The last few years have seen a dramatic increase in the number of direct to consumer (D2C) brands. This explosion has changed the brand / consumer relationship – emerging (or traditional, for that matter) brands no longer rely on physical stores or middlemen to present their products or services to the public.
Consumers can now buy everything online, from makeup and glasses to housewares and vitamins, directly from the brands themselves, effectively eliminating retailers. Today’s consumers sort of have that buy / sell relationship.
The majority of today’s D2C brands were born on the Internet. Their target audience is the younger generation – the digital native, so to speak. This audience demands – and these brands offer – a much more intimate experience. These brands are normally startups and have larger potential margins than their traditional e-commerce counterparts.
A good example of the D2C brand is Harry’s. The brand started as a D2C company focused on delivering a subscription product directly to consumers. Once its founders realized the potential of their product, they then branched out to offer their product in various retail chains, such as Target and Walmart.
But what is driving the switch to D2C?
According to a study, more than 80% of consumers plan to make purchases from D2C brands by 2023. For an industry that barely existed ten years ago, this is quite astonishing. So what are the drivers of this success and what can traditional brands gain from it?
D2C brands are, or focus on:
• Be 100% digital.
• Advocacy for their target communities.
• Customize their products on a large scale.
• Provide (and prove) that their mission and values are meaningful.
• Exploit the weaknesses of traditional brands.
D2C brands provide insight into the strategic execution of digital assets, customer advocacy, product or service benefits, and hyper-personalization within a scalable digital ecosystem that pays off over time. time. They have created the ultimate blend of confidence and trend. As more traditional brands research this model and launch their own versions of the D2C model, they may also capture extended revenue, or at least protect their current flows.
What challenges are D2C brands facing?
D2C brands face three major challenges, none of which are insurmountable with the right approach. These challenges include:
• Good knowledge of customer relationship management data: your customers’ data is not just a flow; it’s more like opening a valve. These waters of data flow through various touchpoints. It’s not a bad thing if you can handle everything right. This challenge is to be able to manage, understand and interpret everything quickly and efficiently. If you can identify the data that allows you to proactively meet your customers where they are, not only will you serve them better; you will delight them.
• Appropriate Transaction Processing: A dynamic view of the entire sales order lifecycle is a must, from the original transaction to the delivery of the product or service. Having this information visible in all departments throughout the purchasing lifecycle allows everyone from sales to support to understand where the customer is in that lifecycle.
• Preparation of full customer snapshots: It is now standard to have transparent service across all channels. But what long-term effects are created by meeting customer needs with every interaction? In other words, if you provide good interactions, do they have the same long-term impact on your brand as negative interactions? If you have a system that connects as many touchpoints as possible, for example, customer service agents can see the necessary information regarding a customer’s loyalty status, account size, or VIP level. This information is crucial for support to provide the type of service that a specific customer expects. Over time, as you record this information, it provides useful information for all departments.
How to make the leap from the traditional brand to the D2C brand
Before making the final decision, you should be able to answer these questions about your brand:
• Are you the owner of your brand’s customer relationships? To what degree?
• Does this relational property offer enough leverage to increase the lifetime value of your customers?
To answer these questions, you need a different mindset. There are different aspects of your brand, such as customer loyalty, that you need to measure. Most traditional brands look at KPIs, such as impressions, organic reach, and frequency of interaction. The resulting numbers can be overwhelming and easily confuse marketers about the brand’s true influence. And brand engagement doesn’t always equate to revenue.
KPIs that a traditional brand looking to venture into D2C should consider include:
• Actual number of purchases.
• Number of repeat purchases: Either the number of purchases made by a customer, or the number of times said customer returns to buy the same product.
• Average value of each order.
• Total lifetime value of order revenue.
Build your sales funnel around the resulting metrics. It may take a while to get used to this new state of mind if you are new to D2C, but it can pay off in the end.
Why brands accept the challenge
There are a lot of reasons why brands decide to change, or at least integrate D2C into their current business model. Having retail partners or other intermediary distributors is often not right for a business, even if it puts your brand in front of consumers.
Many manufacturers find designing a product the easiest part – in fact, selling it can be difficult. This is why so many brands are choosing the traditional route. It offers a ready-made audience, even if it puts the fate of the brand in the hands of the brand’s outsiders, i.e. retailers. But there are plenty of reasons why these types of relationships (business to business) aren’t always right for a brand, and going for D2C opens up a whole new world.