An eCommerce Podcast Hosted by Brett Curry

“Tested Advertising Methods” by John Caples and Fred E. Hahn‍

Convert Views‍

Genesis Digital LLC‍

Frank Kern‍

Kartra‍

Harmon Brothers‍

David Ogilvy‍

Ogilvy on Advertising‍

BOOM! by Cindy Joseph‍

Jared Mitchell

‍

Transcript:

Brett:

Well, hello and welcome to another edition of the eCommerce Evolution Podcast. I'm your host, Brett Curry, CEO of OMG commerce. Today, you've got a treat because this is a guest coming back for round two. Not many guests get to come back on the show a second time. You only do that if you really crush that first episode, and this guy did.

Brett:

Are you a D2C brand spending over six figures a month on paid media? If so, then listen up. My agency, OMG commerce and I, have worked with some of the top eCommerce brands over the years, including Boom, Native, Groove, Monin, Organifi and dozens more. Every year we audit hundreds of Google, YouTube, and Amazon ad accounts, and we always find either significant opportunities for growth, or wasted ad spend to cut, or both. For example, are you missing YouTube ads? Whatever you're spending on top of funnel Facebook, you should be able to spend 30% to 50% of that or more on YouTube, with similar returns. So if you're spending 300,000 to 400,000 a month on Facebook, you should be able to easily spend a 100,000 to 150,000 or more on YouTube. Visit omgcommerce.com to request a free strategy session, or visit our resource page and get some of our free guides loaded with some of our best strategies for YouTube ads, Google shopping, Amazon DSP, and more. Check it all out at omgcommerce.com.

Brett:

Andrew Eckblad is with me again. He's one of the smartest video marketing guys that I know, runs an agency, has a rich background in video, and just as a fascinating guy to talk to. We're going to talk about eight mistakes to avoid when creating your video ads. It's going to be super fun, high energy, very helpful, and so with that, let's dive right in. Andrew, how you doing man? Welcome to the show and thanks for coming on.

Andrew:

Yeah, thanks for having me back. I love it. I got some good response from the last time I was on.

Brett:

Nice. It was a good episode.

Andrew:

I'm back in. I'll do it. You don't take too many people back a second time. Is that true?

Brett:

Well, I just don't know if people don't want to come back.

Andrew:

Oh, okay.

Brett:

It could be more me. Maybe they're bored with the show.

Andrew:

Yeah.

Brett:

We've had some guests that have been back for sure, but it is not a huge list.

Andrew:

All right, all right.

Brett:

You're still part of an elite club, so you got to feel good about it.

Andrew:

Excellent. That's all I cared about.

Brett:

Now speaking of elite clubs, for those that are watching the video, if you've got really good eyesight, you can probably see behind Andrew's head the sign of... I'm counting six trophies, and then another one that I just now saw because you moved more.

Andrew:

Oh, yeah. It's a Telly.

Brett:

It's a what?

Andrew:

Telly.

Brett:

A Telly, okay.

Andrew:

Those are easy to get. Those don't...

Brett:

Okay, so forget about the Telly.

Andrew:

Yeah.

Brett:

The other ones, I was like, Andrew, those look like Emmys, and guess what? They are. So tell us a story about these Emmys. How'd you get them?

Andrew:

So early two thousands, I worked more in television and film and we did a series in New York that was like a fashion documentary series. It followed the whole like photo shoot process from conception casting shoot to print. It was like a limited run. We did like, I think it was five or six episodes and yeah, so those are regional image. They're not the big national ones you see on TV, but they're regional ones and yeah, it was really fun getting to

Brett:

It's still pretty cool. When you first told me regional Emmy, I really wondered you're based in San Diego. I wondered was this, was this work with Ron burgundy or, or what was this?

Andrew:

Yeah, I tried. I tried to, but I couldn't get in with him.

Brett:

He's pretty tough to work with, and so it's probably good that didn't work out.

Andrew:

Yeah.

Brett:

That's awesome, man. So we've got these eight mistakes we're going to dive into, really excited about that. But before we do, kind of give your background, because not only have you been winning Emmys and stuff, but you've been doing some other cool things as well. Give us the background here.

Andrew:

Yeah, I'll give you the 30 second background. I initially was very interested in TV and film. That's what I worked in, in the early 2000s. I decided that I actually wanted to make money at some point, so I hooked up with Frank Kern, who's a pretty well known marketer. Started working with him in 2008. Helped him with his video. We came up with a lot of video techniques together that kind of combined direct response marketing, and entertainment, and the structure of television, so we'd do kind of entertaining stuff, and ... back then.

Brett:

I remember some of those videos. I still remember one where Frank Kern was driving in a VW van, and there was this internet marketing sneak attack, or something that he did.

Andrew:

Yeah.

Brett:

I still remember those videos, and those were really, really old.

Andrew:

They were so fun to shoot.

Brett:

I was coming up in the game and learning as well.

Andrew:

Yeah. There wasn't a lot of video online back then. It was harder to post things. YouTube wasn't what it was. Facebook wasn't what it was. But, he would have huge lists, and so these videos would go out to hundreds of thousands of people, and then they'd get traction, and he would be able to sell his products. But through him, I learned a lot about video marketing and direct response marketing, especially, and I've been able to take those skills, combined it with my skills as a video guy, and kind of apply that not only to advertising, but also to VSLs and those sort of things for different companies.

Andrew:

I have my own agency called Convert Views, which is just the creative for video ads for Facebook, Google, stuff like that. Then I also had content for a company called Genesis Digital, who my late friend, Andy Jenkins started. I still work with them on all their content and everything. That's Kartra, WebinarJam, and EverWebinar are their products. But yeah, so I kind of have my foot in all areas of video online, but a lot of video marketing stuff

Brett:

Love it. So such a rich background. Love Frank Kern's stuff from back in the day, and what Andy Jenkins and crew built, phenomenal. I know you're carrying the torch there, doing some really cool things. You and I then collaborated on a pretty large D2C automotive brand, did some video work together, which was super fun. So, I know you're doing a lot of e-comm stuff now. So, et's dive in. Let's dive into these eight mistakes. Number one, go.

Andrew:

Okay. Number one is I think everyone understands that a video has to capture attention. If you don't know that, then know that you have to do something to capture attention on the front of a video, so some sort of pattern interrupt. But, lot of people don't do the correct pattern to interrupt. A friend of mine called it a light show, so fireworks or explosions might get attention, but it's not going to compel someone to continue to watch the video, so that's a big mistake. What you're trying to do is you're trying to, in the beginning, frame the video, create a true hook, and give them a reason to watch right off the bat.

Andrew:

I'm already jumping ahead, but that's going to lead into our number two, which is going to be a reason why having a hook. But the point is, that pattern interrupt should be a real quick introduction to why they should watch in a creative way. An example of this, I just did a video. It's a script. It's not shot yet, but the front end... The company was selling a battery back up, and it was supposed to be going against gas generators. The very start of the video was, are gas generators really the best solution for an emergency situation? Visually, it was pulling back from a gas generator, and it had a box next to it. The idea was that you're questioning what everyone thinks is the best solution. You're providing curiosity because there's something there that people want to see what the answer is, and you're framing the video in a way that could carry someone to the next part. I might have kind of butchered that explanation because it's a new video, but that's kind of an example of how to start a video the correct way.

Brett:

Yeah. I love this. It's not that hard to get someone's attention, or to get someone's attention in the wrong way.

Andrew:

Right.

Brett:

You can yell something obnoxious. You can be crazy, whatever.

Andrew:

You can throw a ball at the screen and it can make someone jump.

Brett:

Right. Start a fire, do something crazy, and that will certainly get attention, but a proper pattern interrupt should also frame the message. It should frame-

Andrew:

That's right.

Brett:

... you're about to sell. I've talked a lot... I'm a YouTube guy, so I talk a lot about the Harmon Brothers videos, but it's real easy to see what they're doing and their pattern interrupts frame the video. You got the pre-video with the girl in the red dress sitting in a public toilet. She talks about a mother load she just dropped. It's kind of shocking and whatever, but it sets the stage for this before you go spray called Poo-Pourri. Then similar to what you're talking about with a gas generator in that video for a specific audience, you got the box, that's kind of a little bit of curiosity. You're posing a question that's going to make someone think. So, yeah. Pattern interrupt is super important. You need to interrupt someone. That's what you're doing with the video. They didn't come to YouTube to watch your video. They didn't go to Facebook to watch your video ad there either, so you got to interrupt them, but you have to frame them at the same time.

Andrew:

Yes.

Brett:

Talk about that a little bit. That first five to 10 seconds, and this is mistake number two. What should we be doing with those five to 10 seconds?

Andrew:

We should be giving them a very specific reason to watch the video. This could be done in a lot of different ways. It could be done with curiosity. You could pose a question, you can state an objection, you could establish a problem and a need. A lot of that goes back to fundamental copywriting. I think good copywriting, and people who do video marketing should probably study copywriting for scripting and stuff, because a lot of it carries over.

Brett:

100%.

Andrew:

Yeah. You're really kind of setting up the reason why someone wants to invest their time into the video. Out of all the stuff we're talking about, that's probably one of the most important things. I actually think this is more true on YouTube than it is on a place like Facebook, just because the nature of the audience, and the nature of the format, and people's expectations when they're going through YouTube, where their mind's at.

Brett:

Totally agree. Yeah. People are on YouTube to learn, to do, to buy, to be entertained.

Andrew:

Research. Yeah.

Brett:

I'll just kind of mindlessly scrolling through Facebook, which is fine, and then sometimes something quick and easy can kind of can do get the job done on Facebook.

Andrew:

Yeah. I think a side note, it's important to understand that there is a difference between those two platforms. A lot of times something that works really well on one won't necessarily work well on the other. Sometimes it's just about tweaking a few things to make that work better.

Brett:

Totally agree. We've really only had a few advertisers, the automotive brand that we collaborated on, Boom by Cindy Joseph is another, a few others where the same video hits on YouTube and hits on Facebook, but typically, Facebook is shorter, YouTube is a little longer, all things is being equal. But, sometimes what works on Facebook could be a good hook for YouTube, or what works on Facebook could be the product demo portion of a YouTube video, things like that. But yeah, the platforms are different for sure.

Brett:

I want to key in a little more on this concept because I think it's really powerful, that you want to give some kind of promise in the first five to 10 seconds that it's going to be worth my time to watch this video.

Andrew:

Yes.

Brett:

Right. I remember I'd been a student of marketing for a long time. I've read some of the marketing godfathers, like David Ogilvy, Ogilvy on Advertising, and John Caples, Tested Advertising Methods, and several others. I don't remember who first said this, but they posed the question: What's the goal of a headline? You think about a print ad or whatever. What's the goal of the headline? Well, the goal of the headline is to get someone to buy. The goal headline is to get someone interested in buying. The answer to that is, no. The goal of the headline is to get someone to read the next sentence. The goal of the headline is to stop them and get them to engage with the ad. The whole purpose of the ad is to get them to take action, but the goal of the headline is to get them to keep reading.

Andrew:

Yes.

Brett:

That's goal of a good video as well is promise something where they realize, my life may be better if I watch this video. They may still be skeptical, but really, all you're asking for is a maybe. Maybe if I watch this, I'll get something out of it.

Andrew:

Yes.

Brett:

Any other insights there? Any other good examples there? I know it's kind of hard to think of them on the spot, but any other thoughts there?

Andrew:

No. I mean, you definitely covered it really well. I know why you're the host because you say things so much better than I can.

Brett:

It only feels that way.

Andrew:

You're expanding on it in a way that's like, "Oh, that makes a lot of sense." I'm just like, blah. But no, I think it's really just having a filter like, do I care? I will say this. The wrong way to start a video is with a satellite statement, something that people already know. So saying, "Everybody knows tap water's bad for you," and then trying to get into like a reason why they care. That's a terrible way to do it. And also assuming that people care about what you have to say is also terrible. The people watching aren't your friends and aren't your family. They don't care, so you really have to have that filter when you're creating this open. It's like, "Do I care? Does someone else care? Why is someone going to invest their time, even if it's just 30 seconds, 45 seconds a minute to watch what I have to say?" That really has to be hit in the first five to 10 seconds.

Brett:

Yeah. I love that. Don't don't make statements like, "Yeah, tap water's bad for you," or, "You're a business owner. You're trying to cut expenses." Well, of course.

Andrew:

Or introducing yourself. "Hi, I'm Andrew Eckblad. I like to make videos." It's like, skip, skip, skip, skip, skip. No one cares.

Brett:

I love seeing that stuff on the internet and you do too.

Andrew:

Yeah.

Brett:

It's one of those things where introducing yourself is fine, getting your name there is fine, but that's not what you lead with.

Andrew:

That's not an open.

Brett:

It's not an open. Maybe for something like radio where it's harder for people to change their channel. Well, it's really not that hard, but yeah. For online video, you're right. People are pretty ruthless. Even nice people, even people that be super patient with you face-to-face are ruthless online.

Andrew:

It's worse than it used to be. Every year, the attention span gets lower. You used to be able to do anything and make money, but-

Brett:

Right, right.

Andrew:

... not with ads.

Brett:

Because they're so novel like, "Whoa, there's a video ad online. This is crazy. I've never seen this."

Andrew:

Yeah. "I need to watch it." But yeah, it's this cutthroat, so you really got to be direct.

Brett:

Yeah. You've got to either have some promise of a benefit, some promise of the answer to a question so you're opening that loop with the promise of closing it, something to get them interested to get them to keep watching. So, cool.

Andrew:

That's right.

Brett:

Any other examples or thoughts on that one before we move to number three?

Andrew:

Nope. That's all I got.

Brett:

Cool. All right. Mistake number three. What do you got?

Andrew:

Let's talk about length, video length. Listen, when I first started doing online stuff, I thought length was really important because the fact is the more time a video goes, the more people are dropping off and not watching.

Brett:

Right.

Andrew:

But the reality is through millions of dollars of testing, that length doesn't matter. We have successful videos that are 10 minutes. We have successful videos that are three minutes, even 60 seconds. Even, ironically, some of the longer videos tend to do better, like in the five to six minute range. But of course, that falls back to the product and the audience. There's a lot of variables. From what I've seen, length doesn't really affect how well a video does. You could probably speak to this better than I can since you actually do the media buys and stuff. What have you seen on this?

Brett:

This is such a fascinating question. It's also one of those questions that's one of the most frequently asked. I speak at events a lot talking about YouTube, and people are like, "Hey, how long should my YouTube video ad be?" I think, just because it's an easy question to ask. I think the way that I would frame it is there's no magic length. Right?

Andrew:

Right.

Brett:

It's not that length doesn't matter. It's just that it depends. There's no magic formula, right? One of the videos you and I collaborated on back in the day, I think one of the top hitters was 45 seconds, but for the most part, as we've tested, and now we've spent millions, and millions, and millions on YouTube, is that usually needs to be longer than 60 seconds. If you go less than 60 seconds, especially in the 30 second range, you just don't get conversions. You'll get views. You'll get better view rates. Your cost per view will go down with a shorter video, but you don't get the CPAs you're looking for. Right?

Andrew:

Right.

Brett:

You and I were talking about this. Google reps and other people will say, "Hey, no. 15 seconds test..." 15 seconds. "Six second bumper."

Andrew:

Six seconds, yeah.

Brett:

We did that so many... In fact, you and I worked on some six second bumpers, could never bet them to work. Generally, I like to say minute or longer, but like Ezra, Boom by Cindy Joseph, he's in that same ballpark that you talked. Five and a half minutes are some of his top videos, but then we have several others that are a minute and a half or so that are just crushing it. So yeah, we found more in the minute and a half to three and a half minute range as a rule, but I wouldn't be afraid at all, of going a little bit longer, and I wouldn't be afraid of going closer to that one minute either, as long as you say enough. Say enough to really push someone to where they want to click.

Andrew:

Yeah. I think the one caveat to that, which I've just thought of ,is on Facebook, we've done like sale videos with badges, like 60% off, and it's showing off someone with a really expensive jacket, or a sheet. Something that has a really high AOV with just a quick sale notice, those tend to do okay. Those are the only short ones I've ever had success with, but when you're actually demonstrating something, or selling a product, or doing something a little more in depth, the short stuff, like you said, it doesn't really matter how long it is. It's the message. It's as long as it needs to be, and that's it.

Brett:

Yeah, exactly. As long as it needs to be, keep their interests, say enough when they feel like they have to click, and then you're good. I think if someone has a frame of reference, like they know your product, they know your brand, they know what you're selling, then yeah, do... If it's a sales, something like Men's Warehouse or something, people that are customers of Men's Warehouse, they know what they have. If I saw a thing that was 50% off or whatever, and I was looking to buy a jacket or a shirt, then it wouldn't take much to get my attention. But, if it's a new product where I don't really know why I would want it, or what it does, or why it's great, then you need more time.

Andrew:

Yeah.

Brett:

Love that. It's awesome. Video length, getting hung up on video length, is a mistake for sure.

Andrew:

Yes.

Brett:

Awesome. So, that was mistake number three. What about mistake number four?

Andrew:

Okay. So number four is build for the small screen. That's something as an editor, I forget because I work on a desktop. Whether you're doing graphics or video, you're seeing it on a big screen. You're able to feel the nuances and everything. But when it comes to people consuming video ads, whether it's Facebook or YouTube, I mean the huge, vast majority is on a small screen. You probably know the numbers better than I do.

Brett:

Yeah. But I mean, depending on the product it's 60%, 70% higher. That's even on the low end. Even like for Boom, by Cindy Joseph, where we're targeting women 55+, it's still mostly mobile, which is crazy. Another one is 90%-

Andrew:

I think Facebook's like 85% or something, or higher now. Then you have TikTok and all that stuff, and Instagram. It's remembering that people can't see everything on a phone, like they can on a desktop. What does that affect? Primarily, it affects titles and graphics. You don't want small titles. You don't want small graphics. If you do titles, make them big, fill the screen, keep them simple, very visually consumable, one or two lines. That's definitely one thing.

Andrew:

Another thing is for YouTube, is understanding the safe zones on YouTube. The bottom right, you have the skip button. The bottom left, you have a clickable CTA. Is that correct?

Brett:

That's correct.

Andrew:

Then the top right, you have a link to the actual advertiser, right?

Brett:

Correct.

Andrew:

Then my understanding is that YouTube, depending on the platform it's showing, it may crop slightly, on certain areas. If you were to look at this on a screen, you have a little section in the middle that's uninterrupted, and maybe a little on the top left, but other than that, you want to keep the edges clear. Either large graphics, large texts, or just don't do graphics and texts at all.

Brett:

Yeah. You really want to keep that, especially that lower right, where the skip ad button is, because it is more of a region. You want to put some kind of call to action button there and get someone skipping the ad, and then doing the opposite of what you want, but also the lower left there's that built in CTA that Google has, or even the play button. You can be in those zones. Top, middle can be okay for logos or things like that. But yeah, for sure that upper right corner, you want to kind of avoid that as well. Understanding the safe zones, super important.

Brett:

It's so funny. In the past it was always like, "Hey, let's optimize for the big screen, and let's think about the big screen." Aspiring actors wanted to be on the big screen, and now, we're doing everything for a small screen. But that's where most of your views are going to come from, and so that's where most of your clicks and conversion are going to come from as well. I also love the tight framing, maybe not to the extreme of TikTok videos where it's right on someone's face, but still, tighter frame makes a big difference. Especially someone watching on their phone and they see it in landscape mode at the top, a tight frame is important.

Andrew:

Yeah. You don't want to be tiny in there. You want the product. If you're presenting it, then you want to fill the screen. On top of that, you want it to be bright and easy to see. You don't want to be in a dark room with weird shadows or all that stuff, because the harder it is for someone to watch something, the less effective it's going to be.

Brett:

Yep.

Andrew:

So, simple, bright, you don't have to over-complicate it.

Brett:

Exactly. The more someone feels like they have to work to understand what you're saying, they're just going to give up. Right? They-

Andrew:

Yeah. What do they say?

Brett:

If there's too many things going on, they're not going to work hard for you.

Andrew:

A confused mind never buys.

Brett:

Yes, love that. A confused mind never buys. Really, we're lazy when it comes to ads. We don't want to exert effort for your advertising.

Andrew:

Don't want to dissect it. We just want to know, and either click or not.

Brett:

Yep. Awesome. So we're about midway through. I'm going to kind of recap real quick, and then we'll get onto number five. So number one, we want a pattern interrupt. We want a pattern interrupt that properly frames the product, the problem, the situation, what we're trying to do. You want to frame it and interrupt people properly. Interrupt the right people in the right way. Two, we want the first five to 10 seconds to really provide a promise, so there's going to be a benefit for just watching the ad. Get them to want to around, and make that appealing and enticing. Number three, don't get hung up on the length of the video. It needs to be long enough to sell. You don't have to get too hung up on it. Build for the small screen is number four. What is number five?

Andrew:

Okay. Number five is taking advantage of authenticity, or at least trying to use authenticity as a way to get people to engage with the video. There's a lot of nuances to this because you could do something like these really bigger six-figure expensive ads obviously are produced. They're acted, but they're very well done and they're very successful, but you're not going to make 30 of these videos and continuously rotate through them. You're going to have hero videos. When you're looking at cheap, effective videos that could be produced quickly, that are successful, that have a lot of return on investment, then I think using authenticity is a great way to take advantage of that.

Andrew:

The best example would be a UGC, a user generated content video, where someone's giving their opinion or their review, or someone's holding their phone up, shooting themselves, and they're being like, "Oh, I just got this great outfit. I love it." They're looking at themselves in the mirror, and they're showing it off. Because it's in the same format that people use to communicate with each other anyway, especially like on Facebook, people are going to at least give it a shot, as opposed to something that looks very polished, like an ad that I immediately identify as an ad, so I immediately skip it. I think taking advantage of the format's native language, I guess is a way to put it, is a powerful way to easily and simply create videos that can be effective.

Brett:

Yeah. It's so great. I talked to a friend of mine who runs an agency that focuses on TikTok and they like to say for TikTok, don't make ads, make TikToks.

Andrew:

Yeah. I love that.

Brett:

That's super clear and makes a lot of sense for TikTok, but it really applies to every platform. Understand the Facebook platform. Understand what looks and feels authentic there. Understand YouTube. YouTube, you can get away with a little more polish and a little more production value. It skews a little more TV than these other platforms, but still, you want authenticity. If it just feels like a commercial, looks like, feels like commercial, people are just going to keep going on, on Facebook. If it looks like a commercial on YouTube, well, people know that it is anyway, but if it doesn't grab you and if it's not authentic, then they're going to skip it there, too. I love this. I also like for YouTube, but also for Facebook and other places, a mixture of some production value with UGC. Sometimes those working together can be really valuable.

Andrew:

Yep. Yeah, absolutely. I think it's knowing the language of the platform, and being okay with speaking that language with your advertising.

Brett:

Yeah.

Andrew:

Especially on something like Instagram. People are scrolling, and if it looks like something that their friend shot, then they're going to give it a chance and listen.

Brett:

Yes.

Andrew:

Especially if it has an interesting open or something. If it's a really high polished ad with a bunch of graphics, they don't stop. There's no reason to.

Brett:

Totally makes sense. We've been living conditioned that that's the salesperson selling me something. No, thanks.

Andrew:

That's right. That's right. Of course, every platform is different, so you really got to look at different platforms, but that's kind of a good... For low budget ads, that's kind of a good thing to remember.

Brett:

Love it. Yeah. Lean into authenticity, and lean into UGC. And I think that applies across all platforms.

Andrew:

Yes. Absolutely.

Brett:

All right. Number six.

Andrew:

Number six. You're going to know more about this than me, but it's advertising the right product. What I mean by that is having a product that has the AOV to support the advertising. Something that I've found in video marketing is it's really hard to make money off something that's less than $65, $70 average order value. It's having a product that could pay for the ads, but it's having a good upsell path, the right landing page, the optimized landing page. Having all the backend stuff there to support the advertising, I think is something that a lot of people forget.

Brett:

Yeah. I'm so glad you mentioned this because as media guy and someone who's been buying and creating campaigns for forever, this speaks to my soul. So thanks, Andrew. But yeah, you really do need that AOV to be often $65, $75 or higher. Or another way to look at it is you need to be able to absorb a customer acquisition cost of $50 or higher. Really, now on most platforms, a cost per acquisition of $50 is probably low, especially for cold traffic. If it's warm traffic, remarketing, repeat purchase, then you can certainly spend less than $50. But probably as a rule of thumb, if you can't spend $50 to $100 acquiring a new customer, you're going to be limited on some of your channels for attracting customers. Now it could be then that your AOV is north of $100, or it could just mean that we know what our six month LTV is. We know how many times we get someone to purchase for six months, and then you could absorb that $50 higher customer acquisition cost. Understanding that is really important.

Brett:

Then one of the other pieces here, and I'll mention our mutual friend, Jared Mitchell, that's how you and I met.

Andrew:

Yes, my best friend.

Brett:

He's your best friend, and he's a good-

Andrew:

Yes, the best man at my wedding.

Brett:

Yeah. That's next level, although he is going to host all 10 Curry's at his house for like the second or third year in a row. We go out to Cali and we crash at the Mitchell's.

Andrew:

I got to stop by for that.

Brett:

You do. You got to come and see the whole Curry clan at the Mitchell's.

Andrew:

I got to meet the family.

Brett:

It'll be crazy. Yeah.

Andrew:

Yeah.

Brett:

Jared and I were working on a YouTube deal for he and his wife's business, Skincare by Alana. We were working on a specific product. As we were running YouTube, we just did a small test, just kind of for fun. As we were doing a test... His wife, Alana is great on camera. Actually, you helped with this.

Andrew:

She is. Yeah.

Brett:

You did this.

Andrew:

Are these videos I shot?

Brett:

Yeah, these are the videos you shot.

Andrew:

Okay.

Brett:

We started running them and we're like, "Well, the CPAs aren't great, but the other video metrics are really good." The view rate was good. Click through rate was actually great. People were clicking on this ad.

Andrew:

Yeah.

Brett:

CPV, the cost per review, were low. As we looked at it, we were like, "Jared, these numbers are pretty good." People are enjoying watching these videos and enjoying clicking on them. He's like, "Well, let me get to work." You know what Jared has going for him. He knows CRO. He knows conversion rate optimization. He's a super smart guy.

Andrew:

He's great at that.

Brett:

He reworked the page, and then he got his funnel built out, and then they started working, and then they started hitting those numbers. That was never designed to be a scale project, but it did start to work. It did start to hit those CPA targets once he fixed the landing page and some of the follow up sequences. That's where also understanding the numbers, where you can look at the performance and say this is... As an example, if the view rate's really low for an ad, but let's say the click through rate's kind of high, we'll know you need to fix the opening. You fix the opening and the view rate's better. Or, view rate's good, click through rate's bad. Something's wrong with the product demo or with the CTA. You just have to look at the numbers and understand what to fix next.

Andrew:

Yes.

Brett:

Really good. So right product, understand your numbers, you're going to have the upsell system-

Andrew:

If someone says, "Oh, I got a $20 product, or $25 product," then start looking at bundles, start looking upsells.

Brett:

Exactly.

Andrew:

How can you bring that AOV up to where it makes sense?

Brett:

Right. Right. Yeah. I've consulted with some Amazon businesses where AOV is $25, and they don't really know when people purchase again. I'm like, "Well, that's probably more of a search marketing activity, running Amazon search ads, Google search ads, things like that, is probably your path there.

Andrew:

Yep.

Brett:

Cool. All right. We got just a little bit of time left. That was number six. Let's lay down number seven.

Andrew:

Number seven is a big one that people forget, and that's, don't throw away the CTA. What I mean by don't throw away the CTA is it's an opportunity to pitch to the viewer something specific. A lot of people have their video and then it comes to a title-

Brett:

I've been guilty of this one, by the way. Even as a video guy-

Andrew:

Me too.

Brett:

... that loves performance and loves direct response. I've made this mistake many times.

Andrew:

Yeah. Yeah. You don't want to just have a card that shows the product and say, "Click now, lower." You can still have that at the end. What you really want is someone on screen, and if it's a scripted video, then this is part of the script. But whoever is taking us through the video, the "host," they need to present the CTA at the end of the video directly to the viewer. That makes a big difference in how that CTA is actually consumed. Then of course, that CTA, that should have either a special offer, a deal, a promotion or some sort of bonus. It should be a strong offer presented by the person on camera. That can make a big difference in videos.

Brett:

Yeah. I love that. Such a simple thing, but sometimes we get right up to the close, people are... If they've been sticking with you that long, they're interested, they're engaged, they're likely a good prospect, but then you don't ask.

Andrew:

Yeah, you don't ask.

Brett:

You just leave it to a visual to ask. Have the person on camera make the ask. Go here, check this out, try this out, read this thing.

Andrew:

It's like going back to VSLs. In a VSL, you have the offer in the VSL. You should do the same in the ad.

Brett:

Yep. Just like back in the days when Frank Kern was pitching his stuff. He did the pitch. He did the close at the end. We've seen this work too, whether it's hair care, or skincare, or automotive, or whatever. This just works. The interesting thing is even if you do all the steps right and you get up to this point, if you don't ask, a lot of people won't take action. You got to ask, and you got to make it compelling.

Brett:

The thing I'll also point out here is I love introductory offers. We work a lot in the supplement space, so there's a case to be made that, do free plus shipping samples for supplements, or do some kind of introductory offer. If you're doing a subscription, make that month one bundle irresistible, and you can kind of work with price. But, you don't have to do that. You could just tell people to go here and check this out, see it in action, see how this will help you, run this calculator or get this guide. See how this is going to impact your life or your business. For Boom, by Cindy Joseph, almost never, ever, ever do discounts. It's always click here, check out our five makeup tips for older women. This promise of a benefit, and then they go and they get that benefit. We've been sending traffic to those pages for years and it just works, and it gets a predictable CPA. There needs to be a CTA. If it makes sense to bundle and discount for your brand, then do that. But if it doesn't, then don't. You don't have to.

Andrew:

Right. Right. You don't have to, but thinking about the CTA and incorporating it into part of the video can help. We've even done tests where we put countdown timers on it as if it's a page, and that has helped.

Brett:

Has that helped?

Andrew:

Not always, but we've seen... Sometimes it works, sometimes it doesn't, but you could do fun stuff like that at the end of the video. But more importantly, have a delivered CTA and just ask. It could be simple. Just tell them what to do next.

Brett:

Yep. Love it. Delivered CTA. Don't skip it. It seems simple. Seems like, "Yeah, do we really have to do that?" Yes, you should really do that.

Andrew:

Yeah.

Brett:

Awesome.

Andrew:

Okay. That was mistake number seven. Mistake number eight.

Andrew:

Mistake number eight. The last one is don't make it more difficult than it needs to be. Video is very intimidating for a lot of people. Luckily, it's easier now than it's ever been before, because we all have a phone and we could just shoot ourselves. Sometimes, that's all it needs to be. If you don't know what to do, create a script, get a phone, shoot yourself in a UGC style, shoot some B roll, throw some shots in, make sure there's value in the video, show off the product, demonstrate the product if it's demonstratable, and if it's a project... When we're working with a car care product, before and afters were awesome. Just showing a before and after from a cell phone footage is fantastic. I think if you're getting started in video, don't over complicate it. Don't make it more difficult than needs to be. You have the tools right now to create a compelling ad. You just have to structure it correctly and try it out.

Brett:

I love it. I'm so thankful you made this one of the mistakes, because we do have the tendency to over complicate things. That's one of the reasons why I don't like to mention that YouTube is kind of like TV, even though it is. When I mention that, then people think super bowl ads or something. I got to create this super creative-

Andrew:

I got to get a huge crew.

Brett:

You got to get a huge crew. This has to be a major production. It doesn't. I think one of the things to consider is if you're a business owner, think about the times, think about the phrases, think about what you say when you're one-on-one with someone when they light up, when you make this comment or you saw an automotive product and you show them this thing, when do people get all excited? When do they lean in, when do they really perk up? Those are the things you need to say in your ad. It can be super simple. I would much rather test with a simple video, one person on camera talking to someone, just like you would to a friend or to an ideal prospect, and give that a try first, and then try more complicated things from there.

Brett:

I remember, and I don't know if you've seen this or not, but Frank Kern, he had a video, I think I saw on Instagram first, but he started... It was just him with a microphone, staring at the camera. This was recent. He was like, "This was an ad."

Andrew:

Yeah, like classic Frank Kern.

Brett:

It was oddly captivating. Part of it... I haven't followed Frank Kern for a long time, but I don't think that was it. Part of it was just oddly captivating. I just watched it, but it was just Frank talking. Barely any edits, barely any anything. He just said, "This was an ad."

Andrew:

Well, that's a perfect example of what I'm talking about because Frank used to pay me to create videos. He needed a video guy to... You used to have to shoot on cameras, not your phone, so he needed a camera guy who could shoot, and who could edit, and who could do all this stuff. Then as time went on, him and a lot of other people realized that they have the tools to just create something, and there's authenticity with it. Him saying, "This is an ad," that's a great interrupt, even though it's...

Brett:

It's a great interrupt, and it really ties into your first point because it's a pattern interrupt, first of all. Why would you say that? That's interesting, so now I'm listening for a second, at least.

Andrew:

Yeah. Why are you admitting this?

Brett:

He's talking about marketing, and he's talking about how he's speaking to business owners, and so it is a beautiful, simple hook that works.

Andrew:

Yeah, and he self shot it, and whatever little edits he had to do on it, he did it. If it's clunky, it doesn't matter because you still watched it. It's a good example of just kind of where we're at with video, which is knowing the structure is half the battle.

Brett:

Yes. T.

Andrew:

He rest of it's testing and just getting it done.

Brett:

Totally agree. Yeah. Having that right script, understanding the nature of the platform you're running an ad on.

Andrew:

Yeah.

Brett:

Being simple, being straightforward, really mastering that hook and that pattern interrupt, and then dropping in some of your key benefits and some of the things that you know resonate with people. It can be simple. Then you're just testing and iterating from there.

Andrew:

That's right.

Brett:

Awesome. So we did hopefully demystify a little bit and make this seem a little simpler, but I'm a guy that understands video. I still like having video people to work with. I still like talking to the pros like you. I love working with you, Andrew. For other people that are watching this and thinking, "Okay, okay. So I could do this on my own, but I'd rather just call Andrew, or get a hold of Andrew." Call Andrew... What is it, the '90s? How can they check out your company and your services?

Andrew:

The company is convertviews.com. If you want to talk to me, you can always email me at Andrew@convertviews.com. Even though we gave you these tips, it's all super difficult, so you have to hire me to do everything. You can't do anything on your own. None of this makes sense. This was all just...

Brett:

It was just good radio. It was just to make an interesting video. No, the truth is you can do it.

Andrew:

I mean, you cannot do it on your own. You have to pay me tons of money to help you. That's the last point.

Brett:

Yeah, yeah.

Andrew:

No, I'm just kidding. But yeah, if you have a larger company that needs a lot of media... We don't really work with startups because it doesn't make sense for them to pay someone when they're so little and they're just testing, but if you're a company that needs consistent creative, we don't do the media buys, we just do the creative. We're not trying to replace your ad agency. We're not trying to replace internal people, but if you need just a steady flow of effective video ads, that's what we do.

Brett:

Yeah. Love it. If you're in that stage where you're needing 3, 4, 5, 6, 10, 12 videos a month, that's the type of client that's great for you.

Andrew:

Yes.

Brett:

One thing I'll say too about you, Andrew, and this probably came through in the interview, but you understand data and you understand performance. We used to get on calls. You look at videos and be like, "Hey, this view rate's not good. This conversion rate was off." Then you know kind of what to test from there. You're really looking at data driven creative, which is super helpful.

Andrew:

That's right. That's a very good point.

Brett:

Convertviews.com or andrew@convertviews.com. I'll link to those in the show notes as well. So Andrew, man, round two may have been better.

Andrew:

Do I get a round three? Do I get a round three?

Brett:

Let's start thinking. Let's start thinking about round three?

Andrew:

Have you had three rounds with anyone?

Brett:

I have. Yeah. One other business. Well, a couple... They're OMG people. I'm trying to think of anybody outside OMG that's been three times.

Andrew:

Yeah, OMG doesn't count.

Brett:

OMG doesn't count. Maybe Ezra. I think guys were Firestone. That's a pretty short list.

Andrew:

He's a different level than me, so that's okay.

Brett:

He's next level from all of us. So anyway, Andrew, man's been a ton of fun, and thanks for taking the time.

Andrew:

Yeah. Hopefully I'll see you when you visit Jared.

Brett:

Yes. Let's hook up next time we're in Cali. Let's absolutely do that. All right, brother.

Andrew:

It was great talking with you.

Brett:

You as well. And as always, thank you for tuning in. We would love to hear from you. What would you like to hear more of or less of on the show? If you haven't done it, leave us that review on iTunes. It helps other people discover the show. Don't forget to subscribe, and don't forget to check out my new podcast, Spicy Curry. You find it on the website or on iTunes. It is spicy. We just talk to the top names in eCommerce, so check that out as well. And with that, until next time, thank you for listening.

‍

Episode 195

:

Brian Moncada - Adspend

7-Figure YouTube Ad Framework with Brian Moncada

As you know, I’m no stranger to YouTube ads. It’s been an obsession of mine since 2016.

But, I love talking shop and swapping ideas with other YouTube ad experts.

My guest today is Brian Moncada. He and his team run YouTube ads for other marketing legends like Frank Kern, John Asaraf, and others. Brian knows his stuff!

Brian has worked mostly with info marketers and influencers. We work almost exclusively with DTC brands. So our combined perspective on YouTube ads is pretty powerful.

‍

Here’s a look at what we cover:

Brian’s ad framework.
How to harness intent-based targeting.
How to create urgency and scarcity.
Why most YouTube ads fail.

‍

Mentioned in This Episode:

Brian Moncada

7-Figure YouTube Ads Swipe File & High-Converting Script‍

Adspend.com‍

Adspend YouTube Channel‍

War Room Mastermind‍

Dean Graziosi‍

Tom Breeze‍

Russell Brunson‍

YouTube Advertising Masterclass‍

‍

Transcript:

Brett:

Well, I am so excited about today's topic. I'm going to geek out today more than usual, if you can imagine that. This topic is one of my favorites, it's been one of my favorites for years. We're talking YouTube ads and I have a YouTube ad expert on the show today. And we actually met through my business partner, Chris Brewer, the man himself, Chris heard my guest today speaking at War Room and was blown away and he's like, "Brett, I know you're the YouTube guy, but you got to hear from Brian." And so Brian and I connected, instantly hit it off, kindred spirits on the YouTube side of things.

Brett:

This episode of the eCommerce Evolution Podcast is brought to you by OMG Commerce Resources. That's right. Here at OMG Commerce, we want to help make sure you're educated and in the know to capitalize on the latest tips, tricks, and strategies to help you grow your e-commerce business. So if you go to omgcommerce.com and under resources click on 'guides', we have some cutting-edge free information for you on things like how to dominate with Amazon DSP ads, or how to use Amazon sponsor brand video ads and how to craft the perfect ad. We have several guides on how to capitalize on YouTube ads, from creating the perfect ad to knowing when you're ready to scale. Plus, there's the newly updated Google shopping guide, plus more. Check it all out at omgcommerce.com and click on 'guides' under resources. And now back to the show.

Brett:

I'm delighted to welcome to the show Brian Moncada and Brian is the founder, the visionary, the leader of adspend.com. Fantastic URL. So with that quick intro, Brian, welcome to the show. How you doing, man? And thanks for taking the time.

Brian Moncada:

Dude, Brett, thanks for having me, man. I'm glad to be here and I am doing phenomenal.

Brett:

Yes. We were just talking about this. I don't know what time of the year you'll be listening to this podcast, because this will be... have some longevity. I'm in the Midwest. It's literally snowing and sleeting outside right now and Brian is in Miami just living it up. What's the weather like in Miami today, Brian? Just make us all feel bad, for those of us...

Brian Moncada:

Yeah, I don't want to hurt your feelings, but it's beautiful. It's 78 degrees and it's sunny and it's nice.

Brett:

Yeah. All right. Well, that's the forecast. The forecast For this podcast is going to be hot and so we're going to dive into YouTube. And so let's talk about this, Brian, because a lot of the clients that we talk to... and just to kind of set this up a little bit better, this will be, I think, a unique perspective on YouTube, the two of us together, because myself and my agency, OMG Commerce, we're all e-com. We're 50 people strong and growing but all e-com. You're all Legion and info marketing and working with influencers, and then so really those two unique perspectives, I think, will be great. I think it'll be gold for the listeners. And so before we dive in, can you give everybody a background? How did you become YouTube expert? How'd that happen?

Brian Moncada:

Yeah, great question. So about almost four years ago now, I went to work for Dean Graziosi full time. At the time he was not running any YouTube ads. I actually got hired on to run Facebook ads and about two or three months into my journey with him they're like, "Hey man, YouTube ads is an untapped traffic source for us. You should learn YouTube ads." I learned YouTube ads through... Actually, I bought a course from Tom Breeze and Russell Brunson-

Brett:

Tom Breeze.

Brian Moncada:

Yeah, he's-

Brett:

Friend of the show, friend of mine, just a legend. Love Tom.

Brian Moncada:

Yeah, I love Tom as well. And I got their course that he did with Russell Brunson. I ran some ad spend through that course. Then I got consulting with Tommy Powers, another OG in the YouTube ad space.

Brett:

I know Tommy as well. Yep. Good friend. Good guy.

Brian Moncada:

Yeah, and so after that I was able to successfully scale Dean's free plus shipping book funnel, Millionaire Success Habits, to multiple seven figures in revenue, run a few other YouTube ad campaigns through his businesses, including mastermind.com with Tony Robbins and Russell Brunson. And then after that, I started adspend.com to essentially do the same thing, but for another wide variety of entrepreneurs who need help getting more leads with their business and YouTube ads. So that was about two years ago, going full time for adspend.com, so we've grown pretty well since.

Brett:

Amazing, Brian. Yeah, really great story and you've worked with some big names in the industry, tremendous track record, you get invited to speak at places. I mentioned War Room. I know you've spoken at their events and so really delighted to have you on the show. So let's talk about the differences between Facebook and YouTube. So let's do a little compare and contrast. So in what ways is YouTube different from Facebook? And then I also want to kind of dive into... maybe where you feel like YouTube's a little better than Facebook. So let's start with the differences though first.

Brian Moncada:

Yeah, differences, I mean very plainly, YouTube is a search... intent-based platform. With YouTube ads, you can actually target people that are searching for specific keywords or intent-based queries that you can go ahead and show your ads in front of. And also it's an education and entertainment platform. With YouTube... I don't think anybody here goes to YouTube to find if their friends are online. That's what Facebook's for. Facebook is a social platform to interact with friends and basically, I like to refer to it as high school. You go in there, it's kind of like a very good drama show sometimes. People are going back and forth, they're liking statuses, it's a talent show. But then YouTube, it's like college because people go there to learn or to be entertained. And you know, Tom Breeze, what we just talked about, put it in a very good way. You want to create edutainment for YouTube, so-

Brett:

Edutainment. Love it.

Brian Moncada:

Exactly. And with YouTube, you're going there to watch videos of your favorite influencer or your favorite brand and/or learn how to do specific things. Like the other day... I'm in Miami. I have plants, a bunch of snake plants and there's gnats that sometimes infect your plants, which I didn't know. And so I went to YouTube to search how to kill gnats in my snake plants. And I was able to find a video specifically about how to spray your plants to kill your gnats. And that ultimately is what separates YouTube from Facebook, being able to watch videos, to solve problems and to also be entertained. It's the new TV. And with Facebook, you can't really find those specific answers to those problems that you have. When you have a question, when you want to solve a problem, you don't go to Facebook to search for answers. You go to YouTube or you go to Google. And so that's really the main difference, and I'm sure you have other suggestions as well, Brett.

Brett:

Yeah. I'll just kind of riff on that just a little bit. You're researching on YouTube how to kill these gnats. What a perfect time for someone either who has an information play to run an ad, to place an ad in front of that video pointing you to a resource or some information that they then monetize in some way, or a product. Like, "Hey, here's a quick, easy..." I don't know what you would use... spray, trap, something... net, to kill these gnats. That would be a great time to put that ad right there. And yeah, the intent signals are available on YouTube because YouTube owns Google and it's got all those intent signals and what a powerful thing. Facebook knows a lot about you too, but Google and YouTube arguably knows as much or more. And you've got just a different reason why you're going to YouTube. Love the way you kind of frame that. What are some other differences between YouTube and Facebook that you've identified?

Brian Moncada:

Other differences specifically is just with YouTube, it's just a better quality buyer. It's a better quality customer, specifically when it comes to return on ad spend. The platform itself, in my experience, almost every time leads to a better quality buyer because again, using the reference of the high school and college, people on YouTube, they typically cost more when you're running ads to them. But they also have a higher LTV, from my experience, in the online education course and coaching space for your business. And the reason why is because it's more intent-based.

Brian Moncada:

Like you were just saying earlier, if someone had put an info product in front of me as I was clicking on this video on how to kill gnats, I probably would've clicked. And if it was an offer that was super irresistible, I probably would've downloaded it. I probably would've bought it because I needed to solve the problem fast. I had a pain point that was I want to kill these gnats, so I don't have to worry about gnats flying around my apartment so I can make sure my plants are safe, and I don't have to deal with the stress that comes with clapping my hands and killing gnats every single time I see one. And that's why YouTube is so powerful, where Facebook, like you said, does work and is great, however, YouTube also has a lot more scale because there's just so...

Brian Moncada:

It's the number two search engine in the world. The number two search engine in the entire world and if you can crack the code on YouTube, your scale is a lot more prone than just Facebook. Because Facebook, you can only get to a certain amount of scale for... unless your offer is just so broad. Because you can see results faster on Facebook, especially if you have a niche offer, from my experience. But what happens if you try to go scale, if your offer's not broad enough, it's never going to appeal to a wide variety of audience.

Brian Moncada:

As with YouTube, what we found is if your offer is still niche, but at least broad enough, your targeting can be a little bit more broad as well, and really allow you to get those jaw-dropping return on ad spends, unlike Facebook and dealing with the ad disapprovals and the constant headache of... sometimes that you experience with having to go through ad rep and email support. Where YouTube, you get a little bit more support as well and more consistency is the biggest thing as far as differences from what I've seen. I'm sure you have others as well.

Brett:

Yeah. Yeah, I love that. And I think one thing to keep in mind too is that Facebook, and this has started a few years ago, Facebook has to limit the number of ads that they put in the newsfeed. There's a limited amount of inventory in the newsfeed to keep people coming back to Facebook. When you look at YouTube and just the sheer volume of videos that are there and when you also look at the fact that when someone visits YouTube, that average session duration's 40 minutes. People are spending a lot of time on YouTube.

Brett:

The level of inventory is almost unlimited and you mentioned it and you're spot on. It's the second most popular search engine behind Google. And you may think, wait a minute, it's not a search engine. It's not. It's a video sharing site, but people use it just like you did to solve your gnat infestation problem. You go to YouTube when you're trying to find stuff, learn stuff, buy stuff, things like that. And so really the scale is huge, so you can be really, really focused and niche, like how to solve this gnat problem, or how to fix this issue with my lawnmower or whatever, or you can be really broad. You've got the ability to be laser focused and the ability to scale on YouTube, which is pretty unique and really not anything else like it.

Brett:

Now, Brian, you mentioned something and you talked about how it's kind of the new TV. I think that's actually a pretty good segue to talk about creatives. So how do you look at, how do you frame creatives for YouTube when you're talking to clients, or when you're teaching this from stage?

Brian Moncada:

Yeah, great question. So as far as a holistic overview of creatives, your ads on YouTube have to do two things, like I talked about earlier, they have to be educational and they have to be entertaining to some degree. Because ultimately, if you're trying to sell to another business owner, they don't have to be as entertaining as someone who's trying to interrupt the binge watching routine of someone who's trying to watch their favorite influencer to sell them something they've never thought of selling them. Whereas if I'm going to sell to somebody who wants to run YouTube ads for their high ticket coaching and course business, I need to hit them with a very powerful hook, keep their attention by sharing something valuable that they can use, whether they click or don't, and then ultimately, give them a call to action so that they can click and learn more about our solution, our offer.

Brian Moncada:

And so with creatives, just to back up here, again, those two things, educational, entertaining. Educational and entertaining. And so that may seem pretty crazy because the biggest thing and myth that people have in their head is, well, I have to film videos, that's going to take a lot of work. I have to get a production team. I have to hire a videographer and all of those myths that people believe, when in reality, all it takes to get a high-performing creative on YouTube is you have a really good phone and camera in your hand right now probably. It's an iPhone. It's probably the best camera quality that most people have access to in the entire world. And as long as you have good lighting and good audio quality, everything else takes care of itself in terms of the script. You need a good high-converting script. You need a hook, you need a story, or a body, depending on what you're selling to, and you need to make an offer at the end.

Brian Moncada:

So hook, story, close is the format that we teach our clients. And we always write five hooks for our clients with a different variety of angles in terms of the hook, which are usually from 0 to 15 seconds, and then this story, which is the educational and entertaining piece of the body, and then the call to action at the very end, which is the offer. So that's the framework and ultimately, in between you must be able to share some educational content with the viewer and entertain them by keeping their attention, if you're selling B2C as well, so I hope that answers your question. Obviously-

Brett:

Yeah, it is brilliant. And so I want to dive into a few things there. I'll start with the iPhone though, because I don't want to forget this part. So get the iPhone, this is the 12S Pro... I don't remember... Max. But I like the new iPhone commercial that says 'Hollywood in your pocket'. That's really accurate. You can create good quality videos from your iPhone, especially if you're pitching information or you're an influencer, I think sometimes they work best that way on the product side. So on the e-com side, some of the most successful videos we've spent millions and millions of dollars on videos that are just a mashup of different UGC of customer testimonials. Or for an automotive client, we had a matchup of people walking around their vehicle and showing this accessory that we were advertising and it was brilliant. It worked and we spent millions on it.

Brett:

And so yeah, you don't have to spend a ton. This could be your camera for your YouTube video. The other thing I want to mention, I want to key in on both entertainment and education. And I love the fact that you brought up both of those and you do need to do both. I think there's this real value that if you educate someone along the course of your ad, that delivers so much value and it actually creates a stronger connection between you and your prospect, where they feel like, "If you deliver this kind of value in just the ad alone, what are you going to do if I actually do go learn more, or do take your course," on the info side, "Or what if I do actually buy the product?" You're going to have more faith or more trust that you'll deliver value there because you deliver value in the ad itself.

Brett:

And then, hey, we all want to watch fun videos. We want to go to YouTube. Maybe we are there to learn, but we've all experienced a video that was so deadly, dull and boring that we just... we skipped, we couldn't tolerate. I compare it to accounting class in college. You used the college example. I was a marketing major. I respect accounting. I need accounting, running an agency. But I had one accounting professor that literally read the slides, so put PowerPoint slide up on the wall, read the bullet points, just read it. I'm like, this is painful. Everyone was fast asleep. Okay, so you can have an educational video that was that style, it's going to bomb. You need to have some entertainment, spice, some humor even, something to make people want to keep watching. I want to unpack more of the framework too, but I want to talk about that. How do you strike the balance between education and entertainment?

Brian Moncada:

Yeah, that's a great question. So one thing that we always try to do with our clients, especially on the info side, is most of them always just overthink the creative in general. So what we try to do is share with them the minimum ... production elements necessary to be able to produce a creative that's going to get some conversions for their business. And so what does that look like in terms of the entertaining? Well, the entertainment comes from making sure that in the actual editing and post production process, we're adding different elements in there, from motion graphics, from sound effects, from music that goes along with tone, all of the actual ad. So that way it's not just, again using the iPhone example, just filming, talking head without any other elements to keep the flow of the video and more importantly, the attention of the viewer.

Brian Moncada:

So post production does come into this a lot, however from the actual filming side of things, the way we make it a little bit more entertaining is the hooks are always filmed in one central location. And then for the body, or the story in this case, where they're actually sharing value, educating them, we make them film it in a different location. So it sets up the video to be more interactive, more interactive by just setting the different setting for the actual story.

Brian Moncada:

Now, does there have to be anything in terms of making funny jokes or doing something crazy on camera? Not necessarily, because the script that you write ultimately has to be very punchy, especially now, as you know. Because YouTube ads are now penalizing if you're above three minutes. They're up charging you if you have a three-minute ad, or if you have an ad that's above three minutes. So you really have to be key with your script and just keep the attention of the viewer. And so again, the way we do that is we have the hooks filmed in one central location. We have the influencer then film the body in a different location. And then in terms of the post production, we add B-roll we add sound effects, we add music underneath to not overpower the actor's voice, but just to keep the user's attention enough to make sure the flow of the script is still entertaining somewhat, but nothing crazy other than that.

Brett:

Yeah, I really like that. And so yeah, you don't have to be a stand up comedian. You don't have to be Harmon Brothers level humor necessarily. And the Harmon Brothers, it's the group behind Squatty Potty and Poo Pourri and Purple Mattress and things like that.

Brian Moncada:

The legends.

Brett:

Really, really funny. Also, they're legends. Really funny, really great at selling stuff. You don't have to be that funny, but you do need to think about pace and you do need to think about some of those certain elements that really spice things up. So you talked about post production. What's so interesting... and this would be a great example. The point I'm about to make is not about music, but I'm going to talk about music. If you've ever maybe watched an action sequence of a movie without the music, or you watch like the scary scene of a horror movie without the sound, it really loses an element. It's like, "Well, this doesn't even feel real." So sometimes those little elements totally change the emotion of what you're watching. And something that'd be similar in post production, adding a graphic, adding a sound effect, adding a close up. Sometimes just the angle going from a wide to a close up really changes both the engagement and the feel of the commercial. And so some of those things are super, super important.

