When Brand Focus is More Important Than Brand Scalability

When Brand Focus is More Important Than Brand Scalability

Effective brand strategy is critical to companies in the second-stage business life cycle. The outcomes that brand strategy needs to accomplish depends on where in the life cycle your company is.

Does generic talk of “growth” make you cringe?

When you hear young companies aspire to scale, do you smirk a bit? “Been there, done that,” you might say. “It’s not all it’s cracked up to be.”

Six-Point’s focus is on “second-stage companies” — meaning 10-100 employees or $1M-$50M in revenue. But that is a wide gap, and the growth-oriented companies in the first half of second stage have very different headsets than the focus-oriented companies in the latter half of second stage. Companies with more than $25M in revenue or 50 employees, especially ones that are decades old and may now be smaller than they once were, are battle-scarred enough to cast a skeptical eye at growth for growth’s sake. They know that not all revenue is created equal.

One of our clients, a product manufacturer, had experienced solid revenue growth over many years. They were getting national placements in “big boxes,” controlling full retail bays, and selling entire walls of planogrammed product. But it soon became clear that the bump in revenue didn’t equal profitability. The big boxes did what they do — demand more and more price breaks, start private labeling, and erode margins wherever they can.

This company had to make some hard calls: Say no to some high-volume, big box sales in order to focus on more profitable customers. Reinvest in streamlining operations and new product development to better serve their core customers. Begin to speak directly to new end-user customers and influencers, rather than simply relying on shelf space to drive sales.

This same decision to focus on profitability over unbridled growth is one that faces most privately held companies under $50M. Especially as they become large enough to attract attention and compete with companies (and sometimes even customers) much larger than themselves. At some point they have to ask … is growth the goal? Or is profitability and strength really what we are looking for, even if we have to shrink top-line revenue to get there?

From a brand perspective, this is a time when saying no is much more important than saying yes.

If your company is in a period of needing to focus on its core instead of simply chasing growth, here are four critical questions that you must be able to answer:

  •  Who is your primary customer? Yes, this can be someone other than the end user, such as distributors or franchisees. No, you can’t have more than one. More than one primary customer will guarantee underperformance. As Robert Simons of Harvard Business School underscores, the competitor who has clarity about its primary customer and devotes maximum resources to meet their specific needs will beat you every time.
  • Is this customer profitable when we include all aspects of making and fulfilling the sale?
  • Where do our core values and our primary customer’s core values intersect?
  • How can we maximize this customer’s brand loyalty? What would make them accept no substitute for our brand?

These should be your areas of focus as you hone your brand strategy. Protect and defend your core. Focus your capital and human resources as much as possible towards your primary customer, and cultivate their brand loyalty. Minimize resources that are allocated to attracting secondary customers or any unprofitable business.

Yes, the overall size of your company will shrink, but if done successfully, the business will become more profitable. Employees will be more engaged. The cost of customer acquisition and customer price sensitivity will drop, and customer retention will increase. From there, you will have the groundwork laid for a next stage of growth that is purposeful and focused.

Should you work with an agency who is a specialist in your industry?

Should you work with an agency who is a specialist in your industry?

When companies search for a branding or marketing agency to partner with, they often wonder if they need a fresh perspective with specialized branding and marketing subject matter expertise, or if industry specialization is more critical.

There is an ad industry adage: Two clients in the same industry is a conflict. Three is a speciality.

Industry (or vertical) specialization is a common tactic employed by marketing and branding agencies to gain credibility and expertise. When we were developing Six-Point Creative, one of our big questions was “do we specialize in a single industry?” We opted instead for “horizontal specialization.” In our case, this meant focusing not on industry but on company lifestage that we felt was underserved in the agency world (second stage companies preparing for additional growth), and on brand development and brand strategy instead of general “marketing and advertising.”

Prospective clients often ask me if they should choose an agency that is more specialized in their industry. Unfortunately, I don’t have a yes or no answer to that, but I do have some food for thought.

You want a horizontal agency if: 

  • You have a significant amount of internal industry expertise. Leadership teams that already have a lengthy history and experience in their own industry may greatly benefit from a relationship with an agency with a broader experience. I have seen many companies get so mired in looking left or right to their competition that they miss opportunities by not seeing broader social, technological, or business trends. Our clients are already experts in their industry and their existing customers and markets. They are relying on our expertise to bring them best practices for reaching new customers and markets, and employing positioning techniques that are not already part of their competitors playbooks.
  • You are trying to do something new or disruptive to your industry. For these companies, experience outside of their industry is a necessity, because they are developing opportunities that their competition isn’t. A distributor launching private labeled products for the first time needs an agency skilled in product launch, not industrial distribution. A business-to-business company who need to extend its brand to the end user consumer needs a consumer product specialist, not an industry specialist.

You might want a vertical agency if:

  • Your industry is highly technical (and you don’t have the time or the resources to get an agency up to speed). When speed and self-direction is of the essence, and you have a technical product or industry, you might gain a lot of value from a company who has worked in your industry for years. You will spend a lot less time with them upfront, and will likely have to do less collaboration with them during the engagement. You may even save money if they can use pre-developed templates, technology, or content and repurpose it for your business. For many small businesses in which resources are scarce, this is a significant benefit.
  • Your internal team is new to the industry. If you have hired talent without industry experience, especially in marketing and sales, it can be very helpful to bring in outside industry marketing specialists to give your team insights on the competitive landscape and what techniques are traditionally successful. Particularly if you are in an area of the company where the labor market is tight and limited, bringing in an outside partner from elsewhere in the country can allow you to access industry expertise that isn’t available locally, as well as industry connections to media or other partners that may be particularly valuable to you.

