
Where did all the customers go? Did the economic downturn really crush DTC? And what does that mean for e-commerce brands? (Especially ones who might not be considered a “necessity” product? In this episode of Brain Driven Brands, we dissect the...
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A
Welcome back to Brain Driven Brands. I'm back. I'm sure by the time this comes out, I. I will have, like, not been on eight episodes in a row.
B
You really haven't. It's okay. Neither have I. I felt bad. Like, I told producer Scotty that I was gonna record some stuff in Germany, and then chaos hit and it was like, there's no way, Scotty. I'm so sorry. So if you haven't noticed, we haven't been here in a while. We're back though. Team is assembled. Except for Scotty.
A
You want to talk about how. How awful everything is in E. Comm. Right now? Because that seems to be the hot topic.
B
I always hate doing, like, these negative, kind of like, Debbie Downer episodes. But, like, guys, I'm scared. I'm a little nervous. Oh, this is like, it's not in a good spot. It scares me how many people are like, oh, you're not scared at all. There's been a lot of people that I've watched on Twitter that are just like, the. The whole thing is crumbling. And I'm like, that's scary, guys. Can we. Maybe it's not as bad as. I don't know. I try and stay positive.
A
Yeah. I don't know. I think like, one. I think everyone always is either too high or too low. Like, true.
B
We got the extremes.
A
Yeah. I think the truth is always somewhere in the middle. But, like, I don't know. I think this shit's supposed to be hard. So, like, that's very. It is what it is. And, like, if I look back on my career, I can honestly be like, yeah, making this amount of money has at times been very easy. And now we're going to go into a time where it's hard and, like, that's right.
B
Okay. But not everybody's as nonchalant about it as you are. Okay. So one of the things that I saw this week was there was like a battle of the SaaS brands to be the most accurate. Like, we saw a ton of people come up with all of their stats, which, again, everybody's kind of seeing a different thing. So, like, some people had Shopify data, some people were coming in with post purchase data, all kinds of things about the state of the consumers, which that I found way more interesting.
A
Yeah.
B
Of like, what do you think is going to happen? Because Shopify stock is down and, like, doesn't really seem like consumers are very happy right now or very optimistic about life in general. So I don't know. What do you think about this? Did you see all those posts?
A
Yeah, I was following along. That's when I was driving home from vacation and I like pull over at rest stop. My wife would go like, take the dog out. And I just scroll Twitter and be like, oh, my career's over. Cool, cool, cool. Let's continue this 19 hour drive home.
B
Oh, I'm not gonna have a job in half a second. Yeah, man. There was a lot of people that got involved in the conversation too. It was like threads on threads.
A
Yeah. I mean like, it's real. We've talked about on this podcast. Like we, most of the people in our industry live in a bubble of like, we don't really worry about money in our day to day lives. Yeah. Which is a super blessing. But like most Americans do. And I think this is just one of those times where like we should all force be forced to be reminded of that. Like.
B
Yes. Yeah.
A
Hey. Household average income, last I checked was like $62,000 a year. Yeah, that's hard to live on. And I live in Greenville, South Carolina, so I assume like soon that's real hard in some other parts of the country as well.
B
And so true.
A
That's like, I think just something that we got to keep in mind. Like we are fighting for fewer hard earned dollars right now. You got to have a damn good reason for someone to buy from you right now.
B
I know. Especially if you're in an industry or in a vertical where like your product's not a necessity.
A
Shut up.
B
I know.
A
Okay.
B
I'm thinking more like supplements, but yeah, you know.
A
Yeah. Especially because no one needs a watch. Yeah, I do know that, Sarah.
B
Here's the funniest part though is I am seeing because. Okay, because we run cims and we run across it. If you don't know what CIM is, it's a core identity map. It's based on picture based surveys that help pull out all of these like emotions that your customers are feeling. Now the interesting part about CIM is I run it across industries, lots of different industries. I think we're up to like 40 different industries right now. And you can see very distinct trends when you run these because we're asking similar questions to similar customers, just in different industries. So a lot of the, a lot of the trends that I've seen coming out of CIM right now are, are specific to the fact that customers aren't spending a lot, but what they are spending money on, they're actually like doubling or tripling the amount of money that they would spend on it because they're looking for quality. They need stuff that's going to last a long time. Because most everything they're buying these days is an investment.
