Why Direct-To-Consumer GTM is critical for brands channel success?
DTC GTM = Direct to Consumer Go-To-Market. Where a consumer has the option to interact directly with the brand, buy products or services, usually via Brand’s own Online stores, Call Center or Exclusive Company branded Retail stores.
Why is a DTC GTM critical for Brand success? If you don’t have time to read the whole article, here are the 2 reasons:
- A direct engagement with customers always makes the brand stronger. Unfiltered customer feedback is the way to improve your products, process and systems.
- When the brand knows the customer, you can do personalized offers. This is also called “Segment of One” Marketing, irrespective of how you fulfil (direct or indirect)
Some of us, run intense high volume sales and service operations. When you run eCommerce sales, you manage thousands of customers in a DTC (Direct to Consumer) way. You need to deliver on multiple parameters from web site experience, payment gateways, call centre sales experience, last mile delivery and logistical experience and a bit of post-sales technical support. I’m sure a Big basket or OLA cabs or Amazon have the same issues. But for traditional brands like Nike, Levi’s or HP which have a long history of multi-tier channels, the journey of DTC execution is more impressive, when more than 95% of business is via Channels.
Mistakenly, many channel partners think Direct to consumer (DTC) business of a brand is detrimental to channel partner business. Having been in HP Channel Business for over 6 years both at Asia Pacific and India country level, I can say with confidence the perception is incorrect. If you see any major brand, be it in FMCG or IT, the DTC portion in consumer business is usually well below 5%, even in developed markets. More than 95% of business is still done via 2 or 3 tier channels. So DTC is never a threat to channel business. So why is it important for a brand to have a DTC Business?
A direct engagement with customers always makes the brand stronger as you get unfiltered customer feedback on your products, process and systems. Hence, DTC Business makes every internal process in a company stronger – and eventually makes the whole company/ brand stronger – benefiting the channel partners the most.
Now let me explain this with the types of customers. Traditionally, companies categorize their customers into 3 types and arrive at NPS (Net Promoter Score). NPS measures customer loyalty to a brand’s product and services.
The NPS is essentially based on a single question. “On a scale of 0-10, how likely are you to recommend our product/service/company to a friend or colleague?” Promoters usually Score (9-10), Passives (7-8) and Detractors (0-6). And NPS is derived by subtracting (% of Promoters) – (% of Detractors). While NPS is great for an overall feel of the brand, the real joy is in qualitative feedback of customers, which is usually written as comments.
In my view, there are four types of customers. Brand lovers, Brand Neutrals, Silent Switchers and Golden Annoyers. This you can’t compute this by a NPS Survey, but comes only by reading the qualitative feedback, which we get when we run DTC brand.
Brand Lovers: They are the most happy with your brand. They will tell everyone of their friends and family, about the great experience with the product / service / brand. Usually in NPS surveys they are promoters. In qualitative surveys, they write simple lines like “HP is best” or “Love HP” or use words like “Good/ Awesome” etc.
Brand Neutrals: These customers have purchased your brand. They are neither happy or angry with the experience. They like a few things about your brand and hate a few things. They usually will buy again from you, if your brand is constantly improving and provides a purchase/service experience better than what competitors do in the market. In comments section they, use the word “But” in some form. Example: “Good products, BUT Delivery could be faster”/ Price bit high/ Service can be better/ Your website is slow/ My payment did not go through/ Your delivery boy kept me waiting” etc
Silent switchers: These customers have purchased from you – and they are NOT happy with your brand. They have nothing positive to say, but most importantly they remain quiet. They usually give low NPS scores, but leave the comments section blank. They might switch brands and not recommend your products to their friends.
Golden Annoyers: This in my view is the most special type of customer. Usually about 5% of your customers. They are unhappy with the brand experience. But they also had high expectations of your brand and felt let down. They love your brand, but as a company we have let them down. The beauty is they take the time to complain to our senior management, our CEO etc. They write long mails, which is usually very annoying to read – but every word they write is Golden as feedback to company. This can be anything from product quality issues, ease of browsing your website, how a call center agent talked to them, to how a delivery boy made them wait, or a software or accessory was promised on the site was not bundled, or how their post sales service was not good etc
For any market leader, Brand Lovers and Brand Neutrals make about 70% of the brand. And this usually reflects in the market share of the brand. Silent switchers and Golden Annoyers make up about 30%. How you deal with Golden customers in a DTC environment, makes or breaks your brand in the long run.
A brand usually has two choices, for the Golden Annoyers. One option is, solve their issue tactically and move on. They eventually become silent switchers. Other option is, treat them as GOLDEN customers. This 5% also speak for the other 25% silent switchers. So they actually speak for 30% of your perhaps dissatisfied customers.
Go out of the way to Solve their problem first. Then analyze their feedback one by one. Talk to them. Incorporate their feedback to improve your products and services in future. And report to them after a few months what we did. You know what happens. These 5% who were your strident critics, eventually become brand advocates. They tell their friends about their experiences. And that word of mouth is pure magic.
Almost every fortnight I get a long memo, from one of these Golden customers. And I’m thankful they wrote to us, so we get an opportunity to fix the issues of HP and make our company even better.
2. When the brand knows the customer, you can do personalized offers. This is also called “Segment of One” Marketing, irrespective of how you fulfil (direct or indirect)
why is this important? customers are increasingly frustrated to be the target of mass campaigns. How nice would it be if the brand knows about me, my purchase history, my demographics and give me a customized offers. Yes this is a topic for another day.
And you know who it benefits most? Our channel partners. As we build better products, better process and systems. Because like Partners, when we serve end customers, we understand all the pains and pleasures ourselves. But as a company, we can fix these issues faster, when we get unfiltered feedback directly from customers. And build customized offers to our customers.
Originally published on: Why Direct-To-Consumer GTM is critical for brands channel success? | LinkedIn
