One of the appeals of eCommerce—easily the most popular of all D2C formats—is that it doesn’t require a lot of tech to get started. You sign up with a ready-built platform, add your items for sale and branding to their existing templates, and your digital shop is ready for customers. Given the ease, companies large and small have rushed to take advantage of the eCommerce boom.
However, every gold rush loses its shine when constraints begin to emerge. Emerging socio-economic factors, in particular, have a tendency to pierce business operations and bleed into customer experience directly, affecting it adversely and sometimes irreversibly. COVID-19, for example, heavily disrupted supply chains, causing shortages of a wide variety of products, from toys to cars. Demand for ecologically conscious shipping and logistics pushed up costs, while inflationary pressures have caused commodity prices to soar across the board. Unable to sustain category demands, ensure a significant enough range of SKUs, and meet expectations of service, eCommerce brands have come under strain, particularly D2C brands. According to a report by McKinsey, of the 60% of respondents who had tried to purchase items that turned out to be out-of-stock in the previous three months, 39% switched brands or bought a different product, and 32% switched retailers. Indeed, in times of constraints, when a company struggles with stasis, its customers feel the pain. In defense, while companies turn to conservative operations, customers start prioritizing convenience over brand.
However, there is a truth that stands diametrically opposite to this fact––customers want to choose familiar brands. Whether they are buying a new product or a familiar one, 6 in 10 customers would rather buy from a brand they’ve previously transacted with, according to a Nielsen study. “Innovating on established brands that are already trusted by consumers can be a powerful strategy,” says Rob Wengel, Senior Vice President, Nielsen Innovation Analytics. In this context, CX plays become important.
It follows then that the way to stand out as an eCommerce business in the shaky eCommerce space is by evaluating how your brand generates value, enhancing that value, and applying a bionic approach to customer segmentation, targeting, and engagement. In 2022, leading with deep personalization—giving the customer what they want the moment they want it, and even sometimes before—is the best way to activate a value-oriented operation.
According to a McKinsey survey, 76% of consumer respondents said they were more likely to buy from companies that offered personalized experiences, and 78% were more likely to recommend such companies to friends and family. McKinsey estimated that for D2C brands in particular, approximately 25% of revenue is driven by personalization—more than double the percentage of non-direct brands. Indeed, personalization isn’t just a nice-to-have: it’s a significant driver of revenue, referrals, growth, and customer lifetime value (LTV).
This is when the nothing-but-the-essentials, operations-focused tech stack you started with begins to show its limitations.
By and large, most digital D2C platforms generate insights that focus on the product. They can tell you exactly what someone bought and when, but they don’t necessarily give you the best insight into the behaviors that led to this action––search queries used to find a product, the pages clicked, or the content read. They also can’t tell you what happened before someone entered the shopping platform, including how customers engaged with your brand on social media or Google ads. All of this information is critical to mapping customer intent and behavior, the bedrock of any good personalization strategy. To pin it down you need to upgrade your tech.
There are three key components of a tech stack that can help online D2C brands deliver a delightful, personalized customer experience.
- First, is your platform. It has to be agile and adaptable.
- Second, you need a robust customer data platform (CDP) to collect intent and behavior data across multiple tools and channels.
- Finally, you need a customer relationship management tool (CRM) to log your customers’ interactions with marketing, sales, and support functions, so you can plan your outgoing communications, personalize offers and messages, and deliver more value.
1. Choose a platform you can build on
Most new D2C companies don’t have the resources or expertise to build an eCommerce platform from scratch. And they don’t need to, thanks to the proliferation of ready-to-launch, deeply agile, and intuitive platforms––such as Shopify––that streamline the process from idea to inventory, to your first happy customers.
These platforms represent the first pillar of your online D2C tech stack and function as the foundation for everything to come. Choosing the right one is an important early decision that can affect your ability to offer personalized customer experiences later on.
When starting out, opt for a platform that allows you to collect data on customer behavior, even if rudimentary. As long as the insights can help pilot a handful of personalized experiences––from real-time shopping cart communications to offer-related pop-ups on-site––you are off to a great start.
That said, it helps to choose a platform with enough modularity––the ability to add and remove functions as your company develops. For example, Shopify’s app store includes apps made by independent developers, which enable Shopify store owners to add functionalities such as pre-order, charitable donations and inventory management
Through these apps, you have your first opportunity to offer a beyond-the-cookie-cutter customer experience that caters to individual user preferences. Bhargav Chandrababu, Freshworks’ Head of Marketing Technology and Media Ops, campaigns for knowing your customers’ common behaviors and beliefs for building a storefront that feels like it understands its users. How often do they buy a product? What SKU size do they prefer? Is there a price point within which they operate? Is there a clear preference for a certain make/style? Even a primitive knowledge of these, he says, is sometimes more than sufficient for building storefronts that demonstrate brand-customer alignment. “Even simple additions, such as making it possible to subscribe to frequently bought products, can make customers feel like their needs are being understood”, he says. Other ways to do this include making referral easy, adding local language options, and communicating a purpose that speaks to your customer’s own values.
