9. Launching a Direct-To-Consumer (DTC) Brand in 2020

Shiva: Alright, so our guest today is David Hoos Director of marketing at The Good. So when I was thinking about doing an episode for the DTC, I can think about a better person than David. Good morning, David. How are you doing?

David: Doing well, thanks.

Shiva: Cool. Thank you so much for taking your time and joining on a Wednesday morning. It was a busy schedule right.

David: Yeah, it’s, it’s good morning so far.

Shiva: Cool. So, just for the listeners to give a background about your company and your expertise. So do you want to give us a little outline about your current role and what you’re doing right now?

David: Yeah. So at The Good we’re conversion rate optimization firm, specifically for the eCommerce and DTC space and what that.

Essentially means is that we dig into a bunch of data on how customers are behaving on your site. And we learn about where they’re getting stuck, which is where they’re having trouble, interacting and moving closer to purchase. And we help, run AB tests and other sorts of, experiments on your site to help improve that overall experience for your customers.

And it results in basically a, a better online experience for them, a smoother spirit experience for them, and they end up purchasing more. So it’s kind of a win-win. We help your customers, we help you, and everyone’s happy.

Shiva: Cool, perfect then. So let me start with the basic question. So let’s say if I’m a manufacturer. And I sometimes, you know, maybe I already have a good relationship with the retailers, right. For starters, you know, why do I wanted to launch a DTC platform?

David: Yeah. I think the main thing is that you can, you can be building that relationship directly with your consumers. So if you’re selling through other channels, you’re not getting as much data on your customers. Also, your margins are better when you can do direct to consumer a lot of times, coz when you’re selling wholesale, you know, you’re basically losing a chunk of revenue that way. I definitely think that there’s definitely a case that can be made for doing both just by, you know, for diversifying.

Your revenue streams, but, direct to consumer is definitely a smart route to go. And especially, I mean, in today’s climate with, COVID happening, I think a lot of brands that were already in the DTC space, we’re benefiting from people. You know, people are more people who are stuck at home. And. It’s you know, it’s been great that they could order things directly to their house rather than having to try to go to a retail store.

Shiva: Yeah, exactly. And so for the starters, let’s say, so this is some of the biggest mistake that everyone takes, it as a matter of they’re in B2C or if someone is getting started.

So, merchants usually they sometimes underestimate the power of the product photos. So for as a consumer, right, so what would the kind of like, increase the conversion or as a consumer let’s say, if this is what, I look for in a online store and let’s say if this is what the product photo that I wanted to purchase in this website.

So are there any sort of like criteria for the product photo category?

David: I think honestly, the biggest thing is I think lifestyle photos. So you want to, in the same way that, copywriting, you know, they say help your target audience. Imagine themselves kind of being transformed by your product and write about it that way.

Product photos essentially should be doing the same thing. So if you sell a bicycle helmet, well, have some product photos of people and like out bicycling with the helmet on or you know, you want to see it kind of in the wild. People want to see more pictures of it you know, in real life, instances in real places.

And then beyond that, I think if you think about your photos as your opportunity to give your audience, as good of a perspective of what they would be seeing in a real retail store, you want to give them all the angles that you possibly can, because you know, if they can’t physically look at it in a physical store, the next best thing is for them to be able to browse it from as many different angles as possible.

Shiva: Yeah. I mean, the social proof and then sort of this 360 degree or 3D product view, right?

David: Yeah.

Shiva: Okay. And when it comes to the product content, how to frame the organic, content, you know, that brings in the visitors?

David: Yeah, I think a lot of it, I think maybe dovetails nicely with the discussion around product photos, but I think the more you can get into the use cases of the products and be talking about content in terms of.

What are the instances where this product would be utilized? What are some tips? You know, it, for example. Some of the home improvement stores do a really good job of this. You know, they’re just selling, a lot of raw materials maybe, but if they are producing content that talks about here’s how to make this type of chair, here’s how to make this type of table with these items, you’re going to get a lot of engagement with that content.

And then that is in turn going to, generate more, conversions to buy some of those products that they need for that.

Shiva: And let’s say if we put this all together in the homepage, so what kind of layout the homepage layout, usually, you know, get a good conversion, is that going to be more of a favorite category or is it more like a, the hot selling product that I wanted to list down on the homepage?

So, what, sort of the consumer is looking for, especially on a DTC brand.

David: I think the main thing with the homepage is that you’re giving kind of a snapshot of the range of things that you can offer, but not do it in a way that’s overwhelming, so one of the things that we recommend is, not having a navigation that’s too, that has too many options.

If you can simplify our navigation down to about five different main categories, you’re going to see much more effectiveness from that. If you can do even less, that’s even better. As far as, as you move down the page, I think, yeah, putting some of your best sellers, front and center, maybe some broader navigation.

