An eCommerce Podcast Hosted by Brett Curry

In this illuminating episode of the eCommerce Evolution Podcast, I sit down with AI marketing expert Russ Henneberry to explore the transformative potential of artificial intelligence in eCommerce. Russ shares invaluable insights on how we can leverage AI as a powerhouse marketing tool by creating customized AI marketing hubs. This episode is a must-listen for any eCommerce professional looking to stay ahead of the curve and harness AI's capabilities to drive business growth.

Key topics covered:

• The concept of "AI marketing hubs" and how to build them using tools like Claude and ChatGPT.
• Strategies for fine-tuning AI models with your business data to dramatically improve outputs.
• The three key AI roles in marketing: Scribe (content creation), Optimizer (asset evaluation), and Strategist (big picture planning).
• Tips for crafting more effective AI prompts using the RTIF (Role, Task, Input, Format) framework.
• The future of AI in marketing, including predictions on how major tech companies will shape the landscape.

Tune in to discover how you can take your AI marketing game to the next level and turn generic AI outputs into tailored, high-impact marketing assets for your eCommerce business.

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Chapters:

(00:00) Introduction 

(05:14) Mistakes and Misconceptions About AI

(23:02) The Role of Prompts In AI

(27:57) Introduction To AI Marketing Hubs

(45:16) Examples of Well-Built Marketing Hubs

(51:20) What About Gemini? 

(54:14) Conclusion

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Show Notes:

• Russ Henneberry 
• theClick
• Molly Pittman
• Sway Thai
• Torchy's Tacos
• Nvidia
• ChatGPT
• Anthropic
• Claude
• Perplexity 
• Gemini
• Llama

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more

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Transcript:

Russ:

We don't need AI to get better. You need to be better at using ai.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we're talking about AI and marketing. What are mistakes and misconceptions that people make about ai? How can you turn AI into a powerhouse marketing tool or marketing assistant or marketing team member for you? And my guest is a long time friend, multiple time returning guests to the pod. Although it's been a while. It's been too long. I'm sure it's been a long time. It's been a long time, dude. Yeah. But Mr. Russ Henneberry of the click join the click.ai. We're both Missouri boys. He's in St. Louis. I'm in Springfield, so representing Missouri. But Russ, what's up man? How you doing? And welcome to the show.

Russ:

Welcome back to, I'm so excited to be here and I haven't seen you in person in even longer.

Brett:

Thanks.

Russ:

It's been forever actually. I saw you

Brett:

In Austin, wasn't it? We were both doing, why were we there? It was something with Molly and Sam and I don't know why were, were we in Austin?

Russ:

I'm not sure. You were in an e-comm event. I was at Kajabi's event.

Brett:

Got it. But Molly Pittman was there, wasn't she?

Russ:

Molly Pittman was there.

Brett:

Yeah. So we hung out, waited at a great restaurant, Austin man, Austin does food, right?

Russ:

Sway.

Brett:

We went to Sway. Sway. Look at your memory. Yeah,

Russ:

Sway. Because I go there every time I go to Austin. It's the best Thai food in the world.

Brett:

I love Thai food, man. I am a huge, huge Thai fan. And you had some kind of funky congealed beer or something, if I remember

Russ:

Right. Molly bought me a beer that slowly freezes after you open it and then,

Brett:

Which shouldn't happen. Alcohol doesn't freeze, so it just kind of turns into a gel or something.

Russ:

I can't remember what the heck happened, but a mess, hijinks ensued and Molly just sat there and laughed the whole time.

Brett:

She was cackling. It was entertaining to watch the beer congeal or whatever, and you try to deal with it, it was equally as funny or more so watching Molly's amusement at the whole thing,

Russ:

You basically just, you walk up and you hand somebody a problem and they have to deal with it. You basically have to drink.

Brett:

I'm going to watch this unfold. I'm going to see how you do there, buddy. How are you going to do with this congealed beer? But Austin such fun town to hang out in. They do food, right? Tacos. Oh my goodness. I was just in Dallas for an event with my family and Torchy's Tacos, Austin original. It originated as an Austin food truck. They're in Dallas now. So I ate some, oh my gosh, that was one of the best tacos I've had and in a long time. So Torchy's tacos, highly recommend sway if you're winning Thai food. So there you go. Some Austin recommendations for you. Free of charge on the eCommerce Revolution podcast, free charge, free podcast. That's awesome, dude. So let's dive in and let's talk AI a little bit. Obviously it's the buzzword. Hopefully everyone here has invested in Nvidia stock from way back in the day, and hopefully you're wildly rich now. And AI is all the buzz. We're not really sure who's benefiting from it other than Nvidia who's really benefiting from ai. But you and I are both very bullish on the technology being at least somewhat disruptive now. It's going to continue. But why are you so excited about ai? So much so that your membership site is about ai. I know a lot of the consulting you do is about ai. Why are you so pumped up?

Russ:

Well, because my background, I know yours we're similar age. We came up when the internet was becoming a thing. My first job in marketing, I was in direct mail and then I saw this internet thing,

Brett:

Yeah, was TV radio for me.

Russ:

So we were both doing more old school types of media and we probably, I saw the internet coming along and I was like, I'm hopping on this train. And I never looked back. And I rode that wave. And when I saw this coming out, I pumped the brakes for a while and was like, okay, I'm not going to say anything about this. I'm just going to watch it. I'm going to study it. And eventually I've come to the conclusion there's no future that I see where we aren't using AI isn't just infuse everything we're doing as marketers. So yeah, I'm all in on it.

Brett:

Yeah, I 100% agree with you. I've kind of gone personally from being fascinated by it, maybe partially afraid of it, skeptical a little bit to like, okay, no, this is going to happen. It's going to be good, but not really using it to, now I utilize AI quite a bit. I'll share some stories as we go here, but let's maybe open up with what are some of the mistakes and or misconceptions people have about AI related to their marketing?

Russ:

I think people are frustrated with ai. You mentioned earlier that where are we seeing the ROI in marketing? There's a lot of investors asking if there's a bubble here because there's so much money flying into ai, billion,

Brett:

Billions and billions and billions of dollars being invested in AI right now.

Russ:

And where's where are the sales? So what I think we're seeing right now is that intelligence has become a commodity like electricity or internet access. At 20 bucks a month, I can have access to the leading Frontier model, the most intelligent model. And that's not going to change. We're going to see chat BT five come out, chatt six, claw five, whatever that comes out. And we're going to be able to have commoditized access to intelligence. So what I'm seeing is that it's going to be how we use this resource, just like the way we use the internet. So just because everyone has asked us to the internet doesn't mean we all used it to our best capabilities. Some people won, some people lost, some people won big, some people won small. So it's going to be the same thing here is how is it that we go about using this and the business?

And probably not just the average, but the majority of businesses that I see when I talk to them are using off the shelf ai. So they're using maybe a paid license to cloud 3.5 sonnet, which is right now, a lot of people say the best model, I would say is the best model out there or chat g BT four oh or whatever it is they're using. And they may be paying 20 bucks a month for it, and they're just using the generic off the shelf ai. And what they're getting back from it is generic boiled chicken output. So

Brett:

Boiled chicken, boiled chicken is not something you're going to find at many Austin restaurant menus. So if we're going to just harken back to the good food, it is not boiled chicken. So just wanted clarify.

Russ:

Torch's Tacos has a boiled chicken taco though on Thursday.

Brett:

Do they? Really? No kidding. They do have the trailer park, which is the fried chicken and dude that's so Trailer Park, I love

Russ:

It. But I mean the key to this whole thing that we're seeing reports coming out of places like Accenture, those big consulting companies, Accenture, Deloitte, Dell, IBM, saying that what they're seeing is that Billings for AI consulting are going to go up 400% over the next five years and they're growing 32% year over year right now. And so I started to dig into what it was that they were selling to big companies like Best Buy or Target or whatever, like their clients. And what they're selling is something called fine tuned ai. And this is really the key to unlocking the potential of what AI can be for even a small business. Forget Best Buy and Target. They're paying these big consulting companies to come in and do complex fine tuning projects, but we can just fine tune $20 a month chat, GPT or Claude and get incredible results out of it.

So this is kind of the key is to fine tune it. What fine tuning basically means is that we are going to take an existing LLM model like Claude or chat GBT and adapt it to the use case that we want to use it for. So to keep on our food analogy, if we plugged all of my recipes from my family or something into Claude 3.5 sonnets brain, I can then start to have conversations with that version of Claude about my marinara sauce or about my Texas beans recipe, which if you're real nice to me, I will send you

Brett:

No way. The family, the Henneberry family Texas Beans

Russ:

Recipe, this is the Russell Texas bean recipe. I found it from being down in Austin and going all those barbecue joints and I was like, I got to figure out how to make these beans, but I can

Brett:

The marinara, not to get too focused on food here, but the marinara, you're in St. Louis. So a lot of people don't know St. Louis home of amazing Italian food.

Russ:

It's on the hill, man.

Brett:

It's on the hill.

Russ:

My marinara, I'll put it up against anybody.

Brett:

No way.

Russ:

But I did demonstrate this. I went to Claude and I said, I put all my recipes in there and I said, I just asked simply how could I improve my marinara sauce

Brett:

Recipe?

Russ:

And it says to me, you're not simmering long enough. It went and looked at my recipe. It's like you're not simmering long enough. Interesting. You're using dried herbs. Try using actual fresh oregano, fresh basil in your sauce. So it went and consulted my recipe. Right.

Brett:

Did you try any of those recommendations?

Russ:

Not yet.

Brett:

Okay.

Russ:

I'm going to make the Texas beans though this weekend.

Brett:

Well, let's see if it's

Russ:

We're going to go

Brett:

Russ Original or Russ plus clawed. What does better,

Russ:

I'm going to ask it about how to improve my Texas beans risk. But the thing is, when you go and you customize an AI and you can do this so easily, this is not a technical problem at all. Like Claude has a feature called projects where you can start a new project and upload information into its knowledge base and it will consult that knowledge before it's first and then on it'll

Brett:

Consult that knowledge plus use the llm and now you've got specific insights.

Russ:

That's exactly right. And this is the thing that people are really missing the boat on. And I think a year from now, everyone's going to know this intuitively because there won't be another AI model that rolls out that doesn't allow us to customize it easier and easier. So they are going to make the user interface and the ability to customize AI and fine tune AI to our circumstances easier and easier as it goes along. I'm sure chat, the next iteration of chat GT will make it even easier. Right now what you have to do is go build a custom GPT, which is actually quite easy to do as well. It's a little bit clunky, and I think by the time we get a year from now or whatever, we'll think that the interface with both Claude and Chat GP PT was very clunky. But right now you can already go in and start to fine tune AI for your use case, which is you're a marketer. So we are going to fine tune with the typical marketing stuff like customer personas offers that are very well written out in detailed so that because if you think about it, an off the shelf ai, it's ingested the entire internet.

Brett:

And

Russ:

So it's incredibly knowledgeable, but it also knows absolutely Jack Squat about your business or any business that you're marketing. So I've created this process, I call it the AI Marketing Hub, and all it is is just if I build one in chat gt, it's a custom GPT with custom knowledge about the client's business that I'm working on, or if I'm working over in Claude, I'm going to use projects to create an AI marketing hub. And it's sort of like a central command center from which I'm going to do any AI work with that particular business. So inside that hub, there's custom knowledge about the circumstances of that business. And then I have another hub for, so it's sort of like having an MCC for a client in Google this. Every client has their own

Brett:

Place, account hub accounts, it's all kind of connected a little bit. So let's do this. So fascinating concept AI hubs. We're going to dive into that, really explore that. I know that ultimately this is more about AI is really just a tool, so it's more about what you do with it and how you use it that really matters. But you did say something that was interesting. You said, Claude maybe is your most advanced model or your favorite model. I still talk to people that I'm like, I use Claude. And they're like, who is Claude? I'm like, well, Claude is AI right by Anthropic. And I use chat GPT too. I've got chat GPTO on my phone, but for anything creative writing, I actually use Claude. I really, really, really like it. Compare and contrast the two just briefly for those that are wondering and those that are new to Claude,

Russ:

Well, I'm using Claude for the same purpose. You're using it for any sort of content creation or copy creation. It is superior, my opinion to chat GPT. The problem with Claude, right? The reason that I end up switching back over to chat GPT quite often is because it doesn't have certain features. So for example, Claude is not Web Connect. So one of the best use cases for using chat GT is to kick over there. And I might have it go look at a webpage for me. Like, Hey, go look at this landing page and evaluate X, Y, and Z on there, or pull the copy in here so I can work on it or whatever it is I'm trying to do. So Claude for whatever reason, is still not web enabled. It will be that this is one of the places we're seeing lots of development is in these kinds of user interface type things.

It can't accept video, it can't accept audio. So the multimodal capabilities of Claude are much more limited than you get over at Chat G gt. But overall, if I'm working with text, I am going to use Claude. And then the other big thing over at Claude is this concept of projects, which we talked about and is so critical to building an AI marketing hub we're talking about and sort of fine tuning a knowledge base. But the other thing that they've released that is very cool is called artifacts, which is essentially where you're able to talk to the AI on the left side of the screen and on the right side it's building something, an artifacts what they call it. So it could be a document, it could be an application, it could be interesting, it could be a set of graphs or a dashboard or something. So you start to see where AI is going to go is do you, Brett, you remember when the first CMSs started to come out like JU Law and Drupal and

Brett:

Yeah, early

Russ:

In the day,

Brett:

Absolutely.

Russ:

Before that we were using Dreamweaver or writing custom websites and stuff like that. And once those CMSs came out, we saw such an explosion in content produced on the internet. It was like we have these, what you see is what you get editors, we call it the wyg. Wizzywig is such a huge thing because it was like it took coding out of the game at least for producing, just being able to publish the internet. Well, what I'm seeing happening with artifacts and how when I started to play with artifacts, I started to feel like I had this magic wand in my hand and it was sort of what you say is what you get. So if you can describe it in the English language, I saw somebody on Twitter the other day say something like the hottest new programming language is English,

Brett:

And

Russ:

I love that you say what you want.

Brett:

Can you ask good questions and can you articulate? Which you don't even have to be all that clear, dude, that's so good. And I'm a big fan of Claude too. Obviously you got to use multiple tools. So this is not this tool versus that tool. It's important to be educated. You should probably play with and use Claude as well. But yeah, what I'm using it for a lot of times is transcripts from podcasts or transcripts from interviews or transcripts from long videos and stuff where it's like you upload that transcript and then you can just converse with Claude about that transcript. And I've used it where I have a PDF had this offer from an investor or whatever, and I looked at it and I was like, Hey, pull these numbers from this image or from this PDF, put it into a spreadsheet for me. Okay, now clean this up, change this. It's awesome dude. And I love that. Now the best programming language is English. That's really, really smart.

Russ:

It's going to head to where if you can understand how to articulate what you want. So I really think people that are in the creative world are scared that AI is coming for your job. And there is some truth to that. I mean we just had reports that Amazon, it's Q program or whatever, just replaced 4,000 years of programming time, crazy,

Brett:

Crazy

Russ:

Using ai and it's 79% accurate. And the question is of course, what are they going to do with that? How does that impact programmers at Amazon and everywhere else when we're starting to see this? So there's that. But the exciting thing about this for me is that if you're a creative person and you've ever wanted to build something but you're like, I don't know, I'd love to build that, but I'm not a videographer or I'm not a coder or I'm not, whatever it is that is that barrier, they are going to remove all of this for us. It is going to be literally a magic wand where it's what you say is what you get. And if you want to see this in the earliest infancy, go play with Claude 3.5. It's even the free version has artifacts. And just ask it to build you a landing page for example, and it will definitely activate Claude's artifact function.

It'll start to build the page on the right side and you can talk to it on the left and say, move that button down, change the color to this. And it's just going to keep rewriting that code. And I mean the website will look like it's from 1998 because it's early days, but this is just what's interesting about it is that communicating with something and just sort of casting a spell, right? Like hey, switch that over to this, switch this over to that, and it's just speaking English. That's the programming language you're using because it's going to write the code for you in the background.

Brett:

Totally. And I'm a huge believer that there will always be a need for smart humans. Of course, we've talked about this a long time in the agency space. I remember when years and years ago, Google first came out with smart bidding, with machine learning based smart bidding, and a lot of agencies were terrified and they were like, this is not good. This is not going to be good for your business. Google is evil, whatever. I choked up, hold on. I was on a rant. I got choked up. Oh geez, this is not good for your business. What we found is it really did not limit people's desire for agencies. It kind of just allowed us to do more. Now we could focus on more things rather than just bidding. And so the way I've heard it described, which I really believe is true, you're not competing against AI per se. You are competing against people who are using ai. And so it's always going to be a partnership. Smart humans plus AI is likely going to be the future. And so is then the solution. Russ, just better prompt engineering. Is that it? Do we just need to get better at asking questions we need to get better being more clear, more succinct, more whatever? Or is there something more?

Russ:

Well, so when AI came out, I told you I'd pumped the brakes and started watching it. I saw courses coming out already. Some of the big names or whatever that are always sell course exactly four days after chat toed is out, there's a course on it. But I was basically like, we need to study this, we need to watch this. And one of the things that I saw coming out a lot was, here's a hundred prompts as lead magnet kind of thing, and here's some different things around prompts and there's no question about it. Better prompting gets you better output, but it still doesn't solve the problem that ai if it's not fine tuned. In other words, if it doesn't have any information about your business and its knowledge base, it's always going to give you generic information. I mean, consider that if you hired a consultant for your company, a human consultant, and that person came in, they were very capable and very knowledgeable and very smart, but you blindfolded them, didn't tell them anything about what they were selling, who you were selling it to or anything about the business it was trying to market.

And then you ask it questions like we ask AI sometimes like, Hey, help me build a webinar series or what new products should I roll out for Black Friday? Stuff like that. And that consultant is going to give you maybe good generic advice and that's what we're getting from ai. So that consultant, if that consultant knows what they're doing, which in this case it would be the metaphor is that AI does know a lot, it's very knowledgeable, but it doesn't know your business. So a better prompt, being able to ask the AI in a more clear way is going to get you better output. It's still not going to get you there until you actually take the time to fine tune it or add to its knowledge base.

Brett:

I want to talk about the knowledge base and the AI hub because that's really a neat concept that you've kind of pioneered here and I want to dive into that. I do want to talk a little bit though about better prompts because I think this is important. Used to do a lot of customer testimonials. We used to do video interviews with customers and then create customer testimonials from that. And I promise you, the person behind the camera, which for a long time it was me, the person asking the question, the quality of those questions, the sequence of those questions in this case, because it was human IT enthusiasm, it's an art, you would get lame answers, boring answers, timid answers, afraid answers, or you could get dynamite stuff and it was based on how you asked the question. And I think the same is true if you're doing surveys and stuff like that, the way you ask the question, you want better answers, ask better questions, a little bit different because AI is not human and not emotional, but any tips on better prompts just as a baseline that I think some people will really benefit from before we dive into the Yeah,

Russ:

And that's such an important point. I mean you're right. Surveys. I mean look, we're all marketers, so we know words matter the sequence of when we say things. And so there's no different here when you're prompting. And so what I like to do is keep in mind four, this little four letter acronym, RTIF. So when you build a prompt, if you can start out with telling the AI what its role is, that's the R part and RTIF. What is the AI's role?

Brett:

Pretend you are a marketer, copywriter, director, editor, whatever.

Russ:

Exactly. And what that does, the issue is that large language models are large. They've ingested the entire internet. So that role immediately zeroes the AI down into some domain of knowledge. So if you tell it it's a copy editor, then it's immediately going to zero down because right now you start with a fresh generic out of the box, new chat, you could literally ask it anything. So it's literally accessing the entire index of everything it has, which is everything that we've ever produced and put online. So the minute you give it a roll, you're going to get better output because it's going to be like, okay, I'm zeroing in on this domain of knowledge. The second thing to do is to give it a task. So if you give it a roll, you're a copy editor, your task is to review these product descriptions. And so now you've zeroed in even further, you've given it more clues as to which domain knowledge that you want it to access inside of a sprain, and then we give it input.

That's the I. So role task input. Now input is super important. If we can spend more time with input, the better. So one thing you could do is you could say, here's the product description I want you to copy at, and that's it. So that's all the input that you give the AI is you are a copy editor, your task is to copy edit these product descriptions, here's the product description, edit that please. Then the last one is format, which is the way you want that output formatted. So it could be that you want it long, it could be you want it short. It could be that you want it in bullets. It could be you want it at a table or you want it however you want that to come back to you is the last bit of a solid prompt. But let's kick back to the idea of this input is super important.

If you tell the AI that you want it to do to assume the role of the copy editor, edit these product descriptions and then you give it the product descriptions, you want it to edit, that's basically a zero shot prompt, what we call zero shot. It means that you've given it zero shots. And really, I don't know why these engineers want to call it shots because you could just use the word example. So if I instead say you're a copy editor, your role is copy editor, your task is to copy edit these product descriptions and then here's five product descriptions that are done right now. If you've hit five product descriptions, you have a multi-shot prompt. So you're going to get way better results because you're basically saying use these as a model. And so that is a major part of prep, preparing a good prompt is whatever it is you're asking it to do, can you give it anything more and show it something that is the proper output?

Brett:

It's really great, really, really great. Okay, so let's then talk about AI hubs, AI marketing hubs. How are you building these? What do these look like? Walk us through that.

Russ:

Well, so if we start with this idea, I mean we can go back to what I just said, which is when you give it something to go off of when the AI is fed something into its knowledge base. So it's like, let me give you some more context here so that you're not just again, pulling from this enormous index of information that you have. Instead, I am giving you examples, I'm giving you other things. So yesterday I was at a conference, actually I spoke at a conference and somebody from Google was speaking there and I went to her session and in the end I raised my hand and I said, so what you're telling us is that we need to be bringing our own data to the party, right? Because she was going through some AI enabled ad stuff that's now available at Google Cloud, and in the end what she was saying is you can bring your own data into Google Cloud and we can crunch it up and segment it and do all kinds of stuff and then use it for targeting, creating segments and improving your ad output.

And so at the end of it, I was like, I feel what you're saying is that you guys are doing all of this with Max and everything that you're doing. You're doing a lot of AI stuff already. You're doing a lot of machine learning and everything you're doing there, but that now we are able to bring our data in from Salesforce or HubSpot or our email analytics or whatever and crunch stuff up and she goes, yes, I really love that idea. I'm going to start using that of you need to bring your own data the party. And so I was like, I'm going to start using it too. I really love that. And so I want you to think about an AI marketing hub as a place where you've brought your own information and data to the AI party. So you've got the AI model and it's tremendously capable, we know that. But I think if you're like me, you are probably getting some pretty frustrating output from it. So you're just like, okay, this is good, not great. And as marketers we

Brett:

Know, and maybe that means it's entertaining but not usable. It was interesting that you created it and it's kind of impressive, but it's like, but I can't use this.

Russ:

I can't really actually use this. And so when you build a hub, whether it's through a custom GPT or through a Claude project, or you could go pay Accenture or Deloitte to come in and build an entire model off over the top of llama for billions of dollars, which is what they're doing, they're coming in and charging lots of money to customize AI for all kinds of use cases for the biggest corporations in the world. But you and I, we can take our small business, our mid-size business and we can open up an off the shelf account over at Chachi PT or with Claude, and we can start a project or a custom GPT and we just add to that project's knowledge base with information that's going to be relevant to the type of marketing that we're doing. So if we start thinking about what kinds of things you might bring to the party, the first three things I recommend because there's just almost no marketing case where we don't want to know who we're trying to sell to and what we are selling. So if nothing else, you want to build an AI playground, I call it an AI marketing hub. So use a project or a custom GPT and then upload customer personas and detailed information about offers. And this is just ugly documents in PDFs that it can read. So if you're thinking

Brett:

Clearly outlined that, hey, this is what this PDF DF is, this is what this slide deck is, whatever.

Russ:

Yep. Yeah. If you were going to unblind fold that marketing consultant we talked about earlier and begin with how do we get more out of this marketing consultant we're paying, the first thing you might tell them is, here's our customer and here's what we're selling, right? Because without that, I don't know how we're doing any marketing about anything. You're absolutely working in the blind. You'll be shocked by how much better your AI performs with just a little bit data points. If you have a good well constructed persona and make sure that you've elaborated on the most important part of a persona in my opinion, which is the pain, the challenges that cut. If you were just going to give me one piece of information about somebody that I needed to sell something to, it would be what's the problem? So make sure that part of that persona is very well fleshed out, but you build a persona, however it is that you build a persona. There's no shortage of trainings out there about building personas, but you just need to get it into a readable format. PDFs are great. You write it in a Google doc, create it in a Google Doc, and then you attach it to a project or a custom GPT and you do the same thing with whatever. Take one of your bestselling products, for example, and do a nice description of that. Maybe pull the product description

Brett:

Out so it even be like the product detail page, but put into pdf DF form or something.

Russ:

Yes. Yeah. And so you say, how do we sell more of that offer this PDF to this customer and the AI will be like, let's talk about that. I got a lot of ideas and you'll be, so what I think a lot of people are doing is they're sitting there thinking, I keep getting this average output from ai, so I really am just going to kind of put this on the side until AI gets better, until chat two, PT five comes out or the next cloud. I mean it's good. It's not great and I want to produce great stuff. We have to be producing great stuff. That's what the best marketers do. We don't build average stuff.

Brett:

And

Russ:

So this is, I think a mistake because we don't need AI to get better. You need to be better at using ai. And so if chat g PT five comes out and it's smarter and faster and stronger and able to leave tall buildings with single bound, it still isn't going to know anything about your business. So you've got to learn this skill, which is basically how you fine tune an AI and you don't need to know all the fancy dancey fine tuning tricks and moving weights and all of the weird things that engineers talk about, but we need to understand is what do marketers need to do to AI to get better output from it? It starts with giving it things like customer personas and offers.

Brett:

Yeah, I love it. So I want to dig into some other details here. Maybe get a couple of examples from you too, how you've used these for different clients you work with. So personas and product details or offers. If you want to go next level though or give it more information, what else are we sending? Are we sending things like customer reviews and competitors and things like that? What else are we putting in this marketing hub if we want to go next level?

Russ:

Alright, yeah. And what want you to think about is imagine that anybody that's working on that business, whether it's a client or whether it's your company, is working from an inside of the hub. So now it becomes a game of what else could I give the AI in terms of context and information that would make it stronger and make it more useful to me? And what you find is that it can assist with everything from media buying, data analysis, content generation, product marketing, whatever it is, there's almost no scenario that it won't touch. And so other things that I have bolted in here at different times based on what it is we're working on is you might bolt things like data on there like sales data, inventory reports, website analytics, email reporting, things like that. So you can plug data into its brain and have it understand that first of all, what I like to do is give it a document and I just say simply to it, what do you see there? Because I want to see if it understands,

Brett:

Is it understanding this?

Russ:

Yeah, I'm sort of checking for its understanding. And what you'll find is that it does understand your sales reports, it understands your inventory reports, it understands these things like your website analytics. You can plug things like reviews on products in there, writing samples. If you're trying to create an AI that can more easily write like you, going back to what we talked about with multi-shot prompting, can you give it good writing samples? Here's 10 emails that I wrote already over the last month that are good model when you're writing this promotional campaign, you can put anything in there. If you've got a loyalty program for example that you're working on and you've got details around that, attach it in there and say, Hey, this is our loyalty program. Just so you know, we got a loyalty program, big market analysis, but it does become this sort of creative game, which I love Brett. It's like, what else could I give it?

Brett:

Right? That is how would that change the output and change what it actually creates better,

Russ:

Right? It's such a creative process. And so depending on what it is that you're working on, you just want to think. And if you really think of it this way, if I was working with a human who I'm asking to do X or Y or Z, what would I want them to have access to? Do they need access to my inventory reports to do this work? Do they need access to my website analytics? Because if the answer is yes, they would do a better job with these three different resources, then you ask yourself, how much effort would it be for me to get that into a format where I could bolt it into the brain of the ai? Well

Brett:

Treat it like a marketing treated like your assistant CMO or something. Treat it. I like that frame. What would a marketing employee need? Give that to the AI as well.

Russ:

And the thing is that we may not see that the next few models that come out are all that much more intelligent than the AI that we're playing with now. And we might see that they're become quite a bit more intelligent, but even if we don't, where we are going to see a lot of development in AI is going to be in its multimodality. So multimodal is an important place to be watching can the AI take in and put out, so what can it take in and what can it put out? So can it take in text image, video, audio, data code, and can it put out, so can it take in text and give you back an image? Can it take in an image and give you back a video? Can it take in audio and give you back a video? So that is where we are already obviously seeing right now, chat, GT four oh has vision. It can see things, it can talk to you. That's another modality. And when we think about how we are going to be able to give an AI context around our businesses and our customers and everything, as the modalities change, so will your ability to

Brett:

Put

Russ:

Different things inside of its brain. So if you could literally take, were we live when you were talking about the customer videos that you were

Brett:

Doing? No, I wasn't. No. I can frame that really

Russ:

Quick. Yeah, tell that story because I mean you could upload that whole video in there

Brett:

And you mentioned that Claude can't communicate with audio or video, but Claude is the tool I use most. And so had this project four client, they had five customers give these long interviews on video and ended up each one was like an hour. Now in the old days, we would sometimes pour over those. We'd watch the same hour like five times and try to piece out, pull out little nuggets of hey, this five seconds here, this 10 seconds here, we'd make for a great clip or great customer testimonial to put into a TV ad or something. So what I was able to do though with AI is I took the video, stripped out the audio, uploaded the audio to Riverside, which is a tool we're using now for the podcast. It will transcribe things. So created a free transcript. I uploaded that transcript to Claude and I said, Hey, here's the project, here's the product, here's what it does.

This is what we're trying to do, trying to create a TV commercial. And so find me five or six quotes that speak to benefits, speak to pain, speak to experience, and I need them to be about five to 15 seconds long and it spit 'em out like that. And so then I was like, okay, those are cool, but give me a few more or okay, give me a few more and make them longer or are there any quotes that talk about this? And then as I got to the ones I liked, I was like, okay, give me all of those quotes and put them in a time code spreadsheet where I can see start time, stop time and how long that quote is. And now this was all taken from tech. So Claude was like, Hey, these are going to be estimates, but we'll give you best guess. It was pretty accurate. So dude, this was something that would've taken days and could do it all in. I don't even know how long it took, but it wasn't long. It was 30 minutes. Hour or something like that. Just crazy.

Russ:

What's even crazier though is that you had to strip out all the audio you had to do. You had to actually,

Brett:

I had to do some work.

Russ:

You had to do some work to get it into a format that this tool could accept and that's all going to go away. Eventually Claude and every other model, it will accept all modalities and it'll be able to output all modalities. So in that case, you would've just uploaded the video and

Brett:

Then it probably would've spit out the video for me and then I could say, well, give me the video in this format.

Russ:

That's exactly, that's exactly right. So I think the big thing to think about here is that this whole idea of what data are you bringing to the party? Because if you're just using generic off the shelf AI and you're asking it questions like, Hey, can you make me some interesting things to post on LinkedIn about some topic? It's like, sure. One of the frustrating things actually for me about AI is that it always answers you. It will

Brett:

Always answer you, try again, try harder, dummy. That was a stupid question. Yeah, it doesn't do that.

Russ:

Yeah, it never says, I don't know. And it never, and even though perplexity one of the startup companies that's challenging, Google with ai search perplexity is starting to get a pretty cool interface in terms of trying to ask you more for more context and ask you questions and prompt you and have you select things. And that's what we'll see from all companies. They're going to try to make it so you don't have to be a prompt master, you don't have to really understand how the model works. But for now, if you ask it a question like, Hey, can you create me a LinkedIn editorial calendar? And it has no context about your business, it doesn't know who you're trying to talk to, it doesn't understand your offer, it doesn't understand anything, it will answer you. And then at the end you'll go, I guess I'll use this, and you're going to have a pretty boiled chicken bunch of stuff. Totally. Or you're going to be like, that was a big waste of my time. I'm going to have to go do this myself anyway. But then you go and you plug in all this stuff, you create a hub and the hub, the other cool thing about this hub concept is that it eliminates what I call a cold start problem.

So the cold start is, okay, every time I go to use ai, I have to reprompt give it all this information and have it understand this well, these projects and these custom GPTs have memory of their own and it's contained within that area. So it remembers things and it obviously is able to access things in its knowledge base, but it's also remembering things that are happening in those conversations so that you don't have this cold start problem, you just jump back into your hub and you start back up talking about the LinkedIn editorial or your next email promotion or whatever it is you're doing,

Brett:

Just like you would converse with your CMO or marketing associate or whatever. They've got context now you've been working on stuff together, now you can just ask a question rather than, okay, every time I got to give all this background, it already has it. So that's really cool. Can you give some examples and you practic to be careful on confidentiality and stuff, but examples cool things you've seen people do with these Well-built marketing hubs.

Russ:

So there's three roles that I like to build out and when I'm working with clients on these, I ask them, where do you see the biggest use case for these? And the big three places that I think AI can do better than the average human can is one role is I call it the scribe. So the scribe is like, it's your creative person, it's your creative role within this AI marketing hub. And so we take in, of course, if you were going to hire a writer or somebody that was going to help you with content marketing, what would you want them to have? You might want 'em to have things like editorial guidelines. You might want them to have access to writing samples that are good, maybe they aren't even yours. You go and look at a competitor or you look at some brand you admire and you say, let me pull these last 10 articles or emails or ads or whatever it is, and you say, these are good samples of what we want to be producing.

And you give that to the AI's hub, you give it to the editorial guidelines. I've built a very, very cool prompt that is able to extract the style of a writing out. I post on LinkedIn the other day, I said, and I decided to do this with an author, one of my favorite authors actually John Steinbeck from Wrote Grapes Rat and all that stuff. And I took the book of Mice and Men on PDF put it into Claude and I gave it this prompt and that prompt basically says it is a big long prompt that's like, I want you to look at this and this and this and this. Everything, the cadence, when you look at the styles, are they using idioms and metaphors and dah, dah, dah. So there's like a million things that this prompt is asking it to analyze inside of the Steinbeck piece or whatever kind of content you give, you give it. I also gave it 30. I went and just scraped 30 customer stories off of Salesforce's site and I ran the same prompt. What I'm trying to do is build a mimic, literally extract the style and the tone and everything about that data. And I went and I grabbed a paragraph from a real Steinbeck paragraph from one of his short stories, and then I actually had it write a short story Claude using this prompt that I've used to extract

Brett:

And it read of Mice and Men you gave it that

Russ:

Get rid of Mice and Men and it's also probably got a decent idea of who Steinbeck is. Anyway, but it was really this prop I think that went in there and was like, because it did the same thing when I ran it through Salesforce's stuff. And then I've created a section that's like write like Russ, so I want you to be able to write like me. And it still doesn't get me all the way there. But with the Steinbeck thing, it was crazy. I posted this on LinkedIn and I said, which one's Steinbeck and which one's clawed?

Brett:

And

Russ:

People

Brett:

Did people get it right?

Russ:

Swearing up and down, A, it's B, it's A, it's B. And I was like, no one could agree on which one it was. That's how good of a

Brett:

Mimic

Russ:

It was, right? So that's the scribed functionality. And what you want to think about is what could I give an AI to turn it into a scribe? The second functionality that AI is really good at is what I call the optimizer. So it is somebody who can evaluate assets like landing pages, ads, emails. And for this we use rubrics back in the old digital marketer days when we were building rubrics for people to say, here's what are the 10 elements of a good ad

Or here are the 10 elements of a good opt-in page, or here are the elements of a good email promotion, grade your work on this. We used to do these when I was with digital marketer. We would create, so instead of just intuitively looking at say an ad and saying, well, I see the problem with that ad, fix this. Instead, we would literally extract the knowledge of Molly Pittman, who's such a good ad person and put her knowledge into a rubric where it was like anybody could look at an ad and kind of figure out what's the problem with this ad? Where could I improve this ad? Well, if you feed an ai, a rubric like that, and then you show it a landing page or you show it an ad or you show it an email, it's able to really quickly, it scores it, it would like a professor would, but it's a professor that's got a rubrics working against for a landing page or for, and it's really, really powerful.

And so I call that role to optimizer. And then the last one's the strategist. The strategist is somebody you talk about long-term, bigger picture type marketing stuff and you feed it things like business competitor analysis, market analysis, SWOT analysis, bigger picture idea stuff and give it an idea of, and you can have these crazy long conversations with it about things like strategy. Like hey, I'm thinking of, I think I want to expand my product line in this direction. What do you think about that? What are some risks here? What are some things you can have these kinds of conversations so much context for it to be working for him. So it's pretty wild.

Brett:

That's great. So scribe optimizer and strategist, really, really great. Love that. So we talked a lot about chat, GPT and about Claude, what about Gemini, Google's Gemini? Are you using that at all? What are your thoughts? Any POVs there?

Russ:

Well, so my big point of view there is that Google, and I don't use Gemini very often very much, but Google has instant distribution. They've got AI built into everything. Just like my son, I just bought him, he's going away to college. So I got him one of the new surface laptops with copilot built in. So Microsoft has immediate distribution, Google has immediate distribution. And here's the big thing to think about that's connected to this concept of adding to a knowledge base is that Google already has all your information. So if you're using Google Workspace for example, they already plug, they can plug their AI into your Google drive,

Brett:

Legitimate right into drive

Russ:

Into your calendar, into everything. And that's where we're going with this is that the extension of the knowledge base. So you'll have Gemini, the brain, the off the shelf ai, but it will have access to, and it already kind of does. It's really early days here with that laptop that my son just got. They are not allowing certain functionality in there yet because they're saying that they're still trying to figure out the security and the privacy side of this. But that's where we're going is where you want to extend your knowledge base. We've got all your files, we have access to your Google Drive, we have access to your email, everything. So Google is a major player and while OpenAI feels like the cool kid on the block and Claude sort of feels like the guy from the village that's super like artsy and cool, that's fair. It's really going to be Microsoft and Google that. I think we'll pull ahead eventually because just

Brett:

Because of distribution and access to all the data. Yeah, it's a really good point. And Apple.

Russ:

So Apple, while they don't have a model of their own, they're just renting right now, they could easily go build one if they wanted to. And then you have Facebook, which is super interesting because they've decided to go open source and allow people to build on top of llama and it's as good as CHATT four. That's what I've heard.

Brett:

Lama's great and not played with it, but I've heard it's

Russ:

Awesome. Yeah, I mean it's amazing. It doesn't have a lot of the capabilities of this and that, but you can build on top of it and build anything you want. That's what's crazy about what Facebook decided to do is open source. Super

Brett:

Cool man. Early days. We are early innings, just like when we were first starting to use the internet, that's where we're right now. So Russ, it's people listen to this and they're like, all right, I got tap more into Russell's brain and I need to look at some of these resources. Where can people connect with you? I think you've got a mini course that people can kind of take. Where should they go

Russ:

From here? Yeah, well if you want to get your feet, well ai, you go to join the click.ai/jumpstart. That's a 60 minute course where we've got eight videos and six exercises and by the end of it you'll be like, I feel pretty good about this. So you can go to join the click.ai/jumpstart and take that little mini course and it moves fast and you'll just open up a free version of chat BT and do the exercises. And you'll feel a lot, you'll feel like, okay, I'm ready. Right? I feel like I understand this now, but I love LinkedIn. I talk to you on LinkedIn when I hit you up. So if you see me over on LinkedIn, I love connecting with people over there. So it's just Russ Henneberry over on LinkedIn. But yeah, check me out@jointheclick.ai and I'd love to, that's

Brett:

Awesome, man.

Russ:

Geek out on this stuff.

Brett:

Let's geek out a little bit. Join the click.ai I'm fired up to. I just want to take my game to the next level with ai. And so Russ is going to be my guide, so check out his resources, check him out on LinkedIn. I'll of course link to everything in the show notes, but you can find it as well just by looking. And so Russ Hena Barry, ladies and gentlemen, Russ, thanks so much, man. Ton of fun.

Russ:

It's a lot of fun. Thanks Brett.

Brett:

Absolutely. And as always, thank you for tuning in. I'd love to hear from you, what would you like to hear more of on the show? And as always, would've loved that review on iTunes if you've not done. And with that, until next time, thank you for listening.

‍

‍

In this episode of the eCommerce Evolution Podcast, Brett Curry is joined by Michael Epstein to discuss the resurgence of direct mail as a powerful tool for eCommerce growth

They explore how direct mail is driving retention, building customer loyalty, and even serving as a successful acquisition strategy when used effectively. Throughout, Michael debunks common misconceptions about direct mail—highlighting its effectiveness when paired with data-driven targeting and other marketing channels.

Here are some key takeaways from the episode:

• Direct mail for retention & loyalty: Learn how direct mail can enhance customer retention and build long-term loyalty, especially in today’s crowded digital landscape.
• Direct mail as an acquisition channel: Often overlooked, direct mail can be a highly effective cold acquisition strategy—if you target the right audience.
• The power of data in direct mail campaigns: By leveraging aggregated data, you can identify high-propensity buyers, refine your targeting, and even create lookalike audiences to improve relevance and engagement.
• Standing out in the inbox: Direct mail not only adds legitimacy to your brand but also captures attention in ways digital ads often can't.

If you're looking to scale your brand—whether through retention, loyalty, or acquisition—this episode provides actionable insights into how direct mail could be the missing piece in your marketing puzzle.

---

Chapters

(00:00) Introduction 

(07:10) Direct Mail Misconceptions

(10:41) Retention and Loyalty with Direct Mail

(16:59) Direct Acquisition with Direct Mail

(24:53) Data Targeting for Direct Mail

(33:17) The Importance of Clearly Defining Your Ideal Customer Profile

(41:11) PostPilot's Modernized Catalog

(46:16) Conclusion

---

Show Notes:

• Michael Epstein (LinkedIn)
• Post Pilot 
• Drew Sanocki (LinkedIn)
• Hexclad‍
• The Normal Brand

---

Connect with Brett:

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/

---

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more.

---

Transcript:

Michael:

You really need to start thinking about it as a medium mix and how those channels can work together to grow your overall revenue

Brett:

Well. Hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we're talking about growth through direct mail. Now, I love this topic. I'm an ad nerd from long ago, I did TV and radio back in the day. I helped companies with direct mail. I love stuff that other brands are not doing. And so we're going to talk today about how to grow using direct mail for increased retention and loyalty, also acquisition, and some new things that the smartest, best, fastest growing brands are doing. And so my guest today is the co-CEO of Post Pilot. You're going to learn more about them as we go, but Michael Epstein is my guest. Michael, how's it going, man?

Michael:

Good. Brett, always great to hang with you.

Brett:

I love, absolutely, dude. We got to do OMG hosting an event at the Google, YouTube LA offices. Recently post pilot was a sponsor. Thank you for that. But my favorite part of that was that I got to see you and we got to hang out there at the Spruce Go hanger. Google's amazing offices for just a little bit. And so yeah, give us kind of the quick rundown for those that don't know who are you and what is post pilot.

Michael:

Sure. So yeah, that office made me a little, just a little bit jealous.

Brett:

It's insane. Holy

Michael:

Cow. Anyway, yeah, so Michael Epstein, one of the founders of Post pilot along with Drew Sunki and been e-commerce operators for 25 years at this point, mostly running eight, nine figure brand turnarounds. Direct mail was one of the tools in our tool belt that we used to get quick wins from a lot of these brands who had accumulated huge customer lists over time, but most of them had been unengaged or disengaged over time. So we wanted to find quick wins and direct mail was one of those, but it was really clunky and the stereotypical experience of spreadsheets and finding a printer and batch and blasting and trying to figure out ROI. And we just said somebody needs to build Klaviyo for direct mail, so

Brett:

Klaviyo for direct mail. Love

Michael:

That. Yeah, that's what we did with post pilot, which is a direct mail platform natively plugs in with Shopify Klaviyo on your e-com stack and just makes it really easy to launch and track really targeted direct mail campaigns. And we're going to talk about how we've evolved, I think, into becoming more like meta for direct mail too on the acquisition side, which is really exciting.

Brett:

And it's so cool. Like I said, I've been a fan of direct mail for a long time, but why do you think, Michael, before we dive into retention and loyalty and acquisition using direct mail, why is direct mail having a day right now? Because I believe that?

Michael:

Yeah, it's a great question. I think one, it's always worked as a channel. I think the main reasons that it's been around for a hundred big brands have done it for a long time, continue to do it. I think the big reason that a lot of brands hadn't embraced it was because it was so hard. I mean, knowing these are brands that grew up launching on Facebook and are digitally native marketers, and to think about designing a print piece and figuring out how to mail that thing and figuring out

Brett:

How to, where do I begin?

Michael:

Yeah, it it's hard. And we wanted to make it really easy. And that's one thing that I think has gotten adoption way up. And then the other thing is digital direct mail has become more attractive relative to digital over time. I think starting with the iOS update of a few years ago where it really woke brands up to realize that one, they needed a more diversified marketing mix. If they put too many eggs in one basket, they were putting their business at risk. And then you just saw this volatility that occurred for a long period after that. It was like, we need to build a more resilient business. We need to start opening our eyes to other channels. And also it became more attractive on the cost side. So digital ads get as competition drives up costs over time. It used to be, obviously the direct mail looks super expensive relative to a 5 cent Facebook click, and so why would we do that? But now as costs continue to rise, direct mail and postage essentially stays relatively fixed, and so it just becomes a more attractive channel over time. Now it tends to cost less than the cost click. So I think those are the key factors that are driving the engagement.

Brett:

Yeah, totally agree. It's one of those things where the cost of postage mostly stays like this. I guess I don't really know who follows the cost of postage other than you guys probably, but it stayed relatively consistent, whereas the cost of digital ads has gone up. Now, I do want to say full disclosure, I'm an investor in post pilot, but I do want to underscore I'm an investor because I'm a fan, not I'm a fan because I'm an investor. So I invested because I'm like, yes, we need this. Brands need this, our clients need this. I'm going to invest in the company, but want to get that out in the open. And so I think one of the other reasons, Michael, why direct mails having a day right now is because I remember a ton back in the nineties and the early two thousands back when some of our listeners were just kids, and maybe you were a kid, Michael, I don't even know, but you open the mailbox and it is just stuffed full of postcards and coupon mailers and all kinds of other crap that you don't want.

And so the mailbox was just absolutely cluttered. Now I go to the mailbox and I've got two things or three things. There are a lot of days when there's not much in the mailbox, and so you mail something, it's going to stand out, people are going to see it, and it's also novel. I remember the first time I got a postcard from one of my favorite D two C brands and I was like, what is this a cool brand online is mailing me some paper? This is crazy. And so I think that's all part of it, right? We've got the ability to grab someone's attention, and I know we'll underscore this kind as we get into retention stuff, but there's really no way to reach all of your customers, right? We're big believers in email and SMS, you mentioned you're the klaviyo of direct mail.

We have an email and SMS department at OMG. We love it. It's very successful. But what are great open rates on emails? 30%, maybe 40%. That means 60 to 70% of your top customers aren't opening your emails. So this is a way to get in front of more of your customers and also to reach new customers as well. So really excited about this. What are some of the misconceptions, Michael, and we may have already addressed some of them, but what are some of the misconceptions about direct mail for D two C and retail brands that you would like to bust?

Michael:

Yeah, good question. I think one that it's hard. So again, the typical experience has been hard, spreadsheets, printers, all that stuff. We've made it really easy. We could launch and we've launched people within 24 hours who come to us cold and we handle everything for them, strategy, set up, creative, everything. So one, we make it really easy and two, that you need to always deconflict your channels, meaning I only want to send to people who haven't engaged with email in like six months. And that is something that we actually just published a bit of a study on this where we ran a bunch of analysis. We have tons of data from tons of brands where we looked at brands who were sending to their existing email subscribers and also sending direct mail, and we saw a three x incremental lift on

Those people who were getting booked. Now you can be more conservative and we make it easy to filter out people who are actively engaged with email. So people who have opened or clicked an email a few times in the last 30 days, maybe you want to not send to them and that's fine and make it really easy to do it. But I think the misconception is that you always have to be conflicting every, and that goes for retention and even acquisition. And I think what the big brands have really figured out, the ones who are still growing and still at scale, and this, I think better than just about anyone too because you talk about display ads and you manage a ton of different channels and they all work cohesively and together, and that halo effect, you get totally multiple touch points, lists, all those channels versus trying to say, I want to be super focused on, focused on only incremental ROAS from my YouTube and then only incremental from my Facebook, and then only incremental from my SMS, and you're putting a cap or ceiling on your growth. If you really start to think about that, you really need to start thinking about it as a medium mix and how those channels can work together to grow your overall revenue.

Brett:

Yeah, I totally agree. And I think it's one of those things where there's this old adage of you reach a customer one time, they probably won't remember it, right? You reach them two times, now they're beginning to pay attention and maybe see you reach them three or more times. Now you feel like you're everywhere, especially if that's in multiple different mediums. So I see a meta ad and then maybe I search and I see a Google ad, and now I get something in the mail, holy cow, you are everywhere. And now that message you're trying to get me to remember, I'm beginning to see it now and maybe I'm ready to take action. So I love that the combo of email and postcard, three x incremental lift for those that saw both, that is not surprising to me. And I think that kind of underscores, Hey, this is a simple thing to add to your mix. And so let's talk. I want to get into acquisition because I think there's some really exciting stuff there. And I know that's something that 99.9, or maybe that's an exaggeration, but 99% of people listening to this podcast are not doing. But let's talk about first postcard marketing, direct mail marketing as a retention strategy or as a loyalty strategy. What are some of the top strategies you guys incorporate for better retention and better repeat sales?

Michael:

Yeah, great question. There's a lot of low hanging fruit there, and you mentioned it earlier. If you look at your email, obviously it's a great tool. We'd never say don't send email, but if you look at your open rates and engagement, you're only reaching a fraction of those people, and that's your best audience. And those are people that are engaged in a blog from your brand. And so the easy wins are starting to layer on direct mail campaigns, and you can set them up as automations and flows just like you would with Klaviyo or an email flow where after a certain amount of time they haven't engaged with your email yet, it's been 90 days, they haven't taken the action that you want them to take. Send them a postcard, trigger a postcard to go out to that person. And again, you'll see incremental lift from hitting that audience who has not engaged with your other channels in your digital channels, in your attempts to reengage them.

You'll see incremental lift by sending them a card, easy wins, and around big tent pole events, black Friday, mother's Day, Valentine's Day, whatever it is, you can also start to focus on reactivation and go back. You'd be shocked at how far back you can go with a lot of these audiences and profitably reactivate them. People that haven't engaged with your email or other channels in years, three, four years, in a lot of cases, you send 'em a card and it just wakes them up and you get a profitable return, and it tends to be much more profitable than cold acquisition when you can reactivate some of these long, long defective customers. So those are some of the easy wins. Win backs, churn, reactivation, reactivation of long defective customers. You can send them as one-off sort of tentpole campaigns, or you could set them as triggered automations. And you're always going to find easy wins. I'd say almost a hundred percent of the time, we can find different pockets and different cohorts that are going to respond really well and it's going to deliver incremental revenue, and then you just set it and forget it. You just leave them on autopilot. It's just going to keep cranking for you like an email sequence does.

Brett:

Yeah, and if you look at this as a compliment or like a supercharger for your email and SMS programs, I think that's a really good way to look at it where, hey, where do we make the most money through email and SMS marketing? Well, it's by designing some really great flows. So when we come in and work with the client, this we do first, we look at welcome flows, we at card abandon in flows, we look at post-purchase flows and a series of others. But yeah, all you have to do is make one of those steps, and it's usually not step one or step two, maybe it's step five, step, whatever, throw postcards in there, right? If they have not taken action on any of the other touch points, email or SMS, put postcards in there, it's low cost. And again, it's going to be one of those differences may create a little bit of an aha moment for your customer and get them to respond.

And then to your point then, what are we doing? We're doing back to school sales. We're doing Mother's Day and Father's Day sales, we're doing labor day sales, we're doing of course, cyber week sales, things like that for your big ones, corporate postcard marketing to your best buyers or to your VIP list or to a win back list. And so let's talk about this a little bit, Michael, because I'm sure the main question people have is like, Hey, what kind of results can we expect? And I know that that's, as marketers, that's so tough, right? It's like it all depends on so many factors, but what kind of results are you seeing here in a few of the different scenarios? And then what does it cost? What's our cost per piece for doing stuff like this?

Michael:

Sure. So typically the range when brands are starting to send on retention campaigns, the range that we set is sort of a baseline, tends to be in the five to 10 x row. It's significant, but what we also tell brands is goal, and again, I'm sure you know this with Facebook and Meta and other channels too, the goal isn't necessarily to maximize your roas. The goal is to maximize your contribution, your overall

Brett:

Contribution.

Michael:

And so the key is learn. You can test into all these different segments and cohorts and then learn which ones are profitable and keep expanding your audience such that you can maximize the amount of revenue you're generating from these customers at a profitable return. So great, we launched 180 day win back to repeat customers and it got us an eight x roas. Let's go to a year, let's go to two years. We're still getting three X at a year or three x at two years. Fantastic. It's still profitable for us. It's incremental. We should be doing that all day long. And that's how you really start growing as a business. You're not maximizing to roas. You're maximizing the total profit dollars coming into the business. So that's typically a range that brands see starting out, and then it's like how do we expand?

Brett:

That's great. That's great. Yeah, and I love the way you positioned it really. It's more contribution margin dollars. That's what we take to the bank. You're not taking RU to the bank, but we do want to measure those things. Almost always these activities are incremental, right? Because you're not sending these to people that have just responded to a direct mail or just responded to email or SMS or something. So this is new. These are winbacks. So it is incremental, which is really powerful. Then what about in terms of costs? I'm not talking about all in costs and stuff. I know there's lots of factors and depending on what you're printing on and things like that, but give us a ballpark. What are these costs per piece to send out?

Michael:

Yeah, it's real simple. 55 cents for a four by six, that's like a fully loaded cost. So card goes out 55 cents, that's really it. And

Brett:

That's printing, that's postage, that's everything.

Michael:

Yeah. The only thing it doesn't include is if we're targeting cold audiences where there's just a charge to pull that data to target a cold audience, but for those existing customers, 55 cents, there's no minimum. So as many as get sent out is what you get charged.

Brett:

Super simple, super easy. Love it. Let's transition to prospecting or to direct mail for acquisitions. And I know there's a couple things that play here. One is who are we mailing to? And I would argue that the who is more important than the what in most cases, but who are we mailing to? What are we sending set up direct mail for acquisition for us?

Michael:

Yeah, sure. So there's a couple ways that we think about acquisition. Went direct mail, there's warm acquisition, which is targeting people who have engaged with your brand in some way and not converted, think more like retargeting. And then there's cold acquisition, which is pure prospect. And so on the warm acquisition side, we have the ability to match email addresses to a postal address essentially in real time. And so say somebody opts into your email, but they go through your full welcome sequence and they still haven't converted by the end of the welcome sequence, we know the chance of that customer or that prospect converting starts to decline rapidly over time. We've got to get that person to convert or you're unlikely to ever see them again. So similar to a win back campaign emails tried to get them to convert through that welcome sequence, haven't converted, match that person to a postal address, retarget them with a card, and we see a strong incremental lift from doing that.

If we go a little one step colder, it's site visitor retargeting, which we call site match, and that's where people are browsing your website anonymously. They haven't opted into your email list or bought, and we can actually identify a portion of those people and match that to a postal address and then retarget them with a card as well. And with a lot of our new tech, we're looking at factors not only about how they engage with your site, which pages are browsing, how long they spend, other factors like that, but we actually know a lot of things about that individual and we can say, oh, this person also looks a lot like your ICP. We definitely want to target them and get a card in front of them. This person doesn't look anything like your ICP. Maybe we actually don't send them anything at all. The idea is to maximize return. We always think about not maximizing the number of cards we send. It's maximizing the return on those cards and having a level of confidence that the people we're sending to are the ones that are likely to convert. And that way you can scale more. That's

Brett:

Really great. So you can see, hey, these are site visitors and we can match a certain percentage of those, so let's do that. But then let's also look at some other lists and some other data that you have access to show us is this an ideal client, is it not? And we'll just mail it to those that look to be ideal. Talk us through how many site visitors, obviously we're just getting started online, this is not the thing we're going to launch, but at what point does this method work? Do we need 10,000 visitors a month, a hundred thousand visitors a month where we can actually get a meaningful number that we can mail to?

Michael:

Yeah, I think 10,000 visitors a month is probably a minimum baseline for where you want to be. And again, there's not a minimum. It's more about having enough volume that you can get statistically relevant results and results that move the needle for your business. If you're really small and these segments or these audiences are just going to have very few people in them, it's not the right time for you. We're all busy as entrepreneurs and business owners and marketing managers. We should focus our time and effort on the things that are going to move the needle for the business. So you want to have at least some level of scale that that's going to work for you.

Brett:

Even if it's a low cost, low dollar cost, it could be a high opportunity cost. And so where you putting your attention, where you're spending your time makes a ton of sense. Now, I know we can go beyond that, but does it often make sense to start there to nail offer and language and what the direct mail piece looks like? Is this, you advise people begin before they go to different audiences?

Michael:

Yeah, typically, yes. And it's also to just get a baseline of performance. When you're talking to net new customers, the expectation is it will perform better when you're targeting to a bit warmer of an audience than pure cold prospects. So we think about it historically, a lot of direct mail has been top down, let's go super broad and super big, super cold to start with a big budget and then start to work. Then we get into customers. We actually think more bottom up. So start with the low hanging fruit, start with the bigger wins, totally prove it out at each level of the funnel. And once you've gotten some validation that okay, warmer acquisition is delivering a consistently good return, now we can start to look at cold acquisition and we have some really cool tech and tools too enable brands to do that too.

Brett:

That's great. So we want to talk about that a little bit more. Kind of broadening that cold acquisition there is kind of the who and the what, so to speak. When you're targeting site, what are you sending them? Is it postcard? Is it a trifold or a bifold? Is it something else? What are you, and I know it depends, but what are you sending to those site?

Michael:

Yeah, typically for warmer audiences you can get away with a postcard. So lower cost and what they at least have some familiarity with your brand. So what they really need is a nudge and some reinforcement to take that action that you're trying to get them to take. Whereas the colder you get, the more you typically need more space to be able to tell that brand story, educate people about your assortment, about your value props about your brand. So for those that are watching this online, here's an example, a trifold that I'll hold up so you can sort of see how big it is. This is what we call our card log and the really nice next

Brett:

Cloud. There you go. What an awesome brand. Yeah. So now that, okay, so mailer's super impressive. I'm seeing examples. I've got, was that a celebrity chef? I actually couldn't tell. It was a little bit blurry, but you got a chef there. You price some cooking tips, things like that. Who are they mailing that to generally?

Michael:

Yeah, so that's typically going to some of these colder audiences. So when we talk about acquisition where you want to show larger assortment, you really want to educate people on what makes hex clad so special and unique. You want to pull in the social proof elements, all that stuff that you would want to tell about your brand. You can fit into a format like that. And you can also use this for some of those long-term reactivation campaigns that we talked about earlier where a lot has changed about your business. So think brands with a larger assortment, clothing brands in particular are a great example of that. You've launched an entirely new collection, you've got a whole new seasonal collection that you want to show off. Larger formats give you the ability to show all of that assortment of product. And just like our postcards, our catalogs have the advantage of having no minimum and no turnaround time, like traditional catalogs, we can trigger these just like a postcard.

Brett:

Amazing, amazing. So let's talk then a little bit about the who for going to colder audiences because I think this is the part that's likely going to blow some people's minds. There was a time when we were doing direct mail back in the day that most people were just looking at, okay, I'm choosing zip codes based on income, household income based on where they are. And that's about it. And then you could begin to layer on things like Equifax data and stuff like that, but talk about all the ways you can build audiences for direct mail now.

Michael:

So this is really exciting. We've been working on this for a long time over a year and we've spent millions of dollars investing in building out what we believe is the largest and most powerful data set that you could build for direct mail. And we've built our own AI and through our in-house data science team that we think allows you to leverage that data in ways that provide much better targeting than what's ever really been again available in direct mail. It works historically, it's worked a lot like you described. We're going to find, we're going to either drop it to a zip code or we're going to find a list broker and that list broker is going to give us an audience and we're going to send to that audience and we're going to wait a while and then we're going to try and put some spreadsheets together to match who from that audience ended up buying.

But it's relying on these individual list brokers to sort of give you this audience. And what we've done is we've aggregated a tremendous amount of this data from a wide variety of sources into our own data warehouse. And what we found is that when you can look across multiple data sets this way, it exponentially improves the efficacy and relevancy of that audience. And think about it more like meta where they have so many signals about all these individuals, what they're browsing, what other sites they're visiting, what everything that they know demographically and psychographically about that individual. We've been able to compile all of that. Plus we work with a ton of brands and we have a ton of insights and learnings that we can aggregate and use to train our AI such that again, we get these proprietary signals that we can use to really dial in these models.

And we've seen the performance and we've benchmarked our performance against all the sort of traditional list brokers or people that brands are typically acquiring these direct mail lists from. And we've seen in some cases differences of two, 300% in performance. I won't say it's for every brand and it's going to work for every brand. What I will say is if you're going to use direct mail and test direct mail as a new hold prospecting acquisition channel, the best chance of success you'll have, I have no doubt we'll be using our technology. So beyond what we've seen has been possible and the results that would typically be expected, we think we're going to give you a really good shot. And this is, again, think of it like Meadow. We're building lookalike audiences by using your first party data, looking for other people, looking at thousands of attributes across hundreds of millions of US consumers and finding people that look like your best customer, not just with superficial demographic data.

Yeah, this is a 45-year-old male makes this amount of money and lives in this state. It's like, and they shop at Nordstrom and they drink Bud Light and they drive a Chevy and they have two kids under the age of five, all these different things about them. And that's going to give you again, the best chance of success using direct mail as a cold acquisition channel. We did one case study recently with a baby brand targeting expectant mothers in their third trimester. We have a ton of data, very specific, we can get super dialed and that's what to your point, it's the who more than the how, just like

Brett:

Other acquisition. Yeah, I'd rather speak to an ideal customer like a derometer third trimester with a pretty good offer that's going to do better than a great offer to someone who's not pregnant and we've got a baby product, so you got to talk to the right person. So yeah, I think you're about to break down other insights from that baby mailer.

Michael:

Yeah, that's just a really good example. And that got in some cases like a Forex on cold prospecting, again

Brett:

On cold prospecting.

Michael:

It's crazy not. We want to be on typical really transparent and set expectations accurately. Most brands who are testing out cold prospecting are very comfortable in that one to two xas range,

Brett:

But that mimics, that mimics meta. That's what you see on YouTube. So that one to two xas for cold traffic, that's great.

Michael:

Exactly. And the other thing that we've been able to build that makes it again more like a digitally native channel is because we have, we're connected, we're integrated with Shopify and we're able to track these transactions in real time and put 'em in a dashboard for you. We're also able to feed that data directly back into your acquisition model. Think of it like the learning phase of meta at first. You launch a campaign, you wait while meta starts accumulating data and signals from that campaign and feeding that information back into the model to optimize that model. We actually are doing the same thing. So it's not even like you just launch once. You wait, you see what happens and then you start the process over again. It's we're actually feeding that data right back into the models and optimizing those models over time just like you would see in a medic.

Brett:

Super interesting. Let's use a couple of examples. We talked about the baby example. I'll give you a couple more. You can choose whatever makes the most sense. So say I'm selling men's joggers, that's a product that we could talk about or hex clad cookware, if that's easier. What are you recommending? So we've started with our site abandoner list and that's who we're kind of targeting first. We prove out some concepts. Now what audience are we going to next?

Michael:

Yeah, so these are cold prospects, again, lookalike audiences of your best customers. Some of the attributes that for a brand that we recommend having to give you sort of the best chance of success. One that you have an A OV of, ideally around a hundred dollars or more. And think of it like medi, it's very tough to crack cold prospecting at a 25 AOB on meta. It doesn't matter how it

Brett:

Totally, yeah, just the baseline costs of media and it's actually using direct mail is a perfect way to look at it. There's hard costs there to buy the paper and pay the postman and all that stuff. There's hard costs on meta as well. Yeah, getting cult prospecting below $25 CPA. Yeah, almost unheard of.

Michael:

Yeah. So that's a great data point. Having some product market fit that you've been able to demonstrate some scale with. So the fact that you've been able to scale meta to become an eight figure business and have found that product offer,

Brett:

It means cold audiences convert, right? It means you've got an offer, a product that people who've just heard about you actually want.

Michael:

That's exactly it. And so demonstrating that, don't necessarily recommend brands try their first cold prospecting campaign ever on direct mail. Use meta to get some of that validation,

Brett:

Absolutely

Michael:

That traction. And then use this to diversify your mix and find higher return on those incremental, those marginal dollars that you're investing into acquisition. Then you might once you start capping out in meta. So those are some of the characteristics that we suggest. Great fits are brands that have strong LTVs. So again, you can invest at a one X or a one and a half X and know that you're going to, you can keep feeding that, keep scaling that profitably because you know that there's LTV coming in behind it. Brands that are in apparel, jewelry, what are some other baby products, crush home accessories. Those kinds of brands that have decent LT v, decent LTV and have reached some level of scale are great candidates to be testing.

Brett:

Yeah, it's so good. So let's compare and contrast for a minute. So campaigns that you've seen that have been unsuccessful versus direct mail campaigns that have been successful and ideally exceeded expectations, what's the difference? Is it the mailer, is it the offer, is it other factors? What are you seeing?

Michael:

Yeah, great question. I think one of the biggest things is can we really accurately describe that audience? Can we pinpoint who that customer is and is that a distinct customer? So without sort of throwing anybody under the bus, we've seen some brands who have a very niche product but doesn't apply to, there's no clearly defined customer for that brand. So I can think of there's an auto accessories brand and it's like, who's that? Without going too detailed on what exactly it is, it's just something that you couldn't really describe who that customer is clearly. And that's going to impact our ability to really narrow in that model such that we have a clearly defined target audience. It goes back to what you were saying earlier about the who is so important. If your product sort of applies to everybody, you have no clearly defined ICP, it's going to be very tough to make the numbers pencil out on direct mail.

Whereas we go back to the expectant mother example that is a very clearly defined audience. We went to expectant mothers in their third trimester of pregnancy because we determined that that was the ideal point when they were thinking about buying these clothes for a newborn. You went too early, it wasn't on their mind yet. You went too late, maybe you missed the window. That's something that we can really clearly define and that tends to have a ton of success. So we'll also tell you one, we've seen this a lot, we'll sort of tell you if we think just based on experience, we think it's likely to be a fit or not be a fit, we would rather not send this campaign if we don't have conviction. Believe me, we hammer this with our team all the time. We don't want to send stuff that we don't have some level of confidence is going to work. We don't want pissed off brands, period. And then we'll also run models and see what the models tell us. And does this demonstrate a good distinct audience that we feel is reasonable to go after? Or is it telling us like, look, there's no strong signals in this

Brett:

Audience. That's great. That's so good. Let's use another example. So we've worked with some brands. I can picture some stories or some conversations in my head where asking, I got choked up, Michael, I'm going to get a drink of water. I talk about this stuff. I get so excited. Take two on that. Here we go. Sorry Nick, sorry gang. I'm going to make you work a little bit here for your editing. Editing. So I am thinking of conversations that I've had Michael with customers where we talk about, hey, who's your ideal shopper? And they say things like, well, sometimes they're teachers or sometimes they're professionals and they make 75 to $250,000 and they leave in these areas. And I'm like, that's not an audience. That's that'ss really, really vague, but you can drill in a little bit more. And so one thing we've seen, and I do wonder if you're using this where, hey, I'm selling high-end clothes and I know that my buyers also buy from the normal brand or Lululemon or some of these other brands, they're shoppers of those brands.

We've gotten a couple of mail pieces from vori, which is kind of like the California Lululemon or whatever. I don't know if you guys did it or not. The great pieces, very tempted to buy did not, but very tempted. I wonder if that's kind of what they're doing. So I don't know that a visited re's website or anything, but maybe it's because we buy from other clothing brands that we're getting sent this. We found that type of audience targeting to work well on YouTube as an example where it's like our buyer's kind of mushy, it could be all these various things, but one way we kind of zeroed in on is the people that buy from us also buy from these other D two C brands or these other challenger brands or whatever. Can you guys access that data at all? Are you using that as you're building lists?

Michael:

Yeah, great question. And this is something that comes up and it's something I want to be really particular about, and that is that we never share customer data with any other customer. You would never be able to say, I want to target my competitors' brands or I want my competitor's customers, or I want to, again, I'm North Face, I want to go after Patagonia's customers give me that audience. We never ever would or will

Do that. There are some data sources not leveraging that sort of first party data that we have aggregated that says this person shops at Target a lot. This person shops at Nordstrom a lot. This person shops for cosmetics, luxury cosmetics at Nordstrom or at Target. This is somebody that buys this brand from Walmart. And those are signals that are part of the thousands of attributes that we have on US consumers. So we absolutely use those signals to identify who the high propensity buyers are in specific categories of products, luxury, women's apparel, makeup, jewelry, whatever that might be. But what we do not do, if you ask us to do it, we'll tell you the same thing. You cannot target another brand's customers. We don't share that information. And in no way does that information get disseminated across brands and across audience.

Brett:

Yeah, and I mean that's good business. That's smart. You got to do it legally and ethically and all those things, which I think totally makes sense. But what you describe the aggregated data, the not first party data, that's what you need and that's what we do and we're targeting on YouTube. It's like we're saying, Hey, we want to target people that buy from Warby Parker that buy from Bonobos or that buy from normal brand or Fary or something like that. And Google, Google's not giving you the actual customers, but they're using some anonymized data to find, hey, these are people that are like those that browse those sites, shop those sites, and you've got access to some of that same data, which is super powerful. And that I think is just another way to narrow down that cold audience that's more likely to purchase from you.

Michael:

Yeah, absolutely. And our AI is trained on a lot of this aggregated data and we do have a lot of signals from a lot of

Brett:

Brands

Michael:

That allow us to improve the AI training, but that's different than being able to say, again, these are a ton of proprietary signals. We a ton of brands, but it's again, not the ability to target another brand's customers. And to your point, yeah, I mean that's what Meta does today. Even more so, right? We all have the meta pixel installed on our site. It is telling brand A that you just visited brand B website. Yeah, you're producting in market for that product right now, totally serving you the ad. So it's something that I think as marketers we might not think a lot about today, but that's what's happening across all of your, it's happening marketing channels right now. You're visiting this site you just bought from that site you just bought three times from this brand that makes you a great prospect and that's the ad that you're for brand C or D, and so that's why you're getting served that ad. So I think we've become also accustomed to that, but without thinking a lot about it, we're applying a lot of the same types of learnings with our models.

Brett:

Yep. Totally makes sense. Well, Michael, we're about out of time. Anything else you're really excited about, else you guys are testing that you want to let folks know about before we talk about how they can get in touch with you?

Michael:

Sure. And it's related to acquisition. We've actually rolled out a modernized version of the catalog and I'll hold one of those up.

Brett:

This is exciting to me again, because they're so novel. Yeah, that's so awesome. So man, if I get a catalog in the mail, I almost never get them. I'm pretty likely to browse through it. And if you compare that to time on site or something, it's pretty significant, right? I get a catalog, I'm probably going to open it up and look. So can you show that one more time for the folks watching the video? What brand is that that we're looking at?

Michael:

This is one that we designed that's actually a combination of a few brands around a specific theme. So you can see

Brett:

Nice,

Michael:

It's really cool how it's been

Brett:

Me, so kind of sharing the cost across outdoor retailers basically.

Michael:

But what we love here is that you can do so much with 16 pages or more

Brett:

Where

Michael:

You can weave in content that makes this an engaging piece that you actually want to read and hold onto and great merchandising. So being able to put that story together, tell again your brand story, weave in content about we have brand that did makeup tips and showing all the different shades and things like that. You have so much space to be able to do that, that it's great. I think the problem with catalogs historically has been it's six months of lead time. When you talk about securing paper, finding a printer, that printer typically has a three or four month waiting period just to slot in because of the way this production process works. Again, you have to source audiences, you have to run hundreds of thousands at a time. That's just how the industry is always. And so we've introduced a way to do it much more efficiently.

Minimums are much smaller, starting at more like 50 K versus hundreds of thousands. Lead time is more like four weeks versus three to four months. We can build these audiences using our same technology. And so for brands that are looking to potentially move up to more of a catalog format, we've made it really much more accessible, much easier. We designed the whole thing again in days like other things versus you having to dedicate your creative team for months to put one of these together. And the interesting thing is they actually don't cost much more than a postcard.

Brett:

Wow.

Michael:

The reason is, even though it's a lot bigger, the reason is just the process for running these types of products at larger scale,

Brett:

Scale

Michael:

And at one time is just a lower cost way of producing them. So it actually allows you to send something like this in the 60, 60 and change cent range. It's crazy. Which is crazy. And we've optimized the format, we've optimized all these things to get the cost down as much as possible, but it allows you to do it. There's just a little bit more of a commitment and timeline than there is with just sending a postcard where you could send one and you could send it

Brett:

Super interesting. Again, I think there's a progression here, right? Use postcard mailers for retention, for loyalty, for win back, then use it for site. So those are browsers type do not purchase, then start testing some of these cold audiences maybe with a trifold or something. And then you go catalogs. But Michael, I don't know if it's at your house, but I know for me, I'm on my computer, my phone eight, ten, twelve hours a day, right? Working sometimes when I'm home, I don't want to look at anything digital. And if I get something cool in the mail, it's kind of fun to look through it, right? Or I can even think of times, I've still got two young kids, I've got eight total, but we get Amazon toy catalogs around the holidays or whatever, and my 7-year-old Benjamin, he'll open that thing up, he'll circle things, he'll be like, Hey dad, I'm, I made a wishlist, which usually ends up being a hundred items or something, but it's just fun. You engage with these printed pieces in ways that we don't engage with stuff online. And so I think it's a really interesting add to your marketing mix.

Michael:

Yeah, you're exactly right. And there's studies about this, but you can just sense it, sense it. Having that physical piece from a brand one is much more memorable than a digital ad or an email that's sort of forgotten almost instantaneously. And it also makes your brand feel a lot bigger and more trustworthy,

Brett:

Legitimate legitimize

Michael:

It. We hear that all the time. And there's against studies on this stuff that I won't quote, but basically think about it for yourself. You get a piece of printed mail, you get a catalog from a brand, and it just adds, as you said, a level of legitimacy and trust and it's this capturing of attention, and that's what we're all competing for right now.

Brett:

So, cool man. So cool. Well, Michael, this has been fantastic. I love this topic. I love creative marketing tactics and strategies that other brands are not using, and my guess is that your competitors are not using direct mail, so you should absolutely consider it for those who want to know more, those who want to talk to you, those who want to explore post pilot a little bit, what's the best way for them to take next steps?

Michael:

Yeah, just hit me up directly, Michael, at post piot.com, copilot.com website, find me on LinkedIn, find me on Twitter, happy to answer questions, let you know what we think might make sense for your brand.

Brett:

Love it. These guys are smart. I've known him for years. I trust him. That's why I invested with 'em. And yeah, hit up, if you got a question, you're wondering if this could work for you, email Michael, and he will shoot straight with you. And Michael, if I'm not mistaken, you've kind of upped your LinkedIn game a little bit, right? Are you posting more on LinkedIn? I know Drew Sinski is committed, he's consistent, but you guys both have good LinkedIn games going right now.

Michael:

I'm just trying to keep up with Sinski. I

Brett:

Dunno that I, that's difficult, man. That's difficult to do.

Michael:

Hey, we all are right? We

Brett:

All are. It's Drew's world. We're just living in it, trying to keep up,

Michael:

Trying to be out there for sure.

Brett:

Yeah, that's awesome. So check out Michael Epstein on LinkedIn, on Twitter out Drew Sunki, check out your boy Brett Curry. I'm posting consistently now, Michael on LinkedIn at least 3, 4, 5 times a week, something like that. So hit me up as well with that. Michael, thank you so much, man. It's been a ton of fun.

Michael:

Always, Brett.

Brett:

And as always, thank you for tuning in. We'd love to hear from you. What would you like to hear more of on the show? If you've not left that review on iTunes, please do so. It makes my day, helps other people discover the show and you'll feel good about yourself. You did a good deed for the podcast space. And so with that, until next time, thank you for listening.

‍

In this episode, I sit down with Molly Pittman, CEO of Smart Marketer, to dissect the latest trends in eCommerce marketing. Drawing from her groundbreaking $600 million study in Facebook ad spend, Molly shares invaluable insights on crafting compelling offers, creating high-performing ad creatives, and optimizing landing pages for maximum conversions. This episode is packed with actionable strategies to help eCommerce brands scale in today's competitive landscape.

‍

Key topics discussed:

‍

• The importance of diversifying your offer system to reach different segments of your market and scale beyond traditional eCommerce tactics.
• Surprising findings on the effectiveness of image ads vs. video ads, and how to balance "native" vs. polished ad creatives.
• The critical role of benefit-focused hooks in ad performance, with 88% of top-performing ads featuring clear hooks.
• Strategies for streamlining landing pages and focusing on the most impactful messages to drive conversions.
• How to build a data-driven creative production system that starts with customer insights rather than templates.

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Chapters:

(00:00) Introduction 

(04:35) Mistakes in Crafting Compelling Offers

(12:44) The Importance of Offer Systems

(18:02) Findings from the Facebook Ad Creative Study

(23:43) The Effectiveness of Native Ads

(29:58) The Importance of a Strong Hook

(37:28) The Impact of Landing Page Quality

(40:20) Conclusion

---

Show Notes:

• Molly Pittman (LinkedIn) 
• Smart Marketer
• Smart Marketer Agency
• Alex Hormozi (LinkedIn) 
• 100 Million Dollar Offers
• Dean Brennan (LinkedIn) 
• Heart & Soil 
• Post Pilot
• Michael Epstein (LinkedIn)
• Nutri Paw
• HydroJug
• Jacques Spitzer (LinkedIn) 
• Raindrop

---

Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

---

‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more

---

Transcript:

Molly :

As we scale, the offer system does need to get more complex. If you're spending more, you need more offer styles to use and also ways to fill the customer journey.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we're talking with the one, the only, the world famous Molly Pitman. And I always, if I ever want to know what's working now, finger on the pulse, what's working on meta, what's working in terms of offers, what's working in terms of creatives? I go to my friend Molly Pittman. We go way, way back to the T&C days. Now we collaborate a lot as she's the CEO of smart marketer and managing partner of Smart Market Agency. And so with that, Molly Pittman, welcome to the show. And how's it going?

Molly :

Brett Curry, one of my favorite people to talk to. I feel like you and I have found ourselves in frequent conversations recently of like, Hey, is this happening for you? For me? That validation and support is so

Brett:

Totally

Molly :

For entrepreneurs. So thanks for being a good friend.

Brett:

Yeah, sometimes we're sharing ideas, sometimes we're just kind of like, what the hell? And are you experiencing this? I'm experiencing this. And so the agency life is a wild one, and so we get to share that. And yeah, it's a great, I

Molly :

Call it business therapy. Business therapy,

Brett:

Yes. Glad we can be therapy buddies on this agency journey. Hey, you

Molly :

Need

Brett:

It? Yeah, without a doubt. Without a doubt. So walk people through those that don't know, and I think most people probably do, but what do you guys do at Smart Marketer? What do you do, the Smart Marketer agency and give us the latest and greatest.

Molly :

Yeah, good question. So we really have two sides to the Smart Marketer business. One is the media side that's been around 12 plus years now, and that is purely there for education. So courses, which Brett Curry is a faculty member and part of Brett teaches a few of our courses, mentorships masterminds, any way that we can support business owners and marketers in their effort of growth and staying up to date on their skillset, that is really the media side of Smart Marketer. And then of course we have the agency side, which is the done for you. So that's where we offer services like email and monetization, creative paid advertising, really in efforts to also help grow businesses, but usually at a different size.

Brett:

Yeah, I love both sides of your business. On the agency side, obviously we share a lot of clients. You guys growing on the meta side and OMG helping on the Google and YouTube side, and it's a great partnership there. Really good teamwork. Love that. I wish more of our clients use Smart Marketer Agency. And then on the training side of the media side, listen, that's how we train new people that come to OMG. We send them through the courses that we created as part of Smart Marketer, but also your other courses are fantastic. So you've got an in-house team or you've got an agency utilize those resources to get someone up to speed. And it's all performance driven, proven stuff. It's just great training, great training,

Molly :

Thank you. Yeah, it's really one business and it's just living by what we do, which is do it, know what works, and then teach it. So both sides of the business really feed one another in a great way.

Brett:

Cool. Alright, well I want to dive into a few things. So I want to talk about offers and kind of what you're seeing in terms of offers, because I think that's often an overlooked part of marketing, oddly enough, is not trying to dial in the right offer. I want to also dive into creative because I know you guys just did a huge study on 600 million in Facebook ad spend on what creatives are working and why and things like that. So we're going to break that down. And then if we have time, I also want to get into your perspective on landing pages and how do we optimize that experience once someone gets on our site. And so let's start with offers though. What are you seeing working now, or maybe let's back up a step. What are the mistakes you see e-commerce brands making when it comes to crafting compelling offers?

Molly :

Good question. Well, the first mistake I see almost everyone making, whether you identify as e-commerce, more of an info media consulting, coaching business, sas, local, doesn't matter. The big shift that we are seeing, the businesses that we are really watching succeed in this moment, going into 20 25, 1 of the most interesting parts, Brett Curry, is that none of them really identify any longer as a certain business type. And this really relates to the offers. We're going somewhere here. So take Smart Marketer for example. Are we an agency? Are we a media publishing company or really both, right? We serve a group of people in multiple ways, which allows us to acquire customers that break even and allows us to monetize and grow, which is the goal of any business. Or you take a client that comes to us, they're selling supplements, they're like, I'm an e-commerce business.

And we are able to help them think bigger picture and put things like more information or media style offers on the front end of their business. That is the secret sauce nowadays, guys, and I'm not just saying e-comm and info, I mean this can be local and services. This can be info and services, this can be e-comm and info. Any way you mix it. The businesses that are really growing are not just staying in the lane of who they think they are. What are other physical product companies doing, for example? So with the offers, what are people doing wrong? They're just not thinking out of the box. They're staying in their lane and so they're not able to grow because there are a few issues with that. Number one, let's say you're selling supplements, okay? There's only so far you can go. There's only so much market of people that, okay, my dog has allergies, I want your supplement, or my joints are in pain, I want your supplement.

There's only so much scalability there, and there are only so many offer styles that fit the e-commerce lane. You're really going to reach about 60% of what you can do. Now, if you think out of the box, if you really start to think, what else could I be doing? Could I have a free plus shipping book? Could I do webinars, free classes? Okay. Now you have not only a self-liquidating offer where any money you make on supplements or your physical products is just free money, as we like to say. You also have so much more scalability in the market because you're able to reach the people that might not immediately have that pain in the moment, and you're able to indoctrinate them, build a relationship with them, and your lifetime value is higher. So it really solves almost all of the problems that we're seeing in business right now.

Rising traffic costs, which are affecting customer acquisition market saturation. A lot of our clients have just simply reached market saturation and things like needing to increase lifetime value so we can have more cashflow in the business. So really quick, Brett, just a quick example of this. A client came on about four months ago selling supplements, doing about half a million dollars a month. Great ebitda, happy, ready to scale, but the first thing that we did was help him throw a more information style offer onto the front end of the business that's breaking even and now acquiring hundreds of customers every single day. Just got the report back. Hey guys, I'm blown away. I'm doing about 800 KA month now in just four months, and my margins are higher now. It's crazy. Now, is the media buying better? Yes. But it was a function of looking at the strategy and the offers in a different way.

Brett:

Yeah, it's so good. And this is why I love Alex Oroz in his book, a hundred million dollar offers. If you craft the offer, well, everything else becomes easier. Let's start with media. If you've got an offer that's highly converting, lots and lots of people are taking you up on this offer, the Facebook algorithm, YouTube algorithm, Google algorithm is going to be able to find more people like those that are converting. So it fuels your media. I think it makes the creative easier when I've got this crystal clear offer. The ad almost writes itself, but when you don't have a clear offer, you're just like, well, we're a supplement and we do these 15 things. And it's like, I don't know, you just wrote an ad that doesn't really speak to anything. And so I just did an interview with Dean Brennan from Heart and Soil.

I dunno if you've heard of heart and soil supplements, all animal-based products. So it's the opposite of vegan products, but it's all grass fed beef supplements. And so they grew from zero to 50 million in three years primarily because the co-founder, doctor wrote a book, had a book funnel and just built this massive audience. And then they launched the company and it was shot out of a rocket. And so obviously a lot of people that are listening to this podcast already have a business, and maybe you haven't written a book yet or whatever, but having an info offer, I think it's something that a lot of people are overlooking, and it's something that can give you a competitive moat because your competitors probably aren't. And if you build that community, man, you've got a more profitable business, a more scalable business, a more sellable business. So really, really great

Molly :

And really quick Brett's also understanding that the offers that took you to a million probably aren't going to take you to 5 million, probably aren't going to take you to 2050. Things do get more complex and people just really need to understand that, right? This isn't just about spending more money and being better media buyers. That's just icing on the

Brett:

Cake.

Molly :

There is. I mean, unless you have a truly novel product that people have not heard of that just knocks your socks off, this is the game to be playing

Brett:

Going into

Molly :

2025.

Brett:

It's so true. And we're both media buyers. Weve both done media buying in the past. We run companies now. So we're not doing a lot of the button pushing at the moment, but it's what we do. And when we have teams that live and eat and breathe media. But here's the thing, there's not a ton of secret sauce left in media buying. It's mostly following the fundamentals and being extremely disciplined and focused and being a real, real pro at media buying. And then really the way the game is won or lost is with offers and creatives and kind of the whole execution of the puzzle. But yeah, you're not going to just scale by, Hey, I've got a different account taxonomy or structure of campaigns that matters, but that's not ultimately going to be what takes you to a nine figure business.

Molly :

Exactly. And we hire media buyers that think in this way too. And for me, constantly being up to date on what's working on these platforms, that's a no brainer. Dennis, our director of advertising, he's amazing. That's what he smart all day every day, analyzing what's working, what's not working, constantly updating our SOPs. That is a no brainer, but that is not going to save your business. That is probably not going to be the big lever. The big lever is the shift in thinking, especially around the offers like we just discussed.

Brett:

Yeah, love it. So I've heard you talk about you create offer systems for people or teach 'em how to create offer systems. I know that's part of a larger training, not something we can easily summarize necessarily in a couple minutes, but talk us through is an offer system and how might that help our listeners?

Molly :

So your offer system is really understanding. So when I say offer, I mean anything that you're asking people to do, whether it's in an email, it's in an ad, wherever you're talking to them, in person in your store, what is your offer? Are you sending directly to product page? Is there a webinar? Are you asking them to get on the phone? I mean, Brett, think about it, the type of offer styles that could be out there. I mean, there's millions of variables, there's no way to document them and creativity is key. But what I have found is that as we scale, the offer system does need to get more complex. If you're spending more, you need more offer styles to use and also ways to fill the customer journey. So someone that's just starting out, let's say you're even spending a thousand, $5,000 a day on paid traffic, that's awesome.

If you're an e-commerce brand, you're probably sending most of that traffic to a product page, bam, bam, awesome, good for you. But you want to get to $50,000 a day in spend, that's not going to be the way difficult. You're probably going to have five to 10 top of funnel cold traffic offers that all are built differently. And a mistake that I see, Brett, number one again, is people thinking, okay, I just need five to 10 E-commerce style offers. No, that's not it, right? We're mixing in other styles, but we are also measuring them differently. So the free plus shipping book funnel that you just mentioned, we have seen stuff like that work really well for clients. But some clients will try it and they'll say, oh, the ROAS is higher when we go direct to product page, this doesn't work. And I kind of look at them like this. I have not done my job in education land if I hear that, because that is not the goal of that offer. The goal of that offer is to go and acquire the part of the market in which you have not been able to reach with the traditional marketing that you have been doing. So it's the understanding that as you scale, you need more offers and you need divers of offers and you have to be measuring these offers in different ways because they're all built for different reasons.

Brett:

Yeah, it's so good. I think a great comparison or good analogy here is I've always loved Google shopping. It was actually the first thing in e-commerce that I spoke on stage about was how to optimize your Google Shopping ads. What's beautiful about Google Shopping is people click on those image based product listing ads and they're likely to buy, I want these Air Jordan shoes. It's the right price, it's the right style, it's the right color. I click on it, I'm likely to buy. But here's the problem with Google shopping. It has a ceiling. You can only scale it so far it's limited by the number of people that are searching for your type of product. And so it's great to start there. I think that should be a foundation for any e-commerce brand. But if you want to be an eight nine figure brand or beyond, you've got to go beyond Google shopping.

So that's where you layer in meta and that's where you layer in YouTube. But again, to your point, the number of people who will see an ad click on that ad and then buy your stuff, whether that's a widget or a supplement or a pair of shoes, it's limited. It's a small number, but there is maybe a greater portion or a different portion of your audience that will click on your ad and read some content or watch a video or sign up for a webinar or get a free book plus shipping, especially if you're solving a really complex problem for them, they're likely motivated to buy a book, especially if it's three plus shipping or whatever. And so to unlock scale to really create this robust growth engine for your brand, you've got to have more offers. I completely agree.

Molly :

And Brett, it's also a different conversation that you're starting. That's why it allows you for more scale. So it's the difference back to my dog example of does your dog have allergies? This will help versus, Hey, do you want to be a better dog owner? Do you want your dog to live longer? Okay, those are two very different conversation. Which conversation do you think has the most volume? That's really the point that we're trying to prove. So yeah, this mindset shift, if people are not making it, they will be left behind. This is the missing piece right now.

Brett:

So we need more offers and we need a diversity of offers. And then hey, once you find a handful of things that work, you can scale those to the moon, but it's got to be more than just a, here's our product, here's the coupon code. You're going to need to think beyond that.

Molly :

Got it. That'll only get you so far. Again, unless your product is so crazy novel, but 98% of the people that come to us, this is a product you've probably seen on the market before, and we want those people to be able to win too.

Brett:

Absolutely. So let's talk creative now. So offer, I think that's the foundation. If you have clear offers, then really the creative becomes easier. But there's still tons of ways to go back. Creative. Do I use UGC? Do I do more of a hero style video? Am I going high production value or low production value or somewhere in between? And so you guys recently did a study, I believe, of 600 million in Facebook ad spend to see what works, what doesn't, and you kind of broke it down. And so if you could kind of explain how you did this test, and then let's dig into the findings.

Molly :

So this is going to be the short story. I could go down a big rabbit hole here, but the way in which we analyze this is essentially pumping all of this data into one creative report where we essentially had a proprietary formula that allows us to rank creatives as low, mid, or high performing. Because again, not everything is created. How am I supposed to measure? Someone would say, okay, well why don't you just rank them based off of roas? That's not fair. What if it's a book funnel

Brett:

Remarketing ad top of funnel ad,

Molly :

Right? Or what if it's a book funnel where the ROAS goal is 0.5? Because that is the goal of that particular offer.

You can't rank them based off of roas. So not to go into too much detail and completely nerd out, but essentially a proprietary formula that factors in number one ad spend, because we know all accounts that are being pumped into this report are direct response. So we're only spending essentially if it's working and if you are spending more on an ad or a creative, it is doing its job that's factored in. ROAS is factored in also. But we're also factoring in other metrics like click to purchase and metrics like unique link click through rate, especially for offers that are going to things like lead magnets where there isn't even a purchase being made. So we had to figure out a way, how do we create a quality between all of these? So we rank them and then we analyze the top 100 ads, and this is over 40 industries, Brett Curry, all different business types. And the three coolest findings that I think are most applicable here really gave me data to prove what I think you and I have known for a while. And the first thing, especially when looking at meta ads was that 48% of the top ads were actually still images. 52% were video.

Brett:

So cool. So crazy. So

Molly :

That shows you and you guys, this pertains to email marketing, Google, YouTube. Yes, we did this analysis on Facebook, but guys, this is also an analysis of consumer behavior in 2024.

Brett:

And

Molly :

I believe, I know consumers are now seeing 10,000 ads a day. They used to see 5,000 ads a day. Still images are amazing because if you can portray a marketing message in one click, quick glance, if you can do that, bam, someone is hooked in. So that was the first cool step

Brett:

Down. One interesting thing to just piggyback on that for a second is it would be a very accurate statement for someone to say, the majority of the time video ads win. And I think when people say that, we may hear, I just got to do video ads in because they win most of the time, and that's true, but it's like 52% of the time. So 48% of the time, almost 4.8 out of 10 of the top performing ads are images. And you can test faster, you can create more of them. It's less taxing on your team, gives some diversity to your ad set up. And so yeah, I think a lot of people have overlooked images. We want to go all video, and I love video. I'm a TV guy and an infomercial guy from long ago. I love video, but don't sleep on image.

Molly :

No. And it's especially an inventory thing on these platforms. So I hate the question, which works better. Video or image that immediately shows me where that person is not sophisticated, which is okay, but it's like, do both. Do both. And this stat proved it. I was like, yes, invest

Brett:

In images, man. Take good product photography, use AI to help you create some new image ads. But yeah, don't forget image ads. There's scale to be unlocked there for sure. Okay, awesome. Awesome.

Molly :

Finding again, Brett, the big picture takeaway there is more than meta, right? It shows you that when video became popular, things are actually circling back around now because of our attention span and the amount of ads that we see every single day. So this pertains very big picture.

Brett:

Yeah, it's always one of those things where, yeah, when something is novel, then it really stands out When it no longer is novel, then it doesn't just for the sake of being novel. So yeah, video ads used to be rare whenever we'd see them, whoa, I've got to watch this. Even if it sucks. Now videos are everywhere. So now a really great arresting image can be fantastic, and it kind of sticks out. It's kind of like in the old days, you go to your mailbox and it was just full of junk mail. Now you go to your mailbox and there's not a whole lot there. So a little something can stick out. It's a quick plug for my boys at post pilot talking to Michael later today. So that's why I thought of direct mail. But people have kind of abandoned images and so now they're novel again.

Molly :

And then the second thing that was really cool, we wanted to analyze native versus non-native, which again is relatable.

Brett:

Can you define that? What do you mean by native versus non-native?

Molly :

Very big picture. So the way we defined it is native ads look like they belong in whatever platform in which they are. So

Brett:

An organic post is what it looks like,

Molly :

Right? They're not overly designed. They don't overly feature the product, so they look like a post or a video or a tweet or whatever from a friend or family member. They look less like a non-native ad, which looks like an ad.

Brett:

An ad, yep.

Molly :

UGC has been the talk of the town the last six plus years. I mean even more than that, I'm talking about even very basic imagery that is just real, not using stock images, using real imagery. It makes a big, big difference. So of the top ads, 62% of them were native and 38% of them were non-native. So this also shows you that there is still space 40% of ads that can look like ads. And there's nothing wrong with that. You just want to balance because different consumers are going to respond to different style ads. One of the best ads for Boom Ezra's makeup brand right now, it looks like an ad. It's got the product all over it. It says this rosy makeup sold out in just 16 hours. Now it's back for you. That is okay, but we also want to balance this with the native style ads. So really a 60 40 split there.

Brett:

Super interesting. Did you see any correlation between types of products or industries where maybe native favor particular industries a little more than others, or polished ads favored some industries versus others? Or was it that wasn't a clear takeaway?

Molly :

So I wanted that to be a takeaway, but it wasn't. This was across the board. This is even piping in local business ads breadth that have multiple locations. This is really every business type. There was not a correlation. Isn't that wild? Because

Brett:

Super interesting.

Molly :

And the reason is it doesn't matter, right? This is about the consumer and what they want to interact with. I don't care what the business type is. So across the board, about a 60 40 split.

Brett:

Great. And what are you seeing any insights on what's working for those native style ads? Any examples come to mind of brands that do that really well?

Molly :

Yeah, definitely one of our clients, Nutri Paul, the dog supplement

Brett:

Company, shared client, yep.

Molly :

Shared this. We shared this client. You guys go to Facebook ad library right now and type in Nutri Paul. You will see so many examples of these. And the best part of this, Fred Curry, most of the native ads that are working the media buyer made them in Canva in four minutes.

Brett:

Isn't that awesome?

Molly :

So one that you'll immediately see is an upclose picture of a dog's dirty teeth and then an Upclose picture taken on an iPhone of a dog with clean teeth or a literal picture of a dog who's scared and hiding, and then an after of them being energetic. So it's just looking real. That's it. All the way down to smart marketer. We're running ads for a creative class right now. And of course our best converting ad creative Brett, it is actually a photo with no text overlay even. It is a photo that I took with myself and Ben Bennett, our director of creative at the restaurant that we own here in town. And it works because people stop. They're like, what is this? This looks real. And then of course, all the way up to UGC and the more complicated native styles that are out there, but basic is working better, which is so cool to see.

Brett:

And I think the real takeaway here, Molly, is that you need to do both. And we said that about the last point, but you need to do real native feeling native looking ads, but do other stuff as well. This is not about which usually works, so let's only do that. Let's do both, right? Let's get into a consistent rhythm of creating and testing content. That's where you really unlock new levels of scale. But I love that. Yeah, it's just an image of you and a guy at a restaurant. And that was an ad for a creative class, which is super interesting.

Molly :

Yeah, it's wild. And Brett, what is really cool about this is that success is really becoming more about the quality of your asset production. Of course, offer copy, creative, everything that makes up these campaigns. And the, again, is not to do what works best. Always the goal is to build assets that suffice and attract as much of the market as possible. So that is why diversification is so important. And then the third thing, oh, sorry, go

Brett:

Ahead. Well, and we've found, looking at a YouTube account as an example, usually the YouTube accounts that really scale, that unlock unusual amounts of scale. And on YouTube it's more difficult. There are more people that scale on Facebook than on YouTube. It's accounts that have diversity. They have polished hero videos that almost feel like TV production. They have UGC content, they have mashups of UGC, they have high production content thrown in with some iPhone shot, UGC mixed into those. You need creative diversity. That's where you scale. And I know from talking to people like you, that's the same on meta.

Molly :

Yeah. And then one more quick stat, and this one isn't surprising, but it's very validating. So I analyzed the percentage of ads that had a hook and didn't have a hook. And what I mean by this is feature versus benefits, which we all know in marketing, and this is still something especially big brands struggle with. You and I have worked with them. The ad is all about the feature of the product. So we went in and analyzed, and if there was a benefit displayed in the creative at all, we said it had a hook. If it wasn't, it didn't have a hook. 88% of the ads had a hook, 12% didn't. The 12% were all retargeting ads where people had already engaged with the brand. So I don't think we have to beat this over the head, but if you are not speaking to a transformation, if you are not speaking to the true benefit of whatever the offer is probably not going to work.

Brett:

Yeah, it's so good. Yeah. So essentially a hundred percent of the time you need a good hook, or the only time you don't is if someone is mostly sold and you're just, you're tipping the scales enough in their favorite for them to say yes. I heard a great analogy recently that I want to repeat here that I think maybe unlocks a little bit different view of this. Let's say we're selling Hawaii vacations. What you should do is talk about Hawaii and how amazing it's, and what it's going to be like when you're there, when you're on the beach or when you're in a jungle or driving a jeep on some trails or whatever. What a lot of people want to do is talk about, here's what check-in is going to be like at the airport, and here's what it's going to be like to be on the plane. And the seats are really comfortable on your way there. Nobody wants to talk about that or think about that as you hear that, you're like, Ugh, I don't like that part of travel. I don't want to go through TSA and all this stuff. But that's what we do when we're talking about features versus benefits. Talk about the benefits. If you need to throw in some features along the way, which you probably do a little bit, great, but you got to lean into benefits.

Molly :

And the biggest reason for that, Brett, is it makes it sound like an ad. This amazing hydro jug here that you pointed out. Four

Brett:

Ounces. Yeah, just hold that up. Now. I would like for be able to guess how many ounces that is. I thought that was like five, six gallons. I wasn't exactly sure, but how much water does that actually hold, Molly?

Molly :

64 ounces.

Brett:

64 ounces. So half a gallon. That's a lot of water.

Molly :

I love this water bottle. But most people would sell this as the texture and the color and how much water it holds and how it keeps the water cool. And all of the features of the product. If Molly's selling this, it's about hydration and how that's going to help you be a better entrepreneur. How you can have a half gallon of water if you're somewhere where you don't have a good water supply. Simple example. But if you don't get that, it's just not going to work or the scale is not going to be there.

Brett:

Most people are chronically dehydrated. That's why I'm actually drinking electrolytes. I'm almost done here. Why I drink electrolytes? Because my brain functions better. I work faster, work smarter, feel better, all that when I consume electrolytes and just enough water in general. So yeah, really, really good. Any other takeaway? Get choked up here talking good marketing. Lemme do that again. Any other takeaways from the study?

Molly :

Yes. I don't have a piece of data for this necessarily. I'm going to get one, but I was actually shocked by the number of ads per brand that were actually doing the heavy lifting. So the amount of ads that are tested versus the ones that actually do the heavy lifting, it's actually a pretty small percentage.

Brett:

And so there's a really great takeaway. You're going to find some outliers or some ads that do disproportionately well compared to others, but usually you've got to have the volume to find those, right? You can't just go with four ads and they're magically that the four best performing ads you've got to usually launch and test a lot of them to find those. So there's quality in the quantity.

Molly :

And it made me realize, Brett Apple, they talk about how they build product and they build product with the customer first. Where most companies build a product then figure out why the customer wants it. They start with the customer and the product comes last. And the system we use to build creatives and all these creatives I was analyzing, especially the top ones, it was reverse. Most people are building creative backwards. They have an offer or product they want to sell. They go look up templates, they start with how they want the creative to look, bam done. They're missing. They're doing it backwards. They're missing a huge piece there of the research, of the hook selection of the thorough creation of the brief that then becomes cool. You want to go use a template, great, but I need you to do the marketing work before you get there. It's not just about using a proven template that worked for another brand. So most people have that flipped and the creatives that were the top ads, they had been produced in the reverse order where what it looks like was actually the first step instead of the first step

Brett:

Customer centric. And the way my buddy Jacque Spitzer from Raindrop Mutual friend of ours, he talks about, a lot of times we start building ads by saying, what do I want to say? Rather than saying, what do my prospects want to hear? What do they want to learn? What do they want to solve? What do they want to experience? What do they want? And then we'll figure out how to tell our story in a way that really lines up with them.

Molly :

And really quickly, Brett, the way that we do it is number one, create a data based plan. So the analysis that I did needs to be done on an individual account level because this varies a bit. Or you could use the high level stats that we have, but come up with a plan based off of data for how many creatives you need and what type. Then go into, okay, we have a whole hook library, so we're choosing a different hook for each ad, and then we're writing a brief before and after because we know the avatar, we know the offer pertaining to that hook, and then every one of those ads has a unique hook. Now we go into how should it look, our whole style library and then the production and of course the feedback. So most people just need a more fleshed out system than what they currently have.

Brett:

Really great, I love the feedback loop portion. I think that's a piece that if you're missing it, then you're really under-leveraged and you're missing opportunities. So not only creating and testing lots of videos, but you've got to have that feedback loop from your media buyers to your creative team to the strategists that are involved, whether that's you, whether that's a team or whether that's an agency. Got to have those creative feedback loops

Molly :

For sure. Yeah, it saves time too, because a lot of people are just creating from scratch over and over and over, when really they should be using data from their past creatives to build iterations. Bam. Now you're not working as much from scratch.

Brett:

Totally, totally love it. Well, we don't have a ton of time left, but I do want to talk briefly about landing pages. I know this is an area you guys test a lot. You guys help with this at the Smart Marketer agency. But any takeaways, any learnings recently on landing page and landing page quality? Because really that is a huge part of this, right? The ad is designed to get attention and get a click or get some kind of action, but the landing page is what seals the deal. What have you learned lately?

Molly :

So this is not the case in every scenario, but the majority of offers, and this kind of relates to the creative actually the majority of offers, and therefore landing page tests that we're seeing shorter, more concise pages that get right to the point they're winning. And I think it's for the same reason as what we discussed with still images. I just don't think a lot of consumers have the time or bandwidth to do a lot of consumption. So again, it depends. It's something you should test. But we are shortening pages kind of going more old school, which is funny. Now on the other hand, there are cases where longer pages are working totally, we've got to test it, but shorter pages, less video for the same reason we're removing a lot of video from landing pages. It seems like people get distracted. And then just the stuff that you know should be doing the same thought process that we just went through with the creatives, that needs to be on the page, that needs to be iterated on the page, especially when you're just straight up selling a product.

Brett:

It really is fairly straightforward where whatever promise you made in the video or in the still image ad on meta or elsewhere, are you confirming that on the landing page? Is it clear that there's some congruency between your ad and the landing page? Are you reiterating those promises and those claims and those benefits? Is it visually are we seeing the product and being able to shop that product and experience it almost like if we were holding it in our hands? But yeah, then also looking at, and I love the fact that you pointed that out. We found that video works well in some cases as we're optimizing an Amazon product detail page as an example. A lot of times videos do great there because people are really comparison shopping in other contexts, you don't need it. It just slows things down. People just need to see the images and read a few things and that's all they need.

So got to test that as well. But yeah, it really is a continuation of that ad. And I do like getting to the point sooner, communicating more clearly with less fluff. One of the things I like to say is, Hey, if you make someone work, you lose the sale. If you make them think too much, you lose the sale. So make it easy and make it extremely, extremely clear. Any other final takeaways as you look at the study? You're just looking at recent experiences before we talk about how people can get in touch with you? Yeah,

Molly :

The confused mind says no, right? Yes. Just one other quick thing on the campaign building. Something that we've started doing is really identifying, let's say 10 hooks for a campaign. And then each hook has its own ad creative, and then it actually has its own block on the page, Brett. So there are different ways you can implement this, but think about it as different sections and then we are actually able to test, okay, out of these 10, what are the four hooks, the four reasons that actually get people to buy? And then that's a lot of the ways that we're removing stuff from the page. That's a little map like right, and a bit more bigger picture marketing

Brett:

Map. So smart. So smart, yeah, love that. Don't remove so much that you lose the sale, but find out the real reasons people are buying and remove the other superfluous stuff.

Molly :

I think CROs going less of button color video here, this element here, way more of message testing, which hey, that's fun. That is fun and fine by me.

