Why referral networks can beat direct-to-customer channels

Is selling direct to your customers really your best channel to market? In some instances, having advocates working for you through a referral or distribution network can yield much greater returns.

“In the US, there's about 350,000 [hair] salons; there's about a million or two licensed professional hairdressers. We estimate those hairdressers touch half of the US population every four weeks between cutting their hair, colouring their hair, styling their hair etc.” explains Reuben Carranza of US-based Luxury Brand Partners.

“Most people look at a salon and don't think about a salon as a major operation; it's a small individual mom-and-pop organisation. But that industry is probably the most influential industry when it comes to physically touching people's hair and changing their lives.”A woman having her hair done at the hairdresser

As such, Reuben says using hairdressers as a third-party route to their end-customers is a valuable tool, allowing these valued professionals to sell his products for him.

“[For example] if you're creating brands in hair care, the torture test if you will is: can your hair care product pass the standards of a hairdresser? Because the hairdresser is really the pinnacle of judging whether a brand has the performance or not,” says Reuben.

However, as Reuben points out, the performance of the product is only one aspect of this — the packaging and presentation are also crucial to compete against established and well-known brands.

“What we really focused on … was creating brands that could be on the shelves of a high-end luxury retail store where you're judged by the company you keep — a Chanel or a Tom Ford — and would the performance be warranted enough to win in salons?” he explains.

Hear more insights from Reuben and his business partner Jared Fisher on the My Business Podcast now!

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