The benefits of Direct-to-Consumer are well established at this point. However, it is also pretty clear that it is regularly misinterpreted and undervalued. A lot of this can be tied back to fundamental misunderstanding of the importance of strategic planning.
If you are wondering how to even get started, check out our ‘5 fundamental questions’ article.
If you have already started but it just isn’t delivering, you may be making one of the ‘5 most common DTC mistakes’.
1. Investment choices
Ecommerce is often thought of as a quick short-term win, but the potential that it represents for your overall bottom line means you absolutely must think long term. Over and / or prematurely investing in the most common ‘go to’ buzz words – performance / digital marketing - can leave you dangerously exposed.
So before ploughing a lot of money into so called ‘easy wins’, make sure you have invested the time (and money) to secure your foundations . . .
2. Not appreciating the full set of skills needed.
To launch and maintain a successful DTC channel you need a multitude of different knowledge and skill sets across the whole business. These will include (but certainly not be limited to!):
Web development and optimisation – There is much more to consider than ‘just’ a website.
Finance – How will customers pay? Will you offer credit?
Logistics and supply chain – Are you set up for single pick/pack/ship? Remember you will also be responsible for returns.
Analytics and reporting – Not evaluating data leaves you exposed when determining priorities for investment. Conversely being too reliant on immediate data and making premature tactical decisions can be equally as damaging.
Customer service – Direct sales mean you are responsible for both the presales and aftercare too.
For a Direct-to-Consumer website to work you need everyone to accept it’s happening, AND to understand why it’s happening and what you expect the results to be.
Cliché though it may sound, you must be in it together.
3. Lack of (visible) value proposition.
For customers to leave their usual, trusted way of buying (in physical stores or from Amazon for example) you need to give them a good reason to make the switch to buying direct.
To frame it in a different way, your retailers become your competitors within your DTC strategy (remembering competition can be mutually beneficial for all) – so what’s your point of difference?
Once you have established what your value proposition is, make sure people know about it. Display it clearly across all your touchpoints. It is simplistic to believe customers will just happen across your homepage and navigate themselves to the deal.
4. Don't expect customers to automatically come to you.
So, assuming you have got your store set up, and you have a clear and enticing value proposition, you now must actually get customers to your site.
To do this, you need to understand:
How customers are shopping your category?
What is your current brand awareness - i.e., will people be searching for your brand directly?
Are people aware of your brand or your offering, or will they be more likely to find you with category led searches?
Who is your target audience - who are you actually trying to talk to = who you should be targeting with paid marketing?
You also need to have a clear strategy to drive people to your site:
Will you be using paid search for your brand terms, or your category terms?
Will you be retargeting customers, or will you be leveraging competitor terms through search to convert at point of purchase?
Do your other channels support the website? For example, are you using social media to drive people to the website?
Bear in mind retailers will potentially be bidding on your brand terms through paid search if they stock your products and will also be bidding on category terms (need to consider this relationship as part of your strategy).
Is your SEO optimised for your website to ensure you are as high up the google rankings as possible? Make sure you are considering other ways to improve your SEO ie. blogs and ensuring keywords are throughout your copy.
It's all to do with understanding your customer and their shopper journey first and foremost, and then using this to build you strategy for how they will get to your site.
Just to round off this point; if you’ve managed to get people to your site don’t then lose them in the journey. We talked about the value proposition above, but you also have to ensure that everything else (delivery options / pricing / product offering) is optimised to ensure you don’t lose the purchase once they are there.
5. Channel management
Coronavirus (amongst other pretty big macro events) accelerated the switch from purchasing in stores to spending money online. Lockdowns forced this behaviour to a certain degree, but really all it did was fast-track a transition that was already in play. At the peak (Jan 21’) % of sales completed online vs. in store was 37.8%*. Since restrictions have eased, this has settled back to 27.1%*. This is still almost 10 points higher than pre.C.
There are two important points here.
I. Online sales will continue to grow. Not having a slice of that pie means you are going to miss out on opportunities for your business.
II. BUT, even at the pinnacle of lockdown, over 60% of sales were still transacted in store. Bricks & Mortar are and will continue to be a crucial part of some brands overall strategy and so channel management is essential.
In fact, retail / channel engagement and management that is poorly executed is one of the quickest routes to failure. This particularly applies to a business that’s existing or historic business is heavily reliant on retail distribution. There is no point in hiding from the truth, distribution partners are unlikely to be thrilled about you selling direct. But if managed properly (and sensitively!) DTC growth aspirations and retail relationships absolutely can co-exist (check out this article that will help with dealing with this exact issue). In fact, ensuring there isn’t conflict between channels, keeping the customer experience positive throughout and standardising your brand touchpoints can benefit you and your retail partners.
So, there you have it – the top 5 most common mistakes brands make with their DTC strategy. And 5 really is a great number.
But we are feeling generous so here’s a couple of bonus point to consider. . .
A lot of brands don’t have any form of reviews when starting their DTC venture. And this is problematic because reviews build trust, credibility and provide social proof. Furthermore, they offer extra content to your product listings, and give you an SEO boost. So, whilst formulating a plan to build product reviews, implement brand reviews (e.g., Trustpilot). You need to give customers a reason to shop on your website vs. others, and trust is an important factor in that.
As we have established, DTC needs expertise and time. Expecting your current teams to be able to deliver everything that is required alongside their day jobs is unrealistic. If you want results, do it right.