Win with Creator Collabs🤝

#8

This week we’re talking creator collaborations. This is a step beyond influencer campaigns, and I think it’s the future of profitable growth for D2C.

Isn’t a creator collaboration just like an influencer campaign?

Sort of.

An influencer campaign creates traffic — like a commercial with a pro athlete wearing your brand. A tiny fraction of the people who see it will convert.

A creator collaboration also creates traffic, but does it like Nike launching the Air Jordan brand. He designed the sneakers. He wears them. I can wear them! More people will convert.

Here’s a 4-step framework for you to run a profitable creator-collab for your brand!

The Simple Strategy

Creator-collaborations are where brands and content creators (or influencers) co-design a product. The content creator isn’t sponsoring a product. They’re telling people about a product they helped create!

TLDR: Here are the major steps for a winning collaboration product.

1. Value alignment - Brands and creators have to have strong alignment for this to work well. As a brand, you need to pick wisely. 🤝

2. Winning Product - Brands should use an existing product that sells. Collabs are not the time to test something new.🏆

3. Create buzz - Creators and brands should tease the launch of something new and have followers sign up for a waitlist 👀👀👀👀.

4. Sell them out - Keep demand greater than supply. Sell out this product line quickly.🛍️

Why it works

Why are Creator-Collaborations such a powerful tool for profitable growth? They hit all the boxes for increasing profit. They can increase:

• Customers by launch promoting to the creator’s following.

• AOV by selling a product above your current AOV.

• Frequency by giving existing customers an exciting limited-time offer

• Margin by reducing ad spend AND importantly for bootstrapped businesses, cashflowing new customers. (You pay CAC as the new customer converts, not before it).

They can be a win on all fronts.🙌🏻

How to do it.

There are 4 major steps.

1. Value Alignment - Picking who to co-design with 🤝.

When you co-design a product, it’s closer to hiring that person than just using their platform to promote your business. You have to work with the creator and they have to work with you. Think this out before you start.

What makes a good partnership?

You want to go to market with someone you trust, who furthers the mission of your brand and who you think adds a unique view on your products.

The creator should bring an audience to the table, ideally 1 to 1.5x the size of your brand’s current following. For example if you have 50k followers on Instagram, look to collab with creators in the 50-75k range. This is an opportunity to reduce the Customer Acquisition Cost, so you want the audiences to overlap a little, but not a ton.

A good place to start to look for potential collaborators is in your existing customer list, or affiliate programs.

Who could lend a new voice to your brand?

Influencer Julie Sarinana talked about her partnership with Bandier as natural, “going from a customer to a collaborator felt organic.”

2. Winning Product - Picking what to co-design 🏆

Collaborations should be an extension of an existing product line. This is incremental innovation, not “Big I” innovation. You should not be launching a totally new product as a collaboration.

Instead, pick a winner. Do a new scent, or color, or print.

Of your SKUs, what represents most of your profit? You likely have a handful of winners, pick one of them.

Bath-product brand Tubby Todd did a masterful job of this with influencer StyleFitFatty. For their collab they created a new scent for a best seller, relabeled it, added a Tote and created a bundle. Brilliant!

3. Create Buzz - 🐝

The primary aim of a creator collab is gaining new customers for your brand, without spending on ads.

Instead you reimburse a portion of a completed sale to the creator you’re collaborating with. It’s a game-changer for cashflow.

Because gaining new customers is the aim, you want to have as much buzz for the product drop as possible. Use a waitlist for the product and tease the collab. Both brand and influencer should be doing this.

Use a waitlist to collect email sign-ups. This way, you will get people into your email marketing who are interested in the brand, even if they aren’t ready to make a purchase of the collab product. You can continue to nurture these folks until they have a strong enough problem that you solve.

Here’s a rough timeline you can use to build that buzz!🐝🐝🐝

4. Sell them out quickly. 🛍️

There are four reasons why you want to sell out.

1. You want to be profitable - You do not want to have cash tied up in inventory, even if you “know” it’s going to be a winner.

2. You want to credit the influencer! Get them a win! - You can always run another collab with the same influencer. If your first project ends in a whimper it’s unlikely they’ll want to do another.

3. Collabs are best in the off-season — Every brand has an offseason, a slow time of year. A collab is a great project to launch in the slow season to spur existing customers to purchase and get new ones before the big season. Selling out of a product in the off season also means more cash converted for inventory in-season.

Because you will probably make your inventory purchase before the waitlist is complete, go with the MOQ from your supplier. Yes you make less per item, but you’re also spending less to acquire these customers. If you can order after you’ve filled out a waitlist, undercut it by 5-10% to ensure it sells out.

Which leads to the final reason to sell out.

4. Make your influencer profitable — I like to recommend the following math for brands. Be transparent with your collaborators on the costs you incur per item. Tell them how what product and operating expenses are per item. Split profit per item 50/50 with them.

   

   1. First this ensures that you can cover your expenses. Because you’ll actually complete the sale, cash will flow into your account, then you will pay the creator their share.

      1. For example, if you do a 500 unit order of a $40 product, assume that product cost is $8, S&H is $8 and you’re left with $24 in Profit.

      2. $40 goes through you, and then you pay the influencer $12. This means that you can cover your initial product expense of $4,000 with only 143 sales (4000/28 = 142.8). Totally doable. The unit economics are sound all the way through the project.

   2. Second, it incentivizes the influencer to continue to promote the collab to their audience. That might mean stories, or lives, or reels, whatever they want. They get the freedom to promote as they see fit.

      1. Because you ran a low MOQ, there’s no risk of over-saturating the creator’s account. Their content won’t become “salesy.”

      2. You can say how much the project is worth to the creator. “If we sell out, you’ll earn $6,000.” And then you can run another one.

In Closing

If you haven’t thought about doing a brand-creator collab, or a brand-brand collab, you should!

They’re more attainable than they look! Maybe your next product drop will be like Mike!

Or like Tubby Todd 🛁

Catch you next week!!

-Nate

Whenever you’re ready, I help bootstrapped DTC entrepreneurs increase their profit in two ways.

1. If you ideas on what collabs to run, the 1 hr, 1-on-1 might be right for you. These are best for businesses in the launch stage, usually under $200k in revenue. It’s amazing how much we can get done in an hour!

   Book your call here.

2. Make your business more profitable, peaceful and resilient with Simple Strategies Coaching. A cross between coaching and consulting, it includes 2 major deliverables and 12 weeks of 1-on-1 coaching with Nate. These are best for more complicated businesses that are scaling, usually between $200k and $1.5M.

   If a collab is right for you, we’ll design it and launch it together!

   Book a call here.