A seamless connected digital experience is a hallmark of the most successful consumer goods companies. Manufacturers that have embraced e-commerce along with traditional channel partners have also succeeded, with 50% of their revenue coming from digital channels. Yet now is the time for manufacturers to add a direct-to-consumer (D2C) option, as it can provide benefits such as extended market reach, better management of customer relationships, and better control over the organization’s brand image.
This is especially true in the small- to medium-sized businesses (SMB) segment, where larger sales teams and more channel partners are typically required to reach more customers. While larger marketing and sales teams may help improve sales, it does little to improve the customer experience.
With multiple approaches and technologies to choose from, and acute competitive pressures, organizations can easily invest in technologies that do not address the best experience for the customer base. So before organizations rush to create D2C capabilities, they should plan a direct-to-consumer approach that is sure to resonate with customers.
Overcome Traditional B2B Marketing and Sales Challenges
Organizations with a B2B focus have long enjoyed a consistent revenue stream despite minimal contact with the customer. Products and services are sold via dedicated sales teams (often third party), partner channels, and distributors. There was no concern about customer interactions and touch points during the purchase and ownership journey. While this approach has worked well in the past, it has drawbacks:
- Manufacturers do not know the customer’s experience and feedback.
- Marketing, sales, and services workflows are disconnected.
- The customer base is limited to the capabilities of traditional marketing and sales channels.
- There is potential lack of empathy and limited customized interactions.
- Diminishing brand image due to inconsistent customer support and interaction.
Implementing a direct-to-consumer channel will help companies minimize these drawbacks. But there are hurdles to overcome when beginning direct interaction with the customer. Many organizations with traditional B2B marketing models may not fully understand what is required for a D2C transformation. This unclear understanding can get an organization off track. As with any major IT endeavor, companies should start by creating strategic alignment with the entire organization – a lack of alignment often leads to funding divergent technologies.
Behind this transformation is a change in customer needs and expectations. To craft the best response, start by focusing on the customer rather than technology. Define what the customer wants and needs, and then find the best technology to meet those needs. This will ensure that the transformation will build engaging customer experiences that lead to high customer loyalty.
Finally, pressure to keep pace with competitors can tempt companies to rush through some or all parts of the D2C strategy. To overcome this temptation, clearly sequence all digital programs with the “crawl, walk, run” approach. This will promote investing in the right technologies and allow for adjustments to be made along the way.
Four Strategies to Enter the Direct-to-Consumer Space
When properly planned, entering the D2C space can prove highly successful for manufacturers. For example, a leading technology company that improves people’s health and well-being through innovation created a single integrated D2C website available in more than 20 countries. The objective was a unified journey from product browsing to finalizing a purchase. On Black Friday (the Friday after Thanksgiving in the US), the company saw a total of 2.2 million visits and processed 72,000 orders, 99% of which were completely touchless. This was a 174% increase vs. the prior year. This example illustrates the positive impact a direct-to-consumer channel can have on the company and the consumer.
There are four strategies that can help manufacturers ease into a D2C journey:
1. Product Strategy: Start with a set of products which can be sold through an online catalog. Add the entire product line once the infrastructure is in place. When creating a digital product catalog, consider these scenarios:
- Enable a quotation process via e-commerce to capture consumer expectations.
- Create product bundles for a complete solution.
- Provide CPQ capabilities allowing customers to choose options.
- Expose the complete product catalog and include a wish list of all manufactured items that are sold via partner channels to predict future buying preferences.
2. Channel Strategy: Customers want a consistent experience. Creating a robust omnichannel strategy with different offerings is crucial. Define great omnichannel experiences for customers by considering these tips:
- Unify data across all teams for a consistent, data driven experience. Data should include the customer’s cart, wish list, and even offline interactions.
- Empower employees with information and tools that showcase product capabilities. Access to all information allows employees to provide best-in-class customer service.
- Build personalized relationships using interactive capabilities of e-commerce to show the products in action and provide personalized assistance. This helps build a strong relationship with the consumer.
3. Market Strategy: The aim of a D2C model is to reach as many customers as possible in a large market. But before diving in, employ a ‘crawl, walk, run’ strategy to prevent risking too much capital. To choose the right market:
- Conduct market research and competitive analysis.
- Explore partnership models with all e-commerce channel providers like Amazon.
- Adopt human centred design to analyze current sales models in the target geography – avoid channel conflicts.
- Technology Strategy:Avoid investing in technology platforms without defining a centralised technology roadmap and organization wide KPIs and ROI matrices. Follow these strategies to define technology needs:
- Building D2C capabilities around data and analytics. The identified data should be collected, sanitized, and relationally stored to allow its seamless movement enabling the personalized and sustainable relationships that lead to customer loyalty.
- Integrate the IT landscape to become a building block for microservices based on the application architecture. Provide the end-to-end D2C capability required by both the organization and customers. Separate the frontend and backend, to allow data exchange interfaces.
- Give preference to platform scalability. Scalable products are a game changer when organizations want to increase customer base.
The Benefits of Direct-to-Customer Channels
B2B manufacturers have been slow to embrace and implement direct-to-consumer initiatives. It is a significant investment and can be challenging to have the right vision. But it is estimated that by 2023, ecommerce will account for 22% of global sales – up from 14.1% in 2019. Clearly, ecommerce is gaining momentum.
Consider these benefits when offering a D2C channel:
- Selling directly allows consumers access to the entire product line, whereas individual channels only have an assortment
- Consumers are willing to pay 17% more for products from companies known for great customer service
- 66% of customers said they would be loyal to a brand if they had an ongoing relationship
- 61% of consumers would willingly provide information to brands that provide optimized experiences. Collecting more consumer information directly allows manufacturers to understand consumers’ demographics and quickly respond to changing preferences.
Seamless, meaningful customer experiences are possible with a well-planned D2C e-commerce strategy. A D2C channel allows manufacturers to define and manage customer relationships, provides better control over the brand image, and increase customer loyalty. And that leads to more revenue.