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Many consumers have shifted to digital storefronts, and many direct-to-consumer brands have benefited from this change. For example, Peloton generated $4.02 billion in sales in 2021, but the switch to e-commerce is only one of many components that have helped D2C businesses grow.
This article will discuss the strategies Peloton, and other successful D2C brands have implemented to grow and maintain their customer base. We’ll also touch on how the D2C model can be leveraged to the advantage of B2B-based businesses and sellers.
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Selling unique and high-quality products
Patrons who shop online have access to a seemingly infinite number of vendors, while consumers within a physical store are limited by their supply. D2C businesses with unique products have grown over the past few years because customers want products they can’t find in stores. Plus, D2C brands can invest more money into the quality of their product because they do not have to pay third parties to host their items. Thus, their product can be of higher quality for the same price as their competitor’s items found in stores.
Quip illustrates this point. Yes, electronic toothbrushes already exist, but Quip has distinguished itself from other products because of its features. The company’s system is built around making oral hygiene easier for their customers.
The product’s distinctive features include a subscription that keeps track of toothbrush head replacement, an app to track oral hygiene habits, and the toothbrushes have a stylish and high-quality look. They were so successful that Quip has been able to add other products like toothpaste and floss to itsr offerings, which have even made their way into major retail stores like Target.
Intentional marketing
“For DTC entrepreneurs, the way people discover new products and services has changed drastically in the past few years (even in the past 12 months). You have to meet your customers where they are. My recommendation to founders building in this space is always to spend time understanding this,” stated Sofia Laurell, founder of Tiny Organics.
D2C brands that have had success with customer acquisition and retention use intentional marketing. These merchants gather data to understand their audience better and refine their marketing tactics. As a result, ads are more personalized and superior at enticing consumers.
The meal subscription company HelloFresh focuses its marketing on millennials, and its target audience is more receptive to user-generated content. This content may be sponsored or affiliated and come from content creators without association with the product’s company or everyday users. User-generated content allows consumers to find products and services organically and gives them an idea of what it’s like to use the product or service before purchase. Also, merchants will learn about the first impressions of products and their advertisements.
Although indirect, many consumers like to comb through reviews to understand if there are major benefits or flaws to a product or service. Merchants can gain valuable feedback and information from customer reviews. For example, insights from reviews will aid in product upgrades, customer service changes and the identification of common concerns/questions.
Adapting to consumer needs
D2C brands continuously go through changes and embrace evolution. As a result, they have been able to maintain and grow their consumer base with changes that can happen at all levels of the business. Sometimes alterations are made to items, for example offering products in different colors. Other times, adjustments are made to operations such as how a company tracks its receipts or its marketing tactics.
Another area of evolution has focused on values. D2C businesses have total control over the distribution and production process, so they can select sustainable and environmentally friendly practices. These companies have seen growth due to their choices because customers want to support companies with similar values. One case comes from Imperfect Foods. Its mission is to reduce food waste, so its customer base quickly emerged from people with similar interests.
It’s also worth noting that data from D2C interactions can be applied to B2B customers as well, both for creating more personalized customer experiences and for improving products. This can result in B2B companies having greater control over their customer relationships and branding.
Leveraging D2C for B2B in this regard starts with identifying customer segments and then asking yourself key questions about your customers; what they are buying and how often, what they need but are not currently receiving from your company, and how any of your customers have been forced to pivot within the last six months to one year. Then, taking this information and applying it to a B2B-model where instead of selling directly to customers, you’re selling directly to businesses who are serving those customers.
Using a subscription-based check-out model
Physical and digital markets both encounter the obstacle of window shopping. Some users even go as far as putting items into their cart but fail to follow through. Some of the most successful D2C businesses have implemented a few strategies that have increased their check-out completion rates and boosted sales.
Many D2C brands have opted for the subscription model, which means there is only one time when users must complete the check-out process. Some subscriptions auto-renew while others run for a set amount of time. Regardless, D2C businesses have been able to boost customer retention and revenue with subscription models.
Other winning approaches include a simplified check-out process (usually only one page long), prominently displayed subtotals, mobile compatibility and acceptance of various payment methods.
Wrapping up
The competition in e-commerce is demanding and difficult to contend with. Nevertheless, high-quality, one-of-a-kind products are able to compete, offering a vast array of choices now available online and offline. Moreover, intentional marketing gives brands an advantage because it focuses on the consumer rather than what the business believes is important. This personalization means that their audience is more likely to respond favorably to the advertisement. The effectiveness of this personalized approach is a key takeaway for B2B sellers.
Furthermore, D2C companies have learned to adapt and evolve as the market changes. Patrons are on the lookout for what’s new and what supports their needs and desires. The subscription-based model, for example, is oneof the most viable and lucrative options that emerged. Users no longer have to return to stores (virtual or physical) to obtain refills on easily overlooked items. Now there’s no need to worry about forgetting replacement toothbrush heads. Subscriptions reduce how often consumers need to go through the check-out process as well.
Direct-to-consumer brands vary widely in their products and services. Some choose to focus on lifestyle, such as Peleton, while others focus on making life easier for the consumer as do HelloFresh and Quip. However, all of these companies have been able to achieve growth and increase their revenue thanks to the core strategies discussed in this article.
Kiara Taylor is an expert on the integration of finance and technology. She writes about the impact of both micro and macro trends on global finance.
