Bullseye for DTC Brands: Part 2

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

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

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:

  1. 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?
  2. Channel expansion. Are you expanding into new channels in order to gain access to new customers?
  3. Category expansion outside of core product. Are you expanding category to bring in other customers or even encouraging cross-category purchase?
  4. 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?
  5. 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:

The Rookie

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

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.)

The Challenger

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

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.

The Leader

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 info@somethingdigital.com.

Introducing Bullseye for DTC Brands

If you’re a regular reader of this blog then you know we’re pretty excited about our Bullseye, a quick and easy assessment tool we designed to help B2C and B2B companies select the right partners and services to grow your ecommerce business to the next level. In fact, we did a three-part series that began with tactics for measuring your business maturity, then moved on to growth, goals and KPIs, and ended with a discussion on how to select the right partners.

Bullseye is a byproduct of our 20 years of professional services. For decades we’ve peppered customers with questions about their goals, KPIs, technical skills, staff availability, existing infrastructure and a dozen other factors that will drive success. Our typical professional services questionnaire can exceed 200 questions, which is entirely reasonable if we are going to design and build a website for a company that will be the foundation of their growth over the next decade. Part of being good at professional services is knowing how to ask the right questions so that we can provide business owners with the kind of advice that will set them up to hit the goals they’ve set.

Bullseye, on the other hand, has a more narrow goal: to help companies assess their business’ maturity so they know where and how to begin their planning process. For that we’ve narrowed down to the essentials, resulting in a 30 question quiz.

Why Bullseye for just DTC brands?

In the six months since we’ve launched Bullseye, we’ve had some great feedback, the most common of which is to refine the questions so that they specific industries. No problem!

As we thought about how to narrow Bullseye, we spent a lot of time reflecting on our own customer base, which has a huge contingent of DTC brands. These brands run the gamut, from small startups that have been in business for a year or less and sell just a handful of products, to very large enterprise DTC brands, like Garden of Life. Some have small Shopify sites, while others have multiple sites running on Magento, all of which are integrated with sophisticated platforms. And of course, we have many customers in between.

We leveraged our experience with the breadth of customers to refine the questions so they help us understand where your DTC business is today, as well as chart out your next steps on your path to growth.

DTC is a channel, not a business model

This time last year the business press and punditocracy couldn’t stop talking about DTC brands. Casper, Allbirds and Dollar Shave Club were the absolute darlings of venture capitalists and enjoying billion-dollar valuations. The IAB hosted DTC-themed conferences, and put together new tools and resources to help long-established brands get a lay of the DTC land. To the IAB, DTC is a game-changing business model because it allows consumer brands to establish one-to-one relationships with their customers, meaning they can legitimately collect, consolidate, analyze and use first-party data. For a P&G or Unilever which rarely sells directly to an end consumer, that’s a big deal.

But here’s the thing: in real terms DTC is a channel not a business model, and it has been that way for the past five years. The DTC brands that have captured the imagination of the business press — Casper, Allbirds, Warby Parker — are now multi-channel. All three brands currently have retail outlets and they sell through other retailers and marketplace. For instance, consumers can pick up a Casper mattress in Costco, Target, on Amazon as well as Casper.com.

The upshot is that when we talk about DTC, what we’re really talking about is a brand’s origins, which happens to be rooted in the digital ecosystem.

Why origins matter

A brand’s origin matters because it has a huge influence on its growth strategy. Brands that are digitally native face a specific set of challenges that differ from the obstacles that a catalog retailer or a brick-and-mortar store will need to overcome.

For instance, unlike a brick-and-mortar store, new DTC brands can’t count on local foot traffic to bring new customers through their doors. This is a huge challenge because the customer acquisition tools for digitally native brands are expensive and crowded. Breaking through the noise via a paid search or Instagram campaign will cost a pretty penny and require constant optimization to be effective. On top of that, customers can’t touch, feel, weigh, sniff or taste products, which means the brands need to find ways to eliminate the risk of the unknown for their consumers. Because survival requires mastering these challenges, DTC brands must develop a mindset and business approach that is different than, say, a brand like Sundance Catalog, which started as a single retail outlet, expanded to a catalog model and eventually added an ecommerce site. Ultimately, of course, all brands will need to embrace a multi-channel sales model if they wish to embark on a path of sustainable growth. The path they take to get there, however, will depend on where they’ve been.

There are many market dynamics that affect all retailers equally, regardless of origins. DTC mega-star Everlane is benefiting from closures of The Gap and Victoria’s Secrets outlets, as are Amazon and the mom-and-pop stores that sell similarly priced-items and are close to where those stores once stood. But reaping those benefits requires a certain level of DTC maturity, specifically, the ability to capture those displaced consumers through multiple channels.

