Exponential Growth Can’t Rely on B2B Sales
The vast majority of CPG startups operate as B2B businesses. They don’t interact with their consumers, even when they sell DTC (!). They aren’t even curious about how ordinary people receive and use their products. As long as case volume sales grow, they’re happy. As long as their wholesale price can float operations and their salary, they’re good. As long as they can pay for kids’ private school, they’re good.
Such founders rely on their sales staff to grow the business by adding accounts. Stable velocities that retain their shelf space are a good outcome for them. They only worry about velocities when they’re declining and threatening access to an account.
For such brands, the ‘growth strategy is a theory related to account sequencing-based purely on the company’s ability to service the account and the cost of servicing it.
I’m not saying you can’t become a $5-20M business this way, especially if you are a very gifted sales negotiator with a good reputation in the conventional retail trade. You can.
But you’ll never scale the business this way. Or it will take 20 years.
You haven’t got a strategy at all. You’re stringing accounts together. Without a competitive frame and motivation driving all areas of execution, you aren’t strategically managing the business at all—a competitive positioning forces you to commit the whole balance sheet to some audience, niche or broad. The anchoring of your thinking about the end consumer is the crucial difference.
Once every decision is made at the company because it supports a strategy to delight the ideal, predisposed consumers, you have the potential of running an exponential growth brand. Skate Ramp brands draw their exponential growth rate directly from consumer enthusiasm, not from stacking accounts one after the other. However, you have to ensure you’ve co-completed the product line with your early consumers. Something is usually off when you launch. Your sales guy can’t help you figure it out in most cases because she is NOT in touch with the end consumer.
You, the founder, and your team ALL need to focus on your end consumer, why they love your product, and make your decisions to find more of those people and keep them happy and coming back, even if it’s only twice a year.
Every quarter I take a new cohort of CPG founders through my Riding the Ramp strategic planning seminar. It builds on my book, the only book that explains how you can achieve exponential growth in consumer packaged goods. Exponential growth allows you to grow fast enough to achieve scale before you get copied but not so quickly that you leave no time to iterate and optimize the offering.