Today’s brands stand at a crossroads – and there’s everything to play for. The digital commerce revolution has irrevocably changed consumer shopping behaviors and expectations; online, in-store, and everywhere in between.
Challenger brands are arriving with pure-play direct to consumer propositions, from emerging niche vendors with products refined, augmented and improved from direct consumer feedback to new market entrants re-thinking long-term relationships and consumer loyalty with enticing subscription services.
Those brands able to seize the emerging opportunities, opening new channels and leveraging powerful data analytics to directly engage with customers, are broadening their market reach and getting to understand their consumers needs and behaviors first-hand. In the process, they’re reaping impressive financial rewards. Indeed, our research indicates that beyond an additional 5% of revenues generated through direct channels they’re also experiencing a 50% contribution to future revenue growth.
More gain – with less pain
Digital platforms are empowering brands to open new channels and extend their customer reach. No longer solely dependent on bricks and mortar retailers, brands can now leverage a wealth of options to establish a direct customer relationship and often sell direct to customers locally and globally.
It’s an approach that’s proved successful for well-known mega-brands like Nespresso, Red Bull and Edgewell. Combining traditional indirect sales and distribution channels with direct-to-consumer channels that might include self-branded stores and e-commerce websites, they’ve elevated their ability to build and authentically communicate their brand stories and drive more direct customer engagement, fostering greater consumer loyalty.
In a market where consumer sophistication increases daily. Being able to rapidly respond to changing product preference trends (e.g. the beyond category growth and profitability of ‘free from’ personal grooming, skin-care and beauty products) by directly testing sales of new product or product variations directly with known brand advocates provides a wealth of insight regarding product adoption prior to planning larger scale distribution and retail trade promotions.
The good news is that going digital cuts through the cost and complexity for brands looking to participate in the fast-evolving direct-to-consumer marketplace. For example, social media has transformed how consumers and brands can interact – either directly, via brand ambassadors or engaged support communities.
Meanwhile, digital platforms like native mobile apps, electronic kiosks, websites and online stores have changed the rules of the game. Especially when it comes to delivering context-based promotions and showcasing digital ‘endless aisles’ of products and assortments or experimenting with pricing and SKUs to identify the optimal point for conversion and profitability.
Reaping the rewards – with data
A well-executed direct-to-consumer strategy is all about delivering relevant, personalized experiences and making it easier for customers to make informed choices. And direct interaction through e-mail, mobile apps, e-commerce, mobile loyalty applications, social media and in-store media all add up to excellent ways to turn big data into delighted customers.
That’s because direct digital channels make data collection much faster and deeper, no obscuring third party or channel partner reaping the data & insight benefits from the direct consumer relationship.
By leveraging powerful data analytics, brands not only get to deliver promotions and offers more efficiently, they’re also able to offer consumers expanded choices, increasing awareness of relevant related items and customizing benefits and personalizing the shopping support they offer at every customer touchpoint. Re-targeting and re-marketing to customers to get them to complete a transaction, re-purchase or purchase by providing a motivational (and relevant) promotion or discount.
But that’s not all. By harnessing all this data, brands are able to tap into consumer wants and evolving needs and anticipate their demands. Making it possible to innovate, differentiate and respond fast to opportunities that previously were difficult to identify.
Gaining mastery of experience management
Today’s customers aren’t just asking for more engagement. They want engagement that is individualized to their needs, interests and behaviors in the moment. In other words, they want relevant offers, promotions, pricing, recommendations at the exact point in time they’re considering their options and making their purchasing decisions. Any misstep equals a missed opportunity and a less than satisfactory brand experience.
Brands with direct to consumer capabilities and data insights from their behavior are able to optimize customer experiences, product selections, pricing and message for individual consumers. These consumer service ambitions can be cost-effectively enabled through AI and machine learning to intelligently curate individual consumers experiences. Understanding what really matters to customers is the first vital step in closing the experience gap. And it’s not just at the sharp end of the shopping journey itself that brands need to focus on.
Having a clear and easy to use returns process is also essential to any direct to consumer channel. If done well – a brand can unlock the insights from evaluating product returns across multiple channels, making it possible to connect customer sentiment to the reason behind the returns and detect patterns. These reasons could lead to making immediate changes to production, manufacturing or engineering processes in ways that were never previously possible.
It’s time to get hyper-focused on the consumer
Today’s consumers expect brands to allow them to browse and make purchases on their terms – where, when and how they want, directly or indirectly. That means brands must provide a consistent, personalized and more digitally supported omnichannel experience – whether that’s web, mobile, social, in person, or a combination of these. Achieving all this requires advanced analytics and the ability to constantly track and anticipate customer behavior and understand real-time intent.
But most of all, brands need to stay hyper-focused on delivering on a myriad of choices that consumers face: what they want, where they want to shop, how much they are willing to pay, and what information they need to make a final decision.
For example, a recent Consumer Propensity Study of 1000 US consumer online shopping habits revealed how their favorite brands close the deal. Topping shoppers’ wish list when completing online transactions included further evidence for the importance of mastering the whole direct purchase experience – easy returns and exchanges (58%), being able to use comparison tools (47%), access to a physical store (36%), AR or VR technologies to visualize products better (24%) and a chatbot or 24/7 Q&A service to deal with their product queries (24%).
One thing is for sure, brands with direct-to-consumer channels not only benefit from increased direct sales. They also have an opportunity to gain an unfiltered insight into customer wants, needs and behaviors – and can use these insights to streamline the path to purchase, resolve problems and create value.