X-XXX-XXX APRIL 23, 2011ERIK ELIASONYOHANES FREZGIGENA CHUAThis report was composed with guidance from David Skok, a Partner at Matrix Partners. His understanding of themodel was critical to developing the report and his quotes and models are cited throughout the report. Building a Low Touch Sales ModelIntroductionBusiness to business sales has traditionally meant hiring and training a salesforce which ischarged with the task of sourcing qualified leads, obtaining face-to-face meetings, deliveringpresentations, and ultimately closing deals. This traditional model has become known as the hightouch sales model and has upended by the newer, cheaper, low touch sales model.Each model is design to understand the need’s of their customers and result in a closed deal, buthow they do this varies greatly. This paper explores what the low touch model is, theimplications of the model, and how to implement the model within an organization.1.0 The Low Touch Sales ProcessThe low to no touch sales process focuses on removing human interaction from each step in thesales funnel as well as decreasing barriers to adoption by simplifying product offerings. Humaninteraction is replaced with automated processes to facilitate the sells experience. Automatingsales and simplifying product offerings drastically reduces customer acquisition cost (CAC) andlowers overall headcount in sales and marketing. There are three types of solutions that fallunder low to no touch selling with increasing CAC as human interaction is added. Figure 1.0: Cost of Customer Acquisition Spectrum1
Building a Low Touch Sales Model X-XXX-XXX1.1 Low to No Touch Sales ModelsFreemium2This is the least complex sales model where a version of the company’s product is given tocustomers for free, with the goal of eventually up-selling or cross-selling. Examples of these areOpen Source products like JBoss, MySQL, and Asterisk, as well as web services like DropBoxand SugarSync. Naturally, only some of these customers can eventually be converted into payingcustomers. The conversion rate depends on the appropriateness of the customers targeted, as wellas the effectiveness of product or service.No Touch Self-ServiceIn this sales model, the company drives traffic to its website using Search Engine Marketing(SEM) or Pay Per Click ads. Inbound Marketing tools such as Search Engine Optimization(SEO) are used to attract interested customers to the site. With effective inbound marketing toolsand a compelling website, visitors can convert to paying customers without any salespeople.However, the viability of this model also depends on the nature of the company – the product orservice needs to be simple for the customer to understand and also have a compelling valueproposition that does not need additional push by a salesperson.Light Touch Inside SalesThis model includes providing a light level of customer support such as providing emailresponses to inquiries or an occasional phone with an inside sales person to quickly resolve anissue.1.2 Traditional Sales Process Versus Low Touch Sales ProcessThe modus operandi of low touch sales is automation. The table below contrasts the differencesbetween traditional field sales and low touch sales models.
Building a Low Touch Sales Model X-XXX-XXXFigure 2.0 Traditional Versus. Low Touch Sales Stage of Buying Process Traditional Field Sales Low Touch Sales Outbound Marketing Inbound Marketing -Brand Advertising -Relevant blog contentAwareness -Trade Shows -White Papers -PR Campaigns -Videos -WebinarsConsideration -Delivering Initial Presentation -E-mail Campaigns -Organization Specific -FreemiumEvaluation Presentation -Free Trial -Customer Forums -Key Stake Holder Analysis -Based On Action Taken By TheQualifying Coach Feedback Customer -No Implementation CostPurchase -Implementation Cost -In software products done through (SaaS)1.3 Benefits of the Low Touch Sales ModelCompanies implementing the low-touch sales model can expect a range of benefits, fromreducing the costs of acquisition to increasing retention rates and customer lifetime value. Thescale, timing, and duration of these benefits can be estimated by considering key metrics for thecompany’s business model to succeed.Lower Cost to Acquire CustomersHiring and maintaining a salesforce usually represent the most expensive aspects of the salesprocess. Especially for small companies with constrained resources, these costs could be bothfinancially and managerially draining. Thus, companies that are able to dramatically reduce oreven eliminate these costs would not only become more profitable but also gain a significantadvantage over competitors with a less effective cost structure.Companies especially start-ups need to balance two factors to make their business models viable:CAC and the customer lifetime value (LTV). CAC can be calculated simply as total sales andmarketing expenses divided by the number of customers acquired in a particular period. CACcan be higher during a company’s ramp-up period due to fixed costs such as headcount that maynot necessarily need to increase as the number of customers acquired grow.
Building a Low Touch Sales Model X-XXX-XXXLTV can be calculated by estimating the gross margin that a company can expect to make from acustomer over the lifetime of their relationship. A company will only be viable if CAC is lessthan LTV. In the low-touch sales model, the gap between these two becomes greater, i.e. acompany can acquire a customer for much less and still be able to retain or even increase theirLTV. The successful implementation of a low-touch sales model therefore represents a highlyeffective sales process where the company extracts more value from customers at a lower cost –indeed, “more bang for its buck.”Studies on the relationship between sales complexity (i.e. low-touch vs. high-touch) and thecorresponding CAC are surprising. David Skok finds that rather than reflecting a linearrelationship, CAC actually increases exponentially as sales complexity increases. (Figure 3.0).Furthermore, CAC jumps by 10x from one sales model to the next (Figure 3.0). These studiesshow how CAC increases significantly once human interaction with a salesperson is required. Ofcourse, these costs are also directly correlated to the productivity of sales team, i.e. differenthigh-touch models can reflect varying costs given the effectiveness of the salesforce. Based onSkok’s definitions, we further explain the various levels of sales complexity below. Figure 3.0 Sales Complexity vs. CAC3The implication of these findings is that companies stand to benefit significantly if they are ableto shift to a less complex sales model, i.e. from field sales to high-touch or from light-touch to
Building a Low Touch Sales Model X-XXX-XXXno-touch. The caveat as previously mentioned above is that certain types of products or servicesmay require a specific type of sales model. There is nothing wrong with companies that stillchoose the high-touch model following the conclusion that their product or service requires thistype of service. Whenever possible however, companies should shift to a less complex salesmodel whether in some or all aspects of their selling process in order to lower CAC and increaseprofitability. Companies should consider how they can redesign their sales processes or eventheir actual products to minimize the salesperson involvement required.Indeed, a company’s ability to shift to a low-cost sales model can disrupt the entire industry.Companies can sell the same product or service for significantly lower prices because CAC isnow lower, transferring this value to customers and gaining a competitive advantage.Competitors would find it difficult to engage in a price war as they would likely be unprofitableat the same price point. Consequently, lower sales costs level the playing field as even smallercompanies with limited resources can compete effectively against larger competitors. Thedecreased costs associated with smaller sales teams allow the company to spend more resourceson critical issues such as product development.Expanded Addressable MarketAnother benefit of having lower CAC is that companies can expand their addressable market.Products or services that used to be too expensive for smaller customers could now be affordedby them. Software as a Service (SaaS) and Hubspot for example, have discovered the perfectdelivery mechanism for small to medium-sized businesses that do not have IT staff s viawebinars and email newsletters.Higher Customer Lifetime ValueLow-touch customer service tools such as online communities may provide more effectivesolutions to customers. Users who encounter the same problems can interact and shareexperiences together, providing solutions that the company itself may not be aware of. Onlinecommunities give customers access to “super users,” or customers who are usually early adoptersand have significant technological prowess to find solutions to problems that salespeople are noteven aware of.Even if users are not able to find solutions among themselves, it decreases the number ofcustomer service calls needed, which leads to decreased customer dissatisfaction. In addition,the empowerment that customers find using these tools also make them more likely to influence
Building a Low Touch Sales Model X-XXX-XXXpeer groups and less likely to shift to competitors. In aggregate, these consequences potentiallyincrease LTV, a very important factor in making business models successful.Interactive Product CreationPerhaps more importantly, tools such as community interactions allow the company to discoveruser problems that were previously unseen. In addition, it gives voice to the consumer andreduces the need for intensive market research such as focus group discussions. Consumers canbe expected to voice out their opinions of potential product improvements given they’re alreadyusers and the interaction can be made anonymous. Tools such as these are important channels totest new products and get immediate feedback on existing ones.1.4 Challenges of the Low Touch Sales ProcessWhile there are indeed many benefits to the low-touch sales model there are negativeconsequences that must be addressed such as maintaing customer lifetime value, customerretention, and alienating potential customers.Maintaining Customer Lifetime ValueTo implement the low-touch model many businesses are required to change their product.Specifically, businesses simplify their product offering to appeal to as wide of audience aspossible. While this widens the top of the funnel, it typically involves removing product features.Many of these features are a core tenant that drive customer WTP and LTV. To maintaincustomer LTV businesses should employ a multi-dimensional pricing model to identify customerwillingness to pay and create tiered products levels. The multi-dimensional pricing model is anexercise in which the organization plots out all their product features and determines whichfeatures increase WTP the most. The organization then segments the product offerings based onthese results and offers product tiers with various price points.Customer RetentionLow to no touch sales focus on simplifying the product, removing complexity fromimplementing, and making the first financial commitment easy. A tradeoff of having a productwith a low hurdle rate is also having low switching cost. This is especially true for commoditysolutions. To help combat low switching cost in software solutions consider including featuresthat upload or tracks a consumer’s data, which increase switching cost as customers load or storemore information in the application.
