Break One Rule and Break It Hard: Disrupting the Soda Industry with a Healthy Spin
After discovering the importance of microbiomes and their impact on nutritional health, Ben Goodwin was inspired to create a delightful product that reaches as many people as possible. Once he met David Lester, they began using innovative product development, the power of science, and the emotional significance of nostalgia to create Olipop. In this episode of Shopify Masters, you’ll learn about how Ben and David developed Olipop, from the flavors to the brand identity, to solve real human problems.
For the full transcript of this episode, click here.
Show notes:
Building a business sparked by nutrition and personal growth
Felix: What was the opportunity that you saw in the marketplace that led you to start Olipop?
Ben: We've got an unusual background. A lot of businesses in this space are founded off of more of an observation of white space or a trend that is prime for exploitation. For us, this whole nexus started when I was a kid. I grew up eating a standard American diet and our family didn’t have a lot of cash. That very materially affected my health. By the time I was a teenager, I was overweight, and had anxiety and other issues. I had an epiphany one day at 14 that this was not going to create a good life and I needed to overhaul everything.
I started paying attention to my nutrition. I started dieting, exercising, and going to therapy. It's all super useful, and I lost 60 pounds in less than a year. I became a little obsessive about nutrition and got really curious and fascinated by it. I discovered over time that what I was putting into my body was having a really profound impact, not just on my physical energy, but also my cognitive clarity, and my emotional stability. I became really fascinated by that link and really saw nutrition as an opportunity for personal growth, development, and self-actualization. That’s where all this started.
There's a longer story associated with that, but basically, I ended up dropping out of college when I was 20. I had an interesting mentor who won a supreme court case by himself, with no legal representation, which blew my mind and drove me to drop out of college and then get into product development of consumer packaged goods and beverages. I helped a friend get a kombucha company off the ground 15 years ago when I was 20. That's where I learned what the microbiome is. It's all the non-human microorganisms that live in and on your body but are concentrated in your digestive tract. The microbiome has a profound influence on your overall health–from your digestion, to your immune system, to your organ function. There's also something called the brain gut access. Basically we produce the majority of our neuro-transmitters and hormones in our digestive microbiome.
"We have a chronic nutrition issue in the United States and that those issues are around our nutrition, which affects our metabolic health, thus our microbiome health, and our digestive function."
There's all sorts of human and animal studies that show that the health of your microbiome has a pretty profound impact on how your brain works, your nervous system, your endocrine system, and your hormones function. That was the light bulb for me, way back in my early twenties. I was like, wow, this might be the system that transformed me to be totally hooked on this, for the rest of my life. The more you research it, the more you realize that we have a chronic nutrition issue in the United States and that those issues are around our nutrition, which affects our metabolic health, thus our microbiome health, and our digestive function.
Dave and I have been working together for the last nine years, to find the most scientifically credible and impactful ways to benefit people's microbiome and digestive health, but to package it up in a highly accessible format that reaches the most people. That's more or less the foundational composition of Olipop and its intent.
Felix: How important do you think good nutrition is for entrepreneurs?
Ben: I can't even begin to describe how important it is. Obviously, if you don't have a high level of emotional and oftentimes even physical pain tolerance, entrepreneurialism might not be the right fit for you. That's a part of it. Simultaneously, entrepreneurialism, especially if you're lucky enough to experience some success, you've got to go through a difficult phase where it’s both a marathon and a sprint. It’s the worst of both worlds for a while. It's also really rewarding, especially when you have a positive experience. Addressing your physical, emotional, and psychological health is non-optional.
"I need to have access to the deeper parts of myself to get myself to work and function optimally, and take exceptionally good care of myself, because that creates the most sustainable dynamics for me to put the pedal to the metal and go for it in life."
It’s foolish to ignore those things, because you're going to have to be at it for a while. You're going to have to take care of yourself. Psychological health issues especially are really rampant in the entrepreneurial community. I had a rough time growing up. A lot of entrepreneurs actually experienced trauma in their lifetimes, which can make them more susceptible to some of the disruptions that might naturally come from a higher risk occupation. I view it as I need to have access to the deeper parts of myself to get myself to work and function optimally, and take exceptionally good care of myself, because that creates the most sustainable dynamics for me to put the pedal to the metal and go for it in life.
