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D2C CX principles

5 Principles Underpinning Successful D2C eCommerce Customer Experience

The leading pack for eCommerce customer experience (CX) has been remarkably stable. For the best part of a decade, the same cohort of companies has jostled for positions on leaderboards like the American Customer Satisfaction Index (ACSI). Last year, Etsy, Nordstrom, and Macy’s made up the top three. The year before that, it was Nordstrom, Etsy, and Costco. Further down the list, Amazon, Nike, Target, and Apple are common features.

The near-permanent residency of these companies on CX leaderboards is not surprising considering that outstanding CX is neither easy nor coincidental. Moments of joy stem from careful operational fundamentals. Customer delight grows from a cultural dedication to customer-centricity. While CX leaders represent a diverse cohort of companies, they share many underlying principles and philosophies. In this article, we will explore some of the most prominent.

#1 Customer obsession, not cost obsession

There’s a disparity in how businesses and consumers each think about eCommerce and specifically direct-to-consumer (D2C) models. Most companies treat eCommerce as a channel and cost strategy. They believe that cutting the middlemen (merchants like retailers, agents like distributors, and so on) will return better margins.

Consumers, on the other hand, have a radically different view of eCommerce and D2C.

“They think about building relationships with brands that are like them,” explains Ben Gaddis, senior partner at consumer intelligence and experience consultancy Material. “They look for companies that make their lives easier and allow them to customize their experience.”

Ben Gaddis
Ben Gaddis, Senior Partner at Material, a consumer intelligence and experience consultancy

Those two perspectives stand in conflict with one another. Organizations cannot build deeply personalized experiences and cultivate intimate relationships when they treat customers as little more than walking dollars.

Unfortunately, the tension isn’t immediately obvious. It’s easy for online businesses to funnel money into acquisition and quickly build a customer base. It can feel like sustainable growth—but it isn’t. If the product offering isn’t right, customers won’t stick around for long. Businesses will quickly burn through their pool of cheap leads and their acquisition costs will skyrocket.

In practice, aggressive customer acquisition is no substitute for customer-centricity or positioning your customers as central to your operations.

Aligning efficiency metrics and profit margin goals with your customers’ wants, needs, and challenges naturally aligns business and consumer perspectives. Customer centricity drives organizations to design product offerings and experiences their customers genuinely want. It empowers them to develop sustainable businesses, rather than ones that rely on expensive customer acquisition just to survive.

#2 Strive for a journey mindset, not a transactional one

Historically, organizations have modeled their internal operations functionally, usually around P&L and/or business outcome: product(ion), research and development (R&D), sales, marketing, human resources, and finance. It’s an intuitive structure. Specialists work together, sharing knowledge and developing expertise. However, it’s not the best organizational architecture.

“Increasingly, companies are organizing around user journeys as opposed to business units,” says Gaddis. “Instead of having a marketing team that’s responsible for acquisition and customer success that’s responsible for onboarding, they’re creating a group that’s charged with that entire part of the journey.”

The transition from functional to journey-based organization offers two key benefits.

First, customer experience becomes less fragmented. Traditionally, dozens of teams and subteams touch a user’s first interaction with a business, each delivering their own little slice of the journey. Even with exacting oversight and precise coordination, it’s likely that elements will feel disparate or disjointed. On the other hand, single owners create clarity, cohesion, and impact.

The second benefit is mindset. Traditionally, leaders will evaluate marketing teams on success metrics like customer acquisition costs (CAC), marketing qualified leads (MQLs), and lifetime value (LTV). These metrics are transactional and don’t always correlate to a good customer experience.

Teams working on particular journeys are forced to confront the underlying experience. Is onboarding delightful? Are a user’s first five days joyful? Does support provide the help someone needs? “Ultimately, all CX is centered on building strong relationships”, notes Gaddis. “It starts with a 360-degree view of the customer.”

But he’s quick to highlight that a journey mindset isn’t a silver bullet. Often, companies will create amazing journeys only to leave them lingering in a filing cabinet. Effective customer journey work is iterative and actionable. 

