5 of the Best Ways DTC Brands Get New Customers

Luggage from direct to consumer brand Away

Luggage from direct to consumer brand Away

 

By Tricia McKinnon

Drew Green, the CEO of digitally native menswear brand Indochino, said it right when he stated: “customer acquisition is the hardest part of running an online-only business.” While setting up an eCommerce brand has never been easier growing that business is harder than ever. Many direct to consumer brands have successfully used Facebook and Instagram to acquire new customers but most will admit that it is costlier and less effective to use those channels.

Zak Normandin, CEO of direct to consumer brand Iris Nova, (parent company of Dirty Lemon beverages) said cost per action on Facebook increased by a factor of three between 2017 and 2018.  The company used to incur between $20,000 and $30,000 per day on advertising for Dirty Lemon on Facebook and Instagram. 

Speaking about this Normandin has said that: “we were acquiring customers profitably through that process, which was extremely exciting.” “[But] I think it was probably the beginning of 2018 when the marketplace became really cluttered. Those costs just became unsustainable. We were trying out every new tool that Facebook released…even though there is incremental change, the costs of acquiring customers though those channels just continued to go up.” After that Dirty Lemon decided to part ways with advertising on Facebook and Instagram.

If you are only focusing on one way to acquire customers (i.e. Facebook advertising) it might be time to try something else. Here are five strategies that successfull DTC brands have used to acquire customers with great success. 

1. Open brick and mortar stores. Perhaps this will sound like a misnomer, but even direct to consumer retail businesses need brick and mortar stores. This is because the vast majority of retail sales still happen in stores with online sales representing only 15.6% of retail sales in the third quarter of 2023 in the United States. While shopping online is convenient there is still a lot of friction in the shopping process. Consumers like to touch and feel products and let’s be honest returning online orders can be a hassle.

Still not convinced? Consider the famous last words on this topic by digitally native brand Everlane. Everlane is a clothing brand that sells high quality basics (cashmere sweaters, cotton t-shirts and jeans) but at lower prices than retailers like J.Crew. The brand started out online only in 2011 and then a year later founder Michael Preysman famously told the New York Times: “we are going to shut the company down before we go to physical retail”.  

Five years later Everlane back tracked and opened its first store in 2017. Speaking about the change in direction Preysman said: “when you’re in the online-only world, you can’t bring people into your space and your brand the same way you can with a physical store, where it feels transparent, open, and honest. So we wanted to bring the brand to life and be part of people’s lives in a more meaningful way. People do want to try things on. Having them come in and touch the product and talk to employees makes such a difference. We started out with T-shirts, which are really easy to buy online, but denim in particular is really hard to shop for [without trying it on].”    

2. Reduce friction in the shopping process. Direct to consumer retailers have had a lot of success by identifying pain points in the shopping process and then creating functional and at times novel ways of solving those problems. Sounds obvious, but it can be very difficult to do in practice. One of the direct to consumer brands that has done a very good job of this is ThirdLove. ThirdLove is a direct to consumer bra and underwear company which launched in 2013.

Ask any woman and she will tell you it is a pain to find a bra that fits well. Online shopping can make that process worse if the customer does not know their size and desired style ahead of time. To resolve this issue ThirdLove created a fit finder quiz to help customers find their perfect bra size. The online quiz provides a bra recommendation in as little as 60 seconds. Problem solved. Over 17 million people have used ThirdLove’s fit finder quiz.

ThirdLove did not stop there. Early in its evolution it implemented a “try before you buy” service. Once a customer receives their bra order, ThirdLove said that customers should: “Wear it. Wash it. Live in the bra for 30 days”. Bras that customers try on and are returned are cleaned then donated by ThirdLove to charities that focus on women in need. Returns and exchanges were free within a 30-day period when the program launched but since then the return window has been extended to 60 days.

Speaking about the program in 2019, ThirdLove co-founder Heidi Zak said: "we had an amazing product, but how would we get women to actually take that chance and try the first bra?” "We sat down as a company to figure this out." After the program launched 75% of customers who tried the program ended up becoming ThirdLove customers.  Zak has also said: "[The program] allowed a woman to take a risk on a brand she hadn't heard of and that truly changed the course of our business. It made us profitable."

Warby Parker has used a similar program to drive growth. Using Warby Parker’s home try on program customers are given the option of trying on five pairs of glasses at home which Warby Parker sends to customers free of charge. If a customer does not like any of the glasses they can send them back for free. This program was especially important for Warby Parker when it did not have stores and only sold glasses online. 

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3. Explore unconventional and creative marketing. Sometimes the best action is the one most people aren’t doing. Menswear direct to consumer brand UNTUCKit realized this when it first tried to figure out how to acquire customers.  

In the early days of the brand the company tried the traditional step of hiring a PR agency to gain exposure. But after going down that route it decided to take the unconventional approach of firing its PR agency. If felt that the PR was not giving the brand the exposure it needed. Instead UNTUCKit placed ads on sports radio and in print airline magazines. While these are not the kinds of marketing moves that everyone is talking about these vehicles often have more captive audiences than a fast moving social media feed.

You can try the conventional but if it’s not working why not take an unconventional approach? Taking the less travelled route may have less competition with better exposure. The exposure can also come at a cheaper price. UNTUCKit found that for approximately $350 it could reach 200,000 potential consumers using radio ads. After its first local radio ad placement in 2013 it had 1,500 website visitors in less than 10 seconds versus a normal level of traffic of 150-200 visitors. 

Speaking about this approach, UNTUCKit CEO Aaron Sanandres said: "I think that the biggest lesson is to be curious, right, think about the different, maybe nonconventional ways, that you can get your message to the right audience, whoever that audience is for your particular business. As long as you can measure it."

