- Dr. James Richardson
- Founder of Premium Growth Solutions
Sponsors:
Links:
Bio:
Dr. Richardson is the founder of Premium Growth Solutions,
a strategic planning consultancy for early-stage consumer- packaged goods brands. As a professionally trained cultural anthropologist turned business strategist, he has helped more than 75 CPG brands with their strategic planning, including brands owned by Coca-Cola Venturing and Emerging Brands, The Hershey Company, General Mills, Kraft Foods, ConAgra Brands, and Frito-Lay as well as emerging brands such as Once Upon a Farm, Peatos, Ithaca Hummus, Mother Kombucha, Rebel Creamery, zaca recovery, and others.
James is the author of Ramping Your Brand: How to Ride the Killer CPG Growth Curve, the #1 Best-seller in Business Consulting on Amazon. He also hosts his own podcast—Startup Confidential, and his thoughts appear regularly in industry publications such as Foodnavigator.
Transcript:
Charles (00:00):
In this episode of the Business of eCommerce. I talk with Dr. James Richardson about what causes exponential growth. This is a business of eCommerce episode, 157.
Charles (00:20):
Welcome to the business. E-Commerce the show that helps e-commerce retailers start launch and grow the e-commerce business. I’m your host, Charles Palleschi. And I’m here today with Dr. James Richardson. James is the founder of premium growth solutions, a strategic planning consultancy for early stage consumer packaged good brands as a professionally trained cultural anthropologist turned business strategist. He has helped wasn’t 75 CPG brands with the strategic plans. Some of those brands include read them off air Hershey’s general mills, Kraft food. Frito-Lay a list goes on how he’s helped a lot of brands. And he’s super interesting take on growing the business and what to really focus your time and attention on. And I think that’s the big thing here on. If you really want to double down, he kind of talks about here’s the exact segment and here’s how you should find that segment and who should be focusing on. So I think that part’s super helpful on really kind of nailing who to focus on if you want to be able to really scale your business and see that year over year exponential growth. So let’s get into the show and I think he has some great tips. Also, he links to his book at the end that we’ll link in the show notes. So let’s check that out. So, Hey James, how you doing today?
James (01:32):
I’m good. How are you doing Charles?
Charles (01:34):
I’m good. Awesome. To have you on the show to dig into this topic a bit, we’re talking earlier about exponential growth and how there’s some DCC brands that seem to get it and others wish they got it and others never do. And it seems to be this like magic formula people think, but you’ve kind of talked about this a bit. So curious to kinda get your thoughts on that.
James (01:59):
Yeah, so I I do work with a mix Adidas C and retail only brands, but I think what I, what we were just chatting about, I think before we hit record, was that I meet a lot of DTC folks who thanks to the internet itself are well-versed in all the KPIs of D to C business management. And they’re, they’re drowning in data and lifetime value and average order value and all this stuff. They try to measure the health of their business purely within the context of those data points, which are coming in through Shopify essentially. But they’re not necessarily asking at any point, even if they’re doing well, which is actually just as important. And in my view asking why, why are people repeating what behavioral is attracting them to like constant purchase on a monthly basis or weekly basis, if you’re really lucky and you’re able to sell like drinks to people or stuff.
James (03:00):
But I mean, if you’re not asking the question, why are people repeating? It’s going to be very hard Charles to put together any kind of like marketing playbook, whether that marketing is purely online or online and offline that is going to have the right messaging and have the right symbolism to find, to create more of those repeaters out there in the universe. Right? Yeah. In other words, so there’s two basic, there’s two basic approaches to fast growth. And I think D to C you’ve seen it too. I’m sure in your client base is basically they’re sorta raise a bunch of cash and buy a ton of trial through, through newsfeed ads and just, just ramp the trial up through the roof. And if I get repeat well, that’s, that’s okay. But yeah,
Charles (03:50):
That’s the the star, you kind of just juice the numbers and if you’ve got to have people coming to the site, you know, you know, you’re gonna
James (03:58):
There’s, I mean, in Silicon Valley, there’s a whole crowd of investors. That’s the, basically their model. Yeah. Like they don’t actually worry about lifetime value or annual revenue per user. They, they worry about user count, user flow, acceleration of trial, all this stuff, all the front end of the business, the front end of top line. But what’s keeping the top line. What determines of a top line goes exponential is repeat and the quantity of it and how much those repeat people are buying. Because if you can get 10% of your customer base channels to buy you monthly while everyone else is dabbling, the 90% and half of them never come back, but you can get 10% to repeat on a monthly basis. And they’re spending, you know, they’re buying a half a case or case your product. And that’s how they buy online in my world and consumer packaged goods when a case of Spindrift and otherwise I’m not coming to your website.
