Week 9: How Combining Distribution + Retention Marketing Unlocks the Halo Effect for Your Brand
Introduction
Welcome to Week 9 of our Definitive 10 Step Guide to DTC!
Today, we’re going to talk on the multiplying effect that happens when you combine two areas we’ve talked on in the series, together.
We’ve discussed in Week 7 how today’s leading digital-first brands are taking a more omni-channel approach to their sales, and we studied in Week 2 how great brands are leaning into community for retaining and incentivizing their core customers. Let’s talk about an emerging playbook for how to combine a wider distribution strategy with effective retention marketing.
This strategy allows you to cast a wider net (and leverage your partners for marketing, and cost-effective acquisition), and keep more of what you catch (by pulling in these new customers into your designed ecosystem to feel special, incentivized and known).
Let’s get started! 👇
Step 1: Cast a Wider Net ↔️
Fish where there are fish
Over the past two decades, commerce has increasingly moved online, with many newer brands primarily selling direct first. However, brick + mortar retail is still the dominant form of all consumer goods sales in the U.S.
Part of our continued narrative guide to emerging DTC operators is to go digital-first, then expand strategically to meet your customers where are. Increasingly, today’s digital-based entrepreneurs are seeing that is offline, as well.
In 2021, U.S. retail grew 18.5% YoY compared to 14.2% for eCommerce; the first time on record that has happened. While this can be contributed to an extremely tough 2020 for retail (and 2022’s retail growth is expected to return to a more conservative 4% growth), it is powerful to show how strong retail in the U.S. still is.
As much as eCommerce can be a darling within our space, we must remind ourselves physical retail accounts for the vast majority of sales in the U.S.
By building an effective digital-first business, you can harness your positioning, your brand, and your data to leverage retailers, from niche boutiques to big box stores.
Through doing this, you will introduce your brand and products to an entire consumer-base that you weren’t able to reach through targeted ads on Facebook and Google. It’s important to remember to meet your customers where they are. Remember, the name of the game for brands today is to meet your customers where they are at.
The power of retail marketing
Many of the brands we worked with at Gin Lane either went into wholesale in a big way (Quip, Harry’s, Hims)or have opened up their own retail locations in markets across the country (Warby Parker, Glossier, Smile Direct Club). It is hard to beat the power of an in-person experience.
We asked Erik Kimel, one of the earliest team members at Harry’s, their former Senior Director for New Growth, and later the Co-Founding GM at Flamingo, to share some insights on how they thought about retail marketing. Here’s what he had to say,
“We always follow the customer in everything we do. That customer centricity manifested itself in ways big and small, everyday.
For example, with Harry’s, we knew our customers were already shopping in retail, so it would be customer-centric to be available on shelf as well as online. And for online, we could say to guys “you can forget without forgetting” by having a subscription that personalized refill blades to your shaving preferences.
When we were launching of Flamingo, we understood that women are removing hair with multiple methods, and that it’s pretty harsh on the skin, so in addition to having razors at launch, we also offered wax strips and body lotion (at retail) to support her holistically with great body hair and body care products.”
A digital-first approach can help helps you find your product/market fit, then like Canopy or the folks at Very Great, you go retail, and go big.
Eric Prum, the Co-Founder at Very Great (owner of W&P) explains,
“For W&P it has been a journey. If we’ve learned anything about wholesale, it’s that you will only gain long-term success if you have a product that really adds value to folks’ lives — it has to be truly differentiated. Our biggest wholesale hits at W&P have been the ones that are true innovations in the kitchen space, the products that customers discover, purchase and come back to over the years.”
Navigating Wholesale 101
Remember, digital-first to test, then you can scale through other channels, meeting your customers where they are. Before we get to Part 2: Keeping What Catch, we wanted to share some insights on how to best navigate wholesale.
For this, we tapped Soojeong Chi, Pattern’s Senior Director of Revenue Operations, to offers some insights on retail best practices.
“If your brand’s buy is in stores, make sure you know exactly what doors you’re in and how those doors perform for your category. Make sure you understand who the shopper is and whether they align with your consumer insights.”
Soojeong is highlighting the importance of making sure you are ‘fishing in the right pond.’ Just because you could sell in a particular store, doesn’t mean you should. Leverage your digital-first consumer data and insights to best understand who your customer is, and what they are looking for. Seek out partners that can provide sell-through opportunities with these customers and your category of products.
Next, when negotiating on the financial parameters of the partnership, Soojeong advises brands to make sure they feel comfortable giving away the level of margin that’s expected at these larger retailers. One way to best do this, is to see the buy as more of a partnership. In exchange for taking a healthy fee of sales, what can your wholesale partner bring to the table?
“Is the partner going to provide your brand a significant amount of marketing that will help drive more revenue and gain a larger audience?”
“It’s important to take a step back and evaluate if a retailer is really going to be a partner to you, or if they’re just using you to fill a gap in their assortment without much care. Make sure you only move forward with the ones that will give you the time and attention you deserve.”
Like all wholesale, you have to deal with their terms of buys. Some are upfront, most are not. There are terms that dictate you may have to buy back what doesn’t sell. And if they place a buy and it doesn’t sell, they may not want to sell with you again.
Be thoughtful of whom you choose to go fishing with!
Lastly, talking on online sales, Soojeong continues,
“If your brand’s buy is online, make sure you understand what communication and placements you are going to be a part of as you enter into the partnership, and ensure you have a clear line of sight into the marketing.”
The same principles of a good ‘retail’ partnership apply to your ‘eTail’ partnership. You want to make sure the brand can promote your product, customers can find it, and they believe in the product.
