Pulling the Right DTC Levers: 2023 Edition

Scott Hughes, EVP of Strategy at Critical Mass, speaks on the state of DTC today


Photo by Towfiqu barbhuiya on Unsplash

Critical Mass
Digital
Calgary, Kanada
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Scott Hughes
EVP Strategy Critical Mass
 

Direct-to-consumer sales (DTC) have become as much a buzzword as a behemoth. Headlines proclaiming DTC is “over” scare brands away, as both big and small look for the newer, better way to operate in a rapidly shifting world. But the idea that DTC needs to be reversed, or rejected altogether, is a mistake. In fact, despite the hard times faced by many of the DTC unicorns of yesteryear, legacy retail brands with a longstanding habit of evolving ahead of the curve (Nike is a well-known example) have enjoyed considerable success in emulating various DTC strategies and tactics. Why is that?

In short, DTC is still full of stuff that works. Early DTC winners won over huge numbers of loyal followers because they offered unsurpassed customer experiences—better channels of communication, expanded services, and more fun and function to satisfy their audience’s needs. They understood their customers extremely well and delivered what they wanted.

In marketing shorthand, these brands pulled all the right DTC levers. Those “old” strategies do not need to be thrown out; in fact, if you sell a product or service, you have the right (and probably responsibility) to put them to work.

 

DTC Levers That Should Already Be in Everyone’s Toolkit

It seems to be a universal truth that when we’re handed new tasks, the old tasks don’t go away. We all just have more to do now. So it goes with DTC. Marketers, including my own organization, have been talking about the following DTC levers for a few years now. They’re not new, but they’re as critical as ever. So, before we dig into the new levers, let’s look back at the ones that have served brands well.

  1. Challenge category legacy: Shake off the old ways of doing things, especially when old pain points are so commonplace they’re hard to see.
  2. Performance over price:  Price doesn’t make most brands different, but a high-performing, quality product does. Market that quality.
  3. Appeal to unreasonableness: Expectations are running high—go higher.
  4. Rethink retail: Physical locations and digital experiences are all touchpoints in an ecosystem—think of them that way.
  5. Be purpose-driven: People buy what you sell but not until they believe in what you stand for.

Again, those levers aren’t new news, but rather things we’ve been talking about for a while. If brands aren’t doing them, then they’ve got catching up to do.

 

Three DTC Levers Brands Should Start Pulling

It goes without saying that data needs to drive the DTC shift (that’s the overall context here). The ends are velocity, and the means are signals from search and traffic data, social listening, and media performance, among others. Data reveals the right places, spaces, paradigms, segments, messages, and moments.

Having said all that, here are three more levers we’re coaching our clients to pull.

 

Lever 1: Fans vs. Followers

Overall, the DTC velocity in consumer experience is about purpose-driven product personalization, and fans versus followers. The value of a like is what drives community. Just look at the rise of TikTok to see the impact of personal engagement. The celebrity endorser is not a familiar face, but with micro-influencers, the impact of the creator on product ROI is unmatched. A real fan of a product with a small, sincere following is the key to meaningful engagement, driving loyalty and purchases. Consumers will help you build a resonant message and believe in a brand that believes in itself.

 

Lever 2: Community Engagement

Product aside, could it be that the TikTok micro-influencer from Lever 1 was still less interesting than the actual unboxing? How you use your community, not just your product, is an important consideration in a well-orchestrated ecosystem. 

Either way, being solely obsessed with vertical integration is over. Passive consumption (not to mention wasteful email marketing) is a thing of the past. Because across many channels, strategic use of communication with first-party data is more essential than ever. Pulling on community engagement blurs the lines between company and consumer, service and value. Listen effectively to your engaged consumer base to adapt and create the best possible result.

 

Lever 3:  Amplifying Ecosystems Through Partnerships

With shifting brands and customers, creating community across myriad touchpoints for a “seamless cross-channel experience” may seem daunting. For smaller brands, it could be buying real estate in high-traffic locations, or partnering with a big brand for a quick pop-up, while bigger brand just go straight to DTC.

If the market proves too expensive, a big brand may worry they risk losing the whole customer base, but they can pool various channel assets to target much wider audiences. Interweaving their broader brand portfolio keeps people moving, extending relationships to feel like more of an ecosystem. They may not even realize they have overlapping customers. This extension of services provides protection, either by remaining top of mind, or by revealing another growth stream.

DTC brands are getting pummeled, but legacy brands need to use DTC thinking. Despite facing the same macro situation as more classically DTC brands, they need to realize they have an advantage. Check the boxes, pull the levers, and streamline strategy to amplify how you understand your audience and put it to use.