Put some priorities around it,” Gaddis continues. “Make the journey, not a moment in time, but a continuous tool that you use to measure yourself. It’s driven by ongoing data collection—qualitative, quantitative, and behavioral.

Better journey assessment leads to improved pattern assessment. This way, eCommerce brands focus on the highest-value opportunities and unlock demand centric-growth.

#3 Prioritize experience before technology

In all but a few edge cases, technology is the wrong starting point for customer experience improvements, yet businesses typically treat tools, services, and technology as their first priority.

Leaders will acquire the latest personalization technology or omnichannel platform assuming they will augment customer experience. Adding new technology will alter the customer experience but there is no guarantee it will improve it.

“We advocate for starting with a customer or business strategy,” says Gaddis. “You may want to acquire customers more profitably or simplify the buying experience. You need to know what you are trying to achieve because the team, budget, creative, and technology are all very different.”

#4 Intentionally design your CX operating model

Customer experience is a young discipline. Only in the last 10 to 15 years has it really gained traction, momentum, and authority. Most businesses founded before the function’s emergence will have grown without CX as a key concern. Indeed, many organizations founded since its coming of age grew without due regard to CX, too.

In these cases, leaders typically add CX as a peripheral business unit. Instead of nurturing customer-centricity across the entire company, CX efforts remain siloed. Initiatives and campaigns become CX initiatives and CX campaigns.

The best-performing companies do not let CX develop haphazardly. Instead, they implement specific CX operating models. Deloitte analysts identified three archetypes:

  • Decentralized: “Business departments work rather independently on CX concepts/initiatives and steer their technical implementation (functional silos).”
  • Hybrid: “A staff function is established to consult and coordinate CX efforts across all functional business units but has no predominant decision authority and responsibility for technical implementation.”
  • Centralized: “A dedicated organizational unit acts as CX CoC––it bundles all CX activities, i.e. collects functional requirements from business departments as SPOC and steers and performs technical implementation end-to-end.”

All three operating models can deliver results. Whichever model is the right choice for an organization will depend on its pre-existing structures, power dynamics, people, and technologies.

While high-performing companies exhibit diverse operating models, the commonality is that they intentionally think about them. They audit their circumstances, implement an intentional operating model, and reassess their performance regularly.

#5 Formalize experience innovation and experimentation

The waning risk tolerance of growing companies is best exemplified by Facebook’s change to its motto. As a fledgling startup, CEO Mark Zuckerberg encouraged his employees to “Move fast and break things.” But as the company grew so too did the stakes. Breaking even simple things could cost millions or even billions of dollars. In 2014, two years on from the social network’s IPO, Zuckerberg tweaked the motto: “Move fast with good infra.” The slide from unfettered experimentation to constrained creativity is clear.

All growing companies go through a similar transition. As they expand and the stakes rise, they de-risk their operations. While that shores up their financial security, innovation will slow.

Safi Bahcall, a former biotech entrepreneur turned author of ‘Loonshots,’ recommends organizations create dedicated spaces for experimentation where artists (those who create value by taking risks) are isolated from soldiers (those who create value by minimizing risks). In their experimental world, companies must support artists through success and failure.

“They should be failing,” Bahcall said. “Apple failed a ton, Amazon failed a ton. Take Amazon’s—whatever it is—$2 trillion market cap. The key for them was always understanding and managing and embracing failure.”

By creating a safe space for trial and error, Bahcall believes companies can survive the slide toward de-risking. They can nurture bold ideas, brave moonshots, and courageous loonshots (his term) to create experiences that differentiate their brand.

Disruption and development

Customer experience is not a level playing field. The leading pack has budgets many orders of magnitude greater than mid-market and small businesses. Businesses like Amazon and Walmart can provide value-surplus in the form of speed, convenience, and more. While few companies can build a distribution network to match Amazon’s, they can compete on experience – it is the emerging axis for clutter-breaking growth and market penetration. 

By treating CX as a strategic priority rather than an afterthought, companies can cultivate experiences to rival the existing eCommerce giants. But they require a rock-solid foundation from which to do so. These five principles for building a CX-driven eCommerce business will help organizations make impactful decisions on a day-to-day basis and set them up for long-term success.

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