John Jantsch (00:01): This episode of the duct tape marketing podcast is brought to you by the HubSpot podcast network. Hey, I want to give a shout out to another member of the HubSpot network, the success story podcast, hosted by Scott D Clary. It's one of the most useful podcasts in the world. Success story features Q & A sessions with successful business leaders, keynote presentations, conversations on sales marketing. Hey, and if you're a freelancer, his episode on how to make seven figures freelancing on Fiverr is a must listen to the success story podcast, wherever you get your podcasts.

John Jantsch (00:47): Hello, and welcome to another episode of the duct tape marketing podcast. This is John Jansen. My guest today is Dr. James Richardson. He's the founder of premium growth solutions, a strategic planning consultancy for early stage consumer packaged goods brands. As a professionally trained cultural anthropologist turned business strategists. He has helped nearly 100 CPG brands with their strategic planning. And he's also the author of ramping your brand, how to ride the killer CPG growth curve. He also hosts his podcast, startup confidential and routinely appears in trade magazines, serving CPG, the CPG industry. So with that, Dr. Richardson, welcome to the show.

Dr. James Richardson (01:34): Thanks for having me,

John Jantsch (01:35): John. So for those of everybody, generally speaking has a knowledge of concepts of marketing. Anybody that listens to my show. What w what would you say are the significant kind of critical distinctions between considering a CPG brand versus say, like marketing a service?

Dr. James Richardson (01:51): I think you, it's easy for founders to underestimate the challenge of changing habitual patterns of consumption. So consumer packaged goods, if you're intending to, to scale quickly is about changing habits. And whereas services tend to be purchased fairly sporadically or on a longer time cycle. So it's just a very different animal.

John Jantsch (02:15): We'll talk a little bit about the, you just said changing habits. So it would probably two challenges. If I I'm just gonna throw out goofy names. If I sell Coke, getting somebody to want to drink Sprite or something already in the category is one challenge. Right. But what if I'm creating, there's so many drinks I'm thinking like hard kombucha or something that like, that's not even a category that existed a few years ago. So how do you convince somebody that this is something you've never had before and you're going to love it? Okay.

Dr. James Richardson (02:43): So I think this is what I tell my clients is that first of all, you've just got to, you've got to shove your, your thing into the marketplace in some, in the local context where you have easy access, uh, to your fans, and then you need to listen. Cause usually early on in the first, even the first months and certainly the first year or so, your fans will probably do a better job than you, the founder of articulating why it matters. And so I'm, I'm a big believer in using those fans to figure that out early on, and then whatever that, why is that something that you get to them selectively pick from, if there's more than one, I use the language of outcome, but there's more than one outcome that people are seeking from your thing. Then you get to, you get to use the marketing flywheel to reach more people who may not intuitively get it.

Dr. James Richardson (03:38): If that makes sense. So like the heart kombucha is a good example because I don't know if you've ever had any of those brands theirs, but they taste a lot like wine. Yeah. And so we know when you, when you're creating a new category, it's really important to figure out where you're sourcing volume from and what is the, what's the logic of figuring out where you're sourcing volume from and what is the, what's the logic or linguistical linguistic frame you can use. You can either do that with language, but I'm also a big believer in just inserting, because in my industry, we're selling widgets, these are physical art, they're physical artifacts, right? And in some cases they're, they're status symbols, they're extensions of personal identity or their claims about your identity. And so sometimes you want to just show up in the right social space.

John Jantsch (04:29): So though, are you saying, are you saying it's a little bit, you, you have to make a connection that they already have everybody when they come up with a new services, it's like Uber, but for lawn mowers, is it that same thing? You were just saying it, it fills the space of IRD like wine. So I'll like this, or at least already you're looking at,

Dr. James Richardson (04:48): Well, what you're looking for actually, John is, is a late what I call a latent dissatisfaction that there may not be articulating until they have your thing. And this is really quite common actually in consumer packaged goods because Americans have two to 300 different products stored in their homes or apartments at any one time. And that crosses 50 to 80 categories. Right. It's just, we, we refuse to think very consciously about those things, because it, it would be insane. I pick an attorney I'll think of hard and long about that, but so you have to you're, you're, you're hoping to tap into symbolism language or social context to nudge people into saying, Hey, here's, here's this key attribute that my brand delivers we're chasing, we're offering the same outcome as the thing you're already drinking will be, but here's, what's better about ours. And that has to be done in, in my, like a really simplistic fashion.