A
Yeah.
B
Because they don't have the cash to spend. So they're like, I better make sure it's a good one if I'm actually going to buy it. So you, your industry might actually be a little bit safer. A lot of industries just based upon the fact that you guys are high quality and you're an investment piece.
A
Yeah, I mean, like, we're, we're doing all right. So we're still up like 90 on the year.
B
I think you're fine. Like, you're doing good.
A
No, but like, should, should we or, or should anyone, like, be messaging into that more? Because I was actually gonna like book an hour with you to write some, some copy about, like, hey, instead I'm just gonna get it for free on this episode.
B
I was gonna say, wait, like we're talking right now. Amazing.
A
No, but like, you know to basically ask for someone's wallet, right?
B
Yes.
A
Now I'm asking them like, hey, listen, I know groceries are expensive. Gas prices have come down a bit, but like, they're still not great. Like, but don't you want a great watch? What's the better way?
B
Don't you want a nice watch to.
A
Message like, hey, we know money's tight. Yeah, but like, we still got a business run, so buy from us.
B
Well, I mean, it's a valid conversation to have. And I think that's why that whole conversation on Twitter, like, popped off, because you had some people on one side that were like, no, consumers are still, they're still spending, like, they're still doing fine. They're slowing down on discretionary spending right now, but they're, they're, it's going to climb back up as soon as we hit holiday season. And then you had other people who were like, shopify is going to go under. Like, I don't think you understand, like, we're about to die. I was like, ah, it's always somewhere in the middle. It's never to either extreme. Right. So for you guys and for anybody that's looking for like, what messaging should we put in place right now to keep the business afloat but also not offend the crap out of our customers? I think that's where you start is. And I, I can't remember where I posted about this. Talking to somebody about the fact that, like, sometimes I think customers don't trust brands because we are so, so careful about not telling the truth. Brands don't tell the truth almost ever. Sorry. Brands, we. We don't like it because the truth means that it's. It's possible that if I tell you the truth, you won't buy from me.
A
Yeah.
B
But I. I think the opposite is actually true for humans. Right. So if you're making a connection with somebody, I would so much. And you've done this for me constantly, where I'll bring a problem to you and Scotty, something that I'm working on in my own business. And I go, like, what do you guys think about this? You guys don't sugarcoat your answer, like, at all. You guys are real freaking harsh about it. And you're like, well, you're just an idiot, Sarah. It's a problem. And you just need to do xyz. I don't know why you haven't done it already. Now, the interesting part is most of the time, I think you. You might assume, well, that must be like a turn off. Sarah must just not want to be friends with you guys. But that's why I come to you.
A
Yeah.
B
Because you're not going to tell me what's nice to hear. You're going to tell me what I actually need to hear. So, messaging for brands. I think at this point it might be better for us to just acknowledge that it's happening similar to how we do with tariffs. Now, there's a right way and wrong way to do this.
A
Yeah, for sure.
B
Saw some brands running some emails that were like, we're running a tariff sale. I was like, don't do that.
A
That's the wrong way to do it. For sure. And then I saw some brands, like, talking about Trump and being like, this tyranny, whatever. And I'm like, you're also going to alienate half your audience.
B
Exactly. You don't want to make people feel worse about what they're already experiencing. But there is a nice way to say what you're trying to say, which is, like, it's hard out here, man. And we see you, like, you're trying your hardest just to make sure that your family eats every week. And we get it. Like, a watch is not in that, like, bucket. That's not a part of your ecosystem. But just understand that when you are finished surviving this part of your life, we're going to be here, like, we will be here to help you commemorate what you survived. That's a much better message.
A
Bars, I think. All right, thanks. I will see you next time. No, but, like, I think you're so right. Like, We've talked about when on this podcast a lot. And like, the when is changing for a lot of Americans right now and last three years, but right now, like, the when is changing. And yeah, they might be going into a period of their lives that's more frugal and more conservative in their spending habits, but they're still spending money.
B
Yes, they are.
A
And like. And the top 10% are still spending money, for sure. And there's enough of them to keep our brands going, I think.
