DTC Marketing Playbook
There has been a huge rise recently in the popularity of business models that rely on selling their products directly to consumers.
One reason direct to consumer (DTC) businesses are popular is because building your own relationships with consumers can be very valuable. However, building these relationships can be difficult, expensive and time-consuming.
This is a collection of advice on building direct relationships with consumers. Much has been written elsewhere in more detail about each of these topics but hopefully this provides a useful starting point.
There are three parts to this guide. The first part is about making sure your website is up to scratch. Ensuring your website performs well is the foundation of your marketing. There is no point driving customers to your website if it behaves like a leaky bucket. Once your website has the basics in place then part two explores building relationships with customers. Once these core channels are in place then it's time to explore other channels such as Amazon.
- E-commerce platform
- E-commerce offering
- Capturing marketing data
- Acquiring customers
- Retaining customers
- Online marketplaces
- Offline retailers
Part 1 - Your website
1.1. E-commerce platform
There are many e-commerce platforms available that are well suited to creating DTC businesses. Shopify is our favourite due to its simplicity and wide range of themes & extensions. Here are some things to bear in mind while setting up your Shopify store.
It’s vital that your homepage clearly communicates what your brand is about. You should show customers the life that your products will help them achieve.
You should use ‘lifestyle’ images that either show the result of using your product or actually show the product in action. The images should feature models and be professionally produced - although there are ways round both of these requirements!
You should organise your products in a suitable way; either by category if that is how your products are typically sold elsewhere eg. menswear vs womenswear for clothes, or by user journey ie. stress relief products, sleep aids etc.
These category pages should clearly show the products available. Where possible they should be in a long list (with infinite scrolling) to make them easy to browse for customers who don't have specific intention. Ideally, they will also be filterable and sortable by common attributes in order to help customers who do have a specific intention to narrow down their selection.
Product pages should include:
- A clear product title containing all distinguishing features of the product
- A product description, containing include as many keywords relating to the product as possible and describing potential uses of the product Images are key to helping your customers make a buying decision. You should have photos of the product from different angles, preferably with a plain white background. You can include closeups or feature/design detail shots if suitable. It’s also ideal to have lifestyle shots of the product in action in order to give the customer a sense of scale for the product and to help the customer imagine themselves using it.
- A clear price which should include any applicable sales taxes so that the customer is not surprised by these during the checkout process.
- An ‘add to basket’ button which should be clearly visible on the page. It should stand out visually and not be crowded out by other elements on the page.
- A size selector should be visible, if appropriate, showing a range of sizes that the customer will understand. A clear size guide close to the size selector can help customers understand the options more clearly.
- Product reviews, if you have them, which should be clearly visible together with a star rating if appropriate.
A smooth checkout process is key to a good e-commerce conversion rate. Most e-commerce platforms offer a range of payment gateway integrations. Our favourite credit card processing service is Stripe. PayPal, Apple/Google Pay, Amazon Pay and Shopify Checkout are all also with investigating as they make life even easier for your customers.
1.2. E-commerce offering
There are a number of other factors to consider for your e-commerce offering.
Offering free shipping helps reduce friction in the customer buying experience. However it is also an expensive cost to have to absorb. Whether or not to offer free shipping will depend largely on the gross margin of your products. If you have a large gross margin then it is a nice perk to offer customers. If margins are thin then charging for shipping is also fine - most customers are used to paying for shipping.
The gold standard for returns is to offer pre-paid labels so that customers can return unwanted products free of charge. As with free shipping this reduces friction in the customer buying experience. However it can also be very expensive to maintain. Again the gross margin of your products is a key factor - if you have plenty of margin to cover costs like this then it can increase sales and customer satisfaction. Our advice is not to offer free returns initially - unless it's a key part of your offering - and then to experiment with it once you have built up some scale and carefully assess the economic impact that it will have.
Having a clear customer service contact form, email address and phone number will help reassure customers. Another popular customer service channel is live chat powered by a tool such as Intercom. Live chat can be a valuable way to develop a connection with customers and understand their behaviour. However, it can also be very time consuming!