So if you sell both men’s and women’s clothing, you know, having kind of a, a men’s category and a women’s category, that people can, move through your homepage is really kind of, You know, a hub or a place of navigation to the rest of your site. So you want to not make it too, too busy, too congested.

You want to, really just help people find, the things that they’re looking for, and, get going in the right direction.

Shiva: So do you mean, that’s the place where, we can just talk about the brand or more like, we can do the brand building sort of activity, and it’s ideally like, getting the actual product of that specific brand instead of, you know, taking them to a different product detail page or, like you said, navigating, right. Is that correct?

David: Yeah, I mean, I would be careful with your brand building on that first page. I’ve seen some mistakes where, you know, people were, you know, in an effort to do more brand building with say, their navigation, they’ll use, More branded terms rather than, clear wayfinding terms for their navigation.

And so, you know, if somebody calls their blog, like the hangout or something like that, people are, might be confused as to like, Oh, well, what happens if I click on this? Like, I don’t know what the hangout is so it’s, I think it’s important to first and foremost be clear. but. Beyond that. Yes. It’s, I think it’s a great place to kind of be showcasing your brand and the things that are unique about it.

Shiva: I’m just curious. So do you encourage them to go for a blog section in the homepage or not?

David: like a blog section?

Shiva: Yeah. Right. So let’s say if they write articles every week, like two articles every week, right? So do you want them to have a, before the footer section, do you want them to have a separate blog section over there in the homepage or should we just completely avoid them?

David: I think you can do that. I don’t think it, needs to be as high priority on the page. So if you can put that closer to the bottom. one of the things that we do is we just have our most recent article, on our page, but it is closer to the bottom of the page. Realistically, your blog is going to be good for bringing people to your site.

but. if people are there to either research or purchase, they may not be navigating to your site, in the first place just to go to your blog. They’re more likely to go there to do a little bit of product research and then purchase. So you don’t want to get them off of off track from what their goal was when they first showed up.

Shiva: So, talking about the content and then the blog, can you tell us a little bit about, you know, building an email list or let’s say for someone who’s just getting started, so how to, you know, where to begin this, you know, building an email list.

David: Well, so I’m going to say something that is probably unpopular, but, I’m not a big fan of website popups, at least not when people first show up on your site. I think that’s a poor customer experience. I think it’s much better to either have a form prominently displayed maybe on your homepage. Because you know, then when people are signing up, when they want to, you’re going to have a higher intent email list and people who are going to engage with your emails that are going to convert from your emails at a much higher rate.

if you’re basically having to bribe or threaten your, new visitors in order to join your list, it’s not really high quality. consumers that you’re, getting. And then what’s that’s gonna result in is, maybe people, fewer people who actually open your emails or people who mark it as spam. and then that’ll hurt your deliverability in the long run.

So, you know, your emails might get to fewer people who maybe do want to engage with you because you know, you’ve been sending to people who aren’t that engaged. So, I guess that’s one thing. beyond that, I think, you know, there’s a number of different ways you can do that. I think. You can, maybe work with other partners in your space to host events.

you can host events yourself, virtual events, things like that. you can, you know, offer, I don’t like to, encourage discounts too much, but, when you can offer different sorts of specials. So, you know, a free bonus thing, that is being thrown in or, You know, a special bundle that’s only available for a limited time.

Things like that. offers can be a great thing to help build your email list, but I would make sure that they’re not turning your brand into a discount brand where all, you know, the only reason that people are engaging with you is because they’re expecting a discount

Shiva: For sure. And so let’s say, what kind of newsletters.

Typically you know consumers, like let’s say, like you said, so not everyone is going to, like a popups or the discounts and other things, right. So, what kind of content or, what kind of, stuffs that typically consumers like that’s gonna bring in more click rate or conversions from the weekly or monthly newsletters?

David: I think what it comes down to is just, highlighting the benefits of things. I think also, one thing that’s important to consider with your newsletter is, making sure that your segmentation is, set up well. So for example, if you have, you know, men’s and women’s clothing, and you have people who purchased women’s clothing before, but you’re sending them newsletters and emails about.

Men’s clothing, you know, you’re not going to get a very good click rate because you’re sending it to the wrong person. But if you have, if you’ve collected some information on, okay, this person has in the past, you know, purchase women’s clothing, we’re going to only send them offers around women’s clothing, and this person over here has only purchased men’s clothing in the past, so we’re going to only send them stuff related to that.

That’s just some basic segmentation that you can do, but that principle applies across the board where, you know. Don’t send emails that don’t align with their previous purchase history otherwise you’re not going to see as solid of results.