James (04:49):
I don’t want one, can I want a case of Spindrift. And I want it every bloody month. And those consumers end up creating an enormous amount of annual revenue for that brand. Right. If they can actually pull that off now, Spindrift does it through Amazon, not D to C and that’s smart for logistic reasons, but even if you were doing Adidas, see the question is who are those people and what is it about them so that you can go out into the white space of the population and, and find more people like that by learning the behavior of the people who generate that kind of profitability for you. And what makes it exponential is that you don’t you don’t have to add nearly as many of those people to start to bend your top line up exponentially. And if you can grow that number, like say, you say you have a repeat heavy user rate of like 5% in the beginning, and then you get it up to 10% in a year and then it’s up. And then as you scale that group you can, and scale their frequency as well. You, you actually accelerate your business to scale much, much faster than buying trial. More importantly, you can do it for like far less money.
Charles (06:05):
I say, well, and the thing about that is if you know this, this one type of customer, right, that, you know, you have your customer, your Titus out a hundred percent of them, but you know, this is 5% and they’re the 5% they’re going to repeat. You could spend astronomically more to market on just that 5%, because you know that first sale, you can, you could lose on that, who cares, but you’re gonna make it up and sell.
James (06:28):
Well, that’s a great, that’s a great point that you raised. Cause I often we’re, I often, I don’t work with a lot of startups myself. But when I do, I dialogue with them online on LinkedIn live and other four, where I show up and I, and they often ask me about, you know, should I spend, we’re talking to brands that are, sound like 200 grand trailing, right. Should I spend on Instagram ads? And you know, and if they’re in retail, I basically say now in most cases, because they’re not in a category in my industry, the category is so important because it depends how frequently it’s consumed and bought. So like people drink bottled water. People who have bottled water in their home, drink it at a base level of frequency. And then the heavy users will drink it like three bottles a day.
Charles (07:13):
This week’s episode is sponsored by Prisync. Prisync is a competitor price tracking and repricing tool that helps e-commerce companies make intelligent pricing decisions. Using the dashboard and daily Excel reports Online sellers can monitor price changes and immediately make pricing adjustments. Here’s some features that I love about Prisync. First is smart match. What smart match does is allows Prisync to search for our competitors and attach their prices right on your dashboard. So you can monitor their pricing changes against competitors. You already know about, they find competitors. You didn’t even know existed. Once you have that, you can configure your repricing rules. What this does is you can now set your prices to be based on the average price, the lowest price, the highest price of your competitors go up and down. And also you can say, don’t go lower than my cost by plus $5. Whatever you want to do, you can set these rules and pricing will automatically adjust your prices. Next is price change notifications. You can set rules to when prices change pricing will send you a notification alerting you of your competitors. Prisync changes last, but not least is a price history. You can then go in to the dashboard and look up all the pricing changes over time, the price, and because of monitoring that way, you know, just because it’s slower today, they might just be having a sale and it might come back tomorrow. You can see all your competitors on one charge. Super cool. I urge you to check it out. Thanks again for Prisync, for sponsoring this week’s episode. Now back to the show.
James (08:54):
What would be an example, a category when you say
Charles (08:56):
Like just a, the retail of soda in that sub category,
James (08:59):
You shop at grocery store. So like soda versus packaged rice or potatoes. So it’s how you shop at grocery store basically. And, and the problem is that in food and beverage and CBG, the, the rates of consumption, they there’s an enormous continuum. In how fast you empty a container, how many containers you buy on a shopping trip, whether it’s online or offline. So I meet a lot of people who are like, I don’t know, they’re selling like gluten-free cookie mix, right? That stuff doesn’t move, right? The heavy users actually don’t even buy it that much. No, seriously. If you study them, it had just a snail category. And so it’s a really bad, bad category to invest in paid advertising of any kind, especially online, because, you know, you could do the wat. If you do the advertising thing, like $8 for an Instagram click, you basically have to spend two to $300 to get a repeat user, but they’re not buying, they’re not buying enough every year, Charles of the gluten-free brownie mix to make your money back. And just, but when you sell a case of Spindrift, it literally only takes you about three months to make all your money back
Charles (10:06):
Those guys though, because when you start thinking about that, maybe there is some, okay, there’s a tiny little number of gluten-free muffin shops, right. That they’re going to just, they need to buy the stuff every week. And if you identify that one avatar on like, you know, we don’t sell to, gluten-free like regular people, we sell just a gluten-free bakeries and maybe right. They’re gonna, they might have to buy multiple cases per week. Like I was even that’s the way.
