Why Customer Service Quality is More Important for DTC Brands

Why Customer Service Quality is More Important for DTC Brands

February 1, 2022

Customer service is an important criteria for businesses to succeed in today’s landscape. Brands with superior customer experience generate 5.7 times more revenue than competitors that are poor in customer experience.

The only anomaly is if the company is deeply entrenched in an industry with less competition, strong barriers to entry, and owning a large market share. Examples are airlines, cable TV operators, internet companies. Unless you are one of these, customer service quality has a large impact on your business.

It’s even more important when you operate a Direct-to-consumer (DTC) brand. Barriers to entry are low and competition is increasing. Brand and customer relationships become true differentiators.

DTC brands own the relationship with the customer

In traditional retail, a customer visits a retailer or eCommerce marketplace and selects your product out of many brands. As a brand, you would not be informed when the purchase happened, but at a specified time interval from the retailer. You would also not know the customer who bought the product. The relationship is between the customer and the retailer.

In DTC, it’s a bit different. When there’s an issue with the product, customers won’t contact Walmart, Target or Amazon, they will directly reach out to your company. This also includes returns and refunds. This leads to more customer service requests and more pressure on the team.

What this does allow is for the company to create a tightly controlled and curated brand experience from beginning to end. And a large part includes customer service.

Why the stakes are higher

The first generation of brands Warby Parker, Everlane, and Casper were pioneers and hence faced less competition during their growth phases. First-gen brands benefited from advertising arbitrage then but it no longer exists. Now the competition is increasing and standing out is harder.

Adding to the competition, big consumer brands are launching their DTC lines such as P&G’s Native Deodorant and bandage brand Welly, which launched in partnership with Target in 2019.

Brands should go the Zappos route and differentiate through customer service.

Another point why the stakes are higher is that many DTC brands are subscription-based. While this brings in more recurring and stable revenue, the chances of customers cancelling the subscriptions are always present.

Single purchase products usually have a one month window of return. For subscription-based products, customers can cancel subscriptions any time. That’s why you should provide the best experience to members, customers, or subscribers.

Quality customer service

When you think of the entire customer journey from awareness to post-purchase, customer service is the biggest touchpoint for a DTC company. Especially for subscription products. It is a long-term and ongoing relationship with the customer. This includes the retention and advocacy part of the journey.

A related point: Many DTCs have also reported that customers who interact with their brand in the physical realm have lower return rates and more repeat purchases than pure online counterparts. Now what remains to be inferred from this is whether it’s the “physical” aspect of the interaction or simply the interaction with another human.

And for most brands, customer service is usually not their core competency. Establishing the borrowed supply chain, online-only retail, product development, and social media marketing are their key strengths.

Setting up a ticketing platform alone may not be enough to achieve the goal. Companies that do well on customer service build loyalty through developing authentic connections with customers. They measure their team against a certain set of values or skills.

Distributed teams add one more layer of complexity to achieving high-quality customer service. It may be easier to monitor quality in person when your team is small. But when reps are distributed or the team is growing rapidly, you need a better way to manage quality.

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