Brett:

Absolutely. The testing color of buttons, that is a snoozer and you're not going to find any major winds there. I promise. It is not 2006, so, awesome. Well, as we wrap up, Molly, how can people learn more about smart market or agency? Maybe they can get their hands on this report. I don't know if that's under lock and key or if that's top secret, but how can people connect with you to learn more on the media side or connect with the agency?

Molly :

So hop over to smart marketer.com. There is a button in the navigation that says resources or free resources. So you'll find the free creative class there. That's where the findings from that report are. You'll also find some other free resources from us in different areas of business growth and digital marketing. And then yeah, if you're a business spending more than 50 K ish a month on paid media, we love to talk to you in our agency. Just click on the agency tab or the Work with us tab or go to smart marketer agency.com and apply.

Brett:

Love it. Molly Pitman, ladies and gentlemen, so smart marketer.com, smart market or agency.com. We'll link to everything in the show notes. Thank you so much, man. This has been awesome. We could go two or three more rounds. I feel like we're just getting started, but that'll have to be enough for today.

Molly :

Thank you, Brett. Hurry. Fun as always. Thanks for listening, y'all.

Brett:

Awesome. And as always, yes, thank you for tuning in. We'd love to hear from you. If you've not left a review on the show, we would love that. That would make my day, helps other people discover the show as well. And with that, until next time, thank you for listening.

‍

‍

In this episode of the eCommerce Evolution Podcast, I sit down with Dean Brennan, CEO of Heart and Soil Supplements, to unpack the meteoric rise of this innovative health brand. From zero to $50 million in just three years, Heart and Soil has disrupted the supplement industry with its focus on nutrient-dense organ meats and regenerative farming practices. Dean shares invaluable insights on building a brand with passionate customers and maintaining profitability during rapid growth.

‍

Key topics discussed:

• The power of organic growth and building an engaged audience before launch.

• How premium packaging and high-quality ingredients can actually protect profit margins.

• Strategies for creating compelling content that inspires and guides customers.

• Structuring your week as a CEO to balance deep work and management responsibilities.

• The importance of psychological barriers in health transformations and plans to build an ecosystem similar to Dave Ramsey's approach to personal finance.

‍

This episode is packed with actionable advice for eCommerce entrepreneurs looking to build a brand with 'staying power' in today's competitive landscape. Whether you're just starting out or scaling rapidly, Dean's journey with Heart and Soil offers valuable lessons for sustainable growth.

---

Chapters:

(00:00) Introduction 

(04:08) The Benefits of Animal-Based Diets

(12:40) The Importance of Packaging and Branding

(19:07) Organic Growth and Protecting Margins

(24:16) The Importance of Organic Content

(32:59) Prioritizing Deep Work and Structuring Time

(42:36) Building an Ecosystem to Overcome Psychological Barriers

(45:48) Outro

---

Show Notes:

• Dean Brennan (LinkedIn)
• Dean Brennan (Twitter) 
• Heart and Soil 
• Andrew Youderian (LinkedIn)
• Drew Sanocki (LinkedIn) 
• Dr. Paul Saladino
• Seth Godin (LinkedIn) 
• Preston Rutherford (LinkedIn)
• Story Brand - Donald Miller
• Asana
• Dave Ramsey

---

Connect With Brett:

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/

---

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more

---

Transcript:

Dean :

It is not about us, it is about the customer. It's about barriers that they have to achieve the outcome that they want in their life.

Brett:

Hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today I am super excited about my guest. If you look at some of the rising stars, some of the success stories, some of the companies that you want to model in the D two C space, this one has got to be on your short list. Talking to the CEO of Heart and Soil, Mr. Dean Brennan, we got to hang out at Ezra Firestone's Blue Ribbon Mastermind in Austin, Texas. I was blown away. Not only that, not only was I blown away by Dean's story, which we're going to get into today, but I'm a client, I'm a customer. I buy the product. I'm a big fan. And so we're going to dive into the wild success behind heart and soil. But with that, Mr. Dean, Brennan Dean, welcome to the show and thanks for taking the time.

Dean :

Yeah, thanks for having me, man. Really excited about this and I loved meeting you back at the Blue Ribbon event and I think this is going to be a fun conversation.

Brett:

Absolutely. So for those that don't know, heart and soil, not sure what's, for those that are not familiar with what, I'm not sure what they're picturing right now, but what is heart and soil and why do you think it's so wildly popular right now?

Dean :

Well, we could say heart and soil supplements,

So we're a supplement company. It's funny, I say heart and soil too. I usually drop the supplement piece. But yeah, we're a supplement company and I think we're a little bit different in a lot of ways. When you think of supplements, you generally think of multivitamin or something that's generally produced in a lab, a lot of synthetic ingredients of things of that nature. We've realized our founder is an md, Dr. Paul Saladino, that Americans don't really eat nutrient rich organs anymore or nutrient rich animal foods. And if you look at the nutritional profile of just liver, you'll find that it's one of the most nutrient dense, if not the most nutrient dense food on the planet. And so we kind of find ourselves in this point in time with chronic disease, just taking over rising medical costs, everything like that. It's talked a lot right now in the political realm, but we've become a sick nation and we've kind of abandoned the real foods that we used to eat that used to drive our biology and help us thrive. So to make a long story short, nobody likes to eat liver. Liver doesn't taste all that great. It's not the thing you think of when you're like, I'm going to go have a really good dinner, let me cook up a bunch of liver. So we take liver and other really nutrient dense animal foods and freeze dry 'em, very low temperature process. We source regenerative farms that are good for the environment and we put it into a convenient capsule for you to take.

Brett:

That's awesome. And I think, actually, I've got to tip my hat. I dunno if you know Andrew Derian from e-Commerce Fuel Leader in the Space. Awesome.

Dean :

I just talked with him three weeks ago, was on his podcast.

Brett:

No way. So a combination of him and Drew Sinski are the reasons I became a hard and soil

Dean :

Supplement. I just talked to Drew too a week ago. Yeah,

Brett:

Good guys. So I think the way Drew made a post or something about doing a postcard for you guys or something, and Andrew chimed in and said, I got the postcard and I ordered and it's amazing. And then I bought it from the LinkedIn post. So it was like a roundabout way of these guys in e-commerce let me know about your product. And I was like, this is really cool. And so what has been the vibe or the perception around the brand because over the last 10, 15, 20 years, I don't know, I'm just making up numbers, but for a while the thing has been plant-based and vegan and stuff like that. There has been a resurgence or maybe an emergence lately of hey carnivore diet and the fact that red meat actually is really nutrient dense and especially thing things like liver and other organs really nutrient dense. Has there been pushback or has this mostly been widely accepted? What's the Talk about that just a little bit.

Dean :

Yeah, I love that because for me, it comes back to my story I think a little bit in terms of how I found this animal-based diet and plant foods have always been, at least in recent history, all the rage in terms of nutrition. I was somebody that early on in my life, in my twenties, I had ulcerative colitis and I thought at the time that plant foods were super nutritious and that they would do my body good. Now, I will say that when I went through that experience, so I essentially doctors couldn't tell me what I was supposed to do. They're like, you just have this genetic thing and we don't know what causes it, and you're just going to have to take this medication for the rest of your life and someday you might be in a colostomy bag. So here you go. And that was

Brett:

Not what you want to hear as a young man for sure.

Dean :

It was devastating for me as a young person who prided myself in being an athlete and healthy and you're like, man, I got a lot of years left to live in my life and I really got to deal with this. What? So anyways, to get back to your question personally, how I found my way to animal-based is I tried a lot of different things. I was able to put my ulcerative colitis into remission just by removing processed foods, beer, alcohol, and then manage my stress a little bit better and sleep a little bit more. It was in college when I was diagnosed with that. And I fortunately grew up kind of in the country and my parents didn't have a lot of money. And so I thought to myself at the time, I wonder if what I'm eating is causing some of this stuff. And so I intuitively made some changes and was able to heal in a lot of ways. What's interesting is I still had issues for a while that would just surface every so often. Even when I thought I was doing everything and at the time what I thought was right was eating a lot of spinach,

I was buying the big package of spinach and I bought into this thing that it's extremely nutrient rich and you need to eat a lot of it. And I was taking it by the handful just raw, and it was irritating my gut. So wasn't until later I kind of tuned into some people who were talking about plant foods in a different way. You probably remember the paleo diet. And

Brett:

Totally

Dean :

That kind of caught my attention because I thought this nutrition thing is very hard. One day the news is telling you eggs are good. The next day they're telling you eggs are bad, totally red meat's good. No, now red meat is bad. And that was difficult to navigate. And when I started looking at things through more of an ancestral lens, looking at how did our species evolve, how did we survive all of these years with pretty much zero chronic disease, how were people able to hunt into their sixties and run and sprint and do all of these things? That was the first key to me where I was like, this makes sense. If I look at, I almost don't even need to get into the science of it, but when I look at things from this perspective, I can very easily make decisions for my health.

Should I be sitting all day? Well, our ancestors probably did that. Didn't do that. Totally. So probably not. Anyways, I'm getting a little bit off track, but to answer your question, I think that the plant stuff is kind of caught on in a mainstream way, and I don't think it's been looked at through the right lens. I think a lot of the research that you see is survey-based, and a lot of the research that you see that's against meat is also survey-based, which means that when you see a study that says for the most part, oh, red meat, bad red meat causes this, they're surveying a large population of people like let's say in the United States. And there's these confounding factors. Most people that eat meat probably also smoke cigarettes and do X, Y, Z, and that's not considered in the research. So we have gotten a lot of pushback, but I also think that's what has really propelled a lot of the growth because it's different. And I don't know if you've ever, not nutrition, but any other type of product that you've ever bought that was a little bit different that you identified with, you want to tell 10 other people. So I think people doing this kind of diet or looking at, Hey, I'm taking a product like whole package that has full testicle in it and it contains naturally occurring testosterone, which no plant has that, right?

Brett:

A bioidentical, you're I going to find testosterone in any plant.

Dean :

Yeah, a bioidentical form of testosterone that actually your body can utilize. You're not going to find that in the plant world. There's a lot of things you can't find in the plant world, but when you're taking that supplement and you tell your buddy, Hey, you wouldn't believe what I'm taking that has some word of mouth.

Brett:

You got to take my bold testicle pills. Yeah,

Dean :

Yeah,

Brett:

I was telling you off air. I did. I'm a little bit ornery. I did sneak a whole package pill to both my wife and her sister let them take it because I was like, Hey, this will give you energy. We had this family event and they were tired, so take this, it'll be great. And then I told 'em it was bull testicles. It was a fun moment for me. But what's really interesting too, and to piggyback on this and I want to get into several things, the way you're growing and some of the unique things you're doing, I got a couple of things I want to dive into there. I also want to talk about how you're running the company as a CEO. I think it's really fascinating. I always want to learn I'm leading a fast growing agency. You're leading a fast growing e-commerce company, so I want to dig into that too.

But another quick note on this plant versus animal-based diet. I did a gut health intelligence test a couple of years ago, and what's interesting, this company, I'm not affiliated with them, but they say there's not really very many universal superfood. And as I got my results back, some interesting things came up and then I dug in a little bit deeper. Only 50%, according to this company, only 50% of the population should eat broccoli. About half the population, broccoli is an irritant and it will actually block the absorption of other nutrients. Kale not a universal superfood, it's one that I should avoid. Spinach is one that I should avoid completely red meat was on my allow and even recommended list. Super, super interesting. And I found as I started shifting and eating a little more the way this recommended, I felt better. My daughter takes plant-based protein. She loves it when I take it, I feel terrible afterwards. And so yeah, I think we're missing a lot. And I love the way you said it. Just think back to our ancestors. What were they doing? They were eating a lot of meat and so makes a lot of sense.

Dean :

Yeah, it's good. And to your point of the broccoli thing, plants evolve to have plant defense chemicals. They don't want to be eaten. The fruit of a plant does. That's how it passes its seed. You eat a seed or an animal eats a seed, it poops it out, it grows a new plant. That's how it reproduces and carries on its chain. But the leaves of plants, they have a lot of defense chemicals, phytates, they bind to nutrients. And so just because you read on a package or your a G one supplement that it has this and this and this in it, it doesn't mean that your body is actually utilizing it and it doesn't mean that it's not binding to nutrients and you're just not utilizing the full source of nutrients there.

Brett:

So love this little science break. So try some heart and soil supplements. I highly recommend. Let's talk about some of the things you do that are unique that I think are really valuable. I want to talk product packaging for a minute. I remember when I first got my first order, the box was really cool. It had a bowl on it. It's a really neat artwork. You open it up, it's a glass container for the supplements. It feels really high end. It was just nice. It was a nice experience. Sometimes you order supplements and I'm a supplement guy. I try all kinds of stuff and you get just a plastic bottle and a cardboard box with paper stuffed in there. I'm assuming that's a very thing, but can you talk through why you do the packaging the way you do it?

Dean :

Yeah, very intentional. I mean, the first thing I'll say is that plastic is a big problem in our environment

Brett:

Totally

Dean :

For a lot of different reasons. But one of 'em is BPAs and the chemicals, the plastics leach into food and into water and it can cause problems with your hormones. And so being a health company that actually cares about people's health, we're never going to put anything in plastic. That's just a decision we made on day one. It's something that we talk about. So I'd say that's point number one is, and it's funny, when we were sourcing the glass and stuff, we had a lot of people just, we had so many people that were just pushing us towards these plastic products. It's easier to get on the line. It's like you have less breakage, all of these things. And we were just uncompromising and no, we're using glass and let's figure out how to do glass. We actually just launched a protein powder product today and that was a whole other thing. We are not using a plastic container. What most protein comes in, we're using a card. We have this cardboard. It's a

Brett:

Really cool packaging by the way. It's kind of a cylinder and it's cardboard. It's got your signature bowl on the front of it. Yeah, so how excited I'm about that. I don't do well with most protein powder, so I can't wait to try yours because confidence is going to be better.

Dean :

Absolutely. So that was the first part of the decision is we have to give our customers, we have to follow through with what we say we can't be. I think that's where brand trust breaks down and everything else with companies is when you say we care about this or we do this, and then you don't do it. Even the experience with the frontline team that you're working with, if you don't have the experience of how you say as a company you're going to do things, if you don't do it that way, you got a problem. So everything from the experience with our frontline teams, with our packaging, we want to be who we say we are. So it boils down to that. And then the other thing is the design on the cardboard. We just wanted it to have kind of a natural type of feel. I didn't want to overdo it. You see this packaging that's way overdone and we source from regenerative farms and we're kind of about returning to our roots as who we were back then. And that comes down to craftsmanship, who makes things anymore that are nice that they spend time on. So we thought about all those things with how we package our products and I think that's how our packaging evolved.

Brett:

Yeah, it's really great. I think there's been lots of studies on the psychology and the experience behind product packaging and of course when you think product packaging, a lot of people go to the Apple example and just how fun it is to open an Apple product and you feel good. You feel like you made a right choice when you open that product. I feel the same way when I open the heart and soil supplements. What I've also found is that we keep our supplements in part of our kitchen, so they're kind of visible as people come in. But having that glass jar out, I've noticed a few people look at it and say, what is this? Because it's also unique. It also says beef organs on it, which is also a little bit of a like, what are you doing here? I'm expecting a kale supplement. What's beef organs? But have you heard that before? Do you think this helps fuel word of mouth or are the products displayed maybe just a little bit more in a house because of the packaging?

Dean :

A hundred percent. Yeah. We get pictures from customers that send us pictures of how their supplements are displayed on their counter. Funny personal story, I think I could say it probably will take a couple of minutes. So I didn't have any experience in e-com before even getting into this whole thing. And you kind of have these proud moments sometimes. My dad works in North Carolina and he works on appliances and goes to people's homes. He was a business owner and then switched jobs at some point close to retirement. And my dad's not plugged into the health world. He doesn't know really what heart and soil is. He knows I work there and he knows it's a labor of love for me. But anyways, one day he's in this customer's house fixing their refrigerator and the customer grabbed something off of his counter and was like, Hey sir, I got to talk to you. I got to talk to you about, have you heard of heart and Soil? I was struggling. I was obese and had energy problems and he had all of our supplements lined up

Brett:

On his counter. He got the product evangelist trying to convert your dad,

Dean :

And he's talking to my dad. And I don't know, I think of some of my top wins in my career and just because I respect my dad so much and it's kind of a cool moment as a son, your dad is out in the wild in another state of the country and this guy comes up and shows you and tries to sell him on the products that I'm essentially involved with. It's pretty

Brett:

Cool. And then your dad being able to say, well, yeah, my son is the CEO of the company. That's a cool moment for your dad too,

To feel some pride for his son. That is so great. I think it's also really cool that with the right packaging and the right presentation of your product, it does impact the psychology of how someone experiences it, not just in displaying it and talking about it, but do they feel like it's working? And I know you don't eat supplements from a taste standpoint, but I've seen studies that show the packaging and the wording impacts the taste of a product, but I think it does impact the way someone experiences your product. But I think one really correlating topic here is margin and profitability. That's really been the name of the game as I know you guys have experienced, you guys launched in the pandemic, what a crazy time to launch an e-commerce brand, but then e-commerce took off. So there was a period of time there where it was all about growth at all costs, and there was wild times for e-commerce.

Now really the trend is okay, growth but profitable growth, you guys have been able to grow exceptionally fast with little to no margin degradation. You've been able to maintain your profitability, maintain your margins, and I would guarantee that some of your cost of goods are higher than others. So how do you think about that? How do you think about spending more on product packaging and more on ingredients and how that actually protects margins rather than herd it? Because I think a lot of people are attempting to make shortcuts on some of those things to give them more margin, but I think in a lot of ways it does the opposite.

Dean :

So for us, man, there's a few things that come to mind. One is the reason why I believe that we've been able to grow as quickly as we have without degradating margins is due to organic growth. That'd be the number one thing that I would even say. And that's a difficult thing to do. So you say like, well, why? Right? I assure you that it did not happen in the ad channel

Brett:

100%.

Dean :

And I was just talking to somebody about this the other day. They're like, man, what did you guys do? You shot out of a rocket ship and there were some timing things. It was a time of covid. People were thinking about their health. You had people really kind of thinking like, well, oh my gosh, what can I do to protect myself against Covid? There were those types of things that I think helped propelled us. But the number one thing that happened that people don't always realize is you got to back up. From launch date about four years, our founder, Dr. Paul Saladino, for four years built earned attention. Earned attention and an own audience podcast. Two of them every week daily Instagram posts, email newsletter. That was four years of not making a return, but building an engaged audience that legitimately wanted to hear from him and would've really cared. Seth, God always says, do you position yourself in a way in which if you left, would people miss you? Right? If he would've left on that day before launch, a whole lot of people, thousands of people would've missed him and would want to hear from him.

Brett:

Great way to put it

Dean :

That I think is the number one driver is the organic growth. And the hard part, when you get to the place where we're at right now, we went from zero to about 50 million in three years, and you hit a little bit of a different growth phase. And so the challenge is how do you continue to amplify that organic growth? Because I think the organic growth helps made the paid acquisition more efficient. It's difficult to do, you can't really measure it, but we're spending a lot of time thinking about those things right now. So organic growth is the first thing. The other thing, I mean, we pretty frequently revisit our terms with our suppliers,

Brett:

With

Dean :

Manufacturers,

Brett:

You've,

Dean :

We've made a lot of progress over the four years in those areas, which we could have easily not done and just let it go because the margins are good and it would've been no big deal. But if you can work on those operational components and save a margin point, a couple points here and there, it's huge for your business. It's huge. And it kind of prolongs the time that you can stay in business and you have extra resources to be able to hit that top of funnel, middle of funnel, bottom of funnel.

Brett:

Yeah, you've got to protect margin. And I love the way you described that is finding a point or two here and there. It adds up and it allows you to either invest more for the customer, so invest in that next product, invest in that protein product, or it allows you to invest in great content or community or advertising or something, or just allows you to be a really healthy company, which then you're going to build to weather storms. Because one thing that we've learned lately is that nothing stays the same. You've got the global pandemic and then crazy inflation, all kinds of stuff, and it is not a predictable life. We live, right? And those companies that were not able to protect margin are really hurting now, really, really hurting the last year or so. It's been a struggle. And so companies like yours where you are protecting margin, you're in such a great place.

I want to talk a little bit about content for a second because this is so important. I don't know very many great brands, whether that's a consumer brand or great agencies. That's the space that I live in. Obviously as a service provider that don't do something related to organic content. And I think the very best are very good at organic content. My buddy Preston from Chubby, he talks about this all the time. It was one of the unlocks they had at Chubby and they had a 10 figure exit and then a billion dollar IPO. They started investing in organic content, fun, irreverent content related to their wild board shorts and other things that they sell. And sometimes you mentioned hard to track a return. I posted this content, what was the ROI on this content? I don't really know, but I know collectively what it does for me.

And I'm an ad guy, that's what we do as an agency. And I'm a firm believer in paid ads, but you've got to have a community as well, and organic fuels ads. It makes my job easier as an ad guy if you got go to organic content. So you guys do email marketing really well. That was another thing I was very impressed by. I would find myself reading your emails or go to, oh, delete this email. Like, oh, that's interesting. I'm going to click on that and then I'd read the whole thing. But yeah, how do you guys approach content? How do you think about it? Is the founder still really involved in content? Talk a little bit about that strategy.

Dean :

So our founder, he has his own kind of personal brand, and that's still very top of funnel for us and drives some people into our ecosystem content for us, if I could boil it down, it's like I believe that you need to have something to talk about that is worth talking about that other people care about. And in our, not that it's all about mission statement and this kind of woo stuff, but for us, at the end of the day, we want to inspire people and guide people to better health. And that's the way I look at content. I'm like, the first question to me is how can we inspire people? And then how can we guide people? How can we hit the inspiration piece? And then where in the funnel, what channels does it make sense to incorporate this more practical guidance types of pieces where someone's like, oh, if I'm shopping, do I have a shopping list?

How do I do that? And so that's how we approach content. We're like, how can we reach people, inspire? How can we give 'em practical steps to incorporate this stuff? And then how can we get them to share a piece of content with somebody else? So from a high level, that's essentially what drives it. And I think you need a product that essentially works and you need something worth talking about. And we have the blessing of our entire team believes in this stuff and they live it. Almost every single person here had a health condition that they were able to resolve using this lifestyle and our products or just eating liver. And so the people making the content, it comes through, it's subtle, but we're not relying, we're not saying, Hey, X and Y agency who doesn't really understand what we're doing. We're not having them create the content for us. We're doing it. And there's something about that

Brett:

Always better if you can do it, in my opinion, get someone to maybe help with the polishing of it or something. But the core should come from you. I think

Dean :

I agree. I a hundred percent agree. The passion comes through. And that was part of the strategy too, is like we're telling somebody, Hey, this and this can help with your health outcomes, so we better have people on camera that actually do it. We're not going to be the doctor that's telling you, Hey, don't smoke, it's bad for you, but then you're taking a smoke break and smoking a pack of cigarettes. We do it and we live it. And I think that that comes across in the content. It's a high level strategy. It's not a tactic, but it's more what fuels it, I believe.

Brett:

And that's so much more effective than having the goal of I must create content. I've got to create content today. That's what I got. And almost always that's going to come across as stilted or invaluable or you're just going to be talking to talk, but you guys are inspiring and guiding. And really your whole team is that guy that encountered your dad who's like, Hey, I got to tell you about that. I just got to tell you about it. I know you're fixing my appliance, but I got to tell you about these supplements, right? That's your whole team. And so the content comes naturally there. Am I inspiring and am I guiding? And then that's also a good way to, okay, maybe I have an off day creating content as we all have them. Is this inspiring at all? Is this guiding anybody? Is this helping in any way? Okay, I got to rework it, but I love your content, love your emails. So thank you. Keep up that work for sure.

Dean :

I was going to add one more thing to that that I think is important, and it is quite obvious to a lot of people that have been in marketing for a while, but one book, Donald Miller StoryBrand,

Brett:

One of the best dude, loved

Dean :

Donald Miller, huge fan. Yeah, I've listened to him for a while, and Seth Godin also. But that book I remember is when everything clicked for me and I was like, oh, and this is pre heart and soil when I was doing other creative marketing. But that's been one kind of guiding principle for us, is that it is not about us, it's about the customer. It's about the barriers that they have to achieve, the outcome that they want and their life. And so if you look at our newsletter, our Instagram, our YouTube, our podcast, that principle, you can see it across all of our different channels and sometimes we stray away from it a little bit, but that's one consistent that we've had from day one. And I think it's very, very important if you're, it's not about you. Who are you trying to serve? What are the barriers in their life and how do you help them with your product and with your messaging?

Brett:

Yeah. I love the way Donald Miller positions it. You are not the hero in your customer's story. They are the hero in their story. You're the guide. You're the one who's helping them unlock and get to another level of the hero journey. You're the ones climbing Mount Everest, you're the 10, Zig the Sherpa, helping them along the path to get where they want to go. And sometimes, yeah, you do have to postures, maybe I don't like the word posture, but maybe you got to position yourself. Here's why we're so freaking awesome, but so that we can support you so that you can become the hero that you want to be and deserve to be and things like that. So yeah, it's a really great way to position it. Love Donna Miller and how to build a StoryBrand. Awesome, awesome stuff.

Dean :

I had one more thought as you said that, and this might be useful, but this is an example of it. So we were maybe a couple of weeks ago actually, that the team was producing some real content for Instagram, and it was essentially showing off what we're doing at HQ and what we're eating. And one teammate kind of called it out and is like, oh, we're like, Hey, this is about us. Look at what we eat. And it sparked a conversation that was like, it's a subtle difference, but it's like, okay, let's still show what we're eating, but let's say, Hey, I come into work every day at eight. I struggle with having energy at 10. Some of you may experience that as well. This is what I eat for breakfast, right?

Brett:

Yes. You

Dean :

Flip that around and you add that context to where it can resonate with somebody and you're not just talking about yourself or just showing a highlight reel of what you're doing as a brand.

Brett:

Yeah, totally agree. Because you can be inspiring by showing someone what you eat for the day, because like, Hey, this is how I solve my energy problem. I want to help you solve your energy problem too. So here's how I do it. That's valuable. Just, Hey, take a look at what I'm eating is not

Dean :

No, exactly. That's

Brett:

Valuable. That's great. So one thing I want to get into, and this is something you shared at Blue Ribbon in Austin. We're a growing agency, we're acquiring other agencies. That's kind of one of our areas of focus as we move in the next three to five years. I'm investing in brands. I love this space, but I've got to be more and more disciplined with my time. There's a time in my twenties when we didn't have kids and I can just work all the time, and they're like, whatever. But now I've got to be focused with my time. And so I'm just really curious, how do you structure your day or your week rather as a CEO, and what insights might we be able to gain from that?

Dean :

It's changed a lot, and this is something I tweak a lot, and I think everyone should. Yeah, me too. You can set something and try to force yourself to do it for an extended period of time, and it can get to a point where it's not productive. So I've noticed that as a CEO too. There's always different pressures at different phases and you have to adjust and adapt and kind of meet the moment where it is. But there's a few things that have always worked for me. One is I do deep work better in the mornings than the afternoons, and so I'm very protective of my time in the morning. So generally I'll break out. Monday is my more management day. It's when we have our leadership meeting, and we do do that one in the morning, but we do a lot of deep work and make decisions on things, and it's more strategy focused.

I do a lot of one-on-ones on Mondays. I get those knocked out at the beginning of the week. I think it's good to kind of start the week with some momentum and have those conversations and not if you have those on Thursday, I think you've missed some days. So I'd like to get off with good energy with the whole team. The other days, Tuesday's more like product or research focused. Wednesdays I dip into the financial stuff, but my meetings, if I have a meeting with our fractional CFO or whatever, that's kind of on that financial day. But in the afternoon, the deeper work is in the morning Thursdays. I try to, aside from this conversation, what Wednesday generally if I'm talking to anybody outside of the company, I do that Thursday afternoon.

Brett:

That's great.

Dean :

I try not to kind of mess up the flow of those other days and make sure that I'm giving my due diligence to whatever the topic is for that particular day. And Thursdays are a little r and r too. I try to take the morning hikes on Thursdays, get in more of that reflective state, if that makes sense.

Brett:

Totally.

Dean :

I kind of go on and off with this habit, but I found it really helpful to write things down by hand. And so I'm a big fan

Brett:

Of, you remember better when you write by hand? A

Dean :

Hundred percent. I've tried. It's funny. Most of my life I've been at a productivity nerd, so I've tried every productivity system, workflows, connecting apps together. I've tried so many things, and the one thing that it just works every time is writing things down. I remember it better. I retain it better. And as a reflective exercise to when's the last time you thought back? What happened a Friday afternoon? What happened this week? Where was I good?

What decisions did I make? Were those the right decisions? What could I have done differently? I think most people rarely do that kind of work, easy to do. It's like any other habit that's really powerful and compounds over time, but it just is something that's easy to let go. I try to do that stuff Thursday and then Fridays, I try to keep those days light as well. And I do a little bit more strategy work, longer term, three year type thinking for the company on those days. Of course, any business fires pop up all the time and sometimes it gets disrupted. I'm not trying to paint a perfect picture for your audience, like, oh, that's impossible. But more or less directionally that's what I try to do. And sometimes a wrench gets thrown into it and that's okay. You don't stress over it. You just kind of move on.

Brett:

Yeah, totally. There's going to be days, there's going to be weeks where it gets derailed a little bit, but that's all right. You get right back on track. And I really liked the way you laid that out. The way Alex Ozzi kind of talks about it. You got either manager time or maker time. Those are the phrases he used, and it's a different mindset, right? Manager is all about efficiency and it's also about people and relationship and let's get as many meetings in as we can and let's tackle problems. The maker time, it's kind of like I need space, I need room to breathe. I need to go deep and kind of get lost in something and think creatively. And so those usually don't go well together. But my calendar is actually similar in a lot of respects to the way you're doing it. I like more meeting days early in the week because I think if you're waiting until later in the week, I wouldn't be able to focus if I didn't have my meetings and my check-ins and our all hands and all that stuff. If that was later in the week, I would've a hard time going deep the first part of the week because I'd be worried about stuff.

And so I think getting that, taking care of that, prioritizing that first frees me up anyway to do other things. I really like the way you also said, Hey, Thursday afternoons, that's when I talk to outside people from the company. And I think you have this temptation and this's, this temptation as a CEO of a growing agency, I need to be accessible and people need to be able to reach me. And no, what your responsibility is to your team and to the company and maximizing that return. You are not responsible for outside people. And so obviously you need to be accessible to a certain degree, but keep that confined. And I think that's really, really smart. So you said that that's kind of evolved over the years. Did you any resources there? Trial and error? How did you land on that?

Dean :

Yeah, I kind of landed on that. I mean, it's taken many shapes or forms, like the deep work stuff and the shallow work morning, afternoon, that's always stayed consistent. One thing that I've refined that really helps a lot, and you kind of hit on this a little bit, but I think somebody needs to take inventory of what is the deep work that I should be doing that's going to add the most value. You can go through day to day and spend time on things that aren't really that meaningful. And so what I do, and there's a million ways you can do this, is in my project management or my task management software. It's Asana. I have a custom field for deep work or shallow work and then a priority.

And what I found really works for me is that I have an input capture. So anytime in a meeting, anytime somebody texts me, anytime it's in Slack and there's an actual action that I need to take or a question in my mind of something I need to figure out, I input capture that into Asana very quickly. And so this list starts getting created in there, and I don't pay attention to that list until the end of the day. So my last 20 minutes in the day, I go into that list and I'm like, okay, is this important? Is it not? And I kind of move, and this is the key, is I will block out time if that thing's going to take more than five, 10 minutes or it involves an hour of deep focus, I block it on the calendar and I attach that task to it.

So that helps me not get distracted by this giant list of things that I need to do. Because if I set my calendar on Sundays, I set it for the whole week and it evolves a little bit. That's why I revisit it every single afternoon. I might adjust some things for the next day moving forward, but if I do that right, then when I show up every day, I know exactly what I need to do. The resources, the conversations I had are all right there. So I'm not poking around in 10 different systems to try to figure out where I'm at. And I take notes on that stuff in the task. And so it kind of keeps me on track. That's been one of the biggest, I hate the word game changer, but it's been the biggest tool that's really helped me focus my time and energies in the right place.

Brett:

So good. Always trying to get to that highest and best use of time. And not that you can't do small stuff, sometimes we have to do that, but yeah, prioritizing, preparing. So you go into your day and you know what you're going to do, and then if you get derailed a little bit, that's all right. Then you just get right back on track and knock out the list.

Dean :

And what doesn't work or what hasn't worked for me is blocking every single minute of the day because it's easy to do that if you start. Most people when they start doing that, they block out every single minute. I drove myself crazy doing that, and I failed over and over. I wasn't getting all the stuff done. And then it would just add up. And

Brett:

Then if you feel like, oh, I missed that block. Oh, I missed that block. Ah, just screw it. I missed the whole

Dean :

Thing. Exactly. Or you start noticing that tasks that you blocked, you don't actually do 'em when the time comes up. That's a signal to me like, oh, this isn't really important. So then I either delete it or I figure out somebody who should work on it. And most often or not, it's just not important,

Brett:

Really, really good. And man, that's one of the biggest unlocks is just realizing maybe I don't need to do this at all. Maybe I need someone else needs to do it, or maybe we just don't need to do it, which I think is pretty powerful too. So Dean, this has been awesome. I'm mindful of time. I know you got a hard stop. Very generous. You're very generous with your time. This was really, really helpful. What's next for heart and soil supplements? I'm super excited to try the protein, and that just got released, so that's new. But what's next for you and or heart and soil?

Dean :

A lot of exciting things. I'm spending a lot of my deep focus time right now on, I don't have an answer to the question yet, but we talk about this organic growth and how to amplify it and word of mouth, how to amplify that. And at the end of the day, for us, it's like how do we not just drop the supplements on somebody's step and walk away, but how do we actually become actively involved in their transformation and in their journey? I found I'm really inspired by what Dave Ramsey has built at the Ramsey

Brett:

Network. So good, so

Dean :

Good. And I've got a number of things planned, but what's interesting there is I had this aha moment one day where I was like, whoa, this network that Dave Ramsey has built is really good at moving someone from in debt to out of debt and happy. And then I realized that the same things that get in the way with changing your health outcomes are the same things that get in the way with personal finance. It's very obvious. Everybody knows, oh, I should spend less than what I make. Everyone knows that. It's not like it's not rocket science saving some money, not rocket science, but for some reason, 90% of people can't do that. But he's built a framework that gets people to their goal works.

Brett:

It works.

Dean :

And that's when I realized that health is the same way. It's like there's nuance in it. There isn't personal finance, but there's a lot of confusion and nuance. But at the end of the day, most people know I shouldn't be drinking a bunch of alcohol. I shouldn't.

Brett:

You should move a little.

Dean :

Yeah, I shouldn't be overeating. I shouldn't be eating all these processed foods. People have an intuitive sense of what they should do and what they shouldn't do, but they don't do it. So what gets in the way, it's those psychological barriers

Brett:

And

Dean :

It's the psychological barriers in the finance world. And so I started studying kind of his ecosystem, and I've talked with some folks over there, and I'm trying to figure out right now, how do we build even more of an ecosystem and maybe some non-physical products to actually help people in that same kind of way that Dave Ramsey does in personal finance? And I think that'll be a huge unlock for us as a business, but I think it's going to be an even greater unlock for the people that we're trying to serve.

Brett:

It's a big challenge, but kudos to you for working on tackling it. Yeah, it's not that we don't know what to do per se, it's that we don't have the inspiration. We maybe don't have tools, and then we don't have the guidance that we need. And so it sounds like you guys are providing that already to a certain degree and wanting to go deeper in that, which is really, really awesome. So super great, man. Thank you so much. Heart and Soil co. Check it out. Buy some of that new protein, try the beef organs, try anything else that looks or sounds good to you, try it. I'm confident you're going to love it. Any final words of wisdom or anything else that the audience should check out?

Dean :

I just want to say thank you. This was a great conversation. I enjoyed it. If people do want to look me up, I'm on Twitter. Dean c Brennan, you can find Heart and Soul on Instagram pretty easily. Just search heart and soil. Heart and soil supplements. But no, I've loved this conversation and I haven't done a ton of these, and I get a little nervous for talking in front of people, but this was great,

Brett:

Dude. Yeah, you're a natural man. This was easy for me as a host and super fun on it, and I wish we had more time. I guess one of those things where we're like,

Dean :

Dang,

Brett:

Conversation's over that was super, super fast and really good. So yeah, kudos to you. I'll link to Twitter and Instagram and stuff. Obviously it's easy to search and find, but I'll link to it in the show notes as well. Cool. Dean Brennan, ladies and gentlemen, Dean, thank you so much.

Dean :

Thanks for having me, Brett.

Brett:

Absolutely. And as always, thank you for tuning in. We'd love to hear from you. What would you like to hear more of on the show? And if you haven't done it, leave that review on iTunes. That helps other people discover the show. And with that, until next time, thank you for listening.

In this fast-paced episode of the eCommerce Evolution Podcast, I sit down with Neil Twa, co-founder and CEO of Voltage, to discuss the future of Amazon selling. Neil, a brand owner, investor, and podcaster himself, shares invaluable insights on how to navigate the evolving Amazon landscape in 2024 and beyond. From AI-driven changes to brand-building strategies, this episode is packed with actionable advice for sellers looking to stay ahead of the curve.

‍

Key topics covered:

• The impact of AI on Amazon's search algorithm, including the upcoming Cosmo engine and how it will revolutionize product discovery
• Amazon SEO strategies for 2024, focusing on optimizing images, titles, and overall listing quality
• The importance of building a true brand on Amazon, moving beyond just being a seller
• Strategies for profitable growth, including Neil's 20% EBITDA target and minimum $12 net profit per unit rule
• The future of Amazon selling, including the potential need for design or utility patents to defend against competition

‍

Whether you're a seasoned Amazon seller or just starting out, this episode provides critical insights to help you thrive in the ever-changing world of e-commerce. Don't miss Neil's expert advice on building a sustainable and profitable Amazon business in 2024 and beyond.

---

Chapters:

(00:00) Introduction 

(02:12) The Importance of Amazon SEO

(16:43) Preparing for the Personalized Search Engine Algorithm

(29:25) The Influence of Rufus (AI Shopping Assistant)

(34:11) Building a Brand and Expanding Product Lines

(42:48) Prioritizing Profitability and EBITDA

(48:12) Conclusion

---

Show Notes:

• Neil Twa (LinkedIn) 
• Voltage Digital Marketing 
• The High Voltage Business Builder Podcast
• PickFu
• Bryan Porter
• Simple Modern

---

Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

---

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more

---

Transcript:

Neil:

Market the product correctly, understand the organic engine versus PPC, and then understand how we create quality products, not me too products to move them into full product launches.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we're talking Amazon growth building an Amazon flywheel, and how you should grow your brand on Amazon in 2024. My guest is Neil Twa, he's the co-founder and CEO of Voltage. And Neil, surprisingly is from my part of the country. So he's in southwest Missouri just like me and really a unique perspective that Neil has. So he's a podcaster, he's a brand owner, he's an investor, he's involved in private equity, and so he's building brands, he's buying brands, he's selling brands, so he knows the Amazon space inside and out. And so today we're really going to talk about several topics. We're going to talk about AI and how it's changing the Amazon landscape. We're going to dive into Amazon, SEO because it's still super important as we'll talk about what's new there. Going to dig into building a brand and being profitable. And also may talk about how to grow your business during an election cycle, which some wrenches may be thrown in the works a little bit. So we're going to tackle that as well. But with that, Neil, welcome to the show, man. And how's it going? Good,

Neil:

Man. I'm doing wonderful. Thanks for having me

Brett:

Here. Yeah, thanks for being here. I had a blast on your podcast. It's good show. Excited to do the old podcast swap and get you here. We

Neil:

Still managed, didn't do it in person, even though I think we're like an hour when he's southwest. We're literally an hour that hardly ever happens. Dude. I talk to people from all over the world, but I hardly ever talk to anybody in my state.

Brett:

Same. It's always like one of the coasts. We're an hour apart but still an hour. That's so

Neil:

Well had a cram of meeting below this one and one on the other side of it, so it's like I couldn't get to you in time. Totally.

Brett:

We'll get to it. Totally. Exactly. Yeah, that's awesome man. So let's talk Amazon SEO O. And the reason why this is still so important as a topic is because still the vast majority of purchases on Amazon are driven by search. If we want to buy something on Amazon, what do we do? We go and we search. Maybe we're discovering products through the recommendation engine and other things, but it's mostly still search. So if you want to win the Amazon game, you have to know SEO. So Neil kind of break down that what's the 80 20 of Amazon SEO? What are the things we need to be focused on that really drive 80% of the impact? Well, it's

Neil:

Important to understand that that has inverted and changed over the years. Organic used to be the big engine 2012 to 2017 ish. And then with the adoption of PPC and the growth of that inside of Amazon and hiring away Google engineers and reformatting the whole thing, they've now turned into a media engine that by 2026 is going to be a marketing and distribution and advertising engine surpassing the profits of their AWS, which basically runs the interwebs. So this is going to be a massive change that everybody needs to prepare for with 50 50 on the organic now and the PP 50% of your sales still come from organic. Now we will always love to see that inverted and turn that into the 80 20 where we get 80% organic and 20% PPC, which is a shot we always go for. And there's metrics you have to look at in the organic side before that's even accomplished.

And one of the things, it's a tactical level now that I've kind of explained this. Here's a strategy to this, which is basically get more organic sales and get less PPC if at all possible and use PPC to kind of power the engine, but don't make it the engine. And a lot of people miss that because they don't know things like Amazon's IDQ score, which is where your SEO engine is inside of your little playground on Amazon, within your seller account, within your asin, you get assigned a score and that score is going to go down.

Brett:

What is that score again?

Neil:

IQ score. idq. It's a score basically considered a hundred points and everybody gets a fair shot at it from the very beginning. So the engine itself, this a nine engine in the filing system is just trying to look where to place you and in this big marketplace so that you aren't completely buried by other products in your niche or what's called a node on Amazon with somebody who has 20,000 reviews. So you might want to go compete with them and they don't want to bury you. Why? Because the social aspect in commerce and the economic engine of changing products and innovation means they may not want to miss a great product that's going to market and simply bury some opportunity because the next guy has 20,000 reviews. So they built the system really as a free market, which is cool, so you can actually get a product in the marketplace even if somebody has five, 10,000 reviews.

In fact, Amazon itself has told us that in this search, in this engine that you are going to see 5% of all of Amazon revenues in the first year go to product launched in that year. Okay? It's not a lot, right? So here's where this goes. Strategy year two and year three, that goes 20% and 40% by year three. So you need to think of any market E in this day and age. You've got to battle through years two and three to make any e-commerce platform an opportunity, any paid traffic and opportunity. And of course organic search is a huge component of that done.

Brett:

Just to break that down and just to clarify that, Neil, because that's a really interesting point. So only 5% of sales in a category will go to products launched year. Actually

Neil:

All of Amazon revenues for year one SKUs are only 5%. Yeah, it jumps to 20% in year two and it jumps to 40% in year three. So those who are thinking they're going to hit their home runs in year one need to be really prepared that by year two and year three, the brand is going to mature, the reviews are going to mature. Your ranking and market share are going to mature. Your growth is going to mature along with Amazon's normal growth and expectations. So what do they want you to do? In simple terms? I want you to launch more products. What do I want you to do? Launch more products, right? Increase the base and portfolio of your product base and the engine itself on Amazon will reward you. Why? Because demand capture, we have to understand what Amazon is. It's now a demand capture platform.

It used to be demand creation when I started, which was very different, but now it is demand capture. So things like social commerce, Facebook, TikTok shops, other locations, influencers around the web and et cetera are creating the demand through that creation. But it's being captured 30% of the time from television ads on Amazon 30% of the time from paid traffic channels on Amazon TikTok shops, we see 30% of it go. We call that the halo effect. So in an omnichannel strategy, you have to understand that Amazon is demand capture. So we got to go in with the understanding that this organic engine is setting there wanting to basically present a product based on existing demand. Now, I think so many people think that you go to put a product on Amazon and you need to create demand for it. You don't actually need to do that.

You don't need to get offsite traffic to it in the first six months. You don't need to do a lot of funnels and a lot of heavy lifting. What you need to do is optimize for organic inside. That's your strategy. So tactically, what do we do when you launch an asin? Don't touch it for the first seven to 21 days. I know that the issue is, well, I'm not going to make enough sales. I just put it in there and it's nothing good. That's going to happen. But in actuality, you're going to lower that IDQ score. If you start ads from the very beginning, as will not convert well from the very beginning, and then you'll have a engine that now shows us that it becomes dependent on the ad traffic in order to expand the reach of that asin. You understand what happens? They penalize you, they penalize you because they want to make more money off of you and you and your ignorance go and put your credit card in and start buying traffic from day one and then you are now forced to buy more traffic for the life of that asin.

So how do we avoid that? Don't touch the product launch for the first seven to 21 days. Resist the urge to start no ads. What are you looking for? You're looking for that 80%. Am I dialed in? Do I get impressions? Do I get clicks? Hopefully I get some sales and I start to see how optimized my data set is for this AI engine because that's what it is. I'm not selling products to people. Amazon is I'm selling listings to an AI engine. I'm selling data. So as a direct marketer and a business guy, that's how I approach the system. So I talk about product. So many people focus on product development and r and d to the point of capitulating, any opportunity when they really need to focus on what's the data and how do I sell the product? Because sales fixes everything. And the next step is innovation of a product to move you away from the market share innovation will create more demand and those product skews that mature in 24 and 36 months, you'll continue to innovate them because we all know that products become saturated brands. Why there's 15 different burger joints and 24 different coffee shops because they're all selling similar products, but they're different brands. So in the organic strategy, we need to move towards the brands, and while we do that, we need to be able to capture the demand that already exists and it's in there running at 8,600 units a minute. So don't think that you don't have opportunity on Amazon and you need to do all this other stuff in order to drive demand for your product on the marketplace. It's moving 8,600 units a minute.

Brett:

Yeah, I mean that's the real strength of Amazon. The traffic is there, the demand is there. You just got to capture what is there and then you can move on to the next step, right? So what are some of the components of that IDQ score that we need to be aware of and that we can help guide or manipulate?

Neil:

Some of them are obvious because Amazon gives you that seller health account status and always we want it to be green. That's returns, defects rates and other things you have to pay attention to that. If your product is not meeting demand, those defect rates will go down and as they go down, so does your IDQ score, right? Just the quality and conversion of the listing can also lower it. If you are what's called unit session percentage on Amazon USP or in the marketing world, the conversion rate is lower than the top three to 10 competitors in your node that currently have that market share, you're never going to overtake them, right? You're going to be at a degraded state in the data engine before you even try to manipulate it.

Brett:

Why would Amazon move you ahead of them? They know that for every 100 people that see their products, more people are going to buy than for every 100 that sees your product. So you're going to get penalized and move down

Neil:

The page. They already know the historical data of those products. The data's already there, the system's there, the inventory's already moving. So you are stepping into a very competitive state, which means you need to do something very different to be competitive and no longer can you just throw up a listing and a he'll marry and say, well, I'm going to get a few hundred units and all my hopes and Lambo dreams are going to come true. It just doesn't work anymore like that. It really doesn't, right? So we have to capitalize on that both from a conversion perspective, which is going to do the first 7, 10, 21 days are going to tell us that how well are we optimizing our data against current market share? Alright? And then it's just going to get down to as it works better, and we have a phrase in our company, don't marry your product.

Steal someone else's girlfriend instead, right? Because that product data has to prove itself for the first 100 units, and I'm looking at it in a 90 day cashflow plan, okay, a hundred units, 90 days, can I move that in 90 days or less? The faster I move it in 90 days on a hundred unit test order, that will determine how much more inventory I'm going to put in based on conversion and metrics I'm seeing come through the first 30, 60 days. If I'm turning over that a hundred units in the first 60 days or less, I'll order a thousand units. I've seen provable data, I've seen growth in the worst conditions possible. New seller count, usually new health. If you're a new seller and you've got no stats whatsoever, a brand, no one's ever heard of or whatever, you're just at the base of all the business.

It's the worst scenario. If you can get at selling in that scenario, it will only get better if you do it. And what will negatively impact, of course, is bad product at that point because negative reviews will come in, negative seller feedback will come in and that will kill the engine. It just beats it to death. So we have to do those two fundamental things really well. Market the product correctly, understand the organic engine versus PPC and then understand how we create quality products, not me too products to move them into full product launches. The engine will reward that as that stats come in and those sellers come in that IDQ score will actually stay high enough to compete with the current IDQ scores, which we will not know because Amazon close to the test data, but we can see it in the market share of the competitors that are in the market.

Now, you may enter market with 40 to 60 competitors, but let's be very clear, there's only five to seven competitors in your niche you're ultimately ever going to compete with on all of Amazon with billions of SKUs. When you niche your product in, there's only five to seven major competitors you have to deal with and they're the ones that are going to own all the market share, right? So I'm sorry if I'm going too far detailed into your question, but I want to make sure we cover the aspects of it. Organic versus PPC. We're actually going to then focus on something called TA costs tacos. We joke about tacos, total advertising, cost of sale, organic and PPC sales. So once I see organic sales and data coming in, I'll launch my auto campaigns. We'll go through another 30, 60, 90 days guys, not five or seven minutes. I think a whole lot of people want to happen, but we'll go through the next 30, 45, 60 days as that campaign dials in as we see the data and statistics come in, then we make very data driven moves next to target products and growth that continue to mature that product cycle.

Brett:

Great. So kind of going back to IDQA little bit. So we're trying to limit things like returns and defects and negative reviews and we're trying to optimize conversion rate and things like that. What are some of the other elements that are contained in that and how do we know when we need to pull a lever to try to improve a certain element of that score?

Neil:

So with that unit session percentage and basically in the world of conversions, it can be anywhere between three to 5% at volume of movement or as high as five to 25% in terms of smaller niche based products or long tail keywords that offer that higher conversion for your unit session percentage, typically you want to target higher at the beginning and then it's going to come down if it's within three to 5%, usually for higher volume products, you're really dialed in and that's a great metric because if you get the profitability right, then it turns into a whole lot of fun, but the metric of it is if you go to the dashboard, it's changed. If you go kind of to the ASIN listing itself versus we're talking about mobile differences because 60% of all the sales on prime day were mobile, so you got to understand the differences, but they're still 40% of desktop.

That makes up a huge thing and it's easier for people to visualize this for a second, but if you go to the listing and you basically draw an F across it, you're going to come down the image side on the left, you're actually going to go over to the title and then you're going to go down through the first two bullet points. So it's kind of like a big F when they come down through images and they're looking to basically revalidate the capture they have in their mind the demand, it's already created, the audience, the conversation, the referral, the social media thing, a friend that bought it, all they're looking to do is get that validation of emotional charge off the images and say, does it fit, look and seem like something I can

Brett:

Always, is this what I'm looking for?

Neil:

This is what I'm looking for. And it's really down to the images. If that does not quite fulfill the need or something is not answered, you didn't speak to their specific need or unique situation or the solution in which that they were thinking, they'll go to the title and they are like, well, was this the large? Was this this small? Was this the heavy duty was this, well, this fit the person up to 300 pounds. Well let's do this. And if that is validated in the title and you've done a good job, they'll slip right over to the add to cart button and they'll do that in 30 seconds or less. If they don't, they're going to go to your bullet points. By the time they get to your bullet points, you may have already lost them and it goes very fast on this system.

So between the product itself, price point is just a variable of the solution if you are, and what I mean by that is if you're selling products on Amazon like 30 50 less in retail price point 30 or less in retail price point, they're going to be very price conscientious. They're going to be very review driven and I would like to avoid that altogether. So I sell products, and this sounds opposite of your brain, but I sell products 50 to $200 in retail price point because they are not thinking necessarily about the cost, which sounds counterintuitive, and they're not really reading the reviews to look for the negatives. They're looking for reinforcement of the solution. That's a very different psychology of those two buyers. I prefer to play in the one who's like, well, I don't really care if it has a 250 reviews, if there's one that has 200,000 reviews. What I'm really looking for, does this provide my solution? Is it right from me? Solution oriented to problem solve fast and hit that A to cart. Now mobile's a little different

Brett:

Products are just looking at the image, maybe glancing at the title then that's enough for me, I'm just going to buy it. But they are

Neil:

There to capture that demand. You've seen it, my kids, my wife, the 7-year-old, et cetera. We've watched how fast they're just like, Hey, this is the one I want. This is what I was looking for. This is the one that Bobby had. This is the one that SIS had. They're like, whoop, this is the one we want. Knowing the return process, knowing Amazon comes to your door, if I don't like it, I'll return it. Right? That's typically how people look

Brett:

At it. Very cool. Very cool. Talk about the new changes that are coming down the pike here with a nine and some of the AI engine driving that. How is that going to impact search and then what do we need to be preparing

Neil:

For? So organic search itself is going to change dramatically. 10 plus years over 12 years of the A nine system when it first came in, it really hasn't changed. Just the fundamental core of the whole engine policies, compliance, fake reviews, we can talk about that and how it's getting involved and all that stuff has to do with everything that revolves around that same core keyword based search demand engine, and it's all keyword based at this point, but with something coming called Cosmo, there's a white paper on it, it's out there now. You can go check it out if you want to read the white paper. I didn't. I had ai, help me read the white paper smart

And summarize and get into the details and really understand some of the core fundamentals of what's changing. Cosmo is changing as a large language model in LLM into all this data, petabytes, terabytes of maybe even zetabytes of data that Amazon has collected in its entire history, and it's turning that engine into a solution oriented, basically, it's revolving around not just everything you buy, but the people that buy what you watch and what you interact with online. I think minority report, okay, when he's walking through and it's like, Hey, you need this because you're this person, or hey, you've got blue eyes, so you need these sunglasses. It's going to know crazy amounts of things about us, and it's going to go through your Twitch and your freebie and your prime videos and it's going to look at the way you're accessing that data, what you're watching when you're watching it, and it's providing all that information back to this new engine called Cosmo, and it's then going to only present the most highly relevant products to your demand at the time you are looking at it very dramatic, right?

They're going to change the way the engine produces navigation search and results, which is going to be obvious impact to the customer. As the engine test went down, they did it on 10% of their search and market and they ended up with 4.9 billion in additional revenue, a 0.7% increase in CTR and only 10% change. So this is going to happen, and part of rolling that out is we now see rufuss coming to the table because it's going to change the way you interact with the system. You're going to become more dependent on things like this AI system called rufuss, which just launched in early 2024 just earlier this year, and that engine is starting to help you make product-based decisions based on your current data and questions you ask it. So it's formulating even more information into Cosmo to help refine the coming changes. Now, there's not going to be some date in this end, like November 30th, this is all going to change.

Amazon rolls this stuff out and you don't even know what's happening. So as a new seller, you should be very aware of that because the way you think about keywords and the way you're going to be trained to the listing and the way you're going to adapt any old training is all basically going to go away is what I'm saying. And it's going to have to change towards how do I write a natural language convincing query-based listing that has not just keyword stuff but natural language into it, right? It's going to know, for example, and this is one of their examples, that a woman would be pregnant and if she's pregnant, she might want these kinds of products based on her history or other people like her who have watched certain SOS or done certain things. It could go down as far as to her watching bridezilla on freebie and then basically showing her products that would be targeted specifically to her upcoming wedding, whereas right now it's completely general.

So again, think minority report in the way this thing is going to start tracking and showing ads that are relevant to you. It's a huge change. We've never seen anything like it, but of course the system and the data have all now proven that it's going to work extremely well. So existing sellers, if you're paying attention to this, what does that mean for you? Everything you've done with keyword, everything you've gotten away with in the last five or seven years from keyword stuffing listings or putting in semantic based queries into your language and your copy, you're going to be negatively impacted. Here's one thing you could do very quickly, just tactically right now, if you've got an image tag and a listing already running on Amazon, take the images, all of them and one by one, upload them to chat GTP or Claude AI and ask it to describe the image to you.

If the image describes something completely different than what you're seeing, you're going to get a negative strike. So if it doesn't describe the coffee grinder that's in the image, but it tells you that it looks like a dog whistle, you're going to be screwed, right? The images and relevant of the reading, the data and the intuition of the engine are now going to drive the results, not the keywords. They don't need you on the keywords anymore. The engine and the data are way more intelligent than we are, so it's going to be able to show and predict based on images and the copy language and the viewing ship and exposure online and videos and everything they're doing down to what just in time they want to buy to increase that conversion rate. And it's going to come and it's going to come relatively fast and many people are going to be caught off guard.

Brett:

Yeah, it's super interesting. So there's a couple of things that really come to mind here as I hear this one, nobody really has more actionable data and behavioral data than Amazon. Maybe Google, Google's got all your search history and the sites you visit, stuff

Neil:

Like that. Yeah, they're selling information but not products in the menu.

Brett:

Yeah, Amazon knows what you're buying and when and what you're watching on Amazon Prime or Freeview or these other channels, and so they really know you and so that's super interesting. I'm curious, so if we think about a search engine results page, so I go to Amazon and I'm searching for, I just bought a Blackstone griddle or my wife got me one for Father's Day. So I'm looking for all kinds of tools and stuff like that. So I'm looking for Blackstone accessories as a search. What percentage of that search results page do you think will be unique to me versus what percentage will be like cookie cutter across anybody that searches that

Neil:

Keyword? I predicted as this rolls out, and I could be completely wrong in this guess, but I'm going to put my crystal ball out here for a second. And guess that you're only going to see the most relevant listings to you, which may be seven to 10 listings. It may be four or five. It's certainly not going to be hundreds anymore.

Brett:

Interesting. I know when you Google

Neil:

Highest converting relative to your history viewing and intent to buy based on all the data that you've consumed or have had in your purchase history already and people like you,

Brett:

Super interesting. So I remember when Google first started doing personalized results in the SERP and they would kind of say it's about 20% of the results are personalized to you. And I don't know that percentage just probably shifted some over time, but it sounds like maybe Amazon's going all in on, Hey, we're just showing personalized items for you. I guess probably depends on the category, and I probably chose a bad example, Blackstone accessories, there's only so many of them, so maybe that's going to be pretty similar across the board. But what's really interesting about this two, Neil is to me this sounds like now you're just building products and building listings for people. Now you're building listings for your ideal customer. And so

Neil:

As you always

Brett:

Getting a clear picture of who your buyer is, what their life is like, what problem you're solving, what they're going to like about it, what kind of photos would speak to them, what kind of headline would speak to them, because then Amazon should know who's likely to buy it as well. And so this is more about marketing to people than it's building for an algorithm,

Neil:

Specialty marketing to the intent of the buyer, and they've been building that pattern of behavior for a long time, watching your frequently buys, watching data in the background of how you interact and what you purchase versus what you clicked on and didn't purchase and for what reasons you did. And they've been compiling that data for a long time and it's so much data, they haven't had the processing power to actually get it through a large language model, but now they do thanks to Nvidia and the creation of GPUs and all the stuff they're doing, they're building these hyper stacked based machines. I know the one that Elon's working with Dell on right now just went live like hundred thousand Nvidia S one hundreds or whatever the top end one that was, I forget the actual name of it. It's huge processing power. So it's going to be able to really quickly move that data, and I even predict things like, okay, I'm watching an outdoor sporting goods thing on freebie or something for the outdoor bass classic, and here it comes.

Instead of showing me a woman with Swiffer wet on the floor, it's going to show me the rods and the reels and the boat accessories and everything specialty relative to my niche and my thing. And I'll be like, oh shoot, lemme get that right. And it'll increase what's 30% of demand from television right now? I think it's going to increase at the 40 or 50% people watching it are going to end up on Amazon and buy the product because it's sitting right there. It's hyper relevant. It's like, oh, that's the fishing poll I want, and there it is. They're offering me a discount. I was just watching bass fishing. It's like,

Brett:

Yep, shoppable moments in those TV media moments. Really, really powerful.

Neil:

The risk is for those who don't listen to this, the risk is those who don't heed the change that are coming and like, well, I'm invincible. I've been there for five years. My ASINs been doing a million plus a year and I'm not going to be infected by this wrong. Your listing is going to be out of date very fast and it's not going to be optimized. You're going to have to be paying very close attention to

Brett:

That. So your advice then one is images and it does make sense and I've had a good friend of mine told me years ago like, Hey, if your images alone, don't sell your product, you need to go back to work on your images. The rest is important too, but the images, if they don't sell the product, get to work, make those better. So we run our images through an AI tool of our choice and have it tell us what the image is. If it's getting it wrong, we got to fix it. What else are we changing then? Are we changing the titles? We're changing the listing, the bullets, we're

Neil:

Looking at titles next really because titles should be very specific to the product type. So if somebody says something's heavy duty, that's really kind of a generalized term. One man's heavy duty could be, it holds a hundred pounds and another other man's heavy duty as well, it's got to hold 300 pounds. So a very good title would be something that's more specific to this is heavy duty up to 300 pounds. So we got to get more specific why? Because the engine's also going to see that and say, well, this will now be categorized into products that can maintain up to 300 pounds. It will differentiate you in the model itself. Cosmo's going to know that if you just put heavy duty, you're going to be lumped into anything that's heavy duty and not hyperfocused. But these changes are going to have to happen, and the titles I see on so many listings are really poorly done.

That's not speaking to the audience or a specific pain point or need and giving them a specific answer that's like, oh, great, this is the one that will hold up to 300 pounds at the cart. Yeah, people can change that really quick listing and title next. If images are something you don't really understand what your customer might want, and as you had said, very astutely, got to know what the customer wants and what they want. Go to pick fu. We use pick foods, great system, love that tool and get your product feedback for people who are on prime and find out which image they like the best and continue to do that process over and over again. Never settle for just one optimization now and something in six months because people like us are doing it continuously and we're going to out position you, so you have to stay on top of that. Always look to improve, then look better, put it back, try the next one looks better, leave it there and just keep optimizing for every little inch you can take because you never know that one will last. 1.0% of CTR might get you above the next largest competitor and boom, you're going to see yourself go on a ride.

Brett:

Yeah, I've said it and forget it's never going to work on Amazon. Got to, I love that initial test on pick fu where it's, it's no risk. We're just showing images of the people, they're voting, but it's almost instant feedback and then you put the winners on Amazon and see how it performs there. It's really beautiful. Two step

Neil:

Process. Always be optimizing through the listing. The title bullet points would be secondary, of course we know reviews have their impact, someone can control in someone we can cannot control when it comes to reviews and of course never fake your reviews or do any of that stuff carte blanche, right? But reviews have a positive impact course in the longevity, the things that are harder for you to incentivize or change or manipulate, so be very careful that. But when it comes down to the listing and conversions, your bullet points would be third and then of course a plus content premium level A plus content will be kind of the fourth. It's not really the first, especially when you get to mobile because back to that, again, 60% of all sales were done on prime on mobile, which means no one's really scrolling through all of that listing a plus content on their mobile. They're simply going through the images, they're validating the title, and if you notice right below that, it's add to cart. So if you don't get them in that first, second, third scroll, you lost them on

Brett:

Mobile. Yeah, totally makes sense. So only for a higher consideration product, are people really going to the a plus content? I still think it's important to kind of shape because when it does feed Amazon more information and for the few people that get there, it's great. But yeah, for a lower ticket item, low consideration product, they're making the decision before the A. Correct. They've

Neil:

Already started, they're just looking at the

Brett:

Price. So let's talk a little bit about rufuss, the AI shopping assistant, and I'll share a quick story here because I really just started interacting with Rufuss over prime day over that holiday, and so probably a lot of listeners have seen it already, but you've got a listing opened up and there's kind of these prompts that are there. Either you can ask Rufuss a specific question, your own question, or they give you some prompts like, Hey, what are customers saying? Or does this fit true to size if it's apparel or something like that. And so I was looking for a product, some cookware, no, I'm sorry, I was looking for that too, but I was looking for an autonomous vacuum, one of the smart vacuums. My wife was interested, so I found one and I clicked on what are customers saying? And it was interesting. Rufuss talked me out of buying this vac. People are pretty mixed. It's pretty mixed on whether this is effective. It's pretty mixed on whether this actually works and you can't customize it. It just pointed out a lot of the negatives, but it was pulling all of that from the reviews, which was super interesting. Well, it

Neil:

Does. It pulls it from the reviews, it gives you the summary. If you've noticed there's an AI summary that occurs now on the listings and RUFUSS helps pull that forward right away. What are the major bullet points? What are the green and yellow and what should you be cautious about? That is something to some degree that the seller can control and to some degree they cannot. In fact, much of that, they cannot control about what Rufuss has to say. So there's where the amplification and a smart amplification of this shopping assistant is going to be on the valid aspect of your product, the creation and innovation of your product, and making sure that the reviews are amplified properly through rufuss. Something you can't control.

Brett:

Yeah, so you've got to build a great product, you've got to get enough customers there. You've got to get good authentic reviews or else Rufus is going to find it, right? He's going to bring

Neil:

Find, drive right into everybody's attention because they're just seeing a point driven. We're six second or less people. We're going to skim through there and be like, okay, well quality is low. People didn't like the value of this, and that shopping assistant is going to become much more powerful as an assistant to the reviews. And we always wondered how Amazon was going to fix some of it's review based problems,

Brett:

Right? Which these are real problems.

Neil:

Absolutely. Pros on that are going to be that this is going to amplify good products better. That may have been hidden a little bit in the process of other sellers simply having more time in market and reviews. However, it's a very negative amplification. If you're not careful, it would sink the ship because it will take reviews and then anything summarized will become negative. It's also dangerous in that way, and I hope Amazon puts in a little bit more fail safes on the brand management side to stop fake reviews from manipulating Rufus summary. That could absolutely destroy you,

Brett:

Right? That's still one of the biggest problems on the platform. It still is. I think Amazon has made strides, but the negative, the fake reviews, it's still a crippling

Neil:

And people are like, well, that's Amazon. This is the ecosystem buyer. I get all that. It's a historically long challenge and a lot of data in so many sales and people are like, well, I don't see that on TikTok, and you don't do this on Shopify. You can manipulate every review on Shopify. TikTok shops reviews is just wide open for anybody to do anything they want right now. And so they really haven't put any of the fail saves against the marketplace. And so it's not really a fair comparison. You could look at Walmart, they're doing a much better job of review management and staying on target with review qualifications. They've spent more time than the other platforms getting closer to a more traditional true review and integrity of the reviews. But even as they grow, we're going to face some of these major challenges. So again, it's not apple's to apple's comparison to say reviews on Amazon are all bad in their situations manipulated because I see it on Shopify and all this other, eBay's had that problem forever, right? eBay's always had that problem. It's been one of their downfalls.

Brett:

And so one other thing I want to point out about Rufuss, which I think was really interesting. Another quick anecdote. My son Benjamin, he's seven. We just watched cars three for probably the 30th time, but if you got him thinking he's got a little bit of money that he saved up, and so he was like, dad, I want to shop or cars three toys. So I gave him my phone. Amazon was pulled up, he's looking at different options. He wants the tractor trailer that the car goes inside. And so he found one, I hear him just kind of talking to himself, not really paying attention, and then he's like, dad, look, check this one out. This one, the car will fit in the trailer. See, it says that it will right here. It says that it will. And he had interacted with Rufuss. Oh boy. He clicked on buttons, was like the car will go in the trailer, so this is the one that I want. And I'm like,

Neil:

Alright,

Brett:

Figures it out.

Neil:

Our kids getting involved as we were laughing about earlier with it, one click purchase and stuff all of a sudden with Rufuss helping them, it's like, oh crap. But the intelligent aspect of that is really cool because it's going to start giving you personalized information about your history and the products you purchased and what accessories and goods match up with those, which goes back to brand building again. If you're a single or even three or five SKU product-based business, you are not big enough yet to really have enough data for these systems to compliment you in the coming years, right? We've talked about more than five SKUs for a long time. Why Amazon told us personally that 70% of the FBA sellers have less than five to seven SKUs in their entire seller platform. I'm like, oh, you guys are. Then they told us, well, how do we get more? It was like they told us you put more SKUs in the system, you get above 10 to 15 SKUs and then all of these other things will happen. We're like, well, crap, launch more products. But still people are not paying attention to that. Why? The data you're giving the system is going to be fed into things like Rufuss and Cosmo and it's only going to amplify what you're doing, your reach and how you will control more market share and gain more market share through those systems. Not enough data and it won't be relevant enough.

Brett:

Let's talk about brand building for a minute because this has been a trend for a number of years. We've been preaching it at OMG Commerce, all our Amazon clients that you got to think beyond just being a seller, and I know that's still a term that we're using, that's fine, but think more like you're building a brand. And so you just touched on SKU count or number of ASINs. That's a critical piece of having a real brand and not just being a seller on Amazon, but what are some of the other components of how do I build a real brand on Amazon?

Neil:

Well, there's a reason why Amazon has a billion SKUs. There's a reason why Walmart stores have 250,000 of them in there's because they know that less than 20% of all those SKUs make up their 400, 500 billion a year in sales. So if we know that about retail and we borrow it for the e-comm world, what does that tell us? We need to be building a brand that has a wide enough stance on it with enough SKUs to give us those kinds of numbers. You're simply naive. If you think that you're going to take a multi seven, eight figure business out to market with one to two SKUs, in fact you're dangerously on the precipice of crashing the entire business. If one or two of them go down, no matter what platform you're on selling 'em, it could be your own website, okay? We've got to expand that SKU base app that is a brand driven asset, giving people more of what they want and different shapes, sizes, and boxes.

We know this phrase, and we've probably heard it, success is boring. Why? Once I dial that funnel in dial that vertical in and got my cylinder, I just keep putting more and more of the same products in there and just keep offering innovations and changes and shapes and colors and shapes, et cetera, and widening that base out so that I can find those other products that will rise to the top. That is a brand strategy that leads to you moving away from a product-based business and into a brand-based business that will sustain for a long time, okay? Long enough that you realize that all products have a saturation to them. Now, everybody's afraid of saturation from the beginning. I'm more concerned about saturation in the long run, which is where a product business owner should be focused on the short term, but a brand owner is focused on three to five years.

So I'm thinking very differently about a brand strategy than probably most of you are. And that's what I hope you gain from this is to get to the point where you're starting to think, I need to move more products into the market, find the ones that rise to the top, find the complimentary ones that rise with them, and give enough data to be able to get out of saturation into a hole and only segment saturation into certain verticals when it occurs, and then remove it through innovation. Once I do that, you realize product in innovation is a natural legacy of a brand, and brands like 15 burger joints on the corner don't go away when the products continue to innovate. That's why there's 15 of 'em, right? So everybody's wondering, well, what's the real difference? I mean, the simple difference isn't just more products, it's more emotional appeal and dialing in over a longer time that emotional response that your customers get.

So they're willing to talk to other people and come back and BRI you later. And then if they buy another brand, they feel bad that they didn't buy yours. It really wasn't as good as the one they got, and they'll come back and buy yours again later. So then we move into real metrics of business, the CLTV or customer lifetime value and move into larger metrics that allow us to gain more value from that instead of just looking at first purchase acquisition. Whereas so many brand owners who want to be brand owners still focus at the product side. They're always looking at first customer acquisition, and they're not considering what the value of that customer is. So in simple terms, for those who are currently selling on Amazon, Amazon itself, just as a platform happens to know this. We'll talk about the other ones in a minute if we want, but Amazon itself has a thousand dollars a year Prime membership, CLTV, 12 months, $1,000. What am I going to do as a brand owner, Brett?

Brett:

Yeah, I'm going to go after Prime Prime. I'm going to

Neil:

Go after Prime members to get them to buy $1,000 of my product in a 12 month period. That should be my CL tv. I should match that. So if I have a $1,000 product and sell one of them, congratulations. Right? True. But that's not really how it works. You're going to sell a hundred dollars product 10 times at least, and you're going to get 'em on subscribe and save, and you're going to buy other products. You should be looking at that as more of a minimum because that's what Amazon's basing its product based model and its revenues off of Match it and watch what happens.

Brett:

Really cool. So we're looking at minimum of five SKUs, right? So beyond five SKUs puts you in the top tier of FBA sellers, and I think one of the things that I like to look at is what does a customer say after they buy your product and they're talking to someone comes over to visit, they're like, oh, hey, where did you get that Tumblr? Where did you get that knife? Or whatever. If the person just says, oh, I just got it on Amazon, I don't know what it is, but I got it on Amazon, or do they say, oh yeah, it's this brand and I bought it on Amazon. And one example, a buddy of mine, Brian from Simple Modern, was on the podcast a few months ago. They built this brand, simple, modern starting on Amazon. Yeah, good stuff. But it's such that I would say to someone like, this is my simple modern Tumblr, rather than leading with, oh, this is something I got on. Amazon takes work and intentionality and understanding who their customer is and building the product for the customer, and then of course all the branding components that go along with that. But I think that's really where the game is headed, right? Brand building and not just, well,

Neil:

It really is. So in simple terms, if you're a seller or you're new, don't send product into Amazon in the original China's Chinese packaging, right? Brand differentiate from the very beginning. Then you'll move away from, I found this on Amazon to, it's actually simply modern, the Tumblr. It's in your image, in your products, in your packaging, et cetera. Don't be lazy. Take the next little step to finish packaging and branding. It could be very simple. It can increase the value. We've taken one product and innovated it by simply increasing the brand value through the packaging and sold the product for more. It's about perception

Brett:

Of that value. It makes sense. Just like packaging sells products on a physical shelf, the packaging sells products on the digital shelf. I

Neil:

Know everybody buys it. It's kind of silly, but it's the iPhone and Android box. It just, it's so different when you're paying for it and you feel the difference in it. Well, we are driven by that feeling, so we need to make brands that get that emotional connectivity and stay with us for a long time. That's why you and I wear white new balance, right?

Brett:

It's a dad life, man, the white new balance trend. But I hear there comes an age, they are coming when the comfort is just too much to resist and you have to,

Neil:

Jts are making a comeback, right? J are making a comeback. Everything was

Brett:

In high school.

Neil:

People are so funny. You talk about Brandon awareness, it's just a quick story. I was in an airport, I think it was Colorado, was headed back east a while back. I was in line, the lady who was in front of me, I believe it was Delta Airlines if I'm not mistaken, I noticed that she had some towels on her case and I looked over and there was my brand on the side of it and I go, Hey, what do you of those towels? And to your point, she said, oh, this is brand name. I got it on Amazon. I'm like, they're really cool. And she's like, and I go, I sell those. And she goes, you sell these products? Yeah, I sell those on Amazon. She's like, well, that's so cool.

Brett:

My brand,

Neil:

My product in the wild.

Brett:

That's awesome, but that's when you know it's a brand. She said the brand name first. Brand first. I do this with other products. I'm like, I don't know what it is. By got on Amazon was whatever.

Neil:

It's something I got off of. I can't even think. And that's what so much of the TikTok stuff is because literally, here's an example of that. I was looking to play with this little thing. I got it off TikTok shops and I bought it, and if you look at the product and the thing, it was selling in relatively good, but there's literally nothing on it. I have no idea who built or manufacture this thing. It's just, it's a box from nowhere land.

Brett:

Just a quick money grab right there is what that was.

Neil:

Well, they got me for my six bucks,

Brett:

Hopefully. We'll see. That's hilarious. So I've got three other topics. We're almost out of time. So one quick one, and we'll make this so brief that we're probably going to do it injustice, but we're going to go there anyway. Profitability. This one we talk about a lot. This is where really everybody in the industry is focusing is how do we grow profitably? I think there was a time in e-commerce and even Amazon where it was like grow at all costs. We'll figure out profits later. Those days are gone now we need profits today. How do you coach people? How do you think about it with your brands growing profitably? Just kind of your top two to three tips.

Neil:

So my baseline of expectation for a new brand or moving an existing brand into this position is 20% or greater. How we get there and when we get there is just a matter of the numbers. So in any 20%

Brett:

Ebitda, right? So 20% net net,

Neil:

20% net ebitda. So how do I get there? I got to have products that actually build into that. So the portfolio builds into that. So the entire brand, after all cost of operations, goods and services, et cetera, it come down to 20%. So the end result is I need to obviously start at the product level. So for us, we don't sell products that have less than $12 in net profit per unit in them. Point blank after all fees, goods stacked, returns, shrinkage, advertising, et cetera, $12 minimum. Typically we're in the 24 40 $8 range. That gives us enough profitability to acquire the customer organic sales, to obviously balance that difference and then stay in the growth mode with the business. So knowing that from the very beginning, that is where we need to go. If you're not there, you need to move yourself into an elevated position, which means you need to elevate and every product you've got can be elevated in your mind.

You might be like, oh, I see other products. There's no way I could sell this product for more money. You're wrong, point blank. So you have to be able to look for ways to innovate and elevate right all the way through to a notice of allowance for a design patent. If you can get that on the product, you're going to indemnify yourself and add additional value. Of course, you got to launch new products to get a utility patent, but you can reinnovate products in a brand or relaunch a new product that has the opportunity to innovate and get it to a utility. If you can, and it exists on Amazon, then you can go right back and offer them a cease and desist letter or a royalty agreement, and here's your royalty agreement. I now own the rest of the product in this marketplace and the becoming effect, I believe going forward.

To answer your question, kind of forward thinking in the question is that in 20 25, 20 26, it's my personal belief that you are going to need some design patent or utility patent to really defend yourself in the coming marketplaces. And that will differentiate above Chinese sellers and everything else. Especially as we see Amazon trying to make a very short term, in my mind, a temu move that's going to literally implode here along. I think there's just an opportunity cost to do that, and it's going to destroy itself. So I don't personally believe that has a long effect, especially with anything changing in the geopolitical world. I think that's too dangerous of a move. I think it's an opportunity cost. We're going to see, most likely they'll back out of it at some point because it's not going to be really sustainable in the end. But for us, brand and long-term growth is going to come at the profitability from the product all the way through the brand. So again, cost and operations get down to where's the rest of that money go. I don't hire employees.

Brett:

Nope. Don't hire employee. That OPEX has got to be really, really low.

Neil:

It has to be low, right? But it doesn't, through automations and systems and tools, now I can take one operator and have them run two or three accounts because once they're running them under SOP, once they're running 'em with OKRs, once they're running 'em within systems of automations, things we developed a voltage, things we use externally to help create the automations of that AI being one, systemized automations and tracking being another PPC automations and large language systems that basically go in and automate PPC management for us, once we know it's dialed in, that can take one person and turn them into a multi-use case across multiple businesses. And so we can run very lean in this model at very large scale with everything being outsourced, Amazon a WD, third party logistic warehouses. You don't need the freight and shipping management of that. So that gives us the opportunity to scale profitably in economies of scale without going operationally. How do I know? Because I ran a 21,000 square foot warehouse with 12 employees once upon a time. I don't recommend it. It's no fun.

Brett:

Not the business. You want to be in the business,

Neil:

You don't have to be in that business you did once upon a time. But in literally the last five years, thanks to hypergrowth expansion of the markets during a certain period whose name shall not be mentioned, that period allowed for massive growth of automations and systems that do not require me to have a warehouse anymore, to move logistics and product everywhere in growth.

Brett:

It's exciting times, man. It is a crazy time to compete against Chinese sellers and the team moves of the world and fake reviews and all this stuff. But it's also a great time because I really believe we touched on it, right? You build products now for customers, build products for your avatar and think building a brand and how do we continually extend our line and launch the next product because futureproof our business. And then how do we think about profitable growth? How do we treat this a real business and not just a money grab? How are we thinking about managing our p and l and optimizing for ebitda? Because if we want to have an exit one day or we just want to ride this thing for as long as we can, you need to treat it like a real business.

Neil:

You have to, because in my world, there's no such thing as a side hustle or a hobby business. You're going to do this, right? And then we're building and growing and of course we're exiting and acquiring as you and I discussed. And so that way I'm talking from a buyer perspective. I don't want to buy your single channel business. Totally. It must have multi

Brett:

Omnichannel, right? That is risky. I think. Yeah. The trend is omnichannel. And so for those that are listening, because we're basically out of time here, but for those that are listening, who should reach out to you and how can they reach out to you? And what do you guys do? Because you guys are buying brands, you're selling brands, you're coaching and building, helping you build brands. But talk a little bit about what you do and then who should reach out

Neil:

To? Well, we are launching, growing and Building. We're a consultancy group. We have a closed mastermind called Business Builders, which allow people to come in and I train them as CEO operators to give them a leg up, an opportunity to run their 100% owned business model. Why? Because in the end, I have a first rights of refusal to acquire that company in three years to five years when it gets above a million in ebitda. So I take them from beginning launch and all the way through growth and optimization to exit. We exit to our private equity group. So if they want to do that and they're brand new and they want a real run at this to make sure you bring 50 to a hundred K to the table, because we're going to go real fast. We're going to go hard. We're going to go into places where there's opportunity costs, but that's where the profits are.

It's where the growth will really be. It's where the market opportunity is. Don't treat it like a small business and it's going to be a capitalized inventory business. This business grows on capital inventory, which means it requires cash like real estate. So don't think about it any differently. You got to buy more real estate, more inventory to make it really grow, but you don't have to buy more people unlike real estate. And I don't need totally, it's turn tenants and termites either. Plus I can return much faster than $500 a month on a rental property at the growth and growth. So if you're in that place and you think about it and you're new, that might be something you want to talk to me about. We've got free resources, you speak to me, it's an invitation only kind of thing. We'll see if we're a good fit and maybe we get in the same rowboat.

I just want to make sure our goals and expectations are set for growth and they're set for exit, which is kind of the model we work. If you're an existing seller and you need optimizations of growth and you've kind of stagnated through some growth within your brand, you're not really sure how to turn that around or turn the gas on it. We've done that with a number of companies, anywhere between million to 30 million in sales a year and help them grow and expand and create more profitability out of their bottom line by showing them things that they really didn't optimize for before. And even from growth capital methods to grow the business through capitalization methods as well as additional products and leveling up. We teach them how to do that. And then of course with the exit in mind, always with the exit in mind.

Brett:

Yeah, love it. So you're building coaching incubating brands that you can one day buy and then build and sell again. And so it's really interesting model for sure. So what's the best way to get in touch?

Neil:

Voltage dm.com? Voltage digital marketing.com. You can go check that out. Yes. My last name is, it's three letters. You can Google me. I'm not far away from anybody. Voltage, one word. You'll find my social medias. That's another way to connect, but probably the website's the best way to unlock some training there, see what we do, understand how we move this forward, and of course, reach out to me if there's any interest.

Brett:

Awesome. Neil Twa, ladies and gentlemen, we will link to everything in the show notes if that's easier for you to find. It'll be there. But Neil, this was fun, this was fast, paces was intense. You delivered a lot of value, so really appreciate you coming on.

Neil:

Thank you, sir. Appreciate you having me

Brett:

Here. Absolutely. And as always, thank you for tuning in. We'd love to hear from you. Hey, if you haven't done it yet, leave that review on iTunes. Also, if you're listening to this and you thought, Hey, this would be a great episode for so-and-so to listen to because they're building on Amazon, please share this. That means the world to me. And with that, until next time, thank you for listening.

‍

Dive deep into the minds of online shoppers with Jon MacDonald, founder and CEO of The Good, as he unpacks the psychological forces that shape e-commerce behavior. In this episode, Jon and I explore key insights from his new book, Behind the Click, offering actionable strategies for e-commerce brands to enhance their digital customer experience and boost conversions.

Key topics discussed:

• Understanding the two types of online shoppers: 'satisficers' vs. 'maximizers,' and how to cater to both
• The critical questions customers ask themselves before making a purchase, including 'Does this company understand my problem?' and 'What does buying this product say about me?'
• How to create an emotional appeal that makes customers feel like they already own your product
• The importance of post-purchase communication and why asking for reviews too early can backfire
• Real-world examples of successful e-commerce strategies, including Easton Baseball's 247% increase in online sales through a simple quiz
  

Whether you're a seasoned e-commerce professional or just starting out, this episode provides invaluable insights into creating a more engaging and conversion-friendly online shopping experience.

---

Chapters:

(00:00) Introduction 

(05:58) First Impressions and Understanding Customers

(09:59) Making it Easy for Shoppers to Find What They're Looking For

(23:07) Addressing the Needs of Different Shopper Types

(28:50) Is This Product For Me?

(33:26) Making Emotional Appeals to Drive Conversions

(41:37) Effective Post-Purchase Communication and Guarantees

---

Show Notes:

• Jon MacDonald (LinkedIn) 
• The Good
• Behind The Click
• Opting In To Optimization 
• Alchemy
• Why We Buy
• RevAir
• Easton Baseball
• Bass Pro
• 1978 Hertz Commercial (w/OJ)
• Simple Human

---

Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

---

‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more

---

Transcript:

Post-purchase, unfortunately is the step that most brands overlook, but it is the biggest lever to being successful in my point of view.

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today I've got an old friend joining me on the pod, Jon MacDonald. He is the founder and CEO of The Good. And very few people on the planet understand online buying behavior, shopping, behavior, version rate optimization like Jon. And so we're going to be talking about Jon's new book behind the Click and talking about psychological forces that shape the way people shop online. And so some really cool topics we're going to dive into here to make your shopping experience better so that you can delight customers and engage them and get them to convert more. With that, Jon, welcome to the show, man. And how's it going? Great. Thanks for having me again. Yeah, we have known each other for quite some time now. It's been great.

I think this is maybe podcast number three, four. I don't even know. I'd have to go back and look, but I'm trying to remember when the first podcast we did together was, it was well before covid, so we're talking 2017 or something. 2018 maybe. I dunno. Well, we're both OGs in this business, right? Yeah, no doubt here. We're no doubt, man. No doubt. So yeah, really excited about diving into the book. And so what's the big idea behind the book? And there's some really practical stuff that we're going to unpack here as we go, but what was the big idea and why write a book? Well, I really wrote a book. I mentioned I'm an og, I guess been in CRO for 15 plus years now. It's hard to believe I started the good that long ago, but the more work we've done to optimize conversion rates, the more we've realized that to make real lasting gains, you have to pull back way further than just a conversion.

And there's so many factors that affect conversion from psychological, deeply ingrained factors that we deploy every day and they happen before the customer even begins to think about purchasing from you. And so every element of your website tells the customer something about why they do or do not want to work with or buy. So I didn't want to just tell people tactics to use to optimize those digital journeys. There's so many tactics out there. I would say CRO is actually becoming a bit of a commodity. It is, dare I say that word, but it a hundred percent is I wanted to show more about why these digital journey issues occur. Why are your conversion rates low and why a specific tactic might work for your specific audience and explain when it all comes down to it, you have to explain it as fundamental psychology behind the issues so that the teams that we're talking to can come up with solutions that work for that specific audience.

Realizing that decisions online are not just logical, but so heavily influenced by psychological factors that I felt like it had to be said. I had to bridge this gap by applying psychological principles to improving digital experiences and try to rise above that commoditization that's happening, the checklists world that is out there. Yeah, I mean it's so good and certainly there's value to saying things like, hey, better headlines on your product detail pages, headlines that are benefit oriented and that highlight the features and better product imagery and add to cart above the fold and some of those things. But those are sort of table stakes, right? That's potentially the commoditized part of this. But understanding the psychological factors behind why we do what we do as shoppers, what we're looking for really matters. And so I'm going to recommend two other books obviously. First of all, shameless plug for you, get the book behind the click, but two other books.

Have you heard the book Alchemy? I have by Rory Sutherland, I believe. Yeah, I love this. He talks about, hey, some problems in business and in sales and in social settings, they don't require a logical solution because humans aren't always that logical. And he uses the term psychological, not psychotic, but using psychology and logic. And he talks about how sometimes what you do to get people to donate more to a charity is not the logical thing. It's kind of almost an illogical thing. And so understanding the psychology there is very important. And then one book that I know you and I both love why we buy Bi Paco Underhill, I love how he talks about simple things like, hey, when you first walk into the store, this is like a physical store, brick and mortar retail store. You need a landing space and you need to feel comfortable.

And people are making decisions in those first few seconds, am I going to politely scoot out of here as quick as I can or am I going to go deeper and is this the right store for me? I'm looking at the people, I'm looking at the products. Is this store for me? Am I in the right place? And I think a lot of those principles apply with nuance to the online experience. And so really excited to dive in here. And in fact, that's a great place to start. Let's talk about kind of first impressions. So when someone lands on our site, whether that's homepage, landing page, wherever they land, they're making evaluations. And I know in your book you talk about there are two questions and actually more than this, but two questions you mentioned that I really like. One is, does this company understand me?

And two, does this company have a solution to my problem? So unpack those for us a little bit and how do we think about those so that we can craft an experience that really delights customers? Well, I think you hit it on the head with the landing area in a retail store, right? I am firm believer, and I know you've heard me mention this several times over the years that really should treat your e-commerce site as if it was a retail store. Meaning if you wouldn't do it in retail, don't do it on your e-com. Too many brands turn visitors into a number as opposed to a human because they can with e-commerce, it's easier, but there are the same psychological principles at play here with that landing, what PA was trying to talk about was basically two psychological factors that then lead to the questions that you mentioned.

The first is anchoring bias. So this is the idea that people will overly rely on that first piece of information that they encounter. So if you don't have a good landing home spot, they're going to bounce, right? They're going to turn around and leave the store or move off your website. And then confirmation bias, which is the tendency to give more weight to information that aligns with preexisting beliefs. So if somebody came to your site via an ad or a friend referred them, whatever that ad or that friend said really needs to be reinforced when they get to the site because they already have this preexisting belief from that referral or that ad. And so this is where people are asking themselves, does this company understand my problem? Because consumers are only at your site for two reasons, and that's to understand if you can solve their pain or need and if you can convert and then leave as quickly and easily as possible, get on with their lives.

Nobody's at your site to hang out. So really that first question of does this company understand my problem is all about crafting that first impression, making sure that you have a great anchor to reinforce along that entire digital journey that follows. So open that welcome mat, right? Make sure you're speaking the same language that was prompted to get them there. And then you have to follow it up pretty quickly. What does this company understand or have a solution to my problem? If you do understand it, then can you solve it? Okay, so this is really where I recommend brands do user testing to determine what your customer's needs and what their assumptions are because they're coming to your site with these assumptions formed by that first question, I have a problem, do they understand it? And then they're going to have all these assumptions that come out of that.

And so really what you need to do is address both of those questions immediately within the first third of the homepage if you can, or whatever landing page they're on, which is where it becomes a little more of a broader site journey. If you have an ad, you should take them directly to a landing page that addresses the content of that ad. Don't just send 'em to a product detail page. Don't just send 'em to a homepage. Make sure there's alignment there if you send them to a specific page. Yeah, it's so good. And so talk about some specifics here or maybe what would be helpful is looking at some examples. So what are some companies, what are some sites that do this really well? What I can tell you is how many SaaS sites have you been to SaaS products that we use every day?

You go to this site and you're like, I have no idea what this company does. It's word soup. You're like, oh my gosh, what are they trying to say? I can't tell you what they do. They're trying to talk to too many people. And this is really where I think even a lot of e-commerce brands struggle is they don't have a very clear ideal customer profile that they're speaking to. And this is where working with OMG, et cetera, where you would run ads, very specific segments that take them to very specific landing pages that when you marry those two up can really address both of these questions very quickly and get people into that next phase of information gathering. But I would say in terms of good sites that do this, the reality is I am not a fan of looking at competition. I'm a fan of focusing on yourself.

And there are, I talk about it in this book quite a bit. I know I talked about it a lot in the last book, opting into optimization. But the reality is that there's a reason race horses wear blinders. If you want to get to the finish line first, the quickest path is directly there, right? Straight line between two points. If you're consistently looking around and looking at the competition, who knows if what they're doing works for them. Who knows if you're being opted into an AB test, who knows if that tactic was brought by an executive or recommended from customers or their private equity firm said, you have to say this, right? Nobody knows what the situation is except for them. So I'm a huge fan of instead of looking at your competitors or trying to copy from others, is talking to your customers and asking them, what brought you here?

What are you looking to solve? Do you think we can solve your problem? Looking at your customer's information is really going to get you where you want to be much quicker than looking at competitors. Yeah, I think it's important to be aware of the competition, but be obsessed with your customers. And I think if you, to use that racehorse analogy, you do want the racehorse to focus, but there's also something about feeling the other horses around them. Maybe some horses get faster, and so we can do that too, knowing the competition is there, I'm getting up earlier, I'm working harder, I'm aware of what they're doing, but I'm not copying what they're doing. I'm thinking about who is my customer, what do they want? How can I delight them? And you really know that by doing user testing, by watching your data, by doing surveys and things like that.

And so if you do that, man, you are really set up for success. Well, and this is where if you notice a lot of these, I have a bunch of breakouts in the book, and if you look at a lot of these, you'll see that they're right. I specifically did not mention who the clients were. I did not mention specifically any of the branding. I left all of that out and I broke it down to just simple wire frames because what's important is understanding the psychology behind what was deployed, not who did it, and whether or not it was going to work for you in that same manner. I wanted to show an example of something and use. So yeah, I specifically tried not to mention brands in this book as much. Nice, nice. Okay. So if we're going to answer the questions of, is this product for me or does this company understand me and can they solve my problems?

What are just a couple of tips. We talked about a few, but a couple of tips to how do we make sure we're addressing that properly? Well, I think the first thing you need to understand here is with that anchoring bias, you really need to answer that quickly. So right up front, it should be the main headline. Too many e-commerce brands focus on pushing one new product or have, heaven forbid, an auto rotating banner with lots of marketing. You really need to, at that stage in this discovery phase, these consumers, they're being pretty selfish. I don't want to spend my time here if it's not going to help solve these problems I have. So with that in mind, really want to focus on very quickly addressing those two questions right up front and center and making sure that you're doing testing on that to make sure that consumers align with it.

Now, the biggest issue I see is that too many brands continue to market when somebody gets to the site. Really at that point, I'm under the belief that your marketing has won. People are at the site, it's now time to facilitate a sale. I'm not saying that you deploy tactics, black hat tactics, et cetera, that are really pushing people in that direction. But I do think this is a problem that a lot of e-commerce marketers get wrong. They think that their website is a great repository for all this marketing when the reality is it just creates more challenges for the consumer to get through that information. And it's unfortunate it's an epidemic that I see all over the place. But yeah, this really, really great point. I think it kind of leads to our next topic. One thing I just want to call out really quickly related to this, I think part of this is just really deeply understanding your customer.

And I think to do that, sometimes you have to do things that don't scale, like talking to your customer, even talking to your customer on the phone and doing surveys and things like that. And I'll give you a quick example. One client of ours, rev Air, really unique hair drying appliance. It's kind of like a reverse hairdryer. You kind of to see it, really understand how it works. It's Scott, the inventor of the product and the founder of the company, brilliant engineer and inventor. And so it's almost like a reverse hairdryer where you put your hair in it and it kind of pulls air through and dries it. Anyway, I created it for his family, for his daughters. Turns out as he started to get to know customers, women with type four hair, which I was unfamiliar with the types of hair, but largely the African-American population falls into type four hair.

It's like revolutionary. This product works like nothing else. But they only found that out as they really got to know customers and talk to customers. And so then that really shaped the whole experience on what they did online and who they featured on the landing page, who they featured in their ads and how they position things. But it really comes down to how well do you know your customers? Because I would argue, Jon, as I talk to e-commerce brands, there's a lot of brands that really don't know who their customer is. Our customers a women that's 35 to 54. I'm like, that doesn't mean anything. So you got your customer, and one of the best ways we've found to get that information is to talk to your customer service team. Yeah. Because the ones on the front lines, they are addressing the questions that come in.

They're the ones where if you say, Hey, for one week I want you to fill out this simple Google form every time you have a conversation and just answer a couple of quick questions. And really it's what type of question you answering. So you can filter by that. And then what was the question they had or what topic did you address? And is there anything else you'd like me to know? Within a couple of days, you're going to start seeing similarities. And we had this issue years ago now with the Easton baseball, they make bats. Oh sure. They around forever. In fact, if I can point, there's a bat right up there. They gave us, I see it. Yeah, it says the good. That's awesome. That's so cool with their logo next to it. But they were basically, if you went to their website, you just got a wall of bats and they all look the same.

If you can imagine small picture of a bat, they all look exactly the same in a grid. And parents had no idea what bats to buy their children, but the kids were like, I need an Easton Bats little league. This is what everybody swings. Okay, great. So what they started doing is we had 'em talk to their customer service team said, what are the biggest challenges? Well, we're getting a lot of returns and phone calls from parents that are upset. I said, oh, wow, okay, tell me more about that. Well, the problem is the kids would go and use it for batting before a game and they'd warm up with a bat, put a couple dings on it, scuff marks or whatever, and then they'd get up to the plate and the umpire wouldn't let them swing with the bat. And they say, oh, that bat's not certified for this league.

You can't use it. And the parents were so upset because they had no idea that there are different types of bats for the different leagues that have to be certified. And I can't imagine what it was like buying a bat on that site beforehand. So what we decided to do was, okay, let's create a quick quiz. First question, what league is your kid in? Second question that filters it down to maybe 10 bats. Second question, what type of hitter are they? Because not every kid is swinging for the fences, just it's the way it is in little league. Okay, we can answer that question really easily. A parent knows their kid. And then next was budget. If you answered those three questions, you were able to get it down to one, maybe two bats, and all of a sudden it's a no-brainer. As a parent, do I want to spend 400 or 200 and okay, I'll spend 400.

I know this bat is going to work for my kid now because I feel much more confident about it, they're going to go and not get half the return it. And this led to a massive 247% increase in online sales, not to mention the fact that they had severely reduced returns. So all in terms of revenue, I mean the return on investment of just talking to your customer service team, that is huge. Yeah, this really underscores something you said earlier that nobody wants to hang out on your website unless you are Bass Pro shops the physical store, and people want to go and look at the museum and just dream about boats or whatever. They don't want to hang out at your site. So no parent. But I think probably what Easton did, which is what a lot of companies do is like, oh, you want to bat we have 5,000, which would you like?

And we're like, I don't know. I'm just going to pick one or let my kid pick one or something. Well, they were filtering wrong choice. They were filtering by color, they were filtering by technical terms. We know, and these technical terms were invented by Easton. It wasn't even like industry standard terms. It was their branding team and their marketing team saying, we want to be different. So we're going to name some of these new technologies we have and everyone's going to be excited about them. And meanwhile the parents are like, I don't know what that means. Sounds cool. But so yeah, once you start talking to the consumers, you understand what their challenges are and you can help 'em through that information phase. Yeah, really good. And so that really kind of leads to some of the next questions you mentioned in the book that you talk about is can I find what I'm looking for?

And then to go back to kind of Paco Underhill and talking about the in-store experience, it's even more true there where a lot of shoppers don't want to ask questions. Now, me, if I'm in a retail store, I'm going to ask, where is the whatever? Because I don't care what I look like. I just want to go get it and get out of there. But a lot of people won't ask. And so if someone feels confused, they don't want to look like an idiot, they're not going to ask in store. And I think online it's the same. We don't want to work hard. We don't want to feel like an idiot trying to find what we're looking for. So how do we address that? How do we address that online quizzes, great example. How do we make it easy for someone to find what they're looking for?

Well, I think what you need to understand first is that there's really two types of shoppers, and neither really wants to ask questions of anybody else, but the satisfiers they're called are the folks who will take that first solution to their problem and buy it and move on with their lives as quickly as possible. And would you call this shopper again? Satisfier. Satisfier, okay. Right. And then there is what's called the maximizer. The maximizer is somebody who is going to go in and open 25 browser tabs. They're going to go to all the competitors. They're going to line up everything, compare contrast, they're going to Amazon and doing all this research. And then each of the individual brands of the products they find on Amazon, they're going to their site. These are the folks that no matter how big the purchase is, and you would think this might vary based on the dollar amount being spent or the importance to the life of the person buying it.

Not true. There are people who will go buy the first car they see on a car lot, and that's a expensive purchase. And most people's lives, or there are people who will go and buy a basketball and they'll do so much research about what the best outdoor basketball is and what's going to last the longest and have the most grip, whatever. The reality is that no matter what your price point is, there's these two type of consumers you need to answer their questions. But it's not just figuring out what the questions are and answering 'em. You need to not overwhelm the consumer. So you need to provide the information. And the best at doing this I've seen is Amazon. Amazon really is good at this because they give you all the bullet points upfront, the short information, a few photos, and then you can add to Carta buy now.

But if you scroll down, you see on almost every product, even if the brand of the product has not done this, Amazon will do it. They'll do a comparison table, here's the one you're looking at, here's some other options. And they'll have the comparison table where they are very easily showing you how they align. Now, that is for the maximizer. They're trying to keep 'em on Amazon instead of going someplace else. So as a brand, what questions you're answering are going to differ based on your products, but those two types of people, you need to make sure you're addressing really quickly the bullet points. Yes, this aligns, I'm going to buy it and get on with my life, or here's the bullet points, but here's more information that you probably want to. And if you can address that in a way that does not overwhelm the satisfiers than you are in a good spot.

And I think looking at the satisfier and the maximizer and then trying to kind of assess who am I as a shopper, I think it kind depends on what I'm buying. I'm probably more maximizer if it's a ticket item. When I went to buy my truck, I really analyzed a lot of things and I watched a ton of YouTube videos on four wheel drive trucks, and I really nerded out and had fun with it. If I'm buying a pizza cutter or something like that off of Amazon, I'm just going to look at reviews and does the picture look okay? And worst thing going to happen is I don't like it. I give it to somebody else or whatever because I really don't return things. I dunno if that's what I've learned about myself. If I buy some on Amazon, those was a really expensive purchase, I'm probably just going to give it to somebody. It's too much trouble to return. They love you. Yeah, exactly.

But I think looking at it that way, so for the satisfier, if I can neatly package, what's the minimum amount of information that someone will need to know to feel comfortable making this purchase? Can I make that instantly obvious with the pictures, with the bullet points, with the title, make that instantly obvious. And then if it's somebody that's really getting into comparison shopping, then yeah, tables, charts, graphs, videos, other things that we can provide in another category. I like coffee a lot, and Jon, I like coffee paraphernalia. I've got a pretty nice coffee maker. I've got the espresso machine. I've got a nice grinder. I buy quality beans. So if I'm looking at a new coffee accessory, I'm probably going to check it out, having fun in the process. And so having those kind of dual pads or enough information for both types of shoppers, it's brilliant.

Yeah, I would a hundred percent say you're a maximizer through and through, even though you gave the example the pizza cutter. Because the folks who are satisfied is, what they will do is go and say first image on Amazon, when they type in pizza cutter, it will say Amazon's choice. They'll click that and then add it to cart right away. Okay, yeah, that's not me. All right. So they won't even look at the photos. They're not going to look at the reviews. They're just like, it's a pizza cutter. It's backed by Amazon says, it's their choice. Let's go. It does the job. I'm out of here. So that's where it's kind of like you don't want to get in the way of those people because that's easy conversion. So make sure there's that easy path as well. Yeah, remember there's a great sales analogy. I remember one of my first sales managers that I had, and I started selling when I was in college, and one thing they said was, Hey, when someone is ready to buy, when someone has said yes, shut up.

Stop selling and take the order. Start signing the contract. You could talk yourself out of it if you keep going. And I think there's some online application to that as well. So really, really good. Any other thoughts on the information gathering stage? Oh, one other brilliant question that you asked in the book, which I love this so much, then this is a question that customers are asking, who else has purchased this product? And if I join them, what does that say about me? So can you unpack that for us? Well, really what you need to do here, show 'em exactly what the purchasing choice says about them to other people. So how do you do that? Well, social proof is huge here at this stage, right? Because I want to look at not only what the results were or how happy other people are, but who are these other people?

This is where influencers come in and why influencers have blown up over the past decade. Social media has definitely helped that, but it's just made it an easy vehicle to address this concern in this question. Now, celebrities, I mean all the way back before, I mean you had maybe not the best example, but OJ Simpson running through the airport for Hertz at the time. He was well-known enough, dude, he was so lovable until he wasn't right. The naked gun movies, he was in those brilliant, the Herz commercials. Yeah, whole nother story. But the reality is that that was saying, Hey, I like that I too have had to run through airports to get to my rental car. How cool is that? That's relatable. And so you start saying, oh, wow, even he had to do that, right? So you have to start thinking about these types of things of how are you relating to the customers and making it realize that they are part of the community now.

And there's a lot of ways to do that. There's loyalty programs, there's forms, online forms, there's ways to have these influencers do more than just post a social post or a video, but be more involved. Maybe come into a studio and make a whole video about how this has changed their lives or something of that sort. This is also where infomercials on TV work really, really well for this specific reason. Oh yeah, I can see myself in that situation or whatever. So I think this is one of those things where going back to the psychology of it all the way back to evolutionary way, way, a long time ago as humans, if we were in a pack, we had a unit together with several of us, we were safer than if we were off alone by ourselves. So the need inherent need to feel like we're part of a group is hardwired into our psychology as humans, and it's unlikely to change.

And this is where even just going back to a few years ago, COVID was so hard for so many people because we are hardwired to be social. And when we couldn't be as social because the factors outside of our own control, it became really difficult for folks. And so that just pinpoints again, that psychology that is deeper rooted in each of us that we need to be taking into consideration when we are building these digital journeys and driving people to our website and trying to get them through to conversion. And that's why celebrity endorsements mean so much, even though that doesn't seem super logical. If I buy Patrick Mahomes cleats, I'm not going to run or pass like Patrick Mahomes. But it works. Influencers, micro influencers, they work because every buyer is thinking, if I buy this product, what does it say about me? Either the way it makes me feel if I'm the only one that knows that I bought this, if it's something that maybe isn't publicly displayed or what will other people think about me if I buy this?

And so yeah, it's a really important question that people maybe aren't asking out loud or thinking about consciously necessarily, but they are thinking about it. And so you've got to address it with your landing pages, with your homepage, with your ads. Is this product for me and what does it say about me? Love that question. So good. And you can see how you wouldn't be able to answer that question effectively unless you've answered the other questions we talked about first. Yes. So these all kind of build on each other as part of that journey. Yeah. Really good. And so then moving on to the purchase and conversion stage. So now we're really clear on, hey, this is designed for me. It will solve my problem. I am in the right place type of thing. It's also saying, Hey, this is for people like me and it's going to communicate something to my community that I want to communicate.

So then now how do we get someone to purchase? And so you talk about making an emotional appeal, so getting someone ready to convert. So kind of slightly preconversion, getting them ready to convert by making an emotional appeal. Can you explain that a bit? Well, the emotional appeal is if you are answering the questions up to this point, effectively, logically they're saying, yeah, okay, this is the right product for me. I could probably fit in here. Now is time to do that emotional angle because we're ready for it. Our psychology is ready for it. At that point, one of the best ways to do this is to make customers feel like they already own that product. So what is their life going to be like after they have this product? Okay, you're buying a pizza cutter right now. Last thing, we have family pizza night.

