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Ep. 15 Designing to Command a Premium

FEB 01, 2020

00:19 Welcome to Episode 15: Designing to Command a Premium, the first in a series diving deeper into the contents of Ramping Your Brand. My new book for founders available now on Amazon.com. Design, oh, it’s such a sexy word. Herman Miller chairs, Maserati cars, Whole Foods produce displays. I mean, who wants lousy design? Anyone, anyone? Walmart? Bueller, Bueller? Look, when I began my career in business about 20 years ago, every over-educated person in market research, and there were many of us folks, we all wanted to do design research, user-centered design, user experience research. Everyone wanted to work at IDEO or Jump Associates. If you don’t know either of those two, don’t worry. I almost got sucked into this design-y vortex myself.

01:11 Look, I tease the design folks not because design is unimportant, but rather because design folks are a tribe that a notoriously averse to quantitative analysis of any kind. I mean, how did these people even do their taxes? Seriously. All right, enough preamble. Look, a third of my new book, Ramping Your Brand is about design and there’s a reason for that. It’s that important. I can’t get into everything here that I want to. So in my 10 minutes, I’m going to dive deeper into some of the subtleties that my editor wouldn’t let me get into. Jerk. “We want them to get into part two James, not die of exhaustion,” she said. Still a jerk.

01:49 Okay. Where I want to go deeper is the one thing most founders vastly under-think regarding design in the giddy rush-up to their initial shipments of pallets and their initial route to market push. Until, until that is, velocities start to tumble, slip, and slide. And then the buyer calls you with the bad news. What news? What you’re going to hear as a founder are words… Verbs, excuse me, verbs, such as D list or pull or remove in some grammatically appropriate variant.

02:27 Yet what may often be going on for first time CBG founders is something so fundamental, it utterly escaped you until then. What is that? Your product is a sensory disaster. It may crumble all over people’s work desks, the primary occasion in which they wanted to consume it, until you filled their lap with your shitty crumbs. It may be incredibly bitter when you intended mildly sweet, oops. It may have chunks of stuff where no chunks belong, per cultural norms in the category. It may be too dry, causing people to almost choke. Very common problem in naturally formulated products. The flavors may be stale six months after they leave your co-man’s plant. They may crumble on route during transit, leading to some serious consumer frustration.

03:21 How does one pickup 1,000 shards of potato chip? Certain particles in your beverage may just never stay in solution for more than 15 seconds after being shaken by the consumer, leading to an uneven flavor experience as the consumer moves through the drinking process. Am I getting too anal retentive for you? Look, I just listed some of the things I personally have experienced in my career, sampling hundreds and hundreds of premium products from startup founders with no prior experience. Again and again, first-time founders and their co-mans, who are suspiciously unengaged in quality for them, but suspiciously very engaged in quality for their high-paying contracts, continue to launch products that basically aren’t done.

04:12 The most popular founder questions early on regarding their entire business are, “Where do I get money?” And B, “How do I get on the shelf?” Absolutely the number one and two questions, or maybe number two and one, depending on how you think about it. But very few founders use anything other than their own bloody tongues and noses to assess the sensory experience of consuming their products. And that’s what I’m focusing on in this episode; this deep dive is the sensory experience, sensory design. I literally spoke with one anonymous founder 18 months ago, who said, “Yeah, we have some issues with the few of the UPCs, but I just need to get out there and get these sales going and we’ll work that out as we go.”

04:58 Huh? Okay, if you made a premature promise to your broker and distributor to have product ready, and it actually wasn’t ready by your own admission, by your own standard, by the standard of your own tongue, I can see the temptation to ship a mediocre product, just to maintain shelf access, keep everybody happy, not ruffle feathers, not tick off the distribution beast, and then go solve the problem later. In the stress of the moment, as you realize that your product is actually not ready, but you’ve authorized the co-man to finish it and palletize it and get it ready for pickup by UNFI or KeHE, or whoever, or your mother, those hardship dates in front of you, tunnel vision can easily set into the naive and inexperienced founder. Then you just hit “Ship,” because you literally don’t know what else to do. You are essentially panic-shipping.

05:58 No! No, no, no, no, no. You can never knowingly ship inferior product in a market this competitive. I’m sorry. No way. No, no, no. I’m happy to give you a list of older Boomer females, sorry, who launched the health food movement in the United States in the 1960s. I have some names. I think they may even be on email, and you can sell them your mediocre crap if you’d like, because I happen to know for a fact that they’ll eat anything, anything, no matter what it tastes like for the cause. Look, those people aren’t a market anymore. They’re a funny deviant aberration. The rest of us folks who buy premium product, we want to enjoy our food and beverage, and we’re not going to trade that enjoyment off so that it can be healthier, chock full of ancient grains, or whatever the health fad is of the moment.

