The appeal of the DTC model is well understood. The reasons include lowering costs and maximising profitability by cutting out the third party managing the customer relationship. So given its obvious allure, why are we now seeing a series of high profile casualties? The likes of Purple Bricks and Cazoo joined Peloton in being drastically devalued. I believe the failure to succeed is due to a lack of focus on really optimising the direct relationship with the customer.
A more in-depth understanding of the underplayed opportunities, and a focus on ‘radical people-centricity’, can help brands dipping their toe in the water swim fast rather than sink in these unchartered waters. To succeed with a new model requires a new mindset with a shift from ‘transactions’ to ‘relationships’. I believe there are five opportunities that are being underplayed by many DTC brands which could accelerate their growth and impact.
1) Storytelling
In the traditional retail model, brands are so often subsumed into someone else’s storytelling. Whether through a third party vendor who owns the retail estate, a platform like Amazon, or an over reliance on expensive advertising campaigns. However in today’s world consumers are more empowered and advertising-adverse than they’ve ever been in history.
They don’t want the story telling to be top down but rather related to their experience. More choose your own adventure than Jackanory. DTC brands therefore have the opportunity to build a more compelling and connected story as they have dramatically narrowed the distance to the consumer.
By creating platforms for engagement that deliver a two-way dialogue and ‘actively listening’, they can better understand their customers and create a gravitational pull back to them through the strength of their narrative. This ensures that customers are drawn into their orbit, without ceding control of messaging.
Warby Parker is a good example of a disruptive firm who understood the power of storytelling from the outset. They disrupted the $140 billion dollar glasses industry by selling to consumers directly online, at a fraction of the price by cutting out the middleman. Their storytelling really helped their proposition get off the ground from day one.
Their story was a lifestyle brand offering value and service with a social mission – for every purchase, they distributed an additional pair to someone in need. This almost Robin Hood like ethos, taking on the big multi-billion dollar players, was communicated through all their channels helping them achieve dramatic growth from the beginning.
2) Personalisation
Once you have the attention of consumers through effective storytelling, truly effective personalisation is needed to maximise the DTC model. A smart data strategy based on first party data is needed to build true personalisation. Deep analysis and interpretation of that data, alongside active listening to the customer will result in people feeling heard in the relationship.
This is crucial in a dialogue not mediated through a retailer or tech platform who own the data. And it is certainly this is becoming more important in a cookieless world where all marketers are having to build new strategies. It’s part of a broader move from a ‘transactional’ to a ‘relational’ approach to doing business. It will ultimately lead to deeper insights and better lifetime value as you use the data to improve the relationship and product relevance.
Makeup brand Glossier is a high growth brand that made a huge impact with their personalised approach. Glossier replaces the experience of trying on makeup at a counter in a department store through the creation of an immersive, digital journey that offers a personal experience without the need for a physical meeting.
Glossier also uses their blog and social media to provide platforms for customers to voice opinions on Glossier products and desires for new ones. They then develop products based on real world feedback – a continuous feedback loop that improves the product and makes customers feel valued.
3) Collaborations
Once you have a better relationship with customers based on understanding their needs you can focus on a relevant value proposition, leveraging products and services from other brands in the space to build win/win scenarios. This can enhance customer loyalty and improve your understanding, all impacting the bottom line. This approach actively demonstrates that, like in any relationship, you have taken the time to listen, understand and connect to your consumer’s broader lifestyle, passion and pain points.
A great example of an effective partnership based on listening (quite literally) is the collaboration between Uber and Spotfiy. The partnership allowed passengers to play their own Spotify playlists while on an Uber ride. Passengers could request a ride from a music-enabled vehicle and then have immediate access to their Spotify profile.
This encourages regular Uber riders to sign up for a paid subscription as they need to have a premium account to be able to play their music in an Uber. Meanwhile it improves the customer experience for Uber riders, who are more likely to give positive scores.
4) Exclusivity
Within the closed community of a DTC relationship an effective strategy can include exclusive releases and loyalty rewards. These can often be based on smart collaborations. This can enhance the special nature of the relationship and also offer precious insights, and garnering data to build better relationships over time to improve Lifetime Value.
In the old world of supermarket club cards, points were garnered through spending on items in store. In the digital world, it can be based on following a brand’s social channels or filling out quizzes. For cycle brand Le Col, it is about rewarding the rides that its target audience of MAMILs (and I’m one) like to get competitive about. In a really smart move by the brand, they teamed up with Strava to reward how committed you are to riding your bike.
Strava enables you to track distance, which is then translated into Le Col points as part of the Le Col Cycle Club that earns you discounts on the latest performance kit and provides access to a number of other exclusive benefits. For keen cyclists Strava is an integral part of everyday life, and by inserting themselves into the relationship Le Col dramatically increases their touchpoints with their target audience.
It is part of an agile approach through continuous experimentation, testing and learning. Of course the value exchange you show back is crucial. Savvy customers understand this as a two way street, you show value to me and I will show it back to you.
5) Advocacy
Once you have built a trusted and valued relationship with customers, you have the opportunity to literally change a brand’s fortunes in the most dramatic way, namely advocacy. This is the chance for an audience, many who hate traditional marketing, to become an empowered army of marketers on your behalf – direct to other customers.
There are some key principles that can get you off to a fast start with ‘word of mouth marketing’. Firstly, a relentless focus on being radically people-centric. Active listening, deeper understanding, heightened engagement and continuous experimentation are at the heart of this approach. If you want to activate advocacy you need to consider your Why.
“People don’t buy what you do; they buy why you do it. When people connect with your why they are more likely to engage and actively talk about your brand.” –Simon Sinek, Start With Why
You need to focus on creating remarkable experiences that are worth advocating. Bad experiences erode brand equity as much as great experiences improve it, so you need to consider every single touch point and think about how you can elevate them over and above category norms. If you can start to unlock advocacy this will limit your reliance on advertising spend.
From transactional to relational
The DTC model continues to evolve and some of the initial pioneers are not necessarily those who have gone onto long term success. A change in mindset is required to truly succeed moving from a transactional to a relational model with radical people centricity as your guide. This can be realised through effective storytelling, personalisation, win/win collaborations, exclusive releases and loyalty programmes. These all boost your chance of gaining the kind of brand advocacy that means you can eschew traditional marketing altogether.
There is all to play for in this brave new world if this model is fully grasped and embraced. As Simon Sinek puts it: “We are not victims of our situation. We are the architects of it.”
Cover image source: ysuel