Every Friday here we have one of those uni out on our deck, homemade pizza oven things. Love it, man. Love it. And I can tell you the last thing I want to be doing is messing around with a pizza cutter when I'm trying to just enjoy pizza with my family, et cetera, it should just be something that's done and I don't even think about, right? So the emotional peel here would be, wow, what would it be like if the pizza cutter didn't cut, right? If it was too hard to use. If you ever used one of those ones that you see at pizza shops, that rocks back and forth. Yeah, I've never used one. No. Are those great? Well, they're great if you want to lose a finger, right? Don't give that to your 8-year-old. There you go. Exactly. You see a machete. Exactly. So you have to really be showing people what it's like in their houses and why a pizza.

It's like, Hey, here's a safe alternative, or here's a good option for have your 8-year-old use it so they can be more independent, et cetera. So start talking about things like that. They're going to hit on emotional appeal of what it's like when they already own that product. What's it going to be like in day-to-day use? How's it going to improve their lives in a way that's not just logical? That car can get you from A to B, and maybe though you really want to enjoy the smooth ride because you're going to be in that car and you're going to be driving 50 miles each way every day. So you just want a comfortable ride. So you'll see some ads on TV that will talk about how quiet the interior is, et cetera, right? That's more of somebody helping somebody realize that they're in that position and that is the emotional appeal to them.

So one thing I want to mention right here, and I'm open to suggestions, and maybe you have one, Jon, we do pizza night on occasion. It's not a regular thing. I applaud you for that. It sounds super fun. I don't know that we've ever purchased a nice pizza cutter. I don't know what the problem is. I don't know if we're buying in the wrong place or buying the wrong, I don't even know what brands we're buying, but seems like every time I turn around there's a new pizza cutter in the drawer and they're all terrible. So if you've got a good recommendation or someone listening's got a good recommendation, I'm all ears. Can I tell you what we do? Yes, please. Okay. Get a knife sharpener and sharpen the blade occasionally. That is the key because they all just go dull on the just go dull.

I guess it's a knife just like anything else dull. Right? Exactly. And that's what people don't realize is I had a friend when they came over, they were here just for pizza night one night, came over and hung out with us as well, and they were like, wow, do you have a knife sharpener? And I was like, yeah, okay, here you go. And they sharpened the blade on it. And now I'm like, wow, I'd never thought to do that. So that's the hint. Don't spend any money. I never thought about that either. So we just throw the pizza cutter away and buy new ones all the time. Just got to sharpen the blade. All right, well, that was a pro tip right there. That's a free tip. Optimizing your pizza night courtesy, Jon MacDonald. Thanks, Jon. That's awesome. So speaking of making emotional appeals, and it's so important to make an emotional appeal, there's a couple of things I want to point out.

I heard this quote from a guy named Roy Williams a long time ago where he said, no person goes physically where they haven't first gone in their mind, and that includes clicking a button to purchase. I don't click a button to purchase unless I've already pictured it in my mind, pictured owning that product and what that's going to be like. And I think if you look at the advertising grates, and you talked about quiet interior made me think of the famous David Ogilvy Rolls-Royce ad, right? Where it says that 60 miles an hour, the loudest noise you'll hear is the clock dash, right? And so you're just picturing, I'm in this luxurious ride cruising down the highway and I'm hearing the ticking of the clock. And so we've got to go there mentally, emotionally for they're actually going to do it in real life. So love that, make the emotional appeal.

What else are we doing here to make the purchase to guide someone and make it easy for them to say yes and bye? Well, I think the last thing to really be thinking about is if addressing that, if they think this is the wrong choice eventually, what is the worst possible outcome that they could experience? So really what you want to do here is eliminate all of those possible issues that they could have. What's the easiest way to do that? Well offer some type of guarantee. So build trust with them throughout the process up to here that you understand who they are. You're talking directly to them, you're making it easy for them, whether they are a SFI or maximizer, all those things that we've done up to now should have built some trust now guarantee. So if you do a guarantee now they're going to trust your guarantee.

They already have built up some trust through the rest of that process, right? Then if anything goes wrong, they know they can get help. They know that you're going to take good care of them. There are so many examples of when things go bad or wrong in a purchase and then you end up saying, wow, this was a horrible experience. I'm never buying from them again. But they have built trust up with me and I get ahold of them because like you said earlier, the last thing I want to do is ask for help. So the last thing I want to do is contact them to get help, get a replacement, whatever it is. So if they make that super easy, I'm all in. I mean, we just had good example. We just had a soap dispenser from Simple Human. They make really cool modern homeware stuff, and it was just a soap dispenser in our kitchen and it stopped pumping.

It was like an automatic one to touch whatever. It stopped pumping. And I sent them an email. Last thing I want to spend my time on, it was just like, Hey, this stopped pumping. What can we do? They're like, no worries. As a two year warranty, we'll send a box right now with a new one. Just put the old one in the box and use the label that's inside. Send it back. We're good to go. Two days later, it was at my house. They two day shipped it to me and I shipped it right back to 'em. And I got an email this morning, said, Hey Jon, we got the shipment back. You're all good. Thanks. If anything else happens, let us know. And I was like, I'm buying your products again. You doubt made it super simple and telling everybody, because this was amazing.

There we go, right? I'm telling the story right now. So again, what's the worst possible thing that could happen here without a soap dispenser for two days? And they send me a new one for free. Where's possible solution? And turning even that negative into a surprise and delight kind of moment, which is really magical. And so let's wrap up by talking about post-purchase. So how can we leave shoppers on a good note really no matter what? Yeah, well, I think post-purchase unfortunately is the step that most brands overlook, but it is the biggest lever to being successful in my point of view, because you're going to get your lifetime value up and you're going to get the return on your ads up. You're going to have so much. The easiest dollar to make is when you've already sold. So you already know that customer. They already know you.

So you want to answer three specific questions here where my expectations met. So help them to understand with proactive communication, what's going to come next, right? The good and the bad, right? Oh, well, we've had customers ask this question. Our product doesn't really do that, so we wanted to call it out. Now, that is one of the best things you can do because again, you're building up that trust, you're helping retain that trust. And most consumers can be like, yeah, okay, whatever. Did this product or service work as should. This is where onboarding, no matter if you're selling on e-commerce, you have a SaaS product, whatever, onboarding matters. And it can't just be a simple email flow. It really needs to be something where you send 'em to a video on how to use the product, how to assemble it, how to, thinking of the soap dispenser.

They have online videos on how to change the soap. Seems pretty easy, but it's actually not easy. I had to watch the video, which is how I know, but I was delighted that the fact that the video was there and worked. And then the third question people have is, what I make this decision again or recommend that a friend does the same. This is where too many brands ask for a rating or a review right after purchase. Way too early, way too early. You got to give some time. You don't know. And there's some add-on services out there that you can buy that will immediately ask for reviews, and they talk about how many reviews they can get you those people. You are not reinforcing the positive experience yet. You're just racking up reviews for review's sake at that point. And then you're not getting good detail in those reviews either.

And I think that's a really important factor. Again, for maximizers are probably going to read some of the reviews or just at a podcast with an Amazon pro, and we were talking about with Amazon now there's the AI shopping assistant, and you can ask Rufuss, what do customers say about this product, about X, Y, Z? And Rufuss is going to dig through those reviews and synthesize that for you. Even Amazon has been pulling out and saying, this is a frequently returned item, and they've been denoting that now on products. And if you're a consumer, you're going to look at that kind of with some side up like, oh, I guess I have to read the reviews, or should I just go to the next product? Depending on what type of buyer you are. Exactly. Yeah. So good. Well, Jon, we are out of time. One last plug here.

Check the book out beyond the click, where can folks find the book? And also Jon, for those that are like, Hey, I'd like to work with Jon. I'd like to work with the good and see what they can do to help my company. How can they get in touch with you? Yeah, so the book, it's everywhere. Books are sold. Amazon, it was a bestseller on Amazon in multiple categories. Congratulations. Thank you. The best place to go get a book though is the good.com/btc for behind the click. And there's a code. You can use BTC podcast five zero for 50% off a copy of the book. So if you get it off of the good.com, I'm happy to give you 50% off. My margin's the same either way. So happy to share that with everybody. Or of course, Amazon, et cetera, wherever you'd like to get it.

If you want to go to hold of me, find me on LinkedIn, I'm so active on there, feel free to DM me. I do read everything that's going to be the best bet to get ahold of me personally. Awesome. Jon MacDonald, ladies and gentlemen, Jon, really appreciate it, man. Super fun as always, and looking forward to next time. Yeah, thanks again for having me. Absolutely. And as always, thank you for tuning in. And hey, we'd love to hear from you. If you liked this show, we ask that you share it, share it with somebody else that could be inspired, buy it or could find it useful. And if you haven't left a review for the pod, we'd love that as well. And leave a detailed review just like we were talking about here on the show today. And with that, until next time, thank you for listening.

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The best brands do things differently. Jimmy Kim has taken a unique approach to growing Sendlane from obscurity to becoming one of the fastest-growing ESPs on the market. As both a former brand owner and a current tech leader, Jimmy brings a fresh perspective to DTC. He explores what he refers to as the "retention revolution," the need to rethink email strategies, and the changing landscape of DTC.

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Key topics explored:

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• The critical distinction between marketing to prospects versus customers, and understanding when to “hammer” and when to “nurture.”
• Why sending more frequent emails can counterintuitively improve deliverability and engagement.
• The growing importance of financial literacy and data-driven decision-making in the DTC space, with examples of brands excelling in this area.
• How to effectively leverage click data as a powerful feedback loop for understanding customer preferences and refining your marketing messages. Most brands think they are utilizing click data, but they aren’t.
• The benefits of an omni-channel approach and why successful brands are expanding beyond pure DTC to include retail and marketplace presence.

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Chapters:

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(00:00) Introduction

(08:14) Transition To Sendlane

(12:43) The Importance of Email & SMS Marketing

(22:40) Indicators for Rethinking Email and SMS Strategy

(26:03) Common Mistakes in Email and SMS Marketing

(29:17) Diving into ISP Levels

(30:27) Rewarming for Deliverability

(33:06) What Sendlane Offers

(37:35) What Are The Best eCommerce Brands Doing?

(42:46) The Importance of an Omni-Channel Approach

(49:11) Conclusion

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Show Notes:

• Jimmy Kim (LinkedIn) 
• Jimmy Kim (X) 
• Sendlane
• The ASOM Podcast
• True Classics
• Cuts 
• BYLT
• Jacques Spitzer (LinkedIn) 
• Raindrop
• Jimmy Sansone (LinkedIn)
• The Normal Brand

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more

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Transcript:

Jimmy:

It's not about just top line revenue, it's not about just your click rates, it's not about your revenue that you make. It's about understanding that flow and how that is ultimately driving your business and the time and energy that you're putting in to create it.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today I have the man, the myth, the legend, Jimmy Kim from Sendlane. He's the founder and CIO, Chief Innovation Officer. Just passed on the torch of CEO to someone else, which we'll hear a little bit about on the pod. But Jim and I connected at Ezra Firestones Blue Ribbon Mastermind recently. And when you're in one of those rooms and somebody walks in and everybody's just like, Ooh, I want to talk to this guy, that's what happens when Jimmy's around. Everybody wants to talk to him, be around him, things like that. And so I knew this is the guy that I need to get to know. And of course, I've heard the hype and the buzz around Sendlane. And so really excited to dive in. We're talking tension marketing, loyalty marketing, future of D two C and other fun stuff. So with that, Jimmy Kim, how's it going man? And welcome to the show.

Jimmy:

Yeah, hey man. Thanks for an introduction. Always flattering to hear these things, but yes, thank you and excited to be here today.

Brett:

Yeah, yeah, for sure. And now first things first, you are a podcaster now as well. So I know you've been a guest forever, but now you and some of your buddies, you've launched the awesome podcast, spelled a SOM. So describe what that is and why are you guys doing that?

Jimmy:

Yeah, it's a show about perspective. We recognize there's all these siloed shows, but there's not a show that kind of brings in the three elements of, to me, the three, four elements of what really is entailing in D two C and e-commerce in general, which is not just the marketer, or not just the operator, but also bringing in the agency and the SaaS that kind of thinks about it. And we talk about different topics and something like AI, for example. And we all have a different viewpoint on that because everyone thinks about how these things are applied. And what we've learned ultimately at the end of the day is everything all kind of comes back to the center where we all realize we all are achieving the same goal, but we have a different goal in mind. But it all in the principle of things ultimately is aligned. So it's been a really cool show. And yeah, it's a video first podcast. It's a little bit different and unique, but we're getting some good feedback, so we're pretty proud. Yeah,

Brett:

I was checking it out earlier and really, really great. You guys have a good chemistry, good flow and tackling, really important stuff. And I love that approach. Where, yeah, agency, which that's my background, own an agency now for going on 15 years, a little bit over D two C, brand owner, SaaS owner, all trying to solve some of the same problems and do some of the same things, but coming at it from a different vantage point, different perspective. So getting that all in one room or around one table, it's

Jimmy:

Kind of cool. That's exactly right. No, thank you for allowing us to plug that. But yeah, check us out. We're on YouTube.

Brett:

Sweet. So Jimmy, one thing I'd love to know is, and I've heard a little bit of your background, but we would love to hear a condensed version of the highlights, but when did you first realize, Hey, maybe I'm an entrepreneur? Maybe you didn't have that label or that title, but when did you know, I think I'm going to be an entrepreneur? I

Jimmy:

Think I knew I was going to be an entrepreneur really early in my life. And not to bore everyone, but I have the typical stories, the lemonade stands, the car wash business, the grass mowing business. I did anything I needed to do because at the early days it was about how do I get to my goal? And the goal was to get cash. I can buy stupid things like video games and cars and stuff. It's not that different today anymore. But really early on, that's what got me to start doing things to try to figure out how to create my own wealth and money because I couldn't work or whatever it might be. My first real business stint into entrepreneurship happened after I left the car business. I joined the internet world in 2008. So I'm a dinosaur when it comes to this world of internet. I've been around since 2008. I discovered affiliate marketing. That's actually where my roots started. I learned a little tool.

Brett:

I know many by the way. I know so many great marketers, business owners, several brand owners, agency owners, got their start in affiliate marketing. Do you have any thoughts or theories? Why does affiliate marketing breed what I consider to be a really successful class of individuals?

Jimmy:

Yeah, I think people have mistake affiliate marketers for this negative connotation, but you know what they are. They're all growth hackers, man. We're all growth hackers because we do everything unconventional, different, unique, and we have to find our way around a lot of regulation ultimately. And that's kind of where people are really scrappy problem solving. And I think that, yeah, to your point, I know a lot of great affiliate marketers now that have become so much into the world that you are surprised when you hear the background was that they were slinging eBooks or promoting Amazon products, and you're like, that's what you're doing. I mean, we talked about EZ or Firestone, that's where he came from too.

Brett:

Totally, totally. It's true. And I think, yeah, unconventional you, you've got to find opportunities and no one else is exploiting if you just do what everyone else is talking about, there's not going to be enough margin in there for you, correct affiliate marketer. And so yeah, I think that affiliate marketer mindset is pretty similar to an entrepreneur mindset, so that's great. That's great. So awesome. So

Jimmy:

Yeah, so I started there. I worked for a great guy, his name was OnX Ngal. He taught me a lot of stuff early on about the internet and things. And I quickly fell in love with email. And I started my journey in 2011, roughly starting my first business. And that started off as an affiliate marketing business. I learned all this stuff, I applied it, I started making money, and then naturally like everyone else, I became a content creator, started teaching what I was doing because I realized that made me even more money. And then where I fell into Sendlane and everything else is that I had this love with email. And one day a friend of mine hit me up and he was like, Hey, I've got this PO for $50,000 for my clothing company, for this retail purchase, and I don't have the money and the banks won't give it to me, but I have this new brand that I'm building out at my clothing store.

Can I get 50 grand? And I was doing well. So I let him borrow it, and I walked into his store just a couple months later to start talking about how we're going to get repaid back. And I looked around and I was like, man, this is cool. You produced this great basic, that's really nice. It's the unique style. Well, how are you doing online? And he looked at me and he was like, we're not doing anything online. And that was kind of the moment I was like, Hey, how about I take you online and you let me launch this thing and I become a partner of this thing instead of paying me back and let me invest some money and grow into it. And that's kind of how the brand started. So it was a men's street, it was a streetwear boutique first, and then we became a men's streetwear direct to consumer business apparel business. And in 2013 I joined it. And over the next four years, we scaled that thing to about 10 million of revenue annually. And it was quite a good learning. I didn't make any money because I learned apparel. Business sucks, and it's really hard to make margin and money

Brett:

Super hard. Yeah,

Jimmy:

You miss a season and you get screwed. There's so many things that we learned from that. And I mean, I say this and I'll probably end up in the apparel business again one day, but I say that now, I wouldn't do it because it's just so hard to make money off of it. You can grow it, but making money is hard.

Brett:

There's so much appeal or so much attraction to it because the total addressable market is huge. Everybody wears clothes, and so you can kind of carve out something interesting there. But yeah, predicting what's going to be hot, what's not, and ordering enough inventory, being able to liquidate the inventory that doesn't sell. It is a different business model. And I don't think it's, for me, man, I don't think I could get there, but I do admire those that have figured that out. It's impressive for sure.

Jimmy:

No, a hundred percent. So yeah, so I had that thing going on and I had this content creator business that eventually evolved into this software business. So when I was a content creator, I would hear from my customers the problems and struggles that they would have. So we started creating products to solve those problems, to sell to them. And it ended up becoming this great model eventually becoming a software guy. And so all of that stemmed into this need and necessity. So I mentioned earlier I was an affiliate marketer, and even today is the same problem, but back then even affiliate marketers were shunned from a lot of channels, including email. And so we said with myself and the two guys who built it said, how do we do this ourselves and stop paying someone else to do it? Why don't we pull our money together and build this thing?

And that was the first day of Sendlane, and it wasn't the business who was selling the product or the deliverability engine that we built today, but that's how it started for us. And then for four years, we used this tool internally, not as a business again, but just really just internally as a tool to make money for ourselves. And then in 2017, I had the big kind of moment. That was kind of my big moment where I exited my other two things. I sold my software company, I exited my partnership on the brand side and sold my partnership back to him as he wanted to kind of take it a different direction. And then of course, I looked at everything that I had and I said, I want to go do something. And naturally, coming off of two really good successful businesses, I was like, I could go build software now.

And that's when the day of Sendlane started. So we built that company in September of 2017, was actually the official incorporation date. And that's when we started to build what we looked into. And I know what most people will think right now is like, oh, so you wanted to build another ESP? The honest answer was no, it was never the answer to build an ESP. The problem that I saw when I was coming off the brand side was that we were using too many freaking tools. Man, if you think you're using tools now, back then it was like the backend stock app, the little widget for this, the Swatch color app we're using 30, 40 different apps. And I realized, and it's really funny, but I realized I had an issue because there was this weird app, and I don't even remember the name of it, but all I remember was $4 99 cents. And I didn't know how to contact support. I didn't know how to cancel it, and it would just keep rebuilding me. And as an entrepreneur and as a founder, it bothered the heck out of me that I was paying someone. That entrepreneur

Brett:

Was like, our stick rate is incredible. Cancel. Yeah, because you can't people, they just don't leave because

Jimmy:

Yeah, exactly. We would file chargebacks, it was a mess. Anyways, I ended up realizing that the future of what I wanted to do and how I wanted to look into the future became a unification story. And then I looked at retention because I've always loved email as a side of that and said, how do I go out and unify it? So even down to my first pitch deck was always about building the unified future. So first thing I learned was it takes really long to build software. So it took me three years to build the software almost or almost four years. And I came out launching in e-Commerce in 2021. So it took me that long and during that time, I had to sell and do whatever I needed to do, sell to whoever with this old platform. And then we launched a new one in 2021, and first one was email.

And we knew how important it was, not only because of my background, but also because just the story needed to have that base foundation built in order to go into the future. 2022, we launched SMS 2023, we launched reviews 2024 so far we launched forms and we'll continue to launch into the future into 2024 into 2025 with more channels like WhatsApp and push notifications, we'll be building a loyalty motion, a customer service motion. And ultimately the goal that I've always had on my initial pitch deck vision was how can I get all the retention touch points of a lifecycle to repeat and create the second purchase faster? Because in my clothing stores, everything was eaten up on the advertising on the first sale, and I realized that that 20 30% of those repeat purchasers, that's where my money and bread and butter was. And we needed to figure out how to get that in faster. And the faster I can bring that in, the more I could invest into the future. So that's always been the vision. It's been the vision since 2017. It's never changed. I've always wanted to build the unification story, and that's what we do today. And our typical customer today is consolidating from two, three platforms and bringing it into one platform and driving their business, having better success, better vision, better visibility, but ultimately a tool that is really building for the future of innovation of how we think about things.

Brett:

Yeah, it's really smart. I see consolidation on the agency side as well. There was a period of time back, back when you had a million different apps to do a million different things. Agencies were very specialized at that time. And now it seems like push there is for consolidation as well. I want one agency or I want fewer agencies for sure on the D two C and SaaS side, I want fewer tools to do the same thing because I can just get there faster, get results faster and that sort of thing. What are some of the tips or suggestions you would give? So getting to that second order faster, what are some of the tips from the suggestions, some of the ideas, obviously the tools going to enable you to get there faster, but what are some of the practical things that people can do to get there faster on their own?

Jimmy:

Yeah, I mean, some of the things that we see in the market, and what's funny is the thing about email has been for the last 20 years, the playbook hasn't evolved that much. We started back 20 years ago and we would do two things. We'd do newsletters and drip campaigns. So those are these weekly things we sent out. And then you would just have these automated flows. What's happened now and 20 years later is the playbook hasn't evolved that much. In fact, the data is muddier, the information is a little bit more misleading, attributions at all time high because I say everyone's attributing. So it's on a high. And the thing that comes down to it is it always has come down to core principles of what email and retention really offers. So two things happen, and I'll dig on these two things. Number one, the first thing that people don't seem to understand is a difference between a customer and a prospect.

And this is a big failure point that I see in this market because a prospect who's never purchased before is not the same goal to create a repeat purchase. The goal is to create the first purchase where the second purchase is often a different motion and skill. So separating those people's core number one like that, if you can just uncover that, you will start to unlock a lot of different things because you'll realize your prospects are not where your money's made. You need to be sending them more messages, more emails, more SMS, because you need to get'em convert or get the heck off of your list. This is like your buy or die kind of mentality. It very much lives in email especially. And the number two thing that I'm seeing in this market on why people aren't successful or they're not doing enough is actually just a simple thing of not sending enough.

And I say this in the funniest way because I think there was this core principle, again, going back 20 years, oh, if I send too many emails, my customer be bothered if I send too many emails, people do this and that. But what's changed is now if you don't send email, people forget about you now because there's so much, and not sending email does not get you brand equity. It gets you brand loss that's ultimately happening. So the second thing that I tell people quite often is if you're not emailing every day to some segment of your list, you're probably missing out on revenue dollars and brand awareness and noise. So it's an overarching theme that comes into place, especially with all the changes in deliverability and all the things that have happened, they're incentivized you to send more. All these changes that happen right now with deliverability in June, those are basically, and the people who are the least affected are the people who mail every day. The people who are most affected are the people who don't mail at all or mail very irregularly.

Brett:

It's such a good point that the paradox, so to speak, of email is actually the more you send, the better your deliverability, the lower your opt-out rates. Because yes, sometimes, and I've done this before where I've signed up for something, they never email me, they email me a month later and I'm like, wait a minute, who are they? Did I sign up for this? So it unsubscribe? Maybe I hit as well if I'm feeling real salty. But yeah, it's like I don't remember now, but if you email me regularly and you're providing value, then I'm potentially going to remain subscribed. Now I want to talk about a couple things related to that. So you talked about segmenting prospects and returning customers. How does the language change, the offers change the email strategy change in SMS strategy between prospects and customers?

Jimmy:

Absolutely. So look, a prospect, too many people are trying to build value in their emails and have focus on content. But this is why I always say I give a very simple thing. You need to hammer or push on your prospects and you need to nurture your clients. And what I mean by that is very simple. When a person is in a prospect funnel, there's only one objective to get them to make a purchase because the longer it comes from an opt-in because they're usually opting in from a newsletter, 20% off coupon, whatever that intent is, that intent is dying fast. And so your goal, obviously we've got those automated messages and things that are going out, but your goal is to get them to make that purchase and do something about it or get off. So that's a very simple focus. It means the messaging should be very clear.

Direct sale offers things to get them to convert, not content, not information that they don't care about. They haven't bought into your brand, they don't give a crap about your founder store right now. They don't care about your social media. All they care about is why they came to the product. Why did they most likely click on that social media ad and why did you hook them in? And that problem that they're trying to solve or that solution, whatever that solution is, to whatever their need is, should be the focus and we should be pushing on them aggressive. Then you flip over the customer and suddenly they're already bought in. This is where you're just building relationship and you're focusing on letting them know more about your customer. You're building advocacy, you're building loyalty within the user. And if you're going to build that, that requires a very focused message around who are you? What are you doing? You still need to showcase products. You've already identified what they've purchased. You should be able to start picking that up a little bit. Is it a men's or women's item, categorize it, whatever it might be, starting to use that information. That's where you're segmenting and you're driving more effective messaging, and that's really the best personalization you can do today in this world.

Brett:

Man, that's so good. So hammering your prospects, nurturing your existing clients. Yeah,

Jimmy:

Love your customers and push on your prospects, right?

Brett:

Yeah, and it's one of those things, I'll use an analogy and it probably isn't the best analogy, and there'll probably be some pushback for people listening, but I think the urgency is the same here. You look at some of the selling timeshares or my 22-year-old son is selling solar for residential door to door. And in both those environments, they know that if the prospect doesn't close in that meeting, they're not going to close. Correct? It's not going to happen. If they were like, well just get back to me in a week, okay, it's done. It's dead. Maybe one out of a thousand or one of a hundred, I don't know what the numbers are, but pretty much doesn't happen. And I think you got to look at your prospect list that same way they are expiring and expiring quickly. You don't get them to take action in a very finite window and it's over. You missed it, right?

Jimmy:

That's it. It's over the longer, I mean, most purchasing cycles and everyone knows their own purchasing behavior cycles around initial opt-in identity to purchase, but most of 'em are happening within the first two weeks. And once you're at a two week window, slower and slower and slower, and yes, everyone can tell me about their story, how there was 180 day person who reactivated and purchased. I get that. It's a bonus, man. It's a bonus of, it's a game of mass audience and it costs money. So you've got to try to think about that because right now, prospect is actually negative ROI until it becomes ROI, and people spend and focus most of their time in that bucket. But the moment, as I kind of gave on tip one, the moment you separate your audiences and you look at a prospect, the mind blowing thing that happens to merchants when we suggest such a simple change in the way that do nothing but send the same email, just segment them out differently so that you can at least look at how the revenue and the actions are driving their click behavior and you'll suddenly see, wow, suddenly all your money's actually coming from your customers.

Why? Because that's where actually what email marketing does plays into the picture, right? Email plays on acquisition and retention acquisition on the popup and the follow-up, but really the focus is retention. And I know the stat that people always talk about in the world is always about, oh, what's my percentage of revenue? But that's a really flawed stat too, because if you have a pop-up, for example, and people are opting into that pop-up, making a purchase, you didn't do the work. I hate to tell the retention person, but that work was done by the top of the funnel guy. You just supplied a tool to help create the thing. The thing that you need to be actually looking at is your overall store repeat rate. Your job in retention is to increase the repeat rate of the business, not of the email single channel. And this is where people lose the sight of what we call an email and SMS marketer to what I consider a retention marketer because a retention marketer, which to me is the evolution of what an email and SMS marketer is becoming. They're thinking about the inventory customer support, they're thinking about feedback, they're thinking about the overall business needs of retention and how to increase that number. That to me is the future of what email and SMS drives

Brett:

So good. And so yeah, it's not just about how do I maximize email as a channel and how do I maximize the email stats and KPIs? How do I maximize retention? And I think, honestly, Jim, I think this is a trend that we're seeing across channels and across platforms. So we do a lot with Google and YouTube and a lot with Amazon ads and stuff. And really there was a day when it was all about what's in platform roas, and then it was like, well, let's look at some third party tools, but it's still about what is Google and YouTube contributing? And that's fine, but it's really more about what is our incremental growth and what is our contribution margin and are we profitable in all of our ad spend? And then how does Google and YouTube and those things ladder up to that? And I think in a very similar vein, what you're talking about is how does email and SMS lead to more retention? And if it's not, then we've got to retool, right? Yep,

Jimmy:

That's absolutely correct. And it's retool re strategy, redo everything. It can be anything that comes into your business. It could just be, and Brett, I tell merchants this, and I mean in the nicest way it could be a product problem. People hate to admit that they have a product problem. The reason why, look, I'm going to tell you something, Brett, when you see great products, it doesn't matter if they have an email SS program that's good, bad, whatever, the repeat purchase rate is incredible. And you're like, why? Because the product is so good. It doesn't actually matter what you say. The consumer has already made up their mind that they're going to come back and make that purchase.

Brett:

Yeah, it's so true. It's so true. Marketing cannot fix a bad product for retention, marketing and fix a bad product. You may have low LTV because your product needs work. And so that's something we got to look at for sure. So if someone's looking at their business, what are some indications from your point of view that would lead someone to say, okay, I got to rethink my email and SMS strategy, I've got to retool my retention. I've got to look for the retention revolution like you guys talk about at Sendlane. What are those indicators?

Jimmy:

I think there's a lot of things that indicate, and there's no one magic bullet that comes into this place, but if I'm thinking about it at the simple thing, I'm looking at revenue that I'm generating, however I'm tracking it, right? I'm looking at the output. Are we getting, it comes into a 1, 2, 3, right? Everything is important still in the data side of things. So if we're going to get granular, the open is giving you the trend line of interest. The click is telling you how your message isn't resonating and the conversion is telling you how your product resonates through the message of interest that they've gained, right? It's a funnel. And a lot of times people only look at certain parts of the funnel and they drop off and pretend that it doesn't exist. Like an email marketer often doesn't really care what happened on the conversion of the page, but often that is the place that you need to be optimizing or you need to be working or you need to be working on the copywriting and message across both sides of that.

So to me, every one of those metric points is telling your story and understanding where the break of that story happens is where the data is useful. It's not about just top line revenue, it's not about just your click rates, it's not about your revenue that you make. It's about understanding that flow and how that is ultimately driving your business and the time and energy that you're putting in to create it. I mean, if you're using a simple thing, it should be an ROI metric email and SMS is driving 40, 60, a hundred times ROI to your tool and costs of your entire thing, not just your tool, but your agency or your marketer and having your entire team. You need to be understanding that because if it's truly going to be a big driver of business, you should be putting focus, which is where the agency recommendation always comes in for me, because most businesses shouldn't own this. In-House for example. I have a big thing about that because I believe that unless you are someone like me who's just got this obsessive love for email, go hire somebody that already knows and does things and it should be an agency because you're going to get a team wrapped around that. You know what I mean?

Brett:

Those, and I love that so much, not just because of an agency owner, and we do have a retention and email and SMSA department and a division, and we recruited a guy, kind of a top email marketer almost two years ago now to kind of build out that offering for us. And we agree there's so much that goes into it, constant need for creativity and graphic design and copywriting and then breaking down the data. And then there's both the creative side and the tedious side of email marketing that unless you've got someone that just absolutely loves it on your team, better to hire a pro. For sure.

Jimmy:

It's even simpler. Like the math, Brett, I always tell people to bath, I've got a $10 million business and three to $4 million is supposed to become from repeat purchase and retention. Why you got a $60,000 person in charge of that thing?

Brett:

Totally.

Jimmy:

Yeah. It's insanity. And even saying someone's paying 150 grand to an agency, that's still nothing to the end outcome of what that channel is supposed to produce for you. But sometimes brands are shortsighted about this and they don't think about it because they think that they're saving money or they have better control. But the reality is, and this is the other hot take on it at $10 million, honestly, it just doesn't matter. Just getting 'em a message is all that really matters.

Brett:

So good. So good. Awesome. So what are some of the other mistakes you see? So as you talked to a lot of D two C brands, you look at a lot of email accounts obviously. What are some of the other mistakes that you see? Obviously we're not sending enough, we're not segmenting our prospects from our customers. What other mistakes do you see?

Jimmy:

I mean, optimizing for the wrong metrics is always a big thing that we see. So we know the famous thing about open rates, and everybody in this market at this point knows that open rates aren't reliable. In fact, Brett, 2019, when you got a 12% open rate, that was great and somehow we're at 50, 60% and no one's questioning it. It's not because people are opening more emails, it's because there's less information. And that data is the pixel of what an open rate is, is the most rudimentary thing you can think of. You send an email, there's an invisible pixel. When it loads an image, it fires an open. That's all an open rate is, there's nothing magical about it. So optimizing wrong for the wrong rate, you should be optimizing for the click through rate because it's saying that people are seeing your message, it's relating, it's working, and they're clicking through right then it's their job on the landing page or the PDP to make the job happen.

So that's number one. The number two thing that I see is actually something I talk about a lot too, is segment and hygiene. And what I mean by that is there's an old adage of delete your old list. I'm not telling people to delete their old list. What I am telling people is to really reconsider the things that you're doing within that list and the understanding of data. Again, I talked about it, a 90 day customer who has open and active and as a customer who's made a purchase is highly valuable. But a 90 day person who is a prospect who's never purchased is very low in value. In fact, you've lost a lot of money on that person in human at this point, but people don't look at that data and really drive a decision around that. And so when I talk about this, it's like, okay, if a customer's over 30 days, and I mean if a prospect's over 30 days, great, we should still be emailing.

We should still be trying to activate, but maybe we slow 'em down, maybe we message only the hard hitting stuff towards, and maybe we just realize that they're out of cycle today and really understanding what those mean and then how to drive the hygiene of your effectiveness of your list. And so that's something that I see a lot of mistakes on. I see a lot of mistakes on too heavy of image focus. I think something that brands have forgot about is copywriting is probably more important than the actual image and words. When brands tell me direct responses, the plain text email is working so great for me, I'm like, it's not that it's working great for you, that you actually wrote copy instead of posted the picture with a 50% off sale. It's because you made someone read the words and drive the narrative to create the action.

Old school marketing, but it's 1 0 1 and people forget the 1 0 1. It's not about pretty images. It's actually about driving experience, teaching, educating, and getting someone to click on that email or SMS. And that doesn't happen through images. As always, it happens through words, which is why plain text works really well. Is it good for the brand? Absolutely not. Is it good for deliverability? Absolutely. Great because again, you're writing words against that. And then the third thing is actually deliverability. I think all the changes that have happened, it's continuing to happen right now. People are not focusing under deliverability. So I'm going to give you the one tip that everybody should be thinking about, which is simple. People look at the overarching numbers, they never dive into the second layer of numbers. You need to be diving into the ISP levels. So that means we call 'em top level domains or TLDs or ISPs, but these are like Gmail, Verizon group, Microsoft.

If you're not diving into that second layer of data and identifying what's going on there, because here's the thing, you can have a great open rate, but a really crappy delivery on a single vertical. And if it's your Gmail that's getting hurt, your revenue is down in the toilet and you can't figure out, my open rates look good, but my revenue is down. It's because your Gmail users are about six times more likely to make a purchase, spend more money than Yahoo or a OL or Hotmail. But too often we're looking too high without digging in. So deliverability is really a big driver right now, and that's changing in the market.

Brett:

Yeah, that's an area that I don't hear people talking about enough deliverability, but I would argue it's the single most important thing you can do, right? No one's going to open respond or purchase from an email they do not see that does not land in their inbox. And I think it's one of those things where a lot of the numbers mask that, to your point, that deliverability may be in the toilet and you just don't know. So how does somebody kind of dig into that and then what do they do to improve deliverability? I know there's a lot of technical things there, so we can just touch on the high point.

Jimmy:

Yeah, I mean, look, it's pretty straightforward. It's like one, obviously identification is number one. So being able to see the metrics, breaking 'em down and noticing the lack of trend. So I'll give you the trick that we think about your Gmail, your Yahoo and a OL or your Verizon, kind of our trend line. They should set the pace. They should look similar, two to six points off on your open rate and they should look similar. So that's trend line number one. The other ones will always be declining. Apple, a hot Microsoft, they'll be about half usually, and that's normal. Okay, so number one, you identify. Number two is just kind of checking through everything, the technical side, D, K, MD, mark, dude, everyone's an expert, now go hire five, Fiverr guy for $5, and he'll go do and fix your stuff if you need to or go use tools that are out there to do it or ask your ESP.

It's not that hard anymore to do this stuff. It's really easy and you need to go follow 'em and make sure that you're doing it across your entire business, not just your email stack, but your external tools you're using, your external communication you're using. All of these are important because reputation has been really big. Three, you should set up some monitoring tools. So one thing that people don't know is Google doesn't report spam rates back to an ESP. So the spam rate that you see inside tool is actually not Google, it's everything but Google. Now the data correlates with Google, so it's not too bad, but you should go install something called Google Postmaster Tools, again, completely free. Go install it. Look at your domain reputation, your spam complaints, your history, and you'll be clearly understand if something is going wrong before it's all wrong and in the toilet, which is going to lead you to number four, which is cleaning and fixing it up.

So once you've got technical, all that stuff, it really comes down to a principle of rewarming. Oftentimes the simplest fix is to stand up a new subdomain for your sending and then rewarm properly and rewarming properly is painful. It sucks, but the reality is, is that's the only way you can fix it. There is no magic hot button to just fix your deliverability if it's not a technical problem. Generally it's a volume and warming up problem that you've got to go reset up. And I saw this happen with all the changes this year between this from the start of the year to now, June. People didn't warm up after they've changed and authenticated their sending, saw their revenue tank down in toilet, not sure because they see good open rates. But then I dive in and I see that their Gmail is in the toilet, and when their Gmail is in the toilet, it's not driving revenue and results. You fix the Gmail, you start and start seeing the revenue. It's just a simple, big kind of flywheel that comes into play. So that's what I recommend without getting super deep into

Brett:

It. Love it, man. That's super, super clear and high level, very valuable. So I want to talk a little bit about features and benefits and what simlan offers because I think that there's a few things at play here. One, you entered a very competitive space. This is an industry that is rich with competitors, and it's one where there's a couple of very clear leaders, but we were talking about before we hit record that Moiz Ali, friend of mine, founder of Native, we've had the privilege at OMG of working with Native now for going on six years on the Google and YouTube side. And so I still keep in touch with Moiz, but he's kind of a D two C influencer now hosts a podcast. His tweets, her his posts on X, I guess is the way he say it now. Sometimes, man, he just calls people out on X. And so he did that recently with one of the biggest competitors in the email space and he said, Hey, I posted this a year ago on, it would've been Twitter at that time, calling you out for not having these three basic features. And guess what? It's a year later. I'm still waiting. I'm paraphrasing a little bit, but that was kind of the post, right? So a

Jimmy:

Little bit more hot taste.

Brett:

It got a lot of attention for sure. So what are some of the features that Sendlane has that you're proud of that maybe others don't?

Jimmy:

Yeah, so on that list, two of the three things that he mentions we've had for over a year. So we had those principles because not because he tweeted it, because we've already had 'em, because I've had a marketer mindset of those principles, which is where that's exactly what it was. Dynamic segmentation, everything should be real time. And I think the other thing that he talked about was why is there not a one-on-one, personalization prediction time. In fact, I get burned often right now for that because I have that, but I didn't build the old school time travel thing because I didn't believe that that worked. But everybody wants time travel, which is like localized time zone sending, right? We built something called machine learning, open optimization, which takes 50 events, open clicks, purchase behavior. We congregate a time within a 24 hour window where we believe the user will be at the top of the inbox, most active in their thing.

We use it through data. And so we built that tool a while ago and it's very successful for our users today. But it's definitely something there. There's a lot of things that our tool does different. I think that the thing that I focused on, one was this because I had the vision of unification from the early days. My product feels like it's together. It doesn't feel like we layered things on. So number one, people, the biggest difference is that it's everything you do in our platform feels the same, right? Number two, we have all these little cool features and tags. One of the things that I love is something called tags. And tags to me is this malleable tool that floats across the entire application. So we can do as simple as when you click a certain link on an email, it can tag a user for that identity of the intent that they might be giving the contextual data that they're firing back that they clicked on a men's product or whatever it might.

You can do it because they made a purchase or a web browse behavior, whatever. And then you can take those tags and fire off of those as triggers. So if they clicked on men's three hours later and they did not purchase, I could fire a men's SMS off to them and say, Hey, you looked at these men's shoes here, don't forget, go make a purchase. So we have more contextual data and we think about it. And then the third thing I think that's pretty interesting is that we're actually a pure play ESP. Again, you asked a question, why would you go into competitive? We were naive man, and when we were super naive in the early days, a I didn't know even a SendGrid existed. So what did we do? We did the most painful thing and learned how to deliver email. We built our own infrastructure.

Now, early on I was stupid, but now it's become our superpower. Not only does it allow me to pass great pricing to the user because I don't have all these cogs in my back system, but two, it's allowed me to evolutionize what deliverability is by adding more machine learning, adding more AI into it and trying to make it better and better and improve it. Right now, I'm not saying it's perfect, but we definitely have better line of sight. I can go ahead and something that I know that my competitors can't do often is I can call the head of Google, I can call the head of Yahoo. I can call them and say, Hey dude, what is going on with this customer? Why are they doing that? What can you help me and tell me and how can I drive that result for the customer? Then we bring it back down to the customer, which is something that people love, is that we have deliverability expertise at a core. We're not just a platform sitting on top of a platform. We are literally the platform. We own our own infrastructure

Brett:

Today. So good. Jimmy, you've got a unique perspective. You founded and own some brands. You were in other industries now, SaaS, founder, podcaster. What are some of the things that the best D two C brands are doing right now that others aren't? And obviously related retention is great, but just any observations you have I think would be very helpful.

Jimmy:

Yeah, I think that there's two things that I would say that I'm seeing more and more of that is happening. Number one, financial literacy. And it's not just financial, but it's also data literacy. I think that people are realizing, hey, you can make a more predictable business if you can start predicting with the data that you've got available to you, not only on the top of the funnel, but even on the retention side too. And building a business model that really is a plan shouldn't be waking up and saying, I'm going to go do 2 million this month. Top line and LED is going to pour it in there. You should model it, create goals, go after those goals and treat it more like a real business. So I see that being number one. And the number two thing that I'm seeing the best businesses do is they're using the click as more of a feedback loop, less than just a mechanism and purchase.

Lemme explain that. So again, I kind of mentioned it earlier. If I'm sitting out there and I'm sending messaging out and I'm able to start identifying what people are clicking on, what that's telling you is that this is what they're interested in. That call to action is driving that product is driving it. So for a company to start understanding who their customer is, what messaging is getting them to work and be able to drive is a really powerful thing. So one of the clients, I think you probably know him, but Ron over at Avi, for example, their brand, it's a weight loss supplement company. It was a supplement collagen company. But one of the things we did with them is they said, Hey, let's go find out who your customer is. Let's find out what they want and what they need. So this is one-on-one principle, but a lot of people skip this because they have a great product idea, but they don't realize who their audience is.

So Ron used to talk about how good health and good sleep and all these other things they didn't, and there were great real benefits to this product, but what he ultimately learned by watching what they're clicking on asking them the questions learning is that they cared about weight loss and fast weight loss look pretty simple to understand now, but when you sit back and you are the brand, it's hard for you to understand because you want to believe it does all these other things for your people and you want to push on those, get a better night's sleep with avi, right? No one cared, but it's lose weight in 28 days or whatever it might be. Everyone cared. So understanding their audience and continuing to test and understand through the data that's available instead of going out and surveying, but adding technology to be able to start identifying and learning what's working and then reapplying it into your business and strategically applying it.

So those two things are what I see in the market right now. People starting to really understand who their customers even better in having data and financial literacy. Those are the brands on the right and on the hook on the rocket right now. And true classics, for example, is a perfect company. That Ben over there, over there, dude, that man is a math finance wizard. That's what he is. Everything else, he's a great operator because he's a finance wizard and the way they operate in that business financially and data driven is so insane, but there's a reason why they're $500 million brand in four years.

Brett:

It's just crazy. Yeah, 500,000,004

Jimmy:

Years. That tells you that something though.

Brett:

T-shirts, plain T-shirts. Now Brett, their

Jimmy:

T-shirts that I used to make in 2013, they look so similar because we had created these great blanks, but we were too early, we were too naive, we didn't have it. And then you can also argue that there's cuts built and all these other ones that try to come up with them, but they've kind of kept to their core principle. If you think about true classes, you think about basics. I know they do all these other things now, but basic great shirts that are affordable, cheap, and if you throw it away, it's not a big deal because it was 20 bucks.

Brett:

But what's also cool is, and I was talking to my buddy Jacque Spitzer from Raindrop about this, that the true classics, I think they started at 12 or 13 bucks and now they're like 20 or 26, and they've continued to inch up that price because it is basically simple, but it's still a great value at 20 or 26 bucks. And yeah, they're just on fire. And I couldn't agree more with you on the finance piece. There was a time, especially during the covid boom where as clients were coming to us, they're like, Hey, just help us capitalize on growth. Just more customers. That's all we care about, make sales, right? And so we were just juicing campaigns and trying to get top line growth, but now everyone's like, Hey, you know what? Actually time out. We need a real business. We need contribution margin. We need to see what channels are actually driving incremental growth, and then where do we optimize?

How do we get medium mix modeling and get that all working? And yeah, the messaging on why someone actually buys, I think people would be surprised how often the founder is wrong. You think someone is buying because of the great night's sleep, and that's really like a third or fourth benefit. It's nice, but I'm really buying because I want weight loss. That's what moves me to make that first purchase. Maybe I stick around a little bit longer of the sleep aspect, but I'm buying because of weight loss. So you got to have that insight though to be able to lean into that messaging.

Jimmy:

And I think what you said there, I have a hot take on this that I always talk about e-commerce as the channel that it is, right? People who jump to e-commerce do it because it's the low barrier of entry, but the barrier of entry starts to increase pretty high. And there's this, I don't say that's a glass ceiling, but it's like a glass ceiling. Yeah, we're going to see the true classics of the world take off in this world, but many people will get stuck because really you can't get into distribution, retail, wholesale. This is what really matters. We tried to skip that by creating a direct to consumer business so that you can avoid those things. But really, let's be honest, the biggest brands in the world, those are the things that they nail with and you have to nail 'em. So my thing that I always talk about is e-commerce has immature market because a lot of the people started are not as business acclimated, and they haven't built a real business.

Often they're doing this because it's their first or second business, and they like this model, but eventually you get better and better, and then you realize that retail is important. Your retail takes off, your Amazon takes off your Walmart, all the distribution channel and your D two C shrinks. And if that's happening, that means that your business, you're going the right way. In my humble opinion, direct to consumer, as much as I love to hear a hundred million dollar direct, dude, that shouldn't exist. Unless you're billion dollar company, you should be leveraging a lot more of the retail side of things because that's where, to me, you build a real business of predictability and we build a business where you're not focused on the creative and the marketing and everything. You're really focused on the product and delivering a great product, selling to a great buyer who can position you on the right shelf to the right buyer in front of them and the mass audiences.

And that's to me how you build a true brand in the market versus e-commerce. And I think that's where e-commerce will always have immaturity in the market, the founders and the different people, and they do grow up, but it's always like everything else, man, Brett, the layers of growing up over time, and there'll be people that are as a Firestones room for example, and that mastermind, those people are growing up. There's plenty of the other ones that won't ever grow up past that, that will never make it into that room because they don't even understand that that education that you're learning is so important to the growth of your own business and your human mind. This is my third business. I'm still a nube man. I still consider my nube when it comes to business side of things. I may be out of the market, but then business side, I'm still learning every day.

Brett:

Totally. And we got to keep that growth mindset and that as Jeff Bezos talks about the day one mindset, it's always day one. We're always learning, we're always growing, which is really great. And I think you really nailed something that's super important. I think the best brands, the best brands that we see now are not just D two C, right? D two C is just a channel. Everyone that I see that's really growing is omnichannel or close to it. So just had a good conversation with my buddy Jimmy Sansone at the normal brand awesome clothing and apparel brand, but they've done studies where when they open a normal brand store in a market and they're in other retail outlets in that market and they're doing D two C marketing in that market, all channels go up. So don't open a normal brand store and then see other retail outlets go down in sales.

They go up in sales, and this is so true, and you layer in Amazon for those who do Amazon as well, the raising tide rises all ships. And we're doing this big YouTube push now for a pretty large outdoor brand right now. And we're seeing the same thing. We're kind of selecting different markets based on some reports we're in through Google, C-D-I-B-D-I type thing, category demand, index brand, demand index. And what we're seeing is as we're pushing hard on a market, we are seeing sell-through increase in Walmart. We're also seeing sell through increase on Amazon, and we're seeing a lift with online sales. And what's cool, what's interesting is that with these ads, we're actually pushing everybody to Walmart what they kind of wanted to do, but it's kind of wild improving everything. Yeah.

Jimmy:

You know what I always say? Here's a really big thing. I hear this story right here. This is the one story, and I hope any founder listening to this hears the story a little bit because it's important when you go to an Amazon and a Walmart and you start showing a retail, your D two C starts to come down, revenues will start dropping. But don't panic, to your point, Brett, they are going to the other channels often and they're making purchases and people don't seem to understand that. They freak out, they panic, they realize it because when you go omnichannel and you're no longer going a single channel, dude, people are humans. Man, if I'm buying something that's an edible, for example, like this thing here, if I see it at a Target and I like the brand, I'm going to buy it there instead of waiting for you to ship it to me in three to five days or I'm going to go to Amazon, I want it in four hours, right?

Look, I will buy everything and even as a D two CP moment and I try to buy it from them. But the reality is, man, the buying experience is just better. The trust is better At Amazon, for example, and as a consumer, that's where I'd like to go. And so even if I'm been buying your product, I'll still end up on Amazon to make that purchase later on because that's what just makes lend sense for me. That's my easy thing. I can buy a lot of things at once. This is why a Walmart or Target and Amazon's exist today is because consumers don't like buying a single product off a single site. They really want to go buy everything they need in one place. And I hate to tell people, but most people's products aren't products that go single store specialty unless it is a pizza oven or something like that, that has that need. But most people don't sell that kind of product,

Brett:

Right? Right. Yeah. And it's one of those things where what we see when someone goes omnichannel is direct attribution in all your D two C channels is going to look really crappy, right? Because now you're generating leads and they're going to close elsewhere. I think over time your online sales as a whole can still grow, correct? But you are directly attributed click conversions. That's going to get real messy, really muddy. And this happens a lot where some people keep different inventory on their D two C site than they have in Walmart and than they have on Amazon or whatever. And so you're going to see, okay, we do this big media push or this big push or whatever, you're going to see a different skew mix sell online than what you see on Amazon or in store, but you're 100% right as you lean into these other channels, that's when you got to just be good at business, right? Yeah. Understand business, not just the D two C tools and optimizing ad accounts and things like that.

Jimmy:

And when you look at big brands, and this is always a good learning from the big brands, when they go direct to consumer, they decide to open up, they do it for loyalty reasons, they don't do it to make more money, they do it because they know their most loyal customers will come to their site and find it. That's a whole different mindset than what people are doing today.

Brett:

And a lot of the bigger brands see, hey, the vast majority, once we reach a certain point in growth, the rest of the growth we're going to see as a brand is going to come in retail and going to come in of the channels. So really, really good. Jimmy, we can keep this going forever, man. I've got more questions I want to ask you. So that just means we're going to have to have you back and do round two at some point. But if people are listening and they're like, man, I need more Jimmy Kim in my life. I need some more of the awesome podcast, or I need to check out and see if maybe I'm going to get better results there. How can people connect with you? How can they connect with the pod and with Simlan? Yeah,

Jimmy:

So I very much found on social media on X. You can find me at Yo Jimmy Kim. I think it's on the little title thing here too. So if you're listening, it's just Y-O-J-I-M-M-Y-K-I-M. You can also find me on LinkedIn. You can search me on LinkedIn. I'm the guy wearing the hat and has a pink background there. The awesome pod is found all over any streaming service and everything you have, but we are video first, so if we always ask people, find us on YouTube, we've got plenty of shorts. If you don't want to consume an hour podcast, we got shorts, we do a lot of hot takes. It's a show on perspective, so you can find me there. And then for Sendlane side, please DM me if you need questions, but you can find our information on send lane.com. You can learn all about us. We've got a big social presence there too. So we're a little bit of everywhere and it's if you want to talk to somebody, even me and you're just starting off, please DM me. I do respond to everybody. So I tell people this and I think it's the most important thing. This is why I'm not the CEO because I want to do more of this and I want to do less of the board meetings ultimately.

Brett:

That's awesome. Jimmy Kim, ladies and gentlemen, Jimmy, thanks for bringing the Heat man and the hot takes super good and look forward to doing it again.

Jimmy:

Yeah, thanks again, Brett.

Brett:

Awesome. And as always, we'd love to hear from you. What would you like to hear more of on the show? If you found this episode helpful, please share it with somebody else that would make my day. And if you haven't done it, we'd love that review on iTunes as well. And with that, until next time, thank you for listening.

‍

‍

Ever wondered how a razor company slices through the competition?

Tune into our latest episode where Ashly Knox from Henson Razors reveals how an aerospace machinist and a team of digital marketing wizards turned a single product into an 8-figure sensation.

Forget discounts and flashy gimmicks—Henson Razors is all about precision, focusing on one stellar product, and keeping a laser focus on cash flow and financial health.

Ashly’s got the inside scoop on the principles that are driving their phenomenal growth so get ready for some sharp insights and a fresh take on eCommerce success!

‍

Key topics and lessons:

• How Henson Razors achieved 8-figure success by selling a single premium product with no discounts, subscriptions, or gimmicks.
  
  
• Why focusing relentlessly on making the first purchase profitable is critical for cash flow and sustainable growth.
  
  
• How Henson uses creative constraints and the power of saying no to stay laser-focused on what matters most.
  
  
• Mastering inventory management and the cash conversion cycle to steadily scale the business.
  
  
• Why manually tracking key metrics helps develop invaluable business intuition before automating reports.
  
  
• Doubling down on 1-2 acquisition channels that work rather than chasing every new trend.

---

Chapters:

(00:00) Introduction to Henson Shaving

(08:55) Reducing Irritation + Secondary Benefits

(14:56) First Order Profitability and Low Acquisition Costs

(24:41) Why The Philosophy of No Promos, No Discounts

(29:46) Understanding Cash Flow 

(38:28) Inventory Management

(41:06) The Power of Focus

(45:20) Focusing Your Acquisition Channels

(49:26) Conclusion

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Show Notes:

• Ashly Knox (LinkedIn)
• Henson Shaving
• Ezra Firestone (LinkedIn)
• Boom by Cindy Joseph
• Sean Frank (LinkedIn)
• Ridge
• Taylor Holiday (LinkedIn)

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

---

‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

---

Transcript:

Ashly:

I've just seen it often enough to say that operators will take a win, a quick win, and then the temptation is to exploit that win as much as possible instead of sort of backing away from it and going, why did we get those results? And are we happy with that as an ongoing part of our strategy or not?

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and my guest today is Ashly Knox of Henson's Razors. And what I'm really excited about here is this is a company that does no promos, no discounts, no email popups, they're not on Amazon. They essentially have one product. They're doing eight figures online. They're extremely profitable. And so we're going to show you how, talk about the operational philosophy and what's working right now for hints and razors. And so with that, Ashly, welcome to the show and how's it going? Thanks,

Ashly:

Brett. Yeah, going great. Thanks for having me.

Brett:

Yeah, thanks for coming on, man. And such a great story. As you and I were prepping and we were kind of talking about the hints and razor story, I was like, man, this is unique. This is definitely unique to the space of razors because talk about a space that's a little gimmicky, right? Let's pack 15 razors on this little shaver, and so if this brand's got four, we need five and then let's go six or whatever. And then let's do extreme discounts or discounts on the front end to hook you on a subscription on the backend. Let's charge you a dollar for some kind of club that we got going on type of thing. And you guys really came in and said, no, not going to do any of that. Just simple, great product, fair price, no gimmicks. And so let's dive into that a little bit. First of all, what was the genesis of this? Because I think if you were to sit down and talk to some e-commerce experts and you were to ask, Hey, what category should I get in? I'd like to build an eight figure E-commerce brand. Razors would probably not be at the top of that list. So how did you get going here?

Ashly:

Yeah, so it's sort of a little bit of a bizarre story because Henson is this weird mix of aerospace machinists and digital marketers, e-commerce guys, operators. And so back in the pandemic, actually the aerospace machinists are one of our co-founders. They mix parts for satellites, parts for Mars rovers, legitimately hard to make very in demand aerospace parts, legitimately and sort of just through a series of circumstances during the pandemic where a lot of those projects got either paused or shut down, they had to pivot. And so one of the machinists over there was like, I think we could make a safety eraser. And so they did. And when they did it and it was actually good, they came over to us and okay, well here, what do you think? And could you sell it? And we're like, well, we can sell anything. Sure. And we really just thought, honestly spoken

Brett:

A true marketer, can we do it? Yes.

Ashly:

How many is tbd, right? We honestly thought it would be a little side project. We'll spin up a Shopify store, we'll put it online, we'll help these guys out and we'll see what happens. And then it just took off. So that's sort of the genesis, but then leading into your intro there, because we had this product that was well made and sort of functional. Again, remember this wasn't like a bunch of MBA guys getting together saying what business model should be attacked? This was aerospace machinists looking at cutting forces and angles and going, how do I make this tool as efficient as I can? So that was the genesis of the product. So then for us as marketers, we said, well, how do we build our brand and marketing effort around that, which I think other brands do, but sometimes it's very often the other way.

It's sort of like business approach. How do I get ebitda? How do I get high lifetime value? It's all the things that e-commerce operators want to get, and those are the driving forces, not product necessarily. For us, it was entirely about the product. So since the product was well made efficient, lasts a lifetime, uses 10 cent blades, we're like, we don't want to do subscriptions or clubs or any of that stuff. We just want to sell it on its merit, which means no recurring revenue for us because you buy it once, use it forever. We don't even make the blades. We don't really make money on them. They're 10 cents. We don't sell any other products currently. So our business model is actually terrible. It's garbage. You wouldn't want to do it the way we're doing if you had your choice, right? Because that razor razor blade model is highly profitable.

You sell the handle no money or very low profit, you sell the consumable part of high profit, and that's how you get your high LTV and your profit over time. That's what all the big guys do. What if you go to a jug store and look at the razor aisle? That's what you're looking at, the razor razor blade model. And we just said, well, they're already there. They're already doing that. Our product doesn't really need that kind of bells and whistles. Let's just see if we can sell it as it is and see if we can get that to be a profitable business and we can. So now that we can, we're like, okay, there's an interesting sort of lesson here, which is what if you just sort of focus on a really streamlined, doing something as a very simple sort of effort, putting all of your eggs in the let's make that thing profitable. And then from there, from that sort of profitable foundation, then you can start to expand things. Because trust me, we would love higher lifetime value. We would love all the things that all those other models have more intrinsically, but now we have the upside of trying to build on them in a way that has a really strong base, if that makes sense.

Brett:

Yeah, it totally makes sense. And yeah, there's nothing wrong with the model that those bigger razor companies have. In fact, I think if you looked at purely the math and purely the business model, you would probably favor one of those models. But you have a superior product literally designed by aerospace engineers. And so you've got to lean into that. And it turns out as you try to sell this and sell this the way that you have, it resonated with people. The marketplace was hungry for a product like this. And it's interesting, mention a company, they're out of business now. So think it's okay if I mention them where they came out with 99 cent razor. So this is not Dollar Shave Club, this is 99 cent Razor Club. I'm like, come on. Really? No innovation there. That's just let's be more gimmicky than the last. But you guys said no, it's going to be simple, straightforward, awesome. Razor, let's go. So as you were launching this, when did you understand, man, we've got product market fit here, this product and the way we're structuring the message, this is resonating. I'd

Ashly:

Say it happens pretty quick. Probably within the first eight to 12 months we're like, oh boys, there's actually a market here. People like this. As soon as we started to get enough feedback, I think probably the switch for us was when we started to realize that we were actually winning cartridge users. There's lots of safety reasons around for over a hundred, the actual fundamental design isn't necessarily that's new. How we make it is very innovative, and the devil's in the details for sure, but safety raisers has been around forever. We're not the first safety raiser by any stretch. So early on we were selling to people that already had familiarity with safety raisers. As we started to win more and more people coming from the drugstore, sort of multi-blade cartridge razors and saying they much preferred ours. We're like, okay, we're onto something. Because now this market, our total addressable market isn't just that group that had familiarity with safety razors, it's everyone. And that happened within the first year. So that was when, okay, holy crap, we're onto something

Brett:

Super interesting. So talk about the difference here in the quality. And we were just talking before we hit record. I got served one of your ads on meta recently. It was brilliant. But explain to people that are like, well, why should I trade in my four or five razor setup here to go with something like the instrument?

Ashly:

Yeah, I mean fundamentally, so there's a couple of things that we know to be true. One is that two thirds of men still expect irritation when they shave. That's a really high number for a category that's been around as long as shaving has. That's a really high number of bad outcomes. I actually can't really think of any other product category that's that well used that has that many bad outcomes, right? Yeah.

Brett:

60% of you will use this product, you'll feel horrible afterwards. You'll have bumps, you'll have whatever.

Ashly:

But we're guys, we just keep using it idiots. So because that's true, fundamentally, if irritation is something you would like less of, you need to use a single blade just full stop, less blades, less friction. It's fundamental, not pitching hens in here. Just go and get a safety razor single blade better for your skin. So that's one thing specifically for us, it really has to do with how we support the blade. Something to get too boring here, but think of anything you would use to cut. You're cutting carrots at home, you're sawing a piece or whatever it is, you would never want to cut anything with a blade that's not supported. Well, you wouldn't want the blade moving, vibrating, flexing, bending. You wouldn't have as much control, just fundamentally wouldn't have as much control. And that's what these aerospace machinists really identified when they were making their first design for the razor was they're not holding the blade well enough.

And remember their whole job is doing very specific cuts on titanium, really hard metals that have to be within 12 microns of tolerance, very difficult things to do so they understand cutting action blade support, all these things as good as anyone on earth. So that was sort of the consistent flaw. Multi blades, other safety razors, disposable razors, none of them support the blade well enough to hold it rigid. Their design and then the manufacturing execution of that design is what lets us do that, which means you just have less of those less collateral damage when you shave, right? You want to cut the hair and not your skin. In a perfect world that's much easier to control when you have a blade that's not going to move.

Brett:

Interesting. And so as you listen to customers, hear from customers, what are the main selling points? What are people either buying it for originally or what are they most delighted with after the fact? I'm assuming it's a combination of what you just said, but curious there

Ashly:

Definitely people are hoping to have less irritation. It's still our number one reason why people buy it. What's interesting though is in the data that we have on this is there's a few benefits that people really like once they own it, but aren't necessarily big reasons to buy, which is a little unique. I'm not sure I've really seen that before. So two examples would be one, the sustainability piece. There's no plastic in our blades or a razor. The blades are recyclable. Our packaging has no plastic. There's just no plastic anywhere involved in anything we do. And I think there are certainly some people that might buy for that reason, they like it, but really they're buying it for the precision or the lack of irritation. But then once they own it, they're happy that they're not polluting. The other one is the cost. So we're $70 us to buy a raiser.

I understand that's more than the $9 raiser you might buy at the store because the blades of 10 cents, instead of say $3 for a cartridge, they're 30 times less. The consumable part is 30 times less. So over time you're spending less. And that's sort of a tricky thing to pitch people on when there's the dollar shaves and there's all these perceived to be cheap options out there, even though they add up over time, it's not really how people's brains work. Totally. So that cost of ownership, while some people go, oh, that's neat. It's really once they own it, they're like, okay, wait, I just bought my razor. I bought a pack of a hundred blades, which we sell on our site for $10, right? A hundred blades that'll last you three, four years. So once they have that at home and they try it and then they're like, okay, I'm now two years in and I still haven't spent anything else.

I'm now three years in and I still haven't spent another cent. Then they're like, okay, this is great. Because a lot of people used to go into Costco getting those big sheets of cart razors for 40 or 50 bucks and going, oh, that sucked, but oh, well, they just don't have to do that anymore. So yes, there's that upfront cost, but then once they own it, so that's just kind of a weird dynamic I've seen where the sustainability and the cost of ownership when you own the product, people can't stop raving about that, but it's not totally why they buy it, which is sort of a unique scenario.

Brett:

I think it's really important to note that those are kind of secondary benefits. They're meaningful and people will likely talk about them. And I'm sure your power users, your most passionate customers, they're telling their friends and they're talking about the long-term cost savings. But that is secondary, right? I'm not thinking like, okay, I would like to save. I'm budgeting out my razors for the next three years. I'd really like to save a little bit here. That's not enough to get me to switch, but less irritation or understanding that every time I shave, I've got bumps, I've got nicks, I've got scratches, I'm bleeding. This is enough, is enough. That's really where you win people over. And so that makes sense and I think that's really important for everybody to kind of outline what are my primary benefits, what's the real reason someone will switch, may not be the reason they stay, but it's the reason they switch.

So really important to call out. Well, let's kind of dive in. We walked through your operating tenants, and I love these. I think these are, there's lessons packed in here, and so we're just going to kind of go through this and have a dialogue on it. But I know one of your operating tenants, and this lines up with my buddy Sean Frank from Ridge, is first order profitability. Now, I think it's probably obvious why you guys do this, but talk a little bit about that. Why first order profitability and how does that impact what you do?

Ashly:

So for us, it's a bit of a necessity for sure. When you sell one product that people are going to use forever, you have to, if you want to make money and we do, then you have to make money on that first transaction. We sort of don't have any other option currently, but what that does, so that requirement really forces a very pragmatic approach to everything that we do because we don't have any get out of jail cards to play. And this is what we see in e-commerce all the time where they're like they're do some acquisition channel that maybe they haven't cracked or maybe they haven't totally solved and it's got a really high acquisition cost. Yeah, but maybe we'll make up for that later. Or there's just a lot of the fundamentals of an approach for us don't, as you mentioned off the top, we don't really email our customers almost at all. If you buy a razor, we'll give you tips on how to use it and take care of it, but we don't really email them because why we have nothing else to sell them. And so you can imagine every day we get pitched dozens of email vendors being like, why aren't you emailing your customers? And I go, what would we tell them? They have the thing that we sell.

But that lens allows us to really focus. We really, really focus. And the thing, when I talk to other and look at the landscape, I'll look at companies that are, I don't mean to necessarily compare revenue, but just in this context might be doing a 10th of our revenue and they have three times the employees and are working on six times the marketing efforts. And I'm just like, you're too small to be that diverse. You have to really focus on making something work, whether that's an acquisition channel or a product or whatever it is, a campaign. You have to focus on making it work. And that doesn't mean you can't test things, but that's all you're doing is testing. You focus on the things that work, you grow them as best as you can, and then you test, you just dabble, you dabble, dabble, dabble, dabble.

It's weird because at Henson, I feel like we're obviously doing really well and we're successful and we're pleased with the macro results. Those little tests that we do, most of them fail, but because we didn't have any real risk associated with, we're not hiring a headcount, we're not spending huge budgets. We know that the core parts of the business are finely tuned machines that are very reliable sources of revenue and profit that we can count on and rely on. And so those tests are only that, and most of them fail unfortunately, but the ones that work, we then nurture into new pillars of the business. So for us, day to day, it actually feels like we're failing all the time, but in reality, we're winning because we focused on the things we're good at.

Brett:

Absolutely, and listen, as we look at this, and I've run a traffic agency now for 14 years and done marketing forever, and there is something real about a CAC LTV ratio, your customer acquisition costs compared to LTV and let's just say for the sake of argument that my average order value is $60 and I know with quite a bit of certainty that I can get someone to purchase three times in the first six months that they're a customer. So maybe I would spend all of the first purchase on customer acquisition. Maybe I would even go in the hole a little bit. And we've worked with some businesses, worked with some brands that do that, that they've got their backend dialed in. They know that once they make a sale, then they've got email followups and they know they've get a certain percentage of people to buy.

So the math works, and you said this, I love the way you framed it, the get out of jail free card that does create or can create someone to become lazy and to say, it's okay. It's okay that this wasn't profitable. We'll make up for it on the back end. That's kind of like everybody's, every agency's favorite pitch or every marketing person. It's like, no, no. Okay, so we lost a lot of money upfront, but we're going to make it all up in the back. You guys don't have the luxury of that. And so you have to hold every dollar accountable upfront, and I think that creates a bit of clarity. It creates a bit of focus. It allows you to say, okay, yes, we're still going to test. You can never really survive and grow a business if you're not testing, but you're going to test in limited quantities so that you can remain first order profitable. So I love that focus and I love that puts on and also think there's this approach that like, hey, constraints lead to creativity, guardrails actually lead to creativity. They don't inhibit it. So any additional thoughts there? Yeah,

Ashly:

I think maybe just the one thing I would build on in that example you talked about there is if you do have a good C to LT V ratio, and there's plenty of businesses that would, and there's certainly different products that lend themselves nack to that, right? I was talking to someone the other day that sells baby food. Well, for the duration that that kid is a baby, they're probably going to be a high use customer. So it's not a forever LTV, but it's a fairly predictable one in that window. And they should exploit that for sure. They should. I'm not opposed to it. The caution is if your fundamentals are bad and if you're leaning on it too much, let's just say that you get a little, like you were saying, almost lazy or something there, or you take your eye off the ball all a little bit and you start to live with that inflated CAC because you're like, I know I have the LTV.

If that happens too long, then all of a sudden you're like, okay, well my ratio's not as good as it was, and then what you do, it's like, well, we have to drive our LTV back up because now our CACs higher, let's make the LTV higher. So we get back to that ratio and now you're doing, here's the reality of e-commerce. The tactics you do to drive a higher LTV are sort of the unpleasant ones very often. They're spamming, they're emailing, they're getting in front of it, it's discounts, it's offers, it's bundling. It's all the sort of trickery that you might do to try to convince enough people to participate in whatever that mechanic is. And then if you end up doing that too long, the thing that I am very wary of is what's your ultimate experience you're delivering at that point? How happy are your customers At that point?

I get the spreadsheets might work and maybe the math is still there, but now you're, you're committed to the hamster wheel of, because I have such a high cac because I took my eye off the ball there and relied on my LTV, but then that went up, so then I had to get that up. Now I'm over here. Now you're on the hamster wheel and good luck at mass. And then you see these brands and even as a consumer, I see it all the time. I'm like, man, the acquisition thing, the ad, the whatever, I liked them bringing me in, but boy, I don't love the experience now that I'm in.

I don't know how many customers love the brute force approach to marketing. I don't think anyone does. I get that the math works because so long as enough people convert on low cost channels, you kind of keep doing it, and that's just never been our approach. We're like, we want actual loyalty. We want be, and we're in a category where that's prevalent, so we're like, let's be different. Let's really focus. So for us, it means focusing always on low acquisition. If we can never take our eye off that ball one, we have to now, but imagine a world where we come out with other products down the road and we could sell them other things, that becomes a benefit for us, not a driver. Absolutely. It becomes something we get to benefit from versus a thing that's driving our focus. LTV would be something we would enjoy having a higher wolf of course, but LTV being high isn't a gun to my head, if that makes sense.

Brett:

Yeah, I really love it. I love the focus and I think it is served you well, and I wish more companies had a more rigid focus on customer acquisition costs. Even those with good. So let's talk about you do no promos, no discounts, no real offers and things like that. This is really important, and I'm not saying you can't run sales. We have clients on varying degrees of the spectrum. Longtime client as a Firestone boom by Cindy Joseph. They would do one sale a year around the holidays, was like a 10% discount. It wasn't major, but they just want to do something for their customers around the holidays. Other than that, nothing. This is our price. It's a great offer. This three six replace your makeup bags type thing's, just a great offer. Newer client we're working with now where they've kind of come to us and they said, Hey, we really can't close deals unless we're running a discount. So it's an awesome product, but they've kind of gotten on this discount hamster wheel, this discount spiral where they've got a discount right now or else it's not working. We've got several ideas we're about to execute for them, which I think will actually help quite a bit. But why the philosophy of no promos, no discounts, no, and how has that worked for you?

Ashly:

Yeah, it's two parts, right? It's the one which we talked about. It's the slippery slope. The hamster wheel. Once you start, are you committed to it and how do you backtrack from it? It's easier to not have to deal with that if you never do it. So that's definitely one of them. The other one is just sort of back to our sort of first principles company is that we're trying to, we really are, in this case as marketers trying to, my job is to show the product's merit, show the product's competence because it's a good product. So that's why a lot of our videos are more explanatory or informative because the average person doesn't really know much about shaving. If we're going to say less irritation, we're going to tell you why instead of just say it.

So it's really because that we want to just have it at a fair price kind of forever and not let it be about anything else. So will we ever do a discount at some point? I don't know. We always reserve the right to try to think about that in the future, but we've never discounted the razor ever. We actually just this month, because I was listening to the Ridge guys talk about how well they do it on Father's Day and we don't, so we did a little free shipping. We actually chart us. Another thing we do, we charge for shipping.

We're so gimmick list, we actually were offering free shipping just for Father's Day as one of those little tests I'm referencing doesn't seem to be moving the needle. So that's just another thing for us. Yeah, another thing for us to say, it's almost like if gimmicks move the needle for you, gimmicks, that might be a little harsh if sales discounts move the needle in some cases, for sure they were. I get, especially if it's a commodity type thing. So it would vary by category or by store. I understand the variables, but as an operator you want to really look at that carefully and the temptation would be is, Ooh, sales are up, let's go. Or it's like, why did sales go up so much?

Are we not off? Are we not convincing the value of the product at the price we'd like to listen for well enough and should we go back and focus on that first? Knowing discounts are always a lever we could pull later. I think that's where people, again, I'm not trying to overgeneralize, I've just seen it often enough to say that operators will take a win, a quick win, and then the temptation is to exploit that win as much as possible instead of backing away from it and going, why did we get those results and are we happy with that as an ongoing part of our strategy or not? I know there's plenty of brands that are having very thoughtful conversations like that. I see a lot that just sort of grab a win and go grab a win and go, and then again, eight months from now you're like, how did we get here? It's like, well, that's the path you chose.

Brett:

Yep. It was one step at a time. I took Brazilian jiujitsu for a little while and it didn't stick. It wasn't my sport, but I really enjoyed parts of it. I remember kind of rolling with some guys and then I would be like, well, how did I end up here? And they're like, well, you made a series of about eight mistakes in a row. I'm like, alright, you're going to need to show me. I have no idea what I just did, but I think the same thing happens in business. How did I end up here? Well, it was not just one thing, but it was several things that kind of led to this spot. I do have a thought related to your email list. Have you ever used the email list to get your customers to buy another razor as a gift? So leading up to Father's Day, Hey, you don't need another one, right? You're set these things last forever, but buy dad one. Have you thought about that? Just curious

Ashly:

A little bit. Yeah, we've dabbled. I think we often send an email on Black Friday usually with no offer or no update just to say Hi, you haven't heard from us. Merry Christmas, whatever. We did one early this week actually for Father's Day. We did exactly that. Hey, friendly reminder, this could make a really nice gift. You get a 36 hour spike for sure. It's like, again, we probably make things too hard on ourselves, but we really resist the temptation because while that spike looks nice for 36 hours of, Hey, look at all this basically free revenue, SEMA costs essentially nothing. It's just a 36 hour spike. It doesn't really change our business at the macro level at all. We sort of are able to see it for what it is and we will strategically it when it makes sense to, but the idea of doing that every two weeks being like, what about a gift now how about now? It's not worth to me, it doesn't seem like it's worth it. I'd rather just do a good job convincing more people that they should try a

Brett:

Razor. Totally makes sense. It's national teacher's day. You want to buy a razor for your teacher, right?

Not really. Probably not. Yeah. Awesome. So one of the next tenets you talk about is understanding cashflow. I love this topic. I think there's definitely a trend in our industry, more people talking about finance and marketing going together. Sean Frank talks about it. My buddy Taylor holiday talks about it quite a bit, but I know this has to do with your cash conversion cycle. How do we turn cash into sales and sales into cash type of thing. So are we turning cash into inventory, inventory into sales sales, into cash? What is your take and how does your company look at this understanding cashflow?

Ashly:

It's probably the topic we discuss as much as anything else as operators. I think most certainly marketing gets a lot of airtime. The cashflow gets almost as much and I think we've actually learned a good amount. It's probably the place, if I look at my growth as an operator over the last three years, that's one of the areas where there's been the most. Certainly we sort of understand some of the,

Brett:

You're more of a marketer by trade is your background more and marketing. We generally don't focus as much on the finance. We like the marketing metrics like the creative side, but really nerding out on finance. Not typically what a marketer does,

Ashly:

But it's so critical. Absolutely. Here's an example where because it's tied to marketing it necessarily is, so definitely there's the cashflow in terms of how much product you order and relative and there's like you said, the negative cash cycle of having net 30 terms on an ad source where you get the money before you owe it, so you get to turn marketing effort into cash much faster than the cash cashs do those. I think most e-commerce operators are probably familiar with most of those dynamics, but there's other things at play too. I think we used to, because we're so acquisition cost sensitive, we used to look very narrowly at that. I'll give you an example. We do a lot of YouTube sponsorships, not the pre-roll stuff, like actually sponsoring the channel and the guy gets out guy,

Brett:

The creators directly

Ashly:

Sponsor creators directly and they'll do the little ad read, right? Lots of brands do it. We've had a lot of success there. We really like that approach just in general, but it has typically it's an net 30, not always, but typically it's an net 30 world. So ad the video goes live, it does whatever it does, and then 30 days later you owe a check and if it's ROI positive, you've probably earned more than enough money to cover the cost of the check, and so it's free, right? It's not actually free, but it's cashflow wise basically.

Brett:

Basically. Yeah.

Ashly:

But in that world, the thing that I love about YouTube specifically is that video keeps running, so I pay for Facebook

Brett:

Ads, it gets better over time, it often grows. That is the beauty of YouTube organic. So it's got this

Ashly:

Evergreen long tail, which means conversions keep coming in. So we've done this really big macro analysis on profit generated by YouTube channel over time. If there's a profit rate, I guess I don't know what the term would be, and a YouTube video starts, people who are listening instead of watching, I'll try to describe this properly. Basically you see this curve that goes up. You start at a negative number. If you assume the cost is incurred at the time the video goes live, and then it's actually owed later. You've got this negative for whatever it's costs, and then you just start to chip away at that, eventually get past break even, hopefully. And then you start going from there, and then if you repeat with that channel, the curve the next time around is steeper. If you repeat again, it's steeper, you repeat again, it's steeper.

Why? Because you're getting the leftovers from all the other ones that are adding onto it. So it's a compounding effect. Usually what we used to do is we would just look at like, did I hit my acquisition target within 30 days or something? If I did or I didn't, then I will or I won't repeat it because it has these compounding effects and if your business is at a point where you can possibly withstand the short-term impact to cash, then you get accelerated profit the more patient you are, if that makes sense. That's a dynamic that I don't think is discussed enough above, and certainly if you're at the early, early stage, you maybe don't have that luxury, but as you start to mature as a business and as cashflow is more stable, patience is actually profitable because the rate of profit can improve the longer you wait, as crazy as that sounds. So we've seen that dynamic a few different times and it's unlocking some really nice returns for us because we're looking at we're cashflow and marketing is the same analysis for us. We don't really separate them. We are always looking at them together and that's been something that's been very helpful for us. Yeah,

Brett:

Cashflow and margin, cashflow and finance, same discussion. I think maybe another way to look at that is kind of the contribution margin probably from those channels will be another way to discuss that. What else are you doing? What levers are you pulling? How are you looking at cashflow that would be useful to pass on to the audience?

Ashly:

So we do, it sounds lame to say that we do this in a spreadsheet, but I actually think everyone should do it in a spreadsheet at least to a point. Because your business is unique, your economics are always going to be unique. For us, we're lucky because we make the razors down the road, so we actually do monthly pos. We run out one or two big bulk a year, wait for it to get shipped from China. It's down the road. We just, were always making razors. So we've found a way that works for that where it has a very reasonable, we're basically buying razors every two weeks, which is sort of counterintuitive, but that means from a cashflow perspective, it's very stable for us.

But the spreadsheets are really great. We really, maybe another lesson within a lesson here is resist automation actually for a while until you have a level of intimacy and understanding that then you can automate. So we just automate literally six weeks ago, automated all of our cashflow and all of our internal financial reporting and stuff and how we calculate all that contribution, all that stuff that we just automated because it took us three and a half years to feel like we really understood it. I used to go and Shopify pull out the reports manually put, and it was like, why are you doing that? I want to be intimate with it. I want to know what a good day looks like and what a bad day looks like. I want to know, I want to be able to tag, okay, we had a big day on YouTube, we had a big day on Facebook, we had a wholesale order.

You sort of want to know how your business works and live at all those 30,000 scenarios that happen so you can see how that impacts cashflow, profit, all the things, inventory. So we've lived it and for sure made mistakes, but we've lived it. Now we can automate it. And so that would be something that if I was ever going to start a company again or advise a company or just talk on a podcast, I would say resist the temptation to optimize things until you feel like you really, really understand them good. Even if that means,

Brett:

Yeah, we talk about that a lot when we're managing Google ads or Amazon ads. There are great tools or scripts to run. There are things you can do to automate and limit manual work, but nothing really replaces you as a human getting into account, downloading a report, looking at things and doing that consistently because then you really know the numbers and you'll start to almost feel the numbers as well. You got to be analytical, but you'll start to kind of feel it. There's something off here, there's something, or there's something going really well here and I can just kind of feel it by looking inside the account or looking inside my dashboard that I'm manually updating. And so I really love that approach and especially in the beginning until you get intimate with the numbers, then it makes sense to automate. So it's fantastic. Then you touched on this a little bit, but we talked understanding our cashflow. What about inventory management? Anything else to kind of double click on or talk about there? Other than the fact that your manufacturer's down the road and you're kind of ordering every two weeks?

Ashly:

I think you have to just be cognizant of what phase you're in. I think sometimes that's why being reactive can, like you were saying earlier, that really good jitsu example or whatever where it's like, well, you made a series of mistakes that led to a thing. A lot of times the decisions you make in isolation or on their own are perfectly valid. They seem fine, but then they have these knock on effects you don't understand. So for us, last year we went through this big period of trying to ramp up capacity with razor production and den felt compelled to leverage that capacity and started to overorder product, and we had the cash to do it at the time, but then we ended up doing that, honestly, three months too many, not that dramatic, and that really just drained cash. The balance sheet was great. We had all the inventory, but it really drained cash.

Brett:

T and l is probably looking great, right? All that, but cash slow t and l were

Ashly:

Like, we're profitable, but where's all our money? Well, it's sitting on the shelf over there. But my point there is you sort of have to know what you're doing. And in hindsight, I think we were just trying to ramp capacity ramp sales. We're trying to do everything at once when you almost, it's almost, you'll get there faster by doing them in some sequential order. Like, okay, let's build cash and then build some inventory and then turn that inventory into cash, and then it makes more sense to do things sequentially is one of the things I've learned where you just have this desire to scale or go fast or do this or take advantage of the resources you have when actually what's almost always faster is going step one, step two, step three.

Brett:

Yeah. Yeah. What's interesting, I heard this quote from the military, and I don't think this always applies. Sometimes the military is kind of clunky, but I love this quote where they say, slow is smooth and smooth is fast, and that's kind of where this role is into play. We're like, no, no, no. We're hyper scaling. We're going fast and breaking things. So we're doing all this concurrently. Well, in the long run, that'll probably slow you down, not speed up.

Ashly:

I love that. Yeah. That's our motto here, without saying those exact words. Totally. The approach is do less, do it really well, and then in a year from now, you'll be in a better place. For sure. Yeah.

Brett:

Yeah. Awesome. Great segue to one of your other points you talked about as we were prepping, and that's focus, right? Keeping it simple. So what are we saying no to? And I think this is, again, you've got a marketing background. I'm a marketer. I love new ideas, I love new things. I love trying stuff. I love thinking about growth. I love thinking about adding services, stuff like that. But really saying no and focusing is one of the best unlocks to a healthy business and a business that scale. What's your philosophy? What's your approach and any examples of things you say no to?

Ashly:

Yeah, I actually think it's our superpower is our ability to say no. I think we say no all the time, and it's just so hard to do when there's so much opportunity out there. And if you look, every marketer's heads on a swivel with all the different trends that are out there and you hear, oh, well, this company A, B, C had success doing this. You really have to be able to internalize some success that some other company had and look at your business and see if you think you could replicate it or not. And we're pretty good at that. And so if we're like, no, I don't think we could do that because of X, Y, Z, whether it's, hey, we just don't have the talent to pull that off, or we don't, doesn't fit, or our price point would mean no, or just whatever.

There's a hundred reasons. Then you need to just ignore it and just go off of the things that you think ought to work and really harvest them back to the spreadsheets, become intimate with the things that work so that you can keep them working. We, we've never really done much on social. We're technically on TikTok, but I wouldn't say it's been a meaningful part of our business. We don't do email, we don't upsell anything. We don't do what most people do or a lot of companies have had success on, but we're very successful. So there's no buyer's remorse there. It doesn't mean we wouldn't get to them, but it would have to be like some fundamental light bulb would have to go off to say, oh, I know how we should do TikTok, and then we would do it in the absence of that conviction, we're not going to just put resource against something and we're not going to try.

That sounds weird. We're not going to overinvest in trying for the sake of it. We're going to take smart little tests and stuff, customers, Hey, come up with this. Hey, I love you to a different color. No, we're just, no, sorry. Not that we don't want you to be happy, but just because you say you want a red razor doesn't mean we're going to sell them at scale, right? So sorry. So we've just been really good at focusing, and I think it's served us well because again, nothing's in a vacuum, right? Okay, well, let's go and do, let's focus on organic social and do more of that and let's do 10 posts a week and let's really focus. Well, you're either going to have to hire a resource internal, external and manage that resource, which requires effort and cost or an internal resource is going to get shift priorities to do it, which means the other things they're working on, don't cap. Everything has a cost, everything has a cost, and we're just very wary of those costs. Not that we're not willing to invest in things that make sense. We spend a lot of money on a lot of things, but most of our money goes to things that we know work.

Brett:

Yeah, it's really great. And it is one of those things that we got to understand everything you say yes to. Those do stack up and often compound, and then eventually you're going to have to say no to something that you don't want to say no to. And so I love that you frame that as a superpower. Our superpower is saying no to stuff that we don't have conviction about and to stuff that we're not ready to fully exploit or leverage. And so I think that's really smart.

Ashly:

Any agency agencies listening to this thinking about prospecting us. Sorry.

Brett:

Yeah. Yeah, such a good point there for sure. So cool. So another thing that I think you've talked about, I've heard a few other leaders in the space talk about this, but you've kind of focused your acquisition channels, right? It's mostly been YouTube sponsorships and meta ads, correct. Have those kind of been the primary areas of focus or what has been your customer acquisition channels?

Ashly:

It's been those two for sure, and they've done all the heavy lifting. We have some wholesale business, we have some distributors here and there kind of all over the world, which does contribute some volume less so top line revenue, but definitely volume and profit for sure. But no, we're sort of a two channel company now, pragmatically, we sure we'd love to see TikTok go or we'd love to have some other channel contribute to that. But it's back to just back to that focus in deploying those resources. We know we can grow meta and YouTube because we sort of know the recipes there. It doesn't mean it's easy, it just means we sort of know how. It just takes time and effort. And so what's the trade off there? Well, if I took the time and effort away from there, which I know the formula to, and I go put it in TikTok, which I don't know the formula in our case, do we end up with two plus one equals one and a half? That's the thing that we guard against. So we're always doing the smart limited effort tests and other things and the hope of, but those are our channels. And I saw, actually there's, I should give them credit, but I don't remember their name, but there was a company that came up, I think it was, no, I don't want to get their name wrong. A company just actually came out with a report on the top a hundred brands for YouTube sponsorships, and we were number 57, I think. No

Brett:

Way.

Ashly:

Which I thought was neat because we wouldn't be number 57 on meta, I'm sure, but we are there. So we're sort of a big player in that space, relatively speaking because we've just focused on it.

Brett:

Yeah, I love that you've kind of identified, hey, here are two channels that fit our product. They fit our market. The guys and gals that are shaving, we can reach them in these markets. We understand how these work. On the YouTube side, it really fits both a marketing objective and the cashflow objective. And so in those cases, it's almost always worth it to say, how can we double or triple? Or maybe not even that. Maybe it's just like 10, 20, 30% improvement on those. How can we spend more and do better on those channels versus how do we spin up something brand new? And so I love that, and I've heard a few people say, and I believe this, you can get to low to mid eight figures likely with just one channel or maybe probably more likely to, you can achieve a lot of growth and a lot of profitability with a pretty simple traffic and customer acquisition strategy. Yeah, we did. Yeah. Yeah, right. Yeah, yeah. Love it. Love the story of Pinson Razors love what you guys have built. It's refreshing. I think it's also challenging to us as marketers and operators, how do we focus on some of the fundamentals? How do we say no to things? How can we be less gimmicky and more focused on value? And so really, really good stuff. Any closing thoughts or any asks for the audience? Or if not, where can people go and get an amazing razor?

Love it. Love it. Are you on the socials? Are you active on LinkedIn or D two C, Twitter or anything like that? I love it, man. Talk about a hamster wheel that can vary easily. And I know it because I'm living it right now. Kind of become a hamster wheel. It's fun too. I like it. But dang, it can be time consuming to get into both D two C, Twitter and LinkedIn. So kudos to you for that. Well, Ashly, this has been absolutely brilliant. Thank you for the time. And as always, thank you for tuning in. We'd love to hear from you. If you've not left a review on this show, please do so. And if you listen to this and you're like, man, this is a perfect episode for so-and-so please share the podcast would mean the world to me. And with that, until next time, thank you for listening.

In this episode of the eCommerce Evolution Podcast, Eugenia Chen, founder of PandaLoon and CEO of Huxley Media Group, shares her secrets to creating viral content that can propel your brand to new heights. Discover the science behind crafting videos that captivate audiences, drive engagement, and boost your product's visibility across multiple platforms.

‍

Key Takeaways:

• How PandaLoon drove 30 million organic views in just a week and 160 million organic views in the months that followed.
• Understanding the importance of emotional hooks and how to grab viewers' attention.
• Learning how to keep your audience engaged until the very end.
• Exploring the differences between popular platforms like TikTok, Instagram Reels, and YouTube Shorts, and how to optimize your content for each.
• Gaining insights into the power of organic content and how it can significantly impact your brand's success on platforms like Amazon.
• Discovering the benefits of appearing on Shark Tank and how to capitalize on the exposure to drive sales and establish credibility.

‍

Tune in to hear Eugenia's incredible journey from math professor to successful entrepreneur, and learn how you can apply her proven strategies to create viral content that will skyrocket your brand's reach and engagement.

---

Chapters:

(00:00) Introduction

(08:20) Eugenia’s Experience on Shark Tank

(14:17) The Science Behind Virality

(31:02) Which Platform Is Best? 

(36:09) Using Organic Content For Ads

(38:19) Conclusion

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Show Notes:

• Eugenia Chen (LinkedIn) 
• Huxley The Panda Puppy (Instagram) 
• Huxley Media Group
• Pandaloon
• Shark Tank
• Daymond John (LinkedIn)
• Lion Latch
• Jacques Spitzer (LinkedIn)
• Sara Blakely
• Spanx 
• Jesse Itzler

---

Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

---

‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

---

Other episodes you might enjoy: 

‍

• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

‍

• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

‍

• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

‍

• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

‍

• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

---

Transcript:

Brett :

Well, hello and welcome to another edition of the e-Commerce Evolution Podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we're talking about the science of going viral. The best brands that I know today are thinking about and investing in organic content. And so my guest today is the CEO and founder of Pandaloon, which if you're a dog lover and you're on TikTok or Instagram, you've maybe seen some Pandaloon videos. These have for sure gone viral. So we're going to dig into that. And she also runs Huxley Media Group, and so really has a unique outlook on viral content and D two C and growth. She's been on Shark Tank, all kinds of fun stuff here, and so I'm delighted to welcome to the show, miss Eugenia Chen Eugenia, how it going?

Eugenia:

It's going great. It's fun to see you after Seller Summit.

Brett :

Yeah, I got to hang at Seller Summit with our friend Steve Chu and Tony, and what a great event, man. What an awesome event in Fort Lauderdale and heard your story there and thought, got to get you on the podcast. So for those that don't know or that haven't seen the videos, which most people probably have or a lot of people have, what is Panda Loon and what was the inspiration

Eugenia:

Behind this? So Panda Loon is a viral pet apparel brand. We were on Shark Tank, so it all started when my dog Huxley, who looks like a little panda in everyday life, he's always supervising. So he's off screen right here. I decide to,

Brett :

If he does get close, I'd love for Huxley to make an appearance on the pod for those that are watching the video. So entirely up to you, but probably more up to

Eugenia:

Huxley. Yes, I will. I'll let him know. So he already looks like a panda, so I thought I'll dress him up as a panda for Halloween, and I made a homemade panda costume that looked like a walking teddy bear walking on two legs. So if you've ever seen a little panda running around the internet, that's my little guy, Huxley the panda puppy. And it went crazy viral, had no following on Facebook at the time, but on Facebook it shot up to 30 million views in about a week. That's insane. And then insane,

Brett :

30 million views in

Eugenia:

A week. It's crazy. And then through a few different uploads and reposts, it has now reached over 160 million views on that first video.

Brett :

And that's across multiple platforms or that's just the

Eugenia:

Facebook platforms? With Instagram, it's platforms, but primarily Facebook and I think, yeah, a bit of TikTok, but mostly those two. Yeah.

Brett :

Yeah, that is absolutely mind boggling and wild. I mean, you could expect mean people love dogs and your dog is very cute, and Huxley may be in the corner being like, Hey, you can talk to my agent buddy before I get on this podcast. So I accept that. So you would expect it's going to do okay, but to go to 30 billion views that quickly. Insane. And now you said 160 million views at this point and counting.

Eugenia:

It was insane. I think it was a time where something that was visually intriguing and fun to watch was just that sweet spot for the internet.

Brett :

Yeah, yeah. So cool. So you made this costume yourself, put it on Huxley, he becomes an internet sensation, an absolute star. When did you think I should start selling these and I've got potentially a real business? Yeah,

Eugenia:

Pretty much right away. I was already an online seller. I was already an Amazon seller. I thought I was kind of bootstrapping my way towards creating my own product, but I hadn't quite landed on exactly what I wanted that to be yet. So I was actually a math professor in my previous life, but it wasn't working out that great, I guess at the time.

Brett :

So what type of math did you teach? And so was at the undergrad level,

Eugenia:

Graduate level? Definitely undergrad. I would say lower undergrad. So it was a lot of basic college algebra, some calculus, and a little bit of statistics.

Brett :

So college algebra, that's when you've got a lot of begrudging students that are like, I don't want to be here, but I have

Eugenia:

To be here. Precisely. Yes. So I had to, I guess encourage would be the word, or coddle a lot of students through their math experience. But it was nice in a way because I could see that people were empowered by that, that they didn't think they could do it, but if we made it actionable and they could overcome it. So that was cool. Well,

Brett :

And now this gives even greater credence to your formula for virality because you're a math professor, so your formula is absolute

Eugenia:

Whole up.

Brett :

Yeah, I should publish something. Awesome. For sure. So you were selling this from the get go, felt like it was going to be a business. What did the video do though? So as it starts climbing into the millions of views, what is this doing for sales online?

Eugenia:

So at the time, I didn't have it ready to sell to my regret. I wasn't expecting it to happen like that. So people started emailing my online store and just asking, where is this? Can you make it? What's the deal here? And I wasn't prepared, and I always feel a little bit scared to take anyone's money before I have a timeline ready. So I just took their emails and I said, I'll work on it, let me email you and I'll update you as soon as possible. So I hit the ground running. I went and found a local seamstress in San Diego at a sewing company who could make a pattern. So I could try to turn my little homemade version, which is not the best sewing, but just kind of encapsulated a very good illusion, a very precise fit and design. And she helped me turn that into a pattern so I could try to pursue manufacturing. The local sewing company actually didn't want the project because this furry fabric, apparently they would have to shut down the entire factory just to sew my project because it would fly everywhere. Whoa.

Brett :

Because the fur goes everywhere. So

Eugenia:

I had to figure out a company that was bigger because they would have the laser cutting machine and be able to handle that kind of thing. Got it. So that's when I started finding an overseas manufacturer that handles plush fabric and refine the prototype and put in my order for my first line of panda costumes. And I started taking pre-orders at that time, which at this point it was very out of sync from the viral video. So it wasn't the biggest pre-order launch by any means, but I just had faith that this was something that could go viral again and it was worth pursuing.

Brett :

It's amazing. So let's talk a little bit about, and we're going to get into the science behind virality because you made a really great point as we're prepping and getting ready to hit record, is that of course there's an element of luck and an element of timing for virality, and you can't fully predict, no one would guess that there's going to reach 160 million views, but that's not to say that there isn't a formula, and that's not to say that there aren't some steps you can take and some planning you can do to get some viral success. We're going to dive into that, but first I want to hear about Shark Tank. So did they reach out to you? Did you reach out to them? How did that

Eugenia:

Begin? I was just a regular person who stood in line. It was a big hotel east of LA and I stood in line at 4:00 AM with hundreds and hundreds of people, maybe a thousand or so, and I had my chance to give this 62nd pitch in front of a table of casting directors. And I just thought, okay, I'm going to go for it. I've been a fan of the show for a long time, why not? This sounds fun. I've had this moment and something that's visually interesting. So my dog, Huxley and I, we went up and we gave our pitch just like the show. And then it seemed to go well because everyone started looking over and the casting director asked to take a photo of Huxley in his panda loon. So that kicked it off. And by the next week, I had gotten a call and the ball started rolling towards Shark Tank.

Brett :

It's crazy. So what was that experience like? And I think the most important question that everybody wants to know is, did you get

Eugenia:

A deal? Yes. Spoiler alert, I got a deal. I got a deal with Damon John.

Brett :

Oh man, he's

Eugenia:

The best at, yeah, he's great. So he has equity in Panda loon. People always want to know what's he like to work with, and I'd say he is very down to earth. He follows my lead. He's never ever been demanding in any sort of direction. It's always been, what do you want to do? What can we do to help? Yeah, I'd say that as the show's progressed, I think it's hard for sharks to juggle a lot of companies. So you have to kind of pick what you want to focus on with your shark. The Shark Tank process was super fun. I know that some people have kind of a traumatic experience, but totally,

Brett :

I've heard the trauma

Eugenia:

Stories. I was very fortunate, I guess, that it was a fun edit and it was made to be a fun segment, and I had a great experience. It was a bit nerve wracking, and it was a lot of work leading up to it. That's the part that I had no idea that I was spending easily 20 hours a week doing show stuff leading up to filming. And then afterwards you have this secret where you can't tell anyone, but you need to prepare for 4 million people to hear about your product. So it's an interesting experience, but I am so grateful for it.

Brett :

And what was that like then once the show aired? What did that do to website traffic into sales? And then has the show aired multiple times since

Eugenia:

Then? Yeah, when the show aired, it was a little interesting. I was a little heartbroken, but I can't be too mad that I got to air, which is great. Not everyone gets to air after they film, but I aired in January, which is very much not my season. So it was a little bit like trying to sell Christmas trees in July

Brett :

One month earlier, and it would've been

Eugenia:

Insane. Insane. So the traffic had, I think it spiked 3000% compared to the previous time of the same month. So it was a huge spike, but I knew that I had to work really hard to keep momentum going until my peak season that fall. So it was a huge traffic boost. It wasn't the ideal time for conversion, but it was still a really nice lift. And the lift actually continued for pretty much most of the year because I guess the beautiful thing with Amazon is that they love that velocity and bestseller ranking. So that lifted quite a bit. And then your question about have I aired multiple times? Yes. So I got one what I would consider a big rerun where you get to air again on A, B, C, which is great. And then I've had a lot of CNBC reruns. Sometimes they're like every other month or sometimes every quarter or so. So it's

Brett :

Awesome. That's great. And a comment you just made, I want to dive in into this a little bit. A lot of people would, one lot of people wouldn't even try to get on the show you did and you were successful in it, but then if people get on the show, they're like, well, let's see what happens, right? It's going to be in front of a lot of eyeballs. Let's just see how the Shark Tank effect impacts my business. But you understood, and part of this was because it aired a little bit past your peak season, but you knew you're going to have to do some work to keep this momentum going and to keep the lift up. And so how did you leverage the Shark Tank appearance, and what kind of work did you do to make sure that you were able drive sales lift from that? Yeah,

Eugenia:

I definitely took the Shark Tank appearance credit as a resume item to wave around wherever I could as a small person selling something that is kind of silly. There were times before I could say, so before I could say I was on Shark Tank, that people would just kind of be like, oh, yeah, that's a really cute hobby that you must do out of your garage costume for your dog. Wow, that's fun. Yeah, your parents must be so proud you left teaching math for this. But as soon as I was on Shark Tank, they understood like, oh, okay,

Brett :

Instant validity, instant street cred. You're a real business at that

Eugenia:

Point. Totally. Yeah. So when it came to wholesale orders, it was no longer trying to prove myself. It was just like, oh, okay. Yeah, you're a real business there.

Brett :

Yeah. Very cool. Very cool. Okay, so let's dive in. Let's talk about some of the science behind virality. So when you're sitting down to create content and you want this to reach as broad of an audience or as big of an audience within your niche as possible, what are some of the things you're considering and what are you looking

Eugenia:

At? Yeah, I really think hard about the concept maybe too hard at times because the concept has to be interesting enough where you can craft a hook. And the hook is actually, I would say 50% of the work of being an exceptional content creator. And you must deal with this with ads too, where you have to make, yeah, absolutely. You want to make that scroll stopping. Otherwise, no one's going to see. It's probably going to cost some incredible multiple more to get eyeballs on it. And similarly with organic, if you don't make that first even split second interesting, and then really, hopefully you get about two seconds to really bring people in. So nowadays you have to do something that's visually intriguing often, and then also supplement it with audio and sometimes a text hook as well. So that would be the first step.

Brett :

So how are you thinking about the hook and the big idea? So you're saying two seconds, maybe three seconds, and thinking about panda loon, it would've been somewhat interesting if you started the scene with you sewing or creating something that'd be somewhat interesting, but I don't think that's what you did. And so how do you come up with that concept, that big idea, and then how do you translate that into a

Eugenia:

Powerful? Yeah. So when you have something that is surprising, looks like a stuffed animal that came to life for a long time, that was an effective hook in itself. But nowadays, most of the time when we're showing products, we want to tap into some kind of emotional hook because people can read that emotion much faster than they can read a sentence or hear a sentence. So oftentimes when I'm assisting companies in their strategy, the thing I try to focus them on is figuring out what emotions happen behind the problem of their situation that their product solves. So for example, if you are the classic garlic press example, so if the problem is that most garlic presses are really hard to squeeze, then you need to show the pain, the frustration, things like that at the top of the scene in order to hook people. When you're doing something like what I have, which is very cute and fun, that may seem actually easier in some ways, but I actually believe that being able to show the pain of a problem is much better because it's way more repeatable in your content.

Brett :

Yeah, I love that emotion without emotion. People don't pay attention. People don't watch movies. They don't watch shows without some emotion being evoked. People don't pay attention to ads or remember ads or take action from ads unless there's emotion. And you got to look at your organic content in the same way. And one thing I talk about a lot when we're screening ads or showing ads to people is what are the moments of the ad when you lean in? What are the moments in the ad when you can't take your eyes off of it? Or you find yourself gasping if it's a shock or laughing out loud if it's something funny. And when you find what that is, there's some kind of emotional trigger. Move that piece to the front. Exactly. Right. That is probably your hook, rather than that being buried, kind of use some old newspaper lingo. There's this idea of burying the lead. This is the most interesting part, but we're going to bury it in the middle of the video. No, no, no. Bring that to the front. That is almost certainly, definitely your hook. So thought,

Eugenia:

Yeah, that's actually something that I've been doing more and more in my editing, and I think that it works, especially for the way that content is starting to look in 2024, where people are interested in kind of the hyperreal videos where they follow along. But because of that, you have to find that moment, that shiny moment within your video. So I'll move it to the front. So for example, I made a video with my dog where we're photocopying his paw, so this was just an organic piece of content, but there's a point where he slips his paw out at the last second, and we laugh. And so moments where there's a pop of laughter or shock, a gasp, like you said, yeah, move that right to the front, that's going to grab people, and then you can show it more linearly as far as beginning to end. Yeah,

Brett :

Bring me into that emotional moment. Help me feel something. Now I'm interested in your story. So now tell me the linear story or something close to linear, but get my attention first. So this is really important, tapping into the right emotion. So for you, for panda loon, this is whimsy. This is just the awe factor, not the shock and awe, but the awe. This is cute, this is warm and fuzzy. But if you're coaching another business, how do you find, what emotion should we tap into?

Eugenia:

Yeah, often it's more about the problem, so it tends to be more negative. So negativity is a great hook. And so I think I encourage businesses to not be afraid of it. And I think that's something that a lot of businesses, especially ones that are run by elder millennials or up, that we're a little bit afraid sometimes to show things that are negative or a little bit, but those play so well on social. So I would say don't be afraid of the negative hook of showing that I feel horrible and run down. I need to take this supplement. That's where you're going to show the transformation between the two.

Brett :

Totally. And I think, yeah, people are reluctant to lean into the negative, but we're more motivated to fix a problem or to overcome pain than we are to just lean into pleasure. And in a previous life, I did quite a bit of marketing for chiropractors. That was just kind of a niche that I had. And I remember chiropractors would always say things like, I don't want to just talk about back pain. I want to talk about wellness. I want to talk about feeling great. And here's the deal. Nobody wakes up and says, I feel fantastic today, but I'd like to feel better. So I'm going to find a chiropractor. I want to go peak wellness here. Let's go reach out to a chiropractor. That doesn't happen. Somebody wakes up their back is killing them, they can't sit, they can't think they can't do anything, and they're like, I got to find a chiropractor. Now, once someone visits the chiropractor, then they can talk them into a wellness plan and kind of go from there. But it's the pain that gets someone to take action. And so I think that applies though to a lot of products where we're motivated to fix things.