Felix: You mentioned that you two worked together for the last nine years, was it all in the beverage industry?
Ben: I spent about four years doing the research and development for the last beverage business that we had. Three out of those four years, I was feverishly looking for the right business partner. I went through a couple cycles of that and then finally met David. Two weeks after meeting we shook hands and honestly haven't looked back since. We're very different people and we cover different areas of expertise, but we have materially overlapping principles and values and have gained a deep level of understanding for each other over time. We've always worked together on launching our own businesses and we've worked together in the beverage space.
Felix: Obviously a very valuable pursuit for both of you. Did you see a gap in the marketplace that coincided with your passions?
Ben: In our particular case, when you look at the raw data, according to the CDC, two thirds of Americans have chronic digestive distress. Data coming out of UCSF indicates that up to 88% of Americans have some sort of metabolic dysfunction or disease. We obviously get way too much sugar in this country but some of the insights that we discovered when researching for Olipop's functional formulas was that we also don't get enough fiber, prebiotics, or adequate nutritional diversity. That’s a recipe for disaster for the metabolic microbiome–high sugar, low fiber, and low nutritional diversity.
A lot of that's driven by products like traditional soda, and there's no lack of clarity around what that product does to your body. Before the pandemic, we were seeing reductions in the size of the soda market year-on-year as consumers were migrating away from that addictive drink, but also a really pleasurable and enjoyable drink. People were trying to migrate over to healthier options with a simultaneous increase in awareness around microbiome importance and science and a real significant increase in awareness around digestive health.
Those are some of the broad meta trends. In terms of the exact strategy that we chose to approach it, that was driven by the science and the last five to eight years of microbiome research around dietary intervention versus probiotics, as being the better choice for a lot of people to create a sustainable microbiome. There's some awareness, but that has to be combined with what's being indicated as being effective in science in order to create a real solution for people.
David: Three years ago when we were initially fundraising for this business, the idea of a healthy soda was an odd concept, and certainly not a trend. People were suggesting we create sparkling water or a kombucha. Prebiotics were definitely not a trend. We had a lot of questions around why we were doing prebiotics when probiotics were much more prevalent in the market at that point. There's a lot of interesting innovation learning here. I focused on innovation for a large part of my corporate career and had the opportunity to launch and see a lot of products too. One of the fascinating things about working with Ben is his focus on solving a real human problem and then finding the best way to do that.
We actually went and pitched to investors with a lot of confidence, because we weren't following a trend, we were following the science. You're also looking for things like where is the consumer dissatisfaction? The soda industry to us looked like a space that was ripe for disruption because there's aspects of soda that people love. It's delicious, it's nostalgic, it has deep culture and emotional resonance, but there is one fundamental problem: it's not good for you and it has way too much sugar.
Ideally people would like to be consuming products that have some nutritional benefits. You combine those things and essentially, what we've executed with the concept is the idea to break one rule and break it hard. The rule that we broke is the ingredients panel. This is fundamentally different from a can of Coke, but everything else is quite familiar to people. It is delicious from the flavor profiles. It looks like a soda, our marketing is fun and vibrant and that gives you a really rich combination for successful innovation.
Using data as insight into solving real human problems
Felix: What is the combination of trend versus science and customer satisfaction? How do you balance these elements?
Ben: One of the things that was helpful for us is that our prior venture was a testing ground for us to investigate this opportunity. Our prior beverage was also a healthy drink and we did have some flavors that were pretty distinctively soda based, and we saw them really take off. It was almost like we did a large scale clinical trial or marketing study in our prior venture, which did give us a lot of insights. From a broad brush stroke perspective, the best innovation is made around solving human problems.
"From a broad brush stroke perspective, the best innovation is made around solving human problems."
There has to be an insight. A lot of times people will be like, "Oh, we know we need data. We know we need data. We need market data. We need data on our customers." That's certainly not untrue, but the data is only so useful as your ability to synthesize it and come up with an insight. A lot of times people become paralyzed by the data without realizing that the magic is the conversion of the data into an insight. That's more of a right brain process mechanically, and it's more of a deep brain process as well, because you've got to bring together a lot of divergent data points and come back with some insights. Then you've got to be able to go out and test them.