B
Yeah, Yeah. I think the brands get really nervous about this because I think they assume. And this is really interesting. Ooh, okay. So this is really interesting psychology, something that I saw on Twitter that I just now realized. Why do the brands assume that their product is not important enough to be included in necessity? That's my question. Because that tells you a lot about what the marketers think about their own products.
A
Right.
B
We aren't a necessity. Why? Yeah, why is anything a necessity now outside of, like, food, clothes, housing? Right, that makes sense. Because that's like Maslow's hierarchy, which we can do a deep dive into if we need to. But outside of that, for Sarah, one of my necessities that I will never, ever, ever freaking cut is coffee.
A
Here is what happens if you stopped.
B
Drinking coffee for three months.
A
One of the most powerful drug experiences I've had in my life was the first cup of coffee after three months off. Really? It was psychedelic. Really incredible. Yeah. Come on. You're never going to understand your relationship to caffeine until you get off.
B
It is a non necessity. Like, I don't need it, but. Exactly. Red Bull. Like, every customer on the planet, every human on the planet, has necessities that are bucketed in that category that aren't actually a necessity, but it's a part of what they do to cope. So it gets categorized that way.
A
Well, so there are. There are like, tiers of necessity. Right?
B
There's like, so true.
A
There's like oxygen and food and water. Like.
B
Exactly. Survival. Necessity. Yeah.
A
And then like, one step out is like, well, shelter and clothing. And then one step out quickly becomes that, like, well, are they going out to eat instead of cooking at home?
B
Yeah.
A
Or are they going to see a movie because they need to escape for a couple hours or they need to feel good about themselves, so they need to put on a watch and go out. Like, should. Should we be marketing all of our products more as like, hey, this is a version of a necessity. You city folk, you worry about a lot of shit, don't you? It's not food and water and oxygen, but like now's the time that you need X, Y and Z.
B
Yes. Well, and I think, oh yeah, it really comes down to what does necessity mean to them. And you guys already have like lots of data around this because we ran a CIM for you around that. These guys are really into survival. They're really into earning things. They don't want rewards necessarily. They want a medal at the end of their journey. They're like hard earned journey. So that's why I say for your customer type, it's better to message into that like when you're ready, when it's time to like commemorate all of the hard work that you put into this. We're still going to be here like, Right. So you can still create that connection. When it comes to like straight up sales though, a lot of this comes down to maybe you are a necessity and you don't know that you are.
A
Yeah.
B
And how can you activate that particular piece of your customer's brain and identity easily without offending people?
A
Yeah. Well, like what's super interesting, I've talked to a ton of marketers who are fantastic, good marketers who have been struggling since like early maybe and it's a long time. It's a long time. And one of the things I think of about like is, is we don't really feel it until after Father's Day. And I wonder if it's like, oh, because no matter how bad people are struggling, a Father's Day gift is still kind of a necessity. And like they could have gone cheaper but like that's still a holiday where they had to get their dad something. So. Yeah, there's always a way to frame it. It's like, no, you, you do need this right now.
B
Yeah, I, I, it all comes down to that like psychology of it, like all comes down to psychology. This is, goes deeper into. This is like a segue a little bit. But I, I post, I scheduled. Jesus, my brain is still on vacation. I scheduled a newsletter this week. I don't know if you read my newsletters. You probably don't. No, but you should read my newsletter because I post really interesting stuff. So I did a breakdown of.
A
Put me in them more. I'll read them.
B
I'm sorry. You're on every episode of Rage and Brands and you're never like, no, I know. Okay. Anyways. Okay, so this week, this week's like breakdown for my newsletter was Chipotle. Do you remember the fall of Chipotle?
A
Yeah.
B
This is like 2015 yeah. And they closed nationwide, all of their stores.
A
Oh, did they?
B
You. You didn't hear this?
A
They closed everything at one point.
B
Yeah. Okay, I didn't know that. If you guys don't know the story.
A
They're back now, but then also going out of business again. Right. I thought you meant like the recent fall.
B
No, no.
A
Okay.
B
Chipotle's had some. Some time. They've, they've. They've gone through some.