Brett:

Can you talk about hooks just for a little bit? So is there a specific approach you take to hooks? Because I'm of the opinion, if you compare hooks and videos to headlines back in the day of print ads or subject lines and emails, the hook is the most important part. You got to deliver on the rest of it too, but how do you approach hooks and what are you thinking about, what are you trying to create when you're designing a hook?

Brian Moncada:

Yeah, great question. So we follow a very specific framework and for your audience that has more of the e-commerce business and background, these elements will still apply, it's just customizing them to their specific business. So what we try to do in the hook, the first zero, five seconds of the ad is a pattern interrupt. So what's the pattern interrupt? Well, you want to make sure that you get their attention and there's a few ways you can do that. So you can narrow their attention on maybe an object or by showing them something, like a prop. So for example, one of our clients, Mike Basevic, he actually sells essentially mindset coaching for high performing CEOs and professionals. But he's also competing with big pharma, because what he does is he helps them overcome their limiting beliefs.

Brian Moncada:

One of his ads that we wrote for him was stop taking pills, stop doing all of these substances to overcome your anxiety. And I was like, "Man, this would really make it a lot better if you showed the pills on the screen in the first five seconds of the ad." So that's exactly what he did. So having a prop to use, if it's relatable to the script or in your case, in your client's cases, having the actual product and making it the center of focus in the first five seconds in a way that the viewer pays attention to it. So you can flash something on the screen that's confusing. You can make a shocking statement. You can allude to something that means danger's coming.

Brian Moncada:

So for example, you can drop a big hook, that's unique, that's useful, that's ultra specific in terms of the script where it's, in my case, going back to the example that we're running with here is, if you're a homeowner that experiences gnats in your plants and you want to get rid of them as fast as possible, well, that's also another pattern interrupt because it's very specific to the person you're targeting, which is beautiful for YouTube ads, like we talked about because you can target those specific people watching videos related to how to kill gnats.

Brian Moncada:

So that's the first five seconds, the pattern interrupt. And you want to make sure this is fast-paced because you only have five seconds again, before they can skip the YouTube ad. Next is the big promise, the big promise, 5 to 20 seconds. So this is the immediate big promise made after the pattern interrupt. And you're not stating the benefit of the product, you're stating the benefit of consuming the rest of the ad. So it's basically your headline. So it should hook their attention, build curiosity, feel new and speak to a specific desire. So big promise can mean a number of different things, especially in the e-commerce space, but the big promise of the actual marketing message of the product.

Brian Moncada:

Then from then on, then you go into the big proof, but mainly what we focus on in the hook is just a pattern interrupt and just the big promise. And then we transition to the actual body, or the story, by usually saying a one liner then, "Keep watching this video because I'm going to show you..." big promise. Or, "Then don't skip this ad because in the next two minutes, I'm going to show you..." And then you allude to the rest of the ad and what they're going to learn by sticking around to watch the video. So for an e-commerce space, it could be the same thing with a little bit of a voiceover work, just making sure that they continue watching the ad to see more of the product demonstration, for example. So that's the hook that we focused on with YouTube ads.

Brett:

Love that. And so I'll give a quick example. Working with a client right now, Viome, with a V, V-I-O-M-E. And they are a-

Brian Moncada:

Dude, I just got their product.

Brett:

Dude, it's fantastic. I'm on day 30 of using their... So basically what it is that they will... it's a gut health intelligence test. They'll give you personalized food recommendations, so what you should eat based on what you can metabolize and what your digestive system, what your gut can handle, and then they create personalized supplements for you. It's a brilliant concept.

Brett:

So this video we're working on, and the hook actually came from them, but we're, we're spicing it up a little bit. I'm going to butcher it a little bit, even though I helped write the script, but basically it's like, "Hey, it is broccoli really good for you? Like, really. Is it good for everybody?" It shows broccoli and stuff. And then it says, "Did you know that actually 49% of people should not eat broccoli?" And that's actually true.

Brian Moncada:

Wow.

Brett:

And then the other one is like, well, what about kale? The most super of super foods. There's nothing more super than kale. Actually, it's only a super food for 11% of people, for others it's okay. Some people shouldn't need it at all. As an example, spinach, I should not eat spinach and I should not eat broccoli. Yeah, my body doesn't process it. So that's the hook and then we said, "Hey, do you know that gut health... gut health actually is tied to anxiety, obesity, inflammation, and diseases." so you unpack this and you're like, "Okay, well, you got my attention." If I'm either suffering from something or I'm kind of a bio hacker, which that's what kind of what I am, and then you think you probably are too then you're hooked, you're in. So you got that pattern interrupt and the big promise. I love that. So that's the first... so you talk about the pattern interrupt being the first five seconds, which makes sense. That's when the skip button comes on. Big promise was like 15 to 20, is that what you said?

Brian Moncada:

Yeah, 15 to 20 seconds. But what you said is actually a beautiful framework as well, because what that script is using is the question, which is also the hook, or in this case the pattern interrupt. It's asking them a question. And then you're expanding on that question by asking them another question that's really just not general knowledge to the mass public. Did you know that broccoli can actually be harmful for 49% of people? Nobody really knows that as common knowledge.

Brett:

Nobody's talking about that.

Brian Moncada:

Yeah, so it's like, whoa, what is this? That's what they're asking themselves now. "What is this?"

Brett:

Yes.

Brian Moncada:

And you're just buying five more seconds of their time. So what you just did is a perfect example of the pattern interrupt and the hook in general.

Brett:

Cool. All right and then I like the names you have for these. So we go from pattern interrupt to big promise to big proof. So talk about the big proof and how you guys approach that.

Brian Moncada:

Yeah, yeah, yeah, the big proof, man. So that's really also what you can do in the actual hook as well. The hook could also be just big proof when it comes to a specific case study or testimonial where... for your example, the broccoli, did you know this can be harmful, 49% of people and the gut biome. Like, well... for example, Jade here went from struggling with anxiety, fatigue, restlessness, sleepless nights, his Oura Ring score in the bio hacking case because people in the bio hacking case would probably have an Oura Ring, was always hitting less than 70 every single night when he woke up, to being able to sleep better, eat better, move better, all these different benefits in terms of proof for the actual product.

Brian Moncada:

Or in this case for Viome, for you, it would be something for... "That's why we created Viome. Viome helps average Americans, modern day Americans improve their gut score by 50% within 30 days after taking our free..." or whatever the case may be. It's not free in this case but, ... after taking our gut health test, which we ship to you as well." So it's that big proof after the actual promise to show them, okay, cool now here's the product introduction as well with the proof of what it actually does for the person.

Brett:

Yes, spelling that out, spelling out what this product actually does for somebody. Awesome. Where do you guys-

Brian Moncada:

Yeah, just building authority-

Brett:

Yeah. Go ahead.

Brian Moncada:

No, just building authority, making sure it's more authority, right?

Brett:

Authority, yes.

Brian Moncada:

Yeah.

Brett:

Yeah. Hugely important. Where does social proof for UGC, how does that fit into the framework for you typically?

Brian Moncada:

Yeah, I mean, so what we found on YouTube is there's really three different styles of ads that we run. So for UGC and for social proof, after we make the proof claim, we're usually dropping one, two, maybe three testimonials right off the bat. With actual user generated content in terms of transformations. If it's in the health and fitness space, for example, or screenshots, if it's in the business coaching space, for example, with actual income or results generated and making sure that we're showing those on the screen, or as B roll, when we're talking about that big proof.

Brian Moncada:

So a lot of the time, the reason why the ads work so well, especially in our space, is because we're showing that proof. So it's very important as we're speaking about a specific claim, we show actual screenshots, we show actual B roll, especially for building up the authority of the influencer, the authority of the brand, showing them on stages speaking, showing them, working with their clients, or showing them teaching in front of their camera, their laptop, really making sure that we're showing all of the articles they've been featured in too.

Brian Moncada:

So it's really making sure all those edits are in place to prove to the viewer that this is worth spending five more seconds of your time listening to, because we're an authority figure in this space and we have this big promise and proof that can help, potentially you, and then you continue into the next part of the actual body. So huge, huge piece for us as well, and especially for you guys. I can imagine the best ads, like you were saying earlier, I can imagine how many user generated content you have access to for Viome, because I posted all my story, like, whoa, this was my gut score. This is my natural age that it tells you as well. So I was like, whoa, they could just take that and they could clip it and they could use me as a case study.

Brett:

Yeah, absolutely and they're doing that and it's beautiful and it's brilliant. So we got big proof, we're building authority, we're doing all the things you mapped out there. Love that. So pattern interrupt, big promise, big proof. What comes next?

Brian Moncada:

Yeah, reveal the new opportunity, man. Reveal the new opportunity. So well, first of all, actually, let me back up, just got to expand on the promise more. So this is where you actually go into the education. So go into the education. So you basically want to obviously show them after you build up the authority, with us and our clients... So for the actual big proof, what we do is, again... they're the face of the brand, so it's like, "My name is Brian Moncada. I'm the founder Adspend.com and our agency books our clients 25 highly qualified sales calls on their calendar every week guaranteed or their money back. We spent millions of dollars on YouTube ads. We currently manage $1.6 million a month on YouTube ads traffic alone in the high ticket coaching and course space."

Brian Moncada:

"And the biggest mistake that I see..." So now we're going into the education. "The biggest mistake that I see most people make when it comes to running YouTube ads is number one, their offer isn't packaged or positioned correctly for the YouTube ads platform. They run the same funnel with the same ads through YouTube and they just simply don't convert and they're scratching their heads, 'Why?'" So now I'm going into the education. Well, if someone has tried YouTube Ads and they haven't had success and they hear me say that, it's like, "Okay, well, I actually tried that and it didn't work." And then I get them for the next five seconds, so now you're going into education. So educate them on one to three bullet points that can actually help them right now.

Brian Moncada:

"The second reason why most people fail with YouTube ads is because the creative stuff. And the creative is how the message from the ad, the funnel, is being communicated to the viewer. So if that messaging is off or it's not enticing enough, the funnel's never going to convert and the ads are never going to get clicks to get traffic to your page. So that's why at adspend.com..." And then I go into the actual offer now, the new opportunity, what we do and I really soft CTA that. So again, just the next piece is just the education. One to three bullet points that are mistakes people are making right, mistakes or other products people use that just simply don't work and just simply are ineffective and really educating the viewer in two to three sentences max per bullet point, you can get through the ad very quickly.

Brett:

Love it, love it. And then how do you close the ad? Are there other elements then to the framework, or how are you closing out the ad?

Brian Moncada:

Yeah, so in that case, we do a soft CTA. "And if you want to learn more about this, you can click the link on or around this YouTube, ad. You'll be taken to a page that looks like this." So then you show the page, you show the landing page, you show exactly what the user-

Brett:

Let people know what they're getting into, what they're about to see. Yeah.

Brian Moncada:

Overcome the skepticism that way, because people still are afraid to click on things, which is totally understandable. So you show them the page they're going to land on, you show them what's going to happen next. And then you go back into more of the urgency, the scarcity, the twisting the knife as I like to call it, because again, if they're having a problem and they're looking for a solution, or they're in the market for a solution, you got to really make sure that you persuade them to take action to solve that problem. So we go back to urgency and scarcity now.

Brian Moncada:

And the reason why you don't want to wait to take action on this is because if you keep running Facebook ads, for example, in my case, then you're always going to be relying on one traffic source. And what happens if your traffic source or your ad account gets shut down? It's a scary thought, but this happens to a lot of our clients before they started working with us, which ultimately caused tons of stress on their business. You paint the picture of what happens if they don't actually take action right now and click to learn more. So urgency, scarcity, twist a knife, another call to action again. "So if you're someone who wants to generate 25 highly qualified appointments on your calendar using our Done For You YouTube Ad system, then click the link right now. You'll be taken to that page where you can enter your first name, your email, learn more about how our process works and speak to us to see if this is a good fit for your business."

Brian Moncada:

So that's the call to action number two, and then finally what we do is we do just a sign off. Like, "My name's Brian Moncada. I'm the founder of Adspend.com. I look forward to speaking with you very soon." So you just leave them feeling good as well.

Brett:

That's awesome. That's fantastic. And so we've kind of broken this down, but really good marketing and good advertising has always been the right message to the right person at the right time. And then YouTube can really deliver that well, almost better than any other platform. And so we've kind of broken down the right message and I love your framework and I love that you kind of... And you can tell you were the one voicing that spot because you kind of just did it here live on the podcast, which was super fun. So we talked about how to deliver that right message and we talked a little bit about audience too, because we talked about it's an intent-based platform we're going to learn or buy or research or whatever. But what are the audiences that you like to start with and how do you think about audience targeting on YouTube?

Brian Moncada:

Great question. So we use what's called intent-based validation, intent based validation and what this is a combination of different keywords and custom intent audiences. So every single time, no matter what, our agency starts with five campaigns, five campaigns that are broken up into keywords and custom intent audiences. So what custom intent is is custom intent is you typing in specific keywords in building an audience based off actual keywords. People have searched for on Google or YouTube, which is pretty insane if you think about it, because again, going back to, for example, Viome in this case, you could target people who search Viome on Google and show an ad to them the next time they're on YouTube. You can show people an ad the next time they're on YouTube if they've searched for the keyword of how to kill gnats and I could show them my ads.

Brian Moncada:

So custom intent is very, very powerful because again, it's an intent based audience. And we start with that type of targeting first, along with keywords, which keywords are also super powerful because the big thing that used to be working really well a few years ago was video placements and channel placements. And although those do still serve a purpose, what we're seeing now, especially in 2022, or even beyond if you're watching this, custom intent is just way more specific, way more profitable, especially when you're starting out because it's again it's your lowest hanging fruit first. People who are already raising their hands saying, "Hey, I have this problem," and you're showing them a solution the next time they're on YouTube. So custom intent and keywords. Those are the two types of targeting we start with always.

Brian Moncada:

And of course, not going to figure it about this one here. I normally don't mention it because it's pretty obvious, but I'll mention it anyways, remarketing, website visitors, customer lists, people who have already visited your site, but haven't taken action in your sales funnel. You want to show them ads that are specific to them to get them to take the next action in your funnel. So remarketing, keywords and custom intent. And of course, if you have a YouTube audience, meaning you have subscribers on a channel that you can remarket to as well, we always start with YouTube remarketing, actual website visitors remarketing, and then custom intent and keyword campaigns. Those are your lowest hanging fruit first. We prime your account for scale. And if those work, you can realistically be sure that if you expand out a little bit more, you'll most likely convert.

Brett:

Yeah, as you train the algorithm with those audiences and get enough conversion data, then you can really start to expand and go crazy and experience some of that scale, like we talked about, the scale that's really unique to YouTube. And yeah, I'm glad you mentioned channel actually, YouTube channel, because this is something that doesn't apply to everybody. I'd say most of the clients we talk to, especially in the e-commerce space, don't have big YouTube channels, but some do. We have a competitive barbecue client, which some of my favorite rubs and spices that they sell and so they've got this competitive barbecue YouTube channel. Well, there's a lot of people that just watch the channel for the tips. They don't know about the products, and so it's a great place then for us to target people that are subscribers, viewers of the channel and get them to buy the products.

Brett:

One thing I will underscore is that... just like you said custom intent is all about what someone is actively searching for on Google or on YouTube. And so you can enter that conversation that's taking place in someone's brain based on what they're searching for. The keyword campaigns, totally agree. We love keyword campaigns. Basically, those are contextual, so that's going to... if you type in 'gut health' as a keyword, then Google's going to put your ad by other content related to gut health. So often the way someone gets there is by searching, but sometimes people... I think I've seen it about half of the views on YouTube now come from what YouTube recommends and their suggestions and things like that. And so those keyword campaigns can be super, super powerful. So I love that combination. I would fully agree with you. Those are great places to start and then you can kind of scale from there, so that's awesome.

Brett:

Cool. Other tips or tricks or things that you'd like to tell people about YouTube, who either don't know much about YouTube or maybe they've tried it and it didn't work.

Brian Moncada:

Yeah, great question. Well, nowadays especially, with the amount of videos that are being uploaded on YouTube every single day, like you were mentioning at the very beginning of this podcast, Brett, there is no reason why if you have even a smaller e-commerce business in this case, that you shouldn't at least test a small budget to YouTube ads. There's people that can buy your product and are in the market for your solution on YouTube. And with 2022 and responsive ads, that's the new norm. So you can no longer just show your ads in stream. You have to show your ads in stream plus Google display.

Brian Moncada:

So a few extra tips for you guys, make sure when you upload your ads to YouTube, you put a thumbnail because your thumbnail, if you don't have, it's going to be seen without it and it's going to look weird. It's going to take a random screenshot from your video and put that as the thumbnail. You want to make custom thumbnails for your ads. And you also want to link your call to action, aka your landing page in your description of the video and in the first comment of the video, because if people click on your ad as what's called an in discovery ad, because there's those videos on the right of YouTube when you're watching a video that are suggested videos. And probably a lot of your clients have clicked on them, or your viewers have clicked on an ad or a video, not thinking it was an ad because it was in the suggested videos, but it turns out to be an ad.

Brian Moncada:

Now, the problem with that is if you don't have your call to action in the description, you may have a chance of losing a potential conversion there, so make sure your landing pages in the description, make sure you pin a comment on the actual ad with the landing page as well, and make sure you have a custom thumbnail that's enticing, captivating, really just intriguing for the viewer so that they click and they actually watch the ad. And ultimately-

Brett:

That's great.

Brian Moncada:

... running YouTube ads.

Brett:

Yes, yes, absolutely. So can you talk about thumbnails for a minute? How do you guys approach thumbnails? Are you mainly just looking for the right frame, the right images that will make someone click, or are you thinking about what copy to overlay on that thumbnail? Talk through kind of what you look for in a powerful thumbnail.

Brian Moncada:

Yeah, so the framework we use is if the hook of the video is a specific... Like, we use the first sentence or the main hook of the actual copy on the thumbnail. So for example, for our ads we had... The main copy of one of our ads is, "How to generate an additional six to eight figures in revenue using YouTube ads in our HSP system." So we took a copy of that and we put it in the thumbnail copy, how to generate an extra six to eight figures in revenue using HST YouTube ads. The average person, they're going to wonder what the HST system is or what HST YouTube ads are.

Brian Moncada:

Plus, we have a picture of myself in there so it's also showing them what they're going to experience. Very simply for your audience, we have five to seven words for the actual headline, which you get from the actual hook of the ad, which in your case for the Viome example we shared earlier, 'Is broccoli actually good for you?' That's the thumbnail copy right there. And the picture is probably someone that has broccoli like this looking at it. Like, I would look at something like that would be like a good enticing thumbnail. So we are customizing the thumbnail and the copy based off the hook of the ad. That's the easiest way to do it.

Brett:

Yeah. Love that. Love that so much. Well, Brian, we could keep going because this is exceptionally fun for me and it's been fun for everybody as well, but we're coming up against time. For those that have been listening and like, "Dude, I love what Brian is having to say and I would like to find out more," talk about how people can connect with you, what resources do you have and what should someone do from here.

Brian Moncada:

Yeah, great question. So the biggest and most important piece of any YouTube ad campaign is the script. You need a high converting script, especially if you already have an offer and funnel that's proven, so that's the biggest bottleneck that most of our clients experience and well, maybe you out there experience because you overthink, what do I say, how do I say it, how long does the video I have to be? And we've solved that problem by creating what's called our seven figure YouTube ads video swipe file and script template. You can get that very easily by going to adspend.com/free-download, adspend.com/free-download. And I'll send Brett the links so we can potentially put it in the notes of the episode and you guys can get that.

Brett:

Absolutely. Yeah.

Brian Moncada:

When you guys do get that, it'll give you our script template that you can literally copy and paste your answers from to create your first five, or next five, high ROI YouTube ads to start running YouTube ads immediately. Plus, you'll also get our swipe file of five proven ads that have all scaled to the seven figures in revenue path or more to get a really feel of an idea of what different industries are doing. You can see and model those same principles in your YouTube ads that we discussed today.

Brett:

Awesome. I love it, man. I am going to go download that right now. I'm always looking for... I love the idea of a script template. I love the idea of a swipe file. We've created something similar just with swipe file on the e-commerce side, so that's available at omgcommerce.com if you look at resources and guides. Check that out. It's the top YouTube ad templates and examples. But dude, I can't wait to read your guide and check that out. So I will link to Brian's guide in the show notes, check that out there. I'm sure you google it and find it as well, but I'm excited to check it out. So Brian, this has been fantastic. Any parting words of wisdom? Any final thoughts as we wrap up this chat on YouTube ads?

Brian Moncada:

I just want to say thank you, Brett, for having me on. Thank you for letting me share a little bit about YouTube ads. And I know you and I geek out about this stuff a lot anyways, so it was fun masterminding with you and sharing some values with the audience. Thank you.

Brett:

Yeah, thanks man. Thanks for coming on. And so if you need YouTube help check out Brian's agency, hit him up, get those free resources, begin that conversation. Brian, thanks, man. This was awesome.

Brian Moncada:

Thank you.

Brett:

Awesome. And as always, thank you for tuning in. We could not do this without you. It'd be a waste of time to do this without you. And so we'd love to hear feedback from you. If you have not left the review on iTunes, please do that. That helps other people find the show and hey, it makes my day. And so with that until next time. Thank you for listening.

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Episode 194

:

Ezra Firestone - BOOM

Ezra Firestone's Top 7 eCommerce Growth Strategies

No one knows more about eCommerce growth than my friend, Ezra Firestone.

No one knows more about eCommerce growth than my friend, Ezra Firestone. Arguably, no one is a more interesting interview than Ezra either. This episode does NOT disappoint. Ezra bootstrapped growth for Boom from $0 to $40mill + per year. He also recently bought another high-profile eComm brand (more on that in the show).
‍

This episode is straight fire.

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Here’s a look at what we dive into:

How Ezra is approaching email marketing and email list growth in 2022. I’m guessing you’re missing his email strategy - even if you consider yourself an email marketing pro.
How BOOM is approaching front-end offers.
Why you should consider inventing a holiday and how BOOM did just that.
How to grow your SMS list.
Plus MUCH, much more!

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Mentioned in this Episode:

Ezra Firestone

- Twitter

- Facebook

BOOM! by Cindy Joseph‍

oVertone‍

Zipify Pages‍

Smart Marketer‍

Blue Ribbon Mastermind‍

Klaviyo‍

Postscript‍

Attentive‍

Dan Kennedy‍

Jay Abraham‍

Native Deodorant‍

Northbeam‍

John Grimshaw‍

Molly Pittman‍

Train My Traffic Person

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Transcript:

Brett Curry:

So today I've got the man, the myth, the legend. He's flexing if you're watching the video. Got Ezra Firestone on the call. We're talking about eight top strategies to just blow up your business this year in a good way. We may not get to all eight, we'll see how it goes. But with that intro, Ezra, what's up, man? How you doing? And welcome to the show.

Ezra Firestone:

Brett, the Fury Curry, I'm fresh out of the cold plunge, dog. One minute, 30 seconds, 32 degrees. My whole body is red, I'm shivering, I'm shaking, we're podcasting. Happy to be here man, thanks.

Brett Curry:

It's hilarious. You hopped on the call and I was like, "Oh no, something's wrong with Ezra. He just doesn't look right." It's like, well, you just got out of a 32 degree bathtub. Of course, your body's in shock. But I appreciate taking the time to do this. And man, it's just always, always fun to chat.

Ezra Firestone:

Yeah, man. And just watching your journey, I seen you come up in the game from back in the day, when you had an SEO agency. You know?

Brett Curry:

Yeah.

Ezra Firestone:

From way back. I don't even know if it was 2008, 2009, it was a long time ago. 2010, whatever it was. And then to watch you rise to be one of the most prominent voices in the e-commerce world, and also to have a top 2% advertising agency, maybe you guys are top 1% at this point, I mean, you run all of our stuff. So it's been fun to watch your journey and just happy to be on the podcast.

Brett Curry:

Dude, thanks. It's been so fun to grow. I credit you and your community with a lot of that growth. And your approach to having fun, and doing what's right, and being extremely successful, and that blend, is awesome. Your motto, for those that don't know, is "Serve the world unselfishly and profit." And actually before we get into tactics and strategies for this year, and there's some amazing ones, can you talk a little bit about that for those that are new to the world of Ezra Firestone?

Ezra Firestone:

Yeah, I mean, I think that's a description-

Brett Curry:

... Yeah.

Ezra Firestone:

I think it's a description, not a statement. It's how I have seen things work. That when you are in a role of service, unselfishly with the goal of serving, you do profit by the very nature of serving. And it may not be monetarily. Maybe it's spiritually, mentally, emotionally, physically, energetically. But my goal is to serve. And I find joy in the act of service. I think there's a lot of value, and fun, and enjoyment, and good. And also in business, if you can truly serve a community, you will be profitable. And so I think that's just a description of how it goes. And also it's what I'm looking to do. I'm looking to serve the world unselfishly and also profit. I want to take care of my family. I want to take care of my community. I want to put resource towards causes in the world that I find noble. And I need fucking money to do that. Right?

Brett Curry:

Exactly. Yeah.

Ezra Firestone:

And the way going to get that money is by helping a group of people out with solutions to problems they have.

Brett Curry:

Yeah, I love that. If you look at, what is leadership, what does it mean to lead a company or to be a CEO, it's really serving. Serving your team more than commanding and dictating.

Ezra Firestone:

100%.

Brett Curry:

And how do build a brand, how do you build a business? It's serving a community. It's serving the needs and meeting the needs of buyers. And so, yeah. I love it. So it's really, really just-

Ezra Firestone:

Yeah. And then just because you're serving a group, doesn't mean you can't sell them stuff.

Brett Curry:

Exactly.

Ezra Firestone:

Selling them stuff is also serving them.

Brett Curry:

Because people want to buy stuff, right?

Ezra Firestone:

Yeah.

Brett Curry:

They want to have those needs met. And retail therapy is a thing too. So one of the greatest acts of service you can do, is sell a good product to the right person.

Ezra Firestone:

I'll tell you what dude. You and I both know that this last six months have been the most intense and stressful on the personal side of my life, with some health problems of some family members. And I done fucking discovered stress shopping, bro. I had never done that. I'm not a guy who buys shit that I just don't need or want. I'm willing to buy things. I have a lot of money, and I didn't come from money. I now have more money than basically everyone that I know, and I'm not against purchasing things. But I usually purchase things that I really like. I'll buy a nice espresso machine, or I'll buy a nice skateboard.

Brett Curry:

Which I've had espresso from that espresso machine. And you pull a mean shot of espresso, my friend.

Ezra Firestone:

Yeah. I will spend money happily on things that are enjoyable and that I will use, but I don't just buy frivolously, until now, dude. I bought six pairs of the same Chelsea boot. When I turned around, I was like, "What? I have lost my mind, dude." This is stress shopping.

Brett Curry:

Why did I buy this?

Ezra Firestone:

Yeah.

Brett Curry:

I think one time I was on a call with you and you just recently bought like a samurai sword or something. I don't think it was actually a samurai sword, but it was some kind of sword.

Ezra Firestone:

A katana. Yeah, it was a Japanese katana. I use it to chop wood for my sweat lodge. So that was actually a useful tool. It's good for chopping kindling.

Brett Curry:

Yeah. That's awesome, man. Super fun. So people are buying right now. The economy's pretty hot, and certainly there are some issues too. But people are buying stuff. So let's dive in. You recently wrote a blog post, which I'm going to link to, so you can see this in the show notes, talking about eight top growth strategies. And first of all, for those that don't know the journey, talk about Boom by Cindy Joseph and how it's grown.

Ezra Firestone:

(singing)

Brett Curry:

Because you guys are set to do about 40 million this year, right?

Ezra Firestone:

So I started this brand in 2010. Took me to 2014 to make my first million dollar a year in total revenue. By 2016, I was doing 17 million. This last year, I did 42. This year I think I'll do 47. Top line revenue at about a 25% EBIDA margin, so maybe making six or 7 million a year in profit on that.

Brett Curry:

Which is amazing. Amazing.

Ezra Firestone:

I got about 30 employees at that company. I also own Zipify Apps, about a $10 million a year software company. Also a couple million bucks in profit on that, maybe about 60 employees there. And I just bought a company called Overtone Color, which has about 20 team members. It'll do about 25, 30 million this year. And I got Smart Marketer too. And I'm just a guy. I didn't go to college, I have no special skills, other than that I'm a good communicator and I'm willing to put my foot down and do the work, and ask for help when I need it. And I think my story shows that if... I'm a complete failure in the eyes of the school system. They labeled me a dumb kid, and someone who was not going to be successful. And I think for anybody who doesn't fit into the mold, who maybe is dyslexic, or maybe has some reason why the general society is telling them that they can't be successful, the internet opens up an opportunity for us.

Ezra Firestone:

And there's skills that we can develop. Advertising, direct response marketing, landing page optimization, copywriting, product development, podcasting, social media, that can support us in taking care of our families. And I didn't come from resource, and so I wanted to create that. And I've been able to, and I've been doing it now for 17 years. I got pretty fucking good at it. I made every mistake you could make. I didn't pay my taxes, I did all the stupid you can do. But I did it when I was younger, and earlier in my... And I didn't have podcasts like yours to learn from. I had a bunch of creepy dudes on an internet forum who were shilling fucking gambling and porn. That was when I got into the game.

Brett Curry:

Yeah. Online marketing was a bit of a dark place back in those early days.

Ezra Firestone:

You didn't want to say you were an internet marketer. It wasn't good.

Brett Curry:

No, no, that was not prestigious. No one looked at that highly. For sure.

Ezra Firestone:

So yeah. So I've been doing it a long time now, I'm really good at it. And I've been talking about it since about 2011. I was one of the first people to start blogging about e-commerce. And by the very nature of being one of the first, I became popular. Not that I was anything special than anyone else, but I was the first to do it, and so I got real popular. And I've stayed in that space of documenting my journey. And I got a bunch of people who think it's cool, and follow what I do. And I'm pretty good at it, you know?

Brett Curry:

Yeah.

Ezra Firestone:

And I've been able to successfully train and educate, and bring up in the game, thousands and thousands of internet entrepreneurs over the years. You being one of them who I've impacted.

Brett Curry:

Big time.

Ezra Firestone:

Not that I did anything for you, other than show you what I was doing. So yeah, so I like talking about this stuff.

Brett Curry:

It's been so amazing to watch that progression as well, and getting to see behind the scenes, seeing you operate with your team. So I've been to your house and I've hung out with the inner circle of Smart Marketer and Boom. And of course we were on calls, and our agency serves you and stuff. So I've seen you in a lot of different capacities. And man, you're the same leader behind the scenes as you are on stage. You care about people on stage or one on one. You're extremely smart and strategic, and you get marketing, and you understand human in nature, and you take massive action. All kinds of stuff we can break down. So it's been really fun to observe that and get the front row seat of that as well.

Ezra Firestone:

I can also do a cool poker chip trick. Look at this.

Brett Curry:

Is that right? Oh, look at that.

Ezra Firestone:

Wait.

Brett Curry:

Look at that.

Ezra Firestone:

Hold on. Damn, that was not cool. I dropped it. Hold on.

Brett Curry:

We're going to try this again. So if you're listening, just take my word for it. He's a great poker chip-

Ezra Firestone:

My hands are frozen. My hands are frozen. We should probably get into tactics.

Brett Curry:

Do not attempt a poker chip trick out of a cold plunge.

Ezra Firestone:

People are going to be like, "Enough of this bullshit, dude. You should talk about some tactics." We should talk about some strategies.

Brett Curry:

Exactly. So here we go. So let's dive in. One thing that we've seen you guys operate on, we're running this on YouTube for you, but you're buying more email leads. So talk about that. So this is top strategy number one, buying more email leads. What does that look like, and why?

Ezra Firestone:

Dude, nobody's talking about email. Everybody's like "SMS, video ads." This and that. Well guess what has always been since I've been in the game, about 25 to 40% of my business? Literally since '05, dude. Emails.

Brett Curry:

Email. Email.

Ezra Firestone:

I've been sending motherfucking emails since 2005. And it is to this day, it'll be 36% of Boom's total revenue this year.

Brett Curry:

It's crazy.

Ezra Firestone:

And nobody-

Brett Curry:

Email touches 36% of all purchases through Boom.

Ezra Firestone:

Yeah, it's last click, dude. It's last click for 36% of my purchases.

Brett Curry:

It's awesome.

Ezra Firestone:

So why would I not be putting so much energy in growing that list? Nobody does it. Everybody just runs top of funnel video ads, conversion ads, and they hope that when somebody comes to their website, their onsite popup, or their card abandonment, or their exit intent, are going to capture the email lead for them. Great, do that. But also, you know what I'm doing? Gated content. I'm doing giveaways. I'm doing all kinds of different straight up lead generation campaigns. One of my best ones, is we use these things called pre-sell articles, which are basically articles that are story-based, like, "Five makeup tips for older women." Or "Seven makeup tips for women who wear glasses." Or "How to overcome perfectionism in your fifties." Or whatever kind of content that our community is interested in, that leads back to our products.

Ezra Firestone:

And we use those in our email auto responders, we run ads to them, we mail them to our email list. We use them everywhere. At every stage of the sales process. What we also do, is we gate them. So we put an opt-in front of it, and it says, "Hey, enter email address here to get our five makeup tips for women over 50." We run ads to that with a conversion objective for the lead event, the lead event fires on the thank you page. They enter their email address, guess where they get dropped? On the same pre-sell that I'm running at the top of the funnel.

Ezra Firestone:

But now we have their email lead, and we put them on a automation sequence, to warm them up and try to sell them. And if they don't buy, we put them on our bucket list. I also run giveaways every six weeks. And basically those are my two main top of funnel lead gen strategies, is gated content and giveaways. But I'll do Facebook lives, and I'll do other things as well. But if you just do gated content and giveaways, you should spend about five to 10% of your total marketing budget on email lead generation. Because some people take a little longer to warm up than others. So if you're only running conversion ads, you're going to miss out on growing your audience in a way that could be beneficial for you.

Brett Curry:

Yeah. I love this so much, and it's something that we've observed you doing, and something we're talking about now with other clients. That, if you can grow that email list, and if you're properly running email marketing, you're going to be able to convert that at a really high rate. And so gated content, so information people want, and/or giveaways, great ways to drive that list. And I was looking through some of your notes here. Looks like over the last 12 months you spent about 200,000 buying email leads that have then generated 750,000 in sales. So about a 375% return on add spend. That's not bad. But that's not like-

Ezra Firestone:

And that's with excluding anybody who was already on the list, dude.

Brett Curry:

What's that?

Ezra Firestone:

That's with excluding anyone who was already on the list. So those are new leads.

Brett Curry:

Just strictly new leads. So that really changes the game, because you could be looking at those campaigns and thinking, "Well, I just drove an email sign up. I didn't make a sale there, so it's not really worth a whole lot." But then you've got to look at that whole picture. What did those email subscribers do for you over the next six to 12 months? And in your case, it's a 3.75 X ROAS, which is amazing.

Ezra Firestone:

Pretty sweet. I mean, not that everyone's going to have that result, but it's worth doing, still, nonetheless.

Brett Curry:

Exactly. So, all right, awesome. So strategy number one, buy more email leads. I'm sold on that idea. Idea number two, launch new products. So talk about how Boom is approaching launching new products.

Ezra Firestone:

So to have a successful e-commerce business, you have to get your repeat customer rate up. Ideally over 30% of total revenue comes from repeat customers, people who bought from you once before. The best way to do that is to sell them more of what they already bought, if it's consumable. Or to introduce new items that they might want from you. And by the way, if somebody knows you, likes you, trust you, you're putting out content, you're engaging them, you've delivered a good product, they're going to probably want to buy whatever else you have to offer if it's tangentially related to what they bought in the first place.

Ezra Firestone:

So what we do is we send a customer survey every six months to our two X buyers, and we give them a bunch of stuff, like "If we were going to add more colors, what colors do you want? If you could wave a magic wand, what products would you have us create?" We have a 20 question survey. We say, "Hey, five people who take this survey are going to win $100 gift certificate to the store". We get a couple thousand responses. Based on that, we figure out what products to make next, based on the desire of our community.

Brett Curry:

That creates your product roadmap.

Ezra Firestone:

As an example, 50% of people wanted a mascara, 46% of people wanted a lip gloss, and 53% of people wanted an additional color of Boomstick. We released all three of those products last year, based on that information. They were our three best product launches ever. We just released the Boomstick color last week, we sold 15,000 units in 18 hours. 650 grand in revenue in 18 hours.

Brett Curry:

Whoa. Wait, wait, wait, wait, wait. Say that again. You sold what?

Ezra Firestone:

We sold 15,000 units in 18 hours, dude. We sold out. 650 grand in 18 hours. Now of course I've got a mature company, but the point is that this process gets better over time. So when you're developing a new product, you're doing it in desire to your past customers, in relationship to their desire. And for us, you have componentry, formulation, and secondary packaging. So componentry is like, what is the component that it's going to go in? Well, the Boomstick, we already have that. That's great, we'll reuse the component we already have. The formula is, what is it going to be, why is it going to be that way, what are the benchmarks other brands are doing that we want to meet? We go through a bunch of iterations, we send it out to our best customers to test. It takes us about six months to a year to develop a formula.

Ezra Firestone:

And then our secondary packaging, is what is the box, what's the write alongs, what are the inserts? We get all that together, we run a photo shoot for it. And then we do an early bird. "Hey, we're going to launch this new product. This is what it is. Get excited, sign up for it to hear about it first." And then what happens is, as they're signing up, and as they're posting on social about it on the thread, we're finding out what they want to know. They're asking, "Is it hypoallergenic?" And we're like, "Oh shit, we don't have hypoallergenic on the sales page. It is hypo allergenic." So we add that to the sales page. The questions they ask, they become the FAQs that we put on the... So we use the pre-launch as a way to build out the marketing material. Build out the FAQ, build out the sales page.

Ezra Firestone:

And then we launch it, run ads to it, do emails to it. And then it becomes part of our ongoing marketing. Put it in bundles. And you can do this too with products you already have. So you can reformulate them to make them better than they already are. Based on feedback, you can change the componentry or packaging, make it more sustainable. You can bundle it with other items to make a kit. So you can renew and make better products you already have, and relaunch them, as well as introducing new items. But for us, we are aiming to introduce four new items a year, which is once a quarter, which is hard to do.

Brett Curry:

That's aggressive. That's one a quarter.

Ezra Firestone:

It's hard to do when you're making them all from scratch.

Brett Curry:

It's hard to do, yeah.

Ezra Firestone:

But it's a huge, huge part of the business. So yeah, it's really important to continually making the products better.

Brett Curry:

Yeah. And it's interesting that it's also fairly risky, too, to launch a new product. Will it go well, will it not go well? But the approach you're taking, it really eliminates a lot of the risk. You know that if you deliver a good product, which you guys do, you know how to do that, you're delivering exactly what someone is requesting, and exactly what someone wants.

Ezra Firestone:

Yeah, and they also then can become a new top of funnel sales processes. So we can run top of funnel ads now. So for our mascara, I mean, that's our second best seller of all time, and we can run it at the top of the funnel because everybody's interested in mascara. And we didn't have one before. So we couldn't run ads for it at the top of the funnel. So we were missing a customer acquisition funnel there that we were able to add to the business.

Brett Curry:

Love it. And so then this actually directly ties into it. So this is strategy number three. Create more front end offers. So talk about that and how that's evolved for Boom, more front end offers.

Ezra Firestone:

I think that's mature business strategy. For Boom, we did 10 years where we had one front end offer, which was our Boomstick trio.

Brett Curry:

Yeah. Boomstick.

Ezra Firestone:

And all of our social proof, all of our sales funnel optimization, all of our pre-sales, all of our video ads, all of our email sequences, everything was about that front end offer. Just make that as deep as possible. Have marketing assets for it, loyalty assets for it. Just really work on that and scale that. And that's a lot easier to go deep rather than wide. And a lot of people have a thousand skews, and they can't do that. Like with this product, this brand, I bought, Overtone, I got a hundred skews. So it's hard for me to have one front end funnel.

Ezra Firestone:

But for low skew e-commerce, it's easy. You just pick whatever your widest and best seller, and most relevant seller is, and just focus on that. But once you scale that, now you got to start introducing new front end offers. There's only so many people who are interested in a multipurpose blush stick. Some people aren't interested in blush, but they're interested in mascara, or lip gloss, or brow gel, or whatever. So we've now introduced a bunch more products to the... You're right, my voice is kind of frozen. It's funny, I sound like a frog.

Brett Curry:

You're good, dude. Hey, you're so you're bringing the fire, even though I'm feeling cold for you.

Ezra Firestone:

I usually have such a rich, deep voice, man. Anyways, it gives us the ability to have more fish hooks in the sea.

Brett Curry:

Yeah. Love it. Love it. Let's go on to the next one, and this is related to number one, but this is now strategy number four.

Ezra Firestone:

By the way, another front end funnel is one of those lead gen funnels, too. Even if it's leading to the same product.

Brett Curry:

Yes.

Ezra Firestone:

It's a new top of funnel way of getting people in the mix. That's a new funnel. It doesn't have to be a new product.

Brett Curry:

Totally. And so looking at that, and what we've observed, working with Boom, working with other successful brands, is that a lot of them have one to three really successful top end funnels that they just push hard on, almost forever. And then with some tweaking and changing, and then you've got all your backend stuff as well. So, yeah. Really, really good. So let's talk then about strategy number four, growing your SMS subscribers. So diving into text based marketing. So, tips or suggestions you would give there for growing that list and utilizing SMS?

Ezra Firestone:

I mean, the 80/20 of SMS is this. Have the collection at checkout, where you're collecting people who check out from you, who click the little box to be collected. And have a two step opt in. First, get the email, second, incentivize for the SMS. So they come to your site, you say, "Hey, get 10% off, entering your email address". They enter it. "Hey, by the way, do you want an extra 5%? Give us your SMS". Klaviyo lets you do this, Postscript lets you do this, Attentive lets you do this, et cetera. Those are your two main ways to collect. And that's 85, 90% of the value. You can do other shit to collect, but it's not worth it. Just do that. And then when you send an abandoned card email and they don't open after 18 hours, slide a text in there, via Klaviyo. So connect it to your email logic, and do your-

Brett Curry:

Is that usually the way you do it, where you'll email first? And then if there's no response there, then you text?

Ezra Firestone:

Always. Yeah, because SMS is more expensive. So we'll use it as a... And you can only do this if you're using Klaviyo, because it talks to it. You can't have Attentive in Klaviyo, because they don't talk to each other. So if you're using Klaviyo, Klaviyo's a little more expensive for SMS, but if you're doing it the way I do, it doesn't matter, because you're only using it as a... You know? You're using it as a way to capture the people who aren't responding to email. Instead of just blasting them with both, and spending the money for that. So, if they don't respond to the card email, we'll slide an SMS. If we go purchase email, they don't cross-sell, we'll slide an SMS. And then once a week, you broadcast your bucket list with a piece of content or a sale. That's it. That's all you need to do. Have an opt in pre purchase, have an opt in at checkout, use it in your automation sequences, do one broadcast a week, your solid potato salad, you have 85% of the value you can get from SMS.

Brett Curry:

Yeah. You really go beyond that, it's just going to be tiny little gains. And potentially a difference-

Ezra Firestone:

It's not worth it. It's not worth it.

Brett Curry:

Not worth it. Not worth the effort.

Ezra Firestone:

Just spend your energy acquiring more customers.

Brett Curry:

Yeah, totally. And so those weekly broadcast on SMS, are you doing a mix of promotions and content?

Ezra Firestone:

So those will be content. The best piece of content from the week will drop via the SMS. And then if we're running a sale, that week, we won't send content, we'll send about the sale.

Brett Curry:

And your best piece of content pulling from the way Boom is doing it, it's based on blog, is that right? So you're writing blogs weekly or something?

Ezra Firestone:

We send three pieces of content to our list every week. Maybe it's a long form article, maybe it's a user generated content video, maybe it's a recap from a Facebook live we did. Whatever. We're sending content every week, at least three pieces, long form written articles, videos, user generated content. We've got a whole social media content engagement system. And so whatever worked the best that week, we'll drop to the SMS list. And then every six-

Brett Curry:

Nice. So you're emailing that content initially. So you're emailing-

Ezra Firestone:

Yeah, we're emailing that, we're posting it to the blog, we're posting out to social, we're amplifying it. We're doing the whole system. And then the best shit, we drop to the list, which links over to the blog. And we drop to the SMS list. And then every six weeks we're running a product launch or a sale. So that sixth week will be a promotion via SMS.

Brett Curry:

Got it. And anything you can say about response rates, metrics? How is SMS working in comparison to email? I know it's just designed to be a compliment to email, but anything you can say about stats, performance?

Ezra Firestone:

Yeah, I mean, SMS gets better response rates, but you have smaller lists. And you get way more unsubscribes. So it's-

Brett Curry:

And you got to be really careful about spam related stuff.

Ezra Firestone:

Yeah.

Brett Curry:

People get pretty hot on-

Ezra Firestone:

Yeah. Yeah. There's a lot you got to worry about with that. But basically it works really well, and you should use it as a compliment, and not instead of... And you should do what I'm talking about, which is basically 80/20 it.

Brett Curry:

Not really standalone. You're not going to just be like, "Hey, SMS is my one strategy."

Ezra Firestone:

Some brands do. Some brands do. But I think if you ignore email, what are we doing?

Brett Curry:

Right. For most people, it's just a beautiful compliment, and a way to really increase the effectiveness of email. But it is a compliment. Awesome. So now we're going to move into strategy number five. I actually love this one. I love all of them, this is all gold. But this is something that was kind of an aha moment for me. I first heard about a strategy like this, it was made be Dan Kennedy back in the day, maybe Jay Abraham. I go way back, man, looking at marketing stuff. But you're talking about inventing a holiday. So there's this idea that people need a reason why. They need a reason why I should buy now, they need a reason why your product is better. And sometimes an invented holiday is a great reason why you should buy now. So, talk about invented holidays, and talk about what you're doing at Boom.

Ezra Firestone:

So excuses to communicate are important. And we take everyone we can. We communicate on Earth Day, we communicate on Animal Friendly Day, we communicate on National Dog Day. Because people like that kind of shit.

Brett Curry:

They do. People like it.

Ezra Firestone:

And everybody has a dog, and everybody likes the earth, and so on and so forth. And we do too. And so we are always doing emails like that. Like, "Hey, it's Earth Day. And you know what? We care a lot about sustainability. And these are our most sustainable products, for these reasons." And whatever. And so we're constantly mailing on using the fake or created holidays as a reason to communicate on social and on email. And so we made up our own. We made Pro-Age Month. We are the first people to say pro-age. Now it's a commonly known thing. Now you've got a million knock brands, but we spent 40 million over six years, popularizing the concept of pro-age, back in 2010. And now Allure is stealing it, and it's like we have penetrated the mainstream with this.

Brett Curry:

It's awesome.

Ezra Firestone:

We've entered the zeitgeist with this concept. And so now it's a thing. And so we want to claim ownership of that, because we do own it. You don't never own an idea, but we created that movement. And so we created Pro-Age Month. And the month of August is Pro-Age Month. And we tell pro-age stories, and we've got a logo for it. And we are claiming our rights to the pro-age movement. The pro-age revolution that we started in 2010. And a good way to do that, was to create a holiday around it.

Brett Curry:

Create a holiday, create a month, and people love that. And it's such a great conversation starter and connection point. And if you think about one of the big components of building a brand, is just building that connection and that community. And sometimes odd or unusual holidays do that. And inventing your own holiday, I think it's brilliant. I think more people should look at it. And I think a lot of brands lend themselves well. Maybe it's not pro-age for you, and Ezra owns that anyway, so back off, really. Seriously.

Ezra Firestone:

I mean, whatever. You could say pro-age if you believe in that. What I find, is most people say pro-age and they don't actually know what it means. Which is hilarious. They'll be like, "Pro-age..." this or that. And then they'll have anti-aging skin drops.

Brett Curry:

Yeah. "But cover your gray, and no more wrinkles." Yeah, yeah.

Ezra Firestone:

You've missed the point here.

Brett Curry:

Yeah. Yeah. But inventing a holiday, pure gold, I love it. Anybody can do it. And so highly recommend that as well. So we're getting tied on time, so we're going to have to maybe move rapid fire through some of these or just save some of them for the blog. But number six is, list products on Amazon.

Ezra Firestone:

Yeah.

Brett Curry:

What are you guys doing there for your brands? Talk about that a little bit.

Ezra Firestone:

Amazon will make up 20 to 30% of a good brand's sales. And you're going to miss those customers if you're not over there. And our-

Brett Curry:

Because some people only buy on Amazon. That's just it.

Ezra Firestone:

I mean, yeah. And we waited 10 years to put our products on Amazon, because we could fill the demand that we had with... Our supply chain could barely fill the demand we had from direct to consumer. But once we beefed up our supply chain, and we realized that adding to Amazon wasn't going to cannibalize our direct to consumer platform, we added our main product on there, and it just crushed. It just added 10 to 15% of incremental sales.

Brett Curry:

Immediately. Yeah.

Ezra Firestone:

So now we're adding every one of our products, once every two months, onto Amazon. You guys are running all of our ads over there, doing all of our A plus lists. All we do is do the customer support, and create the assets for the page. You guys literally do everything else. You run all the ads, you optimize all the pages, you handle all the seller support. You do fucking everything for us. So it's great for us, because it's a channel that really works, that we don't really have the expertise for, that you just do for us. I mean, we pay you for it, but probably not what you should get paid. Because I think you give us a deal. But-

Brett Curry:

We do. We do. But, gladly. We gladly give you that deal, for sure.

Ezra Firestone:

Yeah. So it's been really good for us.

Brett Curry:

Yeah, it's been amazing, it's been fun to execute on our end for sure. And one thing we noticed with you, we noticed this with native ... as well, client, friends. And we don't run their Amazon, but we observe. We run their Google and YouTube. Is that there's some expectation that when you launch on Amazon, there's going to be some cannibalization of your store's sales. And certainly that happens some, but this has been mostly incremental growth for you guys, right?

Ezra Firestone:

100% incremental. There's been no cannibalization whatsoever. Which is crazy, because I was sure there was going to be. We sell it at the same price, and some people just like to buy over there. And I think what was happening was a lot of people were seeing our ads on Facebook, going to buy on Amazon, not finding it, and then buying knockoff brands. Because they only buy on Amazon.

Brett Curry:

Buying something else. Buy knockoff. Yeah, we experienced that. That'd be a topic for another podcast. The copycats and the people that were...

Ezra Firestone:

...

Brett Curry:

... really leeching off of your brand name on Amazon.

Ezra Firestone:

Nightmare.

Brett Curry:

But yeah, nightmare for sure. For sure. But we're getting there. So yeah, big believer in Amazon. And what's interesting to me, and this is where Boom and Overtone are set up perfectly for Amazon, is that success on Amazon in the long term, and I think even right now, is based on building a brand. So taking the community building aspect, the brand building aspect that you're doing off Amazon, and do that on Amazon, that's where you see long term success. It's not just hacking the titles and the keywords, and the bullet points, to try to inflate your ranking, or using super URLs, or some other strategy to hack your ranking, but building a real brand.

Brett Curry:

And that's what you guys are good at, and that's what we're helping you with. And it's working. It's working on Amazon right now. So let's talk, and this will probably be our final concept for the podcast, and I'll push the final one, people to go check out on the blog post. But the seventh strategy for growth, is advertising on television. TV? What? Come on now. So what are your thoughts on TV? And this has been fun to watch too, but what are your thoughts on advertising on television?

Ezra Firestone:

I think it's really only for very, very, very mature brands. Because the minimum that you need to do it is 350 grand. Minimum. Just to test. And that's a two month test. And you also have to produce television quality ads. Now we were able to use user generated content. We spent 50 grand on a TV commercial produced by a fancy agency, and at flopped all crazy. And then we made our own ad, based on UGC that we had. And we crushed. So we're much better direct response advertisers than these TV agencies, it turns out. Which we should've known, because we've been fucking running direct response ads for 15 years. Makes sense we would know what would work, versus what they produced. Even though what they produced, it was a whole... We could talk about that another time. It wasn't very good.

Brett Curry:

Yeah. Yeah.

Ezra Firestone:

But it's hard to tell how successful TV has been for us. We've spent about half a million dollars over the course of six months, and I think incrementally, it has been successful. But we're having Northbeam, which is a company you hooked us up with.

Brett Curry:

Shout out to Northbeam, Austin, and the folks there.

Ezra Firestone:

We just turned it off, and looks like sales are down 15K a day since we turned off TV. We'll see. I think TV is great for omnichannel presence. If you're spending three, four, 500K a month on social media ads, you should add in TV at 10, 15% of your budget, to reach more people, and reach the people that you're reaching on social in a different area. And for us, we just turned it off to see how it's going to impact whether we run it or not. And so we're still trying to figure out the attribution on it, and how well it's working. But our sense is that it worked pretty well.

Brett Curry:

Yeah. And that's a great way to test it. Turn it off, see what the impact is there. And it also helps tremendously to have a tool like Northbeam, third party attribution. Brilliant stuff, check it out. And we're seeing some similar things. So first of all, I got my start in TV, radio, print. So I still really like TV. I'm still involved in local TV just a little bit with a friend of mine. But I love this strategy. I think it is for bigger brands. But yeah, if you're spending multi six figures on Facebook ads, YouTube ads, then TV may be something that you check out. But along a similar vein, we're testing now, we tested it with Boom and with a few other clients. Creating some awareness, we call it awareness layer YouTube campaigns.

