Exploring the future of DTC at Direct Currents
At Direct Currents this past April, Faraday gathered some of the most forward-thinking minds in the DTC space to facilitate conversations around brand-building and growth marketing strategies.
Over drinks and hors d'oeuvres, attendees from brands like Birchbox, Crabtree & Evelyn, Hubble, and Vroom chatted about their various marketing strategies, what was working and what wasn't, and how they're looking to expand in the future.
Later in the evening, we heard from Maria Molland, CEO of THINX, and a panel of executives from leading DTC brands Warby Parker, Burrow, Away, and Leesa. Moderated by Digiday's Aditi Sangal, the speakers discussed mission-driven brand strategies, omnichannel growth, and the importance of leveraging data.
Building a mission-driven brand
In a time when people are inundated with ads from DTC companies across every channel, it's not enough to simply put product ads in front of consumers and expect them to convert. Brands that are growing intelligently have realized that the most effective way to reach new customers is to lead with their brand missions, rather than traditionally straightforward product marketing.
Direct Currents keynote speaker Maria Molland spoke on how THINX is focused on revolutionizing the feminine care industry by making sustainable menstrual products that can benefit women on a global level. More than just a feminine care brand, THINX has made their mission the basis of their marketing strategy.
THINX and the other brands represented on the panel focus heavily on social media as channels to help build their brands because they realize that developing a strong presence on those platforms can have a massive influence on consumer trends. The media versatility and wide audience on Instagram in particular have proven to be useful resources for mission-driven companies looking to grow a loyal customer base. But more importantly, social media gives a brand the ability to convey that their customers shouldn't just invest in their products as commodities — they should invest in the brand as a lifestyle.
Direct Currents panelist Alex Kubo, Head of Intelligence at Burrow, said, "We're taking a much more conservative approach to building our brand and building a resonance — and kind of an aura — around the brand, rather than just preaching products and value props." Showing consumers that buying a couch can be more than just buying a functional piece of furniture has proven to be key to growing their brand.
Implementing omnichannel growth
Of course, mission-based marketing on social media can't be the sole driver of any brand's revenue if sustainable growth is the ultimate goal. Implementing and optimizing omnichannel campaign performance is instrumental to a successful growth strategy.
Intelligently growing brands have been diversifying their marketing channels as they hit the ceiling of what Facebook's audiences can do for them in an increasingly costly and competitive ad space. Mattress company Leesa has been leveraging direct TV ads as an acquisition channel, originally thinking it would be a "first-click equivalent." Nick Stafford, former COO of Leesa and recent founder of DTC growth agency Belay, noted that the addition of TV to their marketing strategy is actually "a very important part of the customer journey … More people were engaging with us in some other form, but then the TV was the thing that drove the purchase."
Brands are continuing to find value in podcasts as well. Different mediums allow for varying types of engagement — while Instagram is visual and often video-based for brand and product marketing, podcasts bring an audio perspective that Kubo believes "can really help create more of the voice of the brand, whereas channels like social and search are kind of like your opportunity to pitch one value prop."
Leveraging offline initiatives is becoming an increasingly important piece of DTC brands' brand-building and omnichannel growth. Burrow, Away, Leesa, and Warby Parker have all opened brick-and-mortar stores or partnered with larger retailers to push their products offline and give customers unique experiences with their brands.
Implementing offline tactics has come under fire recently, though, as traditional retailers have shuttered thousands of stores the last few years as in-store business continues to decline. In light of this so-called "retail apocalypse," it makes sense to question why the brick-and-mortar approach to retail is becoming a standard practice for DTC brands.
Panelist Brian Magida, Warby Parker's Director of Performance Marketing, explained how the company's first customers would come to the founders' apartment to try on their first few pairs of glasses. What felt like a ridiculous thing to ask of a potential customer became an intimate experience their initial base found valuable. Years later, having opened almost 100 retail locations nationwide, Warby Parker continues to offer personable offline experiences that have helped to grow their customer base and establish their prominence in the eyewear market.
Unlike a traditional storefront, pop-up shops and showrooms give brands the opportunity to explore new markets at a lower risk. Recently, female-founded brands LIVELY, FUR, and Blume collaborated to put together a shoppable pop-up event in New York City, featuring a panel of the brands' founders.
