User Centricity unlocked: Customer Centricity as a Success Factor for Manufacturers’ D2C Strategies

Abstract

The term “direct-to-consumer”, or D2C for short, is currently shaping many discussions in the omnichannel marketing and sales world. As always, the definitional spectrum is broad. Two approaches are particularly worth mentioning:

  1. The establishment of new brands selling directly to customers, especially via online marketplaces.
  2. Established manufacturer brands with already extensive direct communication activities to customers (websites, apps, social media, marketing automation …) that are starting to sell directly to their customers online in addition to their existing multi-level sales models.

This article focuses on the group of established manufacturer brands. The expansion of their omnichannel marketing to include e-commerce makes user respective customer centricity an even more important success factor. This is what this article is about. To this end, we first examine the strategic context of D2C for these manufacturers. We will then show the special importance of customer centricity that goes hand in hand with this.

D2C strategies for established manufacturer brands

The term D2C is currently the subject of much discussion among manufacturers, especially in the context of e-commerce. This refers to the web store activities currently being initiated in many places by manufacturers who previously sold in multiple channels and are now establishing a direct sales channel to the customer.

However, we recommend a broader understanding of this term, which extends to all of the manufacturer’s marketing and sales activities. It is critical for manufacturers to holistically relate their D2C strategy to their entire omnichannel activities. Of course, this includes the customer journeys that building a manufacturer’s web store can initially cover, specifically for product selection and the purchase and transaction process. But the spectrum of value for their customers that manufacturers can cover through their D2C activities is much broader: no one, not even a specialized retailer, can provide such comprehensive information and advice on their own products as the manufacturer. In addition no one can communicate the company’s philosophy and values or the correct use of the products as the producer. All these possibilities enable the manufacturer to support the customer at all moments of the customer lifetime cycle. This support can best be provided in direct contact with the customer – and that is exactly what D2C is all about, direct contact with the customer. That’s why it’s conclusive to build D2C strategies holistically around all of the customer’s needs.

“No one, not even a retailer, can provide such comprehensive information and advice on their own products as the manufacturer. No one can communicate the company’s philosophy and values as well. No one knows as much about the proper use of the products. All these possibilities enable the manufacturer to support the customer at all moments of the customer lifetime cycle.”

This also indicates that many manufacturers are already active on many D2C levels, for example via their websites, apps, newsletters and social media channels. The retailer is often only left to handle the purchase and transaction. The D2C web stores that are currently frequently set up by manufacturers are therefore often not actually the start of a D2C strategy, but merely the addition of the option to buy directly from the manufacturer.

Despite this, such a webshop can be a strong catalyst for the further development and added value of manufacturers’ D2C strategies. The main reason for this is the increased importance of the customer account, which was also offered by many manufacturers before or without the launch of their own webshop, but is now becoming essential for order processing. The web store will lead to a larger number of customer accounts being opened and to the data and information about the customer available there being enriched – for example, by the products in their possession. Better knowledge about the customer can in turn be used for better dialog with the customer, for example through personalized communication or even through individual offers and prices based on customer value.

Hence, it can also be deduced what D2C strategies of manufacturers should actually be about:

The ambition of manufacturers to initiate, develop, monetize, and sustain long-term, valuable, and loyal relationships with their leads and customers – e.g., through support in the event of problems.

Why does Customer Centricity play such a special role in this?

Three mutually related reasons are crucial for customer centricity to play a key role in successful D2C strategies:

  1. Increased customer expectations of the manufacturer’s omnichannel experience
  2. Increased internal expectations of the manufacturer regarding the success of the D2C activities and thus overall regarding its own omnichannel marketing
  3. Increased complexity and budgets required for implementation

The overarching conclusion is: The potential for success is increasing, but at the same time the risk of failure is also rising – and the question of what needs to be done for success is becoming more open. Of course, the answer must start with the customer – the “user”.
Let’s take a closer look at the reasons mentioned above.

Rising customer expectations

These expectations are rising because the manufacturer’s e-commerce activities are making other, previously frequently used information channels, especially those of retailers, less relevant. At the same time, the manufacturer’s channels are thus becoming more important in all areas. The customer will regard the manufacturer as a fully comprehensive authority that can provide information on all issues, unlike the dealers, who can refer to the manufacturer in case of doubt in the event of difficult questions. Customers have every right to expect this, because who should be able to provide better advice on products than the manufacturer and who should offer better services?

Increased internal expectations at the manufacturer

On the other hand, the internal expectations of the manufacturer who implements the D2C strategy also increase. In particular, by building up their own e-commerce, they suddenly have very valid, measurable and monetarily concrete KPIs in the form of their own D2C sales, the development of a regular customer base or their customer lifetime value. These will increase internal interest in the first step and internal target expectations in the second step. Although the own e-commerce sales will often still be low in the first phases, there will be interest in pre-existing KPIs to measure the given sales funnel support of online marketing. Because now it is no longer about lead generation to the trade, which is difficult to track afterwards, but about the own conversion.

