Can I Pay with My UGC?

This Week’s Insights from @michellegoad

Can I Pay with my UGC?

With consumer brand content going viral and gamified membership programs accelerating many of the fastest growing brands, we look to who is doing interesting things to stoke the UGC flames and where we believe the UGC universe goes next. Spoiler: an alternative payment method.

Let’s Dig in 👇

Building UGC Flywheel Gold:

If there’s one thing the Greatest digital brands have in common, it is their ability to build an intentional UGC flywheel to drive their organic growth.

What is this in plain English?  Brands offer consumers something- it can be a retail experience, an unboxing element, a UI success modal, a viral trend they’ve started, etc with the intention of inspiring consumers to share this brand moment on their own social media and tag the brand in the post. The objective here is to increase brand tags on social media and exposure from trusted organic accounts (YOU) who market the brand for free. This action helps the brand acquire more of YOU (your followers/peers) to their business. Often times, brands will repost this content as a pay-back to the consumer who hopes of growing their audience through this exposure. Think of this as a next-gen transaction but instead of money, it’s in audience growth/awareness. Anytime you see someone on your social media feed tag a brand, know there was a team behind the scenes tasked with inspiring that moment to happen. 👋

Meet Your New Must-Win Retail KPI:

UGC Flywheels aren’t just for digital channels- they can be applied to all channels. Let’s double click on Retail stores which are ripe for acceleration in this space. Imagine you walk into your next Retail Brand Design meeting and you are laying out your objectives with the team. Outside of revenue per square foot, conversion, etc you look and see a new metric: UGC Post/Consumer, meaning for each consumer who walks into the store, did they also create UGC and post it? I don’t believe we are far off from this metric becoming mission critical to measure and grow because it’s one of the most effective and consistent ways to market a channel and accelerate your payback period on the build-out investment.

In the pre-social days, stores would throw huge opening parties, hire famous photographers, invite socialites and call it a day. This is still effective for launch tweaked a bit with influencers, but how does one market their business the other 364 days of the year? In a social-first retail world, you make the social-friendly design investment once in your store, and for every consumer who creates content and shares it, you reach all of their aggregate audiences combined every day of the year. This reach would cost a fortune if you were doing this sheerly through Paid Ads. Creating moments that are so Instagram or TikTok worthy that every consumer who walks in the door must take their phone out to capture content and share it will be and should be on your list of core KPIs to track. Check out Saks Fifth Avenue who just opened a whole floor dedicated to doing just this which helps answer the proverbial question: if nobody selfied in your store experience, did it even exist?

A few Great examples to bring this to life:

Welcome to Miami:

Well, not just Miami, but Wynwood to be exact. I just returned from a family trip to Miami and was blown away with how busy this spot remains post Covid and how much it continues to expand. This was one of the first neighborhoods to pop-up on our radar years ago in the new age genre of “made for Instagram” real estate developments. Looking at the deal terms, we’d say this real estate developer’s use of a social-first commerce strategy has paid off in spades.

The play? Hiring a rotating cast of graffiti artists and enabling them to paint murals in a park where consumers buy tickets to view the art. These murals are spacious and easy to create graphic photos with that works really well as engaging Instagram content.

The UGC flywheel gold: Consumers pay to enter the Wynwood complex, who pays consumers back with incredible “sets” to capture cool content with and share it on social which then markets Wynwood as a destination to visit to their collective audiences. Wynwood uses its COGS in investing in the constant rotation of artists and turns it into always-on marketing. The best part- this strategy doesn’t just create a highly profitable ticketed destination to visit as a stand alone business, but the Enterprise value of the entire Wynwood neighborhood real estate has grown exponentially as a result. Moishe Mana who is credited with turning this neighborhood into what it is today, began the transformation of the neighborhood by acquiring the Wynwood free trade zone complex for $5M in 2009 and eventually bought 40 acres of the surrounding land in the neighborhood. With this accelerated foot traffic, came a whole ecosystem of new business renters looking to capitalize on the traffic around the complex including UNKNWN and their latest basketball court installation (running the same play), Sweetgreens, La Colombe Coffee, eg every millennial brand seems to have an outpost here.

