How DTCs must Serve Unique Customer Needs: Q&A with SoundCommerce

SoundCommerce Q&A

In this Q&A, DTC Daily speaks to Laurent Burman, who has just taken the role of Chief Commercial Officer at SoundCommerce. Coming from a retail background at Amazon and P&G, he speaks to DTC Daily about his new role, the technologies that DTCs should adopt to drive success, and what they can learn from marketplaces like Amazon.

Explain what SoundCommerce does and your new role?

SoundCommerce helps direct-to-consumer and omni-channel brands grow faster and more profitably through its operations data platform. We provide clients with unique data and insights collected from internal systems (eCommerce platforms (Shopify/DemandWare/Magento/etc), Google Analytics, warehouse management systems, delivery carriers (UPS, Fedex, USPS, etc), Amazon Marketplace, wholesale, CRM, customer care, marketing automation and reporting tools) that allow them to make real-time and predictive decisions regarding product assortment, inventory, marketing, merchandising, DTC fulfillment, exception management and long term customer value.

As Chief Commercial Officer I oversee all client-facing functions at SoundCommerce, including customer support, sales, marketing and partnerships.

What challenges do DTC brands face when it comes to making the most of data?

DTC companies have a huge let up to their wholesale counterparts when it comes to data. Too many of these companies do not take advantage of data to fully capitalise. They either fail outright or leave money on the table.

The biggest challenge for DTC brands however, is how to fully realise their inherent advantages. Paramount is the ability to infuse the value of data in every aspect of their business – from marketing, product development, multi-channel customer experience, promotion, customer care, finance and even logistics.

DTC brands also have the advantage of gross-margins where they cut out the middle-man by going direct. The downside is added costs of customer acquisition and direct distribution. Emerging technology, service providers and third party logistics partners have reduced these costs but have also increased competition and complexity. A great example is the use of Google/YouTube, Facebook/Instagram, Snap and influencers on those platforms. These have been the traditional growth engine for emerging brands but are channels that are no longer free/cheap. Competition and supply and demand require a great deal of data in order to make this type of marketing pay off.

DTC brands have enormous amounts of data and are able to integrate their SaaS/cloud-based operating systems to share transactional data via APIs. Each system typically lives in organisational silos, lacking enough context to optimise across all critical dimensions of customer experience, growth and profitability. The challenge has shifted from having the data, to making profitable use of it.

Brands have difficulty integrating all data sources quickly, reliably and inexpensively and analytics teams are mired in implementation, integration or validation rather than in developing insights and making informed, profitable decisions. Because so much energy is spent on data collection rather than analysing and decisioning operations are not run to maximum profitability. This must change.

Which technologies must DTC brands focus on to drive bottom-line success? 

Technology options for DTC brands are abundant. The right solution for any particular brand depends on customer and business success drivers. In my view, DTC brands should license much of their technology and invest engineering resources on seamless integration with the right mix of purpose-built solutions that provide agility and flexibility, and typically out-weigh cost-savings from choosing a single provider.

Focus on core functionality, APIs and integrations. Systems should have robust APIs that feed other systems data and accept inputs from multiple sources.

Investment in adtech (e.g. DSPs, CDPs etc) and martech (e.g. CRM, marketing automation, personalisation etc) is essential but brands must know limitations. Digital advertising tends to be a large investment – it drives growth and optimising this investment across platforms, audiences, and devices drives higher ROAS. For brands focused on the bottom-line and sustained customer lifetime value growth, supplementing these systems with data will pay huge dividends.

Last, invest in an operations data platform. ODPs pre-integrate to operating systems and function outside of operational silos; drive operational decisions; and orchestrate actions that consider critical customer dimensions: experience, lifetime value and costs.

What lessons can DTCs learn from marketplaces like Amazon, to help develop their own e-commerce offerings? 

While Amazon can represent growth opportunities with Amazon third party marketplace potentially enabling DTC brands to go to market without a wholesale relationship, it is ostensibly a wholesale relationship and not a DTC relationship from a data perspective.

Sustainable DTC brands will remain credible DTC businesses. That means continued investment in DTC capabilities – both online (own .com and in other marketplaces), at retail (owned stores or select partners) and on a tactical level, DTC eCommerce brands must embrace fast, free shipping and free/easy returns.

Last, purchase data is the key to what customers look for on Amazon. Shoppers purchase top of the page items. Brands have grown by leveraging ‘gaps’ in return products Amazon presents in selective searches. The algorithm doesn’t replace the need to identify in demand products, but has proven what’s available by surfacing early winners and identifying unmet needs. DTC companies should be adept at mining order behaviour and customer lifetime value data to inform merchandising, promotion and assortment.

How can DTC brands ensure growth at a sustainable rate, rather than fading away? 

Lasting DTC brands are those that serve unique customer needs. Understand and deliver to a large and diverse world of customers, and move beyond intuition to gathering and acting on real customer data. Jeff Bezos knew customers needed to come to Amazon.com directly. He launched Amazon Prime and a decade later, customers searched on Amazon 2x more than on Google or any other search engine. The most valuable customers realised the value and changed their shopping behaviour. Successful brands must find ways for their consumers to discover and shop directly; and provide value and service for repeat and loyal purchasing. A view of customer behaviour over multiple purchases and channels while understanding customer lifetime value drives is critical. Successful DTC brands need to be operationally intelligent and efficient. This requires continued improvement in operations, logistics and in their operations data infrastructure to ensure every decision tied to customer value and variable cost is ensured.