James (10:31):
And that’s the way you think yourself out of those traps. Right. Cause so, so something like something like an ingredient category often, like the end consumer is actually not the wisest target audience. Right. You just, yeah. It’s actually a business is probably a better target
Charles (10:47):
A business, or even like a one example when you were just talking, I was just kind of throwing some notes out on when, when would this it work, right? Like when is this not a good idea? And it’s kind of, I like to frame it in both ways, right. Because they’re thinking, well, okay, let’s say I’m a bed retailer, right? Like I bought one bed like 15 years ago, I just bought another one. But then I start thinking, well, if I had, you know I know some folks that have multiple Airbnbs, right. To have several of them, and they’re constantly, they have, you know, three bedroom houses and they have multiple three bed houses and the beds in a year get destroyed. So they’re just, they just turned their beds. I’m thinking if you just targeted, you know? So you could spend for that click tons of money on just after being beat lawyers. Right. And you sell your bed is an Airbnb bed. Yup. They advertise.
James (11:31):
So the, I work in a industry with very low unit pricing. So every sale, the average sale is about two 50.
Charles (11:40):
Okay. This is all packaged goods.
James (11:43):
Yeah. I mean, it’s like, it’s it basically it’s worthless. So it’s, it’s super dependent on volumes sales before anyone starts taking money. And so that’s a very strange, it has a very high standard for ad return. But what’s interesting is you can actually, if you sell soft drinks or like beer, even as a startup, you can actually develop a really nice return, even if you’re only in retail, because at that $8 click, all you have to, if you can create 10%, have a user with a fantastic product that people really like, you know, you spend, you might spend three to $400 to get every heavy user, but they’re buying like a case a month. So you’re going to make it all back during one year. And if you can keep them for two years or three years in your brand, now you’re making money and along and along the way you bring some dabblers and triers and they pay the cost of the ad.
James (12:30):
But when you’re, when you’re in something that’s bought very infrequently and not in large volume, that’s when people get in trouble. But yeah, like if you have a super high ticket, durable goods, like a mattress, the frequency of the purchase doesn’t matter because you’re going to get that advertising return. But I was thinking like I have a, I have a friend who sells a really great tasting, mixed nut, but he just, people don’t buy jars of mixed nuts that often they just don’t anymore. They did in the eighties, people used to plow through, it’s just not an on-trend category. And so he can’t do anything about that cultural background. And so he would never get the return because his average person’s probably buying three, four jars a year.
Charles (13:14):
So what would you say that, what would you say to those folks? Would you be, Hey, let’s like, let’s find the, you know, mixed, not connoisseurs or like, what would you recommend to that person if they’re, if they’re already in that category so fine. Maybe they shouldn’t get into that category today, but if they’re already there and they have an established brand, how could they start really like hammer down on that target market?
James (13:37):
I think that, you know, they’re they may have some constraint, playbook options and paid advertising. It’s not going to be one of them. So they’re going to have to leverage cheaper digital techniques to get word of mouth. And for companies that don’t have the ability to, they don’t have a category that’s amenable to a lot of, out of store acceleration, which is soft drinks and beer and liquor and snacks and like nutrition, bars, and lights, and like that lifestyle and athletic kind of products. Then they’re going to have to be more patient and stay in one city and build the business up there before they go crazy. And that’s, I see people get in my industry. They, they get frustrated because they realize, Oh yeah, I’m the mix nut die. And I don’t have a lot of, I don’t have the options of a Spindrift.
James (14:21):
I don’t have the book options. And I know that because I’ve studied up on this, but then they go and do crazy stuff like fire themselves out nationally to try to ramp up stores and distribution. When in reality, they would probably be better off going to a third-party site like Amazon, which has the most Bibles and consumer packaged goods in the world. And just working in advertising algorithm where you can actually get a meaningful return because you’ll find it’s easier on Amazon, for example, to find the mix nut who like wants to buy a gallon of cool mix knots, trying to find them at your average grocery store, it’s going to be beyond a needle in a haystack, but they’re on Amazon.
Charles (15:03):
I think, I think that’s what gets people like sucked in, right? Cause you go to conferences, your blog posts, you hear all the success stories and you hear, you know, higher up my business from, you know, zero to 100 million a year using paid ads. And they showed us it’s a company and they have like hit it out of the pocket and you’re like, cool, I should do that. And then you have someone else, like how I’ve gone from Sarah to a hundred million using content marketing. They’re like, cool, I should do that. And you basically getting whiplash with all these different techniques, because you’re lucky to know they did it using content marketing paid you know, PPC, social, and you kind of look at all these different things. You’re like, cool. We should do a little, all of that. And you always kind of see, okay, the companies that do real well are the ones who find that like fit on your, the, you know, the nut retailer and which of these channels makes the most sense. Just ignore everything else initially. And just go and go and just hammer down on a channel.
