How to Adopt a Direct to Consumer Model?

First, why in the world would you want to establish a direct to consumer model?  Selling single units on your website and amazon definitely won’t pay the bills, right?  No it won’t, unless you can sell single units to thousands at a time.

So why do it?  First, in any consumer product, it’s about creating demand…..and creating demand with the consumers that actually use or would use your product.  The old school philosophy of banging sales into retail is insanity at it’s finest. Same goes for trying to bang sales into a distributor. The end user isn’t noticing these efforts and the sales guys that you are selling to have hundreds of brands to sell…..are they going to push yours or sell what the customers asks for?  C’mon.

The plan is to lay the foundation.  

  1. Make sure you have logical fulfillment and warehousing options to handle any kind of direct to consumer business.
  2. Spend your time and effort creating consumer facing advertising and marketing.
  3. Create quality content that’s entertaining for your consumers (see blog on content design https://www.pinnacle-brandmanagement.com/execute-video-content/).
  4. Customer acquisition should be spent on direct consumers, not retail sales leads.
  5. Save money forcing sales reps to make calls.  If properly executed, you can have an order taker collect retail P.O.s or even smarter, create a portal on your website to accept orders.
  6. Spend your dollars making your brand and products look amazing.
  7. Constantly be innovating with new products.

With the proper direct to consumer marketing platform enough consumer interest will be generated to create a situation where you can dictate your terms to any retailer.  There are brands out there, believe it or not, that have retailers begging them for product, yet they won’t sell to maintain specific branding and pricing standards.

This doesn’t happen overnight.  It could take a year or more to develop, however, creating consumer facing content that lives for an eternity on the internet will gain momentum with each new video or article that you post.

Fun Fact: I started a Soccer store YouTube page in 2013.  At first we didn’t get any hits on our videos and after a year lost interest in the business and it’s model but had 49 videos living on YouTube.  By 2015 the channel had over a million views (without posting any new content) and we are kicking ourselves for exiting the business. We were positioned to have a very highly rated YouTube channel and the sales would have undoubtably followed.

Moral of the story, grab the direct to consumer model by the horns and don’t give up!

3 Lessons on How to Retail Products in your Health Club

As a former gym owner I was fortunate enough to get an education from the school of hard knocks on how to sell ancillary items in my gym to increase my overall revenue. Owning a 24 hour key card facility added a layer of uncertain security with inventory but after we got past that there was even more we had to learn about being a retailer.

In your gym, you have to consider it like a retail store front. Anyone that enters is an opportunity to provide an additional product or service that they most likely are already buying somewhere else or online. The nice part about owning or operating a health club is that it’s a location that they can’t otherwise experience the benefits online.

That being said, this should open your club up to all kinds of retail possibilities.
At first we brought in powdered nutritional products (protein, pre workout, creatine, etc.) and pills (multivitamins, fish oils, etc). With a membership count of only 500 active members these items did not fly off the shelves.

Lesson Learned: not everyone will take these products, if you’re lucky 20% will try and 10% will take on a reoccurring basis. Most of these product come in a 30 day supply so plan your inventory accordingly and remember they have expiration dates.

The second category we explored was the RTD (ready to drink) drink cooler option. This was a success! The only challenges we faced was getting the drinks at a competitive price because our orders were on the smaller side and managing the inventory. In the evenings we used cash box and we sold drinks after hours. On the rare occasion our inventory didn’t match up and it took our managers extra time to reconcile the payments.

Lesson Learned: we should have offered cold drinks from the start and found proper inventory management systems.

Finally, we dabbled in gym accessories, shirts, headphones, shaker bottles, exercise bands, watches, shoes and shoe inserts. These we could normally buy at very aggressive prices and make a ton. Plus, if bought correctly, would never go out of style. It was a safe bet to inventory as it would always sell.

Lesson Learned: The one size fits all model is the way to go. Any clothing without dates written on them (ex. Fun Run July 4th 2016) only sell that day and never after. Lastly, keep it timeless, certain color trends don’t last very long, be sure to stay within the neutral zones especially if you are going to stock inventory.

The last tip is the power of suggestion. Just because you have product sitting in plain site doesn’t mean it will sell itself. Have your staff continually talk about what’s available and make precise recommendations for specific members. If executed systematically, you can add thousands to your bottom line every month.

5 Tips for Successful Email Marketing

Email is one of the highest delivering platforms available for our industry.  It produces, on average, 38 dollars for every dollar spent according to Campaign Monitor.  Ok, great! Grab a bunch of email addresses and start sending them messages, right?  Not so fast. Here are a few tips for successful campaigns.

  1. Don’t buy your email lists.
  2. Make a professional looking email.
  3. Email with an intelligent frequency.
  4. Use a catchy subject.
  5. Entertain, Promote, Inform.

Don’t Buy Your Email Lists.

Man, it’s so tempting to buy an email list from some guy that promises the list from a health and fitness expo or from a marketing company that claims they are targeted fitness enthusiasts.  Although, this may be true, if you have not received permission to email these people you could be subject to penalty.  In addition, the higher the percentage of emails sent to SPAM or reported increases the likelihood of providers banning any emails being sent from your address……thus killing any hope for email marketing in the future.

Make a Professional Looking Email.  

Seems like a no brainer right?  Of course, yet some brands are still putting terrible material out in the market.  This will instantly devalue your brand.  Look at the big ecommerce sites like Bodybuilding.com, Muscle & Strength and Tiger Fitness.  These guys spend hours each day studying email trends.  Make sure your B2B and B2C emails look similar to theirs. Again, a terrible looking email with just text, poor images and even misspellings will end up in someone’s SPAM folder, increasing the odds of your emails getting blocked throughout your entire list.

