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Home Lifestyle How can D2C brands overcome growth fatigue?

How can D2C brands overcome growth fatigue?

by uma

How can D2C brands overcome growth fatigue?

By Paul Archer, CEO and co-founder, Duel

 

In today’s fast-paced and competitive business landscape, growth is a constant pursuit for brands. So it’s no surprise that when we recently sat down with a host of business and marketing leaders from global D2C brands, each of them identified growth fatigue as their biggest challenge, experiencing diminishing returns and increased competition as a result.

What has caused growth fatigue among these brands?

Prior to Covid-19, the majority of brands were advertising across a wide range of channels, both on and offline. However, when the pandemic hit, brands were restricted to online channels and so typically reinvested all other marketing budgets into online advertising.

This led to a short term increase in sales for most online retail brands (with little else to do during lockdown, many of us did a lot of online shopping with that excess time and budget), but as offline incumbents moved online, this led to skyrocketing customer acquisition costs and diminishing returns for most D2C brands.

And due to the subsequent cost of living crisis and increased interest rates, consumer spending habits have also drastically changed since Covid. So with acquisition costs on the rise and consumer spending down, it’s no surprise the majority of today’s D2C brands are finding growth a big challenge.

To sustain long-term success, brands must address growth fatigue head-on and move away from expensive advertising-led growth strategies to one of organic growth. But what does this mean in practice?

Focus on building a community

While brands are made up of many things including products and/or services, they are more than anything a collection of people – customers, employees, sponsored athletes, industry professionals and more. And so the key to true organic growth for brands is turning this community into an army of advocates capable of promoting the brand to their own networks.

But how can brands cultivate advocacy in this way? It’s first about understanding what their community cares about and then it’s about creating bespoke incentives such as referral programs, specific loyalty initiatives, and exclusive reward schemes to motivate them to share their positive experiences with their own networks.

Some of the world’s biggest and most influential brands including Lululemon, Patagonia, Rab and Monica Vinader have all grown in this way. They are all community-powered brands who do not pump huge sums into online advertising to promote their product, but instead trust their customers to do it for them, and to great effect.

 

Invest in UGC

At a time when trust in brands is at an all time low, research from Stackla has shown that user generated content (UGC) is 2.4 times more trusted than brand created content. That’s because regardless of age, consumers want to see what other people are saying about a brand, not what a brand is saying about themselves before buying from them.

We are increasingly looking for real content, created by real people who we can relate to and trust in order to make better and more informed buying decisions. That could be from family, friends, communities we are part of or authentic brand advocates we follow on social media.

The best way for brands to take advantage of UGC is to build a loyal network of brand fans and then both make it easy for them and incentivise them to create and share content with their own followers. Companies including Lululemon, Charlotte Tilbury and Gymshark all do this – they don’t pay celebrities, they trust their own customers to share their own content with their own followers and have all grown massively as a result.

Redefine the influencer

Brands have historically got their influencer marketing strategy wrong because they focus on the wrong influencers (random celebrities who know nothing about the brand and would happily promote a competitor if the price is right).

However, the concept of influencer marketing is brilliant. As we know, people buy into people, and true influencer marketing is all about authentic storytelling for brands that want their message to not only be heard, but trusted and actioned.

And so brands need to redefine who their real “influencers” are. And this starts closer to home – by identifying superfans from within their own customer base. These people may not buy the most, but they have the most influence because they literally tell everyone they know about their favoured brands. This makes them the most powerful engine of word of mouth and free customer acquisition available to brands and every business has them.

For brands to overcome brand fatigue and meet their ambitious growth targets, they need to move away from expensive advertising-led strategies and more towards customer-focused ones.

Only by focusing on growing a community of brand advocates who then promote the brand to their own networks, with their own content, can brands truly expect to overcome growth fatigue.