D2C startups: Data obsession delivers massive returns
CPG brands can learn from D2C startups like Dollar Shave Club that harness the power of data to connect with consumers and drive brand loyalty.
What if I told you that you could tap into exactly what your customers want? It boils down to an effective direct to consumer (D2C) strategy, collecting critical first-party data, and using it to personalize consumer experiences across channels.
This is especially true in the consumer packaged goods (CPG) market because the landscape is evolving quickly, along with the needs of the digital consumer. The direct to consumer CPG future is here.
But before CPG brands can claim D2C victory, they have to wrangle changing consumer expectations, increasing competition, and digital disruption.
This effort is not in vain, as trust, loyalty, and a high customer lifetime value are just some of the rewards that CPG brands might enjoy. So what can leaders do to make the most of the D2C opportunity?
Direct to consumer CPG sales on the fast track
Digital commerce is now the fastest-growing sales channel for CPG brands, as more consumers shop online for everyday items. Product availability, frictionless interactions, and speed have emerged as some of the most important factors for consumers as they shop online.
Consumers are looking to buy from CPG brands that offer the right products at the right time. Building brand loyalty will take extra time and effort, but it will be well worth it.
CPG e-commerce sales brought in $175 billion in revenue in 2020 and growing fast. The pandemic encouraged shoppers to buy any and every type of product online, which gave the consumer products industry a distinct bump.
But holding onto that lead post-COVID will require a concentrated strategy.
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Doubling down on direct to consumer CPG strategies
There are three ways that CPG marketers can strengthen their D2C mastery:
- Meet consumers where they really are
- Capture demand by optimizing consumer intent
- Build relationships with consumers beyond the first sale
With consumer preferences and market dynamics shifting rapidly, CPG brands have to update their omnichannel sales strategies on an ongoing basis.
The consumer of the future continues to transform and the only brands that will be able to keep up are the ones that collect and act on data around the clock.
The first step is to get access to that data.
D2C and the data imperative
Retailers have historically owned the first party consumer data, but now that CP brands are selling D2C, they are able to harness the power of it.
CPG is a particularly tricky category because consumers often buy many different products from disparate brands. With the power of D2C, CPG companies can link all of their first party data sources, across brands and regions, to pinpoint key metrics they need to act on.
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Get results by getting personal
True, dynamic personalization is always-on, real-time, and offers coveted one-to-one communication across the consumer ecosystem.
The payoff for achieving this feat is huge, as companies that use advanced personalization see a $20 return for every $1 spent, and 95% of companies that implement personalization see 3x ROI in the year after the personalization investment.
Marketers across verticals have caught onto the importance of personalization, as 68% of digital leaders are prioritizing personalization by engaging customers using a data-driven foundation for real-time insights.
CPG direct to consumer: Better connections, more sales
CPG brands must approach D2C channels as a requirement because the data they produce and personalization features they enable are as good as gold.
To remain competitive, brands should meet consumers where and how they shop and develop a sustainable D2C strategy as part of a broader channel strategy. This enables them to control their brand presence, own consumer relationships and data, and create a unified customer experience across online and offline channels.
D2C is the latest frontier for consumer products companies, but they need to approach it as more than just a sales channel. D2C is a direct conduit to the consumer and to a much better understanding of consumer behavior and preferences.
This connection allows CPG marketers to develop a more comprehensive view of consumer behavior at every stage of the customer journey. With that insight, can create more relevant, satisfying experiences to meet customer needs in each channel and situation.