Eugenia:

Totally. And that reminds me of something I'm constantly telling brands is that people aren't thinking about you. They don't wake up and think, oh, I wonder my chiropractor is doing, especially in this TikTok atmosphere, which has then bled over to the way that we scroll through Instagram reels, or we scroll through YouTube shorts, people are scrolling through and they just saw a video about someone's pathological liar, husband. They saw some cats falling off of things, and then they see you. So we're far from top of mind, and in order to get our message heard, we really have to grab them like that.

Brett :

Yep, yep. So good. So we're thinking about emotion, we're thinking about a concept. We're hooking people. What's kind of next in the process?

Eugenia:

So the structure of a viral video, it starts with those things, and then we need people to watch to the end. And I think this has a lot of overlap with some ad metrics too, of we want that retention, we want that watch time to be as high as possible because that will signal to the platform and the algorithm that this is a video worth pushing out to more people organically. So in order to get people to watch to the end, we're going to be working our way towards a reveal. So something that happens at the end, whether it's just the resolution or maybe it's a surprise or a twist or a result. So all along the way, we want to construct it the middle to be something that builds suspense or is gradually working your way towards that ending.

Brett :

Got it. So you've got the reveal in the beginning, kind of the hook. Then you're teasing something like, Hey, stick with me, I'm going to show you this thing. And then you're building to that so that someone sticks around. What does that look like? Or do you have an example from a Pando video from

Eugenia:

Another video created? Actually, one video that I show sometimes when I am trying to get this point across is my friend's product Lion Latch. So it's a little jewelry case holder that has a carabiner that clamps it in place so it can't unscrew and fall out. So the problem is that my friend invented this because she broke her wedding ring. She was catching a softball and it broke and diamond fell out. So there's emotion, there's stakes behind this. So she shows that broken wedding ring at the beginning and it captures you, and then she's showing her product getting filled with jewelry. So there's a little bit of visual suspense where you see this little pile of rings and she's putting them into the jewelry case. So we're waiting for this process to hit completion. Yeah,

Brett :

What is this? Show me. What am I watching here? This is interesting, but what am I

Eugenia:

Watching? Yeah, so she gets all the jewelry in there, she puts the top on, and then she clamps it closed, and she shows how it locks and it's not able to come apart. So we've waited to see that reveal of what is this? How does this work? And then we get that final picture at the end of how it's going to protect the jewelry.

Brett :

Very cool. Love that. Okay, so we're concept, we're hooking, we got the emotion there, some kind of big reveal in the beginning. That's the hook. Then we're leading someone to something. We want them to watch the whole thing. And I will, just as a side note, you're 100% right. This does tie into ad metrics as well, because what platforms want is they want people to engage on the platform. They don't want to serve ads that people hate. They want to serve ads that people love. And we've seen this, we've got a pretty large outdoor brand right now, and we're doing a YouTube push to try to drive in-store sales. And they've had some videos, and these are fantastic videos, and we got great structure in our campaigns, but they're getting 60 plus percent view rates on some of these videos, which is just insane. Typical view rates are 20% or something. But if you can do that, if you can really drive up those view rates in the beginning, and then also your completion rates, platforms want to show those ads, you get a lower CPM, you get more exposure and it just all works. So totally ties into ads as well. What's kind of next in the viral process?

Eugenia:

Sorry, I think my internet just lagged.

Brett :

Oh, no worries.

Eugenia:

Could you repeat what you said just so I kind of get the gist of it?

Brett :

Yeah, yeah, sure. And so yeah, I just kind of talked about ads and how it ties into it. View rate gets people to watch longer, the platforms want to show it anyway, so I just tied that back to, Hey, what is next then in crafting this viral

Eugenia:

Content? Okay. Exactly. So all that tends to help us with retention or watch time. So then what are the other metrics that signal to an algorithm or a social media platform that this is a video that people really want to see? So the next strongest signal that I see or shares and saves, because if someone cares enough to say, Hey, hey Brett, I want you to see this video. That usually means that it's extra engaging, extra interesting. So I look for shares and saves because I notice a very strong correlation between the percentage of shares and saves as views. So if I see a 1% ratio of shares and saves or more, if it's just a little bit more, then I can usually predict that this video will do quite well. And when I look at viral videos, they tend to have a higher than average share and save ratio.

Brett :

So likes and hearts, that's one thing, but that's the baseline, that's the minimum level of, I like your content. This is kind of cute, but if I'm sharing it with a friend or family member, I love it. And if I'm saving it, then that means either I'm coming back later, I'm going to share it later, whatever. So shares and saves. And you said if you can see a 1% share or save rate, then you're

Eugenia:

Onto something. Yes, exactly. If it falls below that, then I think there's something wrong. Likes I find to be kind of the most irrelevant ratio, because if it doesn't get about five to 10% of likes, then it's not getting delivered anyways, so it doesn't really matter. So shares and saves, there are some things that we can do to improve our likelihood of that. So with saves, if you make any content that is worth reviewing later. So for example, if you created a tutorial or something that had steps in it that someone might want to refer to later, that's a good way of creating save bait in a way. And then shares that kind of ties into the concept and the hook. If this is something that really delivered a surprise, really delivered an incredible punchline, that often will motivate us to share it with a friend.

Brett :

Very cool. Good. So then what else can we say here about viral tips, viral strategies? How else are we making our content really go

Eugenia:

Nuts? So the biggest mistake I see that brands make big and small is just being, unfortunately what's very much human nature is just to be a bit self-centered, because just like that, what I said before is people aren't thinking of us, and it's so much more extreme with this discovery type of algorithm, the tiktoks, the Instagram reels, the YouTube shorts, where unlike browsing on YouTube where I might be searching and I'm curious about how to make really great Google ads, and then I find a Brett Curry video. Oh, well, that's a great thumbnail, Brett, I'm going to go ahead and click on that. By then, I've really bought in, right? I've evaluated, I've searched a question, I've seen your thumbnail, I've seen your title. I am trusting that you have something to deliver, and then I'm going to watch your video. That's so much more of a more committed viewer than someone who has just seen the cat video, the Four Seasons baby video, all the junk we see on TikTok. So we have to really think about someone who's not coming in with us at all, top of mind and quite the opposite, and someone who's coming in without any context. So we have to treat each short form video like we're introducing ourselves to a stranger all over again. It can be very hard because we're thinking about our products every day. We've done it for years, we've obsessed over it. So we really have to step outside of ourselves and think about what is it like from an audience point of view.

Brett :

Yeah, we have that what's called the curse of knowledge. So in the weeds and in the background of our product that it's impossible for us to fully be objective about it. And to think about it like someone who's never seen it or experienced it before takes a lot of work to get that perspective. My buddy, Jacque Spitzer, he runs Raindrop awesome creative agency. He talks about one of the mistakes, and this totally ties into what you said, one of the mistakes that marketers make is they sit down and think, what do I want to say? What do I want to say? When in reality, you should be thinking about what does my market want to see and what do they want to hear? And then how does that relate to my product or my offering? So really tailoring this to, it doesn't matter what I want to say, it's, it matters what you want to receive or see about this. And then, yeah, I think one of the biggest fallacies, biggest mistakes in marketing is assuming that your customers or the marketplace is thinking about you. They're not. They're thinking about themselves. And so for you to break through and to get them to think about you takes a lot of work.

Eugenia:

Totally.

Brett :

Yeah. Awesome. So let's talk about platforms just a little bit, because I know you had your initial success on Facebook and Instagram. You've done really well on TikTok as well. Do you view those platforms very differently as your crafting content, or is it mostly the same with a few differences?

Eugenia:

Yeah, I do think of them a little differently, but for the most part, TikTok has set the trend. So TikTok has dragged these platforms along to their culture and their type of algorithm. They're not quite the same algorithm, but they're following along. So I often create with TikTok in mind for the most part, because that tends to be where the other platforms are going to follow. So TikTok is sort of the trendsetter in that way. So I'll think about TikTok first where their videos are favoring over a minute long, so the delivery is crazy different. If you can just hit that one minute and one second mark. As opposed to being under. Yeah, yeah. Isn't that wild? They blew up as the 15 second video platform, and now they favor over a minute. I saw they released some news on how much longer content is being consumed, and it was a majority of it being over a minute.

So the appetite for longer videos has grown quite a bit. So this is an advantage for us. So if we know that the demand for over a minute videos is much higher, but the supply is still a lot of people favor creating short, quick videos because it's easier, we can take advantage of that. Instagram is also following suit a little bit. So I received a notification on Instagram reels when I posted a short video and it said, oh, hey, reels over 30 seconds are performing better. Wow. So there's a bit of an appetite there. So for reels, I'm aiming for somewhere between 30 seconds and a minute for YouTube shorts. They still accept short videos. And I had a short video recently that did nothing on TikTok and Instagram, but it reached, I think it's about 4 million views on YouTube shorts. Wow. Yeah. So super simple, easy. It was just my dog and his Panda loon, panda costume, just running on a dock and then posing looking happy, and that was it. So it was wonderful. I used some text to try to hook people into that, but it did great. So YouTube Shorts has more flexibility, and in some ways I believe it favors shorter content just because audience is still expecting short content from that platform. So I will create the first concept with TikTok in mind, but then create these alternate edits for the other platforms.

Brett :

And when you're editing, I love that. So you're creating for TikTok first with TikTok in mind first, then you're doing edits for Instagram reels and YouTube shorts. As you're making those edits from TikTok to the other platforms, is it more about the length of the video that you're changing or are there other elements about the video that you're changing to do well in Instagram reels?

Eugenia:

Yeah, that's a great question. So on Instagram and Facebook, so much content is actually consumed on mute. That's very different. If we want our video to do well on those platforms, we really have to figure out how do we make this consumable while it's muted,

Brett :

Visual storytelling, and maybe submit some text on screen screen

Eugenia:

Exactly, exactly thing. And then caption. So we have to also think about leaving a lot of extra space at the top so that we can include captions, although people won't know what's going on in the video. And then YouTube shorts is also more heavily visual than TikTok. TikTok tends to have a lot more storytelling these days, a lot more audio, face to camera talking. I've noticed that in 2024, there's even seemingly more favor towards natural sound. So people are less interested in the voiceover. Unfortunately, on TikTok, I miss the days of voiceover.

Brett :

Interesting. For a while, it was like the AI voiceover trend was going on.

Eugenia:

I think that there's been a increased appetite for that hyperreal stuff where instead of a day, the or old days of, Hey guys, come with, I'm going to go and do my makeup now. People just want to see the natural sounds of the makeup clinging and someone storytelling in face to camera style like FaceTime. You'll even see something interesting. If you see a video that's gone pretty viral and someone put music over it, people will comment, Hey, can you repost us with just the raw sound? I don't want to hear the music. Yeah,

Brett :

No

Eugenia:

Way. And they have no idea what the sound is. It's even interesting. But they just have that hunger for what really happened.

Brett :

Don't need music. I want to hear that. I want to hear the story. I want to hear the real sounds

Eugenia:

Of what people want to be a fly on the wall and watch what happened.

Brett :

And so how are you advising your clients? You're coaching them on creating content, you're building for TikTok. First, you're making edits for Instagram reels and YouTube shorts. How are you then advising them what to do with this content from an ads perspective? Because a lot of times great, viral, organic content can make for either an ad in and of itself, or a component or a piece or the hook

Eugenia:

Of an ad. Yeah, definitely. So I see that people talk about TikTok ads quite differently than Meta and the others where TikTok ads seem to have a much higher level of pressure on seeming like organic content. So in order to create TikTok ads, I think we really have to figure out what's playing well in organic TikTok. Otherwise, we're kind of just throwing money away. People have just such an expectation when they're scrolling through TikTok that this is going to be something that's entertaining on its own and not feel like an ad. So the moment that someone smells the ad stock music or the ad tone, they can get really turned off on TikTok. So I think for my clients, I try to encourage them to use this as an opportunity to set a higher bar for what feels like a real authentic, organic piece of content that they can then use for their ads. For Meta. I see such different results from company to company, and I'm sure way more about this than I do, just as far as what ends up working on their ad account. It's so varied, but if you make something that is organically grabbing, I think it helps you with your ad retention and all the things that could make ads hopefully a lot less expensive.

Brett :

Totally. Yeah. And sometimes we're seeing even just taking an organic content, the best piece of organic content and running them as ads, we do that on YouTube shorts quite frequently. Well, let's do this. This has been an absolute blast. I do want to talk about Panta Lo a little bit more where people can find it and buy it and stuff like that, and also your agency. But any other final tips, final takeaways, final thoughts that we didn't already talk about? Yeah,

Eugenia:

I think just as far as actionable steps for people who are trying to direct their teams or themselves trying to make content, just keep in mind that people want to hear from a person. They want to hear about your stories and your voice more so than they want to hear from a brand. So I think of actually one of the sharks that was on my Shark Tank episode, Sarah Blakely, she's such a rockstar.

Brett :

Wow. She's a legend man. Yep. Founder of Spanx, married to Jesse Itzler, Jesse Itzler, Hass, written books and marquis jets. Jesse Hitler's an awesome guy too, but Sarah, wow, what an amazing,

Eugenia:

She's a legend. Youngest self-made female billionaire. I'm going to keep her in that spot. I don't buy the Kylie Jenner thing. So if you look at her personal account, her Sarah Blakely account, people are so highly engaged. She's talking to the camera, she's bringing them along with her personal perspective and point of view, compare that with the Spanx account. People are not that interested in seeing a catalog photo hosted. So yeah, bring people into the raw story. Be willing to share the emotion and the things that are problems that your product can solve. Brainstorm on all the problems that your product can address, and just keep on hammering on that. A big mistake that brands will make is that they feel like, oh, well, I demonstrated my product a couple of times. People are tired of saying that, no, it's a totally different audience. You reached 10,000 people.

There's hundreds of millions of people still out there who need to hear about it. So you have to do that ad nauseum. So stick with it. And then really, really, when you are engaging with team members or content creators, hold them to those metrics. See where the math is pointing you on. Whether this is set up for success. I sadly see a lot of brands wasting tons of money or multiple salaries being spent on creators who are just not going to perform well. So yeah, really look at those things and if you need help, get someone who has a real clear view of viral strategy in there to help you with do that.

Brett :

Really great advice. I think one of my favorite bits of wisdom related to communication or organic content or ads is just about the time you are sick of saying something. That's the very beginning of people beginning to understand it and absorb it. And so you've got to tell the same story a thousand different times in a thousand different ways. And you've got to re-look at the same problem from every angle and use different analogies and different stories and different things to tell that. And really, yeah, when you are sick of something or when you think you've just repeated yourself over and over again, you're just getting started. And so hopefully that gives a little courage to, I'm just going to keep shouting this from the rooftops in an interesting way, and it will make a difference over time. So that's awesome. So as people are listening to this and they're like, Hey, I just got to get a visual of what a pantaloon is, or maybe they're like, Hey, my dog could be the next Huxley, maybe I need to buy a panda loon. Where can people find

Eugenia:

Your dogs? Sure. Panda loon.com is always the best place to get everything, the best and best prices. We're also on Amazon as well. If you're in a hurry and you need that prime shipping, I totally understand. And then we're also my socials. I tend to lean into my socials through Huxley's accounts, Huxley, the panda, puffy, and that goes into, actually what I just said was people want to hear from a person. So it's like me and my dog's point of view as opposed to a brand. So yeah, I lean into storytelling on those accounts.

Brett :

So how demanding is Huxley? He's a star. He's a star of the business. Does he demand certain treats or certain dog food, or how do you spoil Huxley, but also how do you keep it real

Eugenia:

With him? He lives a pretty pampered life, I will admit. Yeah, he has a pretty great life. Nothing but the best for Huxley. He really is my co-founder. I tell people that and I think they giggle. Like I might be joking sometimes, but he's been to every meeting with me, every speaking event. Yeah, every call, he's there. He's right there. So yeah,

Brett :

It's amazing. It's amazing. I forgot to mention this. I forgot to ask rather, I forgot to ask earlier, but Amazon, what's your, in just a few minutes, what is your overall Amazon approach? Are you digging into Amazon ads? Are you working on Amazon Organic? Are you mostly treating Amazon as this is a place for people to buy? It's a preferred place for some people to buy, but I'm going to focus on brand building and content and then let Amazon just close

Eugenia:

Teams? Yeah, honestly, it's a bit of both. Everyone has a love hate relationship with Amazon for sure. I have a friend who describes it as an abusive relationship sometimes.

Brett :

Yeah, not completely inaccurate for sure.

Eugenia:

Unfortunately, don't turn off the podcast. Amazon, if you're listening. Yeah, I have to use Amazon. Unfortunately, it seems to be a place that is almost impossible to get away from, in part because there's such a seasonal rush for my product that in October when you need that quick shipping, people are just going to go there. So it's a combination. I do some Amazon ads. I leaned in a bit heavy on Amazon ads last year, and I felt like it ate up my organic sales quite a bit. So regret. But I am finding that getting organic content to perform off Amazon really skyrocketed my Amazon. So I launched on Amazon and had some luck in a video going viral at the same time again. And so it went from complete zero ranking up to when the number one new releases very quickly because of that organic. And I think Amazon just really loves when you bring them traffic so much that they're willing to reward it.

Brett :

They love external traffic, absolutely take care of Amazon's traffic as well. So treat that customer right. You need to have a high conversion rate and things like that. But Amazon loves it when you bring in fresh eyeballs and people that are coming from outside of Amazon just to buy your product that is gold and really makes a difference. So Eugene, yet, this has been brilliant. This has been super, super fun. I loved it. How can people get in touch with you? What if they want to work with you on content or consulting or whatever, how

Eugenia:

Can they get in touch you? Yeah, I'd love to hear from you. You can always find me on social and send me a DM or Eugene at Huxley Media Group. If you go on huxley media group.com, you can grab my email pretty easily. Yeah, I love helping brands. I've created content for a lot of big brands, but it's actually a ton of fun to help small and medium brands with strategy so that they can learn to fish for themselves.

Brett :

Well, Gina, this has been absolutely a blast. Thank you so much. We'll link to everything in the show notes, but really appreciate the time and now I'm motivated and inspired. Got to go create some viral content. Alright, sounds good. Awesome. And as always, thank you for tuning in. We'd love to hear from you. If you've not left a review of the show, please do that. If you heard this podcast and you're like, Hey, this person needs to hear this content, then share this with them, that would mean the world to me. And with that, until next time, thank you for listening.

‍

You've heard that creative is KING.

‍

In reality, it's probably King, Queen, and more.

‍

In this episode of the eCommerce Evolution podcast, I sit down with Dara Denny, a performance creative consultant who has worked with an impressive array of brands like Speedo, Laura Geller, Daily Harvest, and Condé Nast. Dara shares her wealth of knowledge on crafting ad creative that truly converts, diving into the importance of testing, iteration, and taking big swings. If you're looking to level up your ad creative game, this episode is a must-listen.

‍

Key topics and lessons include:

‍

• The power of specificity in ad creative, from calling out exact prices to reflecting customer age demographics
• Why UGC isn't dead, but some of it does suck, and how to garner UGC that works!
• How to strike a balance between data-driven iteration and taking big, bold creative swings
• Dara's creative testing methodology, including how to structure tests and identify winners
• Five ad formats that work, including feature-benefit callouts, "golden nugget" reviews, founder stories, statistics, and educational ads

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Chapters:

(00:00) Introduction 

(04:56) Which Hook Won?

(16:48) Is UGC Dead?

(28:40) Creative Testing - Quality vs. Quantity

(36:42) Dara’s Testing Methodology

(41:35) What Is A Typical Ad Win Rate

(43:22) Five Killer Ad Formats

(53:48) Conclusion

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Show Notes:

• Dara Denney (YouTube) 
• Dara Denney (Twitter) 
• Dara Denney (LinkedIn) 
• Dara Denney (Instagram) 
• Thesis
• Speedo
• Laura Geller
• Daily Harvest
• Conde Nast
• Jacques Spitzer (LinkedIn)
• Raindrop
• Ogilvy on Advertising

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

--

‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

--

Other episodes you might enjoy: 

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• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

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• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

‍

• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

‍

• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

--

Transcript:

Dara:

So number one, I definitely don't think that UGC is dead, but I just think that the heyday of easy UGC getting results and this idea that, oh, people want to hear from other people that are like their friends. It's just no longer that easy. You just actually have to make really good content.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. On this episode, we're talking about creative that converts, and we all know creative is king. Without the right creatives, whether you're running YouTube ads or meta ads or TikTok ads or whatever, you are destined to fail. I know YouTube says that 50 to 85% of your success comes down to the creative. I believe that. And so my guest today is Dara Denney. Now you probably know her already. You may be one of her faithful subscribers on YouTube, or you may have heard her speak at an event. I got to hear her speak recently in Austin, Texas at Ezra Firestone's event. Her talk was my favorite of the show, so we connected and I said, Hey, got to come on the pod. She graciously agreed. So with that, Ms. Dara, Denney. Dara, welcome to the show and how's it going?

Dara:

Amazing. Hey Brett, thank you so much for having me on. It was really amazing to meet you back in Austin, so I'm really glad that we get to do this and talk even more about creative.

Brett:

Yeah, I can geek out about creative. It's one of my favorite topics, so it's going to be a lot of fun. But a couple things to call out. One, you are a performance creative consultant, but you're also a creator. So how does that work? How do you consult and create, because you're kind of doing both.

Dara:

Yeah, I never sleep candidly. No, I'm kidding. Well, I worked in the advertising industry for years and years. I've really spent the last seven, eight years working agency side. So I've been able to work with an amazing array of brands. Initially I was a trained media buyer, and then really as a response to how important creative was becoming over the last few years, I started focusing more and more on the creative portion of meta ads. So at my last role at the agency, I was actually overseeing the entire creative department. So I made the UGC Creator division. I also managed about 15 video editors, graphic designers, motion graphics artists, and also the creative directors. So the people who actually spearheaded the strategy. Now I am very much working to create more educational content for those type of people and for brands and people working at brands and agencies to make creative that converts. But I do still actually do the work. I think it's really, really important because how much our industry changes to really have some skin in the game. So I do actually work with a few brands right now to help them with their performance creative strategy, and that's honestly my favorite part of the week. I love making the content, but I still really, really love the

Brett:

Work. Got to be in the game. We were just talking about that. It happens so quickly that you get rusty if you're not in the game on the daily, you miss out and things change. So core fundamental principles of creative don't really change, but some of the execution does change. And so it's important to be in the game. And I believe it all comes down to creative overall strategy and then execution. So how do we do those three things and do them well? And you've worked with some impressive brands like Speedo, Laura Geller, daily Harvest, Conde Nast, and a bunch of others. And so really excited to draw from your knowledge. And also we found out not only did we share in our affinity for creative, but while we were in Austin, Texas, we did what any good Texan will do. Neither one of us are Texans, but we rode a mechanical bull. So we were at this event, there was a mechanical bull there. There were a lot of people hanging out, and we both braved it, rode the mechanical bull. What was that experience like for you?

Dara:

It didn't last very long, to be honest, but I think we were true to our nature. We were going to test it out absolutely. And we were also just there to win in Texas, so we were just taking the experience and seeing what would happen. And to be honest, the test, it didn't pan out for us, but it was a good learning experience.

Brett:

We did not miss our calling. The rodeo was not the life for us for sure. So we ended up in the right spot. But I brought several team members, several OMG team members with me. I initially said, not a chance am I getting on that mechanical bowl. Peer pressure was there, so I did get on there. Yeah, it was ugly, but it was also fun and funny. So good stuff. Well, so let's dive in. One of the things you led with in your talk, which I love this, you kind of did a witch hook won, and the beginning, the hook of an ad, I know this is true on YouTube, I believe it's true across platforms, the hook is the most important part. You don't get attention or get the right attention. Really nothing else matters. And so you showed multiple variations of a similar ad.

Visuals looked about the same. Headlines were different, voiceover was a little bit different, and you pulled the audience on which test one. And I will say, I did win this one, I picked this one, right? I don't always pick it right. And this is one of the things like this is why you always test because sometimes even someone who's been doing this forever still gets it wrong. But lemme just kind of lay out these winners and so you can play at home, you're driving in your car, listening wherever you play at home. And do you want to set this up? This was for a smoothie client. Can you talk about what the product is real quick and then I'll go through the headlines?

Dara:

Yeah, I've talked about this ad many times. So I'll just say this was an ad that I did for Daily Harvest a few years ago, and essentially we were testing some new UGC creator content and we essentially formulated this test to be a hook test. We were testing out several different headlines and questions. Really the angle to that we were taking is we were changing up the comment that was in the TikTok response bubble for each of these. So that was really the only factor here that was different. So yeah, one out by a landslide. So I'll go ahead and give it back to you so that you can go through the different headlines.

Brett:

So here it is. So headline number one, this smoothie is cheap and tasty. Double question mark. So not just one question mark, two question marks. There we go. If you have ever spent $9 on a smoothie, next one. So headline three, manifesting a healthy relationship with food this year. Any suggestions, thinking, Hey, I'm going to get healthy. What can you recommend to me? That's headline three, headline four, something sweet but healthy. Any suggestions? We got headlines 1, 2, 3, and four. What say you, dear listener, give you a second to guess, and then the big reveal, Dara, which one of those won? It

Dara:

Was B. So this is the one that said, for those of you who ever spent $9 on a smoothie, there's a few

Brett:

And we all have. Yeah,

Dara:

Right. Yes. Especially if you live in New York, which we both do. They're like $14 now, which is astounding. No,

Brett:

I actually live in Missouri, so I want to clear that up. I've stayed in Brooklyn, stay with my buddy Ezra back in the day when he lived in Brooklyn. We love New York City, but no, I live in Missouri, so it is cheaper here. I've spent lucky spent time. Yeah, I'm from the Midwest, so it's like seven here. It's way cheaper. Way cheaper. Yeah. So why, why did that one win?

Dara:

So before I dive into why this one won, I want to give some background on how we chose those

Really great. Initially, we actually went through all of the comments on recent ads and were pulling out primarily questions or comments that people had. And we looked at the ones that, or we looked at the themes that came up again and again. And we also looked at the comments that had the most engagement and we really wanted to find a variety, a big swing. We noticed that it was really important to get people who were manifesting a better, healthier relationship with themselves in the new year because this is an ad that was coming out around January. So we wanted to try and capitalize on that feeling as well. And then we also wanted to look out for the people who were like, oh, I want a sweet treat, but I want it to be healthy. That was something that kept on coming up again and again.

We actually threw in the value prop of, oh, people who spend $9 on a smoothie in there as a totally random last minute one. So it was really surprising to me that one won initially. And what's funny too is daily harvest smoothies at the time were not that much cheaper than $9. I think they were about $7 per smoothie, but I think there was something about people feeling that experience of the $9 smoothie was something that a lot of people had experienced. And when they saw that, they were like, oh yeah, that's me. That's in the morning. Because a lot of Daily Harvest customers were from New York and California, so they were accustomed to paying that higher price. But I also think it was how specific it was too. That stood out in people's minds. The specificity marketing is something that I lean into a lot right now, whether or not it's calling out a specific price range or doing some price anchoring, which is really what that strategy is, but also with people's ages. So I work with a lot of brands right now that target 40 50 plus, and we find that with these age groups particularly they like to say their age in their website reviews and their ad comments. And when reflecting that same strategy and ad creative, that's something that helps a lot. And I just think that the more specific you can be, the more that you're going to stick out in the minds of your users and differentiate yourself from the competition.

Brett:

So $9 more powerful than saying $10 for a smoothie as an example. Yeah,

Dara:

Exactly.

Brett:

Or calling out an age of 43-year-old dude versus a forties, something like that. So be specific.

Dara:

Yeah, yeah. Or even just saying, oh, these are cheaper than, these are cheaper than what you buy on the street. If you can actually just say what the price is, that tends to stick out for people.

Brett:

And I love that you were price anchoring. You were saying, Hey, if you've ever spent $9 on a smoothie, which does indicate, okay, you are serious about your smoothies if you're willing to pay $9, it also says these are less, but then it compares it to the $9 smoothie, which means that's like real ingredients. This is not just a powder, it's not just a kit. This is not like some sugar laden thing. This is a real smoothie. And so lots going on with that headline, which was really cool. Why else do you think that ad won? And we have the disadvantage of not being able to show it on the pod, but what other elements of that ad made it work?

Dara:

Yeah, there are two big elements. I want to zoom in on one, which again, we can't see the ad right now, but the visuals were wildly important. We had a lot of dynamic shots. So the first shot is actually opening up someone doing almost a flat lay looking down into the smoothie, and then the exact next frame was actually the smoothie being poured into the bowl and you are in the bowl. So immediately we have these competing visuals that are drawing people in and getting people really interested. And the frames were changed up pretty much every 1.5 to two seconds. So we were never focused on one visual long. And a lot of people, that video had a really solid hold rate. So people were watching that thing a lot longer than normal. The other thing that was really important to the storytelling of that video was we did use language that was pulled again directly from website reviews and midway through the video we actually have a part of the script that says that it tastes like a milkshake, but it's actually really healthy for you. And that was something I pulled directly from an ad comment. And even though the brand hated that line, we had people in the ad comments that'd be like, oh my god, yeah, it does taste like a smoothie, but it is really good. You need to try the mint chocolate chip. That's the one that tastes the most like a smoothie and the one that tastes most like a milkshake. And we just saw that language being echoed back to us, which showed us that, hey, yeah, this is actually really effective.

Brett:

And sometimes I think we get too cute as marketers or we have this elevated view of our brand, which isn't necessarily bad, but it's way more important to understand what resonates with the customer. And if you see a recurring theme where people say something about your product over and over again, and especially in this case where you put it in an ad and then more people comment on it, it doesn't matter at that point, if you like that phrase or not, that phrase is working and it's resonating with people, so you got to lean into it.

Dara:

Yeah, I wish I could have tested it as a hook. The brand would not let us, but at least I got it midway through the script.

Brett:

You got it in there. And that is a win. And one thing I always talk about for other agency people, agency life is difficult. I love this gig, I love what I do for sure. But when you are pitching an idea, creative idea or campaign idea, whatever, you got to please multiple people, you got to first convince the client and what convinces the client may not convince the user and you got to convince the user and then you got to get the platform on board and all that stuff too. So it's difficult, but I would call that a win for sure that you got it snuck in there in the middle, so that's awesome. I love the fast paced edits as well. This is something we've seen on the YouTube side as well, where sometimes you take the exact same script and a lot of the same visuals make the cuts snappier and or speed up the voiceover, and sometimes you can speed up the voiceover by 10 or 15% and no one notices.

It doesn't sound off at all. It's just a little bit faster. And that almost always increases retention, increases click-through increases conversion rate. And I love the way my buddy Jacque Spitzer from Raindrop talks about this. It's not so much that we have short attention spans, it's just we have short consideration spans. So we will binge watch Netflix for eight hours in a row or we'll watch a three or four minute ad if it's awesome, but if it's not, we're bailing very quickly. And so some of those things, fast edits, unique angles really keeps us considering and hanging on longer.

Dara:

I even think about my own user experience when I'm going through TikTok. I very often will put my thumb on the right side of the screen so that it'll go two x, three x and speed up. And I also hear people being like, oh, I listen podcasts at 1.5 or two x. And I think that we are very much now in, when I think about our consumption habits overall, it's like we need the information faster. So if your own paid ads content is belaboring the point, you're going to lose people if you're not getting to it quickly.

Brett:

Totally, yeah. And I've always heard, and I do the same thing with audiobooks with podcasts, I'm a 1.2 to 1.8 kind of range depending on how fast the voice is naturally. But we can process information a lot faster than most people speak. And so when you're face to face with someone, you're reading cues and you're paying attention to a lot of things and someone's there so you're being polite. But online, dude, we're ruthless. If it's not keeping us, we're failing for sure. So awesome. Let's talk about, you talked a little bit about UGC and this is something you and I talked about before we hit record, but there's kind of this popular thing going on right now where smart people that I know and respect and love are saying UGC is dead, right? Do something else, UGC, it's tired, it's played, do something else. What is your take on that? Why would someone say that and is that true?

Dara:

Yes, so I have a really interesting perspective on this. For the last three months actually, I've been tracking 20 brands, best performing creatives. So every single month I'll take a look at the same 20 brands that I have ad account access to and I'll list out their top three performing types of creatives. And what's really interesting is for the last three months, more than 50% of all of these creatives have been UGC. So number one, I definitely don't think that UGC is dead, but I just think that the heyday of easy UGC getting results and this idea that oh, people want to hear from other people that are like their friends. It's just no longer that easy. You just actually have to make really good content. Another interesting wrinkle to that is I do see UGC creators themselves not being as effective. The brands that actually succeed with this type of content are actually just working with creators.

So these are going to be your micro, not huge influencers, but they are creators that already make content about the industry that your product is in. Those are the people that I see to be the most successful. Going back to my data poll, my own little pet project that I've been doing UGC versus images, images are still wildly important. Totally. I'd say that about 70% of all the brands that I was pulling, so 15 of these 20 brands, they still have images in their top performing creative. So it's not that it's an either or. It's like how can we use all of these formats to supplement the end goal for wherever the brand is In scaling journey, what I've noticed too is that brands that spend more than 500 K per month, particularly those that are spending more than a million per month, they do tend to over index a lot more on UGC and on that creator content to actually still get customer acquisition costs that are profitable for them. And what I see them doing that's really smart is they will rapidly test a lot of messaging points using images and then take those messaging learnings and apply those to their UGC content so that they're not just putting out BS like content from creators. They're actually starting from a really good learning whether or not it's an angle or a specific messaging point, and those are the people that are seeing the most success right now.

Brett:

Super interesting. So using images to understand and the text that goes with it and understand hook to understand what angles are working, and then they're taking that and then they're specifically asking creators to create content based on that, or they're taking existing content and editing it and pulling forward hooks that line up with what they just proved in their image ads.

Dara:

Most of the time it's taking messaging point or angles that are interesting that are great learnings from images and then applying those to the creator brief essentially. And again, when you're working with creators or influencer types that are already making content about that specific industry or niche that comes a lot more naturally than your run of the mill UGC creator who's just trying to make an extra buck, which I respect it and there was definitely a good time for that. I think that time probably isn't now anymore, and we're really just looking to work with creators who love to make content for a specific industry.

Brett:

Got it. So you're not looking for a huge influencers, you're looking for influencers that are really dedicated to a specific vertical or specific topic that they've got a following, they're great at creating content, they're authentic. Anything you would add to that? What are you looking for in a creator that's going to create great UGC?

Dara:

Yeah, I'd say these creators typically have anywhere from 10 K to a hundred K to a hundred K followers on. I think TikTok is a great place to find these people because you can often amass more followers on TikTok versus Instagram, and that's kind of where I initially find really great creators who haven't hit the mainstream yet, but have a bit of a cult following within a certain niche industry. I work a lot with beauty brands right now and TikTok is bar none the best place to find those people. But it's the same thing too. When I'm working with an apparel brand or a supplements brand, TikTok is really just still the hotbed of where to find amazing creators. I've used all of the platforms to find creators and find UGC, but I think that nothing really compares to working with the creators that already have dedicated themselves to a niche in a way

Brett:

That range of followers makes sense because it's showing 10,000 followers. It still means you're doing some unique stuff and you're doing pretty well and up to a hundred K, that's great, but they're maybe not so big that they're demanding a high fee or maybe they lose touch with their audience a little bit or whatever as they get bigger, just harder to work with. I think that makes sense. But I really want to double click on your first point where you said, really the days of just doing UGC, that was the strategy, that was the unlock. We did UGC, that's done right now. It's got to be good UGC, it has to be the right influencer, right creator, the right message, the right editing, you're putting it together the right way, it's following the good principles of marketing, but still UGC at the center of that makes a ton of sense. And I think you proved it there too by those top spenders that are spending 500 KA million, a couple million a month online, UGC makes up a large part of their ad spend. And we see the same thing on YouTube. A number of our bigger clients, their top spending videos are influencer, influencer mashups, like mashups of influencers work really well. Is that something you're seeing on the meta and TikTok side, like a mashup of influencers or is it more individual influencer delivering their content?

Dara:

What's so interesting is actually when we did the talk at Blue Ribbon, so this is only a month ago, and I had done the last two data polls for the month. I had seen that single testimonials were winning across the board, everything was focused on one creator, one influencer, and my hypothesis there was, oh, okay, it seems like people get a more authentic experience when it's just from one creator and they're a little bit more suspicious or it's more like of an ad queue when it's compilations or multiple creators. But in this most recent dataset that I pulled for May, I actually found that compilations were on the rise again. Yeah, my personal belief is that the question of whether or not to go single testimonial versus compilation probably boils down more to it being a factor of how you're doing your internal tagging and your internal strategist being able to pull the right content from the right different creators and knowing when and where to make those mashups, which I find can be really hard for teams, but with some of the brands that I worked with, we've found a solution for that. So that's why I think we're seeing more of those.

Brett:

Nice. Yeah, so I think the edits are simpler. If it's one influencer, you still got to have quick cuts and it's got to be tight and it's got to be sped up. Don't let them ramble, got to get to the point and lead with a wow statement or provocative question or something. But I think it is easier to add just one. And so it takes a unique skillset to do the mashup or the compilation of UGC or influencers. But one reason why I think the compilation works so well or the mashup is as a viewer, if I'm watching an influencer, I'm conscious or subconsciously judging like, well, they're not like me, they're bigger than that person and so this clothes might not work, or I don't really work out like that, so maybe this product isn't for me or I don't like that person's tone.

What are there's reasons why someone doesn't resonate with us? But if you've got multiple people in an ad, there's likely going to be someone there that really connects with you where you're like, ah, that's my person. I see me in that person. And that allows for a much deeper connection, trust, overcoming of objections, wanting to then make that click, but it's a bit of a different art. And so getting that mashup to work is a little bit more difficult, but we like what we call the mashup explainer where it's like, Hey, we've got these three feature benefit sets or these three points we want to make about our product, so let's mash up three or four people making each of those points and kind of string it together with fast edits and B roll and stuff like that. And I think that can work.

Dara:

What I used to see with compilations versus testimonials too is compilations would work really good for more top of funnel audiences or broader audiences because of the point that you mentioned before, people are more likely to find themselves in a multiple cast of characters. And when I see compilations not working for a brand, I actually do dig into, okay, should we expand the ages? Is there more diversity we could inject to the compilation cast of characters there so that we can reach better audiences? But I also think single testimonials inherently target more of a lower funnel individual who are like, okay, I want the in-depth perspective, I want the authentic IRL review. So single testimonials again, could in theory be working inherently targeting a more bottom of funnel audience. So there really

Brett:

Good point.

Dara:

Yeah. Yeah,

Brett:

They may work a little more for mid funnel, bottom of funnel could work for remarketing as well. People want that. Yeah, I'll just sit and listen to you talk about this product. I really want to know. Yeah,

Dara:

Exactly. So it's kind of hard since Facebook is all broad now, and a lot of my brands aren't using many retargeting audiences, so it's really hard to say, yeah, this is a retargeting audience only or this is a prospecting audience only. It's all the same thing now. But when I take a step back and look at, okay, which part of the marketing funnel in theory would this be targeting? Sometimes that helps illuminate more clues for me.

Brett:

Yeah, it's really cool and I'm glad you brought that up. I know for a lot of DTC brands, meta is the biggest platform where most of the ad budget goes and not as many people are running on YouTube. Although I think people, everybody should run on YouTube if you've got the right content. We're still seeing a breakdown of top of funnel viewed video remarketing working well on YouTube, but I totally get now on Met. It's mostly just broad audiences, but you want the content there so the algorithm can do its thing and find the right match of ad to audience, but you got to have all the ads there. And so this is a good time to pivot and talk about quality and quantity of creatives. And I remember hearing someone say a long time ago, I can't remember the context, but you find quality in the quantity.

And it seems like especially on meta and TikTok, you just got to crank out a lot of content. If you don't have enough content, your chances of winning are very low. And I heard this example one time, I may butcher the context a little bit, but it was a class, like a college class. And so one group was given the assignment of create the best pot that you can create, take as much time as you want, choose your materials, whatever, but make the best pot you can make vase, that kind of pot. And then the other group was like, Hey, just make as many as you can possibly make in this timeframe. And it turns out the group that made the most actually ended up creating the best as well because they were testing, learning, trying, failing, doing the next thing. And I think that kind of applies to ad testing as well. You don't know, and so just start creating a whole bunch, but how do you ensure getting the right quantity and quality of creatives?

Dara:

So I think it all kind of backs into a budget that a brand is going to be spending on meta ads. So the way that I like to roadmap out the number of creatives to test per week really does back into that monthly budget. And so if a brand is going to be spending a hundred K per month on meta ads, I'm thinking to myself, okay, that's going to equate about three to four creative tests per week, and I'll roadmap that out for a month so that at any point in time we know what type of creative is going to come down the pipeline for the next four months. And to go to the second part of your question, which is like, okay, quantity, that's the quantity part. How do we focus on quality? Really it's a confluence of prioritizing what you can get out the fastest and what you think is going to perform the best.

So at any point in time, of course, we want to prioritize what we think is going to perform the best while what's also going to be the easiest to produce, but sometimes it's really our big swings that we have the highest confidence in and we have to roadmap those out to give us more time to actually produce that so that we are still hitting our three to four creative tests per week benchmark, because a lot of it is a numbers game. I know when I talk to a lot of my friends about dating, for instance, especially for my friends that are single in their thirties and they want to find the one, it kind of becomes a numbers game at a point. And I think it's the same for creative testing, even though we all get really attached to the creatives that we want to win and the learnings and yada yada, but especially as you begin to scale a lot, you just have to have that volume and you have to get learnings from that volume.

I think one of the biggest things that brands are in danger of though when they start pushing up their quantity and looking for that quality is they get into what I would call iteration paralysis where they only start making content based on the data and based on their learnings. And I can always tell a brand is in iteration paralysis when I look at their ad account or I look at the creative they're currently testing and if I can squint and they all kind of look the same, they're all using the same content, they're all using the same font and they're not materially different. I'm like, Ooh, you are not standing out on the feed as well as you could. Because the reality is people are swiping up pretty quickly when they're scrolling through Instagram when they're scrolling through TikTok or Facebook or whatever, they're having conversations with their partner, they're having conversations with their parents, maybe they're just looking at it while they're in a meeting, they're not really paying attention. And if you are showing up the same time every single time, you're blending in the background. So that's why I really do encourage brands to when thinking about quality, it's not just about being data-driven, it's also about taking the big swing and the brands that I see taking a few big swings every single month, those are the ones that tend to win more often than not.

Brett:

Man, it's so good and iteration will only get you so far. And if all you're doing is little tweaks, why would you expect anything other than just little improvements? Right? And I remember hearing people talk about landing page optimization is something as well where it's like, wait, let's just test every little tiny variable

This test. So let's test. Let's test the button color first and we'll get 'em like, dude, you're never going to get anywhere meaningful. But if you can use the data to then form theories about what people are liking and not liking, then take a big swing, be risky. That's where you're going to find a breakthrough is with a big swing, not with alliterations, nothing wrong with tweaking as well, but if you're never taking those big swings, why would you ever expect to get a big outcome? And so really, really good call out. I've never heard of the squint test, but I like that if you're squinting at the ad library, it all looks the same. Okay, you got to branch out. You got to be a little bolder there.

Dara:

Yeah. Yeah. I'd say too, when thinking about big tests and yeah, I just think that a lot of media buyer types, I work with a lot of growth teams and the number one thing that they tell me they're afraid of when it comes to creative is they're really afraid to give the subjective opinion as to why a creative worked. That's why they're really comfortable looking at videos and being like, oh, this brand had this video had a hook rate of X, Y, Z, and that was better than this one. That's why it worked. The hook was better. But they won't go into more of the subjective things that actually make a big difference. Like, oh, the creator was the creator looked like this or said this. That was really interesting. And the data isn't always going to reveal why a creative worked. So the more comfortable you can get with being subjective and pulling out those bigger learnings, that's where I see creative teams starting to make those much bigger unlocks.

Brett:

And really, I mean, that's what you're looking for in the data. And this is something we deal with as an agency all the time, and I know you have as well where teams can be tempted to just share with the client, here's all the data, here's the data, here's the data from creative A and creative B and creative C. You're like, okay,

Dara:

That's not an analysis.

Brett:

What do you think? What does that mean? What do we do? And so I just on a call with a big brand where we're doing this big YouTube push and seeing what's driving in-store traffic because you can actually track that with YouTube. They're a D two C brand, but also on Amazon also in retail stores. And two ads quite similar. One I actually liked better than the other, but the one I didn't like as well had quite a bit higher conversion rate as we're looking at it because it was in store and stuff. The main thing that we saw that was different was the option two, mention the brand name very quickly and for YouTube. And I don't know that that was the reason, but that was our initial hypothesis. We're like, Hey, let's test this more. But with YouTube, people can skip after five seconds, but if you mention the brand in the first five seconds, that could really trigger people looking up directions to Walmart or some of the things we were testing for this brand. And so that's where the data really matters, and that takes someone that kind knows creative and knows the game and has kind of been in it a while to look at a couple of different creatives and say, this is what the data is indicating why and what do we test now? What's our next swing?

Dara:

That subjective analysis of honestly the gravy.

Brett:

It is. It is, and it takes a little bit. You got to kind of put yourself out there and you may be wildly wrong, but you got to be willing to do it, and that's super important. Can you talk a little bit about your testing methodology? So how do we go about creative testing? So now we're getting these three to four creatives a week. If we're spending about a hundred K, or I'm assuming it just, does it just kind of double as spend doubles? Does it go up linearly with the budget? Is that how that usually goes?

Dara:

Yeah, yeah. I'd say that for every additional 25 grand that you're spending every month, that's another creative test to add per week is my really rough estimation for that. And the anatomy of a great creative test for me is when I'm making a creative test, I'm not just going to be making one asset. I am going to bake in a little bit of iterative variation testing into every single test. So if I'm going to be testing a UGC creator's content for a brand, I'm going to create ideally three unique hooks for that content. So I'm going to edit it down, have the base edit, and then I'm going to test out three really different hooks. And my secret sauce here is I do try to make these hooks fundamentally different. Maybe I'll have the creator, I'll start with a reaction point. So earlier to your point, you were talking about having creators say something about the product that's really surprising or exclamatory, I find reactions, authentic reactions from creators can do really well.

So maybe I'll do that. Maybe I'll have another one that talks about a certain value prop that they really liked about the product. So it'll be really product first and then I'll try another one that's maybe more problem oriented because I find that a lot of times when I look at the hooks that work again and again, they're either product oriented, so they're already talking about a specific product or they're problem oriented, so that is going to be targeting slightly different parts of the funnel as well. So depending on who you're trying to target, they could be different, which is why I like to test those things inside of one unique creative test. So say I have these three variations for this UGC creator's content, I'm then going to deploy that ideally in its own ad set, all three of those so that I can throttle money to that ad set.

I'm not really concerned about getting the same amount of spend between each of those variations. In fact, if I see one variation coming out heads and tails above it, I think that's a really good sign because it means that that version is probably really scalable in some cases. Yeah, I'll go ahead, scale that one up to a different campaign, try throttling money to the other ones, but if it doesn't work, it doesn't work. We've already found our messaging point that is going to be the winner for that one. And for me too, I like testing things on a broad audience that is the most scalable audience. And the idea too is if it's going to work on broad, it's going to work on all your other audiences. And you're also sort of creating a new ecosystem within that ad set too. That's its own unique targeting pool based on that creative.

So I like to scale that up within the ad set. And again, if we're seeing really good results from scaling that up 20% every three days-ish, but if I see a bang an ad, I'll double triple it overnight. It doesn't really matter. Absolutely. Just let's push it and if it continues to work, then we'll put it to the scaling campaigns and see how it compares against other winners and see how long it takes for those to scale up and compete against each other essentially. But yeah, what I do too is after we see that creative winning or losing, I do retros at the end of every month with the brands that I work with to look at a specific test in depth, this is going to go over a lot more of the subjective analysis, but it's also going to force them to pull learnings that they can then iterate on. So okay, what are we going to do in the ad account next? But also, should we take a learning here, apply it to an upcoming static test or an upcoming creator brief? How can we make sure that we're always drawing those learnings from every single test? Sometimes I'll have brands make slide decks for all of this, but oftentimes we don't have time. So it's just something that's done verbally and a meeting. Yeah,

Brett:

Just do the platform, just show the ads in the platform, talk through it, talk about what the next tests are going to be. That's what really matters. I do think sometimes we get hung up in the, are we presenting this data when every, it's just about we get the data, let's make some theories and hypotheses on that, and then let's work on our next test, which I think makes a ton of sense. What is a typical or kind of expected win rate? So we're testing three ads in an ad set, or maybe we're testing six or eight creatives across an account. How many of those are we expecting to be losers? How many are we expecting to be mild winners? How many are we expected to be maybe runaway winners? Any thoughts there? Yeah,

Dara:

I'd say that it looks really different as you start to scale more With some of the brands that I work with, they're spending more than $2 million per month on their ads. And what I'll see is there's a certain benchmark I need creatives to hit, and I'd say more than 50% of those creatives are hitting it, but they're not necessarily creative winners. They're just something that are going to add padding to your ad account, add that newness, add that juice, and then after two or three weeks we turn them off, they stop being as effective. But in terms of absolute banger winner, unicorn ads kind of rare.

Brett:

Yeah, it's rare. They go a few months right before you hit another one. I mean it

Dara:

Can time the creative that hit your benchmark should not be underestimated. And I can count on those, and I see those almost more than 50% of the time. But the real banging unicorn ad ones once a month sometimes.

Brett:

Yeah, I mean it's on

Dara:

How much creative we're putting out.

Brett:

And if it's sale period, it's like a star player, the star student, I mean they're not going to be that many. That's just by definition there's not going to be that many truly exceptional outlier type ads. So Awesome. So let's do this star. We are coming up against times. So we've got about five to seven minutes. I want to go through quickly. You have some ad formats, which I think will be really helpful. We'll lead people with this. This will be good food for thought. So I'm going to need you to give a 32nd explanation of each of these and we'll run through them. So ad format number one, feature benefit, call out. What is that and how would you advise people to execute

Dara:

Those? So essentially what this ad is, is it's a static image ad and it ideally will have your product on a plain background, and then you are pointing out certain key benefits or features of that product. I love, love, love this ad because it is so easy to create. Anyone can create it in Canva. And this is actually something that Ogilvy used to use in his print era days, which I think is really interesting. And based on his research, he actually found that people retained a lot more information about the product or service by using these callouts, which is why it still works today. And my most recent analysis of the 20 brands where I'm pulling their creative learnings, we still had featured point outs in those top performing ad formats. So it's definitely something that's really easy to execute on. And even though for performance creative types, they're like, yeah, yeah, this is not revolutionary. It's absolutely not, but it should still be used.

Brett:

Still works. And that was another reason I loved your presentation because you called out the greats, the classics. Yes, David Ogilvy, Ogilvy on Advertising Required Reading for anyone in the marketing advertising space. Yes, some of the styles and stuff don't translate, of course, but the principles and what they're doing, human nature doesn't change. Good marketing principles don't change either. And so I love that feature benefit call out number two, golden nugget reviews. What is that?

Dara:

Golden nugget reviews. Golden nugget reviews are those testimonials from your customers that are just so absurd and memorable and wild that you can't help but just have a chuckle to yourself. Those things often make amazing advertising. These testimonials are not going to be things like, this is the best shampoo, or Oh my God, I loved these shoes. Those things are really generic and honestly are probably maybe potentially faked even if feel like you do get that comment and maybe it feels good as a new business owner, it's not really memorable. So I often

Brett:

You're the only one that likes that comment. As a brand owner, other people don't care.

Dara:

Yeah, I think some tactics that brands can use though to find those golden nugget reviews are like, again, specificity here is key. So if people are bringing up their age, they're bringing up a transformation in a certain amount of time, those type of things can very well be golden nugget reviews. But I actually just had a conversation with a few founders today and I was like, yeah, do you guys ever screenshot reviews on your website and send 'em to each other and text message? Those are probably the ones that you should be using.

Brett:

Totally, totally. Yeah. Yeah, I love it. I interviewed Mickey Agrawal, founder of Tushy on the podcast, been a little over a year ago, but one of these that came up for her, which I just still stuck in my mind, it was Tushy is a bidet company, so you attach the bidet to the toilet and stuff, and really brilliant marketers, but some customer said, tushy is eye candy and butt bliss. And it was like, okay, it's just wild. It is weird. But it was like they look really good and of course your butt has never been happier. And so they borrowed that, used it in ads, it did very, very well. So golden. That's a great example. Yeah, golden nugget reviews. Love it. Number three, founder story. What is that?

Dara:

So a founder story is essentially going to be a video told from the point of view of a founder. It's essentially saying why you created your brand and why it's so important to you. I think there's a few reasons why this works really well. Number one, I think that people don't want to buy from the unknown unnamed corporations anymore. They love knowing the story and the people and the behind the scenes of their brands and their favorite brands. I think the brands that kill it on TikTok are actually just the ones that show the behind the scenes, show their office, show their warehouse. So it kind of goes back to that innate curiosity we have about the big brands that we love. But I also think that these founders are often the ones that are most well positioned to communicate the problems that they had that forced them to make the product.

Something that I talk a lot about with brands right now is the ones that are succeeding on meta ads are the ones that are solving an actual problem because it is just a little bit harder to succeed on meta right now. And if you're speaking to a specific problem that people have, that problem is often going to get people to make an action quicker if you're providing a solution for them. So I often just think founders can really twist the knife a little bit more when speaking about problems and show a little bit more of an empathetic view to people that are looking for that solution,

Brett:

Especially if the problem was very personal to them, and especially if it was embarrassing or just their life was bad. The taboo

Dara:

Helps

Brett:

For sure, taboo helps as well, but, and then I solved it and now this is what my life is like, and that really connects with people. And so yeah, love founder stories when the founder is authentic and even if they just show up halfway decent on camera, but they're authentic and real can work quite well. Number four, statistics sounds like that could be boring, but how do we make this interesting?

Dara:

Yes. So statistics, if I was giving this talk a few months ago, I probably would say something like, oh, if you use statistics and numbers in your ads, that gives people a logical reason to say yes. And sometimes people just need that logical approach instead of a more emotional based one or a buy more button, sort of like if you give people statistics, they're more likely to trust you. I also think that statistics are a different visualization of the before and after experience. So you really have to use statistics that communicate more of that end value and that transformation as opposed to one in four people have this problem. If you instead say, Hey, 97% of these people experience this outcome, that's way more impactful than a statistic about the problem or whatever. So I find that using statistics can just really unlock for people what they think they can expect.

Brett:

And I think statistics also lend to believability. We want to believe the promise of a product, we want the benefit to be true, but we're also skeptical as we've been burned in the past. And so numbers can kind of lend credibility there, but I also think numbers can be emotional as well, and sharing the right statistics can really dial up the emotion and make it a little more concrete. And kind of goes back to the specificity we were talking about. I've got a fresh in my mind just two days off of this, but we did the Murph, the workout on Memorial Day weekend with this one of my wife's family. And so if you're not familiar, you run a mile and you do a hundred pullups, 200 pushups and 300 squats, let's do with a weighted vest. I did not do with a weighted vest.

I thought I was going to die anyway. But you tell someone we did a hundred like, are you kidding me? That's insane. So that number really is more of an emotional reaction than we did a lot of pull-ups, right? And so I think looking at it that way too, does the number communicate something? Is there actually some emotion or some benefit or some believability in that statistic and use that to draw that out. But I actually love this one because it can be super boring. Nobody probably hated a class more than they hated their statistics class, a lot of us. But you pull out the right statistic, emotional connects to a benefit, it just works. So that's awesome. And then number five, last one, educational ads. What are those? So

Dara:

Educational ads back into this idea that people really are looking for content first. I also think that educational content, what's interesting about it is it can be inherently way more top of funnel. You're trying to educate people on a specific problem or a specific solution. I think it can really, really work for brands that are in the supplements industry, but it can really work for anyone because I think that if you can really showcase why you're different through a content first approach, that can be a really big unlock for brands. There's an example I like to share of a brand, and it's a supplement brand that I worked with. And in this ad, the founder is actually just going through certain ingredients that are in her supplement. And what's interesting is she never actually mentions what the product is. She never actually mentions what the brand name is. But because she was going through these different ingredients and tying them to certain problems that people might have, that ended up being a top performing ad creed for them because people were like, wow, actually this sounds a lot like me. I'm going to click more into this. And they were then able to go to the landing page to see, oh, actually there's a solution for me here. And that was a lot more scalable because they weren't just targeting people who were already looking for a specific solution.

Brett:

And I think it's one of those where if you can have this perspective of if someone just consumes this ad, they'll receive a benefit. So they'll receive a benefit from the ad itself. And I think if that's true, then someone's going to be much more likely to talk about that, to share the ad, to mention that little nugget they learned from the ad itself. And yeah, I like that approach where you're talking about, Hey, turmeric, this is what turmeric is, anti-inflammatory does these things and cortis jump into cortis right now. It creates energy, but stable energy and you feel centered and grounded. Anyway, that totally makes sense and I love that approach. Really, really good. So awesome. Dara, this has been an absolute blast. I can just keep going talking about this stuff, but we are up against it. We're running out of time. So for those that are like, I need more Dara de in my life, how can they connect with your content or connect with your company? What's the best way to take next steps?

Dara:

So the best way to figure out what I'm up to is to follow me on YouTube. I launch one long form video every single week there. That's about media buying and performance creative. So yeah, like and subscribe. And I'm also on Twitter at Denney dara. So if you ever have a question or want to see the random things that I'm thinking about marketing on that specific day, that's going to be the place to find me.

Brett:

Awesome. Dara Denney, ladies and gentlemen, Dara, thank you so much. We'll have to do it again sometime.

Dara:

Amazing. Thank you so much Brett.

Brett:

And as always, thank you for tuning in. We'd love to hear from you. What would you like to hear more of on the podcast? Have you not done? So we'd love that five star review on iTunes if you think it's worthy. And hey, if you heard this and you think, man, so-and-so has got to hear this podcast, please share it. Please share the content that would mean the world to us. And with that, until next time, thank you for listening.

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In this episode of the eCommerce Evolution Podcast, Tomer Hen, CEO and co-founder of Switch Supplements, shares his secrets to leveraging affiliate marketing and influencer relationships to drive explosive growth for your brand. Discover how Tomer took Switch Supplements from zero to $30K in recurring revenue in just eight weeks and how you can apply his strategies to your own business.

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Key Takeaways:

• Learn how to identify and build authentic relationships with high-impact influencers in your niche.
• Discover the power of a non-transactional approach to influencer marketing and how it can lead to increased brand awareness, social proof, and sales.
• Understand the Amazon-TikTok flywheel and how to capitalize on the spillover effect to boost your rankings and revenue.
• Gain insights into turning your most passionate customers into a powerful army of affiliates and brand advocates.
• Get practical tips on how to start implementing an affiliate marketing strategy, even if you're starting from scratch.

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Tune in to hear Tomer's inspiring story and actionable advice on how to harness the power of affiliate marketing to take your eCommerce brand to new heights

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Chapters: 

(00:00) Introduction

(04:37) Why Did Switch Start Influencer Marketing?

(07:55) How Do You Find the Right People?

(10:37) $0 to $30K Recurring Revenue in 6 Months

(13:15) How Do You Build an Affiliate Army?

(16:33) Advice on Turning Influencer Content into More and Better Ads

(21:07) Hacking Word of Mouth

(26:20) The Amazon/TikTok Flywheel

(33:48) Conclusion

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Show Notes:

• Tomer Hen (LinkedIn)
• Switch Supplements 
• Massive Influence Newsletter
• Ryan Daniel Moran (YouTube) 
• Kill Switch 
• On Switch 
• Andrew Huberman (YouTube) 
• Huberman Lab
• Google Marketing Live

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

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Other episodes you might enjoy: 

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• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

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• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

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• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

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• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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Transcript:

Tomer:

And if they are your customers and they love you and they recommend your products either way, if you sprinkle that with some financial incentives and some guidance and tools that will make them see this as a financial opportunity for them, but also as a way to recommend a product they love to other people in their lives, then this is where you can hack word of mouth.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we're talking about building an affiliate army, leaning in a little bit to influencer marketing and affiliate marketing and the content that comes from that. And so I'm so excited about this topic and my guest. My guest is Tomer Hen. He's a CEO and Co-founder of Switch Supplements, and he is also the founder of Massive Influence. They provide coaching and consulting for influencer and affiliate marketing. And so I believe Tomer and I first met at Ryan Daniel Moran's Lake House, if I'm not mistaken, talking about the Capitalism Fund and some other fun stuff. And that's where we connected. And so with that intro, Tomer, welcome to the show, man. And how's it going? Hi

Tomer:

Brad. How's it going? Thanks for having me here.

Brett:

Yeah, dude, it's going great. Excited to talk about affiliate marketing Love Switch supplements. And for those that are not familiar, what is Switch supplements? Who are you gearing your products toward and what products do you offer?

Tomer:

Yeah, so we're in a mission to help high performers, entrepreneurs to crush their days, to feel at their best and sleep at their best. We have a line of natural atropic supplements. Our flagship product is called Kill Switch. It's a hot chocolate sleep supplement that knocks you out and make you feel really good in the morning.

Brett:

That's awesome. And then another product that I've tried that is coming back soon, we'll maybe tease it a little bit if you're allowed to do that on the podcast, but on Switch. Can you talk a little bit about that product?

Tomer:

Yeah. On Switch is our morning focus and flow supplement, and the reason why we are creating version three is because the product tastes really bad, but people love how it makes them feel. So many people could bear the taste because they loved how it made them feel, but now we want to create an excellent product that also tastes really good. So right now focusing on Kill Switch, growing this product, people love it. And next in line, we're going to have on Switch 3.0 and some other products in the line.

Brett:

Super exciting. And yeah, I can attest to that with On Switch. I'm one of those people though. If I know sometHeng is healthy and it's creating a desired benefit for me, I will drink Pond water. I believe we've got a pallet where I can tell if, okay, this is premium coffee or cheap coffee, or this is good quality sushi or not. I've got a refined palate a little bit, but dude, if it's healthy, I will drink anytHeng and so on. Switch does work, but I'm excited about version three that will be enjoyable to consume as well. So going to get into building an affiliate army and Influencer Marketing really leveraged this to create some impressive growth with Switch. And so we're going to dive into that. But first Teller, what's your background? Because you said sometHeng kind of crazy to me as we were getting ready for this. How long have you been doing affiliate marketing?

Tomer:

Basically since I remember. So I've been an affiliate marketer myself since I was 13, which is 17 years ago. Then I turned into helping other companies, bigger companies to build their own affiliated programs while I was promoting the good old ClickBank offers. And then I had an agency for about 11 years. And in 2020 I decided that I really want to build a physical product brand, and I decided to combine my experience with performance marketing and affiliate marketing with my new passion for physical product brands.

Brett:

Love it, man. Love it. So I want to dive into how we're going to get tactical and practical on the pod and show people how to create an affiliate army and influencer army. But first the why are you doing this and maybe even talk about specifically why did you do this for Switch?

Tomer:

Right. So for Switch, it started after we basically ran out of cash trying to make our ads profitable. And as you know better than me, that supplements are very hard to promote on. They are, many brands are crusHeng it, but many brands will pay $200 CPA to acquire a customer. So for a new brand to compete with those giants, it cost us a lot of money. And we came to a point where we had no cash, we had inventory, and we had a really good product and we knew that, and that was the frustrating part. We knew that when people try our product, they love it. We had a really good repeat buyers rate, but we had no money to get it out there. So we decided to use the inventory that we've had to send it over to influential people that our audience trusts and likes and let them try kill, switch. And if they like it, we can create a relationship with them and they might even give us a shout out. And this is how we were able to create that social proof and attract more customers and more customers to a point where we sold out completely without running a single ad just by working back then with about 40 influencers that we never paid for. By the way they were all promoting us. They love the product, some of them got some commissions right after, but we had no money to pay upfront. So we

Brett:

Did. It's amazing. And you really hit on an important point, and we've done a lot of marketing for supplements. I mentioned at the outset, I'm a believer in supplements. I take different mushrooms and of course multivitamins and all kinds of stuff. I've always been into supplements, but it's not easy to sell, right? You compare supplements to other D two C categories like apparel or accessories, you can show it, right? It's visible, it's visual. I can see the ring, I can see the pants, I can see the sweatshirt. If it's sometHeng automotive, which we've done a lot in the automotive space, I can see the before and after on the car truck or SUV, I can see it and I can say I want that, but with supplements it's like, Hey, do you want this jar of stuff that tastes terrible or do you want to swallow more pills?

No, I don't want to swallow more pills. Right? So obviously you're leaning into the benefit and you're trying to make this USP and this value prop really clear, but sometimes it's difficult. It is difficult, and it's difficult to say that in a way that's believable. And so what's great about affiliates or influencers for supplements especially is if you tor as the founder of Switch, say, I love kill switch, it allows me to have the best sleep of my life and I wake up refresh. And it also doesn't tastes like a tasty cup of hot cocoa. That means sometHeng and people will pay attention. It's not bad, but it pales in comparison to a real user talking about it, especially if they talk about it in an authentic way. And so we talked about earlier, what is it? Necessity is the mother of invention. So you needed sometHeng to work and you needed it to be free. And so you leaned into what you knew and you found affiliates and found influencers. So how did you go about doing that armed with just a great product and not a lot of cash? How did you find the right people? Right.

Tomer:

Luckily, relationships are completely free. So you can reach out to influencers if you choose the right influencers and you reach out to them the right way and offer them to try your product. If they like it and you nurture that relationship, then many of them or some of them will post about it. And that creates the first awareness to your brand. When you create a relationship with what I call the high purchase intent influencers as in not the generalist lifestyle influencer, but someone that I follow to get advice on a certain niche or topic, let's say nootropics or biohacking, and they post about a supplement that they tried and liked, and I have the same problem, I would probably at least check out your Instagram page. Maybe I will follow your page. Some of them will click the link and we'll buy the product right away.

But we created that awareness, we created a lead flow. We were able to grow our email list just by having other people saying good tHengs about us, our customers, and we got a lot of referrals from our customers and we got a lot of repeat buyers. That's another level to have person with an influence with even as little as 5,000 followers. But those followers really trust what they have to say. We are able to get more sales, able to get more sales. We get more testimonials, more testimonials, more proof for our Instagram page, our emails work, and this is just how it snowballed.

Brett:

Yeah, one of my favorite definitions or favorite quotes about marketing is it's a transfer of confidence, right? Confidence from either the founder or the brand saying, no, I know this product is amazing. It'll change your life. And I'm transferring that confidence to you so that you'll purchase. That is easier done by an influencer in a lot of ways. And I like Andrew Huberman, I tHenk he's a great, the Huberman Labs podcast is awesome. If he recommended a supplement, I would give it some serious consideration. I would immediately jump from, Hey, this is no longer just a jar of pills. This is sometHeng that is likely trusted to create this result. And that's what you created with these influencers. These are people, maybe they're micro influencers, obviously not as big as Andrew Huberman to their audience trusted. And immediately that transfer of trust is quick and it's received well. And so I really like that you talked about you kind of went from zero to, I tHenk 30 K in sales in eight weeks, and I believe that was 30 K recurring if I'm not mistaken. But what did that look like and how did that go down? I know you've already touched on it a little bit, but fill in some of the gaps there. How did you go from zero to 30 K?

Tomer:

Yeah, so that's actually a story that I'm really proud with one of my clients, and they launched the product at the end of December, and the two months prior to that, they started sending dms to influencers in that space that was the pet space, and started sharing about their upcoming launch. Those influencers, because they built their relationship in an authentic way, that person never asked them to do anytHeng, started posting about a product they'd never even received just because the communication was so well, the mission of the brand, the content they've created, and those influencers just wanted to be a part of it. So they started building hype before the product was even on Amazon. Now, once the product was live on Amazon, about 60 influencers posted about it without even an affiliate link. They just said, we tried this product, we like it. By the way, you can get it on Amazon. Guess what many people did? They went on Amazon and they bought the product, which got this brand, the number one new release badge on Amazon, and they immediately went to, I tHenk it was, I can't remember the number of sales, but that was about $1,000 a day in sales. That was just eight weeks or six weeks after their launch. Now, two or three months later, they're already pacing 60 KA month. And obviously once you get the ranking on Amazon and you're getting the reviews, it's flywheel

Brett:

Now.

Tomer:

It just snowballs. Exactly, exactly. But this was a really cool example of how building relationships with just few influencers in your space can lead to not so many posts. I mean, we have clients who are getting hundreds and hundreds of posts every month, which is 60 posts were enough to create traction on Amazon. That snowballed into becoming $60,000 a

Brett:

Month, which is great for a new product launch. I mean, even an established brand that's doing tens of millions of dollars, you launch a new product and you immediately get that to 60,000 a month in sales. That's great. And then you keep building and growing from there and really can add some nice incremental value. So how are you executing on this? So where are you finding the influencers? Are these Amazon influencers? Are you leaning mostly into TikTok? Where are you finding them? And then it sounds like you're giving them product no strings attached, maybe in some cases not even asking them to post or what does that

Tomer:

Look like? Yeah, so first we start with a non-transactional relationship, a hundred percent authentic. Our number one rule is that we do not negotiate with influencers. I don't want any influencer who starts in negotiating with us on their rate card before they even tried our product, because you could sense that they would probably promote any product that would pay the right price, and they probably lost their audience's trust. So we start by saying, Hey, this is us. That's our story. That's what we created. Would love what we have your content. Would you like to get a free product on us? No strings attached, and we really expect them to do notHeng when it comes to finding them. I get this question a lot of which is the best platform to find influencers at, I would say, is there really isn't the right platform. It's kind of like asking what is the best platform to post content on?

I would say first where your audience hangs out, that was maybe an assumption for two years ago, but nowadays on TikTok, everybody's on TikTok, your audience is on TikTok. There is less competition on the non-traditional audiences on TikTok, for example. So I would say just focus on a platform or a social platform that you can stick to that you like the content you like what they post. You can post more content yourself because obviously those influencers will tag your page. So people would need to see some content over there and just focus there. I would suggest the blanket answer would be to focus on Instagram and TikTok. People always ask me, what software do we use and what tools in ai? Honestly, I've never found a better tool than a well-trained VA to a virtual assistant to find influencers for you manually because the algorithms of TikTok and Instagram just works so well. So if you know three to five ideal influencers in your niche, you can use the algorithms that are completely free to find hundreds and thousands of them.

Brett:

That's great. That's great. And now I know you primarily, especially with Switch and sounds like with some of your clients, you're utilizing this content for organic plays, right? And I tHenk it makes all the sense in the world, the more you lean into organic, the better. Even if you're crusHeng it on ads, which we're an agency that leans into the ad space, I'm a big believer in paid because there's a lot of control there, a lot of scale there, man. You got to layer in, I believe, some organic to really kind of create stability, and it can accelerate and amplify anytHeng you do on the paid side. But then there's also this component of, Hey, I'm creating great content that's organic. Now I can grab that. I can mash that up or use it as a standalone. Now I've got almost this infinite supply of great creatives that I can use for my ads, and then I can really scale 'em to the moon. So any advice or thoughts there on taking influencer content and turning it into great ads? Yeah,

Tomer:

That's a really good point. Many of the clients that I work with, their number one goal is I just need more content for ads. I'm sick of getting fake QGC from all these platforms. They don't work well. I'm sick of creating content myself. I just want authentic a hundred percent authentic content that I can use for my ads because my ad team is driving me nuts, and I always ask for more ads. So for many brands who run ads at a large scale, that's our main goal. I always say, that's great. Use the same system drive sales to offset for the free products that you send of the operational cost, and now you're getting content completely for free, and you would probably also make money on the backend with the direct sales that you will get from those posts. What I'm saying is that this is a great way for you to also test which creatives would work well before you spend any dollars beHend.

So you can take your top 10, 20% of influencer posts that have driven the most sales or engagement and then use them for your ad campaigns. Many brands are trying everytHeng and anytHeng that they get from influencers, but they get more data when they see, oh, that post drove so many sales, it probably resonated. The other tHeng is that you could also come to an agreement with the influencer that they will whitelist your account and you'll be able to promote that content from their handle, which calls whitelisting, which would make it even more effective. And then the other tHeng, and that's also a very common question that I get is do I get to use the content? Do I get the usage rights? Because many brands are used to pay for usage rights. The beauty is that when you start with a non-transactional relationship and an influencer that could charge, let's say a thousand dollars for a post did it for you for free, in 95% of the cases, they will also give you the usage rights and allow you to use it in other areas as well. So when you follow that relationship first system and you're not trying to extract sometHeng out of them, you just get it, you get the posts, you get the usage rights, you get referrals. You really don't need to ask them for anytHeng, including users. Right?

Brett:

Yeah, it's so good, man. And I love that first point, especially where you're talking about, hey, understanding which pieces of creative from an organic standpoint did the best, and then leaning into those first for ads makes all the sense in the world. So I was just at Google Marketing Live and talking to some of the product specialists, product managers beHend YouTube shopping, and we'll see how that does. It's designed to be YouTube's answer to TikTok shops, but that's one of the tHengs they do is they say, Hey, now as you have influencers who are tagging you and talking about your products on YouTube, you can see what performs the best and then you can run ads to that directly witHen YouTube and listen, I tHenk the name of the game now with ads, especially on meta and TikTok, but to a lesser degree on YouTube shorts, you need to just test a lot of different tHengs.

You find quality in the quantity. Being able to start with, Hey, we know these 10 or 15 or 30 creatives did really well organically, let's put money beHend those first. And sometimes listen, sometimes you'll find a diamond in the rough that this one influencer just didn't take off for whatever reason. Maybe their audience wasn't big enough at what they said was gold, test that too. Start with the tHengs that had great organic reach and great organic performance and lean into those first as ads. That's just an awesome strategy to both lean into organic and paid traffic. Awesome. So you talked a little bit about this idea of hacking word of mouth, and I've always been a big believer in word of mouth. I tHenk that's kind of the tHeng that can sustain a brand and accelerate growth once you get to a certain level. It's sometHeng I got my start as just a kid doing radio advertising and talking to local business owners, local shop owners, and it was talked about, Hey, my favorite form of advertising is word of mouth, which makes sense. It's just slow and it's kind of hard to control, have a great product and great service. But you talk about hacking word of mouth, what does that mean and what does that look

Tomer:

Like? Yeah, I tHenk that many people can get caught up with definitions. They ask, what's the difference witHen an affiliate and an brand ambassador and an influencer and a partner? And I would say it doesn't really matter how you call them, this is just a person saying good tHengs about your brand and your product to other people. So this person could have an audience, but they could also have 200 followers on Instagram. They could be very active in a WhatsApp group. They could be really active in PDA or whatever it is. And if they are your customers and they love you and they recommend your products either way, if you sprinkle that with some financial incentives and some guidance and tools that will make them see this as a financial opportunity for them, but also as a way to recommend a product they love to other people in their lives, then this is where you can hack word of mouth.

You can turn someone who's a raving fan, who's already a raving fan, and you can add some financial incentives to it and with a few processes just to make them excited and reminded that it exists. And they're probably not going to get to you tens of thousands of dollars in referrals each, but some of them will have a small audience. Many of them will drive 1, 2, 3 referrals to you. And if you do that at scale, this can really add up. I work with a high eight figure supplement brand, and they have tens of thousands of their customers join their affiliate program and they have hundreds and hundreds of them. They drop hundreds of dollars each in sales, and none of them have an audience. They mostly post it on their personal accounts, they post it on different groups that they're at. Sometimes they send it on as a text message message, but it's not about those, Hey, here's take $5 coupon for every referral that you make.

We've all seen that, and all of your customers have seen that, and this is really boring. This is about creating a real opportunity for them to make some little extra money by promoting a product that they like. And since most brands have those loyalty programs or referral programs, when you treat them as your partners, when you treat them as potential as real affiliates, this is where you create contests and you celebrate their success and you send them more free products and you add them to a closed community of your VIP customer slash affiliates, and you treat them as such, you can build a group of raving fans that will become your best brand advocates. And I've seen this over and over with brands, some of them, again, high eight figures, some of them are way smaller than that.

Brett:

It's so cool. And when you do this, it makes everytHeng better. You can use this content for email marketing, SMS marketing for YouTube, for Google, for TikTok and Instagram and Meta, and so highly recommend leaning into this. Now, how does someone like your eight figure supplement brand client, how do they get such a huge army of people that are now affiliates and ambassadors? How do you go from zero to this massive army?

Tomer:

Yeah, so I would say with your customers, most of them obviously will not turn to become affiliates. And even if they are, most of them will not drive sales. But you really just want the top 5% that love your products and will recommend them either way even without getting paid. Again, when you top that with a financial incentive, now they have the incentive to keep doing that. So first you need to offer that. You need to have a very lucrative offer for them. So you need to show them that, hey, if you refer us 10 friends, you might be making $200 from it. And for someone who's not doing this for a living, this is a lot of money. This is not an influencer that does this for a living. Now, if they're also able to get perks that they are not able to get unless they become your affiliate and refer you some sales, like exclusive product drops or early access to new products or a lifetime discount for your products or even priority support. So this is how you build a community of anytHeng between 20 to 500 or a thousand of your raving customers to become your best salespeople.

Brett:

That's awesome. So I want to kind of transition, and we talked about TikTok shops a minute ago, but let's look at this, TikTok and Amazon Flywheels. So sometHeng you were kind of telling me about, and I know a lot of your brands, Amazon is a huge driver of sales for almost all OMG clients, right? Their D two C through Shopify or another platform, their marketplace, which is Amazon, and then a lot of them are also D two C in store as well. But what is this Amazon TikTok Flywheel?

Tomer:

Yeah, so I'll start with a little story. We've neglected Amazon for a very long time, ever since we started switch, and this is why our sales were really low every month. Sometimes we had really, really low sales. Then one day in January, this January, we got a post by a larger influencers in our space, and he promoted kill switch to our Shopify store on his Instagram page. We got more sales on Amazon that month than we got in the past six months, right after he posted, I'm sorry, our Shopify link on his Instagram, but we had such big spillover into Amazon, all of that awareness went straight to Amazon. People prefer to buy there, and we made six x our regular monthly run rate. Now, the interesting part is that up until now, we are getting almost the same amount of sales because that external traffic we sent over to Amazon now rewards us in the algorithm.

So we rank higher, we never touch our listing, we never run any PPC or optimize the listing, but we still get more and more sales on Amazon. So now that we see the potential like, huh, maybe we should focus on Amazon and get some more reviews and work on our listing and optimize, but we're able to get it just from that single post to, I tHenk our growth rate this year is 171% more than last year, and we did notHeng on Amazon like zero, no SEO, no leasing optimization, any of that. Now, in the past few months, we also had many more influencers, probably smaller influencers than that person who also posted about us. And every time they do that, we get more sales on Amazon. Now, if you combine that with TikTok and you know that TikTok prefers TikTok shop videos and products because they want to push TikTok shop, that means that you can get more of that exposure on TikTok.

A lot of that exposure will spill over to Amazon. So if you work, for example, with a TikTok shop affiliate and you pay them a 20% commission or 30% commission, but you are getting three X sales coming to Amazon, you pay zero commission for, you will rank up higher in the algorithm and you only pay that affiliate. The effective commission is much, much, much lower. So knowing that and tracking that, now you are able to maybe offer your next affiliates 50% or 40%. So they will promote you even more because you know that for every sale they drive directly on TikTok shop, you're getting three more on Amazon or even on Shopify. You can win when other brands are trying to negotiate between 15% to 20%. You know that if you build this flywheel correctly, then you will have all that spillover coming to Amazon.

Brett:

It's so smart, and we see this in a number of different categories. You push really hard on meta or Instagram ads, you see a lift on Amazon, even if you're sending all the traffic to your Shopify store, we see this on YouTube all the time. Once an account gets to 50,000 or a hundred thousand or 200,000 or more in monthly YouTube spend, Amazon sales really increase for that brand. And I've shared this before on the podcast, but a buddy of mine is in the infomercial space and so does a lot of TV placements for infomercials and what they expect. Now, when a new product is launched via infomercial, what they expect is that 50% of the sales from that infomercial will be on Amazon, 30% will be from the.com, so from the online store, and then 20% will be from the phone and or other outreach.

And so it's just super interesting that even if you're not mentioning Amazon, people see a product that they really want. For most people, e-commerce equals Amazon. I'm going to go to Amazon and make my purchase there. I'm at least going to check. And that's another really good reason to be on Amazon because what we found with some brands is if you're not there, but there's a product that's pretty close, some people will just end up buying that. So if you're doing any kind of top of funnel activities, influencer, affiliate, whatever, you are driving traffic to Amazon, whether you intend to or not. That's

Tomer:

Correct. And I will also add that influencers create awareness. Most people will not buy right away. And most people who would end up buying the product after they've been exposed to your product through an influencer post will buy after they sign up to your email list or they follow your page or they bought it on Amazon or their search name or Google. So you always see more organic sales once you have more influencer posts, even if the direct affiliate sales are not as high, we always see more direct sales coming right away. Now, the beauty is that if you can also add a system that we call it the DM funnel, where you can convert that awareness into leads, so you can capture leads, and then you can grow your email list, send more social proof to them until they eventually buy. Now, you can use when you see influencers as such and you have a way to convert that awareness into leads and sales, move them through the funnel.

Now it unlocks opportunities that most brands are not exposed to because again, they're calculating their affiliate commission based on their margin on the direct sale. But knowing that most of your sales will come from the spillover, whether it's Amazon or whether people will just Google your name or search your name on Instagram and follow your page and then buy a week later or a month later. So the money is really not in the direct sales. It is in how good the systems are to get more indirect sales from the free awareness that you are getting from influencers.

Brett:

It makes a ton of sense. And I tHenk one important tHeng to remind people of is if you're investing in any kind of advertising, there is a CPA there. You're paying obviously for those acquisitions. And so my thought is you should at least be willing to pay that amount to an affiliate because the nice tHeng with an affiliate is you're only paying if they actually make assailant. If they don't, you pay notHeng. But to your point, because there is that halo effect, the lift, when affiliate or an influencer really post content, we're going to see more than just the directly attributed sales be more generous there, right? Again, there's not really any risk because you're only paying if a sale happens. So really, really insightful. Tomer, this has been awesome. As we kind of wrap up, any final tips or pieces of advice, or if not, where can people connect with you?

Tomer:

Yeah, I would say first, give it a try. You don't have to start in full fledge, just reach out to a few influencers, have a few conversations and see how it goes. Just get the feedback first and build the relationships. I mean, we have a system that we follow that will attract your ideal influencers to post more content for you so you get more sales. But if you want to start it yourself, you can do that. I'm here to help brands cut the learning curve, and I do that through my newsletter. So if you want to get my free newsletter, I send daily insights on how brands grow their sales with influencers and affiliates. That's a massive influence, dot co, dot co. And you also get my Influencers checklist, which is basically daily actions that you can take witHen your brand to start getting sales from influencers and affiliates. So

Brett:

Yeah, it's a really interesting angle where it's like, Hey, with some tHengs like YouTube ads, as an example, a few others, you kind of got to go a little bit all in. I mean, you can still test obviously, but you got to do quite a bit, or else it's not even worth trying. But the nice tHeng about this is you can try it, right? You can reach out to a few affiliates, you can try to get the ball rolling a little bit and see how it does. But I do recommend, obviously, this podcast is a great starting point. Dig into some of ER's content and his newsletter to really accelerate that learning curve and get you off to the races sooner. So Tomer, this has been brilliant, man. Thank you so much for taking the time, and you got me all fired up to build an affiliate program.

Tomer:

Thank you so much, Brad. It was great. And good luck to everybody.

Brett:

Awesome. And as always, we appreciate you. We could not do this show without you. There'd be no point, right? And so I would love to get that review from you on iTunes if you've not done so already. And with that, until next time, thank you for listening.

In this episode of the eCommerce Evolution Podcast, I sit down with Savannah Knight, one of OMG Commerce's top Google Ads specialists, to discuss the often divisive topic of Performance Max. Savannah shares her secrets to success and busts common myths surrounding this powerful campaign type, helping listeners turn their "meh" campaigns into true profit drivers.

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Key topics and lessons covered in this episode:

• Understanding the traffic composition of your Performance Max campaigns is crucial for making informed optimization decisions.
• Utilizing best-performing creative assets and proper segmentation can significantly impact the success of your campaigns.
• Savannah shares real-world success stories and the strategies behind them, including how to effectively use Performance Max for new customer acquisition.
• Common mistakes to avoid when setting up and optimizing Performance Max campaigns, such as the "set it and forget it" approach and improper asset matching.
• Exciting upcoming features for Performance Max, like asset-level performance insights and the "Bid for Profits" option, and how they can revolutionize your Google Ads strategy.

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Whether you're a Performance Max pro or just getting started, this episode is packed with actionable insights and expert advice to help you take your campaigns to the next level.

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Chapters

(00:00) Introduction
(04:07) Why Are People Frustrated With Performance Max?
(06:16) PMAX Success Stories
(07:38) The Importance of Good Creative
(10:58) Using PMAX For New Customer Acquisition
(18:32) Using PMAX For Branded Search
(22:53) How Does PMAX Fit In With Your Other Campaigns?
(29:58) Common PMAX Mistakes
(38:47) Conclusion

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Show Notes

• Exclusive In-Person Holiday Event in LA
• Savannah Knight (LinkedIn) 
• Mike Rhodes (LinkedIn) 
• Mike Rhodes latest PMax Script
• Moiz Ali (LinkedIn) 
• Google Marketing Live 2024 Summary
• Boom Beauty

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Connect With Brett

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

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Other episodes you might enjoy: 

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• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

‍

• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

‍

• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

‍

• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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Transcript

Savannah:

The other thing goes back to getting Performance Max to focus on new customers. It seems so simple, but the bid strategy itself that you're utilizing will kind of determine where your placements are.

Brett:

Well, hello and welcome to another edition of the e-commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we're talking about Performance Max, Google's flagship campaign type. It's a campaign type that really is a bit divisive. Some people love it, some people hate it, some people love to hate it. And so today we're going to be busting some myths and talking about how to make this campaign type profitable and incremental and worthwhile for your brand. And so what I wanted to do is bring on one of our top OMG commerce experts. Certainly I have experience in p max, but not like my guest today. And so I'm delighted to welcome to the show Savannah Knight. Savannah's been with OMG for over four, going on five years as a specialist. She's consistently one of our rockstar specialists. She's got a couple of internal records scaling YouTube campaigns with the lowest CPA. She's got some of the most successful performance Max campaigns that we've ever run as an agency. And so with that intro, Savannah, welcome to the show and how's it going?

Savannah:

Thank you, Brett. Going pretty good. Pretty good. Excited to be

Brett:

Here. Yeah. Yeah. This is also where you can throw in first time, long time type of thing. First time caller, long time listener. I don't know if that's actually true though.

Savannah:

This I try to listen to most of the podcast episodes you put out.

Brett:

Nice. Okay, great. Now, is this the first time you've been on or did you come on a panel one time? I think on the podcast.

Savannah:

This is the first podcast. Yeah, done some webinars. Wow. First timer,

Brett:

Maiden voyage. You've done speaking panels at Google. So we've done a number of events at the YouTube offices. You've done that before. We've done panels for the overall OMG commerce team. I know you've done several other things, but first time on the podcast, it's exciting times for short. So going to dive into pax, and as I mentioned, it's kind of divisive. A lot of people are actually frustrated with Performance Max. I know both D two C brands that are like, Hey, can we just go back to smart shopping? I know other agencies that kind of hate it. There's just been quite a bit of, it's just a divisive topic. And so what we found though is that for a lot of our accounts, performance Max is the top performing campaign type. However, you can't just turn it on and let it do its thing because there's some sneaky features.

There's some things under the surface with Performance Max that make it not a set it and forget it type of campaign, even though that's kind of what Google wants it to be. So a few things to watch out. For one, it will lean into brand and the idea behind Performance Max is it's going to find easy conversions. It's going to lean into those. And so brand is kind of the first place that it often starts, but that does not often add to true incremental new customer acquisition. And so that's something to watch out for. And so I think it's also one of those things where there's just not a lot of transparency. So seven channels rolled into one and people want more transparency, more control. We're kind of control freaks as agencies and as marketing experts. And so we'd a little more transparency. Some of that is coming, just came back from Google Marketing Live.

There's going to be some changes coming to Performance Max, which I think everyone will welcome. And then I think in some ways there's just a lack of trust in Google right now because of a few things in the news. And so we want to help you turn this from a meh campaign into a max campaign. That's what I heard someone say on online recently. As they say, it's more like performance meh instead of Performance Max. So we're going to help you dial it up a little bit, but from your perspective, Savannah, and maybe I touched on a lot of it, but why are people frustrated with Performance Max?

Savannah:

Yeah, I think the lack of visibility is one of the biggest things. So you don't know what's driving the performance, so it's hard to know what to invest in. So a video is working, you want to create more video. You can't tell in Performance Max if that's what's working the best or not. Also having lack of controls. So if you see, hey, maybe desktop is working really well, you can't make those bid adjustments to invest a little bit more into those areas. So not being able to control those kinds of things, no placement exclusions, that kind of things. And then the visibility that we do have, they're not always actionable insights. You can see, hey, this audience is working, but what can we really do with

Brett:

That? And what's really interesting, I was on a call with a large client recently and they said something really well that I think is worth repeating. The worst thing that can happen with a campaign is not that it fails whether a campaign succeeds or fails. That's not the worst thing. The worst thing is if it succeeds or fails and you don't know why. If you don't learn from it, if you can't say, okay, this is what worked and we know why. And so now we're going to duplicate that where this is what didn't work and here's our hypothesis to why. So what we're going to test next, both of those are valuable, finding what works or what didn't and understanding why sometimes the performance Max, especially right off the shelf, does not give you those insights and you need those. And so there's a few ways we can get into the weeds a little bit with Performance Max and uncover what's actually going on inside of the campaigns.

And then we can make adjustments. But yeah, natively it doesn't always provide the insights that we need. So I think to maybe set the stage because we do Performance Max if it's done properly, because we think it can scale and there's a lot of good things there. Also, Google's not going to reverse the clock. I think we can just, if anybody is hoping, Hey, let's just go back to the standard shopping days, I don't think it's going to happen. This is where Google is headed. They want more campaign types, performance Max as indicated by the launch of demand gen campaigns. So what are your favorite Max success stories, Savannah, without mentioning client names and whatnot, what are some of your favorite success stories?

Savannah:

One of my recent successes is with a jewelry client. We spent the last year or so just testing new messaging, new ad copy, getting better with images. They just really leveled up when it came to creative. And so over the last year we did tons of testing and comparing Q1 of this year to Q1 of last year, click-through rates were up about 40%. So that's one of my favorites. Just knowing that creative really does matter when it comes to p max. And then of course another one, I think we've mentioned this one before, back in the early days of max scaling to about 10,000 per day with a lawn care company with brand exclusions in place. So all that coming from new customers, I think that's one of my favorite

Brett:

Ones. That was one of the great ones. And what's really cool about that, and we'll talk about this more later, but that specific campaign leaned in pretty heavily to YouTube. So it was scaling to 10 KA day and beyond, and a large percentage of that traffic was from YouTube. And there's some specific reasons why there. And so we'll kind of dive into that as we go. But what you said about the jewelry client, brilliant, and I want to dive into that a little bit. So let's talk creative for a minute. I think the way a lot of brands approach Performance Max, and I think the way a lot of agencies approach Performance Max is they put a ton of time and creativity and brain power and human capital into good creatives for Meta because that's maybe where they're spending the most money. But then with Performance Max or with Google, they treat it search or just table stakes.

And so they throw creative assets at it and then never look again. And what is really important to understand is that you have to give Google your best. So Met Creatives, met Results. So thinking about what are my top performing image assets? What are my top performing video assets as I put them into Performance Max, am I watching performance and then dropping the losers and adding more potential winners for testing? Am I thinking about headlines and descriptions both for search but also for display and remarketing? Because again, that's another one where we audit hundreds of accounts every year and we look at sometimes, man, these headlines are boring, and these descriptions do not differentiate your product or your brand in the least. And so if you give Google Underpowered assets, the algorithm can only do so much. And so this is something we talk about a lot with our clients and we try to gain learnings frequently from images and things like that and then we can test it. But what is your approach to creative testing and how do you talk about creative assets inside of Performance Max with our clients? Yeah,

Savannah:

So I think Performance Max isn't the best place necessarily to start creative testing just because there isn't that visibility into those creative insights, see what's working. So whenever we start with Performance Max, I like to give it assets that we already know work really well, so we can kind of create that baseline and then from there we can start testing additional creatives.

Brett:

One quick note on that, Savannah, which is really important is right now basically as you upload assets or put assets into Performance Max, you can kind of see what's the best performing, what's good, what's average, what's below average, things like that kind of general stuff, but no specific metrics tied to assets, but that is coming so soon we'll be able to see performance at the asset level, which will unlock a new level of learning and then the ability to tweak and adjust and maximize.

Savannah:

Yeah, absolutely. Really, really excited to get a few more of those insights for

Brett:

Sure. So yeah, I kind of cut you off iStream there. So starting with the best performing assets, don't start with stuff that you don't have any idea if it's going to work. Start with the best and then what do you do from there?

Savannah:

Yeah, I think it's really important to give it every type of asset as well. After all its purpose is to go right place, right time. If you don't have all the creative to be eligible for all the different ad inventory, it can't accomplish what it was set out to do. So making sure you have all the aspect ratios, landscape, vertical, portrait images, giving it at least one of everything is really important as well.

Brett:

And I think that is important because the campaign type does want all the assets and certainly there are some interesting things we can do going feed only or starving the campaign of certain assets to try to push it one way or the other. It's a little more advanced strategies. We can maybe talk about that later, but I think in general that makes sense. Now let's talk a little bit about using Performance Max for new customer acquisition. I think this is one of the areas where people get frustrated with Google and Performance Max in general from the lens of, Hey, is this really incremental or is this just leaning into brand? So how do you look at Max from a new customer acquisition standpoint? And then let's get into some of the strategies and tactics we use to get the campaigns to lean more into new customer acquisition. Yeah,

Savannah:

PAXs can be a great avenue for new customer acquisition just because there are so many different options as far as settings go to make it lean into those new customers. So I know a lot of people are saying it just really focuses on brand and remarketing, but I think that's just if you have it set up incorrectly or just kind of do that, set it and forget it approach. Totally. So if you wanted to lean into new customers, I think the first thing is going to be the brand exclusions. So basically you just create a brand list and it looks at your website and it says, okay, we're not going to show up for any of these searches. Excuse. So for a haircare client that I have recently, we added in the brand exclusions and we saw using the script from Mikes, always shout out to Mikes for that. We were able to see in the search terms report for P max, about 36% of our clicks for that campaign were from branded searches After we added the brand exclusions, we see about 2% are from branded searches, so it's not completely excluding them, but we'll take 2%

Brett:

For sure. Close enough, close enough, absolutely. So let's actually pause a second and let's talk about that Mike Rhodes script because this is something that is a little more advanced or there's a free version, there's a paid version, but this script that our buddy Mike Rhodes created and shout out to Mike Rhodes, longtime friend. He and I spoke at Traffic and Conversion Summit way back in the day. We both talked about Google Shopping at the same event. We're like, Hey, we should maybe be friends. And so then been in touch with him ever since I was 16 something, but now he's got a script that runs for Performance Max to pull out some insights. But what does that script do for us?

Savannah:

So there are actually two, there's one script where it looks it can pull the spend from the different channels so we can see how much of our spend on Performance Max is actually going to display, how much is going to shopping, how much is going to video, which has been huge to be able to see what's really working inside a performance max. The second script is a search terms report. So it'll look at the last 30 days, the searches that were driving performance. So we'll see impressions, clicks, conversions, conversion value and all of that.

Brett:

Yeah, I would really not want to run Performance Max without these scripts. I think it gives a layer of insight that you just don't get otherwise and you're sort of flying blind without these. And one of the mistakes, and I've actually written some LinkedIn posts that'll be coming soon on Performance Max, but I think one of the biggest mistakes that people make is they don't understand the traffic composition of Performance Max. So okay, I'm spending a hundred dollars a day or a thousand dollars a day or $5,000 a day on Performance Max, but where is that spend going? Is it mostly going to search, mostly going to shopping, mostly going to display or YouTube? Where is that going? And you need to see that once, what makes sense to change. If a campaign is leaning into 85% search, then changing headlines, descriptions, thinking about search terms is really, really important.

If it's leaning in mostly to shopping, then that's where maybe some feed optimizations would make sense, or if it's YouTube, then thinking about creative for YouTube makes a lot of sense. And so understanding traffic composition makes a big difference. And what's interesting is since Performance Max was kind of the next evolution of smart shopping, and since shopping is at the core, it's foundational for e-commerce brands, a lot of people treat Performance Max just like, Hey, this is my new standard or my new smart shopping. And that's not a bad way to look at it, except that some campaigns lean way more into search than you might think. And we noticed that with a couple of our brands once we started running the script is that, Hey, we thought these were 60% shopping, but they were actually 70% search. And so then you know what to tweak or adjust, and then maybe I should start another campaign and maybe I should do a feed only campaign to really push it to Google shopping or whatnot. And so getting that traffic composition and that traffic breakdown is critical. Without it, you really can't make good decisions. So then how else are you getting campaigns to lean into new customers? We can exclude brand, we can see what's happening with these scripts. What else are you doing to lean into new customers?

Savannah:

Yeah, so we've got the brand exclusions. The second big one is going to be the new customer features that they have on Performance Max. So there's a couple of different options. We can bid higher for new customers or we can bid only for new customers. So I'll kind of dive in without getting too nerdy about how those work. If we bid higher for new customers, basically we say every new customer is worth a hundred dollars more than a returning customer or whatever value that we decide to give it. So whenever a new customer converts, we're feeding the algorithms more conversion value data, so then it starts going after those new customers a lot more heavily. One thing to note with that it does artificially inflate overall conversion value. So you have to keep that in mind when we look at results. And then the second option is bidding only. And

Brett:

Actually I want to just talk about that just really quickly just to make sure this is clear. So remember when we first started testing this feature a few years ago and we're like, oh, this is smart. Yeah, I'm willing to pay an extra 50 bucks or an extra a hundred bucks maybe even for a new customer. But when you give that change to Google, you put that in the settings, I'm willing to pay an extra 50, extra a hundred. Google just adds that amount to the conversion value of that purchase, and that's all just inflated. It's to kind get the algorithm to work and to show to weight that conversion higher than another conversion. And I remember when I first saw it, I remember a conversation with Greg specifically, what is going on? This is ridiculous. So then you have to get the numbers right. Then you can no longer trust the conversion value column or even conversion value over cost ROAS column if you do this. So then you got to run some custom calculations to strip out that extra fee, which really just becomes kind of cumbersome. So in theory, it's good because you're saying, Hey, go after new customers more. Then it messes up some of your data. So it kind of creates a problem there, but so you don't have to do that route, you get another option. And what is that? Yeah,

Savannah:

I typically lean towards the second one, which is bidding only for new customers. So basically you have to go into the conversion section on the account, define what your current customers are, so giving it the best info that you have going to be your customer match lists. You can create some conversion based lists based on purchasers and things like that in the account. Then it will understand who those people are and then kind of exclude them from the account. It's not technically an exclusion, but it's kind of excluding them from that campaign.

Brett:

And we have found that as we apply the new customer only to Performance Max, it does a better job of leaning into finding new customers. It does not do a perfect job. There's still going to be some repeat customers that come through there, but it does a better job. It keeps your data clean as well when you go that route. So we in general like that a little bit better. Now, an important note to make here. So let's talk brand a little bit. So now we've got a Performance Max campaign that's excluding brand. It's potentially going after new customers only. But then what are we doing for brand? Because it's still important that we show up for our brand name. And I know this is a tricky topic. I remember our friend and longtime client, Moiz Ali said, Hey, this is a tax, right? This is the Google tax that they levy, but you got to show up for your brand name.

I think it's important to note that, hey, just because someone saw your ad on YouTube or Facebook or elsewhere, someone recommended a product, it does not mean they're 100% sold on your product. So I don't think it's the same thing if someone searches for Savannah's Skincare, which has a nice ring to it and then they've never bought from you before, that's not the same thing as someone typing in Nike sneakers. If someone types in Nike sneakers, they probably know they want Nike. So if Adidas sneak in there with an ad, not likely to purchase, but if I type in Savannah's Skincare and someone else pops up, and I don't really know Savannah Skincare other than maybe just one ad that I saw, but another ad sneaks in with a good offer and it looks similar and it looks attractive, like, hey, I'm going to it out. So can't disappear from brand because otherwise we will see sales go down almost certainly. But you also don't want to overpay otherwise you're just giving all your profits to Google. So if we've got brand solutions and Performance Max, we're going to do customer only. What are we doing to make sure we're getting the right brand traffic and not overpaying for it?

Savannah:

So my favorite setup is if brand exclusions are in place on Performance Max still utilize standard shopping to pick up all of those branded searches. So we actually did a test recently on one of my clients sells haircare products. We had a Performance Max campaign with brand exclusions and then tried Performance Max to pick up that branded traffic. But we actually saw when we utilized Standard Shopping, we had a lot more control over our CPCs, so efficiency was way higher with a branded standard shopping campaign.

Brett:

I love that so much. I think branded shopping or standard shopping where you're bidding for a really high row as you're not excluding brand that allows you to show up for branded terms because with anything that's product driven, so anything e-commerce, anything D two C, you search for Savannah Skincare, you search for car accessories or you search for haircare products, whatever you're searching for, almost certainly shopping results are going to show up there. And they're almost always more enticing and more interesting to click than just a search ad. And so if you have a branded search campaign, great, you should, but without having some kind of branded shopping exposure as well, you are going to lose clicks. And that's a really powerful place for a competitor to snipe your branded traffic. And so got to have a solution for that. And we totally think that standard shopping aimed at brand is the way to go. And then any insights on, I know this about Performance Max, but any insights on search on branded search campaigns?

Savannah:

So branded search, I think they're still super important, especially if you're doing a lot of top of funnel targeting. We see that if you have those brand exclusions in place, you can still use search of course, an exact match to still have control over your CPCs on branded search. But having the combo of branded search and branded shopping is super important because a lot of times we see at the top of the search results page, there's going to be that shopping carousel. So if you're not there and on branded search, you're going to see competitors winning out on your search results

Brett:

Page. Yeah, what's really interesting is that when a brand shows up in both places, so when you've got a listing or a position or multiple positions even better in that shopping carousel, and then you have a search ad as well, the click-through rate of both increases because there's just something about that, Hey, I'm seeing now your name in multiple places want to have just more odds of clicking on one of your listings. But two, I think there's a little bit of validation there I'm seeing in multiple places, and we all know that what happens when Click-through rate increases, Google generally rewards that generally they want to show your ads more if click-through rate is high. And so you want to lift that rate for sure there. So very cool. How do you see Performance Max fitting in with other campaign types? And maybe a way to frame this is what's the ideal campaign structure? I know that's a really huge question, but for D two C brand, what's the kind of account structure look like and how does Max fit in with other campaigns?

Savannah:

So I'm still utilizing every campaign type. So even though Performance Max has placements across the board, I still like to have a little bit of that control and have search display, demand gen, all of it we see with Search, I still like to have it segmented brand and non-brand. We are utilizing Broad Match. So the best media buyers, they love Broad Match already. So definitely recommend that Performance Max.

Brett:

That's a bold statement there. There may be an explosion of activity on Twitter. Do we love Broad Match? We really, and actually let's just double click on that really quickly. So broad match, I think there was a time and place when broad match was just terrible, right? Google is almost forcing us into that path to a certain degree, but I think there's some other things behind it that actually make it worthwhile from a testing standpoint at least, but also probably from a new customer acquisition standpoint. Why are you bullish on Broad Match right now?

Savannah:

There's a few reasons. So we see Google's rewarding people with Broad Match. So you're seeing lower CPCs with Broad match than say Exact. So it kind of flip flopped as it was in the past. But they also say, I think they said 15% of searches every day are new searches they've never seen before. So we just want to make sure we're eligible for all the different ways that people could be searching.

Brett:

And this is a stat that's been around forever, but it just has not changed where you have 15% of all search queries done on Google every day by browsers, by people is the brand new. Google's never seen them before. And so it's just one of those things where I think people are just inventing new ways to search. And as we get comfortable searching, we search in different ways and we search with our voice and things like that. And so you want to be eligible for that. And then I think one of the other important distinctions is because now Google knows so much about shoppers and because they can see your previous activity leading up to the search that you just conducted, they can bid up or down, Google can bid up or down based on how likely they think you are to convert with this more broad search term.

So it's the combination of search term or keyword, and then the person behind it and their behavior, they can kind of influence where Google's like, okay, this may be a broad search, generic search, but the person making the search, we believe in them. And one just quick example is if my 19-year-old daughter who's taken a class at college, if she searched for some kind of supplement doing a research paper or something, she's not going to buy it. And so Google maybe knowing that, Hey, I just did all these research searches likely for a paper for school or something. Now I search for a specific supplement, let's not even show an ad. Or if 44-year-old Brett Curry searches for the same supplement and I've got a history of buying a lot of supplements, which I do now want to show that ad. So same search term but different person behind it. I want to bid for one, I don't want to bid for the other. That's what Google is wanting to do and that's what the smart bid algorithm can do. And so another reason that to give broad match a try, but with caution, it could still get of bounds a little bit. So okay, went to broad match search for just a second, but what else? Back to the question of structure of a D two C account and how PAX fits in, you want to continue down that path?

Savannah:

Yeah, for sure. So still utilizing Display Demand Gen campaigns, like we said before, performance Max is a little bit harder to test creative if you don't already have a baseline. So still utilizing display for remarketing campaigns to test creative, test new images, test new messaging, and then demand gen. I'm starting to adopt a lot more demand gen, it's gotten quite a bit better over the past few months. So definitely, definitely utilizing Demand Gen as well. Great for top of funnel Android marketing there. And then with YouTube performance Max, it does have a lot of YouTube placements, but it's not going to go after YouTube like a YouTube campaign on its own will. So still having all the different campaign types is important.

