There’s no denying the success of the DTC market, thanks to modern technology and subscription services. Direct-to-consumer, or DTC marketing, is changing the way many brands do business. It puts brands in control of the entire customer experience starting with discovery through product delivery, but it doesn’t come without its challenges. Transitioning, rather than starting a new DTC business, is one of those hurdles.
To make the process easier, this guide will walk you through DTC marketing, including what it is and why it’s becoming so popular, the benefits and dangers to avoid, and everything else that you need to know. If you feel that DTC is the way for your brand, read on to learn what your future could hold.
What is DTC Marketing and Why Are Brands Switching?
To make a successful transition, you first have to understand the foundation of DTC and what makes it such a hit among both consumers and companies that are trying to change the world of consumer marketing.
Brands are switching or starting out in this format because it’s what consumers want. In fact, according to recent research, as many as 55% of consumers reported wanting to buy directly from brands, and 59% said they prefer to research products on brand sites directly. Traditional retail is continuing to become overcrowded and real estate is increasingly sparse, and DTC is the answer to overcoming those and other obstacles.
DTC is a simple concept. Instead of selling through retailers or other companies, your business sells directly to consumers. The reason many companies are making the switch? Well, just check out a few of the biggest benefits below.
Sales Growth
The increasingly competitive retail market is driving out a lot of brands, causing them to seek refuge elsewhere. The world of DTC is a great solution for many because it allows them the opportunity to get back so many sales that got lost in the cluttered retail market by connecting directly to the consumer audience. Plus, they’re doing it with reduced overhead and operating costs, adding even more growth to the bottom line in the form of savings.
Pricing Control
When you sell within a retail environment or through a third-party, you’ve got less control over pricing and profits. They will often have their own requirements, or take their fees from your sales, causing you to have to increase the standard price of your items to compensate. When you sell direct, you’re able to have total control over your pricing and never lose a penny of profit to retailers. You can even test and change pricing structures based on consumer feedback and further improve your reputation by listening to their input.
Increased Brand Strength and Reputation
Today’s buyers are changing and evolving. What they want and expect from the brands that they work with is much different than in years past. Today’s consumer wants the total package. They want to get the best products, the best prices, and an exceptional user experience. When you go DTC, you take control of the customer journey and can deliver all that and more, creating a strong, reliable brand image that people will flock to.
More Connected Relationships with Customers
E-commerce technology is allowing brands to develop much more connected, close relationships with their audience. Customers today want a brand that they feel truly connected with, and DTC does just that. This entire process allows you to offer a personalized buying experience that fits their customer journey, and that kind of care and attention is what will keep customers coming back time and time again.
Free Testing Grounds
When you’re already going direct-to-consumer with your products, you’ve got a great arena where you can test out new products and markets without having to invest in a full retail operation or make another large financial investment. You could easily develop a new channel for a test market or product, collect feedback over time, and come up with a data-driven answer as to whether this expansion or new product is a good idea.
A Customer-Centric Business Model
The single most important element of DTC is that customer-centric business model. Everything about this marketing approach revolves around the customer and providing them with the experience and solutions that they deserve. Most wholesalers don’t have a lot of experience with customer service or the customer experience, but the transition requires it. This new model requires personalized, compelling experiences for each customer, tailoring your solutions to their buying journey in a way that’s captivating and effective enough to pull them away from their long-trusted retailers.
When setting up your business model for DTC, it should be entirely centered on the user experience and meeting the customer need. The best direct-to-consumer brands didn’t get to the top by doing it for themselves—they did it for the customer. That’s what DTC is all about.
Dangers to Avoid in DTC Marketing
When transitioning to DTC marketing, there are some things that you will want to be aware of along the way. You can generally avoid the worst of the dangers and pitfalls if you take the time to learn about the direct-to-consumer market and how to use it effectively for your brand. Here are some big things to keep an eye out for.
Retail Channel Conflicts
Your direct supply decision is going to undoubtedly irritate some of your retail suppliers. This could be perceived as a threat to their relationship or future business with your brand, and especially if you just do it without telling them. Make sure that you work with your retail partners during the DTC transition and continue to foster your relationship in any way that you can. You may lose some connections, but if you are careful, you don’t have to lose them all.
Over-Promising and Customer Expectations
Today’s DTC brands have created quite a reputation for themselves, with many delivering premium, curated content that is like nothing else available. If you go into the DTC market with something that isn’t up to par, it’s going to be glaringly obvious. At the very least, customers will feel like they’re not getting the value they want from your brand. At worst, it could affect your overall sales and leave customers with a bad taste in their mouth, causing them not to return.
