If I told you that a commodity product can be sold at 165% more top-line revenue while mitigating risk with only minimal changes to cost of goods sold, imagine the revenue lift implications this would have on your business. Seriously, take a second and think of the number. That’s what’s at stake today.
Executives, we’ve steered the ship through a global pandemic, labor shortages, political and social unrest—goodness, the list goes on and on. Perhaps you’re looking at the possibility of recession with an eye toward budget cuts and squeezing every last bit of production out of your currently allocated resources. Well, recession or no recession, the cruciality of limiting risk in our business endeavors and optimizing our budgets is apparent. In the spirit of optimizing our budgets, we must effectively allocate our resources toward positive ROI activities. More often than not, marketing work is excluded from that category of revenue drivers. The tendency toward thinking “we know our customers” can be dangerous and can keep us from realizing our own 165% lift in revenue.
So, what’s next? Let’s look ahead. With a better understanding of our buyers, we can introduce new products/services knowing they will land. Additionally, with a shift from simply selling products to our buyers to helping our buyers realize solutions, we’ll see our prospects turn into our strongest advocates. And, finally, with a proven go-to-market strategy, we can achieve 2x growth and limit our cost of goods sold in the process.
Let’s dive in.
Case Study : The Little Potato Company
In the midst of uncertainty, the brands who position themselves strategically and who listen and learn from their customers will excel. Take, for example, The Little Potato Company, a creamer potato farming company that’s been in business since 1996. Back in 2019, their product “Easy Sides” was released and would soon thereafter win the 2020 CPMA Best New Product award. What is new or innovative about potatoes, you might ask? To be frank, these were the same potatoes they were selling years prior—the only significant change in their product was the package that the potatoes came in.
According to the IBIS report below, the domestic demand for potatoes was down between 2018 and 2019 while they were producing the “Easy Sides” product. Despite the negative trends in the industry, gaining thoughtful insights from their buyers proved invaluable for The Little Potato Company. With their annual crop yield of 265MM pounds of potatoes in the U.S. alone and their ability to price based upon value provided, you can quickly see why their annual revenue is 2x that of their average competitor.
Their new products were centered around ease of use and enhanced flavor, which was inspired by the company’s consumer-research findings. According to Richard Vann, VP of Marketing and Product Innovation, The Little Potato Company’s buyers are pained by the time required to prepare potatoes and by the complication of actually cooking potatoes. Equipped with crucial intel of the problems their customers face and the solutions they wish for, The Little Potato Company was ready to go to market.
The new packaging they released after their consumer research featured written copy and imagery centered around the product’s ease of use and the potatoes’ flavor.
Centricity, the behavior science-based GTM methodology, tells us that when we’re better informed about our buyer’s pains and their desired solutions, the better equipped we are to deliver laser-focused content that will consistently land.
Little Potato and the Not-So-Little Revenue Lift
Let’s take a look at the financial effect of their efforts. On average, one pound of their closest competition’s potatoes costs $3.31. One pound of potatoes from The Little Potato Company, however, costs $5.48. They’re both selling potatoes, the produce looks similar, the adjectives on the packages are even similar—both boasting buttery flavor—and yet, The Little Potato Company can value price their potatoes because their product isn’t simply potatoes—their product is a solution to their buyer’s pain.
As opposed to pouring their allotted budget into new farming techniques or ways to grow more potatoes, The Little Potato Company instead chose to invest in their brand and their positioning. They certainly could have justified the approach: “Let’s continue to do things the way we’ve always done them.” After all, the status quo has a great deal of power in our decision-making. However, we don’t lower our risk by sitting tight. We lower our risk when we’ve invested time and resources into knowing our buyers better.
Imagine if an executive at The Little Potato Company had said, “You know what, I see other people selling potatoes in five-pound bags. I think we need to do that.” Consumer research is not considered, and the decision is sent down the chain of command all the way to market. Buyers are shopping in the market and see two (five-pound) potato options, the standard commodity potatoes at $4.28/bag ($0.85/lb) and The Little Potato Company potatoes at $6.32/bag ($1.26/lb). In order to compete against the standard commodity potatoes, they’re pricing their product at $1.26/lb. This is an actual product on the market currently, by the way. Here’s the catch–these are the same exact potatoes that they could have been selling for $5.48/lb (“Easy Sides''), a 335% revenue opportunity missed!
By making a concerted effort to better understand their buyer, The Little Potato Company positioned themselves as a premium offering compared to store-brand potatoes and grew as a brand in a time of financial uncertainty. In doing so, they were able to capitalize on the opportunity at hand and realize that 335% lift in revenue.
When we utilize Centricity methodology and equip our go-to-market teams as guides in the buyer journey, we maximize the possible return on our investments. Our buyers will feel seen and heard and will soon become our strongest advocates.
The most effective companies will tell you this isn’t a one-time endeavor. Buyers are always changing; markets are constantly shifting; and, oftentimes, our internal view of our efforts is far from the buyer’s view. Equipped with a more complete view of your target buyer, your teams will drive more effective communications, have a more efficient pipeline and ultimately build long-term value for your company.
If you’d like to learn more about practical applications of these principles, we have some great resources for you. We were joined by Erin Sowell, research professional and founder of Thoughtful Research, on our podcast, Centricity, to discuss how and why middle-market business leaders should leverage research before making decisions. We’ve also created an incredibly helpful tool in determining your buyer’s specific pain points in order to serve their needs more effectively.