The development of direct-to-consumer (DTC) sales is accelerating by years due to the effects of the pandemic and the e-commerce boom. However, if DTC brands want to truly future-proof their business, writes SundaySky director of product and solutions Apryl Casale, they’ll need to beat retailers with deeper pockets on customer experience (CX). Here are some ways they can cost-effectively up their game.
Consumers once slow to embrace e-commerce took their shopping online almost overnight due to Covid-19 and the limitations on in-store shopping. IBM’s US Retail Index estimates that e-commerce has now reached levels that were not expected until 2025.
And beyond a widespread shift from in-person shopping to e-commerce, McKinsey and the World Federation Sporting Goods Industry projects a rapid acceleration of direct-to-consumer (DTC) sales that will condense six years of progress into a two-year span.
DTC brands, born of the internet and inherently e-commerce-focused, are at a huge advantage over traditional brick-and-mortar retailers, which have had to scramble to optimize their digital customer experience (CX). The spotlight is on DTC brands as they finally get the attention they deserve, but with success comes challenges.
Their new problem lies in determining how to grow while creating sustainable brand value and profitability. While dramatic sales increases are a good problem to have, it does introduce challenges around budget allocation, channel saturation, consumer content fatigue and more.
That said, with the rise of online shopping, coupled with new policies imposed by Apple and Google that restrict advertiser and developer capabilities, DTC brands that once spent a considerable slice of their budget acquiring customers now must also allocate resources to grow customer lifetime value with cost-effective channels such as email, SMS, in-app and onsite chat.
Here are some ways DTC players can up their game.
Keep it together as cookies crumble
The ability to precisely find and target shoppers online created a hospitable environment for DTC brands to take root over the past decade. To aid in this shift, third-party cookies have been instrumental for gathering data and enabling brands to find and advertise to their target audiences online.
This industry-wide movement presents a greater challenge for all advertisers, but especially DTC brands, since they tend to rely exclusively on online sales to drive revenue. Now, it’s imperative that brands look to their own data to find, segment and message shoppers while properly attributing revenue to digital channels. Thankfully, by virtue of a business model that revolves around direct customer relationships, DTC brands have at their disposal a treasure trove of first-party data, which, in a post-cookie world, will prove powerful. Brands need to deliver contextually-relevant experiences based on a joint understanding of privacy and trust. As such, they should focus on developing a sustainable first-party data strategy that governs how they collect, organize, store and unify their data for a rich but singular view of customers.
DTC brands have an opportunity to harness omnichannel insights to make decisions across all digital properties, which in turn will reduce costs, increase revenue and contribute to overall profitability. A comprehensive view of the customer journey helps brands to understand where and how to accelerate the creation, placement and versioning of creative in order to craft purposeful marketing campaigns that will matter to their customers.
Keep in mind that unifying data isn’t easy or often something that a DTC brand can do on its own. Find an agency to validate data and help effectively cull and apply it. A unified picture of a customer across channels is imperative in creating different layers of personalized experiences based on specific needs and context.
Make an impression
Customers have short attention spans, so DTC brands must focus their CX investments on digital experiences that will truly make an impression. After all, in a crowded online space and even tighter product categories, brand values can start to blend together.
Take the mattress market for example; most consumers likely couldn’t differentiate one brand from another online. What they will remember is a commercial that made them smile, or an interactive quiz on a brand’s site that taught them something valuable about their sleep patterns.
And it’s no coincidence that the most impactful moments involve video. Per recent Biteable data, video can deliver a nine-fold improvement in recall over text, telling a story like no other medium because it incorporates sight and sound, animated graphics and special effects. Furthermore, it’s no longer costly to produce. In fact, sometimes slicker productions seem heavy-handed, while less polished pieces appear to be more genuine.
Particularly crucial is being able to activate data to deliver personalized content on the fly and at scale, which requires a dedicated video experience strategy. With the popularity of video continuing to rise, DTC brands should look to employ video across the customer lifecycle. Being able to automate the creation, placement and versioning of video can also help DTC brands more easily acquire, serve and retain customers.
Double down on owned channels to build authentic CX
The last thing a brand wants to do right now is come across as insensitive, so it’s important to communicate with empathy and emotional intelligence. Channels that require an opt-in from a shopper, whether it’s email, SMS or a brand’s app, are hospitable environments to foster good will through authentic interactions with consumers that build value with minimal costs.
A good example of a DTC brand that effectively humanized its brand with video is 1-800 Contacts. When the pandemic saw eye doctor offices closed, the brand experienced an exponential increase in contact lens orders. With a goal of delivering superior customer service, the company hired more call center employees and deployed a video-powered experience program. As customers received their prescription, they were sent a video experience personalized to them from the doctor who provided their eye exam, offering relevant information tailored to the patient’s specific circumstances and reinforcing the brand’s unique selling points, such as 24/7 customer service and free shipping.
It was a simple, yet effective way to build the doctor/patient relationship during a time when many consumers really needed it. Furthermore, it helped foster long-term loyalty and enabled the brand to maintain an enviable net promoter score in the high 80s.
Create a path for the future
In a survey conducted by Gartner, a positive CX was cited by more than two-thirds of respondents for driving loyalty, beating out the value of price and brand combined.
DTC brands may not have the deep pockets of major retailers, but they have relationships that can yield the right data. With no middlemen or mammoth corporate structure to navigate, they have greater agility. This coincides nicely with newfound consumer willingness to shop online and use digital services.
The technology to provide the right CX and create a path to the future is available. DTC brands are in a very strong position to accelerate their success, but failing to take action is not an option. Those that don’t explore new strategies and channels for elevating CX will lose market share, risk profitability and waste precious resources, while those that do will pull further ahead, creating a competitive gap that could become too wide to close.
Apryl Casale is director of product and solutions at SundaySky.