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Default CategoryMar 27, 2020

Why DTC Investments Make Sense During the COVID-19 Crisis

Peter Yobo

We are in a time of immense uncertainty. This global change is unlike anything most of us have seen in our lifetime. The ambiguity around the COVID-19 crisis leaves us wondering not only how we are going to endure this crisis, but what we need to prepare for the world post-pandemic.

One thing is certain in the midst of so much uncertainty: while many businesses are struggling, there are several shining stars that aren’t just surviving this crisis, but thriving. The primary differentiator? Brands that have a direct relationship with their customers and a fulfillment model that brings their value directly into the homes of their customers. Put plainly, the direct-to-consumer model (DTC).

Disney Plus, Peloton, and HelloFresh all make the list of companies that are experiencing tremendous growth in a climate where most are on the defense. All have infrastructures in place to sell and deliver directly to consumers. Disney Plus, for example, in the height of the COVID-19 epidemic, launched their streaming service in the United Kingdom and Europe and already have 5 million app downloads in those markets in less than a week. This growth was possible because they had direct access to their customers and could safely and easily deliver their “products” at a time when most consumers are remaining indoors. Peloton and HelloFresh are seeing similar success because they safely source and deliver their goods straight to buyers.

Jake Carter, Chief Innovation Officer at Credera recently shared, “Businesses who can find ways to adjust to new customer behavior may have opportunities to use their new COVID-19 mandated choices in a way that will serve customers in the long term.”

As serious as this crisis is, there are opportunities to innovate and find new ways to both serve your customers and see long-term business success. While we can’t predict the future, we’re of the opinion that DTC is this opportunity for most brands. The ability to go directly to your consumers is not only here to stay, but almost a necessity for brands to succeed post the COVID-19 shutdown. But if you need convincing, here are four reasons why now is the time to implement a DTC strategy and five practical steps to make it happen.

4 reasons why your brand needs to go dtc now

1. Data Ownership – The most important reason to go DTC, now or anytime, is that brands that go directly to consumers take ownership of their most important assets: the relationship with their customers. This means you can gather the data, collect the insights to better serve them, and create a reason for them to be loyal to you. You have control over how customers experience your brand and don’t have to rely on a third party for promotion.

2. Build Brand Affinity – Many times, the strongest bonds of trust and loyalty are built in times of great fear and uncertainty. If you had a way to speak directly to your customers during this current crisis, you could add value by cutting through the uncertainty, serving and caring for your customers, and showing them the humanness of your brand. This not only builds loyalty but a brand affinity that lasts far beyond the current crisis. Whoever gets this right now will be the brand that customers stick with when things shake out.

3. Availability of Customers – People are more available now than ever. Your whole target audience is at home and on their devices, they are literally required to stay home. There is no better time to engage them, learn more about them, and show them the heart of your brand than now.

4. Extra Time – Lastly, now is the time to go DTC because as a business leader, you should also have more hours in your day now than you traditionally do. There are no random visitors, no commute, and no office distractions (unless you have little ones at your home office!), so your time can be repurposed for other activities. Redirect this extra time to implement the five “hows” that we’ve outlined below.

5 practical ways to kick off your dtc initiative

1. Know Your Customer – The only way to win at DTC is to know your customers well through research. Your first step is to go to your customers, get to know their pain points, and do it quickly! Our suggestion is to do this through a survey. Pick a sample size and call them to ask them questions or send your mailing list a survey.

2. Brainstorm Ideas – After you’ve identified all the ways you can serve your customers, prioritize which ideas to invest in based on what is most desirable to customers, feasible to build and deliver, and viable with your business.

With most companies working remotely, we’ve found it valuable to partner with our clients to run remote design sprints. In just five days we can help define opportunities that are validated with customers and help put the right plan in place to bring those solutions to market.

3. Rapid Prototyping and User Testing – Rapidly prototype your ideas and get them in front of your customers to test and validate them throughout the product lifecycle. At this point, it’s vital that you don’t make decisions based on assumptions. Within this short window, you need quick solutions that are aligned with your customer needs and/or wants.

4. Build the Business Model – Build the model that allows you to deliver on the proposed solution. Identify the right users, processes, and tools required to sustainably deliver a consistent experience to your customers. An experience your customers are willing to pay for that is profitable for your business.

We suggest service design sprints, which define the relationships between all the components of your service. And through a service blueprint, be sure to analyze how those components tie to the desired customer journey. Don’t stop at finding the problems or the solutions, focus on practical ways to get these solutions to your customers.

5. Bring It To Market – After defining your business model it’s important to clearly outline your plan for getting your solution to your desired target market. That plan should include a definition of the market you will be selling in, the customers who you’re targeting and why they would pick your solution over a similar one offered in that market, how you will get your product to them, and the pricing of your product per consumer group. Then, go implement the plan.

looking forward

Our economy may be in a type of winter now, where things are slowing and many are pulling back, but spring always returns. So when spring comes, and customers return, make sure you’re ready. Going DTC is a compelling way to prepare for the post COVID-19 world, build brand trust and affinity, and drive long-term business success. Reach out to findoutmore@credera.com or go to DTC 360 if you’d like to learn more about our DTC capabilities or continue the conversation.

Find the rest of our COVID-19 insights here: