Episode Transcript
Elise 00:00:05 Hello, and welcome to the Loop Marketing Podcast. I'm your host, Elise Stieferman, director of marketing at Coegi today. We're joined by Coegi’s president, Sean Cotton and vice president of marketing Ryan Green. Let's get started.
Elise 00:00:18 All right. I'm here today with Sean and Ryan talking about D2C models. So as we all know, the pandemic -still in the middle of it- changed the way consumers are shopping. And I think one key area that we've seen quite a bit of a boom is D2C, so going direct to consumer, making it easier for them to get their products. So how have you seen the behaviors of the general consumer changing and how has that affected marketers' approach to driving sales?
Sean 00:00:51 Well, one aspect of that is the expectation of convenience, for sure. Partly driven by the pandemic, part of that was already happening to where people want to order their groceries or any of their household items or apparel just have it delivered to their doorstep. So that aspect of convenience is driving a lot of this, but it seems like another factor is that of discovery, that there's an excitement and there's a thrill around discovery and then sharing that with your friends and your colleagues and your family, and impacting that word of mouth that has always been kind of the foundation for brands to grow. And so I think those two things together, convenience and discovery has been a big part of the expected consumer experience now.
Ryan 00:01:48 Yeah, I agree. There's a lot that's really innovative about the direct to consumer model. You know, even five years ago, really leaning into digital first to launch brands to be able to make a lot of AB testing, quick decisions about what audience to target, who your hyper propensity audiences are, even which creatives to showcase and to run as well. Very early adopters of influencer marketing and really putting the mass media on last, right, after they have made all these learnings in the Petri dish, that is, uh, digital marketing. I think one thing we, when you talk about convenience, sometimes D2C is a little more inconvenient in some ways, right? To go directly to the brand's website and make purchases there versus at a marketplace like an Amazon or an eBay.
Ryan 00:02:53 So for the next iteration of D2C brands, I think really have to bring a value proposition to the consumer to have that direct relationship and incentivize them to order directly like Nike, that allows you to customize the color scape of your shoes. That gives you a reason to buy from nike.com and not from Amazon or from a different storefront. And there's many iterations that you could see from maybe offering timely collaborations with other brands as well as give longer term incentives to continue to be loyal customers, to really push outside of the marketplaces. I know brands always would prefer to have their customers buy directly from them, their profit margin’s a lot higher when they're not going through those middlemen, so to speak. So, you know, having that value incentive is important and it allows for a lot more robust first party data collection that allows for smarter lookalike modeling and fuels the engine of what started a lot of those D2C brands that leaned into digital marketing first before the terrestrial media.
Sean 00:04:11 I think creating a customized and personalized experience is definitely a unique opportunity within the D2C model. And you talked about, you know, some of the offers that they can give to their consumers that would appeal to them. I would add to that even supporting charitable causes, as you know, these companies realize that their consumers have certain issues that are very important to them. They say, you know, as you buy products from us, we also donate to this cause, and then, the consumers buy their product for the quality and for the convenience, but also because it's something that supports their values as well. So I think that's an interesting dynamic as well, in this model, that we hadn't seen before with eCommerce and retail,
Ryan 00:05:02 And there's a value proposition for direct to consumer, that's more friendly to the environment if you're creating widgets in the United States at your warehouse, and you don't have to send that to an Amazon warehouse that then sends it to a second Amazon warehouse that then sends it to the consumer and you just send it directly, you're helping the environment, right? So there's a lot of different angles, I think, that brands can not be seen as greenwashing that can really be adhering to the values of their customer, and having that direct relationship allows them to listen to what their customers really value too and be able to react a lot more quickly than being strongarmed sometimes by retailers that don't have those same interests in mind.
Sean 00:05:55 Yeah. And as it takes the focus away from just solely the price, you know, consumers focus more on these other things, quality of the product is certainly key, but, but all of these other things, it really kinda changes the narrative to where consumer says, I want to pay more, not necessarily want to, but I'm happy to pay more for this brand because this brand is aligned with my values. It's aligned with my personality and all of these other factors that we're talking about and they pay a premium for that. And so I think that's also a difference in consumer behavior versus moving a little bit away from the price shopping to a little bit more of the product alignment.
