Shoppers are increasingly moving their purchases online and selling Direct to Consumer (DTC) is critical in helping young brands to breakthrough. Industry veterans agree that a thoughtful DTC strategy is a smart first step before venturing into retail, as both a means to test your product concept and “get the kinks out” of your supply chain before scaling into retail distribution. Easy as it may sound, your DTC business can be just as lucrative and as challenging as retail, and here we’re going to cover how to get it right, from the start.
When consumers shop online they’re looking to discover something new, exciting and reflective of their values. A powerful online identity means utilizing digital communication tools to tell your story in a way that endears your target audience before, during, and after they become a customer.
Maybe you’re a wiz at artful TikTok videos, or love making explainer videos for YouTube. Perhaps personal Instagram stories cataloging your everyday life as a business owner are your thing. Weekly emails are a quick and easy way to keep your audience updated on your brand and announce new products, too. Using these tools effectively is key to gaining followers and keeping them, and loyal fans are the most likely to become (and stay) customers.
It goes without saying that having an excellent product should be top priority. Customers won’t come back if you don’t deliver on your marketing and product promises. Are you explaining the product benefits accurately? Are you using testimonials to express user feedback? All of this digital messaging helps tell your story, get consumers excited, and, ultimately, sell more product.
An Australian-American brand in the functional coffee space that’s really nailing their story and messaging. Using clear visuals of their packaging, they use social media to showcase the why/how of their products. When your product contains a new or obscure ingredient (for The Good Ritual, that’s a supplement called l-theanine), explaining why that ingredient is important to your product and brand is a great way to elevate your story.
An emerging brand that took the humble, ancient date and elevated it through beautiful packaging and explanatory messaging that makes you wonder why you haven’t considered dates a part of our regular diet before! Their focus on the origin of their ingredients (a date farm in the Coachella Valley of California) repaints the mysticism behind this modest dried fruit and makes it feel like a necessary addition to any natural foods pantry.
An authentic brand focused on loud, proud Asian flavors. Instead of shying away from the their culture, they embrace it. Their intense brand colors, real family photos of the founders, and in-your-face graphics and website design makes you want to join the party. Omsom's style may not be the right fit for everyone (and that’s ok!), but what they do right is dial in their messaging for the adventurous, youthful home cook that wants to spice things up.
I frequently see brands build amazing products that don’t necessarily consider the customer, often leading to frustrating fits and starts to their DTC selling. One scenario is pack size. Perhaps you sell a sauce in a glass bottle and, to keep shipping costs down, you only sell 6-packs on your website. The challenge here is that potential customers are unlikely to jump on a pricey 6-pack without taste-testing first.
How to fix it? Create sample-sized 1 oz sauce packets (or similar) that you can offer to potential customers for just the cost of shipping. If they love it, they’ll likely buy that 6-pack. If they don’t, you’re out of less than a dollar in ingredients and packaging, since the customer paid for shipping, and you likely retain their email address to send them communications (and hopefully convert them) in the future.
Another scenario is pricing. Many customers have become accustomed to the Amazon model of free, fast shipping through Prime. I often see emerging brands try to match the speed and pricing of Prime, which shouldn’t be the standard. Instead, there are smart workarounds to make customers think they are getting their products as cheaply and quickly as possible.
First, I encourage DTC brands to offer free shipping on all products they sell. Sometimes that requires a threshold (free shipping on orders of $30+, for example) but sometimes you can build bundles that ensure customers meet your minimum threshold just by buying your basic offering. Significant friction is created when a customer goes to your site, adds your product to their cart, and then stops when they see an extra $7.95 plus tax added to their total. That’s where cart abandonment often occurs, and it can be challenging to recapture that customer. Instead, raise your prices proportionately so your margins are still sustainable with standard shipping. Customers will think they’re getting a good deal (free shipping!) and you’ll still make the margin you need.
Landing pages are your best tool for converting customers from ads, and even social. When you run an ad or post on social and refer to a specific product, sending your customers to a custom landing page is the better choice than sending them to your homepage, and sometimes even the product page itself. Why? Because ads singularly promote one message or product and when customers click through, they want to see exactly why they clicked. A landing page often gives you the opportunity to say more than a product page. You can include testimonials, links to recent press, even videos that your product page might not support, expanding the customer understanding of your offering. Just never forget to place the “buy now” button on your landing pages in an obvious place (and often multiple places) so people click!
A/B testing is an effective tool often used in the tech space and now prevalent among online advertisers, including emerging CPG brands. You can A/B test pretty much anything in order to better discover what works in converting your customers. Often, brands start with ads copy and test two versions to see which copy converts better. You can also A/B test visuals, like photography vs. video to see what users click on most. Even pricing can be A/B tested. Remember my example above about free shipping? Try A/B testing the free shipping model over a period of a few months to see which performs better, then decide which to make permanent.
It’s crucial to have clear calls to action everywhere you ask your potential customers to convert: social, email and your website. Clear language like “Buy Now” or “Learn More” communicates what you are asking the customer to do and will help guide them through your purchase funnel.
The PDF ☝️ above up to the right is a great place to start!
At a high-level, the most important measure of success in DTC is revenue. Though some TikTok videos might lead you to believe that your products can go viral overnight, it’s often a long, challenging road breaking through the online clutter and converting the right customers for your brand. With revenue as your north star, always be measuring your CAC (customer acquisition costs), ad spend, and COGS (cost of goods sold).
With CAC, make sure it never exceeds the boundaries of your COGS. For example, if your COGS make up 30% of your retail price, that leaves you 70% to cover overhead, sales and marketing. A reasonable CAC might be 30% of that retail price, which leaves you 40% of your margin for your general business spending. There is no hard and fast rule for CAC and COGS measurements (it can vary greatly based on your business model, packaging, distribution, etc.) but the important thing is that you always leave money on the table, i.e. profits. Selling your products at a loss to “acquire the customer” is not a business strategy, it’s a recipe for debt.
Lindsey Rosenberg is the owner of LR Consulting, a boutique marketing consultancy that delivers sales-elevating marketing strategy for start-ups in CPG and tech. Before launching LR Consulting, Lindsey scaled the natural foods company Cherryvale Farms and led a PR agency’s marketing initiatives for major brands like Gatorade, Jordan Brand, T-Mobile and Samsung.
Still not sure about the tools and tactics you need to make your CPG brand launch a success? ? Get LR Consulting’s CPG Brand D2C Marketing Launch Gameplan to make sure you check every box before you launch. LR Consulting also offers free 30-min consults for emerging CPG brands looking for marketing strategy support.