Building a Low Touch Sales Model

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ERIK ELIASON YOHANES FREZGI GENA CHUA This report was composed with guidance from David Skok, a Partner at Matrix Partners. His understanding of the model was critical to developing the report and his quotes and models are cited throughout the report. Building a Low Touch Sales Model Introduction Business to business sales has traditionally meant hiring and training a salesforce which is charged with the task of sourcing qualified leads, obtaining face-to-face meetings, delivering presentations, and ultimately closing deals. This traditional model has become known as the high touch 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, but how they do this varies greatly. This paper explores what the low touch model is, the implications of the model, and how to implement the model within an organization. 1.0 The Low Touch Sales Process The low to no touch sales process focuses on removing human interaction from each step in the sales funnel as well as decreasing barriers to adoption by simplifying product offerings. Human interaction is replaced with automated processes to facilitate the sells experience. Automating sales and simplifying product offerings drastically reduces customer acquisition cost (CAC) and lowers overall headcount in sales and marketing. There are three types of solutions that fall under low to no touch selling with increasing CAC as human interaction is added. Figure 1.0: Cost of Customer Acquisition Spectrum 1 X-XXX-XXX APRIL 23, 2011
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Transcript of Building a Low Touch Sales Model

Page 1: Building a Low Touch Sales Model

ERIK ELIASONYOHANES FREZGIGENA CHUA

This report was composed with guidance from David Skok, a Partner at Matrix Partners. His understanding of the model 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 is charged with the task of sourcing qualified leads, obtaining face-to-face meetings, delivering presentations, and ultimately closing deals. This traditional model has become known as the high touch 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, but how they do this varies greatly. This paper explores what the low touch model is, the implications 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 the sales funnel as well as decreasing barriers to adoption by simplifying product offerings. Human interaction is replaced with automated processes to facilitate the sells experience. Automating sales and simplifying product offerings drastically reduces customer acquisition cost (CAC) and lowers overall headcount in sales and marketing. There are three types of solutions that fall under low to no touch selling with increasing CAC as human interaction is added.

Figure 1.0: Cost of Customer Acquisition Spectrum1

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1.1 Low to No Touch Sales Models Freemium2

This is the least complex sales model where a version of the company’s product is given to customers for free, with the goal of eventually up-selling or cross-selling. Examples of these are Open Source products like JBoss, MySQL, and Asterisk, as well as web services like DropBox and SugarSync. Naturally, only some of these customers can eventually be converted into paying customers. The conversion rate depends on the appropriateness of the customers targeted, as well as 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 tools and 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 or service needs to be simple for the customer to understand and also have a compelling value proposition 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 email responses to inquiries or an occasional phone with an inside sales person to quickly resolve an issue.

1.2 Traditional Sales Process Versus Low Touch Sales Process The modus operandi of low touch sales is automation. The table below contrasts the differences between traditional field sales and low touch sales models.

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Figure 2.0 Traditional Versus. Low Touch Sales

Stage of Buying Process Traditional Field Sales Low Touch Sales

Awareness Outbound Marketing-Brand Advertising-Trade Shows-PR Campaigns

Inbound Marketing-Relevant blog content-White Papers -Videos

Consideration -Delivering Initial Presentation -Webinars-E-mail Campaigns

Evaluation-Organization Specific Presentation

-Freemium-Free Trial-Customer Forums

Qualifying -Key Stake Holder AnalysisCoach Feedback

-Based On Action Taken By The Customer

Purchase -Implementation Cost -No 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, from reducing the costs of acquisition to increasing retention rates and customer lifetime value. The scale, timing, and duration of these benefits can be estimated by considering key metrics for the company’s business model to succeed.

Lower Cost to Acquire Customers Hiring and maintaining a salesforce usually represent the most expensive aspects of the sales process. Especially for small companies with constrained resources, these costs could be both financially and managerially draining. Thus, companies that are able to dramatically reduce or even eliminate these costs would not only become more profitable but also gain a significant advantage 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 and marketing expenses divided by the number of customers acquired in a particular period. CAC can be higher during a company’s ramp-up period due to fixed costs such as headcount that may not necessarily need to increase as the number of customers acquired grow.

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LTV can be calculated by estimating the gross margin that a company can expect to make from a customer over the lifetime of their relationship. A company will only be viable if CAC is less than LTV. In the low-touch sales model, the gap between these two becomes greater, i.e. a company can acquire a customer for much less and still be able to retain or even increase their LTV. The successful implementation of a low-touch sales model therefore represents a highly effective 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 the corresponding CAC are surprising. David Skok finds that rather than reflecting a linear relationship, 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 studies show how CAC increases significantly once human interaction with a salesperson is required. Of course, these costs are also directly correlated to the productivity of sales team, i.e. different high-touch models can reflect varying costs given the effectiveness of the salesforce. Based on Skok’s definitions, we further explain the various levels of sales complexity below.

