If you’re not a little curious as to how Direct to Consumer (DTC) can power your brand, you should be.
DTC is more than a sales channel; it’s a connection channel that enables brands to develop meaningful relationships with new and existing customers. Brands are in a unique position to be both first-party experts in their product offerings and customers while also removing potential friction or misalignment between customers and third-party retailers and distributors. And consumers feel the difference: in a recent DTC study by Google in partnership with Kelton Global, 55% of DTC consumers said purchasing directly from a brand feels like a very different experience than going through a third-party retailer 1.
Brands that get this right will be well-positioned to realize near and long-term benefits. In the near-term, a DTC strategy will drive better consumer engagement and offer brands a growth channel to supplement existing distribution channels. In the long-term, it will allow brands to differentiate consumer engagement strategies as the privacy landscape continues to evolve.
What do consumers look for in a DTC brand?
Consumers feel it’s easier to understand the values of individual brands (66%)2 and that individual brands are more authentic (60%)3. As such, they prefer to shop from brands that stand for something or have an interesting backstory (50%)4. Ultimately, consumers believe brands should be reflective and representative of their beliefs - providing validation that this is a brand that understands who they are and/or who they aspire to be.
And just as each consumer is unique, so too should be each DTC connection. Consumers value personalization - and DTC delivers, with 61% saying DTC connections provide a more personalized experience 5.
When the connection is strong, sales follow. 66% of online consumers have purchased directly from brands in the past 3 months, with 42% expecting to buy more directly from both traditional and digital brands (vs. third-party retailers) over the next year 6.
What can brands gain from a great DTC relationship?
DTC is about more than direct revenue, most of the value DTC creates comes from indirect value drivers.
The ability to diversify channels, reduce over reliance on any one partner and the ability to increase speed to market of products or processes is a huge unlock that drives our recommendation for every brand to venture into DTC.
Brands also benefit from access to stronger, more reliable, privacy-safe data through the relationships built in DTC. First-party data not only strengthens consumer engagement and trust, but it also generates consumer insight. Research from Publicis Groupe has shown that primary data can be worth up to 80% of what a digital dollar in revenue represents.
DTC provides a controlled environment for brands to conduct test and learn experiments in product development that cuts risk and time to market. The value of this live feedback loop comes out to about 50 cents on every dollar spent. Although it isn’t direct revenue, it’s a worthwhile expense for a manufacturer.
The bond created with consumers through DTC creates a halo effect, where the love generated inevitably drives sales across channels. Our research estimates the value of DTC impact on brand affinity at nearly 40% ROI. So, realizing DTC is also a form of marketing with effects throughout the portfolio, changes the equation internally.
No matter the driving reason to get into DTC, it’s important to know that consumers get much more than a new way to get their goods, it’s an opportunity for brands to take their commerce destiny into their own hands and gather significantly more value out of the endeavor than just direct revenue generated in the moment.
How can brands start building DTC connections?
To best position for the continued shift to DTC, brands are mobilizing marketing strategies and investment, with 62% of brand decision makers expecting their company’s DTC budget to increase in the next year8 with a focus on meeting consumers on the channels that drive the most discoverability and influence.
So, what channels are best to accomplish this? In the US, DTC shoppers discover new brands from: Online Search (52%), TV commercials (43%), Friend/Family Recommendations (45%), Social Media Ads (35%), Display Ads (31%), Online Video (24%), and Mobile App Ads (23%) 9.
A successful strategy engages across the consumer journey while being true to the brand’s identity. It is easily discoverable across channels and provides seamless experiences from browsing to checkout. Automated solutions should factor heavily into the strategy, allowing your brand to adapt in real-time to shifts in consumer behavior, sentiment, and demand, resulting in relevant, personalized, and effective connections in every consumer moment.
As consumer behavior and expectations, retail dynamics, and the regulatory landscape continue to evolve, now is the time for brands to take control of their consumer relationships and provide value and utility beyond the sale. The direct connection to your customers, the first-party data and direct sales it generates will impact your brand’s success for years to come.
If you weren’t a little DTC curious before, hopefully you are now - and there’s no better time to turn curiosity into action, than today. Read more on how to put this into action with our DTC research findings here.
1,2,3,4,5,6,9 Google / Kelton Global," Direct to Consumer Study 2021", US, December 31 - January 14, online survey for those that have purchased in the wellness, home, apparel and electronics categories in the past six months n = 3494
7,8 Google / Kelton Global," Direct to Consumer Study 2021", US, December 31 - January 14, online survey for business decision-makers n = 162