D2C director’s guide to drive sales & engage with customers

As a D2C director you’re producing a product in your own facility, as well as you distribute it through your own channels. Because everything happens in house, it’s important to get your sales ramped up. The direct-to-consumer strategy is becoming a popular route for manufacturers and CPG (Consumer Packaged Goods) brands to enter the market directly, which gives it more competition. Let’s look into some of the factors that will facilitate a positive outcome of your D2C strategy.

How to sell more direct to consumer products

An important aspect of D2C is answering customers’ needs directly, which means you can maximize the customers’ commitment to the brand and at the same time their lifetime value. Companies who use D2C as a business strategy, are less reliant on big e-Commerce shops, and therefore are able to create an opportunity to capture a larger part of the growing online market. But how can you scale up a D2C organization? According to McKinsey it’s best to look at factors that prevent your D2C success. There are three ‘individual’ and three ‘overlapping’ factors that collectively determine whether companies manage to implement a growth in D2C commerce, see the graph below.

Factors that are preventing success in D2C e-Commerce

Firstly, and most importantly: focus. If you have too many strategic priorities, it’s going to be impossible to scale up your D2C strategy. It will prevent ‘breakthrough’ decisions and other factors that can possibly lead to success. Related to that topic is the fact that you shouldn’t be hesitant to make strategic choices and bold investments. Of course, this requires a well thought out strategy, but also the ability to see chances for faster and greater business growth. McKinsey explains: ‘Brands can make the mistake of attempting to implement a multitude of fragmented D2C ideas and solutions—for example, by using the D2C platform for both brand-building and sales growth in a nonintegrated way, managed by different teams.’ 

Another key aspect is the misalignment in talent and working culture. Since D2C teams are often formed organically, leaders of these teams may lack the necessary skills and knowledge to lead the way. This happens across different functions and areas, including the marketing department, IT, product development, merchandising and supply planning. Similarly, misalignment may result from differences in marketing messages across different communication channels, managed by teams that are responsible for different channels and customer groups.

Don’t look at D2C as ‘just a channel to sell’, and make it a priority. Because it doesn’t control product or brand development, it can be difficult to actually prioritize long-term customer value creation. But when you put it on top of your list and start investing in it, you’ll see a great outcome – also looking at the customer satisfaction. Cross-functional dynamics and levels of investment weaken the ambition to create an amazing customer experience on your D2C platform. 

There’s a broad set of opportunities when it comes to scaling your D2C business, especially because this way of selling provides direct-consumer relationships. This can be leveraged through own-product innovation, white labelling, or third party products and marketplaces. 

Factors that can promote success in D2C e-Commerce

Previously we talked about things you should adapt in order to rule out factors that will stop you from reaching your D2C goals. Now, we’re looking into factors that can promote sky high success in D2C e-Commerce. Starting with the graph which shows all factors at once, we’ll elaborate each step one by one.

First off, the strategic role and ambition of D2C needs to be clarified. What’s the value proposition? What is your target customer? What’s the added D2C value versus other channels? Get answers to these (and more) questions. Develop practical KPIs across different areas of the organization. Then, commit to it – and make sure the whole team does (starting with the CEO). This is a critical factor: the mindset of the highest levels within the company must be aligned and changed before the rest of the company can follow.

Getting the right people and resources for the job is a major part of letting your D2C e-Commerce strategy succeed. McKinsey suggests a practical way to manage this: adopting a Y+1 investment strategy. This concept requires adjusting resources and investment in advance of growth, using allocation rules that calculate the share of investment, with the expected revenue that will be achieved a quarter or a year in the future as input. Although this approach would result in an over-allocation of investment in D2C e-Commerce compared to other parts of the business, it would help the business to move from ‘running behind’ to ‘being ahead’.

Across different industries it’s ‘normal’ that there’s tension between D2C and retail partner objectives. Especially when it’s about assortment, promotions and pricing. To solve this problem, you need to shift into a different mindset. The natural consequence of achieving this is a renewed level of confidence from retail partners, and a consistent topline and margin delivery that retailers will see and appreciate, while e-Commerce gets a runway to grow.

Lastly, but definitely not least is to go beyond the transaction, building customer lifetime value through three ways. These three ways are: designing loyalty programs offering real value in return for loyalty, and/or establishing brand communities to connect with customers on a social and emotional level.