Assessing the maturity of a DTC brand

When we talk to DTC brands about their maturity level, we key in on the way they reach and engage customers. There is a direct relationship between content sophistication and level of maturity. Take Outdoor Voices, an activewear brand that has launched a television channel featuring original programing and documentaries. OV is hardly an outlier, they’re the new normal now that it’s much harder and super expensive to acquire customers on Instagram. Mature DTC brands are devising compelling reasons to engage consumers, and original content is playing a front and center role in their efforts. This is a far cry from simply sending weekly emails with incentives to purchase (a tactic favored by newer, less mature brands).

Of course, content strategy alone doesn’t determine the maturity level of a DTC brand, which is why we cover many other topics in the DTC Bullseye assessment quiz. I’ll tell you more about that in my next blog post. Stay tuned!

Bullseye Series Part 3: Partners Pave the Way

Earlier this summer we announced Bullseye, a quick and easy assessment tool we designed to help B2C and B2B companies select the right partners and services to take your ecommerce business to the next level. This three-part blog post series looks at Bullseye from different angles:

  • In Part 1 we discussed how we use Bullseye to measure the maturity of a business (it has nothing to do with revenue or business acumen and has everything to do with the size and skillset of your ecommerce team).
  • In Part 2 we talked about how to right-size the tactics and strategies you deploy to grow your business; how to define and measure success; and how we use Bullseye to determine both.

 

In this blog we focus on how we use Bullseye to right-size your partnerships. This is critical, because through years of experience we’ve learned that ecommerce businesses can succeed or fail based on the tools and the partnerships they form to engage their customers.

Right-Sizing Your eCommerce Platform

When some ecommerce managers set out to build their infrastructure, their first impulse is to opt for the platform with the most bells and whistles. This approach, their thinking goes, allows for maximum flexibility in the future. They may not need all the features and functionality now, but who knows what will happen five years from now?

In reality, it may be like buying a Ferrari 458 just to go down the driveway to get the mail. It’s way more power than you will ever need for the task at hand and a huge waste of money.

Though it may sound counterintuitive, features and functionality don’t necessarily equate to business success. Just because you can do something it doesn’t mean you ever will or even should. This is why Bullseye and right-sizing is so important. You can choose (and pay for) an ecommerce platform based on its impressive list of capabilities, just take care not overestimate the ability of those features to drive value for the company. Case in point: among Magento’s hundreds of features, is a wedding registry, but how many companies will actually use it? Certainly no B2B company will ever need such a feature, and gift registries don’t make sense for many B2C companies.

We at Something Digital are huge fans of Magento’s ecommerce platform. We’ve been an enterprise-level partner for 10 years, and have built hundreds of sites on it. Personally, I’ve worked with Magento since 2007. Twelve years ago the company offered features and functionality for the B2C market that are on par with what competitive platforms of today. The company was ahead of its time.

While we’re fans of Magento, we don’t recommend it for high-growth but smaller staffed B2C merchants. Magento requires more internal staff, along with an understanding of generally accepted accounting principles, order management, order lifecycle and so on. Nor does it come with a preconceived notion of how your business should manage orders. If your ecommerce team is small, and doesn’t have the skillset to map out an order management system, we’d recommend Shopify over Magento.

The same is true for any software used to support your ecommerce business. Does it make sense to spend $3,000 a month for an email platform if all your team has time to do is send out newsletters? You don’t need the Ferraris of software if you don’t have the capacity to utilize all of its capabilities. You’re better off spending your money elsewhere in the business.

When evaluating any software choice — whether that’s an ecommerce platform, email service provider, CRM or ERP system — you need to ask:

  • Does this software meet my needs today?
  • Does my company have sufficient maturity to utilize the totality of this software
  • Do we have the vision to utilize this software to grow the business within a reasonable time frame?

 

These questions can be difficult to answer, which is where Bullseye comes in. We’ll assess the maturity level of your business and recommend partners who will be a good fit for your company.

Role of Bullseye in Recommending Software

There are a lot of things to consider when assessing the maturity level of an ecommerce business, but that assessment is absolutely essential in order for Something Digital to recommend the right partners to engage. We can’t say this enough: ecommerce maturity isn’t about gross revenue, it’s about resource levels and skill sets of team members who will be tasked with growing the business. Choose the wrong partners and your business can suffer; select ones that compliment your team and infrastructure and your business can prosper.

Interested in taking the Bullseye assessment? Click here or Contact us now.

Bullseye Series Part 2: Growth, Goals and KPIs

In a previous post we told you about, Bullseye, our new tool to measure your business’s maturity so that Something Digital can help you select the right partners and services to grow your business. But that’s just the start. An important goal of Bullseye is to identify the best areas to target for growth, and to put a rational strategy in place to succeed.

One of the things we say a lot these days is that the outcome of any strategy should be a set of specific tactics that work towards the goals set. It’s why Something Digital is hyper focused on tactics. At the same time, we need to measure success. There’s no point in putting a strategy for growth in place without a means of measuring whether or not it’s effective.

This is why Bullseye is so strategic: it helps to ensure that Something Digital recommends tactics that will advance your growth strategy, and are appropriate to your company’s infrastructure, available resources and skillset.

