By Andrew Caravella
The consumer packaged goods industry is navigating a marketing revolution—and young, digitally native brands are rewriting the rules and leading the way.
Direct-to-consumer companies have emerged as real, formidable competitors to household brands across every industry imaginable, leaving legacy brands under pressure to adapt. While sales in multiple consumer product categories have slowed, direct-to-consumer brands are enjoying rapid growth. For example: Glossier, the beauty company founded by former blogger Emily Weiss, grew 600% from 2015 to 2016 while suitcase brand Away grew 500% between 2016 and 2017.
But growth is not the only goal, and these brands aren’t necessarily shaking up the consumer products industry by reinventing the wheel. What makes them successful is their emphasis on building one-to-one, authentic relationships with their community. Any brand that hopes to retain their customers and ensure long-term growth should take a page out of the direct-to-consumer marketing playbook and start prioritizing connections over impressions.
Relationships today generate revenue tomorrow
Historically, brands that controlled the supply chain and had massive advertising budgets enjoyed the lion’s share of the market. But as people’s preferences evolve, legacy brands are discovering they can no longer just buy their customers with traditional marketing efforts.
According to our own Sprout data, 64% of consumers want brands to connect with their customers. To get to know their customers better, direct-to-consumer brands are focused on building connections with people who align with their brand’s mission and values. And these relationships have real financial impact. When people feel connected to a brand, 57% will increase their spending with that brand and 76% will buy from that brand over a competitor.
So consider how a direct brand, like Away, leverages insights to grow their community and earn a $700 million venture-capital valuation in a little over three years. Building off of their customers’ desires for better travel experiences, Away tapped into deeply personal feelings to build content that resonates with their addressable market—like me. Those that know me know that travel is the most important luxury in my life. The thrill of jumping on (not out of!) a plane, exploring new places and taking in local culture around the world inspires and awakens me. It’s no surprise then that travel accessories and gear are not mere necessities—they can be inspirational in their own right.
In other words, Away isn’t only selling suitcases; they’re selling a lifestyle and bring to life the emotions their customers crave. They stand out from their competitors not only because of their sleek, minimalist products, but because they use storytelling and content to demonstrate they know who their customers are and what they want better than anyone. And guess what? As I’ve come to know and love the brand, I’ve purchased items not only for myself but for friends and family (I went wild with the mini suitcases that only arrive once a year at the holidays!) who share a similar penchant for adventure.
Direct-to-consumer brands are going straight to the source
Where better to foster connection than going right to where customers spend their time? Social platforms like Facebook, Twitter and Instagram enable two-way conversations between brands and people, providing a level of intimacy that other forms of marketing can never achieve.
Building connections is what helped one eyewear retailer reach a $1.75 billion valuation in roughly eight years.
Warby Parker, a defining entrant of the direct-to-consumer category, uses social to spread the word about its product and to connect with fans directly. An early adopter of user-generated content (UGC), Warby Parker launched hashtag campaigns encouraging customers to post photos of themselves wearing trial frames on social and solicit advice from friends. The end result was a win-win for the glasses retailer. Warby Parker received free advertising for its products and real-time feedback from their community about what they liked or didn’t like about the glasses.
All great relationships, in every aspect of life, are built on a trusted give and take. Brands like Warby Parker can take their relationship with customers a step further by reposting given user-generated content to their owned social channels. When brands ask customers to send photos of themselves wearing or using a product, it’s only right for that brand to reciprocate in return and show some social love. Even the simple act of resharing UGC and inviting people to contribute—to reinforce the fact that they are what makes a brand a brand—can turn customers into loyal and influential fans.
Scaling one-to-one relationships for the masses
Nurturing individual connections is key for a long-lasting relationship, but identifying how to scale those connections and effectively grow as a business is a challenge for many brands.
Since its founding in 2010, Glossier has transformed its relationships with individual fans into a powerful brand advocacy program, resulting in the brand’s “unicorn” status with a $1.2 billion valuation. When the brand learned customers shared their favorite products and recommendations to other women, Glossier launched a representative program to encourage peer-to-peer referrals. Through a more structured, scaled operation, the program was a hit: 70% of Glossier’s online sales and traffic can now be attributed to peer-to-peer referrals.
But as industries mature, reaching new customers on the same social platforms can be daunting. To maintain scalability, direct-to-consumer brands need to do more than rely on word-of-mouth marketing and grassroots advocacy.
While some brands find themselves investing in TV advertising, others like Hubble are also experimenting with paid ads to amplify their reach to connect with new customers in Canada and the UK. The contact lens company explored multiple platforms before settling on Pinterest for several reasons. At a recent Forrester Consumer Marketing Forum, I spoke with Dan Rosen, Hubble’s creative director, about how Hubble uses Pinterest to better understand regional differences as they expand into new geographical markets. Not only does Pinterest, as a platform for ideas and inspiration, align with Hubble’s own brand principles, it also attracted a specific community Hubble knew would connect with the brand’s colorful and creative designs.
The future of consumer products starts with connection
With each passing day, the most successful direct-to-consumer brands aren’t always creating the most innovative or never-before-seen new products or services. Rather, they’ve learned how to win over people’s hearts and heads by investing in human relationships right from the start. It’s this relentless and authentic emphasis on connection that’s empowered direct brands to upend the status quo in the consumer goods market.
To learn from and even compete with these direct brands, companies need to invest in resources that yield better connection and take on the responsibility of getting to know their customers on a personal level. Engage with your customers directly on the platforms they frequent most, understand their likes and dislikes and craft content that sparks an emotional response to strengthen the individual relationship. Because if you can’t confidently say you know how to connect with your customers, there’s a good chance they will be swept up by another brand that does.