Wednesday, May 12, 2021

The Truth About D2C: Patience and Data Collection are Virtues

Stephanie Bannos, Head of Customer Experience Strategic Solutions
Strategy

The recent pandemic drove a significant increase in direct-to-consumer (D2C) sales, but the trend is expected to linger even after COVID-19 doesn’t. According to Statistica, D2C increased by 17.75 billion in 2020.

There exists varying shades of D2C across multiple industries—such as building direct relationships with customers through marketing or e-commerce, or empowering channel partners to satisfy consumer needs more effectively —but these differences are rooted in a common foundation of knowing and growing one-to-one customer relationships.

Before embarking on your D2C journey, consider these five truths about the process and how a partnership with Rightpoint can meet them head-on:

Truth #1: There’s a long tail to ROI

Resist the temptation to judge your D2C initiative performance based on early outcomes only: It takes at least a year for customers to fully absorb your D2C messaging across mediums and begin modifying their behavior. Only then will you notice measurable increases in repeat and retention rates—both for engagement and transactional key performance indicators (KPIs). Understandably, this could spook the internal stakeholders who control the purse strings, who may be anxious to yank funding if they can’t immediately justify the spend.

The key to avoiding premature conclusions is through diligence in driving alignment with those who are funding the initiative. Emphasize the timeframe you think is necessary for outcome realization, and set up milestone-based criteria for success so that reliable performance read-outs are delivered within the first 3 months, 6 months and one year. And rather than wait until the end to celebrate the initiative’s success, be sure you bake some of those celebratory moments into the full journey, so as to demonstrate the potential for strong market outcomes in year two and beyond. 

This approach is foundational in Rightpoint’s “Frame & Shape” methodology. We begin by facilitating stakeholder workshops for your team to drive alignment on KPI targets and outcome timeframes. We then take those objectives and build strategic roadmaps that maximize the impact of your efforts. This includes a measurement plan right from the start and allows for ongoing and timely insights, reporting and decision-making. 

Truth #2: A use case-driven approach works

Understanding your customer needs is of paramount importance in producing an experience they will enjoy and prefer when electing to engage with your brand directly. However, needs alone are not enough to define a differentiated experience.  They must be translated into use cases and user stories that articulate how, why and where a customer will interact with your brand, and design the experience accordingly.

Rather than leading with function and features, Rightpoint’s approach is heavily user-focused. We understand a day in the life of your end user, be they customer or employee, and articulate what kind of experience they would prefer and how the current experience can be modified to reach that goal; it’s only then that we consider what features and functionality will reliably deliver those experiences and prioritize a build accordingly—very little effort is wasted.

Truth #3: You have to build a data strategy into day 0 planning

Often, brands address their data strategy during the tail end of an initiative, but this can lead to a litany of challenges from data security to effective data management and accuracy. Data is complex and requires an early, ethical strategy for collection, orchestration, syndication and activation. Otherwise, you will find yourself inundated by data points that may not even be relevant or could expose your brand to privacy concerns later.

Rightpoint engages our data and technology teams in early conversations around goals and objectives: What insights will guide forthcoming business decisions? How will data be activated to drive use cases or personalization? What outcomes are to be measured? With clarity on objectives, we determine what data and technology enablement is required to achieve results. From there, we ensure the initiative roadmap includes all of the ways we will collect, sort, structure and aggregate the data, and where these efforts must be executed within the implementation plan. Going a step further, we use the impending data enablement to define test and learn strategies, activation plans, reporting visualizations and ultimately drive a culture of thoughtful experimentation. 

Truth #4: To grow digital and data fluency, establish a plan

Never underestimate the difficulty in driving adoption of new digital and data-enabled capabilities within your organization. After all, it took a global pandemic for organizations to realize that productivity could sustain – even increase – within a remote work model. 

Change is hard – some employees will be eager adopters, but many will struggle to understand how to use new capabilities or leverage data in meaningful ways.

Rather than simply releasing the features and functionality then enable new use cases through an IT release announcement, proactively prepare your organization for the modern capabilities coming their way. Perform a skills assessment early in the process to identify those who will easily adopt the new technology, those who will require re-skilling, and to identify situations where new hires may be needed and must work their way into SG&A planning. These assessments work best when complemented by a change management and communication plan that builds excitement and provides avenues for feedback on what’s coming.

It’s also imperative that these features be positioned as readying colleagues for the tools that will make their lives easier and enable them to more effectively reach their goals. With a thorough understanding of current state organizational and people readiness, build right-sized training programs on new capabilities, data-driven activations, etc. Show colleagues your commitment to skills development by protecting the time for upskilling or even making professional development part of their individual goals. To supplement training, build a culture of experimentation by promoting test and learn agendas and “giving space” for failures due to the value of learning. The result is an organization that is fully equipped and ready to maximize the investments in digital. 

Rightpoint’s change management team and employee experience practice can help define these programs within the context of your culture and ambitions. Through an understanding of your precise objective, maturity and level of investment, we translate the Art of the Possible to simply the Possible.

Truth #5 Customer KPIs are baked into performance

The truth is that while CX investments do demonstrate customer-centricity to your audience, without an alignment of internal incentives and performance, there can exist a major disconnect between desired customer behavior and how your system currently rewards the people who are responsible for encouraging that behavior. For example, if an organization expects individuals and teams to meet monthly or quarterly revenue targets and does not equally recognize KPIs tied to “customer-centric” initiatives (such as driving retention rates and lifetime value), teams might index their effort to those that generate near-term outcomes and neglect those that will drive sustainable, longer-term results. Not only can this impact long term success, it can lead to under-utilization of near-term investments in CX enablers and a failure to maximize that ROI. When this happens, budgets for future investments could be limited not because the potential isn’t there, but because the incentive structure limited the impact.

The way to combat is to appreciate efforts throughout the evolution to true customer centricity Rightpoint recommends milestone-based recognition of teams and individuals to incentivize and acknowledge momentum during these times of transformation. This might include recognizing the on-time launch of an initiative or tracking the KPIs that serve as leading indicators of success. Our approach involves evaluating historic performance measures to ensure they line up with customer-centric initiatives, and the evolving success measures that can be weaved into organizational, team and individual goals. The result is an incentive program that maintains the integrity of core business outcomes while also empowering colleagues to advance your customer experience goals. 

The Rightpoint Way to D2C

Rightpoint’s Customer Experience Transformation Strategy solution addresses these considerations heads on, but the principles are embedded in all of our work from Digital Experience and Commerce to Employee Experience. To learn more about how we drive direct-to-customer programs – whether relationship-based or full eCommerce – connect with our team today.