People, Partnerships and Purpose
THANKS TO A FRAGMENTED MARKETPLACE and the advent of powerful new technologies, marketing is playing an increasingly important role in the success of a product. Besides the traditional 4 Ps of marketing covered previously, we added three Ps to address the growing importance of People, Partnerships and Purpose in the success of your marketing efforts.
One way or another, your food product will satisfy some need of your customers in a delicious way. The need could be for a convenient and tasty snack at an event or an attractive Valentine’s Day tin of heart-shaped, hand-dipped chocolate pralines. People are people, but how you determine whether they’re customers or consumers can improve your bottom line. Are they enjoying your product themselves or sharing it with someone they love? Are they interested in the taste alone or the experience they have enjoying it?
Customers Versus Consumers
When you’re defining your target market, you may notice that sometimes the person buying your product is different from the person eating it. In marketing circles, we talk about decision-makers as well as decision-influencers. Take kids and their parents, for example. Who has more pull when it comes to that jar of jelly on the shelf, or type of cookie in the cookie jar?
A mother may be the decision-maker with the bucks to buy a loaf of your healthy, whole-grain bread to make sandwiches for her family that week. She might also be the parent who breaks down at an arts and crafts fair and picks up your decorated cookies after being nagged by her hungry kids. It may be the husband, however, who seeks out an anniversary treat he and his wife can share together. Or a customer may, on impulse, pick up a gift on their holiday trip that they couldn’t pass up — perhaps due to your sampling efforts, slick packaging or catchy name. This could be a gift for themselves or for a friend back home who has been walking their dog during their vacation.
When thinking about who might buy your product, decide whether you are going to target the customers with the cash or the consumers who actually end up savoring it. Your marketing can be designed to reach one or both of these audiences, albeit with different messages and goals in mind. Back to that jelly example: the kids need to know that your brand of jelly tastes great on a PB and J, but Mom or Dad (whomever gets the groceries in the house) needs to know that yours is made with local, organic fruit and has no artificial colors or flavors.
As we cover in the Scaling Up section of this book, when you’re selling wholesale, this customer-consumer dichotomy becomes even more complex. In some cases, you may be two or three layers removed from the end consumers of your products. You may be selling first to a food broker, distributor and/or retailer before your product is purchased at retail. Each of these layers has industry standards — and pricing demands — which must be met.
“The New Artisan Economy has become hotter than hot in our cities. This trend is especially visible in the form of new, small-scale companies focusing on local craftsmanship. Consumers are more and more demanding for local products that are produced in a sustainable way, with care for the environment. Keywords in the New Artisan Economy are local, authentic and sustainable. One thing the companies of the New Artisan Economy have in common are the strong stories that come with their products.”
— TED POULS, POPUPCITY.NET
Products or Experiences?
You determine the experience your customers may have with your product. Interactions with customers move beyond “transactional” relationships, seeking to establish unique, emotional and uncommon experiences for individual customers. Your product has the potential to be so much more than merely an exchange of money for a cupcake. The marketing research firm Strategic Horizons, founded by Joseph Pine and Jim Gilmore, examine this idea in their book The Experience Economy: Work Is Theatre and Every Business Is a Stage, where they write, “experiences are as distinct from services as services are from goods.”
With cottage food products, this thinking involves creating an experience around the enjoyment of your product and not simply focusing on its attributes, such as taste, flavor or size. Adding an experiential dimension of your product is another way to differentiate it in the marketplace and connect you on a relational level with those who enjoy eating what you love making.
Next time you visit a farmers’ market, notice the relationships and bonds between farmers and their customers, who will eat the food they grow. Your booth selling pickles, preserves or freshly baked products extends this local economy and naturally thrives there. Many who frequent farmers’ markets are there for the friendship, the ecological connections to the land and a sense of hope and optimism for the future — far more than for the potatoes, peapods or your homemade salsa. What you’re selling is adding to this richness of community.
As well as being a neighbor, a colleague at the office or a familiar face at your local YMCA, you’re many people’s personal connection to the local economy. You complete the growing interest in “buying local” by selling local. The trust and respect you earn from the relationships with your customers differentiate your products from the made-from-mixes, mass-produced or factory-generated products made somewhere far, far away.
