ButcherBox CMO Kiran Smith on how she overhauled a startup-y marketing team

0:03Hello, everyone, and welcome to the Modern Retail Podcast.

0:30company, which you hear the word profitability in all companies talking about it, but they never mean it in the present. They mean it as something in the vague future. That's not ButcherBox. They've done it. That's great. It also is a huge company. I believe 2022 revenue was over$600 million, if I'm not mistaken. And so I want to talk about Kieran, who's relatively new to the company, how she's been bringing it all to a head, making the company move forward. I'm just really interested in how you build a company, especially one that's based on subscriptions, which used to be really hot, aren't doing so hot anymore.

1:01We're going to talk about all of that. But Kieran, how are you doing? I'm doing well. Thank you for having me today. Absolutely. Thank you for joining. So let's start with you because you've worked at some really interesting, really big companies over the years, haven't you? I have. It's been quite the journey. Talk about the journey from then until now. So I started off post undergrad. I'd graduated with a computer science major, which is very unlikely for a marketer. Did a few years in consulting and then decided I wanted to go into marketing. So went to business school and post business school, I decided to take a somewhat non-traditional route and spent 10 years in grocery, which for a marketer is the best place to learn.

1:39It is a data rich environment, high frequency, just incredible engagement with customers and just the best learning ground. And after doing that for 10 years, it was time to try something new. And so I went with the unexpected move of going to kids shoes and being the mom of three girls, I joke that I needed the discount on the shoes. They grow so fast. You need a lot of shoes. And those shoes are not inexpensive. And did kid shoes for a while. I went to Brookstone. I led an agency. I led Arnold worldwide for a few years and then was at iRobot most recently prior to coming to ButcherBox. And then ButcherBox came on my radar.

2:19I met with our CEO, Mike Salguero, and knew right away that this was the right opportunity for me. It seems like it's sort of a return to home that you started in grocery and you're, you know, you're not at a grocer now, but you're in overall a grocery business. Exactly. And a business that believes in the power of food and that it's more than just the food that you eat as the environments that it creates, the relationships that you create and all of the other pieces that go along with it. That very much is part of the ButcherBox story, which is why it had such a high appeal to me. Well, now that you mentioned the ButcherBox story, let's give, you know, for those few of you listeners that don't know, why don't you give just a brief history of ButcherBox so people know where we're at right now?

2:59That's great. Our CEO, Mike Salguero, started ButcherBox about eight years ago, not with the intention of growing it to, you know, over a half a billion dollar company eight years later, but really for a way for him to source high quality meat for his wife who had an autoimmune syndrome. And as he looked around, he realized that there weren't reliable sources for that meet. And it wasn't just he and his family that were looking for it. There were others in his community that were also looking for those types of meet. And so he started this business as a side business, started on Kickstarter, and really from day one was profitable because he started it with affiliates.

3:39And as you know, from an affiliate standpoint, it's not upfront marketing. It is on the backside of as the referrals come through and as a commission-based arrangement. It allowed him to be able to build this very responsibly, financially responsibly, and very rapidly, especially since at the time, eight years ago, where there were programs like Keto, Paleo, Whole30. There weren't a lot of partners like a butcher box that were able to supply the types of meats and seafood that a lot of the people who are following those type of programs were looking for. So it's really a pretty amazing story. How would you describe the marketing schema evolving?

4:24I mean, full disclosure, Kieran and I chatted a few months ago at one of Modern Retail's events, and we had a pretty long conversation about this. But one of the things that I remember you mentioning was that ButcherBox had been operating like a startup pretty much for all eight years, right? So talk about how that manifested in marketing. Correct. I think what I found when I arrived about a year ago is that marketing was spread across six different teams, across multiple people within the business. And from a coordination standpoint, that made sense at the time. It was a startup as a typical.

