Episode 237 / Paul Robinson / Jabra / Director Marketing, Europe, Middle East, Africa, Central & Latin America
Why DTC Is Shiny And New In 2024
Direct to customer is by no means a new channel, but it’s seen a resurgence and a facelift, according to our first podcast guest of 2024, Paul Robinson. Jabra’s Director for Marketing, Europe, Middle East, Africa, Central & Latin America explains how a series of evolutions combined with a big bang in 2020 to give us the new, super charged and effective DTC channel of today.
For manufacturers looking to personalise, increase sales, and develop highly successful offerings to their market, DTC is a mine of useful data. It’s become a huge driver for businesses like adidas, who achieved up to 40% of their sales in DTC. It’s also a game changer in an era where social media has become a sales channel in itself.
Discover online, research online, buy online
Digitally native consumers like Gen Z are becoming familiar with new products primarily on social media, Paul told us on the podcast. The process is: discover a product on TikTok, Instagram and Youtube - research it online - buy it online. It’s a brand new type of consumer behaviour that brands can seize upon to grow and better understand their target consumers as well.
DTC benefits consumers & brands
As part of a multi channel strategy, DTC can be a huge growth driver for the whole business. It also drives better product development, since it gathers real-time consumer data and can help deliver products that better fit consumer needs and wants.
DTC is leading a much more personalised shopping experience than ever before. Additionally, with the buying process easier and more sophisticated, DTC enables new channels and offers to be created. Something like offering free adjacent products with a purchase is much easier to implement in DTC than in-store, for example. Brands can also learn from the data they gather in these scenarios and bring complementary adjacent offers to market - quicker and better consumer tested.
Tune in to the full episode to hear about Paul’s favourite marketing books, understand more of the benefits of DTC, and learn who’s making a success of it.
Transcript
The following gives you a good idea of what was said, but it’s not 100% accurate.
Paul Robinson 0:00
Being fast is really important. Speed kills. How many tests are you running a month? According to Google, some companies are running three to four tests a month whilst their competitors are running 40 to 60 tests a week... you need to be testing and you need to be testing so fast.
Tom Ollerton 0:19
Before we get on with this week's show, I'd like to tell you about an online event automated creative running called Why do we need so many ads an introduction to live creative optimization rarely is the your competitors probably already using live optimization, unearthing new insights and getting huge return for their media spend. We've actually proven over serving 6 billion impressions that brands that don't do this leave 17% of media value on the table. So this event is for newbies and pros. So if you're live optimization curious or just fed up with how your ads are being optimized, then this event is for you. If you go to www dot automated creative.net. There is a link at the top of the page
Hello and welcome to the shiny new object podcast. My name is Tom Ollerton. I'm the founder of automated creative, the creative effectiveness adtech platform. And this is a podcast about the future of marketing industry from a data driven marketing perspective. I'm on a call with Paul Robinson, who is Director of Marketing Europe, Middle East Africa, Central and Latin America at Jabra. So Paul, for anyone who doesn't know who you are and what you do. Can you give the audience a bit of background?
Paul Robinson 1:33
Sure. Hi. Thank you very much, Tom for inviting me. It's really great to be here. There's a huge amount of valuable information in the shiny new pod. So I'm very excited to make a contribution. So introducing myself in less than a minute. I've 25 years of experience in marketing, brand business management, category management and management consulting. I've worked at local level, region level and global level. And some of the brands I've worked at are Sony, Philips, Ultimate Ears, Jabra, Logitech, b&o, blue and jaybird. And I've also worked in a lot of areas within those companies. So TV audio, gaming, creating and streaming headphones, new product development, health and wellness, wireless home PC and microphones. So you could say I've been around the block.
Tom Ollerton 2:15
Right, Paul, I have ridiculously high expectations about how you can shed insight into being a better data driven marketer. So thank you for that. So first off, are you a marketing book person or not? And if you are a reader, what do you read? What's your favorite title from a marketing perspective?
