D2C brands are the disruptors as they have gained huge attention and reached a large customer base through social media.
Direct selling brands have been there for many years, however, the trend accelerated more during the pandemic And, the Direct-to-Consumer business model activated its direct connections with the consumers by accommodating interactive touchpoints and paths of communication.
D2C brands are the disruptors as they have gained huge attention and reached a large customer base through social media. In one of the reports by Yotpo for e-commerce marketing, “it was found that 61 percent of D2C brands rely on social media to reach customers, with SEO as the second tactic of choice at 51 percent.”
It’s a known fact that retail is changing, big-box is shrinking and online brands are planning to open kiosks. In this changing landscape, loyalty is going to be a powerful tool in comparison to the price and service of the brands.
Erica Richey, Head of Retention Marketing explained, “Although price and convenience are important for our customer, they are increasingly table stakes. More and more, consumers are looking to premium brands to provide value beyond the transaction.”
Meeting customer’s expectations and formulating an engagement strategy for each user is a must if brands want consumers to act as their evangelists.
Retention is Important
Consumer retention is an assured way of ensuring profitable growth for D2C brands.
As per the recent study by Harvard Business School, “It has been identified that going for a 5 percent increase in D2C customer retention will be able to boost your profits at least by 25 percent.”
Thus, special attention towards retention strategy can help brands in effectively driving more sales. Many D2C brands are encouraging customers to share their brand stories which narrate a strong identity to the brand. Evolving shopping habits have also made D2C brands enter into the subscription e-commerce market. A final purchase decision is a point from where the relationship starts by building and delivering prompt support and response to the consumer through a dedicated communication channel that determines the ‘longevity’ and ‘happiness’ of the consumer. And, the most important ‘consumer loyalty is a key to ensure excellent results for D2C customer retention that cannot be ignored.
Loyalty in this New Era
Brands need to follow the online first approach to create a sustainable business and design strategies keeping ‘customer purchase behavior’ and ‘new customer acquisition’ in mind. The overall strength of the brand can be measured through market spend per order, where customer acquisition cost is a straight investment on a customer who is expected to add revenues for a longer period by being loyal. Thus, D2C brands should keep a check on stabilizing customer acquisition costs and implementing initiatives like promotion through influencers, refreshing creatives at high frequency, and more.
As per the study done by PYMNTS.com for packaged goods it was shared that remarkable willingness towards D2C brands was observed despite challenging economic conditions and customers bought new brands because of the experience.
Today’s loyal customer is the one who engages with your brand at social media, those who refer your brand to peer, those who put stories about your brand usage and review your brand at the social platform. Brand loyalty cannot be gained through a fixed template, it will be gained by keeping the customer at first in decision making, as Amazon never had any loyalty program but still has high brand loyalty.
World of Possibilities
D2C brand users see value in their brands as D2C brands listen to the feedback and believe in building lifetime value through cross-channel interactions. Younger customer is more willing to try emerging brands and D2C upstarts are in their top list as they can connect with customers through digital channels in comparison to traditional brands.
Jesse Horwitz, Hubble Contacts' Co-Founder, and Co-CEO said, “It's a direct response world now, if you don't have a checkout to optimize to, you're starting so many steps behind”.
This is the world of hyper-personalization and specialism, brands like NIKE have its ‘D2C sales $16 billion by 2020 - a substantial increase on the $6.6 billion generated by its direct brand channel in 2015’.
Brands equipped with X+O data have a huge opportunity to embrace customer experience by undertaking social listening which will help in developing new initiatives, refining their brand journey, and optimizing every interaction. Achieving brand loyalty is not magic, it is a mastery of managing customer experience.