Building a Low Touch Sales Model X-XXX-XXXAlienating Potential CustomersOne of the key challenges of implementing a low-touch sales process is that it may exclude somecustomers who naturally require a higher-touch model. Especially in the awareness phase of thesales funnel, some customers may not be technologically savvy and would thus not go online toview blogs or webinars. These customers may be especially critical if they are decision-makersin the buying process, such as key executives in the company.Even if the company succeeds in promoting awareness, some customers also require a higherdegree of hand-holding. For example, some customers who are unable to locate a customerservice hotline would immediately have a negative view of the company and choose a competitorinstead. For these customers, the reassurance that they can immediately contact customer servicemakes all the difference. In addition, a low-touch sales model makes it more challenging forsalespeople to navigate through the decision-making processes of customers. This meanspotentially targeting the wrong audience and alienating key decision-makers of the deal.This implies that some customers who are aware and interested may not necessarily be convertedwithout a higher-touch salesforce. This is not entirely a disadvantage, however. Smallercompanies or start-ups with limited resources may purposely choose the low-touch sales processin order to eliminate customers who require more hand-holding. The company can then focus onits other customers who could be acquired for lower costs and still provide significant lifetimevalue.2.0 ImplementationMany business and sales executives find the low touch sales model a compelling approach toimproving their competitive position. The section that follows discusses how to implement a lowtouch sales model and the implications of doing so.2.1 Low to No Touch Sales ChecklistWhile low to no touch sales models have traditionally been used in software it has the potentialto be leveraged in other sectors. The checklist below provides a framework for sales managersand executives to determine if their business can easily adopt the low touch sales model.
Building a Low Touch Sales Model X-XXX-XXXFigure 4.0: Low Touch Checklist Area Importance Description Meets Expectations Product High -Product is priced to allow easy financial commitment -Enterprise $10,000 below -Small business $250 per month Product Medium -Product is simple to use Product Medium -Product requires little to no setup Product Medium -Product has a free version, free trial, or is open source Customer High -Customer does not need face to face interaction Business Expertise Medium -Marketing team understand and can execute low to no touch sales strategies Business Expertise High -Sales team understand and can execute low to no touch sales strategiesIf a business does not fit well with a low touch model it may want to consider what aspects of thebusiness can be automated to decrease CAC. For example, if the product is premium priced andonly serves a segment of the market, there might be potential to build a lower-priced alternativethat implements an automated sales process.2.2 The Low to No Touch SalesforceThere has been significant research about the type of sales person that ‘fits’ a company’s salesprocess. If the sales cycle is short and time to close is minimal then a ‘hunter-type’ mentality ispreferred. However if the sales cycle is longer and the customer has unique needs, then a‘farmer-type’ mentality is preferred. The low-touch sales model requires a unique approach thatblurs the boundaries of sales and marketing. This new type of sales person is ChristineCultivator. The diagram below outlines the three different types of salespeople.
