Knowing that a revshare model is a good option for your business requires an in-depth, independent, and prudent financial review. Read more.

This past week, I had the pleasure of working with a customers’ marketing department. They were celebrating – a newly redesigned website was now getting millions of hits! Traffic had improved so dramatically the team was eager to discuss how to turn that traffic into revenue via a Direct-to-Consumer eCommerce implementation. While the salesperson in me was celebrating the opportunity, the analytical businessman questioned the validity of the move. This business sells products used in home improvement projects. Their products are simply components in a larger bill of materials associated with the entire project; envision a kitchen remodel, a sunroom addition, or a pool installation. Today, they sell primarily to contractors and since the consumer really can’t install their products easily, a certified installer is required.   Additionally, some of the products are consumables, also sold through the same contractors. History and trends from their website show consumers are going to their website to research products, shop for colors/styles, and request a preliminary cost estimate. After the installation, consumers continued searching for consumables recommended by the installer. There is an unproven correlation between consumer website traffic and purchase intent.  Will the investment in a Direct-to-Consumer eCommerce channel help or hurt revenue?    The immediate response to this question was “Of course it will improve revenue. Consumables can be purchased direct, with higher margins due to omitting the middleman”. But wait, that middleman is the contractor who is installing your products. The contractor uses consumables as a way to get additional service work. Since the contractors’ revenue is a direct reflection of service work, if your consumables are not available for him to sell, at a competitive price, they will recommend competitive products. Will the investment create an experience the consumer truly wants?   The marketing department quickly said “Why YES! They can order...