A
I'll be honest, I was a late adopter to Chipotle.
B
I mean, super secret. I hate Chipotle. Like, I'm not a fan. I don't like it. Don't tell my husband because he freaking loves it. Consumer Casey freaking loves Chipotle.
A
And I'm like, he seems like a Chipotle.
B
He's 100 of Chipotle guy.
A
Yeah.
B
I'm more into Qdoba because I love their queso.
A
Weird.
B
I was like a big Chipotle.
A
I agree with you there. Like, their chips and queso should be.
B
Better than they are. So mid. I'm like, just put some salt in it, please.
A
Thank you. Oh, my God. And get the lime out of there. Why? Why does it taste like lime so much?
B
Why does everything taste like lime? Chipotle, we love you. Okay, so in 2015, Chipotle was like top of the, top of the roster, right? They were like a cultural movement. Basically everybody loved them. They felt very morally superior when they went to Chipotle because they were like, this is a lifestyle. Like, there's 1200 calories in this bowl, but I don't even care because I eat clean. Right? So they go to Chipotle, get this burrito that's like 2,000 calories. Okay. November of 2015 or this one. October 2015, Chipotle got its first customer report of an E. Coli infection from their lettuce that they were sourcing. By November of 2015, the CDC announced a multi state outbreak. Multi state? Like multiple states.
A
When was this?
B
2015, as a freshman in college.
A
I was not paying attention. I barely had Waffle House money. I did not have Chipotle money.
B
I was going to say you had to be kind of rich to go to Chipotle. I'm not going to lie. The burritos are kind of expensive. December 2015, they had a second genetically distinct E. Coli outbreak that was reported January and February of 2016. The CDC expanded its investigation. More cases surfaced in other states. And by February 8th of 2016, Chipotle closed all US stores for a national food safety meeting, reporting 6 billion in losses.
A
Thanks, Fauci.
B
I was like. So I did a whole breakdown of this. And it reminds me. It reminds me kind of of what we're talking about here, which is like, what happens when you cannot control perception? So we're talking about the perception of necessity and economic downturn and how to stay alive as a brand during a time period where nobody seems to be buying. Similar thing happened to Chipotle. They had a perception issue that just happened to them. Like, of course, they didn't mean to poison people, but that's what they did. They only poisoned. Only. Oh, well, there was. What did it say? 1100 people got sick. 1100. That's it. Now that sounds like a lot, and it is a lot. But if you look at it in.
A
A context, it's also not that. That many.
B
No, that's. What did I see here. I did the math. 0.0003% of the US population. Not even 1%.
A
Yeah.
B
And they had to close everything. And then this, this particular issue followed them for years. Like, people were just weren't eating Chipotle because they were like, no, Chipotle is disgusting. So back to our original conversation. This all comes down to, like, what. What is your perception of your product? Do you think it's a necessity? And what is their perception of the product? Do they think it's a necessity? Can you manage the perception of your products? I personally can, but that's just it too. Yeah.
A
Yeah. I mean, because, like, for me, like, a watch is a necessity when I step out of the house.
B
Yes.
A
Like, I don't go anywhere even if I'm feeling like shit. And like, I'm depressed and sad and stressed and I'm like, just going to the gas station to get a 40 and a candy bar. Like, we'll throw the watch on, though.
B
That's really interesting that the watch increase, like, changes your perception of yourself, Perception, people. So, okay, so for brands who want to do this, how are you managing the perception of your brand for your customers? Do you have, like, tips that they can use?
A
Yeah, the tip is 12 months ago, you should have been developing higher price products for a higher income cohort of your customer base. So if you didn't do that, maybe start that now. No, but I mean, like, you know, it's. It's kind of the same thing we've been trying to do for last two years. Create content and messaging that paints our products as more valuable than our last round of content did. And, you know, we've almost doubled our AOB in Like three years, which is huge. And our best selling watch went from 200 bucks to 350 bucks. So, like, that's it. It all comes back to content and messaging and positioning. And how can you make someone feel like your product is worth more than the dollars they're giving to you?