Reviews are an excellent way to demonstrate social proof. This can have a significant effect on persuading customers to make a purchase. If possible, you should ask for reviews from customers that you already know are happy with your product. Reviews should then be prominently visible on product pages.
1.3. Capturing marketing data
Email addresses are perhaps the most valuable customer data in DTC marketing as they give you direct access to your customers without relying on a gatekeeper (such as Facebook or Twitter). We recommend having a popup to capture email addresses in exchange for a discount or reward of some kind. The popup should appear a few seconds after the visitor arrives on your website.
There are many potential metrics you can monitor for your website. We suggest picking a few key metrics that aren’t too tricky to measure. We recommend setting up Google Analytics tracking and configuring the e-commerce option. It's particularly important to set up the tracking pixel on checkout success so that you can track the whole purchasing journey.
Site traffic (unique visitors per month) and conversion rate are among the most important e-commerce metrics.
Part 2 - Building customer relationships
2.1. Acquiring customers
Customers who have been referred by another customer tend to be very valuable. That’s because they are highly targeted to enjoy your offering by someone who already understands it. It’s very common to offer an incentive for customers who refer friends. This can come in the form of a discount if you refer a friend, a discount if the referred friend places an order and/or a discount for the friend on signing up. The value of these discounts can be tuned based on the lifetime value of customers referred through this channel.
Google and Facebook are the two big paid advertising platforms with which you should experiment. It is important to make sure your website is in good shape before spending money on paid ads. You should also have e-commerce tracking set up, as mentioned earlier, in order to track the performance of customers acquired through these channels.
Your social media mix will depend on your target market. Social media accounts are free to setup and straightforward to maintain, however turning them into a successful customer acquisition channel is difficult and time-consuming. There are a number of ways to prevent social media becoming a time sink:
- Use social media only for customer service ie. responding to happy or unhappy customers.
- Use a tool such as Buffer to prepare content in batches and then queue it up. You probably need to share less content per day than you realise!
- Re-use your marketing content across multiple channels ie. sharing the same customer success story. This can be automated, however this is can make it appear inauthentic.
One important consideration is that social media platforms use algorithms to determine what content users see. They also make money by charging advertisers for promoting certain posts and products. There has been a trend of social media platforms encouraging brands to use their platforms - and then introducing fees in order for brands to reach their own followers. It's worth remembering that social media companies are gatekeepers and have the power to do this. The nature of email as an open protocol means it is exempt from this practice!
'Paid social' is a hybrid of social media and paid advertising. It consists of boosting social media posts with ad spend in order to increase reach.
The key metric to monitor is the average cost of acquiring a customer. This will vary by channel. It will also very over time and as you try different user acquisition experiments. For each distinct user acquisition experiment you should keep records of the input and outputs. This will be very useful for reference in the future.
2.2. Retaining customers
Retaining customers effectively helps drive up your customer lifetime value (LTV) metric. This is hugely beneficial as with a higher LTV you can afford to spend more money on marketing which opens up more options.
It’s best to establish a regular cadence with email marketing as it helps to build trust and a sense of reliability with your customers. There is no right answer for what this cadence should be for your brand - you will have to experiment and get customer feedback. Some brands only send emails a few times per year, some send them multiple times per day. One factor is how often you launch new products. Another is how often you can use other events, such as telling customer success stories, launching promotional discounts etc. A good rule of thumb is that you can probably email your customers more often than you do today. As you experiment with different email cadences, track your unsubscribe rate to see if there are any trends. On your unsubscribe page, make sure to have a survey including a free text field in order to collect feedback from unsubscribing customers.
As mentioned under 'acquiring customers' above, drip-feeding social media content with a tool such as Buffer can be a great way to keep in the front of mind in customers' minds.
Part 3 - Exploring other channels
3.1. Online marketplaces
There is now a huge array of online marketplaces available to help promote your products. The main advantage of marketplaces is that they take care of various aspects of your operation for you. The downside is that they usually 'own the customer' meaning you don't own the direct customer relationship.