Increased complexity of implementation

Ultimately, the complexity for the manufacturer also increases because the entire omnichannel marketing and sales ecosystem is now challenged more strongly and therefore has to be analyzed, prioritized, planned, and implemented more intensively. As a rule, this also involves larger budgets – and associated with this, in turn, increased expectations on the part of management to use these budgets in a targeted and successful manner.

Customer at the heart of decisions

One question in particular is becoming more important and more complex: What are the right strategic decisions? What is the right thing to do and then how is it done correctly? This process must start with the potential or existing customer: What are their specific requirements of the manufacturer, what are their Pains & Gains, and what solutions have to be developed to meet them? Answering these questions correctly becomes the measure of success, because a strategy can make much sense for the manufacturer – but if it does not serve the needs of its customers, it will fail.

When applied correctly, these insights can not only be a selective aid in the initial setting of goals and requirements, but can also act as directional guide lines for overarching omnichannel programs.

This requires a series of steps, such as filtering out the most important customer requirements to be prioritized, overlaying the customer problems with the commercial value (“business value”) for the company, and deriving a synergetic, coherent structure for the necessary operational and technical infrastructure.

By building such Customer Centricity Management, manufacturers can strategically plan and implement the development of their omnichannel D2C activities to achieve an optimal value proposition in the market with a successful long-term business case.

Short profile & contact – eStrategy Consulting

eStrategy Consulting helps clients to use digital innovations to further develop existing business models and to create new business opportunities. We support the retail industry in its further development towards omnichannel and connected commerce and count manufacturers, classic big box retailers, the retail real estate industry or digital marketplaces and platforms among our clients.

eStrategy Consulting covers the entire lifecycle of digital innovation, from analysis to ideation, solution development and market launch. We work as strategy and concept developers as well as seamlessly integrated and pragmatic implementation managers. To do this, we rely on a mix of methods from the world of digital business and classic management consulting. The focus is both on our client’s applying customers as well as his organization and skills necessary to operate.

Contact person

Cliff Pfefferkorn
Partner & Managing Director

info@estrategy-consulting.de
+49 (0)30 978 936 00

Contact

More Articles

Marketplace Leaders: Interview Patrick Kuehl, Alibaba.com

Alibaba.com started as a sourcing platform and has now grown into a global online marketplace. The B2B online platform connects businesses, especially SMEs, worldwide. In an interview with Patrick Kuehl, we discussed the growth drivers Alibaba.com is working on and the challenges that need to be overcome.

Marketplace Leaders: Ralf Bühler, Conrad Electronic

Founded in 1923, the company ventured into the marketplace business in 2017. In the style of “learning by doing”, Conrad Electronic has now developed into a marketplace with over 10 million product offers from 800 sellers in Germany. Ralf Bühler, CEO of Conrad Electronic, reports on how this transformation has been and will continue to be implemented.

Marketplace Leaders: Interview Jörn Rehse, idealo

How can price comparisons such as idealo ensure that reliable price overviews are provided? What challenges need to be overcome and what relevance does the Digital Markets Act have here and in the future? We discuss these and many other topics in an interview with Jörn Rehse, Co-CEO of idealo.

Marketplace Leaders: Andreas Häntsch – eBay Interview

Reluctance to buy and turbulent competition meet trends and success drivers. Andreas Häntsch, Senior Director of Seller Engagement at eBay Germany, discusses the current developments, challenges, and plans with us.

Marketplace Leaders: Interview Kim Niedner, Otto Market

Otto has experienced significant challenges and changes over the past years. Kim Niedner, who played a key role in establishing the OTTO marketplace, talks about the lessons learned, successes, and challenges at OTTO Market.

Top 30 marketplaces in Germany and Europe

Retailing via digital interfaces and platforms, whether webshops, marketplaces or apps, has become an integral part of everyday life for most Europeans. The Corona pandemic has once again increased the importance of online retail.

User Centricity unlocked: User centricity as a success factor at Festool

User Centricity is a key factor for the success of almost all our projects and the cooperation with all our customers. In this interview, Cliff Pfefferkorn, Managing Partner of eStrategy Consulting, talks to Fabian Ertinger, Head of Online Marketing at Festool.

Study: Opportunities for brick-and-mortar retailers in the local online marketplaces in Germany [Update 2022]

Physical stores in German cities and municipalities were under pressure long before the corona crisis. The trend of city dwellers relocating to the suburbs and increasing online shopping efficiency has indirectly led to stationary stores' closures.