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Strategies that skyrocketed The Honest Company to $1 billion

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Confident woman staring out the window from her penthouse office

Retail and CPG aren’t dying — they’re just becoming more niche.

The Honest Company is one of many upstarts that are thriving in a rapidly changing CPG environment by creating products for very specific audiences.

When Jessica Alba struggled to find baby products that met her high safety standards as a parent, she knew she couldn’t possibly be alone in her frustration.

“I founded The Honest Company because I wanted safe, effective products that perform. After all, you shouldn’t have to choose between what works and what’s good for you.”

– JESSICA ALBA, CO-FOUNDER

By focusing on kid-safe products for concerned parents, the company has stolen market share from well-established CPG brands and achieved a business valuation of $1 billion in 2017

Many companies start exactly like The Honest Company: the founder has a pain point and decides to do something about it.

However, few achieve the kind of success that The Honest Company has achieved.

What makes The Honest Company different

Beyond focusing on a specific niche, executives at The Honest Company are excellent listeners. Alba even takes customer service calls.

Outside of having executives field inbound calls, here are a few other things you can implement in your business build a tremendous listening capacity like The Honest Company.

Social listening

If your company is big enough, people are likely talking about it on social media. If not your company specifically, people are certainly talking about your competitors and your category.

These conversations provide a goldmine of directional information about unmet needs and pain points—and with the right tools, you can find and analyze what is being said about specific topics and brands.

Here are a few of the best social listening tools available:

  1. Mention — Simple to use. Covers social media, forums, and blogs. Starts at $25 per month.
  2. Brand24 — Nice user interface. Covers social media, forums, and blogs. Starts at $49 per month.
  3. Hootsuite — More difficult to set up. Only covers social media. Free plan available.
You can learn more about social listening from Neil Patel's article, "4 Best Tools for Social Listening."

Community engagement

Once you find people talking about your brand or category, you can, and often should, engage in the conversation.

Community engagement is about creating dialogue—not responding to positive or negative feedback about your company.

For example, let’s say your social listening tool finds this comment on a forum or Reddit: “Parents, where do you find products you are confident aren’t poisoning your children?”

Don’t just plug your company. Instead, ask questions like:

  1. What types of things do you fear are poisonous?
  2. What product types are you having trouble finding?
  3. Where have you looked for alternatives?
Learn more about community engagement from the Shopify article, "50 Ways to Make Your First Sale—Participate on Forums."

Market research

Every executive knows that their company should be conducting surveys, focus groups, or customer interviews.

The problem? Even if a company is undertaking these efforts, they may not be effective.

Effective market research requires knowing what questions to ask, how to ask them, and when to use surveys versus focus groups or customer interviews.

Surveys
One of the more cost-effective ways to get customer feedback, surveys are best used when you have specific questions to ask after pivotal moments.

Pivotal moments include things like a sale, delivery, customer service call, cart abandonment, or product return.

Like social listening, there are many tools out there to help you conduct surveys. Here are a few to consider:

  1. TypeForm — New twist on survey tools. More interactive and conversational. Free plan available.
  2. Intercom + Survey — Website chat surveys on specific pages like the order confirmation page.
  3. SurveyBot — Follow-up with customers using a survey on Facebook messenger.
  4. SurveyMonkey — Easy-to-use traditional survey tool. Free starter plan available.
Learn more about creating effective surveys from the Hubspot, "How to Write Incredibly Effective Survey Questions."

Focus groups

Focus groups, when executed correctly, unearth disagreements, different viewpoints, and conversational feedback that surveys and one-on-one interviews might miss.

This method of research is often an effective way to test hypotheses with specific consumer profiles and can be particularly valuable when launching new products or understanding poor sales of existing products.

focus-group

For example, let’s say you’re launching a line of aromatherapy products for babies.

You might want to ask a specific target group—vegan millennial moms who live in the city—question like:

  1. What scent do you most associate with relaxation?
  2. Do you believe aromatherapy is effective?
  3. Would you have concerns about using aromatherapy for babies?
Learn more about focus groups from the Community Tool Box article, "Conducting Focus Groups."

Customer interviews

One of the best ways to get deep insights is by arranging interviews with individual customers.

However, you shouldn’t just talk to anybody, ask them meaningless questions, or make them feel like they’re being interrogated.

Much like surveys and focus groups, there’s a method for staging meaningful interviews.

If you do it well, you’re likely to come across potentially game-changing feedback.

Learn how to conduct interviews from the Crazy Egg article, "How To Do Customer Interviews That Reveal Priceless Insights."

Becoming an incredible listener like The Honest Company

Focusing on niche audiences is becoming necessary to succeed in many CPG categories—but this alone won’t guarantee success.

Listening to your customers and making changes based on their feedback is a strategy that can improve your chances.

→ Use social listening to find conversations about your company, competitors and category.

→ Create dialogue by engaging in the conversations you find through social listening.

→ Conduct ongoing surveys to generate constant feedback about specific topics.

→ Run focus groups to test hypotheses and generate feedback from specific audiences.

→ Talk to your customers any chance you get—just outline your approach first.

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