[From the Breakout Growth Podcast with Sean Ellis]
Freshly’s Mission and Product/Market Fit
After a marathon day of work and travel Americans often call dinner a trip through a fast-food drive-thru, but Freshly is on a mission to change that, delivering healthy, tasty, and convenient meals that are fresh and ready to eat in minutes. Their success and breakout growth are based on a culture and mindset that supports rapid iteration and is not afraid to stare down a bit of chaos in the process. Their growth story includes strong lessons on how to manage growth when an organization is moving at 100 miles per hour.
Delivering meals is not new and the chase for good, fast, and cheap has never been fully realized. From UberEats to Blue Apron, many players have emerged looking to solve for some combination of health, taste, convenience, and affordability, but all have their limitations. A quick meal delivered from a fast-food restaurant may be convenient, but it probably is not very healthy. Similarly, meal prep in a box may be tasty and healthy at the expense of convenience. Freshly aims to be different.
Breakout Growth Results
Building a culture and mindset to support rapid iteration, Freshly is accelerating the number of healthy, convenient, and tasty meals delivered across America. They can now claim to be the number one direct-to-consumer, fully-prepared, meal delivery service in America. They are in 48 states, have surpassed a million users, and expect to deliver almost 35 million meals this year.
Growth Process and Growth Engine
So how is Freshly driving these breakout growth results? According to CMO, Mayur Gupta, the real growth drivers to date have been leveraging the intersection of health, taste, and convenience as the basis for solid product-market fit. That, along with the ability to install a mission-driven culture and mindset, has allowed them to use rapid iteration as their catalyst for growth.
Gupta explains that, to some degree, they measure success not in terms of KPIs, but by the rate of iteration. This kind of rapid iterative thinking is specifically important to Freshly because meeting the demands of diverse audiences requires continuous optimizations to attract and convert target customer segments. People who previously were buying frozen meals have different expectations in regards to variety as compared to recent empty nesters for example. Freshly has applied growth testing to developing menu variety, and now they are looking at how they can further meet the expectations of even more targeted audiences such as vegetarians.
Activation for Freshly is largely about getting a customer to make their first order. Once a customer tries Freshly, they are able to effectively experience the intersections of great taste, healthy meals, and convenience.
Each week customers receive an email reminding them to update their meal delivery preferences. The variable reward for customers who click on this email is the large and growing variety of available meals. If customers do not update their preferences, they will continue to receive the same meal choices from previous weeks. Freshly does not strive to replace all meals for their customers. Customers can easily change the number of meals they receive or even pause delivery for a few weeks. This control, combined with a large variety of meals, helps to reduce the overall subscriber churn rate.
Freshly also has a referral program that incentivizes customers to recommend the healthy, convenient meal service to their friends. When a friend successfully subscribes to Freshly, both parties receive $40 in free meal credits.
Given the strong overall business economics and rapid iteration around the product, new subscriber activation, retention, and referral loops, it’s not surprising that the Freshly team has also been able to discover and scale profitable paid customer acquisition channels. On the other hand, Freshly’s growth to date has been built without a strong focus on brand building, and only recently has the company started to put more focus on organic growth and to emphasize its brand and PR initiatives.
To manage this culture of rapid innovation across the organization, the company has adopted a cross-functional pod structure. The marketing team includes top-of-funnel awareness, acquisition, and retention pods reporting into the CMO. These teams have clear KPIs against the company’s larger EBITDA goals and their own key metric of LTV/CAC. When viewed as a ratio, LTV/CAC encapsulates a picture of a strong brand and an efficient growth engine that both retains customers and accelerates the development of organic and paid channels.
By looking at these metrics together, the company removes the mindset where functions such as retention run in isolation against other functions such as acquisition. This ensures that each unit focuses on its own efficiencies while holding itself accountable to larger organizational goals. Laddering up from OKRs and KPIs to a Northstar metric keeps individuals inspired about the mission and focused on key areas of impact while putting a strong emphasis on outcomes as opposed to outputs.
Final Thoughts on Freshly’s Growth
Freshly is a company that demonstrates how data, culture, and mindset can be harnessed to drive breakout growth. They don’t try to tame or kill the chaos, they build around it, knowing that rapid iteration is their catalyst for growth even if it means making mistakes along the way. Learn more about their success story in Sean Ellis’s Breakout Growth Podcast interview with Freshly’s Chief Marketing Officer, Mayur Gupta.