8 lessons retail brands can learn from direct-to-consumer marketing

Post by
Ruth Stephensen
8 lessons retail brands can learn from direct-to-consumer marketing

In 2019 a study of retail brands cited Direct to Consumer, or DTC, brands growth as their number one threat. This proved to be an accurate assumption as the DTC market is currently projected to grow by nearly 20% in 2021.

What is it about direct to consumer marketing that has propelled this success and rapid growth?

The largest contributing factor to this success is that DTC brands are being built to be digital from the ground up, capitalising on the latest technologies and channels. Digital first brands have complete ownership of the entire consumer lifecycle, enabling them to listen closely to their customer's needs, behaviours, and language.

Learning from this customer data, and putting it into action, has helped them shape their entire business operations from product offerings through to marketing. Measuring and learning from results enables DTC brands to provide greater value for buyers, ultimately growing their base of loyal consumers.

Here are some tactics that DTC marketers employ to build quality relationships with their customers, and how enterprise brands can use those methods, at scale, to do the same.

Takeaway #1 - DTC Brands use a Customer-Centric test and learn approach

From the first touchpoint to the final point of sale, DTC companies have control of the entire customer lifecycle - and all the data that comes with it.

Having ownership of this first-party data allows them to understand their customers and user experience with precise clarity and context. Those insights are then used to customise their offerings and messaging according to the individual preferences of their customer.

This shift from a brand-centric mindset to customer-centric marketing was originally born out of  necessity, especially for emerging brands with limited marketing budgets.

Melanie Travis, CEO of the DTC brand Andie Swim, spent a year testing different visuals and messaging on their social media audiences. Taking the time to understand what content resonated with their target consumers helped inform the creative direction of their first major outdoor marketing campaign.

This is no longer a tactic for the budget constrained, performance marketing is potentially the most lucrative way for all brands to get rapid feedback on their products and messaging.

Investing in digital channels where you can get an instant response from your customers facilitates an immediate return to brands. Having your customers tell you what's working for them gives brands a powerful starting position that can be iterated on again, and again, to maximise return on investment.

Takeaway #2 - DTC Brands Personalise the Entire Consumer Experience

Having full control over the customer journey gives DTC brands the opportunity to customise the experience from end to end. From creating customer centric website design to personalised messages and product delivery, creating a streamlined customer experience is central to the D2C marketing efforts.

Increased digital functionalities automate the rapid deployment of personalised marketing and also speeds up the checkout process. Getting personal with their customers enables brands to place their product at the centre of the relationship and actions frictionless conversions.

This customised experience leverages emotional and value-based purchasing decisions made by the customer. Audiences want to feel represented by the brands they buy from and personalising their experience enables brands to be more inclusive. Producing a diverse range of branded visuals, or repurposing user-generated content, can be a powerful way for brands to recognise the communities that they want to connect with.

Consumers expect modern businesses to be more authentic and representative in their marketing and brands simply can't afford to rely on mass marketing appeal. As customer search and purchase behaviours evolve, more buyers are intentionally researching companies, products, and experiences to see if they fit their own values before making a purchase.

Takeaway #3 - DTC Brands are led by Customer Feedback

Consumers no longer care if a brand is well-established. They want the brands they engage with and purchase from to address their individual needs.

In a study published by Deloitte, 81% of consumers are reading customer reviews before they make a purchase. To be able to sustain revenue, all brands should create processes to receive and respond to customer feedback as it happens. This is simplest way to listen to customers and gain insights that accurately reflect their needs.

Consumers don’t have to work hard to provide feedback to a brand. Comments, likes, and shares happen in an instant and modern consumers expect their interactions to be noticed and reciprocated. DTC companies Glossier and Everlane have successfully incorporated customer feedback into their product development process, leading to higher levels of buzz and engagement.

Takeaway #4 - Build Credibility with Customers through authentic relationships

Inviting the consumer to take an inside look at—and even partake in—business operations increases credibility and customer loyalty for brands. As an example, Everlane’s business model is based on radical transparency. Being honest with their customers about the costs and sourcing of their products gave their audience a direct view into the product development process. Customers rewarded them with $12 million in revenue in less than three years after launching. By empowering their customers with information and inviting them to participate in their brand story, Everlane created an incredible level of consumer trust.

This type of relationship with customers conveys a respect for their knowledge and personal ideals. With information widely available on the Internet about responsible and irresponsible business practices, consumers are far more informed than they were 10 years ago. Taking this information into consideration empowers the user to choose brands that respect their preferences and acknowledge their needs.

A study of purchase intent discovered that 31% of Americans purchased more in the past year from brands that demonstrated support for social and environmental issues like the Black Lives Matter movement, sustainability, and LGBTQ+ support. This socially-conscious behaviour was highest with 18-34 year old adults at 48%.

