DTC Is Hot: We Are DTC
In the retail world there’s a quiet revolution going on, commonly known as DTC, or direct to consumer. If you’re on social media at all, you can’t help noticing ads for these products, because social media is typically where they find new customers.
Perhaps the most well-known brand doing this is Casper, a mattress company that sells a product that heretofore assumed an in-store test. That’s been replaced with a click, offsetting the lack of a physical test with a 100-day return policy. Other brands that have made terrific headway in this space include Glossier (a beauty startup that recently raised money at a valuation of over $1 billion), Away Luggage, Quip (a DTC toothbrush), and Harry’s (a subscription service for men’s shaving products).
All of these companies are tiny players in markets that are very large and typically dominated by large consumer brands. Those tried-and-true companies tend to acquire customers the old-fashioned way, with mass-market advertising and in-store displays in traditional stores. These newer DTC companies are gaining market share rapidly, and the world is taking notice.
What makes these companies different and successful bears some examination, because there’s a lesson for all of us here. These companies focus on:
- First-party data: Each of these companies acquires customers directly — which is to say they know who their customers are from the first moment — there’s no middle man (i.e., retailer) in between. That’s what makes them “DTC.”
- Scientific analysis of customer data: Once they acquire customer information, they analyze the heck out of it — to discover consumer segments and market to them in a segmented and ROI-driven manner. They can then improve what they refer to as “unit economics,” which is a never-ending effort to improve the financial metrics of their business.
- Obsessive two-way communication: These companies maintain their brand and their service to their customers with a continual stream of communications offering them tips on how to use their products, videos, testimonials — and of course, up-sells.
- Rapid iteration of their products: Because of #2 above, they collect lots of information about what their customers want, and because they are relatively nimble, they are able to act on this quickly with product modifications and new offerings.
- Complete focus and control of their brand: Each of these companies creates a brand image with colors, fonts, language, and values that never deviates. That’s the key to reinforcing their fundamental difference in consumers’ minds versus the competition.
Increasingly, to continue to acquire customers, these companies are investing in “experiential marketing” where customers can discover these products in a physical setting. Sometimes this comes in the form of pop-up stores, or at live events such as fairs, festivals, and music events. The idea of getting customers to interact with the brand (and take and share pictures while doing so) turns out to have an outsize effect on brand-building.
Lest you think this post is simply a primer on the DTC industry — it turns out that the arts have always been DTC. We acquire customers directly, nurture them, communicate with them, and resell them. That’s what we have always done. And, as these innovative consumer brand companies are moving in our direction — it suggests that DTC marketing is a good place to be right now.
The fundamental thing to bear in mind is that the reason these companies are prospering is that they treat their customer relationships like they are the most important asset they have. Contrast that with packaged goods companies (say, in my case, Crest) that have no idea I’ve been a lifelong customer. They simply know the demographics of who buys Crest, but they don’t know me.
As arts managers, since you’re in a DTC business, do it well. Learn from these companies. Try out their products. Observe their techniques, and steal some of them. Those that are doing really well — are flourishing. There’s no reason your organization can’t also have some of their success.
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