Figure 3.0 Sales Complexity vs. CAC3

The implication of these findings is that companies stand to benefit significantly if they are able to shift to a less complex sales model, i.e. from field sales to high-touch or from light-touch to

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no-touch. The caveat as previously mentioned above is that certain types of products or services may require a specific type of sales model. There is nothing wrong with companies that still choose the high-touch model following the conclusion that their product or service requires this type of service. Whenever possible however, companies should shift to a less complex sales model whether in some or all aspects of their selling process in order to lower CAC and increase profitability. Companies should consider how they can redesign their sales processes or even their 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 is now 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 unprofitable at the same price point. Consequently, lower sales costs level the playing field as even smaller companies with limited resources can compete effectively against larger competitors. The decreased costs associated with smaller sales teams allow the company to spend more resources on critical issues such as product development.

Expanded Addressable Market Another 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 afforded by them. Software as a Service (SaaS) and Hubspot for example, have discovered the perfect delivery mechanism for small to medium-sized businesses that do not have IT staff s via webinars and email newsletters.

Higher Customer Lifetime Value Low-touch customer service tools such as online communities may provide more effective solutions to customers. Users who encounter the same problems can interact and share experiences together, providing solutions that the company itself may not be aware of. Online communities give customers access to “super users,” or customers who are usually early adopters and have significant technological prowess to find solutions to problems that salespeople are not even aware of.

Even if users are not able to find solutions among themselves, it decreases the number of customer 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

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peer groups and less likely to shift to competitors. In aggregate, these consequences potentially increase LTV, a very important factor in making business models successful.

Interactive Product CreationPerhaps more importantly, tools such as community interactions allow the company to discover user problems that were previously unseen. In addition, it gives voice to the consumer and reduces the need for intensive market research such as focus group discussions. Consumers can be expected to voice out their opinions of potential product improvements given they’re already users and the interaction can be made anonymous. Tools such as these are important channels to test 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 negative consequences that must be addressed such as maintaing customer lifetime value, customer retention, and alienating potential customers.

Maintaining Customer Lifetime Value To 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 as possible. 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 maintain customer LTV businesses should employ a multi-dimensional pricing model to identify customer willingness to pay and create tiered products levels. The multi-dimensional pricing model is an exercise in which the organization plots out all their product features and determines which features increase WTP the most. The organization then segments the product offerings based on these results and offers product tiers with various price points. Customer RetentionLow to no touch sales focus on simplifying the product, removing complexity from implementing, and making the first financial commitment easy. A tradeoff of having a product with a low hurdle rate is also having low switching cost. This is especially true for commodity solutions. To help combat low switching cost in software solutions consider including features that upload or tracks a consumer’s data, which increase switching cost as customers load or store more information in the application.

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Alienating Potential CustomersOne of the key challenges of implementing a low-touch sales process is that it may exclude some customers who naturally require a higher-touch model. Especially in the awareness phase of the sales funnel, some customers may not be technologically savvy and would thus not go online to view blogs or webinars. These customers may be especially critical if they are decision-makers in the buying process, such as key executives in the company.

Even if the company succeeds in promoting awareness, some customers also require a higher degree of hand-holding. For example, some customers who are unable to locate a customer service hotline would immediately have a negative view of the company and choose a competitor instead. For these customers, the reassurance that they can immediately contact customer service makes all the difference. In addition, a low-touch sales model makes it more challenging for salespeople to navigate through the decision-making processes of customers. This means potentially 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 converted without a higher-touch salesforce. This is not entirely a disadvantage, however. Smaller companies or start-ups with limited resources may purposely choose the low-touch sales process in order to eliminate customers who require more hand-holding. The company can then focus on its other customers who could be acquired for lower costs and still provide significant lifetime value.

2.0 Implementation Many business and sales executives find the low touch sales model a compelling approach to improving their competitive position. The section that follows discusses how to implement a low touch sales model and the implications of doing so.

2.1 Low to No Touch Sales Checklist While low to no touch sales models have traditionally been used in software it has the potential to be leveraged in other sectors. The checklist below provides a framework for sales managers and executives to determine if their business can easily adopt the low touch sales model.

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Figure 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 strategies

If a business does not fit well with a low touch model it may want to consider what aspects of the business can be automated to decrease CAC. For example, if the product is premium priced and only serves a segment of the market, there might be potential to build a lower-priced alternative that 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 sales process. If the sales cycle is short and time to close is minimal then a ‘hunter-type’ mentality is preferred. 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 that blurs the boundaries of sales and marketing. This new type of sales person is Christine Cultivator. The diagram below outlines the three different types of salespeople.

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Figure 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

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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 ManagementInterestingly, 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

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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 Implement Despite the cost benefits of implementing the low-cost sales model, there are still startup and recurring financial costs that companies should expect. We categorize these costs into technology, people and processes. Technology costs for example, will include the installation and development of software to enhance knowledge management and search capabilities. Certain license fees may be needed for leased platforms such as the software-as-a-service (SaaS) social media vendor solution.