Building a Low Touch Sales Model X-XXX-XXXFigure 5.0: Salesperson Personality Types Harry Hunter Harry Hunter is the classic sales person. He is aggressive and likes to close deals. He seeks appointments with prospects and is driven by closing deals quickly. This type of sales person functions optimally when the sales process is well-defined and repetitive. Fred Farmer Fred Farmer is more consultative. He frequently has numerous meetings with prospective customers and takes time to understand their unique demands. He works to develop long-term relationships and communicates with prospects even after they become customers. Typically his customers require a custom solution and he is the one to offer expert advice. Christine Cultivator Low to no touch salespeople guide customers from early in the sales funnel when they become aware of the product until the end of the funnel when they complete the purchase. Since many of the low touch sales tools are based on digital media, this salesperson must have a passion for web-based software as well as the ability to use social media in effectively communicating product benefits to customers. In many instances, low touch salespeople are also “support gurus,” guiding customers through various channels of communication including email, forums and Twitter. It is therefore
Building a Low Touch Sales Model X-XXX-XXX crucial that the salesperson can coordinate with other departments such as front-end IT developers especially in the earlier part of the sales funnels where qualified leads are being generated. Salespeople need to understand the different tools being used in order to support customers effectively. The new low to no touch salesperson – Christine Cultivator – is therefore a mixture of a marketer and a salesperson. While she loves to close deals, she knows how to leverage digital tools in cultivating relationships with potential customers and especially in moving them down the sales funnel. She is very analytical and has excellent trouble- shooting skills. At the same time, she is technically savvy and provides an additional level of support in helping customers. This means she is willing to learn new web products inside out in order to help customers. When Christine communicates with customers, they are already qualified leads. The ability to manage many accounts simultaneously and efficiently convert the maximum number of qualified leads into paying customers is crucial to Christine’s success. Salesforce Management Interestingly, we find that the low-touch sales method requires a different type of salesforce management from more high-touch sales. In particular, we believe it will be very challenging to implement behavior-based control systems in the low-touch sales method. This is because low-touch sales tools evolve more quickly given the rapid change in technology. Webinars for example, did not become popular until a few months ago. This means that low-touch salespeople must be more independent and creative, requiring less supervision by management. They need to constantly create new content and be able to fully understand social media tools to attract customers. This makes it challenging to establish behavior-based control systems. Thus, the outcome-based control system is a better fit for low-touch sales, although it will look different from an outcome-based control system in high-touch sales. More than ever, the “Customer is King” approach will dominate, since the customer is now more influential and can easily give positive or negative feedback to other customers. Since salespeople are expected to independently deal with customers, it is difficult for managers to supervise or qualitatively evaluate them. The creative skills and efforts of salespeople have a huge impact on conversion rates, which means sale force elasticity is high and salespeople need autonomy to succeed. As opposed to traditional outcome-based systems however, training will be especially critical with regard to basic technological and
Building a Low Touch Sales Model X-XXX-XXX analytical skills. Salespeople will need to form a core base of technological knowledge in order to be truly effective in low-touch sales. Although focused on metrics, low-touch sales pays attention to different layers of outcomes. One of the benefits of low-touch sales tools is that it allows managers to track performance on each layer of the sales funnel to evaluate aspects for improvement. In low-touch sales, the first customer contact is usually already a qualified lead. Rather than being measured on the number of leads they bring in, salespeople can thus be evaluated based on the conversion rate of these leads. Intermediate conversion rates are also critical to identify where poor performers are failing. In this aspect, evaluation is very transparent since there is a range of metrics to use. In fact, the challenge for evaluators will be to select which metrics are more relevant to the company’s success than others. This will be especially challenging given the fast- evolving nature of effective tools in low-touch sales. Companies can choose to tie compensation to certain metrics such as conversion rates, but they can also be more creative. Customer surveys are now easier to attain given access to technology. Qualitative components such as these will reduce the risk of salespeople “gaming” the performance evaluation system. Another critical difference with the traditional outcome-based system are the intrinsic rewards desired by salespeople. Successful low-touch salespeople are not simply fulfilled by deal closings. They find fulfillment in creativity and discovering new digital tools. In this way, they are more like behavior control systems in that they like solving problems and offering good service to customers. We further explain in the next section what type of salesperson is required by the low-touch sales model.2.3 Costs to ImplementDespite the cost benefits of implementing the low-cost sales model, there are still startup andrecurring financial costs that companies should expect. We categorize these costs intotechnology, people and processes. Technology costs for example, will include the installation anddevelopment of software to enhance knowledge management and search capabilities. Certainlicense fees may be needed for leased platforms such as the software-as-a-service (SaaS) socialmedia vendor solution.
