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Understanding the Direct-To-Customer Business Model

Understanding the Direct-To-Customer Business Model

The direct-to-customer (D2C) industry has grown by leaps and bounds in the past few years, fuelled by the onset of the global COVID-19 pandemic.  

A direct-to-customer channel is a profitable way for brands to stay agile and maintain customer relationships amid changing trends. 

Today, customers are eager to establish a relationship with your brand. Research from Digital Clarity Group reveals that  52 percent of customers visit a brand’s website with the intent to purchase. 

Embracing a direct-to-consumer business model drives growth, increases revenue, and allows you to transform your consumer experience with unprecedented access to first-party data.

However, deploying a direct-to-consumer model also means directing organizational change, selecting the right team to craft a consumer-centric approach, and balancing existing relationships with supply chain partners.

Preparing your business for direct-to-customer

Businesses can prepare to meet consumers directly by focusing on four factors. 

1. Define your vision

Business leaders must identify their ultimate goal (or goals) for embracing the D2C model. They could start by building overall brand awareness or drive growth and revenue through transactional elements. Business leaders could also explore expanding into newer markets, launching a customer-facing brand, or boosting personalization by gathering actionable shopping insights.  

2. Understand the potential obstacles in the direct-to-customer model

Direct-to-customer involves an investment in technology, resources, and time. Business owners should ask themselves if they have the resources available and the organizational structure to consider opening a new revenue stream. The next step is to forge new partnerships with key stakeholders within the product, IT, marketing, sales, and service teams.

Before launching a D2C channel, business leaders need to communicate the change and find ways to strike a balance with existing revenue streams. 

3. Define success metrics

Clear key performance indicators (KPIs) will direct all brand, commerce, and channel-related decisions and help establish internal alignment. Beyond sales targets and overarching revenue growth, this may include driving repeat purchases, loyalty, or higher consumer satisfaction with your brand.

Brand awareness is an important measure of success too.  Businesses must identify success metrics early, evaluate them often, and evolve them.

4. The direct-to-customer channel must align with your company values

Your direct-to-customer channel needs to align with your brand’s overall business goals and values. 

Maintain existing B2B relationships with distributors

Business leaders must aim to deliver an experience that consumers cannot get anywhere else on their direct-to-customer channel while supporting existing partnerships with these best practices. 

Content and experiences bring consumers closer to your products, company, and brand. 54 percent of consumers expect comprehensive product information on a brand’s website. Give your customers the inside scoop with enhanced content types like detailed product descriptions, how-to videos, and trending social photos. 

Your D2C channel will provide direct access to first-party data to better understand your consumers and their shopping behaviors. This means you can respond accordingly to combat price competition, create targeted promotions, adjust product assortments, or add more personalized site elements and products.

Expand your product offerings 

A “digital shelf” gives business owners the control to show products in the best light. You can also showcase a greater assortment of products and create a special line only available for purchase on your online site.

Connect with customers through causes

Connect consumers directly with your core brand values. With a D2C channel, businesses can donate an automatic percentage of profits to a preferred foundation or charitable organization. 45 percent of customers are more likely to buy if a brand gives a charitable donation with their purchase.

Build a connected experience between retail stores and digital channels

If you’re planning to establish both digital and physical retail channels, deliver a connected experience. Focus on planning a seamless experience for your customers. 

Put customers front and center

Create a brand-first strategy that resonates with your audiences. This will ensure customers form a deeper, longer-lasting connection with your brand. 

Successful companies understand that their consumer experience is their unique value proposition. Businesses must work towards establishing a consumer-first strategy that goes beyond the transactional to connect people with products and experiences. 

Create engaging shopping experiences

The quality of the sales journey your business offers across digital channels is a key indicator of the success of the business. Access to data across every touchpoint means business owners can identify consumers as soon as they visit the website — and continuously engage them so they keep coming back.

Offer customized customer experiences

Personalized recommendations yield a 4.5x higher likelihood of customers creating a shopping cart and a 5x higher per-visit spend. Artificial Intelligence (AI) enables brands to personalize eCommerce experiences throughout the consumer journey, identifying behaviors and surfacing relevant content that makes consumers more likely to convert. 

Maintain and cultivate customer relationships

The best experience consumers have anywhere becomes the experience they expect everywhere. Your direct relationship requires consistent interactions that keep consumers coming back. Businesses should aim to consistently deliver the one-to-one relationship consumers want with a brand. 

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