There is usually a fee associated with these marketplaces. The challenge is to figure out if the value being offered by the platform exceeds the fees. There are also many consultants and tools available to help you sell on these marketplaces. The cost of these fees should all be factored in too.
One way to explore whether a marketplace is right for your business is to search for similar products and see what is available. If possible, try to determine the sales volume eg. from Amazon's 'sales rank' or from the number of reviews. If similar products are available but much more expensive than your products then there may be an opportunity. If similar products are available much more cheaply then it may be an uphill struggle.
It's worth keeping in mind how you can convert marketplace customers into direct customers where possible. There is a fine line to walk as the marketplaces would obviously prefer you didn't. You could, for example, include your website URL printed on the outside of your packaging or include a flyer with an introductory discount for customers who order direct.
🐘 The elephant in the room is Amazon. Amazon has become the go-to e-commerce platform for most of the western world. Almost half of internet users start product searches on Amazon. Amazon has developed very advanced systems for third party sellers. They can handle customer acquisition, product warehousing & fulfilment, checkout, reviews, customer service, advertising etc. Amazon Prime is also a key attraction offering free next-day delivery for a monthly subscription.
If you decide to sell on Amazon then it's worth looking at their advertising platform. We've put together a guide for how to set up your Amazon Advertising account.
Originally conceived as a peer-to-peer auction marketplace, eBay has evolved into a huge e-commerce platform. It's possible to have fixed-price listings and it is a popular shopping site for many. There are many product types that will sell well on eBay and it is often an overlooked channel.
For handmade or homemade products, Etsy is an extremely popular platform. Many vintage and boutique shops sell their products on Etsy.
3.2. Offline retailers
For all the excitement about selling online, it's worth remembering that 84% of sales are still offline (source). Offline is still a huge opportunity for most brands. There are some famous online-first brands such as Graze.com whose offline sales have since eclipsed their online sales.
As with online marketplaces, offline retailers can be a good source of customer acquisition, however you will have to give up a chunk of your gross margin in exchange for this.
Selling directly to retailers
Small retailers who stock similar products can often be persuaded to place a small order to trial your products in their shop. Offering to send a free sample shows willing and can help them decide. If the products sell well for the retailer then this can become a good sales channel. Larger retailers take more effort - often requiring a pitch meeting and more detailed financial and marketing planning. But the order volumes from national and international retailers can be huge. Don't assume that landing the listing is the end of the story. You will likely have to provide supplementary marketing efforts and/or spend to help keep the products selling.
Using wholesalers & distributors
To save you some of the time that selling to individual retailers takes, you can use wholesalers to reach out to entire networks of retailers. Again, you have to give up product margin in exchange for this distribution but it can be an easier way to scale up. Wholesalers often produce a catalogue that shopkeepers will while away the time flicking through looking for interesting products. Don't assume that a deal with a wholesaler will result in lots of orders from retailers - you may still have to supplement the deal with your own sales and marketing efforts.
Part 4 - Alternative routes to market
One alternative route to market is to skip much of the above and jump straight to selling on Amazon. This lets you trial a product in the marketplace without having to develop a website or any of your own marketing channels. You will still need to prepare product details (descriptions, images etc.) and understand the dynamics of the Amazon marketplace however this can be a much quicker way to hit the ground running. If the product sells well then you move upstream and build your own marketing channels.
Another popular alternative route to market is to use Kickstarter. This is a great way of pitching a product idea. It's possible (but not recommended) to pitch a product when it is still just an idea! There are a number of elements to a successful Kickstarter campaign and for every runaway success, there are lots that don't take off. It's also very common for projects to be delayed so the more you can do to prepare up front, the better in order to avoid disappointing customers. The big advantage of Kickstarter is that successful campaigns can gather their own viral momentum, as well as, receiving the funds upfront which can then be used to produce the product. After successfully delivering your first campaign, you also get an engaged audience of early adopters which is extremely valuable.
We hope this introductory guide has been useful! Please don't hesitate to get in touch with what you thought of it or if you have any questions or suggestions.