Ten years ago, brands had a fear of upsetting wholesale partnerships. Beholden to industry powerhouses like Neiman Marcus or Bloomingdale’s in the fashion vertical or Target and Walmart in the CPG space for the majority of sales, brands across the board were wary of entertaining direct-to-consumer initiatives (DTC) that might disrupt their wholesale business.
However, all that has changed. eMarketer estimates that by 2022, just one month away, the number of DTC ecommerce buyers will reach more than 103 million.
There are many reasons for the continued growth of DTC, including the fact that supply chains and fulfillment networks have been easier to access and tap into, and advancements in web infrastructure make setting up and running a website easier than ever. Also, because of the proliferation of mobile and social, it’s incredibly simple for brands to have 1:1 conversations with consumers, meaning — in theory — less can be spent on marketing. Finally, the economics (for most brands) just make more sense when the middleman is removed, leading many companies to realize improved margins.
However, even though DTC is easier than ever to activate and scale up, owning the customer relationship could be doomed from the start if the brand does not take careful and intentional steps with regard to data in their marketing approach. Failing to do so can result in wasted investment, ineffective decision making and, worst of all, a poor customer experience that leads to churn.
There is a way to build DTC wrong — let’s discuss how not to make that mistake by following these three important steps.
Establish rigor in your data collection process.
No matter how large your business, if you do not prioritize consistent and clean data collection across all business touch points (business data, customer data, marketing data), you will never have clarity in what happened and why it happened, nor the ability to determine what to do about it. In particular, when it comes to marketing campaigns it is important that you have rigorous standards for data taxonomy and campaign tagging that are clearly mapped out and adopted across all teams and vendor partners. In doing so, your analytics are more likely to remain clean and complete. This will ensure you don’t make decisions based on outdated or incomplete data.
Don’t rely solely on paid media for growth.
The days of paid digital media being the hero of your revenue growth plan are over. While still an important piece of the pie, it is critical to have a balance between paid and non-paid strategies that work hand-in-hand for both acquisition and retention. When it comes to traffic or revenue for DTC ecommerce or DTC retail, for most brands that balance is going to be somewhere between 60%-70% direct/earned/organic and 30%-40% paid media.
Build a foundation of connected consumer data.
At all costs, refuse the urge to look at your business in silos. Customers don’t interact with just one channel, whether it be DTC or retail, desktop or mobile, paid social or paid search. Ensure you have analytics, marketing technology and measurement systems in place to connect customers across sales and marketing touch points. Doing so will give you a single view of the customer, which will give you clarity in how to best personalize experiences for that customer.
Building DTC Retail
There is a way to build DTC wrong and a way to build DTC right. Whether you are building DTC for a new brand or establishing it as a new revenue stream within a heritage brand, creating an intentional, data-driven marketing approach will give you clarity in your data and increased power over business results.\
Tierney Wilson is SVP of Client Strategy and Consulting at January Digital (JD). She is January Digital’s first and youngest (age 32) SVP of Client Strategy and Consulting, where she leads JD’s entire account services team across the agency’s Dallas and NYC offices. Wilson brings retail veteran experience from previous work with leading industry brands such as Tory Burch and Dutch Brands to JD’s client services team, enabling a holistic and consultative approach to the agency’s omnichannel, consumer strategy. Wilson’s career began at Lucky as the Publisher’s Executive Assistant, where she identified a new sales category in DTC retail and closed deals with brands including Birchbox and Tory Burch.