James (15:55):
I do think since most people are having a mediocre time. And if you look at the average startup as trying to grow in any industry, it’s really important to ask this, to go out there as you’re struggling and have the maturity and the objectivity go and inquire why with people who are either rejecting you and the nice thing, if you’re D to C, you can actually find the rejectors, right? Cause they bought and then they never bought again. And you have their email address. You can actually go out and learn what was it that caused you to stop buying? And then you can compare that with your repeat purchases and see, Oh, I see the contrast between these two groups. And now I know more about this other group, my repeaters they’re the high value people. I know maybe know a little bit more about them psychologically or sociologically, which is sort of my background.
James (16:40):
And now I have some variables that can go out into Facebook, Cape Pam Bay, campaign manager, or you know, which is the most, which is the cheapest tool to use in absolute terms and go find and use the targeting variable with, you know, wizardry of Facebook ad manager, which is amazing. I mean the level of nuance that you can target is crazy, but you have to know what to look for, right? And if you don’t study the people who are making you the most money today, you’re not going to efficiently scale your business really well. So like I have a client who’s selling Swedish difficult dishcloths and, and she struggled in retail initially. These are these beautiful sort of bamboo woven. They’re totally compostable, by the way, you can just, they just biodegrade like 30 days. So it’s not like the nylon dish cloth to get at target, which is the last forever in the landfill.
James (17:31):
It only costs a buck 50 it’s cost a fortune, but they’re there and she’s a designer, she’s an artist. So she puts see, put draws designs and they get printed on them. So you end up having this piece of art in your kitchen saying not just some ugly rack. So it’s a very interesting, she’s found a space where no art in the American kitchen and she’s like cutting boards dishcloths. And so she’s putting design on them and she’s just created this Facebook, Instagram flywheel. And I took her like two years to figure it out and to figure out through some research light research, you know, how, who these, who these women were that were interested in having design in these bizarre objects that no one else cares about, but man, do they buy a lot of stuff from her? I mean, what we’re talking orders like $150 in order $200 in order.
James (18:21):
So the order value these people and they’re buying like five, six times a year and the real geeks are buying. They’re buying like a thousand dollars a year in gifts for other people. She’s got these super valuable people. And she found out as you start to experiment with social media, Charles, that, Oh, they, they love the artistic component, but they really, the reason they kept camping back to her site was because they kept seeing her do videos and Facebook live and all this, they let her, they wanted to interact with her. They basically wanted to have her over for tea. And then they just throwing money at her. And then I’m like, I was like, yes, you have figured this out because the biggest asset you have is I was an unknown brand. I mean, you don’t target, right. You don’t have this mega retail brand behind you, but you ha you have the ability to create a relationship with people then, you know, no big company is ever going to waste their time doing that.
Charles (19:16):
Well, and it’s funny because targets does that just on a much smaller level, right? You see the, about the steward brand that they have collections and they find someone that’s already popular.
James (19:25):
So our goal is we want to get, I want to get her into target, but she’s got to ramp this thing up so that it seems valuable to them. Right. But she’s, she’s well on her way. I mean, she’s got a national base of people and it’s growing exponentially, but it’s growing, it’s growing exponentially off a small base. And that’s why we want to talk to your listeners about, because I think when we read the zero to a hundred million in a year and a half, which still happens, I mean, it really does. It’s just, it’s not as common as you’d think. But it does, it happens enough that people think it’s some kind of model. If you slow the pace of, to scale down Charles, a little bit, you, Y you arrive at exponential growth and it, it, basically anybody listening can pull up Excel and see how it works, right?
James (20:02):
If you could get to half a million in maybe a couple years just struggling and it’ll be slow, you know, but then double every year after that, you can see, you can see the, what, what I call in my book, ramping your brand. What I call the skate ramp, which is this quarter pipe skate ramp sort of figure. It’s basically the S and business school. It’s the front half of the Esker. And what happens on the S-curve is you’re scaling you’re doubling every year, but the, the top-line doesn’t look like it’s moving. It’s like the beginning of the skate park ramp. You’re not really going up very fast. But then you get halfway up the ramp and suddenly the thing is going practically vertical, right? And that’s exactly what happens when you can double a business off of a heavy user, increasing the heavy user base at a steady clip. And if you can keep doing that every year, you are going to create this exponential curve. Cause they’re, they’re 10 times more valuable financially than some due to just randomly buys one off your site.
