Why brands must build direct customer relationships — and how to get there
What’s the defining characteristic of the retail brands marketplace in 2022? You know the answer already: a huge and permanent shift toward expectations, habits, and preferences for digital experiences. Just a few short years ago, a minority of customers were buying or interacting digitally. Fast-forward to today — 92% of customers globally are now purchasing through digital channels according to a 2021 Accenture Grow Digital Consumer Study.
What’s more, they’re not going back. Expectations ranging from more convenient digital shopping to omnichannel buying experiences ushered in by the pandemic, mean that the new habits are here to stay. Accenture research shows that new eCommerce customers increased their usage of digital channels by 156% during the pandemic and plan to continue at this new level. Also, it’s not just consumer (B2C) customers who’ve made the leap: B2B buyers have, too — they’re seeking the same digital self-service options and seamless access to the entire purchasing workflow.
Challenge and opportunity
It’s a radical transformation that’s happened at breakneck speed. The effect is that businesses that have grown up and prospered in the era of physical commerce are struggling to adapt. Sustaining even minimal margins is proving hard and growing new revenue streams even harder. Meanwhile, the margin squeeze is intensified by a new set of digital entrants: direct-to-customer players that provide smart, constantly evolving offerings and experience journeys increasingly fine-tuned to customers’ unmet and changing needs.
All of this means that established brands are vulnerable to disruption. In response, they’re questioning, revisiting and rethinking their existing relationships along the entire value chain. The inescapable conclusion is that there’s only one way for them to manage the disruption, margin pressures and shareholder expectations, and that is to build a direct relationship with the customer — a strategy that can both overcome immediate headwinds and open up tremendous opportunities for growth and revenue going forward.
Drivers of disruption mean that the right experience is key
To explain why going direct to consumers (DTC) is the best next step, let me drill down into the challenges brands face. One is that they’re getting disrupted through existing channels: with most sales still happening via retailers, brands lack control over — and visibility and insights into — the experiences of their end-customers. This gives marketplaces the upper hand, enabling them to recoup their massive investments in technology, shipping and logistics by generating a rising share of their revenues from the brand manufacturers in addition to their customers.
Added to this is the rising competitive challenge from the direct-to-consumer (DTC) entrants. In brand segments from razors to cleaning to home exercise and more, DTC players are upending the status quo with a new and different offer, further reshaping the retail brand landscape. Combined, these developments mean that businesses previously seen as masters in brand-building in an intermediated world must now establish a direct route to their customers, if they’re to be disruptors rather than disrupted — and even to survive and own their brand experience.
What does a direct relationship entail in the digital era? It isn’t always about selling a product to the customer: It’s also about creating experiences that address customers’ unmet and changing needs. To create it, businesses need to engage with the customer in seamless, frictionless ways that meet their individual expectations across all the channels they use.
A seven-step journey
There’s a great opportunity for businesses to capture the potential value that these changes bring, but it’s a journey. To have a direct relationship, they must shift their business model to be relationship-driven and make their buying experiences more convenient, tailored and effortless. And they must become customer-obsessed — using return signals and deep, data analytics-driven insight to deliver offers, services and experiences on the customer’s own terms.
How can businesses develop these attributes and capabilities? We’ve identified a seven-step journey that they can take, that culminates in building an ecosystem of partnerships, centered around the customer’s needs and expectations, to expand and deliver on their brand promise.
Brand manufacturing is still about building a brand and category leadership, but the equation for achieving this is changing, fast. As more and more brands decide to reach out directly to their customers, we at Accenture and our partners at Adobe are combining our strengths to help businesses create and execute strategies to do this successfully. The outcomes include higher margins, rising sales and more loyal customers.
Find out more at Adobe Summit
Join me and Accenture at Adobe Summit on March 15–17 where my presentation maps out the seven steps on your journey to direct-to-consumer success. The world of brands is changing. Is your brand ready to change with it?