Despite the success these kinds of pop-up shops and events have had, brands still need to be mindful about where they place these temporary offline initiatives, because there's not always the same draw as a full-fledged brick-and-mortar presence.
This intentionality around omnichannel initiatives extends to partnerships as well. Retail partnerships can be a significant source of revenue (and often built-in brand marketing) for DTC brands, particularly those without a brick-and-mortar presence of their own. Partnerships provide the legitimacy of an established brand backing their products, an alternative to going it alone with a pop-up shop or physical retail launch.
These days, partnerships between larger retailers and DTC brands can come in many forms. Nordstrom partnerships have become a great avenue for growth in brand awareness and in revenue for brands like THINX, Dagne Dover, and Bonobos. Meanwhile, Leesa has teamed up with West Elm as their exclusive mattress partner, placing more permanent products in West Elm stores across the country.
Perhaps the newest iteration of brand partnerships has come in the form of temporary retail that provides a single space for multiple vendors. Texas-based Neighborhood Goods and New York's Showfields are havens for consumers seeking out DTC brands in a retail setting. These spaces house a rotating selection of brands, from Rothy's to Hims to Solé bicycles to Eight Sleep, offering companies that may not have a traditional brick-and-mortar strategy the chance to gauge the reception of a physical retail presence among consumers.
No matter how brands go about leveraging offline initiatives — whether through partnerships or a physical retail presence or even a subway ad — implementing a true omnichannel strategy doesn't mean throwing money into every channel with the hope that there will be a significant ROI based on the pure volume of the retail or marketing efforts. It must be executed intelligently, with intention.
The importance of capitalizing on data
Leveraging customer data and market research help brands make smarter decisions and scale their growth more efficiently. Data drives personalization in ad content, where brands place retail locations, what product lines are introduced, and so much more. And while many like to say they're leveraging their customer data to the fullest extent, the truth is that most brands have only hit the tip of the iceberg.
To effectively build out a mission-driven brand with a loyal customer base and sustainably growing revenue, brands must focus on understanding who engages with them, where there are opportunities for expansion, and accurately measuring the impact of their marketing and growth strategies.
Brands that have a loyal following have built trust with their customers, whether that's through selling high-quality products, serving up relevant ads, or providing helpful customer support. This trust requires that brands know who their customers are and what they want as consumers.
Chou spoke to how Away leverages customer insights and primary market research to expand product lines that align with their customers' interests and create marketing content that resonates with their audiences — efforts that can greatly increase customers' trust in a brand.
Similarly, Burrow works hard to understand what drives people to engage with their brand. According to Kubo, "Part of [brand-building] is making sure we're speaking to the right people, identifying the right audiences, and hitting them with the right value props at the right time." This goes for marketing initiatives that aim to scale both online and offline revenue.
In line with this thinking, Magida advises brands to "really focus on measurement, and be true about measurement," particularly when it comes to evaluating campaign and retail performance. When brands intelligently leverage data, they're making sure to consistently measure the impact of their efforts. Experiment and see what works — and more importantly, figure out what doesn't. It's imperative that brands make an effort to learn from the data they collect from various marketing campaigns and retail initiatives, and to employ those learnings effectively.
Often, customer data shows brands that their audiences are more likely to engage with them if they don't have to seek the brand out. Meeting customers where they are both in their journeys and in real life can have a significant impact on a brand's growth strategy.
As mentioned earlier, Leesa's use of direct TV ads was initially expected to drive immediate purchases. But because Leesa was smart about attribution and measuring their marketing efforts, they figured out how crucial this channel of outreach was to engaging customers who were actually already on their way toward making a purchase. The TV ad that found them right where they were at home was the final push they needed.
All in all, a brand can have a great mission and push omnichannel growth, but without carefully considering customer data, third party insights, or primary market research, success is often limited.
Is DTC more than just a launch strategy?
There's been plenty of talk about the direct-to-consumer business model ultimately being unsustainable — great for a brand's initial launch, but not necessarily a smart long-term growth strategy.
The Direct Currents panelists' responses to these claims varied — Stafford doesn't believe any brand has to be a DTC "purist" and encourages companies to seek out growth opportunities that are "positive from a margin point of view," while Chou thinks it's possible to effectively grow an online-only DTC business. And these differing views are obvious in their brands' approaches to growth.
In the end, it seems only time will tell whether or not a strict DTC path can lead brands to success and stability.