The case for DTC: Keys to success and principles for growth
In past posts, we’ve covered the history of direct to consumer (DTC) sales, and made the case for why brands that sell through more traditional retail channels should go DTC themselves. But what does it take for a company to actually make the jump from third party-only to owned channels?
Going DTC isn’t as simple as standing up an ecommerce platform or retail space (not that anyone would ever say either of those things are that straightforward to do). In fact, getting a DTC channel up and running isn’t even the first step— it’s the last one.
The first step for any company looking to sell DTC is to define your strategic goals—what value will going DTC bring to your business? Going DTC opens a lot of doors for any company, from gathering consumer insights to increasing sales.
Next, define what value your DTC channel and offerings will bring to the consumer experience. Why should consumers come directly to you rather than buying through a third party? Your company could offer enhanced personalization, a close-knit community, or even exclusive and unique products. Another opportunity to bring value to consumers via DTC channels is the opportunity to provide accurate and transparent information about your company and products. A recent study shows that 90% of Millennial and Gen Z consumers care about receiving honest information about products, but only 42% of Gen Z and 66% of Millennials think they are getting honest information from companies.
Third, it is critical to establish the infrastructure necessary to support DTC sales. This means delivering unparalleled customer service and seamless shipping/returns. The back-end logistics and distribution center operations are just as important as how snazzy your website or store looks. Infrastructure also applies to more than just boots-on-the-ground operations. An influx of customer interactions and transactions means that your company will be gathering swathes of consumer data. Make sure you have the security infrastructure necessary to keep consumers’ information safe.
Finally, be sure you have your channel strategy outlined. DTC sales can be conducted through ecommerce, branded physical retail stores, or both. Determine the optimal mix based on your company’s goals and be sure to communicate clearly with any existing third-party retail partners you work with. Done right, going DTC can benefit your company and retailers who carry your products.
Once these strategic and operational pillars are defined and set in place, the best way to drive sales and build loyalty is to focus on building consumer-centric business practices. With a strong customer focus and strategy driven by insights into consumers’ wants and needs, the rest will fall into place. Build and maximize direct relationships with consumers using data, focusing on the most meaningful brand touchpoints and your most committed and loyal fan-base.
About the author
Rebecca Lucash is a Senior Insights Consultant at PK specializing in research and insights-driven strategy. She is passionate about customer-centric marketing—learning what drives customer behavior and leveraging those insights to create value and more meaningful experiences. Prior to joining PK, Rebecca worked in the consumer-packaged goods and publishing industries.
Martin Mehalchin is managing director for retail and consumer at PK, the experience engineering firm. He has dedicated his career to working with executives and managers to help them define their strategies and then translate those strategies into results. Among the clients Martin has worked with are Nike, Atlantic Records, Microsoft, Qualcomm, Expedia, Victoria’s Secret, Adidas and DuPont. Martin is a Board member and Chair of the Marketing Committee for the North Cascades Institute.Tags: DTC