The bottom line: Vertical or horizontal specialization is your call based on your goals, structure, and comfort level. But you never want an unspecialized agency. If your agency is totally unspecialized (“we will do anything, for any company”), they are not experts. It is simply impossible.

Market Research: Big Returns on a Little Sweat Equity

One of the alarming statements Six-Point often hears from small-to-mid-sized companies — even the ones seeking aggressive growth — is that market research isn’t something they do.

High-potential brands don’t achieve their potential unless they make informed decisions about their future. Making assumptions about the customer or the opportunity simply isn’t good enough.

Your company can and should be doing market research right now, and it requires no formal budget.

Six-Point creative strategist Tyler Leahy explains where to start.

Misconceptions on market research

One of the alarming statements I often hear from small-to-mid-sized companies — even the ones seeking aggressive growth — is that market research isn’t something they do. Often, it’s mislabeled as a luxury reserved for industry titans with millions or billions of dollars to spend. Sometimes these companies feel they don’t know how to do basic research on their own without outside expertise, or just feel that they don’t have the people or the time. 

Sure, the goliaths have more resources (not just capital, but people and dedicated time, too) to put towards primary research, either hiring glamorous agencies or building a specialized internal team to glean insights that will help them make more strategic decisions, mitigate risk, and forecast the future. That truth, however, doesn’t mean you should do nothing, hedging your brand’s future on unchecked hunches. 

In fact, there’s quite a bit of useful research you can do with almost no formal “market research” budget…and it’s the fruitful work your team should be doing right now.

Here’s an example

At ExpoWest 2019, Eat Your Coffee CEO and Co-Founder Johnny Fayad told SnackNation the story of how his brand collected insights from its superfans, shortly before they began selling direct-to-consumer via their own e-commerce operation. 

Without access to customer email addresses, Johnny and his team began cobbling together mailing addresses from different Amazon order data sources. They then discerned their top 200 Amazon customers, and Johnny sent hand-written thank you letters to each of them. He also encouraged them to complete a survey (in exchange for free product and brand swag) that led to insights that helped shape the brand’s future, particularly at this critical juncture of planning an evolution to its sales model and preparing to launch an e-commerce site. 

The types of questions Eat Your Coffee wanted to answer? Smart ones about customer lifestyle and product use.  

  • How did these top customers get their caffeine fix before they discovered Eat Your Coffee? 
  • How do the caffeinated snack bars fit into their day now

What Eat Your Coffee’s team learned from this process was invaluable. They learned that one of their top three customers was an 82-year-old woman who eats the all-natural bars as a caffeine solution that’s friendly to her acid reflux. Their brand was solving a problem they hadn’t deeply considered. Another realization? While Eat Your Coffee isn’t marketed as a coffee replacement, many customers were starting their days with the product as they previously had done with a cup of coffee — an important consideration that could influence when and how to introduce potential customers to the brand in the future. 

Continuously collecting customer insights allows Eat Your Coffee to refine its value proposition over time. In the interview with SnackNation, Johnny noted that his brand is always “going the extra mile and doing something personal” in their attempts to learn more about their customer. 

I’m an advocate for all growth-minded brands adopting this mindset. B2C. B2B. Doesn’t matter. When you go the extra mile, customers open up, leading to more meaningful data. That’s not the only benefit, either. It turns a learning opportunity into a highly-personal, long-lasting brand touchpoint that makes the customer feel more connected to your brand.

Market research your team can (and should) do right now

Here are the low-cost market research tactics my team at Six-Point is recommending to second-stage companies coming out of the COVID-19 slowdown:

Interview and/or survey existing top customers.

Understand how COVID-19 is changing your customers’ pressures and behaviors. How is the way your product or service fits into their lives changing? Go the extra mile and do something personal.

As Johnny noted, go the extra mile and do something personal. Lead with a handwritten letter or personal touch from company leadership. Donate on the customer’s behalf to a charity reflective of your brand values during this difficult time. Offer a free product or service to help offset the financial pressure people are facing. Any of these personal touches can go a long way!

Analyze competitors, in real time. 

Instead of conducting a competitive analysis once or twice per year, observe competitors at least once per month in the wake of COVID-19 as your industry landscape rapidly adjusts.

How are competitors communicating with customers through different marketing channels? Keep tabs on their social media, their website, and their other owned content channels.

Has the customer experience changed? Mystery shop the online customer experience, looking for tweaks to messaging, delivery method, and the packaging and fulfillment experience.

Begin social listening. 

Actively seek customer questions and concerns. Use social media to create a dialogue with your customers, employees, and other key stakeholders.

Considering testing something new? Poll customers and get feedback in real time.

Track mentions of your brand and your competitors across social channels and influencer activity, news sites, industry blogs and podcasts, and product/service reviews.

Challenge your own assumptions about the target customer and the market opportunity. 

Making a pivot, or focusing more on a specific target customer? Consume existing secondary research to answer questions like…

  • Does existing research suggest this is a viable customer? 
  • How do they make purchasing decisions, and how do they shop?
  • What other brands do they love? 
  • Where do they consume content?

Still unsure where to start? Contact us!