December 13, 2018

Using Scrappy Marketing To Make An Impact With Customers (PODCAST)

How did a food company enter a crowded marketplace with minimal startup capital and manage to become one of the top players in the product category? Sam McBride, Chief Operating Officer of RXBAR, will share with us how the company found and focused on its niche to build a multi-million dollar brand.

TRANSCRIPT:
Jennifer: Sam, thanks so much for joining us today.

Sam: Thanks for having me, Jennifer.

Jennifer: You know, I imagine as listeners are clicking in to hear this podcast, many of them are already familiar with RXBAR and the company, because this is a product that can be found, I mean, in supermarket chains across the nation, convenience stores, I was really excited to see it in airport kiosks the other day when I was traveling, so that I could grab something that I felt was healthy and good for me, in the airport and on the go. But what I found really interesting when I was doing some research prior to our talking, is that I honestly had no idea that the company started with basically a small investment from the founders, and also that all of the initial employees did not necessarily come from a food background. Can you tell us a little bit about how and why the company got it’s start?

Sam: Yeah, absolutely. So, like you mentioned, the company was bootstrapped by Peter Rahal and Jared Smith, and they had an insight that was, they basically asked the question, why aren’t there any protein bars that are clean, and there were other products on the market that had clean labels, and we generally just describe clean labels as a product that has very few ingredients, minimally processed, and basically all ingredients that you can understand. So they set out to solve that problem, and they focused on a very small niche market at the time, which was crossfit. They were making the bars by hand and self delivering them around Chicago.

Sam: Like you mentioned, the early team, which was Peter and Jared, neither of whom have food background, any kind of formal food background, and then myself and Jessie Stewart. Jessie was a lawyer, and I had background in building a consumer business, but never in the food space. So between the four of us, we had no formal food experience and we were hyper-focused on this niche market in crossfit, which for a variety of reasons allowed us to scale the business without any further investment.

Jennifer: Just so that folks listening understand, we’re not saying this a company that started in the 1980s, this company is fairly young, you’re telling me it started in 2013, so the fact that was able to start not all that long ago with minimal investment and bootstrapping, and then grow so quickly, I find that interesting how you guys, you focused on a super niche market in the beginning. Why was the focus on the crossfit market, especially because protein bars, at that time, that was a fairly crowded market space. So why was that focus on crossfit, and you mentioned the problem you were trying to solve was with regards to a clean label. How did you market and message that to the crossfit crew?

Sam: Yeah, so the reason that the business started by folks sitting on the crossfit space, was because while the protein bar market generally was very crowded, you know, if you went to a grocery store and walked in the protein bar isle, there were a lot of options, there really wasn’t an option for paleo eaters or people doing Whole30. A lot of crossfitters at the time were experimenting with paleo or doing Whole30 nutritional resets. So while the overall market was crowded, like you said, the niche market focused on folks who wanted to eat really clean, was actually wide open. So the problem that was being solved with the product was being solved for that crossfit community fundamentally. So that’s the reason that the focus was on the crossfit business initially.

Jennifer: In that first year of business, what type of marketing was used to grow sales? You had mentioned at that time, that the product was being hand-delivered, basically, to the crossfit gyms, but then I think many food entrepreneurs understand that challenge of even like once it’s in a space, how you actually market it to the consumers who are there when you are not there to actively sample or market it to them. So what were you and the team using to market to the crossfit users?

Sam: Yeah, so in those days, first the product is called RXBAR and what that means, in the crossfit community, you do a workout as it’s prescribed, it’s called “Doing it Rx” and so the product was really named after that distribution channel. So for crossfitters, when they saw the name of the products, and then because so many of them were focused on nutrition and doing paleo diets and Whole30 diets, they would turn over the package, read the ingredients, and the product fit. The product market fit was so good, that really, the messaging was sort of built in for us, because the products solved such a clear problem for these consumers.

Sam: One of the ways we got the word out in the early days was we focused on building strong relationships on Instagram. Today it’s called influencer marketing, we were on the cutting edge of that. Before influencer marketing was a practice, we were using social media sort of how it was designed, in that we were direct messaging people and making friends with people who had voice in the space, whether they were a paleo person, a Whole30 eater, a crossfitter, we were literally just direct messaging them, saying, “Hey, this Sam from RXBAR, we have a product that we think you really like, and there’s no strings attached, we just want to send you some and have you try it.” That was our main outbound strategy for marketing at the time and getting the word out, was to get the product into the hands of people who we knew it would resonate with.

Sam: So basically by, you can kind of consider it a form of digital field marketing, it was really sampling, but getting it to this hyper-focused audience really created a lot of buzz around the product, and a lot of conversation about the product. That was really our initial form of marketing.