Charles (21:02):
Yeah. Cause doubling every year, right. Is 6% a month. When you start thinking, well, you stopped breaking out in terms of monthly it’s 6% month over month growth. And when you think of 60% of what you did last month, you’re like, ah, I got that. Like, that’s achievable. You’re not going to have like, you know, logistics issues. Like you can, everyone can ramp up six from what they did 30 days ago. And then that
James (21:22):
It’s easier said than done. I can say that this client I’m finding, she struggled in finding the ad content, everything else for about a year and almost gave up. And I just told her to keep pushing because it’s like, there’s an experimental component to, and she finally found how to communicate with this niche. And now she’s doubling down on it. And it’s like a machine. And her return on ad spend is phenomenal. You were talking to somebody who raised almost no money. You’re running it out of her house. She’s got a return on ad spend that would make a lot of people listening here. Jealous. How do you find those?
Charles (21:53):
Do you find those users though? That’s the thing? Cause let’s say you have two checkouts, one by one’s from Fred one from Joe. And how do you know that? Like what do you look at? And you just have Joe gmail.com and fred@gmail.com. And what do you like? How you looking and saying, Oh, you worth 10 times with Fred is like, how do you know that going
James (22:11):
The way I talk to people who have the luxury of this data is that you want to, you don’t want to just study the basic trial, repeat, split that a lot of DTC people know already know about. You need to look at the extended repeat patterns. So you need to look at the smaller group within your repeat group that are buying on a S on a, what we would call a cyclical or habitual basis. And some of it could be a mix of, of embedded, habitual purchasing has to do with their daily life in combination with seasonal buying, which is what this, my dish cloth client has. Right? Because she’s got a huge Q4 business, obviously, but she’s getting all, she’s getting so much of it from her or geeks who were buying all year long. Anyway. It’s like, she just gets a huge search from them.
James (22:55):
At the end, those patterns are something that you have to be able to look at the data at a monthly level and break it out and decompose it over 12 months, or look at two years of your data and see where these folks are. Then if you can isolate them, what I tell people is you fire out, you fire out a somewhat cleverly written survey, but even better than a survey, which is dangerous because you tend to ask founders that I work with, tend to ask loaded questions and stuff like that in reality, be better to actually get them on the telephone. And the thing is, people never even think about this. They never think about why don’t I just call like some of my top customers or it send them an email and say, can we have a chat? I mean, I guarantee you, 75% of them will say yes, if they’ve spent like a thousand dollars last year with you, they would absolutely kill to talk to the owner.
James (23:44):
I mean, think it it’s like common sense. So you’re waiting for these people are probably dying to tell you all sorts of stuff. If you could just get them on the phone, it’s like a 20th century idea. I know. So do a video call if it has to be 21st century, but it’s just like talk to them and listen, listen to how they talk about how they use your products, how they think about them. That’s where the gold comes from in terms of messaging to optimize your LinkedIn ads, your Facebook ads is, you know, what are the, what are the key attributes of my product or service that I need to highlight? Oh, it wasn’t what I thought. You know, I started this company for X, Y, and Z, but my repeat fans who are spending tons of money every year telling me, no, I don’t care that your dishcloths are sustainable. What I care is that blank. I have something pretty to look at my sink. It’s like, it’s often much more banal and not as interesting as the founder’s motive for starting the cup. It’s often a lot less sexy people. That’s what I’ve always found.
Charles (24:39):
Well, you see all the time and scripts and business, for example, there’s a top-line number of churn, right? Everyone kind of talks about what’s the churn versus industry average. And when you really break it down, it’s almost a useless number, right? Because there’s th there’s these folks signing up that they’re going to be that one time, they’re gonna stick around for a very short time and they’re going to turn out. But then there’s, what is the actual turn number of that target that you can just like, you know, once they sign up, they’re going to be lifetime users, right? Like, yeah.
James (25:06):
Whatever. When I think of Adidas, see businesses, and then the ones I worked in last couple of years, the, the metrics that, the numbers that concern me are not standard. Things discussed on the internet. When I go to like how to run a DDC business, I get concerned when churn is like more than 90%. Yeah. That’s a yes. Right? I get concerned when your repeat customers all churn out after 12 months. Yep. And it’s a product that they should be loyal to. There’s no reason they shouldn’t be. Because if you’re, if you’re spending all this ad money, trying to bring people into a brand franchise, you need to keep them around for at least two to three years at some level of repeat purchasing, or you’re not, you’re not creating layers to your foundation, your business, and you know, which is part of growing up this exponential growth curve, right.
