• by Nikhil Lai , May 28, 2019

Direct-to-consumer brands are blessed with troves of first-party data.  Consumers willingly share this data from actions like web browsing, social media engagement and ecommerce transactions that disclose their buying habits and true preferences.

First-party data means a consumer directly telling D2C brands what and how they want to consume.  Because D2C brands glean insight from this data, often unified in a customer data platform or infrastructure like mParticle’s or Segment’s, they form and own intimate, empathic consumer relationships.  

Consumer intimacy works because the better a brand knows how consumers expect to be treated, the more resonantly a brand can exceed those expectations.  Rather than assuming consumer needs, as Target infamously did when it figured out a teenager was pregnant before her father did, consumer intimacy is about activating consumers’ best interests, a skill many D2C brands have honed.  

Birchbox, for example, mines its first-party subscription data for patterns of consumer behavior that substantially inform product development.  During one of its market segmentation analyses, which legacy cosmetics companies often use to identify their top 20% of consumers and make products to upsell them, Birchbox identified unusual spending habits.  It noticed that over half of its consumers weren’t spending to their full potential on beauty products because they felt “underserved by other beauty product purveyors and… overwhelmed by the sheer volume of beauty products on the market,” according to a Fast Company article. 

In response, Birchbox made its core competency the curation and simplification of discovering beauty products.  This is more than data-driven marketing.  This is empathy with consumers’ socioemotional needs, made possible by the collection, cleanliness and control of first party data.  

Based on this knowledge, Birchbox entices consumer loyalty by adding novelty to its transactions and designing opportunities for self-expression.  Each month, for example, Birchbox enfranchises users to customize their box by selecting a sample of their choice.  Displaying this emphasis on customization, a recent sample features lip balm that “adjusts to your lips’ pH."

Users learn about their choice of samples by monitoring Birchbox’s Facebook and Instagram channels for routine Sample Choice revelations.  Throughout these touchpoints, Birchbox celebrates its consumers’ agency with a mix of self-interest and altruism.  As it gamifys customer delight, Birchbox is guided by its first-party data to know what and for whom it should create.   

The importance of first-party data is growing during the international debate about data protection and privacy, often focused on the efficacy of the EU’s General Data Protection Regulation (GDPR).  In GDPR’s wake, many marketers have shifted reliance to “their own first-party data or to that which belonged directly to publishers or platforms rather than third-parties without clear chains of consent,” according to a Group M blog.

Heightened demand for consent-based marketing is attuned to the spirit with which D2C brands engage consumers.  Striking the tone of an attentive, respectful friend, D2C brands like Rothy’s clarify that they use your personal data to “help make sure we are producing products that serve our customer base” and “provide a personal customer experience” as opposed to big-box retailers which, more impersonally, use personal data to deliver in-store receipt messages and administer focus groups.

By appealing to the personal relevance of consumers, not just their transaction value, D2C brands earn consumer consent.  

Crucial to this consent is the trustworthiness of channels on which D2C products are sold.  A recent Edelman study found that 60% of respondents don’t “trust social media companies to behave responsibiy with personal data.”  This can quickly erode trust in D2C brands, which depend on social media for followers, influence and first-party data capture.  To diversify their reputational capital, D2C brands are testing offline media like TV.

As D2C brands grow, many will decouple themselves from risks posed by social media’s loss of public trust, instead mastering channels like TV with performance marketing savvy and a wealth of consumer data.