Travel company, Away, also used a unique but highly effective approach when launching its first product. The company started out by selling a single piece of luggage. It’s an everything you need all in one piece of luggage that is stylish enough to be seen on the best Instagram feed. During the run up to launch which was scheduled to take place before Christmas in 2015 the company ran into a big roadblock. Away’s first run of luggage orders would not be ready until after the holidays. Disappointed with the prospect of not being able to capitalize on the lucrative holiday season, Away CEO Jen Rubio came up with a novel idea to drive sales.

She came up with idea that the company should write a book to promote Away as an exciting travel company that people needed to know about. The book would be sold in the holiday season prior to the arrival of the luggage orders in February of the next year.  The Places We Return To is the book that Away commissioned and sold. The book features personal travel stories and photos from 40 taste makers. It is a beautiful hardcopy book that would look nice on your coffee table.  

And the stroke of brilliance - enclosed in the book was a gift certificate to purchase a single piece of Away luggage. The price of the book was $225 dollars, the cost of one piece of luggage.

Away promoted the book as the perfect holiday gift for the travel lover (aka their target customer). 2,000 copies of the book were made. Vogue magazine ended up featuring the book which contributed to Away selling hundreds of books on the first day it was available. Within a few weeks the books and along with the company’s first run of luggage sold out.

Often what looks like a challenge (i.e. your Facebook advertising budget is running out) can be a blessing in disguise as it forces you to think of more creative ways to acquire new customers.

4. Focus on a narrow high potential customer segment. Many of the direct to consumer brands that have had a lot of success started out by focusing on a narrow segment of consumers. Instead of launching a deep product line with many choices they chose to focus. This is easier said than done. It is actually harder to focus, and decide what you are not going to do and walk away from potential opportunities. Apple often credits its initial success to its ability to focus on a small number of products. Apple co-founder Steve Jobs once said: “deciding what not to do is as important as deciding what to do that’s true for companies and it's true for products”.

With a wealth of resources in 2015 Kylie Jenner could have launched digitally native brand Kylie Cosmetics by launching a full makeup and skin care line. Instead Jenner started by launching one product, lip kits. This allowed her to focus on a gap in the market (teens wanting fuller lips).  It also enabled her to become known within a niche in the beauty space. Since then Kylie Cosmetics has broadened its product range but its initial narrow focus allowed the company to be known for something which created a lot of buzz and was the foundation for the company’s fast growth. 

Allbirds is another brand which started with a single product focus. It began selling a wool sneaker in 2016. They became a Silicon Valley staple then Allbirds went on to sell one million pairs within two years. Speaking about Allbirds’ success chief innovation officer Tim Brown said: I had a very, very simple insight that shoes were over-logoed, over-colored and changed all the time for no reason.” “And, it was very, very difficult to find ‘simple.’ And I set out to solve that.” Focusing on one product also simplifies marketing. There is only one product or a handful of products to explain, promote and for consumers to understand. 

If the train has already left the station and a brand is already in multiple categories then they can consider focusing on a narrow customer segment within a larger audience.  Nike has done this successfully with its SNKRS mobile app. Nike’s SNKRS mobile app is targeted at sneakerheads, customers who are fanatical about in-demand limited release sneakers. The app is specifically designed with a super fan in mind. For example, SNKRS app users receive notifications about limited release sneaker drops so they don’t miss out. 

Hyper engaged SNKRS app users are often chosen by Nike to participate in unique special events like attending a Kendrick Lamar performance. By focusing on superfans who tend to be the most vocal brand advocates this narrow segment of customers can create a halo effect that draws attention to the brand as a whole.

The SNKRS app has been widely successful. In 2016 the app generated less than $70 million, by 2019 it is estimated that it generated $750 million in revenue. In 2020 the app made $1 billion or 18% of Nike’s online sales.

5. Instead of selling, give back. No one truly likes being sold to, whether it’s a Facebook ad or a slick salesperson so the best retailers invest in giving back to their customers. This can take many forms like the free yoga classes lululemon offers or the Genius Bar at Apple. These retailers both attract and lock customers in by providing valuable advice and expertise. 

But if you are a direct to consumer brand how can you do that without a physical presence? One way is by providing digital content. Did you know that the precursor to billion dollar beauty brand Glossier was a blog called Into the Gloss? 

Emily Weiss, founder of Glossier started her blog Into the Gloss in 2010. The blog gained traction due to her popular interviews with beauty mavens such as Kim Kardashian who provided insight into their beauty secrets. By offering beauty advice via two blog posts a week over time Weiss became known as a beauty expert.  

By the time Glossier launched in 2014 Weiss already had a dedicated millennial following. Her brand was able to grow so quickly not just because of the guests she interviewed but because of the high level of trust she developed within the beauty community by offering her insights consistently over time.  

You may love or hate Gwyneth Paltrow’s Goop brand but what you may not know is that it started out as on online newsletter. In 2008 Paltrow sent her first weekly newsletter which focused on lifestyle advice to family and friends. A year later the newsletter had nearly 150,000 subscribers. By 2018 Goop had over 8 million subscribers. From the humble beginnings of a newsletter Goop is now an eCommerce, media and events company that was valued in 2018 at $250 million. Speaking about the newsletter’s early days Businessweek said: "its appeal begins to wash over you like the warm ocean off Santa Barbara...and after a while you stop laughing at those $935 leather-and-gunmetal pants from Rag & Bone—instead, you want to own them."

If you are looking to acquire customers quickly this is not the strategy for you. Goop did not start eComemrce until 2012, four years after the newsletter launched and it was four years until Weiss monetized her following with the launch of Glossier. But if you are patient, provide your target customers with valuable insights and make a difference in their lives it can prove to be one of the most effective strategies of all. After all that’s the way Oprah did it.


Tricia McKinnonStrategy & Growth, eCommerceComment