quality even more of a competitive factor. Data analytics helps manufacturers by providing key information that can be used to create the most desirable product enhancements. When selling direct to customers, analytics provide the ability to personalize the user’s experience, and even incorporate AI into the mix. That data is critical to help companies respond faster to problems, allowing them to speed up the response and fix issues before they become mainstream. Selling direct is sometimes the best way to acquire it.
In the past (and unfortunately still now in some cases) many manufacturers simply viewed their online portals as a replacement for CSR’s, or a place to provide an online catalog. But deep analytics obtained from direct to customer sales are vital to help manufacturers develop content and services that are more focused on what the customer really wants. This encourages not only engagement with the brand, but also helps develop smarter lead generation and a more informed sales, and service, funnel.
Pricing transparency and the opportunities for lead generation
For many products, the information that is often the most desirable is pricing. In the past price transparency was considered nearly sacrilegious for most manufacturers. Today, however, many manufacturers have learned that transparent pricing can not only satisfy the customers’ need for knowledge, it is an immensely valuable lead generation tool. As manufacturers move towards pricing transparency in front of the login, the opportunity for lead generation and feeding leads to valuable channels increases. This is where manufacturers can actually incorporate direct to sales models to compete with Amazon and other larger marketplaces.
For many B2B marketers in fact, finding and qualifying new customers has become the whole purpose of exposing pricing. Providing prospects with pricing information in return for their email and other data can help turn that prospect into a qualified lead. B2B eCommerce solutions that allow for price listings and customized externally-placed pricing can be integrated with CRM and other backend systems, capture data on new customers that was never available in the past.
Manufacturers must develop robust customer experiences all their own
As a disruptor, however, the direct to customer sales trend goes far beyond meeting the need for price transparency. Surely, as manufacturers become more sophisticated at building strong eCommerce marketing engines, they become better at building digital trust and retaining their own direct customers. In many cases the manufacturer will create a robust, branded site for larger customers. These sites can support major customers with custom catalogs, specific pricing agreements and highly targeted content. Manufacturers usually create this experience behind a login, so they know exactly who is on their site and what is happening during the buying cycle. Price transparency provides a way to acquire a new customer; now they can extend that opportunity by creating sub-brand marketed directly to customers without interfering with other product channels with a rich, robust, confined customer experience.
Yet despite the dazzling promises of greater lead generation, robust branded customer experiences, and of course invaluable data, distributors are far from becoming obsolete. What will happen, however, is that the industry will evolve to remove distributors from buying cycles where they can no longer provide value. Distributors will naturally lean toward those products and services where they can provide greater benefit to both the manufacturer and the end customer. As we’ll see later in this series, this disruptor means that distributors will become far better at what they do, and focused more clearly on where they do it best.