If you think about the way that DTC brands have evolved, it's fascinating. Back in the day, local neighborhood shops would keep communities stocked with all the essentials. Those were the equivalent to the marketplaces online today, but there were also different stores that would only sell their products. Then came a wave of mass retail conglomerates (Walmart, Kroger, Costco, etc.) and they eliminated the need for the smaller stores. Very similar to what Amazon did digitally for a lot of DTC brands — why shop at 8 stores when you can just go to one place and scoop everything up at once? Those were technically also "DTC" brands, just without the serif fonts and pastel colors.
Then with digital marketing becoming an opportunity to gain market share and distribution at a low cost, entrepreneurs realized they could put a good product at the center, and build a simple process: find a good product, run ads, grow revenue.
The flywheel around these businesses still included brand building, customer experience, supply chain/operations, fulfillment, talent, capital, but at the center was always the product. It was okay though because there were two factors working in their favor: the cost of getting distribution (aka running ads) was cheap, and there wasn't much competition, so if the product was good, that was good enough to encourage customer loyalty.
When the barrier to entry became (obviously) lower, the ability to launch and scale brands centered around a single product diminished. You can remember what happened with meal prep companies — when you have no real value propositions, and no real WHY as to why a customer should stay loyal to you, it eventually becomes a race to the bottom with price. When you can get the same product, possibly even coming from the same contract manufacturer, how do you differentiate from the others?
From everything I've worked on, seen, and heard by talking with peers in this space, it comes down to one thing: building a brand that people care about.
In a few conversations, some founders have even bluntly said, "Well, our business is very different than 2 years ago. We can't just arbitrage our ad spend anymore, I think we actually have to build a business and a really strong brand. There's too much competition to just rely on ads." Competition not only leads to higher acquisition costs, trying to win the same customer but also makes it important for people to remember WHY they choose you and what it is about your brand that makes people want to come back.
The last decade of DTC has relied SO heavy on software and apps, so many new companies forgot they need to build the brand piece, which you can't necessarily do with software or just by hiring an agency or a consultant. Yes, you can add QR codes or send Postscript reminders with coupons, but technology is just the equivalent of leading the horse to the water. The horse still needs to want to drink it!
Today, there are two things that move into the center of that flywheel, that were on the outside ring, in the years prior: brand and the customer experience. Think about Peloton's home bike versus the Nordic Track at-home bike... which one would you grab if both were free? That's brand.
Even when looking at companies to invest in today, if the deck is around the product, the team, and the projections of customer acquisition cost and lifetime value, it doesn't intrigue me. I want to know about how they plan to build the brand and eventually get to a point where paid customer acquisition is just one of 17 functions to bring new customers into the brand. There needs to be a very descriptive understanding of who the customer is, what apps do they consume, where do they get their news, how do they find out about new products, what do they retweet or post on their IG stories, etc. Without descriptive and detail-oriented data points like that, you can't even acquire customers on paid media channels without breaking the bank or relying on their 4th purchase, which isn't sustainable for many early businesses.
I put together what I think is the start of a modern-day ingredient list for brands, and shoot me a reply with what you think is missing because there's always more to add. I'll take everyone's suggestion and make a post to share out of it.
- A reason to exist and the problem you're solving. Against 9 companies selling the same product what brings people back to you? Is it the community around your product? Is it the sense of belonging you gravitated toward from the content created by the brand?
- A story to relate to — the "why". Why should someone buy your product over the competitor? Do you have a special ingredient? Do you send your profits elsewhere to better the world? What do you do that makes you stand apart, not necessarily on the shelf, but as a company?
- An amazing product, not a good product. Good products don't win today. Good products to great products are equivalent to comparing 1-week shipping to 2-day shipping.
- A content engine. To cover your bases on owned, paid, and earned media, you need to be able to pump out new content, create moments that earned media can talk about, and also iterate and refine your messaging.
- A deep understanding of your customer. Like I mentioned earlier, you should know much more than your customers’ ASL (get it? lol). You should know what their friends are like, what they consume, what they do on weekends, etc. You can't create good content if you don't know how they'll consume it.
- A unique messaging and visual identity. You have to stand apart. Liquid Death is my current favorite example of this in the beverage space, being so far away from normal bottles of water. The water isn't comparable to Essentia, but if the option is there, I'll always take Liquid Death over Essentia because of their branding and the feeling you get holding their tallboy cans.
- Consistency across consumer touchpoints. There are so many channels you're running on — email, SMS, website, ads, press, influencer shoutouts, in-the-box note cards, etc — you need to stay consistent with your messaging and creative. Cuyana, a women's fashion brand, does an exquisite job of staying consistent not only with their messaging but also in details like ensuring their shadows are the same. You could compare their 2021 creative to their 2019 creative, and you'd think they were shot on the same day.
- The desire to do right by the customer. This one is displayed less, upfront, but is realized over time. When you just care about margins and bottom line, over the customer experience, it becomes known through customer interactions and the way that you build the brand.
- A clear purpose within someone's day or life. If you don't provide value, it's hard to be talked about, or remembered to consume. It's like that person that lingers around your friend group but brings no jokes or interesting conversation. You're never excited to invite them back.
All that said, there's a lot of ways to interpret building BRAND, depending on what you sell, or how you bring value to your customer base, or potential customers. These are some simple ideas I like to exercise, but also reply with ones you think are good, and I'll put them together and share them all with you.
- Use landing pages with details. Don't just send people to your product page, where your entire goal is to just get the sale. Lead with education. Think about going to the Apple Store, you're never sold right away. The Apple employees will educate you on the products, and it becomes your idea to make the purchase and try it. As you find things that work on the landing pages, move those modules over to your product page.
- Lead with stories and emotion, not value props. When we changed the messaging at Hint water from "Sugar-free flavored water" to "This water has gotten thousands of people off diet soda", all our numbers went up: the number of flavors people were willing to try, the click-through rate, the shares, etc. An easy framework to think of these is: how can someone explain to their friend why they have the product? In this case, it's "It got me off diet soda". Use that to lead.
- Use creators to tell your brand story. Creators are powerful and the reason they have a following is that they're good at what they do. Leverage them to create content for you. In addition to it being a more cost-effective way to produce content, your potential customers get the perception that this brand is in more places than they thought and they might be the last to hop on.
- Create content around the persona, not the product. Your social channels, email list, and blog have to be centered around your products or brand. In parallel, create a newsletter that lives around your persona, not the product. For example, if you're a wellness product, use the newsletter to deliver more value to this person. Include recipes, workouts, other brands they might love, upcoming events, etc.
- Host IRL events. Do you know what increases customer LTV? Participation. Whether they're as simple as running clubs, or as complex as dinners and parties, invite your customers to participate. It sets you apart from the brand next to it on the shelf. Digitally, you can host activations as simple as surveys to see what your customers like, don't like, and understand why. The more they participate, the more "in" the brand they are.
- Make organic shares your KPI for owned content. Whether it's your newsletter, Instagram posts, or a blog post, if you optimize the content for organic shares, you'll get 3 extra sets of eyes for every 1 that you bring. It's valuable and creates quick brand awareness. The "catch" here is that it can lead to poor or off-brand content, so balance it.
Please reply with anything you'd add to either list. I think this could be a valuable post for everyone, including me!