Let’s say your top goal is to increase your conversion rate. A worthy goal, to be sure, but one that for more mature companies must be broken down into separate KPIs. Here’s why: every website has new, intermittent and loyal customers, all of whom convert at different rates and timeframes. Focusing on a single metric — your overall conversion rate presented in Google Analytics — won’t allow you to put tactics into place that are geared towards each user type. To really grow your revenue, your strategy should include granular tactics.

Our approach is persona based. We look at your site metrics to identify personas of customers for every stage of your sales funnel (that makes sense for your level of maturity), and then create specific, measurable tactics for each. Such an approach requires multiple tactics and KPIs. In fact the more mature the company, the more narrow the KPIs to measure. Growth will come from understanding the entirety of the customer journey, as well as tracking and optimizing all of the touchpoints prospects engage with prior to making a purchasing decision.

Take first-time visitors. A KPI we might want to track is the length of time it takes for these visitors to purchase; a goal may be to narrow that window; and a tactic can be to prompt a smaller conversion, such as encouraging the visitor to opt in to the site’s newsletter. Another KPI we may want to track is increasing the rate of return visits by new leads; a goal may be to spend remarketing budgets as efficiently as possible; and a tactic can be a lead-back campaign that’s executed across social media.

On the opposite end, a level-one Bullseye company will require a different set of KPIs, goals and tactics. For instance, level-one companies may not have enabled Google Analytics advanced ecommerce metrics. If that’s the case, our first priority is to ensure they have the means to define and measure success. An ecommerce team can work hard to increase conversions across the site, but if they can’t measure it, they can’t claim it.

Next, we’ll need to identify where and how the company can drive the best returns on the investments they make. Often, the best ROI stems from focusing on visitors with the lowest conversion rates. Let’s say that mobile visitors convert far less frequently than desktop visitors, we would focus on optimizing the mobile experience to get more conversions right away.

Some tactics can apply to all levels of maturity, although with different implementations. For instance, if the goal is to increase conversions, a tactic we may suggest is adoption of a conversion rate optimization tool, such as HiConversion (an important partner of Something Digital, and a participant in the Mobile Optimization Initiative). HiConversion offers a powerful A/B testing tool that benefits businesses of all maturity levels, but how its used will vary.

At the end of the day, Bullseye is designed to help Something Digital:

  • Identify, track and optimize appropriate KPIs
  • Right size tactics to deliver on the strategy
  • Ensure the strategy takes your business to the next level

 

Interested in taking the test? Click here or contact us.

Next up: How Bullseye Paves the Way for Partners.

 

Bullseye Series Part 1: Measure Your Maturity

Something Digital has a new tool that’s super helpful to ecommerce businesses who are outgrowing their websites, considering building a wholly new one, or who generally want a health check to ensure they’re sites are working optimally. That tool is called Bullseye.

Bullseye is a quick and easy assessment tool we designed to help B2C and B2B companies select the right partners and services to grow your ecommerce business to the next level.

We created Bullseye because a great many ecommerce businesses come to us for help in making their sites work for their organizations. They’ve hired agencies to build sites for them, but the end products are beyond their grasp in some ways, or not otherwise geared for the people and processes that exist within their organizations. Why have a sophisticated marketing plug-in if you don’t have a marketing department? Why select the most advanced technology available if you don’t have the necessary skills in house to run it?

It’s All About Right-Sizing

The goal of Bullseye is to assess the operational maturity of your business, which in turn dictates the complexity of solutions required to support sustained growth.

Maturity has nothing to do with your business, ecommerce or merchandising acumen. You can have that in spades and still be “immature” when it comes to selecting or optimizing your tech stack. Maturity has to do with your organization’s availability of time and resources to dedicate to an implementation, along with all existing systems touch your project.

A Quick & Easy Quiz

Bullseye is a quick and easy quiz that asks you some questions about your staff levels and skills, along with existing infrastructure components. This allows Something Digital to assess the products and partners that will work seamlessly with your people, processes and tech, and most importantly, will allow you to scale up in order to support your growth goals.

How are we able to distill such critical insight into a quick and easy quiz? We launched Something Digital twenty years ago, and through those decades we’ve assessed the maturity levels of B2B and B2C companies in every sector and size. We’ve worked with companies that have a few dozen employees as well as Fortune 500 retailers. Assessing client maturity is part and parcel to what we do, and we know what to look for.

And while we know, internally, the importance of assessing a client’s maturity level, we wanted Bullseye to help clients understand that importance as well. We believe it will enable all parties to understand why we recommend specific vendors, solutions and approaches.

A Roadmap for Strategy

We at Something Digital passionately believe that the outcome of your business strategy is a series of tactics that are designed to promote a defined end goal, whether that’s attracting more visitors to your website, generating more revenue, lowering the cost of customer acquisition, or boosting average order value. Because tactics enable strategy, it’s important that all ecommerce business managers have strategies, services and partners that match their level of maturity and help them grow.

Growth tactics differ between B2B and B2C, which is why we have a Bullseye for each. Interested in taking the test? Click here or contact us.

Next up: Growth, Goals, and KPIs