Today’s most successful DTC brands like Warby Parker, Rent the Runway and Casper have created a model that appeals to today’s omni-consumer – those accustomed to a fast, convenient, hassle-free, trendy and communal shopping experience.
Since around 90 percent of retail spend in the U.S. takes place in a physical store, it’s time for retailers to take advantage of learnings from the successful habits of DTC brands. Legacy brands can learn from their DTC approach to help win consumers in a landscape where there are more options than ever, and e-commerce giants like Amazon have set the standard for how we spend our money.
DTC brands like the online-first companies listed above are thriving today more than ever because they have a deep understanding of and respect for data. Not only are they paying close attention to the behaviors and preferences of their customers – they’re tailoring and building their inventory and experiences to match their anticipated and observed needs.
A perfect example of a legacy brand adapting its approach with data-driven consumer planning is Fender. The famous guitar company launched a subscription service called Fender Play to help people learn to play guitar and other instruments. However, before they launched the service, they took a hard look at their customer data and learned that 90 percent of first-time players quit in the first year – but the 10 percent who keep playing become players for life. That, along with insights on buying habits, helped Fender build a service that was focused on retention, which tends to be a much bigger challenge than acquisition for many DTC brands. Fender learned from its customers that if you teach them to play – and become that trusted resource from which they can learn – they’ll keep playing and are more likely to become customers for life.
Casper learned from its customers where to open its stores and how those stores should look. For two years, Casper’s team experimented with pop-up stores. Real-time changes were implemented to five beta store models based on feedback from those pop-ups. By listening to customers’ real-world behavior, the mattress brand was able to establish a floor plan for its stores that they knew their audience would respond to.
By collecting and analyzing customer data, retailers can learn so much – how to retain customers, what their stores should carry, and where they need to be. But it’s equally important for retailers to understand how their shoppers want to buy, and what kind of messages they want to receive from their favorite stores. DTC assumes that shoppers are building their own path to purchase across channels, and these brands are purchasing media that maps to their bespoke journey.
Since we know that that not every shopper engages at every touchpoint on the path to purchase, it’s important for brands to know what each customer’s journey looks like. DTC brands, with their sophisticated approach to customer data, appear to have mastered getting their messages in front of customers at exactly the right moment. Their grasp on this data also seems to guide them to more satisfying brick-and-mortar experiences for their customers.
These are not impossible goals for legacy retailers. Melding first-party data with real-world customer intelligence can deliver the insights retailers need to offer the experiences shoppers desire, online and off. The key lesson for brick-and-mortar retailers is that they must do a better job of leveraging observed data, like Blis’ location-powered real-world insights, to understand their customers and what they want if they’re going to compete with DTC brands that are eyeing retail domination.