Brett:

And it's something that Google recommends too. Google still recommends like, Hey have specific campaigns for these channels. And at Google Marketing Live recently, they even talked about what they call the power pair, which is just Performance Max and search running together that in accounts where Performance Max and search campaigns exist, then both of them perform better and we've seen that as well. And so yeah, having specific demand gen specific YouTube specific search, maybe standard shopping for brand and stuff like that, all of that actually helps Performance Max work a little bit better. And I heard, actually, I think you were at the same event as me at the YouTube offices in LA where a product specialist was talking and she kind of used the analogy that Performance Max is sort of like the mortar. So you've got Bricks, which would be some of your other campaigns, and then PAX is kind of designed to go in and fill in the cracks.

Now I really like that analogy from one perspective, but from the other side I'm like, well, performance Max should be a brick too. If it's mostly Google shopping, like Google shopping is a brick, it's foundational for D two C brands. But I think what she meant there is as other campaigns kind of inform the algorithm, and Google gets a really nice picture of who your ideal customer is, performance Max should lean into opportunities you're missing. And that's what I believe. We saw Savannah with that outdoor products brand where they had YouTube rocking. YouTube was spending multiple six figures a month, really great ads. And so then we had Performance Max though with some of the same assets and it was leaning into YouTube well also and profitably. And I believe as we broke it down and looked at it, max was just finding opportunities we were missing in the other campaigns. So the other campaigns informed Google on who your buyer is, performance Max leans into missed opportunities. And that's in general the way it works with other campaign types. You have a really well built out search campaign structure, it's still going to get some of the traffic performance. Max isn't going to steal all of your search traffic, but having these other campaigns helps inform performance Max nicely. Anything you would add to that or any specific call outs like on Demand Gen or some of the other campaign types?

Savannah:

I kind of view Performance Max as I think two ways. It helps to pick up some of the traffic that you've, with Demand Gen and YouTube we're growing top of funnel growing awareness and performance Max kind of helps to close the deal for a lot of those sales. So we're driving that traffic performance Max is closing the deal. And then again, like you just said, it's kind of picking up where we're missing out so we can have great YouTube set up, but then maybe Max see some opportunities where with audiences we're not necessarily bidding on and it knows the right time, the right placements, all of that. So it's kind of closing the gap.

Brett:

Awesome. Let's talk about mistakes that we see people make. So you take over accounts and you're known for taking accounts and really ratcheting up performance and creating some pretty dramatic turnarounds and improvements. But what are some of the mistakes you see that either other agencies make or that D two C brands make when it comes to Performance Max?

Savannah:

I think one of the biggest things we kind of mentioned it earlier is just treating it like a set it and forget it campaign, really not Performance Max does like to get comfortable. So if you don't shake it up, don't consistently add new assets, change up your images, your copy, that kind of thing. It will kind of get comfortable and it struggle to scale. So if you set it and forget it, it is going to start going after just that easy traffic and you won't be able to see its full potential. So I always recommend changing the images every now and then adding new search themes, testing some new audience signals, that kind of thing. Another big one I see a lot of people make the mistake with is I'm going to call it just paint splattering. They just throw everything at it. No strategy, just here's everything I got, which can work. But you want to make sure you're being really strategic with who do you want your ads to be in front of? Who are you trying to talk to? Are you using really good creative or are you just throwing a bunch of random stuff at it? I think that's a big mistake I see

Brett:

Too. Yeah, and a lot of that comes down then to proper segmentation. So we could have a whole podcast about when to consolidate campaigns, when to break apart campaigns for better targeting and things like that. But at a minimum, we need to segment our asset groups, which so it kind of functions like an ad group, but in P Maxs they're called asset groups where if you throw everything together, the algorithm's going to have a hard time really matching up the right creatives to what a user is looking for. And so to give an example, we worked for years and years with Boom by Cindy Joseph, shout out to their Firestone and team, but a few of their products, they have Boom Bright, which is mascara a wildly successful product. They also have some skin moisturizers, boom, silk boom, cotton top sellers, and then they have their boom stick.

But all of those are a little bit different. Now, you could have the same headline, same description, same images to sort of sell all three, but then you just have to lean into brand and overall brand proposition. But really to sell a product to sell mascara, I've got a different headline than I've got for BoomStick, right? BoomStick is like a makeup bag replacement, cotton and silk or moisturizers, mascara bright as mascara. And so you want to kind of segment your asset group, so that same image, same headline, same descriptions, same listing inside of your feed all sell the same product. And that kind of goes into, I'm just going to throw all this in here and just let Google sort it out. Now, if you have an asset group, you have a campaign that you want to lean into shopping traffic, it's okay to have it all together, right? Because then Google does know what to do with the feed only. And so yeah, I think it's kind of lazy segmentation or not thinking about how are we pairing our different asset groups or how are we structuring our campaigns makes a big difference as well. Any other mistakes you see? Either mistakes in running it, mistakes in optimizing it, any callouts there?

Savannah:

One thing that seems like it will be really simple, but I see a lot when we take over new accounts is they'll have, you think this campaign has these certain products in it, the images, all this stuff just because of the naming convention. But then if you go actually into the listing, we see different products. So the assets and the products just aren't matching up, which is such a simple mistake. But I see it time and time again when we take over new accounts. So absolutely check your listing groups, make sure it matches your copy, your images, all that.

Brett:

Yeah, really good call out because a lot of times and someone that doesn't work in Google ads all day, they don't exactly know what's click around and what to see. And so yeah, okay, this asset group is labeled mascara, this asset group is labeled shorts and this asset group is labeled socks. And so clearly that's what they are. But when you dig in and look a little bit closer, that's not what it is. And so then you're not getting the performance you think you're getting. And I think another thing to kind of keep in mind, I'm curious you if you have a thought on this, Savannah, from an optimization standpoint, I've also seen some campaigns and hey, we've seen some P max campaigns just crush results and get to 35,000, $50,000 a day and spend on performance max, new customer acquisition focus, things like that.

One thing I've noticed though is that there are a few different Google campaign types that will do this. Performance. Max I think is one of them that does this where let's say you're rocking along at a 300% row as that's your target ROAS bid is 300%. You're getting a good performance, but you're like, you know what? I can really live with a 200% return on ad spend because there's a halo effect and other things going on here. So then you lower it to 200% and it's like, okay, well now it's getting a 200 to 2 25 we're so good. But if you dig a little bit closer, the only thing that happened is that your ROAS dropped. You didn't get more conversions, you didn't get more clicks, really, all Google did was like, oh, sweet, I've got more to play with. I'm going to lean into display and some other things that just totally crap out on you.

And so I think that's something to look at too. I'm not saying you shouldn't lower your ROAS targets to bid more aggressively. I think in a lot of cases you can and should. Then it goes back to some of the earlier points made. You've got to look at the traffic breakdown. What did that do to our traffic composition? Because the last thing you want to do is just blindly look at ROAS and say, well, we're okay, we were at 300, but yeah, we're still okay with the 2 25, but you didn't get anything additional from that. You just gave more money to Google. And so being mindful of that, as we're getting more aggressive with our bids, where is that extra traffic coming from? How is it performing? And really just having a keen eye there. So I dunno if you have any callouts there or not and no worries if not.

Savannah:

Yeah, nothing specific. I think you covered that pretty well.

Brett:

Sweet. Okay, good. Any other mistakes that you see people make or any other points of education that you make related to Performance Max that kind of create an aha moment for clients that you talk to?

Savannah:

Yeah, I've got a couple. So one is that Performance Max is going to really favor some of your top products. So if you have a huge catalog, it's probably only going to serve maybe 10, maybe a hundred if you're lucky. And so you probably have a lot of products that aren't getting any ad serves at all. So again, this goes back to just throwing it all into one campaign that can really, you're not going to be showing your whole catalog. So going back to the segmentation too little segmentation means a lot of your products aren't going to be showing too much segmentation. On the other hand, you risk not getting enough data struggling to scale, but you want to find that sweet spot of segmenting so that way all of your products are getting visibility. That's a big one. I think Micros calls it zombie products, but yeah, just making sure we break those out so that way you can really take full advantage of performance Max. The other thing,

Brett:

Yeah, and I think just to talk about that just a little bit is it's sort of the 80 20 rule where 80% of the conversions in site of performance Max and specifically the shopping portion Performance Max are going to come from 20% of your products. But we've seen that it's even more exaggerated than that most of the time inside of Performance Max inside of shopping where it's maybe like the 90 10 rule or the 95 5 rule. And so then it's like, okay, we're only selling this handful of products inside of Performance Max, but we want to get the other one some visibility too. So how do we break out campaign structure to attempt to get more visibility there? So yeah, great call out and what else are you going to say?

Savannah:

Yeah, the other thing goes back to getting Performance Max to focus on new customers. It seems so simple, but the bid strategy itself that you're utilizing will kind of determine where your placements are. So if we use Target roas, it's going to really lean into search and shopping, but we found if you switch over to a Target CPA bid strategy, it's really going to go after more new customers. You're going to see more image-based placements, more video placements, which of course are better at converting new customers.

Brett:

Yeah, super interesting. Sometimes the bid strategy mixes things up a little bit too. Target ROAS is definitely more of a shopping type bid strategy or search. It just kind of always has been. Target CPA has always been what we've scaled YouTube campaigns with and display campaigns with in the past. And so sometimes even just making that change can get a campaign to lean into one channel versus another. So that's super interesting. Savannah, this has been amazing, your first podcast, absolutely crushing it. Any parting words of wisdom, any insights related to either Performance Max or anything Google ads related or anything you're excited about that you've heard is coming down the pike related to Google Ads and Performance

Savannah:

Max? So as a marketer, of course, getting more insight and visibility into Performance Max is really exciting to me. But I guess parting words is performance Max can be a great avenue for new customers. You just have to make sure that you're on top of you just stay on top of it, whether that be the settings, the creative. So if it's only leaning into brand and remarketing traffic, there's probably something going on. You need somebody to take a little bit closer look at it. I would say,

Brett:

Yeah, I love it. I think it really boils down to understand the composition of your performance Max campaigns, make sure you're using your best assets, your best creatives, look at getting proper segmentation, and then as you optimize, really watch performance and see how all of those other things, shift traffic composition, things like that, and just keep working because yeah, I'm with you. Performance Max can be awesome. It can also be a real drain. And so the key is in doing it the right way. I know for me, getting the insights that are coming and coming pretty soon is going to be exciting. The other thing I'm excited about is bid for profits. And this is something that we're beginning to test, and I believe it's still in beta. I'm not exactly sure, but it'll be coming soon this year. Where Target ROAS was awesome as that got built up, and I think this is the next level, the next layer for Google where we can attach COGS data to shopping feeds and then bid to maximize profits. And that's awesome because some products in our catalog may have wildly different margins or different structures there. And so ROAS really only tells part of the story. Getting the machine to lean into profits I think is going to be a huge win. So if you want to learn more about that, reach out to MG Commerce. Excited to test that as well. And so with that, Savannah, thank you so much for coming on and we'll have to do round two soon.

Savannah:

Absolutely. Thank you, Brad. It's been so much fun.

Brett:

Awesome. And hey, if you're listening to this and you're like, dang, I need someone like Savannah running my Google Ads account, I know that I'm not getting what I should be getting out of Performance Max, or search or shopping or YouTube, then reach out to MG Commerce. We're happy to one, to a complimentary audit for you, a strategic review for you if you're a qualifying D two C brand. Happy to check that out. Happy to talk strategy with you and with that, until next time, thank you for listening.

‍

Profits are elusive right now for many sellers on Amazon.

The game is getting harder, not easier.

That's why I brought on Matt Snyder, CEO and founder of Brands Excel, to discuss two powerful tools for your Amazon seller tool belt:

• Seller Fulfilled Prime (SFP)
• Amazon Marketing Cloud (AMC)

Matt's diverse background made for a great interview.

He spent six years with the Dallas Mavericks (and has a few great Mark Cuban stories).

He then transitioned into eCommerce, working with Woot.com and eventually Amazon after they acquired Woot.

Later, he joined Veridesk as the VP of online retail, where he helped grow the brand to a mid-eight-figure business on Amazon, primarily using Seller Fulfilled Prime.

In our conversation, we cover:

• Understanding Seller Fulfilled Prime (SFP): what it is, how it works, and when it's the right choice for your brand.
  
  
• The benefits of SFP: increased flexibility, control over inventory, and potential cost savings compared to FBA.
  
  
• Criteria for determining if SFP is a good fit for your products, such as high-value items, seasonal or unpredictable demand, and products with many variations.
  
  
• The importance of having the right infrastructure and partnerships in place to meet Amazon's strict SFP requirements.
  
  
• Leveraging Amazon Marketing Cloud (AMC) to gain deeper insights into advertising performance and customer journeys.
  
  
• How AMC can help break down data silos and optimize ad spend across various channels, including Amazon DSP.
  
  
• Real-world case studies showcasing the successful implementation of SFP and AMC strategies.
  
  
• Lessons learned from working with Mark Cuban during Matt's time with the Dallas Mavericks, emphasizing the importance of continuous learning and taking calculated risks.

--

Chapters:

(00:00) Introduction

(02:06) Matt’s Journey with the Dallas Mavericks

(05:56) Transitioning to Amazon

(12:16) Understanding Seller Fulfilled Prime

(21:37) Requirements for Seller Fulfilled Prime

(26:17) Seller Fulfilled Prime Case Studies

(30:37) Utilizing Amazon Marketing Cloud

(35:26) AMC Case Studies

(39:28) Insights from Mark Cuban

(46:09) Conclusion

--

Show Notes:

• Matt Snyder (LinkedIn) 
• Matt Snyder (Email) 
• Brands Excel
• Comprehensive Guide to Seller Fulfilled Prime
• Vari
• Mark Cuban
• Dallas Mavericks
• Dirk Nowitzki
• Woot! 
• Groupon 
• Living Social
• Shopify

--

Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

--

‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

--

Other episodes you might enjoy: 

‍

• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

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• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

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• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

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• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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Transcript:

Matt:

This is very much, again, it's about gaining control and flexibility over your products, over your logistics and understanding where can you move the right levers to improve your margins?

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we're talking about seller fulfilled prime on Amazon. Is it right for you? Should you consider it? What are the pros and cons, how to make that work? We're also diving in to a topic that's coming up a lot for larger sellers, larger brands on Amazon, and that's a MC, Amazon Marketing Cloud, some really good stuff there. And so I have an absolute expert in the space joining me on the program today, Mr. Matt Snyder. He's the CEO and founder of Brands Excel, and we've collaborated on a few things together. He kind of heads up some content at the Prosper Show. I've spoken there a couple of times, and then we actually met when he was the VP of online retail at Veri. And you may know that brand as Varidesk, but they shifted to Vari because they're going to Onde now. But I have a Varidesk, it's my favorite. Really good stuff. And so just a wealth of knowledge and this guy is going to bring it on the podcast today. So Matt, welcome to the show and how's it going,

Matt:

Brett? So happy to be here, man. Really appreciate the invitation and look forward to the conversation here with you and the audience today.

Brett:

Yeah, man, really excited and I think this is going to be a timely episode for a lot of people because self-fulfilled Prime is a really powerful option on Amazon. It's not right for everybody. FBA is the way to go for many, many brands, but if SFP is right for you, it can be pretty awesome and so excited to dive into that and to pick your brain on Amazon Marketing Clouds. We're going to get into that as well. But first, Matt, this caught my eye immediately when I got on my first call with you. I'm a basketball fan and I'm a Dirk Nowitzki fan, and so when I saw Dirk Jersey on your, I'm such a Dirk fan that I was in DFW airport just like a week ago, and I ate at the Dirk Restaurant. I'm like, this might not even be good. I don't know. I'm going to support Dirk Nowitzki. It's got Mavs apparel everywhere and paraphernalia and whatnot. Actually, it was decent. It was pretty good. So anyway, what's the story with that jersey and what is your background that kind of led to you becoming an expert on the Amazon marketplace?

Matt:

Well, I appreciate your love of Dirk and I would say probably my all time favorite next to Jordan, but so I like you. I grew up as a basketball junkie, went to University of Kansas, thought I was going to be this great basketball player. Didn't make the team surprise, surprise, but I knew that I couldn't plan it. I wanted to work in it. And so shortly after I graduated, or right before I graduated actually was when Mark Cuban bought the Dallas Mavericks and Mark's pulling all these crazy marketing stunts around, want to hire a referee to run a dairy Queen, and then he's running a Dairy Queen the next day. All these amazing marketer, amazing sales guy. I was like, I'm going to go learn from this guy. So I begged and pleaded with the Mavs for several months to give me an internship. They ultimately did. I packed up from Kansas, moved to Dallas, and was fortunate to work with the Mavericks. Was this a

Brett:

Paid internship or just like, no man, I'll work

Matt:

For free non, they're like, we're not going to pay you. My wife and I was married at the time. We packed up, moved Dallas. I was like, we're going to make it here. And fortunate that it worked out, I had an amazing six years with the Mavericks, went of the finals in oh six with the team. So that's what this photo back here is from is Dirk and Anna. A quick story here on Dirk, just because I think it talks about this special person and player that he was, there's this lady within the MAs organization who was kind of like Call Dirk's adopted mom, and she noticed she ran the payroll and she knows that Dirk's checks were not getting cleared. So she went to Dirk and was like, Hey, see these checks that you are not getting glare. And basically he was like this young German kid didn't know what to do. She kind of had, whoa, we got to get your bank set up. We got to do this different thing. So

Brett:

He was getting these massive checks and just not depositing them

Matt:

Sitting the kitchen table.

Brett:

I'll just put it in the mattress. Yeah, I'll deposit that one. That's hilarious.

Matt:

But one of the things that, again, with Dirk that stood out is I was there for six years and every other week this guy would show up, he'd sit there for two hours, he would sign autographs, respond to letters, just, I mean such a humble guy. And something that I took away from my experience there of just like it doesn't matter how big you get in any space or whatever, it's to stay humble and to give back to those. And honestly, it's one of the things I love about working in this Amazon space is that there's some really smart people in this space who've had crazy success, but all of 'em are so accessible and willing to work and help anybody else in this space. And so it's why I'm involved with Prosper, and I try to do as much as we can to give back.

Brett:

Yeah, I love it, man. And the best, stay humble, and I think all of us can get humbled from time to time. It's sort of like the game of basketball. Being on Amazon is going to humble you at times. But yeah, I love that Dirk story. One of the all time great scorers and those finals when they beat the heat, man, that was just one of my redemption. There's not a basketball team close to me, so I've always just rooted for players because there's not a home team for me living in Missouri, but I definitely pulled for the Mavs for years and loved Dirk. So that was a blast. Yeah, loved it. Cool. And so then as we kind of dig into a few topics and looking at self fold, prime and stuff like that, how did you get to Amazon though? So you're working for the Mavs, this is your dream job. You didn't get to play Kansas, which big KU fan, so another affinity, but you're like, yeah, I'm going to work in it. So you go give your time away for free to get your foot in the door. Obviously that becomes a paid gig. And it was a six year run, you said working six year. Yeah. And then how did that kind of transition into, okay, let's become a master of online retail?

Matt:

So a few things that were kind of pulling me in the direction of Amazon. I had a good friend of mine that somehow he acquired this truckload of Apple accessory products back in the day, like the wired earbuds and power chargers. And he went and sold the stuff on Amazon. He's like, Matt, this is incredible. I'm just crushing it over here. And like, man, this is retail

Brett:

Arbitrage, man. Buy truckload stuff here. Yeah, sell it on Amazon, making a

Matt:

Spread. There's something about this Amazon thing. This is definitely going to be the next big thing. At the same time, mark was advising the founder of a new company that started up in the Dallas area called W com. And so for those who are not familiar with W or Throwback to the old e-comm days, W was this daily deal website and the whole concept was to help brands move their excess or end of life product. And we would do it this way that we would write this kind of funny story about the product, have this forum where you could come and hang out. It's very community driven. We wanted people to come have a good time talk about the product, talk about social events that were going on, but at the same time, then maybe they buy a product. And it turned into this just mass following, I think we had over at one point over a million followers who would come to the page, so we could just move massive numbers of products in a single day.

My role there was to kind of take this idea that we had with Whoop and go replicate that across different retail sites. So we worked with buy.com and once Deal day, all these other kind of daily deal sites that were popping up. And we had great success with this and ultimately caught the attention of Amazon. Amazon acquired the company in 2010. I had the fortunate opportunity to work with Amazon for a few years and kind of see the difference of startup mode, entrepreneur driven to like, okay, now we have these core principles and when there's how we leverage data to make decisions and make stark difference. But it also gave me great insights into the inner workings and the mindset and philosophies of Amazon, which have really powered the rest of my career. Going from there, and after following my time with W, the president of W myself started a business for a few years that was again focused on the state of the deal market.

We're trying to solve this problem, but how do brands who now are selling on W and on Groupon living social, like this mass explosion of the daily deal business. So we created this resource or tool, a platform that would allow you to sell your products across all the different retail sites. We would kind of aggregate your orders, your marketing sales, be a kind one-stop shop. We ended up being one of the top 10 fastest growing companies in Dallas through the SMU Dallas Business School and came in seventh. But that year, the company that came in first was Varidesk. And so I met the leadership team over at Varidesk and they had just been, had a phenomenal success with this product. They started as a direct to consumer brand, built this amazing product that was truly innovative, allowed people to go from just a static desk to having a standing desk and revolutionize the office space, but they wanted to expand the channels.

So I came in to help them think through how do we take this success you've had as a D two C brand and build this upon on the Amazon platform? And one of the things that we did early on was make this decision to go solar, fulfill prime. And it really made sense for Varidesk because at the time they had started as a direct consumer. They had all these kind infrastructures in place, they had a three pl, they had a carrier service, they had the technology to run their D two C business, so it's much easier for them to step into this SFP model and have some of these bigger barrier to entry or we solve for it. Initially they had a product that was heavy, bulky, so it checked a lot of the boxes for us. And so I was there for seven years and we took this to a mid eight figure business.

Over the time we've continued to run SFP for the last seven years through the ups and downs and the potential closings and ings and relaunches. It's been kind of a wild ride. But through that, learned a lot about around SFP, the band that could bring brands. And where we stand today, Amazon FBA is still the number one solution for most products, most brands. But as we know Brett, we've talked to a lot of brands that they're just getting crushed right now by inbound placement fees, low inventory fees, fees, fees, fees. So we as brands have to be smarter around adjusting our strategy. Andrew Ja, this last shareholder meeting, he talked about these costs. They're finding ways to improve their profits, they're finding ways to take these.

Brett:

Amazon is going to get their money. Amazon is going to make their margin regardless.

Matt:

And so just as Amazon is being strategic and making adjustments to their side to be more profitable, we as sellers have to be doing the same. And that's where I think this conversation around SFP is a good talking point at this time and where the market is and how things have evolved. And some of these big barriers to entries that I shared, there's really good solutions in place and it can be much more easier for brands who kind of check the other boxes to get started with SFP and it then opens up the opportunity for them to go beyond Amazon and just really opens up a lot of flexibility for these sellers.

Brett:

Yeah, I love it, man. And so yeah, excited to dive in there, but kudos to you guys. Kudos to the Verdes team. I love Verdes. I like the opportunity to stand some during the day and sit some during the day. And so it's really just a great mix of both worlds. As a side note, are you standing right now? You look like you're standing. I'm standing. Yeah, that's what I thought. So yeah, I stand maybe half the time, but probably a little bit less if I'm being totally honest. I sit though in the podcast room, we

Matt:

Always say it's not standing or sitting. It's doing both. It's the movement back and forth. You got to do both

Brett:

Movement. Exactly, exactly. So really, really cool. All right, well it's probably obvious by the name and also because you described it a little bit, but what is seller fulfilled prime for those that don't know?

Matt:

Great question. So seller fulfilled prime, what is this? We all as sellers know that the power of prime, we know that when our product has that prime badge, the customer has this expectation that it's going to be free shipping, it's going to deliver in one to two days if they have any problems. They get all these protections from Amazon to return their product, to make things correct. And to do that, we as sellers get the benefit of using Amazon resources for fulfillment and storage. And it has been the tool that has allowed so many sellers to achieve great success on Amazon. Yeah, because

Brett:

What are the stats, Matt? Once a product or once a company brand goes prime eligible, what sales lift like 30% or more maybe depending on the category

Matt:

In general it's like 20 40%. We would say it varies on the category and things like that, but tremendous impact to your sales. We all recognize the importance and value of prime. And so where self-fulfilled prime comes in is that gives you as the seller, the brand, all these benefits of Prime, but gives you the added flexibility or strategy of being able to keep that inventory within your own warehouse operations or that of a partner three pl. And in this case, what you're kind of eliminating then is you're limiting this period of time where you have to take the product, you have to prep it, send it into Amazon, get the receiving period of time, hope that they don't lose it or something else damage it, but then also all the additional fees that you didn't have to account. And we know that staying in stock on Amazon is rule number one.

We don't want to break that rule of going out of stock. And so you're really dependent on having a lot of things optimized all the way downstream to ensure that you're always in stock, always replenishing, not too much, not too little. It's a hard moving target. And for some brands who maybe they're seasonal, so they're coming to a season where their sales are within a three month window is 80% of their sales, there's a lot of these nuances that sellers have to consider when using FBA. So I would say for a lot of sellers, FBA will always remain their number one solution, but for those who maybe are kind of outside this model, FBA or SFP allows you to get the prime badge, allows you to leverage your own resources and gives you the flexibility to be more controlling over your inventory as well as your fees.

Brett:

Yeah, I think it makes a lot of sense for a lot of brands and first of all, fulfilled by Amazon, FBA is a magical system and it's allowed millions of sellers to make millions of dollars and be really successful. But it is becoming harder. There are rules, there are fees, there's low inventory fees, it's a complex system. And so who is self-fulfilled prime for obviously you need to have some of that infrastructure, you need to have a relationship with a solid three PL that's going to be able to hit targets or you've got to have your own warehouse and shipping system where you can hit those prime targets of delivery times and things like that. But walk us through who is this right for

Matt:

Great question. And so if we kind of think through just what's changed also in these last few months. So the program was closed for a long period of time this past October. Amazon came back, they reopened the program and kind of reset the benchmark in terms of performance metrics. And we'll kind of dive onto that here in just a moment. But with this, I think what Amazon's telling us, there's a few things they're kind of telling with us is there's absolutely some product groups that they have found are not as profitable for them to have an FBA is probably not as profitable for sellers to have an FB as well too. Those also recognize that their need to expand warehouse operations is going to be that there's a hard cost and if they can pass some of that on to or eliminate some of that by having SFP. And third I think is their approach to how do we get these established D two C brands who have built this kind of infrastructure to run the Shopify or BigCommerce, whatever platform they're on. If we can get them onto Amazon and not have to make them dependent on using FBA, it's another easy switch for 'em to come on

Brett:

For. It's a foreign world if you've built everything for D two C.

Matt:

If you looking at that lens then we say a couple of different options of where it makes sense for brands to consider. The first, as I shared D two C brands, they've already built a lot of this infrastructure, they have it in place, it's much easier for them to add this into it. Now there are the performance metrics that we'll get into and they have to make sure that they have resources and capabilities within their staff to provide that. And in some cases we've worked with brands where they have a system in place where Amazon SFP and their D two C is not quite to the same level as there are costs associated with that, but I say D two C brands are a great fit. And then after that, if you start thinking through what would be the other check boxes to consider, so do a self-evaluation of your catalog and if you have products that are, as we shared earlier, seasonal or sales that are not necessarily consistent, you have different periods of time throughout the year where they go way up or way down insurance, you have the right inventory levels, capacities and fee associations.

SFP can be a good solution for those products that are high in value. We talked about sometimes Amazon damage, they can lose your products through returns. There's a lot of opportunities for that to go missing and there's ways to get reimbursements for those. But we know that those reimbursements are always a hundred percent and there's efforts that goes into that and costs to get those fees back. And so if you have a product that's high value, and I would say we're talking probably $500 higher, things like that, those are products that you should probably should consider maybe looking at SFP for better security and lower cost products that are heavy and bulky. Again, if we kind of shared that's what was the case for VARIDESK and the fewer times that we're taking this product, putting it onto a truck, moving it around, less opportunities for that box to get damaged, less costs that we're putting into logistics and operations.

And finally the last one I would say are products that have high variance. So if you have something that's think of sometimes apparel, which can be tough because you can't necessarily be lower price points and you'd be kind of a higher in price point, but maybe example, we have one brand we work with sales footwear helmets, so they've got all the different sizes, color variations and so it's a lot. And so with that it can be easy for Amazon to either missay it, things can happen. So again where you're have these large varis, those can also be really good solutions for seller fulfill

Brett:

Prime. And with the large variations, Amazon's not necessarily wanting to warehouse all of that. They're not wanting to keep every single one of your skews in the off chance that one of them is going to sell because they've got restrictions now and they are being very mindful of what goes in their warehouses. And if you're not selling, you're going to be charged bigger fees and if you're not selling, you're going to be limited on what you can ship into a warehouse since Amazon warehouse later. And so any thoughts or insights there on the game that FBA sellers have to play and when things might be shifting you to SFP?

Matt:

Yeah, and that's generally one of the more frustrating is especially as we talk to direct to consumer brands who're kind coming into this space and they're not as familiar with FBA, they kind of have their own operations and s SOPs in place for their way of doing business. And when we come in and alright, well we have to do the prepping this way, we have to hit these time windows where we know that receiving is going to take longer. We know that right now we have low inventory fees over inventory, there's a lot of moving targets and can be a lot to try and plan and you got to be very precise and if you don't have the right tools or team in place, it can create a lot of either loss opportunities of sales or a lot of fees that can hit our margins. And in those cases, that's again where we can have more flexibility, more control over those type of factors on our seller fulfilled prime for these brands who check those other check boxes in terms of the product qualifications.

Brett:

Got it. Got it. So let's kind of review here just really quickly. So high value items, large bulky items that every time they're moved around there's maybe more reason for them to get damaged or there's just expenses in that you got seasonal. Seasonal or unpredictable demand. You got items with lots of variations, sizes, colors, other things like that, slow moving goods and then yet things that require special handling. So that's maybe if you should consider self-fulfilled prime, but FBA is not easy but s fp is not really easy either. There's little room for error, you got to be buttoned up, you got to have your systems in place and Amazon is very demanding. They want to ensure and in fact they demand that if you're going to be selling on Amazon, you have to meet standards. And so what are those standards and what do you have to have in place to be able to fulfill seller fulfill prime? So

Matt:

For sellers who are interested in taking the next step, there's kind of an evaluation process or some qualifiers you have to hit to get'em into the program. Before you kind of get into that kind of first step, what we would say is first you need to do an evaluation audit of your own capabilities. Resources determine can we do this ourselves or do we need to go find the right partner, a third party logistics company to help us with this? So the overall metrics that we're going to have to have, and Amazon breaks us down into three different size tiers. So you have standard, you have oversized and extra large, and those three categories then have different speed performances that you have to hit. But overall what you should think about is we need to be have national coverage for most of our products. Anything standard has to have national oversized and extra large can have regional. So kind of keeping that in the scope of your product mix, we'll help you think through what do we need as a solution. Most times sellers are not going to have the resources or infrastructure to kind of do this on their own because you really need to have two to three if not four locations across the US that you're shipping from the staff and all that. That's just not cost effective. And this generally was

Brett:

Just to meet those speed requirements because Amazon's wanting you to reach a two day shipping window

Matt:

Typically most

Brett:

The us.

Matt:

Exactly. And so that's just not economical and this generally was a big barrier. And also there was a lack of three pls in this space that could actually meet that requirement as well too. We were fortunate, we had a great relationship with a three PL called mainfreight. They've done phenomenal work for Barry over the years, but there's two other, I would say developments within this space we have found two really great partners, one being where to go, which is actually it's a UPS company. So they have the advantage of working with UPS to get you really good rates. They have a massive infrastructure. Now theirs is more of what's called a four PL model where they technically don't own these warehouses, but they have worked with them to get the right technology, the right personnel and the right operations in place to offer SFP. And Amazon's kind of edited 'em out saying, gave them the approval of like this is a company who can offer you SFP. The second thing is a company called DaVinci Micro Fulfillment, they operate as a three pl, a true pl. So they own the warehouses, they own the staff, it's all theirs, it's all their technology. And they have again gone through the approval process of Amazon, Amazon's given the approval they can manage the SFP and they've got six locations across the US And so these

Brett:

Are two, what are those two? The ones the four pl one's a three pl, what are those again? So

Matt:

Where to go? It's your four PL and DaVinci Micro fulfillment is your three pl. So again, as you and I were chatting earlier and we were talking about agencies and not every agency is the right fit for the brand and right vice versa. Same thing here. You should talk to different solutions providers out there because just because this one works for this brand doesn't mean it's going to work for your brand. So those are two great places to start and see if there's solutions for you there. So these two are going to do the heavy lifting of meeting the speed performance metrics, which is going to be on valid track, 99% valid tracking, less than a half percent of order cancellations, and then your on time delivery being 93.5% and that's usually the one that is really can trip people

Brett:

Up. It's tricky man. It's

Matt:

Tricky. It's tricky. And that's where again, having the right partner in place who has the leverage resources of your carrier solutions, who can go on your behalf and when there are problems with your deliveries can use their flexibility or the resources of multiple different carriers to solve those solutions. With that because the other kind of piece of this is there's what we saw, speed performance promises shown to customers and that's kind of determined on your shipping templates and again the number of carriers that you're using are you offering one day, two day ground services. So that's where I would really advise sellers who are kind of wanting to explore this further, talk to sellers who've kind of gone down this path and also make sure you're resourcing the right expertise to help through

Brett:

This. Yeah, it makes sense. So obviously very Verde was a great case study and self-fulfilled prime multi mid eight figure brand really an SFP heavily. Do you have other case studies you can mention? And I know a lot of Amazon sellers are pretty guarded about their brand, things like that. You can be very secretive, but category whatever brands that have transitioned from FBA to SFP and what kind of lift kind of improvements have they seen?

Matt:

So we have two examples I'll share and two different check boxes in terms of the product assessment and I'll leave the brand names out, I can give you some generalities. So the first being is seasonal. So they're a holiday type of product. 85% of their business comes and literally a six week window. So they have a very tight window to hit and they have been doing merchant fulfillment, but so they've kind of got the resources in place, they're leveraging in some additional solutions with some of the three PL solutions we talked about. So we're actually in the process right now working with 'EM to make sure we got all these check boxes in place, all operations in place before we hit this time window for them. So the expectations with them is that adding this into their program is going to lift sales going into their peak season anywhere from 20 to 35%, but it's going to be able to actually, in their case they're trying to just maintain profitability and with the offset of the increase sales. So that's one kind of example where the gold there isn't necessary to improve profitability, but it's more of we want to maximize more of our sales in this small window of time that we have the second. So have

Brett:

That inventory flexibility because Amazon's going to throttle that inventory and you're not going to be able to capitalize on the full opportunity of that seasonal window if they were going FBA only.

Matt:

Absolutely, and just knowing that in that period of time you've got these inbound delays that can occur and so there's a lot more variables to try and account for and if one of those misses, it can have dramatic impact on your top line sales. Our second is, and we're kind of in the final process with this one too, so we haven't fully crossed the line with them, but they sell somewhat of a seasonal, it's more of the up and down sales throughout the year, but consistently selling year round. And theirs isn't necessarily heavy products but they're kind of bulky in size, so I thinking maybe greater than 24 inches by 12 inches but in a higher price point range from like a hundred dollars to say $200. And so they have been doing FBA exclusively and it's worked well for them. It's year over year.

We're having great sales growth for 'em, but the profits were getting eaten up here is we're having these different fee structures come in. So we worked with the team at DaVinci and we did a cost analysis. We took their last 12 months of their sales, ran it through their system and kind of analysis and we came back to them and said, right now your shipping costs are 19% of your sales. If we can move this to our platform, it will maintain your prime badge so you'll still get that benefit of the sales left, but we can take this down to 11% of your sales. So that is a massive dramatic savings right there. And one again, you wouldn't typically expect that FBA to be beaten by SFP, but it's a great example of where if you partner with the right resources and kind of put the right plan together, it can be a great win. And as we tell brands in this case, we may not move their entire catalog over, we may find select products where it makes sense to put that at SFP and these other products make sense to keep an FBA. So if you're thinking through this, it's not an all or nothing, this is very much, again, it's about gaining control and flexibility over your products, over your logistics and understanding where can you move the right levers to improve your margins.

Brett:

I love that. I love that it's not all or nothing. You can look at your catalog and understand what makes sense to keep FBA, what makes sense to make SFP to really maximize control top line bottom line and look at that holistically. So if you're thinking about self-fulfilled prime, reach out and chat with brands Excel and Matt can help you out there. Let's transition a little bit Matt, because we don't have a ton of time left, but I do want to touch a little bit on a MC. So Amazon Marketing Cloud and it's become very obvious to Amazon sellers over the last few years that growth on Amazon is largely pay to play. You need to invest in ads in almost every scenario where it's at leased to launch a product but likely to maintain sales. And so what we do at OMG is we're kind of full funnel ads.

We're looking at sponsor brand video, which we be called video and search. We're looking at sponsored brand ads and of course sponsored product ads and looking at all of that. We're also, we do a lot with YouTube and Google and Facebook and so sending that traffic to Amazon on occasion or we're just advertising D two C, but there's always an Amazon Lyft, even if we're sending traffic to a Shopify store, there's some people that like to research there but buy on Amazon. And so Amazon developed a MC to try to help marketers get better visibility and better tracking and things like that. How were you guys using a MC vary and how are you consulting coaching brands to utilize A MC?

Matt:

I love this topic and it's one of the most interesting ones to dive into right now. And this question is coming up with a lot of the brands we're talking to and we're talking with some brands who are, maybe they're spending a little bit less, they maybe they're spending 10 to $15,000 a month, but even there we're running into these challenges with just focusing on sponsor products and sponsor displays. There's only so much you can do with those tactics and talking with brands who're spending 10 million a year on Amazon and beyond that on other channels and they're like, we know when we stop spending or reduce spending sales go down, but we don't know which of these tactics or what really is going on. So there's a lot of unknown.

You shared YouTube and DC all these. I think that for longtime brands have kind of operated in the sense of, okay, we have our paid search for our D two C page, we have our social, our email marketing and SMS, and then we have Amazon that sits over here and maybe we even have Walmart sitting over here, but they were all very siloed and there was budgets for each one in some cases. Some of these companies we've talked with, they have multiple brands and even each brand had its own kind of segment and budget and everybody was working independently of each other and everybody was kind of not knowing what was crossing over with all these different budgets and tactics. And I think brands are now realizing that are coming to a place where we need to break down these silos, but how do we do this in a way or how do we get the right insights and signals to help us make the right decisions?

And so it's exciting as a MC is to me where I tell brands is before you jump all into this, there's a ton of value you can get, but it's really before you even get to that step is really understanding what is it that we as a business and brand, whatever our biggest challenge we're, what is it that we really want to solve and what are those measurements going to be to base these changes on before we go into a MC, because as we dive into this, we'll talk some details is a MC can provide a lot of great useful information, but it's about being specific and ask the right questions to get the output that you really want that's going to be incremental and impactful for your business.

Brett:

Yeah, it's really great and it's one of those things where sponsor products, the bedrock, the foundation of your Amazon advertising strategy, but there's only so far that can take you for certain categories. It can be mostly what you need, but it does depend. So we've got a couple of brands we're working with right now, high growth brands. One is in the haircare space, one is the cleaning space, but they don't fit squarely into a category and there's not a perfect alignment with search queries in their products. And so sponsored products are great and they're high return, but we're hitting a ceiling, right? Because there's only so much search volume and still with a lot of, I mean most product discovery on Amazon has done through search. And so you got to kind of look at how do we get creative, how can we show maybe a sponsor brand video ad this product demo video ad and maybe some related categories or show it on related products or things like that. How can we do DSP, Amazon DSP and sponsored online video or prime video ads? Some of those things that kind of go a little upper funnel or get a little broader, but then we got to see, but is that driving incrementality? Is that driving a sales lift or is it waste? And sometimes that's hard to kind of piece together. And so A MC helps there any good use cases, studies, any examples of, hey, we used A MC and unlocked this insight.

Matt:

I think what you shared there, we've experienced, and I've seen it with some of our brands we're working with where we have been successful with the sponsored product placements, but as other competitors are coming into the space, CPC costs are going way up or in some cases the audiences are just smaller is we've got to grow beyond just pace search. And so as we get into DSP, what we've come across is some cases you can do targeted segments or you can do some audience modeling on DSP, but even within those two parameters of levers that you have on the DSP model, as we've done some models we've come in and we've seen where there's just a lot of wasted spend or overspend on certain tactics have just not be able to get UL enough in terms of your targets. Especially in these cases where maybe you have a smaller audience and you're trying to then go capture interest from lookalikes or comparable products using A MC.

We can use all these different signals of not just a, you think of the traditional A MC models, it's going to give, you can see the path to purchase where you get, okay, they sponsored product placement at DSP, but within the standardized reports that Amazon's provided for us, it only goes so far. Even with those, that's where we see working with the right providers in this space to help you really customize the sql. That's what's kind of the really powerful level here is that Amazon's created some great templates, but you can do anything. That's where I say it's about asking the right questions and then having the right resources and team behind you then to go and create those SQL queries and reports. So when we've been able to go with that next level of going even more granular in terms of really understanding well, how many different touch points do they have on S Spark products and how frequently do they get served up with our DSP ads to then really craft in that more specific targeted audience is when we really see the explosion of growth within the power of DSP and A MC working together.

Brett:

Yeah, yeah. It's the future to really get the most from DSP and others of Amazon advertising. You kind of need a MC. And so yeah, both in the attribution piece and kind of understanding what's going on, but also in this targeting and audience building, there's really nothing like A MC. So pretty excited about that. Now, any final thoughts on A MC? I've got a couple more things I want to wrap up with.

Matt:

I think again, as brands, if you're in this position where you're just not seeing the same level of impact with sponsor products and you're pushing to DS DS P should be looked at and measured differently. And that's usually the biggest challenge or roadblock we run into with brands of,

Brett:

And there's some flaws with how it's measured on its own just in the DSP platform. There's some serious flaws there.

Matt:

And so I think A MC where originally was thought of as well that's for enterprise level brands or that's for brands spending a ton of money on Amazon. I think that was true a year ago. I don't think it's true for brands today with where we are and the resources that are out there is that if you're spending 10,000 a month on DSP, you should definitely be looking at A MC and using that to help us build those better models. And we didn't touch on the fact of we're talking about Amazon performance, but if you're a D two C brand or you're spending money on these other platforms, wow, there is so much opportunity to bring this data all together and help really understand the full journey of your customers, not just on Amazon but across your D two C and across these other retail sites to just improve those dollars and get more out of it too.

Brett:

Yeah, super exciting man. Really excited to see how that continues to develop and we're excited to use it for our brands as well. And so I would be remiss if I did not ask you based on your time with Mark Cuban six years with the Dallas Mavericks, and this is a little bit off the cuff, we didn't really prepare for this necessarily, but any lessons or insights or takeaways as you observed Mark Cuban operate? What were some of the top lessons from working with him?

Matt:

It's interesting, you either have fans of Mark Cuban or you have the haters of Mark Cuban. Sure. Those who say he just got lucky. If you dunno the full story Mark made, he's had two big decent-sized exits, the second one being broadcast.com, which made him billions of dollars and just sold 'em MAs again for several billion dollars. So he's had success multiple times and I think one of the things I took away from him is just no matter how successful you've been in a certain segment or business, it's always about just continuing to learn. He would talk about back when he started his first company of billing network systems and he just would go home and just devour these resources around training manuals and he just knew more than anybody else when he stepped into a room. And I'm not saying that I know more than anybody else, but it just showed me that, especially as I've gone into the space of Amazon specifically, is you just can't rest on what you know today because this space is, we're talking to A MC, we're talking SFP and Amazon space has just continued to evolve and if you want to stay relevant and if you want to stay at the top of your game, it's always about just continuing to just be in the market learning and not just resting on your laurels.

This one and the second one, just being that we had all these different saying kind of Mark Cuban sayings up around the office and one of those being it's a little off cuff here, but it's called No Balls, no Babies. And the whole concept here just being that you got to be willing to take some risk and you got to put yourself out there. And that's one of the things I took with him is that I tell my kids all the time is if you don't ask, you don't get. And being able to go out there and just first you got to make sure you're in the position to be successful and to be able to bring value and to go up against some of the best in the industry, but then you also got to be able to go out there and put yourself out there and also be willing to ask for that sale, ask for that opportunity, ask for this promotion, ask for this opportunity for me to prove myself. If you don't put yourself out there and be willing to take some risk, then you're never going to reach your ultimate.

Brett:

Yeah, it's so good. I love both of those points. The first point being usually those that are accused of just getting lucky, there's usually a ton of hard work behind that and almost obsession. He was going home reading manuals, right? For fun. He's digging into stuff. And I think there's a certain level of success that requires that if you're going to be in the top couple percent of Amazon sellers or D two C brands or whatever, it's going to take a little bit of obsession for you to get there. And I love that second point, man, you got to be bold. You got to ask for stuff, right? I've been chatting a lot with my 22-year-old son. He's in direct sales and he is doing a great job and he just read the autobiography of, not autobiography, but the biography of Steve Jobs and was talking about how bold Steve Jobs was.

And I remember there's a story in there when Steve Jobs was like a teenager and he wanted to learn from Hewlett Packard and he is like, I bet I could just find the founder in the phone book. This is back when the phone books were a thing. And so he did, he found one of the founders in the phone book and just called him in the evening and got him on the phone. It's like, Hey, I've got some questions building this computer. I got some questions about whatever. And the founder was like, man, you want a job? You want to come and do a summer internship? And that really paved the way for Steve Jobs and Steve Wozniak in a lot of ways. And it was because Steve was like, I'm just going to call him at home in the evening. Where most people were like, well, I don't know. I want to do that. We sit and analyze, but just got to be bold sometimes. Got to ask for the sale, got to do the deal, got to start. Because a lot of times we get stuck in our heads and we don't operate so beautiful lessons. Any final Mark Cubans?

Matt:

So just to round down that, I told you at the beginning of this about my internship there, but I didn't tell you the full story is that to get this internship, I follow this mechanism is that I got the email address of the HR person and of the director of sales. And so I just would cold email these guys twice a week. I'd see some follow the game, Hey, you have a great game. Must I have just a call out? And then ultimately over my spring break I said, I'm coming to Dallas, will you guys meet with me? And they were both reluctantly, were like, sure, whatever, to really show them some sizzle. I made my resume on a PowerPoint with the CD Rom and sent that to them. This is cutting edge back in 2002.

Brett:

I've not heard the word CD ROM in so long. I'm so glad you said that. Age myself.

Matt:

And so I show up on my spring break and I can tell they're both just trying to do anything they can to talk me out of this. And so I was like, look, we don't have internships, we don't have any jobs. I don't have a way to pay you, so I don't know, you tell me where we stand. I'm like, say yes and I'll be here as soon as I graduate. And so the next week they're like, fine, if you want to show up, we'll find something for you to do. And just as I got there, one of their other account executives had just, and so they had just entered the renewal season. So I got to then step into this role of filling his shoes for the next three months as my internship of how do I can show myself as a salesperson? And I never would've had this if I just didn't take that risk of just, I'm just cold email, put myself out there and make an ask. Ultimately, that led to my first start.

Brett:

So cool, man, what an amazing story. And you didn't just ask one time and you didn't just ask in the same way each time you found a reason to follow up, great game, here's a call out, Hey, can I do this for you? And eventually you did that so much that they couldn't ignore you, right? They maybe didn't want to give you an internship. We got nothing, man. We got nothing for you. Whatcha going to do. And you just kept on asking. And yeah, I think if we can get to that place where we're impossible to ignore, that's really, really powerful and you just got to figure out a way. And so if you are willing to be bold to push for someone to find a way, it'll often happen. And yeah, man, such a good example. Such a good lesson there. Thanks. Thanks for sharing that. Awesome. As we wrap up, as people are listening and they're like, okay, I got to look at self fulfilled Prime or I need to just analyze my Amazon strategy, how can they get in touch with you, Matt? Yeah,

Matt:

So you can easily reach me. My email is matt@brandsexcel.com. You can also find me on LinkedIn. I'm sure we can maybe add my link here.

Brett:

Yeah, I'll look all in the show notes.

Matt:

I'd offer every lesson you here if you're interested. I just want to know some more. You want to go a little bit more in depth? I have a free guides, just a comprehensive guide to sell Fulfill Prime. It'll walk you through everything we talked through today with a little bit more in depth. And Brett, I'll share this with your team Thursday, we can just make this accessible or again, shoot me an email and gladly send it over to your free resource for you to review and help you answer some of those additional questions.

Brett:

Love it. And that's brands plural, Excel, ex CEL, correct.

Matt:

Brands, B-R-A-N-D-S-E-X-C-E-L.

Brett:

Awesome. Matt Snyder, ladies and gentlemen, Matt, this has been fantastic. Look forward to doing this again sometime, and thank you so much. Thanks

Matt:

Brett.

Brett:

Absolutely and always, and as always, thank you for tuning in. If you found value in this show, please share it with someone. If you know an Amazon seller that's kind of been wrestling with how do I make FBA work and should I do SFP, then send them this episode. If you've not done so already, we'd love that review on iTunes. And with that, until next time, thank you for listening.

‍

I love disruptor stories, and Kevin Lavelle, the founder of Mizzen+Main (and now Harbor), has an overlooked but incredibly inspiring one.

‍

Kevin revolutionized the men's dress shirt industry with performance fabrics. Under his leadership, Mizzen+Main grew from a great product idea into a company that has sold hundreds of millions of dollars worth of shirts and is now available in 500-600 stores, including 10 Mizzen+Main stores.

‍

Now, he's tackling a new challenge by creating a more secure and stress-reducing baby monitor solution with Harbor. His journey provides a blueprint for innovative product design and successful company building.

‍

Here are a few key takeaways from the interview:

• Kevin Lavelle shares his entrepreneurial journey of founding Mizzen+Main and the inspiration behind launching Harbor, an innovative baby monitor solution. 

• Discover how Mizzen+Main leveraged influencer marketing, including a highly successful sponsorship on the Tim Ferriss podcast, to scale the business rapidly. 

• Learn valuable lessons about building and managing teams, giving feedback, and recovering from mistakes as a first-time founder. 

• Harbor's unique approach to creating a more secure, reliable, and stress-reducing baby monitor system with remote night nanny services. 

• Understand the importance of building genuine relationships and providing value to your target audience when launching a new venture.

--

Chapters:

(00:00) Introduction 

(02:02) The Story of Mizzen + Main

(14:45) Sponsoring The Tim Ferriss Podcast

(21:14) Favorite Failures From Mizzen + Main

(29:26) What Is Harbor? 

(40:23) Conclusion

‍

--

Show Notes:

• Kevin Lavelle (LinkedIn) 
• Kevin Lavelle (Twitter) 
• Mizzen + Main 
• Harbor
• Tim Ferriss Podcast
• L Catterton 
• Jim Carrey - 2014 Commencement Address
• JJ Watt
• New York Times Article - A No-Sweat Work Shirt? 
• Brooks Brothers
• Kelly Starrett - The Ready State
• The Tim Ferriss Effect: Lessons From My Successful Book Launch
• The Tim Ferriss Effect - Podcast Edition
• Who Not How
• Radical Candor
• The Five Dysfunctions of a Team 
• The Hard Thing About The Hard Things
• Nanit
• Charlie Hill (LinkedIn)

--

Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

--

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

‍

--

Other episodes you might enjoy: 

‍

• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

‍

• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

‍

• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

‍

• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

‍

• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

‍

--

Transcription:

Kevin:

The first aha moment for me from idea to, okay, this is a reality, is when I wore our first prototype home from a seamstress who had made the prototype for me and my wife didn't realize I wasn't wearing my normal button down white shirt and suit and tie.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and I am delighted to have on the show today the founder, the former CEO now chairman of Mizzen and Main. Now, I've been following Mizzen and Main for years now. First heard about them on the Tim Ferris podcast. Of course, if you're a Tim Ferris listener, he gives great endorsements and I was immediately sold when I heard his pitch on Mizzen and Main. And so I've been following them ever since. And they've worked with some greats like JJ Watt and Phil Mickelson and others. For those that don't know, you'll get the full scoop in just a minute, but it's a performance dress wear performance dress shirt for guys, and they've branched beyond that as well. And so we're going to talk about lessons learned and what that journey was like, and also get to hear a little bit about the new journey. And so I am absolutely thrilled to welcome to the show, Mr. Kevin Lavelle. Kevin, how's it going man? And welcome to the show. Thanks,

Kevin:

Brett. Glad to finally do this. I say in person, glad to do this live together and appreciate the opportunity to share what we're building at Harbor and reflect on what I've learned at MIS and Main.

Brett:

Absolutely. And so yeah, really excited to hear about the journey with Mizzen and Main, but also talk about Harbor, the new venture baby monitors, but to the next level, which I was just telling you as the father of eight kids, I could have used your software, your technology back in the day if only you'd been available. So can't wait to hear the story there as well. But let's dive in, man. Let's talk a little bit about Mizzen and Main. And so why did you start an apparel company? Why Mizzen and Main? Just give us the

Kevin:

Scoop. So right out of school, I got a job as a management consultant, did that for a few years and then worked for an investment team within an energy company here in Dallas. Two great organizations and I learned a whole lot, but I just had this burning desire to start my own thing. And there are some people who are an idea a minute, and there are others who have one great idea. And I felt like I had this one great idea. I was a college intern in DC, which taught me I never wanted to work in politics in dc, but I watched a guy run into a building soaked in sweat, and I grew up playing golf. I wore performance polos. I watched them sort of take over on the golf course and wondered why no one made a dress shirt out of this type of fabric makes, and I knew nothing about textile design, manufacturing, branding, none of that. But I just couldn't shake this idea and stayed with me for years. And I got to this point in my mid twenties that I just said, you know what? If I'm ever going to do it, now is the time. And candidly, working as a management consultant and then an investment analyst doing due diligence on other companies, I just sort of had this realization that no one knows what they're doing. We're all figuring it out as we go. It's not like I didn't have some magic playbook.

Brett:

Dude, I just want to pause for a minute. That is one of my favorite quotes, and I remember hearing some really smart people saying that, and even Paul McCartney in from the Beatles, I heard this interview where people were like, Hey, how did you do it? How did you plan to create this great band? And he is like, nobody knows. We didn't set out to be the largest most successful band in history. We just started making music.

Kevin:

You do something you love and things can really work out. Totally. And I'll extend that. We'll get to point where El Caterton, the world's largest consumer retail, private equity firm and really the gold standard in PE on consumer invested in mis doMain. We were so excited to have them, huge stamp of approval. We got them in our first board meeting. I'm sort of ready for them to show me, okay, now that you're in, here's how we do it. Right's, the secret sauce, the playbook sauce. Here's the secret sauce that no one has allowed to know unless we've invested in them. And as it turns out, they don't know either. And what works for one of their companies doesn't work at all for another one of their companies. Now, to be clear, they're brilliant operators. They're great investors, they've got a lot of good advice,

Brett:

Amazing track record.

Kevin:

There is no playbook, there are principles and there are things that change over time. But ultimately it was a little bit of that. You know what, I might as well just give this a shot. And it was sometime around the early days of starting, I don't know if that's when Jim Carey gave this speech or someone sent me an older kind of commencement speech and he talked about his father and lessons he learned from his father, and he said, I just realized I could fail at doing something I don't love. Or I could try to do something I love and it could work out great, but you can fail at anything. And so it might as well be something that you are deeply passionate about. We'll talk more about it. But I spent about a year sort of tinkering, launched in July of 2012. I expected we would like the world on fire with our performance fabric dress shirt, and that didn't even sort of happen. We actually had to go build a brand and build a team and build a business. But it's been an amazing ride and we've done hundreds of millions of dollars in sales since I started the business and gotten to do some incredible things and work with really great

Brett:

People. Yeah, it's so good man. And I know exactly that Jim Carey speech you're talking about. And it is so good because we sometimes are, human nature is like, lemme just go the safe route. Lemme just do the safe pick the safe venture, the safe hire, the safe whatever, and really the quote safe way, you can fail at doing that as well. So do something that you have conviction in passionate about fail doing something you love. So yeah, really, really great advice. Okay, so 2012, you launched the business and so you finally this dream that had been banging around in your head for quite a while. You put it into practice, you make your shirts. When did you realize, okay, I'm onto something. This isn't just an idea that I liked and a product that I wanted scratching my own itch type of thing, but I think there's a real market here.

Kevin:

There were a couple moments as I reflect on that question. Certainly when we launched and we had a launch party and some people came and said, oh, this is so cool. That was a kind of real crystallizing moment for me. I had the idea for years, the first aha moment for me from idea to, okay, this is a reality, is when I wore our first prototype home from a seamstress who had made the prototype for me and my wife didn't realize I wasn't wearing my normal button down white shirt and suit and tie. And that was like, okay, if she doesn't know and I've been talking to her about this since I met her, then there's an opportunity here. Then we launched the first we launched, we had a launch party that was great. I would say then there was the kind of valley of doubt for a while because it was hard.

And I mean it was literally, I poured my life savings into buying the first batch of product and that was the only way I could do it. I didn't pay myself for a couple years and there was a moment, and honestly now I can't remember when it was maybe 18 months, 24 months in something around that timeframe where I realized, hey, I don't remember the last time we had a day of zero sales because I had Shopify's app on my phone and I would see every sale that came in for years. I packed and packed and shipped every shirt from the house. And when I was traveling for work, my wife would fill in and pack and ship for me. But it was a moment where I just realized that I hadn't seen a zero day in a while. It wasn't like, oh, we haven't done it in a week or 10 days or a month.

I wasn't keeping track. I just remembered that that was the case and that really was the first, okay, now we're rolling. And I remember talking with some former colleagues who had expressed an interest in investing and I showed them kind of how we were doing and not disrespectfully, but they were basically like, this isn't something that I can invest in. You don't have any form of traction really. I like the idea. I think it's cool, but there's nothing I can invest in. It doesn't feel like a real business yet from an outside perspective. I mean obviously I disagree, but I saw him maybe two years later and this, he's a great guy and he's a great mentor and a friend, but I saw him about two years later and he's like, how's it going? And I told him and he basically was like, well, shit, that's a real business.

Why didn't you call me back? I'm like, I forgot. But there were moments like that where all of a sudden now we're rolling and I'm not. One of the things Mark Andreessen talks about is with product market fit and product market, that's a little different in apparel, but this idea of you move from pushing a boulder uphill to the boulder is going downhill really, really, really fast. It doesn't mean there aren't a thousand problems a day or things that could put you out of business at any moment. Totally. But in the 2015 timeframe, we sponsored Ferris's podcast, we got an endorsement deal with JJ Watt. We were well over, I think 200 retail stores carrying a product. All of a sudden it was like we couldn't miss, which took off, came with its own set of problems because we didn't think through some of the implications of our decisions. But those were some key turning points where it no longer felt like, I'm just trying to make sure that we sell enough shirts to live another day. Now we're trying to figure out how do we build a business, how do we scale? How do we build out some of the key capabilities that we'll need to grow?

Brett:

How do we stay healthy and grow in a way that the whole thing doesn't implode, which is a real issue when you're growing at the scale and the speed that you guys grew up. Now, I know you don't disclose publicly revenue and things like that, but for those that don't know, and I know a lot of people are geeking out listening to this because they've followed you like I have, but give us some idea of the size of Misam in Main. Yeah, so

Kevin:

2012 we launched in July of 2012. We did something like $50,000 in revenue, and then in 2013, something like 250,000. In 2014 we officially crossed a million dollars in revenue, and that was when things really started to bend upwards. As I said, 2015, we sponsored Ferris's podcast, we did the deal with jj. It was like now we're rolling. And we were growing at multi hundred percent a year for many years. And since I started the company, we've done many hundreds of millions of dollars in revenue. And today we're in something like five to 600 maybe more points of retail distribution. We have 10 of our own stores and a vast majority of our business is direct to consumer through our stores and our website.

Brett:

It's so awesome, man, and kudos to you and you guys really started this trend because there's a lot of other brands that sell shirts that are similar, but really, you guys were the first, right?

Kevin:

Yeah. It's funny. We launched in July of 2012 and right around the same time that we launched it, no one had ever made a performance fabric dress shirt. And at almost the same time that we launched, there was another company that started and was doing some of the same things that we were, but then we were sort of alone for the next four or so years, and we were laughed out of every trade show multiple times by the same vendors who told us, no one will ever wear this product. And at first it was a little disheartening and you just as an entrepreneur, you just sort of have to shake it off. But then all of a sudden when they would say, well, no one will ever wear this. I'd be like, that's fine. We got 50 other stores that are carrying our product and we've sold over a million dollars worth of it. And they kind of look at you sideways. Clearly

Brett:

Somebody's wearing these

Kevin:

Things, someone's wearing it. And that comes to know your customer, not a fashion company. And for people who are apparel snobs who need to get perfectly bespoke suits and perfectly bespoke shirts where everything is exactly to the right millimeter, sure, well, we're not competing with that. We're competing with everything else where guys are going in and they need a shirt that makes 'em look great and feel great. And existing options just weren't cutting it. And now today, virtually every men's apparel company, and now lots of women's are doing some or all performance, everything that they do. And one of the more memorable moments, we got a great article in the New York Times in, I think it was 2014, may have been 13, and the writer doing his due diligence reached out to Brooks Brothers and said, well, what do you think about this? And one of the guys was, I mean, professional and respectful, but basically was like, we are a natural fiber house and sort of let the kids be kids, other kids will go do other stuff.

And it wasn't rude, but it was very direct. That's not what we do. And at first it was a little unnerving for me at the time, especially being a first time entrepreneur, I was a little nervous like, oh no, now they're going to be onto us. But then I realized I want everyone onto us. I want everyone to know about us, and if they don't know about us, I'm doing something wrong. And that sort of stuck with me for a long time. And then when I saw other businesses start to copy what we were doing, it really never bothered me at all. In talking with some investors, they have some investors and I'll overgeneralize here would say things like, well, a man has 15 dress shirts in his closet. Which one are you replacing? Which one is he taking out to put yours in? It's like, none guys don't

Brett:

Have

Kevin:

One in one. It's kind of

Brett:

A silly question,

Kevin:

Honestly, mentality on their shirts. Now they may stop buying something else, but unless you are Tiger Woods and even he left Nike, unless you're Tiger Woods, you don't have one brand in your closet, most guys are going to have five to 15 brands in their closet. And so there was an opportunity for us. We established a beachhead with our dress shirt, and then we were able to expand into different verticals.

Brett:

Yeah, so cool. So I want to talk a little bit about that expansion of the verticals in a minute, but let's talk about the Tim Ferris podcast and other inflection points. So that's just a frame of reference for me where I heard about you and I heard about him talking about how he could wad the shirt up, throw it in a bag, sweat in it, wear it three days in a row is all good. So I was like, wow, this is this magical shirt here. What was that process like? How did you get onto the podcast? What did that do for you? And talk about how that compares to maybe other inflection points.

Kevin:

Well, Tim, we worked with some pro athletes in 2014, and we started selling into pro athlete locker rooms, which gave us an opportunity to do the endorsement deal with jj. That was 14 in 15. We did the endorsement deal with jj. That was the first big, now we're being recognized.

The explosion point though, all of a sudden we doubled overnight and never looked back from a daily sales perspective. And we had huge pops was the Tim Ferriss podcast I remember pulled into, I used to go to Gold's Gym in uptown in Dallas, and I pulled into the parking lot and I saw on Twitter, he posted, I'm accepting sponsors for my podcast in q1. I've got one slot left, lemme know if you're interested. And so on. My phone just tapped in a whole bunch of details about Ms. Main said We would love to sponsor you. And I referenced the fact that Kelly Star, who is also known as the supple leopard or mobility wad, Kelly loves our product and Kelly and Tim are friends. So I mentioned Kelly and I got a note back from Tim, I don't know, within a few days, and basically said, Hey, this seems really interesting.

Send me your product. I'd love to check it out. I need to believe in it to endorse it. And a couple days later, he called me. And if you followed Tim, that in and of itself is a unique experience. He is very much like Async and manage my time. And I'll never forget he called me because he said, I want to be certain that the podcast was expensive. Now, probably, I don't even know, tripled quintupled in price since then, but at the time it was incredibly big bet for us. I'm sorry. And he said, I want to know that this isn't make or break money for you. I know you're a small startup and I believe I could do really good things for you, but if this is make or break for you, I don't want to do this.

Brett:

Wow.

Kevin:

And

Brett:

That's impressive, man. That's just some real integrity.

Kevin:

It does. And I think it is who Tim is. It helps that there was a personal connection he did. And he told me I called Kelly and I made sure that this what you said was true. And Kelly gave us a ringing endorsement, but I said, no, no, it's not. We're good. And I wasn't lying, but it was pretty close to being a makeup.

Brett:

It was a big bet. It was a big bet.

Kevin:

It was a huge bet, and it wouldn't have sunk us as a business, but it's more like, I don't know how many more swings or at bets I could have even taken. Yeah, yeah. So I could go through all the details, but I mean basically the podcast, the first one dropped on a Tuesday and by I think Wednesday or Thursday, we were a net positive ROI across all three podcasts within 48 hours or 24 hours or something like that of the first podcast advertising advertisement. And it was also absolute chaos for us as a business because our systems were not prepared for that level of influx we did.

Brett:

He talks about the kiss of death. If it goes too well, you could put someone out of business because like the Oprah Effect or whatever, you may not be able to handle this type of volume, and

Kevin:

We could not. It was a nightmare. But you do the best you can. You make up to customers that you let down, people would order things, and our inventory systems weren't correct. So we'd be out of stock. We just took care of customers the best we could. We were transparent about it. But one of the outcomes of that experience was I had read an article called the Tim Ferris Effect, and it was about an author who Tim mentioned his book and the author could see his Kindle, and he had a bunch of other big press hits and big moments that didn't move the needle on his Kindle ring. And then Tim mentioned it and he went from 1000 to 192. And so I thought from a thank you to Tim and a reality of how do I tell this story of what we're building at Visitor Main?

I'm going to open the book on what this experience was like. So I wrote a media article called the Tim Ferriss Effect podcast edition. And still to this day, Tim has my article linked in his webpage in his Tim blog about what it's like to work with him. Because while I didn't give real numbers, I gave total percentages like 400% increase in ROI. And it was a thank you to Tim, and it was a great opportunity for us to tell our story, and it has resulted in this long tail of awareness for many, many years. And to put a full circle bow on this, I hadn't talked to Tim in a couple of years, and when I launched my new business harbor, I shot him a text and I texted almost everyone I knew and said, I launch a new business. Will you buy a waitlist spot?

Will you tweet about us? Will you share it with your friends? I wasn't going to do that to Tim. And so all I said was, Hey, Tim, you changed my life with Ms and me. I just wanted to let you know I launched a new business. I'm really grateful for your partnership. By the way, I don't even know if this is still your phone number. And we ended up texting back and forth, and the next day we got on a phone call and he said, I want to invest in what you're building. And so Tim is actually a very significant angel investor in Harbor. That's amazing. Which is a really cool full circle moment and a testament to the power of good relationships.

Brett:

It's so cool, man. And it's so cool that you did that the right way, first of all, for you to recognize on your way to the gym, you recognize opportunity, you acted on it right? Then you direct messaged him, you had the connection with Kevin and you made it all, or I'm sorry, Kelly, Kelly. And it made it all work. And then that just led to this long time effect on the business and a friendship and really powerful, now very influential investor. And so kudos to you for doing that. That's awesome. I want to dig in a little bit, and before we talk Harbor, which I want to get to in just a second, any good lessons from failure and I think the way Tim sometimes talks about in the podcast, any favorite failures along the way, lessons that you're taking into your next venture?

Kevin:

Yeah, I would say not any specific failure, but plenty of failures around the product side. For a while, we just did so well at selling out of most of what we made that we weren't very good at forecasting, inventory planning, managing merchandising. What does it look like when you end up with 250 of these units at the end of the season? Well, we didn't really have that problem. And so we just were constantly underselling under buying what we should and not really sophisticated in merchandising. I had an interview with a prospective board member once Catterton invested, and she said, tell me about your merchandising team. And I said, well, I will when you tell me what merchandising is. And she said, at the end of our interview, she goes, I hope you picked me. I understand it, but I'm not the right fit for this.

And she was awesome, but she said, promise me you will go hire a merchandiser tomorrow. And the reality was, the way I described, it's we were tripping forward so fast downhill that we never fell on our face. We tripped a lot, but we just kept going. And our mistakes were, yes, our mistakes were always salvageable. And that's fine up until a certain point, right? When you have a hundred thousand dollars purchase order and you screw it up, you can survive that when you have a $10 million purchase order, you cannot survive if you mess that up because the ability to fill in underneath that gap is almost impossible. And so I think what I would say from a failure perspective in the lesson learned is I couldn't necessarily hire experts along the way. At MIS and Main, we had very little funding forever, and most of the industry experts I talked to told us why our idea wouldn't work and why we'd never be successful.

So I just sort of like, I'm not going to hire anybody from the industry then. And all of us outsiders changed the industry ourselves. Now that was misguided. I could have found one or two industry insiders who were excited about what we were doing and could have helped us build a more robust engine. And so as I carried that forward into Harbor, and also importantly, I have a track record with Mizzen and Main. So I've been able to get investment to Build Harbor, very expensive to build a consumer electronics business. And we have telehealth and software services. I have brought in some incredible partners. My co-founder is a chief product officer. We've got an incredible head of hardware, really sophisticated and technical people that are required to do something as sophisticated as hardware. And so surviving each of those crazy mistakes would be a, I'll say, a favorite mistake.

And then I think the other thing is the first time around favorite mistake was learning what it meant to hire, grow, and manage, including managing out a team. I made so many mistakes in that hiring process. When I started Mizzen in Main, I'd never even interviewed someone, let alone hired them or been a manager. And so learning a lot about what it means to be really transparent and direct with team members along the way. And there are some people who are incredible at another company and not the right fit for your company or your style or that role. And you're doing them a disservice to keep them in that role or even in the company. And letting someone go is always difficult. Sometimes people make it easier for you, but it's always difficult. And for all of the really great people that I worked with that we had to let go because it wasn't the right fit or performance wasn't there, I feel like I got better over time about coaching and feedback and all of that.

And even when it was a hard exit within three to six months afterwards, I saw where they landed and they were a happier person and their life was better. It was a better fit. And it doesn't mean it's easier to let someone go, but it gave me more as I moved through that. And as I think about building Harbor that you treat people with respect, you set them up for success, you give them clear, concise, consistent feedback, and if it doesn't work out and you've done everything that you are supposed to do, well, then they will be happier and more successful somewhere else.

Brett:

100%. I fully agree with that. And it's one of those things where we think we're being kind. We think we're doing someone a service if we either A, don't give direct feedback or B, just keep someone longer than we should. But really having that direct feedback is what people need, even if they don't love it in the beginning. And then you're promoting them to their next opportunity, which is a great way to put it. As long as you handle that with honor and dignity, man, it sucks. It sucks for both parties. I've had to do it a number of times, but I would agree with you when it's not the right spot, then they're going to be happier eventually somewhere else. A couple of books that they just come to mind that I really love that tie you into what you just said, I love the book Who, not How, and I cannot remember the author, but often the problem we need to solve and the fix we need in our business, it's a who not as much a how.

And I also love candid conversation, or I mean, I'm sorry, that's a good one too, but Radical Candor. Thank you Kim Scott. So good. And I love her quote. It's not mean, it's clear. And so just being very clear with feedback, I want it. I think top performers want it as well. And then quick side one is Five Dysfunctions of A Team by Patrick Lin, a great one, just like how to build and lead a team. And dude, it's hard. Most of your natural instincts are not right when it comes to attracting and leading teams. And it's a skill you got to develop, and really you don't get it until you do it. And so I'm right there with you. I've had many mistakes in building and growing teams, but thankfully, hopefully I've gotten better.

Kevin:

The thing that I have to remind myself when I don't want to give feedback is me not giving them feedback that is a reflection on me, not them. I'm uncomfortable. I don't want to tell someone something that they may not want to hear, but if they don't want to hear it and they don't respond, well, that tells you everything that you need to know because great performers will say, give me more so I can make better decisions, and I don't want to find out later that you wouldn't tell me something along the way. And then if people can't handle the feedback, then they're not a good fit for your culture, and that's okay. It's not a bad thing to say you're not a good fit for this company because there are a lot of other companies, and you deserve to wake up every day and feel like this is where I should be. And yeah,

Brett:

Hundred

Kevin:

Percent doesn't mean that that always goes smoothly.

Brett:

So true. So let's pivot. Let's talk new venture. Let's talk harbor a little bit. And so explain to us what this is, and again, what was the inspiration behind this?

Kevin:

Yes, I will say one thing as you were talking about books, the one that I will, I think it's my most gifted book from a business perspective, is Ben Horowitz. The Hard Thing About the Hard Things, and

Brett:

I've never read that one. I will absolutely get that.

Kevin:

The first time I read it, I felt like I had a new sense of calm and that I wasn't crazy for how unbelievably difficult building an organization really is. Ben is an incredible investor, a great human, and the book is every person should read it, whether you are a CE manager or an entry level team member, it's just absolutely fantastic. So the hard

Brett:

Thing about hard things by Ben

Kevin:

Horowitz, yes, hard thing about the hard things. It's somewhere on the left side of my shell. It's right there in the middle. Hard thing about the hard things next to George Marshall. Nice. So Harbor. Yeah. Where did this come from? So in the journey of building Mission and Main, my wife and I actually worked together for many years. She came on board full-time in 2014, and we had our first child, Jack in 2016 actually signed the term sheet with El Catterton in the delivery room. It was a momentous time,

Brett:

True like an entrepreneur. I was answering emails when my wife was in labor one time and she was not happy about that.

Kevin:

That is the correct feeling for that moment, yes. But when my son was born, I did a whole bunch of research and it seemed like the most innovative product on the market was a company called Manic. Nanit is a wifi camera, like a Nest or a ring camera wise, any of the just basic wifi cameras that runs an app on your phone, and they market it as a baby monitor. Importantly, it is not a baby monitor. It is a wifi camera that runs an app on your phone. And so how do you monitor your baby? You have to have your phone next to you all the time, and you need to be running that app in the background. But I learned that apps crash all the time. And if an app crashes, it can't warn you, I crashed because the app crashed. If you forget to plug your phone in at night or you plug your phone into a dead outlet or the cord doesn't work, rarely do we check that our phone is charging if we've plugged it in a routine that we're used to.

If your phone dies, there's no way for you to be alerted that you're no longer monitoring your kit. And I learned this the hard way because I woke up one morning, my son was a couple months old, and the app had crashed, and I rolled over and I realized there's no audio coming out of my phone. I don't want to sleep next to my phone. It's a problem for basically all of us. We shouldn't sleep next to our phone, but that's what I was doing. And so once that crashed, I did a little more research and learned you can't rely on a wifi based camera with an app on your phone. So I went out and bought an old school Motorola camera and an old school Motorola Monitor. So we had a dedicated, albeit very junky device that would tell us if we were no longer monitoring our kid, but we also kept a wifi camera because as my wife went back to work and we have babysitter and nanny's in the house, we want to be able to check in and you want some sort of record, absolutely anything got wrong.

Seven years later, no one has solved this problem to have the best of both worlds, a camera and a monitor that is a dedicated device that will alert you if it's disconnected or if it fails or any of those things go wrong. And I have wanted to build this since 2017 when it happened to us. And so what we built is a, I've got one of the monitors here. It's a camera and a dedicated 10 inch tablet that you can watch up to four different kids at the time, the camera and the tablet work without internet. They connect directly to each other, so you can use it if your internet goes down, if your wifi goes down, you can use it at a hotel or you're traveling somewhere that doesn't have wifi. Both devices also connect to the cloud, so you get the best of both worlds.

We built the device. Charlie, my co-founder, awesome guy, great dad, he's a dad of two young kids. We built the device that we'd wish we'd had when our kids were that age. We also did things that really prioritize security. And so the camera itself has a memory chip in the device. So all of your memory and all of your footage is on your device, and you can choose to save it down to your iPhone. Cute moment happens, there's something you want to say. You can save it down to your phone and manage it however you want to, but we don't have access to your memories and your feed. And that is a really important distinction because all the other wifi based systems are running through someone else's cloud. And if you are at home, your feed does not leave your home. Now, if you're out of the house and you check in on our Harbor app, of course it leaves the house going to you, but that's end to end encrypted and we cannot see it.

We cannot access it. And that is a fundamental distinction. We also are building both products, the camera and the tablet outside of China. And so from a security and a firmware perspective, we've heard a lot of concerns from parents about backdoor access from some of these wifi cameras that knows where they're built or where the clouds are, or if there's some sort of glitch in the firmware. So we feel we're really excited about that. And then the second kind of unlock, and the big moment for us is our camera and our tablet become the foundation for a remote night nanny platform. And the idea is to democratize access to sleep training. In Dallas, where I'm from an in-home night nanny costs three to 400 plus dollars a night in a city like New York or la, it could be 700 or more if you can even find someone.

And it's also a total crapshoot in terms of quality and reliability. It's an unlicensed, unregulated uncertified position. And I'm not suggesting we should be regulating night nannies, but it's just the reality that it's the wild west. You don't necessarily know what you're going to get. We work with some night nannies. They're incredible. We've worked with advisors who built night nanny companies, amazing people that have helped thousands of families, but most people can't afford that. And so what we are offering is for $20 a night, you get all night coverage where you remotely have a professional night nurse or night nanny, control the volume on your monitor and only wake you up when it's time for you to go in. So broad strokes, what does that look like? If you have a healthy four month old, it's about 10 minutes that you can let them fuss or cry before you go in, as long as nothing is wrong.

So they start to fuss or cry. Our team looks in remotely and says Nothing is wrong following safe sleep protocols, and they're not stuck, they're not flipped over, and you sort of let 'em fuss and cry for a little bit. 2, 3, 4 minutes goes by and they stop. Well, you won't wake up, but if that 10 minute threshold is reached then and only then we'll turn that volume on and send you through a reminder, Hey, your last feeding was at 11:00 PM We're trying to wait until 1:00 AM. Here's a reminder of how you do it. And so you bring that all night eyes on expertise and coaching and guidance remote. And so therefore, we can bring the cost down to like 95% lower than a traditional N nurse. So we've done this with about a dozen families. The results have been life-changing for the families that we've worked with. We launched our wait list in February, and we'll begin shipping the first a hundred units of our product this spring and begin shipping the rest of the products once we launched our presale late summer. So it's really

Brett:

Exciting. It's amazing, man. It sounds like the wait list has really taken off, so you get a lot of interest. Talk to me a little bit about, so obviously the focus has all been, I'm assuming, on the technology and the plan, and you're solving all the problems that parents of infants have. What's kind of the plan for how are you going to distribute this and promote it, and how are you going to get people interested? And maybe it's just taken off grassroots so far?

Kevin:

So we're doing a couple things. We did launch a wait list. Wait list is filling up, which is exciting. We'll convert that over to presale here in the middle of May is our current target. We'll be finalizing that shortly year one, it'll be almost all direct to consumer. We're in talks with a couple of great baby boutiques where we would have some sort of relationship with them that we're working through what that would look like. We have started from the launch of our website, building out really great clear cut value add content for parents. So if you have a question about sleep training and feeding and all the things that parents have in those first few months and years, we want to have the best answer available to you with unequivocal clear guidance. There's a lot of content out there, and a lot of it basically tells parents, you're the parent, whatever you think is best is best for the kid because they don't want to offend a parent with the idea that whatever that parent wants to do may be wrong.

Now, ultimately, parents are responsible for what should I do? What do I think is best for my child? You're the parent. But there are some things that are really just not up for dispute. Like kids need a significant amount of sleep for the first year of their life, and that will go down over time. Kids crave consistent structure and routine. And so every night before you put your kid to bed, you should try to do the same type of routine. Now, whether that's at six 30 or eight 30 because of your work schedule or whatever else is going on, yeah, you got to adapt, you got to make it work. But the idea that, well, I'll just put my kid down whenever they're tired. Well, kid doesn't know when they're tired. That's your job as a parent. And a lot of these websites will not offer that level of clarity.

Now, if you want to put your kid down whenever you want to put 'em down, more power to you. That's great. But parents seeking guidance and information and Hey, what are some of the best things I can do? Deserve to know science-based answers. So a lot of content to serve parents and create value. And then we've begun working with some great mom influencers. It's 2024 mom influencers carry a lot of weight. Super smart, super smart, no doubt. We're beginning to send some mom influencers product to try and share their experience. And it's cool. We've done about a dozen remote night nanny tests, and we're now working with some of these influencers to help sleep, train their kids remotely and have them share the experience of how much better it was to get that sleep. And then the last thing is kind of, I'll say a myriad of additional tactics.

Like we've partnered with a hospital to give a month of sleep coaching for free to all their parents who are going through and delivering at their hospital. We're looking to partner with corporations to offer it as a perk to their employees. We are forming partnerships with some PTAs and some mom groups. We've also brought in a number of obs pediatricians, lactation consultants to be advisors to the company. We've created the Harbor Council to provide guidance and insight where they can also write and share their perspective that they may not be able to share in their clinical setting. So all of those, I mean, it's early days. We officially launched our website just a couple months ago, and we began taking pre-sales in February. So excuse me, wait list in February. So early days, and excited to see, I mean, when I launched Mizzen and Main, Instagram was barely a thing. And now it's one of the most critical drivers of most consumer brands. So you got to adapt and find the right way to get the message out

Brett:

There. I love it, man. And you're scrapping, you're hustling. You obviously got great connections now because of your past success. But looking at all those ways that you're partnering with the people, the entities, the resources that have the ear of your customers, obs and hospitals and PTA groups, I think you're about to do a Facebook Live. As soon as we wrap up here, which I'm watching the clock, I got to let you go here just saying, doing a Facebook Live to a moms group. You're out there sharing the word, and that's what it's going to take. And yeah, man, I'm really excited, excited for you. Again, a little bummed that this wasn't around for at least one of the eight Curry kids. But yeah, really excited to watch this grow. So if people are watching and thinking, man, I'd like to get on that wait list, or I need to share this with my kid or family member, how can they check out? So we

Kevin:

Are online@harbor.co, H-A-R-B-O r.co. We're on all the socials at Harbor Sleep. I tweet at Kevin s lavell, and you can find me on LinkedIn. I've been posting some of the journey along the way. So those would be the best places to find us. And I think the other thing I'll say, just to put a bow on how we're launching and going about this, our focus, we are mission is happier parents and healthier families, one restful night at a time. And we want to lower the stress and anxiety of parenting. It's already an unbelievably difficult experience, the most stressful life altering thing that almost anyone will go through in their life. And so much of what's out there increases the stress, the pressure, the anxiety, the shaming, there's guilt, there's all of that. We want to try and lower that. And one of the ways that we're doing that is telling the truth about these baby biometric devices that are now prolific.

Some of these companies, some of the key players have created devices that are supposed to track your baby's heart rate, their respiratory rate, their blood oxs, all of these different things. Unfortunately, none of them are approved by the FDA and the American Academy of Pediatrics advises against using these devices because they're not reliable. They haven't undergone independent clinical tests. And that's why at the bottom of their websites, usually somewhat hard to find. There are huge disclaimers about do not rely on these devices to prevent, cure, diagnose any diseases. They cannot be relied upon for sids. They cannot be relied upon for R sv, but yet they market, Hey, as a parent, don't you want the ultimate peace of mind? Are you worried about your child's breathing? And that's just, it's shameful marketing, and it is not the,

Brett:

They're giving false hope, false sense of security,

Kevin:

Right? Absolutely. And this is part of why the American Academy of Pediatrics advises against it, because what you need to do every single night as a parent is be vigilant about safe sleep. Is the mattress the way it should be? Is it at the right height? Is it a tight fitting crib sheet? Are they in the right type of pajamas? Nothing else in the crib. That is how you protect your child in a physical sense. If you follow that, you've done everything that you can do and you've done everything that you should do. But when you strap a wearable to a kid, not only does it increase parental anxiety, it lowers the sense of vigilance that parents should have about what they should do every single night. So I have found this has been one of the things that people have been most responsive to in our early days of messaging. They're excited about our new product, but I just got invited on Cheddar News up at the New York Stock Exchange earlier this week to talk about why we are not going down that road. And it is a very different approach to baby marketing and parent marketing that we are proud to stand behind. We're not going to use the fear-based marketing. And I just want to make it easier to be a parent. I know what it's like. It's the most wonderful and stressful thing that any of us can experience. So let's make it a little bit

Brett:

Easier. I love it, man. There's this safety aspect you built in the privacy piece, which is becoming more and more necessary. We're all aware of, man, we don't really have any privacy. So making your product very secure. And then, yeah, there's just the good sleep portion of this, right? Because my wife and I always said, man, if we can get a good night's sleep, we can probably handle anything. But if you don't get sleep, man, there's only so much you can take. And so kudos to you, man. Really excited to watch how Harbor takes off. I'll be watching and cheering from the sidelines. So with that, Kevin, thanks so much, man. This was a blast. Appreciate the opportunity, Brett. Absolutely. And as always, thank you for tuning in. We'd love to hear from you. If you've not left us a review on iTunes, please do that. Or if you'd love this episode, which I'm sure you did, then share it with someone who needs to hear the harbor story, the mis and main story. And with that, until next time, thank you for listening. Alright, my man. Hey, that was

Kevin:

Awesome. Thank you.

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In this episode of the eCommerce Evolution Podcast, Brett Curry sits down with Emmett Kilduff, co-founder and CEO of the Fortia Group, to discuss the current M&A climate for eCommerce brands and how to prepare your business for a successful exit. Emmett shares his insights from 25 years of experience in the M&A space, offering valuable advice for entrepreneurs looking to maximize their brand's value.

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Key topics and lessons discussed:

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- The current M&A climate for e-commerce brands and the impact of the COVID-19 pandemic on valuations

- Understanding the three main types of buyers (strategics, private equity, and aggregators) and tailoring your exit strategy accordingly

- The importance of focusing on bottom-line EBITDA margins and subscription-based revenue to increase your brand's attractiveness to potential buyers

- Common red flags and discount factors that can negatively impact your brand's valuation, such as poor manufacturing facility scores and supply chain issues

- The value of seeking mentorship and advice from experienced professionals who have successfully navigated the M&A process in your industry

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Tune in to learn how you can prepare your e-commerce brand for a successful exit and maximize its value in the current M&A market.

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Chapters:

(00:00) Introduction
(04:17) The Impact of COVID-19 on M&A
(08:19) The Current Climate of M&A
(10:00) Current Valuations and Factors of a Healthy eCommerce Business
(29:45) Common Red Flags
(31:48) The Value of Subscription Revenue
(36:59) Conclusion

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Show Notes:

• Emmett Kilduff (LinkedIn)
• The Fortia Group 
• Goldman Sachs 2024 M&A Outlook Report
• Grips Intelligences
• Monday.com 

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

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‍

Other episodes you might enjoy: 

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• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

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• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

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• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

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• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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‍

Transcript:

Emmett:

It's quite fluid, right? You want to be selling your business when the category is going well and to get the highest price. So timing is everything in business.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we're talking about m and a, something that I know every E-Commerce brand is either actively thinking about or it's in the back of your mind or it's your end game. And so we're going to be talking with a true expert in this space, especially DTC brands. And we're going to be talking about the current economic climate, where we've been on kind of an m and a rollercoaster over the last several years, and then what you should be doing to prepare and to get ready to maximize your outcomes, how to prep, how to think about this, how to be ready for anything. And so my guest today is Emmett Kilduff. He's the co-founder and CEO of the Fortia Group. I got to hear Emmett on an e-commerce fuel presentation. So tip the hat to Andrew Derian for Ka quasi making this introduction with that Emmett, welcome to the show, man. And how's it going?

Emmett:

Great to be here. Thanks for having me, Brett. It is going well. The light is at the end of the tunnel in terms of coming out of the doldrums of a tough two years for MA and e-commerce.

Brett:

Music to my ears, man. Music to my ears. So yeah, I heard your talk now a couple months ago. I loved it. It's not just your brilliant Irish accent, which I believe you could talk about anything and there'd be a certain number of people that would just listen to hear you talk, so that works in your favor, but that's not why I loved your presentation. Love the insight, love the perspective, and really it was helpful. It was helpful just to kind of frame how should we be thinking about m and a for e-commerce brands. So excited to dive in. Yeah,

Emmett:

Likewise. I can't operate an e-commerce brand. I wouldn't know what to do, but I do know m and a, having been working on it for 25 years and really enjoy working with interesting e-commerce entrepreneurs.

Brett:

Yeah, yeah. Super cool. So we're going to kind take this path of, hey, let's talk about where we've been and what we've experienced. I think your perspective on that will shed some light and set the stage a little bit. We'd love to talk a little bit about the current economic climate as well. What are we expecting? You talked about the light at the end of the tunnel. I think that's what everybody's feeling. And then there's always a few things it feels like, well, okay, is the rug just going to be pulled out from under us again or is there really a light at the end of the tunnel? So we'll talk about that and then we'll get into, yeah, how do you prep? How do you get ready? How do you make the most of your m and a activity? And so let's dive in. But before we do that, just a quick background. So you said 25 years in m and a. Walk us through that, just kind of the 32nd version, and who is the Fortia group?

Emmett:

So actually when I finished my degree in business and law, I selected a master's in e-commerce. This is way back in 1999. It was the first master's of its kind nearly globally. So I've always had an interest in e-commerce. At the time, it was more about the.com boom and then ultimate bust, and I wanted to get a piece of that deal flow. So I joined an investment bank called Credit Suisse, who had a banker called Frank Coron, a legend in the tech world. He was doing all the tech IPOs at the time, and so I joined that firm to get involved in the m and a and corporate finance deals. The Foria group then is, I saw a gap in the market a few years ago, Brett, to bring a Wall Street level of service and approach to smaller e-commerce. We're not a broker, we're not a listing website. We're trying to genuinely bring Wall Street. I worked at Morgan Stanley, one of the best firms in the world, best m and a firms in the world alongside Goldman Sachs and JP Morgan, and that's what we're trying to bring to your listeners.

Brett:

Yeah, I love it. That's awesome. So let's do this, Simon. Let's kind of walk through where have we been through this Covid madness, kind of lay that, not that we want to relive all the glory and the pain and suffering, but where have we kind of been on an m and a climate or m and a trajectory that's got us to where we're now?

Emmett:

Yeah, so I guess during Covid m and a was relatively easy. I remember one of the deals we had, we got letters of intent from several parties within five business days. In retrospect, that's just crazy. It's madness. Acquirers should not be moving that quickly, and entrepreneurs should not be looking for offers within 30 days. If you spent five years building a business, why try and rush an offer within 25 business days or 30 business days? One should be taking their time to get the right offer. So it was crazy. I think the peak was December 21. That's when some FBA businesses were going for seven x, which is crazy Amazon and DTC businesses, but lots of them are going for high teens. I don't think we'll get back to those levels. What's happened in the interim is global m and a across all sectors, one to two years ago was at a seven or eight year low and all these things, common cycles is the third cycle I've seen, and thankfully there's a great chart by Goldman Sachs, which shows that m and a has never declined for more than two years in a row.

It's never hit three years.

Brett:

Interesting.

Emmett:

So we've had our two years, we've had 22 and 23, we've had the declines in m and a volume. It should

Brett:

Be the bounce back year, then 2024

Emmett:

Based on prior data and with interest rates coming down, that should be the key catalyst to fuel cheaper debt, which is obviously key to drive m and a.

Brett:

And it is interesting. I'm actually, I'm looking at that chart now because sent it to me, you kind of see this trajectory of a few years, there's a peak, then it drops off, but a couple years and then it builds back up again. It's quite a pattern and interesting to be there. I really like that perspective that hey, we shouldn't expect those valuations to be what they once were. So if you're holding out for that, Hey, I've got an FBA business, I want to be at the seven to eight x multiple, or I've got a D two C brand that's doing okay and I should be at a 13 or 15 X multiple, that's probably not going to happen, right? There were so many unnatural things going on during the covid time period, the runaway valuation of homes. I remember we sold our used four runner. It was like three years old, we're just going to upgrade or whatever. We made money. The used car market was so crazy. I pocketed quite a bit of cash by selling a used car. When is a used car ever in investment? There's just so many unnatural things there, and I think we saw that with valuations as well.

Emmett:

And I think in this immediate six to 12 months post the correction, a lot of entrepreneurs didn't want to hear any of that. They still thought that they could get those high multiples and well, unless you were living under a rock, you eventually had to readjust your expectations. If you read the Wall Street Journal or the press, the markets were tough for acquirers all around the world. So I think today most entrepreneurs have realigned their expectations. There are still plenty who are waiting for 25 to do a deal, and we love working with entrepreneurs who don't want to exit necessarily today. We like to help prepare over a long period of time because when interest rates do come down, you would expect valuations will only go one way. They will not go back to 2021 levels, but if anything, they will increase.

Brett:

Totally makes sense. It's almost taking two years to reset some expectations. But I think most e-commerce brands, most agencies, most people in the space that I know, we've got our head in reality a little bit more right now in some ways, painfully. So. Let's talk a little bit about then, what are you seeing with the current m and a climate? Or maybe we just step back and say, Hey, what are we seeing in the economy in general right now, and what's leading you to say we're seeing the light at the end of the tunnel?

Emmett:

Yeah. Well, I think the m and a chart has proven that in history there are cycles and we should be towards the end of this cycle. So that's great context in terms of the here and now. Unfortunately, light head tunnel could have been sooner. We thought interest rates were going to decline in Q2, it's more likely to be Q3 or summertime due to inflationary figures in the states for the Fed and around the world. But the interest rates do look like they'll come down over the summertime, which is the ultimate catalyst to drive markets. So

Brett:

Cheaper debt just fuels buying.

Emmett:

Yes, and it increases the confidence at board level for corporates to do more deals for private equity to do more deals. So yeah, if you correlate interest rates versus m and a volumes, there's a relationship. So we're getting close, and if we were to talk again post Labor day, it'd be really interesting to look back at the impact the lowering interest rates is having, and I think we'll be set up for a good H two if not good fall.

Brett:

Yeah. So what are you seeing now then? So you're helping e-commerce brands right now, and you have throughout the peak and valley of Covid and post Covid. What are you seeing now? What kind of valuations are we seeing? What is the sale process like right now? What are you experiencing

Emmett:

In terms of valuations, the range for DTC LED brands, BigCommerce or Shopify LED brands? It's a little bit unhelpfully wide only because we're seeing such a wide range of quality. So today it's anywhere between, and excuse me, these are preferred profitable DTC LED brands. It's three X EBITDA up to 12 x ebitda. That's the typical range. Now, there are exceptions to the downside for distress and the upside if the stars align, and it's a massive business, a hundred percent subscription in an amazing category, that's a flavored du jour, but most is sort of three to 12, and there's a lot centered around the median. The median valuation for listed companies in the DTC space today is 7.1. So a lot of people would argue that unlisted private companies should be at a discount to the listed liquid big corporates, you can counter that by saying, well, if we're faster growth, et cetera, then you might want to premium. And we could go back and forth all day on that. But somewhere around 7% is doing quite well at the moment. Seven x, excuse me, for if you're getting seven x, that's doing quite well. We sold a business last year called J Flex Fitness for 7.1 times. It was a business out of Utah, DTC, doing single digit revenue, good growth, and it got 7.1 times and the entrepreneur was delighted.

Brett:

So single digit year over year top line growth,

Emmett:

The growth was double digit. Yeah, double digit growth. Single digit million revenue in terms of quantum.

Brett:

Oh, got it, got it, got it. Okay. Yeah, great, great. Makes sense. So if we're in a position where maybe it's a little bit of a fire sale or maybe distress is too strong of a word, but not a fully healthy business, then we're looking at maybe the three x, if we're going wild on subscriptions and crazy growth and super high profitability, maybe that 12 x, but around circling around that median of seven x

Emmett:

Is yeah, it's for a good business, it's for a very good business with hybrid purchase rate, and it's a brand with a capital B, not a product, all those metrics, and it's a competitive auction. Seven X is doing well today. Great,

Brett:

Love that. So let's talk about what makes that a healthy business. So to get in that median range or beyond, but let's not get greedy right away to get into that median range. What does our p and l need to look like? What does our EBITDA need to be? And then how do you look at this? Because you know how buyers are looking at this?

Emmett:

Yeah, well, I think before you get into things under the control of the entrepreneur, there's a few things. There's obviously the markets which you can't control, but there's also the category. So some categories are more interested buyers at different times. Right now, pet baby beauty are growing, they've high revenue growth and are put into price increases, whereas maybe home and garden isn't the category of most favor today. So you really want to, it's quite fluid. You want to be selling your business when the category is going well and to get the highest price. And so timing is everything in business. If you look at what you can control in terms of your own business brand metrics, the first thing is the quantum of revenue. How much revenue do you have? The more revenue you have, the more likely you've earned the right to sell to the three different types of institutional buyers who are number one strategics, sometimes gold corporates. Number two, private equity. Number three, aggregators. We talk about aggregators a lot in our world, but they only came into existence about four years ago. It's crazy. Before that, it was the other two. So if you've got big strategics won't look at a business unless it's doing in some cases 50 million or more. So now there are big and medium size, big medium and small strategics. Private equity won't really look at something unless it's doing at least 10 million. That's small private equity. So

Brett:

3 million top line and P is usually looking for the 3 million EBITDA or higher generally, or are you seeing some that are okay with two?

Emmett:

Yeah, yeah. No, most need to see a good quantum around three or more. Yeah, to bother. There's two types of private equity deals. There's platform deals and Boltons. So if it's their first entry into a category, it's a platform deal on top of which they'll do Bolton. So the platform deals need to be bigger, bigger than what we've just discussed. They need to be IT league tens of millions of revenue in, say if it's their first foray into pet on the back of which they might do deals that have less than 3 million EBITDA

Brett:

As a Bolton, right? Because you got a little bit of the multiple arbitrage. So now you're taking that 1 million EBITDA business and bolting it on and getting to a bigger thing to the platform, and now you're getting that increased multiple, which is certainly part of the game. Love that you backed up to the global. So let's just touch on a few things there and then we'll dive back into the specifics. So you said Pet Beauty and baby are kind of having a day right now, home furnishings, outdoor, not so much. Can you talk about maybe some of the reasons why and then anything we should consider in relationship to

Emmett:

That? Well, I think during Covid we were all stuck at home and we started to refurbish do some basic jobs in our house, in our garden. And so at that point in time,

Brett:

Lowe's and Home Depot breaking records, just crushing everybody's spending. That sty

Emmett:

Money there, like outdoor barbecues and outdoor heaters did incredibly well. But now that we're allowed out, again, beauty is huge During Covid, a lot of us bought pets, so pet supplies and accessories are huge and there's a lot of macro trends tailwinds there as well. It's fluid. So we work with a company called Grips Intelligence, who I think have amazing consumer transaction that data to identify the latest and greatest trends and movements. And we work with them to stay on top of the pulses, which categories are interesting or not interesting because we obviously want to try and invest our time into categories that are ultimately going to sell and

Brett:

Super interesting. And just one question here related to that data. We just talked about inflation. You mentioned that recently we're expecting some rate cuts here in q2, inflation, a little bit hotter here in the US than the Fed had hoped, like 3.2 or whatever it was. And so going to hold off on rate cuts. Are you seeing anything in the data that suggests inflation, even though it's been coming down, and I saw a chart you sent that, hey, inflation has been coming down steadily over the last what, year and a half or whatever. It's still high. And are we seeing how that's impacting consumer purchase behavior, especially with D two C brands?

Emmett:

Well, I think it's impacting growth rates at a very high level back of the envelope, Brett, it's impacting growth rates of e-Commerce Inc. And around the world. I think the like for likes have got easier, got over the comparing it to the covid years, but till inflation comes down and the interest rates come down, consumers are being cautious, still relatively cautious and are not spending as much as they might. And that's intentional. That's what the Fed is making happen, they're hoping

Brett:

For.

Emmett:

Yeah, yeah. They're doing a good job with that and hopefully will come out of that period of economic history or cycle in summertime as we mentioned.

Brett:

So back then to the specifics. So we're thinking about these three groups of buyers, right? Strategic PE and aggregator. It is crazy to think a little bit pre covid, like aggregators were barely a thing or not on anyone's radar. Is it useful to, as you're considering this process as a D two C brand, considering who might I be selling to most likely and what do they want versus what another buyer might want? Is that a useful process?

Emmett:

Yeah, absolutely. I mean, the best laid plans only survive contact with the enemy, right? Great expression. There's no point to developing your business and your exit strategy in isolation of the buyer will be or what they want. You might know what they want. They might want something you hadn't thought of. Different buyers look for different things. So a strategic will have much more synergies, revenue and cost synergies that can be brought into the equation. What

Brett:

Are they usually paying? A little higher multiples as well, right? Strategics usually pay the most in general,

Emmett:

Absolutely, but you have to be big enough to earn the right to pitch to them. But thinking through how their business is growing and what rationale, strategic financial and operational they might have for a deal is really important to find that right fit. It's slightly different with private equity, particularly if it's a platform deal and not a bolt on, which is more like a mini strategic. It'll be more financial than strategic in thinking. It could be about backing individuals to spearhead future m and a and give them the capital to do so. And then aggregators is different. Again, aggregators, it might necessarily be about strategic rationale. It might be just pure more financial and so on. So yeah, I bring it back, and this is a bit basic, but I bring it back to relationships, human relationships and marriage flirt date marry. You don't get married on your first date. You identify a potential partner, you understand how they work and how they think, and you try and flirt date, marry and see if there's a good fit there. That takes time and you need to identify who he or she might be and work towards a marriage.

Brett:

Yeah. Okay. So let's just pretend I've got a D two C brand and let's walk through how you would maybe advise me on who I should be thinking about in those three categories and maybe how I should be prepping my business. So let's say that I'm in the fitness apparel business. Let's say that I've got a 7 million top line and a million and a half in EBITDA or something in that range, or maybe call it anyway, let's say a 20% margin, so maybe 1.8. What would you be advising me on? How can I be getting ready for one of these three categories of buyers?

Emmett:

So the first thing we would do is what we call a valuation audit, which is a four week project where we look under the hood of the business in a lot of detail, look at all the data, all the financials, and we present back to the entrepreneur about how he or she can maximize the valuation for their business when they ultimately hit the green light on an exit process. And that includes thinking about who the buyers might be and what they might want and what they might pay for. So that's the first step. One is evaluation order. Step two then is flirt tape marry. So before we start flirting, we work with the client to identify all of the targets in those three buckets that you've mentioned. So let's take that example. There are plenty of DTC aggregators around the world that would take a look at that size business. And actually DTC aggregators are doing broadly better than FBA aggregators Brett,

Brett:

Which makes sense.

Emmett:

Some people just sort of say all aggregators are in trouble, which is not the case. There are some FBA folks doing well, but DTC generally are doing better. So I wouldn't discount that they might not ultimately give you the best multiple or the highest multiple, but you never know from a private equity perspective. The task then will be to analyze private equity firms and deal flow for who's got a bigger asset, a bigger platform asset that wants a bolt on, and that takes time. And then for strategics, it's too small to go to Lululemon with, so we need to identify the smaller competitors or folks in that field, or maybe an adjacent field that want to get into that field, or maybe someone in Europe wants to get into the states or maybe someone in FBA that wants to get into dtc, right? So there's all those things to go through.

Then we have our target list that we put into monday.com in those three categories, and then we start flirting. And flirting to us is a one page teaser. It doesn't include any sensitive information, but it includes enough to sort of get on the radar and get some feedback from folks, especially the oil tankers, the strategics who move slower to gauge whether there's genuine interest or not, and be quite frank saying, look, this deal's coming down the pipe in due course. What do you think? Does it interest you? What would you need to see for it to do? What should it do differently if to make it more interesting to you? If we have a two year window, we can make those changes or consider making those changes, and then we ramp it up. There you go, from flirting to dating and ultimately a formal process which gets you your marriage.

Brett:

That's awesome. Let's dive into the finances just a little bit because one thing that I've really seen, and this has become very clear as an agency serving D two C brands and we're all about accelerating growth. We want to take a good brand that's doing well and has some traction and just help them accelerate profitable growth. There was definitely a period of time when we would've leads coming to us and they're like, Hey, just we hear good things about you. Just do your thing. Just go, just grow the price. You quote, fine, let's just go. There's definitely been a shift over the last year and a half or so where e-commerce brands are saying, Hey, we got to be profitable, so we're focusing on our numbers, we're evaluating every expense, so we're looking a little closer at all our agencies. And so we've just been seeing this, right?

Brands are getting more, sharpening their pencils and looking at how do we become profitable. So can you give some recommendations as a D two C brand is looking their p and l looking at their balance sheet, what are some of the areas where you'd say, Hey, you should be in these ranges, these ranges for sg and a and these ranges for payroll and this kind of range for ebitda. I know going to vary. I know it's the buyer's going to different groups of buyers can have different perspectives, but what ranges or what guidelines would you give to somebody?

Emmett:

Yeah. Well, the first thing I'd say is, again, we want to come up a level because the buyers want different things at different times of the cycle. So pre correction, two years ago, people wanted to see revenue growth nearly at all costs. Right now, they want to see bottom line net margin is the number one thing. In two years time it'll probably be back to revenue. We'll have forgotten all the pain. And it's a bit like which sectors are categories come in and out of favor, he, baby beauty, et cetera. You need to sort of skate to where the puck's going to be if you want to sell today, its bottom line is the answer, Brett, as in EBITDA margin. That's the only thing I really care about. As an MA advisor in two years time, it's most likely interest rates have come down the world's normalized.

It's probably back to revenue growth. So that makes it tough for an entrepreneur because you actually need to be on top of the data points and be fluid. So if you're selling today, I would say it's not, it's not necessarily about gross margin or sg and a, it's about corporate EBITDA needs to be at least 15 to 20%. Got it. That's what I need to see. And a good trajectory not declining, obviously revenue growth, I'd rather see lower revenue growth and net margins, even incremental from 15, 16, 16 and a half 17. That's a good place to be today, but if you want to sell in two years time, that mightn't be the right answer. So you want to be spending more for agencies like yourself to chase growth and ideally have a good net margin, but maybe give up a little bit on the net margin so that you can chase revenue growth. It's tough, isn't it? Because it's fluid. It

Brett:

Is. It is. So what advice would you give to the DC brand that they've hit a blip, they've hit some bumps in the road. And so a few years ago it was almost unthinkable to have year over year decline in revenue or year over year declines, but now running into a lot of businesses, a lot of businesses are hitting us up that that's exactly what they've experienced. So it definitely makes sense that top line, slower growth or whatever is less of an issue than EBITDA declining. But how are you coaching a brand? So say within the last 12 months of that magical trailing 12 period, they've had some declines declining revenue and or declining ebitda. What advice are you giving them?

