Overview

This is an attempt to build out a Growth Model for a yet to hit the market D2C brand called The Kanji Company. Given that this a non-existent product as of now, there will be assumptions made at certain stages of the project, but these assumptions will be backed by research done on the growth metrics of similar products available in the market.

What is the Product?

The product is a nostalgic fermented drink called 'Kanji', which many people in northern parts of India might remember from their childhood. Kanji is fermented drink made by fermenting ground mustard seeds in a solution of water, salt and hints of asafoetida (Heeng). Kanji also has carrot, radish and beetroot incorporated in diced form to enhance the flavor and color of the final product. The drink is rich in pre as well as probiotics and is a centuries old traditional method of improving gut health. What's more is that it packs a sour punch with blast of mustard, a flavor profile loved by the Indian palette since ages.

Value Proposition

We are hitting three things - Nostalgia, Sour Punch and Gut Health.

Kanji is something a large proportion of North Indians would have consumed seasonally in the recent past. Though in the recent past the drink has been less and less prevalent, reasons being a fermentation process which requires time investment, unfamiliarity with the process. It hits the correct note with the 'Nostalgia' feels, something you vaguely remember and correlate with your childhood, home and the 'pre' India life. We are always living in the 'post' times, the aim is to find things from the 'pre' times, and Kanji hits the bill perfectly.

The flavor profile is quite unique and habit forming. The flavor profile in various friends and family tasting surveys hits the palette in a surprising yet satisfactory way. The sourness is something which keeps bringing you back for the next sip and the mustard is what forms the core flavor memory.

And to tie it all is the benefits - Gut Health. Kanji is rich in prebiotics (the pickled/fermented vegetables) and probiotics (the lacto-bacteria created due to the fermentation process). It has been used through the ages to promote gut health and digestion. Kanji taps into the growing market of gut-health products with a flair of unique flavor.

Growth Model

The scenario we will be modeling for is the inception of the brand. During the first few months the most crucial aspect of the business will be to establish a Product Market Fit.

NSM

The North Star Metric which aligns with the goals of the Org in this phase is the Number of Retained New Customers. The number of retained new customers primarily captures two important things - Number of New Customers and Number of Customers which have retained in the natural frequency.

Growth Equation

To track the Number of Retained New Customers we will use the dependencies established below

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Number of Retained New Customers = Number of New Customers x Retention Rate

Here, it is important to note that we have kept the Natural Frequency of purchase for Kanji as 1 Month. Any customer making a repeat order within 1 month of the last purchase is termed as a repeat customer.

Important Metrics to Track New Customers

Lets begin with New Customers

New Customers = F(Organic, Paid, Referral)

Organic: These are the customers discovering the product through their own efforts, either on search engines or social media platforms. There is an angle of offline customer engagement through pop-ups, the Kanji bottle through a QR code provides a way for the customer to visit the website.

Therefore we arrive at three metric than can be followed under the Organic banner:

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Paid: These are the customers discovering the product through targeted Ads. The metric to follow here is pretty straightforward

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Referral: These are the customers discovering the product through referral links. Here we track how many people share the referral link and how many of those are successful.

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The above metrics track the process till the customer hits the Website. This is our top of the funnel. The metric which will track the most crucial step is:

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Important Metric to Track Retention Rate

Any customer who has made a repeat purchase within 30 days of placing their previous order is considered as a retained customer. This customer profile is considered as Core Customer base as well. In addition we define the following customer profiles for those who have made any sort of repeat purchase.

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In our case we define a dynamic retention rate, one for New Customers and one for Existing Customers.

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Any new customer making a repeat purchase is added as an existing customer to the next months tally.

Retention Rate is affected by the experience and overall satisfaction of the customer, though difficult to measure we take the following as a proxy to measure it:

Scenario Evaluation

Here we model the different scenarios using the metrics defined above.

The graph above covers three scenarios - Nuke, Flat and Incremental Growth.

Nuke: As we can see in the case of everything going south, the number of customers stands at around 100. In this scenario we consider a downward growth of every metric that we have discussed in the previous section. Therefore the actual frame that we have to consider is to take the Customer base at the end of the year from 100 to 2000. This is our baseline.

Flat: It is interesting to note that we can calculate another baseline for us here as well. The Flat growth scenario captures the effect on the Customer base when all the metrics are unchanged and not moving. This gives us a baseline of around 400 Customers.

Incremental Growth: Finally we have our last scenario, in which we have employed strategies across the board and tried to calculate a target figure for Customer base. This scenario gives us an idea about the space which is available for us to grow. In case of all cylinders firing, the customer base figure reaches around 2000.

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Identifying Key Levers

To identify key levers of growth we run the model in various 'configurations'. Each configuration works in a simple way, we clamp the other metrics to a Flat Growth mode and keep the metric in focus in an Incremental Growth mode. Using this method we arrive at three different Focus Configurations as shown in the graph below.

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It is evident from the graph that we have to chose between metrics which capture our Organic Growth and metrics which capture our Branding Efforts. Though at the surface, it is tempting to pick Branding Efforts, we should do a deep-dive into the nature of growth.

The Customer Base we get from Organic Growth is compounding while the one we get from Branding has a step like nature. Each step-up in the Customer Base we get in Branding Focus growth costs the Org more time and efforts as compared to Organic Growth. Further, the key Metric for Organic Growth are:

An improvement in these metrics has an indirect effect on Branding Metrics, especially Ad Clickthrough Rate. CTR is improved by the overall look and feel of the brand and its adverts, similarly the same factors affect one of our identified core levers - SMP website visits.

Conclusion and Takeaways

Given we are operating in the PMF stage and any Org in this stage is resource constrained we have to pick our battles.

Growth Through Organic Channels

We did a comparative analysis of our efforts, we focused on three areas - Organic, Branding and Retention focused growth. Though Branding yields a quick growth it is not sustained in terms of cost and efforts. Organic Growth compounds over time and the target metrics overlap with the other two focuses as well.

On-ground and Online

The efforts in Organic Growth can be broken down into two areas - On-Ground and Online.

The key initiatives on the On-Ground front will be informed by the nature of the product. Given the product positioning is that Kanji invokes nostalgia and has a good for health angle, we will target avenues such as - Brunch Cafes, Organic Farmers Market and Jogger Trail Pop-Ups.

The Online play for a non-existent segment is a tough nut to crack. SEO and discoverability on SMPs will be driven by aligning the brand messaging with well established movements.

The product will have to piggy back on Good-for-Gut movement and the Kombucha movement.

The look and feel of the product will be informed by neo-traditional design language currently being championed by brands like Banjaran.

Final Thoughts

The objective has been broken down to monthly targets in the Growth Model. This gives us room to pivot in case the identified growth strategy is not working.

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