In recent weeks much has been reported on the gradual resumption of trading on the High Street and the retail casualties for whom it’s come too late. Covid-19 has already compounded challenging trading conditions for many retailers, with those lacking a robust ecommerce presence (or even none at all) bearing the brunt.
Meanwhile, Corona has expedited further growth for online markets. All consumer trends sparked by the lockdown (home office equipment, sports and leisure goods, garden furniture, cookware etc.) would all have once upon a time meant a trip to the department store. Instead, as early as April Amazon were reporting sales as high as $11,000 per second and a surge in third-party sellers signing up to their marketplace. A decade ago I was doing my first tour of duty in grocery ecommerce, widely sneered at back then, with securing a delivery slot now the holy grail of surviving lockdown. Times change.
Dissecting the winners and losers so far proves interesting, however there is perhaps an even more critical niche in all this – the increasingly urgent need for brands to develop their own direct-to-consumer (DTC) offering. For some brands the goalposts have moved overnight, with the historic definition of sales success achieving broad distribution and multiple listings by retailers (be it online or bricks and mortar) now crippled almost overnight due to a lack of autonomy to influence their own sales.
Whilst all this makes for a compelling case for brands who primarily operate a B2B2C model by selling to retailers/distributors, embarking on their first pure B2C platform can be a daunting prospect with a perilous learning curve. Here we outline three of the key considerations for a successful DTC launch amidst the current pandemic.
Pre-existing distribution and retail
The challenge: Alarmingly, the competition for your shiny new retail channel will be your current customers who stock and sell your product(s). It’s vital not to either jeopardise these relationships nor cannibalise your sales. When done right a DTC offering can successfully grow total sales in both volume and value. Although you should be the foremost authority on your product, as far as the internet is concerned your new website may not be. There will be no pre-existing footprint online with google rankings, and you will be competing with other stockists on paid search bidding. Without careful consideration and the right expertise, brands can easily pay over the odds as they learn how to successfully execute paid media activity such as PPC whilst pushing up CPM costs and their stockist CPAs as well. DTC marketing ROI is poor and your retailer’s own budgets produce fewer sales as well – no one wins.
The solution: Involving agency expertise prior to launch is paramount. A DTC project is a resource hungry, high-focus workstream and a very common pitfall is for brands to engage an agency/involve their current one only after or as it launches. SEO is a classic example: agencies should work in tandem with the site build to ensure best practice is in place from the start. This can expedite your rise up the search engine rankings, whilst avoiding additional dev costs further down the road when you may not have the resource to implement them. Few things are as soul destroying as having to rebuild or tweak something you’ve just invested in and taken months to deliver.
The challenge: Launching a new site will involve many pinches of salt when forecasting. You will need to model what traffic to the site will look like in its infancy, and also structure an educated estimation of likely conversion rates on this traffic. In terms of your existing insights on your customers, you may be fortunate enough to have a detailed understanding of your social following or reliable CRM data, but this will be of your end user or even an aspiring owner or fan as opposed to purchaser data. Similarly, the insights you have gained from your marketing to date may also have limited application.
The solution: Once again, early engagement of agency support will be key. With a brand-new website, the majority of your traffic will likely be reliant on implementing an effective online paid media strategy across PPC, Social and Display. Challenging your agency partner for detailed modelling on traffic they can achieve for you will provide valuable insight in forecasting sales based on conversion rates. Similarly a good agency partner will be able to help you navigate audience data and insight on the best way to reach those who will not just own your product but buy it online, and crucially from you as opposed to elsewhere. From our own experience, Space & Time can attest to the difference this can make and our extensive insights portfolio from the likes of TGi, GlobalWebIndex etc. has been a big asset in supporting our clients in driving their ecommerce revenue profitably.
The challenge: If to date your primary model has been B2B2C it’s likely that the majority of your marketing budget and activation has been to drive brand awareness and consideration so that mental availability is established, aiding conversion with your retailers over your rivals (and rightly so). There’s nothing wrong with this and for many marketers the lack of direct influence over what happens within the retail environment can be a real frustration. At Space & Time we are no strangers to how important brand equity can be in driving sales and our work with Positec (Worx) is a great example of this. However, the tactics, timings, channels and KPI’s you’re familiar with may have little relevance when the campaign objective turns from brand recall to a conversion goal within a set CPA target. Similarly, the message may shift and evolve from ‘buy our product’ to ‘buy our product and also buy it direct from us instead of elsewhere because…’
The solution: Ultimately a cohesive and omni-channel approach will be required here in order for any and all marketing messages to be integrated appropriately. As an example, you will need a clear vision of the USP for buying from your brand directly as opposed to one of your retailers. Your media and creative agencies will need the expertise to leverage this CTA across the correct channels and employ new or historically less significant ones which will become essential to you, such as retargeting. As an example, if it is a price incentive, planning and execution will need to consider how this will contradict or run alongside any message around quality or premium to avoid contradiction. This level of diligence is essential and one we regularly employ with clients. It may be easy to get high levels of engagement due to a product or brand’s desirability/aspirational nature, but the focus on mitigating wastage and driving sales rather than just clicks/likes is what allows us to achieve commercially successful CPA’s.
Expertise and Resource
The challenge: In launching a DTC proposition, your requirements from an agency can change overnight. Are your SEO partners familiar with your ecommerce platform e.g. Shopify? How much DR and conversion experience do they have over the ATL brand campaigns you’ve been running together? Can they provide service across all the new channels you may now need? How will the advance of AI and voice search influence how your product or service is bought? Equally important is reviewing your own internal capabilities: your existing marketing team will almost instantaneously face new objectives or their KPIs may change in terms of priority such as from reach to CPA.
The solution: Early engagement with your agency/internal stakeholders here is key. Having these conversations in advance to qualify what have vs. what you’ll need should feature within scoping out the DTC project. In some cases, you may need to re-tender your agency partners and possibly in only one or two areas. At the same time, it’s important to build this process into your roadmap. If you appoint third parties via recruitment, this can take weeks or months in some cases which may impede the agility you need to launch a DTC offering amidst the current climate. Likewise, any internal or external training you may require will be needed in advance to equip your team with the knowledge to vet/qualify any new prospective third parties. All agencies have a hefty responsibility to remain current and abreast of the market. At Space & Time we’re no different. Increasingly valued by our clients is our continued investment in their own training and support, building upon our own award-winning training for our team. Be it our immersion sessions with our ad partners such as Google, Facebook etc., or increasingly the bespoke programs we provide based on their development requirements. Whoever you currently work with, it is worth exploring how they will either meet or upscale to your changing needs as early as possible and planning to remedy any gaps in tandem with your DTC launch roadmap.
If engaged at the right time, the right agency partner(s) can play a pivotal role in the successful delivery of your DTC project and launch. Be sure to challenge your agency on their eligibility to support you – both for the current challenges you face and how they will help guide you through your future growth plans as traffic and sales continue to scale upwards.
At Space & Time we have experienced real success in building genuine, deep partnerships with clients, avoiding an ‘us and them’ or ‘black box’ approach. The more transparent and integrated we are, the better our working relationship with clients will be. Our own set up is geared to encourage complete media agnosticism and an omni-channel approach to digital marketing, in order to deliver an exemplary client and customer experience.
To learn more about how we can help you adapt your DTC marketing strategy, please don’t hesitate to get in touch.