When asked why a brand such as Nike would go DTC, here’s what
Brian Yarbrough, a research analyst at Edward Jones had to say, “DTC allows them to
control their own destiny, showcase product on their terms instead of the
retailers, [and provides] a great avenue to test new product.”
Brand after brand is jumping on the DTC bandwagon, cutting out interference
to a direct conversation with consumers. But, just “being there” is not
enough to actually do DTC successfully.
Michael Kors recently announced the
closing of up to 125 DTC stores
due to significant declines in sales. Michael Kors Chief Executive John
Idol commented that the brands’ difficulties stemmed from “a difficult
retail environment with elevated promotional levels” and a product and
store experience that had gotten a bit stale.
Taking the necessary steps to understand, and constantly re-evaluate, just
what consumers want from their DTC interactions is the requirement all
companies need to remember if they choose to make that shift.
Proctor & Gamble’s, Gillette brand re-launched its DTC program with a greater emphasis on meeting consumer demands. The newly
repackaged,
Gillette on Demand offering allows consumers to order their razor blades with just a text—or,
no action at all via subscription. And notably, the company also took
consumer sentiment and a changing market landscape to heart when deciding
to
lower its prices by 12%. Gillette spokeswoman
Barbara Diecker commented, “We are fully aware of the challenges we are facing…”
Get the Fundamentals Right
A successful DTC strategy is based on one fundamental principle —
listening to the voice of your ever-changing customers, trusting their
wisdom and acting on it!
In the course of over 16,000+ hours of VoC research interviews conducted by
our firm, ERDM, consumers told us
repeatedly, that spray and pray marketing won’t cut it…engagement and
communication has to be personalized, relevant and competitively differentiating;
- Consumers perceive personalized engagement as essential. They believe
that it
forges strong ties with a company when there’s an almost-certain
problem or outreach from competition.
- In every communication method or channel with consumers,
deepening relationships has to be the base upon which all other actions
are based.
- Customers evolve over time. They want brands to
engage them to such a level that they opt-in to tell the brands about
their changing needs and preferences so brands can change the value
they provide and stay relevant and valuable.
- Consumers do not want to be “marketed to.”
This type of messaging is not perceived as differentiating or helpful.
Case in point, Nestlé, which traditionally has been reliant on retail
channels for sales, announced that it will be seeking new DTC routes.
According to CEO
Ulf Mark Schneider, the company is now looking to establish “a direct channel of
communication with our consumers… to be sure [customers] have the service
levels, the communications, and sometimes even the direct sales.”
First Steps
So, as brands are rushing to go direct to consumers, what are the
essentials before plunging in?
1. Recognize that being in front of your consumers is not the same as having a meaningful relationship with them.
In
order for a DTC effort to be successful, it must be based on perceived
value and relevancy.
Melissa Parish, VP and research director at Forrester noted, “brands need to analyze all
of the contextual signals they’ve got, while remembering that your
audience’s values are also part of their context….Aligning with those
values can be your competitive differentiation.”
2. Understand that your consumers evolve over time.
To remain competitive,
brands need to
leverage insights from all touchpoints in order to stay a step ahead
and be flexible and nimble
enough to demonstrate that they are listening and know when it’s time to
change.
Penn State partnered with ad agency Wunderman in a study that noted.” 79 percent of respondents [would] only consider
buying products from brands that show they care and understand their consumers.”
3. Put anticipatory practices in place to be prepared for consumer
interactions—both good and bad.
Going direct to consumers means new and expanded communication. Companies
must have the means to quickly engage and respond.
Vala Afshar, Chief Digital Evangelist at Salesforce noted,”
65% of consumers expect companies to interact with them in real time.”
As brands seek to go direct, they must remember that at the core of any
good two-way conversation there must be listening, trust, perceived value, and responsiveness. Without
these core practices, brands can take their products direct to consumers,
but consumers may not welcome the outreach.