06:52 If you, the founder didn’t enjoy your thing as the pallets were being shrink-wrapped, why would you in good conscious ship it? That’s one question, but I realize there’s a moral panic around the business at that point with the hardship date, what are you going to do? I promise you, it’s going to be far better for you in the long run to disappoint your broker and distributor before you ship garbage, underperform at the shelf, and now have a proven, documented mathematical track record of failure with either your distributor or your retailer. Better to disappoint them before that track record shites than to actually knowingly set yourselves up to fail.

07:37 This is where younger founders, especially those who are honestly new to business or newer to business, they get trapped psychologically in the route-to-market bureaucratic mechanics and those sunk costs of onboarding and the slotting fees, which in this case, you will probably lose. More experienced business people realize that this kind of [inaudible 00:07:59] up is cause for professional advanced negotiation and damage control. And that’s the option that many young folks who realize what’s about to happen, don’t understand and they lose sight of in the panic to ship. But it’s much better to calm down, take a nap, come back and engage in the negotiation skills that you really need to have to get your stakeholders to realize that you’re not ready.

08:27 I’d like to tell you that you’re just selling symbolism in consumer packaged goods. I’d love to tell you that, “Look, if you just get the front panel right, you don’t have to worry about anything else.” But it’s just not true. This is an experience-based, outcome-based sector. And that user experience has to meet expectations. And if you know it’s not going to, you cannot be shipping things.

08:51 When it comes to sensory qualities such as texture, flavor profiles, moisture levels, heat, sweetness and saltiness. You want to make sure you approach category norms as much as possible with a natural formulation. I can tell you that this is not, not that easy in a lot of formulations. So no matter what special magic inspired you to create your business and that you’ve included to pull off a modern… what I call a modern, socially required premium alternative to processed brands in the category. No matter what that is, you still have to nail sensory norms in the category and you have to be palatable and enjoyable.

09:36 And remember that taste perception is actually relative to the individual’s brain. Yes, I don’t get into this in my book very much, but sensory signals are all interpreted, right? I talk about that. These interpretations are very quick. They’re very subconscious. Some are driven by class, some of them are driven by your ethnic background, but they’re also driven by your own personal neurology and your habits. If you don’t believe me, pass around bowls of plain whole milk Siggi’s yogurt at your next multi-generation, and most likely cross-class, family celebration with the whole extended Uncle Larry, kit-and-caboodle crowd. I’m pretty sure when you pass those bowls around, you will receive not only a massive onslaught of mockery for your chosen profession, but you’ll also receive an astonishing continuum of responses regarding its sweetness level even in 2020. Uncle Larry will declare it to be sour and disgusting, and someone over there who may be anorexic will declare that it’s sweeter than candy.

10:35 So, that is the world we live in. The human brain will re-calibrate to varying levels of salt and sugar over time in your own individual diet. Just as with coffee, if you habituate yourself to very little sodium or sugar intake, your brain will register saltiness and sweetness with lower and lower levels of actual sugar sodium molecules. There’s a point at which this obviously stops, but the principal holds. Look, have you ever grabbed some Fritos? I mean, the original Fritos in the red and white bag? Have you ever grabbed some Fritos after years of not having them and suddenly been overwhelmed with sodium shock? I have. It’s fun.

11:11 I bring this up because as you go to market, what tastes great to you may actually… Something that you could honestly ship and be proud of, to my earlier point, but something that tastes great to you may actually be asking for a major, major, major smack-them-over-the-head sensory trade-off among early adopters of premium, or early adopters of your offering. You need to get a handle on this early on by interacting with the early repeat buyers of your product line. Understand their initial sensory perceptions during this window of early adoption, before they adjust and stop noticing the variants from category norms and they’ll… which is when they’ll be a bad source of information.

11:52 If you get them in those early months, you’ll get that initial sense of how far away you really are. This does not require a multi-million dollar sensory research lab, which the big companies own. No. Basic English words will suffice to determine if your thing is the Greek gods or the Siggi’s of premium offerings in your category. I think a few of you may have gotten my little dig there. But your tongue, your tongue may not be the right measurement tool. You have to accept that when it comes to understanding sensory design and understanding what you’ve created. That’s all I’m suggesting. Strongly suggesting. Don’t rely on your own personal satisfaction of the sensory experience as indicative of the actual consumer’s experience of your product in the real world.

12:41 And don’t be tempted to downplay deal-breaking issues like excessive bitterness or dryness or breakage as minor issues in the panic to ship and the panic to grow. When in reality, I assure you, they are not at all minor issues. They kill repeat. They kill your velocities. They turn you potentially into a giant door-hungry house of cards, which if I see you doing that, I will weep quietly in a corner. That’s all I’ve got, folks. Remember, be safe out there.