Dr. James Richardson (05:49): So like for instance, a lot of hard can boosters are lower and vastly lower in calories than a glass of wine. Yeah, yeah. Right. So you start to get down into some serious nuance. Yeah. But when you get into the nuance and you can unlock what it is, and usually it takes your fans for you to figure this out, because you may have created the company for some other reason. Right. But it's, it's in the nuance details where you can say, I have the new, so instead of saying, I'm the Uber of blankets, forget Uber. I'm more modern than,

John Jantsch (06:21): Yeah. So are you saying that a lot of ways you shouldn't even try to define it's almost again it out there, and you may find that there are unintended sort of pathways that open up that you really wasn't what you were thinking it was going to be.

Dr. James Richardson (06:37): Yeah. I, I think we, I have found that in most of my clients businesses, and in most of the case studies I've reviewed there, I talk about my book. There were pivots and those pivots were based on, oh, oh yeah. I had no idea that that's what, this was kind of a kind bar was a weight management product. Yeah. Yeah. But, but Dan Lubetsky created it as a status symbol, but that the fact that it's in a, in a clear wrapper, really isn't the reason it's scaled it scaled because there's no sugar and it was the, there never was an issue. Yeah. So sometimes you, because the founder is the worst source of bias and consumer packaged goods, you have to let the consumer and the market basically reeducate you on what you have and then run with that. And I think, I personally think that's true in B2B. It's been true in my business, my consulting business, I've done the same thing. I went to market for four and a half years ago with one idea what I was going to be doing. And I'm not doing that.

John Jantsch (07:40): I think you, you ended up discovering, I think a lot of times when you're starting out, you're, you're guessing for the most part and, and being open to discovering how often are, are big hits rather than cooked up in a laboratory are cooked up because somebody couldn't find a weight management product. So they started making their own flavored waters and all of their friends liked it. And then it turned out Kara golden was on the show, the creative hint to the water, the fruit flavored waters. And that really is her story. She wanted to create a product that tasted better than water. I was wanted to stop drinking sodas. And so she was baked cooking it on her stove top and or somebody told her at some big consumer packaged company told her she was crazy. He'd go back to just being a housewife. And she now has a a hundred million dollar product. So how often do you think that happens to where somebody is just trying to scratch an itch? They have personally.

Dr. James Richardson (08:36): Oh, I th I think it's, it's most of the folks who don't have a prior background in the industry, it's the vast majority of them. The problem though, John is most of those, not all those itches actually have any, any scalability. Right. So the biggest problem that I was just listening to one of your episodes before I got on, about finding your ideal customer. And then I, because I only work with my ideal customer, I literally throw away 50% of my leads every year I screen about. Yeah. So I'm in part of that is just finding people who, who really are going to benefit from what I can do. Yeah. As a consultant. I think that that has value as a B2B service provider, but for consumer packaged goods founders, what I found is a lot of folks are tempted by stakeholders to chase a whole bunch of trial.

Dr. James Richardson (09:24): Let me just get a ho if I can just get there, they all believe they're the next kind bar with when the other 98% conversion rate or whatever he claims in his book, men, very few of them are, most of them need some kind of tweak in the product experience. They're halfway there. They need to get better. And those are all fixable problems, but you have to be, you have to be coachable and you have to be coachable by the market for like, if you can't learn from the market, right. I don't want to work with you. Yeah, yeah. And no, and stakeholders, or they may take your money though. That's, what's funny.

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John Jantsch (10:58): So, so I want to unpack one thing that comes up in the book a bunch, and you, you use the metaphor of scare skate ramps. So you must have been a skater. I'm guessing that's my son I'll use that is so, so, so talk about how you use that metaphor.

