Surviving Competition of Online Players
DOETINCHEM, the Netherlands – He was a keynote speaker at the World Cycling Forum; the Conference on consumer centricity & increasing speed to market that took place June 7 and 8 in Porto, Portugal. Here he provided hands-on-advice on how suppliers/brands are to transform digitally in their dealer operations.
Ronald van Klooster is passionate about the opportunities that new marketing technologies can bring to brands. He is the co-founder of Maxlead (www.maxlead.com); a consultancy specializing in online marketing for suppliers operating with dealer channels. Here’s the interview Bike Europe published in its May 2017 print edition.
How do the new realities in retail look like?
“Consumers used to be easy to reach. Newspapers, television or radio, only three media channels. Over the past 10 years, this has quickly changed through the internet. The internet provides a growing number of contact options to reach the consumer. Technology and data are becoming increasingly important for reaching consumers at the right time in the right media channel. For each industry those contact options, also called touch points, are different. For bicycle brands reaching the consumer has also become fragmented and harder. The playing field in which the consumer’s fight is taking place is becoming more and more crowded. The internet forces brands to make choices on how to survive the competition of especially online players.”
With that competition in mind; is a distribution strategy operating through dealers still a commercially viable and sustainable option?
“The dealer channel must make itself indispensable. If it does not it may very well happen that this channel ceases to exist. Links in the value chain like dealers are already being deleted. This disintermediation trend is also happening in the bicycle and e-bike sector. For instance by an e-bike brand named Stella, successfully operating in Holland. It offers straightforward online products (and offline), supported by lots of advertising, and consumers love it. But, as long as the bicycle manufacturers continue to make complex (electric) bikes, the retail channel is needed.”
What are your views on the future of retailing bicycles and e-bikes?
“Brands are putting more money and effort in the hunt for consumers. Online marketing has become a sales tool and much needed as dealers often lack the skills to do that effectively. Online marketing, dealer portals and experience centers generate leads. These leads to consumers that have shown online their interest in particular products will be passed on by the suppliers/brands to their dealers. Many times it’s there where it goes wrong. In particular in sectors that operate with dealers which are similar to the bicycle business. Experience shows that many dealers don’t follow-up the provided leads. Then the supplier’s investment in online marketing turns into a disinvestment. It raises the question what the added value of such dealers still is? That value will be determined by the success rate of the dealer converting leads into actual purchases.”
How can suppliers/brands transform digitally for obtaining leads?
“Do what for instance Booking.com does where consumers book their travel arrangements making them feel like avoiding pushy operators. Such bookings spur a digital signal or cookie to Google Adwords and travel operators resulting in online ads. Another example, purchasing at webshops means accepting their transaction terms and conditions. Accepting them also provides webshops permission to link an online profile (cookie) to the consumers’ name. This identifies interested consumers and brings leads. We at Maxlead have installed such online marketing tools in the IT systems of several customers.
“What you see more and more now is brands trying to entice consumers with incentives for obtaining their online profiles. Money and effort is put in this as online consumer profiles bring leads with which dealers can reach out to the right consumers with relevant information at the right time.”
How can dealers follow-up on leads; what does it require?
“Foremost it requires a well-organized sales force. Follow-up on a lead means calling this potential customer within 10 minutes. If that does not happen then what’s named ‘outbound performance’, or the chance of converting the lead into an actual purchase, decreases immediately.
“IT tools are able to track dealers’ outbound performance and can make that performance transparent to dealers. It offers suppliers/brands also an insight which leads are well followed by their dealers. It offers the possibility to suppliers/brands to select dealers on their outbound performance. And for instance stop providing the ones with a low performance with leads.”
How will the business model with leads work out for dealer margins?
“What is certain is that margins will no longer be determined by purchasing volumes only. Maybe the Über model will become commonplace in the value chain of the bicycle sector. This means that the customer assesses the driver and reviews his or her performance. This could work out for bike retailers. Supplier/brands monitor the reviews and fit it in their kpi schemes for determining the dealer’s margin. This might sound like a fata morgana now for traditional bicycle dealers, but it’s already reality in other sectors. However, what has to be taken into account is that bicycle and in particular e-bike retailing distinguishes itself from other sectors through the service aspect. But also that service aspect requires a superior online follow-up as this is can provide an all-important competitive edge for dealers in their competition with online suppliers. My tip for dealers to work that out successfully; put young people in your team. They know what’s going on.”
More at Maxlead.com