Emmett:

Yeah, my advice is depending on other factors, I would not go to market until you've got a clean 12 months and you're back growing again. Because otherwise it's a defensive conversation. If you're on the back foot explaining something negative like that, then it doesn't help you position the whole exit in the right way. So would, if you can hold things being equal personal scenario, business scenarios, wait until you've got better for

Brett:

Got it. So get that as much as you can get that trailing 12, clean, healthy, moving up into the right, you're going to be way better off. I've heard talking to a few other m and a advisors and m and a experts that as long as there's a narrative you can explain just about anything, but I like the way you put it. It's going to immediately put you on your defensive or on your back foot or from a posture of defense rather than posture of strength if that trailing 12 is not clean.

Emmett:

Look, especially in a tough market overall, it's a buyer's market right now today as we do this podcast, Brett. So yeah, the buyers have a lot of interesting deal flow and you want to package a positive story, and there's no better way to do that than having graphs that go that way across your

Brett:

Up to the right baby, up and to the right. Yeah. And so let's talk maybe about some common red flags or maybe discount factors would be a way to talk about this, but as you are diving into the numbers, you're doing your valuation of a D two C brand, what are some of the red flags or discount factors you're looking for?

Emmett:

If I think the biggest red flag to us from a due diligence perspective was when a US acquirer sent someone to order the manufacturing facility of it in China for a brand, and the score was 3.3 out of 10. It was the lowest score the acquirer had ever seen

Brett:

Of the manufacturing facility

Emmett:

Because they didn't live up to fire standards, human resources standards and other things, which I won't go into, but that killed the deal G, the investment committee at the choir said, under no circumstances do we want to be related with a business that might get us on the front of the World Street Journal or whatever. And that's one example of a red flag, that type of thing costs 700 books for an entrepreneur to go and do now to check how their manufacturing facility scores. If it's low, you change it. If you have to change it, you have to have a few quarters where you see everything washed through and business practice work. And so you've delayed your sell by nine to 12 months. So do that now so that you're ready for sale in a year or two years and diversify your supply chain. That's one example of a red flag. And there's 10 of these things that things that we've seen over the years that when we take on a new client, we try to ensure that they don't have these potential deal breakers.

Brett:

Yeah, totally, totally makes sense. What are some of the things, and I would assume that falls into this category, the manufacturer scoring so low. Are there any kind of surprising things where when you do your due diligence, you bring this to a D two C brand, they're like, whoa, I never even thought of that. That wasn't even on my radar. That would be an issue for a potential buyer.

Emmett:

Well, maybe on the positive side, a lot of brands, and it sort of surprises me that they're surprised when I explain, when we explain how much more valuable subscription revenue is to non-subscription revenue, and by subscription I mean proper recurring annual subtype revenue, not repeat purchase, which is also good, right?

Brett:

Good sign too, isn't it? Yeah,

Emmett:

Yeah, yeah. Proper subscription revenue, that's a game changer from a valuation perspective. And so when we say that to some folks, then they start to see, okay, well how can I double down on that and increase that stat? That's I

Brett:

Double my subscription rate. Yeah.

Emmett:

Yeah. And that's a massive impact on valuation.

Brett:

So what are some specifics there? So in terms of real subscription business, where does that start to get interesting? What kind of subscription rates or what kind of percentage of revenue or how does a buyer look at that, where they're like, whoa, this is a healthy subscription business?

Emmett:

Yeah, I mean, there's a supplement business that we're in contact with that is a hundred percent subscription, amazing. There's a business in the states that we're speaking with, and it has B2B contracts that are one year at the moment, and we're encouraging them, well, we're giving pretty strong advice that they should try and move those to three year contracts, which allows you to get a much better multiple on that portion of revenue when they come to market. I mean, it sounds so obvious, but a lot of the businesses don't think strategically. They're so busy just doing their day to day. I mean, an interesting point, Brett, when I worked at Morgan Stanley, every company we spoke to had a board at a cap table, had big shareholders, a lot of e-commerce folks I speak to, especially in FBA, because they're mom and pops, but even in DT dtc, they don't have boards, they don't have institutional shareholders.

So in a lot of ways they haven't been given mentoring or advice or they don't have a sounding board to sort of talk through a lot of the things, the advice that we bring to the table, whether it's working towards subscription or higher value income, et cetera. And I think mentoring and advice is really key. I'd encourage your listeners to, if they're in a pet business, reach out to someone who's sold a pet business and give here or she some share options to help guide a successful journey. We don't want every entrepreneur making the same mistakes as other entrepreneurs. That's not efficient. I'm rambling a little bit, but I think that's important. Advice and mentoring is important.

Brett:

I love it. And that's really what we've been on the m and a journey for about 18 months now, talking to PE groups and other agencies and strategics, and partially because we may want to be a platform and build something bigger, but also because all of our clients are considering m and a at some level, it's either the end goal three or five years down the road, or they're actively pursuing it or had a number of clients where they've partnered with PE groups and now they just buy a new business three or four times a year. And we get to help with that. We get to help grow the new business or the Bolton, which is super fun. And so, yeah, it's been a really interesting journey. Back to one more specific on the subscription business, because this is interesting to me. So we got the supplement brand that's nearly a hundred percent subscription. What about another supplement brand that was at 15% subscription rate or 15% of revenue is coming from subscription. Where do they probably need to get that to where that starts to become a real powerful narrative?

Emmett:

Yeah, it is a great question. And it's not as specific as saying 35%. I think it's at least majority with trends showing that you can convert the rest to subscription. In theory, I subscribe to a protein manufacturer, but they give me the option to do monthly or annually, and I always just go monthly just because sometimes I don't like being stuck into a long-term contract. If they said annually, and that was my only option, I'd go for it. I really like the product and then my revenue be worth a lot more to them from an exit perspective than not. So that's an interesting business question for folks and for people like yourself to think about.

Brett:

Yeah, we would shift, how do you shift the subscription model so that it doesn't tank conversion rates or take rates on the subscription? How do you keep people longer? All those things become important, but not just important to the health of the business in the short term, but it's going to have a pretty big impact on multiples in your ultimate valuation. Exactly. Which is really exciting. So Emmett, as we wrap up, want to talk about how folks can reach out to you, because I think it's become very clear to people that you know this game and you've done the Wall Street level, you work with D two C brands, you're just a wealth of knowledge and you can guide someone through this process. Before we talk about that though, how people can get in touch with you and stuff, is there anything else that we should have talked about that we didn't like? Questions that are coming up right now, or as you get calls or outreaches from D two C brands, what are they most wanting to know right now? Any hot topics we missed?

Emmett:

The most common question I get asked by entrepreneurs is when aware of valuations, which we've covered. My biggest piece of advice to folks is prepare early. If you fail to prepare to fail, please start to think early on about your strategic options and roadmap. And that's what s and p 500 companies do. That's what all companies with big aspirations should

Brett:

Do. Yeah, and what's so cool about you just beginning the m and a journey, and I think talking to someone like you early on is at a minimum, you are going to run a better business. You're going to start to view your business like an investor would, and you're going to make better decisions, better adjustments, you're going to improve the health of the business. Whether you decide to sell in 12 months or 36 months or whatever, you're going to run a better business.

Emmett:

And there's a great phrase in m and a that the best businesses get bought, not sold. So you want to make your business as viable as possible. And to do that, you need to understand how buyers work and have everything ready and how you know how to do that if it's your first rodeo. Yeah,

Brett:

So true. So emit then as people are listening, they're like, Hey, I got to talk to 'em and I need to talk to the Foria group. I need to kind of begin this process. How can they best connect with you?

Emmett:

Sure. Our website is www.theFortiagroup.com. Please email us at inquiries at the Fortia group do

Brett:

Com. That's FOR Tia a Fortia group, so the fort group.com. We'll link to everything in the show notes, of course, but do check them out. And Emmit, this has been a ton of fun. Really enjoy talking to you. I've loved getting to know the m and a space a little bit over the last couple years here or so, and you're one of the beacons, the shining lights in the space. And so thank you for taking the time and thank you for sharing your insights.

Emmett:

Yeah, thank you, Brett. Pleasure.

Brett:

And as always, thank you for tuning in. We'd love to hear from you. What would you like to hear more of on the show? And did you like this episode? Do you know someone who's considering selling their D two C brand or their agency or their whatever? Share this episode with them. That would mean the world to me, and I know probably help your friend as well. And also, if you haven't left that review on iTunes, we'd love that as well. And with that, until next time, thank you for listening. All that's a wrap. Hey, Emma, that was perfect, man.

‍

We've all dreamed of quitting Amazon. And it's hard to argue with 800% growth in 4 years. 

‍

That's why I was so excited to sit down with Sean Reyes, founder of ShockSurplus.com. I wanted to discuss Sean's journey of growing his business by 800% in just four years, his decision to break up with Amazon despite it accounting for 70% of his revenue at the time, and the importance of thinking like a media company.

‍

While most brands should NOT quit Amazon, some should. And his thoughts around margins and building content are valuable for all eComm brands. 

‍

Key topics and lessons from the episode:

• Sean's strategies for managing margins and advertising costs in a highly competitive environment with intense margin pressure.
• The value of creating authentic, informative content on YouTube to build trust and authority with customers.
• The decision to move away from Amazon due to high fees, lack of customer interaction, and increased competition on listings.
• The importance of thoroughly understanding sales tax nexus laws to avoid costly mistakes and legal issues.
• Sean's advice for eCommerce store owners looking to diversify their revenue streams and uncover new opportunities for growth.

‍

Quotable moments from the episode:

‍

"We've got to be more like a media company that sells parts rather than a parts company that does media. Because I always felt like once you have the experience of producing valuable content, you could direct it anywhere."

‍

"You need to get behind the product, use it to drive proper recommendations, and create a customer experience that no one else can give."

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‍

Chapters: 

(00:00) Introduction + Current Challenges for eCommerce

(05:19) Maximizing Your Marketing Budgets

(17:12) The Power of Organic Content & YouTube

(21:41) Crafting Authentic Recommendations

(23:31) Creating Value

(31:59) Consistency is Key

(34:40) Breaking Up with Amazon 

(42:54) Leveraging TikTok

(45:26) Conclusion

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Show Notes:

• Sean Reyes (LinkedIn)
• Shock Surplus (Website)
• Shock Surplus (YouTube) 
• Jeremiah Prummer (LinkedIn) 
• KNOCommerce
• True Classic
• Fox Shocks
• King Shocks
• Alex Hormozi (LinkedIn)

‍

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‍

Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

‍

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‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

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‍

Other episodes you might enjoy: 

‍

• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

‍

• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

‍

• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

‍

• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

‍

• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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‍

Transcript:

Sean:

I look back and I'm like, I don't believe the numbers. I don't think we were ever profitable on Amazon as a retailer with 25 points, 30 points, maybe of gross margin. Amazon's eating most of that.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we have a merchant success story. We're talking to Sean Reyes, the founder of shock surplus.com. Such a unique story, so many lessons, so many nuggets, so many bold moves that Sean has made, and some really unique angles that I think you guys can learn from and apply to your business. And so we're going to dive right into his story. But Sean, first of all, thank you for taking the time. Welcome to the show, and how's it going? Thanks,

Sean:

Brett. It's going. It's going. A lot of other people is going right now. It's a war in retail and

Brett:

It's such a war, no doubt. Yeah, I remember when I first was introduced to e-commerce, so back in the early days I did SEO and I did other marketing. I did local TV and radio and stuff like that. When I got into working for e-commerce companies doing mostly search marketing, I remember someone saying, this is the big leagues. Everything, every dollar counts, every little detail matters. Like you win or lose in the margin. The tiny things, remember this quote from General MacArthur, Douglas MacArthur? He said, in war you win or lose, you live or die. And the differences in eyelash, right? So this tiny, and I was like, man, e-commerce is intense, but I love the challenge of that. I love the challenge of being in the big leagues, but dude, if anything, and that was 2015 or something like now, I would say things are even harder than they were, more opportunities for growth. So I think it's a great time to be an entrepreneur, a great time to be in e-commerce, but just difficult man. Tough sledding for sure.

Sean:

Yeah, the margins, everyone's been paying attention to margins a lot more in the past couple of years. I remember towards the end of 2019, going into 2020, I was really just starting to get a lot more concerned with margins at that point. The economy has just been growing for 10 years at that point, or just knowing the cycles of society, it's like you're expecting some kind of a downswing. So paying attention to margins, I think a little bit ahead of the curve has helped us out a bunch. But yeah, it's still number one priority for us.

Brett:

What are some of the practical things you do to watch margin to protect your profits, your contribution margin, things like that? Any specific tips or suggestions that you do?

Sean:

Our cost structure is pretty, we're extremely lean. We've got about 15 full-time people and we're doing low eight figures in sales, so highly efficient. But even then, margins are still razor thin. And so one of the things we've been really keeping an eye on is advertising cost and how that plays out. You can swing two to three points of your total income in advertising cost in a year, and so you don't watch that one bad month. How long does it take to claw back that one bad month to the bottom line? So advertising cost is the biggest thing. I'm very much, I definitely wear the hat of CMO, director of marketing here at Shock Surplus and just the brand voice. And so I'm always just live and die by our marketing and our ad spend. We are heavily supported by ads do support a lot of our sales. We're about 60 40 right now. I'm trying to really flip that balance to where

Brett:

We're 60% supported by ads, 40% by organic, organic or repeat.

Sean:

Yep. So I'm trying to flip that balance and really have the business a lot more supported by our organic traffic and kind of those sources.

Brett:

Yeah, I love it, man. And I'm a longtime ad guy. I've always loved the ad business. I was fascinated by it as a kid watching TV commercials. Then as I kind of grew up, worked in tv, worked in radio, I love it, but I would be the first to jump on your side of the table and say, yeah, man, but it's got to produce predictable return and in a few points, one direction or another can make a massive impact. So we can't not spend, but we also can't overspend because that leads to negative consequences as well. So any insights there? I'm sure a lot of what we look at is what a lot of people look at, but any insights on what are you measuring in terms of your marketing dollars to make sure you're not spending too much or too little?

Sean:

Yeah, our biggest thing, one of the big things for us is so many of our customers are outside the 30 day attribution window because we have very high ticket sales in the thousand dollars, $2,000, $3,000 window, and we're talking to that customer for months, sometimes even years. And so when you're trying to reach those customers and understanding a lead gen campaign from Facebook, how long that takes to pay back and how that translates to direct search and some of those things. And so we've been really trying to make a very, very slow migration, not to rock the boat too much, but trying to shift a lot of out of bottom of funnel stuff into more middle and top of funnel. So we really look at a blended ROAS over a long timeline. We've also breaking out our spend a lot more specific in terms of brand line, like a very specific type of product and tracking those sales over a 90 or 20 day window.

That perspective and that kind of tactic has proven to lift our A OV lift specific sales and new segments for us over the past couple of years. So that's been working extremely well for us, especially trying to, we're really trying to get out of giving Google all the freaking money in the bottom of funnel and Google shopping. They're the only ones winning there, otherwise just we don't want that price shopper. So we're really trying to move a lot more of our marketing dollars towards to win on brand and to really go after a lot higher a OV customer that we call our ideal customer profile.

Brett:

It's super smart. And listen, I love Google Shopping. This is one of the first things that I did to help our agency grow, and I wrote The Ultimate Guide to Google Shopping that Shopify published back in 2016 was huge for agency. But again, I would agree with you. You can't just be bottom of funnel. If you're just bottom of a funnel, then you are never really going to grow and you potentially just compete on price. And then yeah, you're maybe giving Google too higher percentage

Sean:

Unlimited. Yeah, unlimited competition. Every single day there's a new competitor that's just bidding on blue text on a screen, right? Yeah. It's just losing game's.

Brett:

Such a good point. And we're going to dig into a couple of things that are really unique for you, Sean. One is the way you approach organic content, and we would love to keep an eye on how you get from 60% ads and 40% content to the reverse of that. And so you do some really unique things that are going to unpack that you broke up with Amazon, so we're going to unpack that as well. And then you're going to tell that bold story, which is amazing. But I also liked the fact that you pointed out, Hey, this was a pretty long sales cycle and what I will say, it's clear in this case you're selling shocks and someone's maybe selling out $4,000 for new shocks for their truck or whatever their Jeep, and they're going to research that. They're going to think about that.

They're going to maybe make a couple phone calls, they're going to talk to people in their local market and check things out before they buy. But one thing we're seeing even with things like CPG or Simple Apparel or something is that there's a number, there's a cohort of new customers take longer than you think. You look in your ad platform and everything's going to show maybe not for you guys, but for other brands it's going to show less than a week or less than a day. But a buddy of mine, Jeremiah er from No Commerce k and o, they do post-purchase surveys. They did this study with classic true classic tees, and they found that even 30% of purchasers of true classic tees had waited three to 12 months after hearing about the offering before they bought the T-shirts. Just simple white, black T-shirts, right?

So there's always going to be a percentage there. I'm sure that the numbers are way more dramatic for you for people that last wait a lot longer. But yeah, understanding, hey, we got to feed the funnel a little bit, but we still got to measure because we can't just spend a ton of money and hope, fingers crossed that it's going to come back in a few months. So what are some of the things you're doing? So you look at a longer window for roas, how else are you measuring to both give the media time to close but still holding it accountable for results?

Sean:

Yeah, I would say we're not even doing a great job on measuring that. We do post-purchase survey and a lot of our $2,000, $3,000 customers have basically pegged at six months or more for the research, a lot of anecdotal stuff of, I remember looking at our live chat and a couple of weeks back I saw that one of the first conversations with one of our customers was two years ago in March. And so it's great to be able to stay top of mind with these people because we backtracking a little bit, we're just a retailer. We're selling so much of what other people are already selling. We don't have our own brand. That's the only place you're going to get it is from us. We don't really ever have exclusivity deals. And so for us, it's just been building brand from the very beginning of education and trust and knowledge and experience is our only product, and I feel like that's what we do the best.

So, but as far as measuring the long cycle, it's been one of our biggest challenges here in order to, we know it happens a long time, but through for the listeners, we grew 800% in the past four years. And so it's crazy. We've been just trying to hold on, not hold, yeah, we've been a little bit holding onto that growth and trying to transition away from bottom of funnel stuff where a lot of this growth came from and migrate more towards longer sales cycles, less addicted to the immediate cash cycle of bottom of funnel stuff and being more efficient on the long tail, but also not disrupting the business too much and pulling back too hard, which can happen. And we've seen those consequences before when we try to make shifts too dramatic. But there's so many attribution tools out there right now that just, they actually don't even bother to attempt to track these longer sales cycles or longer windows. They're just like, we can't do it officially. So they're not even attempting to, some

Brett:

Are even trying. And that's one thing I will say about third party attribution tools, and I do support them and we have a few that we like and so that our clients use and stuff, but they are not your savior. They do not make everything crystal clear. I think they can make things clearer or they can help you triangulate the truth. But to your point, they don't necessarily solve a six month attribution window does, but they can be useful in some ways. And so what we've seen some brands do that have a longer sales cycle is they're measuring engagements along the way. So what kind of leads am I collecting, kind of engagement am I getting with this video and how long are people watching and different things like that. That's often what we'll do when we're launching a new YouTube campaign and the beginning weeks or a couple months of a new YouTube campaign are a little rocky. And so we're looking at, okay, how do we make decisions then based on other engagement metrics? So if we're evaluating three or four videos, let's say we really want to measure both the view rate and we try to simplify that and we look at the retention rate on that video, we look at the clickthrough rate on that video, different things like that that can kind of begin to say, okay, this is appealing to our audience is likely sending people back to us. So any thoughts there on micro conversions or things that you measure? We've

Sean:

Been doing, I mean we've been getting a little bit more aggressive towards on YouTube channels, just having this seems like obviously a no brainer for anyone that is trying to craft a YouTube strategy. We never really our YouTube strategy out the gate when we started in 2019, which is let's just regurgitate all the knowledge we have into a video format with some parts in front of us. And that was our strategy. And we had a number of videos that have crested quarter million views and half a million views since the get go. But more recently we've been a little bit more targeted towards here's a landing page for this YouTube video, let's track the clickthrough rate to the lens. Doing some of these, in retrospect, very obvious things, but nowadays it's tracking all the efforts now because one thing that I never really took into account before was how much man hour, how many man hours and time has gone into the content in terms of backtracking all the way to the very beginning of the conversation of tracking margin is what is your true marketing spend and taking into account your manpower, all the content hours and all this stuff going into the true cost of your marketing dollars.

So thinking from that perspective, we're a lot tighter now on the true performance of this video is, and are we expecting sales out of it or is it just going to be one of those things that we're going to be hopefully that we start to start building audience? Some of the things we've been doing recently is really just trying to get into a new audience that we maybe not have talked to before. And so now this whole series is a trust building exercise to talk to a new segment that is not our usual bread and butter. And so in that regard, it's like we're not really tracking the performance there, but we're trying to build these organic pages on our site, build that audience and build authority there. Whereas others, it's like a product reveal or a product release. And then now we're doing discount codes and tracking the discount codes and all that kind of stuff. So we segment it in that regard. We're usually aiming for about a video a week on a review schedule, which feels aggressive. We may be pulling back there, but that's just kind of how much knowledge we just want to get out. And it's not videos, it's really just talking heads and some manufactured, not manufactured virality, but kind of manufactured a head to head versus this versus that brand

Brett:

Versus Got it. You know what I'm saying? So good. Yeah, yeah, yeah. And really, man, I think simple there is great. And one cool thing about your categories, I think it lends itself well to that people really enjoy the research process. Before I bought my new-ish, I guess I've had it for almost two years now, but a Toyota Tundra, TRD pro, I found myself just for entertainment after the kids go to bed, I'm on YouTube and I'm watching four by four videos and the Fox shocks are the ones that are on the TRD pro. And I was like, Hey, listen, most of the time I'm just driving in the office or driving around. I'm not using these shocks, but it was evaluated, I was looking at this versus that. It's fun, it's entertainment, but then it also does lead two purchases. And so I want to dive into this a little bit and hopefully my notes here ripe, but you guys have 25,000 subscribers, maybe more. You said you've got some videos that quarter million views, whatever, you've really built this channel. So yeah, I know you already alluded to it a little bit, but how are you deciding what content to create and then who's kind of in charge of that? Are you just doing all this content? Do you have a team behind it? How does that work? We've

Sean:

Got a pretty small team. It's literally been me and my creative director and a couple guys on staff that take part in the content. We've had a videographer on staff for most of the past five, six years, but we sell global brands with tons and tons of Google search juice.

Brett:

So they're already awareness. People are already looking for these shocks, they're looking for reviews on these products. So that's already kind of built in.

Sean:

So they're highly technical products, very much of a black box. Think as a gatekeeping as you can get behind the true guts of a product. That's exactly what shock absorbers are and suspension systems are. And it's why I got into the business. I really got into the business to change the industry and change the conversation around this segment of products because I just saw how clueless everybody was back in 2013 when I first started it. And it's almost become even more confusing with how many different brands there are and what the differences are. So starting with that in mind, there's always, when you're out researching, you're researching Fox or King or this versus that. And so we get those questions all the time through live chat and email. And so for us, when we see repetitive questions, we're just going to turn that into a video.

And when you already have a lot of search behavior on Google for brand A and a lot for brand B, you just put them together in a video and boom, your comments explode, your views explode because anyone searching for that is eventually going to see your video. So that's kind of one strategy that we've had since the very beginning. The other strategy is very much like you have a tundra and we know all the shocks available for the tundra, and so we can make a video that's a one-stop kind of research stop for your vehicle to explain all the differences, talking specifically to the tenure customer. So just those two perspectives have served us extremely well because you get the brand advocates on one side and the other and they go at it in the comments or what we hope to do and what we've helped brands do now is if you're trying to enter the market, put yourself up against the incumbents or incumbents because now you're getting all the exposure based on their existing search history.

And so we've done that with a couple brands and I would say we blew them up. I mean just through three YouTube videos and content pieces, we went from basically zero sales in 2022 to about $1.2 million in sales of this one brand with only $20,000 of paid advertising to promote that content and then the content pieces. And so we've kind of proven out that model and we use the strategies I just discussed here for that. And so we really try to keep it basic. We found that when we do really well produced stuff, sometimes it works, but oftentimes it's more of a brand building exercise and people like it, but it's a 5,000 view video or 10,000 view video and not like our 50 to a hundred thousand view videos when we do the really basic, here's your buyer's guide for a Bronco or here's your,

Brett:

Yeah. And I think a lot of times we overcomplicate things, one simple answers, and especially in this case where people are searching for things, they're searching for a head-to-head competition or they're searching for a solution for my vehicle, my Bronco or whatever. And so being simple is key. A couple of questions on how you approach things. So say you're comparing Fox shocks to Kenny or whatever, you're comparing two products and potentially you sell them both. What's your approach? This is a little different since you're a retailer and it's not like this is my product and these others are not my products. Are you trying to be a little more neutral or are you just going full on? No, this is great, this is not great. This is really useful. This is when you don't want to buy this thing. How transparent or ruthless are you in those evaluations? I

Sean:

Think we're both ruthless and transparent, right? One of our mottos is we're not trying to tell you what to run. We're trying to help you figure out what to run. And so that that's kind, we see each brand or option as they have their own pros and cons and how much does it overlap with your own thing? And so we're able to do that because we have so much experience with each of these brands that we sell. Any retailer can do this, and that's what we advise. I've been advising a lot of retailers that do do this. You need to get behind the product and use it in order for your sales staff to really be able to drive proper recommendations and create that customer experience that no one else can give. And so we do it from that perspective. We really try to remain neutral. Very rarely is there something that we steer people away from. And we have found that if we are doing that, then we're actually just removing it from the site site because it's very much like, well, if we can't recommend this product anymore,

Brett:

I recommend it. Why are we selling it at all? Then

Sean:

Why are we selling it anymore? Totally

Brett:

Makes sense. Totally makes sense. So if you look back at some of the early days of creating content, and I know one of the benefits of YouTube is you created a piece of content years ago, it's probably still getting traffic and closing sales today. But as you look at those early videos versus what you do now, how have you improved? How have you maybe restructured your framework or your approach to videos? How have you gotten better? And the goal here is how can we give people shortcuts or allow 'em to benefit from your learnings? How are your videos better now than they were before?

Sean:

Well before it was really, I knew that our team knew that we had experience. Our sales proved that we have experience, but a new person visit, I had conviction. So a lot of people just, there's a certain amount of people that are just going to believe you based on your

Brett:

Conviction. They can feel the conviction and they're like, okay, this guy believes in, he knows what he's talking.

Sean:

And then there's some times where it's just like, but then how do you went over those other people? The more recent kind of thing that we're always really thinking about is all the B roll, all the B roll to show and prove that we have that experience that drives these recommendations and why we have those recommendations. And so we've really gone, I want to say overboard, but as to extreme links of having all the B rolls of us in the dirt or on the trails or with this vehicle or any of the situations that we usually always talk about. And so our framework is very much just like we have three major use cases of our product, which is in the dirt on the highway or towing. And so we're always trying to cover those three bases with all of our experiments and tests and then getting it on video.

So anytime I'm talking about it or one of our staff's talking about it, boom, it's on the screen. So that just goes such a long way so that because so many people now are using stock footage in their faceless YouTube videos and just using borrowed knowledge and stock footage and affiliate marketers, it's that's flooding or Google right now. And so there's a desire for authenticity. And so I've always had that in mind just to try to be as genuine as possible, authentic as possible, because I'm also, one of the things, I'm really trying to take the audience and learning with us and not be like, Hey, I'm a pro and I know everything, but it's like we are just as clueless about this new product and we're going to learn about it and you guys get to watch us. And so going more in on the experience and the learning and bringing the audience along, it has kind of been where we've migrated a little bit to, whereas before I had a little bit more of an ego as far as I've done this all, you should just trust me. It works for a little bit, but my more genuine self is transparent in my ignorance and must be,

Brett:

Let's test this thing. Let's put this thing in the dirt, let's tow something with it, see how it does. And I think that adds kind of this little bit of tension too, a little bit of drama or intrigue like, Hey, how is this going to turn out? I want to stick around and watch and find out.

Sean:

Yeah, we've had some huge viral pieces of just blew up a shock, and it's on Instagram live and the brand's calling my cell phone to take it down. I'm like, no, I'm not going to.

Brett:

Absolutely not. This is gold. Can you talk about maybe some pieces of content that you created where you were genuinely surprised at how well it did, where you make a piece of content and you're like, why did this blow up? I don't get it.

Sean:

Well, I guess, let's see, in retrospect, I don't know why one of my very first videos blew up because I was deadpan just a bunch of products on a table, and we got a quarter million views in the first three months, and it's almost reached a million views at this point, but very basic, very just unassuming. I'm just sitting here talking about my vehicle and what I've done with it, but it's a Toyota Tacoma. So I knew that I already had a Tacoma and a surge in massive popularity. So I already know there's a huge audience there. There's other stuff where we put a lot of work into it. One of our more recent pieces, we put probably 3, 4, 5 months of work into it in terms of assembling the B roll and doing the script and recording and redoing footage and stuff. And right now it's only at about 10,000 views where we were expecting more of a 50 to a hundred thousand view kind of thing.

Brett:

And it just kind of shows sometimes you don't know. It's like the piece has to really land and it's got to be answering a question and media. And actually I want to unpack that a little bit more, see if you got any theories as to why that's not taking off. And I'll kind of contrast it with speaking of the tundra. I had it serviced not long ago, and when I got it realized that the dealership did not reset the maintenance light. So I was like, it still said maintenance due call the dealership. I'm not very technical. So I called the dealership and the lady, the answer was like, Hey, you're welcome to bring it in, so sorry. Also watch some YouTube videos. It's really, really easy. And so found this YouTube video of a dude with giant hands, he's holding his cell phone. He is like, click on this, you scroll here, you click on this, and then you click here and then you do this, and it's the worst shot video ever. But I solved it and it had, I don't know, 50,000 views maybe more. It was so simple, but it did. It solved my problem quickly. That's all I wanted. And so I was happy. Any thoughts on why did this video that took months to produce and B roll and really thoughtful creation here, why do you think it's not taking off some of the others that are more

Sean:

Simple? Yeah, it's a very niche kind of topic. We thought there would be a little bit more of a broad, so it's a brand versus brand on the new Ford Bronco.

Brett:

Okay, dude, love the new Broncos.

Sean:

Yeah, they're pretty sweet and we love ours, but I think part of it is the Bronco market and Broncos content is very saturated. And so that's one perspective. Another perspective is a lot of those Bronco buyers are not in the modification mood or cycle. Usually we see second, third, fourth owners to be the most

Brett:

Makes

Sean:

Modification makes sense. So we kind of knew expectations are the number one cause of disappointment. So totally, it was kind of a soft expectation, but also no big deal. It's going to live there forever and it'll be a good resource. It's going to live

Brett:

There, it's going to be better over time, likely yes.

Sean:

Where I knew one where I had I high expectations that matched the actual performance is A, B, A versus B versus C of the top three brands in our industry. And that right now is sitting at about 300,000 views. So I kind of knew that was going to kick off correctly, and it has. So yeah, but that one is very not produced at all, whereas the 10,000 view one is heavily produced, so many great shots, so much work. And so you see the dichotomy there and you're just like, I've made the decision now for the next year, just back to basics. Let's just translate all this knowledge that's stuck in our brains on simple talking heads and showing the features of the product because that's giving the most value to those people, totally to the broadest range of people. So yeah, that's awesome. Adapted.

Brett:

So you and I were talking about this earlier. You guys are just consistent. I think you said you're creating one piece of content a week, kind of that pace. I enjoy watching Alex Ozzi videos. He's cranking out hundreds of pieces of content across the various platforms and stuff like that. I don't think it's so much about quantity necessarily, or quality in the sense of it's got to be highly produced, but I do think there's something about being consistent and being authentic. How have you created this consistent schedule where you just create videos week in and week out? I guess it's probably just part of your culture now, but any tips there? How do you just create this consistent machine?

Sean:

Yeah, it does take a lot of effort to get effort. A few years back, I was very much like we've got to be more of a media company that sells parts rather than a parts company that does media. I always felt like once you have the experience of producing valuable content, you could just direct it anywhere, whether we're selling shocks or whatever. So we use Trello as a project management tool, and we have a pretty small team to execute. And I've never been afraid of just picking up the camera and just putting it on a tripod and pointing at myself and talking about the things, because we have so many customer engagements that I'm like, I'll look in customer service and find a really good live chat thread and be like, Hey, let's just go turn this into a three minute YouTube video because we're answering this question all the time, and they always, were going to get it in the future, and the parts are sitting right there in the warehouse, so let's just boom, boom, boom, love

Brett:

It quickly identifying this is a video, let's shoot it now. This is what we do.

Sean:

Exactly. So the speed and no one, so many people are scared of getting in front of the camera, but no one cares,

Brett:

Right? No one

Sean:

People that you think are going to care

Brett:

Way your hair looks or the tone of your voice as much as you are or none of that stuff. Yeah,

Sean:

Exactly. No one cares. Just really hone in on your expertise of the product or of your brand and just try to deliver the value to the customer in the best way, how It could just be a podcast or it could just be written a word. And so we try to do a bunch of overlap there, but speed. But when you're inspired to do it is when you should do it and just turn on the camera to do it because that moment is very fleeting and you try to plan for it. You're just like, I'm not feeling it, I'm not feeling it. And soon enough it's just like gone. You just lost it.

Brett:

Just turn on the camera. Love that. So I encourage everybody, go to the shock surplus YouTube channel, check it out, consume the content. Even if you're not in an off-roading, you're not in shocks, you're not into modifications, whatever. Still check it out and see the way they do things. Look sort by highest views to lowest and kind of just learn as you peruse there. And so next big topic, and this is a big one, this is going to cause lots of gasps. People are going to veer off the road as they listen to this, as they're driving and stuff. But at one time, Sean, if I'm not mistaken, 70% of your revenue came from Amazon. So 70% let that sink in. And then Sean, you broke up with Amazon, you made that 0% of your business. So tell us that story. Why did you do that? How did that go down and are you still pleased with that?

Sean:

Yeah, so backing up to 20 13, 20 13, I started on eBay and we got our start because automotive searching for automotive parts has always been a pain in the butt. And if you think about a vehicle and a shock absorbers, you got two different part numbers on the front, maybe one part number for the front, one part number for the rear. So anyways, the customers are having to search for two to three different part numbers for their vehicle in a catalog through some data that these brands just engineers never. So

Brett:

You're probably going to get something wrong, just so many.

Sean:

So I started listing on eBay back in 2013, just bundles, one click purchase for your vehicle, whether it's lifted or lowered or whatever. So I got my start making just bundles every single day, literally just making bundles until two o'clock in the morning and all these bundles were selling the next day. And so that's how we really exploded on eBay. And then in 2015 ish, 2016 is when we got started on Amazon and we were basically transferred all of our bundle listings on eBay over to Amazon. And we had a system in place to where we can scale up all these bundles and making these bundles in our catalog. And so we created probably, I don't know, 20,000, 30,000 fresh listings in Amazon that never existed before. And so we got a really nice headstart there, but then over 20 16, 17, 18 competitors caught wind and started jumping on all of those listings and 2, 3, 4 people on a same listing. And everyone's repricer is now fighting each other. So we were at using the buy

Brett:

Box now on something you created.

Sean:

Yep. So classic story there kind of occurred. And so we also started doing some experiments of like, well, let's just price Amazon at 1 99 and we'll price our website at 180 9 so that anyone price shopping obviously is going to choose our website. We started seeing thresholds there of like, well, if it's 1 94, they're still going to choose Amazon because that $5 delta is the Amazon trust, right? Easier trust. So we started doing some of these experiments, and then we started seeing just how much, once we got up on Shopify 2.0 or once we got over to Shopify in 20 18, 20 19 is when we launched Shopify, that's when we really started to understand how much Amazon and eBay was cannibalizing our website sales. And so once we made that connection along with Amazon is a 12% fee, and we were achieving five to 6% cost per sale on the website through Google. And so that's one obvious, well, the feed over here is better for sure, and then Amazon started doing this whole thing of don't contact the customer or penalizing you for too much contact of the customer, or you can't see the customer's phone number anymore, you can't text them. There's an intermediate intermediary phone number thing, and we're like, oh, that's no good. And then you start to see that Amazon's return rate is 12, 13, 15% on you. Yeah, you

Brett:

Can't contact, somebody can't confirm that they're getting the right product, right? Again, this is a product category where people make mistakes in ordering so

Sean:

Many mistakes.

Brett:

Now you can't help them or fix that, prevent that from happening,

Sean:

And they're trying to get you to give free returns. And we've got 20, 30 pound products. And so a free return means we just lost a ton of money on 15% of our sales, and so we have 5% return rate on our own website. So versus 15% plus all the other administrative hurdles on Amazon. I look back and I'm like, I don't believe the numbers. I don't think we were ever profitable on Amazon as a retailer with 25 points, 30 points maybe of gross margin. Amazon's eating most of that.

Brett:

Amazon is making money without a doubt. You are probably not. And so what was that like when you came to the realization that I think I just need to stop this, that feels like, and I guess if you realize you're losing money or whatever, but that seemed like a pretty big bold decision.

Sean:

There was just a string of $2,000, $3,000 A to Z claims that we just had to eat. And it was like, okay, well, we're removing that entire brand. Oh, well, if we remove that whole brand, we should probably remove this whole. So it was just like a slow slide. We were all competitors. Were also basically filing non-genuine product complaints. And so you're always fighting literally the administrative state of Amazon, prove this, prove this is genuine, prove this is A to Z here, A to Z there. You're like, oh my God, I don't want to deal with any of this anymore. And just the math was just so obvious too, where it's like, well, for all the only ones with this in stock, we would see nationals. I know we have stock here. Let's just remove our listing off of Amazon. People are going to buy from our website.

So we started making those connections a lot more frequently. And so we're like, eventually you just let your Amazon account slide so much that there's too many hurdles to get back in good graces and then good standings and all of that stuff. There's so many hurdles you have to jump through now as a, I don't even know. I can't speak to too much truth about it. We really just have not paid attention to it in the past couple of years. And we may go back when we have our own brand branded box, brand registry and all that.

Brett:

Better margins. Yeah, I mean, listen, Amazon's a wonderful place as a shopper. It's a way to potentially get growth fast as a brand, but I'm firmly in the camp of man, you got to have pretty hefty margins to make Amazon work. And yeah, I mean, I think one of the reasons why our Amazon practice is so successful and why we're growing so much as a brand, as an agency with Amazon is because that administrative toll of just keeping listings up and just fighting with fake reviews and competitors and getting listings back up when they're taken out, when they should have been taken out, that's a huge part of what we do. And it's just the tax cost of doing business on Amazon. So it can be wonderful for a lot of people, but it's also a bit of a slog. A bit of a grind for sure. And

Sean:

You've got to have a really unique product to not get copied also, because the sellers, I know there's companies out there that just monitor the sales rank, and if you break into a certain threshold,

Brett:

Outsource Totally makes sense. Totally makes sense. Well, cool, man. Well, this has been super helpful. So man, dig into the shock surplus content. Check that out, learn from that. Hey, don't be afraid to make some bold moves on Amazon. If you've got stuff that's not making any money, why are you doing it? What else, Sean, as we kind of move into the final portions here, the show, what else are you excited about? What are some things that you're about to test or where are you kind of headed as a brand here in the coming months?

Sean:

Yeah, TikTok shop, we're getting TikTok shop kind of, we've been approved for a while now. We have a pretty decent, I mean, we've got like 15,000 followers on TikTok, and TikTok was built more. We do a lot better on TikTok than we did on Instagram before Instagram, before Instagram copied TikTok as far as the interest graph versus social graph. And so our TikTok stuff, which is blowing up, which is just educating straight to the camera with some action in the background or product in our face. And so we're going harder in on TikTok. We're firing a TikTok shop for our own private label brand stuff. So we're getting going there for

Brett:

Sure. Are you running TikTok ads as well? Are you focusing mainly on organic and then TikTok shops

Sean:

Mainly on organic. We tried ads before and in platform reporting was showing absurd Tencent clicks. But what I think was happening, and we see this sometimes, I see this in our Facebook portal as well, which is like you get a thousand clicks, but you only get 700 page loads, right? Because 30 50% of your people aren't sticking around past 1.5 seconds for that page to load. And so there's that. I noticed that behavior with the TikTok audience quite a bit, and we weren't really getting sales and traffic there, but now, so we just use it as a brand building kind of situation. We're not doing any paid traffic there just yet. What we really want to try out is our private label and incentivizing through the affiliate. The affiliate. Now we're being able to give away 15%. I don't know what we're going to settle on, but try to really go in on the affiliate side of things because the products that we see right now that are available to us, no one else is selling on TikTok as a shop. Nice. And so I think there's open

Brett:

Door, open opportunity. Love it. I think it fits. I think your product is visual. People are researching it on TikTok, I'm sure, in similar fashions to what they're doing on YouTube and stuff. So I think that's a very obvious place to be. Sean, as you're trying to draw inspiration from other brands, other retailers, who are you paying attention to? Who are you learning from either other brands or other resources? How are you leveling up?

Sean:

Yeah, Alex or Mosey is, I think he's,

Brett:

What

Sean:

A legend. He's changed my business a lot just because over the past couple of years, new revenue streams have just been such an important part to uncover bigger revenue streams with bigger margins than what we e-commerce margins have just been pressed so much. And so as we try to uncover new opportunities, he's been a really big inspiration for me to uncover new opportunities, uncover new ways to provide more value to the customer, understanding, really looking at the business from different perspectives to challenge your beliefs and some stuff. So he's been a huge inspiration and legitimately changed my business. Totally agree. Yeah. So him and I don't know, I've been reading freaking sales tax books just describing, because

Brett:

That will get you some funny looks. I'm sure you're reading that after dinner. Some people are like, why are you reading a sales textbook on vacation? Funny looks.

Sean:

Yeah. If you think someone else is handling your business's sales tax, think again, never ever assume someone else is going to handle what is essentially a brand new system for the entire United States. No two states are the same on their sales tax administration for your business. And so can't have one playbook for the whole for all 45. And so that's really bitten us in the butt in the past couple of years. And I've, we've got people on it right now and it's a lot better going forward, but we're paying the price of past mistakes there. And I know, like I was saying before, I know nine figure brands that haven't been collecting correctly and they've got auditors on their door step. We

Brett:

Need $1 million in issues that they got to pay for now. So you got financial burdens, financial hardships, legal burdens and hardships. You combine those two, that is, that's not the game you want. That's not where you want to be focusing as a brand owner for sure.

Sean:

Yes, that's a big thing. I would just advise anyone that thankfully have it settled to triple check that wisdom is learning your lessons from other people. And I'm the other person that made those mistakes,

Brett:

Dude. I love it. I love it. Well, Sean, as people are watching this, listening to this, how can they connect with you? How can they go buy some shocks if they want to up their off-road game? How can they connect? Yeah.

Sean:

Shock surplus.com. We got live chat there, email, we're all over the place as shock surplus.com. I'm on LinkedIn if you guys, I get it after some podcast people reach out and ask a little bit more specifics. I'm super transparent on all the things we do, the marketing of things, operation side of things, always willing to help out. So yeah, hit me up anywhere you guys want and love to help out.

Brett:

It's awesome, man. Really appreciate you being transparent here. Love your story, love the success, and looking forward to watching you continue to grow on the organic side. And best of luck to you in the future.

Sean:

Thanks, man. Really appreciate

Brett:

It. Awesome. Thanks Sean. Tons of fun. And as always, thank you tuning in. We'd love to hear from you. What would you like to hear more of on the show? If you found this helpful and inspiring and other merchants who would benefit from Sean's wisdom, please share this episode. Also, leave us that five star review if you've not done so already. And with that, until next time, thank you for listening.

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Are you ready to make this year's Prime Day your biggest and most profitable yet on Amazon? 

‍

In this episode, Amazon experts Christine Shiloni and Jonathan Finkes join the podcast to share insider strategies and actionable tips to help you crush your Prime Day sales goals. From deal strategies to advertising tactics and inventory planning to post-Prime Day momentum, this episode covers everything you need to know to come out on top during Amazon's massive annual event.

‍

Key topics and lessons include:

• Understanding the different Prime Day deal types (Lightning Deals, Best Deals, Prime Exclusive Discounts, Coupons) and how to select the right ones for your products.
• Aligning your discount strategy with your margins and inventory levels to maximize profitability.
• Crafting an aggressive but targeted advertising approach for Prime Day, including budget pacing, placement focus, and bid adjustments.
• Leveraging increased traffic post-Prime Day to gain new-to-brand customers and drive long-term growth.
• Preparing for a successful Q4 by capitalizing on learnings from Prime Day and gearing up for October Prime Day and holiday sales.

‍

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Chapters: 

(00:00) Introduction

(04:13) What to Expect and How to Prepare

(07:26) Strategies for Success

(13:30) Types of Deals and Discounts

(27:50) Understanding CPCs During Prime Day

(30:18) Post Prime Day: What To Do

(37:35) Deadlines To Consider

(41:43) Outro

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‍

Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

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‍

Other episodes you might enjoy: 

‍

• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

‍

• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

‍

• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

‍

• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

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• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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Transcript:

Brett:

You don't want to get so excited about Prime Day that you smashed through your ACOS goals. And yeah, the sales numbers look great, but your ACOS just got out of whack and now you gave all that extra margin to Uncle Jeff Bezos.

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we're doing a deep dive into Prime Day, getting you prepped and ready to make this the biggest Prime Day ever for you and for your brand. I'm confident it's going to be the biggest Prime Day ever. They all are, but we want it to be the biggest Prime Day ever for you. And so that's what we're going to do here. I've got two esteemed OMG commerce experts. These guys are in the trenches day in and day out, making dreams come true on Amazon. We've got some great coverage on the ad side, the full Amazon brand management and Amazon strategy side. And so we're going to bring you the full perspective here today. And so I've got with me a return guest, Mr. Jonathan Finkes, lead specialist for Amazon ads. He knows everything about Amazon though as well. And so Jonathan, welcome back to the show and is this episode is the second appearance or third appearance for you? Just

Jonathan:

A second one. I know it was such a great experience. It feels like I've been around more often. But yeah, just the second one.

Brett:

All the fan mail, all the comments, all the people we want more. Jonathan, it just feels like you've been here more. So thanks for coming back. Super excited to have you. And then first time Miss Christine Shiloni. And Christine is our Amazon director. She's an Amazon strategist. She's been in the game a long time. She's led multiple groups, worked with lots of brands on the Amazon platform. If you've got an Amazon question, she's got an answer. And so she's here to talk about overall Amazon brand growth and strategy for Prime Day. So with that, Christine, welcome to the show and thanks for taking the time. Sure,

Christine:

Anytime. Looking forward to it.

Brett:

Going to be super fun. I love picking your brain talking strategy about new clients or new brands or whatever, and so can't wait to share with a broader audience all that you guys know about Amazon. So to kind of tee this up, just to give perspective, obviously we know this is the biggest day of the year. Last year, July 11th, 2023 was the biggest single day in Amazon's history. I think they said they sold 375 million products that day, Prime Day, which now is more of a Prime Days or multiple days to 12.9 billion last year. Those are the estimates from Statista up from 12 billion the year before. And so in the early days of Prime Day, it was kind of like a doubling almost every year. Obviously the growth has become slower. You have to slow down law of big numbers, but needless to say, it will be a monster day. Now, what are we expecting as far as timing, Christine, when do we anticipate Prime Day will happen and what might be a little bit different about the timing or the duration of Prime Day this year?

Christine:

So is now saying it's Prime Day week, so we can assume that might be starting on Sunday or Monday prior and maybe going through the following Sunday like they did for Cyber five. Usually Prime Day in July is the second week in July. Usually the first day is that Tuesday. So usually Tuesday and Wednesday are the biggest days. Usually if you're getting deal placement, those are the days that you want your placement because they probably have the most traffic. That's what Amazon's going to be pushing most likely with all of their advertising.

Brett:

So this year could likely be July 9th and 10th, kind of that week. That's the second week of July. July 1st falls on a Monday. So the eighth is also Monday. So kind of that ninth, 10th should

Start earlier maybe. Yeah. What should we expect? So we know this is a big day. We know there's going to be a lot of sales regardless of what you do, but Jonathan, I know you've got good data. We keep track multiple dashboards. We're tracking sales and performance across all the OMG clients. And so we've got a lot of data to pull from millions in ad spend and then sales. And so we're able to look at that data, but what could we or should we expect, what's kind of the range of performance? How do Prime Days compare to a normal sales day on Amazon?

Jonathan:

So one way that I like to break that down is kind of into two groups. We do have a decent amount of sellers who choose not to run any deals on Prime Day. So in the group of clients who do run deals, and this is going, the average pretty much holds true to every Prime Day that we've seen. We have all of them on file. What we see is a range in terms of total sales for each day of Prime Day averaging around a two, again, I think I said for those running deals. But for those running deals average about a 200% increase to the daily sales for those days compared to the average daily sales. But there is a really big range there because obviously each vertical's going to perform a little differently how well you're ranking in that vertical and how aggressive your deal is and how aggressive your deal is compared to other people's deals in your same category. And so even amongst those running deals, there are some who only saw a 50% increase to total sales, which still nice, but if you factor in still good,

Brett:

That's a heck

Jonathan:

Of a bump. Yeah, it's a good bump, but of course it's maybe not as big as you might be hearing elsewhere, like, oh, run promo and you're going to get a 500% increase, but on the high end we have seen thousand percent gain or more. And those are definitely the outliers, and that's why I say the average is closer to that 200%. And then for that group, that's not running any promos. We do actually, if they're well positioned in their vertical, at least showing up organically on page one, we typically see between a 30 to 50% increase in total sales, which is still very nice. You're still definitely seeing a big influx of traffic even without running a huge promo. And so those are definitely things to take into consideration.

Brett:

Yeah, it's super cool. I mean, it really does have the flavors of holiday where people are just buying. So whether you're discounting, whether you're not discounting, there's going to be more people with wallet open, ready to buy. It's an event that people plan for or when it happens, they're just, the money is freely flowing and so they're ready to make a purchase. Now, let's step back a little bit. So you talk about those that don't run a discount, those that do, those that don't run a discount still may be seeing 30 to 50% increase in daily sales during Prime Day of those that do run a deal, maybe as much as a thousand percent increase, but the amount you have to discount does really make a huge impact on your bottom line and your overall performance. So before we get into some of the specifics, what deals to run, what are some of the requirements with Lightning deals, Amazon preferred deals, things like that, let's step back and talk strategy first and we'll just continue with you Jonathan. Then Christina want your perspective as well. But as you're talking to clients about overall strategy for Prime Day, what are some of the discussion points that you're

Jonathan:

Having? So again, there's a lot of things to take into consideration there, but you kind of start from the top. You have to know what your margins are. So if you don't know what your margins are, and it's surprising, sometimes it's surprising that client doesn't know, but there's a lot of sellers who are running a very small tight ship and it's just them, maybe one person helping them, but a lot of people just run it by themselves. And so maybe they haven't calculated all the FBA fees into their margin percentages, but yeah, so you need to know your margins that you can know. How much room do you have to run that promotion? And then when it comes to deciding a promotion and how much, what you might choose to run, whether that's a lightning deal or best deal, or maybe just a prime exclusive discount, thinking about a promotion or choosing, maybe I don't want to run a promotion, you need to take into consideration where you're showing up organically as I was mentioning earlier, because if you're already showing up organically in the top three or top five, you're showing pretty prominently you're getting in front of a bunch of eyes.

Maybe if you see I'm in front of a bunch of eyes that don't have a lot of room on my margin, maybe I don't run a promo because I'm going to get a lot of extra traffic already up in top of search. But if you're not and you're in a really bad position, you might need to be more aggressive with that promotion to draw in more eyes, especially if you have the room and then of course, and that's married to your PPC strategy. If again, if you're not showing up super prominently and you're running a promo, if you're not aggressive with your ads, nobody's going to see it. You're on page two going to see it and you're running a great promo, that's where you're going to be one of those low end factors of maybe only plus 50%, even though you think you should have gotten that 200%. And so then you got to take into consideration the PPC strategy along with the promotional strategy, with really knowing your margins, knowing your business inside and out.

Brett:

Yeah, it really makes a ton of sense. I love that. Start with knowing your margins because, and just to give a quick example, just some super fast math, if we're selling an item for a hundred dollars and let's just say that our margins after everything is 50%, so we're making $50 per $100 sale. I know for a lot of brands you're like, well, I wish I had those kind of margins, but just for easy math. So every item we sell, we make 50 bucks. Now we're offering, let's say a 25% discount, which would be kind of a normal type discount. Well, that means that we've given half of our margin away, so now we need to at least double sales or we saw no net benefit in those additional sales. Now maybe you could make the case that we made a sale and so now we can sell that person multiple items.

So you could make that case for sure, but unless you're doubling sales, then it didn't pay off. It could get worse though. What if you're at a 30% margin? So you're making $30 now for every a hundred dollars sale and you have to give away 20%. Now you're giving away two thirds of your profits. Now you got to triple what you're doing in order just to make the same amount of money. And so that's where you got to kind think about margin. Love that. Christine, how do you have these conversations with clients from the strategy level, and we'll dig into tactics, tips, tidbits in a minute, but from a strategy level, how are you coaching on,

Christine:

First of all, if you're selling a consumable, like something that people, a supplement or something like that, that you have, subscribe and save, it could potentially be worth your while to run very tight margins or potentially even a loss leader to get people into the fold because they're going to hopefully enroll and subscribe and save. So you're going to have that business for the future. You don't have to pay for ads anymore for these people, for these clients, they're already in the fold. So that's one thing that you should definitely consider. Another thing you should consider is your inventory position. Where are you in a position where you could potentially be running out? Okay, so maybe you definitely don't want to run, run any deals at a lower price where you're not going to make the margin that you need on that specific inventory. Conversely, are you experiencing really high FBA fees? Maybe it's worth you running it a little bit tighter margin because now you're going to save money on the longterm storage fees and not have to do a removal order to save money on the backend that way. So those are a few things that clients should really look at on their end, and if the deal does take off, which that's what we all want, do we have the ability to restock rather quickly? Yeah,

Brett:

Yeah, that's great. Now you mentioned subscribe and save. Can you attach the Prime Day deal to subscription and subscription only or does it have to be for

Christine:

One time purchase as well? It's a one time purchase as well. So the deal is a one-time purchase, but hopes that you know what they loved, whatever it is that they purchased, that Amazon's going to be continuously serving them. Would you like to buy this again? You bought this on Friday? Yeah. Oh, I love that. And now they're in,

Brett:

Yeah, we see that a lot. We got the Amazon Echoes in our home, we got the Echo Show in our kitchen, and it's always reminding me like, Hey, do you need to order an espresso pods or you need to order toilet paper or whatever? Exactly. You need to order hot sauce. So it's really given those recommendations. So that makes a ton of sense, and if you kind of know your stick rate or your take rate on subscription, that can help you as you push into a deal because we know, hey, 20% or 30% or 50% of all people that purchase do end up subscribing and saving. So we factor that in as we're running our numbers on discounts. So okay, really, really cool. Let's talk discounts now a little bit, and I'll continue with you, Christine here. What are the options? So if we're considering, okay, I want to be in that category where I can raise sales 200 to a thousand percent type of thing by having a deal, what are my options for deals in terms of categories and what kind of discount do I need to be looking

Christine:

At? So the first option is Lightning Deals or slash best deals. So recently in the last few months, not every brand now has deals populating in the console to book deals. So my thought process on this is not running deals consistently. Amazon's like, okay, so now you're not going to get a deal. So other times consistently just run once a month or twice a month or something like that just to stay relevant with that.

Brett:

Yeah, because from Amazon's perspective, they want to say, Hey, I want these Prime Day needs to be huge for us, so we're going to do deals that we know are successful at other times of the year or time of

Christine:

The month. It could be one deals we know it's going to be doing Here're not doing well, then maybe you don't have deals showing up that way. So a lightning deal, Amazon, if you have it in your console and you've booked it for the Prime Day week, that's great. Amazon will pretty much determine the pricing for the product based on the last 45 to 30 day pricing of your product. So if you do end up with a lightning deal and you're lucky enough, you have it on that Tuesday, it's prime time, it's between 9:00 AM and 6:00 PM continuously, check that deal, make sure it's running at the price you need it to run at because that price will change. It will fluctuate up until the day of. So first of all, you need to add your inventory in there, make sure you have enough, and secondly, check that price because if you've done all your numbers, I know I can run this at 1999 and I can still make my margin and you look in your console two days before and they have it at 1599, okay, now you need to make a decision, am I running it or am I not running it?

So that's one option a best you can

Brett:

Pull the plug, right? So you'll see, you'll be given a little bit of time to say, okay, this is going to be the lightning deal. Are you good or not? And yeah, if you're going to be losing money on every sale,

Christine:

And that's not part of Amazon's algorithm, whether you are losing money or not, this is just what they're determining. Maybe it's based on all the other deals out there in that category, it's not a hundred percent clear. Another option is a best deal, which is usually seven days long. So for that, you really need to check your numbers because you can't stop it once it starts and it's seven days,

Brett:

So you can stop it before it starts, but once that train has left the station, you're on it. You're doing that deal,

Christine:

So you have to get that part. Another option is prime exclusive discounts. These don't have a cost, I didn't say lightning deal and best deals do come with a cost. They're between 300 to a thousand dollars a deal to run. So that also you have to factor that into your numbers to make sure you can cover that additional whatever Amazon deems a cost is thousand dollars say at the highest level,

Brett:

And they're going to let you know that upfront as well. So they're going to show, this is a lightning deal. This is what the price is going to be, and this is your cost to run it.

Christine:

Hop in your spreadsheet,

Brett:

Spread that out over how many units you think you'll sell and see, okay, how does this change the economics?

Christine:

Prime exclusive deals do not have a cost. That's a great option, but they do need to be at least 20% lower than your minimum price in the last 30 days. So that's number one. And if it's not, it's going to push you with referral price errors, and until you lower the price to what Amazon thinks it should be, then again, then it's not going to run. You can.

Brett:

So we can't play the game of we're going to hike the price up the day before by 20% and then do a 20% discount or whatever. No,

Christine:

That hasn't be done 45 days prior to that to let it really get through the system because that's what they want to avoid. And I completely agree with that.

Brett:

Totally understand. Yeah, it's

Christine:

20% the lowest price in the last 30 days. You have to have three and a half to four stars. You have to have seller feedback. And one interesting tip about a prime exclusive discount is if you're running that and you also are running the same product for a lightning deal or a best deal, the prime exclusive discount will automatically pause when your deal starts. Conversely, within a day, Amazon will now say, well, that's your lowest price in the last 30 days. So then your prime exclusive price may get hit and go down a little bit. So all things you just need to keep your eyes on. Lastly, an option. If you can't get a prime exclusive to stick, you didn't get a lightning deal, you can run coupons. You have a tag on your listing, it means you're participating and then a coupon, you can decide the discount, you can decide the ASINs that you're targeting, and at least you're in the game. Coupons, they do charge for every redemption. So that's something that you need to keep in mind, but for a coupon, you're controlling your destiny way more than you are with the other options. Or you say, let's just see what the traffic brings me. You can always add a coupon, take six hours to populate.

Brett:

So just have to do that basically day before, and we're in pretty good shape in that situation. Cool. So Jonathan, from the ad side as we're preparing for this, how are you coaching or when you're managing an account, growing an account, how are you doing things differently and maybe the strategies are slightly different between Lightning deal best Deal type of thing, prime exclusive and then coupon, whatcha seeing from our clients, and then how are you executing on the ad strategy based on

Jonathan:

That? Yeah, so the main point that I talked to with clients is kind of, Hey, what are you guys doing in terms of your promotional strategy? And so I can best align the advertising strategy with that promotional strategy. And if they don't necessarily have a promotional strategy or they wouldn't call it a strategy, they're just saying, oh yeah, it's 20% off on everything. Then the question is, okay, well do you guys have perhaps a budget that you want to hit or keep under a certain budget for the days of the event? And the main thing that I always recommend to all my clients is know, like we were saying earlier, if you know all your margins, you know exactly what you want to be hitting in terms of performance, you should really, if the funds are there, you should have an unlimited budget for the event. As we were saying earlier,

Brett:

If you're hitting performance targets, you're hitting your ACOS goals, you're making sales, it's growing, you're exceeding that 200% growth. You're approaching the thousand percent growth

Jonathan:

Keep. And especially with everyone is being more competitive on the events and striving for just getting another inch of market share. So if you, let's say you burn through that initial budget that you had set for yourself, but you're at good performance mark metrics that might happen by halfway through the day of day one or maybe three quarters of the way through day one. And if you just have set super tight budget restraints, stuff's going to turn off. And we typically see the normal cadence of a daily sales on a normal day. Normally peter's off after about 6:00 PM Eastern, but on Prime Day it can stay at the peak levels well until like 10:00 PM Eastern.

Brett:

Yeah, it's an event, man, where I'm getting home from work, I'm maybe eating dinner, putting the kids to bed, whatever, and then I'm shopping. That's my, it's

Jonathan:

Huge event. And really the budget really follows very closely in line, or sorry, the ad spend follows closely in line with what you see in the total sales side in that range. As I was saying, with deals, we'll see anywhere from 50 to a thousand percent growth in total sales. We'll equally see anywhere from that 50% to a thousand percent increase in ad spend for the days of the event. And with it, like Christine was saying, with it being Prime Day week, I'm not expecting the rest of any extra days to be that aggressive. I'm sure they'll see some lift, but really just the two big days that we historically have just called Prime Day one and Prime Day two, those two days would typically a very large lift again in ad spend. And so that's why I say if we can have that unlimited budget, but we want to hold and make sure we're really tight to those performance metrics, then budget rules are your friend right now, they're still only applicable to sponsored product ads.

Amazon hasn't pushed those out to sponsor brand or display ads, but for sponsored product, you can say, Hey, my budgets maybe I don't want to manually increase them too much just because I don't have the time to be checking in on the account every 30 minutes throughout Prime Day, but I'm going to say the budget is allowed to double or quadruple as long as the ACOS is under 30% or whatever that target metric is. So you don't have to be holding the hand of your campaigns all day long. If you're that super busy solo business owner who doesn't have time to be doing that, right? Or you

Brett:

Get a lot of campaigns running or whatnot, just hard to keep

Jonathan:

Track. You can let that budget rule do the work for you. But me on the agency side, I will be checking my accounts very frequently throughout the days to make sure that they're pacing well in line with budget goals. And there can be unexpected spikes. It's not just a perfect little bell curve in terms of total traffic. There could be a huge spike for one reason or another. It could be you're the first one to get a promo live because your lightning deal had the best slot in your vertical, or who knows, maybe there's a blog article that's writing about your product that you had no control over that, but it just explodes in some random hour that you thought was going to be really slow and then your campaigns run out because you get this huge flush of engagement. But that's a big thing,

Brett:

But that's a really good call out though, Jonathan. We kind of expect that, oh, okay, so it's Prime Day, so all the hours will be elevated, right? It's just going to be this consistent lift across the day. That's not really true. There's going to be spikes. There's going to be ebbs and flows. There's going to be pockets when people are shopping from home. And yet to your point, people will call out deals on blogs or my wife is part of a couple of Facebook groups, and so she gets notifications when certain things go on sale or whatever. And so yeah, someone mentions your product or your category at 3:00 PM Eastern on Tuesday, you could see a huge spike in sales. And if you're not paying attention, if you don't have the right budget rules and things in place, you'll burn through budget ads will pause, you'll lose opportunities

Jonathan:

For sales. And then kind of the final key to that in terms of the ad strategy again, is aligning it with your promotional. So if you're one of you want to run a deal, but you're kind running bare minimum deals or you're being really aggressive with your deals, syncing that up with your advertising strategy in terms of where and how aggressive you're going to be showing. And again, that also ties back to where you've been ranking organically because again, if you're ranking on the second page or the third page, you're going to have to be more aggressive with your ads to get your deal showcased in front of more eyes. And so the biggest, most important area to go after in that is the top of search placement, rest of search and detail pages. Those are good spots to be getting sales, but really you want to be getting people on that top of search.

If you have unlimited budget and you're able to spend more aggressively in all those categories, that's definitely the most aggressive hyper way to go after it. But if you need to focus in on go for that top of search, I don't recommend you hear online a lot, especially on a lot of YouTube videos talking about Amazon top search. They're like, oh, go plus 900% be crazy aggressive. You can set the bid low, but 900%, so it's like 1 cent bid becomes that exactly. But yeah, that's a little too much for my liking. And also almost eliminates the detail page and the rest of search targeting, which we still want to go after that of course. But I tell my clients to go more for a 30 to 50% for top of search. If they're wanting to be more aggressive, I might go to a hundred percent, but I like to fine tune it a little bit more so that we're still being aggressive against competitors on the rest of search and detail pages, but mostly focused on that top of search placement, but also knowing a lot of other people are going to be doing that as well.

And so of course you got to be closely watching the performance metrics, especially from the agency side on the day of in the lead up in the after, because you're making all these little tweaks and things can get a little hairy sometimes.

Brett:

And yeah, that's where if you go too wild on the percentage increases for top of search or whatnot, it can really have a compounding effect. And you don't want to get so excited about Prime Day that you smashed through your ACOS goals. And yeah, the sales numbers look great, but your ACOS just got out of whack and now you gave all that extra margin to Uncle Jeff Bezos, which you want to keep that in your pocket. And so I've got a couple more kind of nerdy ad questions here, and then I want to bounce over to Christine to talk about what to do after Prime Day, because I think we want to leverage as much as we can during Prime Day, but what do we do after Prime Day? And then we'll kind of close out with some tips and tidbits and little things to keep in mind. But Jonathan, on the ad side, what are we seeing in terms of how are CPCs increasing? How are conversion rates increasing? And those usually kind of go together, so you're paying more per click and you got to be really aggressive. You're spending more total, but conversion rates usually go up enough that it balances it out. So what are we kind seeing there?

Jonathan:

Yeah, so on the CCP C side, it really

Brett:

And more about the CPC side. If you don't have conversion rate metrics, that's not as important necessarily. But yeah, how much does CPC

Jonathan:

Increase don't have? Well, I do have conversion rate, but I don't have it on the, sorry, big spreadsheet here. So on the CPC side, typically we'll see about a 20% increase on the account as a whole, which that is skewed a lot because in a big account with a big, there's potentially a lot of products that you're not running promo on. Maybe you're just focusing on your hero product. And that's usually what we see is that clients will focus on maybe the top two to five hero products, depending on how many variations they have, but on a whole, usually about 20% increase in CPCs. But of course that can vary drastically for those top terms for those top products. When you're running big promos and competitors are running big promos, it's not uncommon to see the CPCs double in that time, especially with being more aggressive on top of search.

And if other people are similarly being aggressive on top of search, it can be a bit of a bidding war. And that's where you got to kind of stay on top of it because you could see, say you've set up to be a little bit more aggressive top of search if you're not actively watching the account, especially during peak hours, which is I would say starts after about 9:00 AM Eastern, if you're not checking in, it could be that there's a really aggressive competition in the start of the day or in the middle of the day or in the afternoon, maybe aligning with when another competitor's lightning deal is going active because it's just starting at some other random hour and you see the CPCs explode. So that is something to definitely keep a close eye on because of what you're saying that'll destroy margins. Conversion rates similar, we kind of have it on the account level data, but whichever product you're running the promo on, of course you're going to be seeing increased conversion rates, but I don't have an exact percentage jump there for you.

Brett:

Got it. Yeah. All good. So yeah, you just want to be really vigilant because you don't want to just see your margin evaporate with high CPCs. You want to make sure those CPCs are being counterbalanced by more people purchasing. So Christine, let's talk about what to do after prime base. We got all this traffic, maybe it's 50% increase, maybe it's 200% increase, maybe it's a thousand percent increase. How do we leverage that and get some longer lasting benefit or ongoing benefit? What do we do after

Christine:

Prime? So the first thing I would suggest, well, there's two things they can, it won't run simultaneously, but there's brand tailored promotions where you can target your brand cart abandoners for the last 90 days. These have to be set up about seven days prior. Set that up to target people that visited your page, but they abandoned the cart. There's that option. So those customers would receive on their product display page a discount, the minimum is 10%. That's probably not going to drive a lot of conversion, but you can go up to as high as you want. They're not costly to run at all, and they only show up to these customers that have done it. Now, Amazon has also added that feature for coupons. So there's a brand cart abandoner in the last seven days coupon that you can set up. So a coupon, you can target ASINs, it won't be account wide, the brand Tailored Promotions, it's for the whole account. You don't have any control over that at all. But the coupon, you can target ASINs, you can do it for specific ASINs, you can retarget the last seven days with a specific discount you can run.

Brett:

And again, that's going to be based on cart. So the brand tailored Cart, abandoner discount, that's where we're saying anybody added a cart during Prime Day or whatever time period. Now we're sending them a discount where if they now go to purchase, they'll see that discount and they'll be the only

Christine:

Ones discount, correct. The coupon I would think is probably going to run the same because it's the brand card, so it's probably the same exact data.

Brett:

Got it. But that's just where your specific products with

Christine:

Coupon around this product a deal. Maybe you run a lightning deal and you didn't get all the conversion that you wanted. You can opt in with another coupon for 'em. Another thing to keep in mind is shortly thereafter, Prime Day is October Prime Day. So you literally have until the end of August to get yourself in line for October Prime Day. That's about 45 days before the October Prime Day window is going to start. I would think that probably Amazon's going to start populating the deals in the ads console very soon after the July Prime Day is over. So keep your eye on that. I would say select as many deals as they're going to offer. You see what they end up giving you, and then you decide if you want to take it or not. But if you never pick it, opt out, you never have an option to have it. So pick it and then see where you are, inventory wise, margin wise, et cetera. And then you can discern if you want to run it or not. And then right after that, guess what? It's Christmas, it's Cyber five or Cyber 10. So this is really the start of the fun.

Brett:

It begins. It's so wild after Prime Day, basically you have 45 days before October Prime Day, then we're peak holiday shortly thereafter. Yeah, so it's going to be a fun ride for anyone selling on Amazon, starting here July and then moving forward. So Jonathan, what about for you? So on the ad side, what are we keeping in mind right after Prime Day or kind of the final hours of Prime Day and then ongoing, what are we doing with budgets, bids, making sure we continue success, but also making sure again, we don't burn through

Jonathan:

Budget. So first thing that I always do is make sure that any of those more aggressive adjustments, I'm thinking like top of search. And I mean that's really the main one is top search and maybe any manual bid adjustments themselves, reducing those, but not necessarily going all the way back to pre Prime Day levels. Because as Amazon always tells us, there's typically more traffic post Prime Day as people are still kind of seeing if maybe there's any deals still hanging around or they're bummed seeing something that somebody else got with the promo and then they're coming to see if that's again, still got the deal or maybe they're just checking it out. So you still want to try and capture some of the extra engagement that we see after Prime Day. But no, knowing that those shoppers have a lot less intent to buy just because they kind of built up to the hype of Prime Day.

There were a bunch of promos, and now they might be thinking, man, if I come a couple of days earlier, I would've saved like 30%, and maybe they're a little less likely to bite the bullet on that product. Now that being said, if you have longer promos running, of course you want to still be being moderately aggressive with those ads. Again, not as aggressive as on the event itself because getting back into, let's get back to our margins that we want to be operating at for the rest of the year. And then there are some ad types in terms of display ads and the views remarketing, purchase remarketing. And I like to, especially if you have a consumable product, setting those up knowing of course, what's the likely frequency repurchase rate, because if it's a 30 day supply of a supplement versus 180 day supply of a supplement, you're going to want to fine tune that targeting for that in terms of, Hey, I'm not going to show this ad to this person until it's been at least 160 days if they've got 180 day supply so that they start thinking about it again and knowing that and kind of aligning with that.

And then because there's so much more audience data, the display ads in terms of, because you can obviously target those audiences that saw or purchased your product well, you can also target audiences that saw or purchased competitor products, similar vertical products, and really that's an insane amount of audiences that they let you go after. And again, I do like to run those ads, but we have to align that with the client's strategy and goals going forward because those aren't necessarily going to be huge return on ad spend going after those. But that is how you grow getting more new to brand shoppers and continuing to feed that flywheel, and I like to call it a snowball. Keep snowballing that brand further, further and up.

Brett:

That's awesome. And this is one of those things where, man, you got to be diligent ahead of time to really get things laid out and prepared properly. You got to pay attention to all the details during Prime Day to make sure you're accelerating sales and not missing opportunities, but make sure that's not waste. And then have your game plan in place to make sure you can get an ongoing effect in more new to brand shoppers. Obviously, you won't keep the elevated sales of Prime Day going, but you'll get that elevation and then the new normal will be higher than it was before pre Prime Day. So let's do this. Let's talk about a few deadlines. We're basically out of time. You guys have done a fantastic job. It's been so fun. Let's talk about deadlines we need to be aware of. Let's talk about just tips or tricks or tidbits, kind of a grab bag of anything we need to know for Prime Day. So Christine, why don't you go first,

Christine:

Your prime exclusive discounts. Set them up as early as you can because you're going to have to deal with a lot of the referral price errors so that you can have it all set and ready to roll. You can get it to your ads team, you don't have to worry about it. Check your pricing for your lightning deals and best deals. They will adjust continuously. So just make sure you're really checking that and make sure you keep your eye on the prize, which is going to be October Prime Day and Christmas. So set yourself up, build your organic rank, make sure your listings are ready to go. If you don't have time and you can't really optimize your entire listing, all your infographics and everything, do some keyword research, drop some new search terms in the backend, do something just to give yourself a little bit more of an advantage of the next guy. If you can do some other title optimizations, et cetera, start working on that. Get yourself ranked in the algorithms for maybe some new keywords and you're ready to go and enjoy the ride.

Brett:

Love it, Jonathan. Sorry, I enjoy the ride. I think, what was last piece? Enjoy the ride. Dude, it's so fun. We get so excited when holiday rolls around. It's like our Super Bowl for the whole D two C space for Amazon sellers. We get a couple of Super Bowls, right? We get July Prime Day, October Prime Day and holiday. So I geek out about this. We have a little dashboard we watch internally. We're watching how the sales grow and what clients are crushing it. And so yeah, I'm excited to watch how things go, and I know all our clients are going to be ready. All the OMG clients are going to be ready to take full advantage. So Jonathan, from you, any other tips, tricks, tidbits, any kind of last bits of advice?

Jonathan:

Yeah, from PPC side, it's really not anything fancy or flashy. It's really about, as I've been saying in a common thread throughout the call is like it's a cohesive strategy, but the whole brand PPC can't stand alone. Just perfect brand management in terms of your listings and detail pages can't stand alone. You have to know your margins and align that with your promotional strategy and your PPC strategy. From the ads side, it's really about consistency, being consistent with making sure the ads are pushing in the direction in terms of performance that you want to be going towards. But also you have to know that if you're just going for purely an ACOS number, you're probably going to end up bidding yourself down and down and down until you're getting no impressions and your ad sales have dried up and you're wondering why you're not getting any new to brand orders. And that's a delicate balance of give and take because of course, you can't just infinitely scale your ACO because of course that's going to eat into your margins at one point or another. But yeah, it's just about being consistent and staying focused on your goals and using the ads to help you get there. Got

Brett:

To be ready to play ball, man. You got to be ready to step up a little bit or you're going to miss out on Prime Day. And hey, I would say you got to choose the right partners, and that's where shameless plug for team OMG. If you're listening to this and you're like, dang, I need people like Christine and Jonathan managing my business on Amazon and helping it grow, then we would love to talk to you. And so obviously, based on when you're listening to this, maybe a little bit late for Prime Day, kind of depends on when you're listening, but reach out to us mg commerce.com, click on that. Let's talk button, request a free strategy session. We'd love to talk to you. If you're a growing brand, successful brand and just looking to get bigger and more successful on Amazon, we would love to chat with you, Christine and Jonathan, ladies and gentlemen. Hey, you guys crushed it. That was super fun. I'm so impressed. Thanks, Brett. There's going to be calls for people to be like, Hey, we want more. Christina and Jonathan, get this bright guy out of here, new co-host Christina. Jonathan, you're going to have to go

Christine:

Through my agent for that, most likely.

Brett:

Yeah. Okay. Get me in touch, connect me with your people and yeah. Yeah, that's awesome. Alright, thanks guys. And as always, thank you for tuning in. We'd love to hear from you. If you've not given us that review on iTunes, we would love that. Makes our day, helps other people discover this show as well. If you listen to this and you think, Hey, I know somebody that could really use these insights, please share this episode with them. And with that, until next time, thank you for listening.

‍

I first heard Dave Kline speak at E-commerce Fuel Live in New Orleans a few months ago. It was an awesome event, and Dave's talk was a highlight for me. 

‍

Dave is a seasoned leader with over 20 years of experience working with teams at Bridgewater and Moody's. Dave shares his candid take on how to level up our leadership skills, spot great talent, hire the right managers, and build a team that drives business growth and success.

‍

Key topics and lessons discussed:

‍

• The importance of simplifying processes and avoiding unnecessary hiring by focusing on the most critical problems in your business.
• How do you identify the right roles to hire for and avoid compromising on character when bringing in new talent?
• The benefits and challenges of promoting from within versus hiring external candidates for management positions.
• Strategies for maintaining a flat, collaborative culture while introducing a management structure to support business growth.
• The significance of setting clear incentives and codifying cultural values to encourage desired behaviors and decision-making processes.
• Creating rituals and intentional moments for feedback and idea-sharing to counteract the potential drawbacks of a hierarchical structure.
• Balancing the measurement of managers' performance based on team output and the sustainability of the team they lead.
• Embracing the concept that being a good manager now requires leadership skills, such as being kind, direct, developmental, and coaching team members to reach their full potential.

‍

Here are a few insightful quotes from the podcast:

‍

"Leading is just being kind and direct. Leading is being developmental and coaching. Leading is helping people be better than they, maybe themselves, even believe they can be."

‍

"People will cut a lot of corners for short-term gains, and you end up eroding the long-term  sustainability of the team."

‍

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‍

Chapters: 

(00:00) Introduction

(02:35) Dave’s Background at Bridgewater

(17:13) Minimum Viable Management Explained

(20:12) Common Hiring Mistakes to Avoid

(35:54) The Benefits of Maintaining a Flat Organizational Structure

(43:01) Strategies for Creating Clear KPIs for Managers and Teams

‍

__

‍

Show Notes: 

• Dave Kline (LinkedIn) 
• MGMT Accelerator 
• MGMT Playbook 
• Bridgewater
• Principles
• Ray Dalio (LinkedIn) 
• Moody’s Analytics
• ECF Live
• Andrew Youderian (LinkedIn) 
• Working Genius 
• Patrick Leovinci (LinkedIn) 
• Radical Candor
• Kim Scott
• ECF Live
• Adam Grant (LinkedIn) 
• Give and Take
• Snowflake
• Frank Slootman

‍

__

‍

Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

‍

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‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

‍

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‍

Other episodes you might enjoy: 

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• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

‍

• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

‍

• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

‍

• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Nex

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‍

Transcript:

Dave:

But my real goal was I think you could manage excellently with eight post-It notes.

Brett:

Well. Hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we are diving into what could be the most important topic for the future and the success of your brand. We're talking about leveling up your leadership, how to spot great talent, how to hire good managers, how to build a team and lead a team. So we're not going to get into the tactical business growth stuff on how to improve with Google ads or YouTube ads or Facebook or things like that. But this will permeate every aspect of your business, impact your growth. Now, if you want to sell your brand one day, which I know a lot of you do, this is going to be critical for that as well. So my guest is Dave Kline, and Dave has 20 years experience leading teams. He spent 10 years at Bridgewater, he was at Moody's, so he worked for Ray Dalio's team at Bridgewater.

And I first met Dave at E-Commerce Fuel Live, Andrew Ian's event in New Orleans. We're both speakers there, got to hang out at the speaker dinner and really just loved his content. It was one of the highlights of that entire trip. And so we're going to unpack some of his wisdom, as much of the wisdom as we can cram into 45 minutes or so here. We're going to do that. Dave, now he and his wife lead management accelerator and they've worked with over 800 leaders, built a community of 200,000 leaders. And so with that, Dave, welcome to the show man, and thanks for coming on. Hot Damn,

Dave:

Brett, first of all, you must be a terrible manager because you just raised the expectations on this podcast so high. There is no way that I'm possibly going to clear that hurdle, but I appreciate,

Brett:

I'm a hype man, dude, that's what I do. Have you ever looked at the working genius? Patrick Lencioni and his framework

Dave:

Know, I know some of his other stuff, but I don't know the working genius.

Brett:

Yes, it's pretty cool. So anyway, there's one working genius that's called the Galvanizer. Someone just galvanizes the team and motivates the team and that's my genius. So if the whole marketing thing owning an agency, if that ever fades, I'm going to be a hype man. That's alright.

Dave:

You're my Michael Buffer. Let's do this.

Brett:

Awesome man. Well, so love to kind of dive into your background. I know a lot of probably Ray Dalio fans out there. I confess to you, I read a lot of the book that book Principles man, that is a tome man that is not an easy read, but it's rich with great content. So everybody knows Ray Dalio. What was it like though working part of his team working at Bridgewater? What was that like?

Dave:

It was pretty wild. I mean I spent a decade there and honestly probably one of the stories that catches a lot of people's attention was before I even showed up, and I know we'll talk about recruiting a little bit later. So I did my first round interview there and three different interviews. The third one was with two people, including a recent undergrad and sort of a mid-level manager. And the topic was, should there be a market for human organs? And they're like, okay,

Brett:

You're applying for a management job and they want to know, should we be harvesting kidneys? Yes,

Dave:

Well should there be a market to trade kidneys? And they look at me all seriously. I'm like, okay. They're like, we'll be back in five minutes to discuss. And I'm like, well, what's the rest? What else is there? The direction was should there be a market for kidneys? So we then spent the next hour debating it. I had to make my case, they were taking the counter. Part of the reason they have a junior person in there was to sort of be needling and obnoxious. Could you take feedback from someone who might be 10 years your junior, but twice as smart as you? And if I'm being honest, I sucked at that process. You do not want me making the case for human organs if we need one. And so anyways, the day ends, I'm debriefing with my recruiter and he's like, how'd the day go?

And I was like, I crushed this interview. Love this guy. Great conversation here. I think we're really aligned. The organ market one, I sucked. Here's what I could have done better, blah blah, blah, blah. Here you go. And I thought we were done. You don't bomb an interview at Bridgewater and keep going. And so the next day I get an email and it was my feedback on the interviews. They were now transparently sharing all the raw unvarnished thoughts from the three interviewers and it says they want you to come back because your self-assessment and their assessment of you was identical. So I had this brutal

Brett:

Feedback. This guy is self-aware is one key thing they identified.

Dave:

And so it was just interesting to sort of see them showing versus telling, right? That it wasn't necessarily that you had to be perfect all the time, but and understanding how you fit into the overall machine, where you would call your own number because you're strongest versus where you'd rely on your peers because they're et cetera. They valued that way over my ability to decide whether livers should have futures anyways. And that was before I even locked in the door. And then 10,

Brett:

Give us your top 10 headlines for selling human livers go. But it turns out their thing wasn't so much, how are you going to defend that? Although I'm sure they were looking at how quickly you think on your feet and how can you be persuasive and how can you be logical and handle criticism and stuff. But it was almost just as much the feedback and can you handle the feedback. I know that was a really rich part of the culture there is everybody gives and receives feedback. So yeah, maybe it was as much, it sounds like it was just as much on the feedback portion as it was how you did it. It

Dave:

Was, and I tell this story all the time, a lot of people dunno, but we had a tool in-house where everyone had an iPad and you could rate each other real time and it showed up on the other person's iPad and not only the other person's iPad, but it showed up on, well, it's effectively a Twitter feed of feedback to anybody in the company. So if you're bored at lunch one day or if I'm bored and I'm just curious, what's Brett been up to? Can just go into your profile and be like, whew, Brett had a tough podcast this morning and

Brett:

Nobody liked that intro. Dave liked it, nobody else did. Yeah, exactly.

Dave:

Which while you're in it, it feels like a fire hose, right? You're just constantly good, bad, good, bad. It's so overstimulating, but it's also working five years in every year. So many other people who are smart and see the world differently cheering you on, calling you an idiot when you're an idiot. But you just get really clear and get really good at metabolizing that and saying, how can I use this to be better so I wouldn't trade it?

Brett:

Help me understand this. So you are leading a meeting, right? You're standing in front of a group, you're leading a meeting, you've got your iPad, other people are rating you in real time on what they liked, what they didn't like. This was convincing, this wasn't, you really didn't handle yourself well here. That joke was terrible, whatever. You are getting that feedback as you go or you're unpacking it later

Dave:

In the meeting there's a grid and down the left side is givers and down across the top are receivers. And so there you would be as a receiver and you would just see this red column just like, because the expectation is if you were in a meeting, you were giving feedback. And a lot of ray's belief is that we constant, everything was another one of those. Everything was a case to be studied and learned from. So a lot of times he would have a meeting with six participants and invite 80 observers. The only expectation of the 80 observers was to constantly give feedback as a way to test whether they were seeing the things the same way. So you could make one gaff and get 80 people hammering you on that one thing within 30 seconds.

Brett:

Dude, that would be so nerve wracking. Did it take quite a bit of time to get used to, okay, this is not just a meeting, this is a meeting plus a performance I've got to be on because I'm going to be judged in everything that I say here.

Dave:

It did. I would've said it was funny. You're making me harken back to a story I hadn't recalled in a while. First week there I'm in a meeting and I don't know, I think I checked my Blackberry or something because it was kind of a meeting for context, but I wasn't an active participant and my boss took me aside and he was like, I don't think you understand the expectation of a meeting here. And I was like, okay, well what's the expectation? He's like, the expectation is you're so mentally engaged actively that the person running the meeting could leave and you could step in and no one would notice a difference. And I was like, okay. And then realizing super meeting rich culture, because a lot of that culture was premised on this idea of, well, we're trying to uncover alpha. Alpha is a highly competitive zero sum game.

And so the best way to do that is to get really smart people with dissenting points of view and have them debate until we figure out what's true. And then that permeates everything. So it's like a meeting rich culture heavy in debate. The expectation is I could run any meeting that I'm in, if someone stepped out and my wife would talk about it for the first six months, I'd come home and she'd be like, how was your day? I would just be like, I don't think I have another word in me. You know what I mean? I don't have, I've been on for 12 straight hours.

Brett:

I can't think. I can't process, I don't remember my name. We're going to have to talk

Dave:

Later. So the good news is by the time this app shows up with all the red dots, you're already used to playing every meeting as though as your last, so a little bit performative, crazy. I dunno. Just another piece of the puzzle.

Brett:

So interesting. So what of that do you think is applicable to most businesses? Because some of that I think would borderline be unproductive impossible in a lot of organizations. What translates, what doesn't?

Dave:

Look, I think I've talked to a lot of folks who've spent time there and we're all now in the world working in different domains, working for different companies, running our own companies. The consensus seems to be that 65 to 70% of it sort of seems to be the number was pretty broadly applicable to some degree. There's this one idea that we should have shared mental maps and say, okay, well that's Bridgewater code, but what does that actually mean? It means if we're going to accomplish something together, we should at least agree on the core concepts of what we're trying to accomplish and how we're trying to accomplish it. And we should decide what that looks like before we do it. And then that way we both know what we're going to go do. We would just shorthand that as clear expectations, good communication, but there was a lot of rigor put into it.

There was a language around it, there was value. So I'm like, oh, well, that you tell it to most CEOs and they're like, oh, I'd more of that in my company. I'd like my team to have the shared mental map so they operate together better. So you're like, oh, that's exportable. And then if you ask people, well, do you give feedback was prevalent, should it be the 11,000 pieces of feedback that I got publicly put inside of every meeting? Probably not. But if you ask again, most CEOs, most executives on a scale of you guys give way too much feedback to you. Give way too little. Almost everybody's over here 100%. And even in the feedback they give, they have a tendency to sugarcoat it, couch it, Hey, the famous sandwich.

Brett:

I've been guilty of that one before, Dave, of the, Hey, you're doing really great here. This kind of sucks, but you're really super great over here too,

Dave:

So bad. So I think that part is also exportable that the test, a lot of the leaders we'll work with will say, well, I want to be able to give feedback more, but I'm a really empathetic person. I'm a really kind person. I don't want to be seen as mean. And so I hold back or I don't tell 'em the whole thing or I surround it with a lot of other stuff. And I said, well just play a game with me for a minute. Imagine you're working for somebody and you are constantly coming up short in some way and they notice, but they don't tell you and then you come up short again and they notice and they don't tell you. And right now they're forming a picture of what you're like. And then three months down the road, that picture has hardened you are incompetent and incapable of this thing that they're imagining they've never told you once, but now they don't even have this observation that you could have a conversation about. They've decided and then they share that information with you and you're now mad at two different things. One, why is this the first time I'm hearing of it? And two, you are the person who's supposed to be most invested in my career after me and you're not even willing to tell me when I'm screwing up. Does that feel kind? And then everyone's like, well no, that's not kind at all. And I'm like, well, that's what you're doing.

Brett:

Yeah, it's so good. It's so good. I love, there was a quote from Steve Jobs, I actually heard it in the book, radical Candor, which actually is a funny story that you were just telling me before we hit record, which I want to explore in a second. But there's this quote from Steve Jobs where he was talking to Johnny Ive and the head of design and stuff, and Steve was like, Hey, this sucks or whatever. He probably used more colorful language than that. He like Johnny W told your team. And John was like, well, they're working so hard, they're overwhelmed. I'm empathetic or whatever. And Steve said, no, Johnny, you're just vain and you want them to like you, which is pretty direct. But I'm like, yeah, that's probably true. In a lot of cases we definitely, I want people to feel loved and accepted and things like that, but there's also probably an element of that that I'm just being vain and I just want to be liked, right? But we have to get past that and say clear is kind and giving feedback is kind withholding it is actually the

Dave:

Opposite. It's funny, I thought the quote was going to be different. I thought the quote was going to be, why are you letting them work so hard on something that sucks? Do

Brett:

You know what I mean? That's good too, actually. Yeah,

Dave:

Because we all want to do things that matter. And so please don't hold back and tell me I'm pouring myself into this thing that is terrible. I'd rather know as soon as possible so I can actually pour into something that's going to

Brett:

Be used. Totally. Yeah. Really, really great feedback as well. So yeah, we had Steve Jobs feedback, Dave Kline's feedback. You mix those together and man, got some powerful stuff there. So yeah, I was telling you before you record, I'm a big fan of the book, radical Candor by Kim Scott. Read it multiple times. Our team has gone through it. We talked about it because we tend to be, we're a work culture. We're big, we hire on culture, we talk about culture a lot. We tend to be too nice. I think as a culture that probably starts with me. I'm sure it starts with me. We give feedback. We need to give more. And so we've kind of gone through some of the trainings and stuff, but I believe you got maybe into a bit of a Twitter, Twitter feud or a back and forth with Kim Scott. So we got to hear this.

Dave:

We sorted it out. We sorted out. Eventually. I had have to dig it out. It was a couple of years ago, I wrote a thread when threads were the thing, and it was very much about feedback and very much premised on my time in Bridgewater. And then at the end, I think I included a framework from Ray, and then the next one I included a framework from Kim and sort of tagged her and just sort of, I think for most people the truth is somewhere in the middle I would say the primary, the difference between the two Ray is probably more extreme. Where he would actually thought, and you'll see this in the book, sometimes it was necessary to dial it up that he called it, put some pepper on it. Or if you have to choose between function and style, choose function, it's all very much like it's true or it's not true. It doesn't even matter if I think about how my words are, I just transmit it up to you metabolize. And I would say I didn't really land there because the thing that always was in my mind, managing teams, even within that organization is it's not about my transmission, it's about their reception. The reason I'm giving feedback is because I want them to improve in some way. And so if I do it in such a way that they shut down, then I'm wasting my breath and I'm wasting their time. You missed

Brett:

The point. They can't metabolize that feedback and now you've just wasted your time and yours.

Dave:

And I thought radical candor is a little bit more of that balance between challenge directly and care. Personally. Funny, I had it in there, but she went line by line of my whole thread and commented on each individual one to be like, yeah, I'm with you on this. No, you're an idiot here. Back and forth. And we, it was this crazy Christmas tree. It's like

Brett:

Dave, I'm saying idiot, but it's not mean. It's clear.

Dave:

And I care. I care personally. I care about you even though you, yes, I care about you Strange Twitter man, but all as well ends well. So

Brett:

Yeah, it's awesome. But it's just really cool that you got into a back and forth Twitter debate or discussion with Kim Scott, which is awesome. So let's dive in. Let's get practical here. So listening to your talk at ECF Live, loved it. You introduced a concept that I'd never heard before called Minimum Viable Management, heard of MVPs, minimum viable products, but never heard of minimum viable Management. What is that? Why is that a thing? Kind of lay that out for us.

Dave:

You haven't heard it? I think I made it up the night before. I'm either, oh, did you really? Yeah, I'm either the best of the worst.

Brett:

That's

Dave:

Awesome. But

Brett:

Hey, okay, so we got to pause for a minute. So I'm notorious, I get to speak a lot. I say a lot, 7, 8, 10 times here or something like that. I always, always, always 100% of the time tweak my deck the night before and the morning of when I speak every time, I don't know why. I'll plan it out. I get there, kind of read the audience, or I'm more inspired when I'm in the moment. I always change it. It drives organizers crazy, but I feel like I deliver. So it's okay.

Dave:

Well, I I'm glad to know that because sometimes you come in the night before or the day before you get to start chatting with some people. And I was chatting with a bunch of the folks at ecf and the thing I kept hearing was this somewhere between reluctant and accidental manager. A lot of people started to side hustles and then became a business, and the business had employees. And all of a sudden they're like, I have all these people who are responsible running team, be managed, and somebody wants to be promoted and someone's not good. I might have to fire them. And so there weren't that many people being like, I want the all singing, all dancing masterclass of management. It was like, what is the least I could do to manage well? And I'm like, oh, okay. And I'd be like, well I, I'd probably do these five things.

And they're like, okay, but if I could only do three and then I'd be like, okay, well maybe these three. And they'd be like, okay, but which one? And that's when the light bulb went off. And I'm like, if I really had to strip it down and say, I think you can out manage 90% of people if you did these things. And I just sort of jotted it down and on eight post-it notes everything from should I hire to what should I hire to, how do I hire them to then once I've got set the expectation, give them the work, oversee the work, give them feedback and decide if I need to hire more. That was sort of the super simple version. We can click into any of those where it's helpful. But my real goal was I think you could manage excellently with eight post-it notes.

Brett:

Yeah, isn't that great? And I do think the ability to simplify is such a rare skill and a valuable skill and I think it takes more brilliance to simplify than it does to make things more sophisticated or more complicated. And so I want to definitely double click on a few of those things. Can't unpack all eight, although I wish that we could. But let's talk a little bit about the hiring process. And maybe you want to dive into, I'm evaluating the need because I know that's something you talked about in the event, or I'm actually trying to choose the right person. But where do you find brand owners, CEOs or just company owners, where do they make mistakes when it comes to hiring managers?

Dave:

Perfect. I'm going to go one step back. You said something that connects to the very first one too, which is it takes more elegance, it takes more thought, it takes more courage to simplify than to add. And so even in that first step, which I think most people would skip, it's avoid hiring. I think a lot of us naturally we run out of capacity in our automatic instinct. Your first instinct is lemme hire somebody, lemme get some help. And I'm trying to get people to flip it and say measure of last resort. And so what are the alternatives if that's your last resort? Well, one measure is to stop doing some stuff. We worked with a company, I'm an advisor for teams overwhelmed. They're growing gangbusters. The word burnout was popping up way too often. And so we sat down and just like, well, what could we stop doing? And the first place I started was like, lemme see your client book and show me profitability by client and effort by client. And what you saw was a very common phenomenon, which was some of the most demanding clients were unprofitable. And I was like, great fire them. And it was like heresy because these were like, this company

Brett:

Was, can't do that.

Dave:

Yeah, the company was now eight years old, but these people have been around a long time. There was loyalty. What do you mean fire a customer? I'm like, you're literally losing money them by them being

Brett:

Losing money and burning at your team. Why are we doing this?

Dave:

And I was like, and you don't have to be cute about it, you can fire them with price. So just take that little tranche of 10% and double the price. And what ended up happening was most of them left and the remainder that say were now profitable. And all of a sudden the team got back like 20% of their capacity, they were making more money. And they're like, oh. And I'm like, you didn't have to hire

Brett:

Anybody. So brilliant. And what's so cool, they made me think of a Peter Drucker quote that I think you'll like if you haven't heard, you probably heard it. But he likes to use this test of, Hey, knowing what you know now, would you hire this person, start this project, keep this client, take this client on knowing what you know now, would you do those things? And if the answer is no, then why do you persist? So if now knowing all the details, why are you continuing to go down this path? Just make the

Dave:

Decision a hundred percent. And then there's all some of the common pieces beneath that. So maybe you can't quit things, but automation can you streamline, et cetera. And it's shocking the number of things that just because of that natural tendency to add is sort of build up barnacles on the front of the boat. And occasionally as the leader you just come in and scrape 'em off. And let's get back to the basics and you'll be shocked sometimes that's all it takes. I've seen countless teams where actually the move to add capacity was to remove the one person who was underperforming and toxic.

Brett:

Wow. So rather than hiring, it's actually getting rid of somebody to free everybody else up mentally, emotionally, time

Dave:

Wise, it's one of those people, when you let them go, the rest of the team is like, what took you so long? And so anyways, I know your question was about actually finding good talent, but it's more the

Brett:

First step is do we actually need somebody or what else do we need to change? Maybe there's just a whole bunch of stuff we need to stop doing. Maybe we've overcomplicated our lives so much that we're spending 30% of our time checking off tasks instead of doing actual work

Dave:

Or whatever. Exactly. Then I think when you're like, okay, yes, I've done all that, but I do need to hire, I'd say probably the most common mistake is people hire off what I'd call a very squishy visualization. They haven't really taken the time to say, what is the system that I currently have? What is the most important place for me to put new talent? And I might want to, the distinction I make is every company has a bottleneck at any point in time. I think I may have told the story at ECF, but we sat down with these people who are sort of in the training consulting, same business we are, they're 20 years ahead of us. And it was over lunch and he's like, what's the plan for the next year? And I was like, oh, we're going to social media and newsletter and courses and programs and coaching and speaking.

And he was like, yeah, what if you had to get rid of one of those? And I was like, oh, it's all interconnected. It's a flywheel, it's beautiful. He's like, yeah, yeah, yeah, but humor me. It's just lunch. I was like, well, I guess I'd cross this one out. And he is like, what? Okay, but if you had to get rid of another one. So anyways, where the story goes, we cross out everything but our cohort program, which is kind of our flagship, it's where we impact the most people. It's very profitable for our business. It's great. And he was like, well, how hard is that? You teach that full-time for a month? And I was like, oh no, we teach for four hours a month or four hours a week for a month. And he's like, oh, so you could do two a week.

And I was like, yeah's, like that's actually only eight hours. He's like, you could probably do four a week. And I'm like, I could, I guess. Yeah, it would be a lot, but I could teach four times a week. And he was like, so your business problem is demand. He's like, do you have 200 people waiting in line to fill up four of these next month? And I was like, well, no. And he was like, so the only problem in your entire business is you don't have enough people who want to take the course. And I was like, how dare you? How dare you dare you

Brett:

Make that so simple and

Dave:

So clear over lunch. I bring that up.

Brett:

I think you

Dave:

Even, sorry,

Brett:

Go ahead. Sorry.

Dave:

No, I bring it up because it's so easy to miss in your own business. Everything that I had was just elaborate, beautiful plan, flywheels and all the right things. And in 20 minutes he sort of reduced it down to you only have one problem to solve and all the rest of the problems you're trying to solve don't matter until you solve that one problem. And so I think that to me is like, can we all get that ruthless about our teams, our business and say, what's the one problem? And then am I going to solve it by freeing up somebody I have to focus on it? Or am I going to solve it by bringing in someone who has the expertise to solve it for me? And that's how I, yeah, it's so

Brett:

Good. I think sometimes we just jump right ahead to, okay, well give me the tips and tricks to hire somebody or what's the best tool or the best website or the best whatever to hire somebody. And you're like, well, wait a minute, do you need to hire someone at all? And then you're like, well, okay, but you're going to hire someone. You sure you need to do that? But what is the problem you're trying to solve? And get super, super clear on that. Take a few more steps, take a little more time in the beginning because man, this is one of the biggest decisions you make. That's one of the biggest expenses you make. You get this wrong. It's so hard to unravel when you've got the wrong person. Even the process of firing them or letting them go is really painful and really hard. And you got to make sure everything is buttoned up, especially as you get bigger. We've over 50 total team members. You got to be careful when you fire someone. So getting this decision right man, you better take the time upfront to make sure you're crystal clear. So love that. Other mistakes you'd point out,

Dave:

I think the other one is you sort of work backwards from your point of like, okay, you had to fire the person. Why didn't it work out? Almost? I would say the 70%. One is not, this person didn't have the skills or the credentials. It's this person didn't fit to the culture, they didn't align to our behaviors, they didn't operate the way we operated. And so often when people are hiring, it's from this point of desperation, it's like the team is burning out, everyone's overstretched and you're like, I just need the capacity. And they make the trade off, they trade off. I need to bring in the credentials and I'll give up on the character. And every time I have yet to make that move and be surprised on the upside, I always pay for it down the road. And then I'm in that expensive death spiral of managing them out, having to do that thoughtfully, start the recruiting process over all, it's six to nine months when you get that wrong. And so I dunno, the other thing I encourage people is to be very clear what are the behaviors that are non-negotiable for your team? And then B, devote sufficient amount of time to assessing for it. And then C, don't compromise. If they are showing you signs in the interview when they are trying their absolute hardest to convince you to hire them, it is not going to magically become better when they come in two weeks.

Brett:

Totally. One of the things we've adopted, and this is not mine, I heard it on a podcast, I think, but if it's not a hell yes, it's a no. And so we've tried to let that bleed to hiring as well. And one thing we've done pretty well is hire for culture. We have very clearly defined culture values. We talk about them a lot. So we hire for them, we fire base on them, things like that. But on occasion, there have been a few people, and I'm thinking of one very clearly where this young lady, she applied, she kind of impressed me. She was very smart, she impressed my COO. But the two team interviews she had, they were not a chance, do not hire this person for these reasons. We're like, no. And this was me being like, no, I've got a pretty good pulse on things.

I've got a pretty good read on people. I understand people. She's going to be a winner. And so we ended up one girl who's been with us forever, she's like, okay, I want, if you end up firing her, I want you to buy us a cake. And so we made this wager and we had to fire her and it worked out just as the team predicted. And so what that's taught me is there's several checkpoints along the way, so our gut is right a decent amount of the time. But if I had just listened to my team and just said, okay, you're right. They're like, these things are impressive, but you're right. Or I'm trusting, right? So this is going to be a no. Anytime I've tried to force through that, always bad things happen. Always.

Dave:

There's this Adam Grant wrote a book give and take, and there's this amazing study he cites in there. It's about this school in California. And it just ties to this exact point where this company comes in and is like, oh, if you let us interview all of your students, we can identify the high potentials so that you can appropriately support them. And so the school's like, great, we we'll totally do that. They go through the thing, they come in, they deliver the list to the teachers. They don't tell the kids who the high potentials are. They tell the teachers the year plays out, they come back, they look at the test scores, engagement, happiness by every dimension. These kids were thriving. They had cracked the code, they had been able to predict who was high potential and then they revealed the methodology for identifying 'em. And it was a random selection. The only thing was yes, the only thing that was different about them was the teachers believe,

Brett:

Wow, the teachers

Dave:

Shifted. The teachers started to assume, oh, this high potential student didn't get the explanation. It must be me explaining it, not their ability to retain it. And so they gave them the benefit of the doubt they operated differently, et cetera. And so I share that because in some ways this ties to your team. As soon as your team had decided that this was not a high potential hire, it had basically been decided.

Brett:

Interesting.

Dave:

And so to your point, it's like if it's not a hell, and again, I'm not saying it has to be consensus, you don't have to have every single person, but it sounded you like you had a couple strong yeses and a couple vetoes going on, and there was

Brett:

A lot of nos, like an overwhelming amount of nos except for me and my COO and we're like, Trump card, it didn't work out. But other hires don't have to be unanimous, but it does have to be, there's strong

Dave:

Support here. Yeah, we said two. Hell yes, and a novito. I didn't want anyone to say absolutely not, but I would take maybes and yeses as long as there were two people who would fight over the person.

Brett:

Yep, yep. Love that. Love that. So good. Cool. So one question that comes up a lot and something that we've even wrestled with, and as we grow, we're looking at different things, but you're hiring a manager, do you favor promoting from within? Do you favor going out and finding the expert? I know for some teams it's like, well, there's only me on the team, so I've got to hire externally. But if you've got a team and you've got a bench, and do you develop talent? Do you recruit talent? Is it both? What's your opinion?

Dave:

I hate to say it depends, but it does depend a little bit. Let's call it all things being equal. If I could promote from within, I would promote from within. I think that for a couple of different reasons. One, there's just sort of the probability of success. You already know that this person fits into your company. You already know they work well with the team. Lots of things that no matter how much you vet an external hire, it'll be a way lower fidelity. And if you just do math, the expected value of that new hire is lower. The second thing is I think it just creates, if you want to have a higher performing organization, you want to have this belief that I can be rewarded, I can grow, I can thrive. And you could say that all day long, but if you're not showing that, it doesn't matter.

And so I get the benefit of the rest of the team from them seeing that happen. The reason I say it depends a little bit is I think the common mistake is to say, who's my highest performer in whatever function it is, they should become the manager. And they may be a high performer for capabilities that are different than the capabilities of a manager. And a lot of times if you get those really high performers, to be honest, they don't want to manage. They don't. They've developed a pride of craft in software development and graphic design and whatever it is. And we're saying, take half that time off, succeed only through other people, devote yourself to their improvement, their growth. And you sort of lay that out and you just usually see the body language. The people who genuinely want to lead and manage are like, yeah, I know. And the ones who don't are kind of like, I would endure that for the race.

