6 min read
Close customer relationships help companies be more risk-averse, weather disruptive events, and develop their brand further. After a time of moving away from customers, brands are now discovering the importance of direct communication, service, and buying channels.
- What does D2C mean?
- The advantages of the D2C approach
- Challenges for D2C companies
- The 6 rules of successful D2C business
Loyalty is created through closeness. But nowadays, many companies operate with external vendors, sell their products on standardized platforms and even outsource their customer services. The D2C-strategy (Direct-to-Customer) reinvents customer relationships with a brand.
What does D2C mean?
Direct-to-Consumer or Direct-to-Customer (short: D2C or DTC) describes a company that not only produces its own products but also sells them on its own platform and provides any services directly. All processes close to customers (service, payment, delivery) are being organized by the company.
That in itself is nothing new, in fact, you're experiencing it on a regular basis on the weekly produce market, where you usually buy vegetables, cheese, and bread from the farmers and bakers directly.
However, for most companies, D2C has become somewhat of a novelty, since many companies use vendors or market places to sell their goods. And there's nothing wrong about that. As a customer, it should theoretically not make a difference whether you buy potatoes from the super market or the local farmer's market.
But in reality, it often makes a difference both for the customers and the companies because a direct contact suggests more transparency, trust, and communication.
55%* of consumers prefer buying directly from brands.
A company that not only produces its products but also sells and delivers them through their own channels, has a much clearer view on its entire supply chain, brand management, and even the customer behavior. Yes, it has a lot more things to manage but it also has a 360° view of all processes and interactions and it has full control.
For consumers, this means that their shopping experience can be more convenient, immediate, personal, and trustful since they always communicate and interact directly with the brand and therefore also get more informations about their products as well as direct service channels.
The advantages of the D2C approach:
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- Full control over all processes, starting from production and going beyond customer care
- The brand is always front and center on all channels and therefore can grow stronger if it is not "one of many" on another platform/in another store
- A 360° view on all customer interactions
- The ability to optimize and adjust all customer touchpoints
- Swifter services and crisis communication due to shorter information chains
- No additional costs due to "middleman" services
- More flexibility for product development (full control on testing & marketing new products)
Modern D2C companies don't just sell their products at the market, but offer websites that offer both an online shop as well as information about their products, manufacturing, delivery options, and services. Coupled with a store, the company can deliver multi-channel customer experiences without any disruption in its brand and messaging.
Challenges for D2C companies
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Now, a seamless experience from production to after sales poses its own challenges. To really make use of all advantages,
- all involved systems need to be connected;
- data needs to be centralized, structured, and standardized for use across all business units;
- processes need to be aligned for a smooth "handover";
- and all customer-facing business units need the right information to develop marketing strategies, create the appropriate messaging, and solve customer problems.
As such, D2C has several potential pain points:
- Lack of connected systems
- No access to all data due to data silos (e.g., product details, delivery dates, customer interactions)
- A strong competition due to big commerce platforms such as Amazon, AliBaba, etc.
- Not enough resources to deliver a fully formed customer experience
- Not enough communication between all business units/departments to ensure seamless processes
- Managing the complexity of a D2C approach (production, customer management, payment, service, logistics, etc.)
82%* of consumers currently have 0-4 D2C brands they regularly interact with.
Read the use case of D2C champion Vitra and how they connected and digitized their sales processes, gained a 360° view on their customers and connected their sales systems with marketing functionalities for more customer-centricity.
The 6 rules of successful D2C business
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According to McKinsey, big brands such as Kraft Heinz and PepsiCo have launched their own DTC platforms during the pandemic, mainly to keep those customers that suddenly avoided stores and switched to digital channels. Brands that already had their own online shops on top of other sales channels saw an increase in their D2C sales and plan to even further expand their shares.
But what's the secret to true D2C success?
If a company wants to really earn the fruits of D2C business, it needs to connect all channels, touchpoints, and info points in a way that feels seamless and coherent. Customers love the direct connection with the producer because of the ease of information, the closer relationship and the simple communication channels.
It is therefore crucial, to set up processes and channels in a way that they all connect and deliver the same high quality experience without any data loss on the way.
1:1 interactions that feel personal
The personal touch is what usually differentiates the local farmer's market to the supermarket chain. Even big brands who use the D2C approach need to generate a more personal communication, since the directness only feels authentic, if the relationships are closer.
This demands a balance between data-driven messaging through dynamic websites, emails, and other automated communication and the ability to talk with real people when it comes to questions and problems. People connect with people, which is why personalization should not just be digital.
Enabled employees for better customer communication
For a personal 1:1 experience to work, employees - especially in sales, marketing, and service, but also in other customer-related areas (such as payment or delivery) need to have access to the necessary customer information, be trained for open, friendly and brand-loyal communication, and have the freedom to make decisions that positively impact individual customer experiences (by offering coupons or product demos or refund delivery cost when the delivery is delayed).
Connecting transparency with storytelling
D2C businesses have the luxury of 100% control of their data and information. This also means that they can be very transparent about production, logistics, product design, etc. If presented engagingly as part of the brand's storytelling, this transparency can help customers gain trust and relate to a company that is open about its businesses and tries to optimize its processes, products, and services.
Strong values that can be trusted
Values as well as the Corporate Social Responsibility (CSR) are increasingly important with work place ethics, sustainability, and diversity playing key parts in how customers (and other stakeholders) view a company.
A D2C company has much more control over its production means, resources, and any standards along the entire supply chain. This also means that they have more responsibiliy when it comes to the aforementioned topics.
Additionally, values need to be communicated authentically, since D2C companies usually have a closer customer connection. In turn, customers care more about values when they are in direct contact with a company. These values need to be ingrained not only in the company's brand but in every single process to truly feel authentic.
Cohesive messages from a strong brand
A 100% control over customer interactions, channels, and processes is perfect to keep your brand front and center. D2C companies don't have to fight to make their brand more visible on an online market place or in a supermarket, since they can design the entire brand experience for their shops, online channels, and more.
However, a cohesive message is crucial for the brand to be memorable and feel authentic. This doesn't mean that different locations, target groups, and campaigns can't have a different look and feel. However, they still need to fit the brand in its aesthetics, tone, mission and values. Otherwise, customers might experience a cognitive dissonance (e.g., when a brand talks a lot about diversity but only has men in their upper management).
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