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Arguably, people are even more important than technology since the latter will be ineffective without the right capabilities. Significant costs could be incurred when hiring IT staff who can create this infrastructure and integrate it with existing systems. Training both new and existing personnel will also require upfront and recurring costs. Costs from processes may also be significant, including the marketing and launch of new tools. Creating plans as well as constantly developing tools and metrics could also be a strain on available human resources.

2.4 Changing Company Culture Implementing 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 SalesforceThe 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. TechnologyOften, 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 IntegrationMany 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.

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Different Type of ResultsThe 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 Funnel One of the most compelling ways to communicate how to implement the low-touch sales model is by applying the principles to the sales funnel. By doing so, it provides the salesforce with tactics and actionable recommendations upon which they can act. To communicate the low touch sales approach each stage of the funnel is detailed below with strategies and tools that can be implemented to decrease customer acquisition costs.

Figure 6.0: Sales Funnel

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AwarenessFor the low-touch sales model generating awareness is analogous to inbound marketing. Below are 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,

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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 prospects are the most appealing. For the low-touch model, strategies that employ reciprocity and nurture prospects 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.

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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 pricing and product strategies accordingly. Two of the most popular strategies are freemium products and 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

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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, there are 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 forums, cus tomer 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 Model The low touch sales model is a provocative approach for many businesses. It offers established companies an improved cost structure over their competitors and offers startups the leverage to compete with much larger counterparts. Below are examples of how two businesses implemented the low touch sales model: one a traditional software company and the other a mobile food cart.

3.1 JBoss: Moving to a Low to No Touch Sales Model4

JBoss is a free open source software company that had experienced a high degree of awareness with over five million downloads, but had not figured out how to monetize their business or convert customers while maintain a low CAC.

Increasing LeadsAlthough JBoss had experienced a high degree of awareness with over 5 million downloads of their software, they had not been able to convert their awareness to leads due to low email conversion rates. To incentivize customers to give their email address, JBose cannibalized their only revenue stream and gave away their documentation which customers had previously

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purchased. Giving away their documentation drastically increased the number of email conversions 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 inside sales would target for conversion to their paid services. Customer who downloaded their documentation and performed other steps to signal interest in purchasing JBose’s services were given to the sales team and customers who had lower scores were given additional information to nurture their interest for JBose’s offerings.

Increasing LTVAfter qualifying leads JBose had determined that they could convert their leads to paid customers at a rate of 2.8% with an average deal size of ten thousand dollars. To increase LTV JBose took a multi-pronged approach by adding additional services and broadening their product line while also using scalable pricing to ensure they were capturing as much of their customer’s willingness to pay as possible. Their approach resulted in increase in average deal size by 500% to $50,000.

3.2 Mobile Food Carts: Decreasing CAC Alternatively known as lunch trucks or food wagons, mobile food carts have long existed in the US, but technology is creating a new image for the mobile quick-serve industry. The use of internet 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 Food Carts Portland and Find LA Food Trucks were created to promote and track these trucks. On a larger scale, Mobilecravings.com tracks food trucks across the entire country. Website users can search by city and food type as well as give these carts a star rating. Food-truck owners have profile pages with menus, Twitter feeds, videos and pictures, which are meant to educate potential new customers and assist existing ones.

Increasing Engagement Although the mobile cart business has been largely operated by small businesses looking to cut down initial CAPEX, bigger chains have started producing their own mobile carts. Burgerville CEO Jeff Harvey says food trucks are not only cost-efficient, but also represent a new way to engage customers.

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Decreasing 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 them on the street, loyal customers can now intentionally find their preferred trucks from their specific locations. Engaging and empowering customers in giving them more options not only lower CAC but also provide the potential for greater customer LTV.

4.0 Conclusion The low to no touch sales method has many benefits that could radically change product definition and competition in the industry. Significantly lower customer acquisition costs allow smaller new entrants to have a better fighting chance, as well as redefine sales productivity and improve profitability for larger companies. The interactive process entailed in this sales method also means customers are more empowered in the product creation process, potentially increasing customer lifetime value. This powerful combination of lower customer acquisition costs 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 the position 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 customer decision-making process are complex. Companies that implement low-touch without first understanding the needs of their sales process may suffer higher costs that exceed the benefits brought about by this new sales model.

Even when companies decide that low touch sales is the right strategic fit, execution remains a challenge. There is no single template on how to implement this sales method. Each company has a different sales funnel, and the customer buying process will vary depending on the company’s business model. Companies need to select among the different potential tools and strategies, modifying these to adapt to their business needs. Companies that need to change existing sales models will find implementation especially challenging given the critical changes in 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 can strategically innovate will be able to find revolutionary models for business marketing.

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Sources

1 “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. Accessed April 8th, 2011.