Increasingly, new and established companies alike are looking to add a direct to consumer (DTC) option to their business model. The reasons for this are clear: for many businesses, the advantages of DTC are too compelling to ignore. However, as with any new venture there can be pitfalls, particularly for companies that jump in feet first without first planning their DTC strategy.
The Attraction of Direct to Consumer
The explosion of digital media has made direct to consumer selling very attractive for several reasons. Going DTC adds a valuable revenue channel for companies that want to expand their reach. In the past brands typically relied exclusively on their retail distributors to engage new customers. By offering DTC, these companies can now enjoy one-on-one relationships with potential consumers from all over the world.
Along with this new global reach, direct access also allows companies to collect more robust data about their customers’ preferences and purchasing histories. Armed with this valuable intel, businesses can tailor their customers’ shopping experience in ways that they couldn’t before.
And DTC is not a one-way street; surveys suggest that customers also want to engage directly with the brand rather than with a retailer. A recent survey found that 88% of consumers prefer to buy directly from the brand if given the option. That’s a golden opportunity for companies that have an eCommerce solution on their website.
Armed with the success stories of other new and established brands that went DTC, companies like yours naturally want a piece of the action. But before you leap, take a look at some of the mistakes to avoid when implementing your direct to consumer plan.
4 Mistakes Companies Make When Devising a DTC Strategy1. You lack a clear and compelling brand story
On his popular blog Duct Tape Marketing, author and marketing guru John Jantsch likes to say, “People buy stories before they buy stuff.” In order to attract consumers to your site, you need more than a list of products and specs—you need a narrative that informs people why your brand is special. Lucky for you, as the creator of your brand you’re the best source for a strong brand story.
This is particularly important for companies who know they can’t compete on price point—and with Amazon and other giants in the online retail mix, not many businesses can. In addition, when customers are buying online they can’t physically interact with your product. To fill that tactile void, you need to build a story that consumers can see themselves in—and one that makes them like what they see.]2. Your digital marketing strategy is lacking
So your company has created a winning brand story. How do you tell it to the widest possible audience? You can build a beautiful website, weave a compelling origin story, but if you don’t have a marketing plan to promote these attributes, you might as well be shouting into a black hole. Thus, your digital marketing plan becomes the next essential piece of your overall DTC strategy.
Tactics that work in traditional consumer channel marketing don't apply in eCommerce. Make an honest assessment of your current strategy and internal staff. Technical, content development, creative, SEO, and social media skillsets are essential for eCommerce. Does your strategy have these bases covered? Should you outsource some or all of your digital marketing execution?
There are clear advantages to having a one-on-one relationship with your customers, but as with any close relationship you need to invest time in nurturing it and keeping it strong. This means listening to customer feedback and using it to support your continuous improvement.
A mistake companies who are new to eCommerce make is not allowing customer feedback for fear of getting a bad review. The reality is consumers rely on and have come to expect user reviews to help them make decisions on what to buy. If you don’t allow customers to post reviews, they are likely to bypass your site when doing product research, which in DTC is a big miss.
The fear of a bad review can be alleviated by:
- Having a plan in place for customer service support—whether you hire a third party vendor or assign someone on your team to regularly monitor and respond to reviews.
- Anticipating the negative reviews you might receive and determining in advance how you might mitigate them.
Be sure to respond positively and swiftly to a negative review and use the feedback to improve your product or service and build trust with your customers. With the right planning and customer engagement, you can turn a negative into a positive faster than you think.4. You don’t provide an incentive for customers to shop direct…or you provide an incentive that is too big
Companies that want to integrate DTC into their business model first have to solve this conundrum: how to compete for new customers without alienating their current retail partners. While you may be tempted to offer deep discounts and incentives to attract consumers to your doorstep, make sure you’re not leaving your retail partners high and dry in the process or cannibalizing your sales through other channels.
Of course you need to give people a reason to shop direct—but that reason could be as simple as offering your full line of products rather than the limited selection your retail partners carry. It could be offering first dibs on a new product, including free samples with every order, starting a loyalty program or assembling an exclusive product bundle. You can also help level the playing field by offering a special deal on your site that links to one of your retail partners for fulfillment.
Plan to succeed in DTC
Going direct to consumer can be a sound business decision, but like any decision you need to weigh the pros and cons and plan for the inevitable challenges. By avoiding the mistakes other companies have made in this space, you’re setting yourself up to be the next DTC success story.