Paul Robinson 2:32
I love this question, Tom. Thank you. I read a lot of books actually and research papers. Three, I recommend a lot of Good to Great by Jim Collins, the How Brands Grow Series, Byron sharp and Jenny Romanick, Influence by Robert Cialdini, but the book I've most recommended is really a must read for leaders. It makes you wiser and more humble. And that book is Fooled By Randomness by Nassim Taleb. It explores the pervasive influence of luck and randomness in our lives. The misattribution of success to ability and the failure to lack ability. And when often chance has played a significant role. It contains so many lessons like the illusion of control, where we need to acknowledge the influence of uncertainty. The next time your sales spike, was it really something you did? Or was your main competitor simply out of stock? Or did those favorable changes in local currency exchange rates help you achieve your stretch targets? Or was it all down to you? I'm not saying by the way that luck or chance are bad things, I think Napoleon remarked I'd rather have lucky generals than good ones. So it's really about learning not to be complacent and leading with balance and humility. I think another important lesson, actually from the book is of survivorship bias, where correlations in successful are regarded as causation. Tim Cook, for example, very successful chap gets up every day at 4am. But is that really the reason why he's successful? I think it's really key that you have to look at the total group and not just focus on the successful and that you consider really what it is that's driving that.
Tom Ollerton 4:04
Right. Thanks for removing the need for me to actually read that book. It sounds fantastic. And it reminds me, I think I've shared this in the podcast before it's the guy I think he's the CEO of Ken lion or someone like that. And someone said, like, you know, what's the secret to your success? And then he said, Well, luck, really, you know, if I was born in Sudan, like I wouldn't have this job, you know, there's so many things is that you're born with whether that's, you know, if you wanna be a basketball player, gonna be a certain height, you know, if you want to be really successful advertising, it does help if you have parents that live in London, for example. So it's an uncommon, but what I'm curious to know is how you do anything with that. Yeah, sure, like finding correlation and causation. But if you're working in marketing, you're going to be responsible for KPIs and reporting against those like how do you stop yourself being Fooled By Randomness? What can you actually do with the insight that it's not all on you no matter how good or bad you are?
Paul Robinson 4:55
Yeah, I for me, I think it's actually it's less about stopping yourself being Fooled By Randomness, but really recognizing and acknowledging that it's there. So I think it's really a warning not to be too complacent and not to kind of have a huge ego and think that everything you're doing is related to you. Like the examples you just gave, I think many things are circumstance or luck related, like the basketball player and his height. So you just have to acknowledge those things and really be a balanced leader and have humility in your leadership.
Tom Ollerton 5:27
So moving on now to your top tip from a data driven marketing perspective, what is that bit of advice that you find yourself sharing most often that you think actually delivers provable results in data driven marketing?
Paul Robinson 5:39
Well, Tom, there's really there's really lots of advice to give. So it's a very cruel question to ask for just one, I cut off the top of my head, I think being fast is really important. Speed Kills. So how many tests are you running a month? according to Google, some companies are running three to four tests a month, whilst their competitors are running 40 to 60 tests a week. So I think it's really eye opening there that you can see, you need to be testing and you need to be testing so fast. I think there's things like making use of qualitative data. A couple of examples of good examples, a car manufacturer was focusing marketing budget on customers configuring the most expensive cars as being the best leads. But actually, in focus groups, they found that better leads were those visiting the website that were looking at financing and leasing terms and APRs. And recently, actually, I had one for headphones. So shoppers we spoke to in store, were all asking, Will these earbuds work with my iPhone, and a campaign featuring the message Made for iPhone gave a significant uplift in CTR against what we've been using before, actually, I think on that, on that point, creative and message, they really make a big difference in performance. And don't don't forget this another real example, we tested a lead and call to action and which one do you think would get the highest CTR? So the first one's built for gamers go to gaming? Or are you a gamer? Join gamers now.
Tom Ollerton 6:59
As the man who runs a business that does testing, I'm going to decline the question, I would say that you are doing an A B test. And I think that's a mistake, because you're only going to do is work out which one works, not what is the psychological trigger behind it. So in our methodology, what we would do is to work out what are the themes around the gaming message that are within gaming itself and then test you know, upwards of like 30 different variables to work out what was the driver because in an A & B scenario, you're just going to have this did better than that, which is...
