Kevin Tan, co-founder and CEO, Eyeota

Direct-to-Consumer (DTC) brands are having a moment. In today’s omnichannel retail world, these innovative, digital native companies are launching with an advantage over traditional brands: They’ve been collecting and analyzing customer data since day one.

Brands like Warby Parker, Casper and ThirdLove are familiar to consumers because, while they’re digital-first, they advertise on TV and radio as well as online. But just because they sound like other brands doesn’t mean they are.

These and the next generation of DTC players have a very different view of the world, and it’s all based in data. How they view their customers, their marketing, and the many touchpoints along the path to purchase are very specific to what they’ve learned from their first-party data—and d there’s a lot traditional brands can learn from them.

How digitally native direct brands use customer data

DTC brands leverage data to effectively market to their customers, using channels, messages and even real-world experiences in ways that allow them to create touchpoints that engage all along the path to purchase. Granted, as we’ve noted, DTC brands start with a data advantage. They recognize the value of data from day one and collect it meticulously from every source available to them: purchase histories, website analytics (including onsite chats), and insights from social media platforms like Facebook.

They use web forms and questionnaires to gain a deeper understanding of who their customers are and what they want. It’s a multilayered approach that involves collecting all this data and building out profiles of their customers so they know how women aged 18-24 in Atlanta shop compared to women in New York of the same age. Or how mothers in the Midwest shop compared to men on the West Coast.

This data collection and analysis allows DTC marketers to understand what the path to purchase looks like for each group of shoppers and create the experience each customer wants.

Personalization, online and offline

In omnichannel retail, not every customer has the same journey, and not every customer hits every point of engagement. Some shoppers may respond to a TV ad by picking up the phone and calling in an order. Others may see a billboard, then respond to a mobile ad and order online. It’s important for marketers to understand that the path to purchase is now bespoke, and shoppers choose their own journey.

Traditional retail brands—particularly brands like Gap and Victoria’s Secret that are struggling to stay ahead of the Amazon Effect—need  to adopt some of these strategies, or risk going the way of Payless and Toys R Us.

The fact is that whether your brand is a pure-play digital or a brick-and-mortar, customers not only expect 24/7 shopping and overnight delivery, they expect personalized experiences when they shop—and DTC brands deliver on this promise. Legacy retailers must recognize what these brands already know: By the time your customer enters the store, they have already done their research and have made a decision about their purchase.

Today, “the store is just one point of the whole shopping experience,” as an executive from Footlocker put it—and more retailers need to recognize this fact and engage their shoppers in the ways and on the devices they want.

Ways to leverage customer data in marketing

Brands can catch up, and even get ahead, but they need to start recognizing how critical data is to their success—and their survival. It’s not too late for most retailers, and there are some steps they can take to begin embracing data starting tomorrow:

• Even with a limited set of customer profiles, brands can use third-party data to deepen their knowledge of customer behavior. There’s so much quality data available, even limited data sets can be appended to create a better picture of a brand’s audience.
• Third-party data can be used to create lookalikes for targeting. Using a small base of customer data, third-party data can be used to model it out to the larger universe. This way, ads or content can be targeted to audiences that have similar attributes to their customers.
• Brands can take their offline data and onboard it for use as a seed for modeling. Or, if a brand has online data that is not matched to a piece of PII (personally identifiable information, like an email or phone number) they can work with a company that uses heuristic onboarding to bring that data online
• Test and trial different creative and content campaigns. Utilize third-party data (to understand more about the audiences that react to specific test campaigns for ‘concierge-level’ customization, which feels deeply personalized, to use as seed data for modeling and targeting

Digiday reports that ecommerce brands will build 850 physical stores in the next five years, both pop-up and permanent, so legacy retail brands will be facing competition from younger, savvier retailers in the near future. Brands need to step up their game and start using data more wisely and more strategically to stay ahead, or they’ll go the way of the video store before you can swipe sideways.

Eyeota Pte Ltd. specializes in consumer data and ad targeting. The company is based in Singapore.