“Your creations are experienced on a visceral level; your passion comes across in every bite. More than musicians, more than writers, you live the virtues of authenticity, passion, community and connection. Every food crafter has by necessity created a tight-knit community around them. Your work is a true and authentic expression of tradition. And like any good artist, you walk this path not for the promise of a pot of gold at the end, but from a drive to express what is deep inside you.”
— SARAH WEINER, FOUNDER OF THE GOOD FOOD AWARDS (GOODFOODAWARDS.ORG), ADDRESSING THE 2014 WINNERS
Taking Care of Customers
Taking care of your customers is part of the experience you create around your product. Maintaining a high level of customer service is the best thing you have going for your business, leading to word-of-mouth endorsements and referrals. Regardless of the product you sell, building relationships with your customers demands a few key ingredients:
• Selling a great-tasting product at a fair price;
• Promotional efforts that are honest, authentic and never misleading;
• Professional and courteous service, with on-time deliveries;
• Accurate invoicing and billing;
• Extending some form of thanks for every referral, Tweet or “Like” on Facebook;
• Taking any criticism or feedback constructively, never personally.
The more you can deliver every order with a smile, the better. Never lose sight: you’re the face of the food.
The 80–20 Rule
From the first telephone call to the delivery of a product, how you interact and form relationships with your customers solidify your position in the market. Many companies or organizations we’ve consulted for or interviewed use the 80–20 rule to help prioritize their marketing efforts and focus on building long-term relationships and loyalty among a select group of customers.
Practical experience has led many business owners to observe that about 80 percent of their sales come from only 20 percent of their customers. Covet the 20 percent and do everything possible to keep them happy, since they’re the ones that are repeat customers or big on referrals. If you host special tasting events, make sure they’re on your VIP list. If you carefully manage your customer database and can keep track of birthdays and anniversaries, send a congratulatory note or small food gift.
Maintaining a Customer Database
Every business must both attract customers and retain customers. Once you have customers, maintaining records about them can help you sustain and grow your enterprise. From tracking your customer orders and preferences to capturing useful information like birth dates and anniversaries for relationship-building marketing efforts, your customer database serves as the fuel to propel your business. Without customers, you won’t be in business for long.
Keeping written records of important customer details in a notebook or on index cards has increasingly given way to various computer or electronic-based programs or systems. Among the simplest is a spreadsheet, like Microsoft’s Excel program, where you can list contact information, orders, anniversary dates, customer referrals, frequency of orders and product preferences, among other details.
While it used to be very expensive to take it up a notch with a custom-designed customer database that could be linked to direct marketing efforts as well as invoicing and bookkeeping functions, there are now numerous, low-cost e-mail marketing services available that may work well for your purposes, both for e-mail marketing and as a customer database. Among these are Emma, Constant Contact and MailChimp, covered in the previous chapter.
Some computer operating systems, like Apple’s Mail program included in their OS X for a MacBook Pro, include a basic database program sophisticated enough that you can record contact details, key order information and customer likes and dislikes, plus send out e-mail newsletters. Apple’s Mail program comes with a few sample newsletter templates that you can easily customize with your photos; additional templates can be purchased. You may be limited by your hosting service or local Internet service provider, however, in terms of how many e-mails can be sent out at one time; it’s their strategy to deter spamming. For example, we can only send out batches of 100 e-mailed newsletters at a time.
In today’s world of identity theft and privacy concerns, be attuned to your customers’ requests and make sure the data you collect is secure. Keeping credit cards numbers or check information on file electronically seems to be a disaster waiting to happen. And avoid selling your customer information to any third party, since you run the risk of violating your customers’ trust in you and your business.
In part due to your relationships with your customers, you can help them help you. As discussed previously, customer referrals remain the most powerful form of unpaid advertising or public relations. The words of a satisfied customer craft a long-lasting message about you and the reputation of your company and its products. Don’t hesitate to ask enthusiastic customers for an endorsement quote to use on your brochure or website; don’t be surprised when many blog about you.
Never underestimate a personal touch in communicating with your customers. A handwritten thank-you note to a customer who referred a friend adds a lasting impact for the price of a stamp. In our world of rapid technology and e-mails possibly lost in a flurry of spam, a personal touch can go a long way.
