February 19, 2020
  |   Digital Marketing, UX / CX

Digitally Native Brands vs. Legacy Brands

Legacy brands have been watching digitally native brands enter their markets and completely disrupt the way consumers buy products. From mattresses and eyeglasses to toothbrushes and wedding dresses, there are few industries that haven’t been impacted.

Based on their success, especially among Millennials and Gen Z’s, it may seem like digitally native brands have it all: sophisticated systems, optimized marketing campaigns, centralized customer data, and streamlined customer experiences. But there are a few things these up-and-coming brands can learn from their well-established predecessors.

Most legacy brands have been in the market for decades, proving they know how to stay relevant among consumers and grow their business. As they evolve to meet heightening customer expectations and invest in direct-to-consumer (DTC) channels, there’s a lot to be admired from their digitally native competitors.

What Legacy Brands Can Learn From Digitally Native Brands

1. Technology and Trend Agility

Digitally native brands, as their name implies, were digitally born. Often entrepreneurial in spirit, they’re willing to try and adapt new trends and technologies as consumer preferences evolve. When choosing a digital ecosystem, digitally native brands typically choose one that enables them to create an experience based on best practices as well as one that is easy to set up and scale, reflects their brand values, and appeals to the modern consumer. For many of these startups, the ecosystem includes micro-loan payments, self-service returns, personalized email campaigns, and user-generated content curators.

For legacy brands, becoming an agile company that can easily adapt new technologies and trends typically starts with a necessary change in culture. We see legacy brands invest in new technologies but often struggle to turn those technologies into enablers for achieving business objectives. Leveraging technology to drive a successful direct-to-consumer channel requires subject matter experts that will assist your brand to stay on top of the latest technologies and opportunities in ecommerce.

What do Warby Parker, Casper, and Le Creuset have in common? They own the customer experience. Find out how you can too with Blue Acorn iCi’s report, Own the Customer Experience: Making the Switch to Direct-to-Consumer.

2. Prioritizing & Expanding Owned Channels

Rather than selling products through an online marketplace, most digitally native bands got their start by prioritizing and expanding their owned channels. By leveraging their DTC site and social media platforms, they gather first-party customer data and control the entire customer experience. The more they know about their customers, the more they can form customer relationships through personalization and authentic branded storytelling. For example, Warby Parker leverages their website, packaging, branded content, and physical locations to tell their brand story—giving consumers a cohesive experience across all channels.

For decades, legacy brands relied on retail partners to control the narrative and sell their products. By investing in a DTC channel, legacy brands can use authentic storytelling to reach customers and build lasting relationships – directly with their consumers.

3. Integrating Internal Teams

Successful digitally native brands started their businesses with the common goal of enhancing the customer experience, which translates into cross-function collaboration and minimal data silos. By integrating technologies across the organization from the start, they ensure each function drives data into a single view of the customer. From a cultural perspective, the organization has a customer-first mindset—what’s the best experience for the customer and how do we deliver on that?

Billie, a DTC razor brand, leverages technology to survey customers, mine social media comments, and host focus groups to gain insights into what frustrations women have in their morning routines and how they can help. Based on their findings, they recently stepped into a new category and launched a dry shampoo, facial wipes, and lip balm.

Data silos are inevitable in large legacy organizations that have various internal departments as well as multiple retail channels. Relying on retailers to provide clean, accurate customer data only adds to the complexity of creating a single view of the customer. Implementing a technology infrastructure that collects, normalizes, and analyzes data across systems is fundamental to activating first-party data in a holistic manner.

What Digitally Native Brands Can Learn From Legacy Brands

1. Scaling Customer Acquisition Efforts

Legacy brands mastered the ability to scale customer acquisition through retail partners. Retailers typically buy a brand’s product at a large percentage of the retail price, which means brands are at risk of losing revenue and control over the brand identity. However, as a brand reaches more consumers through these channels, the loss of revenue is made up in volume of sales.

In addition to reaching new customers, legacy brands often leverage retailers to sell limited-edition products that generate brand awareness. For example, Le Creuset created a limited-edition Star Wars-themed product line exclusively sold through Williams-Sonoma as well as their own DTC site. Media outlets like Business Insider, Good Housekeeping, and Food & Wine covered the Star Wars collection, generating hype around the product line before it even launched. These limited-edition collections give Le Creuset the opportunity to acquire new customers through Williams-Sonoma and then retain them through their own optimized DTC site.

Many digitally native brands have partnered with retailers to sell their products. Walk into a Target and you’ll see products from Casper, Harry’s, Quip, and BarkBox. As the cost of advertising on Facebook and Google increases, digitally native brands will explore more traditional outlets to increase awareness and acquire new customers.

2. Investing in Extensive Customer and Market Research

Before launching a new product or service, legacy brands spend millions of dollars each year to test with target audiences. Even as household names, they need to ensure they maintain their brand standard and stay competitive in the market. For example, Starbucks regularly tests new products in select stores before releasing (or not releasing) across all of their locations. The coffee retailer uses this data along with information from market research firms to dictate future product lines.

Market research is a costly endeavor and likely one of the biggest reasons digitally native brands don’t invest in it. However, many of these up-and-coming brands either sell products new to the market or sell products in a way that’s completely different than what consumers have seen—leaving more room for uncertainty. Market research will help you determine if your target audience would buy into the product or experience. If you’re looking for venture capitalists, market research will help you prove its potential success and that it’s something worth investing in.

3. Leveraging Brick-and-Mortar Stores to Form Personal Relationships

Originating in brick-and-mortar stores gave legacy brands the opportunity to form one-on-one relationships with their customers. As a result, the customers feel loyal not only to the brand but to the people working in the store. It’s difficult to emulate this type of experience in a purely digital environment.

While younger consumers use the internet to compare options, they seek physical stores to touch and feel products. According to Adweek, 37% of consumers would visit a DTC’s physical store to get a sense of the product before they purchase. Digitally native brands are taking the physical store concept and turning them into pop-up shops or lifestyle experiences. For example, Burrow, a digitally native furniture brand, initially opened Burrow House to act as a retail showroom as well as an experience with their basement movie theatre.

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Shannon Abel
After graduating from Clemson, Shannon started her career in marketing, focusing on content creation and engagement. As Blue Acorn iCi’s Media Marketing Specialist, she keeps clients and customers up-to-date on the latest trends and news in the ecommerce world. She also produces and hosts Blue Acorn iCi's podcast, The Funnel. In her free time, she enjoys running with her dog and checking out the local breweries in Charleston.
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