B
Yeah, perception comes down to after, like, price. Price is a big piece of it. But psychological perception comes down to what you say, what you do and how many times you do it. And that's it. What you say, what you do, how many times you do it. So for brands, whatever your core message is, whatever you're consistently repeating over time, that's going to become a part of the perception of who you are and what people can count on you for. Right. What you do comes into play too. Okay, continue, continue.
A
Because I'm like, I can say I'm writing copy now. Like for guys who show up, work hard and earn their keep. Every day.
B
Yeah, every day.
A
Now I'm not trying to sell you a watch. I'm trying to, yes. Compliment you on your identity and let you know that other men that are as strong, determined, persevering like you are, wear this watch.
B
Oh, bars. Oh, bars. And this is what I'm saying, like once, okay. Once you understand it and you get to Nate's level, then you don't have to think about it as much. Then it's like, oh, we just got to shift this way this week. Like, we got it. It's not a big deal. Second though, on there is what you do, right? What you say is important, but if you can't back it up with what you do, it makes no difference to the customer at all. Especially when it comes to, like, things like Chipotle. They kept saying over and over, we're cleaning were fresh. They were like pushing this message of like, purity. So as soon as something happened where they're no longer pure, it disintegrated the entire fucking brand. And I'm like, oh my God. Same with this type of a thing. It's an economic downturn. We didn't have control over it. Yeah, well, they didn't have control over their own lettuce. Apparently. We don't have control over tariffs. We don't have control over an economic downturn. However, the only thing we can do is back up what we say so we can constantly say over and over, we're the type of brand that's not going to leave when shit gets hard. And then you do, you stay. You keep sending emails, you keep spending on ads, you Keep doing good things for your customers. You keep running good campaigns, and, like, you stay a good person, really. Is what Sarah's saying. Back up what you say with what you do, and people will believe you. Right. And then obviously, like, that last piece of it, it really, all of this just comes down to, like, managing your own perception of yourself, but what you say, what you do, and then just continuously being consistent with it over time. You'll survive.
A
Yeah.
B
That's how you survive. I'll survive. I will survive.
A
Love it. And then, yeah, like, I half jokingly mentioned it, but, like, you absolutely should be trying to create products that are higher quality and higher price than what you have now. This won't be the last economic downturn we go through, but rich people spend money all the time.
B
Yeah.
A
So market to them. And then the. The last thing I'll say here is, like, kind of like, and I told you so, but, like, don't compete on price ever. Wrong movie. Because now, like, if you were. If you have been competing on price this whole time, now you have no cards to play.
B
Oh, my God.
A
Because you've sold yourself as a cheap brand, and it's like, well, now there's nothing you can do because it's just about the money, and money's tight.
B
Do you know how many dollar stores have closed in my state?
A
Yeah. For real.
B
Thousands. Yep, thousands. Because they can't be with Amazon. Like, people would love to pay a dollar, but I'll pay $3 if I can get it here tomorrow. And I don't have to leave.
A
You don't have to leave. Go to a sketchy store.
B
There's so much psychology in it. Okay. Where can people find you?
A
Follow me at Nate Legos. On Twitter, you can listen to the Tactical and Practical podcast, which, by the way, Sarah, we haven't caught up in a while. Podcast doing numbers.
B
Okay, you say that every time. Is there anything in your life that isn't doing numbers?
A
No, I mean, like, all of it. Views are up, revenues up, cholesterol's up. So, yeah, pretty much all the numbers I want to see going up. Blood alcohol content, up, up. Yeah, life's good.
B
Oh, okay.
A
Where can people find you if you.
B
Want to go up? Like Nate, Follow Nate. If you want to learn how to apply all this psychology knowledge to your ads, your brand, your marketing, your advertising, all of it. You can follow me at Sarah Levenger anywhere you consume content these days. I am over on TikTok and I, I, I know I posted one. Guess how many views I got.
A
1,420 that.
B
All right, first of all, I typically get more views than that, but second of all, no. I got half a million.
A
Oh, holy.
B
Half a million views on one post. I was like, I know marketing, it's so bad that those metrics make you feel good, but they really do. They're very validating for me. And I'm like, thank you, guys. I try really hard. I don't. I don't want to disappoint you. Just kidding.
A
Would you get half a million views.