Shiva: And, what kind of a social media marketing strategy do they have to follow, you know, to bring in the organic visitors.

So let’s say not everyone is going to invest more on the ads. Right? So how to create this organic visitors through the social media awareness or campaigns. You know, what, most companies are missing right now.

David: You know, that’s a harder one for me. I don’t do as much there. I think my, you know, in my limited experience, I think, what I’ve seen is, the more, educational and entertaining you can be with your audience, the better you know, kind of keeping things light and really helping them, you don’t really want it to be, you know, make things too much about you. You want to be, you know, sharing kind of, benefits and transformation to your

target audience. So the more ways that you can do that with your social media marketing is great. I also think, you know, having much more of a community centered mindset. So, you know, are you building a group for all your, customers? Are you, you know, are there different sorts of, you know. Benefits to being part of a club.

And maybe that’s just, you know, all the people who are fans of your page or, who are members of your know social media group, that sort of stuff. I think you can definitely develop some strategies there that will, help drive some more organic visitors

Shiva: Good, good. So, I was just going over this report by statista you know, the returns are expected to cost retailers close to I think, $550 million in 2020. So let’s say for the DTC brands, what do they have to know about, the returns or you know, kind of like, what are the things they will have to be aware of to streamline this whole return wars?

David: Yeah, I think the, honestly, the, the biggest thing to minimize returns is, helping people get, as complete of an idea of what they’re getting before it’s even sent out in the first place. So I think, you know, if you’re selling clothing, I think having as much information, I think a lot of times as the, like on the model that is wearing, it can be helpful. So, you know, if, if the model is six feet tall and, you know, dress looks a certain way on them.

And the person who’s buying it is, you know, five foot four, well, the dress is going to look different on them. So, in my experience, one of the things that I’ve seen work well is if you actually have a variety of product photos, on a variety of models that have different shapes and sizes, and then you have information on those, models, and then that way people can make sure that they’re, into, you know, how it looks on the model is closest to how I look on them, and then they can see, okay, this is the size that I would need based off of that. And then they’re more likely to purchase the right product for them, which means fewer returns.

Shiva: Good. And so one of the things that the companies or the merchants are not doing is, the A/B testing. So, what do you think, I mean, what are they gonna miss let’s say if they’re not doing the A/B testing,

David: I think the, the main benefit of A/B testing is it is more, I guess, certainty. So a lot of brands, they’ll make different design changes on their website, just kind of, based on their gut and decisions that way.

But the thing is you know, you don’t necessarily know if that’s the best change that you should be making, or if it’s going to help or hurt things until it’s too late. You know, you could, change your navigation and then you just have to wait a couple of weeks and see, Oh, are our sales down? Are they up?

You know, is, you know, am I looking at this over the right timeframe to know if this was actually, you know, Good data. Whereas A/B testing, you know, you’re, you’re essentially showing them two different versions, the original, and then you’re showing them what we think is an improved variation of that same part of the site.

And then you’re running traffic, splitting traffic between both versions of that. And then over time you’re seeing, okay, how is behavior changed on this variant, and if there’s more people that are purchasing in the end based off of that change, then you should make that change permanent. And if there aren’t, then you know, you should keep the original version.

And so it, I guess what I’m saying with all that is, it reduces any sort of, questions, any sort of, risks that you have. And so you can be. Essentially objectively be improving your site by little bits every single month so that your website is going to be converting better and better and better every single month.

Shiva: Okay. Okay. So where does the personalization, you know, actually stand, personalization or even, the customization? So do people you know really like to buy the personalized products in the sense I mean, like, let’s say if I’m selling four, just four or five colors of shoes, and instead of that, let’s say if I have a customization option, a personalization option where the consumer can literally, you know, choose what color they want or what elements they want on the lace, on the top of the soul, whatever it is.

So, you know, consumers like that. so what’s the sort of like conversion rate over there?

David: Yeah. I think there’s definitely, a big benefit to doing that. I think when people have a hand in, producing the finished product of what they’re going to get. They’re more invested and engaged, and more likely to purchase with it.

So, I know that sometimes takes a little more resources on the brand’s end, so, you know, it’s not an option for everyone, but, if you can do that sort of, customization, personalization, it can be a really smart way to go. And the key thing there too is, you know personalization, you want to be secondary to making sure that you have all the information on like the right sizing and the right fit.

Because, I think the last thing you want is somebody to personalize something and have it be when they get it, it’s personalized, but it doesn’t fit them right. You know, coz then, they’re gonna, you know, it might be a return that you can’t really do as much with, in that instance. So. Does that make sense?