Paul Robinson 7:31
Yeah, it's quite right. It's quite right to look for look to optimize and come up with the best, actually anyway, it's the latter the latter more than doubled the CTR. So "are you a gamer join gamers now" has basically doubled the CTR. And also I think on on that thinking about what the right metrics are. So things like ROAS, for example, they're unlikely to be your most important metric for growth. And chasing improvement in ROAS can lead you to invest pretty much unwisely or even harm your growth, particularly if you're picking up people that will already buy from you. And not new customers. And I think I've seen that quite often, particularly from my friends working in finance, where they've where they've been really challenging my marketing team on what the role is, is that activities and then having obviously to explain cross functional reason why that might not be the most important driver to grow the business.
Tom Ollerton 8:26
So we're gonna move on now to your shiny new object, which is direct to consumer D2C. So not the newest thing in the world, maybe brand new to some companies old hat to other companies. So I'm curious to know why DTC is your shiny new object.
Paul Robinson 8:44
Well, the obvious new and shiny objects actually that I thought about was AI powered marketing and brand activities. I'm hugely excited about AI. I listened to one of your pods and you explained the same and I've been using it for a couple of years, but almost none of us yet have got past the 10,000 hours of practice that makes someone an expert. So I thought I tried to pick something a bit more valuable for listeners, that's a red hot topic where I'm well past 10,000 hours with about 20 years of experience. And that's DTC direct to consumer. And specifically, I'm talking about manufacturers using DTC as part of a multi channel brand strategy. So I'm not talking about the kind of pure play DTC brands, and I'm also talking about digital DTC. So not talking about physical retail stores operating under the brand. Now, all of us probably slept last night on a mattress that we bought direct from a manufacturer. So like you said, for a lot of people you're probably thinking Hang on DTC is not new. Ecommerce has been around I think, since the 1970s. And we've had DTC in the UK since around about 95 pioneered by Amazon and eBay and Tesco and Dixon's PC World and Argos amongst others. So please let me explain what's new and valuable for you for 20 years since around the mid 90s. As DTC followed a path of slow, gradual, continuous Darwinian evolution, steady but unremarkable sales growth relative to other channels, starting primarily as a web based brand experience over time manufacturers DTC is added sophistication. So we've got things like technical product information, customer service, Quickstart guides, user manuals, product education and how to materials, enablement of direct sales, SEO optimization, mobile adaption and optimization, integrating stock availability, integrating user reviews, which incidentally, just having five reviews increases conversion rate by around 270%. We found so is huge, and consumer outreach. So again, emails that we send tend to get three to 5% response rates back, which is much better than the less than 1% CTRs that you see on lots of other activities. And we've also started to integrate things like where to buy, but still, for most multi channel manufacturers, DTC was regarded as a kind of perfunctory sales activity, because other channels just dominated sales and revenue. So here is where we get to what's new. Over the past five years, I think multiple trends have emerged that would lead us to a kind of Big Bang moment for DTC: manufacturers that were pure play, native DTC brands started to break into the mainstream driven initially by very low cost of acquisition costs in relation to high order profitability. And this brought a kind of big technology supporting technology improvement. We've then had social media overtaking shopping in physical stores as the primary source of product discovery, with people switching instantly from scrolling to shopping and back again. And then retailers particularly like Amazon, UK, have really turned people on to buying online. I think Amazon UK sales increased 82% In the past 24 months, up to up to 21, roughly. And I think half the UK households, they now have prime, they now have a Prime subscription. And you've got digital online native consumers and generations entering now are coming into the consumer market. So millennials and Gen Z come in. And then I think finally the economies of fulfillment direct to consumer, the infrastructure around us. This has really significantly improved with scale. And I saw a stat recently that in the UK, a courier visits every household with a parcel every other day. So all of these kinds of enablers were cooking around in the background. And then the Big Bang happened in the latter part of 2020 into 21. And DTC had a kind of punctuated equilibrium moment, sales just erupted ignited by the COVID lockdown and store closures. And in the few years since b2c Direct commerce globally has increased by 125%. Manufacturers that are active in DTC have probably seen DTC being their highest growth channel, triple and high double digit sales growth is is pretty likely to be what they've seen. To pick an example, adidas they've done about 40% of their total revenue via DTC last year, and they now have 300 million added club members in 50 countries. So a kind of new brand direct consumer buying behavior has been emerging, especially amongst millennials and Gen Z. Discover products on Instagram, Youtube and Tiktok. Research Online, buy online direct from brands.