Ok, let’s now move on to Part 2! ✌️
Step 2: Keep What You Catch
Now that you have effectively gotten your brand into your first round of stores (hopefully nationwide!) and feel good about the partnerships you’ve formed, the next step is to now re-focus on these new (and potential) customers you are getting in front of.
A Brief Overview
We asked Kirsten Green, Founder & Managing Partner at Forerunner, one of the most successful consumer-goods investors of the past decade, on the importance of building a wider distribution strategy combined with a thorough retention plan.
What she had to say should be bookmarked by all of today’s digitally-native consumer goods entrepreneurs:
“Over the last decade we have seen an incredible renaissance of brands coming to market. As the number of brands have proliferated, competition and costs of customer acquisition have risen steadily.
This reality serves as a reminder of how critical it is to focus on delivering a superior customer experience.
Attention here often underpins the best businesses in terms of both goodwill and economic flexibility.
In addition to having a clear product value proposition, it is our experience that a holistic distribution and retention strategy are key levers in the pursuit of building thriving businesses.”
Kirsten emphases emphasizes the importance (and opportunity) of running customer retention + loyalty programs across each of your brand channels,
“In addition to engaging with customers across a cross section of venues, focusing on dedicated customer retention efforts is always important. Too few brands think about this early enough in the lifecycle of their business.
At its core, loyalty is about building a relationship with your consumer, showing you appreciate their ongoing support, and rewarding them consistently (often creatively) for their patronage.”
Together, strategic distribution + excellent retention marketing create a superior customer experience. 👏👏👏
Retention / Lifecycle Marketing 101
Ok you may be asking, ‘What is Retention / Lifecycle Marketing and how do I use this to retain and keep my customers?’
For this, we asked Brittany Lima, Pattern’s Director of Brand, Content & Lifecycle Marketing,
“While the marketing efforts supporting each of our brands at Pattern are typically thought of as DTC support, it’s also important to understand the impact these brand-building activities have across all sales channels, wholesale included.
As we continue to diversify distribution channels (like wholesale) for brands within the Pattern portfolio in order to meet our customer’s needs, brand marketing can be the make-or-break in getting a consumer to advance on their own personal path to purchase and is a critical component to building a loyal customer base, and long-term advocates for the brand.
DTC businesses today have to remember that brand and marketing efforts are maximized by reaching as many customers, and having as many customers able to buy your products where they shop. All of your customers are not in one place.
So when you do brand (not paid) marketing, think that you are speaking to a wider range of potential customers than just Millennials between work and the gym scrolling through instagram, for example.
In considering their purchase (or even continuing on with their own diligence post purchase), consumers often look to a brand’s website, social media, email/sms, and other brand communications to assist in their discovery, no matter where they ultimately purchase from.
This often comes in the form of a quick trip to a product detail page, an email sign-up, or social follow. And why it’s critical to ensure that a consumer’s experience with the brand is consistent regardless of sales channel or even the stage they’re at in their journey.
Remember, the consumer journey is end-to-end. You want to have harmony and synchronicity at each touchpoint in that journey. From the retail aisle, to your social page, to the reviews on your website, today’s modern shoppers are often going to look at multiple touch-points before purchasing. Looking your best, being up-to-date, friendly, on-brand, and having social validation in the form of great reviews across all channels, can help seal the deal for prospective customers, many times over.
The better your touch-points are, the better your conversion rates can be, the better your sell-throughs are, the better your business is.
This is where developing and sharing content that demonstrates the value and quality of a brand or product is important — and why companies, like Pattern, often look to robust lifecycle marketing and retention strategies to:
- Ensure we’re cultivating communities, and encouraging deeper exploration of the brand
- rovide discovery of complementary products (or brands within the Pattern portfolio)
- offer multiple outlets for consumers to get in touch with real humans (our incredible CX team!) along the way.
The value of retention/lifecycle marketing is felt at multiple stages in the consumer journey, and for multiple types of customers; retail, third-party, paid, and organic.
Every touchpoint consumers have with our brands can be the thing that gets them one step closer to making a repeat purchase, driving up a customer’s overall Lifetime Value (LTV) and creating efficiencies (savings!) in the overall cost of acquiring a new customer (CAC).
While strategies designed to build brands and promote retention aren’t often seen as a direct connection to a brand’s success at wholesale, these programs are undoubtedly connected and all part of a thriving, comprehensive DTC business model.
In short, think holistically. Just because a customer was introduced to your brand, or purchased your product through wholesale, doesn’t mean they shouldn’t get the same white-glove digital-first experience we have come to expect in DTC. Attract and invite them into your ecosystem, and help them feel warm, welcome, and a part of a special community.
If you can do that, you have build a special foundation for your business.
In Conclusion
An early inspiration for Pattern was the Pixar film, Ratatouille. And one of our favorite scenes was where the protagonist, Remy is showing his older brother Emile the power of combining ingredients, in this case a strawberry with cheese. While both foods on their own are delicious, when combined together Emile sees the taste profile is sublime.
Think of a strategic distribution plan + effective retention marketing for your DTC business in the same way.
🍓🧀✨
Good luck!
Pattern 🏡
Pattern’s prior installments:
Introduction: The Definitive 10 Part Guide to DTC
Week 1: Why Great Brands Make Great Businesses
Week 2: The Power of Community & Why You Need It
Week 3: Foundational & Performance Marketing for eCommerce
Week 4: How to Build a Great Product
Week 5: Culture & Values
Week 6: Supply Chain
Week 7: What is DTC, Anyway?
Week 8: Should You Sell on Amazon?
BONUS:
If you are a business owner interested in learning about joining Pattern,
we’d love to hear from you! 👋