Brett:

Well, it's kind of like, yeah, you take the best salesperson, you make them a sales manager, you take the best coder, you put them in charge of the development department, and that often does not work. The best player doesn't often become best coach. It's a really unique skillset to lead people and manage people.

Dave:

And something that I see people do more and more is sort of say, well, how can I actually get both? And so you have this expert salesperson and you might say, well, there was something in my instinct of wanting them to be in charge. And it's like, well, maybe it's their approach. Maybe they have really high standards, maybe they're good at evaluate. There's things that they're

Brett:

Good at teaching but not good at managing or something like

Dave:

That. And so you could say, well, maybe I'm going to promote the manager and then I'm going to say, Hey, manager, this is like your subject matter expert and I want you to work together. You get to have more impact on the team because the subject matter expert gets to have more impact because their approach, their methodology, their evaluation cascades through and the manager gets to do manager things, people development and development plans and assessments and et cetera. And you can sort of make it where one plus one equals three. And so you don't even have to, I'm seeing more and more companies be a little more agile with how do you combine the capabilities as opposed to, I've got to be holding to a title, love that.

Brett:

Or, okay, this person's going to be the director, they're going to be the manager. So they have to have the entire package. They got to be the smartest, they got to be a teacher, they got to be a manager. That's pretty rare, pretty unlikely I would say. One question that I did not prep you with at all, but I know I can tell you're fast on your feet. So this is something we've been talking about a lot. How do we have managers in place, leaders in place, but also maintain a flat culture, right? Because it just seems like as we've grown, as I've watched other companies grow, things can become kind of hierarchical and then where people are disconnected and the person at the very top doesn't hear feedback from the rest of the team, how do you like to structure teams? Any rules of thumb or anecdotes on how do we put in place but avoid being this bureaucracy or hierarchy that really slows things down?

Dave:

I will answer, but let me ask one question to clarify. There's some inherent goodness you're seeing in a current flat hierarchy. What's the goodness you're hoping to retain while adding in a little bit more management?

Brett:

So I think the best parts of a flat structure is that ideas come from anywhere. And often the best ideas to improve our Google ad service, our Amazon service comes from the people actually doing the work. And so how do we make sure those ideas are surfaced and those ideas then are spread throughout the organization rather than a situation where the manager is expected to come up with a solution or whatever. And so I think that the collaboration and the more ideas coming from all over versus just from leaders

Dave:

And what's the badness you're trying to correct by having more managers?

Brett:

So just in my experience, and this isn't always OMG, just observations. Sometimes having managers in place slows things down. How can we, I'm trying to think of the saying, but if you have more marketing people, they want to have assistance and you have more salespeople, they want to want to add these layers to the organization, whatever. It seems like as we add managers or leaders, things become slower. The manager's like, Hey, my goal here is to create a really well-defined process well, but it's also to get this thing done for the client and then to make this thing work. So I think speed and still without the wheels coming off the bus speed, then how are we still accomplishing our mission and serving clients? So So collaboration on the flat piece is what you want to preserve. And I think speed and speed to innovate on the things we want to avoid with the hierarchy. Got

Dave:

It. Super helpful. I don't want to just give you the one size fits all.

Brett:

Yeah, I

Dave:

Love it. I think in that this is

Brett:

Live coaching, Dave, people are sitting in on a live coaching session, this is awesome.

Dave:

So look, if I'm in your shoes, I think, and you sort of pattern match to companies that have tried to do this. And again, I don't think that there is any optimization that gets you everything where we have the simplified communication and decision making of a three person company while having the structure and organization of a 60 person company. So there's going to be some trade-offs. I think as people get to this 50, right, around 50 employees, they feel this need. It's like the founder can no longer touch everybody and really understand each person Ray would talk about at that level is when he couldn't send gifts the holidays and know what people wanted anymore. So it's just very natural. So you need that to be in there so that people do have a go-to person who's caring about them, who's helping their career, who's helping them make sense of the bigger org.

I think the three things that you would look at to set that up well, and one will be incentives. And so you need to be careful about how you incentivize these managers. If you incentivize them competitively, then they're going to hoard things that give them power. And what gives you power in a knowledge business is going to be ideas. So if you want the ideas flowing very flatly, you can't incentivize them to sort of be in a winner take all you need to incentivize them to promote ideas and things like that. So I would think about one, what's the incentives that these new managers have? Two would be, and you sort of talked about, you probably already have this as I would just go back and make sure they support it. It's like what aspects and behaviors of your culture have you codified? So an example that comes to mind, snowflake, Frank Sluman was the CEO.

He took over and sort of helped them go through the scaling. He had done it two or three other companies, they added a value of go direct. And so the idea was even as we get bigger and create different fiefdoms, the first place you should go to make a decision is direct to your counterpart at your level in the other part of the organization, not up love that they thought when people didn't go direct, it was a break worth diagnosing. And so if you think about the transmission of information, and I'm an analyst and it goes up through my manager, to my vp, to my director or over to this director, back down through the vp, like holy moly, and even the semi, you're

Brett:

Never going to get an answer fast enough to do anything.

Dave:

And so the idea was they codified that. So people were very clear like, oh, when in doubt I should see if I could figure it out with my counterpart. And only then if we can't do we escalate and get help. And so I would look at how do you codify that within your values and then connected to that, I see this a lot with remote work, but I think the same thing. It's like anytime you have transformation, things that may have been happening organically, you have to reconstruct with intention. And so when people went remote, just take feedback as the example. You and I were walking back from a meeting, we're going to grab some lunch. I'm just like, Hey, I thought this part of the thing was great. I think you kind of missed the note on this. It's super casual and feedback's flowing and happening.

But it happens today and you and I are in two different countries and we finished the zoom meeting. That feedback has nowhere to go. And so I now have to intentionally create a moment where we're back together hopefully relatively soon after the thing, while it's high fidelity in all of our minds, but it's just the thing that could have been accidental now has to be on purpose. And so I'd say you need to think about the reason I was asking you what is the goodness you want to keep is because you'll probably have to put some sort of ritual in place to catalyze that goodness to push back against the hierarchy. Do you know what I mean? And so that could be

Brett:

So good, so good.

Dave:

So if it's ideas and you're like, I really worry that the best ideas are going to get tamped down, you're like, we have a ritual where every Friday it's a all hands and everyone comes with an idea. There's no hierarchy in that room or we're riffing fast. But I think if you have incentives, you have it codified in your culture and you have some sort of ritual to push back, you probably keep most of it.

Brett:

Dude's so good. I am looking at the time and I want to book another hour with you. This has been fantastic, but I do have one question that we'll kind of wrap up with you. I know you're up against it, I'm up against it as well. But how do we create clear KPIs, key performance indicators or measurements for our managers and for our teams? I do think a lot is tied into that, being aligned on direction, being able to give and receive good feedback. A lot of that ties to KPIs and measurements. And so how do you advise people construct those

Dave:

For measuring the quality of managers? That could be another hour.

Brett:

Lemme just throw the biggest question. The day out here as we're

Dave:

Nearing the, here's the two minute version, I would say whether you're setting goals, using OKRs, whatever else, there is probably some set of objectives you're going after as a company. I'm not a big believer in the perfectly cascading OKRs where someone else's key result becomes your objective and it's perfect because by the time you get that plan together, it's obsolete. But call it loosely coupled versions of that I'm a big fan of. And so if I'm then going to translate that to managers, I would say mostly I want to measure my managers on the output their teams produce. I don't know, that might be 80%, the other 20% might be the sustainability of the team they run. Do the people feel developed? Do they have good retention? Do they have good velocity, et cetera. Again, you could sort of play with the reality of your org and how you would weight those. But I find when people put too much emphasis on the craft of management, bureaucracy runs rampant. And when you basically say only the objectives of the team, and I don't care about how you manage people will cut a lot of corners for near-term gains and you end up eroding the long-term sort of sustainability of the team. So that's

Brett:

Love that. So it's to 80% output, 20%, how are you managing, how sustainable is the team that you're leading? That's brilliant. We will have to do part two because I've got a lot more questions, but this been so good, man. It's been so good and so fun. As people are listening to this and like, dude, I got to get more Dave Kline in my life. I got to connect with this guy. I got to understand the management accelerator and things like that. How can they connect with you and what are some of the ways that you help?

Dave:

Three easy ways. We're busy on social. So Decline II on Twitter, Dave Kline on LinkedIn. We have a weekly newsletter called the Management Playbook. It's always under a four minute read, super practical. And then we do run our management accelerator publicly three times a year. Next one is April 30th, and otherwise we're in-house running our program at a lot of companies. And so big, anyone has questions, we would make it very easy to reach out to us. You can do it on any of those platforms.

Brett:

Love it. And what's the u rl one more time for the management? It's

Dave:

GMT accelerator.com.

Brett:

Awesome. I'll link to everything in the show notes as well, but Dave, this was brilliant. Thank you so much serious about part two. We'll have to do that. Any parting words of wisdom? Anything you want to close the show with

Dave:

That's even more pressure than the OKR thing? No, look, the last thing I'd say is this. There's all this like, oh, I can be a good manager, but I don't have to be a leader. And those days are gone. The expectation table stakes now for people who are in manager roles is like you have to lead. And like you said, leading is just being kind and direct. Leading is being developmental and coaching leading is helping people better than they maybe themselves even believe they can be. And so I think once we embrace that, then we can start to get good at it.

Brett:

Got to lead in management. Dave Climb, ladies and gentlemen, Dave, you nailed it. Thank you so much. Thanks for having me and I look forward to doing this again. And as always, thank you for tuning in. We'd love to hear from you. Give us that feedback. Hey, give us that clear, candid, no holds barred, Ray Dalio style feedback. Maybe do that privately, not publicly if you got anything that you don't like about what we're doing here. But in all seriousness, do want the feedback. Love this community. Thank you for tuning in. And with that, until next time, thank you for listening.

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‍

You probably know him from the YouTube ad that begins with "YouTube beats Facebook every time…" 

‍

In this episode, I interview Aleric Heck, founder and CEO of Ad Outreach and KeywordSearch.com, to discuss how eCommerce businesses can leverage YouTube ads for growth. 

‍

Key takeaways include:

• Aleric's journey from creating a successful YouTube channel to becoming a YouTube ads expert, focusing on coaching and consulting businesses.
• The importance of crafting compelling YouTube ad creatives using a "hook, educate, call-to-action" framework.
• Leveraging YouTube's unique audience targeting capabilities, such as custom intent audiences based on search behavior and affinity audiences based on interests and URLs.
• The power of Google's vast data in audience targeting and the potential for even more advanced targeting options in the future.
• An introduction to Aleric's AI-powered tool, Keyword Search, which streamlines the process of finding the right keywords and creating custom audiences for YouTube ads

‍

Here are a few quotable nuggets from the podcast:

‍

"If you can give people an "aha" moment in the ad and actually provide them genuine value, they are far more likely to take action." 

‍

"Google knows everything about everyone, essentially. And so I do think they're holding back on targeting somewhat to protect the user and to protect themselves." 

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Chapters: 

(00:00) Introduction and Background

(08:26) Pivoting to Coaching and Consulting 

(12:22) How To Approach YouTube Ad Creative

(34:52) Targeting The Right Audience

(42:06) Outro

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Show Notes: 

• AppFind‍
• Ad Outreach‍
• Ad Outreach - 8 Figure YouTube Ads & Funnel System‍
• KeywordSearch.com‍
• Aleric Heck - LinkedIn‍
• Click Funnels‍
• Hubspot Inbound‍
• Russell Brunson - LinkedIn
• Google Marketing Live‍
• Tested Advertising Methods‍
• Ryan Mckenzie - LinkedIn‍
• Tru Earth
• William Painter‍
• Raindrop‍

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

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‍

Other episodes you might enjoy: 

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• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

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• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

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• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

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• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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Transcript:

Aleric:

The goal is if you can give people this aha moment in the ad and actually provide them genuine value, they are far more likely to take action.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today have I got a treat for you. We're talking about YouTube, what's working now, and I have an absolute expert in the space, someone that I've known about for years and then known for quite some time as well. We were in the same mastermind together. Shout out to War Room, made that mastermind group rest in peace. And so we've seen each other's work and it's been super fun. We have different areas of focus where e-commerce is kind of e-commerce focused. My guest today, Aleric, is focused on larger ticket items, lead gen coaches and consultants. But I think the synergies of what we do, bringing those together, going to create some powerful insights and results for you. And so my guest today is the founder and CEO of Ad outreach and keyword search.com. None other than Aleric Heck. Aleric, welcome to the show man. And how's it going?

Aleric:

Awesome. It's going great. Thank you so much for having me on. I'm excited. This is going to be great,

Brett:

Dude. It's going to be a lot of fun. When you reached out recently, we were talking about leads and stuff, and I was like, oh, why have I never had Arik on the podcast? And so then we made it happen, and here we are. And so thanks for taking the time. I know you've got some really great insights. We're going to have fun kind of riffing on some YouTube thoughts, and so super excited to dive in. I want to know though, this is part of the story that I do not know, how did you become a YouTube expert? Why did you choose YouTube and how did you end up here?

Aleric:

Yeah, yeah, and that's a great question. It actually is a really natural evolution. It's probably different than a lot of other people that get into different ads and that side of things. I actually started organically on YouTube 15 years ago with the YouTube

Brett:

Channel. Interesting. Yeah.

Aleric:

Back in 2009, I created a channel called App Find and I was reviewing mobile apps, tech tutorials, and what really helped the channel take off was I was teaching people how to use their iPhone for the first time. So I've got some of those basically for every iPhone iteration. I think after the iPhone four, I was doing a complete beginner's guide to the iPhone and those videos.

Brett:

Wow, super interesting.

Aleric:

Yeah, got millions of views. So millions of people watched them. One of the videos, I think the most popular one was the iPhone seven complete beginner's guy. That's when a lot of people were getting an iPhone for the first time. It has over 8.6 million views. It's crazy. So

Brett:

No way is it still getting views to this day? Did you pay attention? So are people still watching an iPhone seven video for whatever reason

Aleric:

They are, believe it or not. And actually it's a lot of other countries outside of the United States, so it's actually really interesting to see.

Brett:

I got this used iPhone seven and now how do I use it, type of thing.

Aleric:

Exactly, exactly. And so it is really interesting because the back catalog of all those, the videos that I made years and years ago on YouTube, still get those views. And I saw recently the term iPhone tutorial, we rank for several of the placements on the first page including, and it also kind of depends on where you search and stuff, but generally it usually pops up first, second result, which is pretty interesting. So some of the videos that I'd created a long time ago are still doing well. And actually today I have hired somebody out of this guy in San Francisco who I've known for a while in the tech kind of space, just to take over the channel, keep it going, and still putting out content every week. It's just not me anymore, but amazing man. Yeah. So keeping that alive, which is

Brett:

Great. It's so cool. It's one of the things that really differentiates YouTube from any other social platform is that content, good content, organic content gets better over time and sometimes it can get more traffic over time, and it can last for years. It can last way. Beyond the point that you think this could ever be relevant, your content may still live on even an iPhone seven video in 2024, still getting some views because a pocket of the world that wants to learn that and wants to see that, of course, we're focusing on ads. I know you pivoted to ads as well, but understanding the way people work within YouTube is super important. So how did you make that leap? So you saw the power of YouTube organic, how'd you make the leap to ads?

Aleric:

So I had all of these different people that were wanting to sponsor the channel, these mobile app developers. This was also the heyday of mobile apps. So think like 20 13, 20 14, 20 15, 20 16, around that timeframe. And I was actually was in college at the time and I had all these different apps that were reaching out and I was doing YouTube videos to promote some of these different apps. I would either put it into the existing videos or do dedicated videos and I was turning it into more of a business and then I got a video editor, script writer, all that stuff. So I was turning the YouTube channel more of a business, and I remember one day, and normally I would just do these app videos. So let's say it's a dedicated video, people would watch it on the channel, it'd be great. And maybe they'd come back later and they'd do another promotion or they'd work with other influencers.

Well, at one point I had one social media networking app that had hired me to do a video or pay me to do a video. I post a video, they get a bunch of downloads that this is great, can you post that same video again tomorrow? We want to double the results. Then I said, well, hey, it doesn't really work like that. You can't just post the same video to the same channel the next week and double the results. That's not how organic works. And they said, well, how can we get more people to see this video? And I said, well, what about YouTube ads? And I was aware of YouTube ads, but I hadn't really done it at that point. And this was kind like 2014 going into 2015, I think that was in the beginning of 2015. And basically like, well, what did we take this mobile app or the video that I made, just the standard video on the channel and just run that as an ad to get more people to see it.

So I set it up just from scratch. I just went in, set it up the first campaign, and then we ran that as an ad. They ended up getting thousands of downloads from that and they loved it. They're like, this is great. So then they go and tell somebody else that it was kind of a performance marketing company that hired me. So there was another developer that was working with them, which is a bigger company, which ended up becoming later on becoming a unicorn company, which was pretty cool. But there was another app that they're like, all right, we're doing a big promotion now. We've got a bigger budget. The second YouTube ad campaign I ever ran was a thousand dollars a day budget for this mobile app that ended up totally blitzing, but that's again, now today we look at that, we're like, all right, there's obviously bigger clients we have than that, but that was the second one.

They're like, you did so well with this here, we trust you to do that. And then I just learned just from doing it what worked, what didn't work. And I think I realized I had a natural affinity towards media buying. I understood how it worked. I was going in reading Google documentation, so it wasn't like I was doing completely blind, but I was just kind of diving in and it was in the earlier days of all this. So I ran that promotion and then that company and I ran that for a while, and a company calls me up, and again, like I said, I was in college at the time. They were like, they want me to drop out of college, fly out to Silicon Valley, join their team. They're like, you can run our ads, YouTube ads and all this stuff. And it was tempting, but I decided to turn it down.

I'm like, I want to build this myself. I see the opportunity here. And so then I tapped my network. So by that time I had worked with hundreds of app developers, had sponsored the channel because at one point it was the top app review channel on YouTube with half a million subscribers, all that stuff. So essentially I had all these apps, and so I just reached out to 'em and said, Hey, here's what I did with this company. I would love to do that with you as well. And I've, since you mentioned, gone away from apps and into which actually I'll get to into more of the coaching, consulting and high ticket space. That's how I got my start, was doing those YouTube ads for apps. Then I discovered ClickFunnels in 2016. I was at HubSpot inbound. Shout out to Russell Brunson exactly. Shout out to Russell Brunson. I was there. ClickFunnels had a booth. They were still early on. And I remember signing up for that. I'm like, this is awesome. Then I said, wait a second. I can go and promote things that are more than just a free app with in-app purchases.

And so that brought me into a whole nother world. I joined my first mastermind also in 2016, and the natural evolution was this mastermind was really designed for consultants, agencies and coaches. And originally I created a webinar for how mobile app developers could promote their app with YouTube ads, and it was designed to get potential clients for me. But what did I run to the webinar? Well, obviously I knew YouTube ads, they were talking about Facebook ads and this mastermind, but I was like, yeah, I'm just going to do YouTube ads. I did YouTube ads to the webinar and it worked really well. And what started happening is everybody else in the mastermind was like, wait a second. How are you getting these results? I quickly became one of the, I got some pretty good results and I said, oh, it's using YouTube ads instead of Facebook ads. And that's when they all started asking, okay, what are you doing?

Brett:

Show me the way. Help me do this for my coaching and consulting business.

Aleric:

Exactly. That led me to really pivoting over to helping coaching and consulting businesses with YouTube ads. And actually for a long time, we have clients that we run ads for as well, but one of the big areas is we also train a lot of coaching and consulting businesses in how to run YouTube ads, helping, that's like a hybrid process, so helping them set it up, but then kind of handing over the keys. And then of course we've got clients that we'll run ads for as well. And we've also got some training programs and things, but really focused in that coaching consulting area. And it's something I love just because a lot of people that are going out and they're creating some kind of impact on people's lives or businesses and it's really rewarding to support those, support

Brett:

Them. Super cool, man. I love that background story. And so we're going to dive into content in just a minute. And the creative that works on YouTube, because the creative that works on YouTube is different than the creative that works on Meta or on TikTok or on other channels. And so what I love about your background though is that you really got to know the platform. Your goal wasn't to become an ads expert. That just kind of happened, but you created great content and people were consuming that. And it was one of the top tech review sites and app or channels and you were talking about apps and stuff, and it just took off for me. My background is from a different perspective, but still kind of the background just led perfectly to YouTube. I did TV back in the day, so I did TV ads kind of pre OMG, and so I really learned what makes for a great TV spot and how to target and things like that.

And what's interesting is that there are some similarities between TV ads and YouTube. I think YouTube is more TV than certainly Meta or TikTok or other platforms are. And then I really knew SEO, I really knew search, I knew query based traffic. And so you kind of bring those two together and that is YouTube or that certainly was YouTube back in the day. And so we were all e-commerce, and I remember, I still remember where I was, I was at a Google Marketing live, I believe it was in New York City. So I guess I mostly remember where I was when they talked about video action campaigns where you can run YouTube but bid to hit a CPA target customer, a cost pro acquisition target. And I was like, this is it, man. This is where this is a new opportunity for us. We can crush this. It's like all my world's colliding. And so then it just worked. And so super cool to hear that. Let's talk creative though a little bit. I think this is where most people go wrong. I've heard Google say that 50 to 70% of your success on YouTube is driven by creative. I think that's true. I think that's true across all platforms, but how do you guys approach creative and what's your framework for creative that works on YouTube?

Aleric:

So we really take kind of a three part framework of hook, educate, then call to action with the ads, especially since we're working with a lot of experts that have some type of value and expertise to share the educate portion we found is really important and it's essentially the key. So you talked about the similarities with television ads. I think that also there's kind of a similarity here too with the expert based ads to maybe those more infomercials or a short form one, not like a super long, but I remember watching some of those types of things growing up and obviously seeing the evolution to ads and essentially really hooking people and capturing their attention. And there's different ways to hook them. It could be identifying a problem that they have showing that you're going to have a solution. It could be more of a pattern interrupt, something to capture their kind of attention.

It could be the answer to a query that they're looking at. So it's like you kind of jump right in and it's almost like that's the video that they were meant to find, which works really well. But basically there's ways to hook people at the beginning to capture their attention, get them to decide, okay, I want to watch this ad. And then from there the educate section is really providing that value. I say I call 'em golden nuggets because we do want to keep them relatively short but worth their weight in gold. So they're small but really valuable. And so you might give a few golden nuggets, a few key points that's going to help somebody. So again, we work with a lot of coaches and consultants, so they might share a couple of keys to losing weight or to selling on Amazon or things like that, or a few keys to going and changing their life or personal development, whatever happens to be.

So share a little bit of that. And the goal is if you can give people this aha moment in the ad and actually provide them genuine value, they are far more likely to take action, the end, which is the call to action because we are sending people to a different kind of place. So whereas you're on the eCommerce side, usually going to be sending more to, and there's obviously different ways to do it, but more to have people purchase a product, what we're going to be doing is usually sending to some kind of training or lead magnet. And we found with YouTube it's the best to actually send it to a video based training because they're watching video on YouTube. They'll go from video to another video and they can go and opt in for that training and then kind of continue. And usually it would be going to book a call and then become a client, or the video might, or webinar might lead to a course or some kind of thing along those lines.

But essentially the hook, educate, call to action providing real value inside of the ad. And I think that's really, really key. And I'll give kind of an example of one of these aha moments, which I think is really, I don't always do this, but I think you'll appreciate this as somebody who I know you've created some been behind the creation of some pretty remarkable ads. One ad that worked really well for kind of a nutrition coach and fitness based person is he had a kind of cup measure you can see through, so you can see filled with oil. So just imagine this kind of measuring cup with oil in it. And he starts off the ad by saying, if a calorie's a calorie, why can't I just drink 2000 calories of oil every day and stay fit? And then he said, okay, now that we've established a calories and a calorie, why do you think that you could just eat 2000 calories of pizza and be healthier than 2000 calories of salad, right?

Because everything that you know about calories is wrong. There's actually more, let's talk a little bit about macros and then diving into that. And so basically then there's education. So it gives this aha moment. It's a visual representation. It's saying, okay, this now makes sense. And if you watch that, and I know that was a big moment for me, I had my own weight loss journey when I kind of realized that there was more to it than I had thought. And it's like how can you distill that into an ad then teach a little bit, provide value? So you've changed their worldview, now you provide value, now you have a call to action at the end to get them to go and sign up for the training where they're going to actually learn. So now you have the what and the why, but what's, how do I actually do this? So it's like, okay, calorie's not a calorie. I need to figure out macros. I've learned something, but I don't know what to do, what actually how to do it. And so that's what is behind the training that people opt into. So that's just an example.

Brett:

Yeah, it's so good. And I want to talk about the middle piece. I want to really dive into the hook because I think that's where a lot of people go wrong. So we'll spend some time there in a minute. But the educate piece, this is where you want someone to feel like my life is better just from watching your at. How weird is that? I feel like I got some value from this ad. In fact, I could probably take what you just said, A calorie is not a calorie. I can go quote that to my friends. I can use that at the next dinner party that I'm at and I'll sound super smart. So there's a little bit of value there. I believe it was John Caps in the book tested advertising methods, although I may have this wrong, where he talks about creating fascinations, these little elements of an ad where it's like, oh, I didn't know that.

That's super cool, right? Super cool related to your product or your service or your offering. And it just gets me intrigued and it also delivers some value. So that's really cool. And we've got a couple other layers that we add there for e-comm. But yeah, it's a similar approach where it's like, I want to teach you something you did not know about this because it's going to change your world and then you'll want to buy my product. And so I do want to talk about hook though for a minute because I think this is where a lot of people go wrong. I think this is where we want to contrast a little bit to our TV brethren and our TV friends and compadres tv. Historically, Madison Avenue type TV ads are great at hooking and getting people's attention, but often getting attention in the wrong way, getting attention in no way that relates to the product itself.

We've all seen TV ads we're like, man, that was funny. Monkey jumped out of a trunk and this thing happened and that thing happened. And you're like, I don't have a clue who that ad was for. And so I think you've got to hook someone in a way that's totally relevant to your product. And so you can do things like pattern interrupt, you talked about that. My buddy Ryan McKenzie from True Earth Laundry detergent strips, they've got this ad that was wildly successful that started with, hey, what should you never mix with water? And then it's witches and electronics and super silly stuff. And then it was also laundry detergent. You're like, what shouldn't mix laundry detergent with water goes on to explain it. So pattern interrupt can be really valuable. Sometimes it's just like a thought provoking question. My buddies at William Painter sunglasses, I kind of help them with media planning and stuff.

There was this great ad created by Raindrop where the spokesperson came out and he is like, your face is your moneymaker, so why would you cheapen it with cheap sunglasses or whatever? Why would you put cheap sunglasses on your moneymaker? And so coming up though with a hook that fits your product so that when someone is leaning in and paying attention, it's related to your product or related to your service or related to the webinar you're about to send them to. And so any other insights you would have on hook? When is that done Well, when is that done? Poorly? Curious how you guys test hooks, just any insights there. Yeah,

Aleric:

And we'll usually on the hook side test several different hooks. I think that's really important. You got to see what is going to work, what's not going to work, and I think having some type of curiosity is really valuable. Also, a great hook pushes away people that aren't a good ideal client and pulls in ideal clients. Now in the past, that was even more important. Back when, and we were talking about all the changes that we've both seen in the YouTube ad platform, but back when it used to be more of the paying per the CPV and it was more based around the 32nd view is what you paid for, then it was like really like, okay, let's get you off this ad if you're not relevant. Now it's more of an algorithm as we both know in terms of bidding based on the CPA.

And so it's a little less on that side. However, it still is important to train the algorithm. So you want the wrong people to skip and the right people to watch the ad. And so one of the things that is also valuable is calling out who that ideal potential person is or using language that they're going to resonate with. So for instance, one of our top hooks is actually around YouTube ads versus Facebook ads. Like YouTube ads beat Facebook ads every time. Let's face it, Facebook ad costs growing through the roof and even when you have great ads, they're almost impossible to scale. In this video, I'm going to show you how you can use YouTube ads just like the one you're watching right now to scale your coaching consulting business to seven or even eight figures.

Brett:

You've done that a few times. You said that

Aleric:

A few times.

Brett:

I have done that, a few. You have seen that ad so many times, but it's so good. And what's crazy is the way you structured that that was fitting several years ago, it's just as appropriate today. And I'm assuming that video is still crushing for you. Oh

Aleric:

Yeah, it's still crushing the original. And so we've done new, we filmed the video a few other times the educate section has changed, but before some of the changes to the platform, we had that one video. That one video was an eight figure ad. We did over 10 million revenue track from that one specific ad that we ran millions of views to. And since then, and

Brett:

That is one interesting thing too, and just as a side note here, Arik with Facebook, I do know some people that they have outliers with their Facebook ads as well and one ad that will vastly outperform the rest, but it still seems like on meta or other platforms, there is ad fatigue and that ad fatigue can sit in kind of quickly. Well, we continue to see with YouTube is if you find one or two or three ads that really hit, you may be able to run those for a year, sometimes for two years, right? Because the audiences on YouTube kind of turn over quickly, and so sometimes you get that winning horse and you can ride that thing for a long, long time.

Aleric:

Exactly, and even when we decided to phase that ad out, it was still working. It's just the content in the middle of the ad was not relevant anymore. We were talking about the old way of doing YouTube ads, which is more keyword and placement targeting, and it's shifted over into audience targeting, which I'm sure we'll talk about a little bit shortly. But basically that ad just continued to perform really well and then it's okay, well this is a good hook. Let's pair that with other new educate section, but with clients that maybe are going into YouTube for the first time, they don't know what hook's going to work or not. What we like to do is create four or five, six different hooks and actually just put those together. It doesn't mean you're filming that many videos. You want to film the videos, segment them out. I'm sure you probably do something similar.

Brett:

More modular type content. Exactly. Mod we can mix and match.

Aleric:

Yeah, so let's film half a dozen hooks. Let's film a couple educate sections, maybe a couple call to actions, maybe one goes to a training, one goes to a webinar or a PDF or whatever, and then put those all together. Now we have 24 different videos in the time it takes to film just two or three videos.

Brett:

I love that so much and awesome. So we got the hook and we found that that is the biggest lever to pull, the most important lever to pull. If you nail the hook, the rest becomes much easier if you do not land the hook than really none of the rest matters either. But let's talk about the educate piece. Some of the ways we look at this slightly differently, although I bet these components are also in your formula as well. We look at things like product demonstration for e-comm, I got to see the product in action. I want to see the sunglasses, I want to see the yard tool that I'm using. I want to see the automotive accessory. I want to see it. So that's important. I also want some social proof. I want to see, hey, are other people like me using this, enjoying it? Maybe there's some UGC or maybe it's just reviews on Amazon or on the.com or whatever that really bring to life this product works. And then I want to overcome objections because all skeptical, we've all been burned by ads in the past, so what am I doing to overcome objections? And so we kind of blend that into the middle part that we call kind of the product demo, but what are a few of the pieces there and the educate portion of the video that really makes that effective?

Aleric:

Yeah, yeah, that's a great question and there's similarities there. It's a little bit different in this side of things. One is you actually want to start the educate section by providing a little bit of credibility, but you don't want to go too over the top in that, and this is especially with expert based businesses because you want to demonstrate before you teach people that you are somebody to pay attention to,

Brett:

Why should I listen to this

Aleric:

Person? Exactly, why should I listen to you? Now, the mistake people make though is they say it right at the beginning and that's not a good hook unless it's something completely ridiculous where the coach behind this famous athlete, and that's going to be a hook in of itself. In general, what you want to do is you want to have a hook. Then you go into, we call it the why you, okay, so why should they listen to you? And that's really going to kind tout the expertise or credibility that you have. Sometimes that's more positioned around yourself and what you've done, or it could also be positioned around results that you've gotten, clients track, record, whatever it happens to be. So you do that relatively quickly. Once you do that, then we like to do either one kind of bigger teaching or three golden nuggets.

So it depends on, and actually we'll usually recommend split testing this. So like I said, there's two educate sections. So one is to teach on one particular topic, maybe to pull back that example, it could be on macros or it could be on our alpha AI targeting strategy and how that's different. It could be basically just one kind of general topic or it could be three tips or recommendations. One of the biggest is myths. So busting myths. So if people had a preconceived notion about something, how can you actually tear that down, tear that apart, and potentially addressing problems or mistakes other people have made in the past. So maybe they've tried something similar before, like you said, and here's why they shouldn't do this, shouldn't do that, shouldn't do this instead, here's what they should do. So I think that when you're looking at the educate section, there's a few different ways to do it, but you want to provide credibility, then you want to provide value, and what we talk about with our clients is to focus on the what and the why, not how is way too long. It's also what's gate kept behind.

Brett:

That's what they're buying, right?

Aleric:

Exactly. And ultimately it's not even behind the opt-in, it's really that's what they're buying at the end of the day, but we want to give them, it's like what and why should they care? What is it? And then they're going to go and get more information, more holistic picture by opting in than they go to training, which we've found. What works really well, this is actually interesting, is so what we do is call it a video conversion funnel, and it's like a cross between a VSL funnel and a YouTube video that people might watch instead of the classic VSLs that I'm sure both of us have seen, many people who are listening or watching have seen the ones with the text on the screen. It's like white background, black text on the screen, maybe a couple images pop up more slideshow. What we've found is going from YouTube to a training, it actually is good if it feels like a YouTube video, so a 15 to 20 minute long YouTube feeling video.

So where you're talking to the camera, if there's slides, you're in the bottom corner, maybe it's a demo, maybe it's even just you kind of talking to the camera and things pop up on the screen as you're talking right alongside, you have these little callouts or things, and so it feels like a YouTube video, but you follow the framework of A VSL to take people again and rehook them. You're demonstrating credibility, you're taking them through, you're teaching them something. You're then stacking what they're going to get from either an offer that you might be selling or in a lot of cases more booking a call, like a strategy call. Here's what you're going to get. And then tying back to that, so kind of following that strategy, but doing it in a way that feels like a YouTube video, so it's produced a YouTube video. That's what we found. I

Brett:

Like that because one of the things we look at a lot, and again, it's a little bit different with e-comm, but you want someone to feel like they just clicked and they ended up in the right place. I just saw this product demonstration. I saw some kind offer. I saw some person demonstrating the product. Now when I click and land on the lander, it feels like what I just saw in the video. So you don't want someone to click and then they're like, wait a minute, that right place that I clicked that I clicked the wrong thing, I got to get out of here. And I think it's a similar thing what you're talking about. I just consumed a YouTube video. I've already shown that I like YouTube. So now when I land on this page with some education or a deep dive into something that feels like YouTube as well.

So that landing page, that landing page experience is super, super important. I want to talk briefly because I want to get into some audience targeting in just a minute, and I'm trying to be mindful of time here. I want to talk about the call to action just really quickly because I think this is a place where people fall short. If you don't ask someone to take a specific action, guess what? They will not take it right? I think we assume too much. We think, well, I just showed this awesome product, or I showed this awesome training, and so they'll just click and they'll go consume it, but really we need to spell it out, click here, get the free trial, order the sample pack, watch this video so you can see this product in action. Sign up for a free whatever. And so anything you teach or help people, one thing we actually just did recently, we do quite a bit of YouTube for retail support. So hey, this product available in Walmart near you, it'll be the best price you can find. So what do you specifically want them to do? Do you want them to click and buy? You want 'em to go to Walmart, you want 'em to target? What do you want them to do? So anything you teach on call to action.

Aleric:

So what we teach on that side, and that's a really good point. You need to tell people to be able to take action, and that is what's going cause those conversions. And so we like to recommend saying the call to action three times at the end of the ad. Now, sometimes it is time sensitive, so it depends on where people are at the length of the ad, but in general, three times is really valuable because it's the repetition. And so I'll give you an example in a second. I don't have it as quite as rehearsed as my hook, but I'll give you an example in a second. But what we say is we want to restack the value that they just received. So now that you've seen just how powerful YouTube ads can be, now that you've seen why it's more than just counting calories, I want to invite you two, click the link right here on the screen or below to go and register for our training.

We're going to walk you through exactly how you can X, Y, and Z. So what are they going to get? So remind them, we just gave them value. Attention spans are short. It's like, all right, we just gave you this value. We want to give you more value, and then you tell them exactly what to do. It's not just like, oh, sign up for my training. It's click the link right here on the screen or below the video, and that's going to get you access to our full training where you're going to learn how you can X, Y, and Z so you can achieve the result that they want. And when you go and sign up by using the link right here on the screen below the video, you're going to be able to get instant access. All you got to do is put in your name, email, phone number, and you're going to be able to get full access to our training where we're going to show you how this works and there's only so much we can cover in a quick video like this. That's why we have this training available. And that way you can bookmark, you're going to be able to have that as your resource. So something like that, again, it's going to be different depending on the person, but basically it's another reason that they want to do it. They want to take action reminding them that if they already got value here, they're going to get so much more and then add a little bit of urgency.

It's going to depend. If it's a webinar, that's an easier one, right? It's like we're watching this, there's a webinar coming soon, et cetera. And then at the end, once we say click the link again, we'll actually go into a screen. I'm actually very curious if you do something like this because, and I will say it's been a little bit since we really more in depth tested this, so now we just kind of do it. We just kind of rolled it out. But basically at one point we tested putting a picture on the screen of the opt-in page that we're sending people to and not doing it, and it actually increased the conversions by small, but one 2% on the overall, not necessarily on the, but basically it actually increases the conversions by just showing, okay, here's where you're going to go. You're going to get to a page looks just like this, just putting your name, email, phone number, you can get instant access to the full training, and at the end we actually just show the page. And it's also part of a squeeze too because yes, YouTube will give you a little bit of a countdown, but it's not always the exact same. You don't want your ad to abruptly end people are entranced and then the ad ends

Brett:

Give them time to go and click. Yeah, it's interesting. We've seen a couple of different things work for e-com. Sometimes you'll do outtakes like this, William Painter do this and a number of others at the end, they're like, it'll do outtakes. And they'll be like, why don't you just click the link? Why don't you just go check it out? I think what's valuable about what you're saying where you show the actual page or you show the actual product is again, it creates that consistency of what I saw in the ad is exactly what I see on the landing page. And so now I know I'm in the right place. It's also kind of priming me to take that action. We don't generally do that where you show the actual page that may change over time, but I like that approach and it totally makes sense that that would work well.

Cool. So let's talk audience targeting. This is one of those areas where pretty unique to YouTube the way you can target audiences here. I know on meta most the advertisers I know in the agencies, I know they're doing more broad open targeting, letting the algorithm do all the work. The YouTube algorithm is powerful, but we're still finding, for the most part, we want to give the algorithm a little bit of help and we want to lead the algorithm into the right path to eliminate waste and to get us rolling into results faster. I love the connection that Google own YouTube and Google's got tons of search behavioral data, and so why not tap into that? What are people searching for? And so building custom segments or custom audiences around that, but would love to understand how do you guys generally think about audience targeting?

Aleric:

And that's a really great question there, and that's what I love too about Google and YouTube and Google owning YouTube is just, there's so much data and I think that's what people don't really think about as much when they think about running ads on YouTube is like, wait a second, Google has all the search data. They also have Google Chrome, so they know basically the websites people are going to Google Analytics install more than half of every website. They're tracking all that details. There's a reason Gmail is free. There's a lot of data they're getting. So there's so much data that Google is utilizing and pulling into the overall platform. And so essentially what we found is the best way to target is what we call alpha AI targeting. And so a lot of people when we look at what they're setting up is they're building using prebuilt Google audiences, and those could be good.

I'm sure both of us have examples of campaigns that do really, really well with prebuilt in market audiences, especially things like that. Google also has started pre-populating certain audiences too to make it a little bit easier for people that aren't building their own. However, what I've found is getting more granular and building your own audiences is going to produce the best results. And so what we do is we recommend our clients really do some research, and I'll talk about my software. Keyword search actually does a little bit of that for us for our clients in just a second, but basically doing the research to figure out, okay, what are people interested? And there's a few different types. So there's custom affinity, it's what are people interested in, what's their general interest? And this is different than Facebook and other platforms where you have to go through the pre-populated list.

Like I said, yes, Google has that, but this is where you can put in interests that people already that people have, and it could be a more granular interest. And Google's AI is going to find who those people are. Now, I know you of course know this, Brett, on your side, but just in terms of the listener, the person watching, just so you know, you can actually build your own audience. This is what they're interested, but then we can go deeper because we talked about how Google has all of the search data, both on Google and on YouTube. What you can do is target people with that custom intent based on what they're actually searching for on YouTube or Google. So people are looking up how to lose weight or how to run, how to use YouTube ads or best ad platform or whatever for these different examples. And there's so many examples here. You can target people that are actually searching for that exact thing and then get in front of them with those ads. And we found that that's really powerful, especially people have Google search campaigns, they can kind of carry over some of their best keywords into these custom intent audiences. People running the old type of YouTube ads, which is more targeting direct keywords or maybe placements. They can turn those into custom intent targeting.

Brett:

And it's just so valuable to capture that search data because yeah, you know what non-brand search terms are converting Google Shopping or Performance Max or search. And so build an audience of those people. So those people searching for those keywords on Google or on YouTube now you can kind of bundle them into a segment, target them with YouTube ads. A couple little variations we like to use there. Well, and one other quick call out, so we got that custom intent audience. I believe that the amount of time is, those are refreshed about every 14 days or thereabouts. I think that's another reason A where sometimes you can find a winning ad and it just keeps working, right? Because that audience is always being refreshed and renewed there. On the e-comm side, we like to use keywords, especially if it's a larger ticket item where someone's maybe buying an expensive pillow or mattress or something, automotive or whatever, where it's like competitor X versus competitor Y as the keyword or competitor X reviews, competitor X demonstration where you can tell if someone's typing in these keywords, they're in research mode, they're trying to decide which product to buy.

And so now we build an audience, and that usually works on the affinity side where you're, and this is totally unique, and I 100% agree with you, we rarely use the the shelf audiences from Google. They can work, but I would rather give Google like, Hey, here's my top five competitor URLs. So Google build an audience and affinity audience based on those signals, and those often work very well and can scale at least to a certain degree. So really good stuff.

Aleric:

Exactly. The URLs is another area that we found on the affinity side that works really well. The intent based is still our top performer there because it's what People're searching for. But the URL audience is performing better than the standard affinity or like you said, prebuilt or even just typing in just individual keywords. Going in and doing those URLs is really powerful because Google has a lot of this knowledge. I've had people ask me, how can that even work? How do they know? Well, they know because people go to Google search and they click on a link and they go to the website. People don't just always type it in or they're using Google Chrome, most popular, one of the most popular browsers, and then they're also Google Analytics isn't on half of the website, so they have all this data. It's just waiting for you to tap into it. And it's interesting, I was talking with somebody else in the space as well, another person at War Room Coum as well, and one thing that he was telling, love

Brett:

Kum, shout out to Kum. Oh

Aleric:

Yeah, exactly. Shout out to kasum. Yeah, Kasum ISS awesome, but they're again rhymes then too. So look at that. Anyways, I was talking with him and he thought, and I would agree that I'm curious your take. I think that he was saying that he believes that Google just has so much more targeting capability. They're holding back because they realize if they gave access to the full thing, it would just be almost ludicrous, your ability to leverage and

Brett:

Open up privacy issues, and they're really concerned about mitigating lawsuits and stuff like that. So yeah, I would 100% agree. Google knows everything about everyone essentially. And so I do think they're holding back on targeting probably somewhat to protect the user more so to protect themselves probably. Yeah,

Aleric:

Exactly.

Brett:

Yeah, super interesting. Cool. Let's talk about your research tool then and keyword search.com. Correct? And how does that work?

Aleric:

Yeah, so one of the things that I found is one of the biggest things that we were doing consistently, either for the clients we were running ads for or the clients we were training to run ads, we were teaching them how to do this, where we were just constantly doing this research, figuring out, okay, what are the different keywords to either put in affinity audience or especially for custom intent, what are all the things people are searching for on YouTube and Google? What are all the different keywords and especially long tail keywords, what people are looking up? Also, what URLs could people be going to UR L audiences? Maybe they're typing in specific channel-based keywords. So we were doing a lot of this manual research, and even when we were leveraging other tools, it was still a manual process. We had spreadsheets, we had templates, all this stuff.

We were going and putting them in the spreadsheets. So we were doing research, we were using a combination of YouTube's auto complete for the YouTube side because that's a little less out there. And then we were using some of these other, there's obviously a lot of the big tools out there that get Google and some YouTube keywords and things like that. But again, it was still a process where we were having to take it from that, put it into a spreadsheet, then go and add it in and create custom audiences. This is a lot of time, why not go and just build our own software? So I set out to do this three years ago, even before the AI side of things, it was earlier iteration, which I won't get into as much, was kind of finding these keywords on YouTube. What we did is we wanted to actually set it up to get more YouTube data, so it's a little more complicated, but basically we're going in and there's certain data that we're actually scraping based on search results and what people are potentially searching in addition to leveraging the existing data based on Google based keywords, which is more available through APIs that Google has.

And we're combining that by looking at what are people searching for, what are they searching for on YouTube? What are they searching for on Google? What potential interests do they have and what websites might they be going to? And what we have done is actually built an AI wrapper around it. So essentially what keyword search does is it allows you to go in and just type in your business some details about it, put in the URL of your landing page, and it'll go and scan that and it will go and give you all of the different affinity audiences to potentially target. So it'll give you like, all right, here's all the different things to set up. It'll give you all the different search terms and keywords for Google and YouTube, categorize by topic with the ability to go and expand each topic. So if I was to put my business ad outreach in, it could go and grab a topic, YouTube ads, and it'll have some keywords like how to use YouTube ads, YouTube ads tutorial, and if I wanted more, I would just click expand and it go and find another dozen keywords.

You just keep clicking that as much as you want, and then it'll go and have other areas, lead generation, I have lead, how to get more leads for my coaching business or et cetera, et cetera, want more. Go and expand that. And it'll actually have a bunch of these different categories. These categories could potentially become a custom intent audience, or you can just choose which keywords you want, you select which ones you want, it'll get all of the different affinities, and you can just choose, okay, which affinities, which keywords do you want? And in one click sync it to Google Ads and it'll actually build the audience for you inside of Google ads through the connection with Google ads that we have in the software. And so it's an ability to go and instead of take all this research, which could take hours, especially if you're doing more robust research, we found the average time it takes to go from performing the search and the AI to actually syncing an audience is 2.6 minutes, which is pretty exciting. So essentially we put it all into the software keyword search, AI ad targeting for YouTube and Google Ads, and now it's starting to do more features as well. We're adding some more features around different targeting and also agency features as well.

Brett:

Super cool, man. Excited to check it out. Sounds really smart, sounds efficient. And also probably going to guide someone through the process, especially if you've never built these types of audiences before. It's different than what you do on Meta or on TikTok or anything else. And so this tool is going to guide you through that. So Alrick, love what you do, buddy. Keep up the good work as people are listening and thinking, okay, I need some Alex's training, or I need to check out this tool. How can people connect with you and your team?

Aleric:

Absolutely. Thank you so much. So yeah, the tool is keyword search.com. There's also a free trial to go and check that out over there. And then I also have a GIF for anybody who's listening. I've got our 19 page YouTube ads strategy, PDF. This is more focused on coaching consulting businesses, but you can go to add outreach.com/gift, that's A DO UTR EAC h.com/gift, and you can go and get that free gift. And then if you are interested in talking with us about whether it be YouTube ads or something like that, you can just go to add outreach.com and there's some details on the page and links to all the social, you can look me up everywhere, of course on YouTube as well. It's Eck.

Brett:

Love it, man. And so we've, so listeners kind of get the inside scoop. We've kind of created this little arrangement where his legion or coaches and consultants come to OMG or come to me. I'm like, you need to talk to Al Rick, right? Go talk to him. His team knows what to do. Same on your side as e-commerce companies come to you. You're like, Hey, go talk to Brad in omg. And so it's a really good relationship that way. I love what you guys are doing because every time someone sees that ad with Arick on there in his Austin office talking about YouTube beating Facebook every time, it may nudges someone a little bit closer to saying, I should test YouTube. I should test YouTube ads. So keep up with the good work, always fun to riff with another YouTube expert. So ton of fun, man. Really appreciate it.

Aleric:

Awesome. Thank you so much, Brett. Really appreciate it as well.

Brett:

Awesome. And as always, thank you for tuning in. We'd love to hear from you. Let us know what you think of the show. If you know someone who would benefit from this show, please share it. Please review it. Please rate it helps other people find podcasts. And with that, until next time, thank you for listening.

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I had the privilege of interviewing Jimmy Sansone. He’s the CEO of The Normal Brand - one of my favorite clothing brands - and the oldest of 10 children. While his brand is Normal, his story is anything but. 

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It’s a story that’s definitely worth telling and chock full of great entrepreneurial lessons. Jimmy grew up in a family of entrepreneurs, so this was in his blood. What started as just an idea when Jimmy was working as an investment banker has grown into a thriving retail, wholesale, and online business. 

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Important lessons:

• How growing up in a large family shaped him and helped him become an entrepreneur.
• What it’s like partnering with your family. Jimmy runs The Normal Brand with two of his brothers, Lan and Conrad.
• How culture shapes brands and the power of culture cards.
• How did launching their own retail stores (they have 11 now with more on the way) increase their wholesale and online businesses?
• Lessons learned from mistakes.

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Chapters: 

(00:00) Introduction and Jimmy’s Background

(11:42) Early Days of The Normal Brand

(15:51) Working with Family 

(22:09) Expansion Into Retail Stores
(25:03) Benefits of Having Your Own Stores

(32:25) Mistakes Made Along The Way

(34:46) Culture and Core Values

(39:34) Future Plans & Merchandising Strategy 

(42:28) Outro 

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Show Notes: 

• Jimmy Sansone (LinkedIn): https://www.linkedin.com/in/jimmy-sansone-aa80b881/ 
• The Normal Brand (Website): https://thenormalbrand.com/ 
• The Normal Brand (Instagram):https://www.instagram.com/thenormalbrand/ 
• Patrick Lencioni (LinkedIn): https://www.linkedin.com/in/patrick-lencioni-orghealth/ 
• Working Genius: https://www.workinggenius.com/ 
• Hudson Hawk: https://www.hudsonhawk.com/ 
• Ryan Holiday: https://ryanholiday.net/
  • The Daily Stoic
  • Ego is the Enemy
  • Discipline is Destiney
• Supplement Superstore: https://supplementsuperstores.com/ 
• 1st Phorm: https://1stphorm.com/ 

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Connect with Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

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Other episodes you might enjoy: 

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• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

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• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

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• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

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• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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Transcript:

Jimmy:

It was during my investment banking time where I kind of had this idea of making these normal shirts I was calling where the normal brand came from.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we have how I did it, how we built It, story. I can't wait to dive into this. I'm visiting with Jimmy Sansone of the normal brand, a brand I've been falling for years now. Love what they offer, love their clothing, love their style, love their logo, love the story. And so we're going to unpack how this came to be and how they did it and what they learned along the way and what it's like working with family and all kinds of really fun stuff. We'll see what's next for the normal brand as well. So lots of good stuff to unpack here that Jimmy, welcome to the show, man, and thanks for taking the time.

Jimmy:

Thanks for having me, Brett. Excited to be on.

Brett:

Yeah, really pumped about this one. I love the clothing and I'm wearing a normal brand shirt, which I will say I feel comfortable in this shirt. I also feel powerful in this shirt, so it's a great mix and I'm probably going to be 30 to 50% more interesting wearing this shirt, so I got to thank you for that. Well, if

Jimmy:

You could write that down into review, we'll repurpose it as an ad and that'll be great.

Brett:

We'll just chop this up. I'll send it to you and you guys can use it, so that's awesome. But in all seriousness, love the shirt. Love what you guys are doing. It's funny, I actually, I got on your SMS list somehow. Email list. I signed up for it somehow some way, and then you guys opened a store in my hometown, Springfield, Missouri, talking to a buddy of mine who owns the local barbershop. He's like, oh man, normal brand. They're from St. Louis and they've got a huge family. I'm like, I got to meet these guys. And so that's how we connected. But this is one of those rare scenarios and one day I'd love to meet your parents because they are one of the few that have more kids than my wife and I have. So my wife and I famously have eight kids, but Jimmy, you come from an even bigger family. So tell us the size of your family and tell us what it was like growing up in this dynamic family.

Jimmy:

Yeah, I'm the oldest of 10 kids, so I have nine siblings, got 40 something or above 40 cousins. So I have a huge extended family and now they have their own kids. And so the generations keep getting bigger and bigger. A ton of fun. It was growing up on a team, we played team sports our whole life, but really we're, when you're kind of born on a team, I honestly, I think I wouldn't have it any other way. And I think it teaches you a lot of life lessons. I think it teaches you how to get along with people, management, things like that. And so childhood was awesome, and still to this day, my siblings are my best friends. So it's a great

Brett:

Blessing. I love it, man. And that's my hope, that's my prayer for my kids that they'll remain close. But I heard another guy talk about, he comes from a big family as well say that kids of big families, they don't grow up thinking it's all about them because it can't be, there's too many other kids and too many other priorities. It's not just all about one kid. And so I think, yeah, that environment can really shape character and make you a unique individual, but also someone that appreciates the team and appreciates the whole, which is pretty cool.

Jimmy:

Yeah, I think definitely you've got to learn humility. It's not all about you and frankly, you're judged on how you treat your siblings. Making life better for your parents really is what we should have been trying to do older when we were younger, and sometimes we did, sometimes we didn't. But yeah, super blessed with our now

Brett:

I'm going to clip that part and show that to my kids, so thank you. Thank you for that

Jimmy:

Reciprocate. But yeah, our parents were just incredible, just phenomenal role models and kind of really showed us the way and how to do things. And so yeah, it wasn't very hard. It was pretty easy.

Brett:

That's amazing, man. So do you guys still get together for dinner, like family dinners on a somewhat regular basis? Oh yeah.

Jimmy:

If you miss Sunday dinner, you've got real problems. And I mean, I live five minutes from my parents' house, so I mean, I'm over there. We work out together a lot of us. So we've got an 18-year-old brother who's a senior in high school. So we go to all of his games we're at,

Brett:

He's a quarterback, right? Plays football,

Jimmy:

He plays football and then he plays lacrosse. He playing lacrosse right now. And so those sports definitely keeps us together. But I mean if we go even a day or two without seeing our parents, I would say that's an odd couple of days.

Brett:

Love it man. Love it, man. The sand zones are my role model, so hopefully we can do something similar in the curry household. Curious, so you're an entrepreneur, it sounds like most of your family, they're entrepreneurs. Did that come from your parents? And if so, how?

Jimmy:

Absolutely. Or even before them, our grandparents were entrepreneurs also big time. And so they definitely inspired us. We were very tied with them. So my dad's dad kind of came from nothing. His parents were immigrants and he built a great business and we got to see what he had built. And then there was a family rule where the third generation is not allowed in that business, which was really a great blessing. It gave us the ability to kind of think on our own and what are the things we want to do. But since the time I was maybe 12 years old, our parents really kind of encouraged us to think outside the box entrepreneurially. So when I was 12, me and my brother Conrad started a sports camp. That summer camp continues to this day, my youngest siblings run it. It was basically glorified babysitting, but that was something that I did every single summer until I graduated college in high school I sealed driveways in college. During exam time we sold point settas like the Christmas flower. And so it was those types of, and then I went into investment banking. But I would say that those little ventures that we had earlier taught me more than banking for a few years did, and definitely shaped the type of people we are and helped influence normal brand in a lot of ways.

Brett:

That's so cool, man. So just help me understand, and this sounds awesome. So the third generation not allowed in the family business with the motivation to say, man, get out, build your own thing, do your own thing.

Jimmy:

That's right. Yeah. I think my grandfather was a very, very thoughtful guy. He passed away a few years ago in 2020 and April of 2020. But statistics kind of tell it all. I think when you get to third generation family businesses, it's like single digit percentages of those that prosper. And even there, there's still so you break apart companies, you break apart families. It was never worth that risk. And so we knew that from the time That's really smart. It was really smart. And so we knew that as a time from a young age, and it really gave us the, and then being able to have a front seat of a family business that's a family business that my dad, my uncles are end that my grandfather started. But being able to have a front seat to see how that works and how it works well, it helped us so much. And that lifestyle of we talk about work all the time now and we grew up with that as well. Yeah,

Brett:

I really enjoy that. And I've got a couple of close family members extended who are in business and we always get together and strategize and talk business. I'm actually the first in my close family to be an entrepreneur, which I don't know where it came from, but it just happened and I love it, but I'm trying to foster that environment for my kids. So we'll see. There's a couple of them that are definitely leaning that way. So as you started these ventures throughout your childhood and kind of the teen years, what was your parents' role in that? Were they kind of cheering from the sideline? Were they giving you direct advice? Were they just kind of standing back and watching and stepping in as needed or what was that?

Jimmy:

I think first it was just from a practical standpoint, I think the beginning, the impetus for it all, I asked for a gift of some sort. I think it was a bike. And my dad just said, sure, you got any money? And I was like 12 and I said, no. And he said, okay, we'll go get a job. And then at that point, you're too young to get a job anywhere. And so he said, okay, start something with one of your brothers. And so he's like, you got all these siblings, why don't you start a camp? So I think even from that, I mean a long time ago, 25 years ago, he helped even just kind of ideate and encourage us, you can do this. Just kind of think outside the box. And so I think just encouraging that mindset from a very young age, you probably can't overstate enough how much that has

Brett:

Helped. That's amazing. That's amazing. Okay, so fast forward a little bit. So you get into investment banking, which is a world that I respect. I've been kind of on a journey over the last couple of years meeting private equity groups and learning m and a and investing and doing different things. And so fascinating world. Was the goal to be career investment banker or did you always view that as a stepping stone to then launch your own thing?

Jimmy:

I always knew that I would eventually work for myself or hopefully with my brothers. That was a goal from the time. I mean, I think it's written down when I was in high school, but I didn't really know what that meant, honestly. And so I would say it was during my investment banking time where I kind of had this idea of making these normal shirts. I was calling where the normal brand came from, and it was this idea of something comfortable. Well-fitting durable and versatile was kind of the three main pillars at the beginning. And so I started getting these shirts made, people were asking me about 'em, and I was like, well, maybe more people would want these. So I quit my job.

Brett:

And was the idea because you didn't have a shirt that you fell in love with or you'd kind of always been drawn to fashion?

Jimmy:

I had a big passion for clothing my whole life, again, kind of inspired by my grandpa and my dad. So in the nineties they were all wearing suits to work really buttoned up. And so when I was 16, I remember I asked for a custom suit. So the formal wear was a big thing, but I loved clothes and just I'd lay out my outfits, I'd think about how does this color work? I'd really kind of shop with my hands. So when I go into stores, I was really really into clothes. I also kind of had a creative inkling. I like drawing and writing and doing other things, but honestly, the idea of being in fashion for a profession never even came into my mind, ever. It was never even a consideration. I thought maybe real estate or I went into finance business, stuff like that. Anything else was kind of stupid talk. But it wasn't until I was in banking and kind of had this idea. And again, I remember talking to my dad and he was like, yeah, you can do it. Why don't you just give it a shot? And so I think that kind of confidence that they would instill in us was

Brett:

Phenomenal. It's amazing. It's amazing. So that was 2015 ish. You're making these shirts, people saying they love 'em, and you go for it, and you start in the basement. Basement of your house is where you're either making clothes or packing 'em and shipping 'em or whatnot. So talk about those early days.

Jimmy:

Yeah, that's right. It actually took me a few years to kind of figure it out. So I left my job in 2012, didn't sell my first shirt to 2015. So there were some kind of, I would say that I had to do some growing up in those times in that three years. But finally got to the point where it was like I put myself in a position where it was kind of back against the wall. It's either do it or don't. And that was a really important thing to get it going, I think. And then I saw progress, and then once you saw progress, then you could kind of believe in it a little bit. But yeah, I had a bunch of mistakes on the initial, I didn't know anything. I didn't know what a tech pack was or how to work with factories or how you could Google as much as you want.

But I was trying to get these made and man, these shirts were coming in really busted up. I had my one that was good for myself and I couldn't make any others for anybody else. So it was sort of a disaster. So I actually started with hats. So the first thing that I ever sold was March 10th, 2015, and we launched with some hats to get some money in the door to pay for our first deposit, for our first run of Cut and Sew, which came in August of 15. My brothers joined me and then it was more of a business and then this kind of glorified lemonade sand.

Brett:

Nice. And so you start with hats because they were easier to produce, easier to get a quality product.

Jimmy:

And there were some people, some mentors that encouraged me to do that. And I also needed some capital to literally pay for a deposit to get the first run of shirts. I didn't know there's big MQs, minimum mortar quantities, things like that. It was a lot of money to kind of do this. I just didn't have that. And so this was a way to kind of get the name out, Hey, this is what's coming in a few months, but this is the brand, this is the story. I got super lucky that brands like Shopify were coming about right around this time. So I was able to build a website for nothing really, really cheap. And even, I'm not a coder or anything, I don't dunno how to do any of that stuff, but I can drag and drop a picture. And so I got really lucky that things like that were happening. And then also just kind of utilizing my siblings and our family network of people sharing things for me. I wasn't running any ads or anything like that. We were able to sell out of our hats a few times and then I was like, okay, maybe this is a thing. I got enough money for the deposit. And then we had to wait a few months. But then you started selling again.

Brett:

Yeah. That's amazing. And so in the early days, were a lot of your sales in person through the family network or were most of them online or combination? Oh

Jimmy:

Yeah. I think I know this guy. I wrote a thing on it, 102 people bought on the first day. I think I personally knew like 85. I mean maybe. That's

Brett:

Awesome. That's

Jimmy:

Awesome, man. So yeah, I mean it's a phenomenal thing to have your tribe come out. So it was family, it was friends. Sometimes I'll go back and I'll look at those names like, God, I forget he did that. Even distant friends and stuff like that. But those are things that you don't really forget when people step up, when you're in a vulnerable position, you're starting something. It's a public thing. It could really go poorly or it can go great and you'll never forget those people. So I got really lucky with 102 from day one in 2015.

Brett:

It's amazing, man. And that's what I've heard. I've heard the advice from, Hey, if you're a friend of an entrepreneur, don't take their product as a gift. Go buy it. Buy it at retail, buy it at full price, leave a review, help them out If you want to be a friend, that's how friend to an entrepreneur buy their stuff. And it sounds like a lot of people do that, which is amazing. So let's talk a little bit about working with family. This is a unique thing and I've always, I've tried to recruit my wife to work for me and she's busy raising a bunch of kids and doing other things, so she hasn't. But I love the idea of working with family, but curious, when is it really great and when is it challenging? And share with us some insights there.

Jimmy:

Well, I think business partners are super important regardless of if it's family or not. So if you just think about business partners, what do you want? I think you want somebody that you can depend on no matter what. I think you want someone that you can be radically honest with and fight with and get over it. And I think you want someone that's as incentivized as you are to kind of perform and takes as much pride. You want to make sure that when you hand something off to your business partner, you can forget about it. And so I'm just lucky that I have those in my two brothers. I have all of those qualities. It just makes for phenomenal business partners. I think that definitely we had an unfair advantage in that we were able to grow up with a front seat to another family business. And so you can kind of learn what to do, what not to do, learn from great successes, learn from things that didn't go according to plan. And so not to say that we're perfect, but for the reason I stayed at the beginning on what you look for in a great business partner, I mean, that's what I have in my brothers. And then you go a step further where it's like I would literally die for them that it makes going to business. It's like, okay, sales are down a little bit. We'll be okay.

Brett:

Yeah, and I love that. Perfectly aligned incentives. You're all trying to accomplish the same thing. You grew up in a family that communicated and hung out together and spent time together. So you're able to communicate clearly. I think in some ways, a lot of the reason families can't work together in business is because there may be dysfunctional outside of business. So if you can't be close as a family outside of business, you're going to be able to do it in business either. And so growing up, being able to communicate, able to do things, run projects, run summer camps with your siblings, I'm sure made that transition to another business much more doable.

Jimmy:

And I think we read books about company culture and stuff like that on trying to learn on best practices regardless of family business or whatever it is. And so I think we try to take, there's still so much that we can learn and try to learn as much as we can, but I mean those best practices, I think you said a lot of it, but it's like direct communication, passive aggressiveness is kind of like a killer. So try to keep that out. Ego is a killer, so having a healthy dose of humility. So I don't know if these Patrick Lencioni books we're big on those.

Brett:

Yeah, dude, I'm a huge Patrick Lencioni fan. Love at the table podcast. We did, I'm curious if you guys have done this too, the six types of your working genius.

Jimmy:

We just sent it to all of our people, so they're all doing their tests right now. Yeah.

Brett:

Yeah. That's awesome. So what are your working geniuses? Just curious.

Jimmy:

I've got to go back and look at it. I remember I was like, I don't remember all of 'em. And I was like, oh man, is that really what I'm like? And it really is, but I forget what they all are now. I did mine. Yeah,

Brett:

It's hard. I had if look at it several times, but I'm a galvanizer and a wonderer, so galvanize, I can rally the troops, I coach sports, I can get people fired up and excited. But then the wonder is you always ask me, well, what if we did this? So I dream a little bit too. So that combination can be great. It can also drive my team crazy and my family as well. But it's been so helpful us just understanding even with our leadership group, like, okay, what are your working genius as well? This is why we don't communicate clearly in these meetings because I'm trying to wonder and you're trying to be tenacious and get stuff done. Anyway, super helpful tool. Yeah,

Jimmy:

Actually, so we've been reading him since 2015 and the craziest thing happened. I had never met him. He shopped normal brand and then had a great interaction with our customer service and he wrote a note in and saying, giving a shout out to Colby D, our head of customer service. She sent it to us and I was like, no, wait. Patrick Lencioni, I reached out to him and now he and I have talked a few times. He's going to do some consulting with us and do some, it's amazing. Amazing.

Brett:

It's

Jimmy:

Amazing. It's crazy how that kind of stuff can happen.

Brett:

Yeah, we attend the Global Leadership Summit almost every year. I'm not sure if you've ever done that, but whenever he speaks, he's my favorite guy. He's my favorite presenter. So what a cool deal, man. That's sign. You guys are doing stuff, right? If Patrick ion's impressed, that's a good sign. Good sign for sure. So cool. So when then, is it challenging to work with family and just curious, any insights there? Well, I

Jimmy:

Think we're all very much alike. Sometimes when you can get frustrated, everybody can get frustrated, frustrated about the same stuff. So it's not like, oh, this guy's like that, but this guy kind of calms you down a little bit. We can kind of be at the same level at the same time, but the great news with that is once we fight, which happens 20 minutes later, we're fine. There's a good balance to it. We've been doing it our whole lives anyways.

Brett:

Yeah, and there's no question, do we love each other? Yes. Do we have each other's back? Yes. He

Jimmy:

Coming back be long term. Yes, yes. I mean it's all those things. Yeah,

Brett:

But we can fight about this one thing. Yes. Yes. And that's actually, that's another Patrick Lucci thing. This wasn't designed to be the Patrick Luconi podcast, but it's becoming that a little bit where he's like, good meetings should have tension. If you're in a meeting with leadership or with your executive team and there's no tension, there's no disagreement ever. Something's wrong. Either the meeting's not necessary or somebody's not necessary. There should be a little bit of tension. And so having that is super productive. So cool man. Let's talk about store expansion. So your online experience is great. I know we skipped a lot of years there, but you grew online from the site you developed on or that you built on Shopify to now you got a beautiful site. But when did you make that decision to launch your own retail stores and why your own store versus just selling through a traditional retail?

Jimmy:

Yeah, we started online and then we got into wholesale really heavy and wholesale meaning sell through other retailers. That was a majority of our business for a year or two. And then the online caught up. But I think it was through that wholesale expansion where we were able to see really great performing retailers. We were able to also see ones that failed you could and learn things about what made one store in one town great. And another store or across town, not good. Right. What's the difference?

Brett:

And were you guys selling all over the country or was it more in the Midwest initially over, yeah,

Jimmy:

We were sold all over the country. Yeah, southeast, northeast, Midwest and some west coast too. But a lot in the southeast, northeast, Midwest. I mean, we're in like 400 some odd doors right now. And so wholesale is still a big part of our business, but we got to definitely learn a lot and then mean to have a major brand, which we want to have, you have to have your own stores. And there's only so much of your brand that you can experience in somebody else's store or even online. Whereas to walk through a physical space, we do as many meetings at our stores as we can with people to, if we want 'em to really understand who we are, really. Like you're walking through something that was once just in your mind, right? In the physical space. And so our first one we opened in August of 2019 in St.

Louis, and that's been voted best men's store a few years in a row. That's amazing. Then 2020 happened, so we were about to do one, and then the pandemic happened. So we were like, okay, let's hang on. And then we opened our first out of town one in August of 21 in Nashville. And my brother Conrad really runs all of our store expansion. My brother Lan runs all of our wholesale stuff. So it's really like those guys being able to kind take it and run with it and be working on product and some of the creative stuff. It's a really good balance. But once we proved that, the store could kind of like, okay, well will people buy it outside of St. Louis? And then we saw that it performed really well in Nashville and we're like, okay, let's go. And so last year we opened five stores, so we're up to 11 now. We'll open a few more this year. And it's been a great venture for us.

Brett:

Cool. What are some of the benefits that you think you've gained from having your own store? And I will attest to, because there's one here in Springfield. I've shopped at it a couple of times. It's just got such an amazing look and feel. Oh, and I also want to ask, did I read that your mom designed the stores or was key instrumental in designing the

Jimmy:

Stores? Yeah, big time. Yeah. Yeah. She's a key part of the overall design, the aesthetic. She helps us source these crazy antiques from all over the place to really give it that extra level. She was big on, Hey, it's got to smell a certain way. Yeah. Yes. Our mom is a

Brett:

Beast. That's amazing. It's amazing. So what all are the benefits from owning your own stores? What are some of the probably obvious benefits, but maybe some of the unexpected benefits, intangibles, things like

Jimmy:

That? Yeah, I think unexpected may be that you really get on the customer service standpoint. On the customer service side, when you meet with our people there, we really want it to feel like it's an extension of our family. It's an extension of the, and so we want people to feel like it's a second home. We want them to feel at home, they're a part of the family and walking in so that there's a ton of training that we do on our side. I mean thick handbooks and a lot of formulaic stuff to make that be a thing, you're going to be greeted within two and a half steps of walking into our store. You're going to be offered a drink within three and a half steps. It, it's things like that from a training standpoint, but then manifests itself in hopefully a real authentic way.

But we want people to experience the brand in all the senses. So we want to be able to touch the clothes, smell it, hopefully it's a great smell. We've got candles burning from sound wise, we've got good music on, be able to try on the clothes of course. But I think it just gives you a chance to have a real personal connection. And what's really cool is we've seen that our managers and team members at these stores have been able to foster these great relationships with the local community where they'll text, they'll have dinner with them and things like that. So it's a little bit different in that we're a part, we're trying to be a part of the fabric of that community wherever the store is. And so it's an extension of our brand getting a lot more local,

Brett:

And you guys do an excellent job of it. And even the partnership here in Springfield with Hudson Hawk Barbers, you're connecting with other local brands that are a good fit for your brand. And yeah, it's just a good experience, man. And it feels like you're kind of stepping into your catalog and you have beautiful photography and the furniture just feels cool and looks cool. And I've got pretty long arms. I've got pretty broad shoulders, so I wanted to come in and try a few things on, ended up buying online. But it was great just to be in there touching and feeling. And I remember when my executive assistant who helped kind of structure and organize the podcast, he's like, I went to the mall and I went to the normal brand store. And it's amazing he was going on and on about it because he experienced it in person. And so that's cool. Did you see other parts of your business accelerate once you started opening stores? And once you got to a tipping point of stores, did online take off more? Did other areas take off more? Just any interesting insights there?

Jimmy:

Both. Yeah. So we actually saw, so wholesaler, maybe you would get worried if you open a store in a town where you've got a wholesaler, another retailer that you're selling through a third party, is that going to hurt their business? And we were very sensitive of that. We really came up through wholesale and online, but through wholesale. And I mean we would bend over backwards for our wholesale partners and still will. And whether it's showing up for trunk shows or showing up or, Hey, this wasn't right. Okay, let me swap you out of that. Let me get you this. So my brother Lan really kind of spearheads that and he just does a phenomenal job. He can be kind of everywhere at once, but we were worried about those stores. And what we found was that in cities where we open a store, our other retailers that are there actually do better, which was awesome. I think it's just the name gets out there and then their customers are shopping there and they're like, oh yeah, I know what that is. Lemme grab this. So our business got better within those, which is awesome. And on the online side, the same thing happened. We have found that in the markets where we have a store, our online presence grows, those people come shop in a store, it's a high percentage of 'em will buy online later. So it's a good kind of customer acquisition tool as

Brett:

Well. Totally makes sense. And did you have any of those retail partners that were a little bit resistant at first? Hey, we don't really want you opening a store in our town, type of thing.

Jimmy:

Yes, absolutely. There were some uncomfortable conversations for sure, but we were very direct about it and very honest about it. And we said, just hold on. Just wait. See what this does to your business. We had done a bunch of research and talked to other brands and things like that. It's not just unique to us. That happens. And then it's always a great thing where after a season or two and you have the conversation, they're like, you're right. We're killing it now with you guys. Yeah,

Brett:

Yeah. Now you've got the data, now you've got the proof. You go to the next city. Now you can really tell this compelling story to your retail partners, your wholesale partners, that hey, this, it's going to be a good thing. And

Jimmy:

We still go. We actually still go to, whether it's trunk shows or events at those retailers where my brother will show up or whatever and promote their store. They're a very important part of our business.

Brett:

That's awesome. So really, and we're going a little bit out of chronological order here, but so you, in the very early days, wholesale was a staple of the business, would you say? Was that the majority of the business in the early days? Yeah, for sure. Got it, got it. And did you identify that as the best path to take it? Or you knew that online was going to take some time to build up, so you wanted to go wholesale or what drove that

Jimmy:

Initiative? It was a need. It was was a capital need. We were a bootstrap business, and so we had to order all this inventory to, because of MOQs things that we talked about earlier. So we had to get on a schedule where we could sell that stuff. Pre-book is what we call it nine months in advance, because we didn't think we could sell it all online, but we had to buy it. So we were like, okay, where else can we sell this stuff? Where they were like, and somebody said, Hey, you should go to this trade show. So the first trade show we ever went to was called the Chicago Men's Collective. It's our biggest trade show by far. I mean, we'll be booked for every single day, morning till night. But that's where we met kind of our first retailers. And we wouldn't have had a company without the wholesale business because we wouldn't have been able to sell the inventory online. And from a cashflow perspective, we wouldn't have been able to pay for the inventory.

Brett:

Yeah, yeah, it totally makes sense. That's so cool. So cool. Well, you guys have done so much, right? Clothes are awesome. Store experience is fantastic. Online shopping is good. Even the text marketing is good. The SMS marketing is good. But what have you learned from failures, right? Because we all trip ourselves up as entrepreneurs and make mistakes, and those can be the best learning tools. So what mistakes have you learned from along the way?

Jimmy:

Oh man, tons. I think as the business has grown, we have more people now on the team. And so that's where we manage a lot more people than we ever have. So there's tons of failures there where it's not just enough to just kind of, okay, lead by example, and there'll be no, there needs to be processes and well thought out structures of how this is going and how that's going. So as the business evolves and matures, you need to kind of mature with it with kind of your procedures. So I would say we'd be here for a long time to tell you how many times we've kind of failed there. But I think the one thing that we've done, we've always had a good culture. We kind of knew that from the beginning. So we've always had a good culture. So that can kind of make up for some of the procedural things that go wrong, but just building processes and things like that. I would say that with store expansion and things like that, you have to, it radically changes the way you do business. So even getting inventory to the store on time, making sure it's merchandised appropriately, let's make sure we're getting them the right inventory. Well, this store actually behaves differently than this store in a big way. And so I think that we've had to add people to the team who can kind of specialize in these different verticals, but we're the type where we don't really, we make the mistake first and then try to fix it

Brett:

In some ways. That allows you to go faster, make a mistake, fix it, iterate, rather than trying to get it perfect out of the gate, which you'll never do anyway. Let's talk a little bit about culture. And we're big believers in culture as well. We have been fortunate enough, we won best workplaces through Inc. Three years. We won the number one place to work in our area, 4 1 7 biz, 4 1 7, 1 number one two years in a row, which is awesome. Wow. But we'd love to hear, thank you. What's your approach to culture? What do you guys think about, how do you approach

Jimmy:

It? Yeah, I mean, we build it. So we have, let's just take it out. We've got culture cards kind of on what our core values

Brett:

Are.

Jimmy:

Nice while I fish that out. So we build it basically off three core values. And this is a Patrick Lencioni ripoff, and we're not afraid to say that, but humble, hungry, and smart are kind of the main three things. Love it. I would say that that humility is what I would rank number one with coming to this business with just the way the business was started with really kind of no experience in it and making a lot of mistakes. You can't afford to have an ego. And so I think that that ego kills all teamwork and the simple transaction of, Hey, my bad, I messed that up. I'm sorry. And equally as important on the other side is all good, let's move on. That transaction is grease on the wheels for a team to move forward. So that's a super important thing so that we all carry one of these with the core values, but that's

Brett:

Awesome.

Jimmy:

Positivity, ownership, solution driven, humble, and hungry. So

Brett:

Good.

Jimmy:

That's kind of how we build it out. But if I was to pick one, kind of depend on the role I guess, but I would say that an ego doesn't have a place within our teamwork.

Brett:

Yeah, so good. Have you read the book? Ego Was The Enemy by Ryan Holiday. That's awesome. Yeah, so good. Love all his books. Yeah, I've gone down

Jimmy:

Stoicism Path for a year. I was reading 'em all. He had me reading Marcus Aurelius.

Brett:

So Good man. I've got The Daily Stoic, which is really good. And actually I think Discipline is Destiny. That may be my favorite book. I've read that too. Awesome is I love all of them, but that may be my favorite. But yeah, similar culture values here actually. So our kind of core three, we think and act like owners, we take ownership and what we do, we constantly help each other level up or we constantly improve and then we have fun solving problems. And so we kind of want to have this attitude of like, Hey, every problem is an opportunity for something. And so we talk about that and we would talk about owning our stuff, good and bad and giving transparent feedback. And so those things, when you communicate those things clearly, then you're living it out from top to bottom. And then when you are hiring based on culture first and skills and aptitudes second, just eventually, eventually that culture kind of permeates. Now it doesn't take much to puncture that culture to start to lose that culture. So you got to be really vigilant. But man, when you've got a solid culture, I've heard, I don't know, the old saying, culture eats strategy for breakfast or whatever that saying is. And it is true. If you've got the right culture, people will solve problems. I

Jimmy:

People will

Brett:

Get tough done friend

Jimmy:

Who's got a big HVAC companies, got a ton of employees and known him since high school and he actually gave us some ideas on, and we've got note cards with the different core values on it, one each, and then how it's demonstrated. And then we task our managers with once a month giving one of these cards out with a note on it to somebody in their team that demonstrated that core value. So find the good. So we really try to an emphasis on finding the good. And of course you can coach people up or whatever on when it's not being demonstrated. But giving a shout out to when it is demonstrated, I think reinforces how important it's

Brett:

Finding the good. And I love that it's a simple call out, here's a card, culture card, but you exemplified this, you model this that has so much meaning. I remember when I was in college, I worked at Lowe's and I worked in the plumbing department. I'm like, I'm not handy at all. But I learned enough about plumbing to be somewhat helpful. This was good at customer service. I was good at talking to people. And so I helped this dude out and he's like, I'm going to tell your manager. And so he did. But my manager immediately walked over, gave me a gift card to some restaurant. I don't remember what it was, but I will never forget that interaction when seeing my boss walk up and say, you did an awesome job. Handed me the card, which is great. So made me want to work even harder.

Jimmy:

If you walk around our office, you can see on the different, our team members will keep these cards on their desk by showing 'em. So yeah, it's a cool thing. That's very not an original idea at all.

Brett:

A lot of times the best ideas are not original. And that's one of those where I think being an entrepreneur, you just borrow good ideas from where you learn them and apply them. And it's more about the application, the execution, rather than coming up with brand new ideas that really sets you apart. So that's awesome. What's next, man? So what's next for normal brand? I know there's probably some top secret stuff you can't talk about, but what can you share with us? What's on the roadmap ahead?

Jimmy:

I think our merchandising strategy is definitely product is what I love. There's no better feeling to me. I'm staring at you and you're wearing one of our shirts. I'm making sure it's draping and things like that. So I love clothes. And so I can't talk about anything with nor brand without talking about what we've got coming up. We're always a few seasons ahead. I'm thinking fall 25 right now, but fall 24, I would say just with the new fabrics we've got coming out and the merchandising strategy of giving people more what they want and having, now we've got the data behind it where we can make a lot more educational decisions on this. It's not as much gut. It used to be like, I don't know. I mean, I like this. You think they'll like it. That's how it used to be. And so I'm pumped about the collections we have coming. I'm also excited about some of the different initiatives we've got at our stores. I think we're really getting out with the community and connecting with the community, and we're onboarding a bunch of new people that hopefully make that experience, make people's days better. I dunno if there's one thing I, I'm always excited about the future

Brett:

And usually it's a lot of little things. And one thing I'll kind of mention, because I think this ties into the physical store thing, shopped at Supplement Superstore a couple times, and actually I think you know the owner, right? Because he's a St. Louis Guy as well. Yeah, yeah. So the first time I went in the store's, been here forever. I think he opened it when he was MSU or whatever, opened the store. So I went in, talked to this girl, she must have been in college or whatever, told her what I was working on and my family working out and stuff. And so we picked a product, I bought it, kind of end of story. I get a card two days later from this girl that helped me. She's like, Hey, hope workouts are going good with your wife and your daughter. We sometimes go to the gym together and stuff. And it was just really cool, man. So it was an awesome experience. So I was like, well, can't buy this online now I got to go back to the store. And so now every time we go to the store, I get a handwritten thank you card that says something about the interaction that we had. So those little touches, man,

Jimmy:

We copied off them in that. We do that. So anytime you shop our stores, you get a handwritten note that gets sent out by the next day. Those guys supplement Super source, first form, total studs, an incredible culture, a great product. They've been phenomenal friends.

Brett:

First form is really good. I would've just skipped the story if I didn't like the product. Product is really good, so I keep buying it. And yeah, the in-store experience was

Jimmy:

Awesome. Yeah, we've got it all here.

Brett:

Yeah, that's awesome, man. Really, really cool. So pay attention to normal brand. I encourage you to shop for it or shop for it for your husband or significant other, whoever. Check out the website, get on their email list, an SMS list. That's one of the things that I do. If there's a brand that I really like and admire, even if I don't plan on buying something, I'll get on their email list. I'm just going to check out what they're doing. And so you guys do a great job there as well. So how else can people connect with you, Jimmy, I see you're somewhat active on LinkedIn. Are you active on any other socials?

Jimmy:

Yeah, I'm somewhat learning LinkedIn, I mean Instagram or on Instagram at the normal brand. And those are the big ones.

Brett:

Cool. And I noticed you don't post all the time on LinkedIn, but when you do packs a punch, that's what I actually just celebrated and just celebrated nine years. Right, so you just had your nine year anniversary post.

Jimmy:

Yeah. I always get my feelings on those anniversaries. So yeah, I just did a post talking about our parents, which

Brett:

That'll mess. It was really good, man. Really good. Worth going to LinkedIn to read that. If you enjoyed this story, go check out the post and I think you'll really, really enjoy it. So Jimmy, this was awesome, man. Wanted to do this again sometime and really appreciate it.

Jimmy:

Thank you, Brett. Thanks for having me on. And this was a lot of fun.

Brett:

Absolutely. And as always, thank you for tuning in. We'd love to hear from you. We love that review on iTunes. If you got value out of this, also share this story. If you know another founder, someone else in fashion or D two C or trying to break into retail or something, share this episode with them and let the sandstones inspire more people. And with that, until next time, thank you for listening.

‍

It’s a good time to be in eCommerce. Just ask Jeremy Horowitz. 

‍

Jeremy is a long-time DTC and SaaS rockstar with a keen sense of what it takes to run a successful, profitable business.

‍

He’s one of my favorite follows on LinkedIn and his newsletter - Let’s Buy a Business is a weekly must-read for me.

‍

In this episode, we break down the difference between a business we would buy vs. one we wouldn’t and why. 

‍

We also talk about key financial benchmarks for eComm and unpack a few publicly traded companies that we would buy or not buy.

‍

Here’s what we cover:

- Amazon and Shopify will soon combine for an estimated $ 1 trillion in annual GMV. Mind blown!

- The P&L benchmarks that make your business a must-buy vs. a must-pass.

- The incredible performance of Crocs (and what you can learn from them).

- Why (legal) stalking your customers is about the only “non-clone able” thing you can do.

- What it would take to save Solo. 

- Why LVMH is unattainable but still teaches the rest of us mere mortals some valuable lessons.

___

‍

Chapters: 

(00:00) Intro

(01:58) The State of eCommerce

(12:39) Constructing a Healthy P&L

(22:48) Would We Buy This Business? 

(38:38) The Importance of Focusing on Core Customers

(43:29) LVMH: The Ultimate Luxury Company

(48:44) Outro

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Show Notes: 

• Jeremy Horowitz: https://www.linkedin.com/in/jeremyhorowitz1/ 
• Let’s Buy A Biz!: https://www.letsbuyabiz.xyz/ 
• Sean Frank: https://www.linkedin.com/in/seandavidfrank/
• Ridge: https://ridge.com/
• Crocs: https://www.crocs.com/
• Solo Brands: https://solobrands.com/
• Preston Rutherford: https://www.linkedin.com/in/prestonr/
• LVMH: https://www.lvmh.com/

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

__

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

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Other episodes you might enjoy: 

‍

• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

‍

• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

‍

• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

‍

• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

‍

• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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Transcript:

Jeremy:

They truly are playing compounding game of just wait every year, make more sales, drive more growth. It is very possible that within the next decade to 15 years, they'll be a trillion dollar company.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today I've got a return guest. This dude is smart. He's blowing up on LinkedIn, everyone's talking about him and commenting on his posts and signing up for his newsletter. But I got Jeremy Horowitz back with me today. He's the founder of Let's buy a biz, check it out, let's buy a biz xyz. Love that top level domain, by the way. But today we're talking about businesses we would buy versus businesses we wouldn't, and I am so excited to dive into this, but Jeremy, welcome to the show, man. And how's it going?

Jeremy:

Thanks, Brett. It's great to be back. I always love jumping on the OMG podcast and catching up. Things are going really well, I think. I'm sure we'll dive into this in a little bit, but it's a great time to be in e-commerce. I know it's been a slog for a lot of brands the past couple of years. We rode the rollercoaster of Covid Up We Road, the Post Covid pullback down, and then now it feels like we're starting to level set back to somewhat saying as normal, but it feels like predictable and understandable growth again. So yeah, really excited to dive back into everything. I know that we usually talk about big predictions, the big bold bets, and I have some of those today, but also really excited to talk about for someone who wants to exit a business, what does that look like? Especially from the vantage point of someone who looks at acquiring a business all the time and then has an operational background of what would we go do if we were to go acquire and run that

Brett:

Business? Yeah, I love that so much. And so it's the first point. It's a great time to be in e-commerce. I 100% agree. We've had four years strung together of very abnormal economic and societal and health stuff going on. And so it does feel like we're reaching maybe a new normal that I think can be very healthy. I was talking about it with my buddy Sean Frank from the Ridge and there, and he said the same thing. He feels like this is going to be a year of more stability for e-comm, and it's just a bright time man. Things are growing. We're going to look at the global picture of e-comm. You've got some good data that we'll unpack. So that's super interesting. And man, I love this perspective of let's buy a biz because as we look at some of these things, at a bare minimum, this is going to help you build and operate a better business.

Even if you're like, I'm building this for the long haul. That's what Sean at the Ridge is doing. I'm building this for the long haul. It's going to be a cash cow. I'm just going to take massive distributions as I grow this thing to multiple millions in EBITDA every year, or I want to have an exit. And you and I, before we hit record, we're talking about our journey. We're actively looking to acquire other agencies. We're actively looking at m and a half for about two years. And it's a super fun space, but so many benefits even if you never buy or sell, lots of benefits to this discussion. And so let's first start with the data that backs up. It's a great time to be in e-commerce. I know you've got some interesting data looking at Amazon and Shopify from kind of a GMV perspective, but yeah, what is exciting to you about Amazon and Shopify and just the state of e-com?

Jeremy:

Yeah, so I think the first thing, and so for quick context where this all comes from is every week I go through a public company's p and l and there are 10 K. And then basically tear it down. What would I do if I ran this biz? What does the financials look like? How can we really get this to the next level? All your usual suspects, Lulu Lennon, LVMH, all those types of brands. And I also like to look at the biggest boys and girls in the space, you primarily Shopify and Amazon. And when you look at their 2023 earnings, they did 936 billion in estimated GMV between Amazon and Shopify alone. Same. So you're thinking about all the sales on Amazon, all the sales on Shopify, it's going to cross trillion dollars. Yeah, it's going to officially cross a trillion dollars in consumer spending in those two categories.

And then when you take a bigger step back and you think of the total, at least US market as is percentage of consumer spending, e-commerce in total is about 15%. So still 85 cents out of every dollar is still spent in physical retail. And these two companies are going to do a trillion dollars in total sales on their platforms across. It's very, very different between Amazon one P three P and then also Shopify and all the new areas that they spend and they play in. But Amazon's GMV is growing at 11% year over year. Shopify is growing at 19% year over year. When you just think about the just raw of dollars, how many Brinks trucks need to drive through to a bank for a trillion dollars in GB, which is going to be even more than that this year, it's a great, well, I would say it's a tail of two.

Brett:

How much money can a Brinks truck hold? I think that's something that's worth unpacking. Yeah,

Jeremy:

That's a good Google. I'm not sure I actually,

Brett:

Yeah, I'm going to Google that. How much cash? Yeah, so how many of those would it take? It looks like four to $6 million according to Google if I'm looking at the right thing. So that's a lot of Brinks trucks.

Jeremy:

Yeah, that's a fleet of brink trucks. And so what I would say is I would say it's a tale of two cities of e-commerce growing. It's growing really well and it's growing really fast. I would say maybe where I may take a nuance or a counterpoint to Sean's course, the point is I dunno if it's going to be stable. I actually think it's a really interesting tumultuous time where it's great for e-comm, the trend line is going up. But I think with the current economic conditions and everything that's happened with interest rates now kind of three big bold bets for this year is it's going to be a wider valley between the haves and the haves, not in the spaces. I think a lot of consumers are just kind of going back to their familiar brands. Going back to the places that you see, I dunno if you also look at the earnings of fast food chains over the past six to 12 months, I have not. The fast food is killing it really. Everybody tried to get healthy during Covid, everybody tried to eat better and now everybody wants those kind of indulgences and guilty pleasures,

Brett:

Comfort food, and it's a little more predictable cost to really eating healthy can be more expensive. And so inflation has been a real thing. Maybe save a little bit of money and I'm getting some comfort along the way with some Mickey D's or some Chick-fil-A or something.

Jeremy:

Yeah, exactly. Just not apparently they're going to change their prices more fast than Uber does upcoming, but I think that's a major part. I think the other big piece and coming as someone who wrote a couple of early stage checks over the past three years, VC funding is not coming back. Private equity is not really coming back in the same way and there's a whole complex macroeconomic reason for all of that,

Brett:

Not what they used to be and things like that. And that's not likely not going to return.

Jeremy:

Yeah, the amount of dollars flowing in through those sources and the valuations are just really, really different. And then also unfortunately, we're just seeing a lot of m as and bankruptcies from the people who dig out too far out over their skis over the past couple of years are now those loans are coming to maturity. They need to figure out how to pay back all of that debt. So I'd say for the brands that kept, and I know we're going to kind of dive into good biz, bad biz, but for the brands that really kept the clean, they didn't take on too much debt, they didn't overhire or take on too much inventory and really stayed in that good healthy place. This is a great opportunity where things can really just pop off. You just find that one good channel, that one right product and things really can because go very well because the dollars are coming in, the customers are spending the money.

I would say it's probably the greatest time to be a 20 to $200 million and up. It's probably really hard to be a new business. It'd probably be very unique to stand out now just because ad rates have gotten so competitive. But I will say, I mean I've been very long on this industry. I've spent basically a decade plus in this industry and mostly in the Shopify space. And I think it's only going to get better, but you really need to be a lot smarter. I think the aperture and the window has closed a little bit where it's not everybody can get through anymore. It's like you need to be a lot more precise in how to build a proper e-commerce and physical products business.

Brett:

And I think the stakes for winning are bigger. The overall pie is expanding. It's at UBS at 15% of total retail, but that's only going to increase. But I like the way you said that. Yeah, the valley between the haves and the have nots, it's widening and we'll likely continue. So yeah, I fully agree. I think there's mountains of opportunities this year both for e-commerce brands, for agencies, for those that support the E-com space, but some challenges too. So one thing that's been interesting, I've seen this trend and I'm curious what your perspective has been, but there was this grow at all costs during the height of covid and then there was a we're figuring out ship again and another supply chain issues. We're just figuring it out, all these other things. There is definitely a renewed interest in just profitability, e-commerce companies saying we need growth, we need marketing, we need to customer acquisition, but we just got to be profitable and there's definitely this ruthless quest to be profitable. I'll fire my mom to be profitable, whatever. That's the sense I'm getting from e-commerce brands and I think that's healthy. That's the way that the industry needs to go.

Jeremy:

And I think the interesting thing, because I know you and I have been from the pre 20 18, 20 19 super boom. That's what this game has always been about. It's always been about profitable growth. And I would say for sure we had a temporary people move the goalposts a little bit and we've kind of returned back to normal, but the goal has always been profitable growth. And I think looking through, I've looked through about 31 public company brands and that's every valuation we can talk about price to earnings ratio, PE ratios, we can talk about revenue multiples, everyone on Wall Street is just how much growth do you have and is that growth profitable? And the past couple of years, they would really, if you're not that profitable, okay, we'll give you a little leeway now. It is just no mercy. You either are profitable or you are not. And then are you growing and how fast are you growing? And everyone has also returns. You're hearing people talk about Warren Buffet a lot more recently than a couple of years ago instead of people on Twitter talking about Bitcoin as per financial advice and how much future cash is this business going to throw?

Brett:

I'm so glad we're moving away from Bitcoin to more buffet. We need more buffet, less Bitcoin talk.

Jeremy:

I feel like it's a 10 year cycle where everybody moves away from buffet, they forget the good fundamentals and they come back and boring as possible.

Brett:

All we need is this crypto. That's how we'll become.

Jeremy:

But yeah, and I think this is probably a good way to think about, and I think more e-comm operators need to think this way is your business is worth the amount of cash it throws off at the end of the day after all of your expenses. I think a really important piece there is you should think like an investor, you should do the analysis every quarter, every year. How much is that cash throwing off? How much is that worth? And then do your own analysis of what we call it discounted cashflow. But you can do it personally of like, Hey, I made a million dollars in net income this year. Should I put that back into the business? Should I take half a million dollars and go on a crazy vacation, buy a sports car, put a down payment on a home as the owner of the business that you are the biggest investor in it. And so thinking through that and thinking through how you want to operate your money, usually operating cash from your business is really important instead of just always grow, always grow, always grow. And then that's also what will determine the value of your business when you exit. Because the bigger that pile of money is, the more someone else is willing to give you their pile of money to take on the future cashflow from your

Brett:

Business. Love it. So we're going to unpack here in a minute. Businesses we buy versus business, we wouldn't, it's kind of like the hot or not I guess, of businesses. And so we make that analysis. But before we do that though, you've looked at so many companies and you've been in the VC space and private equity peeps, as do I, let's set some benchmarks for a healthy, profitable, growing e-comm business. What should we look at in general in terms of constructing a p and l? Now, obviously on a podcast, I'm going to go every single line item of p and l. That would be a little bit boring, but from a larger context, how do we construct a healthy p and l for e-comm?

Jeremy:

Yeah, so I'm going to keep it super high level and this is also actually how public companies have to report their p and l. So it's probably a good practice to start doing the fundamentals. Now obviously you don't go through gap accounting and pay E and y $500,000 to your books this year, but just really simply what you should be reviewing every month, if not even more frequently, definitely every quarter, every year, start with your revenue. How much total net sales did the business bring in? Then what are your cost of goods sold to get to gross profit? Hope everybody who's listening to this podcast, super familiar with that part, really comfortable. How much should we make? How much are we keeping after what we outweighed to buy the product? Then from there, you want to break out opex. Now I think this is the trickiest part, and I've seen after analyzing close to 300 pcom p and ls over the past couple of years where this just goes all over the place. So I'm going to give you Amazon structure because if it's good enough for Amazon, it's probably good enough for your

Brett:

Biz, good enough for Uncle Jeff, probably good enough for us.

Jeremy:

Right? So marketing and sales, that should be pretty straightforward. What are you spending to get people to buy your product then your GNA, so your rent, your team

Brett:

Administrative? Yeah,

Jeremy:

Just all of the backend stuff to keep the business going, your fulfillment and supply chain, and then if you have it, your r and d and why it's super important to break those four key components out. And what I see so much of the time is people will bundle in sg and a or they'll bundle in fulfillment into GNA as well is really all an e-com business is how much around money do I spend on marketing to get someone to buy something and how much does it cost me to make it and get it? And you really want to break those two things out because no offense to all the three pls and people who fulfill, but you are almost always losing money in that part of your business. And then really where the most cash is probably going to come out of your business is in marketing and sales.

And so there's a huge fluctuation, and I'm sure you probably know better than I do, but depending on where a brand is in their growth curve and how much they want to grow, that is really going to be the biggest lever and the biggest place where you push or pull back. Whereas you may not, may not love your three PL and they may be charging you 15% of your revenue to ship out a product, but you're not pulling that back tomorrow or you're not pulling that back next week. And so you really need to understand where are my softer and where are my harder expenses? Because at the end of the day, everything that I see is that is what makes or breaks the profitability of an e-commerce

Brett:

Company. I know every E-comm brand is going to be a little bit different. And we have a lot of visibility obviously, into the marketing and advertising spend with our clients as an agency. And often that's 25, 30% of revenue that's going right back into marketing and advertising. I know it varies for every e-comm brand. What are some benchmarks from your perspective, where should these percentages be with the caveat that it could be different a little bit from business to business, but what are the benchmarks?

Jeremy:

Yeah, so I think this is a really interesting, especially when I was, earlier in my career, there's always seemed to be words of wisdom that I always ask like, Hey, where did you get that math from? And it was just always, this is how it is. And now I've actually pulled enough data to know it kind of reverts back to this

Brett:

Consistent, it's how it's, yeah,

Jeremy:

Yeah. So I would say if you want to be a top tier brand that can really grow and scale and get to significant level 50, 200 billions of dollars in revenue, you want to target about a 50 to 60% gross margin. Now, I've seen some super successful brands that can dip down into the 30 40% and then some crazy high brands that are up in the 80, 70, 80%

Brett:

Sales. Yeah, 50 to 60% gross

Jeremy:

Margin. Yeah, so, so once you get to your gross margin, I think that's the most important determinant for your brand because that will determine your entire strategy. And what's really interesting also is it's kind just a function of math. If you only have 40% of your revenue after your cogs to spend, you're probably not going to spend as much on marketing as if you were spend percent gross percent on

Brett:

Marketing at that point, right? Then you

Jeremy:

Yeah, I mean you can

Brett:

Can't, but it's, yeah,

Jeremy:

Yeah, right. It's much tougher to spend 30% of your marketing at that level versus if you're an 80% gross margin brand, you can spend 30% and you still have 50% of your revenue to go spend on fulfillment operations, sg a. And so it really is interesting how it shifts and changes. I would say there's usually what I would call the pop dip and then rise on sg a. So right, your team, really, really high growth top tier brands can usually get to about 10 million on five people. I haven't really seen it on fewer. There are some brands who can do it on two or three, but that's truly special unicorn edge case. I'd say usually around 10 million in gmv, you're probably at maybe five people with a bunch of agencies and other freelance resources. And so your sg a can be super, super low. A lot of super high growth brands that I see their sg a is around, especially up into that 10 20 million in GMB, usually about 5% of their revenue now that will then grow over time.

So as you get to 20, 50, a hundred million, you will have to hire a lot more people. And then when you go to a public scale, it's usually somewhere around 50 to 20% unless you're Warby Parker and Allbirds and then you're at 40 or 50% and you're not making any net income. So that's a super important component. I would say fulfillment is usually around 10 to 15% of revenue. And this is the one area that I think is super important to break out from your sg and a of how can you whittle that down because every percentage point there could be going to marketing, could be going to bottom line, could be going to all these other areas. And I dunno, from what I've seen economies of scale is nobody's really figured out economies of scale and fulfillment for e-commerce yet. And so I think that's another major component.

And then we're always nets down to, and what's to me the most interesting is a lot of the retail OGs and people who are really successful building malls, physical brick and mortar retail presences always said your net income is going to net out at 10 to 15% of your revenue. And it holds true. The DTC darlings, the retail heavy brands, the hybrids, I mean it all will fluctuate, but you kind of always net out at 10 to 15% of every dollar you make in top line nets out as net income. And it's a really interesting trend and also makes it it's, that's probably the best benchmark. Everything in the middle, your gross margins, your opex is going to fluctuate based on your business and your dynamics, but you kind of always want to net out at that 10 to 15% in net income if you want to be high, if you want to take out more cash out of the business, raise it. If you're comfortable with growth, you can lower it. But it really seems to be that words of wisdom that really does always net out from

Brett:

The data. Got it. And yeah, maybe if you are in the agency world, we're generally seeing the high teens to say 24%, that window is what a lot of agencies shoot for and PE groups that we know they specialize in agencies, that's kind of what they look for. But it's still not far off from what you just said, but the idea there is if you take a higher percentage of profits than your are likely pulling away from something that's going to impact future growth. So you're pulling away from marketing or sales or RD or something to get to that higher margin. Are you seeing many of the e-com rockstar businesses that are hitting 20% net income or that's pretty rare?

Jeremy:

That's very rare. And I actually think the interesting thing that I'm also seeing and hearing a little bit of through the rumor mill is a lot of financial companies don't want you to be that high because actually

Brett:

It's not hitting the accelerator hard enough. It means you're not advertising enough.

Jeremy:

Yeah, I mean I think reason I was looking at this as a percentages and a pie is you got to take something from somewhere else to put it in another pocket. And when you think about an e-comm business, like your cogs and your fulfillment costs are fixed isn't the proper accounting word, but they're a lot harder to move. You buy your product, you commit to those prices, you ship it, you're kind of committed to those things. So really when most brands want to take more profit out of the business, they're cutting their marketing or they're cutting their GNA, which is team or their variable marketing spend, which is almost always an investment in growth. I will say the one caveat for the past couple of years is a lot of people just over hire and just brought on too many people and you're seeing a lot, unfortunately the layoffs are pretty painful and tough, but also Shopify got dragged in the markets for their rounds and they reduced their SG a by 31% year of year and had no meaningful impact on their business. And so I think that's also a little bit of market dynamics and corrections of people got a little too high on the hog in 20 20, 20 21, and now we just need to get back to everybody getting in shape and getting

Brett:

Fit. And I think it is just healthy, and this is something that every business needs. We've got these benchmarks and we're going to ruthlessly attack those. So right sizing, I mean it was easy for e-comm businesses and agencies. We all went through this period. Shopify did it right of just adding too many, getting a headcount way too high for what you really needed. And so the right sizing is painful but necessary for sure. So awesome, man. So love that. Not everybody likes to talk about a p and l, but come on, that's poetry in motion, baby. When you've got a good p and l for your business, you're hitting that 10 to 15% net income, you're growing. That's a beautiful business and it's attractive if you want to sell it or if you just want to cashflow it, you're likely really good. So let's do it, man. Let's kind of buy this business. Would we buy this business? Would we not buy this business? Who's kind of first on the list for us to break down?

Jeremy:

So my favorite one that I looked at and kind of actually where I started this whole journey was Crocs. And Croc is such a

Brett:

Fascinating, it's such an odd resurgence, such an odd resurgence post like yeah, they're ugly, but I love it and it makes me feel good, and so I'm going to wear it. And I love this trend. It's awesome.

Jeremy:

Yeah, yeah, I mean they were probably too early to the comfort economy and then yeah, COVID was a really good bump for them. So just a quick stats on Crocs, they're currently training $124 a share. They have a market cap of 7.5 billion, and when you look at their revenue and net income, they're trading at essentially two times their revenue and 9.7 times their, what's called the PE ratio, which is basically just what is their net income, what is their market cap divided by their net income, which is 9.7 times. Why I always like to look at this and I look at both SaaS and eCom businesses is really important is I feel like too many headlines recently have been this company traded at X on their revenue

Brett:

Or 30 x earnings or 15 x revenue or something. And it's like, yeah, that should only apply to a few business categories, not eCom.

Jeremy:

And I think the difference is if you're an 80% gross margin business and you have high recurring revenue, investors will give you the leeway of saying, okay, this will be a multiple of revenue versus we just talked about it in e-comm business. There's all of these other expenses that are pretty tied to the business. So I think a really important level set there is to always look at what are the PE ratios of public eCom companies, because that's actually the determinant that the financial players are using to get to whatever that market cap should be. But CROSS is a really strong business. They're doing 3.9 billion in revenue in 2023. They have 1.7 billion in cogs, so they're at about a 56% gross margin, and they did about 2.2 billion in gross profits. They have an SGA of 1.1 billion, which puts them at about 30% of their revenue, which they actually are at 20% net income.

So when you think about that, it's the silly brand that everybody loves to make fun of, but they really are building a meaningful business. And every year, because I've been posting about them for a couple years now, every year everybody's like, oh, it's just a covid fad. They'll slow down. They're growing just as fast as they did before Covid, and they actually have this brilliant business model, which I call ludicrous stunt collabs. So I don't know if everybody remembers the Balenciaga Crock from a couple of years ago, 2022, they did over 66 collabs with different celebrities and different huge other brands like Hello Kitty Crocs and all these other things. They're doubling down. They did even more than that in 2023. And I think it's also just a really good lesson in creative marketing as well is they make plastic clogs that our guests are super comfy. I don't own a pair, but I have, the guests are super comfy, but really,

Brett:

I owned a pair in forever, but they are comfortable.

