For manufacturers and consumer packaged goods (CPG), there’s a silent undercurrent that's fast becoming a reliable strategy to thrive in competitive markets and also allows brands to have tighter control over their overall business. Direct-to-consumer (D2C) business model or strategy eliminates middlemen/ intermediaries between producers and consumers. It gives producers/ manufacturers larger control over pricing, consumer data, direct relationship building, and most importantly higher margins.

Online and hybrid business models had only started to become commonplace when the COVID-19 pandemic struck and made them all the more significant. A stark reason why D2C is trending is that businesses have suffered the worst performance of the decade during lockdown and D2C as a model is fairly self-reliant in more than one way. 

A D2C model is where a brand sells its products directly to the end consumer and not through channels like retailers or wholesalers, be it online or offline. One-to-one communication, first-party data collection, lower distribution costs, and higher margins are the four most important reasons that make a D2C business model one of the best models for businesses to rely on. It leads to better customer retention and loyalty. 

While D2C doesn’t necessarily refer to an online model, the way e-commerce has exploded in the past 5-10 years is telling enough of how important it is for any business to be present and scale online. Resistance is more likely to fail businesses, especially when the COVID-19 pandemic has only amplified the need for e-commerce and its need to help survive through daunting challenges from food security, to healthcare, and the basics of livelihood. It will continue to play a critical role in the ‘new normal’ to which brands and the world at large are adapting. Hence, a hybrid model is more likely to see a resurgence of sorts with empathy at the center of customer service.

Consumer Loyalty in Retail

Getting purchases in the digital age is easy. However, if D2C brands are to earn loyalty, they need to enter the veins of relationship building with their customers. What we are referring to here is relational marketing where D2C brands emphasize treating their buyers more like humans than customers/ members that belong to a particular category, group, or segment. There might be multiple people buying a product but their reasons can always differ.

Customer experience must overpower the customers’ expectations for loyalty. D2C brands can be intuitive to find the nudges that make a customer do a repeat purchase or make a repeat customer feel great each time they make a buying decision. 

Let’s consider 10 clever ways in which D2C brands can elevate their customer loyalty:

Identify Behavior - Identify what behaviors signal the love for your brand. It could be an Instagram follower liking your posts and hearing them at multiple points that get you awareness or sales. It could be someone who actively writes positive reviews or offers honest feedback that helps you improve your product. Once you find customers that portray these behaviors, go out of the norm to make them feel special and acknowledge their love. 

Reward Uniquely - Go beyond the transactional mechanisms and reward your loyal customers in ways they would never expect a brand to treat them. 

Brand Communities - Communities are a great place to keep your customers engaged, entertained, and updated about the brand. Brand communities are also an efficient way to influence and nurture sales, retention, and execute loyalty programs. D2C brands can practice social listening by segmenting their audience into relevant groups and monitoring their performance while learning what exactly their customers are saying about the brand. What can also follow in a close-knit brand community are influencer collaborations, designing and executing tailored loyalty programs, and UGC content promotion. 

Personalize - A D2C model is the closest to a consumer. Hence, customer loyalty relies heavily on personalization and creating relevant audience groups. Look at the purchase history to offer recommendations or create a dedicated landing page for each audience group to speak to them clearly at every touchpoint. 

Customer Feedback - As the transaction and experience exchange is direct, customer feedback is the key to gathering the lengths and breaths of data, performance, and areas of product/service improvements. The good part is it’s the unfiltered version coming to a brand directly from the consumer which is the best source to validate your product performance. 

Distribution Channels - A D2C brand need not be in every marketplace but certainly be present where their audience is to build customer loyalty. A brand can be D2C-first instead of D2C-only. If a particular city generates more demand, it only makes sense to cater to that instead of having a presence in a city where the demand is not as high. The key is to be present where the need is and that forms a base to build a strong loyal audience. Further, experiment with different business models to see what works best for you. Choose between a subscription model, or a small-scale business partnership, select a few relevant stores to reach a wider audience, or run a pop-up. 

Incentivize Channels - Let’s not confuse this with unique rewards. Consider your channels and identify growth opportunities. One market could say e.g display more growth opportunities through efficient retail tie-ups and influencer collaborations. Then that’s where you incentivize your channel partners to keep them motivated to perform better. As mentioned earlier, as a brand you’ll always find small pockets where there’s growing or consistent demand. That’s how you are always present where there’s a need which is a key to building loyalty. 

Polish Your Tech - Being present online is not enough anymore as mediums and platforms continue to evolve. Notch up your tech stack to offer convenience and access to your customer and widen your reach to cater to demands. Dig up the tools, plugins, software, social media platforms, bots, and emerging technologies that can either provide or enhance your existing marketing and business models. 

Data Privacy - Direct first-party data can give you a taste of your favorite dessert but can soon cause problems if you don’t take the right steps to protect it. In the blink of an eye, your customer loyalty tumbles down just like the Jack who fell off the hill. Have your SSL, TSL, and HTTPS in place for enhanced security online. 

An Eye for AI - This one is for the tech-averse brands that are hesitant to invest in the latest tech to improve their end delivery and experiences. AI models are reliable as they have proven their potential. It can help brands to streamline communications, automate recommendations, calculate costs faster, personalize and do a lot more for new and existing customers. 

How D2C brands build, strengthen and nurture the relationships with their customers lays the foundational stone to their road to prosperity. There are many cost-efficient ways for D2C brands to delight their customers at various points of their buying and product journeys.