Brett Curry:

And again, you kind of need something like Northbeam in place, to really see the impact of this. But the idea there, is as well we're just going for low cost engagement, low cost views. We're seeing CPMs for some of these awareness level YouTube campaigns at six bucks, five bucks, which is crazy low. But there's something to be said, and this is marketing 101, old school stuff. If you talk to the right people enough times, with a right message, so right message, right market, right media, you're going to get results. And so obviously you got to be ready for it with budget, and you have to have the tracking in place to really make good use of it. But I love that you guys are testing TV. And I also love the fact that it wasn't the super duper polished stuff that worked. It was what we do. The UGC stuff that did well on TV, too.

Ezra Firestone:

Yeah. It was UGC. And we started doing video view advertising on Facebook, when iOS 14.5 happened, because Facebook lost all its data. So we started running video view campaigns to all the audiences that we used to run conversion campaigns to, to let Facebook build up some data of the people who watched most of our videos. And then we would follow up with those people and run conversion ads to them. And now we're doing that with YouTube as well. And I think that strategy post iOS 14.5 on both networks, where you spend a thousand bucks a day at our scale, running video views, or maybe 10% of your overall spend, is a great strategy. We're doing it at Overtone too.

Brett Curry:

Yeah, that's awesome. Well, this has been amazing, Ezra. So that's seven of the eight tips. Hey, to get that eighth tip, check out the show notes, go check out Ezra's blog, smartmarketer.com, and get that final one. But Ezra, as people are listening, I know we got some super fans-

Ezra Firestone:

I'm cold, man. I'm cold. That's what's going on.

Brett Curry:

You're cold. Then yeah, you need to go warm up, dude.

Ezra Firestone:

I do. I need ...

Brett Curry:

Get your robe, get your blanket, go sit by the fire, or something like that. But for those that are listening and thinking, "I need more Ezra Firestone in my life." How can they connect with you, where should they learn more about you? Where should they do that?

Ezra Firestone:

I'm on Instagram @ezrafirestone, I'm on Twitter @ezrafirestone, I'm on Facebook, Facebook.com/MeetEzra. I'm on smartmarketer.com, which is a blog that I have, I'm on zipify.com, which are my apps for Shopify. But you can find me on social media. I'm on YouTube, all the social media networks. Whatever ones you use, I'm there. You can Google me on there or search me on there. And yeah. Thanks for hanging out, hope it's been some kind of helpful. Appreciate you, Brett. I love that you're between two ferns over there.

Brett Curry:

That's a hilarious show. And you're not the first person to say that. They're like, "Dude, are you between two ferns here? Are you Zach Galifianakis or what? What are you doing?" I'm a little more courteous to my guests and a little more on topic, but that show is hilarious.

Ezra Firestone:

It's awesome, dude.

Brett Curry:

But another plug that I'll make here as I'm sitting between two ferns, is, do check out Smart Marketer. Molly Pittman, John Grimshaw, running that with Ezra's leadership, Ezra started it. But some amazing resources there. Train My Traffic Person. So if you got in-house media buyers, you need to send them through Train My Traffic Person. You get to learn from me too, I'm a faculty member there teaching YouTube and teaching Google. But check that out, smartmarketer.com. Highly, Highly recommend it.

Ezra Firestone:

Thank y'all.

Brett Curry:

Awesome. Ezra, appreciate it, brother. This has been amazing, thank you so much. And see you next time.

Ezra Firestone:

Talk soon.

‍

Episode 193

:

Miki Agrawal - Tushy

Disruptive Marketing and Building Edgy, On-Brand and Fridge-Worthy Ads with Miki Agrawal of Tushy

I’ve never met anyone quite like Miki Agrawal.

‍
She’s incredibly creative. No really. She once hosted a “funeral for a tree” at an old cathedral in NYC hosted by comedians and actors. It drew a crowd of thousands, generated millions in free press, and helped shed light on the toilet paper waste that her company TUSHY can help solve.
She understands trends in marketing. She knows how to grab attention. So much so that she was banned by the NY transit authority from running subway ads. Which led to a PR fight that she won…and in the end, got more press and attention than if they hadn’t been banned.

‍
She’s also warm and kind and FUN.

‍
She’s created multiple 9-Figure businesses and has garnered some pretty incredible recognition. She was named “Fast Company’s Most Creative People”, “Young Global Leader” by the World Economic Forum and INC’s “Most Impressive Women Entrepreneurs”.

‍
She’s also the author of #1 best selling books Do Cool SH*T and Disrupt-HER.

‍
In this episode we unpack Miki’s wacky, impossible-to-forget and wildly successful marketing strategies and tactics.
Here’s a look at what we cover:

How Miki was banned from advertising on the NYC subway and turned that into a huge PR win for her brand THINX.
How to use Accessible + Relatable language.
How to create ads that are both effective and “fridge worthy”.
How iteration is perfection.
How to start with play to create great ideas.

‍

Mentioned in this Episode:

Miki Agrawal

- Link Tree to Resources

TUSHY

Thinx

Wild

“Do Cool Sh*t” by Miki Agrawal

“Disrupt-Her” by Miki Agrawal

“Zero To $100 Million” on Mindvalley

Cap Con 5

Ryan Daniel Moran

Toto

“Funeral for a Tree” by TUSHY video on YouTube

Butt Con by TUSHY

Transcript:

Brett:

Welcome to the Spicy Curry Podcast. We explore hot topics on eCommerce and digital marketing. We feel feature some of the brightest minds, with some of the SPT perspectives on what it takes to grow your business. Season one of this podcast is built on the old business adage that, what it really takes to succeed is three things. One: have something good to say. Two: say it well. And three: say it often.

Brett:

My guest in this episode is Miki Agrawal. She's the founder of TUSHY, but she's also the entrepreneur behind several other wildly successful companies. I don't know anyone better than Miki at the, have something good to say and say it well, aspects of growth. And so just a couple of accolades. Miki was named one of Fast Company's Most Creative People. She was also named by Inc Magazine as one of the Most Impressive Women Entrepreneurs. She was also my favorite speaker, and she's also one of the favorite speakers that most of the events that she attends.

Brett:

We're going to dive into some crazy wild stories from her entrepreneur journeys. We're going to learn why she was banned by the New York subway from running ads there, and how she actually overcame that and then ran some pretty powerful ads on the New York subway system. We're going to talk about how she creates events that are just, blow your mind. Like, they had a funeral for a tree, and there's a reason why they did that and got millions of dollars in free press. And she talks about how to craft things that are both artful and fridge worthy, but also effective. And so, I think you're going to absolutely love this interview. And so, lean in, buckle up and enjoy this interview with Miki Agrawal.

Brett:

Over 81% of consumers are opted into text message messages from their favorite brands, and that's where Attentive comes in. Meet Attentive, the company helping thousands of innovative brands connect with their customers through personalized text messaging. Attentive's text marketing platform lets you grow your subscriber list, interact with customers in real time through two-way conversations and drive the war revenue. Brands who use Attentive see $55 in sales for every $1 they spend. See what Attentive can do for you, at attentivemobile.com/omgcommerce. Attentive: drive sales with text message marketing.

Brett:

All right, well today I am abs absolutely thrilled that my guest is Miki Agrawal. Now, I was recently at an event, CapCon 5 in Austin, Texas. My good friend, Ryan Daniel Moran was the host. And there was a star-studded lineup of speakers. Amazing, blow your mind speakers. And I got to say, Miki was probably my favorite. And I hope that some of my other friends that were speaking don't hear this, because I don't want to hurt their feelings. It's just that Miki was amazing. And so, Miki is the founder of a number of really transformative businesses. Most recently, TUSHY. Also, THINX and WILD. She's also author of some amazing best-selling books. Do Cool Sh*t. Disrupt-Her, which I'm actually in the process, I've gone about halfway through it right now. And even though it has "her" in the title, Disrupt-Her, instead of disruptor, it's for dudes too. Right, Miki? And so, I'm actually getting a lot of value out of it. And so, we're going to talk about growth and having an amazing marketing message, and thinking differently and all kinds of great stuff. So Miki, welcome to the show, and how's it going?

Miki:

Yes. I'm so happy to be here with you. And just, the thing that I just can't, I'm just so like, I love is that you have eight children, and you're sitting at the table with 10 people every night for dinner. That just blows my mind.

Brett:

Yeah. The level of noise at the dinner table is sometimes crazy. And we do this thing called highs and lows, where everybody goes around and tells their high of the day. You have to have a high of the day, you don't have to have a low of the day if you don't want to, but it is required to have a high. And the noise level is crazy, but it's also super fun.

Miki:

I love that you do that. That's beautiful, that's amazing.

Brett:

Yeah. So, part of what attracted me to you, Miki, and why I was so thrilled to chat with you afterwards. Is one, you're a master marketer. And the way you craft messages and the way you get attention, it's mind blowing, which is awesome. But you're also like, you believe in strong women, right? And I've got six daughters and I just, I want them to conquer the world. That's probably a weird thing to say, but I want them to just do whatever they feel led and whatever they feel passionate about doing. And so, love the energy you bring and the inspiration you're bringing to young women as well.

Miki:

Six daughters. I mean, it's just, yeah. Like, I think about the food bill just for that dinner, just for those meals, just now. It's just [crosstalk 00:05:10].

Brett:

The food bill is crazy. So I'm happy to talk about that with anyone offline. Yeah. So, when you include groceries and eating out, it's a median household income. It's a lot of money, yeah. But grateful to be able to do it. I wouldn't have it any other way, but it is completely [crosstalk 00:05:28].

Miki:

I love it.

Brett:

So yeah, it's awesome. Well, let's talk about a few things. So if you would Miki, give people kind of just the quick background on you. Because we're going to dig into some of the specific messages that you use at TUSHY and things like that. But give people the background. Like, how did you become this, because not only were you my favorite speaker at CapCon, but I've seen, you were voted best speaker at Inc and Fast Company, and some of these other big events. Everybody loves what you have to say. So really, how did you get here?

Miki:

Well, I'm one of three children, and the interesting fun fact about the three of us is that we are all born within one year. So I have an identical twin sister. The third sister, who's 11 months older. So we're actually, we're Irish twins.

Brett:

Yeah, Irish twins and identical twins [crosstalk 00:06:18].

Miki:

Irish triplets.

Brett:

Okay.

Miki:

So we're twins, plus Irish triplets, yeah.

Brett:

It's insane.

Miki:

Yeah. And then we grew up to a Japanese mother and Indian father. So my mother's from Japan, speaks with a thick Japanese accent. My dad is from India, speaks with a very thick Indian accent.

Brett:

I'm doing the audio book of Disrupt-Her. And you do the Indian accent for your dad, an it's just amazing. You do such a good job, yeah.

Miki:

But yeah, his most, the thing they always say is, he says, when he meets somebody, he goes, "Very good vibes". Or, "Very bad vibes." And immediately, because yeah, he can sniff people out just by "their vibes".

Brett:

By "their vibes", okay, I love that.

Miki:

By "their vibes".

Brett:

That's awesome.

Miki:

Yeah. And I grew up in Montreal, Canada. In French Montreal, in the south shore of Montreal. In a town called [foreign language 00:07:12]. And it's like, I grew up in French, like literally, we were the token Asians in the most French neighborhood ever. And so, it was really beautiful to grow up in this true mosaic of cultures. Japan, India, French, American. And then of course, Canada attracts so many, I mean, every culture, every religion, and they're all celebrated. And so of course, growing up in a household of just diversity and then going to school with just all diverse kids, I think we just learned to question everything. And to look at things from different angles. To be like, oh, this is how the Indians look at it, this is how the Japanese look it, how the French look at it, and the Americans look at it, this is how the Canadians look at it.

Brett:

It forces a fresh perspective, rather than just everybody being the same.

Miki:

Totally. So it's a mosaic versus melting pot thinking. And I think that that mosaic thinking creates beautiful picture. When you think about a mosaic image, and it's just this, all these colors and all these textures, and all of the different historical context of things, creates a different frame than just a single pain. So I think I was very blessed in just being born where I was born, to be given the various perspectives. To not just be like, okay, this is the way it is. It's like, wait, is this, or should I question it? And is there a better way, or is there more thoughtful way? Or that kind of thing.

Brett:

When did you realize that, hey, I might be an entrepreneur? Or have you ever? Like, is that really a conscious thought? Like, when did you think, hey, I'm going to build companies? And not just companies, but wildly successful and disruptive companies.

Miki:

Yeah. I mean, I think I'm just genuinely unemployable. I think I'm just like, you're not my Indian father. That kind of vibes. Where like, anytime someone told me what to do, blood would rush to my head and I would just get really frustrated. I would, I don't know, get triggered or something. But no, I think I just always beat to my own drum. And I think because of this questioning, because of this philosophy of looking at things from different perspectives, I think I just always had different ideas that I wanted to put out in the world. That entrepreneurship, when it was introduced to me, I remember, I'll never forget. I met my very first entrepreneur, standing in line in New York City when I was 22 years old, at this Armani party.

Miki:

I was invited to my very first VIP door, or whatever. [crosstalk 00:09:47] And I was like, oh my God, I'm so cool. It was like, Armani. You know, whatever. Back when it was really cool to go to those things. And I remember standing in line, and in front of me was this gentleman who I'd met. And his name was Graham, and he's now since become one of my dearest friends. But I met him randomly, standing in line in front of me then. I was 22, and he was in his mid-thirties when I met him. And I was like, "oh". Like, "What are you up to?"

Miki:

And he's like, "I'm an entrepreneur."

Miki:

And I was like, "What do you mean?"

Miki:

And he is like, "I have my own business." And this is, by the way, in 2001, when entrepreneurship wasn't a school thing. Nobody was getting invested in, it wasn't a thing. I mean, Facebook wasn't even there until 2006.

Brett:

Now it's super trendy. Everybody wants to say entrepreneur, stamped that on their [crosstalk 00:10:33].

Miki:

Now, everyone. But back then, nobody. It was doctor, lawyer, investment banker, management consultant. Going to work for a company. Becoming a whatever at a company. Becoming a person who starts a business was just not even in the lexicon, in the zeitgeist of culture back then.

Miki:

And he was like, "I'm not in firm."

Miki:

I'm like, "What do you mean?"

Miki:

He's like, "I have my own company."

Miki:

I'm like, "Well, what do you do?"

Miki:

And he's like, "Well, I started a company called treehugger.com."

Miki:

And I was like, "Oh, that's cool."

Miki:

And he's like, "And I sold it." I think he sold it to Discovery Channel, whatever.

Miki:

And I was like, "Wow!" And then he, the next day, invited me to this brunch with a bunch of other entrepreneurs. And that's when it was my big ding, ding, ding moment. I can start my own company, I'm going to do that. And I think in life, we just get given these gifts of chance meetings. And either we kind of get opened by it or we close to it. And I was sort of just blasted open by the possibilities of that. And I think that's what really put me on the course of this new way of thinking and being, and then carrying forward.

Brett:

That's amazing. And I do want to, let's give kind of a brief overview of some of the companies. Just to give people some texture and some more context. So your mind was blown, and you're thinking, I could do my own thing. And then you have, and you've been wildly successful. Really at, essentially, everything. But can you give a quick rundown of the companies, and what they've done?

Miki:

Yeah. Well, I will first start by saying, one of the biggest stories that changed the course my life was when I was 22. After that time, 9/11 happened, and that was a huge turning point in my life.

Brett:

Yeah, because you were an investment banker, working down on Wall Street, right?

Miki:

Yes. The World Trade center was my subway stop every single morning. And it I was working at Deutsche Bank, in investment banking. I call it douche bank.

Brett:

Wow. Someone was asking for that, honestly, right? Deutche Bank, it's so close to douche, you're going to make the jokes, yeah.

Miki:

Know what I mean? Yeah. So yeah, when I was there, yeah, 9/11 happened. I was supposed to be there, and 2 World Trade Center was my subway stop every single morning. And I would walk upstairs to 2 World Trade Center, at the cafe there. And I would get tea with my girlfriend, who worked on the 100th floor. And then I would walk across the street to my office, directly across 2 World Trade Center. And then 9/11 happened, and it was the first day of my life, the only day of my life that I slept through my alarm clock.

Brett:

That is crazy and amazing.

Miki:

Yeah. And 700 people in my girlfriend's office died on that day. Two people in my office died. It was one of those, just like, you can't make this shit up. Like, this is not a real movie, that kind of level of unfathomableness.

Brett:

Unfathomable, yeah.

Miki:

Yeah. And so that single experience, again, it's those moments that I kind of really recognize as these turning points in my life. And that was a big turning point in my life. Where I was like, wow, I could die tomorrow. And when you're 22, you don't think about death. I feel like we start thinking about death after we have children, in a lot of ways. And I'm just always making sure I'm not going to die. Do you know? And I'm sure, with your eight children, I don't even know how [inaudible 00:13:50]. You know?

Brett:

Yeah.

Miki:

But death, it's just not a thing, when you're a kid, when you're 22, you're just sort of like, whatever.

Brett:

You're usually not thinking about it at all, yeah.

Miki:

Just not thinking at all. But then, because I had this near potential death experience, and people around me died, and I was just sort of like, wow, this is a real thing. And I really felt my mortality in that moment. And it was like, wow, I got to make every single day count.

Brett:

Got to do something, yeah. We're going to blink and we're going to be 70, right? And so, what are you going to fill your time with now? Yeah.

Miki:

That's right. And so yeah, for me, it was, I wrote down three things. The first was to play soccer professionally, the second was to make movies, and the third was to start a business. And that sort of set me on sort of a total path after 9/11,.I played soccer for the New York Magic, I worked in the film industry for a couple of years, and then I started my first business, which was in the restaurant space. And so, my first business was born out of a stomach ache. We know that famous thing, necessity is the mother of invention.

Brett:

Yes, so true.

Miki:

Yeah. So the first business was born out of a stomach ache, and I couldn't eat pizza anymore. It was my favorite comfort food, but I just couldn't eat anymore because it made me bloated and gassy, and just so gross feeling after I ate it. And it was full of bleached flour, processed cheese, sugar-filled sauces, processed toppings, it was all that. And so yeah, I basically started New York City's very first gluten free alternative pizza concept. And 17 and a half years later, we're still in business. Almost 18 years this year. In November, 18 years.

Brett:

Amazing. And it's called WILD, correct?

Miki:

Called WILD. Just go to @eatdrinkwild on Instagram. We have a couple locations in New York City, and one in Guatemala.

Brett:

And [crosstalk 00:15:42] for surviving the pandemic. I couldn't imagine owning a restaurant during the pandemic in New York City. That had to been just absolutely brutal. So grateful, yeah.

Miki:

It was nuts. My partner Walid is incredible, and he's such an ingenious person. He has lots of [inaudible 00:15:57]. Where actually what we did was, we opened up, on Seamless Web, three restaurants, out of our restaurants. So during the pandemic, not only did we have our regular standard fair, but we opened up two different restaurants, working out of our kitchen. So basically, we made tacos and we did burgers, or whatever, so that people could order from us multiple times a week.

Brett:

Oh, super smart, super [crosstalk 00:16:24].

Miki:

So, take away. And not just have our gluten-free pizza stuff every week, but they would have tacos one night, and different stuff. And so we just opened three different restaurants under the same roof during the pandemic. And then we got the outdoor cafe seating. And that, our business all came back. And it was actually incredible, because it felt like a bit of Europe being in New York, with all the outdoor cafes everywhere, and people walking around with the menu. It was just, it was very romantic, very beautiful. So the rest restaurants was the very first business I learned. I think I learned so much of the thesis around people and psychology in my restaurants, that then led to building Thinks and led to building TUSHY. Both now valued over nine figures, well over nine. And so I, what I learned at WILD was, when I stood outside my restaurant for almost seven years, handing out little pieces of pizza, just handing them out.

Brett:

That's how you grew the business, was samples, yeah.

Miki:

Exactly, yeah. And getting people to try. And I would also test. Like, if I said healthy pizza, people wouldn't come. But if I said, farmed fresh, healthy farm to table pizza, people would be like, oh, what does that mean?

Brett:

Yeah. Nobody wants healthy pizza. That sounds cardboard.

Miki:

Exactly.

Brett:

But farm to table pizza, interesting. And so, you were testing out those messages as people were walking by?

Miki:

AB testing, literally like email, subject heading.

Brett:

I love that.

Miki:

You know? And it was such, seven years of, it was genuinely like double PhD in human psychology and what led people to come closer to attract them, or to kind of move them back. And it was a really interesting thing. Just by standing, literally person by person, like hand to hand combat, just really getting to know people.

Brett:

Fascinating.

Miki:

And that experience led to this thesis, understanding, that again, built THINX and TUSHY. Which was having a best in class product. Like, if someone bit into it and they're like, Ugh.

Brett:

It doesn't matter, yeah.

Miki:

[crosstalk 00:18:30] my underwear. Like tight now, I'm wearing my period-proof underwear. It was so amazing because, I started my period today, I went to my bathroom. You're like, I have six daughters, don't worry about it.

Brett:

So, it does not bother me in the least. Like, yeah, this is a common conversation around my house, yeah.

Miki:

Yeah.

Brett:

Think of the podcast first, though. First to confess on the podcast, which I embrace this, I welcome, this is awesome.

Miki:

First of all, every single human being is here because of a women's period. So, you're welcome. You know?

Brett:

Yes.

Miki:

[crosstalk 00:18:59] Be more uncomfortable. Yeah. So today, this morning, I went to the bathroom and I was kind of like, there's a little bit of blood everywhere. And so I basically sat on my toilet, used my TUSHY bidet, washed myself clean, And then put my THINX underwear on. And I was just like, ah.

Brett:

You're like, this is amazing.

Miki:

I solved my own problem twice. Just now, in this moment. And that's when I was like, yeah, this is why these businesses are doing well. Because genuinely, they truly, truly, truly solve problems that we face every single day.

Brett:

Authentically solving the problem, not just identifying a problem and kind of addressing it just for a cash grab, but you authentically solve the problem.

Miki:

Needed it, yeah. Which is why in my book, Do Cool Sh*t, I talk about the three questions I always ask myself before starting any business. The first question is, what sucks in my world? That's to start with me, a problem in my world that sucks. And then question number two is, but does it suck for a lot of people? Because if it just sucks for me, then I'm kind of a diva or whatever, and who cares. [crosstalk 00:20:04].

Miki:

And then the third question, which I think is the most important. Which is, can I be passionate about this issue, cause, or community, for a really long time. We know the saying, it takes 10 years to be an overnight success. People don't want to sit in that discomfort for a really, really long time, and then they quit or decide to leave early, and they don't kind of get through it. I think about the entrepreneurs, I think about the musicians, I think about the actors, I think about all the people in my life who've made it. And they've made it because they've kind of grinded for a really long time. And they made through it, and they just stuck with their passion, they stuck with the thing they truly believed in. And so I think, yeah, what sucks in my world, has sucked for a lot of people. Can I be passionate about this issue? I think the passion piece is the most important. [crosstalk 00:20:49]

Brett:

It's super important. And this is something I think you may have shared at CapCon already with somebody else. But, tactics without the underlying passion are worthless or it's going to be short lived. Tactics only work for so long. Like, you've got to have that passion and that drive to push through all the messy and confusing and heartache and suffering that you have to go through as a business owner. And so yeah, the passion is super, super important.

Brett:

Now, why do you think you're so attracted to difficult things to sell? So we'll start with pizza first. So, selling healthy, gluten free pizza. When you started the business, gluten free wasn't trendy. Like, gluten free wasn't a selling point. It's not something you want to stick on all your labels. Because people were like, what are you even talking about?

Miki:

Yeah. And no one was talking about farm to table, no one was talking about [crosstalk 00:21:36], no one was talking about seasonal.

Brett:

None of that.

Miki:

This is in 2003-2004. I mean, it was still super nascent, all of those conversations, it was extremely different.

Brett:

Yeah. And when you started THINX, which is period-proof underwear, no one was really talking about periods. Or, not wanting to talk about it. And maybe some people don't want to talk about now. [crosstalk 00:21:50] But yeah, you just got to get over it. But then also TUSHY, a bidet. I still remember so many conversations just as stuff started to get in the news. People were like, "Oh, bidets are nasty."

Brett:

And I'm like, "How is it nasty to use water to clean yourself versus dry paper?" But anyway, you're choosing these categories that are difficult. Like, it's new to people or taboo to people. Why do you think [crosstalk 00:22:13]?

Miki:

Well, it's a culture shift that I'm interested in. I think from a creative perspective and as a creative challenge. Like, how do you change people's behavior, is the hardest change to make. And then how, how do you utilize innovation and creativity to do that? And so I think from a creative kind of person's perspective, it's like, wow, this is a really fun challenge to tackle. How do you get someone to change their behavior when it comes to food? When it comes to habits? Daily habits that they've been doing their whole lives, not even their whole lives, but for generations. To get them to try something new, and not only try it, but adopt it fully. I mean, that is why Toto hasn't made it to America yet. That is why the tampons and pads, which were invented by men, which is fine. But not that fine, cause they're made for women. So it's just, it's like, those are the most pervasive products in the world, because it's taboo. And so, how do we enter these conversations in a way that's artful? In a way that's accessible, and we're using the best in class product?

Miki:

And I think those, my thesis that I learned from the pizza, from the restaurants was that was that, was the three prong. Prong number one is best in class product. It has to be a best in class product. It has to be a big day that, when I clip to my toilet, it actually feels good, it looks good.

Brett:

It adds to the appearance of your bathroom. Like, it makes your bathroom feel better, cleaner.

Miki:

It makes it more upscale and cool. It makes people want to bring you to their bathroom when you're having a dinner party. You know like that? Or when you're wearing THINX, like when I'm wearing my underwear right now, I feel really sexy in them. I feel really taken care of in them. I know that I'm protect, I know that this product works. So, best in class product. The pizza, when I eat it, it tastes the most delicious pizza. It doesn't even taste gluten and free, it tastes the most delicious pizza you've ever tasted. So, best in class product, no question, that is baseline. Second prong, to really shift culture, is art. Using art to really challenge conversations.

Miki:

And I talked a little bit about this at CapCon. When I remember putting our first TUSHY ads up, or our first period ads up, out in the world, whether online or offline. People's first reaction were like, wow, that's so beautiful. And then their second reaction's, oh my God, they're talking about poop, they're talking about periods. Like, oh my [crosstalk 00:24:49]. But their very first reaction was leaning into the art and the beauty of that. And I think that, that opens up people's hearts and minds. Art just does that, and for everyone at every level, does that. It opens, art just gives people something to lean into. And I think when they're leaning into something, it makes them be curious. And so the first thing is, can we design from a lens of art? So, we hired all artists, we hired all creatives. I think art is such a beautiful lens to shift people's perspective. I mean, that's why people go to museums, people look at magazines, people look at nature as art. And a place to go and really open up our souls, open up our perspectives, change the way we look and see things.

Miki:

And I think that really lends itself to giving people the space to question their existing thinking. And I think that's all we need to do, is give them that space to question, and they can make the decision for themselves. And so then, that's the artfulness, the best in class innovation.

Miki:

And then the third part is the accessible, relatable language. I think we so often want to be so heady, and so clinical, and so technical, and so medical, and so academic, and sound really smart. And make everyone feel we've been and doing all this patent pending work and whatever. And it's just like, people don't care. They want to know, does it work? Does it make me feel good? Does it support me and does it support my life? Like, what's the point of this? Like, I don't care about your terminology.

Brett:

Patent pending.

Miki:

And like, I don't care about high sounding or smart. Like, whatever. And then, I tested all of that. That was all tested. I learned that, the more we speak from our space of truth, the more we speak from our place of that lit fire inside. We talked about that at CapCon as well. The more we speak from that real, true, authentic place, people respond. Because it's real, it's true. It's not coming from like, I wonder what they want me to say? And I'm just going to say it that way. That doesn't feel good, to receive that kind of inauthentic message. Like, imagine if you're receiving a text message from a best friend. And you can tell when they're being inauthentic or they're authentic. You can tell when your sister or brother is being authentic, you can tell when your wife or husband is being inauthentic or authentic.

Miki:

And so it's just that, can we write copy, can we text, can we write our messaging in the same way as we're texting our best friend? And I think that is such an important way to think about messaging to people. Because we're just being bombarded with advertisements, with so much people shouting at us. And we don't want that. We want authentic truth, we just want that juicy truth. And I think that truth is really what, that truth, coupled with art, coupled with the right beautiful aesthetic, the right innovation that you would want to use where, on a daily basis. That together, creates change, creates culture shift. And I've seen that time and time again. Across Wild, across THINX and across TUSHY. All three of them share the same philosophy of best in class product, artful aesthetic design across every touchpoint of our brand, and accessible, relatable language across every touchpoint of the brand.

Brett:

I love it so much. And really, when you combine all of that, plus you go back to the starting point from your first book, Do Cool Sh*t, it has to be addressing something that sucks for you and sucks for a lot of people. Right? So it's got to be that. And so then, when it's addressing a real issue, and then you've got the artful design and best in class, and it works. And you got the accessible, relatable language. All that comes together and it just works.

Brett:

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Brett:

What's so interesting and what was so powerful for me. And I remember talking to the guy that was sitting next to me at CapCon, and I made a couple comments about this. I've been in the ad world for a long time. So there's the brand building space of advertising, which is interesting. There's direct response, which I followed and studied for a long time. And I've worked in the infomercial space and stuff. But you have this ability to create stuff that looks beautiful. Like, you just want to look at it. It's an ad for a bidet, but you want to look at it. But, it also kind of makes you say, I'd like to try that. Like, I would like a clean butt too. I would to do...

Brett:

Because I think sometimes people, they go too far into the art. And it's abstract, and like, I don't even know what you're trying to say to me. Or I'm talking about patent pending, and all aloof, and who cares. So, how do you strike that balance and how do you create something that's fridge-worthy? As you'd say, artful and fridge worthy. But also, that connects and makes you say, I want to buy that underwear. Or, I want to buy that bidet. How do you do that?

Miki:

Yeah. Well so first, just to quickly unpack the word fridge-worthy, for those who don't know what that term means. Fridge-worthy simply means the idea that, you know when you walk into your home, and you go to your kitchen and you see your fridge? You go out, before, you go to grab a beer or whatever from your fridge. You see your fridge, and on your fridge are emblems of your life. You see pictures of your family members, of your eight children in your 10 person family.

Brett:

They take up the whole fridge, exactly.

Miki:

Yeah [inaudible 00:31:16] all over. You have invitations to weddings, you have little postcards from family members, you have little pictures of nieces and nephews. Or whatever it is, right?

Miki:

Hi, Stan.

Miki:

And my challenge to my team has always been, can you create something so beautiful, so artful and so personal, that it can make the small real estate on your fridge? That it can really make that small personal space on your fridge, that it can take up that space. That you can make something for TUSHY or THINX so beautiful, something so cool, that it can live in your home in some way. And so we design from that lens. And from that lens that, again, hits you personally and makes you feel something.

Brett:

It does cause you to shift and think differently. Now it's not just about, well, I'm going to choose blue. Like, you're thinking about everything differently.

Miki:

Yeah. Like, what is it that's going to make, how does it make me feel? And that's a different lens to creating.

Brett:

For sure.

Miki:

Yeah.

Brett:

So then, how do you blend fridge-worthy then with some true sales power, or some power to make people say, I want to buy this.

Miki:

So I always say to my team, in the art of it, I still need to know. I mean, it depends. Like you said, there's top of funnel stuff, where you want to create intrigue and mystery. And that kind of stuff is like, if you look at our TUSHY Bellagio spot that we just shot. I just shot this ad, where I finally figured out, where my friend is this genius rigging person. And he rigged 10 toilets with bidets on them, with our TUSHY Ace bidets on them. That we can play them like a piano.

Brett:

Like the Bellagio fountains?

Miki:

Bellagio fountain.

Brett:

I got to see that, then.

Miki:

I'll share, I'll text with you right after this. It's crazy. And so basically, it plays. So we made this like, (Beethoven's 5th). And just this wildly weird thing. And we don't show you very much about it, but it just says at the tagline at the end. Which makes you mysterious and makes you want to click and see what the hell this is. So there's that mystery and intrigue, which hooks you into wanting to know more.

Brett:

It's a curiosity play, yeah.

Miki:

Pure curiosity play, pure top funnel. Just stuffing people in. And then we spend the rest of the time, really converting them to the bottom, bringing them down the funnel. Educating them on the product, the value propositions and all of that. So that's the one strategy.

Miki:

The other strategy for top of funnel. I always think about prospecting. I always think about, how do you get people to both fall in love with our brand, with our ethos, with our playfulness, with our just [foreign language 00:33:56], with our love of life? They can feel it in this thing, but they're also understanding, what is the product? How does it work? Why do I need it? So it really answers those questions. And maybe like, why do I need it?

Miki:

Like, we just shot another commercial with the singing toilets, with the kind of the playing toilets. Where, it's this very Wes Anderson, weird thing. Where it's like, five people laying, they stick their heads in the toilets at once. And they're laying on these, which kind of represents the heated seat. And then all of a sudden, we start spraying. Like, I start kind of smushing ice cream on this guy's face. And then, this one woman takes a chocolate cake and squishes it in her white glove. And then she smacks it on the ass of white pants on this guy. So it kind of represents all taking a shit, basically, the chocolate looks like shit. And then the sprays go off, and then we get clean. And it's this debaucherous clean thing. And then we press the blow dryer, and then we're getting blow dried. So you're seeing the value, of how it works. Like, you're seeing, we press the remote, and then the nozzles go off and it starts spraying. It's clean. And then you press the dry, then it just blow dries it. So you see slow-mo, the hair blow dried. We walk out frame. So you're kind of, you're getting the idea of what this thing is. But you're still intrigued, tickled. You feel good vibes, you feel "very good vibes". You know?

Brett:

You're probably laughing. You're probably like, I can't believe I'm watching this. But it's also product demonstration in a really fun and creative and crazy way, which is super cool.

Miki:

Yes. And so, it's a lot of things. And I always look at, what are our best performing ads? Our best performing ads are the edutaining ones. Ones that are hilarious, and the ones that educate. Tells you, why you need it, how it works and how to use it.

Brett:

Yeah, totally makes sense.

Miki:

You know? But in a really simple, easy way. And so, yeah, it is an art and science, and they have to go hand in hand. And, creative and marketing always do sometimes have this natural tension, but I think it's a good tension if you have the right leadership.

Brett:

It's a healthy tension.

Miki:

A healthy tension, yeah.

Brett:

Love it. So one thing you talk about a lot, and I remember you showing these examples. That, you'll use actual statements from real customers. And you also talk about campfire stories, sharing campfires stories as a team or whatever, to kind of stir up creativity. So, can you talk about that a little bit? Like, how do you use customer statements in your ads? And then, what about campfire stories?

Miki:

Yeah. So, I always think like, our best advocates are our customers, our users, who love our products. It just, it makes so much sense. And so many times, companies are scared to, they don't want to bother their customers. But if customers love it, and you're asking them, hey, just fill in the blank. THINX is blank. Or, TUSHY.

Brett:

This is my favorite, yeah. Just fill in the blank. TUSHY is, fill in the blank.

Miki:

Fill in the blank. TUSHY is, blank. Just fill in the blank. And within 24 hours, we got 1000 responses. For things specifically, it was, THINX is Mary Poppins in my pants. THINX is strength, freedom and dignity for all women. TUSHY is...

Brett:

One of them was, eye candy butt bliss. I wrote it down. I got the thing.

Miki:

Yeah, eye candy butt bliss. It's like, TUSHY: you could eat off my butt hole. You know? And just like, my rusty starfish has never been so clean. Stuff like that, where it's crazy, hilarious, random.

Brett:

Especially when you know that it was a real customer that said it. It's like, okay, that's super fun. And I'm now totally entertained by reading this.

Miki:

Yeah, by real. And we always say, name of the customer, from a real pooping human. And so, we now use these campaigns, as actual campaigns and taglines for our company. Because our customers know what's best. And we don't have to oftentimes scratch our heads to ask ourselves, what creativity can we use? We can literally just reach out to our customer base, and they'll give us, and they're delighted in giving it to us. And if they see it in the world, they'll be like, oh my God, that's my line. And they now feel even more connected.

Brett:

And then they totally will put that on the fridge. They will totally put that piece, and share with everyone they know.

Miki:

And they'll share it with all their friends, tell everyone they know. And it engages people, attracts them. The same thing with PR. I talk about that a lot. Like, we do a ton of inbound marketing, inbound PR. And we've gone viral so many different times. And it's because, again, studying the psychology of people. Like, how do you create intrigue? How do you create mystery? Where, they want to complete the storyline. So often, people are like, send press releases, and hope that the press will write about them. But it just never works. It piles up on people's desks. Versus, you send these mysterious boxes where you have to assemble this thing. Or like, unscramble a riddle. So recently, we just launched our TUSHY Ace, part of our electric bidet seat with the most beautiful remote in the world.

Brett:

It's the heated seat, right? Which by the way, if you've never experienced a heated toilet seat, it is pretty magical, it really is.

Miki:

Heated seat, warm water, blow dries your butt. Best blow dryer on the market. It's not like where you have to still use toilet paper, because this is a nice strong blow dryer. And it looks an Apple product. It's the most gorgeous remote. Our design, it's just, it's the most beautiful product. And so, we were launching this. And our team, we were like, okay, we are going to create mystery around this product. And so, we put together these deck of cards. And these deck of cards that we made, we made actual TUSHY deck of cards, designed by hand, by my designers. And we had this instruction sheet for the press. And we said, pull out all the royal flushes.

Brett:

Nice. Royal flushes.

Miki:

[crosstalk 00:40:03] And so, they'd pull out the royal flushes. And they had to unscramble the royal flushes, based on the riddles that they were given. Like, for the diamond royal flushes, this is the riddle. And you had to unscramble it based on the different words. The letters that appeared on the 10, jack, queen, king, ace. There was a letter hidden, that then unscrambled based on the riddle. So then, it made the press have to work hard to actually unscramble and send the responses. And then once they get the TUSHY Ace product and install it, they're going to feel they've accomplished something. Like, they actually, they feel so much better.

Brett:

And they're so engaged, and you've delighted them.

Miki:

They're so engaged.

Brett:

You've just made their day in so many ways.

Miki:

Instead of just sending them a product, review it. You're almost like, dance monkey, dance. Versus like, let me bring you into this fun, mysterious story with us. And we're going to be surprised and delighted together. And we're going this extra mile for you, to make you just regale in the delight. And I think that, that is what people want in life. They want to be just surprised and delighted. They want to be regaled. And like, "Oh!". And giggle. They want their heart to flutter.

Brett:

They want magic, they want mystery, they want excitement, they want to be kind of caught up in something. Right? Not just reading.

Miki:

Who doesn't want to be caught up in this ,"oh', moment. And it feels so good and it just enlivens our being.

Brett:

So, how did that work out? How was the press' reaction to that?

Miki:

Well I mean, this one, we just sent them out actually last week, so we're still underway. But guess what? The fact that we had almost, I think it was like 20 press asked for these cards. Because first, we were like, we're going to send you a mysterious package. Are you willing to take it? We need your home address, because we're COVID times. And so we had, almost 20 press gave us their home addresses, to send them the mystery packages. And so that already means that they're hooked. And we did this before, for THINX. Where we had people go and smash bricks, and they had to open the bricks and look for these invitations. And 80 people showed up to our event, after they smashed the THINX. 80 press RSVPed. We had another event, where we poked a hold in eggs, and put these mystery scrolls in them. And then all 20 press showed up to our event, because they wanted to crack open the egg and look at the scroll. And we said, you can't open them until you come to the event.

Miki:

So it's just, creating the mystery, creating the intrigue. It's human nature that, when they start something, they want to finish it. They don't like incomplete story lines, they like to complete story lines. And when there's an incompletion, there's still this intrigue, this mystery that keeps you wanting more. And so, we're in that storyline right now, with the TUSHY Ace, and I'll let you know how it goes, but I feel very confident.

Brett:

Yeah. That idea of opening and closing loops. Once a loop is open, people want to close and they want to figure out. They want to solve the mystery. That's why cliffhangers work, and all of those things.

Miki:

And in relationship and romance. When you're romancing, you're seducing. It's the same kind of storyline. It's so much fun, that game.

Brett:

Yeah. And I know you've got to go, so I've got two quick things. But I also want to mention, just briefly. You talked about two stories, two events. Because you're the master of doing these just crazy, off the wall events, that also work. So, one was ButtCon, and one was the Funeral for a Tree, for TUSHY. Are those outlined in one of your books? Because even if nothing else...

Miki:

Not yet.

Brett:

They're not? Oh, dang it. Okay.

Miki:

Not yet, but my next, maybe. I might have a Do Cool Sh*t sequel, and talk about TUSHY in that.

Brett:

We'll highlight that, or I'll find the story, that I can put. Anyway, I'll let the audience [crosstalk 00:43:41].

Miki:

I'm happy to share them really quick. I can share them over the next couple minutes, no problem.

Brett:

Okay, just do it quickly over the next two minutes, yeah.

Miki:

Sure, yeah. So again, it's all about creating unorthodox events, unorthodox gatherings. That make people go, "Huh? What are you talking about? What is this?" So we held two kind of events before COVID happened. And we're going to now resume them once COVID's now finally, hopefully at bay. But one of them was called A Funeral for a Tree. And the other one was called ButtCon. The Funeral for a Tree is, we actually held a real funeral for a dead tree at the Judson Memorial Church, which is the biggest memorial church in all of New York City. In Washington square park. We had a 400 seat capacity, and we sold out. And we had a 25 part choir. We had Matthew Morrison, the actor, is one of our dear friends, playing the reverend. We had his wife, Renee, who is one of my best friends as well, who played Maple, the wife of the dead tree. It was just the most wild experience. And the people who came...

Brett:

People were reading eulogies. Which, I got to hear one. It was hilarious. Just super funny and well done.

Miki:

I mean, it was just comedy. It was sad, it was beautiful, it was inspiring. It was all of the above, and people left so inspired to save trees. [crosstalk 00:45:14] And to do it by buying TUSHY, by doing all kinds. You know? But it wasn't a marketing...

Brett:

It didn't feel like a sales pitch. It didn't feel a, "Hey, here's your coupon for TUSHY." As you walk out the doors.

Miki:

For one second. It didn't feel like. It just felt TUSHY opened my eyes to these important things. [crosstalk 00:45:31].

Brett:

We are killing a lot of trees because of toilet paper, and here's how we can help solve that.

Miki:

That's right. 50 million trees are cut down every single year because of toilet paper consumption. 30 million cases of urinary tract infections, hemorrhoids. All these health hygiene issues, not to mention planetary issues. All these things could be alleviated by just using a bidet, using TUSHY, under $100 product. You know? But we didn't even say any of that stuff at our Funeral for a Tree event. That was, we just put on this amazing event, brought to you by TUSHY. And people just were like, this was the most inspiring theatrical event I've ever been to.

Brett:

You get an insane press on it.

Miki:

[crosstalk 00:46:07] Amazing press. And same thing with ButtCon. We held this event called ButtCon, which was all things butt-related. We had butt lift surgeons, we had anal reconstructive surgeons, we had anal porn stars, we had cake sitters who makes money on sitting on cakes as a living. We did a class on making money on your ass. I mean, just crazy things. Like, we had Kim Kardashian's physical butt trainer, came and showed us how to do butt exercise. We had twerking champions doing the twerk, teaching people how to twerk. Just name. We had gut doctor, Dr. Mark Hyman, who is one of my dearest friends. And he did a whole gut and butt session on how poo the right poops, and what the right poops look like. We had, again, every walk of life in the realm that touched the butt, or gut, or the poop space was there. And we had 49 press, of the top, top, top, top, top press came to the event. Because they were like, what the hell is ButtCon? We had to see for ourselves.

Brett:

They said, "What are you doing?"

Miki:

What are you doing here?

Brett:

And the press you got from both those events, to pay for that kind of exposure would be almost impossible. But you got it because you did some crazy stuff.

Miki:

Yeah. It was truly, again, another reminder that just, what you put in. When you put in, like, if you build it, they will come. And you have to build spectacles. Again, things that surprise and delight. Things that make people go, I need to go and see what this is about. And that's the most important thing.

Brett:

I love that, I love it. So I know, you've got to go. So just kind of in closing. If people are listening to this and they're like, I need more Miki Agrawal in my life. And so, where can they, one, go to find your books? But also, just experience your marketing. Because hopefully, this has opened your eyes a little bit. Like, you need to pay attention to what Miki is doing from a marketing standpoint, you're going to learn a lot. So, how can people get more Miki in their life?

Miki:

Yes. Well first, you can also always come check me out on Instagram where I answer most people's questions pretty directly. Like, people have questions, I'm pretty good about responding. So Instagram, just @mikiagrawal. You can also go to mikiagrawal.com. If you subscribe to my mikiagrawal.com page, you'll actually get one disruptive move every week to do for yourself and for your business. So it's 52 disruptive moves. So that's just on mikiagrawal.com. And of course go to helloTUSHY.com. Check it out, get a TUSHY bidet. It's the best gift of all time. Holidays, it's the gift. It's just the best gift you can do for yourself. I mean, period, end of story. From a health high hygiene, confidence, feeling sexy, feeling good perspective. And then you can also, oh, if you want to learn about the strategies. I mean, definitely, Do Cool Sh*t, Disrupt-Her, check out my books. But then, if you want to actually learn about all of my tactics, of all of my strategy and building my companies from zero to $100 million plus, I built an actual course called Zero to a $100 million on Mindvalley.

Brett:

Mindvalley, I'll link to that in the show notes.

Miki:

If you go to my link in bio on my Instagram, I link to a free masterclass, a one hour masterclass which goes into a lot of these campaigns. But then, it also links to the quest, the Mindvalley quest, Zero to a $100 million. So, definitely check it.

Brett:

Beautiful. Got to check it out. I got to check that out. I got to watch that. And I'm going through Disrupt-Her right now. I absolutely love it, I highly recommend it. I like the audio version. I'm an auditory learner. And you narrate the books, so I get to listen to more Miki as I'm driving around. So that's been awesome as well. So Miki, this has been fantastic. Thank you so much for doing this. I've been inspired, and got some new ideas cooking around in my head. I know other people have too. So, really, really appreciate it.

Miki:

Yay. I was happy to be here.

Brett:

Awesome, thank you so much. And as always, thank you for tuning in. We'd love to hear from you. What do you think about the show? What do you want to hear more of? Less of? Let us know. And until next time, thank you for listening.

Brett:

Are you a D2C brand spending over six figures a month on paid media? If so, then listen up. My agency, OMG Commerce, and I have worked with some of the top eCommerce brands over the years. Including Boom, Native, Groove, Monan, Organifi and dozens more. And every year, we audit hundreds of Google, YouTube and Amazon ad accounts. And we always find either significant opportunities for growth, or wasted ad spend to cut, or both. For example, are you missing YouTube ads? Whatever you're spending on top of funnel Facebook, you should be able to spend 30 to 50% of that or more on YouTube, with similar returns. So if you're spending 300,000 to 400,000 a month on Facebook, you should be able to easily spend a 100,000 to 150,000 or more on YouTube. Visit omgcommerce.com to request a free strategy session, or visit our resource page and get some of our free guides loaded with some of best strategies for YouTube Ads, Google Shopping, Amazon DSP and more. Check it all out at omgcommerce.com.

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Episode 192

:

Drew Sanocki and Michael Epstein

How Direct Mail Can Deliver Higher ROI than Facebook or Email Marketing

My guests today are two legends in the eCommerce space. Drew and Michael most recently ran and successfully exited Auto Anything.

Today we’re going Old School. We’re not talking email. We’re not talking TikTok, Facebook or even YouTube.

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We’re talking Snail. Mail. The gold old USPS. Physical mailboxes.

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Why?

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Because this is an untapped opportunity for DTC brands.

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My guests today are two legends in the eCommerce space - Drew Sanocki and Michael Epstein. Drew and Michael most recently ran and successfully exited Auto Anything a multi nine figure eCommerce brand. Now they are helping DTC brands grow through direct mail marketing. And while that might not sound sexy, it’s incredibly effective.

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Why postcard and direct mail marketing? 20-50% of your customers don't have a good email address on file. And email open rates are only 20-30% at best. So you’re missing a lot of your current and past buyers if you’re just relying on email and SMS.

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Here’s a look at what we cover in this episode:

How should brands use direct mail?
How to build a great postcard
What postcard campaigns to start with
How Ezra Firestone turned $1,400 into $4,000 using a simple postcard
How to make direct mail part of your email and SMS flows

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Mentioned in This Episode :

Drew Sanocki

- eMail: Drew@PostPilot.com

Michael Epstein

PostPilot GFO (Godfather Offer)
Axle Group Holdings‍

PostPilot ‍

AutoAnything‍

Karmaloop

Teamwork‍

Odeo‍

Chris Tyler‍

Klaviyo‍

“How Brands Grow” by Byron Sharp (Audio)‍

Shopify‍

BOOM! by Cindy Joseph‍

Petalura‍

Allan Shiffrin‍

Handwrite‍

Austin Brawner‍

Overlander‍

Bulletproof

Transcript:

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 is going to be fun. It's going to be informative and it's going to be old school with a very modern twist to it. We're talking direct mail. Now, if you know anything about my background, I got my start in traditional media, TV, radio, a little bit of print. I used to do a little bit of direct mail. I actually love direct mail. But here's the interesting thing. It is an untapped, unleveraged opportunity for eCommerce brands. And so we're talking about that today. And so my guests on the show today are really two eCommerce pros, eCommerce veterans, guys that you need to know if you don't already know. And so I'm going to intro them and then bring them on here.

Brett:

But the first is Michael Epstein. Now, Michael was the CMO of Axle Holdings, so AutoAnything, and a number of other big brands. He ran marketing for that group. Had a majorly successful exit. Also has worked in SaaS. And just a really, really smart guy. I've had the privilege of being on several calls with Michael. I always learn something when I'm chatting with Michael. So Michael, welcome to the show and thanks for taking the time, man.

Michael:

Always great to be here, Brett. Thanks.

Brett:

Yep, absolutely. And then the next guest is truly a legend, truly a legend.

Drew:

To go along with the old theme.

Brett:

I wasn't sure how to play that off. I wasn't sure, really lean into OG or not lean into OG. I don't know. I do feel good, Drew, that you have more gray than I do because my beard's really starting to go gray. But super excited to have Drew Sanocki on the call. And I met Drew through a mutual friend, Ezra Firestone. I got to hang out with Drew at multiple events. He's always one of those speakers that when he shows up in an event, people are like, "Oh man, we get to learn from Drew Sanocki." And so Drew was the CEO of Axle Holdings and ran AutoAnything, also ran Karmaloop. Was a CMO for Teamwork. There's even a story, and I don't know that we'll get to it, but in his previous, his first e-commerce business, I think it was your first one, Drew, you guys shared office space with Twitter, right, back when Twitter was a baby?

Drew:

Everybody loves that story. Yeah, they were across the hall. They were a podcasting company called Odeo. And Twitter was across the hall. Airbnb was upstairs. And then we were there selling furniture in the middle of all that, thinking we were the most successful out of all those companies.

Brett:

They're like, man, we can teach these guys so much. Twitter? What's that...? Airbnb? Yeah, whatever. That's so cool. And actually, Drew and I got to work on a few projects together. And I remember after one particular project, Drew, you were working with one of our team members, one of the Chrises, we have lots of Chrises on our team. But one of them was like, "Dude, I want to be like Drew Sanocki when I grow up." That was his feedback after.

Drew:

I don't remember which Chris that was or why.

Brett:

It was Chris Tyler. But he was just like, "Man. Drew Sanocki is so smart."

Drew:

I'm not sure why.

Brett:

Anyway. So fellas, we're going to get into some serious education. We're going to talk about why to consider direct mail, how to consider, how to use it, all that type of stuff. But talk to me, you guys are now behind a really cool company called PostPilot. And so, can you guys describe what that is and why you're involved? And then we'll get into the education.

Drew:

Yeah, it's probably why Michael and I are both on this call together. So we've worked together for about 10 years. We've been in e-commerce each for about 20. And so we were at this previous company together, which was an e-commerce roll up in the automotive category. And one thing we've always sort of done is use direct mail at all the retailers we've run. And we were sort of interested in the category, that we acquired the software company about three years ago, called PostPilot. PostPilot's direct mail for e-commerce. If you think of Klaviyo for postcards, that's essentially what the software app does. And we were, at first, kind of curious, running it as a side project, and then it got a full head of steam. And now having exited the automotive roll up, we are all in on running PostPilot. So what PostPilot does is plug into your e-commerce store, pull your customer data. And the goal is to make direct mail as easy as email.

Brett:

That's awesome. Really excited to dig into this. And like I mentioned, my business partner, Chris Brewer, actually used to have a direct mail company. So he's all over direct mail. I actually used to do lumpy mail back in the day. When I was first starting another agency, we did direct mail. So I'm a big believer in direct mail. I've got some thoughts here too. But why is direct mail so powerful for e-commerce? And I'll let either one of you take that. Epstein, you want to take that first? Why is direct mail so powerful for e-com?

Michael:

Sure. So in this day of kind of digital overload where people are getting bombarded in their email inbox, they're ignoring or deleting most of what's in there, and the age of iOS impacting people's Facebook performance, there's just an appetite to look for unsaturated channels that allow you to cost effectively reach and convert more of your customers. And so, direct mail has become one of these kind of must haves now for eCommerce brands that are looking to kind of fight back against 20% email open rates and iOS updates impacting your ad performance. So this is a great way to get in front of those customers and drive incremental revenue and profit.

Brett:

Awesome. And you know, one thing that I've noticed too. There was a time, so when I was first getting into marketing in a major way, and when I started my first agency, it was in 2002. And at that time, there was an abundance of direct mail. There were times you open the mailbox and it's jam packed full. And most of it is marketing mail, which is the nice way of just saying junk mail. But it was full of marketing messages. That's not the case anymore. I don't get that much direct mail sent my way. And when I do, if it's interesting, it's occupying a different head space than when I'm checking my inbox.

