Ecommerce sales, new customers, and conversion rates ranked as the top KPIs for direct-to-consumer brands, according to a new report by Yotpo and Magento. The findings suggest that brands are prioritizing their digital store and user-generated content as key marketing channels of their strategy.
Respondents included 512 ecommerce and marketing decision-makers, 41 percent of them brand founders, who represent brands across all industries and use a variety of platforms. The surveys were conducted over a period of one month between March-April, 2019.
According to the report, D2C brands acquire the majority of their customers through social media (61 percent), followed by organic search (51 percent) and direct traffic (50 percent). While marketers are increasing their investment in Facebook, Instagram and Google ads, 63 percent of brands surveyed see equal or greater ROI from referrals than they do from digital ads.
As more brands increase their spend on social ads, competition for visibility intensifies and customer acquisition costs rise.
“Brands might consider investing in collecting content from customers and producing a variety of ad creative to constantly test and ensure maximum return on ad spend,” advises the report.
About 73 percent of D2C brands have already implemented on-site customer reviews, and 36 percent have utilized customer photos, giving them an edge over the influx of startups and established brands in establishing purchase confidence.
Reviews generate as much as a 161 percent uplift in conversions, extending benefits to social media and significantly impacting SEO, which ranks second highest as an acquisition channel in the report.
Only 15 percent of brands currently feature customer-created videos, but more than a third plan to invest in them as the next primary visual marketing tool for creating authentic connections.
Despite the limitations of a physical store in brands reaching a wider audience, the report also found that brick-and-mortars as an acquisition channel perform moderately better than paid ads and influencers.
Ecommerce in the US has tripled in the past decade across all sectors, with current totals surpassing $517 billion annually (Statista). It’s predicted that ecommerce will continue to grow 30 percent more within the next five years.