Coordinating the efforts of the sales and engineering teams can be a challenge. The marketing team can be a key asset in helping coordinate both teams and share information between the two. However, for the marketing team to be successful they need to have access to consumer data.
When selling directly to the consumer, highly detailed data collection is possible. Having their own DTC channel allows a brand to see things such as:
- Which pages customers are visiting the most.
- How much time is being spent on each page.
- Which products each customer is purchasing.
- Geographic location of customers.
- Information entered when creating their account such as e-mail, ethnicity, and age.
78% of customers are more likely to buy from retailers with targeted ads according to a 2014 Infosys Survey. Collecting extensive data will allow brands which are developing these direct-to-consumer channels to further refine how they target their customers.
The ability to collect emails whenever the customer registers on the website is a major benefit when comparing direct-to-consumer to other channels. When selling through a retailer, the retailer may collect e-mail addresses, but these addresses never reach the brand. As a result, any direct marketing efforts via e-mail must go through the retailer. However, when the e-mails are collected through a DTC channel they can be used for many purposes. Two of their most essential functions are alerting customers of sales or new products, and surveying customers.
Alerting existing customers before via e-mail of an upcoming sale or product launch can generate additional revenue and gain loyal customers. Prospective clients have a 27% chance of buying after their first visit, and a 54% chance of buying after their second visit. So, if a sale or promotion entices them to come back and view the website, customers are more likely to make a purchase in the near future.
Surveying customers can be one of the best forms of receiving feedback and gaining a perspective on where your company needs to improve or adapt. Surveys sent after a client makes a purchase can be very helpful because a customer can describe their shopping experience and point out any issues which may not have been thought of previously. Also, if there are changes being considered, sending out a survey to see how customers would react to them could refine the changes and safeguard against backlash.
The information acquired by collecting this data and conducting these surveys can also be relayed to the engineering and sales teams to know how the product needs to be adapted, which products need to be promoted, and how sale prices can be adjusted. The information allows the engineering or product development team to adjust the product to satisfy customer needs. Information received through surveys about how the product can be enhanced can be valuable in creating a better product. The sales team uses the information collected to know which demographics to target and how the customer’s shopping experience can be improved. The goal is to use this data to improve brand loyalty and customer retention, as well as to allow the brand to gain insight on what it is already doing well, and what it is lacking.
When selling through a retailer or distributor, brands don’t see direct customer feedback or interaction. For example, if someone asks their friend where they got their shoes, the answer might be “at Footlocker” and mention nothing about which brand of shoe they bought. If a consumer always purchases their shoes at Footlocker or their clothes on Amazon, they aren’t loyal directly to the brand, but rather to the retailer. Not having that brand loyalty can hurt the brand because they are still having to compete to acquire a customer’s interest every time they are shopping through that retail channel.
Customer retention is much easier and cheaper than customer acquisition. A study conducted by consulting firm Bain & Company alongside Earl Sasser of Harvard Business School in the year 2000 showed that a 5% increase in customer retention could increase profits by anywhere from 25%-95%. In today’s fast-paced environment where consumers don’t want to shop around, or take the time to look for other brands, and are more likely to purchase from those they are already comfortable with, brands could see an even greater increase in profit. Also, it costs 5 times as much to attract a new customer than to retain a current customer. In addition, existing customers spend 31% more and are 50% more likely to try new products. These factors all advocate for a direct-to-consumer channel that allows the brand to communicate with directly with the consumer.
Direct-to-consumer channels also offer a safe environment to test new products before sending them to a retailer. If the brand realizes there is an issue with the product, they can immediately stop sales, issue refunds wherever necessary, and directly address customers. Whereas if the brand is selling through a retailer, it may take days or even weeks to correct the issue.
Increased customer engagement also leads to increased customer retention and brand loyalty because when consumers are browsing the brand’s website they are not being enticed by other brands as they would on a retailer’s website.
Sometimes when marketing is handled through the retailer, messages can be misinterpreted or altered. Misinterpreted messages can result in the brand reputation being impacted in a negative way. DTC channels allow companies to represent themselves in a way they see fit and make changes quickly before any damage is done.
A direct-to-consumer channel allows for companies to collect the necessary data, address the customers directly, and adapt their company’s goals to fulfill the needs of the customer.