Dr. James Richardson (11:15): So I, it literally came out of the mathematics of the, of a big study I did on the brands that scaled in the last 10, 15 years, the ones who got to a hundred million and beyond, and consumer packaged goods, which isn't very common. And they all rode this curve, which is an expedite. It's really just the sigmoid curve that you learn about in business school textbooks, but which rarely happens today at the grocery store because of the dynamics of the major players and the beauty of this curve is that, that it does two things. One is that it allows arrogant competitors to ignore you because they think you're failing. But every year they look at your numbers and you're like, well, he's still small, whatever. Meanwhile, you're actually doubling, but because you're doubling off of a small base, and this is the key to the math, you're, you're buying time to do it. We're just talking about, which is learned from your fans, iterate, finished the experiment, essentially finished your product line in market, or you make a big pivot.

Dr. James Richardson (12:22): And that gives you if actually buys you the time to pivot. And you're pivoting at a lower, lower scale, which in my industry is sort of, it's almost critical because if you say you're like $50 million, you do discover, oh, I'm running out of consumer. Oh no, you now are going to have to spend you have money. So that's great. But you're now going to have to, you're not going to wind down a $50 million business and replace it with something else. And that mathematic, you're never going to find an investor sign on there. Yeah. So that's going to be very painful. Probably won't happen, but you can completely pivot like a two or $3 million business. Yeah. Birth something else out. And then within two years, everyone's forgotten the original thing. And sometimes that original business gives you the right thing. It gives you access to a consumer audience. Spindrift is a great example of that. They launched premium soda pop all natural, yada yada, yada, but there's no market for it. Believe it or not. When people want a Coca-Cola Pepsi, that's what they want. They don't need an artisan version of, and when they do, it's like a goofy Christmas gift or something, what he discovered was people wanted, they wanted a different kind of sparkling water and that took off. Yeah. Yeah. So, but he did it at the right time. Now I'm talking about bill Creelman, but he did at the real, at the right time in the business. In other words, he killed the first idea early based on data.

John Jantsch (13:52): Yeah. So how big, how big is design in the package, the colors, the box, it comes in the bottle. It's in how thinking of like method, for example, a very design driven product taking on Procter and gamble products. How, how big a role is that? Maybe more so even than what's in the box.

Dr. James Richardson (14:13): Yeah. Design is, is important and can serve package goods for premium products, which is sort of my world, but it's, I wouldn't, I wouldn't say it's up to the importance of Dyson and that category of durable goods, um, where the user experience actually is incredibly complex and people are super demanding and they have a million ways to attack you. Right? When you're just selling a beverage, there isn't much going on there. There's very specific uses. This is the thing that's counterintuitive about design. It's not so much about being the next coach handbag of beverages. That's not really, you can do that to get attention. That's, that's great. But that just gets you trying. What really matters is able to use your packaging to signal. And this is what I help folks with using just the right words, just the right symbols and deleting everything else. And it's the leader, it's the removing the clutter, which is a big thing too.

John Jantsch (15:05): Well, it probably accentuates the brand promise or the brand story too, obviously. Right?

Dr. James Richardson (15:10): Yeah. I think there's something that you'll notice that most, most premium brands across industries, I'm sorry, across production verticals that chase the consumer, the premium ones tend to have very clean websites. They don't have a lot of IX. They're not like the used car dealer with the 75 pop-ups it's. So they, they assume, you know why they're cool. Yeah. And, and if you don't know, they're going to rely on your social network to tell you that, and that gets really extreme in the fashion world. But I think it's a mix of that in CPG word of mouth. John is huge in driving the initial years of growth like you need. And that's what, and that's, what's funny is that the word of mouth storytelling about your premium CVG brand, that's actually where the secret sauce is for paid marketing later. You're going to, if you can learn from them and then fund that story once you get the right one.

John Jantsch (16:07): Yeah, yeah, yeah. Yeah. Well, and that's, I mean, obviously the role of influencers for good or bad, frankly, certainly plays a role in, in a lot of cases. That's a page story too. Yeah. But, but how important is that role, if you want your brand to be seen as cool, does it have to be seen certain places?

