Over the many seasons fashion mogul Daymond John has been a judge on ABC's hit show Shark Tank, he's seen hundreds of business pitches. Lately, he's noticed an overarching trend: A large percentage of the entrepreneurs standing before him on the show have adopted a direct-to-consumer sales model.
“This year, I’ve met over 82 people who are doing businesses out of their homes and making more than $1 million in sales," he says.
It's a strategy that pleases him because it increases profit margins. Hearing that someone has made a product for 50 cents and is selling it for $10? "That's like talking dirty to me."
In order for the model to work, however, businesses first need to develop a strong following on social media. "If you have 10,000 followers on Facebook or Instagram, hopefully you can convert 1 percent a week on sales," he says. This allows for experimentation with both product design and marketing strategy; John advises that entrepreneurs consistently play around with both, using social media to "see what works."
Time spent as both an entrepreneur in the fashion industry and a host on Shark Tank has taught John a lot about how brands can go about successfully building a loyal social media following: Here are three of his strategies.
1. Keep it simple.
At this year's SXSW, John judged PayPal's duel, which pitted two startups against each other for a prize of $30,000. Ultimately, Earhoox, which sells malleable earbuds designed to mold to wearers' ears, was victorious. "They broke it down very simply," John says. "We all have a problem with our headphones falling out, and they have a product that can fix it."
When marketing products over social media -- a medium that rewards brevity -- simplicity trumps complexity: Having to explain what something does or what it is for is a surefire way to shed interest fast. John recently invested in a company called Bombas socks. It doesn't get much simpler than that, he says: "It's socks! We all have them."
2. Create an identity.
Standing out online requires more than just a digestible concept: A product also needs a backstory, a reason that elevates it above all the other similar products out there. The watch company MVMT, in which John is an investor, has done this particularly well. While the company makes "decent looking watches," its success stems from the way it has positioned itself. "The movement that [the founders] created was, 'Hey, you’re in college. You are going for an interview, you don’t want to waste money on a piece of crap watch, but you don’t have the money for an expensive one just yet… this one is $80," he says. "They did $2 million in sales their first year of business."
3. Include the audience.
The best way to build a loyal, engaged following is to embed customers in the design process, John says. Ask for peoples' opinions over social media whenever possible: "Hey guys and girls, here are the colors I’m going for – which ones do you like? Hey, tell me what you dislike," he says.
Social media is powerful because it provides an instant sounding board, comprised of target customers. Asking for feedback not only increases audience engagement, but it also likely leads to the creation of a product more people want, and will therefore buy.