What Is The Low-Touch Business Model? The Low-Touch Business Model In A Nutshell

The low-touch business model is one where there is little human interaction between the buyer and seller from the customer acquisition process to product or service delivery. Under the low-touch business model, there is little to no direct interaction between the buyer and the seller. 

Understanding the low-touch business model

Since automation and digital sales are important components of the business model, it is popular with eCommerce platforms where products are offered with a direct checkout option. When there is interaction on an eCommerce site, it commonly occurs via live digital assistants or chatbots. Indeed, most buyers are not motivated to interact with a company unless they have a pressing issue such as a warranty claim or customer complaint, which makes this business model low-touch as opposed to “no-touch”.

The automated nature of the low-touch business model can also be seen in situations that pre-date the internet, such as withdrawing cash from an automatic teller machine (ATM) and filling the car with gas from a self-service pump.

The three stages of the low-touch business model

Every application of the low-touch business model will be different, but most incorporate three general stages.

1 – Customer awareness 

Modern low-touch businesses utilize digital and content marketing strategies delivered via the company website, blog, or email address. Some others may use videos, webinars, or any other automated solution that minimizes costs.

Email marketing is considered particularly advantageous because of the way it can be used across multiple customer touchpoints.

Whatever the strategy chosen, the primary focus during this stage is to get ultra-specific on a target audience or buyer persona and focus on adding value to the channels where these individuals spend their time. Ultimately, the automated communication of the low-touch business model is only successful if it is backed by a deep understanding of the ideal prospect.

2 – Customer evaluation and qualifying 

For products with low profit margins, a buyer may peruse the item description or consumer reviews before making a direct purchase. Sellers of premium products or those offering software-as-a-service (SaaS) may entice buyers with an automated free trial or access to a freemium version. 

In either case, the in-product experience should be maximized to encourage the prospect to purchase after the free period has ended. This means delivering value as quickly as possible to reduce customer churn rate and increase customer retention.

3 – Purchase and after-sales 

Consumers now expect the eCommerce business to handle payment, invoicing, and product delivery by default. However, the low-touch business model should also automate the return, repair, exchange, and warranty claim process wherever possible.

The business should also encourage the customer to leave a review since 90% of customers who read online reviews claim that positive reviews influence their buying decisions. This form of social proof can then be used in the first stage to generate awareness.

Key takeaways:

  • Under the low-touch business model, there is little to no direct interaction between the buyer and the seller.
  • Automation and digital sales are important components of the low-touch business model, so it is a natural fit for eCommerce platforms where products are offered with a direct checkout option.
  • There are three general stages to the low-touch business model: customer awareness, customer evaluation and qualifying, and purchase and after-sales. There is an emphasis on email marketing and its ability to connect with prospects across various touchpoints. It is also important to develop a specific and accurate buyer persona as a foundation for the stages that follow.

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Business Models Connected To Low-Touch

C2C Business Model

The C2C business model describes a market environment where one customer purchases from another on a third-party platform that may also handle the transaction. Under the C2C model, both the seller and the buyer are considered consumers. Customer to customer (C2C) is, therefore, a business model where consumers buy and sell directly between themselves. Consumer-to-consumer has become a prevalent business model especially as the web helped disintermediate various industries.

B2B2C Business Model

A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.

Account-Based Marketing

Account-based marketing (ABM) is a strategy where the marketing and sales departments come together to create personalized buying experiences for high-value accounts. Account-based marketing is a business-to-business (B2B) approach in which marketing and sales teams work together to target high-value accounts and turn them into customers.

Retail Business Model

A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.

Wholesale Business Model

The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Direct-to-Consumer Business Model

Direct-to-consumer (D2C) is a business model where companies sell their products directly to the consumer without the assistance of a third-party wholesaler or retailer. In this way, the company can cut through intermediaries and increase its margins. However, to be successful the direct-to-consumers company needs to build its own distribution, which in the short term can be more expensive. Yet in the long-term creates a competitive advantage.

Marketplace Business Models

marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

E-Commerce Business Models

We can classify e-commerce businesses in several ways. General classifications look at three primary categories:
– B2B or business-to-business, where therefore a business sells to another company.
– B2C or business-to-consumer, where a business sells to a final consumer.
– C2C or consumer-to-consume, or more peer-to-peer where consumers sell to each other.

Marketing vs. Sale

The more you move from consumers to enterprise clients, the more you’ll need a sales force able to manage complex sales. As a rule of thumb, a more expensive product, in B2B or Enterprise, will require an organizational structure around sales. An inexpensive product to be offered to consumers will leverage on marketing.

What is a low touch approach?

Under the low-touch business model, there is little to no direct interaction between the buyer and the seller. Therefore, most of the interactions that lead to the business transaction between customer and seller are automated or at least require little effort or competence. Therefore, the product and service might be either highly standardized. Or they might be customized via digital/tech features at scale.

What is low touch customer service?

In low-touch customer service, customer support is mostly automated. Think of the case of a vending machine, which runs mostly on autopilot, as the customer can proceed with ha self-service procedure in picking up the product.

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