Danielle Savin, senior director of digital marketing, digital customer experience at Capgemini Americas
Kristina Burbich, senior manager of digital strategy at Capgemini Americas
All eyes should be on the direct-to-consumer (D2C) ecommerce space. By selling directly to customers, brands can establish
stronger relationships with those customers, gain more data to refine offers and develop new offerings and add a revenue stream that complements existing B2C and/or B2B retail and marketplace channels.
Because D2C appeals to customers with its emphasis on a direct connection, its growth continues to trend upward, hitting $129 billion in the U.S. in 2021 and is projected to reach just under $175 billion by 2023. Consumer interest in D2C subscriptions continues to rise, too, especially among Millennial and Gen Z consumers.
Because D2C companies are making inroads with consumers, Forrester urges non-D2C marketers to study the way D2C brands engage customers. Here’s what we’re seeing.
B2C and B2B brands will continue to move into D2C
Throughout 2021, we’ve seen many companies start working on D2C initiatives, even in industries you might not expect, like packaging. There are three key lessons these companies must embrace to thrive in D2C:
- Know your objectives. It’s critical to set KPIs to know where you want to go in terms of revenue, new customers, sales conversion, cart abandonment, and other key metrics.
- Treat your customers as unique. For example, a packaging company adding D2C can use their customer data platform (CDP) to segment their customers by product type or order volume. That way, they’re not marketing bulk orders of shipping boxes to customers who want small quantities of gift bags.
- Commit to a marketing budget. D2C may require your brand to operate in new marketing channels and to speak to new customers. You’ll need a team that can translate customer data into content that connects with your target audience and helps you make progress toward your KPIs.
The D2C customer experience will continue to improve
D2C subscriptions are doing well in terms of functionality. But brands could make some improvements in terms of personalizing the experience. For example, they can let customers say, “I don’t want this every month. I want it every other month or every six weeks.” They may want specific windows for delivery or the ability to suspend deliveries while they’re on vacation. Non-D2C brands can offer these options, too.
D2C experiences will also continue to expand. For example, businesses like fitness equipment brands had to pivot last year from selling to gyms and fitness centers to reaching individual consumers with equipment at the right price and online classes. Now that we’re all used to doing more things at home, from cooking classes to yoga, those kinds of online offerings combined with in-home products will remain an option for businesses that want to add a different channel.
Social media marketing and marketplaces will help D2C brands grow
Social media marketing tailored to the brand’s audience and voice will be critical in the year ahead. To do social effectively, brands need to understand where their potential customers spend their time and what messaging works best on those platforms. It also means that brands can and should focus their marketing efforts on those specific platforms rather than generating content for every social platform. Brands’ social content needs to be authentic and based on data that reaches the audience at the right time with the right offer or message.
Marketplaces are another valuable channel for D2C brands because they capture search traffic. Even though the margins are lower for marketplace orders than D2C, these channels are essential for reaching consumers and engaging in new ways. Then you may be able to bring them over to your website to do business directly with you as your customer relationship grows.
A strong technological foundation will still matter
D2C brands that aren’t already using a customer data platform (CDP) need to adopt one in the year ahead to flourish. It’s not enough to rely on an email marketing platform for the relevant insights you need to connect with customers, understand their shopping habits, and personalize their experiences effectively. A CDP can deliver all these variables because it brings together data from your ecommerce platform, point-of-sale terminals, marketplaces, customer service, marketing, and other sales channels for a clear, detailed customer profile.
With this information, brands can better see the lifetime value of their customers, the cost to acquire and keep them, which channels they’re coming from, and what products they’re buying. When they combine the CDP data with AI and machine learning, brands can leverage real-time analytics to pivot quickly to new channels when that’s necessary or desirable. Ultimately, the technology that successful D2C brands—and other brands—use in 2022 will be tools that strengthen their abilities to unify customer data and personalize the end-to-end customer experience seamlessly.
Planning will remain the key to successful D2C launches
Every company, even those that have already seen success in the B2C space, needs to do careful planning and assessment for a successful D2C launch. That starts with assessing the technical stack to understand what it can do for D2C in its current state and where it may need upgrades. Before investing in new tech, organizations should calculate the expected total cost of ownership and ROI. Assessments typically don’t take as long as you might think. Organizations should plan for an assessment to take between two to four weeks.
Clarify your reasons for adding D2C and the goals for that expansion. For example, how fast do you want to grow the D2C channel and which markets do you want to start in? Define what will differentiate your D2C offer and the customer experience from others.
Commit to creating marketing content that will resonate with your target audience and budget for it. Organizations need to ensure their brand content stands out and reaches their D2C customers at the right moment in their journey. Consult with experienced experts who’ve helped other brands build and implement their D2C roadmap. Today an organization can launch a D2C channel in as little as 6 to 12 weeks.
D2C now influences marketing
Even if your company has no plans to move into the D2C space, it may be competing with D2C brands in the year ahead, as more of them raise startup capital and move into new niches. Knowing what D2C marketers will be doing in 2022 can help any marketing team keep pace with innovations, strengthen customer relationships and deepen loyalty.
Kristina Burbich and Danielle Savin contributed to this report.
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