Brett:

And obviously, email is super important. We're all fans of email on this call, for sure, and SMS. But direct mail's a little bit different head space. You're usually reading that at a different time, in a different location. Maybe you're in the kitchen, maybe you're in the bedroom, whatever. It's a different time. Anything you would add to that, Drew, on why direct mail is such a hot opportunity for e-com?

Drew:

I think just because it works. If you said to me, "Hey, there's this untapped channel where there's not a lot of competitors."

Brett:

Your competitors aren't using it, almost certainly.

Drew:

Your competitors aren't using it. It's a way for you to talk directly to your customer. And your competitors won't see you doing it. It's not like they'll see your ads or they can sign up for your list. I would be interested. And I think, when I talk to retailers and I say, "Who's your most attractive segment?" And broadly speaking, it's always your previous buyers. You're going to do better marketing to your previous buyers than you will to prospects. So we all agree that previous buyers are the best audience. But then it's sort of this dirty little secret that you can't actually market to all your previous buyers. And the reasons, I've read something like, under 50% of your actual customers are subscribed to your list. I mean, it's going to be different by the retailer, but on average. And then on any one email send, maybe 20% of those open an email, right. And that is an e-commerce average.

Drew:

So you put those two together and it's a very small percentage of your best target audience that actually can hear from you and reads your messaging. It leaves a wide swath that you can target via direct mail, which is really the only thing that can fill that gap and go out and communicate with that group of customers. So that's why I find it really compelling. It's sort of been a secret weapon I've used for 20 years. Predates me. I mean, it went back to the '50s, and the growth of catalog retailers. But it works. The cost is capped because postage is capped. Competitors aren't using it.

Drew:

And as you said, Brett, there's a lot of neurological studies and psychological studies as to how people perceive mail. And they perceive snail mail as sort of a gift. They like it. It's tangible. It's a tangible way to sort of present your brand. And people interact with it differently than they interact with an ad or with an email. So all those put together, I think it just makes it a compelling channel.

Brett:

Totally agree. And we love remarketing, as a Google and YouTube agency. We use previous customer lists to run display ads and discovery ads and YouTube ads. And those work. And running repurchase campaigns or loyalty campaigns. But you're right. You're still not reaching everybody. You're just not. There's going to be a lot of people on your list that you are missing if you're just running email and just running remarketing campaigns. And therefore, that's where direct mail can come in and fill the gap. So that's kind of the why. What about the how? How should we be using direct mail as an e-com brand?

Drew:

Well, I think you hit the nail on the head there where you do a lot of remarketing. And I think when we say direct mail to people, people automatically think prospecting. That's certainly one part of it, just plastering a zip code with flyers. But really, the highest ROI, just like in most marketing, is remarketing and retargeting to existing customers, existing buyers. So I think starting there, and kind of working up the funnel is a great way to sort of test the waters. You start with your win backs, abandoned cart campaigns, second purchase campaigns, anything that happens after the initial purchase, and you're going to find a strong return on those types of campaigns.

Michael:

And it's an incremental return because you're targeting a lot of folks that just have not engaged with your digital channels. So you're leaving profits on the table. If you've built all these great campaigns, you've figured out the right audiences. And then again, you look at open rates or you look at your reach and you're just not reaching all of them. So there's incremental LTV and revenue to be had when you can find an effective way to reach those customers.

Brett:

Got it. So you got win back campaigns. Maybe it's a product someone should purchase every three to six months, and someone hasn't purchased for nine months, so you're sending them a postcard. Or someone who's added a cart and has not purchased, you're sending them a postcard. How are you fitting that into the flow? Because you mentioned, and I love this positioning, Drew, that this is like Klaviyo, but for postcards. So are you just making one of those follow up steps in the process a postcard, you're kind of working that in? So maybe the first couple touch points in either win back campaign or abandoned cart campaign are email or SMS, and then postcard comes next? How does that flow work?

Drew:

I think you could do a number of things. Where we've seen people get paralyzed is, number one, where should I start in terms of the campaigns? And then number two, how should I design the actual postcard? And regarding the former, I would just say, open up Klaviyo, open up your email software, look at the campaigns that are highest ROI and just clone them to postcards. If it's a discount ladder that goes out over 90 days with an increase of discount, then let's just take that same cadence and that same offer and flip it into postcards.

Brett:

So then it's running in tandem with emails? You're running the email and you're running the postcard, basically same message, same people, different mediums.

Drew:

Yes. And we get that question a lot. How should I de-conflict the two? And there's a lot of data that says you don't have to bother de-conflicting. If the same customer sees the same messaging through email, a Facebook ad and through a postcard, then AOVs, average order sizes, typically go up and conversion rates go up.

Brett:

And conversion rates go up.

Drew:

Right. And there's some theory behind that. This guy, Byron Sharp, wrote a book called How Brands Grow. And it's all about the salience of your messaging. The more messaging you have in front of a customer from your brand, the better.

Brett:

Often, the more messaging from multiple types of media, right? So not just the same thing over and over again. Multiple touch points.

Drew:

Exactly. So it's one of those, if you can afford, I would do all three. If you can't, then you certainly could do things like send email for a month. And if the customer has not responded to email, then you move into your print campaigns. We see that with a lot of abandoned cart campaigns where companies like to hit the abandoning customer a couple of times via email almost immediately. And then a week later, send the postcard if the customer hasn't replied.

Michael:

And you can segment customers the same way you do in your email service provider like Klaviyo based on what they purchased, how long it's been, average order value, all those things. Or you could even integrate directly with Klaviyo and use the same list and segments you've built in your email platform to target your postcard campaigns.

Brett:

So you could use almost the same audiences, same flows almost. But copy that over to postcards.

Michael:

Yeah.

Brett:

Do you do the same thing then as soon as a purchase happens, if it is a win back campaign or abandoned cart campaign, then that cancels the rest of the flow so that that's all built in as well?

Michael:

Yeah.

Brett:

Nice.

Drew:

Yeah. We've actually got a native integration with Shopify and with Klaviyo. So you can just pull in your Klaviyo campaigns right into PostPilots so they will sync.

Brett:

Got it. Cool. What are some of your favorite direct mail success stories for e-com?

Michael:

There's a bunch. I'd say, the one that comes to mind, you brought up Esra Firestone earlier. And he ran a postcard campaign for Boom, the cosmetics brand, and had a ton of success with it. Spent something like $1,500 and generated $40,000 in revenue from that campaign by-

Brett:

And that was a win back campaign, is that is what that was?

Michael:

That was a win back campaign. Yeah. So it was basically like, you've got customers buying makeup. You expect that customer to rebuy within a certain period of time. That's how long the product's supposed to last. You've been hitting them with email campaigns. And if they go longer than the expected timeframe without repurchasing, then you hit them with a postcard campaign and you get just extraordinary conversion rate and revenue off of that.

Michael:

And this is super profitable because, again, you didn't pay to reacquire that customer. You got a customer that has bought from you to buy a second or third time. And there's so much more margin in that. And you get them back into their kind of routine of buying again. So it extends to subsequent purchases after that, and they get more orders coming in because you've got them back on track.

Brett:

Yeah. So that ROI that you talked about, that was off that initial purchase. But the beauty of this is, if you sell a consumable or you have repeat purchases, then this reactivation of a customer can be extremely profitable because of all those future purchases as well.

Drew:

I've got two favorites.

Brett:

All right. Yeah.

Drew:

And I would say one is a PostPilot win. And the other one is one that is on our roadmap, but is just a more of a direct mail win that I like. And PostPilot, what I see a lot of customers doing are abandoned carts where you put the QR code on the postcard. And because of the Shopify integration, we can get that sort of direct link back to the cart.

Brett:

Nice.

Drew:

I see a lot of customers, you get an abandoned cart, it triggers maybe an immediate email, an email a couple days later. And then if the customer still hasn't replied or if they're not on your list, they get the postcard three, four days later with the QR code that sends them right back into the cart where the product is.

Brett:

It's their QR code?

Drew:

Yeah.

Brett:

That's fantastic.

Drew:

So I think that's kind of cool from a usability point of view, just like an experience point of view.

Brett:

And one interesting side note. This is one of those kind of unexpected benefits or shifts, digital benefits from the pandemic. It's shifted so much of our digital behavior. But QR codes, man. I remember when everyone was like, "Yeah, QR codes are dead. No one's using them. Those are long gone." But now that we had to use them at restaurants or other places, QR codes are very much alive. I'm seeing them everywhere. And actually pretty easy because you just use your camera app on your phone. And so that's really, really useful. So QR codes sending you right back to your cart. That's super cool.

Drew:

Yeah. And then you could put tracking and UTMs in the QR code too so the postcard campaign shows up in Google analytics now. So I just like that as a usability thing. And then I really like this brand Petalura, Allan Shiffrin's the CEO.

Brett:

What's the name of it one more time, Drew?

Drew:

Petalura. He's a colleague. I met him a while ago. His background's in cataloging. So, ran a printer. And he's just been able to grow, I mean, I'm not at license to say how big his brand is, but let's just say mid eight figures brand or eight figure brand, I would say almost 90% off a catalog. Isn't that crazy, in this day and age, that you could grow an e-commerce business that big off of catalog prospecting? Get the right list and then send that list a catalog. And he's just wash, rinse, repeat. And he's done it profitably. It's not like he's bleeding money as he acquires these customers.

Drew:

So just my conversations with Allan have been really inspiring and have got us thinking through how we're going to roll out prospecting at PostPilot because that, I think, is the next big win this year, is starting to get into prospecting, but doing it right, not just doing it off zip code. Putting some more thought behind how we can get prospecting audiences and look alike audiences and just some really cool stuff off a customer behavior on your website.

Brett:

Yeah, I think that will be an amazing innovation, because just doing blanket zip code targeting. That's really never worked very well. But if it's a very targeted list, and if you could somehow build that lookalike audience or behavioral audience and pull that into email or direct mail, rather, that would be pretty powerful for sure. So let's talk a little about the creative aspect behind a postcard. I think most of us understand what it takes to build a good display ad, or a good email. Email's all about subject line and opening line of the copy and have an offer, an image and stuff like that. What does it take to build a great postcard, a postcard that people want to read and want to respond to? What are some elements there?

Michael:

Sure. So I think we talked about QR codes. You can do dynamic personalization, meaning, you can insert fields like their name or other attributes about them dynamically onto the card so they're one to one personalized. That's great for engagement. You want to think about it similar to ad copy or ad creative, where it's engaging, it reflects your brand so that it's easy to spot when somebody opens their mailbox. And you want to include an incentive typically, get them, create some urgency, put a deadline on it, give them an incentive to come back and act on that with a strong call to action.

Michael:

But I think we also rolled out done for you creative services. Because we realized that, this was kind of a pivotal moment for us at PostPilot, no matter how big the brand was, eight, nine figure brands that you think have this creative team. And I'm sure you've seen some of this on the ad copy side and ad creative side, Brett. You say, I'm just going to send it over to the creative department and wait for something to come back and it can kind of get stalled. Everybody's got a lot on their plate. So we actually brought in designers in house, and we have a professional design team that will help create your campaign using best practices that we know because we've seen millions of cards and thousands of campaigns go out, and we'll just make sure that we implement a great best practice design that we're very confident is going to get you a great return.

Brett:

Yeah. And I love that because what we run into is, we work with some larger brands. And a lot of them do have a creative department. But as a kind of a comparison, we do a lot with YouTube. So we create YouTube ads. Most of the time, even larger brands don't have anybody that's a YouTube expert or YouTube person. I guarantee you, most of these brands, they've got designers, but they don't have a postcard person, like, assign this to the postcard expert. We don't have one of those. So makes total sense. Anything you would add to that, Drew? Anything you would want to point out as far as headline goes or other personalization tips? Anything you would say that makes a postcard really work?

Drew:

Yeah. I mean, I think you mentioned a couple things. I think about it more as an ad. Think more of an ad than as an email. So it's a visual medium. So all the ad principles would apply here. And then a best practice is, when you design it, think ad. But when you implement it, think email. The campaigns, the automation, the personalization, a lot of that stuff should be more analogous to how you use email.

Brett:

Yeah, totally makes sense. So design it, use design principles of an ad, but then think about your flows and your campaign more like email. Any specific tips? It's been a while since I've done postcards, but I did run postcard campaigns back in the day. But you know, sometimes you look at rules for headlines that sometimes 7 to 10 words is ideal, and things like that. You want to have enough copy, but not too much, and some of those things. And any specific guidelines there, or does that just vary?

Drew:

Yeah. I don't know about rules of thumb there. I mean just, white space and images are all great. I think it comes down to, if you're going to put a coupon code on, we like to recommend single use coupon codes as opposed to a generic coupon, unless you want it to go all over the internet. I mean, there may be a case where you need that. Automation and triggering is something that I'm not sure people realize you can do with direct mail. But define that audience. Take a VIP, for example. If you want something special to go out to one of your top customers that spends X dollars, then you can set a tripwire that kicks in when any customer spends over that amount. And then design an evergreen card that constantly is sending out when customers reach that threshold. So that's pretty compelling, as a marketer, to be able to set it and forget it.

Brett:

Really compelling. And I know you talk about this a lot, Drew. You did some presentations back in the day, I think for Andrew Youderian and also for Ezra. We talk about whales. So not just good customers, but the best customers, the whales, like they talk about at casinos, the high rollers and stuff. So what would be some ideas there? So once someone reaches a certain threshold of spend, now we're sending them a postcard that kind of thanks them and recognizes them and gives them an offer? Or what does that often look like?

Drew:

Yeah, you can do a lot with that. I mean, the general idea is, you've got these whale customers who drive your business. And usually, if you lay out all your customers in a spreadsheet and sort them by their spend, you'll see that it's the 80/20 rule. You've got 20% of your customers are going to drive 80% of your revenue. So once you realize that as a marketer, you should be thinking of those whales all the time. Like, how do I get more of them? To extend the analogy, how do I turn minnows into whales?

Drew:

And one of the ways is just a simple VIP campaign that thanks them. There's a lot of data that shows if you just reach out and thank the whale customers, they are more likely to come back and order again. So at ROIs, whether you put a coupon in that email or not, or in that postcard or not. We acquired a business last year called Handwrite, Handwrite.io. It's robotic handwriting. So you can have an email from the CEO, if you're an influencer driven brand or from a salesperson, that's like, "Hey, just want to thank you for spending $2,000 with our store."

Brett:

Yeah. This would be a postcard or something that would go out?

Drew:

Yeah. It could be a postcard or could just be a handwritten note. You could then say, here's a special offer for you. Or if you don't want a discount or give a coupon, that's fine too. Just the thank you should ROI for you. It should have that customer come back. One thing we did at AutoAnything is, the VIP's got a custom invite to sort of premium service. So, "Hey, here's your own sales rep, with his or her phone number direct line. And even though you might send that ultimately to your whole customer support team, but it's nice to kind of have the VIP think that they're getting premium service. And it's a good way to kind of conserve your customer service spend. Do you have to answer the phone for every customer? Probably not. But you'd want to answer it for your VIPs. So give them a special number. It's a great way to sort of treat them.

Michael:

We actually did a test.

Brett:

It's super smart.

Michael:

We did a test with one of the AutoAnything brands too, where we carved out a segment of VIPs and sent them a thank you note once they hit a certain number of orders or a spend threshold, and then measured the performance of that cohort versus the control group that didn't receive that thank you note, and actually saw over a 10 times better increase in revenue over the next 90 days for the group that received the card versus the ones that did not. So really just an effective way to drive brand loyalty and get those repeat customers really engaged with your brand.

Brett:

So just to make sure I'm understanding the test. So you took two groups of whales or VIPs. One of them, you did not send a thank you to, but they're still VIPs. The other, you did send a thank you to. And the group that you did send that thank you to, their spend was 10X the control group?

Michael:

Yes. And these were customers that were getting the regular email campaigns. They were both getting the same email campaigns. They were both exposed to potentially the same Facebook ads. The one difference was that one received that card and the others didn't. And we just saw much higher engagement from that group.

Brett:

Yeah. Sometimes we just want to be seen and recognized, right? We start to feel it internally if we're spending a lot of money with a particular company. And it's nice to be like, "Hey, is anybody noticing this? Does anyone see that I'm forking out these kind of dollars for this company?? And so even just being recognized is pretty powerful.

Michael:

Absolutely. You've got a lot of choices on where you could buy from. And so, how do you create these different surprise and delight and memorable experiences that keep you top of mind and make sure that you're the default choice next time a customer's in the market for a particular product? Drew talked about salience and Byron Sharp. That surprise and delight type experience is almost like a cheat code to increase mind share, and make you more memorable for when you're in the market for a product in the future.

Brett:

Are you recommending? And it almost seems like, if you're going to recognize that VIP or that whale, that maybe a handwritten note would be better than a postcard? Are you guys recommending? And do you guys do either of those, by the way?

Michael:

We do both. And so, there's a bit higher cost to the handwritten card. So it kind of depends on what type of business you are. Jewelry businesses and other businesses that have really high LTV and want a super memorable, premium experience for their customers. And it's easy to justify spending two bucks to target your highest value customer, and keep that customer loyal and coming back and potentially spreading word of mouth about your brand, because they got this handwritten note in the mail, and it was just super delightful to them. And then other brands, you can certainly do it with just a postcard too. Because you can still personalize it. You can still say, thank you. You can still include a loyalty reward or incentive for them. And those work great as well, and super low cost.

Brett:

Very cool. So kind of walk through, and I'm sure there are all kinds of opportunities here. But what does it cost to do this? So what does it cost to send postcards to a win back audience? Or what does it cost to send a handwritten note to a VIP? You mentioned two bucks or whatever there, Michael. But, can you give some examples, some ideas there?

Michael:

Sure. So postcards start at 49 cents. And that's an all in price. So that includes postage, printing everything. So typically, less than the cost of a click these days. And then, as Drew mentioned earlier, the nice thing about it is that price is capped. So it doesn't matter if you're targeting that customer during peak periods like Mother's Day or Black Friday, you're not going to pay more because it's a certain time of the year.

Michael:

You're not going to pay more because you're targeting a very coveted audience type that has a ton of competition from not just direct competitors, but people in other industries that still are targeting the same audience as you. So that's a really nice aspect of direct mail is that the price is fixed. And then we have our handwritten cards, which start at under two bucks. And that, again, includes everything. First class stamp, handwritten envelope, handwritten card on custom printed stationary. So it's a pretty cost effective tool now.

Brett:

Yeah, that's awesome. And I totally see that where, if you get a really high AOV and high LTV, high lifetime value customer, then the handwritten note is a no-brainer. For most others, the postcard is probably okay too. On the handwritten note. And I've seen, and I don't know if this is the technology you guys purchased or for something else. But is that where you write something and then it tries to mimic your handwriting? Or is it just, it looks like handwriting?

Michael:

Well, you can either select from a variety of styles that we have. And they'll have all the nuance of human handwriting with the letters looking different and the angles and spacing and all of that stuff. Or you could actually digitize your own handwriting as well. And it can copy your handwriting or your signature.

Brett:

Yeah. I was just curious about that. Because I know for me, my handwriting is absolutely terrible. I probably should have been a doctor. I've definitely written notes and not been able to read them myself. So while it would be cool and novel to put my handwriting there, it'd be better if it was somebody else's handwriting for sure.

Michael:

We've got a couple chicken scratch options for those folks who are like, "This is way too neat. Nobody would ever believe me."

Brett:

Yeah. Okay. That's that's awesome. Fantastic. How do you encourage folks to look at this as they're kind of laying out their media mix? Any thoughts on that? I love what you said, Drew about, start with bottom of funnel. Start with existing customers and abandoned carts and win backs and things like that. Any advice you would give to how you structure this in the media mix and into your overall planning?

Drew:

I think it's just, as we've seen last year with iOS 14, attribution just got killed for Facebook and even email, because I think email clients got hit later in the year.

Brett:

Yeah. And iOS 15 just killed it. We don't have open rates now. So that's a real loss of important, meaningful data there.

Drew:

Yeah. So you've got to put the dollars somewhere. I would start running tests with simple retention campaigns. Win backs, abandoned carts come to mind as probably the best. You choose, every business is different, but on average, maybe it's customers who haven't purchased in 60 days. They should get a postcard and it should say, it could either be a cross sell type postcard, "Hey, you bought the toy, here's the batteries. Come back and buy the batteries." Or it can be a discount to buy from another category on your site. So I'd probably start there, because that's the most likely to get the win for you. And test that, automate it, have us do it. As Michael mentioned, we've got a program where we'll do it for most retailers out there of a certain size.

Drew:

And then we lock that in and then you could start moving up the funnel and put those dollars towards more of abandoned carts and even some cold prospecting lists and things like that. But when I'm putting together my marketing, our marketing budget at AutoAnything, Mike put it together, it was always, what's going to ROI really over the next quarter, if not the next 30 days? That's just kind of the business that we ran. So the retention stuff was kind of a no-brainer. And you realize when you build that net around retention, every dollar you go and spend on acquisitions is going to be more profitable because you've got that stuff backstopping you.

Brett:

Yeah. I love it. And that's where guys like me and agencies like OMG, we can spend more on YouTube because now every customer is worth more. And that's good for the brand because now we can be more aggressive at top of funnel because we're making each customer more valuable.

Brett:

Do you ever use postcards? Just thinking about email flows, I know our mutual friend, Austin Brawner, talks about indoctrination campaigns. So you sign up your initial sign up to get that first coupon or whatever. That's the indoctrination sequence that would talk about the brand and the products and why you should buy from us and why we're amazing, or I've heard them called acquisition campaigns. Do you ever use postcards in that sequence? And if so, how?

Michael:

Yeah. We have a number of customers that use it for welcome sequence. So whether it's a postcard or a handwritten card. Again, depending on kind of the product and the price point, and what type of experience they're trying to deliver. But certainly, a lot of brands to send that thank you card with, again, typically an incentive to come back, because these are customers that are really warm. They've just recently engaged with their brand. They're probably the most engaged that they're going to be right after they make a purchase with your brand. It's crucial to get that second purchase as quickly as possible because, we talked about it earlier, that's where the profits are coming from. That initial acquisition cost is so high now that you've got to be able to figure out how to get that second purchase. And that's what's going to allow you to be competitive when you go out and look to acquire more customers.

Brett:

Awesome. And that makes sense. And then what about before? And I've been out of the direct mail game a long time so this may not be available. But is there a way, if you get someone's name and email, there's not a way to look up their address pre-purchase, is there? Like, if they sign up for that initial list, there's not really a way to send them a postcard. Is there?

Michael:

There will be.

Drew:

He's teeing you up, Epstein.

Michael:

Yep.

Drew:

He threw that ball up above the rim.

Brett:

And we didn't even practice this.

Drew:

Epstein's going to jump up there and he is going to dunk it right now.

Brett:

Dude. Yeah.

Michael:

Yeah, stay tuned.

Drew:

There's no possible way to do that. Is there, Michael?

Michael:

Not until now, Drew.

Brett:

We didn't rehearse that. We didn't practice that. I didn't ask about that offline. But that was what I was thinking, because that's another piece, again, thinking about I'm a top of funnel guy, right. But I know that new customers, that's only one way to grow a business. You also got average order value increasing, and increasing the number of repeat purchases. Those are the ways to grow business as well. But if you can drive traffic through top of funnel, YouTube, Facebook, whatever the case may be, get an email opt in. Now you increase your odds of closing them. But if you could throw a postcard at those people, that's pretty exciting. So it sounds like that's coming soon. TBD, to be determined type of thing.

Michael:

Yeah. Glad to hear you're as enthusiastic as we are about it, because we think it could be a really killer capability for-

Brett:

Yeah. Because I think that's, as you talk about going upper funnel with postcards. That's the first step in upper funnel. Because that could be a pretty big audience. And so, you tackle that and then you can start going beyond that.

Michael:

Exactly. These are people that have at least raised their hand. And so they're a lot more engaged and likely to buy. And that's where you start, again, versus going totally cold and just blasting people in a particular area or particular demographic group.

Brett:

Very cool. Anything else you guys are really excited about as it pertains to direct mail for e-commerce that we haven't talked about yet?

Drew:

The thing that's on our mind right now is prospecting coming later this year. The other exciting thing to me is just that it's sort of untapped. It's been around for hundreds of years actually. And e-commerce has just been hesitant. It's like a bit of a blue ocean. Most retailers I know haven't tested it. So that's kind of exciting to me. It's like this old channel that is relevant again.

Brett:

Yeah. It's old. It's proven. And that's why I kind teed it up in the beginning as, it's old school for sure, but with enough digital twists to make it really, really interesting. What about you, Epstein? Any interesting things that you're really excited about that we did not talk about yet?

Michael:

Oh, I think we covered a lot. Drew touched on some of the prospecting and other capabilities that we're working on. But in general, I think it's exactly what you said. E-com and direct to consumer is in our DNA. So we built the product that we know makes sense to direct to consumer marketer, gives them the tools and capabilities that they're accustomed to, makes it as easy as sending an email campaign. And I think we just are consistently finding new ways to continue to further that experience within the platform and just make it that much easier, continue to deliver stuff that we know matters to e-com specifically.

Brett:

Awesome. Well, fellas, and if someone's listening and they're like, okay, I'm sold. I'm in. I want to give postcard and direct mail a shot for my D2C brand. How can they learn more about PostPilot? Should they just call Drew on his cell phone, I would assume?

Drew:

Yeah, you can do that. Send me a piece of mail.

Brett:

Should they write to you, just send a letter?

Drew:

Yeah, write to me.

Brett:

No, what's the best way to find out?

Drew:

It is drew@postpilot.com. I'll reply.

Brett:

Great. Okay.

Drew:

I would say, go to the website, PostPilot.com. We've got a great offer if you want to start out where we essentially do anything for you. The customers we've acquired and that use the platform that don't stick. They have really high lifetime value. And what that allows us to do is do almost everything for a new customer. As long as you're doing over a certain amount of revenue, we can build you a campaign, design it for you and send it out on our dime and show you the results. So that's at PostPilot.com/gfo. Godfather offer.

Michael:

Godfather offer.

Drew:

Yeah, I should have said. GFO is the godfather offer.

Brett:

What is that? So godfather offer. I like it. Very cool. So PostPilot.com/gfo. Check it out. There's a cool little video there from you, Drew, which is awesome. And there's an offer you can't refuse here from the godfather himself. So I love that. I love that. Cool. Any other resources or things people should check out? I see you got some nice examples on the site from Boom and Overlander and Bulletproof. So I think it looks like there's some really good opportunities. If you just want ideas. And I know for most people, the way they get ideas for their next email campaign or video campaign is sometimes to see examples. And so you've got lots of examples of successful postcard campaigns on the site as well.

Michael:

Yep. We're going to continue to add more of those. But case studies are great ways to get inspired.

Brett:

Awesome. Well, fellas, this has been fantastic. It was a little bit nostalgic. It was motivational. It was inspirational for me to talk direct mail with you guys and to see this in action. Any closing thoughts, remarks, closing asks for the audience?

Drew:

I got nothing.

Michael:

If you haven't looked at it.

Drew:

Thanks for listening.

Michael:

Yeah. Thanks for the time. And if it's not something that you've explored before, give it a look and let us help figure out what we know is going to work for you.

Brett:

Direct mail, just do it. Just check out the godfather offer as well. So we'll link to everything in the show notes, of course, or just Google it and check out what Drew and Michael have built. Fellas, thank you so much for the time. It's been a lot of fun chatting with you, and informative as well. So I really appreciate it.

Drew:

Thanks, Brett.

Michael:

Thanks, Brett.

Brett:

Awesome. So as always, thank you for tuning in. We'd love to hear feedback from you. What did you think about this show? If you haven't already, we'd love that review on iTunes. It helps other people discover the show. And with that, until next time. Thank you for listening.

‍

Episode 191

:

Josh Chin - Chronos Agency

The Future of Email, SMS, and Push Marketing with Josh Chin of Chronos Agency

Josh Chin is the Co-Founder and CEO of Chronos Agency, an email marketing agency with a team of 100 strong.

Josh Chin is the Co-Founder and CEO of Chronos Agency, an email marketing agency with a team of 100 strong. Josh has been a featured speaker at top industry events including Geek Out, Affiliate World, Ecommerce World, and others.

In this episode we discuss top email and SMS mistakes Ecommerce store owners make, what strategies are working now, and what the future holds for these channels.

‍

Here’s a look at what we cover:

The top 3 automations you need to build right now.
How relying on templates could be dragging down performance.
What to do now that open rate isn’t a thing anymore.
Utilizing push notifications and tap cart - what you need to know.
Top email strategies - what’s changing and what isn’t.
Real World email examples.
Plus more!

‍

Mentioned in This Episode:

Josh Chin

- Twitter

Ecommerce Profits Podcast

Chronos Agency

Industry Report “Future-Proof Your eComm Business in 2022 Report"‍

Tapcart‍

Nick Shackelford‍

GeekOut (GeekUp)‍

Josh Chin’s Podcast with Brett‍

Gorgias‍

Really Good Emails‍

Klaviyo‍

CD Baby‍

Google Analytics‍

Postscript

Transcript:

Brett:

Well, I am absolutely thrilled to welcome to the show, josh Chin. He is the co-founder and CEO of the Chronos Agency, and more about Josh in a minute. I'm excited about this topic because today we're going deep on email marketing, SMS, and a little known thing called TapCart. And we're going to be talking about what's working right now, what you're likely missing and how to really optimize these channels this year and beyond. And if we've learned anything in the last year or two, with iOS updates and attribution issues and rising CPAs on Facebook and Google and other places is that email, email is still a breadwinner for e-commerce. It's absolutely critical. It's not going anywhere, and so we're going to dive in.

Brett:

So let me tell you just a little bit about Josh. You're going to love hearing from him, learning from him. We actually both spoke at the same event, so we hung out in LA a few months ago. Our buddy Nick Shackelford, shout out to Shack, called Geek Out. Spoiler alert, that event is changing to Geek Up in the future, which is cool. But we were both speaking at this event. We get to hang out. We were like, wow, we're having a lot of fun chatting about... you know, we're geeking out about marketing stuff. I was on Josh's podcast. Now, Josh is coming on my podcast, but he runs a team of 100 and... almost 100. And they run email marketing, SMS campaigns, tap commerce, really doing some amazing things in the industry. He has a great reputation, so does the company. He's spoken at places like Geek Out, just talked about that, Affiliate World, Ecom World and others. With that, Josh, welcome to the show and thanks for coming on, man. How you doing?

Josh:

Brett, I'm super excited. Thank you so much for having me and I'm thrilled. You know what? eCommerce Evolution is one of the podcasts that I listen to and have been following from a long time back. I started the agency about four and a half years ago, and it's been a wild ride, incredible journey. And one of the things I love about the industry is that people are so open to sharing their so-called 'trade secrets' and insights that they've gathered. It's very unlike any other industries that I've come across. And that's one of the big reasons why I love talking about the stuff that we're doing, what's working, what doesn't work, and it ultimately benefits the community at large. And it puts me in a better position to succeed as well.

Brett:

Well, first of all, thank you for the shout out on the podcast. Glad you enjoy it. Glad you're a listener and glad you're here today. And I totally agree. One of the things I love about this industry is, in general, there's a lot of really cool people who are willing to share their secrets and ideas and tips and tricks. Whereas, I got my start in TV and radio way back in the day.

Josh:

Wow.

Brett:

And in traditional business, there's a lot of closed-lip, "Hey, this is my secret, my tricks, my tips, and no way I'm letting it out there, because then competitor will grab it or whatnot." And so I like going to things like Geek Out, or Ezra Firestone's events, or other events where people are just pretty open, people share ideas and it's super fun. So that's what we want to do on this podcast as well. So let's dive right in, Josh. Let's talk about email marketing and let's look at, what are some of the biggest mistake you see e-commerce companies making when it comes to email marketing?

Josh:

Ah, okay, I'm I'm going to answer this question in layers. The first-

Brett:

Layers. I like it.

Josh:

... mistake, layer one is not having the right foundations. And that often comes from a point of view of email is such a massive channel. There's so many things to do. I have absolutely no time to get things done. And that often happens when a business is approaching the one mill to crossing the one mill in revenue mark. And people often think about email as, "All right, I'll get to it when I have time." But the truth is you need email to get profitable and to scale successfully and profitably, especially at the beginning. When you think about channels that we traditionally rely on in the digital space with Facebook, Instagram, Google, it's getting increasingly expensive. So it's increasingly more important for us to build a strong relationship with customers that you're bringing through the door from day one. And the only way you can do that is to provide a coherent, consistent and good experience post opt-in and post purchase.

Josh:

So if you had to simplify email down to just its core essence, it's three automations that you need to build before anything else. And it really doesn't take that much time with the templates that are available and tools like Klayvio and the guides are available on our website, at Chronos. You really have no excuse to not do it. So it's a welcome series. That's what welcomes your new subscribers, along with a popup or an opt-in-

Brett:

So this is pre-purchase. So this is you sign up, you see a YouTube ad, Facebook ad, Instagram ad, Google ad, whatever, you land on the page, you don't buy.

Josh:

Exactly.

Brett:

But you opt in because of a popup or something that grabs you. Now, you get a welcome series.

Josh:

Correct.

Brett:

Okay. Got it.

Josh:

A welcome series. We call it a customer acquisition series, because that's the core focus of that flow. Then we have a cart recovery flow. Some people call it the cart abandonment flow. That's critical because that's often a key point in the customer's journey, where they're kind of indecisive or making a decision. They're distracted or they have some questions about your products that are unanswered. And that's why they're not making a decision, but it's critical because that's where interest and intent is at its peak.

Josh:

The last piece is in post-purchase. Post-purchase is incredibly important. It's one of the highest revenue generating activities and flows that you can have in your email system over the long run. Without your post-purchase flow and automation, you will not have a good experience for customers coming into your store. So if you have to break the two things up like between cart abandonment and post-purchase, a lot of people rely on just templates and prebuilt stuff. What I would strongly recommend everyone listening here to do is to customize your emails, to make it your own. Don't rely on templates that you can pull off the Internet. It's not you, it's not your brand. You got to make sure that it's on brand, it speaks to your audience, and only you know how that's done.

Josh:

The reason you want to have these two flows done up right from the get go, is that you're setting yourself up for success in your future campaigns and future communication. You're setting a good first impression for new customers that are just getting to know your brand, who you are, what you sell, what are the products you have. It's super important to have that foundation laid out.

Brett:

Yeah, so really, really good stuff here. So one of the issues is, especially as you're kind of smaller and you're growing, you're like, "Hey, I don't have time to email and fulfilling orders and doing all these things." So it's more of an afterthought. It's there, but it's not optimized. Then, let's kind of look at those layers. I definitely like the idea of don't just grab a template off the Internet and plug that in. You want your brand to shine. You want your personality to shine emails that are fun or emails funny, or emails that just have your personality shining through, are so much more effective than boilerplate templated emails. But let's maybe break that down just a little bit. So I love those three main automations: welcome series or customer acquisition series, cart recovery series, and then post-purchase. What are some of the mistakes at each step. What are some of the mistakes you see? Let's just start with that first one, the welcome series. Where do people get that series wrong? I'm guessing one of the ways they get it wrong is they don't do it at all, but-

Josh:

Yep. That's one way.

Brett:

... what are some of the mistakes they make there?

Josh:

Now, the most typical offer that people often have on their business is a discount code, a 10% discount code, or something that takes some amount off the price, which is fine. But what people often forget is two things. Number one, you don't just stop at one email. Stopping at just one email limits your ability to reach a wide enough audience. Now to give you a sense of the magnitude of the problem, we send approximately... as a globe, globally, about 26 trillion emails are being sent every single day.

Brett:

Wow.

Josh:

That's a lot of emails for very few people have access to the Internet. To stand out, it's incredibly important for you to have frequency of your messages, as well as the personality and personalization of your messages. These two things come hand in hand. So the easiest gap to fill here is the frequency of your messages. If done right, on average, each email is going to generate about a 30% open rate. Your welcome series are typically going to be higher at 60%, 70%, 80%, because they're expecting an offer. But what you often find is that even with 60%, 70%, 80% open rate, your click rates are going to be significantly lower at maybe 16% or 17% on average. You still have a huge chunk of your people who have seen your message, but hasn't converted yet. So have multiple followups.

Josh:

One of the easiest forms of a followup is a text-based email that links up with your customer support team. Because often you'll find that your biggest objections coming from your customers are things that are recurring, things that you can deal with, either through your customer support team, or through an FAQ of some sort. So if it's a common question that you're getting, you can have a simple FAQ type of... series of information in your emails, or you can redirect people into your custom support team, then they can handle that. We use a tool, an amazing tool called GORGIAS. We sync that up on the backend.

Brett:

GORGIAS is great.

Josh:

Amazing tool. They turn your customer support team, essentially to a profit center, which is amazing. And that process eliminates the likelihood of people seeing a message, but not converting as much as possible. So you're opening up the top end of your funnel significantly more.

Brett:

Yeah, I love it. And this is one of the reasons why I love email so much. Obviously it's a huge driver of revenue and when and you mentioned earlier, "Hey, email is driving 20% of my revenue," I know some businesses that email is like 40% of the store's revenue, or at least email is a part of 40% of revenue. It's super significant. That's huge. But also, I'm a huge YouTube fan. As an agency, we do a lot of top of funnel YouTube. And so that's often the first touch. But whether you're doing Facebook, Instagram, YouTube, if you can drive more signups and then you have a really polished, welcome flow, and then you have a great abandoned cart flow and you start to convert more, then guess what? You can spend more at the top of the funnel to really grow the business and accelerate that growth.

Brett:

So when it comes to the welcome series, how many touches are you typically looking for? Because you mentioned frequency being something to consider. How many emails are you looking for there? And any other tips. Is that going to be a combination of... Sounds like a combination of email and text. What does that look like from frequency standpoint?

Josh:

So when I talk about text, I'm looking at two forms of so-called text. You have text-based emails and SMSs, and we'll touch on SMS in a little bit, that's super exciting. But when we think about frequency, the number of emails that we have in a welcome series, it really depends on how long the conversion cycle looks like for a customer. For instance, if you're selling a mattress, an amazing mattress client that we worked with, they sell relatively inexpensive mattresses. But even then, the amount of time that people take to make a purchase from initial impression to conversion, is on average, a couple of weeks long. It's not immediate. It's not like a low ticket item, where people make an impulse purchase.

Josh:

For that reason, that's kind of an extreme. Or furniture, that's another really great example where people take a relatively longer time to consider. On the flip side, you have products that are really cheap, things that are a lot more impulsive by nature and your products are probably going to fall between that spectrum, somewhere in the middle. So understanding that cycle, how long when people take to consider a purchase is important for you to create emails that answer and address key problems and key issues that people have in making that purchase, whether that be comparing your product against someone else's products, your brand against your competitor's brand, the opening experience, the unboxing experience of your product, what that looks like, the post-sale support, if that applies, what does that look like?

Josh:

All these questions can be answered pre-purchase within that welcome series, and that's what you want to think about. So it can be as short as three emails to as long as 10, 30 emails, until someone converts. A good rule of thumb to kind of visualize this is as you add more emails, your engagement is going to fall significantly over time. Between open rates and click rates, it's going to fall over time. And once you see a steep decline in attention, that's when you know you've probably hit your... close to the maximum of number of emails that you should be having in your welcome series.

Brett:

Nice. Okay. And then, any tips on what you prioritize there? You talked about showing unboxing, or showing what the post purchase is like, or showing how you use it. Any tips or I ideas to kind of guide the building of that?

Josh:

That's a really good question, and it's a difficult one to answer because it comes from a lot of testing and a lot of data. That information can only be applied to your brand specifically. The starting point for that conversation, I would strongly recommend looking at reallygoodemails.com as a source of inspiration.

Brett:

Reallygoodemails.com?

Josh:

Reallygoodemails.com.

Brett:

Just a collection of great emails?

Josh:

Collection of amazing emails run by great buddy of mine, Matt. And they curate the best emails that they've seen in the marketplace based on categories, industries.

Brett:

Nice. I had no idea this existed. This is great.

Josh:

Exactly. Amazing, right? Amazing stuff. And you can look at what some of the biggest, most successful brands are doing. Because you have probably already invested quite a bit of time, resources, and data into split testing what works for your welcome email, and start from the categories that fit your industry the best and take inspiration from the structure of those emails, and create an email that fits your brand's personality. That's one way of looking at it. The framework and the structure, I would look at competing brands. The copy is where it's really unique to your brand, and you got to align that to what's happening on your website, your ad copy, and all that stuff. You don't want any dissonance between different channels and how you speak to consumers.

Josh:

The last piece of the graphics... Now, I would strongly recommend that if you're just starting out, just keep it simple, as simple as possible. Tools like Klayvio make it super easy for you to create an email with just drag and drop, no code, no HTML. So keep it simple. Make sure that you're keeping the structure easy to edit in the future, because you want to be creating multiple variations of that email, ultimately along the way. So that's... Yeah. What else? That's basically it.

Brett:

Yeah. No, it's super helpful. Let's go on to the cart recovery process. So for that cart recovery flow, what are some tips... what are some strategies to keep in mind there?

Josh:

All right, cart recovery, here's what people often get wrong. Cart recovery is, as most brands would understand, it's one of the highest revenue generating, highest ROI, email series that you can have in any email system. And that's true for most brands. So why aren't we optimizing this series even further? We end up seeing... when we do a lot of audits, we audit... I think hundreds of brands every single year, and one of the most common mistakes that we find is that the cart abandonment series has been in place since the beginning of the email program's inception. Nothing has been changed, no split tests, no optimization, which severely limits the growth potential of the brand, because that's where most of the conversions can potentially happen.

Josh:

Some of the benchmarks that you want to be looking at, cart recovery flow should be converting about 20% of all of your email subscribers coming through that flow. So if you're having 1000 cart abandonment emails sent out, you should be converting up to 200 of those people into customers. That's a lot. 20%. If you're using a typical plug-in cart recovery app plugin, you're probably going to be converting at maybe 7%, 8% to 10%. But if you customize your experience, make it unique to your brand and you can draw inspiration from other brands and what they're doing. You'll find that your conversion rate goes significantly higher up.

Josh:

A tactic that I can share here is to split test email number one with just a pure text email. We've been doing this for a long time. We have a really nicely designed HTML based email, versus a text-based, just pure text, no images, just one link back to the cart. And we kind of compare the results based on these very, very different looking emails with the same subject line, everything else remains same.

Josh:

We often find that the text-based email performs a little bit better, and this may change in the future. I attribute that success to the way that the algorithm is set up with Gmail specifically, where Gmail is by far the market leader in email. Gmail looks at text-based emails and they tend to categorize those as conversations, and conversations are not marketing emails. So because of that, it's typically prioritized in the key inboxes that matter the most, the primary tab, the updates, the things that people actually check out for. So you see your open rates go up, engagement go up and click rates go up significantly more. Obviously, this is not something I can do for every single email that you send. It's something to be used sparingly and in a way that makes sense for your customers.

Brett:

Yeah. Very cool. And then what about that final post-purchase flow? What are some tips or strategies you'd recommend there?

Josh:

All right, a couple of things. On a high level, post-purchase is where you're building the relationships that matter most to your brand. This is where your customers have... these are your customers, people who have converted, they have trusted you, they gave you their credit card information. They've made that leap. Now you got to ride that wave, continue on that excitement. Post-purchase is typically the moment where people have the highest sense of excitement, attention and anticipation. So think of different ways to build on that emotion, whether it be showing your personality a little bit more. A really good at example is CD Baby's post-purchase email. If you're not familiar with what that is, definitely go Google that.

Brett:

You said CD Baby?

Josh:

Yep. CD Baby, run by... started by this man called Derek Sivers, and he wrote a book about it and it's incredible. He turned a typical transactional post-purchase confirmation, order confirmation email, into something that's unique to their brand. Fascinating. It created a lot of loyal customers for them, and it's something that really changes the way that consumers relate to you as a brand of their choice. So personality, think about how you're building anticipation and excitement.

Josh:

On a tactical level, what you can test out is what I recently tweeted, actually, on my Twitter page. Include an upsell within your email. In fact, the first email that goes out, would you like to add A, B, C product? Something that makes sense to their order, into your cart at no shipping cost at all. We'll just tag it on to your existing order. What that does is this essentially creates a second purchase opportunity, where they have to confirm that purchase, click on your link, complete that auto form and all that stuff, which reduces the friction to a third purchase. A second purchase typically happens at maybe 20%, 30% of the time, if you're doing really well. But the third purchase happens at 60% to 70% of the time, so 60% to 70% of your people-

Brett:

Yeah, if someone makes that second purchase, once someone's bought twice, they're very likely to buy a third time.

Josh:

A lot more. Way more. So you're reducing the barrier to the third purchase, so that's what I would test. I would strongly recommend that. It's one of the tests that we're running right now. So, yeah.

Brett:

Very cool. Very cool. We'll talk about a couple of the things that I know are really, really important and pressing issues, given the current state of attribution and privacy and tracking and all that, but post iOS 15, what should we be measuring? Because now we can't see open rates on iOS devices, what should we be measuring? And what workarounds do you have so that you have enough data to optimize what you're doing with email marketing?

Josh:

Look, it's terrible. Brett, it's terrible. Open rates are not a thing anymore. We have to look at metrics that make sense in this current landscape. So that's click rates, that's other forms of engagement. We're using the UTM parameters a lot more. We're looking at how people are acting on the website and extracting that behavior and information onto email. So in a nutshell-

Brett:

Quick question, Josh. Why are you guys using UTM parameters more?

Josh:

That's just... It just comes down to click rates. We won't be able to measure the impact of opens anymore. So as a proxy, we got to look at the secondary metric that happens right after, which is the clicks. And we need to understand where the clicks are coming from, what campaigns are driving those clicks and all that stuff. And we wanted a unified place to visualize all that information and that's Google Analytics. We're still learning and growing in that aspect, but it's been wonderful. And it's so important to have... when we talk about attribution, one of the problems with attribution is that every channel has its own methodology and way of attributing success and conversions. So the only way we can agree and have agreement across all channels is to rely on the single source of truth, and in our case, the easiest, lowest hanging fruit is, well, UTM parameters and using Google.

Josh:

So with iOS 15, one of the biggest shifts that we have seen is that something we've been advocating for a long time. With Klayvio and SMS and all these fun tools, it's all about building a strong relationship with your customers, but what that kind of translates to is information. That's first party information and zero party information. So when we talk about zero party and first party data, zero party data, that's information that your customers are giving you through surveys, or inputting information manually to you and giving you information directly. First party data are things like site behavior, what they have clicked, what they have purchased, what they have seen, how long they've lingered on a certain page, and all that stuff paints a picture of who this consumer is, what they prefer, what they like, what they dislike and what they're going to do next. That gives you the information that you wouldn't otherwise have to create journeys and automations that are uniquely personalized to each consumer.

Josh:

That's where the power of email and SMS is shifting towards and where the most money's going to be made, versus just here's a template, here's the framework for email, slap it on, click send and the end. That's... biggest mistake number two that I see. So we talked a little bit about this before hitting record. We have seen a lot of brands, and I personally come across a lot of brands that have gone from like 30%, 40%, 20% of revenue generated with emails doing really well to 8%, 5% over the course of three months, and it's like a gradual decline. So it's not a sudden reduction in revenue, but a gradual one.

Josh:

So you'd be able to see the warning signs along the way, reduced click rates, reduced conversions, reduced click throughs, people not engaging with your emails anymore, the number of replies, if you're tracking that, that's all going to paint a picture of how well you're doing in your email program. And those are warning signs to keep a lookout for, as you continue monitoring and building your email program. People often set it up one time and forget about it and not optimize the system, and that's where it leads to its gradual decline.

Brett:

Yeah, it makes sense. And so, really now that open rates are kind of not a thing anymore, we're primarily then looking at click through rate, conversion rate, reply rate, those things. There's really no proxies or no workaround to tell what emails are getting open more than others. I guess we can still tell this subject line versus that subject line. If the click through rate is better, we can guess the open rate was probably better too. Any other tips there, or proxies, or workarounds?

Josh:

Start looking at alternative channels, I would say. I mean, even before I was 15, the average open rate that you're going to be seeing on any individual campaign on your email is going to be 20%, 30%, if you're doing really well, if you're segmenting your list really well. That still leaves 70%, 80% of your audience untapped. You got to be looking at alternative channels that can address that 70%, 80% of people that you're not touching with emails and that's SMS, that's mobile apps with TapCart, which we have been diving really deep into.

Josh:

TapCart's an amazing partner. They build mobile apps for Shopify stores that ultimately acts as a dedicated app, that is a standalone sales channel for the business, which is fascinating because then you live on your consumer's mobile phones, you get to send out push notifications for free any time of the day. Obviously, don't overdo it. With SMS, you have a really intimate channel. And we talked a little bit about this as well. With the level one of SMS being a communication channel, the second level being a marketing channel, that relies on the same pool of data and information that email has, and the final level tree evolution of SMS is a conversational tool.

Josh:

And it's moving into a much more intimate space of conversation and relationship building with a brand. It's something that we are really looking into and how that might pan out is going to be really interesting, because we'll be coming into two really key bottlenecks. Number one, to create authentic conversations one on one. It's really expensive because it takes a lot of people and it's really unscalable. Number two, the alternative to have a pure AI play is incredible inefficient and ineffective, because it doesn't understand context. At least-

Brett:

It doesn't lead to good outcomes. That's where the user becomes frustrated. They can tell they're communicating with a bot.

Josh:

Exactly.

Brett:

And they get frustrated. They leave. It leaves a bad taste in their mouth towards your brand.

Josh:

And it just takes one detractor to make the whole thing not worthwhile. And so the current solution and the current optimized solution sits between the two extremes of using AI enablement and support with a human support behind the scenes. So knowing where to include human interactions in that conversation is incredibly important. But having the FAQs, the frequently asked questions, the things that you know can be answered very quickly, like, where's my order? Can I get an update? Stuff like that can be answered by AI, but anything that's more complicated than the frequently asked questions, that's where you got to include a human in it. And ultimately, be authentic, be real. If you're using a bot, say that you're using a bot. People need to know that that's what they're dealing with. Often businesses-

Brett:

"Hi, I'm the CBD Baby bot."

Josh:

Exactly.

Brett:

"And I can help you with these things." And so you're like, all right, now I know I'm communicating with a bot. Now, my expectations are in the right place. And so then they go for it and yeah. Makes sense. Okay, so then how do you... let's just talk SMS and email first, the blending of those two, then we'll touch briefly on TapCart in a minute, and then close out here in a few. So how are you blending the email and SMS? I love the fact that you point out, even though we can lament, we don't have open rates. We knew even in the good old days when we did that, hey, it's only 30%. If you're doing really well with email marketing, only 30% are opening. So 70% of the people on that list, not even opening. So we can connect with them, ideally through SMS. How do those two, how do those blend? So you've got... maybe we go back to some of these flows. Where does SMS fit in alongside email?

Josh:

The number one thing, the number one opportunity here is to use SMS as a reminder tool to your email offers. With a tool at Klayvio, and Klayvio does email and SMS all in one platform, which makes it super were easy. We use Postscript as well, as well Klayvio. When you're thinking about using email SMS, they have to speak to one another. So if this, then that, kind of built out of automations, play a huge part in the success of email and SMS. So using Klayvio, as an example, if someone has clicked on your offer in your welcome email number one, what do you do next? Do you send a followup email, or do you send an SMS followup with that same offer? The easiest way to answer that question is through a split test. You can create two... basically two splits and two flows that happen as... basically, two scenarios. You can then compare the click rates between the two of them and conversion rates that occur based in those two scenarios and make the best decision they can.

Josh:

So that's one way of looking at SMS. Another way of building SMS as a channel that drives revenue is using SMS as an exclusive platform. So what I mean by that is using SMS for offers that are uniquely SMS. So things like pre-sale launch. You're dropping a new product, and it's only available on SMS. So people have to sign up to your SMS list to get notified ASAP. The reason for that is with SMS, you're seeing an open rate of what, 80%, 90% and more. It's really incredibly annoying to have that red little notification on your SMS app unopened.

Brett:

You got to get rid of it.

Josh:

You got to get rid of it. So people are going to look at your messages and super easy to read. It's much shorter. It's much more concise and you're delivering messages at a higher frequency. So for all those reasons, SMS is an incredibly powerful platform to use for launches, like sales launches, product launches. Using SMS as a lead in for that, and then email as a tag along for more information. For example, if I'm launching a new series of backpacks, I know that these segment of consumers are travelers. They're work travelers. They're digital nomads. I'm going to send them a text message that speaks to them, tell them about this new product that's designed specifically for them. And if they don't convert, send an email that outlines the features of the backpack, what to expect, photos, images, gifs, and all that fun stuff within that email, and then follow that up with another SMS with the offer. So building that out as an experience is way more powerful than just relying on email, email, email alone, where you're only tackling like 20%, 30% of people all the time.

Brett:

Got it. Yeah. Makes sense. So testing layering in SMS with email, love it. I know when I get a marketing text message, I read 100% of them. Doesn't mean I like them. Doesn't mean that I want to get them all the time. Doesn't mean that I don't opt out, because sometimes I do, but I open them for sure. So speak about that a little bit. How do we keep people engaged and enjoying our SMS messages, versus being annoyed and potentially opting out of SMS for us?