James (25:55):
You’ve got to keep them at least for two to three years, they’ll eventually get bored of you. I mean, that’s sort of, that’s the world we live in and consumer in a postmodern consumer society. But if you can’t keep them for, that’s why I’ve had a couple of clients where they’re like hire, they try, they hire me like six months into their overfunded DDC. And I’m like, I’m like, guys, things look really good now, but you haven’t even been around long enough to look at one of the key KPIs is where are all these people in another seven months dies because you can act the problem. The problem will return. If you have enough money, if you have enough money on Instagram and you can, and you have good advertising copy, you actually could create a problem, which is you can create a fad. You can really create an online fad that will grow really fast. It might even get rid of written up by Inc magazine as some amazing unicorn. And then 18 months later, it starts collapsing.
Charles (26:48):
Yeah. Cause you don’t have to have sustainable purchase. Right. You didn’t know.
James (26:51):
I need enough to realize, Hmm. I just spot a whole bunch of trial. I didn’t really target my advertising at the people who were going to live with this brand and find more of those people. I just use like shock advertising or attention, getting advertising to get a whole bunch of orders in my system. Right. I can’t name names, but there’s more than one of these.
Charles (27:14):
I’ve talked about a bunch of those show where everyone kind of tells you going into it. Like you gotta sit down and create this like customer avatar and you gotta have different and you gotta really understand them. And that’s like the step that everyone goes. Yeah, definitely. And they just skip right over it and they keep going. Let’s not run some Facebook ads.
James (27:29):
And I think the pro I mean, I talk, I’m an anthropologist. So I, I grown because I don’t avatar is just, that’s the video game version of saying some good grass, graphic or personality is the popular, that’s the time magazine word. Right. And Americans were biased towards thinking about behavior psychologically. That’s a cultural issue that has nothing to do with reality. We are, psychologists are in the media all the time. They’re the professors of psychology are much better network. They write a thousand more books than my colleagues too. We have my colleagues get Malcolm Gladwell to go to the New York library and read our stuff and then write about, so the social science perspective on this is that you, you are you’re actually able to accelerate really fast, including with paid advertising. If you can find out not only who your repeat customers are and why, but if you can find out which highly socially networked subgroups subpopulations in the United States, and those are usually related to occupation or some kind of recreational activity, those two things.
James (28:35):
And I talk some of my book ramping your brand. If you can figure out if you’ve got like some weird skew, like, do you have like an abnormal number of surfers or whatever it is. And then double down on that group in the early years, you can get wild acceleration because in a tightly network community of people who love because of the sacrifices they make to be part of that community, right? Whether it’s a job or whether it’s a recreational thing, I used to be a mountain biker, for example. So, you know, they will constantly share information within that highly networked group. In fact, they, they have to share information to sustain credibility in the group, but you can’t just work. So, so sharing, Oh, I found this and dah, dah dah, and this tool, and not at if you can have a relevant product in insert into one of those highly networked groups, the word of mouth just blows up like crazy. This is how cliff bar built itself to a hundred million dollar business in like seven or eight years in the nineties. I mean, it’s a long gone case study that we’ve all forgotten about it, but it was all done through the mountain bike community in the West coast. And it was mostly word of mouth. And by any marketing now it helps when you’re a founder is a radical, like long haul mountain biking, super geek probably knew it. He probably had a thousand mountain biking friends that he could see this
Charles (29:54):
Was it. He has an audience already. He goes to those events. He’s just in that world. Right. But you’re saying if you’re, if you’re not right, like you let’s say you start off day one and you haven’t really like, nailed us. Just start getting some orders, like get some volume coming in at some point, then start seeing, okay, out of these orders, who are the folks that actually buy it more than once. So who was just like my top 10, top five, just keep going to that top percent and then just start researching them and get your data points.
James (30:21):
The conversations with your top customers who, you know, at why do you use it? And it, that basic question is sort of counterintuitive to most entrepreneurs. They know why they founded the company. And it seems like a stupid question. Why would I ask them why they’re, but you have to be that objective. You have to step back. And the presume you’d have no clue why they’re buying it because that’s when you might learn something interesting. Like, well, I take this on my mountain biking trips every weekend and you didn’t even see that coming. And now you have a clue that, Oh, wow, there’s maybe a community where I could use these three customers who are mountain bikers to go invade that community. Right. And in the early years, shipping like a free case to someone who’s a, who’s actually an influencer inside a social tightly organized social network. Like that is that a thousand times more valuable than advertising some generic audience, even on Facebook.
Charles (31:16):
But the first key is you gotta target that audit. You gotta, you gotta find what that audience, and then find that influencer in that niche. Yeah.
