Revolutionary Measures

Going direct – and the impact on marketing

The rise of the internet was meant to usher in a new, more direct way of communicating, including the removal of middlemen. We’d buy goods and services directly from their producers, rather than having to go through shops or brokers, cutting costs for consumers and opening up new opportunities for companies. It would be the end of the package holiday, the supermarket and the insurance broker, amongst other business types.

It is fair to say that things haven’t worked like that. While small companies can sell direct on the internet, the majority of goods and services are still bought from middlemen who bring products together, allowing consumers to compare them in a single place and then make their choice. Think of Amazon, ebay or insurance comparison sites, which are essentially old-style brokers with an updated business model.

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Why has this happened? Partly because people find it difficult to cope with too much choice – there is always the worry that you’ve made the wrong decision and also because these companies have ensured it is as easy as possible to buy from them. Amazon has one-click ordering, buttons to press that automatically send new stocks of household essentials, and voice ordering via Alexa.

However, this model is changing, at least in part, due to the rise of Direct to Consumer (D2C) brands. Companies like Dollar Shave Club, Harry’s and a plethora of mattress start-ups are all selling via the internet without any middlemen involved. They often use a subscription model – i.e. you get a delivery of shaving products, beer or food kits on a regular basis, backed up by generous introductory discounts and strong guarantees of quality (if you don’t like the mattress we’ll come and collect it and give you a full refund). They may be relatively small in the UK at present, but they tend to target younger, more affluent consumers and are therefore likely to continue to grow and spread.

These brands are also having an impact on marketing, particularly as many are start-ups that need to establish themselves before similar rivals appear.

1.Name recognition is all
It could just be that I’m their target demographic, but I see adverts for D2C shaving brands such as Harry’s everywhere I go online, in the podcasts I listen to and offline in the press. You need to create and sustain strong name recognition if you are to succeed – given the number of challengers in particular markets it is a question of first mover advantage. This impacts traditional brands, whether that is the likes of Gillette, Tesco or Amazon – they need to respond if they are to keep customers loyal.

2. Marketing is constant
Subscriptions do give some security when it consumer retention, particularly as there is an inertia effect when people don’t get round to cancelling them – look at the number of people who failed to cancel their free Amazon Prime trial before it started charging them. However, consumers, particularly of D2C brands, are savvy and are likely to be constantly checking that they are getting a good deal. So customer marketing has to be tailored, personalised and constant if you are to stay front of mind and engage with your existing consumers.

3. You need a story
You can’t create a D2C brand by just moving your product online or to a subscription model. Not only would that be likely to cannibalise existing revenues, but it wouldn’t generate the appeal of an exciting, new, internet-first brand. People want to get more than a product – they want the story behind it. That means highlighting your credentials, why you are different and what sets you apart. This could be that you buy the finest Japanese steel for your razor blades or donate mattresses to charity – whatever it is, it needs to be clear, differentiated and appealing to your target audience.

4. You need to build a tribe
Business guru Seth Godin pointed out the opportunities that the internet provides to build your own tribe – a group of people that follow your brand, understand what makes you different, act as ambassadors and ultimately buy from you. The most successful Kickstarter campaigns are those where someone with an existing following launches a product. Podcasts that spawn books or tours are another example. Essentially your tribe feels a personal connection to you, believes in your ethos and will both sign up for your new offering and spread the word to others. Building a tribe takes time, but creates a lasting customer base for your brand and all of its products.

None of these marketing tactics are new – and importantly none of them are out of the reach of traditional brands. If you want to protect your products against the rise of the D2C brand you need to look at how they are operating, what you can learn from them and how you can improve your marketing and engagement with customers and prospects.

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March 7, 2018 Posted by | Creative, Marketing, PR | , , , , , , , , , , , , , | Leave a comment