Why Consumer Goods Companies Need a DTC Strategy

Direct-to-Consumer|6 Minute Read

Why Consumer Goods Companies Need a DTC Strategy

“Any 21st-century consumer goods company needs to be fluent in the winning strategies of the DTC movement if it wants to succeed,” business expert Emily Heyward wrote for Inc.

That’s especially true today. The emergence of the global pandemic, combined with new data privacy laws governing third-party data, has affected the entire commerce landscape.

These macro factors, among others, have made connecting with consumers in a highly personalized manner all the more critical for organizations to thrive in 2021 and beyond.

Leading consumer goods companies (think Coca-Cola, Procter & Gamble, Nike) have navigated these challenges by building strong, direct-to-consumer (DTC) relationships.

They’ve primarily done so by prioritizing first-party data collection and acting on that data (e.g., cross-channel lifecycle orchestration, predictive modeling and analysis) in real time.

Yet many consumer goods businesses — from well-known food and beverage brands to household-appliance manufacturers — have yet to emulate these companies’ strategies.

One reason is they sell their products through retail partners who don’t have any incentive to share data with them.

This limits these companies’ real-time ‘view’ of shoppers’ engagement and purchase behavior and prevents them from orchestrating individualized experiences that can transform their relationships with customers and drive business growth.

Circumventing these partners by collecting their own first-party data, unifying it in a customer data platform (CDP), and ensuring all growth teams (e.g., marketing, ecommerce, analytics) can access and leverage that data efficiently is the best way for these companies to ‘catch up’ and establish mutually beneficial DTC relationships.

direct to consumer dtc

Embracing the DTC model: Consumer goods companies’ path to building better, mutually beneficial customer relationships

Amazon may be the gold standard when it comes to building customer loyalty and exceeding customer expectations. (As is expected from one of the world’s largest brands.)

But that doesn’t mean your consumer goods company can’t replicate Amazon’s success in terms of developing direct customer relationships and delivering an end-to-end customer experience (CX) that leads to greater shopper loyalty and satisfaction.

Many consumer goods businesses have already done so in recent years. Here are a few notable companies — including a BlueConic customer — who’ve thrived with DTC models.

PepsiCo launches two new DTC ecommerce websites.

The multi-brand food and beverage company launched PantryShop.com and Snacks.com in early 2020 to enable consumers to buy its products directly from them in customizable bundles as opposed purchasing at brick-and-mortar retail locations.

One reason for these sites was consumers’ hesitancy to shop in stores amid the pandemic.

But these sites also afforded PepsiCo the opportunity to collect more shopper data, better understand individuals’ brand preferences and product interests, and further engage them.

“If there is a certain bundle or solution that consumers like a lot, that may inform our assortment or marketing messaging strategy more broadly,” PepsiCo Global Head of E-commerce Gibu Thomas told Modern Retail following rollout of the DTC sites.

Thomas went on to say the company has a “relentless focus on consumer centricity,” and this DTC initiative is just one facet of its overarching customer engagement strategy intended to generate both greater loyalty among customers and revenue.

The results of PepsiCo’s shift to DTC are promising: The business reported its ecommerce sales doubled in the third quarter of 2020 compared to the same period a year earlier.

Beyond Meat enters the DTC space with an online shop.

It’s not just consumer packaged goods (CPG) ‘heavyweights’ embracing DTC. Newer and smaller companies, like Beyond Meat, are also turning to DTC to diversify revenue.

The plant-based food manufacturer’s revenue model revolved nearly entirely around grocery chain and ecommerce marketplace partners. But the pandemic upended this model and led the business to explore new opportunities to reach its growing audience.

Beyond Meat ultimately launched its own ecommerce site in summer 2020 — one that not only sold its ‘meatless’ products and offered two-day delivery for those offerings, but also enabled the company to collect consented first-party data.

Beyond Meat Chief Growth Officer Charles Muth explained to The Verge the DTC site enables the company to “have direct conversations with our consumers” during and after their visits and market to them accordingly across channels based on their interactions, behaviors, purchases, and interests following site sessions.

HEINEKEN USA focuses on building DTC relationships.

BlueConic customer HEINEKEN USA is several years into its ‘consumer data journey.’

Part of that journey has been determining how the company can best leverage its growing first-party data asset to directly engage its customer base across channels and touchpoints.

HEINEKEN uses the unified, actionable first-party data it collects and stores in BlueConic to deliver new digital experiences and construct new customer loyalty programs.

Each online and offline interaction and purchase informs dynamic updates to persistent profiles the CPG company has for each individual in its data and tech ecosystem.

Speaking with BlueConic at the 2021 MarTech Conference, HEINEKEN USA Director of Consumer Data Strategy Rebekah (Bek) Kennedy noted this always-accurate, unified data has opened up new engagement opportunities for the multi-brand company.

For example, Bek stated the company will begin a DTC email pilot program in 2021.

Actionable first-party data has set the business up for DTC and ecommerce success, HEINEKEN USA CMO Jonnie Cahill told Digiday, adding the quality of that data impacts the consumer goods company’s ability to build and nurture customer relationships.

“[Y]ou don’t always hear the word ‘quality’ when it comes to data strategy,” Cahill explained to the publication. “You hear the words ‘quantity’ and ‘millions’ and ‘how many.’

“Well, ‘how good’ is also an important question.”

dtc business model

Why many consumer goods companies use CDPs to drive their DTC strategies

“Forays” into direct-to-consumer business models “provide valuable direct connections to consumers, rich data, and opportunities to test and learn quickly,” McKinsey noted in its research on how consumer companies can navigate the “next normal.”

All you need to set out on your DTC path and build direct relationships with customers like the aforementioned companies is a CDP like BlueConic in which you can unify first-party data for everyone who engages with your business online and offline.

With a pure-play customer data platform that makes all that data universally accessible to marketing, analytics, customer service, ecommerce, and other teams charged with interacting with customers, your consumer goods company can:

  • Activate new direct-to-consumer marketing programs based on a single customer view
  • Attract, convert, and retain customers in new ways (e.g., digital products/experiences)
  • Optimize ads to reach engaged customers (and suppress ads to disengaged individuals)
  • Confidently use data, knowing it’s always accurate, consented, and updated in real time
  • Rely less on third parties for both revenue growth (retailers) and data access (agencies)
  • Better understand what leads customers to buy, churn, and become loyal to the brand
  • Uncover shopper insights that lead to smarter decision-making across the organization

The DTC model will never replace the need for many CPGs to sell their goods through brick-and-mortar locations and ecommerce marketplaces to grow their businesses.

But DTC is a low-hanging-fruit opportunity for every consumer goods company today — and one they can properly take advantage of with a CDP at the center of their technology stacks, guiding growth-focused teams’ customer engagement efforts.

Watch our 2021 MarTech Conference session with BlueConic customer HEINEKEN USA to learn how the CPG company transformed its relationships with customers using our CDP.

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