The age of the manufacturer has dawned already. Many brands now sell directly to the end customer and have recognized the added value of the direct-to-consumer strategy. It’s not just about sales growth and new target groups. With a direct line to the end customer, you understand their needs better, get helpful feedback on products and services, and can often build a real customer relationship for the first time.
D2C – What does Direct-to-Consumer mean?
Although the term D2C or direct-to-consumer simply means direct sales to consumers, there is more of a philosophy behind the word than a sales strategy. Direct-to-consumer means above all being customer-centric. Actively seeking contact with customers, learning from them and tailoring products and services to their needs.
Until now, brand manufacturers received feedback almost exclusively through their retail partners. The feedback was delayed, incomplete and inaccurate. Many manufacturers found it difficult to derive specific customer needs from this feedback. But in order to better tailor products and services to customer needs, it is important to know one’s clients better.
A direct-to-consumer strategy requires a new focus at all levels of the company, not just in the front-end store. From the IT department to logistics, the consumer should come first. The question “And what does the customer get out of it?” has already worked wonders in some companies!
Why D2C is so popular right now
Corona, at the latest, has given the D2C concept a lot of hype. But even without the challenges posed by the pandemic, some manufacturers and brands recognized the opportunities of a D2C approach early on and took advantage of them. The enormous growth in online business in recent years (also fueled by the pandemic) has caused many companies to rethink their approach. The direct route via an own online store seems to make sense on many levels, even if it is resource-intense. Unfortunately, far too often the appropriate resources are lacking to convert the stationary business, which has been established for years, to online “being the way it is”. In addition to the new online world and the accompanying technical conversions, the direct-to-consumer strategy requires a completely new mindset and corporate orientation.
D2C is not about expanding an additional sales channel or increasing online sales in the short term. It’s about winning fans, building real customer relationships and retaining them in the long term with understanding and excellent services and products. In addition to the positive effect of ensuring independence from retailers through the direct route, direct contact with the end customer offers numerous other advantages for manufacturers and brand owners.
A decisive success factor here is the topic of customer experience management. Those who actively accompany their customers during the customer journey can influence buying behavior and build brand loyalty. After a purchase has been made, analyzing customer reviews is increasingly important. Manuel Siskowski, founder of the direct-to-consumer brand Wiesemann 1893 told gominga in an interview that, for him, review data is much more meaningful and of higher quality than market research data. He therefore advises all companies to actively monitor customer reviews and, in the event of a negative review, to contact the customer directly. If the customer has the feeling that he or she is being heard and that you care, even if something goes wrong, he or she will continue to have a positive attitude toward the brand.
Opportunities of the Direct-to-Consumer Strategy
Successful implementation of the direct-to-consumer concept can result in many advantages for manufacturers and brand owners. Even today, acquiring a new customer is many times more expensive than a repeat purchase by an existing customer. Accordingly, the primary goal of every brand manufacturer must be to bind customers to the company in the long term by satisfying their needs in the best possible way. But if you don’t know their needs, you can’t meet them. This is the reason why close contact with the customer is so important. It’s about getting to know your own customers and understanding what makes them move. If this approach is pursued consistently, satisfied customers beckon in the long term and thus a good basis for a solid online business.
Some direct brands even develop their products directly in cooperation with their customers. Direct Brands are mostly small brands that specialize in a pure D2C approach. Surveys are created and data is collected by these agile companies in order to develop exactly the right product for the target group. Another important aspect is building true brand loyalty. Especially in online business, the range of different manufacturers and brands is almost unmanageably large. The loyalty of consumers is decreasing more and more. New products and new brands are being tried out. This makes it even more important to retain buyers in the long term through genuine customer centricity. Social media channels can be used to transform them into real fans. In addition to social media, the company’s own web store and marketplaces, sales and communication via mobile apps are becoming increasingly important. A young, digitally affine target group in particular can be served much more intensively and specifically via its own app.
Advantages of Direct-to-Consumer:
- Digital target group is reached
- Brand awareness is increased
- Independence from retail
- Long-term customer retention & loyalty
- More sales via digital channels
- Internet as a test channel and for quick customer feedback
Braun Büffel – award winning retail case with the D2C approach
The medium-sized leather goods manufacturer Braun Büffel has done its digital homework and successfully initiated the transformation. The digital offensive was so successful that the case won 1st place in the Best Retail Case Award in September 2021.
The main success factor was the overall cultural change in the company. Through the customer journey analysis, Braun Büffel got to know its own target group better and was able to optimally align online sales to it. At the same time, the employees were brought on board and participated in the restructuring from the very beginning. The success is very clear:
The share of D2C e-commerce sales rose to 30% within 2 years.
Direct Brands – How small brands steal big market shares
There are various ways to implement a direct-to-consumer strategy in a business. The best-known solution is sales via the manufacturer’s web store, social commerce or sales via marketplaces. Another option is the introduction of a direct brand.
Direct brands are agile, digital and have one thing in common: they know their target groups and develop products and services tailored to their target groups. The distribution channel is less decisive than the contact with the end customer. Close contact can provide valuable data, which in turn can be used to better satisfy the needs of a target group.
Many direct brands often only have one product or a very small product portfolio. However, these products are so relevant to a particular target group that these brands strongly dominate small market segments. It is therefore hardly surprising that suppliers with a focused orientation also steal large market shares from large manufacturers in certain market segments.
Examples of successful direct brands include tool manufacturer Wiesemann 1893, which has relaunched its traditional tool brand as a direct-to-consumer brand since 2017, sustainable cleaning products manufacturer Everdrop, and Woom Bikes.
How the Direct-to-Consumer Strategy becomes a successful model
To build a D2C business, it is essential to consider the following points:
- Analysis of the customer journey: Who are my customers? Which channels does my target group use?
- Strategic anchoring of a direct-to-consumer mindset in the corporate culture: Culture & mindset are essential!
- Digital Readiness Check: Is your own IT infrastructure capable of implementing a direct-to-consumer strategy? Which systems and processes need to be adapted?
- Together with retail instead of against it: don’t be afraid of cannibalization, because online you reach other target groups and ultimately retail also benefits from increased brand awareness.
- Customer experience management and review management used sensibly leads to positive customer experiences and creates real added value for the customer and the company.
Anyone who wants to go down the D2C route themselves or is thinking of introducing their own direct brand should have set the strategic course correctly beforehand. For successful implementation, all departments of the company must be involved. For more on the topic of direct-to-consumer and direct brands, contact the digitization experts at ecom consulting.
If you have any questions about customer experience management and review management, we at gominga are always happy to help!