Jennifer: That made me think too about, I could envision somebody finishing a workout in a crossfit gym, and did you guys find that there was a lot of word of mouth, just within various gyms? Maybe you couldn’t track it on a per gym basis, but you could see how one person had heard about it, tried it, really liked it and then is telling the other people that they’re working out with at crossfit. Because those communities, those niche markets, tend to be very interconnected with one another.

Sam: Yeah, no doubt about it. The thing that we knew about the crossfit space was that the influencers often are someone at the gym that’s sort of a local legend of sorts, and they may not have a massive national audience on Instagram, but they may be very influential within their community. So we did everything that we could to support the people in the crossfit community who were really evangelists for crossfit and for clean eating. So when we talk about influence or marketing, we were reaching out to people who had 1000, 2000, 3000 followers, which, if you’re a big PR agency or you’re a big company, you’re most likely not going to pay a ton of attention to that type of influencer. But we built really strong relationships with those folks, and to your point, they have an outsized influence within their community. So we really did it from a grassroots, ground-up standpoint.

Jennifer: From that grassroots standpoint, did you focus first on one local region before trying to grow it to … you know, focus first on Chicago before you even try and go up to North Shore Chicago or to another part of the state, or was it a, hey, we’re going to look at the whole Midwest or the whole US, and look at who the influencers are within that?

Sam: Yeah, so one of the advantages that we have with our product is it is dense, and it doesn’t have to be kept cold, and so it ships very easily. So there was an initial phase, when it was just Jared and Peter in the business, where they were really focused on Chicago, but very quickly we expanded to be a national business, shipping all over the country. One of the benefits that we had working in the crossfit space, was that crossfit has this built-in mechanism called a drop in. If you’re a crossfitter who belongs to a gym in LA, and you’re traveling to Chicago for work, you can drop in to any other crossfit gym for the day and get a workout in.

Sam: So you have this sort of built-in, word-of-mouth mechanism in that, even though these gyms aren’t formally affiliated, they’re affiliated at the master brand level through crossfit. So you’d have people from LA come into a gym in Chicago that were carrying the bars, and like I mentioned before, the product solved such a clear problem, that they would say, wow, how do I get this? So very quickly the business moved from a local Chicago business to a business that was serving customers all over the country.
Jeniifer: And then what was the next step and when, to decide to, okay, we’re going to take this beyond just the crossfit market? What was the next step after the company decided to focus beyond the crossfit market? What was the face to … who were those people that you decided this is who we’re going to focus on next?

Sam: Yeah, so I would say phase 1/2 was sort of expanding as far as we could within crossfit, and then also engaging communities that are sort of involved in the crossfit space but maybe not directly crossfit. So two examples of those are paleo and Whole30, they’re not necessarily aligned with crossfit, but there’s a lot of overlap, and so we spent a lot of time focused on thinking about those communities and how we engage with consumers who are doing Whole30 or are eating paleo, so that was kind of phase 1.5 or 2.

Sam: The next real distinct phase was when we decided to go into traditional brick-and-mortar retail. Because to your initial question, the space is very crowded, so we made the strategic decision early on that we would stay in our lane, so to speak, and focus on crossfit, paleo and Whole30 basically until we felt strongly that we created enough awareness and we had enough of the consumer attention that we had some kind of edge going into retail. Because in a crossfit gym, we’re the only bar on the shelf, whereas when you walk into a Whole Foods or a Wegmans, now we’re one of maybe 100 brands in a huge set. So we wanted to make sure we had some competitive advantage when we were going into that hyper-competitive environment.

Sam: The other thing we had to solve for that point was, the packaging that we have today is updated as of September 2015. So prior to September 2015, we were basically focused on crossfit, paleo, Whole30 and a couple other markets that were surrounding it, but we weren’t in any traditional retail. So one of the things we had to solve for was how do we message the main benefits of our product to a market that is not engaged in crossfit, paleo or Whole30? Another way of saying that is, how do we cross the chasm from this niche market, to a much more mass-market consumer.

Jennifer: That’s right, because I remember reading a few years ago and I can’t remember if it was Entrepreneur or Inc. magazine about that big change in the packaging, and so I was thinking about how in the beginning of the interview today you were talking about, well the crossfitters would turn the package over and they could deduce the benefits simply by reading the ingredient list. But it sounds like with this packaging reset, you had to make it much more apparent and obvious to, let’s say kind of an “average” consumer.

Sam: Yeah. So the way that we thought about that was what’s the consumer path, what has to happen for us to win? So when we went into retail, Cliff Bar and Kind and Larabar, they all had way bigger brand awareness than we did, and so we knew that there were a lot of consumers that were going to walk into the aisle, and they were going to recognize Cliff, Kind and Lara, and they would see our RXBAR, and unless we initiated the conversation that we really wanted to have with that consumer, then we would probably lose, because of their advantage on brand recognition.