Josh:

I love that. That's such a good question. When we build SMS as a program, we often think about what is the identity and the brand's personality. We typically have a persona for the brand and we often give that persona a name. Say Kate, Kate from CD Baby. How does Kate from CD Baby text her friends? That's the question that we ask and we extrapolate that into our marketing messages, using the tone of voice. And one of the biggest things is that people often get caught up with grammar and punctuations and all that, all the minute details in text. But you realize that text, in text, when you're texting a friend that often goes out the window.

Brett:

Totally.

Josh:

You're trying to sound human, not like a textbook. That's the biggest thing that people often not realize with text, especially in the marketing space. You want to be able to relate to consumers, not bombard them with messages and information. So when you think about that from a conversational perspective, it becomes super easy, because we all text. We all text our friends and you know exactly what it feels like to receive a good text in a marketing message.

Brett:

Yeah. Yeah. Speak the way your customer wants to hear, speak like they're talking to a friend. And then I'm guessing there's also some frequency considerations there too, right? We're going to want to text less frequently than we email?

Josh:

Yes. 100%. It's a matter of testing, but in general, we look at maybe one to two texts, SMSs per week. In some cases we text a lot more, especially during product launches or sales launches, especially when the consumer has explicitly opted in for more messages. So that's how we think about it. But it really depends on how-

Brett:

So one to two texts per week? How many emails per week are you typically sending?

Josh:

We're looking at-

Brett:

And I'm sure it varies.

Josh:

Yeah. It really varies. And it really depends on how much content you have to offer. It's not about, hey, we got a discount on this product, 20% off, 10% off all the time. It's really boring and you'll see engagement go down really quickly. But we're looking at anywhere between two emails per week on a low end, sometimes one, if the list is really small, to as high as five emails a week, or even daily emails, if it really applies to the brand. It depends on what the context is. If you have just one product that you're selling, that's killing it, or two products. There's only so much content that you can send about the product, so you got to start looking at other forms of information and content. What problems are your consumers trying to solve and how can you provide value around that problem, is how we think about creating content.

Brett:

Yeah, totally makes sense. Super cool. Okay, so we just have a few minutes left, but I definitely want to hear about TapCart. So push notifications and mobile apps for Shopify stores. So explain to those that are not familiar with what TapCart is, what is it, and then why are you so stoked about it?

Josh:

Absolutely. TapCart.com is a site, it's currently for Shopify only. They've been talking about mobile e-commerce, mobile commerce for a long time now. And what exactly does that mean? When we think about an experience that's purely on mobile, we often think about the mobile version of a website, and that's often limiting because it's still a browser. It's not native to a mobile phone. It's not as fast. It still relies on the load speed of a website, the connectivity of the site and all that stuff. But when you have a mobile app that's built for your brand, you own the entire interaction and the experience that people have on your website. And that allows you to create opportunities of communication that you 100% own.

Josh:

Push notifications are channels that are 100% in your hands, that you own that is not relying upon Google, corporations or platforms. There are no platform risks except for maybe TapCart, but still you own the app. So that's what I'm interested in. One of the key problems that we are facing right now with TapCart is that downloading an application is a high commitment activity.

Brett:

It is.

Josh:

It's often really difficult to get people to download an app. So what they're building up next-

Brett:

Because I've heard we all use like seven or so apps on a very frequent basis.

Josh:

Exactly. '.

Brett:

And beyond that, it's hard to get any real frequent adoption of your app.

Josh:

So adoption and app downloads, app installs is incredibly difficult, especially if I was 14, app install, ads are going to be even more difficult now. So the shift that we're seeing right now is creating an experience first for a consumer through email, SMS, and then lead in with TapCart for an elevated experience for the next level of your top 10% of your customers. That's how I think about it right now, but what's coming up next with TapCart is app clips, which allows for the app experience to be delivered via a QR code and iMessage, a text, or anything, without having to download the application itself.

Josh:

So you get to go to the site, experience the app, go through the checkout process, even make a purchase without even downloading the app. And then if you choose to, you like what you have experienced, with a tap of a button, you get to download the app for free. So that's bridging the gap. Then you got to think about all right, now that we have a really good tactic tool to make that happen, what's the reason for people to come on to the app in the first place? I get to go on the site. I get to use my mobile phone. The mobile sites working. Takes little bit longer-

Brett:

Yeah, Shopify does fine on mobile. Check out on Shopify, it's fine on mobile. So why... yeah.

Josh:

Yeah, it's totally okay. Yeah, what's the point, right? Then you got to create opportunities through your brand to have people come to your app. Some of the really interesting ways and strategies that we've seen, private launches through your mobile app only. A lot of businesses are reliant on drops, especially in the fashion space. New drops, new releases. What if you released a collection of products that's only available on your app for the first 24 to 72 hours? And people-

Brett:

It's the true VIP experience.

Josh:

Exactly.

Brett:

That's where the most loyal customer hangs.

Josh:

Correct.

Brett:

Or may likely use your app.

Josh:

The top 10%, 20% of your customers. And you're then opening it up, that option up to everybody who's interested. And you're expanding that VIP segment a little bit further and creating an experience that's really, really mobile first and super intuitive to your consumers.

Brett:

Really cool. Well... So just really quickly, because we're about out of time here, but once you have TapCart, once you have that mobile app, now you can send messages to those app users whenever through push notifications. That opens up a whole new world of notifications. Any additional insights there?

Josh:

Exactly. And it's instant. It's instant delivery, even SMS gets throttled a little bit over... you go sending batches sometimes with email. It takes a bit of time. With push notifications, it's instant. It's super quick. It's multimedia as well. I got a ton of push notifications right now on my phone from Skype, Google and all that stuff. There is no way to miss it. One of the pitfalls that we've seen with push notifications is that it can get annoying very quickly if your messages are repetitive. So think about the experience from a consumer's point of view and whether that really adds value to their lives or not. Is it important that they know that there is a 10% discount off this specific product on your site right now? Probably not. But is it important that they know that the product that they've added to their wishlist has just come back to stock? That's important.

Brett:

They'd be eager to see that. They want that notice. They don't want you spamming them with coupons all the time.

Josh:

Exactly. So that's how we think about TapCart and push notifications.

Brett:

Cool. I love it. I love, it. Well, more we can unpack there I'm sure. Sadly, we're up against time. So Josh, what resources do you have and how can people get in touch with you if they think, "Man, I'd love to talk to Josh and his team about my email marketing and SMS marketing?" Or going with something like TapCart and a mobile app. How can they get in touch with you and what resources do you have?

Josh:

Absolutely. The best way to get in touch with my team is Chronos.agency. That's At C-H-R-O-N-O-S.agency. You can connect with me on social. I'm getting pretty active on Twitter as well. It's @JoshuaChronos.

Brett:

...

Josh:

That's right. It's @Joshua C-H-R-O-N-O-S. And resources, we have a ton of ebooks, case studies and guides available on our resources page. We recently put together an amazing massive industry report. We call it the Futureproof: Your E-Commerce Business in 2022 Report. We've gotten a bunch of partners that we work with very closely from Klayvio, Postscript, TapCart, and all these fun people with a lot of information in there. I will... I guess I'll send you the link to add in your show notes or something along those lines?

Brett:

Yeah. Yeah, send me the link. We'll drop in the show notes. We'll also link your Twitter account, but check out the site, get some free resources. Any final words, any final bits of advice, any final asks for the audience, Josh?

Josh:

Yeah. If you haven't set up email, SMS and TapCart yet, now is definitely a time. If you're hesitant and if you're confused, feel free to schedule time with my team. We'll be happy to run you through what your options are and all the best. Crush it out there in 2022 and beyond.

Brett:

Love it. Josh, thanks so much, man.

Josh:

Brett, thank you.

Brett:

You brought the fire and super, super good. Amazing. So thank you, Josh. And thank you for tuning in, as always couldn't do this without you. It would be pointless to do the show without you, our loyal and faithful listeners. And so we'd love to hear from you. If you have not done it yet, leave that review on iTunes. That helps other people discover the show, makes my day as well. And also, we'd love to hear what topics would you like us to cover this year? Any feedback on things you'd like to hear or things you're sick of hearing. And so with that until next time, thank you for listening.

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Episode 190

:

Josh Durham

Lessons from the Trenches - $10 Million in Sustained Growth

Josh Durham has achieved some amazing success online. He’s also a survivor of an eCommerce crash and burn story that’s truly spectacular.

Josh Durham has achieved some amazing success online. He’s also a survivor of an eCommerce crash and burn story that’s truly spectacular. He built an amazing brand from $0 to $10 million in just 3 short years and then lost it all in a matter of months.

After the dusting off the debris Josh joined my buddy Peter Goodwin as the head of growth for Groove Life and helped add $10million in top line sales (with good margin) in about a year and a half.

In this episode we dive into valuable lessons from rapid growth and rapid failure. Here’s a look at what we cover.

Law of Quarters - and how it should help you think about margins, product pricing, and operations.
How failing to introduce successful 2nd, 3rd, and 4th products can spell death to a brand.
How to structure a successful Ambassador program that will become a new content engine for you.
Tips for building a real community around your brand.
Knowing your numbers and your MER (Media Efficiency Ratio).
How to generate an unending supply of amazing User Generated Content.
Plus more!

‍

Mentioned in This Episode:

Josh Durham

Aligned Growth Management

- Twitter

Aligned Growth Management Newsletter‍

Weighting Comforts‍

Groove Life‍

Peter Goodwin‍

“The 4-Hour Workweek” by Tim Ferriss‍

“Rich Dad Poor Dad” by Robert Kiyosaki‍

QALO‍

Enso‍

Athletic Greens‍

Mossy Oak‍

Realtree Camo‍

Enquire Post Purchase Survey Shopify App‍

Triple Whale Shopify App‍

Northbeam‍

Pura Vida Bracelets‍

MVMT Watches‍

Gymshark

‍

Transcript:

Brett:

Well, I'm absolutely thrilled to be talking to Josh Durham today. And this is going to be a how I did it, how I'm doing it story. Merchant success story. Also agency success story. And this was really, really fascinating because Josh has just a very unique experience in a pretty short period of time. But he was the founder and CEO of Weighted Comforts, a weighted blanket company that he's really started from zero and built to $6 million a year in revenue and then it imploded. So we're going to hear that story. Lots of lessons from the good and the bad of that. He was then also the head of growth at Groove Life. Working with our mutual buddy, Peter Goodwin at Groove Life. Shout out to Peter. And so Josh helped Groove Life add 10 million to the top line in growth as he was the head of growth, which was an awesome experience. So we're going to unpack that a little bit. And then now he's running an agency called Aligned Growth Management. And we're going to unpack that just a little bit as well. So lots of good stuff to talk about. Can't wait. With that intro, Josh, welcome to the show and thanks for taking the time, man.

Josh:

Absolutely Brett. Thanks for having me.

Brett:

Yeah. So where are you hailing from? Where do you call home?

Josh:

I am from Nashville, Tennessee.

Brett:

One of my favorite cities, man. And it's a city that's just absolutely exploding. A lot of tech and eCommerce energy It seems in Nashville. So that's a pretty hot place to be right now.

Josh:

Absolutely. Always a fun new restaurant to be visiting. I also feel like I'm living in a war zone because there's just construction constantly around me. Like the house across the street from my house actually just got torn down and they're going to build three houses its place, but it's definitely a fun place to be for sure.

Brett:

It's crazy. Maybe not at the level of Austin. I just got back from a trip to Austin recently and all kinds of construction and mayhem going on there, but Nashville's really growing at a fast clip too, which is super interesting.

Brett:

Yeah man. So let's dive right in. So Weighted Comforts. Weighted blanket company. You grew it from nothing to six million, to implosion. Tell us a little bit about the ... What was the genesis of that? Why weighted blankets? Which by the way, there's probably not a worse thing to ship other than maybe gallons and gallons of water or something. But how did you get into the weighted blanket business?

Josh:

Yeah. Great question. I was going to say on the shipping side, one of my biggest accomplishments was we got it down to $12 per unit, even though the average blanket was 20 pounds. So that was quite the accomplishment.

Brett:

I guess they're not super bulky, but they are extremely heavy.

Josh:

So heavy. I know. That was probably one of the worst parts too is when you're getting started and you're shipping product yourself, you're going to throw out a disc in your back with all these blankets.

Brett:

Yeah. My wife uses the weighted blanket. I personally don't like them. But as I just try to move it, I always forget how heavy it is. I try to move it, I'm like, "Holy cow. What is this thing?" It's just always shocking how heavy it is.

Josh:

Yeah. You're like, "Someone's on top of me," when you're sleeping in the middle of the night. But yeah. So how I got into it was actually my mom. She was a marriage and family therapist and she was actually using these blankets for her most anxious clients. And so as soon as they would use this heavy blanket during a therapy session they would calm down immediately. And so she was like, "Oh, there must be something to this." And she was telling me about it. And of course I feel like if you're an entrepreneur, you've probably either read one of two books. You either read The Four Hour Work Week or you read Rich Dad, Poor Dad. And for me it was The Four Hour Work Week.

Josh:

And so I'd been looking for a product with high margins, high revenue per product, that kind of thing, and just thought that it was an amazing product. And so we started selling it on Facebook Marketplace. Touting the benefits of reducing anxiety, improving sleep. And one of the first posts that we put on this Facebook group we sold over $1,000 off of just one organic post. And so I just knew something was there. And so for that first year we just made everything custom and actually met customers at Jo-Ann's Fabric. Had them pick out their own fabric, their own custom weight, all those kind of things.

Brett:

Wait a minute. So you were generating leads. You would then schedule an appointment, go meet me at Jo-Ann's Fabric, and then you were making them custom for each person.

Josh:

Yep. Exactly. That's exactly how it started.

Brett:

Wow.

Josh:

Yeah.

Brett:

And then you realized that's probably pretty miserable or scalable at least.

Josh:

Yeah. Totally. So then I started to dink around with Shopify. Built out a Shopify store and just started trying to figure it out. And so something that we realized early on in that market was most of the brands were catering to children with autism or some kind of disorder. A sensory processing disorder, for example. And so we really saw that there was room in the market for adults with just general sleep ... Like a general sleep disorder or just general anxiety. And so we catered the brand. And so we started making the weight of each blanket a standard weight and a standard size instead of having it all custom. And that really enabled us to go into eCommerce and to scale quickly. And so for a while we were doing about $10,000 a month online once we started rolling. But it wasn't until I really figured out how to run Facebook ads, which I hired a coach in 2016, where we went immediately from 10K a month to about $50,000 a month.

Brett:

Facebook ads, that was the channel, that was the vehicle that really allowed you guys to hit scale.

Josh:

Yeah.

Brett:

Well, that combined with you've got standardized sizes and stuff where you're not making stuff at Joy-Ann's fabric. Yeah.

Josh:

Totally. Yeah. So that was actually ... Yeah. Facebook. That was really when Facebook video ads were just absolutely crushing. Like more of a long form type video. And so we were just getting super cheap cost per views, cost per clicks. But really a big part of that business too was employing the refugee community in Nashville. And so we actually discovered that through a program called Sew For Hope, which basically would teach refugee women how to sew to have a source of income for their family. But when they would graduate that program, they didn't have anywhere to go to. And so we started hiring all of their graduates out of that program and basically were able to-

Brett:

Large refugee population in Nashville?

Josh:

Yeah. Actually an extremely large population here. And so part of the benefit that we had with them was giving them a consistent source of income but also eventually when we got into our own physical space, we started doing paid English classes on site so that it would help them integrate culturally.

Brett:

That's amazing. I think that is a ... One, it's a noble to do. It's also a good business practice. I'm sure some of the ladies you hired were amazing workers and it worked out well. I know that led to some issues too. We'll talk about management of cogs and some of those things here as we go. But let's first talk about what were some of the things you guys just absolutely got right, right out of the gate? And then we'll talk about some of the failures in a minute.

Josh:

Yeah. For sure. The things that we got right I think were, like I said, honestly, standardizing the weight of each blanket. So standardizing the product. But also the demographic that we were going after. The brand was really for moms. Moms were the buyers. Whether they were buying for themselves or for other members of their family, that was our target market. And so we were really in the vein of Magnolia Farms, Joanna Gaines type looking brand with really natural light and photos and stuff like that that really had more of an aesthetic than if you were buying a blanket from another brand that might have minions on the fabric.

Josh:

It wasn't gimmicky like that. It was more for adults. More florals and pastels on the fabrics. And so I think that's the thing that we got right as well as just the channel. And so just going deeper and deeper into Facebook where eventually we were spending close to a quarter million a month on advertising fairly profitably. And so I think those were some of the big ones. But I think that ... Well, I don't want to get ahead of myself, but I think some of the things that we didn't get right was really evolving the product into what the brand should have become. It's like a product 2.0.

Brett:

Got it. Got it. But you did understand your target market pretty well. You nailed that product. And then you're really good at marketing, right? You dove deep into Facebook, you got great results there. So yeah. So let's talk about then what did you not do well? So product 2.0, talk about that. So you built this amazing hero product and you weren't able to extend the line or do kind of that next gen product.

Josh:

Yeah. One of the difficult parts about the weighted blanket was for one, most people only needed one blanket.

Brett:

Yeah.

Josh:

Right. So they're kind of one and done. So the repeat purchase rate was so low. I think it was almost at only nine or 10% repeat customer rate.

Brett:

So you're not thinking about LTV at that point. Return on ad spend for getting that first sale.

Josh:

Yeah. There's no LTV. It's just they spend $200 then they're gone.

Brett:

Just AOV. AOV is all that matters. That is-

Josh:

Yeah. Exactly right. And so the product that really helped drive sales primarily was our ... We had a weighted blanket that was made with Coolmax fabric. And so the benefit of that was that it was a heavy blanket but it wasn't hot because the fabric would wick away sweat and the fabric would breathe. But after that there was no secondary product. There was no pillows. We didn't really get into any kind of essential oil diffusers or sheets, that kind of thing. It was kind of a difficult business to be in. Are we a health and wellness company or are we more of a home goods company? Because really the main benefit that we were driving with the blanket was reducing your anxiety, improving your level of sleep. And so I think that's where we got caught is where we were really scaling one single product but we didn't add on to those lines to where it would make it easier to have a stronger structure of revenue coming in from other products.

Brett:

So you kind of struggled with, are we more of a bedding company? Do we need to have pillows and other betting related things or are we really an anxiety reduction, a stress reduction company? So why do you think you got hung up there? Was it just running in too many different directions or why were you not able to nail that identity?

Josh:

Yeah. Honestly, I think one of the things that I got caught up in for sure was just wanting to continue to scale without having to evolve the product. I was just a money hungry marketer that wanted to ... I'm all about keeping things super simple and just trying to go deeper in a few things and just continue to scale that core product because it was working. And we were-

Brett:

And you cracked the code on Facebook. Facebook ads were really working and that was the golden era of Facebook. And I think that is one thing that I'm curious if you agree. That is one thing that I think some startups don't really understand is that even if you nail that first product, customer acquisition costs are always going to go up. It's the nature of platforms. It's the nature of business. It's just your CAC costs, customer acquisition costs, are going to go up. So what are you doing to increase LTV, increase your average order value? How are you addressing those things? And it sounds like you maybe waited a little too long. You were loving the action on Facebook and just trying to press that lever rather than thinking about expanding.

Josh:

Yeah, exactly. I was putting my foot on the gas. And that was the golden year of Facebook ads for sure. I think we hit the perfect timing for that product as well.

Brett:

Yeah. Which is awesome. We'll talk about Groove Life in a minute, but they're a really shiny example of product extension. Peter's always wanted to be more of an adventure company. So silicone wedding rings. I forgot to wear mine today. But silicone wedding rings. But then as they pivoted and they've successfully ... Or not pivoted, but they've added to their product line belts. And I've got on my Groove Life belt right now.

Josh:

The Groove Belt.

Brett:

The best belt I've ever worn. It's kind of magnetic the way it clasps on the buckle and it flexes a little bit with you.

Josh:

Very addicting.

Brett:

Yeah. And that's their number two product and it's a huge part of their business, but it fits. It's accessories. It's for people that are active and engage in adventure and then they've added some other things as well. Wallets and some other stuff. It's been cool. So they nailed it. So I think that is something ... Any thoughts or advice you would give to a merchant? Like here's how you would approach product line extension now knowing what you know from successes and failures?

Josh:

Yeah, for sure. I think a lot of it is around just revenue growth. So I think that having that core product, getting that up to a half a million a year to a million dollars a year, I think that's a great threshold of that's where I would start thinking about your product 2.0. Of how you can add to that. Because you really need that core funnel or that core product to go sell on its own. And then adding on those secondary products of like, okay, what are these customers also going to purchase?

Josh:

Even the things that I learned at Groove Life was ... For example, the Apple watch bands. A lot of the customers that were buying the Apple watch bands weren't the same customers that were buying the silicone wedding rings. They were actually two very different customers.

Brett:

Interesting.

Josh:

The Apple watch band market from what we could tell was a lot more urban and maybe more concerned with health and fitness than the typical person that was wearing a silicone wedding ring. Because really Groove Life started out of this more blue collar outdoorsman market versus an urban health and wellness market. But once we added in the Groove Belt ... Everyone bought the Groove Belt from our customer list when we launched the Groove Belt. Whereas when we launched Apple watch bands, it really came onto like ... I don't know how you say that. Cold use? Not cold use but-

Brett:

New users, new shoppers, new ... Yeah. Yeah.

Josh:

Yeah. It didn't take off inside our email list, but it would do decently well on cold traffic. And so I think that's just something that you have to keep in mind too is how different products will connect with the type of customer that you're already trying to attract. And so, who's going to buy it after that core product and what kind of person is going to also buy from you versus Amazon? And so I think it's a lot more easier said than done, but it's definitely something that you have to figure out as a brand owner.

Brett:

Yeah. I love it. So let's talk about some of the key takeaways from the weighted blanket experience. So you talked with me as we were prepping a couple weeks ago. You were talking about how there's such a need to get granular with your costs and to know your numbers inside and out. What advice would you give to people and what kind of key takeaways do you have from that experience related to understanding the numbers in your business?

Josh:

Yeah, for sure. One of my favorite sayings is top line revenue is vanity, bottom line profit is sanity. And that's-

Brett:

It's fun to brag about those top line numbers when you're at events and masterminds and marketing conferences and stuff like that but does top line really matter?

Josh:

Yeah, exactly. I'm an EBIDTA man. I just think that it really matters about your bottom line profits in terms of how healthy your lifestyle is going to be for sure and if you're going to be able to sleep at night. But yeah, there's this framework that I like to use for most eCommerce brands whenever I'm analyzing a potential client to kind of look at ... Looking at their numbers. And it's what we just call the law of quarters. And so this was actually developed by Taylor Holiday largely and I gave him a lot of credit. I've learned a lot from him. But basically it's just you have four main costs in an eCommerce business. So let's say that your cost of goods sold is at 25%. So that would be one quarter of your cost in an eCommerce brand.

Josh:

And then another 25% of your cost in a total eCommerce brand would be your marketing cost. So that would be ... Say you're running at a four X ROAS. That would be 25% spend to revenue ratio so that would be another 25%. And then the third 25% would basically be your operational expenses. So that's your overhead, rent, maybe you also include shipping in that cost. And basically through that framework you're basically going to be ending up with 25% net profit at the end of the day. And so if any of those numbers are different for your business you can actually allocate a different percentage to each different bucket so that you can still end up with 25% net margin. So maybe you're actually able to cut back on your op ex expense and maybe you're able to allocate more budget to profit or maybe you have to allocate more budget to your marketing expense. Whereas that's probably the case for most brands. But that helps me and in some way be able to go into any eCommerce business and get a basic understanding of how the numbers play out for each brand.

Brett:

Yeah. I really like that. So quick recap, the law of quarters states 25% to cogs or cost of goods, 25% operation, 25% marketing, 25% net profit. Obviously it's going to flex or change a little bit depending on your business. But I think it is a great way to look at it and say, "Oh wow, my cogs are actually 55%. Whoa." That's a rough space to be in eCommerce because now you got no money for market. Either you're going to have to be bare bones on operations or you're going to have very little money for marketing and it's just not going to work. So if it moves a little bit, a few points in one of those categories, then you've got to be able to justify that adjustment to other categories as well.

Brett:

And one thing I'll point out here too is that when you're looking at 25% dedicated or allocated to marketing, it's not necessarily that it's a four X ROAS in platform. You're looking at more of a four X as far as MER. Media efficiency ratio. So total sales and total marketing dollars, you're looking at a four X there. Rather than sometimes your new customer acquisition cost is going to be higher than that. But looking at that total media efficiency ratio, four X in this case. So yeah. So were you not able to get to the law of quarters with your weighted blanket business?

Josh:

Yeah, exactly. So the thing that happened with that business was ... So in December, 2018, basically, we hadn't hit our sales goals like we had hoped. We actually hit ... In November we hit 800K that month. In December we also hit another 800K. But we had forecasted closer to 1.2 for each month. And that year we had actually tried going from two million to 10 million in one year.

Brett:

Five X to grow in a year. It's a lot.

Josh:

That's just a huge jump. Especially operationally. When you're bootstrapped, that makes it extremely, extremely difficult on cash flows. And your team in general. Especially as you're making that jump, you're probably going from a cash basis, accounting to accrual in that. So it just creates a lot of different confusion when you're making that jump. But anyways, we really over invested into inventory and then very quickly in 2019, we really started to see ROAS drop as more competitors came into the space. We went from tracking four competitors to over 30. And Target came out with their own weighted blanket and their cost was closer to $70 when ours was closer to 200. And so very quickly the numbers no longer made sense. Our op ex was probably 30% of revenue. All of a sudden our ROAS on Facebook was at ... It was at probably at like a three X blended. And so just the margin was starting to shrink very quickly. And so it just made things extremely, extremely difficult.

Brett:

Yeah. Totally makes sense. And so lots more we can unpack there, but in an interest of time, I want to transition to Groove Life. And we may circle back to weighted blankets as we go here a little bit. But let's talk about Groove Life. So you were the head of growth. You guys grew by $10 million in top line while you were there. I know the bottom line was healthy too. Talk about some of the key things you did to help Groove grow as the head of growth.

Josh:

Yeah, for sure. Obviously it wasn't all on me. Peter's a great marketer-

Brett:

Super smart.

Josh:

Himself to Groove Life. And Bryant was there.

Brett:

Yeah. Bryant Garvin, shout out.

Josh:

As well as the CMO. But yeah, one of the big things that really helped Groove grow ... I think outside of just marketing, I think we can talk about YouTube. I think that we can talk about a lot of the fun stuff that we were doing on TikTok and Facebook ads. But I think that one of the things that really helped Groove grow is what we were already talking about was just adding in these new product lines. Because really that was kind of like the new revenue growth. Because I think that we had really saturated the silicone ring market of people who were probably going to buy a silicone ring regardless. And I think that we were capturing a lot of the attention of that market already. And we had quickly taken over a large market share from KLO and Enzo as well was one of our other competitors. But really adding in the belt and really increasing the revenue share into the Apple watch bands, that was actually kind of a huge component that enabled us to grow.

Josh:

So that's how I like to think of things is really your marketing strategy starts from your product development. I think that's one thing that Peter's really great at is thinking from a marketing perspective when he's designing each and every single product. What are the benefits? What are the calls to action that we can make inside an ad that's going to make this click worthy, inside the timeline? Right?

Brett:

Yeah. It's kind of the way Amazon does it, just to give a quick insight there. They start with the customer and work backwards. When they're doing a new initiative or a new product designer rollout, they think about what would we put in the press release? That's what they think about from the very beginning, because that forces them to think one, what is worth talking about here and what will people want and who would want this? And so it sounds like that's something Peter's really good at is thinking about, "Okay, if we're going to build this belt, what are the points of differentiation going to be? What are we going to be able to say in our ads and why will people fall in love with this?" And that's key because sometimes I think people are just like, "Hey, this market's hot. Let's just make a belt. We can sell it." But really thinking about marketing from the beginning is really smart.

Josh:

Yeah, absolutely. I think one of the other things that was really cool that we were able to do was ... I don't know. Have you ever seen ... Have you gotten the ads from Athletic Greens where they're running all the different ads from different influencer pages? Also, it feels like Athletic Greens has just been absolutely destroying everyone on ads recently in the last couple months.

Brett:

I heard of Athletic Greens through the Tim Ferris podcast. I don't see their ads much. I'm not sure why they're not targeting me specifically. But yeah, I'm very familiar with them, but just not their ads.

Josh:

Oh, that's funny. I've been talking with a lot of people on Twitter about everyone seems like they're getting the Athletic Greens ads.

Brett:

I'll visit their site and then I'll see what their remarketing game is like.

Josh:

There you go. Yeah. Check it out. But anyways, my main point was just around their influencer strategy of white labeling influencers. Just the added trust that you get from influencer marketing. And so we leveraged a lot of that for the Groove Life account to where inside Facebook, I was actually running 20 different ad accounts on behalf of Groove from different influencer accounts. And also even some of our licensing partnerships, like Mossy Oak Camo, Realtree Camo, all those guys. We were actually running ads from those accounts and being able to leverage their remarketing audiences.

Brett:

Yeah. So super smart. So you were basically ... You had access to their Facebook manager account. Mossy Oak and/or some of the influencers. You were running ads with their content, pointing people back to Groove Life, but you were doing all the spend. How did you position that? Because it's a real win-win for you and for the influencer, for you and the partner brand. How did you position that as a win-win?

Josh:

Yeah, for sure. It's definitely a case by case basis. Sometimes in the licensing contract it might come with that as part of the deal to where we get access to their ad account and can run ads through their pages. In the case of a smaller influencer, sometimes they got a 5% rev share through any revenue attributed through the Facebook account. Other ones were just a one time fee for the year. So we would sign an MMA athlete or we would sign a bull riding athlete. And so that would just be a part of the added fee for the year. But yeah, we'd set all those up basically for them and really leverage all the creative and start to do some fun remarketing campaigns where at seven days this person would see this on a site visit or then they would see this next page. And it just seems like you're omnipresent once you go through the remarketing funnel, of everyone's talking about you.

Brett:

Yeah. It kind of feels like you're everywhere and that everybody ... Especially if someone happens to be following multiple influencers which does happen in a given space. Then you turn around and you're like, "Whoa, everybody that I trust and know is talking about Groove Life. This is huge. They're everywhere." Omnipresent.

Josh:

Right. Yeah. Some people, I think, think white labeling is a silver bullet. Which I don't know that it really is you're just going to do white labeling and it's automatically going to get you a huge ROAS. But what I do think that it can enable you to do is to get into new markets. And so if you sign someone in bull riding or if you sign someone that's more of a fitness athlete, it lets you leverage that person's audience and that person's likeness into a new market that you maybe never had access to before where just running ads from your brand page would kind of be offsetting or it might not make a lot of sense. But this gives you a stepping stone into a new market and gives you new volume that you hadn't had before.

Brett:

I love it. I love it. I want to talk ambassador programs in a minute and then talk about what your agency is doing. But before we do that, I know one of the things we talked about ... And I talked to Peter about this too. He and I hung out at an event in October so we were talking about this. But going beyond attributed ROAS. So going beyond the ROAS, return on ads spend, that you can see in platform. Can you talk about that a little bit? How are you guys thinking about that? Because I know you're still running Facebook ads for some clients and you're still very plugged into that as you're doing ambassador stuff, but how are you going beyond attributed ROAS?

Josh:

Yeah, that's a great question. So what we like to do is we looked at just your blended ROAS overall on the whole store. But you obviously have to pay attention to some level of in platform reporting. And so, one of the things that we've been doing has been A, well, we like to use a tool called Triple Whale, which I've shared with you previously.

Brett:

Yeah. I've met with those guys. Yeah. They're great.

Josh:

Yeah. Those guys are awesome. Max and AJ have done a great job building out the platform. But basically being able to see ... Basically with Triple Whale you're able to see your in platform reporting from Facebook, in platform reporting from Google, it brings in your Shopify revenue, Collegio revenue, all those fun things and gives you your site wide media efficiency ratio and your site wide ROAS. And so we love to look at that first and foremost. But another thing that we're doing-

Brett:

That's the real number right? You got to know how each platform and each campaign is performing. But there's going to be some cloudiness there and multi-touch attribution still isn't perfect. And you've got iOS 14.5 and later issues. But knowing that blended or MER number of total ROAS, that's the key number.

Josh:

Yeah, absolutely. That is the key number. And I think that a lot of people get caught up in the end platform reporting so they're not able to scale. And so one of the things I did last this last year in October was I took on a brand that was on a more of a profit share deal. And basically I installed a post-purchase survey where it was asking where'd you hear from us? It was actually from Inquire. Inquire Post-Purchase survey. It's an app on Shopify.

Brett:

Nice.

Josh:

It's really awesome. Check it out. But basically I installed that app and started getting almost 50% or 70% of people that were answering it were answering Facebook and Instagram. But really inside Facebook and Instagram, inside as manager I was getting a 1.0 ROAS. Maybe 1.2.

Brett:

... in platform, right?

Josh:

Yeah. I was getting really cheap cost per outbound clicks. And that was the cool thing is I was getting these really cheap clicks and so I doubled the budget immediately and all of a sudden my revenue doubled as well at a four or five X blended ROAS. And of course it was still-

Brett:

So your total ROAS was great. It's just the in platform it didn't look so rosy.

Josh:

Exactly. And so, we ended up quadrupling that store's revenue within three months, just because of that one change. And in platform, it looked like it sucked, but overall it was doing a four to five X ROAS after email marketing and all that fun stuff. And so I think that's definitely something to look at. Just kind of getting ... You have to have different touchpoints and understanding the whole marketing funnel, not just inside Facebook or inside Google.

Brett:

Yeah. And that's such good advice. And yeah, We hear really great things about Triple Whale. And I know Max so shout out to Max. They built a great tool. We also love Northbeam. Tool that we recommend to clients where it fits. But yeah, looking at how all of the platforms work together and then measuring your total ROAS is super important because ... We've seen this YouTube too. And we're more of a YouTube agency and we actually ... Our paths almost crossed. We helped Peter launch on YouTube and then ... Which the goal there is always we would launch it and then you guys would take it over and you did and did great.

Brett:

But we're seeing the same thing on YouTube as well where in platform you maybe seeing a 0.75 or a one ROAS, but you also notice that, yeah, but when we turn YouTube on Amazon sales go up and branded search and shopping go way up. They grow 300% in some cases. And so yeah, that's where you've got to look at the translation of what in platform numbers translate to the proper MER. That's the key. Not getting hung up on, I got to hit a four in platform, but I've got to hit a four total. What number in platform translates to that total number that I need to hit? So that's the real key. Yeah. Yeah.

Josh:

Absolutely.

Brett:

So talk about ambassador programs for just a little bit. What are you doing there now in your agency and maybe talk what you did at Groove as well. But what do those ambassador programs look like? Is that what you were just talking about where you take over people's ad accounts?

Josh:

Yeah, absolutely. So, yeah, I'm really stoked about ambassador programs mainly because last year, I think a lot of brand owners, when iOS 14, iOS 15 started to hit, really, they saw that drop in their in platform ROAS. Everyone was like, "Okay, what are the other ways I can make money on my eCom store without spending money on ads?" The answer for a lot of people was, "I want to start a community." But I haven't really seen anyone build out a community well for eCommerce brands. There's very few. You can kind of look at maybe PureVita or you can maybe look at MVMT watches or maybe Gymshark. More of these huge legacy ... Now legacy eCom unicorns.

Josh:

But I really want to set out to really build communities for eCom brands to do one of three things. The first is really driving organic traffic in sales through influencers. Just through influencers. And so that way you're getting the benefit of the organic audience, getting that organic traffic, which a lot of brands struggle with. But then number two is maybe the most important, which is getting the creative from those influencers and being able to leverage that across channels. And so by building an ambassador program, you're actually building out a well of creative to where it's getting refreshed every single month and you can refresh your ad account instead of running your same old static image ads that you're running from your product pages. You're getting something fresh and you're getting some more EGC style creative. And so my thesis is basically, what's going to perform better? The ad that two white guys thought of in a studio together trying to shoot on a backdrop or giving creators your product to help build a new piece of creative?

Brett:

Yeah. It's so good. Yeah. Do the best ideas or the best ads come from sitting around the boardroom so to speak and white boarding ideas and stuff? Maybe, but probably not. Probably your next breakthrough ad is going to come from an actual user, an actual customer, an actual influencer. And so we love this. And I know on the Facebook and Instagram side, you've got to be generating new content. It's very content hungry and that monthly refresh or even more often in some cases. We see the same thing on YouTube where we want to be testing regularly. We also find that creatives last a little longer on YouTube. So maybe it's more like a quarterly refresh, but you still want new, fresh creatives and you don't want to have to be the one racking your brain and coming up with new hooks and new product demos and new appeals to get someone to take action. Let your users, let influencers do that. So that's what you're doing here. So any tips or suggestions? How does one go about building an ambassador program? Other than calling Josh, which I would recommend doing that too. But how can you build an ambassador program? What does that look like?

Josh:

Yeah, for sure. So what I always like to say is your best ambassadors are the people who have already bought from you. And so I always love to start ... I always like to launch an ambassador program to your existing customers. And so that's what we do with each brand. We actually go to their current customer list and we launch. We'll use a piece of software. There's a bunch of different softwares that you can use for this. Our preferred one is Dovetail. It's a great piece of tech. It's also very affordable. It's not going to charge you $2,000 a month like most influencer softwares are. And you can actually have them apply to your program. And maybe you give them a 10% commission on confirmed sales from the organic following, but really the benefit is A, they already have your product so most likely you're not going to have to ship out more product to them if they already have it. Obviously very dependent on the category.

Josh:

But then you're actually enabling them to share about why they love your product so much. And so that is actually going to flood your applications to where you might get 80 new applications from your existing customers. And then from there, it's really on doing outreach to new ambassadors that make sense for your brand. And so what we like to do is really building out campaign briefs. Really asking for more of a testimonial style piece of creative. That seems to be the easiest way to shoot. Face the camera, displaying the product, talking about the three things they love about it and having a call to action.

Brett:

You're giving them that direction of, "Hey, you face the camera, have the product and just tell us the two or three things you love about it." Is that the instruction you're giving ambassadors?

Josh:

Yeah, exactly. But also past that. The two biggest problems we normally see with ambassador programs is A, there's usually a lack of support. Just because usually it's a social media marketer in-house or a performance marketer in-house. They're trying to run this while doing a million other things. So that's one big thing. Then the second one is just poor tracking of ROI. So a lot of people, they either don't have any links that are tracking the sales or they're not leveraging it into pay to really see how you're monetizing the ads. But the third one is just treating every influencer the same. And that might be the first tier of having a testimonial style video. But what if you have an influencer that has 500,000 followers that's been around the block and can actually build out some really gnarly creative. Then you really want to have them in a different here of like your ambassador program so that they're getting a high touch treatment.

Josh:

So maybe you're hopping on a Zoom call with them once a month, talking to them about your promo calendar, showing them, "Hey, here's how I think we help you earn more money." And have a greater level of partnership. And really just developing that relationship so that maybe you eventually put them on a retainer. Because influencers, they really want a long term partnership and consistent income. Those are the two things they want the most. And so if you can paint that picture for them, then you're going to have a really successful program as long as you deliver on your end. And so, yeah, just out of that we're able to get tons of new creative every month from your ambassador program and just keeping them up to date on what your promo calendar looks like and inviting them to new campaigns. We like to build out new campaigns usually every six to eight weeks, so that it's staying top of mind and so that they can continue to earn commission.

Brett:

New campaigns to outreach to find new ambassadors or new campaigns running ambassador content, promoting the product and stuff?

Josh:

New campaigns to your existing ambassadors. So once you maybe sign a hundred ambassadors, just keeping your new campaigns internally for those ambassadors. To be posting about whether it's a new product, a new promotion, maybe you want to launch them all at the same time. All those kind of things can help grow your ambassador program.

Brett:

It's amazing. I love it. And yeah, I'm sure the 80/20 rule, or maybe it's the 90/10 or 95/5, where 80% of your results are coming from 20% of your ambassadors or maybe it's again 90% coming from 10%. But you've got to focus in on those influencers that are really making a big impact and make sure they have everything they need and make sure they stay motivated and make sure they're incentivized and all those things. That totally, totally makes sense.

Brett:

Well, let's do this Josh because we've only got couple minutes left. Tell me a little bit about your agency and what you do specifically. And then I know you've got some really cool resources to help people get started with ambassador marketing. So let's talk about that.

Josh:

Yeah, absolutely. So our agency's called it alignedgrowthmanagement.com and we help eCommerce brands scale to multi seven figures, multi eight figure brands. And yeah, right now we're really focusing on helping scale ambassador programs and doing your paid social as well as a part of that. But yeah, we just actually put together this really cool Google Drive of creative from seven figure, eight figure and actually one nine figure brand in there that we took their top UGC that has done over six or seven figures in sales. And so you can actually come and see what that creative is at alignedgrowthmanagement.com/newsletter. And we're actually going to give you a quick breakdown of 10 different brands and then links to each video so that you can actually duplicate that and take those principles and apply that to your own creative. And hopefully that'll see your cost per clicks decrease and your conversion rate increase.

Brett:

Awesome. So again, that's alignedgrowthmanagement.com/newsletter. Did I get that right?

Josh:

Yep.

Brett:

Awesome. So check that out. I think one of the best ways to learn is by looking at other successful ... Even if it's UGC, where you're not the one actually creating this. Your influencers or your customers are going to be creating it. When you see UGC that's done well, that really strikes that emotional chord and is motivating and convincing and compelling and all that, it can help you understand how do I coach my people to do that? And then also, how do I identify when I get some of this UGC back from my brand? How do I identify which ones I want to run and which ones I don't? And so highly recommend you check that out. And then, Josh, you guys are also for hire as well right? So if someone's like, "Hey, I want to build an ambassador program." And I know you guys are full and probably got a backlog, but you guys are for hire for that as well, correct?

Josh:

Yeah, absolutely. Just come to our site and book a call and happy to chat to see if we can help.

Brett:

Awesome. Sounds good, man. Well, this has been a ton of fun. I'm actually a little disappointed that we're out of time because I have more questions about Groove Life and about ambassador programs and about all of it but we'll have to consider round two at some point. So Josh, this has been fantastic, man. Thank you so much for the time. Any other parting words of wisdom, any asks of the audience? Anything you want to wrap up with?

Josh:

No, I don't think I have anything else. If you want to really connect with me, I'm pretty active on Twitter, @JoshJDurham. And I'm always chatting about D2C growth, how I hate oat milk, and lots of other things on Twitter. So I would love to connect with you there.

Brett:

Continue that conversation. Share you your hatred for oat milk as well. Follow at ... You said it's @JoshJDurham?

Josh:

Yes, sir.

Brett:

Awesome. I'll link to that in the show notes as well so you guys can find that. But Josh, thanks man. Been a ton of fun.

Josh:

Thanks, Brett.

Brett:

Yeah, absolutely. And thank you for tuning in. We love your trust and your support of this podcast and hey, if you haven't subscribed, if you haven't liked ... Actually liked is not a thing. If you haven't given a review or if you haven't shared this podcast, do that. We love that. It helps other people find this podcast of course. And helps us impact and reach more people. And with that, until next time, thank you for listening.

‍

Episode 189

:

Kim and Tim Lewis - CurlMix

How to Raise $4 Million in Crowdfunded Equity

Kim and Tim have been on Shark Tank and they were featured as one of Oprah’s Favorite Things.

Kim and Tim Lewis are truly an inspiring success story. They’re happily married with 3 kids. They run a business that just raised $4 Million in crowd-funded equity. They’ve been on Shark Tank and they were featured as one of Oprah’s Favorite Things. They have huge goals for the future. So what is their brand Curl Mix? It’s a line of hair care products formulated for curly hair…and it has a raving fan base.

In this merchant success episode we unpack some key lessons including:

How Curl Mix got started and how doing FB lives from the shower helped their products go viral
How they got on shark tank and tips for doing the same
The definition and explanation crowdfunded equity
3 tips for raising $4.5 million + of crowdfunded equity
How CurlMix plans to become a black-owned P&G
How to increase recurring revenue
Plus more!

‍

Mentioned in this Episode:

Kim Lewis

Tim Lewis

Kim & Tim Lewis Instagram

CurlMix

“Influence” by Robert Cialdini‍

- Wefunder

Blue Ribbon Mastermind‍

“Trust Me, I’m Lying: Confessions of a Media Manipulator” by Ryan Holiday‍

Ring‍

eE 112 Liz Germain‍

Jeff Weiner‍

Wefunder‍

StartEngine‍

Republic‍

Adam Goldenberg‍

Fabletics‍

Savage X Fenty‍

Kate Hudson

Transcript:

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 have a merchant success story, and it's one that I'm just super excited to dive into this. I think I'm going to have as much or more fun recording this than you will listening to it. This is an amazing power couple in the eCommerce space that I had the privilege of meeting in Denver several months ago at Ezra Firestone's Blue Ribbon Mastermind. We met, I was like, "Man, you guys are awesome. What you're doing is amazing. And so, let's get on the podcast and talk about it."

Brett:

This episode of the eCommerce Evolution podcast is brought to you by OMG Commerce Resources. That's right. Here at OMG Commerce, we want to help make sure you're educated and in the know, to capitalize on the latest tips, tricks, and strategies to help you grow your eCommerce business. So if you go to omgcommerce.com and under resources, click on guides, we have some cutting edge free information for you on things like how to dominate with Amazon DSP ads, or how to use Amazon sponsor brand video ads, and how to craft the perfect ad.

Brett:

We have several guides on how to capitalize on YouTube ads. From creating the perfect ad, to knowing when you're ready to scale. Plus there's the newly updated Google shopping guide. Plus more. Check it all out at omgcommerce.com and click on guides under resources. And now, back to the show.

Brett:

So I have with me today the husband and wife team, Kim Lewis and Tim Lewis, Kim is CEO, Tim is COO. They're co-founders of CurlMix, and they've been on Shark Tank, been on Oprah's Favorite Things. They're ruling the world. Tim even went to college in my home state of Missouri. And so, just thrilled to have you guys on the show. So Kim, Tim, welcome, and how's it going?

Kim:

We're doing well. Thank you for having us, Brett. We're excited to be here.

Tim:

Oh yes.

Brett:

... just look fantastic. You guys just look cute. You look like you know what you're doing? And you all look snuggled in there...

Tim:

That's half the battle

Brett:

It is.

Kim:

That's so kind, but thank you so much. I appreciate it.

Brett:

So lots, lots we want to unpack here. And then I love doing these types of interviews because I think we all learn from success stories, and we learn from failures along the way as well. But you guys have just done some amazing things. I love your site. I love your brand. I love how you guys have been able to grow.

Brett:

So, talk a little bit... And also, side note. So you guys are married, but you met in high school. So you guys have known each other since high school, got married after college, running a successful business together. What is it like? And how did this come to be? Because you guys look like you still like each other.

Tim:

I actually do. Kim is my person. She's my best friend. So I'm an introvert. And so all this entrepreneurship stuff

Brett:

You're an introvert?

Tim:

Yeah. I play a really good extrovert on TV, but honestly I'm an introvert. And Kim is my one person, and we're best friends. She likes me still so far, so I haven't messed that up. But I met Kim first period... No. Freshman year, second period gym class.

Brett:

Nice. Met in gym class.

Tim:

Oh yeah. Yeah, you know what? It took me a little while...

Brett:

So who was interested first? And sorry if I cut you off, but who was interested first?

Tim:

Yeah. It was actually-

Kim:

It was Tim.

Tim:

It was me. She caught my eye. We were sitting in the same line in gym, and I was like, "Man, she's super cute."

Kim:

He barely made the class. I wasn't checking for him. I was like, "I'm going to date somebody who's going to class."

Tim:

That's true. But it took me a couple weeks to build up my confidence and go talk to her. And I talked to her after school, we were chit chatting at her locker. And then out of nowhere, she introduces me to her boyfriend who walks behind me... Ugh, whatever.

Brett:

Take that, Tim. Yeah.

Tim:

Until junior year until she was available again, and we started talking. And we finally made it official our junior year.

Brett:

Junior year. I admire that persistence, Tim. And Kim, I'm just curious, and this is relationship or a dating podcast, but this is super fun and interesting. What won you over? What was it? Because Tim's a good looking guy, but what finally convinced you?

Kim:

It wasn't his looks. He's cute, but it was... Tim was the nicest guy I've ever met, and today is still the nicest guy I've ever met. And so, every time I think about... I go to a lot of conferences. I meet attractive men who make a lot of money, but I'm like, "This guy's not going to do all the things that Tim has done for me or treat me the way that Tim has treated me." And I'm reminded of that ...

Tim:

Trying to get points over here.

Kim:

Stop ...

Brett:

You guys a recording of this, just anytime you need it

Tim:

Need a clip. We're going to run it on a loop.

Brett:

That's awesome, guys. Well, really excited to be chatting with you. So let's talk about CurlMix because like I mentioned, I love your brand, and you guys have done some amazing things from Shark Tank appearance to Oprah's Favorite Things, to now you got a VIP membership and all kinds of crazy stuff that we'll dive into several things, but what's the origin story? Where did the idea for this business come from? And how'd you guys launch?

Kim:

CurlMix, I like to say that it's my... This is CurlMix 3.0 right now, because initially we started a social network for natural hair. So niche social network, though, don't work. And that's what you learn the tech industry.

Tim:

Yeah. We were fresh out of college when we started that business.

Kim:

Yes.

Tim:

We had just read 4-Hour Workweek, and we were oh, we'll be internet entrepreneurs.

Kim:

And didn't actually have a business model. We didn't have a way to make money. So I was like, "The next time I start a business, on day one we're going to make money." And at the time, I was making all my haircare products at home. And I was like, "Man, if somebody would just send this to me in a box, this would save me so much time." And so, Tim convinced me to launch it.

Brett:

Now, why were you making stuff from home? You just couldn't find anything that actually worked for you?

Kim:

Yeah. So a lot of women who have curly, kinky hair, we don't... Early in the early 2000s, there was nothing on the shelf for us. And if it was, you didn't know if it was any good, you didn't know if you could trust it. And many of us, we had straight hair our entire lives. So we didn't know even how to use the products sometimes. So many of us spent hours and hours on YouTube, learning how to do our hair and learning what products to use. And in that journey, some of us end up making things at home because we can't find what we want on the shelves.

Tim:

And not just making stuff at home, but she would go to Whole Foods, spend hundreds of dollars, come back, destroy the kitchen and leave me with the dishes, and may or may not even like what she made. so it wasn't all roses and rainbows.

Kim:

Yeah. I'm sorry. I did. I skipped a bunch. And then, I was watching an episode of Shark Tank one day, and this lady was doing it with organic cookies. She was having everything prepackaged and put it in a box, and then you go home and you make the organic cookies. You didn't have to shop for anything, and you knew it was organic. And I was like, "I wonder if anyone's doing this for hair?" And Tim was like, "You should do it." And we did it. Sold one box to my cousin, I was like, "This is a failure." He's like, "No, Kim, if Airbnb can relaunch seven times, surely CurlMix can relaunch twice."

Brett:

Nice. I Love that. Yeah.

Tim:

Yeah. We just didn't know what we were doing. So we read a bunch of books, things like Influence by Robert Cialdini.

Brett:

Classic.

Tim:

I think Confessions of a Media Manipulator by Ryan Holiday. It was just anything to learn how to pitch journalists, how to get press. And so we ended up relaunching a month later. We were able to line up not only press appearances, but a partnership with a large influencer in the space. And we ended up selling 100 boxes on that first day, including another box to my cousin.

Brett:

Repeat customer. Your cousin is a big part of this story.

Tim:

She's now our chief of operations too.

Brett:

Nice.

Tim:

So she's the CurlMix ... diehard.

Kim:

Yeah. And so we did that, and we did that for two years, the DIY box. I think our best year, we made close to 200K, but it wasn't enough for me to work working in tech full time. And so, our best customers started to unsubscribe because they basically were like, "I can't do a lot with all these boxes. Every time I go to do my hair, I still have to make my products." And they were still buying ready made products.

Kim:

And at that time, our flaxseed gel was our number one selling box. It was the one thing everybody was buying over and over and over again. And the reason they were doing that is because it wasn't on the shelves. No manufacturer would make flaxseed gel because you literally boil raw flaxseeds and extract the gel, and it helps give you this hairstyle.

Tim:

Yeah. And we know... They wouldn't make it because we asked them.` I think we got turned down four times when we tried to ... and they just said, "It's too variable. It's too hard to preserve." No one had figured that out yet. And we got the ...

Brett:

Challenge accepted and opportunity ...

Kim:

Yes.

Tim:

We got the advice from our advisors. You never just stop selling your best selling product. Just find a way to make this work. Because if you do, you have something great. So Kim being the entrepreneur and hero that she is, she spent a month in our kitchen, whipping up 50, 60 different batches, seven months pregnant, mind you.

Kim:

Look at that.

Tim:

Until we finally got something that worked and was preserved. And we decided we've done the entrepreneurship stuff for a while now. We know what we're doing. Let's make sure people actually want this, so let's pre-sell it. So we don't make anything yet. Let's just see if people actually want it. We opened up, I think, 60 spots at the time, because that's how much we could make in a pot on our stove. And we were like, "Let's just sell those 60 and see if people want it."

Kim:

And we sold at the same price we were selling the box for. But the margins on the bottle were 70%, and the margins on the box for 30%.

Brett:

That's amazing.

Kim:

And we sold out twice, basically hundreds in amount of hours. And after that we were like, "This is it." So we pivot the entire business. We threw out six months of box content and-

Tim:

Yeah, we had worked with influencers, we'd done photo shoots, we had ingredients. And we just had to...

Brett:

Man, this is it. Yeah. Because people don't want to mix their own hair products. It was easier, way easier than what you were doing back in the Whole Foods days, but still people want it in a bottle, and so-

Kim:

Exactly. So we pivot the business, and ...