Building a Low Touch Sales Model X-XXX-XXXArguably, people are even more important than technology since the latter will be ineffectivewithout the right capabilities. Significant costs could be incurred when hiring IT staff who cancreate this infrastructure and integrate it with existing systems. Training both new and existingpersonnel will also require upfront and recurring costs. Costs from processes may also besignificant, including the marketing and launch of new tools. Creating plans as well as constantlydeveloping tools and metrics could also be a strain on available human resources.2.4 Changing Company CultureImplementing a low-cost sales model can have significant consequences on a company’s culture,especially if employees are used to a high-touch or field sales model. Reducing the Salesforce The value proposition of a lower-touch sales model is decreasing the need for a large number of sales people, which implies that the salesforce may need to be cut down significantly. This could obviously have negative effects on the morale of both the existing salesforce and other employees. As mentioned in the previous section, the low- touch sales model may also require a different kind of salesperson. If the company finds itself unable to re-train existing salespeople in the new sales model, it may need to eliminate the salesforce and hire a completely new one. Sales vs. Technology Often, the low-touch sales requires a different kind of content such as blogs and webinars. For a traditional salesforce used to handing out brochures to customers, developing this content and engaging in tools such as SEO may be challenging. Sales people often find it difficult to perceive technology as an enabler of productivity, much less find interest in experimenting with how to utilize software effectively. Coordination between IT-focused employees and sales people will be especially critical. Lack of Workflow Integration Many companies focus on technology without making sufficient effort to integrate the new sales model in the salesforce workflow. Sales people need to have a detailed plan of how the new model changes their daily routine, short-term objectives and reward metrics. They should also have a clear view on how they should interact with customers and other employees involved in the process such as marketing people. Comprehensive orientation and training are therefore crucial especially in the beginning.
Building a Low Touch Sales Model X-XXX-XXX Different Type of Results The low-touch sales model can also produce results differently, so sales people need to understand what they can get from social media tools. In many instances, the conversion rate of customers may be slower since they often need to educate themselves with reduced salesperson interaction. Many salespeople get their high from closing a deal, which they will probably not tangibly experience in a low-touch sales model.2.5 Applying The Low Touch Model To The Sales FunnelOne of the most compelling ways to communicate how to implement the low-touch sales modelis by applying the principles to the sales funnel. By doing so, it provides the salesforce withtactics and actionable recommendations upon which they can act. To communicate the low touchsales approach each stage of the funnel is detailed below with strategies and tools that can beimplemented to decrease customer acquisition costs.Figure 6.0: Sales Funnel
Building a Low Touch Sales Model X-XXX-XXXAwarenessFor the low-touch sales model generating awareness is analogous to inbound marketing. Beloware strategies and related tools to employ low-touch sales in the awareness stage. 1. Inbound Marketing- inbound marketing is a strategy in which businesses are found by their customers. Its the opposite of outbound marketing and leverages online content creation as a means for businesses to get found by their customers. In the B2B world, this means businesses are becoming publishers. One of the most proven methods of creating content online is blogging. Thankfully there are many blog platforms that businesses can use to create high quality content. Wordpress- content management system which has one of the most powerful blogging platforms available. Offers highly flexible options including themes and self-hosted and Wordpress-hosted websites. Tubmlr- one of the newest blogging platforms to date, Tumblr is a simple blogging platform which caters to shorter content posts. For example, publishing a picture or a quote is common on Tumblr. Platform includes ‘follow’ feature which allows users to follow other users, similar to Twitter. Blogger- blog-publishing service which allows users to create a publish time-based posts. Includes both Blogger-hosted sites (e.g. mysite.blogger.com) and self-hosted sites (mysite.com) External Platforms- there are numerous external platforms which businesses can leverage to increase their online presence and increase the likelihood of getting found online. Platforms include YouTube for video, Flickr for photos, Slideshare.net for presentations, and Scribd for documents. Each of these platforms have social sharing tools integrated into the experience and also have search engine optimized their websites. Another tactic for external platforms includes guest blogging on industry-leading websites and news publications. 2. Search Engine Optimization (SEO)- is a strategy in which websites structure their content in a way that is optimized for search algorithms. While SEO includes numerous inputs such as page title, keyword density, link backs, page speed, link authority, site maps,