Sam: So when we thought through that, we realized that, really the conversation if we could speak one on one to every person who is considering buying a bar in the country, it would be focused on ingredients. And it would be focused on, hey, here are the clean, whole ingredients that we use in our product, and this why we have an advantage, and this is why it might be the right choice for you. So it made sense to us to try to bring that conversation to the front of the pack, because that’s where most people are looking when they’re walking through the aisle. So we sort of brought the ingredient conversation to the front of the package.

Jennifer: So as you went into traditional retail, did you change up the marketing? Were you still focused on influencers, but potentially beyond the crossfit, paleo, Whole30, or how has the marketing had to change to support this newer space?

Sam: So the first, most obvious change was … well, we never sacrificed that original core strategy. So we were still very heavy on digital influencer, and focused on those relationships. But one of the things immediately we had to do was we had to support our retail partners. So when a retailer brings you in, they’re doing all the work of bringing the consumer into the store. And typically, retailers have a handful of letters that you can pull within their store, to create awareness inside the store. So that was the first change we had to make was we had to add on this new competency of acting within a retailer. So that was probably the biggest change we rolled out in retail, was a focus on how do you get the shoppers walking through a retail store to notice you?

Jennifer: Have you found that that differs depending on what type of store that you’re in?
Sam: Yeah. Different stores have different strategies. Some stores are an everyday low-price leader, some stores prefer a high-low model, where they have one price everyday, and then they promote to another price, some retailers have a pretty well established digital marketing strategy, where they have consumers that download their app, and look at shopping lists in their app. So every retailer is a little bit different.

Jennifer: So obviously, like every retailer is different, every company is different too. So I’m wondering, for the folks listening, if you have any advice for a food entrepreneur who is in the newer stages of their business, or who are looking to make that leap and grow their retail channels. When it comes to marketing, often times I’ll hear from food entrepreneurs that marketing is sometimes the thing that they accidentally let slide, because they’re so focused on all the other things that they have to do. What would you recommend to them with regards to how to actually make marketing work for you, especially if you are challenged by budget and/or time?

Sam: Yeah, so the first thing I would say about marketing is that it’s important to keep in mind that marketing is just a form of communication. So our packaging, which we get a lot of positive attention for, was really just a very simplified form of communication, and what we’re saying is, we have clean, simple ingredients in our product. And the way that we did it was in a way that was incredibly clear. You couldn’t miss the message.

Sam: We even went farther than most companies, and we didn’t include certifications that we easily could have on the front, like gluten free, for example. I think it would be more common than not to include a gluten-free logo on the front of the pack, but we didn’t want to distract anything from that core piece of communication, this is our competitive advantage is that we use clean, simple, whole food ingredients.

Sam: So the first thing I would say, for food entrepreneurs, is to not over think it, and keep in mind that what you’re packaging and all your marketing materials are meant to do, is to have a conversation with either a customer or a consumer that you would have if you could be there in person every single time. And if you take that framework and you simplify it enough that your core advantage can’t be missed, I think that would be a big improvement from what I see most early-stage food companies doing.

Sam: Then the second thing I would say is that when it comes to retail partners and distribution partners like KeHE and UNFI, it is amazing to me how often early stage food entrepreneurs are frustrated by the costs or the process of getting set up, or working with these big retailers or distributors, and the thing to remember is they’re your partner. And if you go into the relationship sort of begrudgingly, I think you’re missing a huge opportunity.

Sam: Whereas, if you go in as a partner and you really listen to them instead of thinking, oh, my gosh, this is so expensive to promote inside of this retailer, and instead you say, boy, this retailer is bringing a lot of consumers in that we wouldn’t reach otherwise, and they’re telling me this is the best way to activate within their stores. Giving them a little bit of the benefit of the doubt and approaching that relationship in a way that’s really collaborative with those retail and distributor partners, I think is the right way to do it.

Jennifer: That’s a great point, because those retail partners, they want you to be successful because that makes them successful.

Sam: Exactly. And that’s the other thing that I think people, as they think about their roll out road map and which retailers they go into and which ones they don’t, there’s a lot of consternation about saying no, or not yet to certain retailers. The advice that I always give is the retailer, they may want your product, but you know your business better than they do at that point, and so if there’s a good reason that you shouldn’t go into a retailer right now, and that good reason is almost always that you don’t think you’ll be successful for one reason or another. That is completely fair and actually good for both parties, because the last thing you want to do is say yes too early or push for a yes too early and get and then fail. You’re much better off saying, hey, for X, Y and Z reasons, we can’t support this roll out the way we would want to, can we stay in touch and come back around at the next review cycle?

Sam: So I think being smart about when and who you say yes to, but again, in a collaborative way, from a position of partnership, is a totally appropriate approach that the retailer most of the time appreciates as well.

Jennifer: That’s a great point. Thank you. That just sometimes saying no right now sets you up for success down the road.

Sam: Yep.

Jennifer: Well, Sam, thank you very much. I really appreciate it today.
Sam: Yeah, of course, thanks for having me.

Jennifer: Thank you.

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