Is DTC Marketing a Good Idea for Your Business?

DTC marketing (Direct-to-consumer) provides a unique opportunity to cut out middlemen and foster a direct connection with your customers.

In an e-commerce world saturated with endless options for consumers, this is a big deal as it gives you unprecedented control over the buyer experience and can help you stand out from the competition. But is DTC marketing a good idea for your business?

This article answers all the questions you’re likely pondering, including how DTC marketing differs from B2C marketing and what businesses are best suited for this marketing tactic.

Outline

• What is DTC Marketing?
• DTC Marketing vs B2C Marketing
• Why is DTC So Effective for Some Brands?
• What Businesses Are Best Suited For DTC Marketing?
• Examples of DTC Brands to Inspire You
• Warby Parker
• Dollar Shave Club
• Me Undie
• Conclusion

What is DTC Marketing?

DTC or direct-to-consumer marketing involves a brand pitching its products directly to customers without the help of third-party agents. It effectively cuts out middlemen in the marketing and sales process.

Some of the most famous brands around the world practice DTC marketing. For instance, Tesla revolutionized the automobile industry by being amongst the first manufacturers to sell cars directly to consumers instead of through dealerships.

Avon also made waves in 1886 when it implemented the radical idea of selling beauty products directly to customers through female sales representatives.

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Many businesses consider DTC marketing to be an attractive strategy because it brings them closer to their customers. With direct marketing, companies are able to eliminate the added complexity, costs, and dilution that occur from dealing with middlemen.

Likewise, consumers enjoy being able to have a first-hand experience with their favorite brands and avoid the added cost that comes with buying from middlemen.

Considering this, it’s unsurprising that DTC e-commerce is a high-performing niche globally. The market is worth hundreds of billions of dollars, and in the US alone, DTC sales are expected to reach $161 billion by 2024.

However, despite its clear advantages, DTC marketing isn’t for everyone. To succeed with DTC selling, your business needs to possess a range of qualities that make success more likely. Take our quiz to find out if this strategy could work for you.

DTC Marketing vs B2C Marketing

DTC marketing has a few parallels with B2C or business-to-consumer marketing. For instance, they are both consumer marketing strategies as opposed to B2B or business-to-business marketing which is focused on selling to companies.

However, there are several differences that make DTC and B2C marketing distinct from each other.

• Sales channel: By design, the focus of DTC marketing is to get buyers to purchase through sales channels owned or controlled by the company. In contrast, B2C marketing encourages purchases through wider channels including third-party retail outlets, the company’s own website, and other channels.
• Personalization: DTC marketing offers greater personalization potential, as the business is creating and selling its products to specific customers. With DTC, it’s even possible to customize the product from the ground up. An example of this is the comprehensive customization options that Rolls Royce offers to its customers.
• Branding opportunities: Unlike B2C marketing, DTC sellers have exclusive control over their marketing, branding, and buyer experience. You can design whatever journey best fits your customers. But B2C marketers may not always have control over this, especially if they need third-party platforms like online marketplaces.
• Profit margin: Since it eliminates the need for middlemen, DTC marketing can lead to more profitable sales, compared to B2C marketing where wholesalers and retailers will add their margin to the final price.

Why is DTC So Effective for Some Brands?

As you probably know, DTC marketing is a game-changer for many brands.

In the case of companies like Tesla, adopting a DTC market approach helped the company capture a commanding market position in record time and become the most valuable car company globally.

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DTC marketing helped achieve this because of the following reasons:

It enables a unique buyer experience

Companies that create outstanding buyer experiences enjoy 60% more profit than their competitors. In simple terms, being able to deliver unique sensations to buyers not only boosts the brand’s profile, it translates into attractive profit for companies that do it well.

DTC marketing provides exactly the right level of control that companies require to deliver such outstanding buyer journeys. That’s one of the reasons why it’s such a big deal.

It is cost-effective

By selling directly to customers, businesses can eliminate several apparent and hidden costs that make their products more expensive for customers.

As statistics show, marketplace fees can inflate products by as much as 30%, depending on the type and monetary value of the product. Taking your goods directly to consumers makes it possible to avoid those fees, sell at more competitive prices, and even enjoy a better profit.

It prevents dilution

This is not often talked about, but selling through middlemen not only has an effect on your profit, it can also hurt your brand.

Dilution can happen for many reasons and in many circumstances. An example is when a retailer fails to sell your products in the conditions you intended, such as serving them ice cold as against room temperature.

When this happens, the customer experiences your product in its suboptimal form and this can create a negative experience for them.

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What’s worse is they’re unlikely to keep that bad experience to themselves. A grumpy customer will share their bad experience with 15 or more people and only 1 in 26 will tell you they had a bad experience. Most of the time, they’ll just stop buying your product.

It provides better data

Apart from protecting your brand from negative experiences you can’t control, DTC marketing also gives you a better customer data pipeline.

If all or most of your sales flow directly into consumer homes, it’s easier to collect accurate data about your customer base and buying behavior. Even better, you’ll be able to extract insights that are bang on the money, giving you the tools to make highly intelligent business decisions.

Without DTC, that data will probably fall into the hands of retail outlets or wholesalers that stock your products. So, on the whole, you’re likely to be getting a much better deal by just marketing your products to consumers yourself.

