The explosion of direct-to-consumer (D2C) brands over the past few years marks a radical shift in the way products are sold.
This revolution is disrupting established industries and creating a fundamental change in the ways brands engage with consumers.
Born in the online world, these trailblazing D2C brands are transforming how we buy everything, from grooming and health and wellness products to mattresses, contact lenses, and clothing.
By leveraging social listening and customer-experience data insights, they’re developing strong direct to consumer relationships, new subscription models, and products that truly resonate with consumers.
They’re also demonstrating how building direct relationships with customers makes it possible to control each engagement moment—learning about customer motivations and behaviors at every step of the journey.
Scoping the opportunity of direct to consumer relationships
Research shows that today’s consumers increasingly value specialism, are more discerning about what they purchase, crave more authentic brand experiences, and will gravitate towards brands that know who they are. And younger consumers are proving particularly receptive to new disruptor D2C brands that directly connect with them through digital channels.
By placing data-driven tailored customer experiences at the core of their offering, these pioneering independent D2C brands have achieved some impressive market growth. Little wonder, then, that many mainstream manufacturers and brands are now eagerly looking to make D2C part of their revenue mix.
In 2017, D2C sales grew by an impressive 34 percent to represent 13 percent of all e-commerce sales. Meanwhile, big brand names like Nike have gotten in on the game. The company forecasts its D2C sales will hit $16 billion by 2020—a substantial increase on the $6.6 billion generated by its direct brand channel in 2015.
Market experts estimate that while D2C represents just 5 percent of total CP sales revenues, it’s responsible for 50 percent of total industry growth. With more players in the sector preparing to incorporate D2C models into their strategies, expect this momentum to get even stronger.
But capturing these brand opportunities and building direct to consumer relationships all depends on achieving a deep mastery of customer experience (CX) management.
Maximizing new D2C possibilities: The benefits of direct to consumer
There are multiple benefits to be gained by taking the direct-to-consumer route—improved margins, opportunities to develop brand advocacy and loyalty, increased control over brand packaging, product and market reputation, and the freedom to innovate to name a few.
For example, the D2C model enables brands to experiment with new distribution models—everything from shipping direct to consumers, to partnerships with physical retailers, and pop-up shops. Or initiate new D2C marketing initiatives that improve brand awareness and boost leads for themselves and their channel partners.
Regardless of the D2C model that’s adopted, success depends on companies successfully leveraging data-driven customer intelligence to make better business decisions, tailor more convenient and personalized shopping experiences, or adapt at speed to changing customer needs and preferences.
By understanding the why behind customer behaviors, companies can use these insights to accurately align experiences with identified customer values across all channels to:
- better serve customers and forge deeper relationships
- differentiate individual brands
- fine tune product/packaging development, marketing and channel strategies.
Check out how P&G is using customer listening while restaging the Pantene Brand:
Selling direct to consumers makes it easier to acquire and harvest this customer experience data, but making sense of these data goldmines is no easy task.
What’s more, in order to orchestrate frictionless end-to-end customer journeys and truly understand customers’ wants and needs, companies also need to be able to integrate this experience data with transactional and operational data (O-data) from every channel.
Today’s leading experience management solutions make it easy to collect experience data (X-data) at every meaningful touchpoint, and intelligently integrate this with operational data to gain the actionable insights needed to close identified experience gaps.
A world of possibilities: Unlock brand loyalty
Armed with X+O data, brands can put customers at the center of their business and engage more effectively on all channels.
Let’s take a look at just some of the ways in which companies are using data-driven insights to sell more products, perfect brand propositions, build exceptional customer experiences, and forge direct to consumer relationships:
Go to market with new product innovations faster: By embracing customer experience feedback and incorporating it into the product development process, companies can:
- Identify new product opportunities and validate concepts faster
- Ensure a better problem-feature solution fit for their target demographic, and
- Scale go-to-market strategies at speed
For example, by undertaking social listening, brands are able to identify unmet consumer needs and develop new product or service initiatives (such as subscription or customization services) that deliver increased customer lifetime value or powerfully differentiate their brand for customers.
Refine direct-to-consumer brand journeys: Benchmarking the customer experience across every channel is just the start. By understanding individual customer preferences and activities as they progress along the path to purchase, brands can take action to eliminate identified friction hot spots.
Whether that’s introducing one click payment options, incorporating how to product videos in online channels, or contextual self-service support options for customers seeking information and help.
Listen, understand and act to optimize every interaction: From understanding how demographic preferences impact product design, marketing, and packaging to identifying the optimal formats and channels for delivering brand messages to consumers, using data driven insights enables companies to initiate personalized conversations that create positive brand associations for consumers.
By understanding which messages and offers work best for which customers, brands can optimize interactions to ensure that relevance increases over time.
For many CPG firms, D2C channels represent an opportunity to maintain complete control over the brand—from initial engagement to the moment a product is purchased and beyond.
Using data-driven experience insights are the key to ensuring brands can consistently achieve the personal touch and connect with the specific needs and values of customers in more meaningful ways.
