The Secret Strategy of Billion Dollar E-Comm Brands
Have you ever wondered how Lululemon managed to sell $9.6B worth of clothing last year? What about how YETI charges 10x more than any other cooler on the market? You might've found yourself in the bathroom with a pack of DUDE Wipes wondering how they sold over $100M worth of products.
These are commodities. There may be small things that make them unique but they're still just athletics pants, coolers, and wet wipes. Now they're billion-dollar businesses. How did they do it?
Even though they're in different markets they each follow the same framework. This model I'm going to share lets them rise above commodity pricing issues. The good news is that anyone can use this same strategy. It won't even cost you a dollar. All you'll need is 8 hours with your top leaders and you can execute the same strategy in your business.
Brand Positioning Strategy
Brand positioning is the process of owning a unique place in your customer's mind. A strong brand positioning strategy is critical because it helps businesses compete in a crowded market. Defining what a brand is, what it stands for, and delivering on that expectation helps companies create a lasting impression.
Person: What group of people do you serve?
In 2006, Roy and Ryan Seiders had a problem. You see they loved to fish. They loved it so much that they designed boats and fishing poles. The part of the fishing experience they hated the most was the cooler on the boat.
The cheap $30 options weren’t holding up to continued use in tough conditions. This led the brothers to begin modifying coolers to fit their outdoor lifestyle. Once they perfected the model, they decided to go all in and the YETI Tundra was born. Word of mouth quickly spread among hunters, anglers, and other outdoor enthusiasts and the brand gained a loyal following.
It’s hard to look at YETI now and imagine them serving such a small niche of people. I was at Dick’s Sporting Goods last weekend and they had an entire section of the store dedicated to YETI products.
YETI would’ve never taken off had they not focused on a specific group of people to begin with. I talk to e-commerce entrepreneurs every single week. The ones who are struggling to grow their business almost always share the same problem. They don’t know what group of people they serve. When I ask who their Ideal Customers are I hear something along the lines of, “Well, we want to serve everyone.”
I understand the sentiment. Entrepreneurs are good people who are trying to make the world a better place. Unless they can focus on a specific group to serve first, they’ll never grow their businesses to the level they want. Here is what every e-commerce business should do.
Go into your sales data. Find the 20% of customers who produce 80% of the revenue. The ones who’ve been buying since day one. The ones who tell all their friends about your business. What are their characteristics? What do they look like? What do they sound like? What do they like to do? Where do they shop? What are there problems? What sort of temperament do they have?
These questions will give you a clear picture of the group of people your business serves. This north star isn’t meant to be legalistic. There will always be exceptions to the rule. We have to aim somewhere if we want our messaging to stand out.
Problem: What is the actual problem that your business solves?
How good is toilet paper at actually cleaning a grown man’s butt? That is the question I can honestly say that I have never asked myself. Sean Riley, Brian Wilkin, Jeff Klimkowski, and Ryan Meegan did in 2012.
The guys all lived in an apartment together in their early 20s. Sean introduced baby wipes to their bathroom and insisted that everyone give them a try. At first, the friends laughed. Soon enough they were hooked on the elevated wiping experience. The problem was that the only wet wipes on the market were branded for women and babies. A dude's worst nightmare when his buddies are coming over.
Every great business solves two distinct problems.
The External Problem
The Inner Problem.
The External Problem Dude Wipes solves is easy enough to understand. In the wet wipe market, the person is dirty but they want to be clean. Brands that focus on the outer problem will always be nothing more than a commodity. I need my external problems solved as quickly as possible for as cheaply as possible.
Great brands like DUDE Wipes focus on The Inner Problem. In their case, men didn’t like to carry around baby-branded wipes. It went against what they identified with. Due to this perceived embarrassment, they would never consider having them in their bathroom. The DUDE Wipes name, colors, and messaging remove the ability to be made fun of and instead make the joke about the activity of wiping itself.
Can you clearly define your customer’s inner problem? Until you do, your brand will stay stuck in the commodity cycle and you will struggle to scale. A great way to uncover these inner problems is through conversations with your customers. More commonly called Customer Interviews.
Here are a few of my favorite open-ended questions to ask during customer interviews.
What do you like about ______?
What frustrates you about ______?
What worries you when it comes to ______?
What are three things you wish you could improve about ______?
What have you tried in the past to solve ____ and why didn’t it work?
How does ______ affect your daily life?
How do you decide which ____ to use?
Can you describe a time when ____ exceeded or fell short of your expectations?
How do you feel when ___ problem arises?
Is there anything else you’d like to share about your experience with ____?
Product: How is your product different?