Tom Ollerton 13:31
This episode of the shiny new object podcast is brought to you in partnership with MADfest whether it's live in London or streamed online to the global marketing community, you can always expect the distinctive and daring blend of fast paced content startup innovation pitches and unconventional entertainment from MADfest events. You'll find me causing trouble on stage recording live versions of this podcast and sharing a beer with the nicest and most influential people in marketing. Check it out at www.madfestlondon.com.
Paul Robinson 14:08
So right now, DTC is critically important for all manufacturers and it's a growth driver for the total business. So I think that brings me on to why DTC is shiny. DTC benefits consumers and as part of a multi channel strategy, it can be a growth driver for your whole business. That's all channels, DTC is just a massive opportunity. So some of the headline benefits DTC is bringing consumers is based on direct consumer feedback future products will much better fit consumer needs and wants. It's been difficult to buy products in some territories. But now products are becoming available in new territories worldwide. Products can be personalized. You can have your name engraved on your on your Jabra case for your earbuds. The shopping experience is becoming much more personalized as well with recommendations and fit with the other products that you already own. Buying has got easier and we already talked about the dominance of social media for discovery, and how that's influencing online purchasing. DTC shopping services are really improving. You've got free returns and Courier updates now is pretty normal behavior. And I think also, new complimentary adjacent offers can be quickly brought to market. So if you think about cornerstone, they were a shaving company. Now they have hair loss treatment, erectile dysfunction, treatment, condoms, weight loss, moisturizers, toothpaste, deodorant, shampoos, they really start to act like a concierge for the modern man. It's very exciting. So I think this and also unique promotions, which can be quite difficult to run in store, especially when bought with. So you have things like huel, who ship meal shakers, and T shirts with orders. This is very difficult to do in store from a logistics perspective to have this kind of when bought with offer. And I think also, of course, special limited edition drops, which, which are great to copy from the fashion area, and are now also moving into other industries with with these great products available online for consumers. So loads of opportunities and benefits for consumers. And I think also important to add, all channels still remain important. And some of those headline benefits for DTC and other channels are equally as valid to talk about. So I think there's really growth opportunity that DTC can help other channels have so let me share a few of those. I think it's possible that we'll see much less returns in future because of the better products I've already mentioned. I think DTC can really help get shoppers into stores to experience product. So I saw recently, actually, I read around 79% of shoppers in the UK didn't know a retailer where they could buy Fitbit. So that's, that's unbelievable, right? So I think that there's really support that kind of direct consumer channel can do from the manufacturer, to help get people to the stores where where products are listed. We know shelf space is very limited in stores. So it's really valuable to get that optimal product assortment on the shelf in store, DTC can help with that, because we can learn very well which product and combinations of products work best and can generate the most revenue for the retailer. You've got more effective marketing materials and campaigns coming, because we're able to test these really well. So we're really testing, learning, testing, learning and optimizing those. And that then benefits other retail channels. There's lots of more localized content coming user generated content, especially. I think snack tights is a good example here, where they've been using user generated content, especially local user generated content, which can be extremely expensive and difficult to do as a brand. They've been able to pull that together. And actually, interestingly, they found around 10% of their customers were men. So they actually started to have content of male users wearing snack tights. I think there's a lot of valuable consumer insights like that one that can be generated from DTC surveys. So are you buying this as a gift? What are you looking for? What can we what can we do better, all of these things can really help to improve your total business. And I think DTC can really showcase multi category user cases in a way that stores can't. So to give you a concrete example, if you're a content creator in gaming, you would need to visit at least five different departments within one physical store to be able to put your rig together. And none of those departments would be able to give you any advice on putting your rig together on the job that you want to do. It's just simply not there. So DTC can really bring that user case stories together, and really present them in a very nice understandable way online. And then of course, give some educational material for the for the consumer, which can then help them when they visit stores and get to experience the product itself. So I think also, overall overall, data see is really increasing demand pool for for brands that are that are actively pursuing and using it as a growth driver. And that of course, benefits all channels. So that's why I've picked DTC as new and that's why I've picked DTC a shiny.
Tom Ollerton 19:06
So anecdotally, one of our clients that will remain very nameless was in the the FMCG space is safe enough to be broad... stopped doing DTC, and I'm curious to know, why do you think brands are pulling out of this space given you've given such a powerful rallying cry for its benefits?
