Customer Knowledge and D2C Growth: A Virtuous Cycle

Improve organizational focus and clarity: Many of the Direct 60 executives have used data from direct relationships with customers to clearly define who their target is. They have created new personas and psychographics of their main customer segments. This has helped them to set clear goals, create the right organizational incentives, and use limited marketing resources more efficiently. They are making sure that the whole organization focuses on who the customer is, and makes decisions with those customers in mind. In the post IOS-14 world, having a clear knowledge of the target consumer segment helps brands to reduce their reliance on expensive performance marketing, and create a more efficient full funnel marketing strategy. 

Offer the right incentives for desired customer actions based on the lifecycle stage: Direct 60 marketing execs are telling us that having accessible data on the customer has enabled them to truly activate lifecycle marketing. A better understanding of where the customer is within the life cycle dictates which action the brand wants to incentivize. For instance, did the customer make a first purchase, and the brand is going for a second–or is the customer loyal to the brand, and the brand wants to use them to bring more people into the brand? Data is also helping brands understand how to nurture these relationships based on the customer journey – when to ask for reviews versus when to encourage a visit to the store with a birthday surprise. This type of marketing resonates with customers and creates value both for the customer and brand. 

Nurture Loyalty Among Best Customers: A brand’s most loyal customers are not only responsible for a large percentage of the revenue, but their behavior is also an indication of whether a brand’s strategy is working. Many on our Direct 60 list are now watching the frequency of purchases, total spend, and other behaviors of their top spenders to keep an eye out for any risks to the overall health of the brand. They are also more effectively testing various incentives and promotions amongst these most loyal customers to promote further brand engagement.

According to Nico Perdomo, Co-Founder & CEO at Catch and a member of the Direct 60 selection committee – “Knowing your customer means knowing their preferences at any given point in their customer journey. What a shopper needs to incentivize retention after first purchase is very different than after purchase number five. Earlier in the life cycle, customers have less brand affinity and are more prone to comparison shopping, versus being more swayed by experiences, exclusivity, etc. after they’ve made many purchases and become brand loyal. We believe that brands can drive new customers to make a second and third purchase by making it easy for them to earn/redeem rewards that stymie the desire to comparison shop and give the brand another opportunity for the strength of their merchandise to shine through.”