Sustained Repeat Purchase is Your Foundation
In Ramping Your Brand, I pound the pulpit about building and fueling a conversion funnel of trial/repeat to grow velocities. Buried within my text though, was an edited-out section on sustained repeat purchase—damn editors.
So, I’m here to push you deeper to understand some basic math behind exponentially growing brands. Like all growing brands, they grow HH penetration…this is the trial component. New households need to come to your brand give it a try.
More importantly, for undercapitalized early-stage brands, a base of habitually consuming fans ‘locks in’ recurring revenue for at least 1-3 years depending on the trend and innovation cycle in the category you are in. You want their overall % of $ sales to remain stable as you scale. As you approach $100M, the % will begin to decline most likely.
But, if you are not retaining converted fans in enough volume, you:
a) lose the HH-level attention with which to increase frequency through price-pack architecture
b) you place the balance of power on distribution breadth and adding doors to keep adding weak trial.
If you react by chasing distribution, you will also avoid looking deeper at the problem with your sustained repeat purchase levels. This is usually something about your product. If that something is a fatal flaw for exponential growth, like your inability to increase low category velocities, you need to hit the brakes. Other things could also be at work.
You can use survey techniques among your fans to see how deep their habit is. And you can do this fairly early on until your brand has the scale to be picked up by the major panel data providers (e.g., Numerator). Purposive fan sampling is a great way to see if you can keep people in the brand for more than a year of repeating. That’s the sign of the Kind bar, SkinnyPop enthusiasm that you want for exponential growth.
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