SKU’d Thoughts 7: Why is DTC customer experience an upgrade over the traditional retail model?

In SKU’d Thoughts 6, I presented a formula that quantifies the customer experience. When it comes to retail, direct-to-consumer (DTC) brands on average measure higher on customer experience when compared to traditional retail brands. The reason for this is DTC brands have tighter control on all four variables in the CX formula — product, responsiveness, convenience, and reliability.

This control means DTC brands can provide a consistent customer journey and experience, in large part because their access to customer data allows brands to produce and provide customers with “what they want”, “how they want it”, “when they want it” all while telling them “why they need it”. Casper, a direct-to-consumer mattress brand, is an excellent example. Through studies, they manufactured one mattress that will satisfy every customer and are hyper-focused on provided consistently great experience for all those customers.

On the other hand, most traditional retail (brick and mortar) is not vertically integrated so control over the four CX formula variables belongs to different stakeholders such as the manufacturer, wholesaler, distributor, and retail outlet. The traditional model is an elaborate game of telephone which all but ensures planned customer experience doesn’t match up to the actual customer experience. The manufacturers can’t really control where their products are placed on the shelf or how in-store sales associates convey the value proposition of those products. This inconsistency in customer experience leads to customer dissatisfaction.

The control over the customer experience is mainly facilitated by the fact that DTC is a one-to-one relationship between the customer and the brand. As we see more DTC brands go into a hybrid Brick & Click model and have physical locations, it will be interesting to see how they scale the customer experience. They will be providing customers with “what they want” and “how they want it” because most people still want to touch and feel before buying. But a hurdle to scaling the customer experience will be the “when they want it”, experiencing an out-of-stock item online is much different than traveling to a store to discover that the product you came in for is not available.

Cross-posted on Medium