Tim:

Yeah, that was January 2018. Mind you, our first baby boy was born December 2nd, 2018.

Kim:

2017.

Tim:

2017.

Kim:

Yeah.

Tim:

It's his birthday today, by the way.

Brett:

Hey, happy birthday, little man. All right.

Kim:

Happy birthday,...And so we did a million that year in revenue after we pivoted. And so, it was like, oh this is... So Tim quit his job, came to work for the business. And then the next year, we were on Shark Tank, and then we helped propel us to about five million in revenue. ... completely last two years really a lot of success, but the first four to five years, we were struggling.

Brett:

Yeah. But so you were an overnight success story that was five years in the making, like mostovernight success stories. So let's talk a little bit about Shark Tank. I know some people want to get on, and other people were just interested by it. So what was that process like, and how did you get on Shark Tank?

Tim:

Sure. So ...

Brett:

You guys were fans of the show, right? You were fans of the show for ... Yeah.

Tim:

We watched all the episodes and even more, once we found out we were going to be on the show, but I'll jump into that.

Kim:

You know what's funny, though, after you go on the show, the people who go on the show stop watching.

Tim:

That's true.

Brett:

Have you guys stopped watching?

Tim:

Sort of.

Kim:

Yes

Tim:

Yeah.

Kim:

I've met a ton of founders who no longer watch ... who were on the show.

Brett:

Is it because the mystique is gone and because maybe it wasn't... Or maybe your perspective on the sharks change a little bit or something like that?

Kim:

I think it's the mystique. I think it's not knowing what goes into it makes it alluring or just interesting, like, "Oh my god. If I could just get in front of the sharks." Yeah. But when you really peel back the layers, it's six months of a part-time, sometimes full-time job, getting ready for the show ...Just to get ready.

Kim:

Yeah. So it's intense. But go ahead on the show, yeah.

Tim:

So January 2018, we got rid of all of our boxes. We basically had no sales. I think we had our lowest month in sales ever. Kim cried. And she was like, "This is stupid. We made a mistake." But I was like, "You know what? Let's just keep going." And then she said, "If we can just double, we'll be okay." So we ended up doing more than double, 8,000 that month. And then if we can double next month, we'll be even better. We ended up tripling to over $30,000.

Brett:

What were you guys doing for traffic at that point? Just curious, how were you driving traffic...

Kim:

We were not spending money on Facebook ads yet. So we were working with micro influencers ...revenue sharing.

Tim:

Email list.

Brett:

Yeah.

Tim:

we didn't have any SMS then, either.

Kim:

No, SMS wasn't even a thing.

Brett:

You were just hustling.

Kim:

Yes. We hustled our way to 30K a month. And then we started investing in Facebook ads right around... Because we knew who we were talking to then, and we knew what they were buying, who our competitor was. So we did that. And then we got to the million in... Oh no, right around March. That was March when we got 30K revenue. And then ...

Tim:

We were like, "We need help," at that point.

Kim:

Yeah.

Tim:

So that's when I quit my job. I told Kim, "I got three months of savings. If I quit my job, we got to be able to pay ourselves in three months."

Kim:

But the Shark Tank, I want to get back to the question, because he basically said... So Tim's aunt called us. And she was like, "Yeah, I know you guys are doing your little business." I said, "Yeah, a little business." And she's like, "Well, they're doing a casting for Shark Tank at UIUC. And I think you guys should go." And we were like, "Oh, we didn't know that." And at the time, our baby was coming everywhere with us because we didn't... he's five months, six months. And he goes to the casting with us.

Tim:

Yeah. It's literally the next day. We have to throw together a pitch. She called us Wednesday ...threw together a pitch overnight, took him to the pitch with us because we couldn't find a babysitter. He sleeps. He sleeps the whole way through the ...

Brett:

That away.

Tim:

And then when we get up to pitch, he wakes up and starts crying.

Brett:

Okay. ...pitch, okay. He was resting up. He was resting those lungs, so the pitch... because he wanted to be part of the pitch too, guys. You can't just... he wanted to be part of the business, like I got something to say here.

Kim:

Man, and we were pitching, he starts crying, we grab one of the boxes and give it to him. And we're Kim and Tim. It was literally hilarious.

Tim:

We thought we bombed. We thought they were like, "This is the worst pitch we'd ever done" But they loved it. They loved us. They liked our story, and they were like, "You know what? You guys made it to the next round."

Kim:

Well, they called us back in two weeks. So, I had been scrolling through my email like a hawk, looking through all the spam for two weeks. And then one day, Tim heard me scream really loud in the house. And he's like, "We got our shark thing." And I was like, "We did." He knew because I was acting crazy.

Tim:

I think I was in the basement. I heard her from two floors.

Brett:

That's awesome. That's awesome. So then it sounds like that really blew up the business, right?

Kim:

We had made a million dollars before we even-

Tim:

Before we aired the show.

Kim:

Yes. And then the year that we aired, that month we were spending heavy, I would say, on Facebook ads.

Brett:

Got it.

Kim:

So we probably...

Brett:

You had a lot of momentum anyway.

Kim:

Yes. Yes, yes, yes.

Tim:

And that took it just way off... I think we were doing maybe 300K per month at that point. And then the month of Shark Tank, we did almost a million in just that month.

Brett:

That's awesome.

Tim:

Which we weren't quite prepared for either.

Kim:

No way.

Brett:

That's the way it goes so many times. You're not ready for that bump from... And then you guys did it again, probably, with Oprah. It's just this massive influx of traffic.

Kim:

But what I would say though, too. I've had a few friends go on Shark Tank after, and what I have learned, it really matters the order in which you go up. If you go up first, second, third, or fourth on the show, that determines how big your revenue is. Because we did do 900,000 that month, but we probably spent two something on ads that month. So it was a proper 3X ROAS and everything. And if we weren't spending it on ads, maybe we would've done 500 or 600 or something like that, I would probably think. But we went up, I think, third in that episode, didn't we?

Brett:

Gotcha.

Kim:

And I had a friend who sells lashes, and she went up first. And she did, I don't know, maybe a million in two days or something crazy.

Brett:

Wow. Wow.

Kim:

And she's a product that everybody can use, all women can use. And so it really does matter if it's consumer friendly, if you go up first, and if it's something that everybody can use.

Brett:

Makes sense.

Kim:

And if it's more drama in your episode. If you cry or if you do a big production ...

Brett:

Sharks get in a fight or something, or you get a fight with them or something. Yeah. Yeah. Because it's TV, man. They want good. They want action on TV, and it is about drama. That totally makes sense. So any tips or suggestions would you give? Who would you advise, "Hey yeah, it's worth trying to get on Shark Tank," or who would you advise, "No, don't bother."... Do you have any thoughts there?

Kim:

Yeah. If you have a demonstrable product, like the Scrub Daddy guy, he got on there and it was totally HSN. He was like, "You can clean this, you can clean that. You can clean it all over. Look at this, brand new."

Tim:

"Wait, there's more." You can really get into the presentation and wow people, you've got it. The other thing is just having a really great story as well. So we have the benefit of being high school sweethearts from the South Side of Chicago, making a product in a space that is underserved.

Brett:

Yes.

Tim:

So, and then on top of that, Kim decided to turn down almost a half a million dollars. And so it played really, really well.

Brett:

So can you talk about that? Was there fighting at this point? Was Tim like, "What are you doing?" Or were you guys in agreement, like, "No, this is not the right deal. We got to turn this down." And also, what Shark offered you the deal?

Tim:

What were you thinking?

Kim:

So Robert Herjavec offered us $400,000 for equity stake in the business. Now-

Tim:

20%, at that point.

Kim:

20%. But I'll back up. When we were on the show, we were already going to make a million that year. We were already on track to do a million. And this is September, so you know your numbers are pretty solid.We could have gotten angel deals from other, or syndicate deals for a six to seven million dollar valuation. When I looked back, actually compared it to Ring. You know the founder of Ring...his name? He came on the show, asking for a seven million dollar valuation, and he got crushed by the sharks. They're like, "Absolutely not. Why do you think you're worth that? Get out of our face." That was literally the... And I think they brought it down to four or something, or he tried to bring it down to four, and they wouldn't.

Kim:

So that was the... I'm like, "Dang, okay. Well, that's what we're worth, but that's too high for the sharks. So we'll cut it in half, we'll offer a four million dollar valuation for 10% equity in the company." And then Robert cut that in half and was like, "No, you're only worth two million dollars."

Brett:

Right. Right.

Kim:

And I was like, I have to go home with this business and feed my family. And then he also said he didn't know anything about the business and the industry ...

Brett:

He's a white dude. He doesn't know the market ...

Tim:

Curly hair, right. And so, we had a whole demo set up where we show before and after. And he was like, "I can't tell the difference." And we were like, "Well, you're definitely dumb money." This is not the partner that we need to actually make it be successful. We were really hoping to do a deal with Alli, who was the guest shark at the time. She's the co-founder of Drybar, or... Who else would you...

Kim:

Lori or Damon.

Tim:

Or yeah, Damon.

Brett:

Yeah. Yeah, yeah. no offers from Lori or Damon?

Tim:

Damon wasn't there. Alli was subbing in for him.

Brett:

Got it.

Tim:

But Damon wasn't there .

Kim:

And Alli made the comment, like "I'm in the business of making curly hair straight." And I was like, "Oh, that was the wrong comment."

Tim:

All about straightening curly hair. And so, it just didn't work out that way.

Kim:

And Lori has other curly hair investments. So she's invested in someone else was on the show before.

Brett:

Yeah. But I think, so one cool thing there is you walked in though knowing what you were worth, and you had success and you had momentum. You went in wanting a deal, but not needing a deal. Right? And so, you were able to say, "No, it's not the right deal." So kudos to you guys for saying no.

Kim:

Thank you.

Brett:

Yeah.

Tim:

There are some sharky deals on that show. So you have to know your numbers like the back of your hand. And we just spent six months drilling, like it was finals week for six months. We would be in the car, and I'd be like, "Kim, what's your cockroach?" We were really going in heavy on the training for Shark Tank.

Kim:

Yeah.

Brett:

That's awesome. Very cool. So I want to talk about Oprah, and then I want to get into some things around crowdfund and community building and some of the amazing things that you guys do so well, but how did you become one of Oprah's Favorite Things? Was that something you tried for, or did it just happen?

Kim:

It honestly just happened.

Brett:

Yeah. Nice.

Kim:

What I have found out, though, that if you want to be on Oprah's Favorite Things, the selection happens in June or July. It's in the summer ...

Brett:

It's just once a year?

Kim:

Huh?

Brett:

Just once a year, typically, for that?

Kim:

They probably spend the middle of of June, all of June and July, figuring out who the companies are going to be.

Brett:

Yep.

Kim:

And so, if you want to be on Oprah's Favorite Things, if you figure out where their office is, you can send them to your products, and have them test it or figure it out. Her team will try it as well.

Tim:

And they also use secret shoppers. So you may not know this, but someone from their team might have already purchased your product. We found out later that there were a few people who were in that sphere who actually did purchase and really liked the product and recommended us to them. And so it helps to, one, just always be good and prepared for those kind of opportunities.

Brett:

Never know who those shoppers are, man. Maybe an investor, maybe a partner, maybe Oprah's people. So you got to be ready.

Tim:

I will say, I was always looking on the orders, like is Oprah... Is this going to be this going to be. If there was ever a celebrity, I hope I caught them, but not always.

Brett:

Yeah. And I know you probably can't say, but have you had some celebrities order from the site?

Kim:

Absolutely.

Brett:

Nice. That's got to be fun. And you're like, "Hey, is this the real so-and-so?"

Kim:

Exactly.

Brett:

Do you ever reach out

Tim:

A couple times I've Googled some addresses and street viewed some place. I'm not ashamed to admit it. I was like, is this...oh my goodness.

Kim:

Do you know TLC Or don't go chasing waterfalls. That TLC

Brett:

Yeah. I was thinking the TV TLC yeah, man.

Kim:

Okay.

Brett:

I'm a child of the '90s. Of course.

Kim:

So Chilli from TLC ordered our products before.

Brett:

No way.

Kim:

So that was cool.

Tim:

She had really long curly hair, and so it was great.

Brett:

That's awesome.

Kim:

And Naz's ex-wife, she ordered Calise

Brett:

Crazy.

Tim:

And a few others.

Kim:

Yes.

Tim:

We'll have to go back through and look

Brett:

Yeah, sure. No, that's amazing. I love that. Love that. So what lifted then that crate being on Oprah's Favorite Things? Was that a really noticeable lift, or how would you describe that?

Kim:

I would say it was more credence. It was definitely a lift, but it's not quite like Shark Tank. Because Shark Tank, you're getting three to four million active viewers when it launches

Brett:

All at one time.

Kim:

Exactly. So you notice it, whereas Oprah, everything is promoted throughout the whole month. And there's different segments here. So you have spikes, peaks all throughout the month, but they're maybe a little bit lower peak. For altogether, there was definitely a lift.

Tim:

Yeah. And then they structured it in a very interesting way. So instead of people coming to your website, they partner with Amazon. So that anything that you wanted to offer for Oprah's Favorite Things had to be shipped into Amazon. And so it was very, very different. So Shark Tank, we were getting all that customer data, all those people that we could tag and remarket to email list. But these folks went to ...

Brett:

Oprah had to be through Amazon. Interesting. Okay, cool. But both of those things are now appearances, and that's media mentions that you can talk about forever and that build credibility and build your brand. And so, you can leverage that for forever.

Kim:

Exactly.

Brett:

Which is awesome. So let's talk about, I want to talk about now crowdfunding because we met at Ezra Firestone's event in Denver, Blue Ribbon, and you guys talked about building community and then how that allowed you to do some crowdfunding and stuff. So just walk us through that. And we were joking around, if you don't have a community, you can't crowdfund. You can't crowdfund without a crowd. So, how did you build a crowd, and how do you use crowdfunding? Walk us through that.

Kim:

Yeah. So we built the crowd through a combination of... I used to go live every Wednesday. I did it for almost two or three years.

Brett:

What?

Kim:

I would go live on Facebook to do my hair, to show our customers how they use the products in my shower.

Tim:

And I would be filming her

Brett:

Live in the shower? This is awesome.

Tim:

We turn it into a whole TV show.

Kim:

Yes.

Tim:

And I would record Kim, and we would do trivia. We would make jokes. We would talk to the customers. We would answer questions, live Q&A. And it was just a really great learning opportunity because our product is one where people have to learn how to use it, how to get the specific style. And so that was two parts, community and education, and people loved it.

Kim:

So that was one of our ways of getting new customers but also helping our current ones. We also have a quiz that most people need to take first to figure out what products they should use from our collection because we have lots of .... And from that quiz, we collect your email and phone number, but it leads into a custom result that has a custom email flow based on whatever issues that you had. So if you say your issue was breakage, you're going to get 10 emails about breakage over the next two or three months after you've taken that quiz. And once you make a purchase, you're also going to get an email from us that says you're in our Facebook group. And that's where the real magic is because we have about 13,000 customers.

Brett:

Wow.

Kim:

In that Facebook group with 90% engagement. So-

Brett:

Wow.

Kim:

We're getting 20 posts a day. People are posting pictures of using the products or asking questions or showing up. One of ...

Brett:

People are asking questions and answering their own questions, probably...

Kim:

They go live for each other, and it's crazy. And so it's a really strong community. So when we dropped the link for our crowdfund in there, they went bananas. They helped us raise a million dollars in about hours. It was pretty cool.

Brett:

So are you still doing Facebook lives, or is that something that's not really that important anymore, now the community's already got traction and it's building and growing?

Tim:

We're still doing them. But we've changed

Brett:

From the shower.

Tim:

We're not doing every one ourself in our shower. For a time, we moved into a studio space that we had at the office where we were bringing in customers and guests and influencers. Then when the pandemic hit, we went back to the shower, but then now we've expanded it, so that now our customers and influencers will go live in their showers at home

Brett:

Oh, that's hilarious.

Tim:

So we've definitely evolved it over time.

Kim:

And it's funny because we tell people to get in the shower to use our products. The reason you have to get in the shower is because the water helps the product spread across your hair better than if you were just sitting outside the shower doing it. So you really need that steam.

Tim:

And the hair gets more moisturized. Right?

Kim:

Yeah. And so we tell them that. We're like, "Well, we can't show them us doing it in a salon. They're not going to be to go to a salon." So ...

Brett:

Exactly. Exactly. So ...

Kim:

How to do it.

Brett:

So interesting about that is it's an immediate pattern interrupt as well. I'm not expecting you to go live from the shower, and I'm not expecting an influencer to go live from the shower. So it's instantly intriguing and engaging, and it's just a pattern interrupt. But then yeah, it just reinforces this is how you use it. This is how you get the best results. So, I think that's brilliant. Kudos to you guys for doing that.

Kim:

Thank you.

Brett:

That's awesome. So still going live, but now you got influencers and your community going live for you, which is super, super cool.

Kim:

And I think what we're going to do is pivot more to YouTube though. YouTube lives... Facebook live, we used to get hundreds of visitors live. I think that our best one had 2000 visitors live. But typically, we would sit around anywhere from 300 to 500 visitors live. Now, I always update, we'll be lucky if we have 150 the whole time. And so now, I'm just like, we either need to switch it up or do it on YouTube and make it more of an event because YouTube is just getting better results from our lives organically than Facebook. So that might be something you see from us in the future.

Brett:

Yeah. I love it. And I'm a big YouTube fan. I'm a YouTube ads guy, though. So I understand the organic side, but that's not my area of expertise. I would recommend, though, for you guys or for anybody watching or listening, episode 112 of this show with my buddy, Liz , she is a master at YouTube, organic YouTube. And actually, it's funny, I got invited to speak at the YouTube LA offices right before COVID, and so I was speaking and she was there in the audience, and she was like, "Hey," asked a question, then we connected afterwards. But she talks about really how to build a channel and leverage it.

Brett:

And the beauty of creating content on YouTube is that it can get better and stronger over time. So you start answering questions... And you guys are going to be great at creating content, but you start structuring the right content, it's going to gain viewership and gain momentum over time rather than just being a flash in the pan potentially. So yeah, I think that's huge. So yeah, I would highly, highly recommend that. How many subscribers does she have?

Brett:

So she mainly teaches people now what to do, but she and her sister started a channel called... I think it's Super Sister Fitness, if I remember correctly. It's been a little while since we recorded, but they just recorded fitness videos, just the two of them. And they exploded for a while, and then they haven't created videos in four years, but they still get a ton of views. They've stopped creating, but they still get a ton of benefit from that channel. I think she's helped launch several other channels too, but yeah. Keeps on giving.

Brett:

Yeah. Yeah, yeah, yeah. So love that idea for sure. Cool. And so then you used crowdfunding then to launch new products? Or what was the strategy? So you used the quiz, use your lives to build that community, that Facebook group, then you launched the crowdfunding. What were you using crowdfunding for?

Tim:

Well, one of the great things about how the landscape of crowdfunding has changed now is that crowdfunding is a lot of different things. So the beginnings of crowdfunding was a kick starter, where if you were hoping to launch a new product, you can get a lot of people to help you finance that, and then you bring it in to the world.

Tim:

But now you can do equity crowd funding, where instead of going to some rich venture capitalists, regular everyday people who aren't accredited investors can now invest in early stage companies and reap those same returns and benefits of those big rich investors now. And that's all thanks to, what was it, the JOBS Act signed by Obama. And now, the limit went from one million in crowdfunding for equity to five million in crowd funding for equity, the month before we decided to launch our crowdfunding. So it was a perfect storm cause we heard about it. We were like, "This could be very interesting," because we are very much a community driven brand, and our goal is to continue to serve underserved parts of the market. But in the same vein, we're going to be building up our community along the way.

Kim:

And we've raised about 3.5 million, and we have about 5,000 investors. And we're going to close out December 23rd, hoping to raise the other 1.5 million and close out our round, which would be phenomenal.

Brett:

That's amazing. And so what's the goal... Now I'm super interested. When you first mentioned crowdfunding, I was just thinking kick starter to launch a new products, which that's a super cool strategy too, but you're doing crowdfunding for equity. So the idea there is, and obviously, as someone buys stock in a certain company, they're not going to buy from a competitive company. I buy stock in Tesla, I'm buying a Tesla and not some other EV. So I'm sure there's that component, these 5,000 investors, and hopefully it'll be six or seven or whatever by the time you close, they're going to be committed to your brand, most likely. What's the strategy behind this, and why are you doing it? Would love to hear that perspective.

Kim:

Oh man. Okay. So there's a couple things. So one, for people who are like, "This sounds bonkers,"...

Tim:

Why would you do this?

Kim:

Robinhood 20 years ago, online training was not a thing. Now it's all the rage. So I think crowdfund in the future is a new way of investing because the gatekeepers will be gone. It's not only the rich get access to something like this,

Brett:

How many accredited investors are out there, right? Most people can't participate in a deal like this in the old days, because you had to make a certain amount of money and meet all these criteria and accredited investor. Yeah. .

Tim:

I think it's something like two million in assets or something like that.

Brett:

Yeah. Or combined 300,000 a year in income between if you're married and stuff like that. So, it's not totally unattainable, but it's not a huge part of the population. Yeah.

Kim:

Exactly. But what was the question?

Tim:

Well, I can start from the beginning. We...

Brett:

Strategy behind why you're doing

Tim:

We wanted to be a venture-backed company because we have plans to eventually IPO one day and be the next black-owned, Proctor & Gamble. So we don't just want to stay with hair.

Brett:

Love it, love it, love it.

Tim:

We want to be a global force in the personal care and beauty space and have lots of brands because that's what we see as the future. There are a lot of places in the market that not only are not being served right now, but they're being actively ignored because people think the money is not there, and we're going to solve that.

Kim:

And I ...

Brett:

Money's not there, or they're like Robert and they're like, "Well, I don't know. I can't tell I don't understand it.

Brett:

They don't get it. And so, even if they tried to do something, they'd probably screw it up. And so, yeah.

Kim:

Yeah. And I've wanted to crowdfund for a while, but the limit was a million dollars and I was like, it's too much work for a million dollars. It's a lot of work. You open up your accounting to everyone, you open up your business secrets, your revenue

Tim:

Like go in public.

Brett:

for sure. Yeah.

Kim:

...

Brett:

Which is painful.

Kim:

Which is one of the reasons I wanted to crowdfund, even when we couldn't benefit from the money necessarily, was because in our industry... Typically black-owned businesses in hair care have really leaned on black people for revenue and support and growth. And then they sell to a private equity company or PE or something else. And while that's great, and that is typically how business works, and that's what you're supposed to, that's how you should do it, a lot of times we didn't see the benefit of those things. So that one family got rich, and the rest of us helped support and build up this brand and we got nothing. And I was like, "Man, what if they could own a piece of the company, and they could come up with us?"

Brett:

Yep.

Kim:

But a million dollars was just not enough money to do all of this. And when it launched to five, I was like, "Oh, now's the time. This is perfect. We should definitely go ahead and do it."

Tim:

And I don't know if Kim is super comfortable with this, but Kim is one of the first 50 black women to have ever raised more than a million dollars in venture capital. And before the crowd fund. This is actually our seed plus round. So our first seed round, we were able to raise over a million from Jeff Weiner, the then CEO of LinkedIn, and a few other business partners that helped propel us to over five million in sales. And then, as we were trying to raise another round of funding to keep that growth going, Kim would go into these rooms, try to pitch basically older white men who didn't understand what she was doing. Even though ...

Brett:

That had to be super frustrating.

Kim:

It is. Black women get less than 1% of venture capital. And every time I've tried to traditionally fundraise, it was just a waste of time.

Brett:

I'm sure. I'm sure. And because it's a waste of time, most people don't even try. So kudos to you for sticking with it and making it happen.

Tim:

Yeah. We literally made the Inc. 5,000 list, one of the top fastest hundred growing companies in the country and ...

Kim:

We're number 93.

Tim:

Yeah. We're still getting nos. I was like, "Wait, what do you mean they need to see more? What do you mean they said no?" If you want to invest in minority-owned businesses ... invest in black businesses, and you say that as part of your investment philosophy, how do you turn Kim down?

Brett:

Right. Right. Exactly.

Kim:

It's funny, Brett.

Tim:

And so we're like, you know what, bump that. We will do it ourselves.

Brett:

Yeah. And really, but the momentum you'll gain there, that community, and you guys are all about community, which is amazing. But yeah, getting that 5,000 to 7,000, whatever it ends up being, that's going to be a really powerful asset as well.

Kim:

You're right. And I'm working on how to figure out how to rally those investors. And the next... Does that mean we all get together for a special event? Does that mean there's some NFT stuff going on? Does that mean ...

Brett:

NFT stuff. Yeah, yeah, yeah.

Tim:

I'll say just ...

Kim:

Crypto, I don't know. I don't know.

Tim:

Just from the start of the crop until now, it's been huge for just our profile too.

Kim:

Our personal brand.

Tim:

We literally get stopped on the street now. I was like, "Oh my God, I'm an investor." I was like, "Hey, owner. How you doing? I invested in y'all. Great job." And it's a really been just a movement because it shows people that there's another way to get VC money. There's another way to grow your business. There's another way to enhance the community outside of the traditional gate keepers. And that's what we are all about.

Brett:

Love it. Love it. So couple of quick questions there, and then I have one other topic before we wrap up here. So what platform would you recommend if someone is saying, "Hey, I should explore this a little bit and think about equity, crowdfunded equity?" What platform do you recommend then? Any quick tips, dos and don'ts for how do you approach this?

Kim:

There are three. There is Wefunder, which is what we used. There's more. There's tons of platforms. These are three. Wefunder, StartEngine, and Republic. And they all have different terms. I think Wefunder's fee is 7% of whatever you raise, but if you're going to be a really, really big raise, you might be able to negotiate. And then StartEngine... but then Wefunder only does preferred shares for its customers or its investors, retail investors.

Kim:

Now, StartEngine only does common shares for its retail investors, which is different. It doesn't give them as much control, which can be advantageous for the founder. But then you can get a lot of hate from the retail investors because they're like, "Why would you treat us this way? We're still giving you good money. Why don't we get those rights?"

Kim:

And then you have Republic, and I forget... I don't know about preferred or common for Republic, but I do know that Republic takes equity in that round. I think you kept to give them a piece, so just double check. But I will say I've heard wonderful things about Republic, and people have always recommended them to me when I went to go fundraise. But Wefunder gave me the best deal, and I really like their team. And I also love their mission. I think they're really...

Tim:

They're investor focused, but I think the other ones are founder focused. And that fits with our philosophy, really.

Kim:

they're just a hard sell. They're really intense. So if you tell them you're interested in crowdfunding, they will not stop messaging you.

Brett:

But yeah. Being investor focused is like being customer focused, right? Because they are customers. And so yeah, love that ethos, and that makes a lot of sense. So any tips, dos or don'ts, things that you wish you had known before you started? Anything like that?

Tim:

Lots of those.

Kim:

Number one, and small businesses like to ignore this part of their business, and you probably know what I'm going to say, Brett. Accounting. If you do not have good books, you are going to spend... We had to have audited gap financials for the last two years of our business, and we manufacture our products, Brett.We manufacture half a million units over the last two years, and we didn't have NetSuite or anything like that to get that data. So we had ... we

Tim:

We were still on cash accounting.

Brett:

... can't be on cash accounting. Cash accounting is good, but not for retail business.

Tim:

Yeah. We went from one million to five million in less than a year. So we couldn't even switch to accrual accounting at any point. We didn't see it coming. So we had to do all that back accounting to get our books up to ...

Brett:

That doesn't sound fun

Kim:

No, that was hard. And then you need a SCC attorney. Do not just trying to go to your general counsel or whoever you're using, paying 500 bucks a month to. It is special law

Brett:

You need a specialist here. Yeah.

Tim:

Yes.

Kim:

And you need the person that you normally work with. So they're going to talk to each other, and those two lawyers are going to talk

Brett:

It's like your primary care physician and the specialist, right? You need both.

Tim:

Exactly.

Kim:

Yes. So imagine I'm paying two lawyers and two sets of accountants to do all of this, to help me crowdfund. And my bills were up there before I got the money.

Brett:

Before. Exactly, before you got any of the funding.

Tim:

Yeah. And it's much better to have done it earlier and spread it out than trying to get it done in a few months because it ran our team ragged for a little bit. There was some late nights, early mornings, and lots and lots of counting.

Kim:

And you can't file the form C until that accounting is done, if you're raising up five million. If you're raising one, you don't need an audit. You need a review. Yeah. Which only takes two weeks. But if you need an audit, it took us three months to do that. And then we had to wait 21 days after we filed the form C to collect the money. So it was arduous and difficult. I would do it again, but I would have my... Now my accounting is as clean as a fiddle. Is that the saying?

Tim:

Clean as a whistle.

Brett:

Clean as a whistle

Kim:

I mess it up every time.

Brett:

I think you could coin something new there. You may onto something

Tim:

This is one of Kim's superpowers. She always blends these old things. So it's a game for me to figure out which ones she's blending you guys got let in on the ...

Brett:

That is so funny.

Tim:

That's the game.

Brett:

Clean as a fiddle. I like it so that's beautiful. So love it. Now I'm geeking out. I'm going to go and invest in your business. I just get pulled it up. I'm going to take a look at this.

Tim:

Thank you so much.

Brett:

So I got to check that out

Tim:

That's the biggest compliment anyone can give, is I believe in what you're doing, and I ...a part of it.

Brett:

Exactly.

Tim:

Here's my money.

Brett:

Exactly. Yeah. Putting dollars behind it, putting money where your mouth is, that's what really counts. So I want to talk about a couple things, and we're coming up against time here pretty quick, but there's more than I want to talk about. And so I know you guys are always about... And now I know you want to be like P&G, which is amazing, but you're trying to create repeat purchases and getting people to order more and stuff. So can you talk about what the journey has been like there for you guys, in terms of things you've tested? And then, I know it's super early at the time of this recording, but I think people can go to your site and they're going to see your VIP membership, which looks amazing. Can you talk about the early stages of that as well?

Tim:

Yeah. That thing is less than a week old, but it was five or six years in the making. We started as a subscription box company, and we're basically a subscription box company again. So I'll let Kim tell the story, but that was just tickled us so much.

Kim:

So right around the time we were doing... My lesson in getting to a million dollars, is that it's easier to sell old customers new things, than new customers, anything. Right?

Brett:

Yep.

Kim:

So we started launching some of our other boxes, but making them ready-made products and different flavors and things like that. And then what I realized is that our average order value was too low. People were buying one or two items. AOV is 30 bucks, 50, 40 bucks. And I was like ...

Brett:

Hard to acquire customers with that AOV.

Kim:

Yeah, exactly. So can we get this to 60, 65? And we're like, "If we sell it to them in a kit with four products, we can charge $65 for that kit." Because shipping is expensive, and you're going to pay it regardless. And it's going to be, for us, at least three to five dollars, or up to seven or eight. So it's how can we get more value in that first order? So we launched a shampoo, conditioner, moisturizer, and gel all together.

Tim:

In the system to give you the wash and go of your dreams.

Kim:

Yeah. Because before, we didn't have a shampoo and conditioner. We only made the moisturizer and gel. And then after we did that, people kept asking us for other unique stuff

Tim:

Basically treatment kits, right?

Kim:

Yeah. And we had months where we were slower than others, and my production team was chilling. And I was like, "Dang, we have a whole manufacturing team, and they can make anything. And so if we are ever slow, we could just make something with a new flavor and launch it, and that would optimize their time." So that we're not having months where they're done with work two hours early and chilling.

Brett:

Right. Right.

Kim:

And so, we were like, "Okay, well, let's see if our audience wants something." So we went to the Facebook group. We've been building this Facebook group for years, by the way. We've had it ever since we started the business, and we were going to the group and let them vote. And they started voting on different collections and products, and we would produce it the next month or whatever. And then they'd be like, "Oh my God, I love it." And it would sell out immediately because they were so excited

Tim:

And that program ...

Brett:

Because now they're invested. They've said, "That's what I want." And now you've said, "Well, here it is." And so, they're going to buy it. Yeah.

Kim:

Exactly.

Tim:

We call that one CurlMix Fresh. And oddly enough, we launched it the few days after the birth of our second baby.

Kim:

Oh, that's funny.

Tim:

Kim was in the hospital the day after she gave birth naturally, taking promo shots and pictures from in the hospital room. We set up a whole little backdrop and photo studio

Brett:

That's hilarious. I'm sure the staff at the hospital was like, "Who are these people? They're amazing."

Tim:

I have to go to the store and buy props, and they're like, "What is this in the hallway?"

Kim:

I hate that story. Because I'm just still in the hospital bed. I ain't doing nothing.

Tim:

The baby is sleeping, so we're like, "Sh... sh."

Kim:

And so we launched CurlMix Fresh, and then we ended up making it... our customers loved it so much, we were like, "Well, we could have our own Birchbox or our own Ipsy or whatever." And it was a good way to test products. And so people signed up for that, and they started subscribing to that monthly for 65 bucks because we wanted the same AOV.

Kim:

But then after out a year and a half of doing that or two years of doing that, our customers loved us and they have no problem buying from us, but they would have literally 20, 30 products and be like, "Hey, I need to cancel my subscription right now. I have way too much stuff."

Tim:

It became a thing in the group to get your own personalized mini fridge to just store CurlMix

Brett:

That's hilarious.

Kim:

And I'm not even kidding, Brett, there's people-

Tim:

They decorate it.

Kim:

One lady spray-painted hers teal she spray-painted hers our brand color, out in her backyard.

Brett:

The CurlMix mini fridge. There you go.

Kim:

Yes. Literally, yes. I was shocked. She even hand drew the logo on her fridge. I was like, "Oh my gosh, it's intense." But then I was like, "Man, how can we allow these people to have the flexibility to stay with us and still provide us the recurring revenue that we need, but also give them the flexibility that they need, so they're not having the same 20 bottles of one thing in the house?"

Kim:

And one of my coaches had me look at Fabletics. Fabletics basically has you buy one credit a month on a $50 month subscription. And when I dug deeper, I think his name is Adam Goldenberg, I think is the founder. I found out that he owned Savage Fenty, which is ...

Tim:

49%f Savage X Fenty, right?

Kim:

Yep. So he runs ...Kate Hudson, Adam Goldenberg, Don Ressler. Just looked that up.

Kim:

Oh, thank you for clarifying. But so Kate Hudson's the face, just like Rihanna's the face for Savage Fenty.

Brett:

Yeah, yeah, yeah, yeah, yeah, yeah.

Kim:

And then they have Fabletics, and they've been using different celebrities. I think Kevin Hart and was the last set of celebrities to do their campaign. And they also own JustFab Kids and ShoeDazzle. And all five of these brands have the same model. And I was like, "Oh my gosh." And then I remember reading on ... he has two million subscribers. I'm like, "Two million people are paying you monthly $50 for points that they're going to come back and use?" And I was like, "It makes sense." Because once you save those points up, like Audible, like you were saying, you can either come back for shopping spree or you can get what you want, whatever you log in.

Tim:

Yeah. But you don't cancel. There's almost no turn.

Kim:

Right. Exactly.

Brett:

Crazy. Yeah, super smart.

Kim:

So we ... for about a week, and we're hoping that it kills it and it keeps going. We launched it for Black Friday and it did better than our actual sale, which is crazy.

Brett:

Wow. That's crazy

Tim:

For Small Business Saturday. And it did better than all... We did a week of Black Friday, and it did better

Kim:

It was our highest day.

Brett:

Whoa. So check it out. It's all over the website, so I think you need to look at it. And I do love that model. Yeah. You and I, we were talking before we hit record. I'm an Audible subscriber, love it. And yeah, I don't mind if I go three or four months without buying anything and letting those credits accrue, and then I'll go buy four books or whatever. So I think it's a great model. I think more people should look at it, and I think they should definitely check out your site and see what you guys are up to.

Brett:

So guys, this has been fantastic. I have more questions I want to ask you, but we're up against time, so I'll have to wrap.

Tim:

We can come back for part two.

Brett:

Yeah. Part two, man. We have got to do it. I will commit to it. I think that'll be super, super fun. We can hear how things go after you finish the raise and get an update there. So if people want to learn more, where should they check you guys out?

Kim:

If you want to learn more about CurlMix, go to curlmix.com. If you want to follow me and Tim and see our kids, you can follow us on Instagram at Kim and Tim Lewis. And if you want to invest in our crowdfund, go to wefunder.com/curlmix.

Brett:

Awesome. Kim, Tim, you guys nailed it. You guys are super fun. I always have fun recording the podcasts because I enjoy it, but this has been one of the most fun in a really long time. So thank you guys for

Kim:

Thank you, Brett. I appreciate it.

Brett:

Yep. Yep. All right. Awesome. Until next time.

Brett:

And so, with that, guys, thank you so much for tuning in. As always, we'd love to hear from you, our listeners, what would you like to hear more of? What are some ideas for the show. And hey, if you haven't left that five star review on iTunes, what are you waiting for? That would make my day and help other people find a show as well. And so until next time, thank you for listening.

‍

Episode 188

:

Cody Wittick

The Simple, Effective, Influencer Marketing Approach with Cody Wittick

Cody's passion is helping great eCommerce brands scale with simple, effective influencer marketing.

Cody is a former college hoop star turned influencer marketing pro. His resume of influencers he’s partnered with is pretty impressive. He’s worked with the likes of Lebron James, Mike Trout, Dale Earnhardt Jr. and more. His passion is helping great eCommerce brands scale with simple, effective influencer marketing. And he believes that most brands approach influencer marketing all wrong.

Here’s a look at what we cover in this episode.

What’s changed in the last year in influencer marketing?
What mistakes are ecomm brands still making?
How do you work with people like Lebron and Mike Trout?
What’s the solution to tracking in a post iOS 14.5 world.
Tips for getting started and executing an effective influencer marketing program.
Plus more

‍

Mentioned in this Episode:

Cody Wittick

Kynship Shopify App: Influencer Seeding‍

- Via Twitter

- Via Instagram

Kynship‍

LeBron James‍

Mike Trout‍

Dale Earnhardt Jr.‍

Qalo‍

Groove Life‍

Biola University‍

Jared Mitchell‍

Bryce Harper

MightyScout‍

MonkeyFeet‍

Native Deodorant‍

TikTok Creator Marketplace‍

Facebook Brand Collabs Manager

Transcript:

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 diving deep into influencer marketing, something that you can't ignore and something that, if you're not using now, what are you waiting for? You got to start using influencer marketing. And my guest today, Cody Wittick, is going to show you the way. He's the co-CEO and co-founder of Kynship, an influencer marketing agency, and he has worked with some influencers of influencers. He's worked with LeBron James, and he's worked with Mike Trout, and he's worked with Dale Earnhardt Jr. And so we're going to be able to tap into the brain of Cody Wittick and find out what should we be thinking about right now as we look at influencer marketing, what's changing in the months ahead, how does this impact things with iOS 14, and 15, and 16, and all the iOS updates where Tim cook is trying to kill marketers and all things good.

Brett:

Sorry, still a little bitterness in there, but we're going to dive into influencer marketing. It's going to be a lot of fun. And so with that, Cody, welcome to the show, man. Thanks for coming on and how's it going?

Cody:

Yeah, it's going good, Brett. Thanks for having me. I'm excited.

Brett:

Yeah, absolutely. And you, Cody, you're coming to us live, or it's live for me, anywho, from one of my favorite parts of the country. You're in the OC, Orange County. How's the weather? How are things there right now?

Cody:

Yeah, I won't talk about the weather too much because I don't want to ...

Brett:

... it's a silly question, really. The weather's always great in Orange County.

Cody:

Yeah, I don't want to rub it in your face, but it's currently cloudy, which it usually never is. So, we're all a little down here in Southern California.

Brett:

I'm really sorry for you. That's really, really rough.

Cody:

...

Brett:

It feels like it's cloudy and 75. It's terrible.

Cody:

Yeah, exactly. It's hard.

Brett:

That's awesome. And also, we discovered this as we were chatting, you ran the influencer marketing program for which QALO, which was the original silicone wedding ring. My team and I used to run the YouTube and Google Ads for Groove Life, my buddy Peter Goodwin. And so we were head-to-head, duking it out on the internet and we didn't even know it, which ...

Cody:

You were enemies.

Brett:

What's that?

Cody:

We're enemies now.

Brett:

Exactly. We're burying the hatchet, though, for the sake of this podcast and for the good of the audience, but you were doing that from, what, 2014 to 2018 you said?

Cody:

Correct. Yeah.

Brett:

Yeah, so it was right in there that we were doing stuff for Groove, which was really fun. Yeah, so give your background. How did you get into influencer marketing? And then any interesting things along the way of ... Let's do the 60 second story of Cody Wittick's background.

Cody:

Yeah. I mean, I played college hoops, so I just always been in athletics.

Brett:

Where'd you play college hoops?

Cody:

At a school called Biola, D2 school here in SoCal.

Brett:

It's hilarious. Shout out to Jared Mitchell, my buddy who I just mentioned, St. Clemente, he went there as well.

Cody:

No way.

Brett:

Yeah, so we'll catch up on that later, but that's hilarious. So I wished I played college hoops and so you actually did, which is awesome.

Cody:

Yeah, so I got to play. So I only bring that up, it was just like I'm a big sports guy, love sports. As QALO was growing, I knew the co-founder. He grandfathered me in, let me come into the company. And so I got to grind my teeth on influencer marketing through working with athletes. And I was really interested in it. And I think just because maybe I was a former athlete or maybe it's just my personality, but I was never like, "Oh, my God, it's Steph Curry," go fanboy over it. I think it's ...

Brett:

... cousin. I mean, I don't know for sure, but ...

Cody:

There you go.

Brett:

My jump shot looks so similar. If you saw it, you'd be like, "Whoa, they're related."

Cody:

Totally, yeah. Yeah, that lent itself into just establishing great relationships with these guys. And it wasn't just athletes, but long story short I was able to run the influence program at QALO for four or five years and learned a lot, worked with some big time athletes, like some of the people that you mentioned in the beginning, but also all the way down to your micro influencers. You understand the use case of a wedding ring is everybody, so there's so many categories. I got to just cut my teeth with so many different categories. Pet influencers, to military, to firefighters, it was just all over the place. So it allowed me to get a lot of experience in a lot of different industries, meet a lot of different cool people, how they function, how they work, what ticks them. Exactly.

Brett:

That's so cool. And one of the questions that people always ask, and it's still a question that I'm fascinated with as well, is obviously the celebrity or the influencer matters. The actual influence they have over their audience really matters. That's going to impact the effectiveness of what they do for you, but is it necessary to get someone like a LeBron James or a Mike Trout or are you better off to get multiple really good micro influencers? Any general thoughts on that? I say the age old debate, it's been raging for three years or whatever, but what are your thoughts around huge influencer versus micro influencer?

Cody:

I love this question because I actually made a ton of mistakes at QALO just because my eyes were just so drawn to the macros. And it was in a time, too, where Facebook 2015, 2016, where we just threw up a Tesla ...

Brett:

Those were the golden years ...

Cody:

Yeah, a testimonial from Andy Dalton talking about QALO and it would get a seven, eight ROAS. Okay, let's just repeat this. Well, we got caught up in that drug, so we're constantly chasing after macros. Some really nailed it, but an example would be Bryce Harper. Thought it was going to crush, totally flopped.

Brett:

Interesting.

Cody:

Stuff like that.

Brett:

I'm just curious on this more, just my own interest. Did he not do a good job with it or do you think Bryce Harper ... Obviously I know who he is, he's a great baseball player, but people don't love him like people love other athletes or what's ...

Cody:

Yeah, and we'll get into this later, but the content was poor. I think he did a poor job on the content itself, but, however, a lot of times a name like that can make up for poor content. Yeah, the content was poor, but everything on audience insights, when that used to be a thing within Facebook, that now disappeared this year, everything told me Major League Baseball. Bryce Harper, he's MVP at the time. This is going to crush. He's going to talk about he's a solid family man, all this stuff, and it just didn't work. So to answer your question originally, I think there's a proper way to get there before you spend a ton of money. To use that Bryce Harper example, to back out from that, we should have tested other testimonials.

Cody:

In this case, it would've been maybe minor leaguers or C list type of players that maybe are more known. And then as that gains traction, you're like, "Okay, wow, Major League Baseball is really achieving a ton," then maybe we go into the macros of the world. So I just think there's steps to take. To address your other part of the question, you don't have to start with macros. Which, unfortunately, a lot of brands think that they have to do and then they spend all of their budget that they might have even just created for this category and spend it on one post from one big time influencer. All your eggs and one basket ...

Brett:

It's dangerous no matter what you're doing. You need time to experiment, and to test, and not everything is going to work perfectly.

Cody:

Right.

Brett:

Yeah, don't put all your eggs in one basket, for sure. And we don't do influencer marketing at OMG, but I'm around it a lot because we're running YouTube ads and running Google campaigns and Amazon campaigns. So I see influencer content and we have some clients that are doing things with MMA, up and coming MMA athletes and fighters. And some not really famous NFL people, but like NFL linemen for the New England Patriots and stuff. And so it's like they have an audience. It's limited, but you can zero in on that audience. And it can be very effective and it's very affordable and it's fun and it's content. It's content then you can also mash up and do some fun stuff with later as well. I think it'd be interesting. What are some tips to get ready for influencer marketing? I want to talk, I've got all kinds of thoughts on here, what's changed recently, and mistakes, and things like that, but what do people need to do to get ready for influencer marketing if they're not already doing it?

Cody:

Yeah, I quote this all the time. It's my own quote.

Brett:

A brilliant man once said, his name is Cody.

Cody:

I say this all the time. That's what I meant to say.

Brett:

Yeah.

Cody:

The more that you can align your influence marketing with your customer experience, the better your influencer marketing will be. And what I mean by that is just in the same way that you think about all the impressions and all the touch points that you have with your customers the better that your customer's experience will be. You put yourself in the shoes of the customer, same thing with the influencer. So to get ready for things an unboxing experience, your branding just as a brand, making sure that your website is reasonable when an influencer goes to your website or on Instagram when they go check you out when you outreach them. So those are sorts of things that somehow people forget because they're not paying for my products or they just forget the human side of it. And so you should treat influencers like your customers because unboxing experience is doubling down on your great first impression of them.

Brett:

Right. And what do you want them to say? You're selling the influencer on becoming excited about your product. If the online experience is bad or you send them something hokey in the mail, that's going to really impact what they say. And no amount of star power, even ... MVP didn't deliver because the content wasn't good.

Cody:

Right. Exactly. So I just think you got to have those things aligned before you start or how to get ready for influence marketing is just going through the same customer journey that you would with your customers before you launch your brand. It's like, "Hey, do we have these things checked off?" Now, all that to say doesn't mean you have to have 12 steps checked off before you start influencer marketing. I definitely think there's a lot of people that might misinterpret that and say, "Okay, I need to have all these things ready before I start outreaching influencers." No, not necessarily. I'm just saying there's basic things, like branding and having a product dialed in and you're unboxing experience, that you should take care of. And it contributes to more success. Not to say that you can't have some success, but it contributes to more success just in the same way that you have a brand in front of your customers.

Brett:

Got it. So what has changed over the last year, two years in terms of influencer marketing? It's still an emerging, relatively new space, but I know things have changed pretty rapidly recently. What are some of the notable changes?

Cody:

Yeah. I mean, you can start talking about Instagram testing hiding likes in things on the platform or certainly the rise of TikTok is a ginormous change that has gone on the map. And I think it's a good thing, but short form content. Create more creative content. Definitely the emphasis on video content has been clearly seen. I don't know if this has necessarily changed in influencer marketing, but brands more and more are starting to value video content more and more. And so I think influencers, because of that affect, have been privy to that and started to create more video content. And certainly TikTok contributed to that as well.

Brett:

Yeah, and I'm also curious, and I think this has always been true, but curious if it's more true now or just the same, that creating content for the platform is super important. I know I've got a friend that runs TikTok ads and he says you don't create ads on TikTok, you create TikToks. Right. And so creating for the platform is really important. How important is that now? Are you doing something unique for Instagram versus Facebook versus Instagram Reels versus Facebook Stories? Are you really tweaking content for the platform?

Cody:

Well, for us, I think it's just reformatting the content so that it can go in all placements, but we let the influencers do their thing on how they actually post the content to those platforms. And they're much more knowledgeable about ...

Brett:

It's true. There are influencers on that platform, so it's a native thing for them.

Cody:

Right. Exactly.

Brett:

Got it. Cool, totally makes sense. What are some of the mistakes that you still see brands making when it comes to influencer marketing?

Cody:

The transactional nature of it. And I can geek out on this topic, but I smile when you say what has changed over influence marketing. Actually, my first thought is, man, there's so much that hasn't changed over the years that is still ... They're still in the old ages of pay for post. Hey, Brett, first touchpoint I ever talk to you, I asked for three posts just because I'm awesome and I'm a new brand. It boggles my mind. Now, with that said, do I believe in pay for posts? Yes, eventually. And you have multiple people, omnichannel, consistently posting to their audiences over and over and over again. I just think from a first touch point, when they post that one time, man, it's just you're settling when you can have so much more.

Cody:

And I think the value is the relationship at the end of the day. All these brand owners that I talk to all the time, they all talk about I want a long term community, I want influencers posting about me consistently. I'm like, "Great, you got to start the right way." A lot of time your belief system is not matching up to your behavior. And so their belief system is that, but their behavior is I'm just going to pay for posts, a million different influencers, and that's it. And that's my influencer strategy. And it's like no. There is a way to get to where you want to go, we just got to change your behavior.

Brett:

So what should that look like then? So what needs to shift both in mindset and in action to really long term community building influencer market?

Cody:

Yeah. Well, I'd say the mindset, the philosophy is build the relationship I'm giving instead of asking. So what that looks like is for most of the time D2C eCommerce brands, you have a physical product that you can send out and you can gift them for free. And when I say don't ask, I actually mean don't ask for anything in return. So I'll tie it back to your customer experience. The customers that end up in advocacy are the genuine ones that go down your customer journey on their own because they love the brand and product. And we wonder why influencer marketing is not is inauthentic. It's because what's driving them down into advocacy is money and a contract. And it's like we got to start the right way and get them the product, get them the brand. Now some influencers will never post and they might not even like the product.

Cody:

Great. It's the same thing with your customers. Some customers will return it, but the influencers that do rise to the top, those are the ones that you want to work with anyways. And they do end up posting for free just because they're so overwhelmed with ... Most of these influencers are just so used to getting exploited or I use that example being asked for things right off the jump. Never heard of your brand before, never even seen your website, but yet you're here asking me for three things right off the bat. It just doesn't make sense.

Brett:

So you're recommending sending and going all out on packaging and design, making it a cool experience for them to open your product, but you're saying just send that maybe with a simple note? Not asking them for anything, just sending them product?

Cody:

Yeah. I mean, my DM or email to you would just be like, "Hey, Brett, I'd love to send you to our product, no strings attached." There's obviously more into our message a little bit, but it's short and sweet. And it's basically that's what we mean by it. And you have the option to say yes or no. And at that point we're just getting your address and we're sending you the product. And that's what we're really doing at kinship, is basically what's called influencer seeding and we're just doing that at scale for brands.

Brett:

Got it. So let's talk about that a little bit. So influencer seeding, so what does that look like? I'm assuming that's identifying the right influencer, reaching out in a systematic way, tracking it, things like that.

Cody:

Yeah, you nailed it. I mean, identification or identifying 500 influencers on a month to month basis, we handle the whole communication flow. We have a Shopify app, Kynship does, that we download onto their store. It just helps seed them the product in a really streamlined way. We track the organic posting. Once we see posts go live, we reach out for content rights. Once we have content rights, we download the content, reformat it for ad placements.

Brett:

Nice.

Cody:

Ideally, we're able to repurpose that content right away. We're sending out an NPS survey to all the influencers that do receive products. So it's a A to Z service, but a lot of it really is labor. These brands just don't have time to do this, let alone 500 influencers in a month.

Brett:

That's awesome. And I think that's one thing that's potentially overlooked, too. I'd be curious your perspective on this. Obviously we want those organic posts to be effective when an influencer talks about a product to their followers, but if you're getting rights to the content as well, there's a lot of leverage you can get from that content down the road. We had a big automotive brand and we did influencer mashups. And we turned them into an ad, where maybe even if I'm watching some influencers and I don't know all of the influencers, if I'm seeing this mashup of soundbites of all these people that are pretty well spoken because they're influencers telling me how great the product is, that's really powerful.

Cody:

Right.

Brett:

So you can leverage it way beyond just that organic piece.

Cody:

Exactly. It's the FOMO effect, right?

Brett:

Yeah.

Cody:

It's like I don't even know any of these influencers, but there's a lot of people that seem to be loving their product.

Brett:

They seem like they genuinely like it. Yeah.

Cody:

Yeah. And I think just a quick note on that is I think that's what seeding lends itself to, is authentic content, which is what is such a buzzword in influencer marketing, authenticity. It is because we're not asking for it and yet they're posting on their own free will and their genuine interaction to voice your product and brand. So it leads to that.

Brett:

So are you guys doing any pay for posting or are you doing all just organic, send the product, just the seeding approach?

Cody:

Yeah. I mean, we do sometimes on a very ... Probably 10%. We have a package that does that, where we're actually contracting these influencers and there's a creative brief and there's rounds of approval on their content and stuff like that, but most of the time we're doing these influencer seeding packages. And I think there's a way. Just to be clear, I'm not anti pay influencers or anti contract influencers. Again, it's just I think there's a proper way of getting to that step. If I really value the relationship, then I want my brand and product to be the focus, not money. So I want to get it into their hands.