You have to do it in order to be able to communicate the vision that you have to people that don't already understand it, i.e. investors, retailers, et cetera. You need to be able to come up with some material data points that are supportive. Let's say for example, typically there’s a focus on digestive health in the healthy beverage space, especially in the natural channel. You've got kombucha and touts look good for your digestion. There actually are no clinical trials supporting that, but I'll just leave that for another day. That's how the customer perceives it. The reality is that kombucha is a billion dollar industry. Then you go look at soda and you look at the fact that they're doing tens or hundreds of millions of dollars worth of business every year.
It's still a nearly $40 billion industry with over 95% household penetration. The soda market is obviously much more ubiquitous, it has a really long history with consumers. There are clear indicators, both on the research that's coming out and what your doctor is telling you, and also on some of the shifts that consumers are making that there are points of dissatisfaction, and there's a pretty material market that's available from that shifting. There's also a growing interest around digestive health. Then you have to say, "All right, here's all these data points, I have an awareness of the landscape, but then what do I believe, what is my insight for believing that, what underlying problem am I looking to address and what level of elegance and sophistication is involved in my solve for that problem?" That's how you can do something that's quite unique and disruptive, but not just out on some island somewhere where you have no awareness of the landscape around you.
Felix: What is your process for collecting data and synthesizing it in a way that informs your business strategy moving forward?
David: This has been an interesting insight for me. Ben is very good at what I call leverage entrepreneurial thinking, which is quite audacious in reframing problems. The idea of doing a healthy soda was ridiculous to people until we actually made it work. The logical thing to do is let the problem mature. You take out the sugar, you end up with sparkling water. What Ben does, which is fascinating, is he puts the different data points together to get to this leverage solution that actually reframes. It’s a very malleable approach to what is possible.
As you look at all the different data points, you have to keep in mind that it's really difficult to get people to change behavior. The natural products industry is really creating a more ubiquitous market and getting people to switch their Coke for kale juice isn’t easy. When you understand the reasons why, you start to approach the problem in a different way. I'm paraphrasing Ben here, but switch out the poison for the solution, essentially. People love soda, it's a great vehicle, so why not use it to deliver nutrients to people.
Changing consumer behavior with elegant innovation
Felix: You mentioned one thing that I want to elaborate a little more on, which is “break one rule and break it hard.” Tell us about your experience with that strategy.
David: I love what I call elegant innovation solutions, which are just very simple solutions. Sometimes people can tinker around with too many things, but not materially change anything. You're lacking in innovation in one space–say the liquid–and you end up doing really wacky packaging to compensate because you need some 'magic' in there, but you’re looking for it in the wrong place. The principle of “break one rule and break it hard” is say, if you're getting people to change consumer behavior, if you present somebody with something that they don't have a framework for and the consumer is asking, "What is this?" Your challenge is pretty significantly greater, because I don't even know what this is to start with.
We looked at brands like Beyond Meat, Halo Top, and Seedlip which is a non-alcoholic spirit. Fascinating brands because Halo Top broke one rule, and broke it hard in terms of the nutritional panel, but they understood that ice cream is fundamentally about indulgence and if you're not indulgent, it doesn't matter if you've got two grams of sugar or 50 grams of sugar. Beyond Meat, everything they do in their marketing is designed to give you the same exact experience you would get from a regular burger. This one just happens to be made from plants and is better for the environment.
That’s our approach to our marketing too, and that's a trigger for purchasing soda. You have to understand the category you're operating in. The vehicle we've chosen is soda, that's the category where we're operating in. That's the occasion base we're marketing to, that's the consumer motivation that we're targeting as well. That category is about refreshment. It's about fun. If you're not doing those things, then people are not going to want to buy your soda. If you are able to do all of those things and solve the dissatisfaction they have, that is where you've got a very interesting idea. You're doing all the things that they love about soda and solving for the one thing that they hate, which is consuming 40 grams of sugar.
Felix: From an educational aspect, was it difficult to reach people and explain how your product is different?
