Looking to Scale your D2C Brand Profitably? Focus on Your Customer Data
Your Customer Data is Your Most Valuable Marketing Asset
How D2C brands are shaping up in 2021? Over the last several years the marketing world has been turned on its head. The global pandemic instantly changed consumer behaviors and forced marketers to accelerate their omnichannel strategies and lean heavily into ecommerce as a primary channel. But even before all of these drastic shifts, digital marketing was already starting to change in meaningful ways.
The Cambridge Analytica scandal brought consumer privacy to the forefront and regulation continues to intensify with the roll-out of GDPR, CCPA and CPRA. With third-party identity tracking and pixels starting to evaporate as a method of capturing consumer intent signals and the prioritization of consumer consent preferences and privacy, it’s clear that ownership and control over your data are of paramount importance to both consumers and marketers. Here’s a roadmap for how to best leverage that most critical marketing asset — your customer data.
The 5 most important items any growth marketer launching or trying to scale a D2C ecommerce brand should be thinking about to accelerate their business.
1) Data collection – Having a commerce platform integration like Shopify or Magento is not enough. In addition to sales and transaction data, you also need to be able to capture and easily access 1st party customer attributes (e.g. product affinity, discount affinity, purchase channel, acquisition source, email address) – and importantly, make sure there is an equal value exchange with your customers so they readily provide this information.
Takeaway: you need to know as much about your customers as possible and you need to have full control over that data, don’t yield everything to the walled-gardens
2) Cohorting – The ability to have all your customer data at the individual person (ID) level allows you to build cohorts on a number of different dimensions. For instance, can you quickly parse customers by attributes such as: month acquired/demographics/product purchased/High LTV vs. Low LTV, discount vs. evergreen buyer?
Understanding different cohorts of your customers and tracking their progress over time will provide greater insight into both your acquisition and retention strategies. Understanding the distinction between cohorting and segmentation is important. With cohorting, you analyze groups of customers who were acquired at the same time, and often by the same channel. The ability to look at these audiences along a common ‘time since acquired’ axis allows you to compare the lifetime revenue in a more apples to apples fashion. Think about leveraging these cohorts, not just for the purpose of activation in digital marketing, but as a key strategy that bridges marketing and financial analytics.
Takeaway: not every customer should be treated equally, and you need to know how their value evolves over time
3) Product Analytics – which of your products are generating the most value/profit for your company? How can you learn from your highest performing products to introduce and optimize a subscribe and save offering? Which products are often bought together and which ones act more like substitutes? What cross-sell and up-sell optimizations can you make based on these patterns?
Takeaway: find your hero products and which ones will attract the most profitable customers
4) Testing/measurement frameworks – The pandemic’s impact on accelerated digital marketing shifts is a dramatic eye opener on how quickly customer behaviors can change. Leverage your customer data to seek the truth in these psychographic and behavioral shifts. Think about ways to track performance that go beyond return on ad spend. And make sure you have a centralized measurement solution that makes it easy to evaluate new destinations and approaches. Relying on multiple walled gardens, each with their own attribution models can become cumbersome very quickly.
Takeaway: digital marketing is going to continue to change rapidly, lean into your data assets to enable continuous testing
5) ROI on your Customers Align more closely with your CFO/finance leads to understand how to think about marketing costs. In order to best understand how to maximize your marketing dollars, you need to understand basic ROI metrics on your Customers (e.g. payback period, customer acquisition cost by cohort, incremental customers needed to hit revenue targets).
Takeaway: it’s time that the Finance and Marketing departments started working together more closely and you need a platform that can bridge financial and marketing analytics
No matter what stage you are in your company’s growth, as a modern D2C digital marketer you have an advantage because e-commerce is already the heart of your business and that aligns with where customers want to purchase goods, particularly in the age of COVID.
Follow the roadmap. You will be well-positioned, not just to scale your business, but to scale it profitably. Not thinking about these strategies will leave you ill-equipped to navigate a future where identity is the currency, unprepared to manage through regulatory change, and at risk for getting lost in a sea of other D2C company noise.
Don’t do it alone. Invest in a business intelligence stack that solves the challenges highlighted in this plan.