Shiva: Yeah, for sure. So I didn’t, I didn’t quite catch that earlier. So let’s say I thought, you know, sometimes personalization or customization increase the conversion, but at the same time, it can help you to reduce the, returns as well. But I never thought about it. Let’s say if you have a wrong size or something like that, so you’re completely going to screw up the whole return process just by yourself.

David: Yeah. So I mean, it’s basically, I think I’m kind of optimizing to reduce returns and to have as much product details, is like the best foundation. And then personalization I think is kind of the next stage where, you know, take care of the basics and then you can move on to personalization.

Shiva: Yeah. Yeah, exactly.

And speaking of personalization, I think integration is also a key when it comes to the DTC, especially if they already have the relationship with the retailers and if they’re already using applications like ERP and other things, right? So we need to make sure that, before we go online, we have a proper integration in place.

And do we have communication between all these applications where we can integrate pretty much everything in one place? right.

David: Mmmhmm

Shiva: So, what do you think about, selling on the marketplaces? So let’s say this is more like, getting a second channel or third channel for your revenue, right? So a selling on marketplaces like Amazon, is that gonna increase their revenue or is that gonna hurt the brand loyalty and other things?

So what do you think about it, or what do you have to comment on that.

David: My philosophy on that is to, you know. Consider it very slowly. I wouldn’t, be quick to sell on Amazon. I know there are some benefits to it. my general thinking on this is to do something, similar to. what major brands like Levi’s have done, with, department stores and stuff like that in the past.

So, for example, if I go to Macy’s, and I go to get some Levi’s, they have, some particular lines of Levi jeans that are only available to Macy’s. And if I go to a Levi’s store, they actually aren’t going to have those same lines. It’s, it’s just going to be, their core offering. So, I think that same principle, it should apply when you’re selling through Amazon.

I wouldn’t put your entire product catalog on Amazon. I would probably pick one item that, you’re willing to sell at a steep discount because that’s what Amazon is going to want. but maybe it’s kind of a good introductory product to the rest of your range of products and, that way you can. benefit from, I guess introducing people to your brand through a channel like Amazon, but then you can attract more of them to return to your brand through your own, direct to consumer website.

and that just improves your margins. it improves brand loyalty. You can be getting more of your own data when you’re doing it through Amazon, you’re essentially, blind to what sort of, You know, who are the people that are purchasing from you? How many times are they returning? That sort of stuff.

So, I think. Yeah. Basically developing products specifically for Amazon, and keeping the rest of your catalog on your own site.

Shiva: Cool, cool. And, so just to differentiate, their online store from the marketplace or even from the retailer, so do they have to offer some sort of, discounts on their website, just to attract the consumers or how to just handle that part alone when we have, you know, other channels.

David: Yeah, I mean, I think I’m always reluctant to encourage people to jump straight to discounts. just because if you do it too often, then your consumers will start perceiving you as a discount brand. And so you only get purchases whenever you’re offering some sort of sale. I think you can provide value in other ways.

So, In ways that don’t actually come across as, as discounts, even though they might cost you a little bit more. I think I mentioned this earlier, but, having a, a bonus product that’s thrown in for orders over a certain amount, or, you know, when you buy these you know two items. Then you’ll get this third thing thrown in for free.

Or, you know, if you purchase these items, then we’ll, you’ll get an invite to this special private event. You know, there’s online, class, you know, for how to use that thing. There’s, there’s a lot of different options, ways that you can add value on top of, your core products that isn’t, saying, Oh, well, we’re just desperate for sales.

So here’s. Yeah. 20% off or 30% off. does that make sense?

Shiva: Yeah. Yeah, for sure David, I think that looks good. So, I think, so we’ll just have to take care of, one of the thing is, let’s say when it comes to the discount. So since you talked about it, so like you said, maybe we can even offer some sort of like repairs, just to differentiate from the marketplaces or even the retailers or we can do it something like a hundred day return policy.

Let’s say if you buy it from our own online store.

David: Yeah, definitely. There’s definitely benefits to, working direct to consumer rather than through a third party for that.

Shiva: Okay. Cool. Perfect. David, thank you so much for taking your time on giving us, throwing us some insights on the DTC was really helpful and I hope the listeners are gonna like it.

David: Awesome. Yeah, it was great talking with you.

Shiva: Cool. Take care. You have a good day.

David: Bye. Thanks

Shiva: Thanks for tuning in and subscribe to be among the first to hear it if you haven’t already, and if you like our episodes, do me a favor by leaving us a review on Apple podcasts, Spotify or wherever you’re listening to this right now. If you want us to cover anything else on B2B or B2C in the upcoming episodes, just go ahead and email it to podcast@dckap.com. Either way catchy you guys very soon in the next episode.

Until then, stay safe and stay healthy.