David: It’s still a challenge. As Ben mentioned, the soda market is a $40 billion category and we're a long way off getting a significant share of that. There are a lot of people that probably don't fully understand what this is. There is a patience in innovation. It's a long-term thing. You have to have a long-term strategy over years to go through different consumer segments, people with different levels of openness to your concept. Initially we started building in the natural channel, and people there are very familiar with digestive health. You can find us next to kombucha. It's not a major leap for people, if they don't understand prebiotics, at least they understand fiber. For all intents and purposes it looks like a soda. People kind of get it.
"There is a patience in innovation."
They're like, "Oh, I see you made up better for your soda. Then they try it and fundamentally and CPG, your product tastes good or it's not going to go very far." Ben's formulation skill is quite incredible in terms of what it can do with these flavors. There will be an increasing challenge. Looking at brands like Beyond Meat, it's interesting to see the evolution they’ve gone through over five years–how they've slowly penetrated the market. There's a limit to what you can do with your own marketing spend. You're heavily reliant on shifts in the broader macro environment. Interest in digestive health increased by 3000% through the pandemic. No amount of marketing budget takes that shift, it's a societal trend, a macro trend. To a degree, you have to have the macro trends on your side. There's an element of foresight, then there's luck and then there's an element of being grounded in science and where things will inevitably go.
Fresh but consistent: Balancing nostalgia with surprise and delight
Felix: One lesson learned regarding your product was around the flavors that customers would like. Tell us about that journey.
Ben: I worked on the first three flavors, which were strawberry vanilla, cinnamon cola–at the time–and then ginger lemon. I felt good about the flavor outcome and all three flavors. I also thought they would give us really interesting feedback. You've got strawberry vanilla, which is based on the flavor of this hard candy that I loved as a kid called strawberry cream saver. It was nostalgic for me, and for a lot of other people also, it's an intrinsically delicious flavor. Cola is obviously going right up against soda, and then ginger lemon was, “it might be helpful to have a tester in here because we're starting off from the natural channel.
The reality is that cinnamon is a flavor in the flavor mixture of cola already. People obviously don't know the precise ingredients, but it's clove, cinnamon, orange peel, lemon lime, and a handful of different things that are in that flavor profile, which was interesting to me. I thought, “I bet I could lean in and accentuate that flavor.” I also used some caramel notes and some vanilla notes. What I try to do with my formulations is find out what the nostalgic flavor is of deeper in that mix, that's going to hit that part in your brain that says, "Oh, something about this is familiar." Then figure out the rest of the flavor architecture that clearly communicates the soda aspects of that flavor also. From there we reformat it to make it ownable by Olipop.
We want people to think: “this is definitely an Olipop flavor, but it also signals this soda structure, and there's something in this that gives me this deeper nostalgic hit.” That's my generalized approach to formulation for Olipop. I've kind of brought in some new different types of cinnamon, everybody will get it, it'll be fun. And people had the association, they assumed that it was spicy cinnamon instead of what it actually was, which is more of like a sweet cinnamon, and so there was a little bit of consternation around that.
We changed it. The reality is I barely changed the actual underlying formula from cinnamon cola to vintage cola, but people are still debating online today about which one they like better, which I think is really funny, because it's pretty much the same formula. Hats off though, that people feel that passionately about the brand that they want to go online and discuss it. We followed the signals and did root beer next, which we absolutely crushed. Then I did cherry vanilla for personal reasons.
I don't find that there's a lot of good cherries drinks/ any good cherry sodas out in the market that I've been able to find. I don't know what is going on, but companies are putting out cherry products that taste like cough syrup. Cherry is my favorite fruit. It just feels like a bit of an abomination. I wanted to contribute to the solution of having a good cherry product on the market. Then we did an orange soda. We've just launched a grape soda. We did an orange creamsicle and then we'll also throw a blackberry vanilla in the mix, which is a nice curve ball.
Our generalized goal is to keep hitting on these nostalgic flavors that oftentimes I, as someone who grew up drinking a bunch of soda, have a certain amount of a relationship with. All while driving a surprise and delight. We want our customers to not totally know what's coming, but then be really excited by the thing that drops. It's a consistent but differentiated experience from flavor to flavor. It meets a different need for them. It's a good experience for them. It’s both fresh, but also consistent. That’s working and now we're lucky enough, because we have such a robust D2C platform and we're really fortunate to have a direct conversational relationship with a lot of our customers. We have a multi-thousand flavor request list at this point. We get really clear feedback on what flavors customers are still interested in, and that’s something that I draw from when we're considering where we want to go with our flavor and brand architecture next.
