• by Rob Garf , Columnist, June 6, 2018

Brands that previously relied on a network of retail and wholesale partners are beating a path directly to consumers, causing a permanent shift from a supply chain-based economy to one that is entirely consumer and driven by data.  

Direct-to-consumer is now the center of gravity — and growth — of the global consumer economy. Why? 

• Technology has equalized competition among brands, empowering customer-obsessed smaller players with the tools they need to compete, and win. 

• Amazon is selling a growing assortment of private label merchandise in direct competition with many brands that use its marketplace to sell their wares. While brands enjoy the reach and revenue uplift that Amazon provides, they don’t enjoy losing control over their brand.

• Consumers, empowered by technology, expect direct connections with brands; one-third of consumers have bought something directly from a manufacturer in the past year, and the number of manufacturers selling direct is expected to grow more than 70%, to 40% of all manufacturers.  

Data is the new currency 

Big brands have been marginalized by data collection behemoths like Amazon, Google and Facebook, who have served as the digital intermediary between brands and their ultimate customers. But as disruptors well know, first-party data is what informs and drives agile decision making.  

The Interactive Advertising Bureau noted in a February presentation, “first-party data relationships are important not for their marketing value independent of other functions, but because they fuel all significant functions of the enterprise, including product development, customer value analysis, and pricing.”

However, we know from our recent research with Deloitte Digital that, despite proclamations about being “customer-centric,” most brands still prioritize products over customers, with nearly 60% of brand leaders saying their company’s unique value proposition lies in product quality or uniqueness.

For brands going direct, enabling the transaction is the easy part. The bigger challenge is shifting their mindset from product-centric to consumer-centric, and putting systems in place that cultivate data from all customer-facing touchpoints. Once data is unified, even the biggest brands can act on it to become more agile, because being direct brings them inherently closer to their customers.  

Direct-to-consumer is defined by what happens before and after the purchase 

Brands selling direct for the first time need to become adept not only in enabling the transaction but also in what happens after the sale.

That means having systems in place to respond to any type of service request wherever customers initiate them. But here’s the rub: all customer-facing touchpoints and data collection points can’t continue to live in isolation. Our research with Deloitte showed that brands have an average of 39 disparate customer-facing systems to manage engagement. It’s no wonder service reps often have no insight into a customer’s purchase history. 

Tying all this information together is new territory for all, but essential for multi-channel brands trying to be relevant everywhere they touch their customer. Customer data platforms integrate with first-party data gleaned from online sales, loyalty programs, ad campaigns, and more. In fact, two of out three brands we surveyed have an active project in place to establish a unified customer engagement platform. 

The choice is not yours 

By now it’s clear that consumers dictate where and how they want to engage with brands — and brands need to be there. Period. 

What’s also clear is that the center of gravity has shifted to a customer-centric world where data is the key differentiator. The question is how brands are going to redefine themselves to ride this wave.