Me, Myself and You: Customisation and Community in Consumer Brands
How customisation and community can help consumer brands differentiate themselves
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Over the past decade, we've seen an enormous shift in the consumer brands landscape. Typical barriers to entry, such as the need to secure retailer distribution, have been eroded as consumer spending activity has shifted online, enabling new brands to sell direct-to-consumer ("DTC"). Similarly, the rise of social media advertising has done away with the immediate need for print or media ads – instead, brands can find their audiences online. Early adopters such as Harry's or Warby Parker reflect the success of this strategy.
As buying power continues to shift towards Gen-Zs, the appeal of DTC has deepened. Gen-Zs prefer DTC brands over legacy brands by 40–45% - for Millennials, this preference is only 4%. As consumers increasingly forgo the cookie-cutter model of big brands for more authentic indie brands, we now have more DTC brands than ever before.
More brands equate to more competition for online traffic, which, in turn, has resulted in rapidly rising customer acquisition costs. Driven by early successes such as Dollar Shave Club and Harry's, VC funding has flowed into the sector, fuelling ad spend and further driving up acquisition costs.
This leaves many brands in a precarious position - it is now more important than ever to differentiate yourself and cement customer loyalty for acquisition costs to pay off. The model of early consumer success stories - product-led growth - is no longer enough. Instead, many brands are turning to product customisation (i.e. making products unique to a consumer) and building community-led products as a way to differentiate themselves.
In 1974, Burger King was looking for ways to take market share from the fast-expanding McDonald's, setting the scene for the ‘burger wars’ that followed in the years to come. In reaction to the standardised menu choices of McDonald's, Burger King famously produced the ‘Have it your way’ strategy, including the jingle ‘hold the pickles, hold the lettuce, special orders don't upset us’. As a result, McDonald's was positioned as inflexible – while Burger King was seen as the company that listened. McDonald's eventually followed suit - a full 24 years later (1998), it launched its ‘Made for You’ strategy.
In many ways, customisation is nothing new. Intuitively it works - over the years, we've all tried hundreds of products in our search for better skin (skincare), nutrient profile (vitamins) or any other use case in the now crowded consumer product market. The process of trying to find products that work for our individual selves is inherently fraught with difficulty given the degree of product choice available.
Given how customised products are designed specifically and uniquely for you, they take away some of this search friction - and are much more likely to lead to successful results. Function of Beauty, for instance, promises to customise a unique shampoo for individual consumers from trillions of potential formulations. Successful results naturally cements customer loyalty - brands can build off this loyalty by adding more customised products to their offering. Function of Beauty, on this basis, has now expanded into other customised product categories such as bodycare and skincare.
Whilst product customisation has historically been reserved for the wealthy, technological progress combined with digitally native brands has made it much easier to scale. Many customised products are now going mainstream, inking retail partnerships with retailers such as Target.
Whilst customisation is seen at length in the Health & Beauty sector, it will be interesting to see which other consumer verticals start to see more customised products. For instance, we’re already seeing the potential for customisation in Fitness & Nutrition as we adopt more wearables, enabling data inferences to be utilised to drive exercise and diet plans.
In recent years, community has become essential to brands as they look to escape the saturation seen in many consumer verticals. As humans, we strive for personal connection, and the presence of communities help brands foster a sense of belonging. Brands also now face a new consumer – Gen-Zs, who increasingly see consumption as buying access to a community.
Like customised products, community has deep roots in the consumer world. There are various early examples, but my favourite is Harley Davidson. Following its leveraged buyout, management geared the organisational structure of the company towards community. It paid off. The Harley Owners Group ("HOG") was created in 1983, featuring local chapters, rides and festivals, and quickly became the world's largest motorcycle club.
The benefit to Harley Davidson of this community factor is ultimate brand loyalty. ‘Wannabe’ riders don’t just want to ride any bike, they want to be a Harley Davison biker - the community instils a lifestyle factor that positions the brand as more than a product alone. Members are proud to wear the the brand, not only riding the bikes but sporting Harley Davison merchandise as well. For many of us, when we imagine the stereotypical ‘biker’, the Harley Davidson biker clad in a Harley leather jacket is quick to come to mind.
By enabling any rider - whether they own a Harley Davidson bike or not - to participate (although only owners can become 'full' members), HOG enables individuals to get a taste of this lifestyle and community factor. In turn, this creates new brand enthusiasts. Members become ingrained in the community - riding twice as often and spending 30% more on the brand than non-members.
Harley Davidson's community play has become a playbook for many consumer brands - who now look for low-friction entry points to help consumers 'discover' their brand and community. For example, you do not need a Peloton bike (or tread) to join the Peloton community - you can download their digital app to participate in classes. Likewise, you can attend Lululemon events without owning a single piece of their apparel. You can subscribe to Glossier content (i.e. ‘In to the Gloss’) and interact with the community virtually without investing in the brand.
When done well, brands position themselves as the nucleus of thriving ecosystems. As consumers get a taste for the community, they become more ingrained and transition to engaged community members. For instance, going on IRL rides with Harley Davidson or Rapha or connecting virtually with Peloton members provides socialisation with like-minded individuals. This becomes part of your social life and is hard to replicate outside of these communities.
By creating brand devotees, community generates natural customer loyalty and brand cheerleaders who are happy to promote the brand through posting (user-generated content) and word-of-mouth recommendations. For brands, community also serves to develop a sense of ‘closeness’ with their end customer. Like customised products, a community provides a ready audience for new products, helping them expand their product range over time. Glossier, for instance, has expanded from skincare to debut makeup, bodycare and more.
In short, community ignites a flywheel of benefits to consumer brands. This is magnified for underserved communities.
With community becoming increasingly focal in the consumer landscape, brands are investing in platforms such as Discord or Genie to build online communities, hosting IRL events and hiring talent specifically for community management.
Rising customer acquisition costs are now becoming a barrier to entry in saturated consumer verticals. As a non-differentiated brand, consumers face low friction costs to switch to other brands - making the unit economics hard to work. Both customisation and community help to cement customer loyalty for consumer brands, making for long-term customer relationships.
Of course, these strategies are easier said than done. Customisation requires a product that a.) can be customised to the individual and b.) actually works better than off-the-shelf options. Similarly, community is only effective if those within the community are actually engaged - and there is real value to being a part of it.
Sources & Additional Reading
The Future of Marketing Is Bespoke Everything | Amanda Mull
Your CAC Doesn’t Matter | Jason Bornstein
Getting Brand Communities Right | Susan Fournier and Lara Lee
Gen Z Behaviors & The Consumer Renaissance | Rex Woodbury
Interview: How Harley-Davidson Built a Community of One Million Fans | Quentin Lebeau
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