If first-party data is currency, then direct-to-consumer brands are living like kings. However, having access to all this valuable data, and harnessing it effectively, are two different things. In this Q&A, Paulo Cunha, CEO, Velocidi, talks about how his business is teaming up with DTC clients, and the value that customer data platforms (CDPs) can help them recognise. 

DTC Daily: Velocidi has chosen to focus on DTC solutions – what drove this?

Paulo Cunha: Direct-to-consumer companies have proven to be a perfect match for a private CDP. They take direct ownership of their customer relationships, which makes their customers more likely to trust them and make them accountable; which makes managing their customers’ information responsibly even more important.

DTC customers also expect to have high-quality personalised experiences. So DTCs are motivated to stay ahead of the curve with predictive analytics, anything that will help them anticipate their customers’ needs.

Our experience with DTC brands, so far, has resulted in some great innovation in machine learning for DTC use cases. And there’s still tonnes of potential for growth and discovery, both for us and our clients. So, for the foreseeable future, we plan on supporting DTC brands and going as far as we can to help them succeed in their business model.

What do you find interesting about the sudden DTC business model growth? Do you think it is sustainable long term?

For the past year, I’ve been reading articles about how ironic it is that consumers are demanding more personalisation AND more privacy. I’m sure it’s not a coincidence that DTC businesses appear to have emerged to meet these competing demands.

DTC is here to stay because the personal touch provided by their business model is becoming the new standard for customer experience. And as long as DTC brands keep their customers’ trust, they aren’t going anywhere.

CDP-technology is often touted as only suitable for enterprise-level, scaled brands, and most DTCs don't fall into this category – how can a CDP work for them?

Many of the major players in the CDP space are indeed only suitable for enterprise-level brands. But the idea that CDPs are only for enterprises is a complete myth. You don’t need sales volumes matching Nike or Old Navy to have a relevant use case for a CDP. We have smaller DTC companies using Velocidi that have less than 100,000 monthly web visitors in only one primary geography.

It’s also a myth that you need to take advantage of every possible CDP use case at once for it to be worthwhile. You just need to start with one thing that adds value. Here’s an example: use predictive behaviour attributes to segment your audience according to how likely they are to convert. The resulting segments can be used a dozen different ways to improve your business. You can increase conversion rates, reallocate spending, tailor campaign messages, you name it.

What should DTC brands think about if they want to invest in a CDP?

You should expect your CDP to have a positive impact on your bottom line. So, as you are thinking about what business challenges you have, and which of those challenges might be solved with a CDP, stick to the ones that have a tangible impact.

It can be, “I want to improve customer lifetime value”, or “I want to increase conversion rates with personalised ads”. But don’t make your primary objective: “I want to get all my data together in one place.” All CDPs will do that, so it won’t help you narrow your search; and unified data by itself doesn’t yield ROI.  

Then let the vendors do the heavy lifting in terms of pitching how they are going to help you. You can do this with a formal RFP process, or you can initiate informal conversations with vendors and work from there.

Are DTC brands better placed than legacy brands to nurture trusting consumer relationships regarding data privacy?

Absolutely. Legacy brands are at a disadvantage to start with, just because they haven’t had the chance to have a direct, first-party relationship with their customers. Many began their digital strategy by exchanging information with third parties.

New DTC brands have the opportunity to start on the right foot with their customers. They are emerging at a time when consumers are more aware of how their data is used and collected on the internet, so being able to offer a transparent data relationship makes a big difference.This content was originally published in Fast Growth Brands.