When we talk about People in promotion, we’re not just talking about reaching customers. There may be aspects of your business where you need assistance, like graphic design, website development, public relations or with your computer. While you could hire people or companies to help you take on various projects, some of these individuals may want to collaborate with you in exchange for the products you create. Addressed in greater length in ECOpreneuring, such exchanges are called barter, one of the oldest forms of commercial relationships between people.
The companies or individuals from which you secure your ingredients are also a part of this People equation in marketing. They could likewise share the stage as you craft a story around your products. These vendors, be they farmers or specialty food providers, may also be your biggest cheerleaders as your business dashes from the gate. It’s a symbiotic commercial relationship, so they want you to succeed as much as you do and can help share your story, your product and your aspirations. They may also send customers your way. If you are sourcing some of your ingredients from other interesting food artisans, showcase and share their stories on your website.
Partnerships, Networking and Cause-related Marketing
Partnerships can be magnified by cottage food entrepreneurs. While steering away from traditional paid advertising outlets, you may discover strategic partnerships that open new doors to connect with your target audience. When dollars do exchange, like when your business makes a donation or takes out a membership with a non-profit organization, the money goes directly to furthering your shared mission.
Explore ways you can thrive on connections with like-minded organizations. For example, can your bakery products be an add-on to a share for a farm that follows a community supported agriculture (CSA) model? Buy Fresh, Buy Local (foodroutes.org) hosts state and local chapters throughout the country that collaboratively champion locally produced foods.
Or can you join an existing statewide industry association and dovetail your marketing to coincide with their efforts to support artisanal food enterprises? In Wisconsin, we used to have Something Special from Wisconsin, managed through the Wisconsin Department of Agriculture, Trade and Consumer Protection, a state-sponsored marketing program for any business, no matter how small, with at least 50 percent of the product attributable to Wisconsin ingredients, production or processing. The Certified South Carolina (certifiedscgrown.com) program is a cooperative effort among producers, processors, wholesalers, retailers and the South Carolina Department of Agriculture (SCDA) to brand and promote South Carolina products. In Vermont, there’s the Vermont Specialty Food Association (vermontspecialtyfoods.org), among the nation’s oldest specialty food associations. See if your state has a similar program.
By joining with non-profit organizations or various causes to help advertise a product, your small enterprise participates in what is commonly called “cause-related marketing.” This benefits both the charity or non-profit organization and your business. You cultivate relationships that echo your values, reinforce your business’ commitment to the issues you care about and connect with people who share your interests, passions and sense of purpose.
Rather than making donations, with cause-related marketing you create meaningful relationships that help serve the organization with which you partner. This mutually beneficial relationship is particularly salient to a cottage food business, since it offers the ability to co-mingle with much larger organizations that might be trying to improve their brand image and become more supportive of the local community and the businesses operating there. More and more schools, hospitals and larger corporations are exploring ways to keep their money local. Your cottage food enterprise is a solution to their problem.
Name: Barbara Preston
Business: Hana Lulu’s Candy (San Diego, California)
Website: hanaluluscandy.com and sdcottagefoods.com
Products: coconut candy
Sales Venue: special order direct to customer; community events, snack stands
Annual Sales: $3,000
Barbara Preston removing tray of her Hana Lulu’s coconut candies from her oven. COURTESY OF HANA LULU’S CANDY
Beyond the Bottom Line with Hana Lulu’s Candy
“Cottage food is really about empowering people to become business owners rather than employees and to develop the confidence to go after their entrepreneurial dreams through baby steps,” explains Barbara Preston of San Diego, California. While she sounds like the official spokesperson of her state’s home-based food entrepreneur movement, Preston actually sings from the choir. As a self-taught cottage food business owner, she views this legislation as more than a business boost for her Hana Lulu’s Candy. “It’s all about taking what we know and using that knowledge as a launching pad to help others.”
