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]