Technology continues to influence the business world and help companies innovate their processes. Since Covid-19, and even before then, consumers have increasingly appreciated being able to enjoy products and services by using the technology at their fingertips. No need to go to a physical store and speak to the workers to get what they need. They can simply click a few buttons to easily order and receive items right to their doorstep.
This strategy of providing products and services is called a low touch business model, and we have seen a rise in businesses implementing this model for all or parts of their processes. In this article, we will look at what the low touch business model is and discuss some of its key advantages and disadvantages.
What is the Low Touch Business Model?
When speaking of low “touch” this refers to the amount of interaction between a seller and a buyer. A low touch business model provides the least amount of human interaction while still providing a great customer experience. This business model relies heavily on technology to drive customer sales, engagement, and delivery of products or services.
It provides a more independent experience for the customer and allows them to explore their options on their own. Businesses can implement online platforms, AI, and automation to build a user-friendly process. The goal is to provide as much value to a customer while minimizing the need for human interaction.
Most large brands today implement this model to some extent. Netflix, Amazon, Uber, Airbnb, Tesla. These are all great examples of companies that have a low touch business model. Even the self-checkout stations at grocery stores are an example of implementing this low touch option of doing business.
The low touch business model may not work for all industries though. It is often contrasted with the high touch business model, where a customer service representative walks a customer through the entire process. The high touch business model is typically more helpful in industries where there is a more complicated sales process that requires a more personalized solution.
Examples of the Low Touch Business Model
As we mentioned in the previous section, this business model may not work well in all industries. However, there are a few sectors where this model works perfectly. Let’s take a look at some of the most common sectors where you will find this business model being used.
1. E-commerce
E-commerce is a prime example of a low touch business model. This sector leverages technology to facilitate online shopping. Usually, there is no need at all for physical interactions. Customers can browse, select, and purchase products on their own without help. In fact, most people prefer to do this. While chatbots seem to be helpful at times, customers may still prefer to shop alone.
2. Digital Content and Streaming Services
Digital content and streaming services, such as online video platforms and e-books, exemplify the low touch model. In fact, most companies in the media business model space can also be considered low touch.
These services allow users to access a vast array of content remotely, without the need for physical media or in-person interactions. Personalization algorithms enhance user experience by suggesting content based on viewing or reading history.
3. Software as a Service (SaaS)
The SaaS sector is fundamentally low touch, offering cloud-based applications to customers. The SaaS business model and the low touch model typically go hand-in-hand.
This model eliminates the need for physical software distribution and on-site installation. Customers can access software platforms via the internet, with automated updates and support, thus requiring minimal direct contact with the provider.
4. Online Education and E-Learning
Online education and e-learning platforms utilize a low touch approach to deliver educational content. This sector has gained significant traction, providing learners with access to courses and resources remotely.
Interactive platforms, virtual classrooms, and automated assessment tools reduce the necessity for physical presence and direct teacher-student interaction.
5. Financial Technology (FinTech)
FinTech companies, including online banking and mobile payment services, operate under a low touch model. These platforms offer financial services digitally. Users can make transactions, manage accounts, and access financial advice without visiting a bank or meeting with a financial advisor.
6. Telehealth and Online Medical Consultations
The healthcare sector, particularly through telehealth and online medical consultations, has increasingly adopted a low touch approach. Patients can consult with healthcare professionals, receive diagnoses, and get prescriptions online, significantly reducing physical visits to healthcare facilities.
7. Automated Retail and Vending Machines
While it may be easy to assume that all businesses using this model are internet-based, that is not always the case. Automated retail, including vending machines and unmanned stores, represents a physical embodiment of the low touch model.
These retail formats allow consumers to purchase goods without interacting with sales staff, relying on technology for product selection, payment, and delivery. Coffee shops and restaurants with a to-go order rack could be considered low touch.
Key Advantages of the Low Touch Model
Scalability and Efficiency
By having technology do most of the heavy lifting, low touch companies can serve a lot more customers than other more hands-on businesses. Staff don’t have to manually complete processes and move customers forward, as automation is able to do this for them.
Companies can more easily scale globally with the low touch business model as well, without the need for a physical presence in other countries. Connecting to a global audience through digital platforms makes setting up shop in other countries a much easier process.
Cost Effectiveness
Another benefit of this business model is its cost-effectiveness. Because of the use of digital tools and automation, this frees up the need for a larger staff.
Low touch business models also don’t require a physical storefront. This reduces overhead operating costs and allows the business to invest in other needs such as specific software to keep up with customer experience and demand.
24/7 Availability
Technology also allows this business model to provide customers with 24/7 access to products and services. Companies can remain “open” around the clock. This flexibility typically brings higher customer satisfaction as well as more sales. Customers are able to browse information, make purchases, and interact with businesses whenever they want to.
Convenience
Convenience is a key driver of customer purchase decisions. The low touch business model fits perfectly into the busy lifestyle of the modern consumer. Customers can access products and services from the comfort of their own homes and can often have them delivered right to their computer or doorstep.
They also have access to support channels such as email, chat boxes, or social media that allow them to quickly receive responses from a company.
Key Disadvantages of the Low Touch Model
Low Personalization
Although implementing automated processes and digital solutions for customers provides many benefits, the loss of human interaction with a company can also be seen as a drawback.
Some customers prefer or need human assistance instead of working with a robot. One of the main challenges low touch business models will face is finding a balance between providing automated processes as well as great customer service.
Managing Complex Requests
Some customers will want a more tailored experience, which can be difficult to provide in a low touch business model. Often, processes are set up to manage the majority of preferences, but may not capture all of them. This can cause an issue in catering to the specific needs of customers and more complex requests.
Technology Issues
The success of this model hinges heavily on the effectiveness and reliability of technology. Glitches, system downtimes, and other technical issues can disrupt operations.
If these happen often or businesses don’t provide quick solutions it can also negatively impact the customer experience. Companies should be proactive in testing and updating systems to ensure operations continue to run smoothly.
Security Concerns
Managing and protecting consumer data should be of utmost importance for digital companies. Risks of cyberattacks, data breaches, and other threats will always be a major concern for online platforms.
Companies must maintain trust with their customers that their information is safe. Without trust, consumers will not want to interact with businesses that cannot properly manage their online data.
Conclusion
As our reliance on technology continues to grow, so will the implementation of the low touch business model.
Ultimately the success of this model will rely on meeting the evolving needs of the modern consumer. As well as striking a balance between automation and great customer service.
Also read:
Dropshipping Business Model: What It Is and How It Works
21 Different Types of Business Models With Examples
8 Key Elements Of A Business Model that You Should Understand
The High Touch Business Model and How it Works
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