Insights & White Papers

M & A Trends:
Ignoring Web Sales Channels Can Limit Growth, Empower Competitors

By Christopher Steiner

Mergers & Acquisitions

Sophisticated sales processes and commission structures are no reason to limit how a company seeks new sales via the web. Failing to provide a good experience on the web opens the door to competitors who do.

Ignoring Web Sales Channels Can Limit Growth, Empower Competitors

Operators tend to focus on what’s working and double the efforts around successful channels. This strategy of overweighting what already works has proven itself time and again and has become standard fodder among business school case studies.

While we do see some companies ignore this lesson to their detriment, we also see companies who dig in so hard on it that they fail to see the potential in auxiliary sales channels. As more of the economy shifts to electronic conduits of sale, companies who ignore this will go flat or shrink, and those who embrace it—see Domino’s Pizza—can ride the wave borne of convenience and cheaply-acquired new customers for years.

Half of the most successful startups during the last decade are simply companies who took complex off-line sales processes and moved them online. The collateral damage of these companies’ success are the incumbent firms in their spaces who were left tethered to shrinking sales channels and no major beachheads on the web.

Businesses who have missed out on goosing sales via the web exist all over. We see many of them in our private equity clients’ portfolios. Plenty of these operations have legitimate reasons for ignoring web and mobile potentials. Among them:

  • The company believes its product to be too unique and nuanced to be sold directly via the web. While this is an understandable position, it’s one that becoming less tenable in most industries. Companies who don’t crack the web sales riddle will lose customers to those who do.
  • The company has no inside knowledge of how to set up and run a web-based store for its product. As mentioned above, this may require a bespoke process, one that’s not easily solved by out-of-the-box solutions. But it is solvable.
  • There is a lack of traffic, and therefore sales, to the company’s website and its web channels. Fixing this takes specific knowledge around web marketing, the activities of competitors, and a lot of hard work to build up a web marketing foundation. But, as with everything else, it’s eminently addressable and can be a major asset to a company once in place.
  • Growth via direct sales, dealers and other channels is spectacular and the company simply hasn’t moved its focus yet to the web.

It’s a rare case when a company owner will exclaim, “This is too much growth,” yet that’s what she is saying implicitly by ignoring the potential of web sales. The sophistication of web-based points of sale and the depth of data and engagement that consumers are willing to go to on the web is often underestimated by those who aren’t spending their day to day in eCommerce.

Nearly every sales process at this point begins with a web search. Giving these potential customers/searchers more information, more outlets through which to explore a product or service, and, ultimately, more seamless methods through which to begin a purchase or sale will lubricate the sales pipeline of any company. This goes for startups, a growing mid-market firm or a large cap.

Solving this kind of problem isn’t simple, but it can be broken into three steps:

  1. Analyze a company’s web footprint and sales channels, compared with competitors and what is possible. This goes from the company’s website itself, to the volume and types of traffic it’s attracting, to the SEO profile of the company and its space. Assess potential and what can be improved, the latter often being a long list.
  2. Hire the right person/people, preferably internally, to take on and tackle the problem. This process can start with consultants, but it should end with hires of people with the right experience.
  3. Execution. Ramping up web sales can take months or years, but the payoffs can be extraordinary. Ensuring that there is a sufficient budget to execute is imperative.

Just as any decision process can be boiled down into a series of binary choices, just about any sales process can be moved into an electronic format. At the very least, key information can be gathered from potential customers that kicks off a number of other marketing processes.

Companies who incessantly push potential customers toward human interactions starting at the top of the funnel can lose leads to competitors who have found better way to nurture leads electronically. Most potential buyers try to exhaust data inputs online before they’re willing to pick up the phone—and they’re more likely to call companies who gave them the best experience during the first part of their buying engagement.

Christopher Steiner is a principal in the M&A practice at Liberty. He is a New York Times Bestselling Author of two books on technology, a Y Combinator alumnus, and the founder of ZRankings.

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Christopher Steiner By Christopher Steiner