Email with an Intelligent Frequency.

If you send one email and don’t see results, don’t give up.  If you send 6 emails and don’t see results, come see me and I can tell you what’s wrong, LOL.  My point is, you need to stay consistent.  HOWEVER, over emailing will get you more unsubscribes than orders.  Start with 1-2 email blasts per month, pick the same business day and send it out before 10am.

Use a Catchy Subject.

This is obvious.  Give them a reason to open your email, yet don’t make it click bait.  Make sure your subject is motivating but also delivers exactly what is promised.  A subject like “Free Protein Give Away” is definitely catchy, until they open it and see “Free Protein with $800 purchase”.  Recipients will unsubscribe with stunts like this.  Start reading subject lines from top stores and get some good ideas.

Entertain, Promote, Inform.

This is the 3 step formula I use at Pinnacle to get opens, more subscribers and less opt outs.  Make your email entertaining and worth opening.  Fresh content, especially videos and recipes work very well.  As our goal is ultimately sales, a promotion is necessary but shouldn’t be overbearing.  Make sure the deal is worthwhile.  Lastly, throw some info in there.  Product ingredient information, workout tips, other fitness or sport nutrition secrets will get them coming back for more.

Emails can get tricky, more importantly they are time consuming and you need to stay consistent.  I’d love to have my team take this off your plate to grow your business and execute with success.

And remember, as the goal for any email blast is to sell product, more importantly, getting someone to at the very least, click onto your website and retarget them for when they are in a position to buy is also considered a successful email.

Is it Possible to Sell a Clinically Dosed Product?

In the Sports Nutrition industry, creating a clinically dosed product is the right thing to do.  You can go to sleep at night knowing your customers are getting a quality product without fillers or small quantities of effective ingredients.  However, to create products like this you either have to be prepared to operate on small margins or you have to price your product outside of normal category prices to maintain a healthy business model.

I’ve found that today’s online consumer does their search based on price…..period.  Large specialty websites are well aware of this, which is why you always see merchandising of low priced product and/or aggressive promos for products that definitely don’t live up to an effective product standard, in most opinions.

So how can you create a high-quality product and sell it effectively to maintain a healthy business?

  1. Increase your direct to consumer business.

If you have a very good product, boost your direct sales.  This is done through strong lead generation, effective social media marketing, an active website and creating quality content.  You can safely price your products in category standards (ex Pre- Workout $29.99) if you are selling directly from your website.  This price may be impossible if you are trying to sell through distribution, Amazon (with their fees) or any other ecommerce site with their discounts off of wholesale.

  1. Double down on the marketing.

If you want to clinically dose your product and work with resellers, you must come in with a plan of how to market it.  In fact, you should do several months’ worth of marketing prior to the release to see what kind of interest you can generate in the product.  If you have to sell a pre-workout, for example, at $39.99 to make solid margins through resellers, you need to make sure people want this product prior to its release otherwise you won’t have any resellers.  Creating quality content is key.  When selling through the internet you need to rely on video as your sales rep.  Educational and entertaining videos may just be enough to get someone to spend an extra $10 on a high quality pre workout with 10 less servings.  Getting a manager at a brick and mortar store to push your product may be a challenge, so don’t bank on it.  Consumers don’t go into the store to browse any longer, they go in with an agenda because they’ve done their homework already. Create a scenario where they go into shops asking for your product.

In summation, don’t create a clinically dosed product unless you have a strategy to take it to market.  Sure, creating these types of products is the best thing to do, but be sure to have a B2B and B2C strategy and if at all possible generate enough content prior to the release to get people lined up to buy.  This will not only help direct sales, but will generate enough interest on the reseller level where you don’t have to chase down customers.

 

Reverse Engineer Your Cost Of Goods

Bringing a sports nutrition product to market requires more than just a good formulation.  Some of the best formulated products don’t even make it through their MOQ’s before they hit expiration dates.  Why is this?  If I make the best product the market has ever seen, what’s the hold up?

Too many new companies try to start categories or create product before they completely understand what the consumer will pay.  The internet has given us the best resource to price out similar products to get an idea where we need to price our products competitively to give it a fighting chance.

If you’re a new company or a part of a lesser known brand your best way to storm into the market place is with low cost goods and an aggressive price point.  As you build brand loyalty, then you’ll have an opportunity to introduce products priced above category standards.

Few things to keep in mind when starting your discovery process.

  1. What does the market dictate for a product formulated similar to yours with the same amount of servings?  
  2. Does your product have a larger market presence than that brand?
  3. If yes, go ahead and add a premium tag to it.
  4. If no, you have to come in lower.

When selling directly B2C, there aren’t many other factors to consider other than, if you want to run promotions, will you still maintain healthy margins?

When selling B2B, this is where your COG is going to play an important factor.  There was a time when wholesale cost was wholesale cost, but through the manipulation of the industry, discounts have since been applied to wholesale where brands extend deeper discounts to those accounts that can move higher volumes.

In addition, in the .com space, promotions influence sales. If you want to play ball with the likes of a Bodybuilding.com, you need to be prepared to give discounts of 35% or more off of wholesale and create situations where the product can be promo’d at 20-50% below that to gain any type of merchandising space.

This all has to be done within your MAP pricing, which needs to be set in line with the competitors in each category.  

This may be enough info for you to bail out and look at another line of work because being able to get product at the price you need to remain competitive is extremely difficult when starting out.  With this in mind, if you are a smaller brand with less access to funds or resources, start with a direct to consumer model.  If you can grow your following, you’ll have retailers connecting with you and you can control the market.