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How important is direct-to-consumer for CPG companies?

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CPG companies are increasingly interested in DTC sales.

A new study sheds light on how CPG brands are approaching direct-to-consumer (DTC) commerce and customer loyalty.

DTC channels account for more than 10% of overall revenue for nearly all (99%) of the 91% of respondents that have them, according to the “Consumer Goods Industry Insights Report,” a global survey of 1,500 CPG executives from Salesforce. 

The survey reveals what respondents view as the top five reasons to sell products directly to consumers, as well as the top five challenges:

Top five reasons to sell DTC

  1. Better understanding of consumer behavior.
  2. Better brand management/governance.
  3. Build direct relationships with consumers.
  4. Better control over pricing.
  5. Incremental revenue stream.

Top five challenges of selling DTC

  1. Consumer preference for shopping at retailers.
  2. Higher marketing costs.
  3. Expanded customer service capabilities.
  4. Lack of organizational knowledge on DTC business model.
  5. Legacy technology.

Customer loyalty proves challenging

The survey also found that 83% of respondents believe it’s now harder than ever to maintain customer loyalty. Respondents listed the top five challenges to fostering customer loyalty as:

  1. Consumer price sensitivity.
  2. Lack of innovation.
  3. Increased competition.
  4. Lack of personalization.
  5. Diminishing brand relevance.

Seven in 10 respondents say their companies have loyalty programs.

Other findings

  • 93% of respondents are using data to optimize prices and promotions, and 92% are using it for profitable growth.
  • 90% of respondents expect profitable growth at their companies over the coming two years.
  • 77% of respondents expect to increase their marketing spend, with social media to see the largest boost.
  • 38% of in-store product and marketing initiatives are executed incorrectly.

“As the consumer goods industry strives for profitable growth, leaders are leaning into data for increased visibility and better insights,” said Kishan Chetan, senior VP & GM, retail & consumer goods, Salesforce. “This first-party, proprietary data will become increasingly important in the very near future as generative AI becomes standard across customer relationship management platforms. The combination of AI, data, and CRM will allow every brand to connect with their customers in a whole new way.”

[Read more: Businesses go direct-to-consumer -core retail principles remain king]

Data is from a double-anonymous survey of 1,500 consumer goods industry decision makers in Australia and New Zealand, Canada, France, Japan, Germany, the United Kingdom and Ireland, and the United States. The survey was live from February 16 through March 9, 2023. All respondents are third-party panelists

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