4:58Roll up your sleeves. Get done what needs to get done. And what happened is that got us to where we are today, which is incredible. It got us to a half a billion dollars plus. But as we look at that next, where is that next half a billion going to come from? How we organize ourselves, how we look at who our partners are, how we're thinking about marketing investment capabilities that we're building. We had to take a look at the organization itself. And that's why I was hired to help build us for that next stage of growth from the marketing. Got it. Would you say that it was, I don't know if this is the correct term, but like reactive marketing or reactive decision making in the sense that as you got bigger, you needed to have something that dealt with influencers four years ago or something like that?

5:42How did it become more complex? Was it just because of the exigencies of the business? Great question. When we first started, affiliates and influencers made up about 70 % of our marketing spend. The reason that worked is because the word of mouth that they provided, the legitimacy that they provided in terms of recommending our product that fit the needs of their members worked really well for us. But at some point from a scale standpoint, that couldn't be the only channel in which we brought out the ButcherBox message. As you know, Facebook, Instagram, all of those different social platforms now started to play a much bigger part in a company's ad spend.

6:23And the effectiveness of now taking those dollars and diversifying it across multiple channels really was how ButcherBox started to evolve. It was, however, done not necessarily in a full, okay, let's look at all of our marketing dollars. How are they performing across each of those channels? Where do you want to shift dollars? That came later in our journey more recently is a major part of how we think about our marketing investment, but it happened more organically as we were growing. In addition, a big part of ButcherBox's growth also came from the pandemic. People were at home. People were not able to get easily to the grocery store.

7:00When they did, the options that they had for meat and seafood weren't what they were looking for. And so ButcherBox's growth obviously came also organically being in the right place at the right time during the pandemic. Interesting. Out of curiosity, how much did ButcherBox grow like 2020 to 2021? Can you share that? I can't share that, but I will tell you it was very significant. Okay, interesting. I mean, that makes a lot of sense, but I didn't even think about that. Did you find it daunting to go to a company that is doing so well, but you would have to systematize so many things that were in so many different silos?

7:34I didn't find it daunting. I found it exciting. The reason is because I've been in these situations before, coming into a new industry, coming into a new organization at some point during their life cycle and having to figure it out when I got there. In this case, the excitement came from being at the very beginning of the ButcherBox marketing journey. And what I mean by that is there's so much ahead of us in terms of capabilities that we can build out that as a marketer we know are directly impacting the bottom line. Personalization, segmentation, targeting, all of those things are ahead of us.

8:10And for me, that's why this is the best place that I can imagine being. How much of your job for the first year was systemization and standardization and just sort of making sure that people understood what was going on, what needed to be sort of right-sided, I guess? It was significant. I would say it took up most of the first year in terms of when you take six different teams, put them under one leader, and then as you set the roadmaps or how that team is going to operate moving forward, it also includes looking at who are our external partners. Let's use media, for example. We were using our media across several different vendors prior, and we consolidated a significant amount of that under one house recently, very purposely.

8:54So as we looked at being able to have the flexibility of where our media dollars were being invested, how they're being reported on, how we were how we were thinking about increased investment, lower investment. It was really important for us to make some of those moves. Same in terms of how you think about from a creative standpoint of what do we do internally? How do we partner externally? All of those things had to kind of get created over the past year so that we then have our foundation and a much stronger place so that we can jump from there. Do you have any, I guess, advice or tips? Because it seems like, you know, everything that you've done and are doing is important for any company that's in growth mode.

9:33But also any organization, especially an eight-year-old organization, has organizational inertia. And so people have been doing something for the same way for a couple of years now. and then someone comes in and says, actually, we're going to do something different. And logically, it makes sense, but they might not love that. Like, how did you go about presenting that to teams, especially teams that had many different leaders? That's a great question. I would say the most important thing was starting to create a relationship with those individuals who are on my team. And I know that sounds kind of silly, but it was building a trusting relationship, a relationship that was built on conversation and understanding and explaining and sharing my past experiences and how some of that was maybe relevant here, learning from them in terms of what's been successful at ButcherBox and what hasn't, and really starting to have them feel like they were part of the journey and where we're heading.

