Digital Disruptors: DTC & Omnichannel Brands
Traditionally, Consumer Packaged Goods (CPG) companies have depended heavily on their retail partners to handle the last mile to the consumer. John Nash, CMO of RedPoint Global discusses how this may have worked well in the past, brands now want to expand their reach to meet the connected consumer wherever they happen to be.
Traditionally, Consumer Packaged Goods (CPG) companies have depended heavily on their retail partners to handle the last mile to the consumer. John Nash, CMO of RedPoint Global discusses how this may have worked well in the past, brands now want to expand their reach to meet the connected consumer wherever they happen to be.
When a brand completely hands over the last mile to a retail partner, they miss out on the most important data to be gained from the relationship: customer behaviors and preferences. This is why many CPG companies are moving away from having only traditional retail partnerships and choosing instead to establish direct relationships with customers through digital means. Recent data shows that e-commerce – including direct-to-consumer (D2C) – will account for 50% of U.S. CPG sales growth through 2025.
A modern brand competing in today’s environment simply cannot rely on a single distribution channel. Rather, by engaging via digital, DTC channels such as a website, mobile apps, social channels, SMS texts, IoT devices and more, brands will earn an abundance of customer data to deepen their understanding of consumer behavior, preferences, and intent.
CX as the new Battleground
The reality is that customer relationship are now digital-centric. Digital channels continue to be the source of most retail growth and will soon influence most retail purchases: Forrester estimates that by 2022, e-commerce will account for 17% of total retail sales.
By focusing solely on digital channels, DTC companies have gained more control over their product lifecycle and marketing, resulting in lower costs and fewer obstacles in getting their brand message across to consumers.
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Subsequently, they have also developed stronger relationships with customers. In fact, 82% of CPG brands have said that selling DTC improved their customer relationships.
The new battleground for DTC brands? The customer experience. These brands have reduced the number of steps it takes to reach a customer, so they must demonstrate that the data collected is being put to good use. The consumer will judge this on whether they receive a personalized, compelling experience regardless of the channel that they are using at any given time.
The Balance Between In-Store and DTC
However, consumers are also demanding a holistic omnichannel experience, and this includes retail. Retailers with omnichannel strategies have a 91% greater annual customer retention rate, according to research by V12.
Giving the consumer more flexibility will drive revenue growth and retention from the added convenience of a consistent omnichannel experience – i.e. allowing customers to visit a retail location before purchasing online or giving them the option to buy online and pick up in-store. This digital/ physical alignment is the beauty of an omnichannel retail strategy. To that end, we’ve seen some once DTC-only brands embrace this concept by opening pop-up locations.
If brands choose to go this route, the most critical factor to success is keeping the customer experience consistent across all touchpoints – including the physical ones. This is only achieved when all systems and marketing programs are communicating with each other to ensure that each interaction informs – and is informed by – every other interaction in real-time.
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Control Every Mile of the Dynamic Customer Journey
Whether only focused on DTC or leveraging a blended digital/ physical approach, brands must be in control of the full, integrated customer journey. How? The foundation resides in a comprehensive, single view of each customer that takes into account data from all platforms and touchpoints.
This ‘golden record’ of each customer should include behaviors, interests, preferences, needs, purchases, and intentions compiled from multiple customer engagement systems and data sources. With this information, brands can create a 360-degree customer view that persists over time.
The customer journey will always be fluid and constantly evolving, with consumers changing their shopping habits regularly. A precise and current golden record is key to driving real-time decisions that are highly relevant and personalized and orchestrating those decisions across all touchpoints. It’s up to today’s brands to gather, analyze, and execute on data from all customer-facing channels – whether digital-only or digital and physical.