Dr. James Richardson (16:25): Yeah. I think social insertion is something that matters in certain sub categories. Beverages is one of those certainly liquor and because, and it also depends what the outcome is. You're selling. If you're a liquor brand, you are selling a mixture of, of class status sex, basically. Right. And so you're trying to be the new thing at the bar. Yeah. And so you have to be at the right clubs now, in other categories, you may want to be showing up at surfing events. Right. Right. Because you've got a group of people who are into fitness and because they're into fitness, they are into weight maintenance because these people were never fat. They just don't want to get fat. So when they drank, they want boom, heart kombucha. That's a story of June shine right there.

John Jantsch (17:11): Well, let's, let's talk about how distribution has changed. There was a day when, if you couldn't get three feet of shelf space at no bubble block chain, you really couldn't exist. But today there are a lot of brands that are direct to consumer. So how has the distribution piece sort of changed? Because on the flip side of that, you see whole foods going out and saying, oh, you can only get this at this whole foods in Austin, Texas, because the person that makes it lives right around the corner. So there seems to be a real hunger to get micro that way. But direct to consumer seems to be driving a lot of these startup brands.

Dr. James Richardson (17:45): Yeah. I, I, so my, my general takeaway is direct consumer for all. Initially it works really well for all, but the frozen refrigerated temperature stay category, which is eliminates a chunk of the grocery store. I, what I found working with my clients is that it's a great learning laboratory to do what, to reduce the time John, in which you accumulate that massive early fans who can then educate you on what you created. Yeah. Right. So you can now do that in three to six months, not 18 months. Yeah. Which is what used to happen. People would go out and they'd sell it even locally. And it would take time to gather the negative feedback. Well, the positive feed, right. D to C allows you to create this flywheel communication. If you know how to use it, plus you can, you can stare at your repeat rate.

Dr. James Richardson (18:33): And if it's really bad, if you can't hide from that truth for very long, right. That's what I like is it's a brutal laboratory in CBG. It's sort of mixed results on how much you can scale and certain categories. And they tend to be not that traditional grocery ones, their beauty and personal care. That's where I'm seeing people create huge businesses. I don't have the, I don't know. Perfect. I don't have the perfect behavioral explanation for why it is with those categories, but I don't think it's, I don't think it's, it's certainly not shipping cost or anything like that. I think there's something cultural about people willing to, they're willing to see a Facebook ad and buy a $180 beauty cream or wrinkle cream almost instantaneously. And you won't see, you won't see P well, John, you won't see people switch their case packs, soda habit, right. Like instantaneously that takes weeks or months to change that.

John Jantsch (19:28): And it's partly it's because sort of maybe the, the dream that's being sold by that I was never fulfilled. So it's, well, maybe the next one. Or

Dr. James Richardson (19:36): I could, if I, if I channel my evolutionary anthropological training, beauty is sex. Beauty is mating and reproduction. It pretty much has the highest stakes like behavior of the species. Right. So deep down in your unconscious, if you have anxious, if you have insecurity about how you appear, it's not that hard to monetize that insecurity. Yeah. I think it's, like I said, it's a little harder to find that group of people who hate diet Coke, like Kara and they need her solution that took her time. Yeah,

John Jantsch (20:07): Yeah, yeah, yeah. Totally. Yeah. So, um, you have a number of case studies, so I'm wondering if there's, you could pick out one that you think is, was a little tiny brand that you worked with that now might be a name, or w w I, I guess I'm asking for your biggest hit, what's your, what's been your biggest that we maybe would, that listeners might recognize or be familiar with or any story that you want to share that you think was a great case study? Well,

Dr. James Richardson (20:36): That's a good question. I just, uh, wrote, I'm going to pick the one I can publicly talk about. Okay. I said, that's a good idea. You're a big name podcast. I don't need lawyer letters. So we're, I started working with John Forker, who's the CEO of once upon a farm, the baby started as a baby food brand for the last two or three years. And they were, you know, they were doing okay, they're doing okay. But they, they had this, he had this nagging suspicion that something was off. And part of part why can't. So I came in and we worked together just for a day. I did a little of my shamanistic sort of data analysis and stuff like that, which sort of in my book as well. And I discovered that we had a velocity problem. The problem was that it was selling, but it was, it was really, it's not the kind of a loss.

