With every successful direct-to-consumer (DTC) brand launch, a tiny bite is taken out of a legacy brand’s market share.
Once those bites start adding up, DTC brands can become a major threat to business, said Clorox CMO Eric Reynolds at the ANA Masters of Marketing last week.
“[DTC brands] are very nimble and capable competitors,” he said. “They’re not just sophomores bumping around in the dark. They can find niches inside my consumer base, and they can have a tighter insight, or a bit of a better product, and they can go in and scrape them off.”
To get in front of the DTC threat, Clorox has made a huge commitment to get to 100 million known consumers. It will do so by acquiring DTC brands, imitating their tactics and using paid media to convert more customers into its various CRM programs.
“Everything points to say, we better know more people,” Reynolds said. “We’re on a full crush to bring people into the Clorox family so we can respectfully use their data.”
That push comes after Clorox’s marketing department co-located previously siloed teams so it could respond more quickly to customer needs.
Reynolds spoke with AdExchanger.
AdExchanger: How big of a threat are DTC brands to your business?
ERIC REYNOLDS: In my world, a few share point changes has a material impact on business. If you have two or three DTC brands each grabbing a point of share, for them, that’s a huge growth. For us, it’s a nuisance. But a nuisance over time becomes a cancer, and before you know it, you lose your consumer base. So in that sense, I see them as a major threat.
How is Clorox positioning against these new competitors?
It’s about being more personalized and customizable. This is where we can learn from performance marketers. To the extent that we can imitate their techniques, we can thwart the likelihood people will leave us.
What’s your strategy for getting to 100 million known consumers?
We have some small DTC businesses, like Burt’s Bees. They become a learning platform. We’re doing classic lookalike modeling, but we’re getting much more granular on the people we know. We’re also getting better at tagging consumers and tying data together.
We’re using social to convert people. When we advertise Hidden Valley Ranch on social, we’re trying to get people to come to hiddenvalley.com and sign up for our CRM program. But there has to be some value exchange. We’re challenging ourselves on the basis for that value exchange.
Third party-data is going to get more challenging. Restrictions like GDPR and the California Privacy Protection Act are going to limit the amount of data I can share with partners. Today we put our first-party data together with Target’s, and it’s really powerful. But I fear Target is going to be less willing to mix data in an anonymous way because of the implications.
What’s your timeline for getting to 100 million?
It will take us a while. But it’s very unlikely someone wants to shop on 50 websites to fill up their cart. So we have to look at categories likely to be peeled off by DTC and apply our energy there first. Vitamins are very susceptible to DTC marketing. On the other extreme, people don’t care enough about Clorox bleach to build an account on Clorox.com.
But look what Brandless is doing. They’re a threat. They’re [taking] all the noise out of low engagement categories, giving fair pricing and bundling them. That is a big idea, and they’re on to something. We’re keeping a close eye on them and others who will to imitate them.
How are you using Amazon to get closer to the consumer, and what are your concerns about going all-in on the platform?
Consumers go to Amazon because it’s a better experience. We have to be everywhere consumers want to be. We may not like the data sharing agreements, but that’s where consumers want to buy stuff.
Would I like Amazon to share more data? Yes. Do we have ways of getting some data out of Amazon? Yeah. But we’re more focused on, within the constraints of the universe, how do we optimize our marketing?
A lot of our low involvement products, if they’re purchased on Amazon, people continue to buy them. You’d be surprised what a runaway hit Glad trash bags are on Amazon. If someone hits subscribe and save, we see the highest repeat loyalty from those who buy through Amazon. Brand awareness works for us, but we have to keep fighting to remain top of mind.
Or Amazon will promote their private-label brands and undercut you on price.
This is a major trend we’re dealing with: private label brands. We’ve competed with store brands for decades and held our own. But we do see the industry trends.
We have to treat them like competition. We have to be more interesting and creative and our product has to be excellent. Because if it comes down to price and brand parity, that consumer will go to Amazon. We take that as a very serious threat. But rather than stand in the wind and scream, it pushes us to be better. The only thing that matters is the intersection brand equity and product innovation. If we lose sight of that, it’s game over for us.
How are you approaching commerce on voice activated devices?
We have to prepare for a voice world. I tend to have the number one or two brands in their categories. Bigger brands purchased online get weighed so that when Alexa comes back with three options, she tends to recommend my brands. But we can’t expect that to will continue forever.
We want Amazon to keep the algorithm fair. If someone says, “I’d like a Clorox disinfectant wipe,” we don’t want Alexa to say, “Well, how about an Amazon wipe?” The trick is to show Amazon that’s not ultimately good for their business. Their self-interest is best when people get to choose, so we’re working on that.
What was the biggest challenge and benefit of reorganizing your marketing department?
We were simply not as responsive or fast enough in an always-on environment. We had a lot of siloed work. We saw a lot of fragmented brand engagement. Our global insights team wasn’t assigned to a brand. There wasn’t a sense of unity. That’s a strategic problem over time.
But when you have to tell an expert they’re not as autonomous as they used to be, that’s hard. It’s been a challenge for our AORs too. There wasn’t a single person involved that didn’t have to reimagine how work had to be done.
I’m grateful we didn’t pilot this for a year on one brand. Everybody stood up and moved into new teams and sat down. It was organized chaos. There was such conviction in going this way, we felt like if we let people vote or slow it down, we were afraid it could die of its own death.
How long did this take and how would you rate your progress?
We’re about 50% to 60% of the way there. Our results have been above industry average the past two years. We’re one of the major actors in that.
But it’s not perfect. We’ve made some mistakes and we’ve had to modify things. But more people are now co-located within earshot of each other. It’s led to a much more nimble and responsive culture. We’re starting to see the benefits.
This interview has been edited.
This post was syndicated from Ad Exchanger.
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