What Businesses Are Best Suited For DTC Marketing?

Can your business thrive with a DTC marketing strategy? Here’s a summary of some features that successful DTC companies have.

Ability to sell digitally

With DTC selling, it’s important to be able to deliver your products to customers wherever they are, whenever they need it. If you cannot fulfill sales, you’ll find yourself saddled with unhappy customers before long.

Successful DTC brands are able to adopt a wholly digital or digital-led approach to selling their products. This way, they can leverage the vast reach of the internet to attract more buyers and satisfy them.

Even when DTC brands have physical outlets, they still complement their sales prowess with online channels. An example of this is Nike which has a thriving DTC component to its sales model alongside B2C selling through wholesalers and retailers.

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Strong online presence

If your business isn’t a digital native, DTC marketing may not be for you. Being a digital native means your company can run comfortably using largely digital technologies and a tech-driven operational model.

You also need to have a thriving online presence, meaning engaging social media accounts and the ability to tap into online trends with comfort. Why’s this so important?

Your customers, as DTC business will largely be online. As a result, a good presence online is vital to presenting your business before those customers and building a strong brand that they can identify with.

Most of the biggest success stories in DTC selling exhibit consummate ease with being online. DTC often requires bold strategies and there are few better ways to push those strategies than through online media.

Doesn’t require intermediaries

The whole idea of DTC marketing is to sell without middlemen — cut out the added layers and bring your customers into close contact with your business.

But if middlemen are an indispensable part of your business model, then you should take a cautious approach to this strategy.

Take the example of Tesla. The company was able to leverage DTC selling because it didn’t need vehicle showrooms and dealerships to offer the same (or even better) value that traditional carmakers provide.

Tesla was able to make this work because its business model did not require all the added value that dealerships typically provide. For instance, you can receive upgrades, vehicle parts, and routine maintenance from Tesla’s outlets and over the cloud.

If you cannot sell effectively without middlemen, then that defeats the point of DTC marketing.

Clear (and strong) mission

DTC brands have a strong and unique mission. Because DTC sales can be harder than leveraging an established network of middlemen, these brands often have to go the extra mile to capture the imagination of buyers.

Take Casper for example. The company launched in 2014 as an unknown brand in a heavily saturated mattress industry that it seemed had since all the innovation there was to offer (think waterbeds and automated mattresses).

But Casper came in with a unique mission and identity. The company’s goal was to provide cheaper mattresses, with innovative designs, delivered straight to customers — something that had never before happened in the industry.

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And they succeeded. Within two years, Casper achieved over $100 million in revenue because it could piggyback on a mission that was singular and clear.

Unique marketing focus

Think again about the most successful DTC brands you know. What’s common about them?

They’re all bold, audacious brands with big voices and an even bigger appetite for disruption.

This bleeds through in all of their marketing material and is why people can’t help but fall in love with them. Look at this campaign from the Dollar Shave Club for instance.

In what world would you expect a founder of a company to stand in front of a camera and do that? This effectively sums up the uniquely confident approach DTC brands take with their marketing in order to stand out and upend the competition.

While you don’t have to do anything this audacious, your brand should be able to capture and hold the imagination of your buyers. That’s what truly makes DTC selling take off.

Innovative GTM strategy

Lastly, DTC brands go to market in innovative and often disruptive ways. We’ve mentioned the example of brands like Casper, Avon, and Tesla that brought new ways to sell in their industry.

Of course, your business doesn’t need to upend your industry in order to find success with DTC selling. But you should have a propensity to think outside the box and adopt innovative ways to get your products into the homes of customers.

Sometimes, that could require brainstorming on a mind-blowing ad that grabs the attention of buyers and forces your product into their consciousness.

Other times, it could be as simple as connecting with a micro-influencer and commissioning a social media blurb that lets buyers gain better insight into your product.

For example, Casper chose to work with influencers as part of its go-to-market strategy. It saw sales almost double in less than 24 hours after paying Kylie Jenner to promote its product.

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Examples of DTC Brands to Inspire You

You’ve seen what your company likely needs to succeed as a DTC brand. But let’s go one step further to see examples of companies, both big and small, that have found success with DTC selling.

Warby Parker

Like many of the DTC brands we’ve discussed, Warby Parker did something unthinkable in its industry — an attempt to sell eyeglasses directly to customers.

For obvious reasons, this would be difficult. But Warby Parker made it work by offering innovative ways for customers to accurately test eyeglasses from the comfort of their homes.

Dollar Shave Club

We’ve said plenty about Dollar Shave Club already, and for good reason. The company sells what most would assume are pretty low-margin, non-glamorous products — shaving blades.

But it sells them so well, with all the right imagery and marketing, that people can’t help but buy blades from the company.

Me Undies

The self-styled “world’s most comfortable underwear” brings a uniquely playful approach to selling an item most people would blush over.

That’s also its strength as it makes people comfortable enough to be playful with their private purchases while also enjoying the benefit of comfy undies.

Conclusion

Overall, DTC marketing can be a super strategy for many businesses, but only if the tactic fits their business model well.

We’ve discussed all the key criteria that can make it work for you, from being digitally native to having a unique marketing strategy. With this knowledge, and the results of our quiz, you now know if DTC marketing is tailored to your brand.