Brett:

Yeah, I love it. And I think especially for people that are listening, that you're holding out on influencer marketing. You just haven't tried it. This approach might be a great approach to just do the organic thing and see who all posts. Are you doing anything interesting to track or anything you'd recommend on track? I know you guys have developed an app, which is awesome, but what else would you recommend in terms of tracking?

Cody:

Yeah, tracking, organic posting, we have a preferred partner named MightyScout, so they track Instagram and TikTok organic posting, even stories. A lot of people have questions on stories after 24 hours. Does it still pull it? Yes. Yeah, they're great. They're part of our flow that we take on ...

Brett:

On MightyScout?

Cody:

MightyScout, yeah.

Brett:

Basically they're just scouring the web looking for mentions on social ...

Cody:

Yeah, we're able to upload their profile and it starts tracking if they mention certain handles or certain hashtags. And then we're able to see that content and the performance of it.

Brett:

Nice. What, if any, kind of changes have you seen with influencer marketing with the different privacy updates and different iOS releases that are making tracking harder for advertisers?

Cody:

Yeah. I mean, in terms of that affects us the most when we're actually repurposing the content. You obviously understand this, but just within iOS 14 and the tracking on the dashboard within that account the reporting is incredibly down. Almost, I think, 50% of what we've seen, but actually when we look at the data and what I've seen just around the market, ROAS is actually not down. It's just the reporting when we actually take in blended and GA and all these different things, but I would say creative is just ... I don't know what number to put this, but it was important before iOS 14. Now, it's important on steroids. So the brands that we talk to time and time again, they're constantly in dire need of new content, more content at a cost effective way.

Brett:

Yeah, fully agree. And it's one of those things where a friend of mine said pre-iOS 14, 15, 16, all that, the Facebook and Google were wrong then. They over attributed. Now, they're wrong. They're just under attributing. Right. And so it's like, it was never accurate to begin with. So you have to find what metrics in the platform makes sense for you, but then look at your total, whether you want to call it MER, media efficiency ratio, or ad spend to revenue ratio. What are my total money out and total money in and making sure you're efficient there, but I 100% agree with you. And I'm a YouTube guy, so I reference YouTube a lot, but Google said when you're running YouTube campaigns 85% of your success is with the creative. I think that's even more true now and I think there was a time when some of us advertisers got a little bit lazy because we knew the algorithm would do the work for us and find people to convert it, now tracking not quite working the way that it used to. We can't be algorithm cripples anymore and so creative just has to be ...

Cody:

And not overly dependent on one platform.

Brett:

Yeah, that, too.

Cody:

It's made brands omnichannel and diversified and it's making everybody better marketers, really.

Brett:

It is. It's weeding out the people that really don't have deep marketing knowledge. They didn't learn how to use Facebook during the golden years when it was pretty easy. And so now you've really got to work and you've got to do organic stuff, and you've got to work with influencers, and then repurpose that into ads. Yeah, it just takes more work now than before.

Cody:

Sure.

Brett:

What are some of your favorite case studies or favorite examples of clients you worked with or could be QALO or whatever of what you've done to really make influencer marketing work and work well?

Cody:

Yeah, there's a couple that come to mind. One of which was a brand that we actually had the pleasure of just through a personal relationship we were able to launch with them. And they just completely relied on the two things that we do, which is Facebook ad account management and influencer seeding. And so that was a brand called MonkeyFeet. It attaches a dumbbell to your foot, very unique product. It launched in October 2020, so ...

Brett:

A dumbbell to your foot. So this is for working out?

Cody:

Exactly. So do leg stuff with dumbbell and at home. People were working out at home more than ever and when they launched. Yeah, we just seeded a ton of different fitness trainers, the products, and uniqueness of the product once you brand. Time of the year obviously all contributed, but we're able to grow their brand to four million in four short months. So incredible rise and now I think they're at six over the course of the year. And so that was one case study. Second case study that we worked with M&Ms. And we did a lot of stuff on TikTok sending personalized M&Ms for Mother's Day and Father's Day where they could put their mom or dad's face on the MM&M. And we're able use our strategies, see the influencers. They posted for free, had several videos organically go viral. And then they repurposed that content and they saw 457% increase in sales compared to 2020, 67% increase in sales compared to 2020 on each of those days.

Cody:

So obviously these are case studies, but incredible success. And with a brand like that with M&Ms and then MonkeyFeet, those are two ways that we've seen seeding lead to a ton of content right away that gets repurposed.

Brett:

Cool, love it. So let's create just an imaginary eCommerce brand for a second. Let's go for a sneaker company, so we're both talking basketball. Let's talk about this is highly unlikely to succeed, but this is an upstart shoe company taking on Nike and Adidas and all that. So where would you start and what would an influencer program look for them? And then what should people expect along the way?

Cody:

Yeah, I would start with seeding. I mean, I'm going to sound like a broken record here, but it's got to start that way every time. No matter what your COGs are, what all these different price points are, you just ... If you can just send out one, that would make that person that you send it out to very important, but in this case example, man, I would try to start with low level high schoolers, college people. I would get it on D3, D2 schools. I'd just be getting this product everywhere because that's where word of mouth actually happens. That's where it's like where are the issues. I would definitely start young because you're not going to go out and get the NBA guys to wear ...

Brett:

Yeah, no way. They're not moving away from Nike ...

Cody:

Yeah, so you just got to start and hope that some of these people do turn into stars and we were the first to get on their feet. And obviously the product's got to be great at that point. It can't just look good.

Brett:

Totally. So then you're going through the seeding process, so you're sending out ... Obviously you want to try to send out more than one, if you can, I know there are a lot of variables here, but what kind of response are you typically expecting? And this is with the assumption that, A, the product is good and what you sent them was good, and compelling, and interesting. How many people typically ... How many influencers typically respond and actually create organic content once you give them a free product?

Cody:

Yeah, great question. So in terms of a benchmark, and this is the bench, we obviously want to go higher than this, but we want at least 20% responding and saying, yes, send me the product. And then out of those people that do receive product, we want to see 30% of those actually post for free. So if you send to 30 individual influencers, that's six opting in and two posting for free. And obviously those numbers sound a lot better as the more that you do it and the more influencers that you reach out to, but still that's two relationships at the very least that you didn't have yesterday.

Brett:

Yeah, and really just cost you a little bit of time and some product. And, again, you get someone who really does a nice job with organic content and that can pay off big time. And then you repurpose it for ads and stuff and then you can leverage that content for months and months to come.

Cody:

Right. It just comes down to all marketing has inherent risk, right?

Brett:

Sure.

Cody:

You don't just turn on Facebook ads and then all these conversions just start happening. There's a risk of spend that you might not get any conversions. So when people are like, "Well, that's such a low number of people opting in or a low number of people that are actually posting for free, why isn't it a guarantee? Why can't you just ask for a post?" You're just settling and there's always the risk. There's always going to be people that say no or don't post for free, but how valuable and what are the goals that you actually want to go? What's the best method to produce the outcome that I desire?

Brett:

Yeah, that's awesome. So other just tips, suggestions? How do we make influencer marketing work for an eCommerce store? Any other tips or suggestions that you haven't already mentioned?

Cody:

What you do with influencer content once you actually have it, maybe you get rights to it. I would definitely recommend being able to leverage that within Facebook and Instagram ads. I mean, we've definitely touched on that, but there's also different methodologies within Facebook where you can run dynamic creative tests. And that's basically you being able to run a bunch of creatives all at once, really being able to test. You're letting Facebook determine what the winners are going to be, so without getting too nerdy into ad account world that's some of the other things that I would just throw out to the listeners. It's something to try and test as you start getting influencer content. I mean, you mentioned one, Mashables, where you can do with more than one asset.

Brett:

I'm looking at your story. Did you guys run stuff for NATIVE?

Cody:

We did.

Brett:

That's awesome. A long time client. We worked with NATIVE for forever, so that's awesome.

Cody:

Amazing.

Brett:

We've put some of your content on YouTube.

Cody:

We're going to be best of friends by the end of this episode.

Brett:

So we started as enemies, now we're best bros.

Cody:

Exactly.

Brett:

So that's awesome. Cool. So obviously I love influencer marketing. I love the power of good influencer content. Any suggestions you have for people? So obviously if they're wanting to run this and they like the sound of what you offer, Cody, and what you guys have done, they can reach out to you at Kynship. K-Y-N-S-H-I-P.co. Any other suggestions, resources, other things they should check out that you guys have done?

Cody:

That we've personally done or just tips and tricks of the trade?

Brett:

Either. Well, either one. Both. Let's talk both real quick.

Cody:

Yeah, so the couple of things that would come to mind is just there's some free tools out there that people just don't even really know about. One of which is owned by Facebook and one of which is owned by TikTok. TikTok Creator Marketplace, it's free. You can apply as an advertiser, that's where you can go and find and work with influencers. It's their own basically influencer marketing platform.

Brett:

I did not know that existed. That's fantastic.

Cody:

Yeah, creatormarketplace.tiktok.com. And you can apply as a brand. If you already have a TikTok ad account, you should be able to get in really quick. And then Facebook Brands Collabs Manager, that's a also free influencer discovery tool that pulls in Facebook and Instagram. So for some of these people that maybe are just starting out with influencer marketing and just don't know ...

Brett:

What was the Facebook tool again?

Cody:

Facebook Brands Collabs Manager. It's funny, they don't even talk about it. I feel like Kynship we talk about it more than Facebook. So I'll be requesting a referral fee.

Brett:

Brands Collabs Manager. Interesting. Okay, yeah, we'll link to that. I did not know that existed either, so we'll link to both of those in the show notes.

Cody:

I think the reason why I bring those two up is just because a lot of times finding influencer ...

Brett:

Now the page says Meta for Creators. We can't forget Facebook, the platform, the artist formally known as Facebook ...

Cody:

Rest in peace.

Brett:

Of course. Yeah, exactly. So Meta for Creators, that'll probably get you there, too. Yeah, super interesting resources. So go ahead, I think you were about to explain ...

Cody:

Well, I was just going to say a lot of times the biggest hangup in people starting is more on the labor and the time. And a lot of those two things come around just finding influencers. They may be convinced by this episode to I'll seed product, but who do I do it with? Yeah, even Instagram itself you can do the drop down arrow and algorithm picked influencers that are all related to that influencer. I used to do that before all these tools came around. That was my discovery tool.

Brett:

So what does that look like? So you're on Instagram, you've got an influencer where you're like this influencer would be perfect for my brand. What do you do from there?

Cody:

Yeah, there's a dropdown arrow on the top third of the profile. You can hit that dropdown arrow and then it just feeds you similar people all pretty much around the same follower account. Some will just be various, but they're posting similar things, using similar hashtags, they might have the same bio. So if you have at least one influencer that you know I would love to get my product to this person, hitting that drop down arrow will show you a bunch of different people.

Brett:

Super interesting. Well, those three tips were worth the price of admission. That was worth you listening to the end of this podcast. So if you did, kudos to you. You got three amazing tips. It was all good, but those are three amazing free tools to get started with. So check those out, Meta for Creators, AKA Brand Collabs Manager, the TikTok Creator Marketplace, and then just looking on Instagram and clicking that dropdown arrow. That's awesome. Fantastic. And then other suggestions? So if someone says, "Hey, I want to talk to Cody, I want to talk to Kynship," what should they do?

Cody:

They can just reach out to me. I'm very active on Twitter and Instagram. So just @codywittick on both and then we can get on a call and schedule something. So that's probably the easiest way to connect with me and the agency.

Brett:

Nice, that's awesome. This is just always a fun way to wrap up as we're wrapping up our session here, any predictions? Where is influencer marketing headed? What things could you see changing? And then what else might be also be interesting, because you alluded this a few minutes ago, what do you expect to remain the same? We always want to prepare for what's shifting and what's changing and certainly be aware, but also you double down on the things that won't change typically. So any thoughts there on what's going to change and what's not?

Cody:

What's going to change? Here's a hot take, follower count goes away. That's a hot take.

Brett:

So platforms are going to hide that?

Cody:

Yeah, maybe even Instagram just solely. I don't know about TikTok. They're obviously a different leadership group.

Brett:

Different beast there, yeah.

Cody:

Yeah. I mean, personally, I would love to see it just because I think the more focus would go on the content itself, but ...

Brett:

It's a vanity metric, too. It's all about engagement so you have 500,000 followers, but what if you paid for them or what if they're not engaged?

Cody:

Exactly, so maybe hiding it. And then what remains the same? What I'm passionate about is just the relationship side of things. These influencers, from Michael Jordan to LeBron James is the only thing that changed. They're both the same influence, but what changed is the platform. It used to be a TV commercial, now it's Instagram stories.

Brett:

Yeah. And I don't want to get into the Jordan versus LeBron debate because that's not appropriate for this podcast. Jordan's better, but if we look at it, and this is what we talk about as a team a lot, things are shifting rapidly in our industry. What will always be the same is that you have to have the right message, a compelling message that just hooks the right person and makes them want to take action. You have to have the right message to the right person. You have to identify who's going to fall in love with my product and who's going to be really interested in what I have to sell and who are the influencers that speak to them, so the right market and then at the right time. So with the right medium, with the right channel to reach. Those things are never going to change. If you're able to deliver the right message to the right person at the right time to the right medium, you win.

Brett:

And then just understanding that it's going to shift and stuff, but get drilled down to the basics and the things that are timeless and that's how you succeed in marketing. So awesome. Well, Cody, this has been a lot of fun, man. Really enjoyed it and good luck to you. We'll be keeping an eye out. Do follower counts go away? So I'll give you credit there.

Cody:

That's the one takeaway that everybody will remember. No one else will remember anything, just a hot take.

Brett:

Awesome. Any final words of wisdom, Cody?

Cody:

No, just build relationships on giving, not asking. That'll be the final one liner.

Brett:

I love it, yeah. On giving, not asking. I absolutely love that, really good stuff. So, Cody, thanks, man. This has been a lot of fun.

Cody:

Thanks, Brett.

Brett:

Absolutely. And as always, thank you for tuning in. Really appreciate you taking the time, taking a half hour, 45 minutes out of your day to hang out with me and really smart guests. And so as always, we'd love to hear from you. What topics would you like us to explore on the podcast? Hey, if you haven't done it already, we'd love that review on iTunes. It helps other people discover the show and it makes me feel warm inside and I would appreciate that. So with that, until next time, thank you for listening.

‍

Episode 187

:

Chelsea Cohen - So Stocked

Inventory Strategies for Supply Chain Chaos & Impacting Your Restock Limits with Amazon

In this episode I interview Chelsea Cohen of So Stocked and we unpack some super smart inventory and supply chain strategies.

Supply chain and logistics. When everything is running smoothly, it’s a breeze. When there are problems, inventory issues can cripple an eComm business. Inventory, and supply chain management has been struggle city in 2020 and 2021. Unfortunately, 2022 isn’t looking much better.

In this episode I interview Chelsea Cohen of So Stocked and we unpack some super smart inventory and supply chain strategies. This content is a MUST if you want to remain competitive (and avoid pulling your hair out from supply chain pain).
‍

Here’s a look at what we cover:

The Golden rule of logistics - don’t let anyone have all of your stuff - and how to apply it.
Container optimizations - with the cost of containers rising, container optimization can have a big impact on your overall profitability.
Carton optimizations - This is a next-level tactic that can save you big. Especially when you combine it with container optimization.
4 points that impact your restock limit with Amazon
3 triggers to pull to avoid restock limit crashes during out of stock periods

‍

Mentioned in This Episode:

Chelsea Cohen

- Via SoStocked

SoStocked‍

Onpallet.com

‍‍

\ Transcript:

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 diving into a topic that may, on the surface, give you a little bit of anxiety. It may cause stress to well up inside of you, but you also know that this is absolutely critical and critical for your success as we move forward. So we're talking about inventory management, and we're talking about practical ways to manage your inventory in the midst of supply chain chaos, because this is one of the ways you make profit as an eCommerce business. If you don't get this right, even if everything else is doing wonderfully, like marketing and branding and conversion optimization, if the supply chain and inventory management is a wreck, you're not going to make the profits that you should be making.

Brett:

And so, I'm delighted to welcome to the show an expert in this field, Ms. Chelsea Cohen, she's the co-founder of SoStocked. And she's so stoked to be here. It's an inventory management software solution for Amazon sellers. But not only that, Chelsea is an Amazon seller, she runs her own store, and she runs a copywriting and listing optimization service. An agency. And so she knows Amazon inside and out, and is just a wealth of knowledge when it comes to dealing with your supply chain and inventory management. And so, with that intro, Chelsea, thanks for coming on, welcome to the show, and how's it going today?

Chelsea:

Yeah, thank you so much for having me, it's going great.

Brett:

Good, good, good. Well, we've got lots of good stuff to dive into. We're going to talk about how do you improve profitability with supply chain, container optimization, carting optimization, some really advanced things. We're also going to be looking at how to diversify your supply chain and how to really survive and thrive as we continue down this period of supply chain chaos. But before we do, I gave a quick intro, but would love to get a 60 or 90-second intro from you about yourself, Chelsea. So, how did you get here, and why are you so into inventory management?

Chelsea:

Sure. Yeah, so I've been selling since 2014, recognized inventory as a major issue in my business, something that was really causing my margins to suffer. I basically started asking around, "What is everybody using?" Everybody said that had tried all the software out there, they'd gone back to spreadsheets and I figured that that was a stupid answer for us in our eCommerce and also entrepreneurship space. I figured someone's got to tackle it, it might as well be me. And so for the past three years, I've been exploring that, and I've been really diving deep into inventory.

Chelsea:

I've talked to hundreds of sellers as we've built out our platform and really built it out based on what Amazon sellers need, and found that not only was a software and a system not really put in place, but also the education side of things was not in place. And so, I basically kind of stepped into that role and decided that I was going to become an Amazon inventory expert. That's where we're at today. It's been very much an interesting subject. I found it interesting, and I try to make it a little bit more interesting, a little bit less terror-inducing than it normally is.

Brett:

Yeah. And I think that this topic of inventory management supply chain, for some people, they just light up, right? Some people love logistics. A friend of mine runs this massive warehouse for a big not-for-profit, so he can geek out on logistics. Some people can, not everybody is wired that way. But right now in this environment, everybody, regardless of whether you skew towards the marketing side or operation side of your business, you've got to master this, and I know everyone is interested.

Brett:

So I want to talk first about diversification. As we're looking at the current environment, we have to diversify. We can't be dependent on just one supplier or even one country in certain cases, where we get our inventory from. So what should we be thinking about in terms of diversification, and what are some practical tips that you have?

Chelsea:

Yeah. So there are a couple of things. One is where you're sourcing. Right now, there are moves into other places outside of just China. China's having various different challenges. They've got power curbing happening, which means that they're not allowed to access power for as long as they've been usually accessing power that's then being shut down. So the timelines are increasing over there. They've got material shortages.

Brett:

Yeah, and just a quick riff on that, I'm sure everyone's well aware, but I know some good friends of mine that are in the eCommerce space. They're talking to their factories in China or another good friend of mine has an employee that lives in China. And yeah, some of these factories are working four days a week or five days a week, or they've got no power at night. I've heard of some that are like buying huge diesel generators just to keep the electricity going at night when the government shuts it off. This is wild times. So that's increasing the time for things to be produced, yeah.

Chelsea:

Exactly. Yep. Yep. And you got raw material shortages. There's a cardboard shortage, which is just kind of horrific. Actually, we're seeing cardboard come through that is supposedly seven layer cardboard, but it's very, very thin. So the quality of cardboard is also wreaking havoc on people's inventory. So those are things that you have to get your inspection company to inspect as well.

Chelsea:

So people are starting to move into other countries. Places like India and Mexico have great spotlights on them currently. India probably has a little bit more of a head start to Mexico in terms of the logistics. There are upsides and there are downsides. I don't claim to be an expert in either of these countries in terms of sourcing by any means, but some of the upsides, labor is actually cheaper in Mexico than it is in China, which is interesting. And I thought that was fascinating to learn.

Brett:

Must people would not guess that, right?

Chelsea:

Yes.

Brett:

I didn't know that either, but it's super interesting. Yeah.

Chelsea:

Yeah, exactly. Yeah. So-

Brett:

And guess what? No shipments, right? They just go right across the border. You don't have to worry about the port of LA or Seattle and so.

Chelsea:

Interestingly enough, because I do have a friend who is starting to source in Mexico. I talked to him, he's actually living in Mexico now. And he thought that it was going to be a lot cheaper because you don't have to deal with that, but the cost was much higher than he expected. And he did run their numbers and it wasn't nearly as profitable as he needed it to be. However, that was when he was trucking into Dallas. However, he found a warehouse on the border, right inside of the country, and then all of a sudden the numbers made sense.

Chelsea:

So you have to be creative and find creative solutions and figure out where do those numbers come from? Why is it expensive? What legs of that transportation are most expensive and why? So that became very interesting. So those are things that people are kind of exploring as India and Mexico. You're not going to get certain products out of either one of those countries. There are certain products that you'll only for now be able to get in China still, but there are specific types of products that you will start to be able to find eventually I think.

Brett:

It is so interesting, just the way we look at different parts of your marketing funnel, right? As we're running at OMG, we run top of funnel YouTube and Google search and shopping and remarketing and we're running Amazon ads, all types of Amazon ads. And we really like to look for, okay, what are the areas where cost is too high? Where cost is just proportionate to return. And so we're constantly tweaking and stuff.

Brett:

I don't know that a lot of people think about that as far as supply chain goes, but the same type of mindset applies. Where it's like, okay, I know this should be cheaper. Ah, there's this one leg of the trip that's really causing this cost to spike, let's reroute and let's find a creative solution here.

Chelsea:

Exactly. Exactly.

Brett:

Cool. Other things we should diversify, and if not, I want to get into flexible payment terms and logistics. I think there's some interesting things around there too, but any other points of diversification?

Chelsea:

Yeah. So other things to diversify, I call it the golden rule and it's, don't let anyone have all your stuff. When I talk to sellers and they tell me that they've stocked out, I ask them immediately, "Well, why did you stock out? What happened to your inventory? Where was your inventory?" And most often it was that they put all their inventory on a boat and the boat's just sitting there or that they put everything on a truck and Amazon hasn't checked it in. There are reasons why Amazon is having problems with check-ins, which we could get into if the time comes. But the rule applies, don't let anyone have all your stuff. You have to have a backup plan.

Chelsea:

So if you're going to put everything in a container, you should actually be producing a little bit more than a container's worth so that you have some inventory that you can air freight over only if you need to. You don't want to take on the expense if you don't need to, but you'll have your supplier keep that extra inventory and fly it over if you have problems at the ports. And the same thing goes with your inventory going into Amazon. You send almost everything, LTL or FTL, and then you have your three PL, your warehouse hold extra inventory that you can send small parcel delivery if needed. Again, those two other meth methods are more expensive, but they're a lot more reliable and faster.

Brett:

Yeah. They're more expensive, but they're not more expensive when you take into account the high cost of being out of stock and all the headaches that go with that. And so I love that idea. You keep it there. You always have a backup plan because stuff goes wrong. We've seen that time and time again recently, but then you've got it there. Only deploy that if you need to and makes a ton of sense. Any other thoughts on diversification?

Chelsea:

In terms of Amazon, most people who sell on Amazon sell using Fulfilled by Amazon, having a fulfilled by merchant option. Where it's not just that your inventory is sitting at a warehouse in cartons, but you have either an outside fulfillment center or maybe a fulfillment center attached to your replenishment warehouse and being able to fulfill, you shouldn't be relying only on Amazon, as we've seen the system is now broken. You can't only rely on Amazon to be your distribution center.

Brett:

Yeah. Because what happens when Amazon says, can't take any more inventory right now or I'm creating the stock limit for you, which I know we'll talk about that.

Chelsea:

Yep.

Brett:

And so, okay, that's brilliant. So have FBM set up as a backup, even if that's not what you use primarily. That makes a lot of sense as well.

Chelsea:

Exactly.

Brett:

Cool. Talk about flexible payment terms and logistics. And so what does that look like? Because I know really this all comes down to profitability and business growth, but what does that look like?

Chelsea:

Right. So one of the things that we are doing that other sellers are doing is to work with your supplier to sort of lighten the load. So we talk about that extra inventory that's currently sitting at your supplier's warehouse in case you need to deploy it by air freight. A lot of times your supplier one, won't charge you for that. They'll hold it for a period of time and not charge you storage. So instead of it sitting locally and you collecting storage fees on a monthly basis, it'll be sitting at your warehouse at your warehouse with your supplier and they'll be willing to hold it for you.

Chelsea:

Beyond that, so everyone has to pay. You pay your deposit. So you produce a little more than a container, in this particular scenario. You produce a little more than a container, you send that initial payment, but then when send that container, you only have to pay for the container. You only have to pay for the inventory that was sent. And the inventory that's being held is inventory that you've paid the initial payment on, but you're not paying storage fees on and you're not paying that final payment. That's something that is being worked out with many different suppliers and is something that helps you to better control your cashflow.

Brett:

Is that something that you found a lot of suppliers are willing to do in this environment?

Chelsea:

Many suppliers are willing to be flexible and to help you out. Some of them do get subsidies. Some of them are not big enough to be able to handle that, but we personally, our supplier is willing to do that and we've found that there are many sellers that do have that relationship. If you had a long term relationship, or if you do large volume or both, it tends to be a little bit easier for you to negotiate that.

Brett:

And you have to ask. It's one of those things that, that, you're definitely not going to get those flexible terms if you don't ask. And so you need to ask them. And more often than not, if the supplier can do it, it, they will do it. And so it definitely makes sense to ask.

Chelsea:

Exactly.

Brett:

Well, let's talk about profitability for a minute. So, thinking in terms of how to be profitable here. It's so interesting I remember when I was first learning real estate and I never got into real estate, but I was interested in it. I remember this saying that, "Hey, you make money when you buy the real estate," which good luck with that in today's inflationary real estate market. But I think in a lot of ways holds true for eCommerce as well. The profit is made on the sourcing and the production. And now the supply chain, because if supply chain costs go up three or four X, holy cow, then your profit is really suffering.

Brett:

So how do you optimize for profit right now? What, are some of your tips and suggestions there?

Chelsea:

Yeah. So, yeah, we have the same thing, you make money when you buy. And that's on the sourcing side of things. We kind of taken a step further and say you make money before your inventory even checks in. And so that's something that I've been lately very obsessed with. There are things that are changing about how shipping works. Shipping costs started in 2020, beginning of 2020 were $2,000 per container are now pushing $10,000 per container. So that's an extreme hike in shipping costs.

Brett:

Yeah. I even heard there's some periods of time and it depends on when you're listening to this, but I heard containers being like 30K for a little while in some instances. And so it's just insane.

Chelsea:

Yeah, depending on where you're going. Yeah, definitely. It's just been crazy. So finding ways to kind of shave some of those things off and paying attention to what's happening. What are those new fees and there are new minimums, there are new maximums. For example, we had a particular product that we actually, by just changing the container, we were able to save 68 cents per unit for this particular product. And it was because for one, our freight forwarder had some minimums. Their minimum was every container's going to be charged at least 12 kilograms. Even if it's under 12 kilograms.

Chelsea:

So we had our cartons at 7.7 kilograms. So we're losing all of that money because we're being charged of weight that doesn't exist. And so there was that side of things. There was the weight fees that we were able to counteract by changing the carton size and putting more units per carton into that. But the other side of things, putting more units per carton, because everyone used to send to Amazon and you know, you didn't really have to worry about the third party warehouse. Now you have this middle man that's charging you for every single thing that happens. They're receiving it, they're unpacking it. They're palletizing it, they're doing all of these things. And one of those things is called a carton pole, which means it's just handling the carton and then carton labeling. Carton labeling is just slapping a label on a carton. But combined, those two costs can average you about $3 and 50 cents, $3 and 60 cents.

Chelsea:

And so when you put more units per carton, that particular cost gets dispersed over more units and you're able to then save more. So that's one of those things where it's important to start looking at, can I optimize my cartons? And I'm actually currently in a spreadsheet right now, building out a tool to be able to calculate these things as something that we built ourselves. For our business, we had to do that calculation and figured this is something that doesn't exist that now needs to be developed because the amount of money that someone can save is just extraordinary.

Brett:

Yeah, it's unbelievable. And it really is the death by a thousand cuts on the cost side, but also the real creation of profits if you're able to start saving some of those little fees over time.

Chelsea:

Yeah. There are other free tools that I thought would be good to mention. Some of them are free. One of them is paid, but in terms of there are other levels. You have carton optimization, but then you have container optimization and you have pallet optimization. There's a tool called onpallet.com and that will help you to build out a pallet. You need to remember that there are six inches that will be the pallet measurement. So when you're using the tool, make sure to include the six inches when you're following Amazon specs.

Chelsea:

And then the other tool is a container optimizer. It's called Pier2Pier. So pier meaning where you drop pier.

Brett:

Like pier2pier computers, pier2pier in the water, okay, got it.

Chelsea:

Exactly. So pier2pier with the number two.com/loadcalc, and it helps you to calculate your container. So those are some tools that people can use to help save them on cost across the supply chain.

Brett:

Nice. Love it. Love it. Very cool. So, one of the things we're really trying to avoid here and you've talked about this a little bit where we've got inventory on a container, but we're keeping some that we need to air freight over just in case. But one of the things you want to avoid with inventory management is being overstocked, right? That's no good. At Amazon, they're going to charge you extra fees and then you've got money tied up in inventory, whether you're financing that and then paying down the loan or whatever. Being overstocked is not a profitable move, but being under stocked can be the death of a listing or can really cripple your business. And so how do you find that balance of not running out of stock, but also not being overstocked?

Chelsea:

Yeah. So one of the things that you need to be able to do when you're trying to estimate is to look at your data in full. So for example, we had prime day last year in October, but we had prime day in the normal time, which is July this year. So if someone were to try to project out October of this year, using last year's data, they have this huge spike in sales, this two day sale, that could cause them to overestimate.

Chelsea:

So being able to analyze your data better, and it's difficult when Amazon doesn't give you all that data. They give it via the API, but they don't give to you in your reports. So if you don't have a software that handles that data and it gets granular with that data, you need to start tracking some of these big sales events or some of these spikes that you see. Some people have a spike that happens just because someone in a Martha Stewart found their product and listed it on a list of favorite things or something like that. And they get this huge spike in sales for that reason temporarily.

Chelsea:

So those types of things need to be tracked, those sales spikes, so that you're actually estimating properly. That coupled with being able to plan out your inventory paired with your marketing. So those are kind of some of the basics on why people tend to over order, it's not analyzing their data properly.

Brett:

Nice. And then, what about ways to prevent from going out of stock and certainly an element there too is forecasting and understanding. But other tips there, because some of that is just dealing with Amazon as well.

Chelsea:

Yeah. Yeah. So Fulfilled by Merchant is one of those ways. It's not, you're going out of stock in FBA, but you're not necessarily going out of stock. Your sales aren't stopping. So having that other distribution channel becomes very helpful. A lot of Amazon sellers right now are facing restock limits. And restock limits are wreaking havoc on a lot of businesses. They're a bit unpredictable, but there are certain things that we know can help to boost those.

Chelsea:

So not getting into what we call a restock limits cycle. The cycle of your restock limits are such that you're having a hard time getting your inventory in and then you stock out and then your restock limits go down and then it's then harder to continue to actually recover from that.

Brett:

Yeah, it's a downward spiral, so to speak, of this restricting restock limits. And I hear this is hitting a lot of people. I know some very successful sellers, some big brands that you all would know of, that also have weird restock limits. Just based on some of these things. And so you and I were talking about as we were prepping a few weeks ago, they're kind of four points that impact your restock limits with Amazon. Can you unpack those a little bit and give us some tips there?

Chelsea:

Right. Well, I will make a little bit of a differentiator. There's restock limits and then there's the IPI score. It's really frustrating, but you have these two different inventory factors that are battling. There are a lot of sellers that don't have a problem with the IPI score. The IPI score means Inventory Performance Index. That's basically looking at how good are you at managing your inventory? And they're going to give you a score. If you go below that score, the score right now, it's 450. If your score is below 450 for each quarter, for that entire quarter, you not only have restock limits, which is a per unit, right? They give you, you can only send 5,000 units of inventory in, and that's your restock limits. But your Inventory Performance Index score and your IPI score actually when you have it below 450 hurts your storage volume.

Chelsea:

So they give you a unit limit and then they give you a volume limit. And very often the volume limit is lower than even the unit limit. And so that's kind of-

Brett:

Volume, meaning the amount of space on the shelf, not just how many units we'll accept, but hey, we're carving out this much shelf space, so fill it up.

Chelsea:

Yeah, exactly. Yeah, and it can be very extreme. So we had someone reach out to me and he was having problems understanding why he couldn't send inventory in. And he had the ability to send in 3,000 units, but the size he was allotted, I looked at the size limitations and I did the math and it was actually the size of a refrigerator.

Brett:

Wow.

Chelsea:

Yeah.

Brett:

Not put 3,000 Units in there, unless it's silicone wedding rings like my buddy.

Chelsea:

Right. Exactly. So he was having a hard time. And then at that point, the only solution is to fulfill outside of Amazon, which will help. It will help your sales velocity. It will help with those factors. So improving-

Brett:

By selling on Fulfilled by Merchant that increases your volume and velocity and that can actually increase those stock limits.

Chelsea:

Right, yes. It helps you to start to improve that. The thing, if anyone has that problem where they're being restricted by those storage volume limits, their number one focus needs to be getting that score up. And that score as we were talking about before, it is actually four different things. It includes excess inventory. So you need to remove that excess inventory and Amazon will let you know what that excess inventory is. Then there's in stock rate. So being in stock, whether it's fulfilling outside of Amazon or within Amazon, being in stock is a factor. Stranded inventory is a factor. And that basically means that you've got inventory that ...What's that?

Brett:

Stuck on a boat or something like that.

Chelsea:

Well, it's stranded within Amazon. So it's sitting at their warehouses, but the listing is not live. So maybe the listing was shut down. Maybe you're selling another brand's product and they no longer allow you to sell it. Whatever it is, to fix whatever that problem is, either pulling the inventory or getting that listing live will fix that. And that's I think really the lowest, the most easy problem to solve.

Chelsea:

And then the last one is sell through. How quickly is your inventory moving from the point you check it in to the point it actually leaves. And when you look at all of them, the stranded inventory in stock, excess and sell through, they're all components of sell through and they can all be improved by sell through.

Brett:

Yep. Yep. Totally makes sense. And I was about to ask that like, what is the one metric? Because if you look at there's several things and I won't get into it in this podcast because it's not relevant, but Google has a quality score they give to every ad and there's one component of quality score which is really more important than others, it's called click through rate. But yeah, that sell through rate, that's really what you want to optimize for. And so if you can increase that, then everything becomes easier.

Brett:

Amazon's happier, you're happier, customers are happy, ideally. So any thoughts on increasing sell through it? I know that that then opens up a big new world of advertising and listing optimization and all that.

Chelsea:

Yeah. I mean, it really is two factors. It's utilization. So it's how much inventory you have sitting at Amazon, versus how many sales you're making. The formula is looking at your 90 day sales divided by your utilization. So the average number of units you have inside of Amazon. So really, when you increase your sales, let's say you're doing some Fulfilled by Merchant stuff. I would say, pull out some access inventory. If there's a product that's slow selling, continue to sell it on FBM. Those sales will contribute to that top line, but not be contributing to that bottom line. So that will help you increase your sell through. That as well as smaller orders more frequently.

Brett:

Yeah. Nice. I love it. I love it. And so we may have already addressed this a little bit, but some tips to avoid your restock limits decreasing if something does go out of stock, right? Because lots of issues going on right now, some things are going to go out of stock. Other levers you can pull things you can do to avoid those restock limits from crashing?

Chelsea:

Yeah. So for sure there are three different things to focus on. One is like we talked about, Fulfilled by Merchant. Those sales do contribute to your restock limits. They contribute to your sales velocity. So fulfilling the by merchant, seller fulfilled any sort of fulfilling by merchant, that's going to help you. Those sales do positively affect your restock limits.

Chelsea:

Then there would be excess inventory flash sales. So let's say for example, you have a product that you have a lot of inventory on. The beauty of it's called storage type limits. So for about a year, a little less than a year, there was something called ASIN type limits. Which means that you've got a limit for every single skew. So if you run out of one, it's a very difficult thing to get it back. Because for a period of time, you've basically have no inventory. You have no sales and you have no way to correct the depletion of your restock limits.

Chelsea:

Now we have storage type limits and it's been painful for a lot of people because they've dropped things very low, a lot lower than the ASIN type limits, but at the same time, you have the ability to use your entire catalog to boost the limits. So you run out of stock in one of your products, you can look at what products do I have that I can push a little bit harder so that I can create, fill that gap that's going to be created, or at least try to fill that gap to avoid the plummeting of that restock limit?

Brett:

Brilliant. Brilliant. I love it. Awesome. Well, Chelsea, this has been incredibly insightful and impactful. I do want to talk about your software and hopefully people are watching the video, they see the clever usage of toilet paper on your shirt. Running out of stock, and it's got a little toilet paper roll running off, which is appropriate for 2020, which is last year. And then also the fed up with this sheet, and then it's got toilet paper with, looks like a spreadsheet. Sort of clever.

Brett:

What is SoStocked? I think we all know kind of the basics, but what does it do for people? And so give us kind of the quick walkthrough.

Chelsea:

Sure. So, SoStocked is designed to be able to take your eCommerce data. We're moving into Shopify, hopefully by the time that this episode airs we'll be in Shopify, we're in Shopify beta. But we started out with Amazon and really finding and creating a solution for Amazon sellers that was better than their spreadsheets. Because every other software out there left people going screaming back to their spreadsheets. So that was a big red flag.

Chelsea:

So we take what is possible within a spreadsheet and make it understandable and customizable so that people who are selling on the platform can not only forecast their inventory based on past data, but also the future planning. We call it inventory minded marketing. Which is plugging your marketing into your inventory to be able to help you to forecast more accurately. And then once that forecast has been created, they'll be able to click a button and place a PO with your supplier. You can email it directly from the system, and then it tracks everything, which was a big problem for a lot of sellers, not being able to know where their stuff is and when it was supposed to be arriving.

Chelsea:

And so it helped you to track everything from your three PLS, your open orders with your suppliers, and to be able to understand why the numbers are what they are.

Brett:

Yeah. Extremely, extremely valuable. And your software also helps when you create some of these scenarios we talked about, where you've got some product that you're putting on a container, other product you're holding back and you're going to air freight it, and so it can kind of help track all of that as well, right?

Chelsea:

Right.

Brett:

Yeah. Very cool. So if someone wanted to check it out more, what would be the best place to go and how should they view a demo or check it out?

Chelsea:

Sure. I would say go either go to sostocked.com or you can also go to, sostocked.com/connect. That's where you'll find me, you'll find my socials and a demo link as well as a link to the webinars that I do.

Brett:

Yeah. Awesome. I've seen some of the webinars. They're very good. If you gotten this far in the podcast, you realize this was a wealth of knowledge and a wealth of information that Chelsea has unpacked. And so I'm extremely grateful for that. Any final tips, final thoughts, and/or do you have any bold predictions for 2022 and beyond, as far as supply chain goes?

Chelsea:

Sure. I would say one of the final thoughts I like to leave people with that recently would kind of opened my eyes, was how much your vendors know and how much you need to use them as allies. We've been using them a lot as order takers. And what I mean by that is that, we've got these three PL warehouse owners, and we've got these freight forwarders and they're constantly shipping inventory across the planet and into Amazon. And they know more than we do. So we've got people who sellers usually go and they do an Amazon order and they send that order, the Amazon shipping plan, and they send that to their three PL. And they say, send my stuff. But that currently, it could change in three months, that currently is not the best way to send things.

Chelsea:

Your three PL managers will know the best ways to send your inventory, the best workarounds, the best providers, the best companies. Right now Amazon's really falling all over itself and really getting a lot wrong in logistics. So Amazon partner carriers are a little bit less reliable, and that's why people's stuff is not checking in. So talking to your freight forwarders, talking to these people and finding out, really picking their brain, it is extremely valuable. It's one of the ways that we saved all that money on the carton calculators we had our freight forwarders say, "Hey, the size is wrong. You're going to be charged extra." And so the conversations that I've had have just completely opened my eyes into how much we don't know.

Brett:

Love it, love it. So play Nostra Damas here, predictions for 2022, what happens to supply chain?

Chelsea:

I think maybe it'll get a little bit better. I don't think it's going to get a lot better.

Brett:

Maybe we'll see things like the cardboard crisis and some of those things, but yeah, is it going to get back to normal, pre pandemic normal?

Chelsea:

No.

Brett:

Yeah.

Chelsea:

No, I don't think so. I think that we need to be prepared for it not to. I think that Amazon personally, in that whole ecosystem, they say that restock limits are going away, I don't believe it. They have these other programs that they're rolling out. There are programs that are in beta for logistics, for supply chain and also for storage and restock limits. But it's Amazon, they have been really not reliable lately. So I'm kind of waiting to see what happens. I'm not ready to hit my toe in that pool.

Brett:

Exactly. Let's feel confident about that. When we see it with our own eyes, rather than just hearing it. Yeah. And I've heard and not to end this show on a doom and gloom note, but I've heard some people with the no supply chain, well say, "Hey, there's likely could be a strike at one of the ports. Port of LA." Thank you so much. Because about do about every five years, they say the longshoreman like to strike out there in LA. So we could see something like that. Suffice it to say, things will continue to not be normal and things will continue to be challenging. That's why you need expertise like Chelsea provides. And that's why you need to really consider tool like SoStocked, if that's a good fit for your business.

Brett:

So check it out. Chelsea, this has been so much fun who, who would've thought that inventory management and supply chain and logistics could be this much fun and this enlightening, but you have delivered pun intended I guess, but thank you so much.

Chelsea:

Awesome. Thank you for having me

Brett:

And you bet you. And as always, thank you for tuning in. We'd love to hear from you. What would you like to hear more of? What topics should we delve into? Give this episode some love if you enjoyed it, share it with people that you know would find it interesting. That's a great way to give a thanks back to the show. To let other people find it.

Brett:

Also, if you found this useful, we'd love that five star review on iTunes that not only makes my day, but also helps other people find the show as well. And so with that, until next time, thank you for listening.

Episode 186

:

Chris Yates - Centurica

Nuts and Bolts of Buying or Selling an eComm Brand

Now is a great time to sell an eCommerce brand. And, if done right, it’s still not a bad time to buy a brand.

The market for eCommerce businesses has never been hotter. Now dozens of brand aggregators have war chests of $100s of millions of dollars with one mission - buy and grow eComm brands. We’re now seeing valuations in the 5-6x of EBITA where just a few years ago we were only seeing 3-4x multiples.

Now is a great time to sell an eCommerce brand. And, if done right, it’s still not a bad time to buy a brand.

Chris Yates is co-owner of Centurica a company that offers buy-side due diligence for digital businesses. He’s also the founder of Rhodium Weekend - a vetted community of digital entrepreneurs and investors.

Here’s a look at what we cover.

Mistakes when going through due diligence
Most important steps/tips when going through due diligence
Mistakes when evaluating your own business
As you hit different vacation tiers - types of buyers and buyers wants and needs change
How aggregators are changing the landscape of DTC M&A
What is Rhodium weekend? Mastermind and speakers. Real in the trenches stuff and fun activities

‍

Mentioned in this Episode:

Chris Yates

Rhodium Weekend‍

Centurica‍

Joe Valley‍

Quiet Light Brokerage‍

‍

Transcript:

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 about topic that is very, very timely, for me anyway, and I think it will be timely for you as well. We're talking about the nuts and bolts of buying an eCommerce brand. If you're a frequent listener to the show, you know that my business partner, Chris Brewer and I, we are actively looking at buying eCommerce brands. We're investing in a number of them, looking at buying others. And so, this is a really interesting topic to me. I almost wanted to do this episode just to pick the brain of my guest, but we're hitting record because it's going to be super valuable to each of you as well.

Brett:

And so, my guest is Chris Yates. He's the founder of Rhodium Weekend and partner of Centurica. Centurica, they offer buy-side due diligence for digital business acquisitions. We have a mutual friend, Joe Valley from Quiet Light Brokerage. Joe's a friend of the show, been on the show a couple times. Joe made the connection, and Chris and I chatted ... super, super smart guy. And so we're going to talk about due diligence and valuations and aggregators and tons of fun stuff going on right now in the land of M&A for D2C brands. And so with that, Chris, welcome to the show and thanks for coming on.

Chris:

Brett, thanks for having me. I'm honored you'd invite me.

Brett:

Yeah, absolutely. So give us a little bit of background here, Chris. How does one get into the business of buy-side due diligence for digital businesses? How did you get here?

Chris:

Yeah, so my story, I'll share it in brief and then if you want to dive in feel free, but ...

Brett:

Perfect.

Chris:

I was buying online businesses back in the early days, 2009, 2010. I did that for a few years, found it actually pretty isolating living in Montana and not being able to find other people who could speak the same language. So I started a conference in person in Vegas in 2012 and have done that annually since then, and built a community around that, and that's what Rhodium is. After doing that for a few years, one of the attendees/speakers of the event was the original founder of Centurica, and he approached me in 2015. He said, "Chris, there's two people in the world I'd sell this company to and you're one of them. Would you want to do a deal?" So I ended up acquiring Centurica in 2015.

Chris:

And then, from there I brought on my business partner, Brian, and we've grown it consistently since then. Where it's at today is we primarily work with funds such as the aggregators and things like that, as well as individual entrepreneurs who are doing acquisitions of eCommerce content, SaaS digitally focused service businesses. So we do the risk assessment, if you will, make sure that you're not buying a lemon.

Brett:

I love this so much. And, just a couple things. We'll talk about Rhodium Weekend a little bit later, but you are right that even just being an entrepreneur, being a digital entrepreneur, being a D2C eCommerce brand owner, it can be isolating, and especially in a COVID/post-COVID world, we're all isolated. And so, having these communities where you can gather together virtually, or now, we're getting it together in person is awesome. And, I've found a lot of the breakthroughs from my business and breakthroughs for just my way of thinking have come from these events. So, we'll definitely want to dig into Rhodium Weekend here in just a little bit.

Brett:

I want to make sure this is very actionable, very practical, but as my business partner and I, we've started digging into, "Hey, we want to buy a brand," and so we've built criteria and we're evaluating different brands looking to buy. But, it's tricky, right? You hear all these horror stories of people that buy a brand, they spend a lot of money, it all falls to crap. It all just blows up, so that can shy people away from mergers and acquisitions, and from growth through acquiring and buying brands.

Brett:

But, when you get it right, this can be absolutely awesome, right? So, let's talk a little bit about the due diligence phase because I think this is likely ... and, you correct me if I'm wrong because you're the expert here ... this is likely where a lot of people get it wrong, right? So, what are some of the mistakes that you see buyers making in the due diligence phase?

Chris:

Yeah, and you mentioned correct me if I'm wrong, you're not wrong, but I will say that before you get to due diligence, there should have been a lot of things that happened that will set you up for success, including having your ability to operate these businesses really dialed in. At the end of the day, the buying is not actually the hardest part, it's what you do after buying it. So, with that said-

Brett:

It's the integration of your current business and the new business and the operation of it. Yeah, totally makes sense. And this is one thing we're thinking through too, is how do we set the criteria so that we know hey, when we buy these brands, we're going to be able to leverage them and grow them and operate them and all those things. And so, I think maybe that the first step is that right?

Chris:

Yeah, it is. And, the same business in two different operators' hands could have very different outcomes. And, I think it's important to just make sure that if you're new to the game, that's when you can really have some challenges. And so, those who are seasoned are a little bit more strategic and they're thinking of acquisitions, the biggest challenge you'll run into is just finding one that's going to fit your very specific criteria. There's challenges on both sides. Not that they can't be overcome, but so in terms of due diligence, just to make sure people understand, that starts once you've agreed on price with the seller, typically. Commonly, you'll go through a process of a few introductory calls with them. You might read over prospectus if it's a broker. If the seller's doing it themselves, they may have prepared some materials for you to review.

Chris:

And essentially what you're doing prior to starting due diligence is you're taking the seller at their word, and you're asking them the questions that you need to know in order to number one, value this business, and number two, decide is this the right business for me to buy? And you can't really get into the weeds before coming to a price so just understand that you're taking the seller at their word and they're making a bunch of claims. So, your process of due diligence is really verifying those claims and getting more into the weeds to better understand the business.

Brett:

I love that. So actually, maybe we should back up because we talked about criteria and we brushed over it. Any tips or suggestions you have on that end, getting really dialed into criteria, knowing what we're looking for, knowing how to make those pre-evaluations before we get into price and then true due diligence?

Chris:

Yeah. Well, I can give you two really easy criteria that I think won't steer you too wrong. Number one, don't buy something that you wouldn't feel comfortable telling your most innocent niece that you own. When you get into those kind of gray areas of business models and-

Brett:

I make a lot of money, but hopefully no one knows about this.

Chris:

Yes, exactly. So, that will steer you properly. And this is just your first acquisition, again. Rules are meant to be broken, but I'm just talking about the first time acquisition. Two is don't buy something that's on the decline, whether it's the traffic or the revenue. Sometimes it's not always obvious that it's actually declining until you get the monthly numbers. Sometimes people talk about annual numbers and when you look at the trailing three months or six months or something, they ran out of stock and things are going really badly. So, that's the other one.

Chris:

And the reason I say that is it's hard enough to take over an existing business, learn that business, be able to maintain where it's at now doing all the things that the old seller was doing while also trying to turn that business around. So just being able to operate it at the point where it's at now is a challenge, but being able to turn a business around with major problems while trying to also learn the business and all the nuances, I haven't seen that go well for first time buyers commonly. So those are two basic rules of thumb that I would start with.

Brett:

I love that. And, there are some people that are great turnaround specialists. That that's their thing. They buy a distressed business and they know how to unlock the value and the potential and turn it around. But if that's not you, and that usually comes from lots of lots of experience ... if that's not, you don't buy a business that's on the decline because as you said, integrating and learning the nuances and operating is hard anyway, and so learning that and fighting a decline is all the more difficult.

Chris:

Yeah. And, it's hard because you look at the multiples on some of those businesses and you might be, "Oh, I can pick this up for 2X the annual profit," but if the run rate were to continue, that 2X pretty quickly looks much worse, and you have this idea of all the things you can do for the business to turn around and things like that. So I think that's more of an advanced strategy for those who have some experience and some deals under their belt. And, that is a fantastic opportunity if that is truly something that gets you excited.

Brett:

Got it. So we've made this evaluation, and like I mentioned before, OMG, is we're looking at buying some brands ... Rather, it's Chris, my business partner and I. We want to buy brands that we feel passionate about, that we feel like our marketing expertise and management expertise, we can really help leverage. And so, then we see that it's on the incline and not the decline. We're happy to tell our niece or our daughter about this brand. So we get to that point, we agree on a price, now let's talk due diligence, because you're right, we're taking the seller at their word. And, a lot of good sellers out there that aren't trying to blatantly lie, but we are all trying to put our best foot forward. So there needs to be some due diligence here and not just taking the seller at their word. So, talk us through then what what are some of the mistakes that people make during due diligence?

Chris:

Yeah. It's the old adage of trust but verify. And, there are people who are intentionally misleading you, but more often than not, it's just mistakes that they missed or maybe they embellished a little bit about an issue that's actually there. One of my friends, Mike, he says, "I know there's a meteor coming at this business, otherwise they wouldn't be selling it. So it's my job to find out where that meteor is, when it's going to hit and how to avoid it getting hit." That's just part of the game. But in terms of the process, we've done this hundreds of times and we found that there's a logical phase to go through in due diligence. I will also say that every seller is a little bit different and some of them are much more guarded with their information early on.

Chris:

And so, I will say that you can't always follow this exact process. It just depends on the seller and how comfortable they are with you and the ability to open up the kimono, so to speak. General rule of thumb would be for due diligence, start with the least sensitive stuff first, and then get to the most sensitive stuff closer to closing. But if the seller is willing to just open the kimono, this is the process of how we do it. Number one, we start with the financial verification, and that just means going to the original sources of the revenue and expenses. That might be access to the Amazon account. It might be supplier invoices from their recent purchases. It might be looking at their payroll reports from Gusto or something like that, getting all that original source data and comparing it to what they've claimed on their P&L. That process, why I think it's important to start with that is because if the numbers don't line up, it's really hard for any of the rest of this to really matter.

Chris:

And if they don't line up, usually one of two things will happen. Number one will be that you'll walk away from the deal because you don't trust the person in any longer, but more often than not, it's just a simple adjustment to the purchase price, using the same multiple that you went in with. And, if you found a mistake or something like that, you just adjust the purchase price down a little bit once you've found what the numbers actually are. And, the other thing in terms of the financial verification that is more subjective and where there's going to be more negotiation is going to be what is added back. So in past podcasts, have you talked about add backs and-

Brett:

We have talked about add backs, but just for people that haven't heard, this is things like the owners taking bonuses or other expenses that ... really seller's discretionary income. It could fall under that. But, why don't you talk through add backs from your perspective?

Chris:

Yeah. Simplest way I can put it would be, "Would this be necessary if you were to run the business in the future?" And if it was an expense that was a onetime expense, or they took a trip to Hawaii and called it a business expense for their annual meeting, that stuff, you would add it back. There are things that are much more nuanced than that. Maybe they tried an advertising strategy for six months. It didn't work out well, but maybe it drove some sales and they're trying to add back that entire expense. You got to talk with them about that, because that probably generated some sales and maybe shouldn't be an add back. Some of that stuff is going to be in a gray area and you'll just have to number one, verify that what they're actually calling an add back is really an add back.