The vision behind Hana Lulu’s Candy stems from a vacation Preston took with her husband in Hawaii years ago, driving down a twisty road on Maui and stopping by a roadside stand. “I tasted this candy, a combination of fresh coconut and cane sugar with the crunchy consistency of potato chips, and loved it,” Preston describes. “I thought I could order it online when I returned home, but the only thing I found were other people looking for it.” This apparent market demand for a unique product led her to try making it herself. After a detailed search online, she found an old recipe. It took another several months of experimentation before she nailed the taste and texture of the candy she had so loved in Hawaii.
While Preston perfected her recipe, her California legislature discussed and passed the Homemade Food Act Bill AB 1616, which went into effect on January 1, 2013. “I was one of the first persons to apply for a license in San Diego County,” Preston shares. “I learned a lot going through the process and realized other people would be heading down this same road and could learn from my experiences.”
This drive to share and collaborate propelled Preston to launch sdcottagefoods.com, where she writes under the pseudonym Cottage Food Sandie. Her site serves as a portal for the movement, offering start-up advice, marketing, pricing and assistance in navigating the regulations.
“Often our cottage food community can share information faster than what comes from the county offices,” adds Preston. “For example, we had the applications available online before the county did.”
Her collaborative spirit propelled Preston to cross-pollinate her business with supporting a cause close to her heart: The East County Transitional Living Center (ECTLC) in El Cajon, a faith-based non-profit supporting men and women battling homelessness. Rather than see her recipe as something exclusively proprietary, she openly taught the women in this program the specific process she developed to make her coconut candy. Preston does have the women sign a confidentiality agreement that they will not disclose or use her recipe in future endeavors. The recipe serves as a stepping stone to help these women garner experience which will help them later in obtaining jobs or starting their own businesses.
“Making candy is a time- and labor-intensive process,” Preston recalls. “I saw this as an opportunity for the women at the center to learn empowering skills.” As a result, the participants experience teamwork and learn how to run a business, manage inventory and pay bills. With Preston’s initiative and support, the women regularly sell at the Scripps Ranch Farmers’ Market and earn about a hundred dollars a week. They technically do not operate under the cottage food law because their “home” kitchen is a church kitchen facility, which is not allowed under permitting laws. However, Preston maintains a cottage food license and supports the women in understanding the cottage food business setup so they can readily set up such a business on their own one day.
Close-up of Barbara Preston’s coconut candy from Hana Lulu’s Candy. COURTESY OF HANA LULU’S CANDY
In addition to sharing her recipe and business savvy to support the women of ECTLC, Preston also operates Hana Lulu’s Candy as her own cottage food venture as a sole proprietor, going to candy-for-community events and on an as-needed basis to fulfill orders. All profits are donated back to the ECTLC. Under California cottage food law, the health department offers two types of permits. The A permit enables operators to sell directly to customers, and the B permit, which Preston holds, allows sales both directly and indirectly to consumers through stores and markets.
Preston sells the small, snack-sized bags for three dollars for one to five bags with discounts for higher quantities, plus delivery charges. “The snack stand at local little league baseball games proved to be a good sales outlet. Parents love a healthier treat option for their kids,” she adds.
In California, most cottage food businesses starting out operate as sole proprietors or partnerships because the state requires an eight-hundred-dollar annual fee for corporations. “You really need to get your venture up and running with regular income before investing to take your business structure to the next level,” advises Preston.
“Cottage food offers such entrepreneurial potential because it is something you can start while still keeping your full-time day job,” sums up Preston. Hana Lulu’s Candy offers her an opportunity outside of her corporate career to empower others, as they become food entrepreneurs. “Too often, people feel trapped by this employee mindset that we are all trained for. But cottage food provides the entrepreneurial training wheels to start without taking on big risk.” Preston continues to offer advice and insight via her website, particularly encouraging new ventures to tap into some of the ethnic product opportunities on the approved list, like tortillas and fruit-filled tamales.
Always on the lookout for new ways to support others, Preston started mulling a new business vision: “I’d love to someday open a storefront that just sells locally made cottage food products. The range, quality and stories behind our local businesses are incredible. It would be so inspiring to offer all of that in one place.”
Packaged bags of Hana Lulu’s Candy. COURTESY OF HANA LULU’S CANDY
Whatever your focus, there’s a non-profit group out there with like-minded members. These groups often seek speakers for various events, especially local service organizations like the Kiwanis, Rotary Club and the Optimists. Why not let it be you? As a part of your presentation about your new business, make sure you have plenty of samples — and order forms, too.
