You'll Need More Than Facebook To Smash The Wall Between You And Your Customers

Twenty years after the Internet first went mainstream, most businesses have yet to take full advantage of the most fundamental opportunity it has created for them. Thanks to digital media, companies can create their own relationships with consumers at incredible scale—and they can use the data from these interactions to build better products, produce more effective marketing and, ultimately, make their customers happier.

Instead, most companies are still using digital media primarily as an extension of their pre-Internet business models and operations. Marketers still build digital marketing plans that are heavily dependent on renting access to consumers from media companies, like Facebook. Manufacturers still depend on third-party retailers to sell their goods. Both parties are missing out on the opportunity to deal directly with their prospective and active customers.

It's no longer enough to have a website, mailing list, Facebook page, or even a mobile application. Businesses need to create and maintain digital assets that are core to how they operate, provide real value to users, and support them appropriately. Here's where to focus resources and energy:

Selling direct. For many manufacturers, selling direct can be a great complement to traditional retail channels. It gives sales, product development and marketing executives the chance to learn more about their customers firsthand, and it can provide a peripheral, higher-margin revenue stream—no matter the product. Many business leaders worry that no one will want to buy their wares directly, but people will buy anything online if it’s marketed well. In its first 48 hours, 12,000 people signed up for the monthly delivery of razorblades from the Dollar Shave Club. Warby Parker sells eyeglasses online; Procter & Gamble sells hair color and air freshener direct; Blue Nile does diamonds; LegalZoom, legal documents. Consumers are purchasing everything online—even pricey, personalized or locally available products. Online sales are expected to grow from 7 percent of all retail sales (equal to $202 billion in consumer spending in 2011) to nearly 9 percent, or $327 billion in consumer spending, by 2016. If you make something that consumers buy, it's hard to argue against opening up shop.

When devising an e-commerce plan, consider how your channel can be a strong counterpart to your retail partners and simultaneously help you meet your business goals. You can use your own e-commerce site, for example, to provide more detailed product information or to incorporate a brand-specific social shopping application. Consumers balance trust, convenience, price and fun to decide where to shop and buy. Think about where your retailers fit into this process and how you can supplement their offerings.

Marketing direct. Marketing directly to consumers means improved CRM, more control over your brand, and a higher return on investment. It shouldn't be confused with marketing on Facebook. Many marketers treat Facebook as if it were their own property, investing significant amounts to build up likes and followers. This is akin to renovating a rental apartment; you can enjoy—but don’t own—the benefits of your labor. What’s more, even after your investment, the landlord can still increase your rent? On Facebook, only 16 percent of a brand’s fans actually see any one post. To guarantee appearance in a majority of fan newsfeeds, brands now have to pay. This is an unfortunate circumstance for dependent marketers but completely understandable, since Facebook is now a publicly traded media company, rather than a public service for college students. Spending a similar amount of money and energy to build an email list doesn’t sound as glamorous, but at least no one plays middleman there.

Instead, start investing in your own platform—ideally, one that amplifies your brand promise and meets user needs. That’s what Nike has done to great effect with Nike+ and what Pepsi started with the Pepsi Refresh Project. LEGO has more than a dozen different mobile apps, which create direct one-to-one relationships with its consumers (both the children who use the products and the parents who purchase them) on a broader scale than is possible through its own stores. While American Express already has a direct link to its customers through its product, American Express OPEN Forum, a branded content site for small business owners, drives brand positioning and consumer engagement far beyond what would be possible through advertising. You can leverage existing social networks and ads to propel awareness of your new platform or product or to get a quick spike in sales or awareness, but the home base of your direct-to-consumer initiative should be a site owned and controlled by you.

It's time for businesses to stop living in the pre-Internet world, which will undoubtedly challenge current processes and procedures. For marketing, the budget needs to be managed so that an exciting new platform or product isn’t only launched, but maintained over the long term. For sales, an operating structure must be developed to deliver goods directly to consumers. In both of these cases, you may have to convince your company’s leadership team to support a leap of faith, but it’s really a very logical move. The tools and opportunity are there; the only thing holding you back is habit.

[Image: Flickr user Kymberly Janisch]

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3 Comments

  • Linda

    Interesting article.  I agree that companies should focus more on branding themselves in a way that is both beneficial to customers and themselves. More importantly, what companies should really focus on is what the customer needs.

    I also featured your post up on our blog here:

    http://www.amirashiraz.com/blo... 

  • Robin Luymes

    For many businesses, shifting to online as primary channel to consumers makes sense. It's why video stores are disappearing, for instance. For most consumer goods, however, the primary channel remains the store shelf where people can touch, feel and compare goods (and walk out of the store immediately with what they want).  Until consumers choose to make most purchases online, manufacturers need to make retail outlets their primary concern. Big businesses are not dummies ... they follow the money.  

    Today, about 17 years after the public first gained access to the internet, some industries have been totally revolutionized, and others have made more modest changes. If consumers had demanded it, all industries would have been revolutionized.

  • Mark

    Consider that this model may not suit every business. Digital "relationships" still cannot compare to live in-person relationships. This is especially important in products that are highly technical and specialized to a particular customer's circumstance. The mention of building your own apps is nice if you have the brand recognition and cash of a Lego or Pepsi, but for the other 99% of businesses out there, sometimes "renting" is a good option over "owning", which is why most smb's lease or rent their facilities, rather then owning them. Ownership can tie up cash that could be better used in other areas. Maybe the business bloggers should look at writing articles that would help the majority of businesses, rather than the top couple percent of businesses (who don't need the help anyway) .