B
On Go look it Up? You're gonna laugh because it's the dumbest piece of content ever.
A
Oh, okay. I know what it is. That's funny.
B
That's the reason why. Okay. Go look it up, people. Thanks for coming. Have a lovely day. I did. My outro, Brain Driven Brands is part of the Learn and Laugh series on the Quickfire Podcast network and is presented by Tether Insights. For more information, go to tetherinsights IO.
Brain Driven Brands: Episode Summary
Episode Title: State of the Industry…Is DTC Dead??
Host: Sarah Levinger
Release Date: July 8, 2025
After a brief hiatus, Sarah Levinger welcomes listeners back to Brain Driven Brands. She acknowledges the absence of consecutive episodes and sets the stage for an in-depth discussion on the current challenges facing the e-commerce sector.
Sarah and her co-host delve into the prevailing sentiment that Direct-to-Consumer (DTC) models might be faltering.
Sarah: "I think this shit's supposed to be hard. So, like, that's very. It is what it is." (01:14)
Co-Host: Expresses anxiety over the industry's instability, noting varied statistics from sources like Shopify and post-purchase data, highlighting consumer pessimism.
They discuss the polarized views on platforms like Shopify, with some forecasting its decline while others remain optimistic about future growth, especially leading into the holiday season.
The conversation shifts to the reality that many in their industry enjoy financial stability, unlike the average American household income of approximately $62,000, as mentioned by Sarah (03:02). This disparity underscores the necessity for brands to:
This insight emphasizes that consumers are more selective, prioritizing longevity and quality in their purchases.
Sarah suggests that brands need to communicate empathy and understanding of the consumer's financial constraints without directly asking for purchases.
The hosts debate the balance between acknowledging economic hardships and maintaining brand presence. They caution against negative messaging or politicizing brand communications, which can alienate portions of the audience.
Using Chipotle's 2015 E. Coli outbreak as a cautionary tale, Sarah illustrates the critical impact of brand perception.
Despite the relatively low percentage of affected individuals, Chipotle's brand endured long-term damage due to perceived negligence, highlighting the fragile nature of consumer trust.
The discussion explores how products traditionally seen as non-essentials can be repositioned as "necessities" through strategic marketing.
They propose that brands identify and communicate the deeper emotional or psychological needs their products fulfill, transforming perceptions from luxury to essential.
Key strategies include:
Product Diversification: Developing higher-priced, premium products to cater to higher-income segments. Sarah notes, "Our best selling watch went from 200 bucks to 350 bucks." (18:53)
Consistent Messaging: Repeating core messages to embed brand identity, ensuring that actions align with words to build trust.
Avoiding Price Wars: Co-Host warns against competing solely on price, citing the closure of dollar stores due to inability to match services like Amazon's.
In the final segment, the hosts offer actionable advice:
Target Higher-Income Cohorts: Focus on creating and marketing premium products that justify higher price points.
Consistency is Key: Maintain consistent messaging and actions to reinforce brand reliability and trustworthiness.
Avoid Price Competition: Instead of lowering prices, emphasize unique value propositions and quality to stand out in the market.
Sarah and her co-host wrap up the episode by encouraging listeners to apply psychological insights to their marketing strategies. They emphasize the importance of authenticity, quality, and consistent brand messaging in navigating economic uncertainties.
Sarah Levinger:
Co-Host:
Economic Sensitivity: Brands must recognize and adapt to consumers' tightened budgets by emphasizing quality and investment value in their products.
Strategic Messaging: Effective communication that acknowledges consumer challenges without alienating them is crucial for maintaining brand loyalty.
Perception Management: Building and maintaining a positive brand perception through consistent actions and truthful messaging can safeguard against crises.
Product Positioning: Transforming non-essential products into perceived necessities through strategic marketing can sustain sales during downturns.
Avoid Price Wars: Competing on price can undermine brand value; instead, focus on unique selling propositions and superior quality.
For more insights and actionable strategies on applying psychology to your marketing and branding efforts, follow Sarah Levinger on TikTok and Twitter. Stay tuned to Brain Driven Brands for future episodes that dive deep into neuromarketing secrets of successful brands.
Note: Timestamps correspond to the provided transcript segments for easy reference.