A single block in Wynwood today will go for ~$45M+. All he does is WIN.

Valuable Lesson: Create a flywheel of UGC on social and it can grow the whole pie.

The Queens of UGC Retail:

From the moment the first Glossier pop-up arrived in 2016, it was obvious that they were the boss…of understanding how to leverage content-worthy design to drive UGC. Every aspect of their stores to this day are designed for optimal UGC content creation, from the oversized fixtures, to the mirror selfies, to the actual products themselves. This is a team who understands how to leverage retail as the backdrop set to their consumer’s curated aesthetic life and drive organic growth and traffic as a result.

A dump of a few of favorites:

As someone who creates the growth strategy for brands to build these flywheels for a living, I have hundreds of these examples. A few favorites to make the point across many different industries and price points. I’m sure you have some favorites yourself (please share in the comments):

Modern Gamified Memberships:

When our team builds growth strategies, we look to the future of who is buying and that means understanding brands and businesses who obsess teens and young adults. When I want to know what’s new and next, I ask a Teen or Gen Z. A major trend we started to see pop up years ago within this demographic that is gaining steam in consumer membership programs was brands incentivizing consumers beyond just transactions and instead asking them to take actions that helped the brand reduce CAC (Cost to Acquire a Customer) in the long run and help grow that sweet organic growth.

Take a look at Edikted, a fast growing Gen Z women’s focused brand and their membership program. Here they incentivize not just buy/get, but also follows on social media and reviews. They do this because it has the potential to extend their direct connection with this consumer to inspire purchase 2,3,4, etc., get them in the black on a per customer basis, grow LTV, create a habit and grow their almighty social follower count which is the closest optic for “Popularity” which can translate to trust much faster than the old fashioned way of brand building, consistency and time.

Valuable Lesson: Content creation cheat codes have just as much value as cash to companies in an increasingly noisy world.

We Accept Cash, Credit Cards, and UGC:

With the costs to acquire a user becoming more and more expensive, Influencer costs rising exponentially, and an infinite need to view more and more content from consumers, we imagine a world in which UGC will become an acceptable form of payment for brands. Instead of offering consumers a 15% off for your email, we believe a smarter way to get more bang for your marketing buck will focus on incentivizing consumers to create and share UGC and by performing this action, consumers will get “rewarded” in return with discounts, invites to cool experiences (to create more UGC), audience growth and ultimately free merch if they’re driving results.

The financial case is pretty straight forward (let’s keep this simple and focus on top line revenue):

Let’s say your AOV is $100. If you offer a discount email offer to a consumer, that “costs” you $15 (assuming 15% off) which means you make $85 for their one purchase.  This traditional offer incentivizes one consumer at a time to buy one thing. Depending on your CAC and ability to re-engage, this likely is the end of the road with this consumer and you may have even lost money on this transaction depending on where the consumer was acquired. Now imagine incentivizing a consumer who has bought your $100 item to post UGC and receive 15% off their next purchase. This brand has the potential to make $100 (first purchase) + $85 (second purchase) PLUS the added potential of gaining new customers from this UGC post. Maybe if they are very effective at driving more orders from their audience, they are automatically enrolled in an affiliate program which gives them visible clout to flex on social as an ambassador to your business.

Value Lesson: Brands need infinite content to stay top of mind to their consumers and the highest probability to reach more potential new consumers is by tapping into existing consumers of “look alike” audiences eg their peers. It’s worked out well for Meta as an ad product- why not build your own version?

The Big Questions to Consider in your Next Steps on This path:

How is your UGC/Consumer metric looking today? Who owns the growth rate in your organization?

How is your brand or company creating KPIs to incentivize UGC content creation behavior?

What new and next methods can you create to inspire more content creation from your existing customers?

- Michelle