Using a Retail Account as a Word-of-Mouth Marketing Trigger

In the early years of growing a consumer brand, just getting to $1M in trailing annual sales is a near-death experience for the vast majority of founders. Unicorn velocities bless very few CPG startups. The temptation early on to add together any retail account that will have you is very understandable. At this point in the growth journey, it makes sense for founders to see retailers purely as revenue sources.

But, as you grow, it becomes critical to assess accounts in a more sophisticated manner. This is really the case when you have an offering with ‘weird’ attributes trying to re-frame a mass-market outcome tied to your category (or not tied to it!).

That’s why I want to remind founders reading this to explore one particular use of a retail account: as a word-of-mouth marketing engine. For premium-priced consumer brands, word-of-mouth stories and proof-points remain the #1 trigger to trial. This is especially true among the majority of those who trade up in consumer categories, the ‘pragmatic adopters’ who don’t trade up broadly to project an elite class status.

How so?

Specialty retailers, health food stores, and Club stores all have a special function in American retail: they are venues where American consumers deliberately browse for new and interesting items. At one point, Whole Foods used to have an average trip time of 45 minutes for what wound up being a basket worth of items. That much shop time at Safeway means a full cart for most of us.

In these discovery-oriented retail chains, your brand has an opportunity to become ‘discovered’ by predisposed consumers as a ‘cool’ choice ahead of the cultural curve in your category, for status buyers especially, who tend to be WOMM advocates in their social networks. There is enormous value in you being ‘discovered’ by these kinds of folks because you need their word-of-mouth storytelling to legitimize you as the ‘modern choice,’ not as some weird thing at Whole Foods.

Having large sets of ALL your UPCs at Whole Foods is a very successful play for brands that are way ahead of the category’s trend curve. This is critical for brands whose modernization play is based on superb flavor. Whole Foods and specialty retail chains in each major market are known destinations for the latest, packaged culinary innovations. If your angle is foodie, you must have a dominant shelf set in these chains. Not to make tons of money (although you may earn bank). You need to be here to maximize your reach among word-of-mouth advocates in CPG categories.

The best part of re-framing specific niche accounts primarily as marketing engines is that your sales will pay for the ‘marketing effort,’ you will make a profit off of your marketing. Still, you won’t make the mistake of trying to work a small specialty chain too hard for an unrealistic revenue scale.

Costco remains the only discovery retailer in America that can function as a powerful WOMM engine AND produce stunning store-level revenues. It is why Costco is the only large volume chain that you’ll ever encourage some of my clients to get into early on in their journey up the ramp.

So, remember to understand objectively how trend-setting your innovation is and, if it is the Siggi’s of your category, then get it into discovery retail chains with large sets as fast and early as possible to accelerate network-based word-of-mouth marketing. And get those early status buyers on your e-mail lists so they can also tell everyone the more conventional outlets you’re selling in.

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Dr. James Richardson

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