DTC's Pivotal Role In Sustainable Brand Engagement
Given today's never-ending market shifts, one pivotal way consumer goods companies can insulate themselves from disruption is by developing a direct relationship with their consumers. But while all companies should have a direct-to-consumer strategy, it's important it's not viewed strictly as a transactional relationship. Instead, DTC grants CGs greater permissions to expand into loyalty-generating areas that are less likely to be impacted by external factors — such as regulations — over which they have little control.
Owning the relationship with a consumer insulates CGs from future market factors that may disrupt how they can interact with them, and those without that direct line will continue to give the walled gardens a lot of control over how, when, and where they can interact. Cory Munchbach, COO of BlueConic, shares why establishing these relationships will be crucial for unlocking new opportunities, what CGs should be mindful of, and overcoming some of today's biggest obstacles.
CGT: What is driving consumer goods companies to set up direct-to-consumer selling methods now?
Munchbach: A number of macro factors disrupted the status quo and accelerated the need for substantial transformation of the way consumer goods companies engage with consumers in order to drive business growth. For example, third-party cookie deprecation is torpedoing long-standing advertising models — including the methods that CG companies have relied on for targeting, like DMPs. Increased concerns around privacy due to both the shift in consumer opinions about sharing data, as well as privacy legislation like GDPR, CCPA, and the recent Ban Surveillance Advertising Act proposal, create a dynamic where data must be respected and treated as a currency-like asset.
Consumers will only be willing to provide data in exchange for genuinely valuable experiences — and even then, so long as the data is collected and stored with transparency and restraint. Companies themselves can’t determine what "valuable experiences" are if they don’t have insight into who their consumers are, their individual consumer journeys, and what strategies or technologies they need in place to deliver those experiences.
What it comes down to is that first-party data is essential for CGs to create sustainable brand engagement, and it’s only through establishing direct relationships with consumers that they'll be able to keep and develop their relationship with customers over time, regardless of external factors.
CGT: What are some of the most common misconceptions about developing a first-party data strategy? Where do you see companies that are launching DTC initiatives get “caught-by-surprise”?
Munchbach: Transforming your business requires rethinking organizational structure and the underlying processes and technologies that enable it. For example, if you are launching a DTC initiative, what kind of data will you collect and what type of systems will you use to store it? Based on those choices, how will you make it easily accessible to your growth teams (e.g., marketing, events, loyalty) for activation? What kinds of skills will your teams need to have to use the data for analytics, scoring, and insights?
Often, there is arguably too much focus on gathering the data itself without enough consideration for the processes that ensure that data gets into the hands of the teams that need to activate data to drive revenue and growth. If you aren’t thinking about how, when, and where the data will be used in parallel to why you’re collecting it, you can't successfully implement the right strategy.
If you have a propensity-to-buy model, for example, taking two weeks for your analytics team to get that score to your marketing team means you’re not capitalizing on the moment in time when a customer has the highest likelihood of converting.
CGT: What are some of the biggest obstacles to leveraging consumer data today?
Munchbach: It’s a toss-up between the burdens of legacy technology that are simply not equipped to handle the demands of the modern marketer and the complexity that new rules and regulation around privacy, which vary so much by region and industry, represent. For CGs that haven’t historically collected first-party data, this is all complex and it can’t be taken lightly. There’s a balance between legal and compliance/data governance teams and marketing teams when it comes to handling data.
Swing too far in the legal and compliance side and marketing and other growth teams won’t be able to use data effectively for their use cases. Striking that balance, at least in my opinion, means having the right tools to connect consent to each individual customer in a profile that can then be federated out to other systems. That way, consent data is updated and attached to an individual, not a single system.
CGT: How have consumer goods companies balanced their needs for direct-to-consumer initiatives and partnering with retailers to sell goods?
Munchbach: This is an excellent question, and it comes back to balance and value exchange. There is often the worry for CGs going direct-to-consumer that they’re going to cannibalize their sales in traditional retail channels — an issue to be avoided at all costs for many reasons which are likely known to this audience.
We’ve seen our customers focus on direct-to-consumer initiatives that center around creating unique experiences only they can deliver — for example, offering the ability to customize products or designing in-person experience rooms to test merchandise. Retail and CG companies have also worked together to share consent consumer data for their various needs. CGs, for example, can get closed-loop attribution by ingesting retailers’ transactional data, while retailers can gain insights on consumer segments and audiences through CGs.
With the use of technologies like data clean rooms, for instance, both parties can share data that has already been consented to and ensure that no personal identifiable information is ever shared.
