3 Steps to Implement a Direct to Consumer Strategy
Direct to Consumer (DTC) is transforming the way brands interact with consumers. Retailers are beginning to gain more traction by marketing over social media. By doing this, they’re breaking into channels where they can speak to their customers directly. But, for legacy retailers, it can be a challenge if they haven’t leveraged technology to optimize their outreach. Which begs the question: what are the best ways to remain relevant? And what are the best ways to engage potential and existing customers? Let’s understand the retail landscape and the steps you can take to successfully engage in direct to consumer marketing.
How Is Direct to Consumer Changing the Retail Landscape?
More brands are beginning to flock to social platforms to market their products. This is presenting itself as a direct form of competition for legacy retailers. Diffusion’s 2018 Direct-to-Consumer Purchase Intent Index stated that a third of American consumers plan to make 40% of their purchases from direct to consumer businesses. Furthermore, 27% of Americans who will purchase direct to consumer products in the next five years will do so due to greater convenience.
Since the internet has democratized retail, everyone has the chance to start a business. Brands can put together an online presence and immediately begin branding and marketing. For example, before creating the cosmetics company Glossier, founder Emily Weiss created “Into the Gloss”. This beauty blog served as the springboard for the brand. This channel, along with Instagram, was soon leveraged as an online focus group for the company. They could spark conversations with potential and existing customers, asking them what they’d like to see. They’d get instant feedback and would create products accordingly. Since the launch in 2014, Glossier is now valued at $1.2 billion with only two physical stores.
Even now, big retailers are still reliant on brick and mortar stores (or wholesale environments). This means that they don’t have nearly as much visibility as they used to. So, retailers who are slow to embrace direct to consumer strategies are likely to lose more of their market share and profits over time.
Benefits of Implementing a Direct to Consumer Strategy
Leveraging a direct to consumer strategy gives retailers more control. Not only can they manage communication with customers, but they can also adapt their products accordingly.
Since customers are mercurial, they change their preferences often according to trends. As a result, they aren’t typically loyal to a single brand. But, when retailers receive comments from customers, they have the tools to make necessary changes. They can use the feedback they get to alter their messaging, products, and pricing constantly and consistently. They can identify the customer’s need directly and personalize their outreach and offerings. When they’re empowered with such data, they can deliver products and services almost immediately. Moreover, they can also increase their chances of cultivating a loyal consumer base. For example, in a 2017 study, Forbes reported that if a millennial received relevant messages based on their own interests from an institution, their loyalty increased 7% on average.
In that sense, direct to consumer gives retailers significantly more control over their revenue, what consumers are buying, and what they’re likely to buy later on. Direct to consumer marketing also enables retailers to expand their ability to sell. Businesses can increase the volume of items sold by having both online stores and physical stores. Further more, they can ensure that consumers get what they want seamlessly from multiple sources.
3 Steps to Adopting a Direct to Consumer Strategy
Here are other steps you should set in place to create a successful direct to consumer strategy:
1. Create 360 views of your customers.
Once you know your customer’s preferences, based on their feedback, it’s important to compile this information. By using WE Insights, you can view your consumers’ interests, along with pre-compiled demographic information. This will help you understand what products consumers are drawn to now, and will be interested in later on.
2. Personalize your Outreach.
Once you’ve gained a deeper understanding of your consumers’ interests, you can tailor your messaging to meet their needs. This is one aspect of the virtuous cycle of creating personalized outreach. This approach provides you with more feedback that you can then use to tailor more products. Personalization is at the core of direct to consumer.
Once you’ve identified who your loyal customers are, you can begin determining who your nest best customers will be. Start by finding the overlaps in preferences and demographic data among your consumers. This will help you determine what groups of people you should appeal to. In other words, it creates an ideal model for your business.
For example, a luxury tour operator wanted to build target prospect lists and run micro-campaigns via direct mail and email. Their customers were mostly retirees, and they wanted to expand their services to younger people who wanted to travel. After using WealthEngine’s modeling solution, the group was able to identify a core customer persona of a younger age. From then on, they were able to iteratively update their model.
Modeling helps you predict what products your customers may like in the future. It also helps you determine who, among them, has the greatest propensity and capacity to spend.
Learn How to Model Your Data to Personalize Outreach
Learn more about how modeling your data could help you personalize your outreach and increase conversions.