What Is Direct to Consumer Marketing and How Can it Help Grow My Business?
While you might not realize it, you’ve likely purchased a product or service from a direct to consumer (DTC or D2C) company. Maybe you were one of the first 100,000 people to join the waitlist for Harry’s razors. Or perhaps you’ve tried on Warby Parker glasses from home or gone for a run in Allbirds sneakers. These leading brands all started as direct to consumer companies.
Direct to consumer marketing is a business model where products and services are sold directly to consumers instead of through a third-party retailer or wholesaler. The direct to consumer model benefits sellers by giving them total control over the end-to-end retail experience for their product, including manufacturing, pricing, branding and marketing, packaging and shipping, and customer data and feedback. This helps companies keep costs down and build stronger customer relationships.
Although the concept of D2C marketing has been around for a long time (think mail-order catalogs), today’s direct to consumer model is a digital-first strategy that meets the increased demand for e-commerce and more authentic brand relationships, particularly among millennial consumers.
Why are Direct to Consumer Brands So Popular with Millennials?
The millennial generation (those born between 1980 and 1996) comprised 86% of U.S. digital buyers in 2020, according to Statista. And their spending power is only growing: McKinsey & Company projects that millennial income will reach $8.3 trillion by 2025.
Not only do millennials have cash to spend, but they also tend to be conscientious consumers who are more likely to patronize brands that align with their personal values. For example, the Deloitte Global Millennial Survey 2020 found that around one third of millennials have initiated or deepened relationships with businesses that balance doing good and making a profit, that have demonstrated the ability to protect their personal data, and whose products or services have a positive impact on the environment.
The total control afforded by the direct to consumer model gives businesses a direct line to customers, which means you can tell your brand’s story the way you want, ensure your customers have a great experience at every touchpoint, and build the more meaningful, authentic customer relationships that millennial consumers are seeking.
5 Direct to Consumer Marketing Strategies
While direct to consumer marketing is a great strategy for small businesses and startups, it can also be challenging for new or inexperienced business owners to implement.
While you don’t have to worry about pricey intermediaries like retailers or wholesalers with direct to consumer marketing, you also don’t get the benefits that an established retailer can provide, like brand recognition and a built-in audience. This means you’re solely responsible for building your brand and attracting buyers.
There’s no quick fix for this problem, but it can be done. Here are five D2C marketing strategies to keep in mind, whether you’re just starting out or want to grow your existing business:
1. Differentiate yourself
Figure out what makes your brand unique and use it to your advantage. Many of today’s top D2C brands (think Warby Parker, Allbirds, Everlane) disrupted their respective spaces by offering a unique solution to a bigger problem.
If you don’t have the budget to be a Warby Parker or Allbirds right out of the gate, don’t worry. Consider how you can differentiate your sales model, brand personality, or even packaging. For example, you could go all in on convenience and offer a subscription-based service.
2. Build a digital marketing strategy
Since your product or service will be sold online, you need to establish your online presence and build a digital marketing strategy to help prospective customers find your business. Your digital marketing strategy should encompass the different channels and tactics you will use to attract and engage customers, such as your company’s website, email newsletter, social media, and online advertisements. While you may not have the budget or need to use every digital marketing tactic out there, you can start by prioritizing what works best for your business and your audience.
3. Tell your story
Everyone loves a good story, including consumers. Why did you start your business? Why do you get out of bed every morning? Why should someone buy your product and how will it make a difference in their lives? Answer these questions and build a compelling story around them. Tell this story consistently across your digital channels to help deepen customer relationships and build brand loyalty.
4. Find and grow your audience
Disrupting entrenched brands is difficult. Here are some strategies for attracting customers:
- Establish a social media presence — 58% of millennials learn about new brands through video-based social media at least once per month, according to a McKinsey & Company report. Your social media presence should convey your brand’s personality and engage both prospective and current customers through memorable and valuable content.
- Start a referral program — Rewarding customers for bringing in new business is a low-effort, high-return strategy for growing your audience organically. For example, Casper’s referral program generates as many as five new customers with each referral share.
- Optimize your website — Implementing search engine optimization (SEO) best practices can help your website be discoverable by Google.
- Enlist the help of influencers and brand ambassadors — Having “real” people tell their networks how much they love your product is another low-effort, high-return way to increase brand awareness. You can even use current customers to help spread the word: Warby Parker asks its customers to create content like videos of themselves trying on new glasses. In addition to raising brand awareness, Warby Parker customers who create content are 50% more likely to make a purchase.
- Publish a blog — Long-form blog posts are an effective way to generate organic traffic back to your website. You can also use blog posts as a source for customer feedback and even research for future products.
- Practice targeted marketing — Targeted marketing is a tactic that can help small business owners raise awareness for their product or service among a specific (targeted) group of audiences. For example, targeted audiences could be specific consumers, households, professionals, or businesses depending on who you are trying to reach.
5. Nurture customer relationships
Now that you’ve started to attract customers and build your audience, you need to make sure they stick around and come back for more. Some strategies for building brand loyalty include email nurture campaigns and newsletters, loyalty and rewards programs, sales and freebies, and subscription-based services. Your customer service program also needs to be top-notch, from how flexible your return policy is to how quickly you respond to customer inquiries.
The Future of Direct to Consumer Marketing
Online shopping is here to stay: according to Insider Intelligence, ecommerce sales in the U.S. are expected to exceed $1 trillion in 2022.
At the same time, the up-and-coming Generation Z (those born between 1997 and 2012) is more likely than millennials to shop via multiple formats, including brick-and-mortar stores, Instagram, and pop-up shops, according to Influencer Marketing Hub. This doesn’t signal the death of the direct to consumer model, but it does mean D2C brands may need to diversify their sales channels to reach Gen Z consumers as this generation comes of age.
The information provided in articles and blog posts are suggestions only and based on best practices. Dun & Bradstreet is not liable for the outcome or results of specific programs or tactics. Please contact an attorney or tax professional if you are in need of legal or tax advice.