How to Grow A Business Through Channels
Imagine this: you are laying in bed, glancing at the clock it’s 8:00 pm, and you showered - so moving and going outside isn’t an option. But the biggest problem here is that - you’re starving and not trying to cook a whole meal after a tiring day of work. But lucky for you living in this day in age where applications such as UberEats, GrubHub, Postmates, DoorDash, Caviar, and many others exist. You can easily just tap tap and food will magically appear in front of the door.
There are 7 proven strategies for business growth. In this seven series blog post, we’ll share anecdotes and assets needed to execute. Here, we are kicking it off sharing the channels strategy.
What's the Use for Channels in a Business?
The goal of the channels strategy is to get customers to purchase products easier. Essentially the concept is to make it more available through channels that are most convenient to your audience. So back to the scenario of thinking of a restaurant. Customers can usually purchase restaurant food in the restaurant itself. However, with the invention of UberEats, it is another convenient channel where people can purchase food.
Even Amazon, the largest eCommerce, purchased Whole Foods for additional channels which gave it Brick and Mortar stores where customers can buy the products. When it comes to channels, you want to keep in mind and ask yourself these three essential questions:
Does the channel remove or improve geographical touchpoints for the customer? UberEats, for example, would remove the geographical touchpoint. Hence, enabling the customers to purchase on the app itself.
“A recent Morgan Stanley survey reported that nearly 50% of consumers use delivery apps to directly replace visiting the actual restaurant.”
By the same token, if a restaurant invested in a mobile food truck that met the customers where they were, that would enhance the geographical touchpoint. The essential point here, which is the most convenient for the customer, is the best strategy.
In the reaching, the additional channel allows acquiring the new customer by existing channels. Online classes, also known as, Massive Open Online Courses (MOOCs) allow universities to reach students who want to learn but do not have the time or willingness to sit in a traditional classroom. This is the new market for traditional universities.
Delivery services aren’t free. Each service charges customers a fee to pick up their orders from a restaurant, and they also charge restaurants to deliver food to customers. Those fees add up quickly, and they directly impact the issue of margins. The marginal cost of supplying business services through the channel cannot reduce the overall gross profit margin. Selling food truck food cannot decrease profit. If online channels decreased the margin, then that would not make sense either. Not generating any profit from a given channel, is a bad deal. With that said, continuing to the example with Morgan Stanley,
“While this could lead to increased revenues, a restaurant’s margins could start to shrink since delivery customers don’t want to or can’t order traditionally high-margin items like soft drinks and liquor.”
Can Channels Actually Grow A Business?
Tying it back to what you came here for, and here's our honest answer: yes - when used correctly. Looking at your situation and what kind of business you are in, channels can really do some serious damage (damage in this context as in - the best way possible; something amazing)! When considering these third-party applications, think back to these points and if it would make sense for you. By using backed up numbers and best judgment, your business will go far when applying channels.
"As long as you choose the right channel, indirect sales can be a beneficial and efficient choice." (Forbes)
Here's a blog on how the geography strategy can improve and expand your business!
Here's a video with further explanation of not only the channels strategy but the other six, in order to expand the growth of a business.
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