Customers expect a new type of interaction with brands since the pandemic hit, and the agility that comes naturally to direct-to-consumer formats may help guide the future of CX
Faced with empty shelves at grocery stores, pandemic bakers refused to leave their sourdough starters unfed. Shoppers swarmed to the source, flocking directly to flour brands to meet their needs (kneads?). Between March and April, Google searches for King Arthur Flour increased by 186% and e-commerce sales increased 200% year over year during the early stages of the pandemic lockdown.
King Arthur flour, a staple in grocery store baking aisles, is accustomed to an uptick in e-commerce sales during the typical holiday baking season. But the brand took this spring’s unprecedented surge as an opportunity to improve its customer experience offerings, particularly as it related to direct-to-consumer (D2C) sales.
In the past few months, brands of all sizes have completed their fair share of COVID-19 pivots as customer needs shifted drastically. In April, McKinsey & Co. researchers published four customer experience (CX) practices they determined would best help companies respond quickly and prepare for the future. One of the four steps—meeting customers where they are—suggests businesses that engage in D2C practices could have the upper hand, as King Arthur learned.
Modern D2C companies such as Casper, Everlane and Dollar Shave Club were once the apples of investors’ eyes. They moved in uncrowded spaces, offered a small number of high-quality products and spoke to the millennial ethos with their sparse, pastel branding. Today, the reviews are mixed: Some of the early success stories have experienced growing pains and the competition has increased.
But D2C companies maintain an advantage in the long game. As the McKinsey authors note, and as many brand and CX experts have echoed, companies able to innovate during the crisis and anticipate how customers will change their habits are set up for a deeper relationship with them once the pandemic ends. Consumers expect a responsive approach from their brands, which can only be accomplished by their building a close relationship with the customer base and nurturing an agile company culture.
When it comes to the McKinsey-identified step of meeting customers where they are, the D2C strategy has an obvious logistical advantage: Companies deliver to the consumer without a middleman. What’s perhaps more important is that companies engaging in D2C strategies also have a direct line of communication with the consumer.
“Direct-to-consumer businesses really do have their finger on the pulse of their target market,” says Ted Waldron, professor of management at Texas Tech University Rawls College of Business. “They understand them intimately. … The fact that they have that capability, that skill to be able to interface with their customers means they know not only what the technical preferences are in terms of products and services, but they also have a feel for how social events, public health events are influencing the folks in their market and can adapt accordingly.”
The four steps to addressing immediate customer needs and preparing for the future, as defined by McKinsey consultant Rachel Diebner, senior partner Kelly Ungerman, associate partner Elizabeth Silliman and partner Maxence Vancauwenberghe:
- Focus on care and concern
- Reach out with support, not marketing.
- Prioritize employees and community.
- Stay true to company purpose and values.
- Meet your customer where they are
- Innovate digital models to help customers stay safely at home.
- Expand home delivery options.
- Consider contactless operations.
- Reimagine the post-COVID-19 world
- Economic difficulty will force cost cuts.
- Migrate customers to digital channels to save money and boost satisfaction.
- Brick and mortar stores may look very different.
- Build agile capabilities for fluid times
- Tap social media for quick customer insights.
- Solicit employees for ear-to-the-ground insights.
- Use “test-and-scale” labs to save time.
- Pay attention to “failure modes” that show you’ve missed customer signals.
Beyond having the ability to directly capture and analyze information on the customer—either through data collection or social listening—D2C companies are also typically smaller and can quickly implement what they learn. Behemoth B2C companies may grab mounds of insights on their customers, but they can’t implement those findings quite as easily.
“It’s just very hard for established firms to mimic those things or try to one-up them,” says Peter Fader, marketing professor at the Wharton School at the University of Pennsylvania. “These big old firms, they’ve been starting up their own internal innovation lab: ‘We want to be able to be nimble and quick and come up with these ideas and knock them off as soon as we see them.’ But they’re just these bureaucratic messes and it’s good that they want to try, but it’s very hard for them to keep up.”