10:24I would say it was one of the most important things, but also setting a vision on where we wanted to head. This is if we want to be here a year from now, here's how we're going to work backwards to get there. Beyond the organizational tinkering and making sure everybody understands what's going on, I guess sort of a company-wide marketing unification, what were some of the most important forward-looking projects that you went about the first year? It really was going team by team and taking a look at how work was getting done, both internally from a process standpoint, how they were working cross-functionally, both within marketing, So how our retention team was working with our growth team, working with our merchandising team and creative.

11:06So how our marketing team is working together, but then how they are working externally with our with other teams within the business, how they're working with engineering and product and I.T. And those are a big part of kind of how we had to look at how we were organized and how work was getting done and where it's getting done well and where it wasn't. And then we also then had to look at externally in terms of what are the things that we wanted to be really great at internally? And what are the things that we wanted to use external partners for their expertise, their point of view, and finding that right balance?

11:41Like in terms of metrics and working with different teams, sometimes they're just not interoperable. And especially when you have a tech team on one side and they don't know anything about attribution on the other, you know, churn. How did you go about making that work? I will say ButcherBox is a very marketing-driven organization. So when I got here, I felt extremely fortunate that the metric side of the business was well understood by almost every team across the business, starting with our CEO, who leads with the numbers. And he's very open about the numbers. And so in every all hands that we have, he's talking about AOV, orders per member per month, churn, all of those things that some people consider marketing metrics, they're company metrics.

12:28And everyone in the organization not only has exposure to them, they know what our targets are, how we're performing against those targets. So I think that's one of the things that makes ButcherBox is somewhat of a unique organization. I'm always appreciative of companies where the leaders are much more transparent about things because I feel like those are the best types of companies because if it's just hidden behind, I don't know, veils of we're doing well or we're seeing big growth, it doesn't help a team, I find, at least. You mentioned churn, and I wanted to get to this just because ButcherBox is a really unique company that you're predominantly subscription-based.

13:02Subscription was a really hot business model. I want to say like, you know, when ButcherBox started up until like five years ago, and then they reached the problem of, you know, acquisition got more expensive. It was harder to keep people in. So how would you say like what has been the secret? I hate to say secret sauce. What has been the secret for ButcherBox that has made the subscription model work? And do you have a unique approach to churn that others just haven't been able to figure out? I would say one of the unique things about ButcherBox is, and I don't say this lightly, we have an amazing product.

13:37As a marketer, to be able to unapologetically talk about how great our meat and seafood products are really gives us a leg up against a lot of competitors, honestly. And so what I mean by that is when you go out and we have our own members talking to people who are around their dinner table saying, oh, this meal tastes great. They're the first ones to jump in and say, butcher box, you've got to try this. And they give the litany of reasons why. That helps a lot that we have that belief that our members have in us and in our products in terms of being our best marketing tool. That helps. The second part is going grocery shopping is a habit.

14:19It's something that people do weekly, maybe a couple of times a week. So therefore, food for us on the subscription side with meat fits into that pattern. getting a box once a month of your essential meat and seafood items isn't as far of a reach for many people as it would be for maybe some other categories. So I think that's one of the things that allows us to continue to have a very successful subscription model that has still a lot more room for growth. We're going to take a quick break and we'll be right back. This was before your dime, although it sort of went in there, but like when you got that pandemic bump, was there a new approach just because there were so many people who, because of the situation, were unable to go to the grocery store and then were able to go again?

15:04How do you deal with one of those anomalous situations? One of the interesting things is post-COVID, people were still cooking at home, much more than they had prior to COVID. So those habits were still there. They found that they liked eating better when they ate at home. They liked the savings that eating at home gave them, the flexibility that it gave them. And so it wasn't that they went back to their old habits immediately post-COVID. I think the second thing that for us that was interesting was if we were able to continue to grow our product offerings by a variety of cuts that we have, for example, or some ready-to-eat items.