How to determine why your product isn’t satisfying customers
Felix: How did you determine that it was a branding issue with the cinnamon cola–rather than an ingredient or flavor issue–when people weren’t buying it? How did you test that?
Ben: That's what's nice about doing things like demos. A lot of people assume that we were a digitally native brand, but we actually weren't. We started in brick and mortar then built out more of a fledgling D2C platform, then COVID hits and David and the team did an absolutely exceptional job adapting to that and building out the platform. That has taken on such a life of its own that people go like, "Young brand, huge D2C platform. They must be digitally native." But we weren't. There are different ways that you can get feedback from your customers if you're going to brick and mortar retail, by just interacting directly with the customers and having brand ambassadors that are pulling information back for you. Talking to the buyers and beverage buyers of different stores. Ask them. Talk to your distributors.
You have your direct relationships, you should be able to get data back about how things are doing and how things are playing out. This is also one of the great aspects of the dynamic between David and myself. The customers come back and say “cinnamon cola is a problem.” I might have reacted to that, but David is much better positioned to take a look at that situation and come up with a solution then execute it, which I think worked extremely well. Oftentimes in teams, especially in founding teams, you need to have an obnoxious, visionary, highly creative, perpetual disruptor. Spoiler alert, that's me.
"If you don't have a partner that can counterbalance you, then you have the task of playing both roles simultaneously. If you can build your team to address natural spikes and skill sets, and achieve that balance, then everybody can coordinate well."
I try to look at, “what am I actually trying to accomplish? What's the most interesting way to do that?” Then you have somebody with David's profile, who had a decade of experience in handling innovation, seeing what worked, what didn't work, and figuring out how to not blow it up. That combination is super useful. I kick off a bunch of stuff. David is like, "This makes sense, it doesn't make sense. Let's work to get this done." He’s amazing at getting those communications together. That synergy between us is really useful. If you don't have a partner that can counterbalance you, then you have the task of playing both roles simultaneously. If you can build your team to address natural spikes and skill sets, and achieve that balance, then everybody can coordinate well.
Why overvaluing qualitative data can lead to bad decisions
Felix: You shifted more toward D2C when David joined the business. Has the closer connection to your customer changed your product development process at all?
Ben: We stack right and order them. We know which ones are the most requested and we say, "Okay, these handful of most requested flavors need to be a part of the launch sequence somewhere on the line." We say, "Okay, here's our plan for flavor development over the next three years. Here's the top three that we hear about a lot. I need to make sure that I develop formulas and we can roll them out." However, the next flavor we have coming out, isn't not requested, but it's nowhere near as high on the list. I had a very specific concept around it that I'm feverishly clapping my hands together around because it's going to fall a little more on that surprise and delight side of the fence, where consumers are going to be like, "I didn't even know I wanted this, now that I'm drinking it, I see what you did and I'm excited." We'll see how much that plays out.
Ben: I formulated and launched the classic grape. That had reasonably high request rates. It was in the top five in terms of most requested. The thing that the whole team came away with was that when someone did come and request grape flavor, there was an exuberance behind the request. Even though it wasn't the number one most requested flavor, you could tell that the audience that was requesting it had a fervent enthusiasm around it.
It's something that I want to work on because some part of me just wants to make our customers happy and we're going to be able to make a lot of people really happy with this product. That means that there's an unserved market that you can serve better with that flavor where you're going to make a real impact. The flavor profile and the can color helped a little bit, too.
The fundamental underlying takeaway is that you've got your data, but then what are the points inside of your data that you're prioritizing as important ones? How creative are you in your approach? How are you synergizing that information? What is your mission, what are you doing, and how does the data relate to choices you should make, keeping your mission in mind. You should never get so wrapped up in the data that you forget about the entire reason that you're doing the whole thing in the first place.