Although these customizations might get people in the door of your storefront, to keep them coming back you also need to deliver a strong, personalized customer experience once they’re there. “Campaigns and marketing can get you to the first purchase,” Chandrababu says. “To make it a behavior change for them [beyond a one-off purchase], they’ve got to have a good experience consistently. You’ve got to start working on loyalty right away.”
2. Create a data pool that runs wide and deep
When you only have a few hundred or thousand customers, you don’t have statistically significant data to chalk out closely tailored segments for personalized experiences. But as those numbers grow, so does the amount of data on your customers’ behavior and needs. At that point, you need a customer data platform (CDP) to make sure you’re not leaving any valuable customer insights on the table.
There are two main benefits of CDPs for onlineD2C brands:
- CDPs get into the weeds of your customers’ behavior. These platforms track every way your customer interacts with your brand, including clicking on ads, where they click once they’re on your website, which items they add and remove from their carts, how long it takes them to check out, how they interact with emails you send, and more.
This is very helpful for D2C brands that have outgrown the insights platforms are capable of delivering since this kind of in-depth data is usually engulfed by third parties and ad platforms. “All your intent signals are buried and siloed by the likes of Facebook, Amazon, and Google,” Chandrababu says. “Your commerce intents are captured primarily by these three key channels—and they’re well-guarded.” A CDP allows you to closely track every step of your customer’s journey, and the decisions they make, independently of such three major ad platforms and others.
- Your customers interact with your brand on multiple devices across many platforms. For example, on Google, Facebook ads, your website, your social media, and your emails. CDPs collate data from all those sources, verify that it’s coming from the same customer and that it’s up-to-date, and then present it as a customer profile, segment, or report that’s available to other systems, such as a CRM or other marketing tool.
In short, CDPs process a lot of high-quality data, and make it easy for you to use it to personalize your customers’ experience and your product offerings from behind the scenes. For example:
- Marketing can use data collected in the CDP to create targeted social media ads on the right channels at the time of day when a customer is most likely to be receptive.
- The product team can see the range of products a customer interacts with before landing one to curate selections better.
- Engineers and UX designers can modify landing pages and navigation based on how different customers work their way around the website.
3. Grow and retain customers with a CRM
Where CDPs focus on technical data about customer behavior, customer relations management tools (CRMs) are about the relationship between you and your customers. They are used to record every direct interaction a customer has with your brand, for example:
- Contact forms
- Customer service emails
- Direct emails
Unlike CDPs, CRMs are mostly used by people who work directly with customers, especially the sales team and customer service. These tools can help identify customer needs, and if and when they change over time. CRMs are also helpful for identifying opportunities for transaction-oriented engagements, like upselling and cross-selling, and content-first engagement, including branded events, seasonal campaigns, and more.
Customer service and marketing can also use CRMs to personalize their sections of the customer experience. For example, if a customer service rep can look at the CRM and see that the unhappy customer on the live chat has placed multiple orders with no issues in the past, they might be empowered to do more to appease that loyal customer.
At the same time, someone in marketing can look at the CRM and see a customer’s transaction history with the brand, including the channels that drive each purchase––be it email, website, or social. Marketers can also use cohort analysis and cluster analysis to identify different customer personas and customize communications to each. “Creating audience segments based on the behavior and the data patterns that you have, and automating your communication with each of these, based on their prior engagement is key,” Chandrababu says. “For example, if you are targeting office workers, email them when they are typically traveling to and from work because they are checking their emails. Personalize the experience not just on the website, but in terms of your communication.”
This cross-functional attribute is crucial in a good CRM. Multiple departments should be able to access the same customer data in one place and get everything they need for their respective responsibilities. That information should include interaction and purchase history, social media, and preferences.
A tech stack to stand out
Digital D2C is looking increasingly less DIY as major brands enter the space, and the earliest D2C brands mature. With so many competitors, the companies who stand out will be the ones who make it easy for their customers to buy exactly what they want—plus things they didn’t even know they needed.
The most forward-thinking D2C companies are moving away from a disjointed function-by-function approach, and towards the CPG model of value operations. That is, instead of starting with a product and building your go-to-market strategy around it, you start with data and identify audience segments. Each of these segments connects to a category, and from there, you develop the cross-functional end-to-end journey, tailoring channel and platform strategy to the needs of each segment-oriented micro-ecosystem.
Just as tech made it possible for more people to get started in eCommerce, there are tools available that can help you elevate your customers’ experience, develop brand loyalty, and reorganize around a value operations model. Your CRM and CDP should be goldmines for the kind of data you need to create specialized audience segments, identify their unique needs and requirements, and serve them accordingly.
“It’s a matter of bringing all the technologies together in a way that enhances the experience behind the buying process,” Chandrababu says. “It’s not just about buying and selling, but about how a customer feels.” This time, D2C is personal.