Brands selling direct to consumers (D2C) is not a new concept, however in the past few years we’ve seen explosive growth in this strategy. For decades, large consumer brands have executed hybrid selling strategies by operating both traditional distribution channels and direct-to-consumer channels such as ecommerce websites and self-branded stores. What has changed in the past few years though is the ease and speed in which a brand can now create a direct-to-consumer channel, and how modern logistics make it easier than ever to get a product into a consumer’s hand.
These digital and logistic advances have harkened in a new generation of disruptive brands that are changing the retail ecosystem. Although these new brands are admittedly small, they are growing at an amazing speed, while many of the legacy incumbents who have been slow to adapt are facing slowdowns in growth. Just look at the grocery business. While grocery store growth is projected to be about 1 percent annually through 2022, growth for meal-order kits is expected to grow 10x over that same period.
The advantages of D2C are stark. Not only does a company assume more control of their brand and how it’s represented, but it also reaps the instant benefit of higher margins.
Executing a D2C strategy, however, is not without its challenges. The onus is now on you, the brand, to understand your consumers, connect with them and create the best possible experience for each user, every time.
We’ve outlined the fundamental elements for any company – big or small — considering ‘going D2C.’ These steps will prepare your marketing department to brace against the challenge, while supporting a vibrant direct-to-consumer channel.
1. Get your customer data in one place – and make sure it’s owned by marketing not IT
Even if the marketing department is well-aligned, if IT owns and manages master customer databases, the procedural hang-ups can significantly hamstring your efforts to engage with customers quickly, which is the heart and soul of D2C.
When building lists of customer segmentations is contingent on an IT ticket that takes days to fulfill, or specialized data management skillsets not typical of marketing professionals, the resulting delay makes even the most basic marketing campaigns that much more difficult to produce, and the speed required for well-oiled D2C virtually impossible.
2. Learn the difference between useful and ineffectual customer data – clear the noise
Your business most likely already has a CRM system that houses a lot of customer data, but how much of that information is useful, and organized in a practical way, for marketing to use? CRMs were built to manage and track customer transactions, and while some of this information is useful, other data fields such as SKU numbers and payment cards used, just get in the way of marketers being able to do their jobs.
Marketers looking to implement a D2C strategy need to review their entire marketing tech stack and first identify the systems that are generating customer data. From there, they should review each of the systems to pinpoint the data that can be beneficial for marketing purposes and ignore what can’t.
3. Break out of the channel mindset – your customers are not thinking in terms of channels and neither should you
When it comes to reviewing all of the systems in your marketing stack, rather than having each marketing group review the technology specific to their group, create a cross-functional team to perform this exercise and look across the entire marketing department.
To-date, many marketing teams have been organized by channel, but modern marketing teams need to tear down these silos and instead begin to think in terms of the customer journey. As a team, marketers should consider the following questions before developing their cross-channel marketing strategy:
- What are the behavioral pathways and attitudes people take at each stage of a purchase journey? Where do they get inspiration and information, and where does that flip over to actual shopping?
- What kinds of products and product attributes do customers prefer across all productlines and categories. These insights come from analyzing website touches and product-purchase history and can help you develop key preference indicators for your products.
- What are the incremental results from various types of offers?
- How does a customer behavior change during life moments (such as having a child, getting a new job, or relocating) and seasonal events? This analysis provides a better understanding for what’s underpinning purchase frequency.
4. Make sure your entire marketing team has access to the same data — knock down the silos
Marketing teams cannot work in harmony to expose the above insights if they do not have access to the same information or the means to communicate openly among one another. Meaningful collaboration starts by spreading data access, along with appending privileges, evenly across the team.
5. Finally, future proof your technology
Technology is evolving at such a rate that in five years, a brand’s most valuable source of customer data might be a channel that we can’t even fathom right now. D2C marketers need to prepare for all types of data, data sources and data formats, and have technology in place that is able to ingest that information.
Additionally, evolving technology like machine learning can continuously analyze purchase trends and call out a wide variety of behavioral patterns. These systems can prompt the marketing team to take appropriate action, whether it means preventing a customer from going away, predicting a follow-up purchase in the near term, or target consumers that look like they’d be an ideal customer.
No individual can ever know for certain what’s coming next, and sustained D2C success hinges upon having as much information about current and future customer inclinations as possible.
Learn how a Customer Data Platform can bolster your move to D2C. Contact us and we’ll connect you with one of our CDP experts.