David: There is a danger in overvaluing qualitative data as well. As a society, I think that's an issue in general. I remember the first innovation project I worked on in my archer days. We did very sophisticated product concept tests, blind taste testing on the liquid, multiple liquid variants, top box, bottom box analysis, and went through a whole iterative process. The product launches, and it totally bombed. I was in a bar with my friends and they said it tastes disgusting–and it did. Liquid in particular, or any product that you taste, drink, eat, is very difficult to work through on a qualitative basis. We very heavily rely on Ben's palette.
When we did it at the archer it was in whiskey, we didn't test it in the same way. We just had master distillers that had a vision for the liquid, and they went and executed on it. It's like consumers not knowing what they want and you're not going and asking them. John has to dial down this caramel nut a little bit, or put a bit more pizza in there or something, they're just like, "Look, here's an amazing whiskey that I think you're going to love." The same thing when Ben is formulating liquids. You look at certain data points and treat their feedback as one of many data points.
Cola is a massive category. Root beer grape are huge categories. Goji berry is not. If you're launching a goji berry flavor, it's probably going to be pretty niche because it's just not in the same size category. When you do come to execute on it, you hand over to the division of the formulator. Ben had a very clear vision of how he's going to formulate it. He went away to the lab, no distractions, tasted his way through it, tweaked things and came out with a product that people said, "This is incredible, but I can't quite put my finger on it." It's very interesting hearing Ben talk through the layers in the flavor and what hits you on the back end and at the front end. No consumer would ever guide you towards an expert's vision that has taken you there.
Ben: When I formulate something, I have to want to drink it and like it. I'm so critical of these flavors that by the time I'm happy enough to release it, hopefully it's going to resonate with customers.
Using an emotional connection to develop brand identity
Felix: Talk to us a little bit about the design of the packaging and the creation of the brand identity.
David: It goes back to the elegance of the innovation. When everything works in sync, and it's simple, with the best innovation consumers just go, “that's obvious. Why has no one ever invented this before?” There’s a nostalgic thread to the formulation that Ben has developed. Consumer packaged goods are as much about emotion as function. It's lost a little bit at times in the natural products industry, when we get very focused on the farm that it’s grown on or the specific ingredient, or the founder's story itself. That’s not why people are buying Coconut Oreo. It's because the way those products make them feel. I call it the modern nostalgia in the concept just carried through into the packaging.
"Consumer packaged goods are as much about emotion as function. It's lost a little bit at times in the natural products industry, when we get very focused on the farm that it’s grown on or the specific ingredient, or the founder's story itself."
The packaging itself is pretty modern minimalist, with pastel colors, and bright. But, there are wins of fun for the flavor, which was actually almost retired before we started using it. It's very old fun, not very fashionable. You combine those two things together in an elegant way, which the design team did, and you deliver something that carries the thread of modern nostalgia, from liquid to packaging.
Felix: How can you determine whether you hit the nail on the head when it comes to the imagery of the brand?
David: You can certainly put it in front of people. I'd caution against overvaluing qualitative. I think an early stage innovation qualitative is very useful. I remember when we were developing Olipop, we didn't have any money. I went and ran like 20 consumer groups, myself. Seven to 10 people, friendship groups, across different parts of Northern and Southern California, to hit slightly different variations of the target demo we were going after. We spoke to about 50 people, and you start to see patterns. If you're doing qualitative you can understand why they're saying what they're saying. We actually changed our packaging a month or so before launch. Our investors thought we were crazy. We'd already raised a series C convertible note at that point.
They’d bought into the packaging that we'd presented to them, but we could see in the research that clearly this was not working. It wasn't communicating. From what people were saying, we could understand why. The initial hypothesis–this is why innovation is so difficult because it's always easier with hindsight–was that the liquid itself, and the ingredients in there are quite incredible. You're drinking this soda that has kudzu, nopal cactus, and calendula. People look at the ingredients panel, and their minds are blown particularly when they try the thing. Initially we thought “we have to show what's in this, because this is what the value is, people will understand that.”
Unfortunately trying to put these ingredients on a pack was complicated. What we lost was the sense of soda. We could see that from the research groups that we were doing. You don't need to do a ton of them, but even getting feedback from a few people, you can start to see patterns. The consensus was that it didn't look delicious. It wasn't colorful. It wasn't what people were expecting from a soda. That’s when we decided to scrap the focus on, “by the way, it's good for you.” As much as we want to shake every consumer and tell them about these amazing ingredients and how they're going to benefit their health, most people are just looking for soda. They're looking for a refreshing and delicious beverage, not necessarily to transform their digestive health in that particular instance.
