Issue 010: How to Build a Cult Brand 101
Exploring how cult brands captivate and sustain devoted communities through unique products and strong consumer connections
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The TLDR:
What is a Cult Brand: Cult brands are defined not just by their unique products but by their ability to create a significant impact on the world and foster a devoted community of users who consider these products indispensable. For founders, crafting a cult brand involves deeply understanding and connecting with their audience to create products that stand out. For investors, identifying potential cult brands is about spotting companies that inspire passion and loyalty among consumers.
The DNA of Cult Brands: Cult brands share common characteristics or "genetic markers" that include leadership ambition, impact-to-market strategies, unique selling propositions, strong product-market fit, active community engagement, effective word-of-mouth marketing, and measurable customer loyalty metrics. These elements are crucial in differentiating a brand in a crowded market and cultivating a loyal following.
Examples of Success and Challenges: The contrasting examples of LaCroix and Vitaminwater illustrate the paths to and challenges in maintaining a cult brand status. LaCroix successfully built a cult brand through product differentiation, aesthetic branding, and strong community engagement, aligning with health-conscious consumer trends. Conversely, Vitaminwater faced challenges post-acquisition, with perceived authenticity issues, legal challenges, and increased competition, highlighting the importance of maintaining consistent brand messaging and consumer trust.
Building a cult brand is the dream for many startups and a sign of success for investors looking at early-stage companies. A cult brand goes beyond just selling products; it creates a devoted community of fans who believe deeply in what the brand stands for. These brands connect with people on a personal level, turning customers into advocates and even friends. For founders, this means crafting a brand that stands out by truly understanding and connecting with their audience. For investors, it's about spotting those companies that have the potential to spark passion and loyalty.
Cult Capital, a growth equity investment firm that backs consumer companies with a strong and dedicated customer following, embodying the essence of "cult" brands, defines a ‘cult brand’ as the following:
Cult Brand (n):
A cult brand changes the world by providing a product that otherwise would not exist; and if it didn’t exist the world would be worse off in a meaningful way. It’s a product consumers can’t live without.
Taking Cult Capital’s definition one step further, I’d argue that a cult brand is one that consumers cannot live without and has loyal following that was homegrown versus grown through an inorganic strategy. After speaking with countless founders focused on building and investors focused on backing strong brands, I’ve gleaned that the following DNA structure is the genetic marker found in 99% of cult brands today.
These genetic markers are essential elements in the creation and growth of cult brands. Let's delve into each one:
Leadership Ambition: A cult brand founder is one that is a mission driven visionary meaning that they are looking to truly change the world for the better and not just hop on a trending market wave (e.g., mental health in 2020, metaverse in 2021, and AI in 2023)
Impact-to-Market: In addition to taking market share from existing players in the market, a cult brand needs to also aim to expand the TAM by reinventing the use of the product or service. This can be found imbedded in the goal for the company and the ‘why’ they are going to market. (e.g., Supergoop’s mission is to change consumers daily use of sunscreen to use the product every day; resulting in an increased TAM for protective skincare by increasing customers daily use of the product rather than remaining a stagnant single use market)
Unique Selling Proposition (USP): A USP distinguishes a brand from its competitors by highlighting unique features, benefits, or value propositions that it offers. This IS NOT just a brands Mission or Value Statement, but their core that they bring to the market (e.g., a beauty brand boasting clean ingredients or boutique fitness brand fostering a sense of community)
Product-Market-Fit: Achieving product-market fit means developing products or services that meet the needs and desires of a target market. This shows how much customers truly value the product and can be demonstrated in product reviews’ specifically, ones that have statements like, “cannot live without” and “changed my life”, indicating that the brand has replaced something in the customers life
Community Engagement: Cult brands excel in building and nurturing communities around their brand ethos and these communities are engaged through shared values, interests, and passions across all forms of social media
Word-of-Mouth Marketing: Word-of-mouth marketing is a powerful indicator that a burgeoning brand is entering ‘cult’ status because their devoted followers are eager to share their positive experiences with others
Customer Loyalty Metrics: Metrics that speak to loyalty and repeat purchaser behavior can be analyzed through competitor cohort analysis, segmentation of loyalty programs by tier, and sell-in / sell-thru rates by both product and by retailer to show which products are resonating with which retailer and why
Each of these attributes plays a crucial role in building a brand that not only stands out in a crowded market but also inspires a level of devotion that turns customers into true believers and advocates. Cult brands manage to weave these elements together into a cohesive strategy that drives their growth and cements their status in the hearts of their community.
Now let’s examine this concept with some real-world examples - LaCroix vs. Vitaminwater
LaCroix is a sparkling water brand that has effectively cultivated a cult following through its distinct branding, flavor variety, and positioning as a healthy alternative to sugary sodas.
La Croix Key Elements:
Product Differentiation: LaCroix stood out in a crowded market by offering a zero-calorie, sugar-free, and sodium-free sparkling water with a wide variety of flavors, which appealed to health-conscious consumers
Aesthetic Branding: The brand is notable for its colorful, minimalist can design, which has become iconic and often featured in social media posts, enhancing its visual appeal and brand recognition
Community Engagement: LaCroix has leveraged social media effectively to build a community of devoted fans who share their love for the product, contributing to its word-of-mouth popularity
Market Positioning: Positioned as a lifestyle beverage, LaCroix has been able to maintain its appeal by aligning with consumer trends towards healthier living and natural ingredients
Meanwhile, Vitaminwater, originally a standalone brand, gained a strong following with its enhanced water products but faced challenges in maintaining its cult brand status after being acquired by Coca-Cola.
Vitaminwater Key Elements:
Initial Success: Vitaminwater was initially successful due to its unique value proposition—flavored water with added vitamins and minerals, appealing to health-focused consumers
Acquisition Impact: After Coca-Cola acquired Vitaminwater in 2007, some of the brand's original appeal was diluted. Consumers perceived the product as less 'independent' and authentic, which impacted its cult status
Legal Challenges: Vitaminwater faced legal challenges regarding its health claims, which led to negative publicity and consumer skepticism about the brand’s health benefits
Market Competition: The emergence of numerous competitors in the enhanced water category further divided consumer preference, making it difficult for Vitaminwater to stand out as it once did
LaCroix exemplifies how maintaining a strong, differentiated brand identity and aligning with consumer health trends can sustain a cult brand status in the CPG sector. Conversely, Vitaminwater shows that changes in ownership and brand perception, coupled with increased market competition and challenges to product claims, can erode a brand’s cult appeal. These examples underscore the importance of consistent brand messaging and consumer trust in maintaining a cult brand in the competitive CPG industry.
In conclusion, the journey to building a cult brand is as intricate as it is rewarding, demanding a deep understanding of market needs, unique positioning, and an unwavering commitment to community engagement. The DNA of a cult brand, as outlined through leadership ambition, impact-to-market strategies, unique selling propositions, product-market fit, community engagement, word-of-mouth marketing, and robust customer loyalty metrics, forms a blueprint for startups and investors alike aiming to create or identify brands that do more than just sell products—they inspire, innovate, and integrate into the lives of their users.
Cult brands like LaCroix serve as benchmarks in the consumer goods sector, demonstrating the power of authentic engagement and product differentiation. Meanwhile, the trajectory of brands such as Vitaminwater offers valuable lessons on the challenges of maintaining cult status amidst corporate acquisitions and market shifts.
Ultimately, whether through the lens of an entrepreneur or an investor, recognizing and nurturing these key attributes can significantly elevate a brand's potential to achieve cult status, thereby transforming ordinary products into essential elements of consumer lifestyles.