Ryan 00:06:41 Yeah. The product marketing and the traditional marketing fuses a lot better when you have that direct relationship with the consumer and can control that consumer experience from a logistics standpoint, from the development of new products and feedback that you can get from that. It's a really intriguing model. The challenger brands, that have succeeded there are really disrupting the space and giving a lot of legacy brands a run for their money. It's not just the blockbuster example from the nineties that we like to look at, I mean how many Fortune 500 companies fall out of that list every year and are being replaced by, you know, progressive companies that are taking a different angle and having that really authentic relationship. And the ones that have focused on influencer for years also understand the authenticity factor of who they decide to be their ambassadors and spokespeople as well. So, I think there's a lot that marketers can learn and need to learn from the D2C model that are significant to how to operate in the cookieless world. I think too, having more ownership of your data and being able to transfer that knowledge across a number of channels is gonna be really important.
Elise 00:08:19 I think you bring up a good point, Ryan, and you as well, Sean, about the authenticity factor and the trust factor, and influencer is definitely a component of that, but even going a little bit further, I mean, obviously social commerce has exploded and its a component of influencer in a lot of situations. So thinking about social commerce as an extension of D2C, what sort of trends have you seen from brands leaning into that space and making it convenient and discoverable of new products in an environment that they're already spending time and it's convenient as well?
Ryan 00:08:56 Well, it's very native for D2C brands to interact with social commerce. So a lot of 'em were born that way- how many brands were launched basically from Instagram and have that seamless transition to being able to buy more quickly there too. The larger P & G type brands, they're gonna cover every social commerce play that there is, but the ones that have more limited budget probably need to focus on one or two. Pinterest is something that goes underneath the surface. A lot of times that does have a really robust social commerce play that a lot of brands need to be thinking about, not just ones that are trying to reach moms with kids, but a much broader audience that's there, that are shopping and curating a number of the experiences that they have in their lives, right, as an example..
Ryan 00:09:54 But there is gonna be a cost benefit analysis that needs to happen and you have to really work with your product marketing and logistics teams too, to understand where the opportunity is and where your audience is, but also where you're gonna be profitable at, where there could be kinks in the supply chain. Supply chain's so important now. And that's, I think, a big challenge D2C brands have. Supply chain's gonna make a big difference to when you're gonna be able to go to market, which social commerce channels you're gonna want to focus on. And if you have a limited product, you need to focus on the places that are gonna give you the most profit from a logistics standpoint, not just audience and marketing standpoint.
Elise 00:10:39 And marketers, you know, when you think about commerce, they have to control what they can control. Sometimes supply chain is simply out of your control. And you know, D2C is just one component of driving sales. So when we think about making sure that there's sufficient reach to your broader consumer, obviously an omnichannel shopping commerce experience is critical.
Ryan 00:11:02 Well, that's why marketers have to be problem solvers, right? If you really are representing the interest of the business, it's not just feeding the machine the things that it wants to make it work, you have to be creative. And it is very helpful when you have all those tools available. When you can go to Snapchat, or you can go to YouTube, or you can be able to call on a micro influencer strategy, within two weeks when the supply does come in, or to be able to shift and react when things change in the world, right? So it's not enough, I think, to just be a digital marketer, you have to be a problem solver for your business, whether you're an in-house team or work at an agency, you really have to be able to think 360 about every challenge that business has and using the right tools to be able to drive what's best for that business and to drive the best experience for the customers and to understand the brand safety aspects that need to be taken consideration across all of those channels. To have that 360 view is really important when you're looking at what agencies you're gonna partner with, or for agencies, which technology services they want to bear too that are able to be nimble and flexible in the output that they bring as well.
Ryan 00:12:41 Cuz there's so many factors that are gonna come to a decision. Some of those are quantitative factors, some of those are qualitative. And some of those are things that you wouldn't think about that maybe you weren't trained on in university, but if you were thinking about it from a problem-solving perspective and an agnostic to where the solution is, I think that that puts you on the right playing field.
