How to Maximize the Acquisition Value for Your CPG Brand
For many food and beverage startups, the ultimate goal is to sell your brand to a larger conglomerate. Chances are, regardless of if you’re in year one or year five of your business venture, you’ve already put in a lot of blood, sweat, and tears. Wouldn’t it be peachy if you could cash in and retire to the tropics—at the ripe age of thirty-five? I think, for most of us, the answer would be a resounding “yes!”
So what’s the secret—how do you get to the next level and hit millions in revenue? The answer is simple: grow your brand.
Perhaps the most famous example of growing a brand to acquisition in the consumer packaged goods industry is Dollar Shave Club. The brand was established in 2011 and sold to Unilever just five short years later for a cool $1 billion in cash.
Invest in a DTC Component
Dollar Shave Club was a pioneer in the direct-to-consumer space. They created a subscription model for inexpensive razors that allowed them to, well, cut into competitor’s profits. By appealing to consumers with a strong customer acquisition strategy, they were able to hook them with an enticing offer. That paired with marketing tactics that relied heavily on humor was a winning combination for the brand. (Who could forget the viral video that has pulled in over 27 million views to date?)
If you’re looking to amplify your reach while maximizing profits, the best way to do so is to cut out the middle man. Online marketplaces like Amazon, Wal-Mart, and Target are all great ways to find consumers who are in-market for your product, but they all take a portion of your profit through their referral fees. To quickly grow your brand, sell directly from your website.
Adopt a Subscription-Based Business Model
Another thing Dollar Shave Club did right was to add subscription fulfillment to its supply chain. Driving trial and repeat purchase is always a critical step in growing your brand’s market share. Enabling consistent replenishment of your product to consumers’ homes via a subscription model is kind of like putting your brand on autopilot. It’s convenient for the consumer and it’s a recurring revenue stream for you.
Allow Customers to Make Subscription Changes via SMS
Services like SMSBump and ReCharge allow your consumers to make changes to their subscription preferences on the fly. In today’s world, that’s essential to creating long-term relationships with your customers. Customers can hit pause on their account if they’re going through financial hardship or add additional products to their order if they have a house guest coming to visit—all by simply responding to a text message from your brand.
Create Experiential Moments with Brick-and-Mortar
Oftentimes, customer acquisition is one of the most expensive components of a subscription company’s
marketing strategy. Reportedly, brands pay 2-4 months’ of revenue upfront to acquire one customer (source). Because of that steep cost, it’s important to consider diversifying your sales channel strategies.
Establishing a brick-and-mortar presence is one way to expand your brand’s reach. CPG companies like Warby Parker and Urban Outfitters are well known for investing in trendy retail neighborhoods that rely on heavy foot traffic. Securing a retail space in a location that provides easy access to your target audience not only results in sales but also allows you to create brand experiences.
Think of your retail space as the place where your consumers go to interact with your brand. Everything from your window displays to your employee’s uniforms is an extension of your brand’s identity. All of those touchpoints allow your brand to create a lasting impression on consumers, creating brand equity.
Be Adaptable & Continue to Innovate
Consumer behavior is constantly shifting. Watching how the Covid-19 pandemic sped up retail e-commerce is a great example of that. To grow your brand from startup to acquisition, stay on the cutting edge of technology and consumer wants. Innovative brands are powerful.
Large corporations like Proctor and Gamble are always looking to acquire startups to add to their portfolio to remain relevant and to showcase their progressiveness in particular categories. If you want to catch their eye down the road, consider these tactics to grow your brand and increase your valuation.
Ready to sky-rocket your brand’s growth?