Six ways DTC brands can leverage first-party data

As consumer interactions on digital and ecommerce channels increase, brands are more and more aware of just how important data is. Read on to discover how to harness the power of data through DTC channels.

January 04, 2023

6 mins read

Celeste Rivas

With direct-to-consumer (DTC) commerce sales set to reach over $213 billion in the US alone by 2024 (Insider Intelligence), brands are increasingly seeking to use this model to better connect with their customers and meet their demands. In doing so, brands are gaining access to first-party data with the potential to shape the future of their business.

First-party data, which is data consumers share with your brand directly, is essential to acquiring insights on audiences and their behaviors — especially with third-party cookies currently set to be phased out in late 2023 — and DTC channels are one of the most successful channels for brands to collate it. Your brand may already be gathering data from a range of DTC environments, such as own-brand websites, apps and marketing emails, but are you truly putting it to work to pave the way for your brand’s growth? Here are six of the ways you can make first-party data work hard for your brand.

1. Understand the difference between reporting and insight

While this may seem basic to brands who have been working with first-party data for a long time, it may not be as obvious to those who are starting out; plus, even the most experienced brands sometimes overlook the nuances between reports and insights. Reporting helps you to understand what has happened; insight will shed light on why it happened. For example, a report for your beauty brand shows a sharp increase in sales for a new moisturizer. Based on this data, your insights team may tell you that in the days after this item was featured in a tutorial by a well-known beauty influencer, the traffic on both your social channels and your website spiked, leading to increased sales. Being able to report and gather insight at speed is key to giving your brand flexibility to adapt and pivot strategies to respond to consumer trends and behaviors.

2. Align your data collection strategy with your business goals

Having clear business objectives will help you understand exactly what data you need, and where to look for it. A clearly defined data collection strategy can then act as the bridge between setting your objectives and achieving them.

For example, your food and beverage brand’s H1 goal is growing its returning customer base. Data from your subscribe and save program can show you how often your customers are signing up and what and how often they are ordering, as well as offer insight into which products are the most popular and are driving new subscriptions. This will enable you to create promotions to keep your already loyal customers happy and design special deals for those customers that have bought these popular items before but have not subscribed, supporting you to focus on your objective.

Remember that collecting data just for the sake of it will more likely create extra work for your teams rather than help you achieve your objectives, so ensure you are able to separate the must have from the nice to have.

3. Assess the true value of customer acquisition

Customer acquisition isn’t solely about the first transaction a consumer makes with your brand – or even the second or third. The true value of acquisition lies in knowing the potential lifetime value of a new customer. First-party data allows this value to be discovered. By analyzing the spending patterns of your customers, you may for example find that you are able to justify increasing spend on marketing and acquisition-driving activities in the short term. It may at first appear odd to acquire a customer at a net loss based on the value of their first transaction, but if you know the full value they can bring to your brand over time, this spend becomes rationalized.

In highly competitive markets, such strategies can be key for success as, by harnessing your first-party data, you are empowered to outspend your competition in the present with the knowledge that net profits will be achieved over the course of the new customer’s lifetime.

4. Have a plan for putting your data to work

Data is not just about reporting on what’s happened before; knowing how to action and leverage your data findings is just as important as collecting and analyzing the data itself. For example, reporting has shown a lift in year-on-year revenue, and your insights team is telling you this is due to a sharp uptick in purchases of your most expensive product.

Could you use that insight to isolate and target your ads at customers most likely to convert creating spend efficiency and ensuring returns become more predictable.

Can insight help you to identify and leverage an item’s surge in popularity on social media or a social commerce platform? Early identification is key and can be done by indexing product demand to compare high and low-volume SKUs on a level playing field so surges can be seen before the item reaches the top seller spot.

This is where data plays its role in shaping the strategic activities of your brand, allowing you to react to immediate trends, or leverage insights to craft medium to long-term activities, from ensuring sufficient supply of an increasingly popular product, to planning a peak season with the highest performance potential.

5. Add value to your customers’ journey while making the benefits of data collection clear

Now more than ever, customers value brands that are transparent. They are more likely to share their data with brands if they understand what their information is used for and how this can improve the shopping experience according to Salesforce, 61% of consumers are comfortable with companies using relevant personal information transparently and beneficially - up from 52% in 2020.

Give your customers the facts and clearly state what data you collect and how you intend to use it, highlighting in the ways they can benefit from data collection. For example, let them know that by sharing their data with your brand they can obtain a special discount for their birthday or receive a notification letting them know an item in their wish list has gone on sale, or even making it clear that by sharing their data you will be able to contact them about products and services they are actively interested in.

6. Personalize your offer

Consumers are increasingly aware of what brands are communicating to them, and over half have said that without personalized experiences they would not remain loyal to a brand. Consumers want brands to know them, and for this, first-party data is crucial. Every time a customer interacts with your brand on a DTC channel, they leave a trail of data that can shed light on their shopping behavior and habits. This will enable your brand to understand what they are interested in, what they want to see more of and what failed to engage them, offering you the opportunity to personalize their experience with your brand. This can be done on an individual level or within the segments you split your audience into, with each approach helping to reduce the risk of clicks on that dreaded unsubscribe button.

At Ingenuity, we live and breathe digital commerce and DTC, and have spent almost two decades harnessing the power of first-party data to launch and grow brands at scale. Learn how we can support your brand in DTC and first-party data management by contacting us today.

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