DTC is already emerging as the hot topic for 2019.
The overriding goal of almost every business is to shorten the distance between themselves and their consumers. Indeed, we believe this is the central strategy most companies should pursue in order to thrive. We're seeing an increasing focus on customer experience, driven by the strengths of digitally native, vertical brands like Warby Parker and Casper, and the continuing fallout from Amazon’s growth — shrinking margins and vanishing shelf space. Yet this conversation consists almost exclusively of gaining and maintaining physical or transactional proximity to consumers.
In our view, this misses the most crucial dimension of proximity: emotional connection.
A wealth of information exists to support the emotional underpinnings of behavior. Work we did in the last year around marker moments translated that into an experience-design context. Emotions, not logic alone, drive decision-making, memory and preference. But three other factors should make emotional connection a priority.
1. Emotional connection is much less expensive — though not necessarily easier — to achieve.
Building a new e-commerce channel or developing an owned brand/retail experience is a costly proposition. It requires a massive shift in the organization in order to fulfill and support. Conversely, a direct emotional connection is far less complex to achieve organizationally. But it requires that the company has a brand, and products, that deliver true meaning. There must be a larger goal that consumers want to get closer to which is authentic and valuable. This is often where an emotional-connection strategy falls down, as it means addressing fundamentals of the business and brand, rather than simply distributing products on Amazon and believing you’re now a DTC brand.
2. Emotional connection is much harder to replicate or replace.
If your DTC strategy is built on functional advantages, like speed or convenience, it will be vulnerable to someone else coming along with a faster, more convenient solution. A direct emotional connection is much more specific and unique to your business and your brand — and therefore much harder to replicate.
3. Emotional connection can be a beachhead.
Finally, a direct emotional connection can be a beachhead for a more unique and more differentiated functional and/or transactional connection that follows. A great example is NikePlus. Relaunched in 2017 as a membership program promising “Unlocks” with a goal to both “Inspire and Reward Athletes,” it did a great job of tapping into functional benefits alongside highly personal, emotional value-adds from Nike. More recently, this has manifested in new initiatives like House of Innovation, which delivers a radically enhanced functional, transactional and emotional experience for members.
The key is a creating a direct, personal, emotional connection, not just a broad emotional campaign.
A direct emotional connection is a personal relationship — one where the brand knows my name and knows me as an individual. These connections can be an incredibly valuable strategy in many places. Tesla's Model 3 reservation program was a great example of a brand using a personal relationship to weather manufacturing delays and cash-flow problems. Airbnb uses hosts to create personal, emotional connections, which makes an Airbnb stay feel different from one booked on any other rental platform.
These are often the simplest gestures to execute.
Another excellent example is Delta, which has been seeing significant lifts in customer satisfaction simply through the personal notes that high-value Medallion members receive on some flights.
In our view, companies who are looking to develop a DTC strategy should prioritize a direct emotional connection and pursue an emotional-only strategy as a first step if resources are constrained or organizational complexity slows them down.