Personalization & D2C Brand Marketing: 6 Ways to Win Customer Loyalty
Direct-to-consumer (D2C) brands are on the rise, upending traditional retail. Companies with cult-like status include fast-rising newcomers like Casper, Third Love, Warby Parker, Allbirds and Harry’s. These digitally native brands—many in lifestyle categories like beauty, apparel and home furnishings—are selling directly to customers, without relying on distribution through department stores, boutiques, or other retailers. And D2C isn’t small potatoes—it’s big business.
Eliminating the middleman can lead to higher profit margins. But for this type of marketing to be successful, D2C brands—and even brands that use other channels but do a lot of D2C business—need to speak to their customers as individuals, and customer personalization might just be the key to cementing relationships and developing customer loyalty in an omnichannel world. According to research by J.D. Power, two-thirds of all U.S. consumers today expect a direct connection to the companies from which they buy goods and services.
Plus, for any brands doing a lot of direct selling, some of the personalization lessons retailers have learned could also have big implications for them—and profit potential.
Does Customer Personalization Help Re-establish Connections of a Bygone Era?
In years past, traditional mom-and-pop shops thrived on relationships and a sense of community—everyone knowing everyone else’s name. You could walk into your local bagel shop and the employees would greet you by name, know what you were going to order, and start preparing it for you. In spite of massive changes in patterns of consumption and purchasing, today’s customers still seek real connections with brands. And they still want to be recognized as individuals with their own preferences.
Why Personalization Pays in D2C Marketing
Perhaps that’s why personalization pays: Collecting and using customer data wisely can help make up for a lack of in-person contact common for many brands. According to a recent Forbes survey, here are the top five ways personalization drives modern business:
- Maximizing sales, basket size and profits
- Increasing sales and LTV through product recommendations
Improving transaction frequency
- Gaining market share by targeting and penetrating niche and micro markets
- Supporting loyalty with unique experiences and service levels
D2C selling proves the power of recognizing your customers as individuals. For example, Harrys.com, a subscription service for men’s razors and grooming was recently acquired by Edgewell Personal Care for a whopping $1.37 billion. A competitor to Dollar Shave Club, Harry’s launched in 2012, selling razors and men’s skincare products directly to consumers. In just over half a decade, it has posted huge online sales and expanded its distribution channels to mega-retailers like Target and Walmart.
Upstart innovators are disrupting the industry, re-thinking customer relationships and loyalty—and turning data-driven customer insights into massive financial rewards. The digital revolution has changed consumer shopping behaviors and expectations everywhere. Here are some important lessons for all marketers, but especially those in the D2C space.
6 Strategies to Win D2C Customer Loyalty
Embrace virality: make the customer experience shareable.
D2C companies would be wise to follow in the footsteps of savvy predecessors who saved on marketing costs by building awareness campaigns that leveraged “virality” and encouraged word-of-mouth sharing. Dollar Shave Club got a huge boost from this infamous YouTube video starring its CEO and featuring rough, bleeped-out language. It reportedly cost less than $5,000 and was shot in a single day. The video immediately went viral and—as of today—has racked up over 26 million views.
Relying on your customers to get the word out is a great—and efficient—way to spur growth. Encouraging and empowering them to do so is even better. Warby Parker created an entire social campaign, called #warbyparkerhometryon, to encourage customers to share their various frame options on social media and solicit feedback from family and friends. A brilliant strategy, this encouraged participation, helped raise brand awareness, and got the word out to prospective customers.
Capture customer data.
To be successful, D2C companies need to tap into their trove of customer data, starting with first-party data captured directly from their audience. Examples of first-party data include:
- Email addresses and social profiles in CRMs
- Geographics and demographics
- Behavioral data from website analytics
- Cross-platform data
- Customer support information
For years, warranties and postcard promotions have successfully gathered direct consumer contact information and details. Nowadays, direct digital channels streamline the process, working in concert with other marketing initiatives. First-party data is easy to collect and manage, especially if you use a customer data platform (CDP).
Additional sources of data are second-party (typically gathered via partners) and third-party data (often purchased from data aggregators). When combined with first-party data, these other sources of data round out customer profiles for a complete picture of each consumer. Once all of the data has been collected, ingested, and assembled into individual profiles for each customer, companies can tap into these deep consumer profiles to enable sophisticated targeting for marketing.
Build 1:1 personalized relationships with your customer.
A one-size-fits-all-customers approach simply isn’t enough. Brands can’t afford to turn off potential customers with “tone-deaf” marketing and mass merchandising. When customers go directly to a brand’s website either to research or to buy, they expect a highly customized experience tailored to their own preferences and online behavior.
“Blasting emails to everyone who tried samples or bought a particular product won’t lead to customer delight. Detecting a mood swing in each customer and changing the tone of push notifications does.” says Kenji Yoshimoto, chief analyst for direct marketing at Shiseido.
Shiseido executives wanted to make sure their new customer loyalty experience was highly personalized. They analyzed data to understand customers’ evolving preferences so they could adapt offers and marketing strategies to each individual, throughout their lives. Leveraging Treasure Data’s enterprise CDP helped Shiseido to analyze historical customer purchase data, demographic information, and recent behavior all at the same time, and in one place.
The loyalty program update worked well for Shiseido. Accurately analyzing and correlating data with customer behavior helped Shiseido accomplish its goal, driving a 20 percent in-store revenue increase per loyalty program member over the course of a year, an 11 percent overall revenue increase, and a 38 percent growth in net income year-over-year.
Offer channel choices, and remember them when you interact with customers.
