Our team recently attended the “Scaling Your Innovative Food Startup: Trends and Lessons in Consumer Packaged Goods”, hosted by Cornell University, with six esteemed keynote speakers whose areas of expertise included product innovation, funding, manufacturing, and branding. The panel was extremely informative, especially for startups in the CPG category, but their insights really transcend any CPG brand that is focused on growth in the face of a perfect storm of economic challenges and realities. Here are some key takeaways:
Preparing when your forecasting is a moving target
For even the most established brands, accurately forecasting sales and revenue continues to be more challenging than ever. Even when there is strong data supporting consumer demand for a certain product, timelines have been pushed out extensively based on securing time on a manufacturing line, receiving equipment to produce the product, or having your packaging printed and delivered.
So if you can’t accurately forecast when you’ll be ready to go to market or your sales, how can you prepare a product launch? The best advice is to prepare as much as you can and as much as you can afford to, leaving yourself with flexibility to pivot and make the necessary changes when it’s go time. If you’re charged with developing a go-to-market campaign, you can build out a framework of the plan knowing the launch date is TBD. If new content must be created, develop the concepts and assets, and take it as far as you can so that it’s “on the shelf” and ready to go. And if you keep the lines of communication open, your internal and external partners should be able to work with you on being as flexible and accommodating as possible.
Showing a pathway to profitability
When brands are looking for investors, especially in the early stage of funding, they’re finding that process is also more strained than ever. People are holding on to cash longer, they’re investing in fewer deals, they’re focused on the deals they’re already invested in and making those as profitable as possible, and they’re expecting a much shorter runway to showing a profit.
Focusing on tightening cash flow as much as possible and managing your margin is acutely important. Experts recommend that if you already received some funding but need additional funds, get out to your investors as soon as possible, be honest with them about how the product is selling, and be transparent and detailed about your unit economics in the hopes that they’ll extend your runway.
For brands seeking new investors, be focused on who you’re talking to; in other words, find funders whose values and interests align with your brand and company vision. For example, look for funders who are interested in your specific category, such as food and beverage or serving the needs of your target audience. In addition, research alternative sources of funding like supply chain financing, and try to find ways to “slow the burn” to get you through the next several months until investors can reassess their portfolio in quarter one and two next year.
Shopper insights to inform marketing decisions
Many large CPG retailers have their own shopper marketing tools and software focused on collecting all sorts of data from their customers through their respective shopper loyalty cards and programs. Whether it’s Kroger, Walmart, or Shop Rite, they want the brands in their stores to use their tools and data but it’s likely going to come with a cost to the brand, which can be very expensive and perhaps not feasible depending on your revenue. Without full access to the retailer’s data, the challenge we hear most often is that brands have limited visibility into campaign results, specifically attributing sales at point-of-purchase back to their campaigns, making it difficult for them to justify what and how they’re spending their marketing dollars.
A couple of recommendations to help close that gap include investigating potential turnkey loyalty programs that are built to be more accessible and hence affordable to smaller brands. One that was referenced during this Cornell seminar was Fetch Rewards, a shopping app that rewards users with free gift cards for uploading shopping receipts. A second consideration is working with a digital marketing partner who can guide you through developing an informed digital marketing strategy that considers your awareness, consideration, and conversion goals, and how to start building an informed campaign dashboard that pulls in various streams of data.
By building your own data points, you’re better equipped to make smarter decisions, and to go to your retail partners and see what additional data they might be willing to share with you at no additional cost. Don’t be discouraged if you don’t feel like you have enough information to get started – more often than not, we typically find that brands actually have a lot of useful data; it just needs to be analyzed into useful and actionable insights.
Using brand positioning and brand storytelling to form relationships
Whether you’re selling direct to consumer, through a retailer or both, never underestimate the value of brand positioning and storytelling to form relationships. Think of your brand story as your icebreaker when you’re meeting with a potential investor, pitching your brand to a retailer, or ultimately connecting with your consumer. More than ever it’s important you’re clear and concise about the value of your brand, why it exists, and the problem your product is solving for a consumer.
Your brand narrative can and should be threaded throughout your pitch deck, incorporated into your online marketing channels, and within your product packaging. This does not have to be an overwhelming process. Whether you’re creating your brand from the ground up or evolving your existing one, look for a marketing partner who understands brand and has an established branding process to keep things efficient.
Building your community
And finally, there’s no better way to say it: It takes a village. For a startup, this means getting to know others in your community and leveraging their experience and partnerships. Get creative and see how you might start to build some brand awareness within your own community, whether it’s through local food co-ops, markets, food festivals, the media, etc.
There are likely things you can do locally that won’t be as feasible nationally, so take advantage of what’s in your own backyard. From a big CPG perspective, one of their challenges is how they can take their national brand and have a more local impact. This may mean turning to local organizations that you can partner with who can help you strategically engage and activate within a certain community in a way that’s authentic and genuine to those who live there. Consider public relations and marketing firms who understand that local landscape to provide you with strategic counsel.