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Opening Remarks, Steve Smith

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MediaPost Brand Insider Summit: D2C November 10-13 2019

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Opening Remarks, Steve Smith

  1. 1. In the past year what has been the biggest change/challenge to your marketing plan? ● The growing cost of doing business: Increasing CPCs + 10-25% tariff increases + the highest pressure we’ve ever had from retailers “asking” for more coop $$$ + rising ecommerce platform costs + pricing pressure from our own factories overseas ● Adjusting our paid acquisition strategy as Facebook costs increase. ● Rising costs of FB, being relevant in Social when coming from a legacy brand!
  2. 2. In the past year what has been the biggest change/challenge to your marketing plan? ● Subscription businesses rely heavily on member acquisition. finding new ways to reach new customers either through different media channels or different marketing & creative strategies. ● The biggest challenge has been maintaining growth while continuing to hit our CAC goals. ● The biggest change was diversifying away from Facebook advertising, by opening up new channels that are performance-oriented and owned (affiliate, email marketing, PR, organic social/blog).
  3. 3. In the past year what has been the biggest change/challenge to your marketing plan? ● Balancing funds between measurable reach items and harder to measure “influence” items ● Gaining an understanding of what works best as marketing tactics/how things work together to further maximize ● Measuring results when Amazon is a large customer and we don’t get any data from them ● Biggest challenge has been finding the best mix of platforms/channels for growth.
  4. 4. In the past year what has been the biggest change/challenge to your marketing plan? ● Challenge: maintaining our category leader position. Lots of competitors have sprung up. They are often direct copycats (poor versions at that!) of our new products or much cheaper version. So with marketing, it's showing WHY we are the best brand vs. the competitors.
  5. 5. ● The biggest challenge has been finding meaningful channels of growth / providing a robust media mix. For us, we built [the brand] on FB/IG but costs continue to rise / the channel is becoming less effective. So we've spent the year testing lots of new channels (linear TV, OTT/VOD, podcasts, branded content, partnerships, etc) in order to find how channels that we can use to diversify the media mix and scale. Secondarily, as we use these channels, we've often found clear attribution is lacking - we're not getting the data we need to effectively determine if a channel is working. As a brand that is heavily DR, it's a huge problem for us! What is the biggest challenge you face in maintaining or growing the pace of customer acquisition?
  6. 6. ● Customer loyalty and brand building is earned post-purchase these days and the challenge is to convince executives that it’s no longer about more share of shelf and higher ad budgets for “awareness”. WOM is much more difficult but I’d rather put a $100 in value or services into my consumer’s pocket than give it to Facebook. ● Conversion of the incumbent practice of purchasing eyewear at physical retail. The [brand] proposition has been enjoyed by tens of millions yet is still a small portion of the overall eyewear consumer market What is the biggest challenge you face in maintaining or growing the pace of customer acquisition?
  7. 7. ● Increased saturation of the marketplace and rising costs. ● CRM & growing alongside and with the consumer ● Competing against our own customers for acquisition (amazon, etc) but where we are trying to maintain certain price and protect the equity of the brand ● Maintaining efficiency while scaling. ● Increasing CPM/CPC and fatigued audience What is the biggest challenge you face in maintaining or growing the pace of customer acquisition?
  8. 8. ● Rising CPAs due to increased Social costs. Educating internal stakeholders on new channels. Finding the right products that justify DTC spend and attention from consumers when selling a legacy brand ● Keeping CAC down. Identifying channels that bring in high LTV customers. Continuing to diversify beyond paid ads on Facebook and Instagram What is the biggest challenge you face in maintaining or growing the pace of customer acquisition?
  9. 9. ● Since our market is shrinking (people are having fewer babies each year), we look at share of market. Our growth focus is on EBIT since we have been making substantial progress on the “middle” part of our P&L these past several years. ● Revenue, unit sales, customer acquisition ● Primarily, it’s through top line revenue growth; but we also dig down deeper into growth per product and from channel to channel. How does your company define “growth”?
  10. 10. ● Most importantly, have we increased sales year over year? From there, it's dissecting sales into a few different cuts: A. what products are driving growth? / Are the new products we've developed bringing new people into the fold? B. Average Order Value C. What is the ratio between repeat purchasers and new customers? How does your company define “growth”?
  11. 11. ● New customers ● Increase in sales overall ● Increase in brand engagement ● Sales growing above category/industry averages. Continuous improvement – a virtuous cycle of mutual benefit. ● Growing membership subscribers at allowable CPAs ● Scale.. I spend a lot of my time educating what growth of data, consumer conversations, etc. looks like knowing the scale happens outside of the DTC channel How does your company define “growth”?
  12. 12. ● We define "growth" as attracting new subscribers and improving retention. We will look to increase AOV as we add new products. How does your company define “growth”?
  13. 13. What has been your biggest challenge in working with outside agencies and tech providers? ● Agencies want long term billings not start-and-stop projects (typically). Often don’t share our vision since their founders have baked their own vision into the culture. Difficult for agency employees to work outside that box. We consistently oscillate between agencies and in-house FTEs and we move fast (agency), learn and then hire based on those learnings. Then we repeat the cycle. ● Management. Synchronicity.
