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How To Counter Direct-To-Consumer Threats


How To Counter Direct-To-Consumer Threats

Since 2015, the string of veteran retailers like Diesel, Gymboree, Rockport, Brookstone, Payless and others that have filed for bankruptcy, or folded into the sunset, has become a grim infographic.

Sprung from pioneers like eBay, Amazon, and Alibaba, the new direct-to-consumer (DTC) model that feeds enterprises like Warby Parker, Casper mattress, Taylor Stitch, Freshly, Porter Road and others to come, meets consumers face to face on their smartphones and laptops.

The most adept DTC marketers watch their screens in real time, doing A/B tests on the run — the striped shirt versus solid colors, lipstick versus brushes, naked pink versus YInMn blue. They are running BOGOs versus discount codes, pushing for signups and spreading their learning across a spectrum of real time hooks.

Instead of thinking from quarter to quarter or week to week, DTC marketers think moment to moment. Because consumers are shopping moment to moment.

Time has collapsed and a single hesitation can be fatal.

Because of lower marketing costs for newbies entering established markets thanks to a “free” Internet, new DTC contenders have risen in consumer packaged goods, fashion, beauty, home furnishings and virtually every category. Even sleepy categories like mattresses and eyewear got a wakeup call that has turned into a fire alarm. Some traditional brands have burned to the ground.

Direct-to-consumer also threatens shopping malls, as consumers conduct their retail therapy online. (At our house, especially during COVID shutdown, it’s easy to judge stress levels by the number of Amazon and FedEx packages piled at the front door.)

To understand what’s really happening, it’s time to look at the Mother of direct-to-consumer, Amazon dot com. “[Everything] Amazon is doing is data-driven,” writes Cheryl Wischhover in a Vox article. “When they make a decision around the structure of a detail page or the structure of the browsing experience on the site, that’s all been A/B tested.”

“They’re doing 10 different versions, testing, and picking the one that resonates the most with consumers,” says John Ghiorso, founder and CEO of Orca Pacific, a consulting company for companies wanting to sell successfully on Amazon. This has ultimately led to Amazon creating its own products in some verticals, adding to the notion that Brands are dead.

But companies without customers are not Brands, they are simply companies on the shill. Without story, generic products on their own are meaningless. (In traditional terms, Amazon itself is building a house of brands.)

Old habits die hard. Advertising is a cult and it is difficult to get your head out of traditional marketing norms. But when 90% of consumers today view advertising messages as 100% lies, it’s time to reconsider.

The Five-Star Revolution

Without question, everything leans toward feeding five-star reviews. (Do you spend $10 million on a Super Bowl spot? Or $10 million building customer reviews? Don’t ask your advertising agency.)

Getting User reviews impacts everything. Not just product quality, but distribution, doorstep delivery, customer service, and follow ups to make sure customers are happy and (then) nudging your happiest customers to take time to review you.

Following these customer moments is more motivating than tapping conventional customer experience. While convention has been to push product into the pipeline and watch it go, for most companies these days that process isn’t going far enough.

And none of this means flipping your $10 million advertising budget over to Influencers.

Instead, getting terrific reviews might mean fine-tuning your CRM, putting more empathetic hires on your sales floor, updating your packaging, or deep diving into the analytics that influence any and all of these decisions.

One approach is to focus on zealots and potential zealots. Your zealots will inform what’s sticky for them. Potential zealots are the low hanging fruit who can reveal friction points. These two cadres can tighten your focus and reap timely results.

“The people who know how bring together their brand’s true promise with their products in a seamless experience are the ones that win in DTC,” says Peter Sena at Digital Surgeons. “Ultimately the way it comes together is because of Brand. If I can buy it on Amazon, I have no reason to buy direct. The only differentiator is experience.”

Which means that, if direct-to-consumer is hitting you hard, the fundamental reason is you.

IRL (in real life) experiences have become shoddy. Tons of intentional marketing can be derailed by surly or disgruntled floor staff. Brilliant examples of community have risen, been celebrated and then put on autopilot. Just ask Sears.

Brick And Mortar Retail Lives On

But store retailing is by no means over and done.

Japanese shoppers, for example, look forward to the attentive customer service found in their bricks and mortar. So online selling is not catching on for Japanese consumers as rapidly as in the U.S. In fact, there is even a Tower Records (remember them?) selling vinyl records in Tokyo.

South Korean luxury department store The Hyundai, is also upping its game. They asked London-based Universal Everything to invent a series of video artworks for a 30-metre-high LED video wall covering the Hyundai facade in Seoul.

Luxury retailers know they must enthrall, transform and upsell what online shopping cannot provide — a multisensory experience that stimulates and excites shoppers. And brings them back.

One thing is certain: Friction points are personal, omnidirectional and moody. There is no universal solution. Performance marketing with all of its acquisition/retention/resurrection tactics is in your face, annoying and sometimes even unthinking.

Another part of this might be mindset. Direct-to-consumer is more startup, more entrepreneurial minded — these aren’t just keystrokes, they are new companies with new technologies and fresh philosophies. More Tim Ferris than Jim Collins. The go go go entrepreneur is agile, proactive and seeks partnerships, workarounds and intentionally builds to break things. The new world is thinking in terms of bit torrents, the old world is thinking in terms of sales meetings.

Managers, manage. They slog through the heavy burden of hierarchies, existing channels, existing relationships while twisting the handles of pre-existing thinking.

The old is massively disadvantaged by the new.

In the end, these interactions are merely reflective of the changes in consumer habits, IRL changes that anyone who wakes to the slurry of emails, Facebook, Instagram feeds and Amazon Prime (good morning, Alexa!).

The very best companies will design and build an ecosystem that meets their consumer at every possible touch point. They will be online and on the street. They will be multi-channel, multi-sensory and multidirectional. If they survive long enough to try it out.

CUT TO: A small room in a faraway place that could be Bucharest, Dublin, or Trinidad. Wall-mounted computer monitors cover real-time IRL. The screens are panoramic, filled with graphs, charts, streaming numbers, sentiment analyses, click rates, blended data, hot and cool zones. Artificial intelligence and learning engines are both active. Each monitor has its own human, operatives wander between screens. The room is a tumult, voices intent, feverish, shouting numbers. Fingers work keypads. At the back of the room, in a darkened corner, a woman surveils the scene from her leather chair, an oversized iPad on her lap. Her slim fingers shuffle charts across screen geographies. Her head snaps to attention as she looks up and stares at a screen. Her eyes seek outcomes. She barks an order. The room responds. She smiles, reassured. Success. Her face glows as she looks back down at her iPad and moves on. The future is already here.

Contributed to Branding Strategy Insider by: Patrick Hanlon, Author of Primal Branding

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