The qualitative research we did was useful and gave us confidence to make that decision. It also gave us clarity in terms of the path that we took with the brief. We made that pivot really quickly. We had to shrink wrap our cans because we don't have time to print them once at market and the rest is history from there.
Felix: The big takeaway here is that the data points are just a factor, something you should consult, but not necessarily follow blindly.
Ben: 100%. Even on the packaging thing. We got some of that feedback and it made everybody really nervous. I remember the particular moment was when we got the actual test run of the cans and David and I looked at them. We were at separate locations, but I called him, and I was like "Bro, this is obvious." Even in that storyline–with a lot of external data points–he knew. Sometimes sitting there and looking at the physical thing, you've got to be ready to come to grips with reality and trust yourself.
"Sometimes sitting there and looking at the physical thing, you've got to be ready to come to grips with reality and trust yourself."
To the point that David was making, we had gotten a little overly cerebral around the presentation of some of the ingredients. We didn’t have an awareness of the actual emotional driver, because the goal of the product is actually to get past people's defense mechanisms and facilitate healthy behavior change through a benevolent product offering. We needed to have designers working on the design who understood the mission in a personal way. That's the thing that ended up helping it to translate.
How Olipop used SMS marketing to hit $30,000 in sales in 15 minutes
Felix: Tell us about the success of your recent SMS campaign.
David: SMS is a really important channel for us and we were one of the first brands to use it in subscription, which is one way that we use it. The approach we took to subscription is that we have to earn the right to the users attention. If people commit to a subscription, that's a big commitment. We don't auto populate subscribe. We look to win your business and have you voluntarily opt in. When your order is about to ship, you get a text and it says, "Do you still want this? Or do you want to change it to something else? We're about to send it." You can opt out right then. We text people right before we send it.
People really appreciate that. It's an interesting medium because it is the most intimate form of connection. There's so many people in your email inbox. I've got a whole email address that's pretty much spam now. Not many people text you. We keep the communication light. We respect the channel and the intimacy of it. We've used it to communicate a new flavor launch. We've sent out a picture that Ben snapped on his own phone of him formulating, with a personal message saying, "Look, I just finished making this for you guys. It tastes amazing. Here's what I did with it. If you want to order it, click here, it's ready to order."
"SMS is about having the discipline not to abuse that channel, and to respect the intimacy of the communication while offering real value to people."
With the last campaign we did something like $30,000 in sales in the first 15 minutes. The click through rate on a text is exponentially greater than you get on email, because it's so immediate. But it's about having the discipline not to abuse that channel, and to respect the intimacy of the communication while offering real value to people.
Felix: The SMS list that you have, these are existing customers?
David: Yes. We allow people to opt in. They can opt in for email, they can opt in for text. As our D to C platform has grown, our owned channels have grown significantly as well. It's been really important, particularly with iOS changes. A lot of people are looking at the data that you hold and at that direct relationship you have with consumers. As a consumer marketer myself for 20 years before this, you had no connection with the consumer, you sell to a distributor, who sells to a retailer, who sells to consumers. You have no idea who's buying your product unless you invest in some fairly expensive research.
Now, we're chatting to them on a day-to-day basis. We have a pretty reasonably sized CX team with a response rate of under 30 minutes. If you email us regarding something, if you're dissatisfied with the product in some way, if you have a question, we get all that information and we pull that data as well. We can see the trends of where our things are going and what we might need to do to improve.
Felix: Do you offer an incentive for people to join the SMS list?
David: We offer a typical money off discount. 15% off to sign up. Consumers–especially see this with gen Z actually–are willing to opt into brands that they like, that serve a purpose in their lives, and we're seeing that with Olipop. People love soda, and they're super grateful that as a company we've developed a solution that meets their needs, that is not taking away the fun and refreshment of soda, while still allowing them to enjoy an experience they love. All this, plus it’s formulated very purposefully and scientifically to support their digestive health in a pretty meaningful way.
