By Ujjwal Dhoot
The eternal power tussle between Brand or Performance Marketing is an ongoing and real one. Marketers might be in different camps on which one is more important, but I can profess and opine neither of them holds a relative priority over the other. Both need to co-exist harmoniously to complement one another. But before we get into how they can be complementary, the primary focus for D2C is a) a differentiated product and market fit b) Superior and an iterative understanding of the customer and last, but not the least c) an unparalleled experience.
When you have to your advantage, an effective product or market fit, knowledge and clarity why your customer engages with or buys from you, then you can be D2C David to the incumbent Goliath.
Let’s elaborate further to simplify and breakdown the framework of the thought process:
- Product – market fit, is the degree to which a product satisfies a strong market demand, or solves a problem the customer encounters with an incumbent’s approach. Paid marketing can often jumpstart the process, but beware that is also comparable to a proverbial well that runs dry eventually, causing you outrageous marketing spend to just keep it going. Electric vehicles (EV) or Hybrids tend to work wonders for the bottom line, compared to performance marketing gas guzzlers. Creating a moat around the business acts as the EV for your D2C brand, and requires a lot less marketing investment, but comes at a higher cost of intellect capital and creativity.
- An intricate understanding of the customer is the prerequisite to providing them with good service and delivering on promises made. Your first 10 customers will mostly be friends and family. They will support your venture unquestioningly, spread the word and in turn, you may not end up taking their critique too seriously.
When it comes to the first 100 paying customers, it is imperative to reach out to and talk to each one of them, whether they are friends of friends, about how they found you, why they bought your product or simply, what their motivations and drivers are.
For the first 1000 customers, take a look at how they come to the business (leverage analytics), their buying patterns, you need to run surveys and feedback loops for further understanding. The pertinent question is that, do the first 1000 customers have the same motivational drivers as the first 100 did? Or are you getting a different quality of customer, with different sets of expectations to adapt to?
When you get to your first 10,000 customers, you need to start formulating your long term marketing investments for performance and brand marketing. At this point, you have arrived and need to blitz your story to the world. Spending big bucks usually drives short term results, does that ensure ongoing success or you need to keep feeding the beast? If not, then the only disservice you’re doing is to yourself – cutting a suit bigger than the cloth. Customer satisfaction is like a relationship you have to work hard at. The trick is to keep wooing and preventing it from falling apart! Just like falling in love is not a one-day process, but a series of positive events, similarly, performance or brand marketing will not change perception with just big marketing budgets, or by creating hypnosis and allure. Introspect and act on the common customer agony of an incumbent’s service model. What do you want to successfully change, to ensure that a customer refers you to 10 of their friends? Even though customer referrals are the true and hidden motivations behind paid marketing outcomes, marketers like to believe they deliver the ROAS and channels are the single largest source of real acquisition. Alas, referrals are amongst the least measurable outcomes.
Now that we have reviewed some pertinent cornerstones of D2C, let’s shift our focus to performance versus brand marketing.
It is not only possible, but in fact an essential part of the D2C playbook to create success by amalgamating brand and performance marketing. Your brand is as strong as you make it; a perfect culmination of a boxer’s strength and a ballet dancer’s grace! In both, there is structure and grace in movement and yet, a different process in achieving superlative performances. This is an equal relationship in which both are important & as you gain momentum, one can either infuse strength in the other or weaken the equation.
One of the toughest challenges for any operator with limited capital, is measurement. Most brand marketers struggle with measurement, unlike their left brain performance marketing counterparts. On the contrary, performance marketers don’t have the dexterity for relevant, authentic and consistent storytelling, and no amount of spend will earn you a customer’s loyalty.
There are no mathematical equations or algorithms developed (yet) to give definitive answers on what percentage of your spend and efforts should go toward brand versus performance marketing. This is where science ends, and the art of D2C marketing begins. “It depends” is closest to the truth, since the balance vastly differs depending on an organisation’s level of funding, product gross margin, marketing CAC (Customer Acquisition Cost), the competitive landscape, operating structure amongst other oddities in your vertical.
Performance marketing can get you short term results, but for long term, effective, sustainable growth and results, move towards a Hybrid approach. Or you can go nuclear with a significantly differentiated product with laser focused, exceptional understanding of the customer and an unparalleled experience.
There is a broad requisite for predictable outcomes for VC funded D2C organisations. Time and resources are the most important and yet scarce elements available in any startup periodic table. While I love the science within marketing, I don’t believe there’s any formulaic or scientific one-size-fits-all approach to run your D2C performance and brand marketing. Several successful playbooks developed in the last decade or so, have resulted in a land grab of market share and profitability. Others have bled away, due to over reliance on either brand, or performance marketing. However, one element is common: your marketing strategy needs to be a hybrid of brand and performance marketing to drive force and form to your long term brand success.
The author is CMO, DXL Group
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