  14. 14. What has been your biggest challenge in working with outside agencies and tech providers? ● We've worked with a variety of agencies/tech partners - some of which have been very successful and others which were not. The ones that were not came down to two things: 1. They had their own agenda/strategy they wanted to put in place that didn't ladder up to ours and because of that, they were not receptive to our feedback / thoughts. As the client, it's a huge issue as we are the ones that drive the strategy and vision for the brand. 2. Getting the data/reporting we wanted; with a few media partners, there was a level of reporting / metric deep dive that we'd get throughout the buy and at the conclusion of it, but they couldn't deliver on what they sold it. As mentioned, getting lots of data is extremely important to us, and helps us make business decisions.
  15. 15. What has been your biggest challenge in working with outside agencies and tech providers? ● Most outside agencies don’t take the time to fully understand the brand and how to convey our brand message through advertising. They get too bogged down into the metrics to focus on the core part of the business. ● Getting all agencies to work together and maximizing the potential ● All agencies being aware of all results of other agencies to max potential ● Overall time management from my team – ie much time managing each agency
  16. 16. What has been your biggest challenge in working with outside agencies and tech providers? ● Balancing speed, cost, and performance. We feel like we can move faster and cheaper internally, but sometimes may be leaving some performance on the table. How can we improve performance without losing speed or ● We handle everything in-house. The challenge [with agencies] is usually a difference in interest. Having business-driven units in house will make sure we are chasing the same KPIs and align on priorities.
  17. 17. What has been your biggest challenge in working with outside agencies and tech providers? ● Performance in CPG and performance marketing outside of CPG are quite different. Finding a balance has been challenging for many partners ● The biggest challenge is maintaining a steady flow of communication, as well as holding them accountable and measuring performance.
  18. 18. What has been your most successful tactic in increasing the lifetime value of your customer base? ● Providing a compelling product assortment. We've found that our hero [product] is the gateway product for customers. It's expensive at $249, but once they are in, it's leads to repeat purchases...on our products that are at a much lower threshold. They are so in love with the most expensive product that buying these additional ones are an easy investment for them.
  19. 19. What has been your most successful tactic in increasing the lifetime value of your customer base? ● What’s interesting about this question is that as a mid-sized manufacturer, we never truly knew what our avg LTV was. We’re actually not even sure that our Retail partners did. It’s only now through our DTC efforts (Brand website direct) that we are starting to understand all the purchases a single consumer takes across our huge catalog and across our brands. ● Delivering high quality products at the lowest pricest the industry can offer
  20. 20. What has been your most successful tactic in increasing the lifetime value of your customer base? ● From a strategic level, having the right merchandise and marketing that fit customer’s demand, which changes quite drastically in the world of fashion, is something we are really focusing on.
  21. 21. What has been your most successful tactic in increasing the lifetime value of your customer base? ● We have implemented style advice through SMS messaging, and private communities that are only available if you make three purchases or more. ● Email campaigns/valuable content ● Adding subscriptions – it reduced the barriers to re-purchase ● Sharing data across platforms to increase bundle opportunities
  22. 22. What has been your most successful tactic in increasing the lifetime value of your customer base? ● Our most successful tactic is communication with customers through multiple channels. This includes our CX team, who help customers get the most of their purchase, and email surveys, which help identify areas for growth. We also continue to develop product and UX based on customer feedback.
  23. 23. ● Development time ● It’s always a challenge to develop products that stand out from the crowded marketplace and can be competitive. Staying within your niche will be limiting, but growing beyond your niche may spread the business too thin. Finding that right product that helps you get to the next step is a big hurdle. ● Validating that you have the credibility to extend to the new space What is the biggest challenge in developing new products that expand the brand and deepen customer engagement?
  24. 24. ● knowing what the right products are. We work to identify these through customer surveys, sampling and testing before we launch anything. But it can be a challenge to find the time and resources for that. ● We've really refined our testing/research strategy before launching a product which has helped decrease the chance of flops - using our super fans and existing customer base to gain insights on product improvements and what new products they want. Then using them to test iterations of products before we actually launch then. What is the biggest challenge in developing new products that expand the brand and deepen customer engagement?
  25. 25. ● It might mean a big shift. An example, we are originally a footwear company. Two years ago or so, we made a decision to expand massively into apparel, and it turned out our customers love us for who we are – a footwear company. So we are now re-focusing all of our effort into making solid women footwear at accessible prices. What is the biggest challenge in developing new products that expand the brand and deepen customer engagement?
  26. 26. ● The new products that will truly expand the brand are at odds with Retail Buyers who ask for this but focus conversations (& forecasts) on new fashions for the existing line unfortunately. Online, “old is gold” so we’re free from this work load. As we expand our online sales channels, we’re finding that these new products that deepen consumer engagement are actually not Products at all - they’re Services. Our go-forward DTC model is to take the margin that would normally be offered to retailers and invest it in delivering our product wrapped in a blanket of post-purchase services. What is the biggest challenge in developing new products that expand the brand and deepen customer engagement?

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