Sean 00:13:09 Yeah. And coming back full circle to the social commerce question, you know, because there are so many different channels that can be explored and add formats and so forth. D2C brands do gravitate to the social environment, because I think they provide a tool set that simplifies things. You have the data of their user base to where you can quickly determine the ones that are buying within their platform and model off of that, and in a rapid fashion, and really make the best use of your dollars. Most of those platforms have multiple ad units and ad formats designed for either leads or for sale or whatever it is, or for scale. And you can do full funnel marketing within the platform. There's other places that D2C brands can expand- CTV and other channels- but it does require that tool set and that discipline that you're talking about Ryan, and usually a third partner that's an expert in that to help you do that. Whereas you can find a lot of success within one social platform, if that's where your audience spends a lot of time. That's not to say that you shouldn't go outside of that. You absolutely should because there's a point of diminishing returns. But for that reason, D2C brands are really kind of a perfect fit for social commerce.
Elise 00:14:39 So then thinking about the consumer journey and D2C and social commerce and influencer, and all the things that are impacting consumer shopping behaviors, what I've heard from CPG brands in particular, but I'm sure other industries as well, is that the sales cycle has shortened, that consumers are able to make their decisions a little more quickly because they've had the opportunity to be served the right message at the right time. So, as brands are thinking about more of that D2C experience and more of an omnichannel shopping experience that goes beyond just instore or just through their eCommerce site, how should they begin to strategize on that from a messaging perspective, channels perspective, audience perspective, and all of those components that work together?
Ryan 00:15:29 Well, it has to be omnichannel because consumers have so much information at their fingertips that that's what's really driving the cycle to shorten because they can do the research and become familiar with the brand, see if they align with their personal values, the price point reviews, which is synonymous for what word of mouth was 20 years ago. So you have to be prepared for that moment when a consumer comes into your funnel. You see a lot more consumers researching while they're in store too. So I think there's an SEO component that becomes very important. Your user experience on your website has to be very clean. I think the other thing that's important to think about here too, is driving new demand. Influencer and social has always been really good at driving new demand for D2C brands.
Ryan 00:16:45 You know I can think of a dozen brands that I've purchased within a couple hours of discovery because I was served with a creative message while scrolling through social media or being introduced to a brand on YouTube from an influencer that I trusted. So the demand generation part of it, I think, is something that you need to be thinking about from a marketing perspective as well, but because the funnel is so much shorter from discovery, to conversion, to advocacy as well. It all needs to be compact and available the way that a user wants to consume it. And because that's splintered into so many different places, the savvy brands have to be prepared for that discovery to happen on Pinterest, to their owned website, to email- across all of the channels. It has to be an omnichannel experience.
Sean 00:17:45 Yeah, there has to be a combination of planning for that consumer journey. Then as we execute our campaigns across awareness and consideration and conversion, we have a roadmap as to how our messaging aligns up with that and the audiences that we're targeting, but there also needs to be implemented some of the technology that's available to us today such as dynamic creative optimization and things of that nature because each individual's consumer journey is different. So if we can allow that technology to work on our behalf to re-engage people that have been to our website or on our social channels in the most relevant way to them based on their past experience, then D2C brands or really any brands are able to do that in a more personalized fashion without all the manual labor.
Sean 00:18:52 Yeah. And I would be remiss if we didn't talk about the role of AI in this, when you start to talk about omnichannel and how many touchpoints and how quickly a brand has to react. A human’s, not able to do that at scale, and to have intelligent use of AI, to be able to be very predictive in particular around messaging and serving the right message at the right time and that right order during that truncated discovery and research phase, is gonna be very significant in the brands that get that right, are the ones that are gonna be successful.
Sean 00:19:27 Yeah, it's really about having the assets organized and the messaging organized in a fashion that machine learning can take advantage of that and apply it in the right situations. And so that was probably the best approach to marketing to consumers in real time, in a way that takes into consideration their journey.