15:42We have butter, for example. We have broth, for example. As we were able to build out some of our offerings, people saw more value in us than just our meat and seafood. And some of those ability to grow in terms of our offerings really helped keep them interested in wanting to stay part of the subscription. I want to ask kind of a broader question just with you as a marketer, especially leading this company as it relates to subscriptions. Do you think there needs to be or there is new messaging around being a subscription company? I feel like it was a novel thing back in the day. And now there are different ways to describe what a different company is, where there's a recurring box coming every month or so.

16:23How do you think about the messaging of such a product and how has that evolved? I would say I think about the messaging going forward about how having a subscription for your meat is a great thing because it's saving you time. It is one less trip that you have to take to the grocery store each week or a couple of times a week. It is allowing you to have control over what cuts you have versus just going to the store and seeing what they have. It's allowing you to plan ahead and say, what am I going to have this week for meals? Great. I know it's in my freezer or in my fridge. I then can plan the rest of it around it.

16:57And it's giving you that first start from a planning standpoint that you don't necessarily get when you go to the grocery store and you're standing in front of that meat or seafood case. So I think of the subscription as somewhat of a superpower that people will have to be able to help them get meals on the table faster, feel good about the quality of meat and seafood they're putting in front of their friends or family. And I think about that as empowering. And I think people will be really attracted to that. You mentioned this earlier, but I wanted to get deeper into it is just overall marketing, advertising and media diversification.

17:30So how, what have you been focused on? What has the company been focused on now that, you know, I, I imagine affiliates and influencers still are very, very important to you because that's, you know, the type of core customer you want repping the product. But how are you thinking about these other channels and how, you know, especially now, what are the areas of focus? The areas of focus are making sure that we have the right messaging towards the right segment of people. We, our customer base is not a one size fits all. We have people who are families, they have kids in the household, they're running around from soccer practice to lacrosse practice, all of the things.

18:06And then we have people who are living in an urban setting, single or married, no kids, we can't treat them the same. Our product offering can't be the same for all of them. Our messaging can't be the same. So how they each individually see themselves in our brand, we have to make sure that we're creating those messages for them, that they see themselves as being part of our ButcherBox family. And that means, okay, so let's think about what are the most important things to that family who's running around and who is looking to have a good meal at home, but without a whole lot of hassle. That messaging has to feel different, sound different.

18:44And that's some of the work that we're doing right now as we continue to build out our messaging stack. What are the channels that you're hitting these people on? What are the most useful channels? Social continues to be a very important channel for us. Affiliates and influencers continue to be a very important part of our mix. We're on TikTok. We're on all of those with a variety of messages. We're learning every day in terms of what works, what doesn't, and we are maniacal about testing, which also email continues to be an extremely important part of our communication mix of how we talk to people, how we talk to them, what we have both prospecting and existing members.

19:28So it's not nothing surprising. Streaming continues to be a part of our media mix as well. So it's a variety. Talk about streaming, because I was going to ask you about this. When you're a company that focuses on the basics, has been profitable, you know, since day one, correct me if I'm wrong, but like you really want everything to be very efficient. And something like TV or top of funnel isn't very efficient by its very nature. So how do you approach that? Or is it just you hope it works or you get a few cues that it works? Or what are you thinking about? We are still trying to figure out the right mix.

20:03If you look at various upper funnel activities, you have streaming, you have the podcast work that you do in terms of podcast advertising, you have word of mouth referral, you have experiential and trial. All of those are what I would consider upper funnel activities. We're working to finding out what that right mix for us is. Obviously, most of our investment is on the consideration and conversion side. But we do know the importance of the health of our businesses in the mid-funnel comes from being effective in the upper funnel work that we're doing. Let's talk about podcasts just because I'm fascinated with them.

