So, what am I worth to a direct-to-consumer, cereal company?
Better-for-you, keto cereal meets customer acquisition
I recently had an interesting interaction with Magic Spoon, one of the most creative, direct-to-consumer cereal brands disrupting the cereal aisle. I was part of an ~exclusive~ deal available only to previous customers where I could build my own four-pack of cereal flavors instead of selecting from a pre-made bundle that was currently available on their site.
After I took their email bait and chose my custom flavors, I noticed their “add to cart” button was not working properly. I quickly wrote to the team, letting them know of the issue so that they could try resolving before others had the same problem. After sending the note, I left my laptop and went for a short walk. Note — this was before the cereal was “in my cart,” even though I was ready to pull the trigger and buy!
While out, I received a response from Magic Spoon assuring me that the problem had been fixed, urging me to try again. But the “impulse buy” feeling that so many DTC brands rely on had faded by that point.
I began to think: what would entice me to go back to their website organically, unprompted, and finish the checkout once and for all?
It’s one thing to click an advertisement; it’s another to put in your credit card information. Let’s use me as a case study: the page was fun, I liked the product, I felt part of an exclusive deal, I was ready to buy. But when I was faced with one small obstacle, I got distracted and left. So what would get me to go back to Magic Spoon’s website? Honestly, I didn’t know. I emailed Magic Spoon back letting them know I would try again later, if I remembered…
Especially for direct-to-consumer brands with models that heavily rely on customer acquisition costs, online conversion, and repeat customers, the fear of missing out on an incremental customer is real.
Magic Spoon even explicitly asked me to not forget about them! After seeing their genuine interest in retaining my business, I thought long and hard about what would remind me to check out when I got back to my computer. How valuable was I as a customer? What would they be willing to do to get me back? I was, after all, so close to purchasing the first time. I decided to test their boundaries and asked for a discount — maybe that would do it!
As a brand dedicated to consumer satisfaction, they quickly offered me $5 to continue my cereal purchasing journey! Yes!
But I continued to think… how can this help me understand the true cost of acquisition for me as a repeat customer versus any given order. Keep in mind — this isn’t my first order from Magic Spoon, so I thought they may be willing to acquire me a second time at a higher cost knowing I may be a purchaser, again and again, going forward. How much were they willing to spend to increase their repeat purchase data?
To my surprise, they showed me how much they valued my future business and gave me a code for free shipping ($5 off)! Though appealing, I checked my last orders and noticed, in fact, I had already received free shipping in the past.
The goal of this exercise was to better understand how DTC brands think about customer acquisition. So, I did what any normal DTC-strategy-obsessed person would do: called them out and asked for more! How far was Magic Spoon willing to go in order to get me to be a second time customer? How far could I push the line? I essentially told them that if they gave me an additional $5 off, they would see an order hit their system. Was I worth $10 to them?
In fact, I was! A wheeler and dealer? No. Curious about DTC marketing for food brands? Maybe. Happy customer likely to purchase again because customer service was awesome and engaging? Bingo.
In all seriousness, the ideas of customer acquisition and conversion fascinate me. If Magic Spoon had denied my requests, I wouldn’t have revisited their site to purchase the product. However, they said yes and I ended up buying their cereal for a second time. Throughout my testing with numerous brands across the food and beverage space, I have seen an overwhelmingly high success rate when asking for a discount, either as a first-time customer or a potential repeat. Consumers want to feel special. And when companies make them feel that way, their conversion rate increases. The question then becomes: how can companies make potential customers feel special before that “impulse buy” moment evaporates? (Or a better question: why does Jordan think about a cereal brand’s customer acquisition on his walks so much?!)
Gabi and Greg are two of the most successful founders I know and kudos to you both for building an awesome brand. Magic Spoon’s website can be found here if you also want to have a magical day.
As always, feel free to reach out directly if you ever want to chat all things better-for-you consumer products!