A product purchase typically includes these phases:
- Pre-purchase: where the customer is conducting research to form a decision
- Purchase: where the customer pays for an item
- Post-purchase: where the customer seeks help or information after the sale
Today’s customers typically rely on a combination of touch points to interact with your brand: mobile app or website, third-party review or product comparison sites, retail stores, and customer support channels, just to name a few. They may want to first research your product on their computers, then compare it to competitors on a tablet. A few days later, they may look up reviews on their phone, and eventually go see it in person. And they may repeat this cycle multiple times, while considering other products along the way. Each of these channels needs to offer a consistent brand experience as well as a viable path to purchase. It’s all about offering your customers choices.
Personalization is where customer data collection pays off. Showing personalized product recommendations based on past purchase is a good start, but companies need to take it a step further, tailoring the entire experience to customer needs. When brands leverage customer data analytics, they can deliver promotions and offers more efficiently to their customers, often relying on owned media assets like social media channels and email. Personalization technology that leverages AI and machine learning helps marketers piece together customer data from multiple sources, such as loyalty programs, in-store purchases, mobile app usage, social media, weather satellites and geolocation. Using these data streams, sophisticated algorithms build unique profiles for each person, which then helps marketers deliver promotions and communications with the right personalized message and offers.
For example, global beverage brand Kirin used the Treasure Data CDP to combine online browsing data, promotional event data and other data, to get complete individual profiles for 4 million customers. Augmenting and unifying this data with offline data, Kirin could then gain insights to improve marketing campaign performance.
In particular, Kirin saw an increase in sales by those visitors who experienced the personalized campaigns at the company’s concept shops, directly operated stores, and beer factory tours. Treasure Data CDP analytics helped Kirin to analyze customer behavior during the customer’s buying journey and develop personalized, omnichannel marketing campaigns. Results of campaign measurements showed an increase in purchase frequency and improved customer lifetime value (CLV).
“The significance of personalized marketing was clearly confirmed by data,” says Naoki Nakajima, digital marketing expert at Kirin. “All customers purchased Kirin products, but those exposed to the personalized engagement were more likely to become loyal customers than those just exposed to standard campaigns.”
By analyzing behavioral data, Kirin was able to determine profiles of its best customers and create targeted customer segments. Kirin was then able to execute omnichannel personalized campaigns and distribute appropriate content with push notifications using Salesforce Marketing Cloud. those exposed to the personalized engagement were more likely to become loyal customers than those just exposed to standard campaigns.”
By analyzing behavioral data, Kirin was able to determine profiles of its best customers and create targeted customer segments. Kirin was then able to execute omnichannel personalized campaigns and distribute appropriate content with push notifications using Salesforce Marketing Cloud.
Map the customer journey.
To manage the customer’s often non-linear and complex path to purchase, you’ll want to map their most common journeys. Mapping these paths—and taking the right actions based on insights—is one of the most critical ways to drive sales and loyalty today. Customer journey mapping is the act of creating a visualization of the interactions a consumer has with a brand as they try to fulfill their needs, over extended time periods and across all channels. It looks at the purchasing path from the point of view of the consumer, focusing special attention on where they are stalling or getting stuck. These days, virtually all of this is accomplished through the use of customer analytics.
The first step in customer journey mapping is to create a simple timeline of the series of user actions. The next phase is to add on a layer of user thoughts and emotions at each stage to build a narrative. The easiest place to gather insights is to conduct research while your customers are shopping—to find out their motivations and behaviors, why they chose the path they did and what their pain points are. Alternatively, you could solicit feedback from your target audience (people who share attributes with your customers) through a focus group to better understand the thought processes and emotions involved in the customer journey. An additional source of valuable data is in-store analytics. How many shoppers are there? How many in each aisle? How many checkout options are there? How many average products per purchase? A third source is web and mobile analytics: website visits, clicks and page views as well as purchases and repeat purchase statistics.
Journey mapping pulls together disparate data points to create a holistic view of the customer journey so you can take action to address any issues they may face.
Optimize for mobile first.
In some cases, a brand may be better off optimizing its mobile web experience instead of building out a dedicated app. However, most of the D2C darlings have invested heavily in a mobile app strategy. Their apps act as a streamlined easy-to-use platform for marketing and selling their own products, encouraging regular use and seamlessly handling transactions. Plus, a brand app usually provides much more detailed data about customer interactions, more consistently, than many other data streams.
For example, Warby Parker’s app (which boasts 57.6k ratings in the App Store and is ranked 4.9 stars out of 5) combines augmented reality and face mapping so users can try on “virtual glasses” without having to order them. Traditional retailer Bed Bath & Beyond also uses augmented reality in its mobile app to help make purchase decisions easier for users. The technology offers a 360-degree view of products, various color choices and additional styles of the items they want to buy.
And Nike—another established brand—is leaning heavily on its mobile strategy to build loyalty. When the Nike+ app is in in-store mode, customers can request fitting rooms and shoe sizes instantly, receive special offers and exclusive products, and even skip waiting in line by checking out in the app. The company recently announced Nike Fit, a scanning technology in its app that uses machine learning to fit customers for shoes. Users are prompted to scan their foot using a smartphone camera. The app will then offer recommendations when a customer shops for shoes online or in-store (storing the information within the customer’s Nike+ profile).
In addition to creating improved customer experiences, mobile apps serve to boost customer loyalty and engagement—further solidifying the brand relationship.
D2C Is an Opportunity to Engage Your Customers and Forge Relationships
Social media has transformed business and the way that customers expect to connect with the brands they love. They want to know the story behind your brand, and what you believe in. D2C companies differentiate their brand experience by supplementing traditional retail, partner, and promotional channels with education, personalized experiences, and one-on-one support. In the digital age, they can finally take ownership of the conversation itself by bringing it into owned media. There’s no time like the present to reap the rewards and get the conversation going.
To learn how to use customer data to become a force to be reckoned with, check out this Forbes special report on customer data as a competitive weapon.