Direct-to-consumer is a digital business model that’s become seen as a disruptor recently. The idea is to cut out the middleman. These brands don’t rely on the traditional retailer to sell vendor products.
With a direct-to-consumer model, the brand does everything, including maintaining its inventory and coming up with their own marketing. It gives the brand more operational control and it also allows them to have reduced operational costs.
One of the big challenges with this approach, as beneficial as it can be, is that there are limitations to customer acquisition strategies for D2C brands. Namely, customers spend less on each order as the D2C landscape grows, meaning brands have to work to maintain their relationships with loyal customers as much if not more than other companies.
That, along with a few other things are key trends as far as the D2C model this year and going forward.
Conversational marketing is a trend that’s growing in popularity for D2C brands because it addresses the problem above—it helps these brands build loyal relationships.
Conversational marketing lets D2C brands connect with customers when they’re at their highest purchasing intent point. The relationship starts to moment you have most captured their attention. Then, you can build that relationship out and add value through personalized buyer journeys.
The trend is toward conversations that are not only highly personalized but also authentic. For the D2C brand, these experiences and the ownership they provide of customer data allow them to outperform traditional retailers.
What’s been seen with D2C is that Millennials are the demographic that currently really seems to embrace it. Millennials as a whole tend to look for convenience, pricing, authenticity, and seamless end-to-end shopping experience, all of which are delivered effectively through the D2C model.
Millennials seem to feel that D2C brands offer them the streamlined and straightforward experience they’re looking for.
A good example of Millennials flocking to D2C brands is exemplified by Casper. Casper is a mattress company that quite literally delivers mattresses straight to your door. You don’t have to go to a store to buy a new mattress.
With the quality of the products and the convenience comes Casper’s dedication to social responsibility and the risk-free 100-night trial of their mattresses. They also donate or recycle unused products.
When you get a customer to your site, as a D2C brand, you have the unique advantage of getting the customer’s full attention. You’re not competing with other products that fall within the same segment.
Use this to your advantage by diving deep into product insights. For example, show how the product is made, which will highlight its quality and you’re telling a compelling story about your products.
You’re also creating a sense of transparency when you do this.
Markets are increasingly saturated, and as such, there should be a move from solely marketing your products to branding.
There are two terms to know here—brand marketing and performance marketing.
Performance marketing has been the focus for years, and it relies on hard data, like lead generation and conversions.
Brand marketing is more about your reputation, your values, how trustworthy you are, and the quality of your products. With brand marketing, you’re putting your focus on eliciting a consumer response and improving loyalty and motivation.
You don’t have to do one without the other. In fact, for the best outcomes, your performance marketing should be deeply intertwined with your brand marketing.
This has been briefly touched on, but it’s something that’s valuable to talk about on its own as well. AI chatbots are one of the most critical tools in your arsenal as a D2C brand. Chatbots are so important in this model because, at its core, is the necessity of strong customer relationships.
Having AI-based chatbots allows for direct online interactions.
Finally, another area of focus for D2C brands is voice-based search. For years, the primary drivers of web traffic were SEO and search engine marketing (SEM). Now nearly 50% of all searches online are already voice-based.
Increasingly, consumers are likely to rely on voice-based search for online shopping and identifying services. D2C brands will have to ensure for the rest of 2020, and beyond that, their SEO and SEM strategies take into account voice search. Content will need to be conversational in style to fill this need.
Overall, D2C brands are in an exciting time, but there are also challenges to be addressed, largely because of the growing competition.