Navigating a slow growth environment: Strategies for direct-to-consumer brands to remain competitive and recession-proof

by Anna Munhin Mar 24, 2023 News
Navigating a slow growth environment: Strategies for direct-to-consumer brands to remain competitive and recession-proof

The direct-to-consumer business model is gaining popularity as a way for brands to reach their customers. Consumers can now purchase products and services directly from the brand, instead of through a retail store or other third party platform. The shift has allowed the brands to be more innovative, but it has also brought some unique challenges.

With many markets experiencing a slower growth environment, it's important for the brands to be strategic. The challenges of a slow growth environment will be explored in this article.

There are several strategies that DTC brands can use to stay competitive and ensure their long-term success despite the challenges of a slow growth environment. When determining the best marketing strategy, it is important to consider the brand's current stage of growth.

The following are some of the best strategies to thrive in a slow growth environment.

There are strategies for brands in early stages of growth.

Building a brand, establishing a strong online presence, and creating a loyal customer base are some of the tactics that DTC brands should focus on. They can focus on expanding their product offerings as they grow.

There are digital ads.

Digital ads have experienced a decline in efficiency over the past 18 months, but they are still an important part of an acquisition strategy. Low-performing, last-click media should be trimmed by early-stage brands.

We use anIncrementality framework for managing digital ads and use detailed analysis of Key Performance Indicators to determine which areas to reduce spending in and which to invest in.

The content is called ugc and it is written by people.

We believe early-stage brands should focus on maximizing creator relationships through their brand. The strategy allows brands to cut back on expensive creative production and capture content that is more profitable.

This doesn't mean you should stop investing in your branding. Evaluation of efficacy and efficiency on a case to case basis is important.

There is a short-form video.

static photos aren't enough anymore as brands have a variety of ways to capture content In-platform ad placements and short-form video content are some of the best tactics for brand awareness. This has been the case across TikTok and other platforms.

There is a focus on customer retention.

Retention is less expensive than acquisition. Improving customer retention and cultivating a loyal customer base is one of the benefits of being a DTC brand.

Investing in up-sell opportunities and implementing repeat purchase strategies are some of the best ways to do this.

Limit the amount of internal costs.

A company can lose a lot of money due to internal costs. In order to guard against tough economic times, the brands should use flexible labor and focus on utility resources.

There are strategies for brands in growth.

On the other hand, mature brands should continue to invest in marketing and customer retention efforts. They should be looking for new growth opportunities.

It's important to fine- tune the sales funnel.

As the brands mature, it's important to keep in mind the sales funnel. At each step of the cycle, brands should focus on developing robust marketing campaigns.

Test and make changes.

A lot of waste is associated with brand awareness campaigns. Data, pressure test awareness media, and brand efforts should be reviewed frequently by mature brands. Cost savings can be seen through the rationalization of low impact advertising channels.

Diversification of revenue streams

Diversification of revenue streams is a key strategy for the brands. This can help reduce the risk associated with relying on a single income stream.

This could mean introducing a new distribution channel, such as an online third-party marketplace, or expanding into a retail or wholesale relationship. Ensuring the resources are allocated to the channels with the greatest return on investment is a priority for other brands with a lot of revenue. We work with brands to find ways to better allocate advertising dollars to the tactics that are the most profitable.

There are strategies for all brands in growth.

A variety of strategies can be used by the brands to find operating efficiency in their marketing departments.

  • Run incrementality tests on media to determine the precise impact of media tactics on revenue and profits, and avoid inefficient spend.
  • Implement delivered product margin analysis to better hold ad spend to clear profitability thresholds.
  • Focus on rationalizing unnecessary tech solutions and reducing waste, while being careful to not let technical debt build up.
  • Prioritize retention strategies to maximize LTV, focusing on re-marketing strategies, upsell opportunities, and subscription models.
  • Reduce and/or reallocate marketing resources from low-margin activities to high-margin/high-growth activities.

Excellent brands are available in any market.

DTC brands have to be strategic in their approach to marketing and operations in order to continue to grow. By following the most important strategies for their growth stage, and being willing to change and adapt plans as needed, they can stay competitive in a slow-growth environment.

Chris Jones is a co-founder of Markacy and specializes in strategic marketing campaigns.