What is D-to-C, and How Can Your CPG Company Leverage It?
Historically, large consumer packaged goods (CPG) companies have relied on TV ads and retailers to reach consumers. Today, however, many CPG companies have begun speaking directly to consumers, engaging with them like never before through owned digital channels. This shift has allowed brands to take control of the consumer experience themselves.
Direct-to-consumer (D-to-C) models are changing the CPG industry from the inside out and providing brands with the power to forge more interactive, dynamic and personal relationships with consumers.
Consider Unilever’s $1 billion acquisition of D-to-C entrant Dollar Shave Club or Campbell Soup’s $10 million investment in D-to-C startup Chef’d, for example. These moves show that CPGs are seeing the unique value in D-to-C channels and capitalizing on them to create loyal customers.
What is D-to-C Marketing?
So what does “direct to consumer” mean, exactly, and why is it important?
When implementing a D-to-C model, a company produces its product in its own facility and then distributes it through channels that it owns, such as an e-commerce website, social media, or a branded retail store. This can work in almost any industry and eliminates the need for brands to rely solely on wholesalers.
A D-to-C model is very different from the traditional CPG model in which a brand engages with consumers via retailers and TV ads and relies on retail sales and trade marketing to stay relevant. Although a D-to-C model doesn’t necessarily sever ties with retail channels, it does shift the balance of power and puts a brand face-to-face with its customers.
Consumers are drawn to brands that provide great experiences across every channel and touchpoint. If CPGs utilize D-to-C channels effectively, these brands will be able to own the entire consumer experience instead of relying on others. Even legacy household name CPG brands need to take advantage of the opportunity to speak more intimately and authentically to shoppers via D-to-C channels — especially with newer brands disrupting the CPG industry.
With D-to-C marketing, CPGs can get closer to consumers, build relationships, and inspire trust across channels. In turn, they can increase sales, engagement and loyalty. This is exactly why brands such as Casper, Allbirds, and Quip have seen such amazing success — they’ve disrupted legacy industries by providing quality products coupled with direct connections with consumers.
How to Expand Your CPG With a D-to-C Model
There are new horizons and D-to-C trends for CPGs looking to forge greater relationships with consumers hungry for more personalized shopping experiences. If you’d like to start exploring D-to-C channels, there are three strategies that can streamline your journey:
1. Be clear about your business objectives.
You shouldn’t dive into a D-to-C model just because everyone else is doing it and you’re worried about being left behind. Instead, establish clear business objectives and strategic values before you start investing in D-to-C channels. Setting definite goals and then evolving to D-to-C channels is the best way to make sure you see return on investment as soon as possible. After all, when you own the entire consumer experience, you can easily incentivize the types of behavior that you want to see from your customers. That said, it’s important to remember that this approach to D-to-C channels might not make sense for every product. Consider how your customers normally shop for those products and whether each one is a good fit for a D-to-C channel.
2. Understand the full scale of your D-to-C channels.
When opening up your business to new channels, you need a way of seeing the forest for the trees. Rather than zooming in to one particular channel, spend time mapping out the larger scale aspects of your D-to-C model. This will help you set goals that are achievable and relevant to your ideal consumer experience. This might be as simple as enabling multiple touchpoints along the consumer journey. When you look at the full scale of your D-to-C efforts, you’ll be able to see where you can make better use of consumer insights to create more meaningful experiences.
3. Create an omnichannel experience.
Instead of relying on retailers to sell products, brands should enable purchases across channels. This is key to the D-to-C experience because it allows consumers to engage with your brand and buy products how and when they want. This can include contact with traditional retailers — it doesn’t have to be controlled end to end by your first-party brand channels. Find an omnichannel balance that works for you and your consumers, then evolve as needed. Otherwise, failure to optimize each touchpoint of the consumer journey will yield negative results for your brand. The more you can optimize each touchpoint, the more positive the results will be for your brand.
Moving to a D-to-C model might feel like a big leap into the unknown for your brand. CPGs have lived in a traditional setup for a long time and have relied heavily on retailers for their structure, budget, and connection to consumers. Investing in D-to-C channels doesn’t have to feel like diving from the highest board — it can simply be the next stage in your evolution as a brand, bringing you closer to target audiences and creating loyal customers.
Diane Keng is the CEO at Breinify, an AI-driven platform that helps enterprise brands collect data and create personalized digital experiences for consumers.
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Diane Keng is the CEO and co-founder of Breinify, an AI and predictive personalization engine that helps brands curate dynamic, meaningful experiences for their consumers at scale. Diane is on Forbes’ 30 Under 30 for enterprise technology and has been featured in The Wall Street Journal, HuffPost, TechCrunch, OZY, and Inc. Magazine. Diane ran three successful businesses before she was 18 and is a noted software innovator who frequently speaks on the intersection of AI, personal data, privacy, and the future of smarter products. Breinify works with retailers and consumer packaged goods brands to enable data science in marketing campaigns that secure 51% year-over-year online sales, 20 times the click rate, and six times the reaction rate.