In a previous blog post I introduced Bullseye for DTC Brands, a flavor of Something Digital’s Bullseye maturity assessment tool we designed for digitally-native brands. The first post sort of set the stage in that it talked about the challenges DTC brands face when acquiring new customers and why the origins of a brand affect strategy going forward. In it I posited that content strategy is a key metric of maturity.
(If this is your first post on the topic, Bullseye is a series of questions we ask businesses that are looking to take their business to the next level. We use Bullseye to help us understand your resources, experience level, available resources, existing infrastructure among other things so that we can recommend the right technologies, partners and strategies to help you achieve your goals”).
This blog post goes deeper into the nitty-gritty of how we define maturity for DTC brands. On the whole, we delve into eight categories that are pertinent to digitally native brands:
Breadth and depth of channel sources
As mentioned in the previous DTC Bullseye blog post, sustainable growth for all DTC brands requires a multi-channel sales strategy. For instance, Casper sells its mattresses via Casper.com, as well as on Amazon, in its owned and operated retail outlets, as well as in Costco and Target.
If you want to continue to grow your customer base, you’ll need to make it easier for more people to discover and purchase your products.
Reliance on marketplaces
Marketplaces are a great way to get your brand in front of new customers, particularly those who are loyal Amazon or Alibaba shoppers. But an over reliance on them can result in a race to the bottom in terms of price, and where the marketplace — not you — owns the customer.
A solid marketplace strategy is essential (as we’ve discussed in previous blog posts) to growing your business, owning your customers and maintaining your brand.
Email marketing is the default tool for DTC brands, and it’s an effective way to keep your brand top-of-mind — up to a point. Bombarding your customers with weekly or daily invitations to buy will probably get your offers sent directly to spam. And even if your killer discounts prompt a lot of purchases, they’ll wreak havoc on your margins.
Email marketing requires a deft touch and should be just one component of your content strategy.
Loyalty and retention
Customer acquisition is the biggest, most costly challenge faced by all DTC brands, which means once you acquire one, you’ll want to do everything in your power to retain that customer and keep him or her loyal.
Loyalty and retention programs require you to understand your various customer personas and develop offers and strategies that speak to each directly.
Affiliate awards and referral
Affiliate awards and referral programs are a great way to acquire new customers, and entire industries have grown up around these strategies.
But not all affiliate and referral programs are created equal. Some new customers may cost you more than others, and some customers would have converted even without the referral (and commission).
Knowing which affiliate sends the profitable customers you can’t get on your own is essential to sustainable growth.
Internal Operational and business maturity
This section accounts for the lion’s share of our Q’s, which is why it’s detailed below in its own section.
Brand affinity allows you to predict how your customers behave, specifically, if they’ll choose your brand over your competitors. There are many ways to measure brand affinity, from surveying customers to analyzing time spent with content, number of shares and likes on social media, and so on.
Brand affinity will help stem customer attrition, and because it’s so costly to acquire new customers, it’s pretty important that all DTC brands have a strategy in place to measure and promote it.
Customer service/customer experience
Marketers are told all the time that consumers want to buy experiences. Consumers have a lot of choices when it comes to acquiring goods and services and interacting with a brand should be more than a utilitarian experience.
International Operations & Business Maturity Deep Dive
It’s one thing to sell products on a website, it’s another to deliver those products with a great experience as a mature operation. But what is that “thing” exactly? We broke it out into five dimensions:
- Promotion, pricing strategy. Are your promotions and pricing strategies designed to attract the customers you most want? Do you have a solid conversion-rate optimization strategy in place?
- Channel expansion. Are you expanding into new channels in order to gain access to new customers?
- Category expansion outside of core product. Are you expanding category to bring in other customers or even encouraging cross-category purchase?
- Business Growth and Accountability. Do you have established business metrics to meet? Do you have someone — angel investors, VC firm, Board of Directors — to whom you answer? What does your financial backing look like? Who sets your goals?
- Analytics & Data Points around customers. Do you have a data utility tool? How are you tracking key metrics, such as brand affinity, customer acquisition costs, lifetime value?
Ranking DTC Brands: Assigning a Persona
Once you answer all of our questions, we’ll take your input and assess your DTC business maturity level. Most digitally native brands fall somewhere in a maturity level 2 or 3, or as we call them, an Underdog or Challenger.
Here is a full list of the maturity-based personas, along with a general description of them:
A relative newcomer to the world of retail or digital retail, the Rookie can take many forms — from a large, corporate enterprise taking on direct-to-consumer retail for the first time, to a historically distributor-based, catalog brand who, 50 years ago, took orders on pen and paper. The Rookie has endless opportunities and is typically capital constrained. Investment is key, as are the right technologies.
The Underdog has gained ground but sometimes feels outgunned. This can be a powerful place to be when growing because loyalists to other products, brands and services are usually eager to seek out smaller, more capable brands. This allows The Underdog to “punch up” (publicly criticize larger competitors that will be reluctant to dignify criticism with a response.)
Brands take The Challenger seriously. The Challenger has some history, is growing into multiple channels, and understands the importance of brand. Still, the Challenger can’t afford to lose ground fighting upmarket with competitors that have more resources and global recognition.
The Trendsetter invests in technology and marketing campaigns that become part of the cultural zeitgeist. On the consumer brand side, they’re household names. In B2B, they’re industry titans who dominate in technology and in supply chain. Most businesses will never reach this level, and a scant few will grow beyond.
Standing at the apex, the Leader is the clear winner in their category, and, more broadly, in retail. The Leader is seen as a brand that excels at everything, invests in research and development, and is guiding the rest of the industry. The Leader excels in experience and prioritize brand equity over quarter-to-quarter gains.
Want to See Where You Stand?
We’re happy to provide a Bullseye test to any DTC brand whose business leaders are eager to take the company to the next level, or even better understand the challenges that lie ahead. There’s no obligation to the test, and there’s a lot of upside, namely, it can result in a roadmap to sustainable growth. Interested? Send an email firstname.lastname@example.org.