Tens of thousands of companies compete against each other in the world of nutritional supplements. Their goal is the same: to win over the minds and hearts of a consumer base increasingly interested in being fit and ingesting healthy products.
It's difficult for a company in the nutritional supplement industry to distinguish itself from the competition. Many companies churn out the same or similar products, but use marketing to differentiate themselves to the consumers they hope to attract.
How do you enter an extremely competitive marketplace and establish yourself as a reputable brand? I spoke to Jay Cohen, CEO of IQ Formulations, to determine some tricks of the trade and a sense of how he built a company that now generates $20 million per year in sales.
Relationships and experience: The formula to success.
"The one thing I would point to that allowed us to excel in the industry was relationships," said Cohen. "It brought me back into the industry and got me set up when I didn't have a dollar to my name and had to borrow on credit. If I didn't have the answer, I had the contact of someone who had the answer."
IQ Formulations has grown 16,000 percent over the past five years, taking it from annual revenue of $120,000 in 2010 to $20 million this year.
"My greatest asset has been longstanding relationships," explained Cohen. "I put relationships in front of business. Products don't sell to people. People sell to people. Unless you understand that as an entrepreneur, you're never going to get it."
Cohen is a veteran of the nutritional supplement industry. He came back to create IQ Formulations after walking away from a prior nutritional supplement business in late 2009.
"I left because I felt the industry didn't have the quality or integrity that I wanted to bring to the marketplace," said Cohen. "Fancy labels, but cheap product. Pixie dust. Not what I wanted to produce."
In addition to Cohen's prior experience in the industry, he also relied on his retired physician father, who helped him start his former company in 1997. He admits living and breathing in the industry and for almost 26 years made a huge difference in being able to succeed in a saturated area.
Separation in a saturated industry is key.
Relationships and experience alone weren't enough against companies that had been in business for many years. Cohen had to figure out a way to do something different and make sure it was what the potential consumer craved.
"What makes our company different is exactly my basis for getting back into the industry. It's the quality and efficacy we put into our products," said Cohen. "We not only built a research and development facility that develops our own products, but we manufacture, produce, package, and distribute internally. There are only about five companies of 50,000 participants in the industry that do it and I'm one of the five."
The way Cohen described it, entering the nutritional supplement industry is actually not too difficult as long as you do not care so much about the quality of your products. It's simple and cheap to hire graphic artists and marketing mavens while subcontracting the development of product to others.
Cohen decided that wasn't the way he was willing to grow his company, and his millions in revenue justify that decision.
Growth through consumer loyalty.
"Our philosophy is growth through the annuity of consumer loyalty," said Cohen. "Target, Coca Cola, Home Depot, Starbucks, they all believe in this annuity--the return visit from your customer based on consumer experience. Exceeding the customer's expectations so you earn his or her residual dollars."
It's never about the one-time sale. Continued sales to the same consumers drive real growth.
Cohen believed spending more money was worth it to deliver a product the consumer could trust, which would lead to scalable growth. It's led to IQ Formulations to deliver a better product at a cheaper price than its competitors.
"We never put the money into the marketing," said Cohen. "We put it into the manufacturing and research. Whatever we make, we are going to put back into our products and machinery to make a better product."
Traveling the road less taken.
When Cohen was considering a return to nutritional supplements, he was told by one of his vendors that if he was going to do it, he needed to do it his own way.
"I decided to rewrite the industry from the first page," said Cohen. "I literally put a one-page rendering of what my products would look like and headed out to Mr. Olympia in Las Vegas to sell my idea."
IQ Formulation's growth this year is 475 percent, and Cohen is wrapping up the creation of a $6 million production plant in Tamarac, Florida.
Following his own path has worked out well.