Motivating consumers in uncertain times: 5 things DTC marketers need to know now
Over the last few years, the marketing efforts of direct-to-consumer (DTC) brands have been buffeted by winds of change from various directions, including an uncertain economy and persistent supply chain issues. But perhaps the most significant change has been the rapid rise of competition in the DTC space itself.
Having disrupted the marketplace, DTC marketers are having to rethink the way they do business. To put that another way, the disruptors are now having to disrupt themselves.
Here is what DTC marketers need to know to continue to grow in this environment:
1. DTC and traditional brand approaches are blurring.
DTC brands are seeing new competition in “their” space from traditional brands that are using DTC methods (e.g., subscription plans, data-driven customization and messaging, etc.) to provide a better customer experience — an opportunity opened up by a change in consumer perception and behaviors. As traditional brands incorporate DTC approaches, the nature of the offerings from each start to blur in customers’ minds. In a recent survey, two-thirds of consumers indicated that whether or not a brand is DTC has no impact on their decision to purchase.1
At the same time, many digital-native DTC brands have been exploring brick-and-mortar opportunities. They are also working with traditional retailers for distribution. Providing a physical touchpoint in whatever form — e.g., a pop-up store in a traditional retail setting — is becoming an essential tool for DTC marketers so they can capture the 70% of consumers who still prefer to shop in person.2
2. DTC’s data advantage is under pressure.
For years now, marketing experts have been urging traditional brands to adopt the agile processes of DTC marketers.
For example, Francesco Urso, former P&G brand manager and founder-CEO of Wolf Project, said that acquiring more data (and employing sophisticated analytics to parse that data) is the most important method that traditional brands should adopt from DTC marketing. He also suggested that DTC companies need to push beyond their current data-centric marketing models with even more innovation,3 given that expanding data restrictions — driven by new privacy-sensitive policies from the likes of Apple and Google — are disrupting established target marketing strategies.
3. DTC brands can be uniquely vulnerable in an uncertain economy.
High inflation is warping purchasing patterns, causing many consumers to become more price-conscious and to delay purchase decisions. DTC brands — particularly those without touchpoints in traditional retail settings — may find themselves outmaneuvered by traditional brands that choose to deploy discount offers and other in-store promotions to appeal to value-conscious shoppers.
Of course, general economic uncertainty is also affecting marketing budgets, prompting brands to reconsider — and in many cases reign in — their creative and media plans. DTC marketers that have been spending heavily on marketing for customer acquisition are having to rethink their budgets to optimize return on ad spend (ROAS).
4. DTC brands need to further unify their digital/physical strategies.
DTC marketers have been notable for deploying both digital and physical — particularly direct mail — campaign executions. It makes sense that direct mail has played a key role in DTC marketing given that DTC brands are in the business of offering something special/tangible and delivering it (often through subscription programs) directly to customers’ mailboxes. Direct mail can convey the distinct branding/sensibility of a DTC brand — the touch and feel of a brand, so to speak — in a way that digital cannot. In other words, direct mail can complete/complement digital messaging.
But with paper shortages and higher postal rates raising the cost of direct mail, DTC brands are under pressure to optimize or even eliminate print. They are bringing digital-style rigor to print campaigns with a test-and-learn strategy. Quad, for instance, has deployed its Accelerated Marketing Insights Simulator — a cloud-based application that uses an online survey panel to rapidly test consumer response to variables before sending out a single piece of mail — for a wide range of traditional and DTC brands, helping to increase response rates by as much as 27% vs. untested pieces.
5. Demographic data is not enough.
Figuring out what motivates consumers is hard enough in economic boom periods, but deciphering their behavior in uncertain times creates a whole new set of challenges for DTC marketers.
According to Diffusion’s 2022 Direct-to-Consumer Purchase Intent Index,4 nearly a quarter of surveyed consumers (23%) said that DTC brands offer higher quality than competing brands, while almost 1 in 5 (18%) said DTC brands offer a better customer experience. Then again, 40% of the same surveyed consumers cited fast and free shipping as a reason they would buy from a non-DTC retailer vs. a DTC brand, suggesting that some factors — such as value-consciousness and convenience — can overshadow perceived DTC advantages.
Where do current and prospective DTC customers stand on quality vs. convenience vs. price vs. other factors?
One way to find out at scale is by using a persona matrix — a combination of demographics with cultural and emotional factors — to determine how to motivate targeted consumers. Using such a matrix of information in conjunction with a test-and-learn approach will help DTC brands figure out consumer motivations in real time — including motivations that may be shifting and evolving due to economic uncertainty — and to adjust their target marketing accordingly.
How Quad can help
Quad works with more than 4,500 marketers — from legacy brands to DTC challengers — to help them reimagine their marketing experience (MX). There are, of course, no one-size-fits-all marketing strategies for today’s brands. That’s why it’s a good idea to work with a channel-agnostic partner like Quad to help figure out what makes sense for your DTC brand right now.
1Mintel – Direct-to-consumer retailing US 2022 (fielded in January 2022, written in March-April 2022)
2Mintel – Direct-to-consumer retailing US 2022
3“DTC vs Big Traditional Brands: Different or Complementary?” LinkedIn Pulse, Jul 8, 2019
4Almost 6 in 10 US consumers shopped at a DTC brand in 2021: report