Takeaway #5 - DTC Brands Double Down on Digital

The pandemic has been a massive catalyst for icreasing digital adoption by consumers. The buying process is no longer linear and is becoming increasingly complex. Research from Google shows that people loop through phases of exploration and evaluation. Consumers are repeating this learning cycle as many times as they need prior to making a purchase decision.

Digitally native DTC brands have responded to this digital acceleration by fast-tracking their  capabilities and increasing online ad spend. As a result, only 22% of DTC brands surveyed experienced sales declines, compared to 80% of larger, traditional retailers.

It's not simply a matter of waiting until the industry recovers, as none of these behaviours are expected to revert to pre-2020 norms. Enterprise brands need to evolve their digital strategies to understand their customers new buying and communication preferences.

It may seem daunting, but there are many ways enterprise brands can scale DTC methodologies using programmatic, personalised advertising, complete with behavioural retargeting to reap the benefits.

Takeaway #6 - Customer Service Interactions are Seamless across channels

At the forefront of any successful business is a team of high-value customer service representatives. These individuals interact with customers on an hourly basis, and have access to data and information that can power personalised marketing campaigns. They can also assist with identifying areas of opportunity for meaningful interactions between the customer and brand.

DTC sheet brand Brooklinen prioritises high quality customer service interactions with a human touch. Their customer service uses a hybrid approach where customer questions can be quickly answered using AI and only engages a staff member if added communication is required.

(quote graphic format) I think the trend right now is tapping lightly into AI. But, at the end of the day, for brands that rely on a personal relationship with customers, the entire process can’t be stiff and automated.Jack Lorentzen, Brooklinen

It is possible to create a high-touch experience like this that is powered by low-cost automation. Combining an intelligent knowledge base with automation enables customers to engage a service rep in real time on the their preferred channel. When live agents are needed, the automated services can ensure they have access to the full customer relationship history, so they can start problem-solving right away.

Takeaway #7 - DTC Marketers Invite Their Customers to Co-Create their Brand

These days, the first piece of content a consumer encounters featuring a product isn't necessarily created or promoted by the brand itself. Social media is flooded with product photos and reviews from users that aren't tied to brand-owned channels or promotions.

This lack of control does not sit well with traditional marketers who are are used to controlling every aspect of how their brand is outwardly presented. The irony of this is that the rise of social commerce may soon mean that brands are not involved in the marketing or transaction process of their own products at all!

Many D2C brands have taken the opposite approach and actively ask their customers to create content for their companies. Warby Parker discovered that 50% of the people sharing their content were more likely to make a purchase. They focused their call for UGC on people who were already sharing photos. As a result, customers uploaded 56,500 YouTube videos, and new ones are still being uploaded every week.

Takeaway #8 - Advertise Using Digitally Native Content to increase engagement

Building highly engaged online communities is core to the success of many a DTC brand. Social media channels are filled with fans and loyal customers who follow brands they love and enjoy consuming their content.

Social media platforms are key acquisition channels, with 61% of all DTC brands citing them as their top source of new customers. Brands wanting to maintain an organic presence on social media must be continuously serving up fresh content and posting regularly to stay front of mind.

However, showing up on social media channels and sharing your latest TVC or page from a catalogue simply doesn't work. Anything that looks like a traditional ad is unlikely to get any traction and could be instantly dismissed. Women's underwear retailer ThirdLove bypasses ad fatigue altogether by creating authentic looking imagery featuring their product being worn by “real” women of all shapes and sizes.

It should come as no surprise that users scrolling through social media don't want their experience to be interrupted by an ad. That is why many DTC brands create content that appears native to the channel it is appearing on, that way the content is absorbed in the same way a user would engage with a post from their friends or family members.

Creating a fresh post for every day of the week doesn't require a considerable investment, especially if you are looking to create a seamless experience on social. Startups like us at Creatively Squared exist to solve this problem and we've created a cost-effective way to produce quality content that is both authentic and on brand.

Final Takeaways

Ultimately the success of D2C comes down to product development cycles informed by first-party data direct from their customers, expertise in digital and social media communications as well as a marketing approach that combines highly targeted programmatic advertising with lifestyle-focused content marketing.

Even if enterprise brands do not have access to the same level of data that their DTC counterparts do, they should still test a wide variety of content and messaging to understand what resonates. Listening to the customer and measuring the response creates unique opportunities to produce branded content that performs on your customers’ preferred channels.

Technology can assist with retargeting and buyer behaviour but the key is to use the creative insert your brand into the conversation seamlessly and in an authentic way. Leverage data from testing will help your company create content that personalises the experience and converts customers from curious viewers to powerful purchasers.

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