Building a Low Touch Sales Model X-XXX-XXX Google Keyword Tool- A free service which allows users to search for specific keywords and obtain data on monthly global search volume, local monthly search volume, and competition for keywords (which is highly correlated to bid price). SEOProfiler- free tool which helps businesses analyze back links for their competitor’s websites. Includes analysis of which websites link to a specific website, strongest pages, and anchor texts. Useful tool to understand how stronger competitors have optimized their website.ConsiderationThe consideration stage of the funnel is designed to qualified leads and analyze which prospectsare the most appealing. For the low-touch model, strategies that employ reciprocity and nurtureprospects are the most successful. These include giving something away and trial periods. 1. Give Something Away- free products are one of the most successful strategies in order to gauge interest from a customer. Free products can include research reports, tips, and tools for prospects. This strategy separates luke warm prospects from hot leads. These free products are typically publicly available and encourage repeat use. One example of this strategy is HubSpot’s Website Grader. This tool analyzes a user’s website and determines how SEO-friendly the site is and provides recommendations to the site owner on how to improve their product. Another method is providing a free white paper if a prospect submits an online form with contact information.
Building a Low Touch Sales Model X-XXX-XXX Figure 7.0: Screenshot of Landing Page 2. Trial Period- similar to giving something away, free trial periods put control in the prospects hands. By giving the product to the user for free for a short period of time, say 30 days, the prospect is able to determine if the product is worth purchasing and the sales team only spends time with qualified prospects who are ready to make a purchase.PurchaseTo increase the conversion from consideration to purchase a business should adjust their pricingand product strategies accordingly. Two of the most popular strategies are freemium productsand product tiers. Freemium- one of the most popular strategies for software companies is to offer a base level product for free. Freemium models include time-based models such as the first 30 days for free or usage-based models such as under a certain threshold the product is free. Product Tiers- to appeal to a wider customer base and capture more value businesses should implement product tiers. Specifically, to implement a low touch sales model businesses should offer a entry-type product that is easy to use and has a limit on the
Building a Low Touch Sales Model X-XXX-XXX feature set. For example, if an online product with a monthly subscription offers email marketing as one of their features, the organization can create product tiers based on the number of emails sent per month. The entry level product could include up to 500 emails sent per month, and if the business exceeds this amount then they are automatically upgraded to the next level of the product which would have a higher monthly charge.Closed DealOnce a qualified lead becomes a customer the demands placed on the business are even greater.A paying customer expects much more than a customer using the free version. However, thereare tools that exists that decrease the cost to manage and serve a customer. Customer-to-Customer Service (C2CS)- customer support is typically a significant cost for low-touch businesses. Whether its paying customers, trial customers, or freemium customers, there are may individuals who will have questions about the product. One strategy to address the concerns of customers is in the form of C2CS. This involves customers answering the questions of other customers. Feedback f o r u m s , c u s t o m e r support platforms, and community websites all serve this purpose well. C2Cs increases customer loyalty and decrease cost to serve customers.3.0 Case Studies For The Low Touch Sales ModelThe low touch sales model is a provocative approach for many businesses. It offers establishedcompanies an improved cost structure over their competitors and offers startups the leverage tocompete with much larger counterparts. Below are examples of how two businessesimplemented the low touch sales model: one a traditional software company and the other amobile food cart.3.1 JBoss: Moving to a Low to No Touch Sales Model 4JBoss is a free open source software company that had experienced a high degree of awarenesswith over five million downloads, but had not figured out how to monetize their business orconvert customers while maintain a low CAC.Increasing LeadsAlthough JBoss had experienced a high degree of awareness with over 5 million downloads oftheir software, they had not been able to convert their awareness to leads due to low emailconversion rates. To incentivize customers to give their email address, JBose cannibalized theironly revenue stream and gave away their documentation which customers had previously
