Speed and agility are giving today’s direct-to-consumer (DTC) upstarts a competitive edge over established brands. Marketing leaders at Warby Parker, Glossier, Casper, Everlane and Harry’s, for example, are laser focused on getting their goods into the hands of consumers by delivering great customer experiences and innovative marketing touches. As a result, they’re disrupting entire industries.
Their impact is being felt across consumer segments from bedding to vision to apparel and most certainly CPG. Consider this: Gillette’s share of the razor market fell from 70 percent in 2010 to 54 percent in 2016, mostly at the expense of Dollar Shave Club, Harry’s and other direct sellers. An analysis by CB Insights found that 42 separate direct sellers have targeted various Procter & Gamble brands.
So what’s their secret? “Many of these successful DTC companies have built smart operational algorithms that can practically run by themselves and deliver continuous optimization in the purchase journey,” says Nikki Mendonça, president of Intelligent Marketing Operations at Accenture. “This takes a consumer from insight to invoice 10 times faster than the established brands.”
These brands are just one example of an ongoing shift in the larger consumer economy. However, there’s a lot that CMOs can learn about marketing and operational agility from these direct-to-consumer companies.
They know the customer by using data
Almost by definition, DTC brands know more about their customers, and their direct relationship generates insights that they use to constantly iterate their efforts. “We know every single customer we’ve already reached, which helps us make more informed and sophisticated decisions,” says Jen Rubio, cofounder and chief brand officer of luggage brand Away.
Without the retail middleman, Away owns the relationship with the customer. This means that from initial demand generation to the final sale and post-sale service, the brand is gathering real-time insights to improve marketing, product development and co-creation and the overall customer experience.
DTC brands deliver some of the most innovative technology-fueled user experiences, often finding ways to make individual products personal. For example, skincare brand Curology asks customers to fill out a detailed survey and upload a selfie. In return they get a personalized skincare treatment plan from a licensed dermatologist. Similarly, hair-care etailer Prose collects 85 data points about each customer’s hair, and then runs it through a machine learning model to generate a specific formula. Another brand, Roka, allows customers to customize their performance eyewear, resulting in 42,000 product possibilities.
“We don’t just create the formula once and then you stick with it your whole life,” says Prose co-founder and head of marketing Paul Michaux. “We’re going to change it based on you, the season, whether you’ve decided to cut your hair short or color it. We take all of this into context every time we interact with the customer.”
They believe the brand is bigger than the product
Patrick Yee, CMO of Daily Harvest, which delivers superfood smoothies, soups and breakfast bowls, says it best: “Modern brands are really guided by a purpose, while traditional brands are guided by the marketplace.”
In other words, successful DTC brands stand for something more than just what they sell; they represent a clear lifestyle or philosophical ethos that’s the DNA of their brand. For example, clothing brand Everlane is all about transparency and ethics; it includes details about the factories that make its garments, how much an item costs to make and the resulting markup to the customer for everything it sells. Mattress maker Casper has built its brand around the healthfulness of sleep, going so far as to fund publications on the topic, and Away focuses on the fantasy and transformation of travel as a lifestyle.
For the marketing teams, the result of having a focused brand platform can be highly impactful. As Rubio explains, “having clarity on the overall direction and purpose [of the brand], while remaining flexible and experimental at a tactical level, has allowed us to establish and organize around concrete milestones quickly, without getting too caught up in the specifics,” says Rubio.
In other words, more agility.
They are extremely social
It should come as no surprise that DTC brands have built their brands not around traditional TV buys or big media budgets, but instead around audiences on social platforms such as Instagram and Facebook, where ad buys reward interactions and good content with efficient, targeted media.
And crucially, when a company sells direct and gathers first-party data, this becomes a feedback loop that drives even more effective marketing through look-alike campaigns. Case in point: Away founder Steph Korey has said the company made $5 for every $1 it spent on Facebook lookalike ads when the brand first launched.
Social is also an engine of word-of-mouth, of course, and DTC brands prioritize these audiences for growth and interaction. By seeing what fans are sharing, they can quickly pivot their content and resulting paid promotion. For example, sock maker Stance pours resources into finding its most avid and passionate fans and giving them a forum via its “Punks and Poets” community (especially on Instagram). Likewise, Away created custom alphabets by different artists to enhance its luggage monograms and make them more sharable on social.
They remove friction to improve decision-making
Try things. Make mistakes. Try other things. Stick with what works. Iterate. Do it quickly. That’s the essence of agile marketing as defined by DTC.
“Larger brands have trouble reaching younger audiences because they’re not as quick at testing new channels and more afraid of failure,” says Curology SVP of marketing Fabian Seelbach. “We’ve tried a number of things that didn’t work out, like podcasts and radio, and then moved on. No one lost any sleep over it.”
But none of this happens without removing friction from the marketing decision process.
“We work really deliberately to bring the information, resources and decision-making power to the front lines so that the right people have the right information and the right level of empowerment to make the best possible decisions in the most efficient amount of time,” notes Rubio.
This goes back to data and its ability to drive agility. “You need to be listening as a brand and responding to your consumer and serving your consumer,” explains Accenture’s Mendonça. “You have to be always on and frictionless, and those are all skills that the CMO and the CMO’s team have to have.”
The agility exemplified by DTC brands is not simply a matter of turning faster because they’re smaller—the standard speedboats versus ocean liner cliché. Instead, what DTC brands are showing is that data-driven decision-making can empower them to try new things and risk failure to ensure brand-marketing success.