02 December 2022
Five ways a DTC model can drive brand growth
Growth has always been a key goal for any business with long-term ambitions. And whether your brand is a rising star or has been serving customers loyally for many years, implementing or optimizing a direct-to-consumer (DTC) strategy, through which you can sell your products directly to the consumer, can help accelerate your company’s journey to becoming the next big player of its industry.
Below, we look at five ways in which DTC can boost your brand’s growth.
1. A simplified supply chain means less exposure to delays
When you don’t need to rely exclusively on retailers or multiple third parties for sales, the process to get your product to consumers becomes instantly more streamlined and simplified. With fewer steps between your shelves and your customer’s doorstep, your brand is less likely to experience delays or setbacks that can damage the shopping experience of your consumers. And with a simplified supply chain, any delays that do occur can be more easily pinpointed and quicker to resolve.
2. Reduced intermediary costs allow for budget redistribution
Reducing or eliminating your reliance on retailers and third-party sellers naturally frees up a part of your budget that can be allocated to other areas of your operation that need it more. Perhaps you want to enhance your logistics capabilities by offering faster shipping and creating a better experience for your customers or want to beef up your performance marketing team to reach new customers or new markets. With DTC, the money you were previously investing in partnering with retailers can be put to work somewhere else in your organization and boost growth in specific areas.
3. Access to first-party data gives you in-depth insight into your customer base
DTC operations give you access to a treasure trove of first-party data gleaned from a range of channels including your brand.com site, social media and own apps. This means you can analyze your customers’ shopping behaviors and direct interactions with your brand to understand their needs and preferences better and, in turn, shape future strategies or refine ongoing ones based on this insight. This availability of first-party data can also open the door to a more effective personalization of shopping experiences, be this in the form of offers and communication around products relevant to the individual, product recommendations based on past purchases or interactions, or even new product development based on purchasing patterns and opinions of your customer base. When more than 70% of consumers expect personalization from the brands they shop with (McKinsey), having access to this data can be crucial to continued and increased success.
4. Liaising directly with consumers means closer and deeper bonds
Having a direct line of communication with your customers not only means a better understanding of their wants and needs, but also a bigger opportunity to foster long-term trust and loyalty and forge lasting relationships. Strategies such as subscription schemes and loyalty programs can help DTC brands turn a one-time buyer into a returning one. However, it’s through creating a differentiated shopping experience compared to third-party retailers or marketplaces that DTC businesses can keep customers coming back to their sites for more. This could mean something different for different brands, whether offering a broader range of products or special or limited-edition items that can only be purchased on the brand’s website, providing educational and relevant content on products and having a superb customer service that makes shopping easier and more efficient. These approaches, in turn, can have a positive impact on revenue, as the costs associated with customer retention are not as high as those linked to customer acquisition.
5. Streamlined operations translate into increased agility and speed of innovation
Having a DTC channel means being entirely responsible for everything from logistics to marketing in that space. And while this may feel overwhelming for those who are just beginning their DTC journey, being in the in the driver’s seat has clear benefits. Because the decision-making process involves fewer stakeholders external to your brand, your operations gain agility. This means that you can implement and test different strategies and set-ups more quickly and change course at speed should you find a better way. This allows for ongoing innovation and enables your brand to remain flexible and change with the times as needed.
Growth can take a different shape from one brand to the next: for some, it might mean expanding to international markets; for others, it could signify enlarging internal teams or innovating when it comes to processes or products. DTC can help achieve these targets and pave the way for long-term growth.
No matter what growth looks like to your brand, if you are looking to launch or optimize your DTC strategy, joining forces with a trusted partner is crucial. At THG Ingenuity we’ve been helping brands such as ELEMIS, Vita Coco and Neal’s Yard Remedies expand and refine their DTC operations successfully for nearly two decades. Get in touch with us today to see how we can support your brand’s growth journey today.
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