Building a Low Touch Sales Model X-XXX-XXXpurchased. Giving away their documentation drastically increased the number of emailconversions and resulted in over ten thousands leads per month.Qualifying LeadsJBose used customer actions to determine scores for each of their leads to qualify who insidesales would target for conversion to their paid services. Customer who downloaded theirdocumentation and performed other steps to signal interest in purchasing JBose’s services weregiven to the sales team and customers who had lower scores were given additional information tonurture their interest for JBose’s offerings.Increasing LTVAfter qualifying leads JBose had determined that they could convert their leads to paid customersat a rate of 2.8% with an average deal size of ten thousand dollars. To increase LTV JBose took amulti-pronged approach by adding additional services and broadening their product line whilealso using scalable pricing to ensure they were capturing as much of their customer’s willingnessto pay as possible. Their approach resulted in increase in average deal size by 500% to $50,000.3.2 Mobile Food Carts: Decreasing CACAlternatively known as lunch trucks or food wagons, mobile food carts have long existed in theUS, but technology is creating a new image for the mobile quick-serve industry. The use ofinternet technology has allowed these businesses to implement a low-touch sales model.Finding Qualified CustomersSocial media sites like Twitter help customers track their favorite trucks. New websites like FoodCarts Portland and Find LA Food Trucks were created to promote and track these trucks. On alarger scale, Mobilecravings.com tracks food trucks across the entire country. Website users cansearch by city and food type as well as give these carts a star rating. Food-truck owners haveprofile pages with menus, Twitter feeds, videos and pictures, which are meant to educatepotential new customers and assist existing ones.Increasing EngagementAlthough the mobile cart business has been largely operated by small businesses looking to cutdown initial CAPEX, bigger chains have started producing their own mobile carts. BurgervilleCEO Jeff Harvey says food trucks are not only cost-efficient, but also represent a new way toengage customers.
Building a Low Touch Sales Model X-XXX-XXXDecreasing CACThe light-touch sales model reduces the need for salespeople handing out fliers to customers.Where mobile food carts used to be an impulse purchase by customers who happen to spot themon the street, loyal customers can now intentionally find their preferred trucks from their specificlocations. Engaging and empowering customers in giving them more options not only lowerCAC but also provide the potential for greater customer LTV.4.0 ConclusionThe low to no touch sales method has many benefits that could radically change productdefinition and competition in the industry. Significantly lower customer acquisition costs allowsmaller new entrants to have a better fighting chance, as well as redefine sales productivity andimprove profitability for larger companies. The interactive process entailed in this sales methodalso means customers are more empowered in the product creation process, potentiallyincreasing customer lifetime value. This powerful combination of lower customer acquisitioncosts and increased lifetime value are truly changing the way business models succeed.Despite the tempting benefits of low to no touch sales however, not all companies are in theposition to implement it. Some may need to choose which phases of the funnel can be low touch,as some phases may still require high-touch sales especially when product nature and customerdecision-making process are complex. Companies that implement low-touch without firstunderstanding the needs of their sales process may suffer higher costs that exceed the benefitsbrought about by this new sales model.Even when companies decide that low touch sales is the right strategic fit, execution remains achallenge. There is no single template on how to implement this sales method. Each companyhas a different sales funnel, and the customer buying process will vary depending on thecompany’s business model. Companies need to select among the different potential tools andstrategies, modifying these to adapt to their business needs. Companies that need to changeexisting sales models will find implementation especially challenging given the critical changesin salesforce culture, as well as the complex coordination required among different departments.The low to no touch sales method continues to evolve rapidly, and businesses that canstrategically innovate will be able to find revolutionary models for business marketing.
Sources1“The Big Picture View. What Really Matters: Proﬁtable Business Models.” David Skok. http://www.slideshare.net/DavidSkok/building-a-sales-marketing-machine Slide 18. Accessed April 9th, 2011.2“The Power of Free.” David Skok. http://www.forentrepreneurs.com/business-models/power-of-free/Accessed March 24th, 2011.3“The Big Picture View. What Really Matters: Proﬁtable Business Models.” David Skok. http://www.slideshare.net/DavidSkok/building-a-sales-marketing-machine Slide 20. Accessed April 9th, 2011.4“Customer Acquisition & Monetization- Keys to your Business Model.” David Skok. http://www.slideshare.net/DavidSkok/customer-acquisition-monetization-keys-to-your-business-plan. AccessedApril 8th, 2011.