Low touch term means the low human interaction between the seller and buyers. The digital transformation of economics means the low touch business models will escalate further. The low touch model focuses on reducing face-to-face and direct human interaction in each sales process. Automation and digital sales are important components of the low touch business model.
What is the Low Touch Business Model?
A business model where goods and services are delivered to the end-users with minimum human interaction. The low touch thesis applies from customer acquisition to the product/service delivery processes. However, there is little human intervention when and wherever possible, hence the term low touch.
Recently, the term has been referred to for e-commerce platforms frequently. Most of the e-commerce websites offer products with a direct checkout option. The little interaction occurs through the chatbots or a minimum live chat feature. Traditional businesses with brick-n-mortar selling products offering fixed or discounted prices also enact the same low touch business model.
The low touch business model requires little human intervention at different stages, unlike a freemium model. There are sales processes such as after-sales or warranty claims that inevitably require the human touch. Hence the model is termed low touch business model.
How Does a Low Touch Business Model Work?
Customer acquisition and sales processes always require rendering information as needed by the buyers. Depending on the complexity of the product or service, the replacement for human services can be automated. Large projects such as engineering or consultancy would find it hard to replicate the low touch business models.
Here are a few key steps in the low touch business model.
Customer Awareness Stage
The low touch business model would utilize digital marketing and content marketing campaigns at this stage. Products are advertised through the company website/blog and digital sales campaigns such as email marketing.
The cost reduction is achieved by delivering automated content across several platforms. Video, webinars, recorded sessions, etc. are also part of customer acquisition at this stage.
Customer Evaluation and Qualifying Stage
For low prices products, the customer usually goes through the product descriptions and reviews. Makes direct purchase with brand loyalty or experience. However, services or unique product sellers may use freemium or trial access to provide access to buyers.
Purchase and After-Sales Stage
Similar to subscriptions or online shopping, the focus is to automate the purchase process. Customers can buy the product/services directly once they evaluate it successfully. The product or service delivery process should also be automated. The after-sales services may include return and shipping policies, repair, or warranty claim procedures.
The low touch business model often resembles modern e-commerce businesses. It suits the digital service providers such as consultants or digital marketing service providers. However, traditional businesses can also adapt the low touch model successfully too. It requires brand development with a consistent pricing strategy. Self-service becomes the core of these brands. The famous furniture and home accessories brand IKEA is a prime example of the traditional businesses adopting the low touch sales processes.
Since the focus is on reducing human interaction it means the sales and marketing staff expenses reduce significantly. However, it doesn’t mean compromising on the marketing efforts.
The low touch business model comes with some key advantages over other models:
- The total customer acquisition cost (CAC) reduces significantly over the long-term.
- The business adapts to automated and digital marketing tools subsequently.
- The business eliminates the complexities of marketing and sales processes to make products accessible to the customers.
- Digitization of marketing means expanded reach to the global customer audience.
- Customer lifetime value for the business increases.
In a modern world of the digital economy, adapting to the low touch business model tools has become inevitable. Businesses can adapt to the low touch theory in conjunction with other practices to best yield economic results.
Apart from digitization and sailing the modern economy boat, there are several challenges that low touch business model presents.
- Converting the Marketing and sales to digitized practices may not be cheap with high upfront costs.
- Customer retention and maintaining the customer lifetime value is challenging with low human interaction.
- It is difficult for businesses with unique products such as software or engineering projects to adapt to the low touch model.
- Marketing expansion may not be targeted to the right audience.
- Customer acquisition with complex and high-value products requires face-to-face interactions.
Digital brands like QuickBooks, Dropbox, Microsoft office, etc. are all examples of low touch business models. All of these brands provide services/products through their online medium without direct human sales interactions.
Amazon and IKEA are other examples of embedding the low touch business model. Both of these brands offer minimum face-to-face sales and marketing services.