When you're in that position, people are willing to hand over their information, because they want to know when the next flavor is available and they appreciate the thoughtfulness behind the subscription approach. If they forget that they might be going on holiday and want to turn it off, they can do so. Our reputation is starting to catch up with us in that respect as well. People trust our CX platform, they trust the way that we'll use that data. That has become increasingly important for brands as well.
Ben: It's a more personal platform as well. We tend to be a little bit more personal in our messaging. We’ll have quotes from a member of the team and we'll also give early access. If you are on our text platform, you might be able to buy a brand new flavor that's dropping 48 hours before anybody else gets access to it, which is kind of fun. We've done a couple of limited release flavors.
If we have a limited release flavor and you're on the text, you're definitely going to be able to get your hands on it before it starts to dwindle. Early flavor access and content that you wouldn't necessarily get elsewhere that has more of a personal touch, has been a very cool part of that channel for us and hopefully something that consumers are responding to.
Felix: This 30K in 30 minutes, was that example of a launch? Did SMS generate those sales?
David: Yeah, people were really excited to see what's next. Text is the channel that we use to inform people first because for us, it's the most valuable form of communication. We reward the people who buy from us in that way. If you want to hear about something first, get on our text platform. That's where you get the first piece of information that is available. You'll get it before anyone else, so we encourage people down that funnel.
Felix: What are the key learnings that you’ve taken away from your experience with SMS?
David: Frequency, I would say. It's easy to ignore an email in your inbox. It's annoying to have to ignore a text ping into your phone. We send two, three emails a week. We send two texts a month, to give you some idea of ratios.
Felix: Do you remember how large the list was at that point?
Ben: We were in the realm of 12,000. It's grown a lot since then, but that's about where we were.
Building a product that resonates with customers anywhere
Felix: What tool do you use to handle your SMS campaigns?
David: There is a range of different tools actually that we use. There's a different one for subscriptions. We've actually just changed tools to manage our CX. We were using the same tools as the guys over at gorgeous for a little bit. We’ve found that you have to stay up to date with the latest ones out there. It's very useful to have a network of other D2C businesses around you to compare notes, because the space is moving so quickly. In the last year, it feels like there’s been a seismic shift, and the time that we've already been invested in the D2C space. It's exciting. Last mile delivery has really transformed the profitability of a product like ours. There's lots of different tools that appear to be changing all the time.
Felix: What apps do you use in general to run the business?
David: Shopify is the key one really in terms of democratizing what we can do ther. If you're listening to this and you're really interested in staying abreast of what we're doing Eli Weiss on our team, posts a lot on Twitter about this and the tools we're using. There's some really good podcasts that Steven Vigilante on our team has done as well. It changes almost every month. We're constantly reviewing what's out there in the market.
Felix: What is the next challenge you want to focus on tackling in the coming year?
Ben: We’re living the dream over here. It's a high intensity drink. The goal for us is to create a product and a platform that is ubiquitous and able to resonate with customers across channels–retail, geography, and across political beliefs. Food and beverage is the base of Maslow's hierarchy of needs and it's an amazing tool to bring people together. Soda has done a really, really good job of that, because it is so universally appealing in its taste profile and in the neurochemical reaction it facilitates for the consumer.
It’s the biggest opportunity, but also the biggest challenge. We'll be continuing to push the product, the brand messaging, and the business apparatus into a bunch of different places and talking to a bunch of different customers, which really fulfills against the mission, but is no easy task, because you've got to find language that is insightful and still authentic, but could still work across a broad spectrum kind of keep leading into the flavors and taking customer feedback. We put a lot of effort into doing all of this and trying to build a culture that really humanizes three-dimensional and the people who work inside of Olipop, their physical health, their mental health, their emotional health, their motivation, while still pushing them to execute at a really high level.
We're doing clinical research. We finished our clinical work at Purdue and Baylor College of Medicine. We got really great results back from that, but we're going to be doing more, which is really unusual for a consumer packaged goods brand, likely to have some sustainability missions as we go. Performing and growing out the base of the platform, executing at a really high level while still looking to consistently and innovatively really do the right thing because ultimately our business exists, not just so we can walk off into the sunset with some cash, but our business exists to serve human beings. That includes the human beings in the company and that includes all the human beings purchasing the product or potentially purchasing the product and being the best stewards of that mission possible on the broader scale.