With the explosive growth of direct-to-consumer companies in recent years, many retail executives are hoping to imitate the source of these company’s successes where engagement and customer experience are concerned. Direct-to-consumer (D2C) companies promote directly from the manufacturer to the intended consumer, with no intermediaries. This unique structure has allowed D2C companies to reach consumers without any interference, giving them complete control over strategy as well as data. As a result, D2C companies are able to maintain low overhead costs and complete end-to-end control over production, marketing, and distribution of products.
The D2C business model was enabled by growth in the popularity of online shopping and advances in near-instant order fulfillment for businesses and consumers. With 60 percent of millennials reporting that they prefer online shopping, D2C companies can make a healthy profit in a right-sized company without needing to worry about shelf space or maintaining a certain sales volume. Instead, they can get granular information related to demand on a day-by-day basis, which informs restocking timelines as well as marketing techniques. This data-driven approach to media spend optimization gives D2C brands a strong competitive advantage.
While fundamental differences may exist, traditional retailers can still take pages from the marketing playbook of D2C companies. Learn more about how retailers can close the gap and encourage their own growth with these three tips to consider:
1. Use Advertising as a Data Source
At the center of almost every successful D2C company is data-driven insights. The insights don’t just define their marketing strategy, but they drive future product innovations and optimization initiatives. With the right insights, D2C companies can perfectly sculpt their single, flagship product that defines their entire brand.
The data collection tactics of D2C organizations primarily revolve around their digital strategy. As the bulk of their advertising is based in digital channels such as native content and social, D2C companies have a wide variety of accurate, relevant first-party data readily available. Not only that, but they are able to achieve a high level of congruence between ad campaigns and the connected landing pages as they strive to integrate digital advertising operations and website operations. This interplay provides a prime environment to turn a lead’s interest into action.
D2C companies find creative ways to collect and utilize online data within their marketing campaigns. Take for example the pre-launch initiative of the hugely successful D2C razor company, Harry’s. They offered multiple tiers of free products to consumers who could refer a certain number of friends to their waitlist. From there, Harry’s captured their email and implemented further referral options via social media. That email and social data was then used to inform precisely targeted campaigns that follow well-defined patterns. If retailers could find similar, creative ways to attain and leverage consumer data, they could create equally as targeted campaigns.
2.Leverage Online and Offline Mediums
With D2C companies leveraging advanced digital attribution to inform every piece of their business strategy, retailers must follow suit. Unfortunately, many retailers struggle with offline media optimization, as it's more difficult to attribute an offline channel’s influence on a campaign, hindering efforts to fine-tune their strategy. However, with new innovations like Advanced TV, retailers must focus on gathering data from an omnichannel perspective to get a complete view of their target audience.
Television marketing is one area in particular where retailers can get a leg up on their D2C competition. D2C organizations often stay away from TV advertising since it does not cater to their attempts for budget maximization. However, retailers that already use television advertising as a part of their strategy can leverage TV in ways that D2C companies cannot. With attribution technology like Advanced TV, retailers can now obtain and track customer data that is far more granular than general age and gender demographics. Retailers must use this information to create content that encourages engagement, and then target that content at those who are ready and willing to engage with your business.
3. Emphasize the Customer Experience
Already, many companies are very aware that a brand’s reputation has a huge impact on sales of a product. Arguably, the importance of a brand’s image is comparable to traits like efficacy, cost, and accessibility. However, brand building is a slow process that’s akin nurturing an interpersonal relationship – if a brand tries to improve its image too hastily, their brand building attempts often become poorly optimized and focus on short-term sales promotions.
While the ideal customer experience is unique to every product and target market, retailers should take key lessons from how D2C companies create a compelling brand experience.
- Use Narrow Targeting – D2C companies utilize campaigns that strive to target people either on an individual level, or on a heavily segmented level. Retailers must take on a similar, person-level approach. This will enable more unique brand experiences that are founded on human understanding and empathy.
- Use Empowerment Tactics – By empowering customers, brands can benefit from receiving customer input while making those same customers brand ambassadors. An example of this in retail would be Lay’s “Do Us a Flavor.” Customers were engaged to create something new for the brand, and customers were given a platform to voice their opinions about those new creations. While this campaign was running, Lay’s enjoyed a 12 percent increase in year-over-year sales!
- Be Transparent – Trust in businesses and their marketing messages have been falling year-over-year: In 2017, 69 percent of consumers distrusted branded advertising. To gain this trust back, retailers must relinquish all secrets. D2C companies often showcase their sustainability – take for example, Everlane’s viral infographic on Tumblr regarding common markup strategies for T-Shirts. As a result of this campaign, their entire initial supply of shirts sold out almost immediately.
Retailers should understand how a data-driven strategy has provided a boon for direct-to-consumer companies to solidify their continued sense of success. While many D2C companies are loved for their low costs and simple approach to products, the true secret sauce to their success in advanced marketing analytics that drive every facet of their business. By using intensive data analytics, retailers will also be able to target the right customers at the right time, enabling them to optimize their media spending and improve customer experience.