Elise 00:19:53 And the last thing I wanted to touch on was the difference between the demand generation side of D2C and talking to your customers that have already purchased from you. I feel like oftentimes they don't get as much love as those who you're trying to convert. You're trying to expose them to your brand. So how can marketers really leverage past purchase data from their own brand and their own customers and continue to bring them forth as advocates and loyalists that really move the needle oftentimes more than what any ad can do?
Sean 00:20:30 Yeah. I mean, one of the black eyes of digital marketing in the area of remarketing has always been “I've already bought that item. And you're following me around the web and I've already bought it”, but if we remarket to them based upon the knowledge that they've already bought with some sort of incentive to inspire loyalty versus just showing them the item that they've already bought. Communicate with them in a way that does build advocacy. That's one simple way to be able to do that, and that could be as they become part of our first party database through email marketing and so forth, it could be through our social media channel followers. Communicate with them in that respect versus selling.
Ryan 00:21:22 Absolutely. I mean, it depends on each product, right? I'm tired of TaylorMade following me around. I've already bought their new driver and three wood, ok? But I haven't bought a dozen of their golf balls. I haven't bought their wedges yet. So there's analogous products that could be put forth, but they have a big advantage. They now know who I am, that I've given them permission, through the transaction that I've had, to email me with additional marketing aspects. Now, are they going to be able to provide value to me through additional content, through offers and sales that are timely to my journey as a scratch golfer, that's coming here, Sean, so you'll have to get ready for that.
Sean 00:22:12 Keep the dream, man.
Ryan 00:22:13 That's gonna be a long dream, but, or are they going to fall into the bucket that you talked about, where I'm gonna get served that same driver all season, because it's their new driver and they're doing what is convenient for them and for their business and what their goals are. I understand when I'm watching YouTube videos, that there's gonna be product placement within those videos, but those pre-roll ads when I made a purchase online, you know, they should be following up with different products. Now, certainly other brands like, in the CPG space, you are looking for repeat customers and loyalty there. So the messaging's gonna be a little different but you have not just permission to talk to that consumer, but you have metadata on what they purchased, when they purchased, and should be able to predict when they're going to need a second or a third purchase or other products that are also of interest.
Ryan 00:23:11 Amazon does a great job of predicting based on past purchase behavior in recency, what you may want, or to be coming up soon. Right. And it's not just specific to, “they bought that soap six weeks ago. We served a soap again to them, but they may also need shaving cream.” They've been looking up things for their kids. So there's timing there too. So that's all AI function as well. You can't do that at scale and be able to have those predictive suggestions come up as well. Those are things that need to tie into artificial intelligence and also need to tie into your supply chain as well, so that you're not serving ads for something that's not available to them on their channel of interest. So it's complicated challenges, but there are solutions to finding the right balance to all of this.
Sean 00:24:13 It can be very powerful to surprise and delight past customers, to where they receive unexpected incentives or promo codes or gifts, or even things on their birthday or their anniversary. Those sort of gestures by brands or outreach by brands, engenders brand loyalty as well in advocacy…
Elise 00:24:43 And authenticity and trust which brings us full circle.
Ryan 00:24:45 And doing that the right way is so important. Because there is a negativity bias that can come if you do it the wrong way. It's frustrating when you're part of a loyalty program and you finally get your $5 reward after spending $300 and it expires 10 days from now. Well, I'm not ready to make a purchase at your store in the next two weeks. Why did my reward expire? You have negative experience from that too, so it can cut both ways. You need to really be thinking in the mind of the consumer and listening to them when you have that opportunity in particular after that first purchase to move to loyalty.
Elise 00:25:29 Well, Sean, Ryan, thank you so much for your time today and we’re looking forward to next time.
Sean 00:25:34 Thanks Elise.
Elise 00:25:36 Thank you for listening. Coegi is an industry leading performance marketing agency based in the Midwest. We've learned a lot since our founding in 2014 and started the Loop Marketing Podcast to share some of our hot takes on marketing trends we're following, best practices we've discovered, and actionable tips for improving your digital strategy. We'll see you next time.
