According to a report by Direct-to-Consumer Purchase Intent Index, more than 80% of end consumers are expected to make at least one purchase through a D2C business within the next half a decade.
Businesses across the globe have had their eyes on DTC or D2B models for a while now. By the time the products or services reach the end consumers, the products tend to lose a sense of original identity and brand ownership.
In such cases not only is there a lack of brand credit but also a reduced profitability rate. The environment of middlemen or retailers tends to give the original creators or manufacturers less authority or control over how the ultimate consumer experiences.
In addition to decreased control over the customer experience, it has also become challenging for businesses to gain a competitive edge over their competitors leading to a lower brand impact. This is where D2C pops up.
Table of Contents
What is D2C – Direct to Consumer?
The past decade has witnessed numerous businesses making shifts from B2C business models to D2C business models.
From clothing businesses to companies selling fresh produce D2C marketing and D2C selling campaigns have become more prevalent than ever.
But what is D2C or DTC? In simple words, DTC, D2C, or Direct-to-consumer refers to a business model where manufacturers try to sell their products directly to consumers without the help of any middlemen, wholesalers, distributors, or retailers.
According to a report by scale fast, about 26% of consumers believe that an improved security and user experience on the payment gateway facilitates their consumption at D2C.
The manufacturers or producers of goods take up all responsibilities from shipping to payments to advertising to marketing.
How Do Direct-to-Consumer Companies Approach Marketing?
One thing that differentiates D2C from B2C or a traditional business is the control and ownership factor. D2C businesses take full authority over end-consumers and king of brand experience they go through.
Here D2C businesses are free to make their own businesses calls and other decisions that will help them keep their customers engaged and connected to the brand.
From building customer relationships to delivering value and a seamless experience to the consumer D2C businesses take absolute control over their entire customer base.
One of the best marketing approaches that D2C businesses use to build their customer base is through customer engagement strategies.
These consumer engagement strategies can include enhancing support channels, integration of self-serve portals, adding hints of personalization or customization to customer interactions, integration of omnichannel support, and developing catchy and interesting marketing content.
Why Are Brands Going Direct to Consumers?
With decreased brand identity, traditional B2B businesses lose a foothold in the e-commerce space and also fail to make personalized connections with customers leading to lower levels of customer engagement and customer satisfaction. Here are a few factors that explain why brands these days are going direct to customers –
1. A complete lack of authority
From baked goods to Clothing stores, more and more brands are opting for DTC or D2C models. When businesses employ middlemen or retailers in order to sell their products or services it takes a toll on the manufacturer’s control over the retail experience.
Losing control over the selling process leads to a situation where the retailer gains absolute control over supply chains, customer engagement strategies, marketing strategies, reputation building, etc. Not having control over the above-mentioned factors can significantly and more importantly negatively impact brand presence.
2. Decreased brand visibility
Lack of authority or control over the end result means fluctuations in brand visibility, and most of the time these fluctuations are intense and might lead to a complete lack of brand visibility making customers completely unaware of the brand.
Though manufacturers try to take control over in-store product showcases or displays, the end results or executions are usually different from what is expected by the manufacturer. This lack of control over how the product is advertised or displayed can cause fluctuations in usage and sales as well.
3. Impact on profit margins
Another major reason why brands want to sell directly is that the chain of retailers and middlemen often leads to low-profit margins.
By completely negating the middlemen, manufacturers and producers can easily target consumer prices that are below the retail price but still above the wholesale price which will ultimately lead to better profit margins. In addition to the increased profits, businesses can also cut down on expensive intermediary fees.
4. Better hold on customer experiences
When handing the products off to the retailers and middlemen, manufacturers lose complete control on creating a positive customer experience.
A lack of customized or personalized customer experience can often lead to non-prioritization of a particular brand that means not only are the manufacturers losing out on creating a demand for the product they are also losing out on profits.
This can also mean that competitors who lean towards DTC or D2C have a better chance of creating a demand and brand impression on the target demographic.
How Kapture’s DTC CRM is Helping D2C Brands –
- Kapture’s CRM helps D2C brands decrease the number of tickets being raised and at the same time helps them build a more independent customer base through its Intelligent Self-service portals or knowledge management systems
- Allows brands to provide multiple touchpoints to customers across various channels. The omnichannel support strategy helps D2C brand agents handle tickets across various channels on a single screen.
- Makes it possible for DTC brands to cater to customers’ needs round-the-clock. This not only leads to better ticket collection but also shows customers that the brand truly cares about its consumers.
- Enables brands to leverage interaction analysis to better understand the company’s first call resolution rates allowing room for better strategic decisions.
Benefits of a Direct to Consumer Strategy
From reduced selling prices to improving brand visibility, customers, as well as brands, get to experience numerous benefits when opting for a D2C strategy. Here are a few examples –
1. Better customer experience
Middlemen and retailers always find it difficult to keep up with the ever-changing expectations and demands of customers.
Knowing who their customers help brands curate customer support strategies and even products and services according to the expectations of customers.
This not only adds up to the customer experience but also helps brands create customer-centric businesses. In addition to this, the direct brand relationship also allows businesses to deliver consumers not only a personalized customer experience but also the ultimate brand experience.
2. Increased profitability rates
Businesses are free to make and follow marketing and sales strategies that cater to their supply chains and distribution frequencies giving them much more freedom than B2C brands.
In addition to this DTC brands also get direct access to consumer data and insights which can help them identify any possible setbacks or understand if there is any space to improve their services. This helps businesses maximize profitability rates and brand visibility as well.
3. Increases brand visibility
When businesses opt for B2C marketing where they do not have direct access to retail stores, etc they tend to lose control over how their products and brand are being displayed and presented to the end-consumer. This can result in two scenarios one where the brand becomes more and more invisible and two – where the brand fails to keep up brand dilution leading to lower profitability. Either ways businesses tend to face huge losses and significantly lowered brand visibility. But thanks to DTC’s direct outreach businesses are able to take full charge of their visibility and at the same time provide customers with dedicated shopping environments.
8 Tips to help you build an efficient Direct to Consumer or DTC Strategy –
- Optimize your content regularly according to the latest SEO trends.
- Develop chatbot personas and customer personas.
- Leverage omnichannel strategy and provide customers multiple touchpoints.
- Run ads on major networking platforms like – Instagram, Facebook, and Youtube.
- Start a customer community where customers can come together and share product experiences.
- Run regular ad campaigns to keep up traffic.
- Increase customer engagement levels on the website through discussion forums.
- Invest in the right d2c customer service tools for better customer support experiences.
D2C companies often face a lot of issues when it comes to competing with retailers or fulfilling orders in a timely fashion. Selling directly to consumers means handling a wide range of tasks from manufacturing to conducting post-purchase follow-up sessions.
Handling customer support operations and making sure there are data-driven marketing and sales strategies are a few other things that D2C businesses will have to pay a lot of attention to.
Without the right technology, keeping an eye on all the departments and workplace operations can be extremely hectic and chaotic in D2C businesses. But thanks to CRMs like Kapture streamlining operations becomes easy and efficient. To know more about how you can leverage CRMs for your DTC or D2C business click here for a demo.