Headed in the Right Direction

Photo by Tim Graf on Unsplash

Knowing your market, consumer and yourself will put you on the long-term path to success.

Founders of small, high-growth CPG companies are often concerned about disconnected strategies, “siloed” departments, limited measurement efforts, and unsupported decision-making. They’re also concerned, or even obsessed, with getting their products into key retailers and into the hands of consumers who might benefit from them. Rarely do they see the connection between these two concerns.

In the mad grab for revenue, market share and growth, many founders neglect an important first step. No, I’m not talking about nailing down mission, vision and objectives. These are important consumer-focused “outputs” that mark any sound strategic plan; but I’m talking about three “inputs” — assessments, really — that ought to serve as your starting point for any strategic planning or thinking.

The three inputs involve knowing your market, knowing your consumer and knowing yourself. Make a deliberate effort to learn these — not by yourself but in collaboration with your whole leadership team — and you’ll find yourself creating a business strategy grounded in a 360-degree reality your whole is in alignment with.

Know your market

You need to know the context in which you do business like you know your own product. How well do you know the competition? Or the industry in which you operate? What are the major relevant trends? What was cutting edge for the last couple of years may become old hat in the next couple. Are you poised to take advantage? You can find answers to these questions in a variety of ways.

Begin by Googling your competition. Look at their store locator to see where they sell and how big they are. Go deeper into websites managed by industry associations like New Hope Network and NOSH that provide tons of free analysis of trends, as well as premium reports such as the incredibly insightful “Next Forecast,” produced annually by New Hope’s Eric Pierce and his team. You don’t have to spend a fortune for trends data, but if you really want to know the space you’re operating in, you should plan to spend some money. You’ll recoup the investment in no time flat.

SPINS, which provides research on trends, product performance at the store level and the shopping experience for natural retailers and brands, offers flexible plans for small companies willing to settle for a snapshot rather than industry deep dive.

Know your consumer

Most entrepreneurs take a stab at demographics by using research or intuition to determine the age, income, marital status and location of their ideal consumer. This is good information, but it’s not great. Great comes from looking under the hood, not only at who your customers are, but also what makes them run and especially why they behave the way they do.

This may sound simple and intuitive, but it usually requires you to get out of your chair and listen to your consumers. Fortunately, this is easy to do. Have your call center ask customers why they bought your product. Better still, be the call center for a few hours, maybe one day a month, and ask them yourself. If you manage an email list, survey your customers about recent purchases.

Really want to know what your customers think? Do what I did several years ago: I put my personal cell phone number in every box of product we shipped to our customers because I wanted to hear from them directly — plus, it created a deeper connection with them.

If you can afford it — again, you’ll make your money back in no time — hire a marketing research firm like Pure Branding that have the wherewithal and expertise to sift through databases of hundreds of thousands of consumers to produce the perfect sample of 1,000 for your product. Such studies may take 6–12 weeks, but you’ll come out of it with the kind of pure gold you need to market, sell, and operate in your zone of genius. Think about it, a prioritized and weighted list of “why” the consumer buys products like yours. This is a game-changer.

Finally, follow Fred Reichheld’s advice and pop the “ultimate question” to your customers in an email: “Would you recommend our company/product to your friends and family?” Depending on their answer, drill down to uncover why they answered “yes” or “no.” By collecting the answer over time on a scale of one to ten, you can also track your progress as you serve your end consumer — totally invaluable!

Know yourself

Above all, know your own strengths and weaknesses — and prioritize them. What are you are good at, prioritized by their contribution to your company’s success? What you are bad at, prioritized by their contribution to your company’s steepest challenges, preferably measured in hard dollar costs to you?

As a first step, I offer as a guideline my mentor Jethren Phillips’ words of wisdom: Price. Quality. Service. Pick two. If you think about the best brands, they’re great at two things. Apple is about quality and service. Southwest Airlines is about quality and price. And so forth.

Be honest with yourself because once you’ve chosen two of these commitments, they serve as a filter for decision making and handling what comes at you. If you’re all about quality and service, for example, and most of the questions you get from your customers are about price, you may be aiming at the wrong market!

Once you prioritize your basic values and commitments, you can apply them to every major decision or pain point you’re likely to encounter.

For example, many natural retailers hold very low inventory of an individual SKU. They order two of something and, when they run out, place another order for two more. Brands lose money with this method but need to keep enough inventory to replenish the stocks or risk losing their shelf space. It’s a decision point to be sure. At my previous company, however, our commitment to service and quality meant we stayed in stock and did free, two-day shipping to boot. This was a cost worth paying to ensure we met the needs of our retailer and end consumer.

In this example, everyone — sales, marketing, operations, finance — bought into the strategy because we identified the pain point together. (More on mastering pain points down the road.)

The Value proposition

Equipped with inputs about your market opportunities, customer and consumer profile, and internal priorities, you’re ready to determine your value proposition. This is the reason why your business exists and what it can do to uniquely deliver value to your consumer. (This is a whole blog in itself!)

Only now, after you’ve learned if your customer and competition are at CVS or Whole Foods and if you are capable of stocking these channels the way they’ll expect you to, are you ready to decide not only how to get into them but also whether you belong there.

Build strategic assessment into your planning early on and you will always know who you are, who your customer is and what marketplace you operate in. Knowing these things will make you an invaluable, one-of-a-kind brand, employer, partner and presence in your industry.

Sincerely,

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All credit to my ghostwriting partner, Dave Moore, who is instrumental in getting my thoughts out in a coherent manner & into these blogs. Thanks Dave!