20:40They were hot, then they weren't. Do you think podcasts work for ButcherBox? Have they worked in the past? Or is that a difficult channel to tap into? It's been a great channel for us, honestly, because if you look at our customer base and podcasts are an important channel for them on their own entertainment side of what they're listening to on the way to work, what they're listening to when they're on a walk, what they're, it's a very important of their entertainment mix. And therefore, if we can find that right podcast, that is where our brand feels organic and relevant to the message that's being delivered, we've had wonderful success with it.

21:16Got it. Got it. Makes sense. Let's talk about the influencer side of things, because you were one of the early entrons figuring out that If you have individual brand reps, people will listen to them and follow suit. But also it's become a lot more crowded. There is talk about micro-influencer, macro-influencer. They're all on different platforms. So how has that evolved? How does ButcherBox figure out who to work with? Has it become more difficult to cut the wheat from the chaff to figure out that this is a person we should be working with? Walk me through all that. It is a world that's changed significantly over the past eight years.

21:51It was, I think I'd say a lot simpler eight years ago than it is right now. What we're finding is our highest level of success is with kind of that more midsize influencer because they have a reach that is significant, but not massive. But we still are able to have messaging that's delivered by them that feels much more organic. We aren't a company that says, here's your script, say it exactly the way that we're telling you to say it. That doesn't work for us. Those don't perform for us. We give them information such as, here's why members love ButcherBox. Here's what we are really proud of. Here's what we offer.

22:29But then we allow them or we ask them to take that messaging and make it their own. Why does it matter to their listeners in terms of why this is a good fit for them? They know better than we do. So that's where we really rely on them for that. Got it. Got it. Has the business of working with these midsize influencers changed? Do they have, you know, are most of them operating affiliate? Are you pay? Are they more bigger brandy deals? Like, how is that working? It's still more on the affiliate commission based side of the world. It will tell you the reason it's changed is because we have so many more as we've grown in size.

23:08It does require our teams to really be diligent about assessing how, you know, what are the relationships that are working? Which are the ones that are not working? How do we what does the report card look like when you're doing that assessment? So I would say it's now not as much of who's the next one, who's the next one. It's being able to take the ones that you have within our offering and saying, which are the ones that we want to double down on? Which are the ones that we may have to move on from? I would say that's a bit of a change that's happened over the last few years. I wanted to switch gears a little bit and just talk about overall business model because earlier this year, you guys had an interesting announcement given that you've been a predominantly, if not pretty much entirely, direct-to-consumer brand, where you launched in BJ's Wholesale Club, if I'm not mistaken.

23:55I want to just give a little background about that deal. Why ButcherBox decided to do that? Should we expect to hear similar announcements in the future? I would say what you should expect in the future to hear is that we're always looking to learn, right? The retail side of the business made a ton of sense. As we looked at it, We know we are a very small part of the retail grocery landscape. And if you look at frequency, our members get a box once a month, once every two months. People are in a grocery store once or twice a week. And therefore, having an exposure for a brand in that environment makes a lot of sense.

24:32How do we get eyes on the brand? And that was our foray to learning from that. It was a great, great learning. Right now, the timing is that's not where we're looking for in that next vein of growth. But I do think it is a testament to ButcherBox constantly testing the waters to see where there may be more possibilities for growth. I would say I don't want to ruin any inside secrets, but I think we'll continue to surprise you in terms of where, as we look to expand our audiences, as we look to expand our offerings, it's something that is always top of mind for us. given that you're not focusing on it now, did you find that there was the potential for subscription cannibalization?

25:14Like people are in the grocery store, they're less likely to be a subscriber. How did you approach that and how are you thinking about that with this under your belt? I would say for us, as we look at the opportunity in retail versus the unique offering we can have by offering a subscription, it allowed us to say, we believe that there is still a lot of headroom in the subscription model of our business. Our CEO recently went and talked about how we're moving into the pet side of the world as well. That is part of a subscription business that continues to allow to bring more members into our family, but also being able to offer additional value for existing members because over 50 % of them have pets in their household.