Paul Robinson 19:28
Well, I'd love to know the brand. I think that will probably be the only way I could answer Tom because everything that I'm looking at and seeing is really suggesting that DTC is a very big opportunity for consumer tech brands with consumers and and also with across other channels. So helping the total business to grow.
Tom Ollerton 19:52
So do you think that it is dependent upon a brand being what you would call I would call it a catalog business? Yeah. So Jabra or Bose or a Sonos. So, like, does it require there to be lots of SK use in order for it to be really valuable? Whereas if Weetabix did it, for example, like you know, actually, they have a handful of products but you know, there's not, you're not gonna buy it when everyone who buys Weetabix also buys like Weetabix minis or whatever they're called like is, is there a certain sort of brand that it has to work for? And are FMCG brands getting distracted by it?
Paul Robinson 20:24
I don't think it's that. I definitely don't think it's that because I think that there if I if I think of some of the most successful DTC brands, those both Multi Product brands and relatively narrow product range brands. I mean, I think adidas is a great example. I added this publicly, they've committed to do 50% of their revenue via DTC, I think by 2025. So I mean, this this is there's a huge number of skews there.
Tom Ollerton 20:55
To jump back to your your most successful, who are the heroes here? Like, who are your top five?
Paul Robinson 21:01
Yeah, I think in my industry, AApple have led the way. I was, I think, particularly with the personalization and the value add that they've created, I think with Apple, you can almost see a whole kind of channel pricing premium-ness strategy, where effectively you can you can buy direct from Apple, and there's various value add. Or you can look to buy your Apple product from, from a consumer tech retailer, or from from an onliner.
Tom Ollerton 21:28
But to push you on to push you on Apple is that there's going to be the majority of the people who listen to this podcast will not have worked for Apple and have their budgets or be at a comparable brand level. So I'm always a bit anxious about using I mean, I'm not saying you're wrong about Apple, but they have they're in a different league to the majority of marketers, you know, so if I'm, if I work for Costco, or I work for a scale up like Mattress Company, to your point, like, is there just a certain sort of threshold with DTC that allows you to experiment allows you to massively invest in your.com into your support, structure, your distribution and all that kind of stuff? So I just what I'm trying to work out is when a brand should decide to go big on it, what kind of RAM what kind of setup should they have? Because not everyone can afford to go big on DSC in the chance that it might not work for them?
Paul Robinson 22:19
Yeah, I mean, I think it's a great question. Thanks, Tom. I don't think you have to be big. So I think there's a very small, I think they're called Hiut, denim, very, very small, almost artisanal workshop denim company in Wales. And they, they actually have simply been building a DTC business with with very little marketing investment, they actually operate and run their business around a newsletter. And the newsletter itself is a very nice lifestyle, story related, kind of it's got thing, it's not about denim, right? It's got stuff about coffee and stuff about music, and all sorts of things. It's really nice. It's a really good read, actually. And I think about 80% of their sales are coming from basic in the direct channel are coming from this weekly newsletter. So yeah, it's talking about craft beers and great design and great architecture and well being and fun and all these things. And they're able, they're able to run a going concern from that. So I don't think that you need to be big, you don't need to be an Apple. I think DTC can can work really well. Even for small companies like like this one.
Tom Ollerton 23:22
Well, Paul, unfortunately, we've run out of time, because I could definitely dig far deeper into it. I feel like I've just, I feel like I've scratched the surface. And I'm sure the audience will, too. So Paul, if someone wants to get in touch with you, where is the right place to do that. And what makes a message that you'd actually respond to?
Paul Robinson 23:42
LinkedIn. I think that's by far the best. Very, very good. Wherever I am in the world. And whatever time of day, I can pick up a LinkedIn message. And then I would say if you if you want to get in touch, just connect and message me. You don't need to dress things up, right? You don't need to come with presentations or anything like that. It just yeah, just just come to me directly. It's good.
Tom Ollerton 24:00
Paul, thank you so much for your time.
Paul Robinson 24:02
Thank you so much, Tom, I really enjoyed talking with you, actually. And I hope the listeners found found this podcast Interesting.
Tom Ollerton 24:08
Well, that's a massive relief. Cheers, Paul!
Subscribe to the ‘Shiny New Object’ Podcast on Apple Podcasts, Spotify, YouTube and Soundcloud.