Jeremy:

Okay, yeah. Everyone I know owns 'em. Like I am the outlier in my social network for not having a pair of Crocs. But yeah, I think it's a really compelling and really interesting business case where I think the other really important part is they're a traditional legacy retail brand that then also had a kind of renaissance of e-commerce, and now the two are really blending the business model. They've found a good way to blend those business models well together. I think the other thing that I really want to make sure this little period ends is this whole D two C or dye mania of just, it has to be D two C, we have to go to a hundred million, 500 million, whatever direct to consumer. No, if you make a product, your job is to sell that product in as many channels as possible through different vehicles. Some of those will be owned, some of those will be rented, some of those will be partnered, and I think they're one of the best examples of just really running the playbook well and always having something fresh. Really, they don't have that many products. Yes, they've extended in some other categories, but to me that's a really, really strong business where it's not a massive product catalog. They don't have 15,000, 20,000 skews, but they're selling in multiple places. Their strategy on

Brett:

Amazon, I wasn't sure, but they're selling on Amazon and they've got a pretty awesome Amazon store.

Jeremy:

I think that was one of their, I think that was a covid, we need to get on Amazon because we have to shut our physical retail down and now they don't break out their Amazon and their earnings, but I would assume Amazon is a meaningful part of their business now and their digital presence between D two C and Amazon is a bit of a flywheel that also then fuels their retail businesses.

Brett:

You get the Hello Kitty collab, the NASCAR Crocs, you got other stuff that I don't even understand what I'm looking at.

Jeremy:

And I think that's also part of the brilliance of the strategy is it's the same product, but the designs are bringing in different customers where I'm going to go on a limb and assume that the Hello Kitty crowd's not the same as a NASCAR crowd. People were probably buying their NASCAR product, probably aren't buying their Hello Kitty product and vice versa. And I think that's a really brilliant design way to acquire more customers. Now I'd say on the flip side, let's take a brilliant market, buy

Brett:

More right now maybe if I'm a NASCAR fan and I've got a daughter, I'm going to buy her Hello Kitty. Or there's the Pixar integration here on some of this, like the Woody Crock here from Toy Story. Yeah, so just brilliant.

Jeremy:

I would say on the flip side, a different example of brilliant marketing use case that didn't work out of not buying a biz would be solo solo brands. So I know everybody loves to beat up on them. They had a pretty tough quarter. I think the more important piece here is really diving into why that business didn't work. So for anyone who isn't familiar, solo Brands is essentially a portfolio company of four different D two C companies. The largest one is Solo Stove, so this is kind of basically the Yeti of fire pits. It's a portable fire pit, super high end targeting the outdoorsy people who want to do Campfires Grill marshmallows. They acquired Chub's, the short shorts company, huge fashion like Shopify 1.0 D two C Darling. Then they also acquired oru Kayak and Aisle Paddleboard. So very much trying to live the outdoor lifestyle, big products people buy.

I think here's my two main problems with it. First Shies makes no sense in that product portfolio. I'm not the customer, so I'll take this with a grain of salt, but someone who bought, I can't just imagine someone going camping, bringing their solo stove and their oral kayak while wearing their American flag, overall short shorts from Chubby. I'm struggling to see that being the same customer base, but I think the other bigger component is we have to stop shipping heavy stuff. It just doesn't make sense. They're an unprofitable business. They actually had a pretty painful year over year net loss and then obviously bring them up of the whole Snoop Do thing. I think it was brilliant marketing. I don't think it was the right strategy at the right time.

Brett:

Yeah, I mean that whole, I'm giving up smoke from Snoop Dogg. Brilliant. I think the execution was really interesting as well. It didn't work maybe for a few reasons, but yeah, quick note on that. I met one of the founders of solo solo stove, brilliant guy, just awesome guy. I know a couple of founders from Chubby's, also, brilliant guys, really cool brands. But yeah, there's been some challenges and maybe some missteps along the way and everybody does sort of love to hate on him, which probably isn't totally fair. But to your point, really good lessons here as we unpack them. And I think, yeah, to your point, I love Chubby's and Preston Rutherford's a friend. Actually I think you and I were commenting on one of his LinkedIn posts. Yeah,

Jeremy:

He's great.

Brett:

He's so good. He is one. He was on the pod recently. So if you're listening and have not listened to the Preston Rutherford podcast episode, you got to go do that. I'm not a Chubby's customer either, even though I got mad respect for them and love it, but there's going to be some crossover there, but yet it's not just this brilliant marriage of all chub's. Customers buy stoves or stove people buy chubby. It feels like kind of a different crowd.

Jeremy:

And so I think because I completely agree with you, all of those are great brands. All of those should be doing much more successful than they should. I don't mean to, I think Chubby should be divested and run as an independent apparel brand or sold to a different apparel brand and will be incredibly successful. And it's almost one of those things of if you set it free, it will do better. And then I think more of the point of where I think the midst of the original strategy was is we're going to aggregate a bunch of DDC brands that are kind of similar and try to run that as a big portfolio versus really there are three large heavy high A OV physical products that outdoors people will buy and a fashion retail apparel brand. And I think

Brett:

Which wildly different when you look at it like connection of D two C and maybe people that like to go outside, okay,

Jeremy:

And we're going to kind of make it work together. Versus Chubby's is a true D two C brand that should be in Appar, that should be in physical retail, a nine figure brand. They're at the scale in size where there's only so many dollars you can torch on meta before you have to move into retail. And then I think the other brands need to just be retail brands, the physical expense to ship. If you buy Brett and Jeremy buy a solo stove and an or Kai, you're spending 60, 80, a hundred dollars to ship something that heavy to a customer all over the country and all over the world. That's where you want to piggyback off of the retail supply chain infrastructure because it was literally built to do that. There are REI, home Depot, these companies ship much heavier things already to their physical locations, and so it shouldn't really be this D two C as an innovative disruptive channel, but really those are retail brands that will probably do much more successful and be much more profitable in a retail channel. But it feels like they're clinging to this. We have to be D two C

Brett:

Thesis. Got it. Your fix for solo stove is we divest Chubbies and it appears actually chubby is profitable, successful, all those things, but let it live and breathe and work on its own. And then we're keeping solo stove and or kayaks and stuff. We're keeping those together or are we splitting those up potentially as well?

Jeremy:

Yeah, I don't know enough about or root kayak and the aisle, but to me those all make sense together. To me, those are all the millennial REI customers. I'm going to buy my solo, so go on my camping trip or we're going to go paddle boarding or kayaking. And to me, those all make sense that urban millennial who wants to get out of the city kind of branding there, I don't know enough about the specific entities, but to me that makes more sense. And then solo brands should be going all after that customer versus let chubby, maybe there's another fund or another retailer that makes sense to have that brand live under its umbrella, but I also assume it could probably, their founders have also been amazing. I was at an event last year where their founder shared their p and l right before they exit up until where they exited. And it was a growing profitable

Brett:

Kyle as well. Kyle, that's legend as

Jeremy:

Yeah. So he presented on the main stage of a conference that I was organizing and retained.

Brett:

That's where I met him in.

Jeremy:

Yeah, Brett also dropped a lot of knowledge on YouTube ads at that conference as well. But to me and Wall Street, it's not a unique appear because Wall Street is taking the stance as well as it's not by that company. I think there are too many of these, like D two C aggregator is not the right word. It's not raio that try to buy 50, but a brands is in a similar boat where they bought three apparel brands and then Culture Kings was your retailer and somebody, everybody was just trying to aggregate revenue to just get to the size to go public. And I think a lot of companies are now unwinding that strategy and just going out really mastering who are our customers, what can we get to buy them to buy more of from us and really focus on that versus this kind of like, I call it spreadsheet math. We're really good at this, so let's just add this new market and that will increase our percentages by X and we'll be a big brand really staying true, really staying focused because the super successful brands are really nailing that really well and just have the patience to let that momentum build and that revenue and those profits compound over

Brett:

Time. And when you're just bolting on ebitda, when you're just buying revenue and trying to piece it together with kind of a loose association, that's not a recipe for synergy and true integration and ultimate long-term success. So yeah, I really like that. Awesome. Any other thoughts on how you would fix solo?

Jeremy:

It's a good question. I think honestly it's probably cut costs and ride it out as high as outdoor and home and goods rose, it fell and it's really just a demand pull forward problem. I don't think there's anything wrong with their business. I don't think that people are going to stop going product

Brett:

Sound from what I hear, products are great.

Jeremy:

Yeah, I don't know anything bad about them. The whole snoop thing generate a lot of buzz and that will always get a lot of thought boys to give their opinions on it. But I think the core of the business is really strong. It just needs to literally ride out the winter. The crazy idea that I have is they should actually go raise more money or go private and scoop up all of the other more struggling outdoor brands because I think it's that classic Warren Buffett we're going to talk about a bunch of times today. It's cost like Warren Buffet, right? Of when others are fearful, be greedy, and when others are greedy, be fearful. If outdoor is really struggling, could someone private or a larger company buy solo brands and acquire all of the other relevant brands right up the storm for two years, three years maybe?

And then you come out of it the other side, you own the entire category. And going back to the reason why I think they should divest Chubbies is if you have seven or eight products that one core customer buys, you could be Home Depot's largest outdoor recreational supplier or someone like that where it's just, it could be six different names, but you're still buying one end product that's really difficult to do. And like I say that pretty easily, it's one of the most complicated strategies to execute and it's actually one of the highest failure rates. But that would be my last crazy out of the box idea of where solo brands could go if they had the resources. And I actually think there's a lot of smaller examples of that across many different industries in e-comm right now where there are 400 lugging brands out there, there probably don't need to be 400 lugging brands, but a lugging brand can maybe get into what's the workout thing that they use or what's the beauty and cosmetics and really start to master what's that one core customer, what's our core competency and figure out that right ecosystem.

If everyone is struggling, I think a lot of consolidation will solve a lot of those problems.

Brett:

Consolidation is definitely going to happen. We're seeing it with D two C brands with agencies as well. One of the things you talked about is understanding who is our customer, what do they buy? How do we then assemble this collection of brands that are and products are going to meet their needs? And you made a post on LinkedIn. I'm just going to encourage everybody. You got to follow Jeremy on LinkedIn. He's awesome there. But one of my favorite posts recently that you, I'm just going to read it because this is powerful. You said the best businesses stalk their customers don't break laws. That's an important caveat, but you need to be in their social feeds following what they fall consuming, what they consume. You need to be in their heads more deeply than they are, do this over and over again across the entire customer base. That's when you'll have the algorithm down. That's the only way to know what they want before they do. That's going to set you apart for everybody else. Everything else is clone, which I love that. And so any other things you want to riff on there? But I think that, and that applies to the D two C brands that applies to agencies, that applies to software companies, obsess about your customer and stalk them, know them inside and out.

Jeremy:

So for anyone, I guess I should start all my statements on things now is this is not financial legal tax advice. Don't break any laws. I was never here. But yeah, this basically came from back in my time at Lumi, which was basically Kim Kardashian's favorite selfie case. So our core ICP was 18 to 34-year-old women who wanted to basically look nicer when they took photos because it was basically a phone case, light rails on either side. It made you look really beautiful. It was basically a photography level spotlight on your face or on anything you were taking a photo of when you went out in any dark scenario for everyone who isn't watching this live, I am a white guy bald with a beer. So I couldn't have been farther away from that demo if possible. Actually most of my career I found most success marketing and selling products that I don't buy and that I also don't fit the core customer base of. And so when I got asked like, Hey, how are we going to sell this to more women? I was like, cool. I don't know. So I mean it's a fun way to basically say do deep, deep customer research, I think

Brett:

Mill, right? Because you can't just rely on your, oh yeah, I know because it's me. You have to get in and know the customer and then follow the fundamentals and actually probably made you a better

Jeremy:

Marketer. Yeah, it really did. I think the important piece now that social media is just, everyone has it and it's everywhere and every brand has some relation to it is I think when most people think of customer research, they think of surveys or they think of pulling data. And really what I found to be the most successful is I would go spend hours reading people's Instagram posts and I would go look at their profiles to see what they posted. It was a little bit different. I was trying to look at what photos they take to understand how they were using the product. But what I actually discovered in doing that was I actually understood what were their interests, what were their passions. Great salespeople will always say, I know what my clients do on a Friday night. And I think that having that level as a marketer at scale is so important because from anything from your messaging, your positioning, we invented new products around a lot of what we did and what we found out there.

It's so easy. All it just takes is effort. And now anytime I look at a new brand, the first two things that I do is I go look through the reviews and then I go look through their social media and what people are saying and what people are posting and then go dig into some of those people because it's the best I found. At least it's the best way to truly understand what the person's actually like and what the person's actually interested in. And then after a certain number of hours, you just do it enough that it's like, okay, this is our entire customer base. And I mean we had hundreds of thousands of customers at Lumi and we get to profile level and personas. This is what the customers like, this is what they do, this is how they talk. And then a lot of the best marketing I've ever done is copying and pasting customer quotes and then putting in ads, putting in emails, putting in all those other components.

Brett:

Yeah, yeah. Did a podcast with the founder of Tushy and she was talking about such a great Mickey aal, such a great brand bidets that you attached to the toilet or whatever. And so some of her best marketing headlines and stuff were just lines taken from somebody. And so one was like tushy is eye candy and butt bliss. So it such a weird line, but it's like it looks beautiful and butts bit happier, whatever. Some of those lines you may not think of but your customers are and that can become your best ads. And so love that strategy, stalk your customers, but don't literally stalk them. As we wrap up and we're just about out of time, but you also had a really, really great post. I think it's worth highlighting a little bit and then people can dig in and look online a little bit closer, but talk to me about LVMH potentially going to be the first trillion dollar product company. Who are they? What do they do? What makes them so special?

Jeremy:

Yeah, so for anyone who isn't familiar, LVMH is the ultimate luxury company. They own 75 different, what they call luxury houses are essentially just brands. And most of them, Louis Vuitton Moat and Hennessy, they bought Tiffany's the famous New York jeweler. They've also bought Fenty by Rihanna, her beauty and cosmetics brand. They're basically the luxury aggregator really. Actually they are over 50 to 80 years. They've basically just rolled up 75 different luxury companies and they've just mastered this playbook because I don't buy any of these products, so I can't really speak to it, but my assumption is they have a very, very clearly defined ICP. They really know who's going to buy their business or buy their products and they're doing 80 billion in revenue. It's really hard to really, I started when these numbers started getting so big, I started like a country's GDPs, their GDP. If LVM H was a country, they would be bigger than Uzbekistan is the 72nd largest country in the world, which feels a little silly

Brett:

And gross margin, 86 billion in revenue on 69% gross, but 69% gross margins. Insane.

Jeremy:

Yeah, absolutely insane. Their net income, when I looked at it, their net income was more than I think 70 or 80% of all the other companies we analyzed last year combined. And so I think the really important lessons here is one, they have a really simple, yet hard to execute business model of they know exactly the type of company that they want to buy. They wait for it to get a certain size, they acquire it and then they just plug it into their machines and it's really aspirational. Also, they just traded a hundred billion dollars. So when you think about their growth rate, when you think about how much profit they kick off and when you think about they truly are playing the compounding game of just weight every year, make more sales, drive more growth, it is very possible that within the next decade to 15 years, they will be a trillion dollar company.

Anyway, the craziest thing is I actually don't think they need to acquire that many more brands. Maybe in that 10 to 15 years they'll be at 78, 82 maybe, but they've done a really, really good job of just consistently growing. And they have about six core categories of spirits, apparel, jewelry, I think they have an other category and then luggage and travel and accessories. And they just acquire a couple brands in all of those spaces, really run them well and then just let them go. I think the other really important piece where it's really hard coming from our end of the space where we're constantly disrupting and we're constantly trying to challenge people is they have a legacy to protect. So they have an incredible focus and I think it's so easy to get wrapped up in, we're doing this today and that looks really shiny and I have worst shiny object syndrome, but the greatest lesson I took from that is just wait 20 years, literally just do the one thing you're doing really, really well.

Let it compound, let it grow. I think they really take that approach really well to everything that they do. They're in luxury. So yes, they can really support. I mean, I don't know any other company that supports 69% gross margin at that scale or even really at most any scale, which you could past like 50, a hundred million in sales. But I think they've also just done a really great job of building the layers of their house brick by brick, layer by layer and just being very patient with it. I know for a bunch of entrepreneurs who are like, I need to hit 50% growth next month, that is the worst thing to leave you with. Absolutely. But I think really not getting distracted by the side quests, just really focusing on that core thing and sticking with it for a long period of time because there is really my buffet quote number three, there is no greater value than compounding growth. And just really having the consistency in the patients to stay on that course is why I think they're not attainable, but it's really something that every brand should go study look at and think about how they can take it away for their brand,

Brett:

That focus and longer time horizon, the patience that's there. Because if you're trying to ruthlessly hit a profit number or a revenue number, you're going to be really tempted to discount and do some things that have a really short-term, great short-term payoff, but a long-term net negative for the brand. And that's the type of stuff that LVMH and their premium brands don't do. And of course we would all look at that and say, well, of course they sell luxury items, easy for them. No, no, no. It's simple, but it's not easy. They are focused and they are just, they're cutting out everything else and they know who their buyer is and they're not worried as much about short-term profits as they are protecting and building the brands over the long haul. So really, really good man. So as people listen to this and like, dang, I want some more Jeremy Horowitz in my life. I need to follow him on the socials, I need to get on his email list. How can people connect with you?

Jeremy:

Yeah, definitely. So if this was helpful, if you want to hear more of my crazy thoughts and ideas and then hopefully some helpful macro analysis of the space, just follow me on LinkedIn, join the 20,000 other e-comm heads who decide that my crazy ideas are worth reading every day. I do try to post helpful stuff and tips as well. Jeremy Horowitz, H-O-R-O-W-I-T-Z. And then if you want to get the weekly teardowns where we do go through public company p and ls, then out of the box growth strategy as on how we would three x five x, 10 x our money running those brands, just go to let's buy a biz BIZ xyz and subscribe to the newsletter where you'll get all 32 p and ls that we've analyzed so far. And you can look through all their businesses, see what all their revenue costs of goods sold, all those other components are, so you can better understand what your p and l could look like.

Brett:

You'll be a better operator, better business mind and thinker if you get on Jeremy's newsletter. And Jeremy, man, love hanging out with you. You are a beacon of truth in a sea of craziness. You speak the truth on business and D two C growth and p and ls, and I love what you're doing. So keep it up and thanks for coming on the show. And yeah, dude, I'm smelling like round. Is this the third podcast you've been on at least two? So anyway, next round, we'll definitely schedule it here in the not too distant future. So thanks for coming on. Super fun.

Jeremy:

Yeah, appreciate it as always. Always have a great time, Brett.

Brett:

Awesome. And as always, thank you for tuning in. We'd love to hear from you what would like to hear more of on the show. And if you haven't done it so far, we'd love that review on iTunes. That's my big ask for you. Review it, share it with someone else that you think could use this. And with that, until next time, thank you.

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No one is a better fit to serve as an Amazon Ads evangelist than my friend, Jeff Cohen.

‍

Jeff is a founding member of Seller Labs and has been keynoting, exhibiting, and attending Amazon events for the last decade.

‍

If you’ve been to an Amazon event, you’ve probably seen Jeff. Now, he’s serving as the official Amazon Ads Tech Evangelist.

‍

I wanted Jeff to join the pod to talk about what’s new and trending with Amazon Ads. 

‍

This is important even if you’re not selling on Amazon. 

‍

Amazon is now the 3rd largest digital ad platform behind Google and Facebook. And it’s growing rapidly.

‍

Here’s a look at what we cover:

• How vertical videos are improving shopping experiences and making ad performance better
• What is the new integration with Facebook, and what it means for shoppers
• How Sponsored TV ads are democratizing TV advertising and utilizing Amazon’s rich buyer signals
• Prime Video Ads and what they could mean for your brand (and when to consider running them)
• Amazon Marketing Cloud (AMC) what is it, how and when to use it to unlock new actionable insights about your business and advertising effectiveness
• Plus more!

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Chapters: 

(00:00) Introduction 

(07:54) Vertical Video for Sponsored Brand Video

(15:43) Amazon’s Facebook Integration 

(19:27) Prime Video Ads and Sponsored TV

(31:33) Amazon Marketing Cloud (AMC) 

(39:22) AI’s Role In Amazon Advertising 

(42:15) The Importance of Your Feedback

(43:46) Outro 

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Show Notes: 

• Jeff Cohen: https://www.linkedin.com/in/jeffreycohen/ 
• Mike Brown: https://www.linkedin.com/in/mike-brown-31a03059/ 
• Death Wish Coffee: https://www.deathwishcoffee.com/ 
• Simple Modern: https://www.simplemodern.com/‍
• Anker: https://www.anker.com/

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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‍

Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, Bryan Porter and more. 

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‍

Other episodes you might enjoy: 

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• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

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• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

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• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

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• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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Transcript:

Jeff:

Because every time you advertise, you're making an investment in yourself and your product and your brand, and you want to be gaining some insights from that so that you can learn, you can iterate, and then you can reinvest.

Brett:

Well. Hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today is a first for the e-Commerce Evolution podcast. We have someone directly from Amazon joining us on the pod, and I am absolutely thrilled. This is actually a gentleman that I've known for a long time. We go way, way back from his entrepreneurial days and now he is at Amazon and Gee's, a close Amazon ad partner. I've got to visit some Amazon offices and so love our partnership with Amazon and thrilled to be diving into some trends, some new things, some stuff you need to know about as it pertains to Amazon and Amazon advertising. And so my guest today is Jeff Cohen, and you may know him from Seller Labs. If you went to any Amazon show, any Amazon conference, you saw Jeff. Jeff was there, and so really appreciate taking the time. Jeff, welcome to the show and how's it going? Oh,

Jeff:

I'm doing fantastic. It's obviously great to be on the podcast with you. We have known each other for a long time. We're both fellow Missourian. Yes, we have those extra bonding moments and I think ultimately I've always appreciated everything you've done for the community. We've kind of grew up in two different slight areas of this overall community of Amazon, but we definitely get to run into each other here and there, and it's been great to see the growth of your business over all these years as well. So thanks for having me.

Brett:

It's cool, man. Yeah, really appreciate saying that. And yeah, we're big fans of Seller labs and cool to watch that evolution and so kind talk about that, Jeff. So you're an entrepreneur, founder, owner of Seller Labs, but now you're working with Amazon. So tell us what that connection is like and tell us the story that kind of made that all happen. Yeah,

Jeff:

I guess technically I was a founding member of the company. I wasn't the actual founders. That gets kind of weird at times, but I like to be truthful. I think when it came down to it, somebody recruited me to try to leave seller labs and I made a joke with her and I said something like The only job I'd ever take is if Amazon would hire me to be an evangelist because that's what I already do. I run around and I talk about how great it's to be on Amazon to sell on Amazon. So I liked to joke. So then she came back and she was like, Hey, this position's actually available. And I applied and was hired, and I like to say I didn't come to Amazon and drink the Kool-Aid. I was drinking the Amazon. If you followed me for any length of time, you'd known that I've been strong advocate of Amazon and the community behind sellers and supporting sellers for the last eight to 10 years.

And so it's great to kind of be at Amazon representing all of the partners that I worked with who were all of my competitors. And so today I work with agencies like yours, tech providers, everybody within the Amazon partner ads partner system to really understand how to integrate in with Amazon, where priorities should be, where Amazon is putting their investments and maybe where advertisers should think of putting their investments. So it's really cool. It's been kind of an interesting journey. Amazon is definitely a more entrepreneurial company than you would think for the size that it's so, it's a great place, it's a great place for entrepreneurs to be.

Brett:

Yeah, it probably does not feel like a foreign space foreign entrepreneur, and I think Amazon treats their people like, Hey, you're owning this thing, and so operate like an entrepreneur would. And so that's funny. So you were talking to this recruiter, so you didn't know the position existed. You were just making up like, Hey, if Amazon needed an evangelist, I could do that. And then turns out that actually existed.

Jeff:

Yeah, I mean, you come from the SEO world, and so I had always Danny Sullivan, Matt Cutz, those are the people from the Google world that I always looked up to, and I always wondered, why doesn't Amazon have somebody like that? And so that was my vision when coming here was that's who I could be and that's how I could serve the community and what I strive for every day. I mean, I take it really as a responsibility because I know that the community wants representation at Amazon and they do have ways of being heard, and I know that they consider me as another way of hearing through things like this as well as being heard through the feedback that I get.

Brett:

That's awesome, man. Yeah, I can totally vouch for you that you've been preaching and evangelizing for Amazon for going on a decade now. And I agree with you. I mean, there's never really been a platform. There's never been a place for merchants to sell their wares and to build a business, and you may know off the top of your head, but the number of millionaires and the support that Amazon has given to brands, it's a pretty phenomenal opportunity. You have to approach it the right way, and there are challenges there and things like that, but it is an unbelievable

Jeff:

Opportunity. I mean, listen, it's not a golden ticket, but for the people that do it the right way and build upon it, you and I have seen the success stories over the years of the companies just like my buddy Mike Brown over at Death Wish Coffee when I met him, he was just an average guy. He's still an average guy, but he was just an average guy running a small business and now he's got worldwide distribution his products. So there's cool stories like that within the s and b world that we hear about all the time, and I think it's really an awesome opportunity for people that have great products and want to build brands. And I think that's really what you need to be successful on Amazon today. That's the

Brett:

Key one. That's the key building brands and coming up on the pod, actually interviewing one of the founders of Simple Modern, which just a phenomenal story and really they launched on Amazon, so they are great. It's a great brand. They've really built it over the years, but now I think I heard somewhere in we'll find out on the podcast, but they sell more drinkware than almost anybody else on the planet, which is crazy. That's cool. Then you got Anchor. So if I'm buying a replacement charger for my iPhone or MacBook or something like that, if I don't buy Apple, I'm buying Anchor. And that was kind of a brand that was my understanding was born on Amazon. And so, but this is what we're telling everybody. To be successful on Amazon, you got to build a brand there. Don't just sell products, build a

Jeff:

Brand, right? And that takes time. That takes time, it takes energy. And as I like to remind people, I shared this the other day, it starts with a great product anchor is what it is. I just bought one for my daughter yesterday because their products are good, they're quality, they have a reputation behind them that drives people to want to be raving fans. And ultimately as marketers, that's our goal. Our goal is to drive and create raving fans, and you need good products to do

Brett:

That. A hundred percent. So let's dive in. Let's talk about some new things that are here and that are available to marketers and will help us sell great products and build great brands on Amazon. So one of the first ones, and I'm pretty excited about this vertical video for sponsored brand video. Tell us what that is and why is that exciting?

Jeff:

Yeah, so you'll see that vertical video has kind of come in a couple of different areas. So sponsored brand ads is one of 'em also within Post. And the biggest problem that we're trying to solve with that is that people are shopping on their mobile devices. And so when you have horizontal videos, they don't play well on mobile devices. So the move to vertical was really to make that ad unit, to make that free unit through post a better shopper experience for people who are viewing on mobile devices. Now, it also solves another problem, which is that as marketers, we're creating content for all our other social media channels. And so when there's some consistency of how that content needs to be created, that's helpful to you as a marketer. I know for myself as a content creator, I might sit there at a show and I'm sitting there and I'm videoing it horizontally and then I'm flipping it and I'm doing another video vertically because I'm not sure where I'm going to be using that content or how I want to use that content in the future. And so being able to port your content from one social media channel to another is something that we want to make easier for our advertisers or for our brands because Post, which is another place you can use those videos is actually a free tool that brand builders can use to expand their audience. And so it's not just about ads and selling ads, it's about just overall that viewer experience and that sharing of content across the social media channels.

Brett:

Totally makes sense. And for those that don't know, can you explain what posts are and how they impact the shopping experience?

Jeff:

Yeah, so the easiest way to kind of describe posts is that, again, it's a free tool. They sit within the stores function of Amazon, of Amazon ads, and what they do is you put an image or a video within the post and then it will show up in different places throughout the shopping experience. So it might be on a thank you page or on a a product detail page. And they're really set to be an inspiration for people to say, oh, I'm interested in this, but what are other cooking things that I could do? And then within the post, people can either interact by clicking on a product and going to buy or by following your brand. And so what it allows is it allows your brand to create followers. And then as you do other activities throughout Amazon, through both the retail and the advertising side, there's ways to use the signal of followers as a way to make promotions. So on the retail side, you can create coupons that are specifically for those who are following your brand. You can do emails through your customer experience piece on the retail side, and then on the advertising side, you can set signals through the Amazon DSP and through other channels to say, Hey, this is somebody who's made a signal that they want to follow my brand, they want to get more information from me, so therefore I'm going to present an ad to

Brett:

Them. Yeah, it's been really great. And on the agency side, we advise all of our clients and help all of our clients create posts, and we've been kind of surprised by the thousands and thousands of followers that some products and some brands get through their posts. And then, yeah, it just makes it easy to talk about new products or to send an email or to really connect with that customer. And so it's an awesome free tool and it's one that if you're not taken advantage of, you absolutely need

Jeff:

To. Yeah, and it's similar to any social media. You have to post consistently, create, generate creative that's engaging. You just have to think of it in that same way, and no, on day one, you're not just going to post and get 10,000 followers, but the brands who have been doing it habitually for the last couple of years as it's kind of risen up and its popularity is probably the easiest way to say they're the ones that are benefiting today because they're seeing the amplification of the audience that's able to see it. Then the other cool thing you can do got away from vertical video is you can see what images are working well within your post, and you can then integrate those into other ads that you're running. So you can almost use post as an AB test type of environment, and if a post is getting a lot of engagement, then you may want to use that image to create additional ads because it's engaging, it's got high CTV stuff like that.

Brett:

Yeah, really glad you mentioned it. That's one of those under-leveraged, underutilized areas of posts. Use it to image test and use it to understand what can I build my next ad from, or what image do I need to add to my product carousel images or what image do I need to use for DSP ads? And so yeah, love that aspect of it. And circling back to the sponsored brand video, the vertical video piece, we were early adopters of sponsored brand video back in the video in search days when it first launched. And that's always like the number that's always like the number one or number two most effective ad type for our clients is the sponsor brand video. And what's great about it is because of the way Amazon shares that it's often below the fold, it's often on more category searches. We find a lot of new to brand shoppers buy from a sponsor brand video ad because they're usually scrolling a little bit further because they don't have a brand preference yet. They're still exploring this category, this product type, and so they see those videos. It's a product demonstration video with the listing next to it. It's just a super compelling ad type. I love it. But yeah, there was a gap. Most of the content that we're creating, even for YouTube shorts that OMG commerce is using or other social platforms, Facebook, Instagram reels, TikTok, vertical video. And so most brands user generate content or your demo video, it's often vertical video. And so now we can use that on Amazon and it's making a difference.

Jeff:

That's awesome to hear. And I think one of the things you said there that I think is important for people to pick up on is that when you're running video type ad units, you're not looking at straight performance metrics. You're not just looking at how many sales that video's generating. You want to be looking at things like how long was the video viewed for, right? Did it get to 25%, 50%, 75%, very, not everybody gets to a hundred percent, but did you get enough of the video view there? And that's going to start to give you a signal back to tell you, do you need to change your video? Do you need to make something more compelling? Did you get their attention in the first three seconds? And so think about all these things in a test and iteration type of mode that gives you the ability to be building upon the investment that you're making because every time you advertise, you're making an investment in yourself and your product and your brand, and you want to be gaining some insights from that so that you can learn, you can iterate, and then you can reinvest.

Brett:

Yeah, so great. Yeah, anytime we can get that data, make the next video ad better just gives us a chance to improve and more effective. So let's talk about, this next announcement doesn't really shift anything for advertisers, and there's not really anything we can do differently here, but I think it's just good for folks to be aware of, and there's been a bit of a splash about it, so would love to hear directly from you, but Amazon announced Facebook integration and so explain what that is and how that's working.

Jeff:

Yeah, so the Facebook integration with, I'm sorry, the integration with Facebook, what it does is it allows a user on Facebook to create a connection between their Facebook app and their Amazon app. And then when the user makes that connection between those two, it allows them to make the purchase within Facebook. And so the problem that it's solving for is that somebody sees an ad on Facebook and then they have to click on a link, go to Amazon, buy the product check out. But if you think about it, if the connection's made and Facebook knows what you want to buy and they know you have an Amazon account because you've given the permission to create the linking, they can create almost a one click checkout from the ad to the acquisition. And so this is really about user experience. And if you think about it, Amazon's always about removing friction from the checkout process.

It's why Amazon OneClick checkout has become so popular, and you can use it both on Amazon and off of Amazon, and we'll see how that program grows over time based on consumers and their desire to want to make those connections and want to do that. But this is just, I think social media in general trying to become more of an acquisition type of play. And if you think about the types of ads that were run on Facebook a year, five years ago, it was more about drawing into the lead funnel. And so they're just trying to remove hurdles, they're trying to make a better customer experience. They're trying to be able to tell you when you see this ad on Facebook, you can buy it on Prime. I was buying something the other day, it wasn't on Facebook, but I was buying something the other day and literally with my phone I was able to use two clicks and buy that product. Overall, it's, it's a super clean, easy checkout process, and when you're able to deliver that, you make customers happy. And at the end of the day, that's who Amazon wants to serve as the end user and the customer, and they want to make them happy, which then gets them to be happier about their purchase, be happy about the product, give better reviews, all that other stuff.

Brett:

And this is super interesting to me because we've seen some success with TikTok shops and Facebook and Instagram have tried some direct checkout type things over the last several years, but really this to me feels different. This is Amazon. We all have our Amazon account set up and our wallet set up. We trust Amazon. Just so easy to say yes to that. And so I'm very excited to see how this progresses and how this evolves. But for right now, this is Amazon choosing to run an ad and place it on Facebook,

Jeff:

Which is nothing new. Amazon's been running ads on, they've been running ads on Google, they've always kind of done that. Even for your products as a seller, you might not even realize that they're doing it for your products. It's remarketing, right? They're remarketing people back to Amazon in the same way that if you owned a website, you'd be remarketing people back as well. They're just trying to remove the friction so that they're able to convert more of those people into shoppers or into buyers.

Brett:

Yeah, can't wait to see how that unfolds more. So let's talk about another area of video ads. And I'm a huge video ad fan, grew up loving TV ads and actually did some TV for a little while, and now we do a lot with YouTube, but also as an agency, we're investing in streaming TV or STV, as you like to say in the business. And then a newer offering is Prime video ads. And so can you talk about those two and why you are so excited about those offerings? Yeah, I

Jeff:

Think, well, my excitement comes in really maybe two or three areas, but the first is that streaming tv, if you're not familiar with the numbers, overtook linear TV as the primary source that people are using for television. Now, what's interesting, there's two interesting pieces about that fact. I think the data was from e-marketer. The interesting part of that fact was that when you add up the number of streaming TV users and the number of linear TV users, the total number is higher than what the market was before at its peak. So they're not just taking away from linear tv, which they are because linear TV is declining, but the overall market is increasing. And what we're finding from that market increase is that the demographic of the people who are engaging with streaming TV that make up that Delta, they're not watching linear tv. So it's picking up a whole new audience that you didn't even have access to before. So I think that's a really cool, interesting kind of fact about this. Now, the second part is that streaming TV or linear TV used to be very difficult for brands to access, especially a linear TV where you had to create, generate the creative, you had to do buys, you had to have all these tests,

Brett:

And usually a pretty big buy. There's often pretty large minimums, especially if you're looking at any regional or national, you're talking about some pretty big minimums. So

Jeff:

What Amazon's done is they've democratized that. And so they released in October a new product called sponsored tv. It's inside the ad console and sponsor TV allows you to do streaming TV ads with no minimum. Now you still have to create your own creative. And so there is an investment that's there, and it's not for everybody. So I like to say that if you've been investing in, we'll call it middle to upper funnel ads, you've been investing in sponsored brands, you've been investing in sponsored display, you've been doing a dsp, streaming TV may be another avenue for you to expand to reach a larger audience. If you primarily are focused on pure performance based advertising, you've just been doing sponsored products, this probably isn't the medium for you to be using today. You need to kind of build up your knowledge, your experience, your understanding of the metrics that indicates success before you just jump into it. Yes,

Brett:

100% agree.

Jeff:

So the democratization of streaming TV I think is super exciting. Then I think the last thing that I think is super exciting,

Brett:

And one thing to just add to that really quickly, Jeff, we really recommend you need a very strong foundation. Make sure you're doing all you can with your other sponsored ads, sponsored product brand sponsor brand video, make sure you got some remarketing in place, make sure your listings are optimized and make sure you're in a category and with some margins where it makes sense to go top of funnel. If all of that is true, then I love sponsored tv. But yeah, it's not the first thing you do. It's not something you do if budget is really tight, right?

Jeff:

Because think about this, right? Think about this, that you put an ad on sponsored tv. So now your question is where does it show up? And I'll answer that in a second, but then they come to Amazon and they search for your brand, and you're not running a sponsored brand ad for your brand. You've just given your competitor

Brett:

Driving sales,

Jeff:

Potential sales, and so you're very right. There is a proper build to be ready for something like sponsor tv. The third thing I'm probably most excited about is around the type of inventory that Amazon's making available. So if you look at the investments that Amazon's been making, the type of inventory they have available with streaming television ranges from free V-I-M-D-B, which would put you onto shows like jury duty or judge duty, my son's favorite, which is really weird, but we can talk about that later. So funny. It can also put you onto devices like Fire tv, which are in, I think over 200 million homes was the last data point. Crazy.

Brett:

We have a fire tv. Yeah,

Jeff:

They're great. So fire TV or the Fire Stick or something like that, or Prime video, which recently went to an ad supported format or even potentially something which the buy is a little different, but something within the Amazon sports arena, which is around Thursday night football. And if you think about Amazon and the properties that they own from an intellectual property perspective around streaming television and shows, it's the MGM library, it's the Amazon Prime originals library. So whether you're a fan of the marvelous Miss Mabel or whether you watch the Boys or whether you're watching the Kelsey Reacher or something like that, right? Reacher, I mean there's a whole range all the way up to oh oh seven, James Bond, Rocky Creed, all the things that sit within the MGM library. So all this is just super exciting because it's creating access for brands to be able to place their ad in of people, but more importantly, they're not just putting their ads in front of people like you would in linear tv. They're able to read the signals and Amazon generates billions of signals that allow you to put your ad in front of the right person at the right time based on the buying behaviors that you are trying to generate. And that's working for both brands that sell on Amazon, the traditional brands that we think of, as well as brands that don't sell on Amazon, who are able to now tap into this market and able to tap into this inventory.

Brett:

And think about it, nobody has more behavioral shopper data than Amazon. Amazon knows what we shop for. Amazon knows what we're in the market for right now. They know what we're looking at. And so being able to tap into some of those signals for our ad targeting is a total game changer. And what's interesting to me about this, Jeff and I got my start in offline, so I did some TV back in the day in the local regional arena. And what's so interesting about TV is I remember helping a couple of a car dealership, a furniture store, jewelry store, get really going with their TV investment. And I remember not too long into the investment in tv, the owner would stop me and they would say, I can't go anywhere. I go to the gas station, people say, Hey, I sat on tv, and I go to the store and people are like, Hey, you're on tv. And it's like, I'm feeling like a celebrity here. And that's something that doesn't happen with other media. Nobody, and I'm a big Google ad fan, but nobody sees you in the grocery store and smacks you on the back. And man, I saw your Google ad. Whoa, big time. It just doesn't happen. But somebody sees your product on tv, they're like, man, this is legit. Yeah,

Jeff:

There's definitely a cachet to I can be on television. So there's definitely a little bit of an I made it, hopefully we're democratizing that, right? And maybe we're not losing that immediately, but we're democratizing that to where more people who didn't think that was something they could use is something they could use. I wanted to go back to the behavioral signals because I think it's important to talk about, I don't know if we have the most, or I've never seen a lineup of chart of who has what. I'm just right. But I think what's important is to say that Amazon is able to aggregate these signals across the board, and a lot of times use machine learning to make predictions around potential buying behaviors. And so it's not necessarily that Amazon knows who's shopping for your product that day. It's more like, oh, there's a signal that would say you've bought this, therefore you might be in the market for that.

You're buying baby food, therefore you might be in the market for baby products. And so it's more at this aggregated level that starts to really, and I think this is the part that people should understand, is when you're just using sponsored products, you're targeting only people on Amazon who are doing search. When you go to sponsored brands, you're targeting people who are searching for more category type based. When you do display, you're showing up in this bigger world, and as you move up into sponsored tv, TV or streaming tv, you move to this giant world of people who are in category, not necessarily just in aisle for your product. And so it's a huge multiplier to the potential audience that you can target, but it still goes back to what you said earlier. You want all those other pieces in place so that you can maximize that investment.

Brett:

And we would call that kind of in aisle, we would call that more demand capture. I'm capturing the demand that's there, but as we go broader and look at STV or other things, that's demand generation, I'm finding the ideal shopper who's likely to buy from me, and I'm generating that demand. And yeah, I mean, I saw the power of video and of TV when all we had at our disposal was age and gender, and hey, we think our shopper watches this shit. Where's going to run our act? Where now it's like, no, we know what they're shopping for and we can reach them individually. And then we see on the backend how many people are watching it, how are they engaging with it? Is this the right creative? Do we need to switch our creative? Where before it was just like, yeah, let's hope that this is the right program, and then let's see if anything happens.

Jeff:

There's a couple other things that happen within streaming television too. One, it's a captive audience. So think about your own behaviors on streaming tv. You're not flipping channels in the same way you are on linear TV two, especially on prime video, the amount of advertisement content to viewer content is very low. So traditional tv, I don't know all the numbers, but it's a lot. Just think about how often you get commercials on streaming tv. It's low. We want to put that customer experience first and foremost, and ensure that the customer is getting what they want. The next is is that you can build interactivity into your ads. So you can have QR codes, which I think are okay, but even more importantly, you have the ability to interact through the remote. And so as more and more devices are working through the remote, you'll be able to click a button and say you're interested, click a button and add to cart or speak into your remote. And then finally, because of all this, but were

Brett:

Prompts for Alexa too, I think I've seen some ads say

Jeff:

That

Brett:

Ask Alexa to do this add to cart.

Jeff:

And then also think of this is you can create dynamic creative. So one of the things that we tested this year within on Thursday night football was that you buy a spot and you could run different creative for different markets. So the easiest explanation for me is think about a car dealership and you have a different type of persona that's going to buy an EV than it's going to buy a pickup truck. You're from Missouri, so I'll go pickup truck,

Brett:

Pickup truck in Missouri. Absolutely.

Jeff:

Because everywhere bigger, the

Brett:

Bigger the better

Jeff:

Baby. That's right. And so that's a different persona, but the car dealer in this instance, the car dealer can have one ad spot, and that one ad spot can then be shown different creative to different audiences. And that's something that just, again, it's allowing for a better user experience, it's allowing for a better advertiser experience. And those are the things that I think are super exciting.

Brett:

That's amazing. Well, this perfect segue to talk measurement now because that's obviously something that we have gotten a little bit spoiled by or come to expect in the online marketing world. And again, comparing to the offline days, the tools we have at our disposal are amazing, but there's still challenges that pop up. And so let's talk about A MC Amazon Marketing Cloud and what do we need to know about that, and then how does that unlock new opportunities for

Jeff:

Measurement? Yeah, so I'll go back to, you'll see a theme, but I'll go back to what's the problem we were trying to solve And the problem that we were trying to solve with a MC or Amazon Marketing Cloud is that one, cookies are going away. Identifiers are becoming more and more difficult to identify cross channel, cross product, cross device type of activity. Two marketers need to be able to see what happens in a multi-touch attribution environment. And so a lot of advertisement that you're doing on, I'll say traditional Amazon ads is using what's called last touch, which means the ad that touched the consumer last is getting all of the credit. And then three, our brands are getting more sophisticated, and so they're asking more questions and they're wanting to bring in their own first party data to help answer those questions. And so we needed to create a tool that would allow us to solve for all these problems.

So a MC is built on what's called a clean room. And the easiest way to describe a clean room is that there's three components of a clean room. And you as the advertiser can come into the clean room and you can ask questions of the data that's inside the clean room, but what you get back is not customer identifiable information. So it's a real rich privacy safe environment. It's allowing you to ask it questions of like, well, what are the age of the people that are buying products from me? And you can then come back and you can see what the ages look like, and then you can say, how many people at this age buy this product and then buy this product? And then you can get that information back, but it's never going to tell me where does Brett Curry live and what does Brett Curry buy?

So that's where it's kind of protecting the consumer within that, what this allows us to do is it allows us to create a more sophisticated, multi-touch attribution type of model that looks at the customer journey. And so that's just one of the many things that it can do. And so now instead of just seeing that sponsored products drove the sale, I can actually see that the customer that was the customer who only sees sponsored products will see an X percent conversion. But when they see sponsored products and sponsored brand conversion turns to Y, and when they see sponsored products sponsored brand and A DSP conversion turns to Z, and I can start to see what the optimal path is, I can also start to see frequency. So a big thing within DSP is setting frequency, how often you want an ad to be shown. And so you can see like, oh, well, when a consumer sees my ad more than three times the conversion rate does this, I don't want them to see it more than three times.

I can then set my controls by having that aggregated data to understand how my consumers are shopping within their panels or within their path of purchase. And so A MC is like this giant, what questions do you have about your business? And then it's going to spit that back out to you. And we make a lot of templates available. And then a lot of our partners like yourself who are integrated into this will develop their own templates, their own reports, their own way that they want to be able to use this. And it's really kind of created this new paradigm for how marketers can understand how their advertising is working and understand where they want to continue to make investments. And then one last thing, and then I'll let you jump back in and ask a question, but then you can also bring in your first party data. And so if you want to start to see incremental to your web sales, you can bring in your hash data so you're not bringing in customer identifiable data either. And AMC is able to marry that information together and give you an understanding of how Amazon's doing in addition to maybe your own site or addition to another third party or another first party data set that you're bringing in to give you more rich information for the types of reports that you're trying to generate.

Brett:

And it's really a game changer and almost necessary, especially as you grow, if you've got a really robust D two C business and you're investing in Facebook and you're investing in YouTube and you're running Google Ads and you've got the full Amazon suite of ads running to be able to have some of that connected so you can see, okay, what's the true lift or how many new customers am I getting on Amazon that I'm not getting in my store and things like that. And so really you don't get that data unless you're connecting it with something like A MC and bringing in your first party data there. And so then who should start exploring a MC versus when does it not really make sense to invest the time and effort?

Jeff:

So today you have to be running DSP to have an A MC instance. Now, I would say that if you are running DSP, you should have an a MC instance. So you can see more holistically how your ads are running. Again, there are basic templates that can start to give you information, but anything, it's a whole bunch of additional information. So the question becomes, what are you going to do with it? What's your agency doing with it? And that's where the turning the insights into actions become kind of the critical piece and the critical component to the success. So I'd say AMC is a complicated tool. They probably don't want me to say that, but it's a complicated tool. It requires some programming background to understand. You have to understand SQL to be able to ask and write the queries correctly. You have to be able to understand what the insights mean and how to turn them into actions.

And so when you're able to do all of that, you can get to a much higher granular level of how you're trying to turn the dials on the pieces of the business that you're trying to do. And so there's lots of tools and tool providers that are out there that are giving you some of these insights. And there's many agencies like yourself that are able to turn these insights into the actions that are driving what you do. And all this comes back to this idea that advertising should be a test and iterate type of mindset and mentality. And you want to use data to understand, are you reaching the audiences? Are you hitting the KPI metrics that are important to you? Where are you going to make additional investments? At the end of the day, you have to be figuring out how these different investments are going to stack upon each other to get you to the end goal that you're trying to get to. And we're just trying to make that all easier for you, and we're trying to provide you more information so that you can be more sound in your decision making.

Brett:

And you nailed it there. It's actionable insights, actionable data, but really as you get bigger, it becomes more complex and you need to have everything connected as best you can so you can make sense of it. And yeah, we're big believers in Amazon DSP, we've been one of the fastest growing Amazon DSP agencies and help a lot of people with DSP. And so that totally makes sense. As you're pushing into DSP, you need to look at and consider A MC as well. Well, we are coming up against it a little bit. Jeff, any other new things, insights, other comments on what we've talked about so far that people need to know? Yeah,

Jeff:

I mean, the other thing, and obviously we would behoove ourselves if we didn't mention AI just real quickly, and I think there's a lot of excitement for brands around AI and what Amazon's doing on the retail side around helping you optimize your listings better or review sentiment analysis or on the advertising side around image generation. And I think one of the big things to really keep in mind specifically to Amazon ads and how we look at ai, AI is, I think part of it is part of our DNA, right? There's a lot of AI that goes into how goal-based advertising works within sponsored brands and within sponsored display and how you connect audiences to find new audiences within your DSP and within A MC. And so yes, all the good talk of AI and generation and all those things is fun and exciting. But I think for us, to us, AI is not about generating and creating new tools.

It's around solving the problems that our advertisers are having to help them be more efficient, to help them be more effective, to help them place the right creative with the right background and the right setting at the right time to the right customer. Those are the problems that we're trying to solve. And I think it's a super exciting time for brands. There's some great case studies coming out about how brands were able to use the AI generator to add holiday images and saw an uplift in their sales. So little tweaks that you could do that would've taken you a lot of time and a lot of energy you're able to do very quickly now through the types of technology that we're developing. And I think there's a lot more to come in the future. I mean, everyone's investing in ai, and I think you can see where Amazon's investing and what we're building into and what that means for the future, and I think it's super exciting for our advertisers.

Brett:

Yeah, I'm very excited to see how this unfolds. And yeah, we've seen the power of AI and machine learning on the goal-based advertising, and now to begin to see generative AI and potentially image manipulation, what can be done there? It kind of goes back to the point you made about, Hey, we're running one TV spot. We can customize the creative based on where you are. Am I showing you a truck or am I showing you a Prius or am I showing you a chief's gear or a 49 ERs gear? What am I showing you? And that's sort of what AI is potentially going to enable on the image side. Can I just easily, quickly and at scale change images to fit a promotion or a seasonality or a use case? And so yeah, pretty exciting to see that unfold.

Jeff:

Yeah, definitely. I think there's a lot to be excited about as Amazon brands and Amazon advertisers. And I think ultimately as a consumer of the product, remember that your feedback's critical to us. We want to know what's working for you, what's not working for you, how it's working for you. That's all that Amazon works backwards from. That's the customer that we're trying to solve. And so hit me up on LinkedIn, share it with me, let me know. Let me know your thoughts about vertical videos, about posts that, it's kind of funny, I don't want to say LinkedIn's a big source for us to do customer information, but I think that over the last two years I've demonstrated that there's some great conversations happening on LinkedIn and our product managers do appreciate a lot of that feedback when they see those conversations and they're reading the feedback from the end user who's talking about what's working for them or what else they would like to see. So that's really what drives a lot of the innovation that we have here at Amazon ads. And so I think you and your team for adding to that as well, because I think that's a big part of how the flywheel circle all occurs is that that feedback's necessary.

Brett:

And speaking of which, I'd love to hear that you're taking that feedback sharing with Amazon. I know you guys are very well, your goal is to be the most customer-centric company on the planet. And so you are an amazing follow on LinkedIn. So if you are not following Jeff Cohen or Jeffrey Cohen on LinkedIn, you need to, is that the best place to connect with you? If someone wants to say, okay, I need to stay up on all the latest and greatest from Amazon ads, so I need to follow Jeff. Yeah, I mean,

Jeff:

If you see me in the grocery store, say hi, right,

Brett:

Chicago land. Yep. Shout out.

Jeff:

I have had a few random, Hey, wait a minute, are you Jeff at the museum? Which is kind of always weird. Yeah, LinkedIn's the best place to connect with me. It's where I spend a lot of my time. I'm also at a lot of trade shows and events. And so I encourage you, if you do see me at an event to come up and say hello, I'm often surprised at sometimes how many people say like, oh, I've seen you, but I haven't wanted to say hello. I'm sure, Brett, you feel the same. We want to to hear from you. We want to engage. Absolutely. We want to talk. So please come up and say hi and yeah, connect on LinkedIn. But I always say I remind people don't just connect on LinkedIn. Say, Hey, I heard you on Brett's podcast. I heard you on e-Commerce Evolution. Find a way to break that Ice city. You're not just one of however many people have connected with me on whatever period of time. Yeah, I mean, I thank you for having me on. I thank you for being an awesome partner to Amazon, and I think that the growth of Amazon and Amazon ads has been largely driven by our partner population and companies like yours. So we thank you guys for everything you do and everything you do for your partners or your advertisers, your customers as

Brett:

Well. Appreciate that, man. Yeah, it's been a fun ride. I guess we're almost eight years in now as an agency, but excited about future. This year's going to be amazing and beyond still, I think one of the best places ever in the history of marketing to build a brand and so pumped about it. But Jeff, really appreciate it, man. Thanks for taking the time. This was super insightful and we'll have to do it again sometime.

Jeff:

Appreciate it. Thanks for having me on.

Brett:

Absolutely. And as always, thank you for tuning in and we'd love to hear your feedback. Would you like to hear more of on the show? And if you've not done it, would love that review on iTunes helps other people find the show. And hey, if you're listening and you're like, man, so-and-so that I know would really enjoy this episode, please share that with them, share it on LinkedIn or on the socials, that would be greatly appreciated. And with that, until next time, thank you for listening.

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Building a brand is hard. Really hard.

‍

Building a brand on Amazon carries some unique challenges. Sure, Amazon has built-in traffic, but grabbing attention, selling a great product, and then getting customers to buy again and again is hard.

‍

No one knows that more than Bryan Porter, co-founder of Simple Modern. They launched on Amazon in 2016 and are now the 4th largest drinkware brand in the US. You probably own one of their tumblers or know someone who does. 

‍

This episode is a masterclass in:

• How to build a brand on Amazon that people seek out. How to rise above the noise of "me-to" products and drive discovery and repeat purchases.
• How to successfully go DTC when you're born on Amazon. This isn't easy, and most Amazon sellers fail outright or are only moderately successful. 
• How to use product variation to increase conversion rates and drive search volume.
• Branded search or no branded search and Bryan's rule of 20x ROAS.
• Competing in a hyper-competitive category.
• Eliminating every weakness your product has.
• Why negative reviews might not be the only sign that you need to kill a product.
• And much more!

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Chapters:

(00:00) Introduction

(04:11) Simple Modern’s Founding Story

(17:42) Demand Capture and Paid Ads

(24:40) Building A Brand On Amazon

(40:40) Transitioning To a 1P Seller on Amazon

(46:23) Outro

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Show Notes:

• Kyle Fraughton: https://www.linkedin.com/in/jbryanporter/ 
• Simple Modern: https://www.simplemodern.com/ 

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, and more. 

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‍

Other episodes you might enjoy: 

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• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

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• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

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• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

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• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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‍

Transcript:

Bryan :

The way that we win at Amazon is we take a customer who's searching for a water bottle or a kid's water bottle or a Tumblr, we convert them and the next time they're looking for something drinkware, they're searching for us.

Brett:

Well, hello and welcome to another edition of the eCommerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we're talking to Bryan Porter, co-founder of Simple Modern. We're talking about how they did it, how they became just a drinkware phenom, one of the top sellers on the planet, a brand born on Amazon that is just crushing it now in the omnichannel space. And really just a brand that I've admired and watched from a distance and now super excited to dive in and learn firsthand how they did it. So with that, Bryan, welcome to the show, man. And how's it going? Thanks

Bryan :

For having me on, Brett. It's going great. I'm excited to talk with you.

Brett:

Yeah, I've been following you on LinkedIn and of course Twitter and you and one of the other co-founders, Mike, you guys post great content and so I've been consuming that, enjoying that. And then there's also a connection. I know Mike is one of the co-hosts of the Operators podcast, A quick plug to the Operators awesome podcast. My buddy Sean Frank is also on that podcast and so had some connections and so finally able to make this happen, and so super, super excited about that. Now before we dive in, Bryan, I think this will be important before we talk drinkware and building a brand in Amazon and D two C and all of that good stuff. If anyone's watching and seeing the video now they're potentially looking behind you and seeing some bottles, but they're like, those are not simple modern bottles. That's some kind of other, it looks like you're sending messages in a bottle or something there. So for those that are intrigued, namely me, what are those bottles sitting on your desk?

Bryan :

It's something that a coworker from over a decade ago started doing. Every time he went to the beach, he would bring back sand from the beach and put it in a glass bottle like this. I just ripped his idea, but I think it's super cool. I've had the pleasure of going to places, beaches across the world from Hong Kong to Greece and the Caribbean and places in Israel. And so bringing it back, having it on the desk is really fun thing to remind me of those adventures and fun to talk about with people who come in.

Brett:

Super cool. Yeah, super cool to be transported back to that experience and also need to see the comparison, right? Because sand is very different in different places, and so it's probably asking to pick a favorite kid, but do you have a favorite or favorite top one to three that you could mention? Not Kids Beaches.

Bryan :

It's funny because places in the Caribbean, that's what I think of when the Turks and Caicos is probably my favorite beach, but the most beautiful sand on my desk in a bottles from Destin, Florida or 30 a, that sands walking on powdered sugar. It's just the widest, softest. So I hate to say America, but in terms of just sand, it's hard to beat that.

Brett:

It's pretty amazing. And I'm not the international traveler that you are, but I've been to Rio, which those beaches are amazing. My family, I go to the west coast a lot, so we go to Southern California a lot. Love those beaches. But we do go to the Destin Panama City Beach area every year, and it's true, man, San, it's the best. It's the softest, it's the widest. It's fantastic. So very cool. Well, thank you for that little diversion. Super fun. Let's dive in because I think a lot of people are wondering how the heck do you do this? First of all, guys started in 2016, but why a drinkware company? Why Amazon and how have you achieved this runaway success? And so can you kind of tell the founding story we'd love to hear?

Bryan :

Absolutely. So the founding story really starts at my previous job I worked with Mike previously. We were coworkers working on an e-commerce brand that was really more of a marketplace than it wasn't like creating a consumer product brand. And then we have a third co-founder. The

Brett:

Focus was more just selling products on marketplace.

Bryan :

We were more trying to compete with Amazon, which there's a reason why we wanted to start a side business. Amazon was crushing everyone and still is. So yeah, we have a history and we like to think of our previous job is really kind of the foundation that we've built simple, modern with, and we really wanted to create products that could contribute to people's everyday lives. We didn't feel a ton of value out of running more of a marketplace, so we felt like who better to try and create an Amazon brand than people who have been writing search algorithms for another website and have just a great understanding of how customers shop on marketplaces and how algorithms would decide to show certain listings the highest. Yeah, so we started simple modern as a side gig.

Brett:

So actually lemme just double click on that really quickly, Bryan. So you guys were creating the search algorithms for this other marketplace?

Bryan :

Yes, yes. We ran several different websites and one of them in particular was purely a model that's very similar to an Amazon where we had to figure out how to show the most relevant best things to customers whenever they search

Brett:

Any key insights. I want to get back to the story, but you're a guy that has written search algorithms, so I think a lot of people are fascinated by that. Any key insights or learnings that you can tell? I know you didn't create the Amazon algorithm, but any insights there that you can share as a creator of algorithms?

Bryan :

Sure. There's a few parts to creating an algorithm. One is how do you index listings? What do you use to decide what's relevant to a search? And there's nuances too that are hard, like the difference between water bottle and bottle of water. Those are two completely different things,

Brett:

But the words are, one, wanting to buy water. One you wanting to buy a container,

Bryan :

The words are essentially the same just in a different order. So you need to be able to pick up on nuances like that. And really most of what you have to go off of are titles from listings, and that's what Amazon does. It mostly indexes off the title and some content within the listing. Maybe you give the option for sellers to feed you keywords, but that's dangerous because who knows what they're going to put in the backend so that they don't want customers to see. So there's kind of indexing side. And then you have to decide once you get your group of relevant products, the order that you show them to customers, and obviously you need to optimize towards the click rates. You need to have the products that are going to grab the customer's attention and get them into the listing and then ultimately convert. So you have to weigh that. And then the thing we thought about a lot is how much do you weigh profitability of listings versus revenue if you're the marketplace? And so there's kind of a balance there. So yeah, it's kind of all those factors tie into it

Brett:

Super interesting and that totally makes sense. And yeah, obviously we try to understand, you try to hack, so to speak, the Amazon algorithm or the Google algorithm, and it does come down to relevance and click through rate and conversion rate and things like that and sales velocity. But yeah, just thought it'd be super interesting to hear from most people. Just try to figure it out. Most people have not written them before in the past, so that's awesome that you did that. So cool. So you guys, you decide to launch a brand on a marketplace, but yeah, why drinkware and why when you did it and yes, so continue the story.

Bryan :

Yeah, so I think one thing that makes us a little bit different is, and I dunno, there's a lot of people who decide to sell on Amazon and then figure out what product they want to get into. But the genesis of our company is that we have more of a channel insight than a product insight that we started with. So we just wanted to sell on Amazon, we're analysts at heart, and we felt like if we tested as many products as we could that would give us a better chance of finding whatever it may be that is best for us to kind of center our brand around

Brett:

Super smart.

Bryan :

So yeah, if you throw enough darts at the dartboard or I guess the more darts that you throw at the dartboard, the better chance you have of hitting the best possible option.

Brett:

So you didn't just start then with drinkware, you tried a few things and drinkware was what checked a lot of boxes and was taken off for

Bryan :

You, correct? Yes. And we did this all at night on the side. So we ended up being able to test I think five different things. They were all things that you could airship to not mess with sea shipping right off the bat. They had to be cheap in terms of nominal dollars per unit and costs because we didn't have a ton of money. So there were parameters that we use to decide what to test. So outside of drinkware, we tested things like a tea infuser, french press, silicone baking mats, a few other things. And this was in 2015 for context, right when Yeti 30 ounce Yeti Rambler was really

Brett:

Actually taking off

Bryan :

At that point doing doing what Stanley is right now. So drinkware was a young category and really starting to blossom at that time. So I think that testing a 32 ounce insulated bottle, the timing was really great. We didn't know it at the time, but choosing the vacuum insulated drinkware category was really the best thing we could have done because that category has been the fastest growing category in home and probably across every category, one of the fastest growing in the last 10 years.

Brett:

And who would've predicted Bryan with drinkware? You'd think you could survive with one or two of these things, but that's not the case, especially for moms for whatever reason. And so my wife, God bless her, she buys a million of these, but there's never enough. There's never enough drinkware because you need different sizes, you need different straws, you need different handles, you need different everything. Everything's got to be different. So you guys really you chose well. So congrats on that.

Bryan :

Yeah, it is funny how much wear has become more of a fashion accessory than a practical thing that you have in your life that you just want one of. And that is really the insight that we doubled down on that contributed to our success whenever we decided to go all in on drinkware after we tested different products. The question then quickly pivoted to how do you create the best drinkware brand on Amazon? Yeti existed, hydro Flask did swell, you have a bunch of these high margin competitors and then you have the factories at the lowest costs and there wasn't really anyone in the middle in terms of price. So that was one observation. So

Brett:

You found that gap of people that want quality but don't want to pay through the nose for it and people that don't want cheap. And so you found that gap and filled

Bryan :

It. Exactly. Typically brands don't like being in the middle. They'd rather be at the top or the bottom on price. But what we found is that we could provide value with the fashion elements, just the number of choices we give customers in our listing. A company like Yeti isn't really incentivized to sell more than eight or 10 different colors because they need to sit on a physical shelf and stay in stock. They're not e-commerce first and manufacturers aren't incentivized to have a ton of different color options because they're not wanting to have all their money sitting in inventory. They want to be buying manufacturing equipment. So they don't want to necessarily run that playbook. And that's really where we found our value prop was to, we got up to 45 different colors at one time, which is, I acknowledge that's way too many. And we've come back down to about 25 D

Brett:

Colors. I sure I can name anywhere near 45 colors, just be making stuff up at some point. That's

Bryan :

Amazing. It's decision fatigue well beyond that. But the beauty of offering all those different options to customers was that it mattered to them. When drinkware is becoming more like shoes or purses where customers want unique things, that's a value add. It also helped us to create a higher conversion rate on our listings, just a better chance for customers to find what they want. If we offer more variety with e-commerce, it does a cool thing where you create more front doors to your listing, more search terms you can rank on. So if we're the only company that sells yellow water bottles, not many people search for them. And so when a hundred percent of that search volume can be helpful, especially things like Mickey Mouse water bottle or licensing, it really helps to bring more customers into your listing.

Brett:

Yeah, and just curious, when did you start going down the licensing path? Was that fairly early or did that come much later?

Bryan :

It started pretty early on. We ended up having success adding more variety into our listings and we doubled down on that as much as we could until it just became ridiculous. And a part of that offering customers variety was with licensing. We started with a local license for the University of Oklahoma, which is where we live, and you can get local licenses, like local fan shops can do this a lot to be able to sell product from teams in their area. So we got that and we got a local license, we Oklahoma City Thunder, and we're able to leverage those local licenses basically into one. We leveraged into a Sam's Club deal, which this is something that Mike spearheaded and did an amazing job. We didn't have the licenses for most of college football or college sports, but got Sam's Club to commit to a PO that was across all the schools. So we leveraged the PO with Sam's Club to get the licenses. So essentially we didn't have anything but leveraged

Brett:

The PO first. That's brilliant. Takes away the risk completely, right? Yeah, almost.

Bryan :

So that's how we got our foot in the door. Ultimately it led to the NFL and Disney, which are the biggest ones and it's really hard to get in with Disney, but obviously it's really helpful, especially if you sell kits products. Yeah,

Brett:

Yeah, I love that. Looking at product differentiation, both as a way to drive conversion rate, but also just as a way to grab more traffic. Because you mentioned this in one of your posts, you guys are demand capture first, and that's sort of the thing of Amazon, it's search driven query-based traffic for the most part. Any things to point out there? Why did you guys choose demand capture type product versus something else?

Bryan :

So that goes back to our experience before simple modern, that e-commerce business that I was telling you about was very dependent on paying for customers and it was great until it wasn't. And our experience really is kind of like, I don't know, a scar that we carry with us that maybe to a fault, we do not want to be dependent at all on advertising and it was really kind of the one main strength of our previous company. And once that goes away, you are in trouble. So we built the business to be 100% organic, not dependent on Amazon ads, not on Facebook ads or meta, whatever. Our whole mantra is we want to be able to win when we're sitting on either a digital or physical shelf next to all of our competition, we're building a product that a customer is going to pick up instead of the other ones. So it's works to this point, although ironically we're trying to figure out how we can add on paid advertising now.

Brett:

And you guys did, now you did Amazon ads for a while, so it seems like I read a post about that, but it hasn't been a central part of your strategy.

Bryan :

So heading really, I guess the first five years of the business, we used Amazon ads as much as we could to grow the brand and it wasn't a dependency as much as an accelerant for us. Makes sense. And we spent about 8% of revenue on ads and we actually got to a point in 2020 where we weren't sure how helpful ads were. It felt like there wasn't fully a correlation between our ad spend and our top line revenue. Certainly there is some benefit, we just didn't think that we were getting all that Amazon says that we were getting. So we turned it off for four months just to see what would happen. And I could talk for a long time about this, I'll spare you from that. But we essentially learned that probably about half of the ad spend that we were doing was driving incremental traffic and the other half of it was just fat that was not providing value to the business.

Brett:

It goes back to that original John Wanamaker quote. Some people attribute it to PT Barnum, but he said, I believe that half my advertising is wasted. I just dunno which half. And that's kind of been a consistent feeling throughout the ages

Bryan :

And that is our experience. So we've trimmed down to about 4% of our revenue we spend on ads, so

Brett:

4% tacos

Bryan :

And we've tried to root out as much as we can the spend that is just lighting money on fire and it's led us to focus a lot on spending on competitor keywords, spending on keywords where we're just not as relevant or as strong with our product offerings or we do spend on branded search when someone searches for simple modern, I'm just not willing to run at lower than a 20 row ads to counteract the lack of incrementality that those sales tend to have.

Brett:

Yeah, it's super interesting. I think it is really necessary to run some branded ads, otherwise you are going to miss out on sales. And we talk about this a lot on the Google side, of course our agency focus on Google and YouTube also, but also Amazon. But on the Google side you can actually segment where you can say, Hey, I'm just going to bid on people that search for my brand name who've never bought from me before. So you can separate those out from say a repeat purchaser and that's kind of nice. But if you just disappear altogether, there's still a percentage of customers that they'll just click on whatever they see and they'll think that if I search simple modern, then what I'm seeing is simple, modern and they'll click on it without ever noticing and they'll buy something else because somebody else is going to, especially at your volume or your size, someone else is going to bid on your term, but if brand doesn't have a wildly successful ROAS or MER or ACOs or however you want to, whatever your metric of choice is, then something's wrong. You got to restructure if that thing's not just crushing it. But it's good to hear you say that because yeah, I think you are going to miss opportunities and especially those first customer opportunities. I think if it's a repeat customer they're probably going to find they're probably going to buy, but you may miss some first time customers if you don't do it.

Bryan :

Yeah, for sure. And with branded ads specifically, we've run a bunch of on off tests and Amazon has started to give us insights on market share and click share for different keywords. So we'll look for all of our branding keywords, how many clicks were we getting when we were running ads, how many clicks did Amazon ads say that it was generating? And then when we turn it off, it would make sense that you would lose the amount of clicks that Amazon ads is taking credit

Brett:

For that you were getting right.

Bryan :

But it turns out we don't. It's about

Brett:

Nice. Interesting. About

Bryan :

20% of the clicks that Amazon ads is attributing we see lost in our total clicks. So

Brett:

That kind of led you to the 20 roas so that math checks out. Yeah,

Bryan :

That's exactly how we got there. And our strategy of what we advertise on branded search is not our best stuff that's going to rank number one. We want to merchandise show customers things that they probably dunno we sell and that they probably won't click on. We love to do that or a new product launch. It's a way where we can try and get some juice to something new.

Brett:

Yeah, super insightful there. Kind of the merchandising component of it. You want to control the SERP and be able to show the products you want to show. So that's really, really smart. Let's talk about, this would be a good jumping off point to talk about building a brand and and I talked a little bit before we hit record. This is something we started as an agency, as a Google YouTube agency first. We've been doing Amazon since 2016, but because of our D two C background, a lot of our Amazon clients would come to us and say, Hey, how do we diversify? We're crushing on Amazon, how do we launch our Shopify store and sell direct to consumer? And it's really hard, most of the brands that we saw attempt to do that only had moderate success. Now we've seen a lot of people have success the other way, we worked with a native deodorant for a long time now p and g brand and still do their Google and YouTube, but they were D two C first and then went on Amazon and that crushed it.

Boom by Cindy Joseph, long time client, shout out to their Firestone, we managed their Google and YouTube and Amazon and we actually helped them launch on Amazon and took off, went from zero to 6 million in one year because they had that brand built off Amazon. But you guys have done something unique in that I can really only think of, I want to have a couple, you guys anchor where you started on Amazon, but you have a real brand. People look for you, they want to buy your product, people are creating tiktoks about your product, you've got a real following. It's a real thing. It's not just some white label product that somebody buys a lot of reviews and it's a cheap price. It's a brand. And so how have you guys done that? How have you built a brand on Amazon?

Bryan :

So this is something that's taken eight years to get to this point, which I think is definitely worth saying. It's been a lot of work to get this point and a lot of trying things that did not work to get to this point. I think that it has helped us D two C that we've been omnichannel. So we started in 2015 on Amazon. We've been selling in Target for, gosh, probably last five or six years and in Walmart and Sam's Club. So I think developing more of a exposure to customers where they see you on Amazon, they see you kind of browsing the aisles at a different retailer. I think that helps to have impressions in different places. But in terms of D two C, we tried for a long time to compete with our Amazon offering and tried to give customers the as good or better of pricing with shipping on our website. It just didn't work. There's no reason to do that.

Brett:

The math doesn't check out, right?

Bryan :

Just let 'em buy on Amazon or if you're

Brett:

Going to do that, yeah, they're going to buy on Amazon anyway. It's easier. All their information is there. It's one click to check out. Why compete with that.

Bryan :

That's right. And Amazon's built the best logistics distribution network for e-commerce and by far we cannot be as profitable.

Brett:

We'll touch that anytime soon.

Bryan :

Yeah, we're less profitable selling the same single item on our website with free shipping is on Amazon, so there's no reason to do that. So what we did was really try to understand the strengths of D two C and try to use those unique characteristics. And what we learned was that on D two C, you can have better economics than Amazon with higher A OV, you have to have a higher average order value putting things in the same box if you have one three PL or one warehouse and you gain a ton of efficiency from multiple unit orders. For us, I guess an example is it would cost us say $10 to ship one Tumblr to a customer, but it would cost us $12 to ship three tumblers to a customer. So your cost per unit just goes down a ton with every additional item. So you want to incentivize bigger carts. And we started off with bundling where we merchandise different things together that customers could add and get a discount better for both of us. Our catalog is thousands of SKUs now, and so what we've pivoted to is more of a in cart cart dollar size discount. You get $10 off at a hundred dollars cart size and so on. There's different tiers as you get bigger. And then we use upselling to try and do the merchandising component of bundling. So there's that component.

Brett:

So it's not so much just offering a bundle outright, but it's more upselling as someone is going through the checkout process,

Bryan :

Right? Yeah. We do it that way just to try and give more flexibility instead of buying these exact three skews together, it's like here are things that you'll probably add them with what you have in your carts and you'll get a better deal. So that's one component. Another is the email and SMS lists that you can grow on D two C are incredibly valuable and it's one of those that you just have to, it takes time, you have to grow it over time, but you're never going to have

Brett:

That usually, especially for a brand like yours where you're primarily on Amazon, the people that are on that email on SMS list, they're your super fans.

Bryan :

Yeah, exactly. And you cannot do that on Amazon. So now since we've diligently tried to grow these lists, whenever we try to drop things weekly is kind of our long-term goal of limited edition drops, but you can tell all of your best fans about it and as long as you're coming out with things that they probably want, we've seen that it goes very well at driving traffic for free to your website. And then the third thing is personalization. Obviously you can't build things like that onto Amazon or have that in Target, but you can give a really awesome unique experience with customers on your website to make it more of their own. So those are really the three levers that we've really doubled down on.

Brett:

It's really great and it makes so much sense why try to compete versus Amazon and competing with yourself on Amazon doesn't make sense, but what are the strengths of D two C? What might people want there? What might be the reason they would do that? And I think you nailed it. And so that's really, really great. And I love the personalization piece too because there's something about that one, people are willing to pay premium so you can build in nicer margins. Also people share it. I saw a TikTok with 800,000 likes or something. There's one you shared, I'm not on TikTok a whole lot, but of just the lady showing her a Tumblr that had her name on it and it blew up on TikTok. And so that's more likely stuff like that is more likely to happen with a personalized product or you get a little different variety there. So really, really smart. That's awesome. And

Bryan :

There's one other thing that I'd like to add in that I think is really interesting and it's kind of what we're doing this year to grow our D two C. If you shop in other product categories for printers, you'll see there's different price ranges of printers and as you go up, it's the same printer but it has better features. The same thing with cars. There's different tiers of cars and

Brett:

Chevy Cadillac or Toyota and Lexus. Is it kind of the same but a little bit nicer

Bryan :

Or even you could buy the standard option or the premier or whatever that just has different stuff inside or sunroof or no sunroof. And so as I mentioned, we've been very sharp on our value prop because we're an Amazon first brand or we started on Amazon, but that's hard on D two C where the best brands typically have high margins, maybe even like 80% plus margins where they can spend a ton on advertising. So we are bringing out offerings that we're calling our signature line for our website only. We're not going to offer it on Amazon. And it comes with really awesome features like ceramic lining on the inside that people like that. It doesn't taste like retain flavor, any of that unique lids that have better features. Silicone rings on the bottom, just kind of like add-ons where it allows us to make really awesome drinkware that's not going to necessarily do great on Amazon because it's not as sharp of a low price point, but for our fans, they are going to love it and we can also advertise it and use it as customer acquisition on Facebook. So we're trying to develop both a mass retail and a specialty retail type strategy within our website and maybe push our website more towards the specialty retail type product offering.

Brett:

Love that. It's really great. And we see this with shoes too. I'm a Nike fan and you can buy the basic Nike shoe at various retail outlets, but to buy the real specialty or special colors, you're paying two or three x, but you got to order online. So yeah, I think there's a real place for that, again, to cater to that customer that really wants that. And so super smart. Let's talk about building a brand on Amazon. And this is not a new thing per se, it's existed. If you walk into Walmart, you can buy Coca-Cola can buy lace potato chips, or you could buy great value stuff. So kind of the white label or the private label, whatever, the own brands. But you guys have done a really good job where people go to Amazon looking for simple, modern or they go to Google looking for simple modern. You've built a real brand there and I think that's possible to do that on Amazon, but it's difficult. So any keys to building a brand on Amazon?

Bryan :

I've got a few thoughts. I know that simple modern is in drinkware and it's contextual to this category and this moment in time. It's hard to say there's a one size fit all approach, but the way that we think about it is the way that we win at Amazon is we take a customer who's searching for a water bottle or a kid's water bottle or a Tumblr, we convert them and the next time they're looking for something drinkware, they're searching for us and not the generic search term. That is our goal. And if we're able to accomplish that goal, even if they're not going to our website, it's searching for our brand on Amazon, we don't have to engage in the knife fight that is like Amazon PPC, we've won the battle at that point. So that's a high level objective of ours and there's all sorts of different tactics to try and achieve that objective. There are some obvious things like whenever we first started, I viewed imagery on Amazon listings as a sales pitch, why the customer should buy your product, all the features and things like that, which isn't wrong, you should do that, but I missed at first that the quality of your images imputes quality onto your product.

Brett:

Totally.

Bryan :

So if you have just this amazing photography, a lot of times customers will make up their mind before they even get the product that this thing's awesome. And it kind of develops that narrative in their mind that I just bought an awesome product and when they open it, it's like what they saw, then there's a good

Brett:

Chance, as long as you don't do anything to diminish that, they're going to have those same feelings once they open it. Yeah, really, really great insight.

Bryan :

So you want to create an experience with your customers that kind of maybe prepares them to use the products in a favorable way. Another one's packaging like unboxing experience. It kind of sets the expectations. If it's very high quality packaging, it signals to the customer that the product in it is also really high quality.

Brett:

It's kind of that second moment of truth. I think Proctor and Gamble may have said this first, I got the first moment of truth, which is kind of the experience on the shelf or in this case the digital shelf. How are you interacting and seeing it? The things you just described. But then when you open it and unbox it, that's kind of the second moment of truth. You can either really establish the brand or you could diminish it a little bit. And you guys do a great job with the product packaging, by the

Bryan :

Way. I appreciate that. We've tried, we've tried our best to create that type of an experience. And almost everyone has unboxed like an Apple product and they do the same thing. It's like next level, you don't want to throw their boxes away, so on.

Brett:

Yep, yep. So

Bryan :

True. So that's a big component. Ultimately we are our products, brands are their products. So being obsessive about rooting out any negative feedback that you see about your product and reviews is vital to creating a high net promoter score and getting repeat customers. Now, I would say one other thing that's a little bit more tricky on that front is that you could have products that aren't a great experience, but you wouldn't necessarily see that in the reviews. You could see it maybe in the return rate. An example is we used to sell, we have the bestselling taller backpack on Amazon and we had a 12 liter size and a seven liter size. The 12 liter size is the most common. It fits like three and four year olds, seven liters, really small. It fits like two year olds. So there is a purpose for it and it was a good product.

But the problem was whenever we sold out of the 12 liter, customers would just buy the seven liter because it was in stock and they wanted that pattern that was on it and they would get it and it'd just be like, this is way too small and I'm going to return it. It creates a negative experience, probably a customer that's not coming back and it's really expensive for us. Totally. They're not going to leave a review because it's not a bad product. But we actually discontinued that seven liter size even though it was a pretty good seller, but the return rate was just too high and it wasn't creating that customer

Brett:

Experience and nothing kills margin faster than a high return rate. So yeah, super smart.

Bryan :

Yeah, absolutely.

Brett:

So let's talk about one thing that I thought was super interesting as an agency and we're working with smaller brands typically, or those that are so rapidly growing, much more likely that they're three p selling through the third party marketplace. But you guys transition to being a one P seller on Amazon. Any insights as to why you did that and then from your perspective, when could or should someone consider making that switch?

Bryan :

So yeah, this is a great

Brett:

Question. I know this could be like we could probably talk an hour about this topic and we had a few minutes.

Bryan :

Yeah, yeah. No, it's a great question. I have talked to vendors who are sick of being one P and just want to get back to the marketplace. And I've talked to people in the marketplace who are like, should we make the jump? Should we not? Grass

Brett:

Is always greener,

Bryan :

The grass is greener, haven't loved the marketplace, is one P better? So my advice for my generic advice would be that if you can have leverage with Amazon, then being a vendor is great because you have Amazon's attention being a vendor, you need Amazon to help you do things that you could just do yourself in the marketplace. Variating different SKUs together into one listing or whatever. Changing content. If you're a vendor and you don't have Amazon's attention, sometimes you just get stuck and it's just terrible. No one's helping you and you have things broken. But we're fortunate to last year we grew, gosh, about 50% on Amazon. It's

Brett:

Amazing. It's amazing your volume to grow that percentage rate. That's unreal.

Bryan :

So we have their attention and they care about us. And so it's good. It's good right now. And my goal is to continue that growth rate and to be worth their time.

Brett:

So it's got to be a volume component and then also probably a growth rate component. Otherwise you may just be better controlling your own destiny as a seller as opposed to a vendor

Bryan :

For sure. And we ended up making the jump to being a vendor, sadly, the week the pandemic started, which was a whole story in itself. Oh my

Brett:

Goodness,

Bryan :

Not a great time to totally transition the most important part of your business. But the reason why we did it is we were getting to a size, we did I think maybe 70 million in retail in the marketplace whenever we decided to make the jump. And we were looking at what are the kill shots to our business? And one of them is like, what if Amazon turns your account off and you can't get it back? It's unlikely, but that is kind of a kill shot. That was a factor. We craved really deeply a partnership with Amazon. We felt like we were doing enough business with Amazon that

Brett:

You would warrant

Bryan :

That we shouldn't be left up to whatever rep we pay for and then just people overseas to run our business. We want to be partnered with them. And you are as a vendor. It's more like a relationship with Target or Walmart where you have a buyer who's helping to facilitate your account, and then you also have a rep that works with you and your buyer and there's more access to teams within Amazon, whether it's the in stock team or compliance team or whatever it may be. So the other component to our transition is that we were really starting to scale up in Target as well, which is retail. And Amazon retail wanted us to be a retail partner because they were noticing there's data that is published whenever you're in places like Target where everyone can see they can pay for your sales data. And so Amazon was aware of our growing business within Target and Walmart and wanted us to be a vendor with them as well. And on that note, I think it actually has been a really helpful thing for us to become a vendor. And once you're an Amazon vendor, your data starts showing up in the mass retail data that everyone sees from Walmart to Target, and it just helps those other retailers understand how big of a business you are. They don't see that your sales when you're in the marketplace.

Brett:

Right, right. Interesting. Yeah, so once you get to a certain size and you want to get into more brick and mortar retail, then being vendor on Amazon that can help make that

Bryan :

Case for those retailers. And I think the year that we jumped from the marketplace to being a vendor, we were already kind of on the radar with our target sales, but it looked like our growth just exploded in 2020 just because they could now see our Amazon sales from being a vendor. So all of a sudden Costco starts calling and Whole Foods and places like that.

Brett:

That is awesome. Well, Bryan, we have just about run out of time and I'm a little bit bummed because I've got five other questions I want to ask you, but we covered a lot of ground. This is super helpful, really insightful, keep doing what you guys are doing. I'm going to keep paying attention. You're one of the brands that I watch closely. But as we wrap up, anything new that people should check out, anything you want to plug or mention a passion project or a new product release or anything that you want people to do? Obviously they can go shop on Amazon or at your D two C, a lot of retail stores, but any asks or passion projects?

Bryan :

Well, for better or worse, I think my passion project intersects directly with what I do, 40 hours, 40 plus hours a week. So yeah, I would say for anyone listening, we simple modern has gotten to a point where we're about the fourth biggest drinkware brand in the us It's crazy. And we're privately owned, we aren't focused on profits. We want to scale this up to be as big as we can make it. So yeah, I would say just follow, keep up with what we're doing. We're going to, for better or worse, do things that are interesting and continue to try and scale this thing as big as we can make it. So our plan is to try and get to the top of the category if at all possible. So I would say stay tuned.

Brett:

Love it, man. Love it. And yeah, I'm enjoying Tasty Beverage out of the, this is the Kona, I believe. That's right. And I realized that I always like black. Oh, there you go. I just like simple colors for my drinkware. I probably should have got one of the wild and crazy colors just because you guys do that. Also, I probably need to get Kansas City Chiefs mugs since I just won the Super Bowl and I'm a longtime cheese fan, but keep creating great products. Super, super fun. So Bryan Porter, ladies and gentlemen, Bryan, thanks for the time, man. Super, super fun.

Bryan :

Yep, I enjoyed it. Thanks for having me on.

Brett:

Absolutely. And as always, thank you for tuning in. We'd love to hear from you. What would you like to hear more of on the show? If you've not done it, please leave that review on iTunes. Go buy a simple, modern mug as well. And with that, until next time, thank you for listening.

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I have 8 kids. Yep, 8.

‍

Being a dad is like being a founder/entrepreneur (only harder).

‍

Here are 6 parallels between the two. 

‍

I posted this on LinkedIn several weeks ago, and it was my most shared, liked, and commented post on LinkedIn ever by a long shot. 

‍

So, I decided to do a deep dive into these parallels for this week's podcast episode. 

‍

Hopefully, these will be especially helpful if you find yourself in a stressful season. 

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#1. We're all making it up as we go. 

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Every week as a parent or business owner, you do at least 1-2 things you've never done before. 

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Follow a system. Sure. 

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Follow principles. 100%.

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But don't shy away from the moments you feel like you're making it up. 

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You are. We all are. 

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#2. You're never really ready.

Waiting until you're fully ready to become a parent, a business owner, or a leader means you'll never start. 

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Waiting until you're fully ready means you'll never launch that new service or new offering. 

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You'll never feel fully ready. 

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Step up. Do it anyway. Try. Fail. Learn. Improve. Try again.

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#3. Listen and communicate clearly in multiple ways.

I haven't always been the best listener. 

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I sometimes jump to conclusions. 

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I've had the tendency to be dismissive. 

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I'm getting better. 

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I'm pretty good at communicating from the stage. 

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Sometimes, I'm less effective one-on-one. 

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Sometimes, you have to say the same thing five different ways before it really lands. 

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#4. Admit when you're wrong.

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Brittany (my superhuman wife) and I became parents when we were young. 

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The "making it up as you go" stuff really applies when you're 22 and mostly clueless. 

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We've had to apologize to our oldest a bunch (love you, Nate). But to all of our kids, a lot. 

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Same with our team members at OMG. Especially those who've been with us the longest. 

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Don't be the parent or leader who won't apologize. 

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Own your stuff. 

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#5. You might want a coach.

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Our marriage got better when we saw a counselor. 

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My parenting improved, too. 

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We didn't wait until we were in big trouble. 

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We sought help when we had a few things we couldn't solve well on our own. 

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We're now BIG believers in counseling. 

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Even when (and maybe especially) you feel you don't need one. 

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My leadership skills improved when I got a business coach. 

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My parenting improved more. 

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If the top performers need coaches, it's silly to think that we don't. 

‍

If Jordan needed multiple coaches, you and I probably do too. 

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#6. Be all-in.

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Parenting or leading in business well takes everything you've got. 

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Not just focus and effort. Everything. 

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Your emotions. 

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Your brain. 

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Your creativity. 

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Your problem-solving. 

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Your area(s) of genius. 

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Your courage. 

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Your tenacity.

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Chapters

(00:00) Introduction 

(03:12) Lesson 1 - Where All Making It Up As We Go

(06:58) Lesson 2 - You’re Never Really Ready

(09:19) Lesson 3 - Listen and Communicate Clearly In Multiple Ways

(12:17) Lesson 4 - Admit When You’re Wrong

(14:39) Lesson 5 - You Might Want A Coach

(19:39) Lesson 6 - Be All In

(22:52) Outro

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 

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Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, and more. 

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Other episodes you might enjoy: 

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• Episode 266 with Cody Wittick - Influencer Marketing and How To Create a Creative Flywheel in 2024

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• Episode 263 with Anthony Mink - Cut Your CPA in Half by Asking Better Questions

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• Episode 260 with Preston Rutherford - Lessons From Chubbies with Co-Founder Preston Rutherford

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• Episode 243 with Jacques Spitzer - Achieving Exit Velocity with YouTube Ads

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• Episode 228 with Jeremy Horowitz - The State of eCommerce, The Economy, and What To Do Next

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Transcript:

Brett:

Hey, we are all of us making it up as we go, right? And we want to pretend like we've got this master plan and everything is well thought out. And the only reason I'm successful here is because my planning and execution is so brilliant and I think the truth is

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today is a unique episode because one, I'm flying solo, so you just get to hear from me today. Two, I'm going to get a little bit personal on this podcast. Now, this is still going to directly apply to your business, to your D2C business, your service-based business, whatever the case may be. But I'm going to talk more about myself and my family and my background than I ever have before on this podcast. So recently I posted on LinkedIn six parallels or six lessons from being a father that also apply to running a business, and specifically in my case, a seven figure agency. And so I've mentioned on the podcast before, if you're a long time listener, you certainly know it, but I have eight kids, the OCHO eight count, 'em eight kids.

Now, it's not a blended family. This is just go to old fashioned growth. Now, a lot of people ask one, do you know how this happens? Did you mean to do this? All kinds of quite personal questions honestly, but I don't mind it. And the truth is, my wife, Brittany and I, we always planned to have a big family. We wanted to have four, or maybe the stretch goal was five, and then we just completely overachieved and ended up with the crazy number eight. So it is not what we expected or planned for, but would not have it any other way. It is pure chaos. It's noise, but it's a ton of fun. We were talking in a, we actually host a small group at our house too from our church, but talking about how there's a lot of loneliness actually going on right now fueled by the virtual world we live in and things like that, and that it's a real issue.

That's not something we deal with. I do not have alone time because when would I do that? I'm either running a company and around people or at home, which is full, which again, absolutely love it. So what are the lessons here? Because I think there's a lot of parallels between being a parent, being a mother or a father, leading a family, helping a family grow, and also leading an enterprise. And I would argue that being a parent probably harder, it's probably more of a challenge to be a parent than it is to be a business owner. But let's talk through six parallels, and I'm going to get a little bit transparent and a little bit vulnerable along the way, but hopefully this will be fun and inspiring because my guess is you probably find yourself in a time of stress. We're all stressed, you're probably in a time of growth.

I think this year is going to be a year of growth for most of us in our industry. And so hopefully these six parallels or these six lessons will help you in your journey. So parallel number one between being a parent and owning a business is, hey, we are all of us making it as we go, and we want to pretend like we've got this master plan and everything is well thought out. And the only reason I'm successful here is because my planning and execution is so brilliant. And I think the truth is yes, we should plan. And so we've got over $10 million total revenue agency. It's growing. I got a team of 63. We're certainly quarterly, annually planning. We've got targets, we've got OKRs, things like that that we're trying to hit. But hey, every day, or at least every week and for sure every month, you're going to deal with stuff you've never dealt with before.

And the same is true as a parent. I remember when all of our kids were little and we had several in diapers and several in car seats, which by the way, the amount of diapers I have purchased and changed, and my wife obviously changed more diapers than me because I was working a lot, but it's an astronomical number. You could Google that sometime and do the math, but I dunno, it's like 50,000, I'm not sure. But it's an insane number. And so there was a time though when all the kids were little, and I remember hearing people say, yeah, enjoy it when they're little, because when they get bigger, the problems just get bigger. When they become a teen, those problems just get bigger. When they start dating people, the problems just get bigger. And I'm like, really? But this is difficult right here. I've got a kid who has declared war on bedtime and Maggie, who's now a teenager, but she declared war on bedtime for about five years.

About five years. She said, no, I'm not going to bed. So there are times when you're like, dude, anything could be easier than this. But then as is often the case, some of that sage advice of, Hey, enjoy them while they're young. The problems do get more difficult. I would just say they become different. And as your kids start to date and especially have daughters and they start dating, it's tricky. And so then you're dealing with, Hey, my daughter is initiating a breakup, or she's initiating a break with her boyfriend and I'm coaching her through that. We're talking through that and trying to help her be strong and advocate for herself and be independent. But then every day there's, there's something new. And the same is true in your business, slightly different dynamics. Maybe you've handled a situation similar before but not exactly the same.

And so we all have things we're doing that are new. And so I'm a big believer in systems, although I'm not a super detailed guy, I'm a little more of an improv guy, but I do like to follow plans. I love following principles, right? We are a principle based company, a culture first company. And so if you focus on culture, and for us at OMG, we think like owners. So we behave and operate like owners, not employees. We have fun solving problems. We don't shy away from problems. We have fun solving problems. That's part of what we're paid for. The biggest thing we're paid for, honestly. And then we constantly improve, meaning we help each other level up and we take the initiative to level up ourselves. So we are principle first, but the reality is a lot of us are making it up. I remember hearing this interview, this quote with Paul McCartney of the Beatles, and somebody was like, Hey, how'd you guys do it?

What was the plan? How did you become the Beatles? And he's like, and nobody knows when they're starting a band, we didn't sit down and say, Hey, what if we became, I don't know, the biggest band ever to ever walk the earth? They didn't do that. They just started making great music and then things started to make sense and unfold and still succeeded beyond their wildest dreams. So number one, we are all making it up as we go. Number two, you're never really ready and you're never ready to be a parent, never fully, never fully ready to start a business. You're never fully ready to start the new service or to launch the new product or to do the new thing. You're never fully ready. Why? Because you're always going to learn as you go. And if you wait until you're fully ready, then you will never do anything new.

You'll never start the family. You'll never start the business. You'll never launch the new service. Here's the deal. It does depend a little bit on what type of business you're in. If you're selling a physical product, obviously you can't launch before it's safe or tested or at least a minimum viable product. But there's something to be said about launching and iterating. This is kind of the way Google has always operated. Hey, let's launch a beta. Let's test. Let's learn, let's fail, and then let's improve. And then let's keep iterating and iterating and iterating until eventually we've got Google search. We've got Google AdWords, which is now just Google Ads, but we've got a product that is absolutely amazing, but it wasn't perfect in the beginning, but we launched a minimum viable product and kept improving. Now, apple is a little bit different. That's more of a measure, twice cut once type of company.

We can't just launch the new iPhone and say, Hey, this iPhone's going to be, it'll just be okay, but we'll be better on the next one. And so that doesn't really work in that model. But for the most part, you can't wait until you're fully ready. You need to launch, just do the thing and then get better as you go. I love the explanation or the picture of being an entrepreneur is jumping off a cliff and assembling the airplane on the way down and hoping that you complete that thing before you crash and come down to earth. And there's certainly some elements of that, right? There are some things you can figure out ahead of time, but a lot of it you have to figure out as you go. And Jeff Bezos talks about a lot that, Hey, when you're 70% sure about something, do it.

Because if you wait until you are 90 or a hundred percent sure it's going to be too late, you're going to be too slow. And what you learn in that extra 10 or 20% or whatever, probably won't make a difference. Launch the thing, learn, get better as you go. So number two, you're never fully ready. Number three, listen and communicate in multiple ways. Now, I can be a pretty good listener. I love people. I genuinely love people. I love hearing stories. I love meeting people. I go into trade shows. As long as you're meeting authentic people, and it's not just an endless line of people that want to sell you stuff or whatever. I like meeting new people. I like engaging in conversations. When I go to an event and I speak from stage and then I share in a group or whatever, it's more of an energy gain for me than it is an energy drain.

Of course, it's tiring too, but I love it. I thrive on it so I can be a good listener. But let's face it, man, I can tune out as well and I can jump to conclusions. And I'm not always the most patient person. I do like growth. And so sometimes I'm not the best listener. I think I'm a pretty good communicator, and I can communicate on stage and be pretty clear on a podcast and be pretty clear. One-to-one can be really good, but sometimes I don't do so well. And I'm going to share a quick story, quick story from when my daughter Sophia was a kid, and Sophia is spunky and ornery and smart, and just, she's so much fun. But when she was little, I was tucking her into bed and I wanted end the day on a positive note. I just wanted to be an encourager.

I totally believe in words of affirmation and building your kids up, and they're going to rise to that level if you keep putting positive thoughts and positive words into their minds. And so I said, Sophia, there's no one like you, right? And I'm just kind of smiling looking at her, and she pauses and she thinks for a minute she says, well, Nana likes me and my friends like me. And then it dawned on me, I was like, oh no, you misunderstood. I was like, no, no, no, no, no. Of course, of course Nana, that's her grandma. Of course Nana likes you. And of course your friend's like, I like you too. I think you're amazing. I said, but lemme think of this another way, no other. And I kind of point at her and I touched her. There's no other Sophia. And she says, dad, I know three other, there's two at church, there's one at school.

And I'm like, okay, all right. This is not working well. And so I said, Sophia, I love you. You're awesome. And that was it, right? And so what's interesting though, I thought I was being clear. I was like, there's no one like you, Sophia heard. No one likes you. And so it was just a reminder though, like, Hey, your market or your team, they may not be as transparent or as quick with their feedback as Sophia was. You may have said something you thought was brilliant and super clear, but your team's walking around thinking he doesn't like me, or He doesn't like this, or this isn't going well. So we have to be ultra clear. And usually the way you become ultra clear is by saying the same thing in multiple ways. Listening, listening for feedback, listening and watching body language and the way people are responding and reacting, but communicating in multiple ways.

I believe everything hinges on communication. You want to be a better leader. You want to be a better CEO, you want to be a better founder, you want to be a better marketer. You got to be better communicators. That's point number three. Point number four, this is a difficult one. You got to admit when you are wrong, and this is hard. If we are confident and we have big egos with which most of us do if we're leading a company, it's hard to admit when you're wrong. Nobody wants to do this. But this is something my wife and I had to do. So we got married very young. I was 20 when we got married. We had our first son, Nate when I was 22. And so this whole thing about, we're all making it up as we go, let me assure you, as a 22-year-old, first time father, I was absolutely making stuff up.

And so was my wife, Brittany, although she's better relationally and she was just made to be a mom. She's amazing. But we were making stuff up as we go. We've had to apologize to Nate on multiple occasions. And even recently, he's 22 now, but we're like, Nate, hey, we didn't know what we were doing. We were young, we were figuring it out. And unfortunately you caught the brunt of us not knowing what the heck we're doing as parents. Fortunately, he's doing awesome. He's got a sales job, he's a great kid. But we had to apologize a lot on the work side. At OMG, we have two longtime employees, two employees that were here almost from the very beginning. So they've been with us now for over 13 years. They've seen the good, the bad, and the ugly in every season. They were with us when we were just doing cool stuff, but making lots of mistakes.

And so they could have quit or they could have harbored resentment or they could have not gotten over things or the whole thing could have not worked. But we have had to apologize in numerous ways at numerous times being like, Hey, thank you for sticking with us. We didn't know and we didn't show enough appreciation on this, or I didn't understand you fully in this, or We didn't handle this situation the right way. And so don't be the leader, don't be the parent who won't apologize. It is not a sign of weakness. One of my mentors and actually the pastor of the church, we attend Craig Gross show. Shout out to the Craig Row show leadership podcast. He says, people would always rather follow a leader who's real than one who's always right. You should always be real. Don't try to always be right because you're not going to be always right.

So be quick to apologize when necessary. Number five, you may want a coach. Now, lemme just talk about my marriage for a minute. I'm super, super grateful for Brittany. She is a supermom. Anybody that can give birth to eight kids and still be functioning and be a sane member of society. And she's awesome. She maintains relationships. She's a cheer coach. She keeps me in check. She's amazing. So we've actually had a pretty solid marriage. We genuinely like each other. We like to spend time with each other. We like to travel together. We like to have occasional date nights, which by the way, we are prioritizing this year. Over the last six months, we've prioritized date nights, as you can imagine with eight kids. That has not always been possible. There for a while I was like, Hey, we're on our semi-annual date here. We get two of them a year is basically it.

But now we're doing it on, we're having dates on a weekly basis. And so we've had a pretty solid marriage. But we went through this period of time about four years ago where we were just disagreeing a lot. It was kind of when a couple of our kids at the teenage years, we started disagreeing more than we ever had and still committed. Relationships still solve, but it was kind of rocky. And my wife suggested, she said, Hey, what if we saw a counselor? What if we met with a counselor? She'd actually been meeting with a counselor to kind of help her work through stuff. And she said, Hey, Nicole, who's her counselor? Nicole can do couples therapy. Would you be willing to do that? And I said, yes. So here's what we found going through that process. One, it allowed me to see myself a little bit better.

How am I showing up in ways that are unfair? How is Brittany perceiving me in the way I'm behaving at home? Or the way I'm a little too relaxed with teenagers or whatever, and not, she's more structured. I'm a little more loosey goosey on certain things, especially at home. And so it allowed me to see how she was perceiving me, showing up. It also allowed me to dig into and say, what are some false beliefs that I'm holding onto? What are some half-truths or no truths that I've got playing in my head that I need to rewrite or get rid of so that I can be a better parent? And it was not always easy. Being vulnerable and being transparent is not always easy. Again, this was another time we had to admit to each other when we were wrong. We also had to fight for like, Hey, this is why I'm doing this, and I don't think this is actually wrong, but let's talk about it.

And so it was hard work, but it was so worth it. And similar things on business. And myself and my business partner, Chris, had a great partnership over the years, but had a few times we're like, Hey, we're not agreeing on this. Let's bring in a coach. Let's bring in someone to kind of help us. And so we went through a period of time, met with a coach. He coached us through the process of nonviolent communication. Really recommend that book Marshall Rosenberg, I believe it is. We'll link to it in the show notes. I may have said the name wrong, but nonviolent communication, this coach Matt walked us through, helped us with that. It was so transformational. It improved my communication and my listening and me understanding. When am I communicating a way that's really feels and sounds and kind of is judgmental rather than communicating, fact communicating, emotion, communicating when I'm frustrated or when I'm disappointed, or when I'm fearful about something.

So communicating with emotion, but communicating in a way that is non-judgmental towards the other person, transformed the way my business partner and I communicate. But at the same time, it may be better communicated to the whole team, and it made me a better communicator at home, made me a better dad, better husband. And so you probably need a coach. And hey, I'm a huge sports fan. I am 100% in Camp Jordan, team Jordan, for the goat, for basketball. And here's a way to look at it, right? If Jordan had multiple coaches, if the greatest basketball player to ever lace up a pair of Nikes, which by the way, he was such a good basketball player that Nike is what it is today. Without Jordan, there is no Nike as we know it. If he needed multiple coaches, if he needed a strength coach, if he wanted a shooting coach, if he wanted a mindset coach, which already his mindset, his mentality was insane.

He wanted and needed coaches. If he did, then you do too. And I know, depending on where you are in your journey, you may be able to invest in a counselor, invest in a coach, or you may not. But hey, podcasts, books, those can make great coaches too. Somebody that I consider to be a coach of mine is Jim Collins. I never met Jim Collins, but read a lot of his books. And I pour over those books and he becomes like a mentor to me. I mentioned Craig Rochelle, I've actually got to meet Craig RHEL and hang out with him just a little bit. But it's not like we talk a lot or ever really, other than just one time. But he's still a mentor to me. And so you can find coaches, you can find mentors even if you can't afford one. So number five, you may need a coach.

Alright, number six. And to wrap it up, hey, you got to be all in, right? There's no halfway in this thing. There's no halfway as a parent, there's no halfway. As an entrepreneur, there's no time for you just to coast. You can't mail it in. You've got to be on your game. So to use another sports analogy, I like to coach. I coach basketball. When you are on the floor, this is what I talk to my kids about a lot. When you're on the floor, your head is in the game. You're not anywhere else. When you're on the floor, that's all that exists. What's going on in the stands doesn't exist. What's going on at home doesn't exist. That's all that matters. And all there is because you start to lose focus for a minute, you're going to catch a ball to the face, you're going to dribble it out of bounds.

You're going to make a mistake. You're going to let your team down if you're not all in. So what does it require as a business owner? Well, it requires your creativity. It requires all of your brainpower. It requires all of your tenacity. Not giving up, not giving in. It requires all of your wisdom, right? Because we don't want to quit on things. But also, we do need to learn where's there a time to be wise and to pivot because this isn't working as we're doing it. So we got to pivot and do something else. So it's going to take really all that you've got. And another parallel. I trained in Juujitsu for just a short period of time, didn't work out in my schedule. I actually loved it. I'd love to get back into it one of these days. But when you're on the mat and you're rolling with someone, especially for me, man, I was a white belt, obviously, very much a beginner.

You are not thinking about anything else, right? The dude across from you is trying to choke you out, right? You are fully focused on what you're doing. You can't panic, right? You got to stay calm and monitor your breathing and learn to try to make moves and counter moves and things like that. And that's really the way it is in business, right? Yes, we need times to rest, but you rest after the bell sounds right. You rest when it's time to sit and rest. You rest when you're on the bench catching a breather. You don't rest when you're in the game. And the same is true as a parent. We rest when the kids are asleep, which when you're in my world where you got little kids and you got teenagers, nobody's ever, there's never a time when all of them are asleep, it feels like.

But it's going to take all that you've got and then more. And I love a quote from Alex Hormo that I heard not long ago where he said, I'm not going to just say I'm going to give my best, right? Because what if my best isn't enough? I'm going to tell myself I'm going to do what's required. And I think that is very much true as a business owner or as a parent, because listen, there may be times when your best isn't good enough. Now, I fully believe you are capable. You're capable of being an amazing parent. You're capable of being an amazing business person. But you may need some tools. You may need some skills. You may need that coach we were talking about. But you may need some training and you may need to level up. So have the mentality that I'm going to do whatever it takes to be successful in this endeavor, or to be successful training these kids, giving 'em what they need and helping them become amazing humans.

And so, hey, I hope that was fun. We'll get back to the pure moneymaking content and talking about ads and e-comm growth here with just the next episode. But that was fun for me to record. Like I said, it really landed, it resonated in the LinkedIn, and so I wanted to dig a little bit deeper and share those insights with you. But as always, we would love your feedback. And so if you've not left that review on iTunes, please do that. If you listen to this podcast and someone else would be encouraged by it or someone else would enjoy it, please share it. That would make my day. If you've not left a review on iTunes, I would love that as well. That helps other people discover the show. And with that, until next time, thank you.

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