The Path to Profitability: Marketing | Part 2

The Assembled Brands team analyzes the financial data for hundreds of consumer goods businesses each year in the course of our normal business. By helping a large number of CPG brands reach their growth goals through funding over the years, we have developed a strong understanding of what consumer goods brands really need to achieve profitability.

This is part of a series on the Road to Profitability. Did you miss Part 1? Read it here.

‍Own your marketing

One of the earliest and biggest mistakes a new company can make with marketing is hiring an agency to run their marketing for them. Agencies can play a very important role in maximizing your marketing spend, but partnering up with one should come towards the last phase of developing your marketing strategy. Without laying the right groundwork you’ll find yourself developing creative that won’t convert, and ultimately spending money on media channels and influencers that don’t fit your target market.

The first thing your company should do is figure out who is going to own the overall marketing strategy of your business. This doesn’t necessarily mean hiring in-house employees full time - in fact we don’t recommend that for most brands! This means figuring out who on your team should be the owner of the tasks mentioned in this article. The owner is responsible for working with your marketing partners. This may involve collecting information from the rest of your team to develop marketing personas, gathering ideas for creative, and managing and advocating for your marketing spend.

Define your customers

You’re probably thinking that you already know who your customers are, but we will now put that to the test. In order to develop an efficient marketing strategy that maximizes your return on dollars spent, you’ll need to develop clear and detailed descriptions of your customers based on your market research. These are sometimes called buyer personas.

To illustrate this, let’s develop some buyer personas for our new (and imaginary) brand: Assembled Fashion. Our investor deck probably already has a market defined for this brand - casual work wear for men and women between the ages of 30 and 45. This is a great point to start, but advertising targeting “men and women between 30 and 45 with jobs” is both very broad and very competitive. You’ll spend a lot of extra money trying to target this group and get lower returns for it because of the lack of specificity and the high amount of competition with other brands trying to appeal to the same demographic.

Let’s break it down a little more. What kind of lifestyle do your target buyers have? Are they childless jetsetters who travel frequently? Urban, suburban, or rural dwellers? What regions do they primarily live in? Where else do they spend their money? How, and where do they spend most of their online time or social media time? Do they primarily shop for your product at work on their computers or on their mobile devices from their sofas? Knowing our target audience’s pain points is crucial when trying to understand their wants and needs, so you can get a clearer picture of who to tailor your messaging for.

If we’ve already had a few sales, we can start by building a customer profile based on the data available. Besides digging into your analytics accounts, you can send out surveys to existing customers in exchange for gift cards or speak to them at events. If you haven’t sold anything yet or you’re trying to break into a new market segment, try gathering as much information as possible (all within the realm of marketing ethics) from your own data and the data of close competitors that may share the same target audience with your brand.

Getting this specific means you will likely have multiple personas for your business - that’s a good thing! See below for examples of our Assembled Fashion personas.

Understand your marketing options

First a quick review of the different ways you can market your products:

If you’ve got your buyers well defined, this next part is much easier. You should already know, for example, whether or not your target audience spends most of their time on Instagram or TikTok or Reddit. If they are frequent posters to social media, in person events can generate a great amount of organic social media traffic. If they are primarily consumers of social media, it might make more sense to directly recruit the right influencers to mention your products.

Almost every brand needs a website, and while starting out with a basic template is a great first step, now that you truly understand who your buyers are, you can develop imagery and a consistent brand voice that appeals to them. Email is another tool almost every brand should strongly consider - email marketing is one of the most inexpensive tools in your kit both for returning sales and cart conversion. Effective email messaging after someone’s first purchase can drive both future sales from that buyer, as well as move prospects further down the funnel, and closer to a conversion.

As for referrals, asking your loyal customers to tell their friends is another incredibly inexpensive and high-return marketing option. For example, you can offer them and a friend a discount whenever a friend uses a referral code. This is called a “friends and family discount.”

Other than overspending on agencies and internal headcount, paid search, paid social media advertising, and influencer marketing are the most common areas for excessive spend. Thanks to your buyer personas, you and your agency partners can develop more targeted ads that will both convert better and cost less per impression than a more general ad would have.

After finalizing your buyer personas, your brand voice and visual identity, it may be time to consider bringing additional partners on board, such as an agency that can help you reach more potential customers and take your marketing efforts to the next level. We’ll take a deeper a look at how to do so in the next section of this article.

Choosing the right partners

Now that you’ve got your strategy and your marketing owner defined, it is time to find the right agencies for your brand. Let’s return to our Assembled Fashion example. Our 2-3 buyer personas are primarily on Instagram, buy our clothes to look good on Zoom, but want to be comfortable working from anywhere, and like to travel with friends.

We don’t think we’ll need an agency that works well on TikTok and we don’t need to develop creative for multiple platforms. We also don’t need a significant amount of community engagement hours the way we would on Twitter and Reddit. We think it would be worth testing some influencer marketing by targeting influencers in the digital nomad space. We know we want to create great email marketing campaigns, because our buyers are often checking their email for work.

The truth about marketing agencies is that while they will often tell you they offer multiple services, they typically start their agencies around one or two strong competencies and then outsource the rest. For example, they might be strong at email marketing and paid social advertising, but outsource their creative and content writing to freelancers. This means that they are often playing telephone with your marketing needs - you tell them, and they tell someone else. This doesn’t always result in the best teams for your needs, which is why your marketing owner should go out and decide exactly what functions they need. (Remember Part 1: Hiring for Growth? You can apply that strategy to both in house and agency hires!)

At Assembled Fashion we know that we need a large amount of creative images for the website, Instagram, and email, so we decided to hire one in house creative person to work with our agencies to develop images. We’ve chosen a website team that has strong experience on Shopify and a portfolio we like, and a paid advertising partner with a strong background in both Instagram and fashion. We shared our buyer personas with all our agency candidates and chose the ones with the best feedback. They even gave us some ideas we hadn’t thought of before, all due to their deep expertise in our industry.

Iterate and Analyze

All of the above is just to get your marketing started. Now it's time to analyze your data and iterate on your marketing. Your agencies should help you with this by reporting on performance of the various areas they are working on and make suggestions. For example, your paid advertising team will be tracking the performance of your various creative options and increasing or reducing spend on different assets depending on what performs well. They might help you notice that darker imagery or creative that is more text based seems to perform better for your buyers. Your email marketing team will test different styles of email subjects and content to see which result in better open and click rates.

Your marketing owner should be constantly gathering and reviewing data from all sources, and updating your buyer personas as you learn more. Maybe you previously thought that frequent travelers were your best buyers, but you’ve started to learn that travel imagery doesn’t sell as well as home decor imagery. Expect to review your overall buyer personas at least once a year - twice might be even better when you’re first starting out.

The better your analytics, the better you can build efficiencies in your marketing. The same dollar should take you further as the months go on and your marketing becomes more efficient. Oftentimes, brands increase their marketing spend and see revenue increase linearly over several years. This is of course better than seeing marketing spend increase and revenue stay flat, but as you get better at marketing the same spend should go further. If it isn’t, it might be time to re-evaluate your strategy.

This is why starting with an agency, allocating a budget, and letting them run it isn’t the best strategy for most brands in their early phases. From your position inside the company you’ll be able to see the big picture for how the entire marketing strategy fits with your brand, and make adjustments as needed far better than an agency can.

We have made it our mission to provide emerging consumer goods brands with the capital they need to fuel their growth. We take pride in helping brands scale as they grow, with flexible capital solutions, industry insights and more. You can learn more about our working capital loans here.