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At the bottom of a photo on The Hustle’s profile of fab.com founder Jason Goldberg was this part of a company-wide email:
“Retail businesses are all about the Merchandise
No amount of marketing or financial engineering can overcome the Merchandise
The demand needs to be generated from the Merchandise
The best competitors spend very little on marketing. The merchandise creates the demand”
Rightfully, this got some attention on Twitter this week.
There is, of course, a reason the 4Ps of Marketing are listed in the following order: Product, Price, Place, Promotion. Without a product, you have nothing. Yet the item listed last gets most of the attention today. Which means the middle is often overlooked (at least when it comes to public discourse).
That’s too bad.
Price and place are probably the hardest. Figuring out how to place a mutually fair value on your product and making it easy for your customer to buy might be the biggest strategic challenges facing CPG brands today.
In Morning O’s last month, we highlighted IRI’s insight that the CPG market was beginning to bifurcate with increasing premiums at the top-end of the market, while more value brands and private labels are capturing more of the rest of the market. We noted that may be problematic for the traditional DTC playbook:
“A slightly-better-for-you version of something at not-quite-a-premium price is how the traditional DTC brand could be described. You could also describe this as attempting to blur the lines between value and high end. And based on the IRI insight, it sounds like that approach may end up being an uphill battle.”
What we didn’t discuss then, however, was how to measure success or failure in this regard. Quantifying the value of how a product is priced and positioned in market is tricky. Perhaps this is why product-market fit is often described as a “know it when you see it” concept.
A solution, though, might be to follow the Jeff Bezos obsession with returning customers.
Bezos has listed repeat customer rates in Amazon shareholder letters before, but never, to our knowledge, a breakdown of how that positively impacted growth rates or revenues. So, to check ourselves, we took a quick look at some data: Of the fastest growing brands we work with, all of them grew revenue over the last 12 months from their returning customers at a faster rate than they did from new customers.
Think about that for a second: In a year when we were all but forced to discover new brands in new ways, in channels that remove as much friction as possible, brands grew faster because they had priced a good product fairly and made it easier to buy than a competitor.
No doubt, these brands had to recapture that attention, but that’s a near impossible task if you can’t get the other aspects right first.
In this regard, retention (or maybe reacquisition if you’ll allow) isn’t as complicated or buzz-word laden in practice as we’ve made it out to be. Maybe it’s as simple as easier to buy an already well-liked product when the need arises.