Before You Hire a Branding Agency, Do a Strategic Review

Part 1

When early-stage businesses struggle in the premium end of consumer-packaged-goods, a shocking number of founders and operators leap to the conclusion that they need a “brand refresh” or a “re-brand.” Look, branding agencies are numerous, and they network heavily at Expo West. They sponsor events routinely, from Bevnet to Nutritional Capital Network investor huddles. In this context, in which founders who have little to no professional experience with what a branding agency does, the latter often pass themselves off as business strategists to the naive. Very few of these agencies are actually capable of commanding the data necessary to play that role with a business owner. Many don’t use the right data or any data. Read Mark Ritson’s hilarious take-down of sh*t branding consultants if you think I’m exaggerating. Branding outfits are not really experts at competitive analytics, let alone experts on the data driving your market performance. They are communication tacticians. When they say “strategy,” think “communications strategy” to use symbolism systematically to influence the trial.

The underlying mistake new founders frequently make is gravitating to tactical service providers to solve ALL their business problems, real or imagined. I get it. These folks provide you with something tangible you can immediately deploy. A new pack design. A better sales deck. Funding. A marketing campaign. The problem with this tendency is that it relies on a major assumption, a massive elephant-in-the-room of your company: the assumption that your strategy is well-thought-out.

Strategy-less tactical fiddling is a pervasive problem among early-stage founders.

Let me give you a blinded example of how this goes wrong to make my abstract point super concrete. An otherwise highly disciplined founder I know entered Walmart extremely early on in the life of the business. When sales wildly underperformed vs. the mainline supermarkets in which he was also selling, he immediately hired a marketing consultant whose objective was: to increase Walmart sales. And so this consultant dutifully set out to execute a campaign that did generate a brief boost in the trial through simple awareness building. But the founder’s error was not in hiring the consultant. That was a symptom of a larger problem. The problem was being unable to back out far enough to put into question one straightforward thing: Why the hell are you selling your thing in Walmart? How was that decision made? Why aren’t you just doubling down on your high-velocity supermarket sales with world-class out-of-store marketing?

So many questions arise when I see founders jump uncritically to this or that executional P as the ‘solution’ to their problem du jour.

By refusing to accept that he didn’t have a real competitive business strategy guiding ALL his execution decisions, this founder hired a tactical consultant to execute his self-diagnosed solution to a B2B problem. And because it worked to solve his immediate problem for a while, his eye was taken off the real problem: Walmart continues to underperform his other accounts on a velocity basis wildly. I can assure you from years of experience in CPG that mainline brands do not underperform at Walmart. Lays. Oreos. Pepsi. They see their highest store velocities at Walmart. Oh, but wait, you’re not selling cr*p like that, you say?

Yes, yes, you’re right. Which is why you need a competitive strategy for a premium CPG business, so that it moves through society in an optimal way to create rabid fans who create high-efficiency sales at maximal unit pricing.

What needed to happen with this founder was something few inexperienced founders even know is an option: back way out and conduct a total, empirical review of the business and the strategy guiding it (implied or written down). When you enter a retailer and faceplant, it almost always means you had no well-thought-out strategic plan guiding your selection of retailers. Instead, as is common, you were focused on strategy-less account accretion. You were running a B2B business.

In premium CPG, your price point alone alienates ~90% of potential category buyers. So, you have to fight very hard to gain attention, generate memorability, and secure repeat purchases. This competitive situation more or less makes modern strategic planning essential.

Part 2

I want to share some thoughts on how you conduct a professional strategic review…of an early-stage brand. Yes, you can do this yourself. Yes, you may wish to have Board members or other experts participate.

  1. Collect the right external data behavioral insights on your fans and (if you’re eight figures) historical, national POS data on your category and competitors, HH penetration data
  2. Gather ALL the data you need – behavioral insights on fans (national POS data, HH penetration data) channel mix data via distribution, store counts, and zip codes for stores,
  3. Use the CPG Causality Pyramid
    • evaluate potential weaknesses in the product (sensory, symbolic, occasion reach); do you have an advantaged attribute-outcome signal you’re sending to consumers?
    • evaluate potential weaknesses in placement (i.e. evaluate %ACV growth (or store count growth) to see if it’s excessive, evaluate the appropriateness of channel placement, then banner placement within each channel and channel complexity)
    • evaluate potential weaknesses in pricing (i.e. benchmark to channel norms first, look for excessive discounting and non-strategic discounting, % of sales drifting into EDLP banners, etc.)
    • evaluate potential weaknesses in your promotions (i.e. effectiveness of trade spend in-store, sampling, PR, social media, e-mail)
  4. Look at your 4P mix – your default playbook
    • is it driven by a coherent competitive strategy (or just a mix of things you’ve tried)
    • is it unique among competitors?
    • is it ownable? (i.e. will competitors be unlikely to follow your moves?)
    • is it bold enough to generate memorability? (think massive SkinnyPop displays from 2010-2012!)
    • is it holistic? (i.e. are you even doing sophisticated consumer promotions?)
  5. Make limited, bold changes in the right order
  6. Measure in six months
  7. Keep adding changes, if performance has not improved

Branding agencies focus on your primary symbolism and package design. Since the product is the first “P” you should evaluate if performance is sub-par, it’s not exactly insane that founders start messing with their pack design to jumpstart growth.

The problem is that branding agencies focus on symbolism ONLY. They won’t tell you that you have a sensory problem or a nutrition problem, or a category problem. They have no ‘right’ to comment on these because of their basis of being hired.

Not to mention that your product may actually be excellent, but your sales efforts were, well, misguided. Changing your brand symbolism might actually screw things up even more.

If you don’t like your performance, you need to do a comprehensive strategic review first. Only hire a branding agency if you have a problem with your core symbolism. But you are the one with the data to determine that, not the branding agency.

If you’re a founder who’d like to learn more about creating your own competitive strategy and strategic plan for exponential growth just like the pros, please register HERE to join the next cohort taking my Riding the Ramp training webinar on July 29. I look forward to meeting you there.

And please check out other founder resources elsewhere on my site.

Dr. James Richardson

[email protected]