Once you’re up and running, contributing donations to various non-profit silent auctions can expand your reach to people who might appreciate your generosity to a like-minded cause. People like to buy from people they know, like and respect. Seek out an auction where you can showcase what you make, perhaps in an attractive gift basket. Avoid offering a gift certificate instead of your actual product, since this takes away the eye-candy appeal. If you become over-burdened by donation requests, consider opportunities where you have a visible presence; perhaps you could set up a small sample display during the final night of the auction.
All CFOs work their passion, at least to some extent. You can do what multinational corporations never can to the same degree: communicate honestly, openly and authentically. Everything is personal when you’re just starting out. There’s no need for customer numbers or a mother’s maiden name. You’ll be on a first-name basis with your customers. Many are also your friends, neighbors or community members. Instead of a fictional farm representing your strawberry jam, consider putting a picture of the real place on the label.
Purpose-based marketing provides the ultimate in competitive advantage for small businesses; the bigger the operation, the less likely it can maintain its values throughout the company or organization. This is such a challenge for large corporations that whole books are devoted to just this issue. Your sense of purpose and passion can be reflected in everything you do. This compelling message, a part of your inspiring story, puts a face to the food item that your customers then savor, one bite at a time.
By associating your business and product with organizations you support, like the Women’s Club, a local entrepreneur group or the chapter of the Sierra Club, you can garner support, build awareness and advocate for issues near and dear to you.
Tips on Nurturing Your Purpose and Passion
These include the following:
Know your elevator pitch
An elevator pitch is a brief “speech” that succinctly describes your cottage food enterprise, something you might say to a stranger chatting with you in an elevator. The most successful CFOs are those who conceived an idea and could express their passion for their product in a way that others could readily understand and support. The elevator pitch is both the “what” you do and the “why.”
Maintain your passion
Keeping up your own energy and enthusiasm for your livelihood is important. There will be people who don’t care for your product, think you have better things to do with your life or, flat out, don’t care that you’re happy selling your product and running your own business. Some of the least supportive people might be closest to you, including parents or siblings. Therefore, maintain a network of like-minded people, organizations or businesses to support and encourage you to stay the course and keep at it, even if you accidentally burn a tray of cookies in the oven. It happens to all of us. Find places where you can meet and interact with similarly spirited souls. Such contagious enthusiasm, blended with new insights, often prove to be inspiring.
Manage competition
Unfortunately, you may sense resistance and even be on the receiving end of negative jabs from competing local business owners, especially if they’re established enterprises operating in state-licensed commercial kitchens. These businesses may perceive you as competition, which you may or may not be. They may not welcome the fact that you just launched your business from your kitchen with little or no out-of-pocket start-up costs.
Your best play is to keep your head high, remain focused on your customers and ignore the flack. If your product is better than theirs, so be it. In a free market where customers choose the best products at the best prices, that’s how it works. In general, competition is a positive force that benefits your community, especially if you account for other aspects of how your business operates, like its impact on the environment or how it builds a stronger local economy. Who knows — you might even improve your competitors’ game, too.
Question each other
Like a ping-pong ball, challenging questions should banter back and forth between you and your customers. Ultimately, your business is about serving their needs. Positive in nature, such exchanges stem from the idea that passion should never stagnate. Be open to suggestions, feedback and criticism. That doesn’t mean you have to rework your recipes, but one new idea from a customer could lead to a whole new product line that outsells all the others.
Find mentors and sensei
In ancient Japanese culture, sensei guided the training of ninja and other warriors who practiced the martial arts. In the Star Wars world, Jedi Knights are responsible for the training of their Padawan learners. Whenever we step outside our comfort zone and leave behind the safety of routine or seeming normalcy of a “job” with clearly defined responsibilities, we face the unknown. Seek out a mentor or two who possess the sage knowledge and a willingness to serve as a guide, a sounding board or a lifeline as you develop and grow your cottage food enterprise. These mentors can keep you on track, pick you up when you’re down and point you in opportunistic directions you never dreamed of.