Initiative 1/3: Form direct consumer relationships for increased loyalty and revenue.
Today, in 2023, growth is about relationships.
Consumers are now willing to provide personal data to a wide range of companies—from Amazon to Zara—but in return, they expect custom-tailored experiences. Every company, whether B2C, B2B, or other, is a consumer brand now, and consumers expect them to perform like one. This means more than just providing better services. It means forming direct connections with consumers, creating personalized offerings and branded content, and building customer communities and networked marketplaces.
Innovation today depends on closing the distance between your brand and your consumer. Consumers know you’ve got their data, and they want personalization in return: custom product recommendations, new offerings they didn’t even know they wanted, and a brand experience that gets better every day.
It might seem like an impossible demand, but brands are rising to the challenge, in part by integrating their touchpoints, but more critically, by connecting with their customers directly. After all, nobody knows your brand and your consumers better than you, so leaving the experience to someone else will always risk disengagement and mediocrity.
Benefits to a Direct Platform That Owns Sales + Service
Offset risk through distributors, but at the cost of proximity to customer needs
Direct access to their customer data
Indirect forecasting data
Can product forecast more accurately and with increased speed to market
Poor R+D intelligence (because it’s intermediated by your distributors)
Tap hyper-localized insights for customization and personalization
Lost margins from direct sales
More favorable margins from direct sales
Lose control of pricing, placement, and promotion
Coordinate alongside valued partners and customers enabled by shared data
Current State: Value Moves One Way, From Brand to Consumer
An indirect environment looks something like a unidirectional chain:
In indirect value networks, exchanges occur as a result of preceding inputs–not multidirectional exchanges. This means there is little room for real-time adaptation, customization, or personalization to individual customer needs.
This means intermediaries are owning the end-consumer relationship, not you. Changing this doesn’t necessarily mean total vertical integration, or assuming every bit of responsibility, but it does require a shift in approach. It means creating a direct consumer platform.
Future State: Value Is Symbiotic Between Brand + Consumer
The first step in establishing a direct consumer platform is to understand how consumers interact with the other parties in your value network.
Successful direct platforms coordinate a holistic set of customer wants and needs. These needs fall into four categories of access: Product, lifestyle, content and experience; sales, financing, and service; marketplaces of curated, value-added products and services; social, membership networking with other owners.
A new, more direct ecosystem will demarcate clear, appropriate roles for each of these players, driven by customer needs and curated by you.
The New Direct Ecosystem: Converting Data Into Consumer Value
A successful direct platform aggregates customer data into a comprehensive set of wants and needs. These fall into four categories:
Customer + Customer
Customers connect with other customers through owner communities, where you facilitate relationships and build loyalty. Adobe’s community, for example, enables users to help and inspire each other, to the point where customers act as supplemental support and marketing staff.
Customer + Suppliers
Customers and suppliers connect through marketplaces, which complement your current offerings with non-competing products and services your customers will love. A successful digital marketplace delivers several kinds of value: insight about unexpected customer needs, a forum for tailoring products, and even a foundation on which to build non-competing products yourself.
Customer + Manufacturer
Customers connect with manufacturers through branded experiences and content that are designed to promote engagement and loyalty. Nike Run Club is a great example, connecting runners with content from their sponsored athletes, supporting community engagement, and providing fitness tracking services.
Customer + Distributors
Distributors, retailers, dealerships, and other ambassadors of your brand connect with customers through sales and service. Innovation at this connection point often takes the form of digital tools combined with ambassador training, in ways that better serve customer needs while also aggregating critical data. The luxury automotive brand Audi delivers sales, leases, maintenance, and on-demand services through MyAudi, its digital platform. This creates a form of “digital auto ownership” and offers a high-value complement to the traditional dealer-customer relationship. Crucially, this creates a consumer connection with Audi itself, not just with a specific dealership.
Read on to learn more about Audi’s digital direct platform.
Going Direct: Audi + Digital Ownership
Luxury automotive manufacturer Audi is rethinking the consumer-dealer-brand ecosystem, and collapsing the distance between their brand and their consumer in the process.
Thinking beyond a conventional consumer brand approach, Audi has shifted from “link in the value chain” to architect of the value web. The result is greater value for dealers, and a custom, curated experience for owners.
For owners, the myAudi program offers a “one-stop shop” for insights about their vehicle, removing much of the stress around ownership and maintenance. In a single platform, they can access warranty information, service records, and a scheduling assistant; IoT integration makes the experience seamless (“Hey, Alexa? When is my next Audi payment due?”).
For dealers, Audi offers an Audi Academy training platform, as well as a brand ambassador welcome kit and intelligent sales enablement tools.
Creating a new value network starts with imagining its functions and relationships, and asking questions about customer needs, expectations, and perceptions. The right network places the customer at the center, delivers holistically on their needs, and establishes the brand as the system’s architect.
For Audi, this means considering:
- New tools that would need to be introduced.
- New education that would need to be provided to both brand ambassadors and consumers in order to condition expectations.
- The use cases and need states that Audi would need to solve for.
The Insight: Reframe conventional relationships and orchestrate the entire ecosystem; don’t summarily dis-intermediate third-party players.
The MyAudi strategy doesn’t eliminate or bypass existing players in the ecosystem; it focuses instead on orchestrating them to enable more direct consumer access:
- Audi develops a direct platform of branded products, content, and owner experiences.
- Dealers facilitate in-person product sales, financing, and vehicle maintenance.
- Suppliers offer value-added products and services in a curated marketplace.
At the same time, Audi provides the tools and training to support each of these players, and unlock the greatest possible value for and from each. Audi Academy empowers dealers with information tools that help them meet the mindset of a consumer who is now at the center of the value network.
All of this means that Audi, as brand and orchestrator, is the one ensuring meaningful moments for customers and elevating their total experience.
As Audi’s leaders continue to refine and extend the myAudi platform, they will provide customers more direct value, gather more direct customer data, and reinforce a direct-to-Audi interaction mindset. The result is deeper, more direct relationships with customers, who can now access the information and services they need, when they need them.
This human-centered approach supports a long-term vision of what a future mobility ecosystem could look like. By creating the right tools and data flow, Audi will expand the digital ownership experience for owners, and further develop a direct relationship with them that complements the one they have with dealerships.
More than just a myopic “consumer brand” focus, Audi instead embraces a holistic, integrated strategy that supports dealers and customers alike.
All brands, B2C and B2B alike, must rethink their value networks to orchestrate customers’ and end-users’ ideal holistic experiences.
Direct platforms have the potential to deliver four types of customer value: (1) product and lifestyle, (2) sales and service, (3) value-add marketplaces, and (4) customer social networks.
Direct doesn’t mean disintermediated. Brands need partners to meet customers’ 360° expectations. Each player must consider the greatest value they could provide, and make tradeoffs that maximize value to the whole.
How to Build Direct Relationships
To frame direct relationship opportunities, dive into our “Insights Formation” framework which is the first step in determining “How to Win,” and focuses on current and potential future “Value Networks.”
To form new, valuable direct relationships with your customers, start by rethinking your value network.
01 / Map your current value network: Show how each network member currently interacts as they buy and sell products, share information, or exchange other benefits.
02 / Look for unmet needs and business opportunities: Collect observations across the ecosystem, develop insights based on your observations of patterns and systems, and form guiding principles for the development of new value networks.
03 / Imagine an ideal future-state network: Consider new physical and digital activities, environments, interactions, objects, and users, and consider how existing ones could be recast.
Get the Framework
“Building Direct Relationships”
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