5 Things to Learn From L’Oreal’s D-to-C Transformation

The consumer experience has never been more vital for the success of your brand. If you’ve mastered selling through your channel partners, now you have a new challenge ahead: shifting to direct-to-consumer (D-to-C), with the global pandemic accelerating this transformation. Product-based marketing doesn’t work anymore. Consumers are no longer thinking in terms of just buying a product. In fact, 86 percent of consumers are willing to pay more for a great customer experience. In my recent interview with Shree Seshan, director of IT digital data management and strategy, L'Oréal, it was fascinating to learn about the beauty brand's D-to-C transformation.

Designing Your D-to-C Transformation

While businesses understand the importance of D-to-C transformation, many are failing to or not able to achieve the results they want. Here are the top five things businesses can learn from L’Oreal when designing their D-to-C transformation:

1. Always stay customer-centric. 

It's important for the business to identify the key driving force for the transformation and define the road map accordingly. L'Oréal wanted to take a holistic approach to consumer experience vs. just focusing on product strategy. It started with a "data-driven marketing platform" to help build personalized consumer relationships while proactively consolidating meaningful consumer data beyond buying habits and transactional data, like skin type or preferred hair coloring system. This is where L'Oreal started transitioning from marketing programs to defining future products and innovations based on consumer preferences, which will eventually lead to personalized products.

L'Oréal has maintained the key driving force of "customer centricity" while going through the transformation. If the business deviates from the main goal during the journey, it might not achieve the same results. For example, a business might start with customer centricity as the key driver, but during the journey its focus shifts to cost saving. This will not lead to the same results because the main goal of customer centricity is loyalty, while the goal for the latter is to attract "price-conscious consumers" who are likely to churn if they find a lower price elsewhere.

2. Understand your customer journey. 

L’Oréal’s omnichannel consumer touchpoints span from website to mobile app to the traditional face-to-face consultation experience in a digital setting. The goal was to provide a frictionless transition between searching and buying while orchestrating seamless customer engagement. To deliver a connected and consistent customer experience you need to understand the consumer journey to identify different touchpoints to collect data crumbs and provide actionable insights to deliver an engaging experience. Most businesses focus on individual touchpoints, moments of truth, and channels to deliver the best experience. However, it's also important to analyze the whole journey, the entire experience that the consumer has with your brand because that’s what matters to them. Connected and integrated channels increase the impact of individual touchpoints, ultimately increasing your marketing return on investment by delivering a more cohesive brand journey for your customers.

3. Obtain system rationalization and stakeholder buy-in.

The key to success for any transformation is a well-defined road map and buy-in from all the stakeholders. To define the road map, businesses can start by analyzing the current systems in place and stakeholders who will be directly affected by this initiative. In collaboration with key stakeholders, you can then define the milestones and role of the stakeholder to avoid any surprises or delays during the roll-out phase. L'Oréal had to consider how its transformation would affect its global, multibrand organization with a large network of longtime retail partners. It has 35-plus brands, each with its own way of operating. Over the years, fragmented consumer information was spread across various systems within the organization as well as with partners. To build the foundation for its D-to-C transformation, L'Oreal started by integrating all the systems and, most importantly, connecting holistic and consistent consumer data to feed all the consumer touchpoints.

4. Consider your technology stack. 

Technology is the backbone of any good D-to-C initiative, and its consideration should be guided by the key business strategy. For L'Oréal, the role of technology wasn't just to gain more efficiency, but rather to create a foundation for customer intimacy. This also meant replacing some of the legacy technologies with modern, cloud-native, multidomain, and responsive technologies that can evolve to address customer, competitive or regulatory requirements in real time.

5. Build a solid foundation on connected data. 

The D-to-C transformation relies heavily on consumer data. When you choose the D-to-C route, you have the opportunity to build real relationships with the end consumer and to capture more data about their preferences, motivations and drivers. You're no longer selling to an unknown entity through a channel partner; instead, you hold the data on their behaviors and interactions. It's important that data collected from all the touchpoints are connected, allowing you to offer a personalized and consistent experience.

A recent study from McKinsey suggests that consumer buying behavior shift to digital is here to stay. Pivoting and transitioning to the new strategy or transformation isn't easy if it's not built on responsive technology and data strategy as the foundation.

Swati Sinha is a senior director of product marketing at Reltio, a cloud-native master data management platform.