Sense of Urgency
Some companies dive into this and bite off more than they can chew. Others are timid and will tread lightly until they get their feet wet, costing their company thousands of dollars in lost sales by being too slow. Either way, it’s not good. Before you do anything with DTC marketing, you need to step back and assess what level of investment you’re capable of making and how urgent it is that you make this transition. If your sales are declining rapidly, it might be time to act and you might need a bigger investment to go “all-in”. If you are just looking to try a new approach, starting small might be the better way to go—such as by launching a direct eCommerce site without fully abandoning your retail efforts, which is a solid strategy, according to Salesforce. You must decide if you’re ready and what you’re ready for.
Important Areas to Consider
You’re obviously transitioning your entire business when you choose to convert to DTC, but some areas deserve a little more focus than others. Take the time to consider these facets of your company and how they may benefit from or otherwise be impacted by your decision to go DTC.
Fulfillment and Shipping Automation
To streamline and keep customers satisfied, you’ll want to make sure that you invest in a partnership with a high-quality fulfillment provider that can fulfill and ship all of your orders in a timely fashion. Managing your entire lifecycle means that you have total control and can provide a better user experience from end to end. However, it also means that you are expected to deliver prompt, efficient shipments and service to customers, based on the example set by current DTC industry leaders.
User Experience
The entire reason that people consider DTC brands is because of that curated, customized user experience. If people feel like they’re not getting that connection, you’re not doing it right. Make sure that part of your transition strategy includes a lot of customer focus, as discussed above along with the importance of having a customer-centric business model. Focus on giving customers the experience that they expect and everything else will fall into place.
Merchandising and Product Development
Going direct allows you a lot more opportunity to expand your product offerings. However, it also requires a different type and level of planning and management for inventory management, merchandising, sales, and more. You’ll have to decide on a new approach to these areas. Fortunately, many have come before you to set the example.
Are You Ready for the DTC Transition?
The allure of direct-to-consumer sales and marketing is obvious. However, it might not always be the right answer or the right time for every business. Based on what you’ve read so far, you should have a little better idea of where your brand stands in terms of being ready for DTC or not. If you’re still uncertain or want a few more signs that it might be time, here are some things to keep in mind.
Do you need total control of your customer experience? Today, it can be difficult to keep pace when your customer journey goes through so many different hands-on its way to obtaining your products. DTC can cut out all the extra steps and make it easier for you to manage every aspect of the journey, from discovery to purchase, remarketing, and beyond.
Are you quickly losing your footing in the retail market space? Right now, the competition is stiffer than ever. It’s not hard for smaller wholesalers and brands to find themselves hanging by a thread when large brands and multi-national chains are continuing to dominate with pricing and bigger marketing budgets. If you’re losing sales and need to fix it fast, DTC might be a good solution.
Do you have a trusted DTC partner on your side to help you through the transition? This is not a journey that you want to take alone. Transitioning from wholesale or retail to DTC is a very specific, detailed process and you have to make sure that you do it right. Working with a team of experts will ensure that your brand gets through the transition as seamlessly as possible and is ready to succeed right out of the gate. If you can’t afford a partner, you can’t afford to make the transition just yet. It’s not safe to go alone.
Are you looking to connect with your customers in a better way? Some brands are seeking the ultimate customer experience improvement by choosing DTC. That’s a noble reason, and one worth pursuing, but you’ll still want to make sure that you’re not just jumping the gun. Sure, it’s a great way to improve customer relationships, but other options are less drastic, too. Make sure that you’re doing this because you want to improve customer experience and because it makes sense for your brand’s needs.
Conclusion
Transitioning to DTC is a complex process, but it’s not one that has to be confusing, stressful, or done all on your own. As we’ve discussed, it’s one that you really shouldn’t take on by yourself. You need to assess where your company stands and make sure that you’re ready for this leap, and ensure that you have all of the right tools and processes in place. If you’re ready to learn more about how DTC marketing might be the next best step for your brand, reach out today.
About the Author
For over 25 years, Jay Sung has been a passionate leader in driving sustainable growth through direct-to-consumer, e-commerce, and customer acquisition strategies. Mr. Sung oversees corporate branding and growth initiatives utilizing a continuously evolving toolkit of digital marketing strategies and technologies to drive innovative direct marketing programs for portfolio companies – from startups to Fortune 500 organizations.
Previously, Mr. Sung served as the Chief Marketing Officer for Guthy-Renker, a $1.3 billion industry leader in the direct-to-consumer health and beauty market. He is best known for developing consumer acquisition and marketing strategies for leading brands such as Meaningful Beauty® with Cindy Crawford, Wen® Haircare by Chaz Dean, IT Cosmetics™, and many others. In addition, he served as the CEO of such well-known brands as The Proactiv Company and Lot18.
Mr. Sung lives in Los Angeles, enjoying all Southern California has to offer. You’ll frequently find him reading the latest business journal, cooking or practicing the piano to relax. Mr. Sung earned his Bachelor of Science degree in economics with a double concentration in marketing and accounting from the Wharton School at the University of Pennsylvania.
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