GGV Capital, Max Ventures, and Citi recently hosted our 2nd annual CMO dinner that included 15 of the top CMOs in NYC. Thank you to our guests from Spotify, Poshmark, Gap, Shake Shack, Michael Kors, Peloton, K Health, Knock, Top Golf, Function of Beauty and several others for sharing your perspectives around tough decisions you face as CMOs such as resource allocation, structuring internal incentives so everyone is motivated to work together, current state of different advertising channels/methods, etc. We’ve highlighted a few of the key insights from the dinner below.
(1) Global expansion — stay true to the message and values. Several CMOs in the room have led marketing for consumer companies that have expanded across borders. In their experience, it’s critical to keep the core message and values in tact when expanding into a new country, but the tactics of how you reach the consumer will differ by country. Companies are successful because they create value in a consumer’s life and have a message that communicates that value. It’s always important to localize for the market, but don’t change the core message and values that led the company to be successful in the first place. Instead, focus energy on best channels and context to deliver the message to the local consumer in the new market.
(2) The strongest communities are a result of a great product. It’s well understood in marketing circles that creating strong community within your customer base strengthens your brand with those consumers. As a result, early-stage companies invest resources very early in a company’s life to build community (often before the product is widely adopted).
But, when hearing from marketing executives at companies who have built strong online communities, it’s often a result of users kickstarting the community themselves on different channels without the company’s help. For example, Peloton has one of the most robust online communities via Facebook groups, but they put zero effort in starting it. Users who loved the product set up the online communities and initially grew it independently of Peloton.
Focusing on building community early in a company’s life can be a waste of resources if an early engaged user base who already wants to talk about your product hasn’t emerged. The best approach might be to monitor online activity of users and if community starts to build (which will be a result of delivering an amazing product/experience) then find ways to facilitate and spread its manifestation.
(3) Utilize TV ads earlier, especially if you’re the first mover in a category. The general thought for a VC-backed company is to continue acquiring users on performance channels until you’ve reached scale then start experimenting with more traditional brand marketing channels such as TV. But, if you’re the first mover in a category, then spending more aggressively on channels like TV can provide a bigger tailwind as you expand. Even if you’re not in the core demo or market yet, it educates the consumer on a new category that’s interesting and they will immediately associate your company with that category. (there is an advantage of being first, theory of primacy)
For example, one of the CMOs at dinner was previously at one of the first online food delivery companies. The company benefitted from buying TV ads early on and educating users about their product. It paid off even if they weren’t in the markets yet, because the product was already more familiar to users once they entered.
The most valuable consumer companies build a brand that is synonymous with a category and spending early on brand channels like TV push towards that goal.
(4) The most effective UGC (user generated content) shows an emotional connection with the product and end user. BarkBox created a large and engaged social media following who loved their pets and also enjoyed watching entertaining content with dogs. Over time, BarkBox realized that content generated by users that showed dogs having a fun experience with BarkBox products were most likely to convert to new BarkBox subscribers. For example, one of the most popular videos was a dog who runs to the road to meet the mailman, jumps in the back of the mail truck and pulls out the BarkBox package. The dog is running around the yard with the BarkBox package it its mouth, extremely happy and eager to tear it open and see what’s inside. It’s easy to see why a pet owner would want to subscribe to BarkBox and create that same joy for their dog after seeing that video.
(5) Pay attention to how users get the most value out of your product so you can lean into it. For example, Top Golf started as a cool driving range where you could better track your golf shots while enjoying a beer. The marketing team quickly realized that ~60% of customers were non-golfers and they were playing for entertainment with groups of friends rather than working on their golf game. The company evolved into a brand and community where non-serious golfers could gather and have fun over food, drinks, etc., (50% of revenue is from food & beverage), which is much more valuable than a driving range and real estate play.
The marketing team has done a great job over the last decade. Once they understood their super fans were a result of having an amazing experience with friends, they built the right messaging around it and the result is a rabid fan base who have become evangelists.
About the Cohosts:
Evolving E originally started as a conference in New York City for the top entrepreneurs and executives in digital commerce, retail, and consumer goods sectors. Since the initial summit in the spring of 2016, it has grown to include events in multiple cities and a community with members from around the world.
GGV Capital is a global venture capital firm that invest in local founders. As a multi-stage, sector-focused firm, GGV focuses on seed to growth-stage investments across Consumer/New Retail, Social/Digital & Internet, Enterprise/Cloud, and Frontier Tech sectors. The firm was founded in 2000 and manages $6.2 billion in capital across 13 funds. The firm has office in Beijing, San Francisco, Shanghai, and Silicon Valley.
Max Ventures is one of the most active seed stage funds based in New York City. Max has a strong consumer tech focus with investments in rapidly growing commerce companies in NYC, San Francisco, and the Nordics. Within digital commerce, the firm will invest in direct to consumer and B2B software. The partners have over a decade of experience in investing in early-stage companies across the globe.