When brands started selling directly to consumers, over a decade ago, it was simply a way to control one’s brand in the market, and gain stronger margins in the process. But since then, direct-to-consumer selling has evolved.
Here, Jon Reily, an experience and commerce executive at Merkle, discusses how d-to-c selling has gone from a transactional exchange to one where customer engagement and personalization is key — which can be challenging for CPG brands, including beauty and personal care product companies.
WWD: What’s driving d-to-c growth?
Jon Reily: Thanks to COVID-19’s impact in early 2020, consumers now expect the ability to buy virtually anything, anywhere, at any time. This has been a boon for marketplaces like Amazon and Walmart, as well as large retailers like Target. However, this has driven what had already been a thorn for consumer product goods [or CPGs] even deeper as these marketplaces and retailers have no incentive to push one brand over another. Instead, they just want the sale.
As a result, CPGs who previous to this really only had to worry about brand-building via advertising and planograms with retailers for good placement in stores are now facing a world where their traditional partners are now agnostic as to the brands they sell and, in some cases, are directly competing with CPGs for market share.
This has driven virtually every CPG brand to ask, “How do I talk to the consumer directly?” and d-to-c is the answer. The question remains, though, is it a good strategy?
WWD: What should d-to-c brands consider in regard to creating a customer engagement strategy?
J.R.: First and foremost, ensure that it’s being done for the correct reasons. Start with the “why” versus the “how” or the “what.” Too often I see brands leap into a d-to-c journey with no real plan or goal other than to “get more data” and to do what they feel their competitors are doing. As with most engagements, if you don’t have a map and don’t know what your desired end result is (destination), you’ll end up with a never-ending series of programs that never really come to fruition and instead only exist to keep themselves going (you’ll wander the desert for 40 years).
Next, make sure that it’s genuine, and is something consumers actually want, versus something the brand wants them to do. The cold hard truth for many brands is that consumers are not going to purchase their products via the internet without a compelling value proposition. In other words, no one is going to buy mayonnaise via a d-to-c experience on the internet. However, that doesn’t mean a program can’t be successful with a strong marketing campaign coupled with a strong value prop as to the why to buy mayonnaise: great story, easy fulfillment, bundling with other products, subscription, etc.
Lastly, realize that a d-to-c strategy is not necessarily exchanging goods for money. Rather, it’s an exchange of value between both parties, and that may come without a specific payment in currency. It might be sharing information about a product to educate and inform a sale at a later date. It might be steering that sale in a direction where it’s most beneficial for one or both of the parties. It might be as simple as brand awareness. Remember that d-to-c does not stand for sales to consumer. It means direct, one-to-one conversations with consumers about products. Sometimes the sale will come at that moment, sometimes it won’t, but a successful customer engagement strategy is just that — engagement — whether the sale takes place then or not.
WWD: Why are consumers responding to more personalized messaging/communication?
J.R.: For years, marketers abused the cheapest form of communication: email. This created a climate where any messaging not originated from the consumer became an annoyance at best, and at worst, was considered an intrusion or suspect. As a result, it has become harder and harder to use “set once, send many” emails to prospects or customers and get any sort of reasonable return. People are now just too savvy and can see a large-scale blast email a mile away. However, this does create opportunities for brands to engage in that one-to-one type of communication they seek with d-to-c strategies, and by taking steps to ensure these communications are in fact personal and genuine, they may get a response.
During and after the pandemic, more than ever, consumers are looking for ways to “solve their problems” versus just “shopping.” Thanks to the mobile phone, we don’t need to go shopping anymore because we always are just a click away from any product or service we want or need. Instead, we’re looking to brands and retailers to be partners with us instead of just vendors. We’re looking for brands that can help us with specific needs or solutions instead of the latest thing to buy. Therefore, communications from brands that — either through direct contact or accurate data prediction — can help break through those forcefields and create real, genuine conversations about services, instead of just more marketing material that will wind up in the digital recycle bin.
WWD: How can d-to-c brands use data and data analytics to drive conversions?
J.R.: Over the course of the next few years, thanks to increased d-to-c programs and finally achieving the true spirit of the “Internet of Things,” brands and retailers are going to be swimming in data. The expression “data is the new oil” has never been truer than it is today. But the problem is that most brands and retailers have no idea how to use this data to their best advantage. Rather, many of them are using it to support old, bad habits like untargeted email blasts.
Instead, the answer is using this data to get a deep insight into the customers’ needs and wants and using that information to drive product development and not just communication. Consumers are starving for new ways to make their lives easier, and will do business with brands, often at a premium, that can help consumers solve their problems. Therefore, using data to predict and learn, versus find and target, is critical to any data strategy.