These two D2C advantages—having a close relationship with the customer and the agility to pivot—also uniquely position D2C brands in McKinsey’s other three steps for CX best practices during the pandemic: focusing on care and concern, reimagining CX for a post-COVID-19 world and building capabilities for a fast-changing environment.
Care and Concern
When the in-person events business seemingly evaporated overnight, the corporate gifting team at D2C sock company Bombas could have been in big trouble. The team, which typically sells bulk orders to companies for use as promotional giveaways at conferences and benefits, instead translated their ability to coordinate large orders into working with hospital administrators to send tens of thousands of donated socks to frontline medical workers.
The McKinsey best practices that fall under care and concern dictate that a baseline starting point is for brands to stay true to their values and purpose. The authors point to Edelman research suggesting that 64% of customers choose to buy from socially responsible brands. “The way organizations step up to play this role for their customers, their staff and the broader community is likely to leave lasting memories in customers’ minds,” the McKinsey authors write.
Bombas, a Certified B Corporation, donates clothing for every sale made by way of more than 3,000 giving partnerships nationwide. Luz Ramirez, director of retention at Bombas, says that the company was able to quickly connect with its local partners (the company is based in New York City—an epicenter at the beginning of the pandemic’s American arrival) and determine how it could help vulnerable populations.
“Our giving mission is a huge part of our company,” Ramirez says. And while it’s always been an important part of the work for employees, she says the company has been pushing to tell its audience about its efforts—which customers’ purchases enable. “It’s been amazing to put out messages from, ‘This is how you can help’ [to] spotlighting what some charities are doing.”
The company has even worked with other brands in the start-up D2C community to increase its giving efforts. While the Bombas partnerships team previously focused on linking up with brands such as Sesame Street for new socks, it turned its attention to working with D2C bedding seller Brooklinen to provide fresh sheets to homeless shelters and with cleaning company Cleancult to supply more soap. Ramirez says Bombas has fielded calls from customers asking to learn other ways it can help, knowing the brand has a massive network of giving partnerships across the U.S.
Many modern D2C brands focus on a small number of products, and—should they have a charitable component—their giving mission is typically closely tied to their offerings. It makes it easier for a consumer to track the direct link between their interactions with the company and the brand’s positive impact on the community. In other words, consumers can feel as though they personally made a difference. According to Ramirez, the company has worked to fold its products’ message with its giving message to better close the loop on the Bombas mission.
“On the marketing team specifically, we’ve challenged ourselves to make sure that giving is incorporated through a customer’s entire life cycle to make sure they understand that from your first purchase to your 10th purchase, you will always be supporting communities throughout the country,” Ramirez says. “And really, your purchase allows us to do much more than even donate one pair of socks, which is a huge help to the charities, but it helps fuel a lot more.”
Having a mission so ingrained in the DNA of a brand also makes it easier for a company to quickly shift to respond to unforeseen challenges in the world, according to Waldron, because the company aligns with its values. “It makes being adaptable a lot easier when you’re really behind and believe in what you’re changing to do,” he says.
Reimagine CX for a Post-COVID World
Example: Imperfect Foods
The McKinsey report authors predict that changes in consumer preferences and business models are likely to outlast the pandemic. For example, a February McKinsey survey from China found a 55% increase in consumers planning to permanently shift to online grocery shopping. Similarly, Chinese market research firm QuestMobile found that the share of consumers older than 45 years using e-commerce increased by 27% from January to February.
“People that were maybe e-commerce curious, they were on the fence about signing up and [then] gave it a shot, because why not?” says Reilly Brock, associate creative director of the grocery delivery company Imperfect Foods. Customers’ desire for grocery delivery during the initial stages of the pandemic lockdown led to a 40% growth in the company’s active user base since the start of 2020.
And perhaps more telling of consumer behaviors going forward: The lifting of lockdowns across the country doesn’t appear to be affecting Imperfect’s numbers.
“A lot of folks have now realized the benefits of our service: the environmental benefits, the time-saving benefits, financial savings,” Brock says. “We haven’t really seen much of that change as lockdown has lifted because a lot of these values that we had, the benefits we had, were always there—they’re just especially useful now.”