James (31:23):
You know what it takes Charles? It takes time. Yeah. That’s all, it takes nothing. I described as cost any money really. But people are often so busy operating and they lose to an operational reality. They don’t feel like they have the time to do some basic stuff. But like, I even have a course on my website. It’ll teach you how to do this research in like six hours. It’s not, it’s not super complicated stuff. It actually doesn’t take a lot of time. It just feels overwhelming. If it’s not something you’re used to doing, but I really tell people that you want to do it because that’s how you can, you can accelerate your passage through the doldrums, which most people go through in the early years where they’re like, they’re not getting the acceleration. They need the ads aren’t quite working. They haven’t figured it out.
James (32:05):
And the secret is going to lie with your highly profitable repeat buyers, but you gotta be able to get into their lifestyle and understand it’s not their psychology that matters. It’s how they live their life and how they use who they, who they hang out with and how they promote and use your product and everyday life. And that’s the secret therein lies the secret of, of finding more of them. But what I’ve found is that a lot of people, fans, especially love to talk about, they love to talk with the brand because they’re so committed. I like, so this is like the easiest group to research. I
Charles (32:40):
Used to people think it’s scary. People think they’re like, not gonna answer the phone. If you just, if you, if you get an order and I’ve seen people do this and it works like 90% of the time, 98% of the time, you just get an order and it’s a high value order. Repeat customer, you just call. And you’re like, Hey, you know, Mary, I just want to, I saw this order. It’s a third order. I just want to double-check, you know, we got everything in the pack that just the way you want, if you order these three skews, you’re like, great. And you’re like, by the way, what do you, what are you doing with this stuff? Just like people just start talking and you could be on the phone for as long as you want.
James (33:09):
Now there’s a you. And I know that there’s a subsegment of people who, whose barrier to doing that. Charles is there actually could be honest, too arrogant. That’d be, I mean, I’ve met these guys. You’ve met them too. I call them the, I call them the DDC bros. It’s just like, come on. Like, yeah. They think if I talk to the consumer, then I come off as some stupid little artists in titling the company. And I want to be this big brand from day one. And it’s just like, man, you have to earn the right to be that you can’t just start there.
Charles (33:49):
Obviously say, Hey, I’m the founder and this is the janitor. You don’t even need to say who you are. It’s just, Hey, sorry. You ordered from X, Y, Z site. I’m just checking in. And like, most people are going to be like, what’s your position there? You know? No, one’s going to ask that question back at you. They’re just going to say, Oh, I, I appreciate like, cause not many times you submit it, our Amazon and somebody calls you back and they’re like, did you mean to order this? And they’re like, Oh wow. My phone’s just, no, one’s going to actually really be upset if someone calls, I’m just going to say, Oh, thanks for calling. Okay. Yes, I did order that. Thank you. And worst thing I say is I’m going to hurry and yes, that, that’s my confirm. Thanks. Bye. So worst case, just going to get someone going yes. And go on with their life, best case, you’re going to get a nice conversation out of us.
James (34:27):
Yeah. And you might, you’re going to get some nuggets about, Hmm. This is why my fans are spending this kind of money and I need to find more people like this. And so my sociological advice is which is also in the book. And I have some other examples in the book, too, lifestyle groups, recreational groups, and occupational groups, and the occupational one tends to slip past people because my wife used to be a bedside nurse. And that’s one of the most jacked in tightly organized groups. I mean, there’s a lot of tension in a nursing, in a nursing ward, but there it’s like the military. Yeah. I mean, I mean with COVID-19, it’s absolutely like the military. I mean, it’s like the war. So these there, for all the problems that had exist on a nursing ward between the nurses, the reality is they, they are a tightly knit group. They have a tightly-knit profession and they net we are highly networked, highly, highly networked. And if you want an example of a career, that’s not, that would be accounting.
James (35:27):
So have you ever been in a soft DA’s office? They all sit in their closed door, has never talked to each other cause they’re pathological introverts. And, and their job actually doesn’t require them to be co-present. They don’t actually do anything together. I mean, why does an accountant need another accountant in his office other than to be yelled at? Not much. So, I mean, the job is basically solitary, but if you, if you look at a certain subset of careers, like sales professionals, pharmaceutical sales reps, also hyper networked group, they have massive national conferences. I actually advised a client who had a hangover remedy that they needed to, they needed to invade one of these national sales conferences and do field marketing there because they would, they could create 10,000 customers in like one weekend. Yeah.
