With so many D2C brands selling on Amazon, Target, and Walmart, should you make the jump to omnichannel? We will discuss the pros and cons and share best practices for expanding your D2C business.
These days, creating a D2C business can be relatively inexpensive. With platforms like Shopify, eCommerce brands can start small with low overhead costs. Plus, new service companies provide support for warehousing, fulfillment, content, call centers, return processing, and more.
New brands can start with limited marketing budgets and acquire loyal customers through new channels like Instagram influencers. It’s easier than ever to get started with digital advertising on Google and Facebook, even with small spend limits.
What is the next phase for these D2C brands? There’s only so much growth a brand can achieve from reaching a few hundred thousand followers of an Instagram personality.
Before making the leap to omnichannel, it’s vital to get a better understanding of your customer base. The best way to measure this accurately is through individual customer lifetime value. CLV can help you answer:
- Who are your best customers?
- When will your customers buy again?
- Which customers are going to churn soon, and when?
- What behaviors do your best customers have in common?
- Which products are popular with high-value customers?
Like solutions for warehousing and returns management, new customer data platforms have popped up to help D2C brands manage all of their data in one place. Pull together all of your orders and transaction data, plus behavioral data from your website and ad platforms, and even survey or reviews data if available.
You can use all of this information together to predict customer lifetime value at the individual level. If you have something like survey data, it’s possible to predict CLV even before the first transaction. Especially for these brands with limited budgets, real-time metrics mean real-time campaign optimization, so you can stop wasting ad spend on the wrong customers.
Many brands struggle when making the jump to omnichannel. With D2C, it’s much easier to build strong relationships with your customers. As you expand to new channels like Amazon and Target, customer loyalty drops. Plus, it’s harder to reconcile customers who are buying through multiple channels.
For example, a leading CPG platform expanded to new channels without differentiating products across channels. They lost visibility across their brands on where customers were shopping. Conversely, a leading vitamin subscription company used different SKUs for different channels to get a better view into individual purchase behavior.
To successfully expand to new channels and achieve sustainable growth, follow these three steps:
- Differentiate products across channels
- Reconcile customer data
- Create incentives for loyalty
1. Differentiate products across channels
Don’t sell the same exact product at Costco, Target, Amazon, and on your brand site. Create products to suit the buyer and tailor your marketing to each customer. For example, sell a supersize version of your product at Costco. Offer bundles through Amazon or Shopify. Keep exclusive product options, flavors, or colors on your website.
Different SKUs help personalize your product for each channel. Beyond that, unique products help you adjust prices and retain margins.
Plus, differentiated products allow you to more easily measure how products and channels influence CLV. You can then invest more in the channels and SKUs that bring in high-value customers.
2. Reconcile customer data
When you were only selling through your eCommerce website, it was easy to have a full view of each customer. When you expand to new channels, you’ll lose a lot of transparency. It’s important to figure out if the same customer is a repeat customer across channels.
It can be difficult to collect data from channel partners. Some partners restrict the amount of data they share, while others, like brick and mortar stores, simply don’t have as much of a digital footprint.
The best way to reconcile missing data is through customer identity resolution. For example, you can use addresses, names, and even zip codes to match customers across channels.
With reconciled data, you can retain the transparency needed to calculate customer lifetime value at the individual level. Then, you can keep using CLV to optimize your acquisition campaigns in real time as you continue to grow.
3. Create incentives for loyalty
When you start selling your product across multiple channels, it’s important to retain the customer relationships you built in the beginning. An effective solution is setting up incentive or loyalty programs. Offer discounts or exclusive offers to shoppers on your eCommerce website.
Not only will a loyalty program draw more customers to your website, it will enhance new and existing customer relationships and provide more customer data points. A loyalty program allows you to personalize your marketing with customer-specific discounts; helps you increase customer lifetime value; and ensures you’re rewarding your best customers to encourage repeat purchase behavior.
Stick the Landing
Bringing it all together, when you go from D2C to omnichannel, first get a better understanding of your customer base. Calculate individual customer lifetime value to learn who your best customers are. Then, continue to calculate and optimize for CLV as you start selling in new channels.
Make sure your products are differentiated, reconcile your data, and create a loyalty program. These steps will enhance your customer experience, provide more data to calculate CLV, and ultimately improve your customer relationships and brand equity.
At Retina, we can provide customer identity resolution as part of our customer lifetime value metrics. Get a complete view of your customer base and strategies to optimize your campaigns spend across channels, based on customer lifetime value. Attract more high-value customers, reduce ad waste and acquisition costs, and focus on retaining and building customer relationships.