Brock says the pandemic may have given some of those e-commerce-curious consumers a perspective shift and the push they needed to change their shopping behaviors. Now they’re seeing how Imperfect’s other CX offerings can fit into the rest of their life moving forward.
One of the CX lessons both brands and consumers may learn in a post- COVID world is that multiple buying considerations can coexist now that delivery—considered a driver of convenience—has become a given. Because so many D2C companies have managed to nail down bringing products to your doorstep, they can also turn their attention to other benefits.
“Increasingly, people are going to demand they don’t have to sacrifice one way or the other,” Brock says. “For us, a huge strength of our service is that we don’t ask folks to do that trade off. We are offering you something that helps invest in a better food system and reduce waste, but also affords you a level of convenience and affords you some value savings. … In the past, marketing has been very much about picking your corner, picking a pole to really dial in on: ‘We’re hyper-convenient, but really expensive.’ Imperfect’s ethos has always been [to] show people that there’s actually a bunch of interesting compromises in the middle that don’t ask you to give up any one value, that actually find ways to kind of weave them all together.”
It’s true that the grocery delivery space is only becoming more crowded as traditional retailers jump in on the trend, but a D2C company such as Imperfect is small and agile enough to try and solve multiple problems at once, setting the stage for future CX expectations. Yes, your local grocery store may offer delivery—but can they also save an order of 40,000 cheese and cracker trays because a major airline experienced a drop in business?
Build for a Fast-Changing Environment
Example: King Arthur Flour
A brand needn’t be a pure D2C company to borrow from the D2C customer experience playbook. Even though King Arthur’s customers typically interact with the brand in grocery stores, the company saw an opportunity when orders directly through its website spiked.
The flour company could have focused only on its supply chain, ramping up production to meet demand, instituting temporary limits on the quantity of products purchased at a time and shifting production to replenish items in higher demand. King Arthur did all of that, but also took a fresh gander at its customer experience.
The brand partnered with digital agency Third and Grove and digital content management company Acquia to revamp its website. Not only were its e-commerce sales up, but the website saw a 260% spike in web sessions. In response, the updated site now integrates its web content and commerce so that the company’s marketing team can quickly design new recipe pages, highlight information and direct visitors to relevant products to buy.
The McKinsey authors reference agile innovation as part of the CX step on building for fast-changing environments: “This often means accelerating time to market for new customer experiences, rapidly prototyping and iterating and releasing innovations in their ‘minimum viable’ state, rather than waiting to perfect them,” they write.
For King Arthur, one example of this experimentation is using its updated digital platform to offer its “Homebound Baking Guide” webisodes, hosted by King Arthur’s bakers and celebrity chefs. According to Chain Store Age, the webpage was built entirely by King Arthur digital marketing staff and has been viewed almost 10 million times across the company’s digital and web channels. (Even those working the brand’s Baker’s Hotline, launched in 1993, have had to rely on innovation during the pandemic, as Eater reports many have fielded rather emotional phone calls.)
One of the benefits that D2C brands have over those taking a more traditional retail approach is their direct access to customer data. It’s far easier to be innovative and experimental when you have access to immediate feedback. D2C brands can track their own customers’ journeys, rather than see what data trickles down to them from the retailer.
One of the recommendations the McKinsey authors make for a fast-changing environment is to listen closely to social media. With more consumers online during the pandemic, many companies are learning to take heed on what they’re hearing. Again, start-up D2C companies have a head start, as they’re known for creating communities around their offerings. These loyal customers are more than willing to share their likes, dislikes, questions and concerns, which can be used to inform the company’s decisions.
“They’re very good at generating emotional contagion,” Waldron says, explaining that D2C brands connect on this level with customers by emphasizing the impression of their goods’ rarity, quality and enhanced functionality.
Emphasizing those values to create an emotional connection within the community is also a function of being able to control the narrative, and companies working through retail formats don’t have that luxury.
“When you start looking at buying directly from the company [in a] direct model, you come to my website and it’s easier for me to communicate to you and educate you and show you our heart and so forth,” says James Wetherbe, professor at Texas Tech University Rawls College of Business. “Now, you’re on my website and I am controlling the narrative, rather than relying on the salesperson in the store.”