Charles (36:18):
I was talking to a founder the other day and Kate mentioned the business, but they were talking about how they grow and it’s all based on affiliates. And someone else on the call was kind of saying, you know, used F like basically talking about like what affiliates work in their business. And it’s just this certain types that the consumer, the affiliate is also the consumer. And it’s just like, why? Well, there’s other ones that, that not, like you said, accountants, like, if you say, I’m gonna give my accountant a coupon affiliate code and they’re like, well, what are you gonna do with this other ones? I don’t talk to anyone, but there’s other ones where the person with the affiliate code talks to more talks directly to more customers that will become more affiliates. That would also be buyers. And it just goes on this crazy flywheel. And if you could find that it’s numbers,
James (37:04):
My industry base, there’s a lot of these trade shows where they go and they’re there really to meet retail buyers. And they, you know, they buy an expensive booze and they try to meet retail buyers and hand out samples and stuff like that. But I’ve always laughed because I I’ve noticed obliquely as a social scientist, walking around. Those shows that there’s an enormous amount of sampling to high value consumers going on because it’s like, it could even be me. Like, I’m just, I’m not up retailers, but I’m walking by taking samples and I might become a customer and I have money. I probably thought through, I’m going to think, wonder if there’s 10,000 boosts in front of me, I’m going to think through which one I bother to have a sample from. Right. So I have plaintiffs. So those tree shows they’re actually accumulating new customers.
James (37:45):
They don’t even realize it. Yeah. And that’s why I was, I think I blogged once. Like, don’t be a jerk at your trade show booth because the guy talking to wants to talk to you as an a buyer. I mean, that is the dumbest. This could be someone who could hand you a hundred customers if you’re just nice, but there’s all these oblique moments. Like for instance, the big natural trade shows. I mean, one of the things they bring together is geeks who are into natural organic foods. So like it re single person there. It doesn’t matter whether they’re an ad agency or whatever. Everybody there is into that category. And they’re potentially high value convert to your brand. So you should look at everybody. There is a consumer, not just,
Charles (38:27):
Well, and you look at now, there’s influences that have larger. They have larger reach than some, some buyers. So the buyers get you the orders tomorrow, but the influence creating you. If they like it, they can just take in hammer down on it and really show it. They have a way larger audience and a buyer ever. Well, which is amazing. So you, and you don’t know who that, you know, find they don’t work for, you know, XYZ brand, but they have an Instagram with millions of followers.
James (38:51):
I think there’s also, I, I have a friend who’s running a business where they crap, he crowd sources, the fans to go harass the buyers. So basically it creates this gentle neutral portal where the place where fans can say, I want to see, I want to see this new brand at Wegmans or something. And suddenly the Wegmans buyers getting contacted, but in a friendly sort of third-party mediated manner. And I do that because I think influencing the buyer obliquely is a huge thing when you’re selling in retail. Cause they’re avalanche, they’re like book editors. I mean, they’re like book publishers, they’re, they’re avalanched with manuscripts. So you’re going to find some way to through
Charles (39:36):
Well, and you as a, you as a brand, right, you’re going to have, you can only hit them so many times, but if you could have a thousand people, each hit them, you know, that’s a force multiplier, right? So now all of a sudden it’s taking you all one brand
James (39:48):
Like a retailer buyer, physical retailer, they, they, they don’t lose anything by being miffed and aloof and quite frankly, condescending to a startup who’s, who’s pestering them. Right. They lose nuts cause you’re replaceable to them, but they can’t be that way to a 500 of their shoppers will look at Fox. So the shopper has this huge, like I’m a loyal Wegmans person, don’t you? You better listen to me. I mean, they did the good retailers do
Charles (40:19):
Well. If you’re a brand, you can’t go on social media and say, ah, they ignored me and they beat me off, put a random consumer can and they like, and then you have the consumer army kind of ganging up. So yeah, using them as kind of the, the lever, the backdoor to kind of leverage on though, that’s a clever one, right on, you know, you the best yet. You can’t do that
James (40:37):
Efficient way to do that. I are used through social networks. So if you think like a big city like San Diego, which has a lot of surfers, if you could, if you can leverage the surfing community to go like annoy the guys at Ralphs who controlled the San Diego stores for a, I mean they’ll probably react. Yeah. That’s a good one. No, I like that. That’s that’s good.
Charles (41:01):
Cool. I think this was super interesting. I yeah, I think the feed notes there, that’s that’s super helpful. I want to of probably a good place to leave it. If folks have I saw the book, we get that in the back half people watch it on video. What’s some stuff about the book or what can people find you?
James (41:17):
So the books on Amazon right now and I put it on sale when this airs, so it should be nine 99 paperback on amazon.com. It’s called ramping. Your brand would love for folks to check it out, pass it around.
Charles (41:34):
Awesome. I’ll link to that. And Amazon, and you’ll put a link to your social profile and yeah. People want to find you. I’ll definitely recommend that. Okay. Thanks. Sure. Awesome. Thanks a bunch.
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