There’s no doubt direct to consumer (DTC) brands have impacted how people shop. Recent research from IAB UK, the industry body for digital advertising, identifies 50 of the leading DTC brands in the UK and surveyed 2,000 shoppers across Britain, highlighting some of the marketing techniques that such companies use to grow their brands.
The ‘Born Online’ report shows that 39% of the UK online population has purchased from at least one DTC brand, with 10% having bought from at least five. This illustrates the opportunity for challengers to enter and disrupt the traditional retail landscape.
It’s not exclusively younger consumers that seem to favour new upstarts, either: the report shows that 9% of DTC customers are over 65 years old and, at Gousto, almost two thirds (65%) of our customers are aged 35 or over. Early adopters drive initial demand, but this coupled with their tendency to proactively share their experiences with friends and family then further fuels growth.
Many of the trends highlighted in the report resonated with us. We produce delivery recipe kits, and we wanted to diversify choice and reshape how people buy and prepare meals. To this end, the immediacy of digital channels to build relationships with customers that are genuine and inclusive, and where people’s feedback is heard, was massively beneficial.
By employing a test and learn approach to optimise customer acquisition, marketing can evolve. Gousto’s early efforts were primarily performance driven, but we now consider brand building at the top of the funnel, too. This means that, while maintaining a strong digital presence, we can develop TV and OOH campaigns to spread awareness further.
A key benefit of operating in the DTC space is this ability to start small and scale fast. With limited investment at the beginning, we were nevertheless able to access a huge amount of data from customers that allowed us to quickly improve and drive a virtuous circle of referral and recommendation.
One thing that DTC brands have in common is this direct relationship with their end users. It allows for powerful curation, recommendation and personalisation that means customers tend to trust that they are being given meaningful choice.
This is a massive advantage, since, with customers living ever more busy lives, it’s important that brands help make things easy for them to find and get what they need. Our automated factory, for instance, is able to pick over 90,000 different combinations of meals from our menu each week.
In the early days, our strategy was to capture demand from early adopters, building up a customer base which we could learn from and which would drive referrals. As we grew, increasing revenue allowed us to invest into more marketing channels. Today, in our third phase, investment into above-the-line advertising is growing. But underpinning all of this has been a focus on improving retention through communications, experience and product improvements.
The nature of DTC means that marketing teams enjoy enviable access to customer data. This, in turn, can form a habit for optimisation in company culture. Whilst established fmcg brands may not have this advantage, there is an opportunity to build a similar culture of speed and experimentation – one which will soon be a need-to-have rather than nice-to-have.
It’s important to empower teams with direct access to data in this way, placing resources and expertise on hand to derive insights from it, and respond. Ensuring that the organisation is structured to support this rapid approach via close collaboration with technology, operations, finance and customer care is critical to any brand today.