Have you ever heard of the term “Dupe” before? I guarantee you that Lululemon has. “Lululemon dupe” gets searched thousands of times each month but it hasn’t stopped them from growing their e-commerce revenue. Ten years ago they sold $281M online. This past year that number was $3.68B. How do they differentiate their products from all of the knockoffs?
There are five categories that companies like Lululemon excel in to differentiate themselves:
Proprietary Recipes Lululemon has patented fabric blends that make their clothes different than anything else on the market.
Innovative Design Lululemon invented yoga pants. They didn't rest on that laurel. They iterate and innovate all the time.
Customer Feedback Lululemon actively seeks customer feedback to improve both the current and future products it makes.
Price vs. Value Lululemon has a high price but introduces value by using fabrics that last longer. They even offer a Quality Promise where they’ll buy back any item that doesn’t perform as intended during the first year.
Niche Focus Initially, Lululemon existed for women who were interested in Yoga. Once they dominated that market they expanded to the next. Too many businesses try to go too broad too fast and lose any momentum they build.
Parable: What character is your customer playing?
Have you ever wondered why some brands really resonate with us and others don’t? It’s a crazy phenomenon if you think about it. Then it gets even weirder if you think about brands you used to like and now you could live without. There is a reason for all of this.
When I was in the Air Force, I loved Under Armour. Their tagline “We Must Protect This House” along with the ads that showed badass people working out in warehouses spoke to my soul. It actually was speaking to the brand archetype I most resonated with at that time, The Rebel. This is one of the 12 Brand Archetypes inspired by the work of psychologist Carl Jung.
Two things happened to make me stop wearing Under Armour. The first is that I got older and changed. I stopped identifying with The Rebel while working out. Second, Under Armour changed its marketing messaging to align more with The Hero archetype. The problem with this strategy was that Nike already holds The Hero archetype in people’s minds. This meant that Under Armour now looked like an imposter in their ads with Steph Curry bouncing a ball with 1,000 different versions of himself replicating the same drill over and over.
Archetypes are at the core of the biggest brands in the world. They help us relate to brands as though they are friends in our lives. Now it should make sense why people will fight to defend a brand they resonate with.
What are the brand archetypes of the brands we’ve covered in this article?
YETI represents The Explorer. This archetype is all about avoiding being trapped and trying to find something new in life. DUDE Wipes represent The Jester. This archetype doesn’t want to waste life and seeks to have a great time by giving the world some levity. Lululemon represents The Ruler. This is all about being in control to create a prosperous family, company, or community.
What brand archetype does your company represent? Here are 3 steps to figure out where you’re strongest:
Step One: Understand The Brand Archetypes
The Innocent: Optimism, simplicity, and happiness. (Dove)
The Explorer: Adventure, discovery, and freedom. (YETI)
The Sage: Wisdom, knowledge, and truth. (Google)
The Hero: Courage, mastery, and improvement. (Nike)
The Outlaw: Rebellion, revolution, and disruption. (Harley-Davidson)
The Magician: Transformation, vision, and surprise. (Disney)
The Regular Guy/Girl: Belonging, equality, and simplicity. (IKEA)
The Lover: Passion, pleasure, and commitment. (Victoria’s Secret)
The Jester: Fun, humor, and spontaneity. (DUDE Wipes)
The Caregiver: Service, compassion, and generosity. (Johnson & Johnson)
The Ruler: Control, order, and leadership. (Lululemon)
The Creator: Innovation, creativity, and authenticity. (Apple)
Step Two: Access Your Brand’s Personality
Who created your brand?
Why did they create the brand?
What was going on in the culture?
Step Three: Analyze Your Current Customers
Who makes up the 20% of your customers that drive 80% of your revenue?
What type of characteristics do those people have?
What are those people afraid of? What do they want?
Choose your Brand Archetype based on the analysis done above. Your messaging needs to filter through that lens from now on.
The Power of The Positioning Flywheel
Flywheels are powerful. Imagine a giant disk that isn’t moving. Now imagine standing next to the wheel and pushing down on one side. The wheel is incredibly difficult to move at first. After consistent effort over a long enough time horizon, the flywheel begins to spin faster and faster. Eventually, the wheel moves under its own momentum with little help needed.
This is what YETI, DUDE Wipes, and Lululemon did to get where they are now. They started by focusing on serving a specific group of people. Then they figured out a specific problem that they could solve for them. Next, they created a unique product that spoke to both the internal and external needs of that customer. Finally, they have stayed true to their Brand Archetype in all of their messaging from day one.
If you have your brand positioning figured out and are ready to scale your business with digital ads, reach out. We are averaging over a 6X ROAS for our portfolio of e-commerce clients and we’d love to speak with you about how we can help you reach your goals.
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