Dos and Don’ts for Growing a CPG Brand, from Julianne Hummelberg

Julianne Hummelberg knows consumer brands. She has invested in dozens of them, and as an emerging growth investor at private equity firm Summit Partners, she helped multiple brands grow to $50 million and beyond. 

Along the way, she’s seen the good, the bad and the ugly of growth decisions. On a recent Nerd Marketing podcast, she shared her insights—including her top dos and don’ts for CPG brands, especially those who are considering expanding into retail. Read (or listen) and learn. 

Do start with DTC (with one exception) 

DTC tends to be the best channel for launching a consumer brand, Hummelberg said. You can collect detailed data on your customers, which lets you understand the market in ways that are impossible at arm’s length in retail. 

Going the DTC route also lets you experiment with new products and test ways to grow order values, retain customers, and more. 

One exception to this rule: Food and beverage brands, especially those that aren’t shelf-stable, should distribute through retail channels first. 

“Shipping and fulfillment for a cold-chain product is just not sustainable for a smaller brand,” Hummelberg said.

Don’t rush to retail

“I see a lot of entrepreneurs get excited by new and shiny objects,” Hummelberg said. That can lead to expanding into new products or distribution channels before they’re ready. 

The most effective $10 million to $30 million businesses are very clear with their priorities, she said. First they hyper-focus on a single channel, only adding an additional one—including Amazon or retail—once they’ve refined their strategy and grown past the $30 million mark.  They build a team that lets them win quickly at the second channel. 

Hurrying to expand into retail can sink a business. 

“Especially with key banners like Target and Walmart, you really have one shot,” Hummelberg said. “If you don't have the supply chain and backend operations, as well as the retail team to ensure performance on the shelf and that you're hitting the velocity requirements of a retailer, you can pretty easily blow it.”

Do use DTC data to inform your retail strategy

The first-party data you collect doesn’t just help you hone your DTC marketing; it can be a powerful tool when it comes to retail. 

Launching around existing customers is easier and more cost-effective, Hummelberg said. Early wins can snowball, because retailers want to support brands that are succeeding. 

Your DTC data can guide where you get into retail. Identify chains whose locations overlap with your customer base, whether they’re in suburbs or cities, on the West Coast or in the Southeast. 

Also consider which retailers have customer demographics that align with yours. 

“Understanding who your customer is and why they're purchasing you can really define which retailers are right for you,” Hummelberg said. “Like Target tends to be a little higher end versus Walmart. Some beauty brands I’ve worked with have decided to go to Target versus Sephora and Ulta—and that is probably the right decision for a more mass, medium-priced line.” 

Don’t start off nationwide

Being asked to do a country-wide retail launch can be exciting and tempting. But nine times out of 10,  Hummelberg said, it’s the wrong choice. 

“The operational burden that that puts on a team can be challenging,” she said. “The inventory costs can be significant. It also prevents you from testing and refining your brand block to drive the most success on shelf.” 

Better to do a regional test or start with a smaller group of stores, with a lot of control and a strong understanding of how the geography intersects with your DTC customer base. 

Do use DTC data for retail forecasting

Set your brand up for success by setting retail targets that are reasonable and achievable, Hummelberg said. Your first-party data—including your understanding of acquisition and purchase frequency—should inform those targets.

“Retailers could have velocity expectations that are not in line with, a) what you think is reasonable or b) what you can deliver from an inventory standpoint,” she said. “Making sure that there's no mismatch there is critical.” 

Do use direct mail to bridge retail and DTC

Since Apple’s iOS privacy changes, Hummelberg said, she’s seen more brands go omnichannel. She sees lots of opportunity to use marketing strategies like direct mail to drive people to brick-and-mortar stores and back to DTC. 

Brands can segment existing customers by location and use direct mail to drive them to stores at crucial moments, like test runs or when you need to meet sales targets. 

PostPilot’s ShopDrops technology also lets businesses hyper-target prospects who live near specific retailers. If a brand’s best customers are yoga enthusiasts who have at least two kids, like to eat frozen pizza, color their own hair, and shop twice a month at Costco, ShopDrops can identify—and connect with—similar prospects. 

Maybe you have prospective customers who have shown interest in your products but can’t make up their minds?  MailMatch and SiteMatch let you send direct mail to people who have signed up for your email list or visited your website. Sometimes a physical touchpoint is all they need to get on board. 

Looking to supercharge your brand’s growth? PostPilot unlocks a new channel for retention, retargeting, acquisition and retail campaigns. Sign up now to get started.