Dr. James Richardson (21:33): I won't get into the details of why not the kind of a loss city, that velocity trend is more important. I not growing, that's going to create scale. So the key behind the skate ramp is that the velocity is actually growing every year. It's sort of like, it's the investor's dream and in investing right as your, your industry keeps growing. And so you get richer and richer and richer, and then it explodes. This is what exponential growth is in CVG. And so I think he wants to get on that track, but was struggling with, they had always wanted us to be a kids brand. Okay. They organic HPP sort of fruit and vegetable. It's a fruit and vegetable, a smoothie, basically a pouch. You stick it in your mouth like goo. Yup. Yup. So babies have no problem with doing that. Kids don't have any problem with doing, doing that, but actually a lot of adults don't have a problem.

Dr. James Richardson (22:26): So they had always fought the investors as well. That we're going to be a big kid's brown, but they had always seen that as down the line. Right. And I think what I helped them figure out is look, the baby food category is probably when you didn't even want to have to start with. Yeah. Which, which is it's okay to discuss now. But I think it was hard to swallow at the time. Cause you raised money on the basis. So we're going to take over baby food. But the reality is that the behavior, the demographics, the cultural trends, all the stuff that I'm trained to intersect and synergize, it was all bad, bad, bad, bad. I, as pretty much the worst case scenario, John of a category review of every death, it was like, I don't think these people you're going to run out of these people so fast.

Dr. James Richardson (23:10): It's basically what I told them. So switch to a kid brand now. And they made that decision. Basically he had half made it already and he, by the end of the day he was sold. So they did. And they had to make a whole bunch of changes. Yeah. They had originally thought that they were going to have to launch all these new lines. This is my favorite thing in CPG is new audience, new product lines. And when you're, I guess, $5 billion brand, maybe that makes sense because you have a bunch of segmentations that tell you that that's, that's real. But if you're starting a business, that's a 1520, if you're 15 to 20 million, you need to still stay focused. John. Yeah. Yeah. Right. So what we found in the data was that kids were already older kids already in the pouches. So they just rip the baby food label right off and re did a new brand identity that doesn't cost too much money. Right? Yeah. Put some cartoon characters on there and suddenly, boom, this end, the ad do some basic things in CPG. Like moms hate picking up four packs, put four of them in a box.

Dr. James Richardson (24:16): So once you stay focused and you listen to the data, then you can actually, that was, so that was an example of a pivot and they're growing like crazy now. That's awesome. And part of that was just not getting distracted by solving growth problems with like new products, which is a big temptation. Sure.

John Jantsch (24:31): Yeah. Yeah. We'll we'll

Dr. James Richardson (24:32): We'll yeah. I, I can't tell you how many brands I've encountered that are between 25 and 50 million. John they're still here and they have a 50 UPC. Nobody knows what they stand for. Right. And they basically, to me, what they have is that they have, they have concatenated like five little niche, consumer basis, nothing to do with each other. Yeah. It's a marketer's nightmare

John Jantsch (24:58): Because it's worth creating the new stuff's where the fun is. So, so James can tell people where they can find out more about your work. We have run out of time. So tell people where they can find out more about your work and, and obviously a pickup ramping your brand.

Dr. James Richardson (25:12): So wrapping your brands on amazon.com, you can also order it for libraries on Ingram. And if you want to learn more about me to follow me on LinkedIn, go to premium growth solutions.com, where I house my blog and that's updated three times a week. Okay.

John Jantsch (25:29): Well, I appreciate you something by the duct tape marketing podcast, and hopefully we'll run into you one of these days out there on the road.

Dr. James Richardson (25:34): Sounds good. Thanks for having me, Joe. All right.

John Jantsch (25:36): That wraps up another episode of the duct tape marketing podcast. I want to thank you so much for tuning in. Feel free to share this show. Feel free to give us reviews. You know, we love those things. Also, did you know that we had created training, marketing training for your team? If you've got employees, if you've got a staff member that wants to learn a marketing system, how to install that marketing system in your business, check it out. It's called the certified marketing manager program from duct tape marketing. You can find it at ducttapemarketing.com and just scroll down a little and find that tab that says training for your team.