Chris:

And then two is should this be an add back? So, that's a big part of that financial verification. What you're trying to do is on one side, you have what they claim their profit and loss statement was, what their discretionary earnings over, let's say, the trailing 12 months. And then you actually verify that from the original sources and say, "Okay, do these match up and does this trace all the way from the original source to their bank accounts, to their tax returns, et cetera, and all of that lines up appropriately?"

Brett:

Got it. And so, now getting into bank reports and tax returns, is that still early on or we're doing that closer to purchase?

Chris:

We would do that right in that financial verification process, yeah. We would compare again a side by side. We'd have what they claimed, what we verified, what their accounting system says, what their bank accounts say, what the tax returns say, put them all side by side and say, "Okay, what doesn't match up, if anything?"

Brett:

Got it. Awesome.

Chris:

And then, why? You got to have that conversation.

Brett:

Yeah, because there's always going to be some things that don't match up. Sometimes you're trying to make your returns look as low as possible from a tax standpoint, and then with add backs, trying to make the profit look as high as you can for evaluation purposes. So, evaluating the deltas there and then is the why sufficient and does it make sense?

Chris:

Correct.

Brett:

Okay, awesome. Financial verification. What comes next in the due diligence process?

Chris:

So usually in parallel with that, we're also looking for any obvious red flags as far as performances on the accounts, and that would be things like are they following terms of service of their marketing channels and sales channels? Simple things like that. So Amazon, as an example, we're looking at their performance notifications, look for anything egregious where they've had some past account suspensions, listings taken down for something other than just a simple complaint from a customer that was a one-off thing, but a repeat violation, any outstanding IP issues, things like that that right off the bat-

Brett:

This is where we're looking for the meteors, right? This is where we're looking for those potential meteors that are about to strike.

Chris:

And these are the ones that would be pretty obvious. You see that thing coming a mile away where it's like, "Okay, yeah, I'm in the Amazon account. I see all this stuff happening." So, we're doing that in parallel just to look for any obvious ... We bucket due diligence into two main buckets as far as our process. There's also legal, tax, things like that that we don't focus on, but for us, we talk about financial due diligence and commercial due diligence. The commercial is more when you're looking at the performance of the overall business, not necessarily just the financials.

Chris:

On that commercial piece, we do a quick run through to look for any obvious meteors or red flags in parallel with that. Once we've finished the process of the P&L, then we're getting more deep into understanding the supply chain, as an example. What do the supplier agreements look like? Are the prices trending good or bad over time? In the sales channels, we're looking at what is the performance of each individual SKU? Is it profitable? Are they consistent with launching new SKUs and are we seeing that in the data, or are some of the SKUs that used to perform really well starting to tail off? That could indicate competitors are nipping at their heels.

Chris:

Really getting granular in some of those KPIs that you want to see. You have to look at the advertising-

Brett:

You would avoid one-trick ponies, right? A business where really all the profit and growth is from one product, and they've got all these other ancillary products that aren't really doing anything. You want to uncover stuff like that.

Chris:

And that can be okay for some buyers, and this is where understanding your buyers is really important. For instance, we mentioned briefly the aggregators, they've got so much diversity because they've already got a portfolio. If you're an individual buyer and you're just doing a single deal and it's got one hero SKU that generates 80% of the revenue, which is actually pretty common, and it might be one parent ASIN, but then there's five variations, but it's really the same thing. You're at the mercy of the performance of that particular one. So, unless you've got a portfolio to diversify, that would be a pretty risky scenario for an individual buyer just buying a single business, so understanding the context of the buyer is obviously important.

Brett:

Okay, awesome. So we got our financial verification, the commercial verification of due diligence. Anything else you want to add to that process?

Chris:

... For a strategic buyer, somebody who's really sharp on operations, this is also when you're looking at how do we transition these assets and how do we grow this? What are the opportunities to reduce some of the risks that we discovered? Because you're always going to have risks. So that becomes every risk is also an opportunity. For instance, if you see that and you're willing to buy a business that has a hero SKU, then the question would be, "Okay, this is a risk. I'm comfortable with it. How do I mitigate that risk?" Well, clearly you, you institute a new product launch process or something like that. Or, I plan an additional acquisition or two to help diversify in a related space or something like that. So that process of looking for opportunities for improvement, all of that good stuff is also part of that.

Brett:

Fantastic. So, let's talk a little bit about valuation tiers and how the buyers there change and how what they're looking for changes. I know you mainly work on the buyer side of things. This I think will apply to both buyer and seller to a certain degree. I know a lot of people listening, a lot of my friends who own D2C brands have just had partial or full exits, and so I think understanding the tier of buyers is useful from a few different perspectives. So walk me through that. What are the different tiers and how do the buyers change at those different tier levels?

Chris:

Yeah. So, one thing I'll mention just to set this up is I always say it's not the price, it's the terms in a deal. So if I said, "I'll pay you $10 million bucks for your business right now, but I'll pay you a penny a day until it's paid off," that's not very attractive terms. But the price may look really good, so this is something that you want to keep in mind with different types of buyers. We'll talk about this a little bit in terms of common deal structures and those kinds of things. There's cutoffs in terms of purchase price for different types or avatars of buyers. If you think about from this lens, which is an individual who's out there looking to buy a business, could be a successful entrepreneur, could be somebody coming out of corporate who's trying to buy a business who doesn't have a lot of experience, but it's just a single person trying to do a deal.

Chris:

It's pretty common that somebody like that maybe would have up to, let's say, $500K in cash available to put into a deal. May come out of an IRA, self-directed or, they might just have had an exit on some past business or something like that, but there's not as many people who've got more than $500K laying around that they can go do an acquisition. So, there ends up this segment of acquisitions that are sub $500K where a lot of those deals get done with a good amount of just cash, right? So, these are the cash buyers commonly. Sometimes there will be more creative deal structures if the buyer is savvy. But, you're commonly going head to head with other cash buyers who are willing to pay a majority upfront.

Chris:

They're not getting any loans, they're not in a fund. That type of buyer are commonly going to be more heavy ... So there's the less experienced buyers. These ones are going to be looking for a seller who's willing to either stick around for a little while and train them. That's a big motivator for them. So if you want to just sell it and be done and walk away, that's probably not going to be the right buyer for you. And then, you have the more experienced people who can step in and really run with it. Maybe they've got the infrastructure in place. So there's definitely a broad spectrum in terms of who they are, but the deal structure is usually they're competing against one another and it's commonly mostly cash up front if it's a $250, $300K type deal.

Chris:

The next category I would say is between, let's say, $500K and $3 million, $2 million, something like that. This is where you get a lot of people who are SBA. They're using a SBA loan to do the deal. Commonly a lot of lenders, they don't do a lot of deals under $500K, and you're competing against a bunch of cash buyers, so it's less common that there will be SBA loans and deals in that range. So, this is a buyer where for a seller, this is actually pretty attractive assuming you can get the deal to go through and your business qualifies for being able to qualify for a SBA loan because you will commonly get 80, 90 or 100% of your cash upfront at closing.

Chris:

So, that's really attractive. Due to the way the SBA rules are, there can't be a lot of really creative deal structuring. It is commonly you get your money upfront, so that actually can be a pretty attractive buyer for you.

Chris:

But what we've seen over the last year or two is we've had multiple billions of dollars raised in these Amazon aggregators is those buyers are getting a little bit squeezed out by the aggregators who are in that low seven figure range-

Brett:

Yeah, because that's a space that aggregators like to play, right? In that one to two million dollar valuation range. That seems to be a sweet spot for at least some of the aggregators I know. And to your point, I think you mentioned this in prep, what was it? Something like $8 billion dollars raised in the last ... was it quarter? I'm maybe saying that wrong but-

Chris:

It was in the last year and a half or something like that. I don't know where it's at exactly because this is what's publicly announced. It is not a small chunk of change. But yeah, there's money in that range certainly. There's that range where you've got a couple main buyer avatars. You've got the people who've got funds who do this all the time, and that would be the aggregators. And then, you've got the individual coming, less experienced entrepreneur who might be using a SBA loan or something like that.

Chris:

The reason I have that cutoff around that two million dollar mark is the less experienced people commonly can't get approved for more than that two, two and a half million range unless they have a bunch of assets. But, SBA loans can fund deals up to five million if you have a pretty experienced acquirer, so there is opportunity even up to five million but most of it happens in that $750, one million, two million dollar range for that.

Chris:

That's an important buyer to understand, and for a seller, ideally if you can get more potential buyers to the table, that's going to commonly result in better terms and a better price for you. Knowing who those buyers are, it's helpful for you, and knowing the trade offs in terms of deal structures. For aggregators, and the ones that I've been one publicly available talks with, have talked about their deal structures a little bit. You'll get a good chunk of money up front, but there's commonly going to be some kind of a second bite to the apple-

Brett:

An earn out type of thing.

Chris:

Yes.

Brett:

Performance based.

Chris:

Yeah, so there's some uncertainty as to what your final result will be there, but whereas with a SBA buyer, you don't have a lot of opportunity to get upside in the business that you sell because the SBA has to look at this and say, "Can they support this loan?" That's actually a limiting factor on your valuation. An aggregator might be able to get you to a six or 7X but that's just not feasible for the SBA because of their underwriting. And, it's not the SBA, it's the bank underwriting requirements to qualify for those SBA loans.

Brett:

Got it. Yeah, totally makes sense. We've got the $500K to two million dollar range. That's your SBA buyers, maybe some aggregators. What's the next tier above that?

Chris:

That's where it starts to get a little big for SBA loans, where they can't fully fund it and it starts to get big enough for, let's just say, some of the smaller, private equity funds, aggregators, et cetera. There's a certain scale, if you look at like the private equity world, there's the lower middle market, which is whatever it is, $50 million dollars enterprise value or where once something's earning, let's say, about a million bucks a year in EBIDA that's where a lot of private equity tends to come in. But, there's this gap there in that range where it's several types of buyers ... a little too big for the unexperienced buyers, but it's still small enough where some PE is interested and you've got a lot of the funds, like the aggregators, playing right there.

Chris:

The other category, I would say, that gets introduced there would be like the fund-less sponsors. These are people who find a deal and they raise money, either after finding the deal or, with a thesis that they ... but they don't have the committed capital until they find a deal. And, so that's a whole other buyer and that adds some uncertainty in the deal because if they don't have the money ready to go right now, whereas these aggregators, they've got this all ... It's a war chest that they have to deploy, whereas a fund-less sponsor, they got to go get the money. And we've seen deals that lasted ... in due diligence period prior to closing after the LOI ... years because they've been trying to sort out the funding.

Chris:

That's a more risky category, but you tend to see more creative deal structures and earn outs or certain partnerships or things like that in that area as well.

Brett:

Awesome. Any advice or tips that you would give from the buyer perspective of deals structure? I know there's a million ways to structure a deal and and it's got to be at least a win-win to a certain degree, but are there any guiding principles or overarching tips that you would give for how should you be thinking about deal structure?

Chris:

Yeah, so I have one rule of thumb with deal structures. Be happy with the money you get up front, and the rest should be a cherry on top for you. Don't put all of your eggs in the ability for a buyer to execute on whatever growth strategy that they think they can execute on because there's just a lot of uncertainty and there's meteors coming at the business that even they don't see. My general rule of thumb is if all you got was the money you got at closing, you should be comfortable with that possibility. Not necessarily happy but comfortable with that being a possibility. So that's a first rule of thumb, and you want to fight hard for getting that money up front if you're you're selling. Buyers, obviously, want to reduce that as much as possible because that helps in a lot of way.

Chris:

So, for other general rules of thumb, so from a seller's perspective, if a buyer is offering you something that's based on the performance of the business, you as the seller being confident in that business is a really good sign to the buyer that this business will continue to perform well into the future, if you're willing to do something like that. So that's actually, it can be seen as a positive for buyers. I wouldn't say don't ever be open to that, but the key in my mind in terms of simple principles would be make that earn out as objective as possible and simple as possible. So, I've structures where it's like, "Okay, if we execute these three strategies and we hit this tier, then your payout goes to this." The simplest way for me in that stuff is just do it on gross revenue, percentage of gross revenue. You're not going to be able to control the expenses of the business post-closing-

Brett:

Right. Gross revenue, that's a number that can't really be fudged, right? All the other numbers can be fudged or open to interpretation or open to all kinds of things that may be outside of your control after the new buyer comes in type of thing.

Chris:

Yeah, exactly. And then, usually I'll set ... let's just call it two main ... I'm trying to think of the word, but just caps. So one cap would be a time based cap. So, let's say that the earn out will last no longer than two years and be some percentage of gross revenue during that period, or a cap of a max. And as a seller, you may not want to negotiate this, but commonly buyers are going to look for a cap on the valuation. So if they just kill it on that business and they grow it really, really, really big, and it had nothing to do with anything that you did as the seller, does it make sense for you to do that? I don't know. So, commonly there's going to be a time boundary bounding it by time and by maximum payout is common. And you as a seller may want to say that I want a minimum number. That might be a minimum monthly payout, a minimum quarterly payout, a minimum annual payout that they'll be obligated to if they just totally screw the business.

Brett:

Got it. So even if things go south because of the fault of the new buyer, getting that minimum payout agreed to.

Chris:

Right.

Brett:

Totally makes sense. Okay, awesome.

Chris:

Yeah, and be careful of anything where it's subjective because the buyer's going to be saying one thing and you're going to have to renegotiate payouts all the time. And, that can be very problematic. It's not a very healthy partnership, which is what you end up in that case.

Brett:

Yeah, so simple, objective. Those are the keys to having those hard conversations, because we're trying to protect against the what if's that are bad ... What if things go south? You want to have things clear and objective and simple so you can hopefully move forward in a way that's less bad than the alternatives. So, that's awesome.

Chris:

And I would say just commonly the other deal structure you see a lot of ... two common ones. One is a hold back, and really that's a milestone payment. It's usually more structured when maybe an asset has been transferred, or a key employee has stuck around for a period of time, or you've provided a standard operating procedures manual. And, that's stuff that can come after closing in some cases. Maybe after three months, you can an additional flat payout, but you're incentivized to make sure those checkbox items are done.

Chris:

So, that's another common one. And then the other one would be a seller financed structure where it's just a seller note, where you're basically becoming a lender to the buyer and you get structured payouts not dependent on the performance of the business.

Brett:

Got it. Really helpful stuff, good stuff there. We've talked a little bit about aggregators so far, and the $8 billion raised over the last year and the half, or whatever the number is. It's pretty astronomical. And, I know some different aggregators, some of the owners of these aggregators, and some of them are sitting on $400 million up to a billion dollars individually for this group. So, they need to buying assets. They need to be going out there and acquiring brands. If they just sit on that money, they're not getting any kind of a return.

Brett:

I know one of the impacts of aggregators is we are seeing multiples rise, and especially with the eCommerce COVID bump that we've had recently, those eCommerce multiples are definitely on the rise. But, talk about aggregators a little bit and how you think they've impacted the landscape of M&A when it comes to D2C brands.

Chris:

Yeah, so one thing that may not be obvious, and I don't own an aggregator. I have no interest in any. I do have many clients who are aggregators. So, obviously I'm not speaking from my own personal experience running an aggregator or anything like that, but from what I understand, many of these aggregators, a big chunk of their funding comes in the form of debt. So that is something to keep in mind in terms of how much of a hole this is burning in their pocket. If you raise an equity round, the return you get on that, the speed at which you need to do it might be much more of a hole burning in your it, whereas debt can be deployed and you don't typically have many expenses until you deploy that debt. So, I think that's something to keep in mind, but regardless, their motivation, my understanding ... Commonly, what the play would be if you look at Thrasios and Perch, they do multiple funds of rounding ... multiple. Multiple rounds of funding-

Brett:

Rounds of funding. I'm with you. I heard what you meant.

Chris:

So, every time their valuation should go up, and the best way to drive their valuation up is to generate more revenue and show revenue growth in the business. And the key driver to that revenue growth is going to be their acquisitions, so the more they can acquire and show revenue growth, the better their next round of funding is going to end up being. So, it's a big motivator for them to deploy that capital. They also have to temper that a bit with is this a long term sustainable business? Because at some point, the shoe's going to drop if they're just being reckless. So, there are aggregators who will pass up on deals, but for a good brand, for a good business, they are aggressively acquiring. And, we're seeing five, 6X multiples not being uncommon these days. Times-

Brett:

Right, when used to it was three was the average for eCommerce brands, or maybe even less than that, but five to six is not uncommon right now.

Chris:

Yeah, and in fact, a few years ago, Amazon companies were actually typically valued less than a similar Shopify based company, or eCommerce company off Amazon because of that Amazon risk. But, that's flipped now. It's interesting. Amazon business is actually valued higher commonly than some of these other eComm off Amazon businesses.

Chris:

Yeah, so what's that doing to the space? Number one is everybody's businesses got a whole lot more valuable just if you look at what your business is worth. Just the equity component of it. If you did nothing other than keep your business stable, your business became two or 3X times your trailing EBIDA more valuable over the last couple of years. That's a clear thing.

Chris:

Two is it increased your liquidity. What that means is you can sell your business and take your chips off the table much more easily than you could potentially have in the past. That's another factor. To me, it's the ability to sell these companies is almost becoming such an easy path. What I think will happen over the next little while ... I have a couple simple predictions. One is those who are really good at new product launch type companies will have an opportunity ... and, there are people who just love that. The starting the new brand and kicking it off and launching products and incubating something, this is a major opportunity for them to spend two years doing that on a brand and then turn around and sell that business and then go do it again, and turn around and sell it.

Chris:

Whether or not that window will continue to be open over time, I think that's an area that is super, super interesting. The other way-

Brett:

One quick thing, I'll chime in on that just to clarify it ... I think people are probably connecting the dots but just in case they're not. Now if I'm getting a five to 6X multiple on my business where before it was a two and a half to three, now I can sell 80% of my business, 70% of my business, maybe get all that cash upfront that I was expecting before, but I get to retain some and maybe get that second exit. I have several friends that have done that very thing and it's pretty attractive right now to get some of those chips off the table.

Chris:

Yeah, absolutely. And that brings me to my second point, which is the aggregators, the reason your friends were able to get that second bite to the apple, which is commonly what it's called in the industry, or that earn out, or whatever it is, is because these aggregators have really gotten good at operating. The ones that are really building the great teams and the brands and the machine of being able to take a brand that maybe has some room for improvement that's not following all the best practices and be able to put that through their machine and make it earn more, and solve any challenges with funding inventory, as an example, that might be slowing down your ability to grow the business.

Chris:

That all gets taken out of there and their ability to grow these brands has gotten very, very good for many of these aggregators who have been in the game for a little while. What that means is everybody else who's competing on Amazon will need to also up their game. It's not longer just one single product image will be sufficient. You need great video, you need great photography. You need great listing, you need great advertising. If you're being inefficient in any of those areas, aggregators who are buying you will see that as a good thing, but if you're just straight competing and you're trying to hold your business, just know that you got to be on your game. I think that's another one.

Brett:

For sure. If you're retaining your brand and going head to head versus aggregators, yeah, you need to be really good. The days are gone of just putting a product up on Amazon and living off that Amazon traffic. We have to think like merchants and like retailers and brand builders. We're building brands, not just hocking a few products on Amazon. That's a big difference.

Brett:

Well, cool. We're about out of time, Chris. It's been absolutely fantastic. Tell us a little bit about Rhodium Weekend, and then I want to hear more about Centurica as well and any resources you want to point people to. But let's start first with Rhodium Weekend. You started that because being an entrepreneur and acquiring digital businesses is lonely, so what do you guys do at Rhodium Weekend?

Chris:

Yeah, so I just basically created the event that I would want to attend. It looks like a mastermind, sort of like a conference where there are speakers, but the speakers are commonly the attendees and they're sharing their case studies of real in the trenches experiences. We do a lot of round table discussions, a lot of fun activities at the event. We went curling as a group last year, as an example. It's intended to be something where ...

Brett:

That is the one Olympic sport where I've seen the memes where it's like ... The Olympic team for curling looks like just a bunch of dads who were bored one weekend and decided to join the Olympics-

Chris:

That like to drink a lot of beer and play on the ice.

Brett:

Yeah, exactly.

Chris:

100%. But, it's an awesome sport. So it's really just intended to be a group for people who want to learn from others who are in the trenches and find people who are a few steps ahead of them. For instance, for you, Brett, you may want to find somebody who's already bought an eComm business and they've done that five times or whatever, and you can learn from their mistakes and not have to make all the same ones and get that mentorship. And then, the cool thing about Rhodium and the culture I've created is one of paying it forward to one another. So then you'll be able to take your lessons learned, whether it's related to that or related to what you do at OMG, and share those to the people who are a few steps behind you. So, it's this virtuous cycle of everybody's helping one another and contributing, sharing best practices and things like that.

Chris:

I curate the group. I meet everybody before I invite them in. We have our typical members, anywhere from top line six figures to low nine figures, with our average member being low to mid-seven. Again, top line annual gross. We have different business models so you can learn from one another. eComm, content SaaS, services.

Brett:

So, media and what not. Love it. Rhodium Weekend, R-H-O-D-I-U-M, weekend.com. Check that out. Let's talk a little bit about Centurica as well because as we're getting into this, as we do due diligence, we're working with you, we're not going to try and do all that on our own. I think that's silly. Talk a little bit about Centurica, how you work and then do you guys have any resources or guides or anything you point people to in the early stages?

Chris:

Yeah, so I'll answer the last piece first, which is resources. On our website, we have a free service called The Market Watch, and what it is, is you can go to our website and see most of the brokered listings that are on the market currently, be able to sort them by business model, price, multiple, et cetera, set up email alerts, if you want. That's great for people who are looking to get a feel for the market, what's going on right now, and to stay on top of stuff when it comes up on the market in one place. I still encourage you to go to each broker, as well.

Brett:

An unbiased opinion, Joe Valley was like, "Hey, if you guys are looking for deals, you just got to get on the list. Watch deals. It's curated." It's just part of the process. You need to do it.

Chris:

Yeah, and we have a team who goes through manually and categorizes them and checks them. So, that's a free service. And then as far as what we do for services, we try to make things as simple as possible with a flat fee based structure. And, it's based on the size of the acquisition you're doing. We look for clients who are multiple acquirers. So rather than seeing you once and then not seeing you again for five years, if you're doing a few deals a year or one a month or multiple a month, that's who we have been specializing in helping lately.

Brett:

Okay, awesome. Well, Chris, this has been absolutely fascinating. I was excited already about doing deals and buying businesses, and now I've got more information at my disposal and more resources. And so, we turn that up a notch just a little bit, so appreciate it. Nice job, and we'll have to do this again some time.

Chris:

Sounds great.

Brett:

All right. Thanks, Chris.

Chris:

Thanks, everybody.

Brett:

And as always, thank you for tuning in and we would love to hear from you. What would you like to hear more of on the show? Give us topic suggestions. Also, if you have not done so, would love that five star review on iTunes if you feel that the show is worthy. That review does help other people will discover the show. And with that, until next time, thank you for listening.

‍

Episode 185

:

Josh Martin - Blank Wines and Rollin Blue BBQ

24-yr Old Entrepreneur Josh Martin on Knowing Your Customer’s Why, Winning Contests and How to Get $.25 Email Opt-Ins

In this episode I grill Josh (pun intended) on his success with his BBQ company and his experience in the wine business.

Josh Martin is fearless. At age 24 he’s winning contests, designing new products, building communities and partnering with some real movers and shakers in our industry. In this episode I grill Josh (pun intended) on his success with his BBQ company and his experience in the wine business. There are tons of lessons in this episode whether you’re running an 8 or 9 figure business or just getting started.

How Josh won the Million Dollar Brand Scholarship Award
Influencer marketing mistakes to avoid
Keys to $.25 email list opt-in strategies
How to run good customer surveys and getting useful data
Understanding the “why” behind your product and how that influences marketing and future product launches
Plus more!

Mentioned in This Episode:

Joshua Martin

- Via LinkedIn ‍

Rollin Blue BBQ

“12 Months to $1 Million” by Ryan Daniel Moran‍

- Amazon ‍

- Facebook ‍

Blank Wines‍

Ryan Daniel Moran‍

Capitalism.com‍

Rollin Blue BBQ Wireless Meat Thermometer‍

Rollin Blue BBQ Rubs‍

“The Brisket Blueprint eBook” by Rollin Blue BBQ

Transcript:

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 I've got a treat for you. We are digging in to a merchant success story. And not only is this story inspirational and fun and enlightening, but this guy is like... He's young and he's making it happen. He's got a couple of business ventures out here. He's winning awards. And so you're going to learn a lot, and this is going to be a really fun conversation. So I've got with me on the podcast today, Mr. Josh Martin. And Josh is the founder of Rollin' Blue, it's a barbecue brand, largely on Amazon.

Brett:

We'll kind of break that down. And then he's the co-founder of Blank Wines. Now, Josh is 24 years old and he's got these two successful businesses. And I found out, so I got to hang out with Josh at Ryan Daniel Moran's lake house, he's part of the Capitalism Fund, as am I. And this dude knows a lot about wine. I was grilling him all my burning wine questions and he knows so much about wine it's crazy. So anyway, with that intro, Josh, welcome to the show. How you doing, man?

Josh:

I'm doing great, Brett. Thank you so much for having me on. I'm really excited to be here and hopefully share some stuff that helps some people out.

Brett:

Absolutely. It's going to be good, going to be fun. So, you won this contest that Ryan Moran laid out, and I want to go through that story in a minute, but prior to getting into eCommerce, what were you doing? And what got you interested in the eCommerce game?

Josh:

So, as you said, I'm fairly young, I'm 24. So honestly, before I really got into eCommerce, I was still in college. And really, I always knew from a young age that I wanted to do something entrepreneurial. But started out flipping stuff on Craigslist and eBay in high school, and went to college, studied wine and viticulture there, and had a couple internships- ...

Brett:

Didn't even know that was a thing. So you have a degree in wine, correct?

Josh:

Yes.

Brett:

There's probably a better name for it, more technical name for that.

Josh:

Yeah, the technical name is wine and viticulture, and it goes through the business aspects of wine, because they have their own whole complicated mess in the wine industry. Then there's viticulture, which is growing of the grapes, and then there's enology, which is the wine making. So, I concentrated on the business side, but I learned a little bit of everything. So, I'm going through school and I get a couple internships and then instantly I just knew, like this... I don't know how the corporate world's going to go for me. I don't think it's going to last too long.

Brett:

Some entrepreneurship in your family too, right? Like your grandfather owns a winery or something like that, right?

Josh:

Yeah, a vineyard. He was a serial entrepreneur as well, so I think that's kind of where the bug comes from. That's a whole, whole nother story, came over from Mexico with pretty much nothing and then ended his life with a few properties, few businesses and just amazing story. So that's kind of where I draw some inspiration from, for sure. So yeah, I was going through and realized like, hey, I've always wanted to do something, I'm kind of doing some stuff on the side, but I was just looking for something that I could really sink my teeth into. And I was looking into real estate and investing and swing trading and got into crypto for a little bit. I tried probably five or six different things, and I found eCommerce and this starting your online business.

Josh:

When I first got into it, I just jumped in head first. And I was like, oh, it's a side hustle, it's this, it's that, I'll arbitrage on Amazon. And then I started realizing, oh wait, no, this is an entire business where you can build a brand and you can actually make a difference and help people along from point A to point B, instead of just, oh, I'm going to flip this, buy it cheap and then resell it, but really actually make a difference. So that's kind of when I just realized that I fell in love with eCommerce and creating business and creating change for people. And the first time that materialized was with the barbecue company. Along with wine, I've always loved cooking, they kind of go hand in hand. I just love ...

Brett:

They totally go... Yeah, people drink wine while they cook, pairing wine with food, the whole ambiance of smoking meat and drinking wine. It's a beautiful thing, right?

Josh:

Yeah. Yeah, it is. And grilling's something that I always loved. And I kind of jumped into that and got a little bit, one step deeper into it. And then I found smoking, and I was looking for a place that kind of was a crossover of something that I enjoyed. Because when you start a business, you're just immersed in whatever category that is, in whatever person that is, and whoever you're trying to serve. So it helps if you enjoy it, in my opinion.

Brett:

Yeah, totally. It helps you relate to the customer better, it helps you get through the grind, the long nights and the long hours, if you at least somewhat enjoy the product and it resonates with you then, yeah, it makes it, the whole process easier, for sure.

Josh:

Definitely.

Brett:

Cool. So, you won a contest, so talk about the contest that Ryan Moran put together, and what was that process like? And I kind of want to preface this by saying, hey, I talk to a lot of listeners of this podcast and I know we've got some people listening to the podcast that have an eight figure business. I've got a lot of friends and people that are having seven figure, large seven figure exits right now. What's cool is I think we can learn a lot from somebody who's scrapping and someone who's just going for it and figuring stuff out like Josh. And you're getting some serious traction with these businesses. And so, just wanted to kind of preface what we're about to talk about with that. But what was this contest that Ryan Moran threw out, and how did you go about winning and dominating this thing?

Josh:

Yeah. It was just perfectly timed. One of my friends told me about Ryan, started listening to some of his content. Like third podcast I listened to, he brought up this contest that he was putting on. And I think this was when he was writing his book. So his book is 12 Months to $1 Million, great book, kind of lays out the whole game plan, that's helped me a lot. But in the beginning, that was before that was released, he was laying out that structure, but in the form of a contest. If you go through the course, submit an application, and we're going to have a reward for a few businesses that take action, find their person, really speak to that person.

Josh:

And then I just took that and totally ran with it. And, kind of funny, it was based off a voting system. And I spent a lot of time thinking of who I want to serve, how I want to serve them, writing out the business plan. What's the first product, what's kind of that gateway product that's going to help me, or help this person get to where they want to go? And what's going to be product 2, 3, 4, 5? Because it happens a lot easier if you're really thinking about who, and what their goals are.

Brett:

Yes. Yes. Yeah, the what becomes much clearer and is much easier when you get a clear picture of the who.

Josh:

Mm-hmm (affirmative). Exactly. So yeah, just running with that, and then put some of the little marketing knowledge I had at that point behind it to start a Facebook group, run a couple giveaways, start building an email list, doing all that fun stuff. And to my surprise I actually won. I think there was over 300 contestants, so I was like, oh, well, we'll see if I win, I'm still going to give it my all. And then I did. One of the prizes was a little bit of a capital investment. And then the thing that was really helpful was getting into the incubator, which is Ryan's kind of back room for new businesses. So that's just been amazing, meeting so many different people who are starting brands and just learning from them, sharing what I learn, and just a great community to build on, really help each other out.

Brett:

Yeah. It's amazing. And it got you into the group that's around the Capitalism Fund, and some pretty established folks, and that's how I met you. And so, yeah, you got to hang out with Ryan Moran more, and so some really cool things happening because you're just hustling, man, and you're making it happen. And so a few things that really struck me, when you and I were hanging out in Austin and chatting, one was your extensive knowledge of wine, and so I was fascinated by that. But two, also your approach to product development and getting feedback from your customer. So, really understanding the who as you were developing it. So, talk about that process. So, you got Rollin' Blue. What was your first product and how did you utilize that customer feedback to refine and really kind of nail that product?

Josh:

Yeah. So this is a good story. The way I do it now is because I did it completely wrong the first time. So, when I won that competition... I was actually going through, I didn't even win yet, I was like, speed, speed, speed. I got to get something up, I got to get something moving, that's how I'm going to learn, it doesn't have to be perfect. Let's get it up and go. So I started with a grill brush, which is a good product, but-

Brett:

Grill brush. Got it. Okay.

Josh:

And it had some uniqueness to it. So, there's an issue with wire bristle grill brushes, and they can break off into your... When you're cleaning on your grill, you put a piece of meat down, it gets stuck in the meat, your kid eats it, someone eats it, it gets stuck in their throat. Happens thousand times a year. So that was kind of the first thing. I was like, problem, solution, no more bristles with this brush that I'm creating. But I went to a manufacturer in China and I just went for speed. I ordered some samples of a couple and just picked one. I was like, all right, let's go, let's learn as I go. And launched the product, learned a bunch about Amazon pay per click, and building an audience for prelaunch, different things like that. But once I actually started getting a little bit of momentum, I got the terrible email that no one wants to get from Amazon, saying your product is suspended. And I didn't want to believe that. It's never fun.

Brett:

That's the stuff nightmares are made of, right? You go to Amazon Sellers, waking up in a cold sweat, imagining they got that email.

Josh:

Yeah. So, went into research mode, I got to figure out why. And I was actually infringing on a patent, the way that the coil wrapped around the metal, someone actually had a patent on that. So, that was the way to do it all wrong. I had to pull everything. I still had 400 units left, or something. And that got me thinking, you know what? I was getting okay traction on Amazon with pay per click, just kind of playing that game. But the people in my group and other groups that I would talk to, other Facebook groups, not just the one that I owned, but people weren't that excited about a brush. People were like, oh, I like this. Yeah. I like this method. I like this method. I like this. So, next time I was like, all right, well, I'm going to do it right. So, I started going into all these different Facebook groups, and that was the first place. And I just started posting as myself and just saying, "What is the single thing that's helped you become a better smoker, better barbecuer, better griller?

Brett:

Great question. Great question. Yeah. And again, one, understanding, hey, if the goal here is to build a brand, and not to launch one product, but three, four, and five, understanding that a lot of people, their grill brush, enh, don't really care, right? It's just a thing. Who knows the brand of their grill brush? I don't know, probably almost nobody. So that's pretty interchangeable. But, so you have the courage to ask the question. You also, I will say, just moving fast, there is something to be said about that. And especially when you're young, you're just trying to figure things out, sometimes you just got to go for it and you're going to make mistakes anyway. So, while you should have checked a few things a little closer, of course, there is something to be said about speed, so that's certainly worth noting. So, okay, cool. So now you're reaching out and you're saying, "Hey, what made you a better smoker?" Awesome question. So then what'd you find through that process?

Josh:

Yeah. So I talked to a few, I did some polls, I just messaged some people, talked to a few hundred people online. And the one thing that keep kept coming up over and over again was thermometer. And I thought, oh, wireless. Yeah. Yeah. Because really, it's just kind of a guessing game at that point. The internal temperature is... You might think it's something and it might not be. ...

Brett:

Which is like, just by the way, a quick side note. So I love to grill, I got a great outdoor kitchen now and I set up... The key to grilling good chicken, I used to have people tell me, "Hey, you just, you feel the chicken, you got to get a feel for what it feels like when it's done." And that sort of works, but inevitably you're going to overcook it. Good chicken, you cook it to like 150, 155, take it off rapid. The residual heat inside of it will get it to the 165, which is the desired temperature. Perfect grilled chicken. So yeah, without the thermometer you can't do that. It's all just guessing and you're going to mess up.

Josh:

Yeah. Even worse than over-cooked chicken is under-cooked chicken.

Brett:

Exactly. Much rather the overcooked chicken than to miss work from food poisoning. Cool. So you heard thermometers, but what made you think, okay, well this is a product, this is a business, versus this is another thing that while it's important, nobody really identifies with the brand, or whatever.

Josh:

Yeah. So, I guess after talking to people, I realized that was the key thing that really helped people. And that's what I wanted to be in the earlier part of that journey. So that was kind of the first things that got them excited and helped them so much. So it's like if I can be at that point, that person might not be to the point where they're buying other products, like the higher end knives for trimming big cuts of meat or brisket or something. But all these cool things they want to do in the future, with a little bit more high end touch to it, that is more niche, but this is like the good first step that someone's making that effort to upgrade their skill.

Josh:

So, I wanted to be at that first position, and that's kind of where I thought it was in my mind. Not so early, like the grill brush, where anybody could be getting a grill brush, but someone who's making that extra effort to improve their cooking. And I guess the brand building piece happened a little bit after that. So, talking to people definitely helped me get my who, but it was a little bit later, once I had built up an email list where I started doing some surveys, just asking people general questions about, "Hey, why do you like grilling? What's your favorite thing to cook? Who do you cook with? What days do you cook?" Stuff like that. And one of the two big things, like the why, why, why, when you start getting down to it, was connection.

Josh:

So creating memories really was what it was, when you get people together to cook out, usually the family, friends, enjoying yourself. And then the second piece was stress relief, which was not a immediate one that I came to. But after talking to a lot of people it was like, it's almost a therapeutic thing. It takes so many hours to smoke, especially something like a brisket, could be on for 18 hours, and it's just kind of this hobby focus thing that you just enjoy doing. It's perfecting the craft, you know?

Brett:

Exactly. There's art to it, there's science to it, there's the challenge, there's the care and attention that goes into getting it right. And then there's also the reward. There's the feedback of, hey, this turned out amazing, or it didn't, and then you learn from it. And yeah, that's just so cool. I guess that really does explain why barbecuing is so magical to a lot of people. So, cool. So then what did you get right, in the beginning? So what did you nail with this product and with this approach?

Josh:

Well, with the second product I made sure to do all of my research in terms of patents, really talking to my supplier, dialing it in. And then actually what I didn't do the first time that helped me a lot was beta testers. So I have a mini group of, I think it's about 20 people right now. So it's separate from my big Facebook group where that's kind of more community, we're looking for people to share recipes, share what they've cooked, share pictures, all that. This one's a little bit more targeted at research and development. We actually send out some products at cost to people, and they can use it and then we get their feedback. And then they say, "I like this," "I don't like this." And then we take that into account. And that has been extremely helpful before, in that development phase before we actually go out and launch the product and do our first inventory run, that's been extremely helpful.

Brett:

Yeah. And it's just one of those things where getting products right is so hard, and to try to do it without feedback and without a community and without people sharing with you, that's really tricky. So, in fact, talk about now, this is exciting, you just launched a line of meat rubs, a pack of three meat rubs, which is super cool. And you and I were actually talking about this when we were in Austin, and I kind of like, and I even did this poll one time, just with friends, like, hey, what style of barbecue do you like best? Do you like KC style? My family's from Kansas City, I am too, go Chiefs. Do you like KC style? Do you like Memphis style? Are you a Carolina barbecue? Are you a Texas barbecue?

Brett:

I will say, I like all of it. I tend to be more of a meat rub fan. So KC style is usually sauce-based, which is great too, I'll take that as well. But after hanging out in Austin some, man, it's hard to beat Texas-style barbecue. But anyway, I digress here, I like this topic too much. You kind of polled your audience, and you're like, hey, I'm going to do a Carolina rub, and a Memphis rub and whatever. And people are like, "No, no, no, I don't care about that." You want to talk about that experience?

Josh:

Yeah. Yeah. So with the rubs is going to be, I guess, technically the third product, which we just launched today. And in the research phase of that, I thought, like you said, it'd be super cool to do a USA pack, almost, where it's all these different regions of Memphis, Carolina, Kansas City, Texas. Even in California, like Santa Maria for tri-tip, I thought that would be awesome. But that's not what the people wanted. So, I went into my group and I put out the ideas and was talking to people and they were just like, "Nope, we'd rather have"... Overwhelmingly, people were like, "No, I'd rather have it be meat-based." So pork, fish, chicken, all purpose, beef. And I was like, well, hey, these are my customers and they know what they want. And I'm only working on assumptions. At the end of the day, it's like, it's not necessarily about me. I might think that I have a good idea, but I don't think I'm ever going to put my quote unquote good idea above the feedback that I'm getting, because... that's really what it's about.

Brett:

100%. Yeah. And that takes some humility, and it takes understanding. And it's one of those things where, yeah, I think it's kind of there's like this intrigue and this magic about different styles, and the rich history of barbecue in different regions in the United States. But most people are just like, "No, I need to know, do I put this on beef or do I put this on chicken?" And even people that are really trying to get good at smoking and grilling, they still want to know, "What meat do I put this on?" They want to get it right if they can. And so yeah, kudos to you for asking and then pivoting and giving the people what they want.

Josh:

Yeah. And then I took that a step further, because I was like, well, if they want it to just be cut and dry, here's how it is. So, I was talking to people and kind of the next progression of what you do in a cook, you get your meat, you season it, and then what's next, you got to choose your wood, put it on the smoker, whether it's pellets or an actual-

Brett:

Chunks of wood or whatever.

Josh:

Chunks of wood, yeah. So then I was like, all right, well, let's do a little research and see which smoke would pair best with these rubs. That was another fun thing to do, a lot of testing on that, lot of rubs, ribs.

Brett:

That's fun, man. Yeah, yeah, yeah. That is a labor of love right there. So then you're able to put on the packaging, "Hey, this beef rub really pairs well with these wood varieties and things."

Josh:

Exactly.

Brett:

Nice. Nice. That's awesome. Cool. So let's do something kind of fun. You talked about, hey, I made this mistake, didn't look at trademarks for my first product. What were some other mistakes made that you learned from? Because we all like to learn, we all like to hear failure stories, right? Sometimes painful to relive, but we all learn from them. So, other mistakes you made in the early days.

Josh:

Yeah. So one of the good ones is influencer marketing, the ever-changing influencer space where it's hard to lock down influencers, and that's going to be the person to take you to the next level. I think they can be, but in the beginning I thought it was just as simple as you reach out to someone, you pay them for a post, and then boom, magic. Traffic comes, and then sales, and it's great. So I guess when I was in that naive place, I reached out to someone. It's kind of embarrassing to say, but it was a Babes for Trump page.

Brett:

Babes for Trump?

Josh:

Instagram page, yeah. And my thinking was...

Brett:

This is for the barbecue...

Josh:

For the barbecue.

Brett:

The thermometer, or the grill brush?

Josh:

This is in the grill brush days, still. And this was when I was like... It's predominantly men who are interested in barbecue, and the demographic fit, but the psychographic didn't really overlap. Yeah. And that was really the big takeaways. I paid someone that just... For three posts, and it just bombed each time. Like people- ...

Brett:

Nothing. No lifted sail. Nothing happened.

Josh:

Yeah. No, I asked for the metrics after the first one and he sent me those, and they were like 10 people clicked, on an account that was like 80,000 people. And after that he wouldn't even send me the next two, so it was probably like zero. But the big learning experience was, it's really about the engagement and the connection that that person, that influencer, that thought leader, has with their audience. It's got to be more than just a Babes for Trump, with Instagram bikini pics on there. There's got to be some more to it. And that was a great learning experience, and luckily it didn't happen when I was a way bigger size and I was trying to do it with a much larger ...

Brett:

Yeah, totally. Yeah. You were at the right stage. First of all, the product you realized you're going to pivot away from. You were at the right stage to make that mistake. And it's a good reminder that influencer marketing is not just about follower count. It's not just about do the demographics line up, but yeah, do the psychographics line up? And why are people looking at the Babes for Trump page? It's because they're just enjoying the pictures and aren't really in the right frame of mind to buy, and stuff like that. So yeah, understanding the psychographics, and is there trust there? Am I looking for recommendations from this influencer in a particular category? So yeah, hey, we all have those thoughts of, yeah, all we need is influencer marketing, all we need is a YouTube ad and it's going to go viral. And, yeah, it's never quite that simple.

Josh:

Yeah.

Brett:

Totally makes sense.

Josh:

What it did lead me to was thinking deeper of what's actually going to help someone, and how can I use that in my marketing? And eventually what that led me to was creating an ebook called the Brisket Blueprint, which is that's like the toughest thing for... It's like the hallmark of a great smoker, is their brisket. That's kind of what people in the space judge it on, because it's the hardest thing to cook. So, a lot of people had difficulties. There's a million different ways to do it. Oh, this way works the best, that way works the best. So I put together about a 20-page ebook of a collection of all these different recipes in one. I did some testing with it. And it really is doing very well right now. So that's kind of my main lead source that I'm using right now. And I'm getting 25 cent opt-ins, actually.

Brett:

No way. ...So you're running Facebook ad to get the free Brisket Blueprint. And then you're talking about thermometers and other things from there?

Josh:

Yeah. Yeah. Right now, my two primary advertising channels is the lead magnet email list building on Facebook and then pay per click on Amazon. But yeah, just building up that. And then right now I'm actually working with the rubs. One of the reasons that I was really excited to launch the rubs is a free plus shipping offer on a little sampler pack. So that's the plan, is to put that as the second page, after the Brisket Blueprint opt-in, where they get that via email, they go through the whole email sequence. But have that be right after, so I can start building that customer list. And it's nice to have a consumable, where someone can taste it, they can see the quality, the flavor profile, all that good stuff, and then get them in quick. And then on the back end, get that customer lifetime value out of it.

Brett:

Yeah, that's amazing. And so how is that free plus shipping offer going, or did you just start that?

Josh:

So, I've not launched it yet.

Brett:

Got it. Okay.

Josh:

Because I just launched the rubs today, actually. So we're at pretty much right as we hopped on this podcast, the first email was getting sent out in that sequence. So, excited to check after the call.

Brett:

Yeah. I can't wait to hear how that's going. I can't wait to try the rubs as well. So let's do this. We don't have a ton of time left, I want to spend most of the time on kind of the building of the barbecue brand, and just love what you've done there, and the way you're learning for failures, but also learning from your customers and pivoting and just all the things you're doing there. But let's talk about Blank Wines. So what was the genesis for the idea behind Blank Wines? Because I think that's a fascinating story.

Josh:

Yeah. So the idea for Blank Wines actually started in college. So, studying wine, we were learning... It was one day I was just talking to, well, now my co-founder, Lars, and we're just chatting and we're just like, it's kind of crazy that there's an entire major for a beverage, like a whole college major, not just at Cal Poly, but there's, I think, almost 10 schools now that have wine as a full major.

Brett:

I think there are a lot of college students that would say they majored in beer, as an example. But I don't think it's quite the same as what you're talking about.

Josh:

Almost the same.

Brett:

Yeah. Yeah.

Josh:

But yeah, so we're just kind of like, this is kind of crazy. It shouldn't be this complicated, because at the end of the day it's a beverage. And there's like two main problems that we were talking about when the idea came up, was accessibility, or lack of accessibility, to boutique, craft, small production wines, where you really find that passionate wine maker who's excited about it. And then the second piece was kind of just snobbiness, like wine always has this unapproachable, "Am I doing this right? Is this the right way to hold the glass? Do I have to smell it before? How do I spin it?" All these questions, it's like the end of the day, it's just, "Do you like it, or do you not like it?"

Brett:

Yeah. I love that so much. Wine is fairly unapproachable, and it is a little bit pretentious and snobby. So it's hard for the average consumer. But yeah, and you and I had a fascinating conversation, talking about how, hey, most of the wines you find on the grocery store shelves are probably all coming from the same vineyards. It's all basically the same stuff, right? So it's hard to experience this craft wine, a lot of passion and expertise goes into making it. And then it's got to be easy to consume too. So what's kind of the value prop of Blank Wines? What do you guys do to solve those problems?

Josh:

Yeah, so the idea is... Well, one, for the accessibility, is shipping directly to your door. So most wine that you get at the grocery store is made in these gigantic, gigantic vats, that are 100 feet tall, and you could probably have a bottle of wine for the rest of your life and never even finish one of those, per day, and never even finish one of those vats. It's just a astronomical amount. And what happens when you make wine in that big of volume is you lose the depth, you lose the character, the nuance.

Josh:

And the fun part about wine, because wine's a living organism, it's ever changing in the bottle. That's why, when you age a wine for 30 years, it tastes different than what right when you bottle it. So the idea is to give people access to these small production wines that have this beautiful character and passion behind them. But without having the issue of coming out to the wine industry, which, by wine industry I mean Napa, Sonoma, are the main two in the US. And by the time you come out, you get your flight, you go through everything, it's going to be a $3,000 weekend, you know? It's a lot easier if you can experience that in the comfort of your home, with your friends.

Brett:

Yep. That's cool. Yeah, I love it. And so I am not a wine connoisseur. I do enjoy wine. I've had a couple of expensive bottles of wine. And I can't really say that I've got a defined palette at all. But I can tell like, whoa, this was really quality wine, versus say, I won't pick on any particular brands, but the stuff you buy at the grocery store for 10 bucks. You can definitely tell a difference. So then what about the approachability? Because you guys do something really interesting with the label, and then also why do you call it Blank Wines?

Josh:

Yeah. So I'll start with the approachability. So there's a lot of questions surrounding wine, and we thought there's not much transparency. You never really know what you're getting in the bottle. You don't have to put really anything on the bottle, except for the percent of alcohol, where it comes from, and what varietal. But what most wineries do is they put that stuff really small in the back and you don't even know. You just see pretty label with cool artwork, and then you buy that and the wine's kind of the afterthought. So what we wanted to do, and what we're doing, is we want to bring wine to the forefront of that. So you're buying the wine itself, you're paying for the quality, you're paying for the actual wine, you're not paying for the label. So we took a modern, simple, almost educational approach to the label, which has, the biggest thing on it is the varietal.

Josh:

And then under you have the descriptors of what it smells like, what it tastes like, and kind of the texture that you get. So some examples of texture would be, if it's a big-bodied wine, it kind of has that weight to it, so it could say something like bold. And then that's the front. And then even on the back, we have more descriptors of... There's four pieces of wine that are characteristics across everything, and it's sweetness, body, tannin and acidity. So we broke that down in every wine that we have. The back of the label is consistent. So if you like a big-bodied wine, you can look at the back of the label and you can see, all right, this has a big body and low sweetness. And I like that other one that had a three on sweetness and a one on body, or vice versa, whatever it is. So you can figure out, navigate if you're going to like it or not, based off of everything else that you have.

Brett:

Yeah. So, and then, yeah, exactly. So then you begin to understand your palette, and really, yeah, the ultimate question is not how expensive it was or what the label looks like, it's did you enjoy it? And if you enjoy it, great, then get more, and then here's how to know what you like, so you can find more of it. I think it's brilliant. I think it's awesome. Kudos to you guys. I hope it's a smashing success. So Joshua, we're kind of running out of time here. If someone's listening, first of all, we're kind of ending the day here, my day, and it's a little bit earlier for you there in Napa. But I want to have a glass of wine and go smoke some meat or something, but if people are listening and they think, okay, I need to check out both, maybe the meat rubs and the thermometer, how can they learn more about Rollin' Blue?

Josh:

Yeah. So Rollin' Blue, we have our website at rollinblue.com. So, R O L L I N B L U E dot com. And we're also on Amazon. So you can just go ahead and search Rollin' Blue Barbecue on there as well. And then for wine, for Blank Wines, we're at blankwines.com. So, B L A N K wines dot com.

Brett:

Awesome. Love it, man. Hey, really appreciate the time. I appreciate you doing this. I think a couple of key takeaways is man, listen to your customer, be willing to pivot as you get the feedback. I think ask great questions, you're asking such good questions, right? Like what made you a better barbecuer? Why do you barbecue in the first place? All of those things are brilliant. I get this sense, Josh, you're fearless, you just get out there and do it. You're young, but you're like, man, I'm going to go fast. I'm going to maybe break things, to use the Facebook mantra, go fast and break things. But you're going to learn and you're going to grow, and kudos to you, man. You're doing so good with the barbecue business and the wine business, and I can't wait to watch it continue to grow.

Josh:

Thanks, Brett. It really means a lot coming from you. I really appreciate it. And thank you so much for having me on.

Brett:

Absolutely. So check it out, go get you some barbecue stuff or a glass, a bottle, several bottles of craft winery, craft wine, and enjoy that. And so Josh, we appreciate it, man. It's a ton of fun. We'll have to do it again. So we'll have to do an update edition here in a few months.

Josh:

Yeah, I'd love that. Looking forward to it.

Brett:

Sounds good. All right. 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? Give us your feedback. Hey, leave a review on iTunes or on your favorite podcast app. Means a ton to me. And with that, until next time, thank you for listening.

‍

Episode 184

:

Joseph Wilkins - FunnySalesVideos.com

How to Make a Funny Sales Video Without Hiring an Expert

In this episode Joseph walks us through his 8-step process for creating funny videos that sell without hiring an expert.

The holy grail right now for online advertising is to be both funny and persuasive. To be relevant and engaging. Funny videos that sell are rare. Mostly because most people don’t know how to create them. In this episode Joseph walks us through his 8-step process for creating funny videos that sell without hiring an expert.

Joseph Wilkins has a rich background in creating videos that convert. He launched his career in the infomercial business while working on the launch of Little Giant Ladder. That infomercial went on to sell hundreds of millions of dollars worth of ladders.

I’ve had the privilege of working closely with Joseph on a mutual client - Tru Earth. Joseph and his team created videos for Tru Earth that have now racked up over 100 million views! More than that, though, they are driving new customer acquisition.

Here’s a look at what we cover:

Why having a crystal clear picture of your customer in your head is a must before you do anything else. You wouldn’t write a letter without knowing who you’re writing it to, would you?
How Joseph assembles a team of people to write scripts and why this is more important than fancy editing skills.
How to find talent for videos
Why you should probably forget about going viral
Getting your pace right and testing before you go live with a video
How and when to add humor to your ads
How to think about production quality

‍

Mentioned in this Episode:

Joseph Wilkins

FunnySalesVideos.com
Tru Earth
Ryan McKenzie
eE 164 Ryan McKenzie - Tru Earth‍

eE 125 Ryan McKenzie - Tru Earth‍

Little Giant Ladders
David Ogilvy
Dave Thomas
Dollar Shave Club
Squatty Potty Commercial
SurveyMonkey
B. J. Novak
Fiverr
Upwork
Freelance.com

‍

Transcript:

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 are talking about one of my all-time favorite topics. I really never get tired of this topic. We're talking about video ads, and specifically, we're talking about how to make a funny sales video without hiring an expert, although you may want to hire an expert, but here's how to do it on your own. We're going to get into lots of actionable content. It's going to be a ton of fun.

Brett:

My guest is just a rockstar when it comes to funny sales videos. We actually met through a shared client, Tru Earth, Ryan McKenzie, shout out to Ryan. You may have tuned into that episode with Ryan, actually two episodes with Ryan on the podcast. My guest today is Joseph Wilkins. Joseph is the founder of FunnySalesVideos.com. He's also the host of the podcast, How to Make a Video Go Viral. He's hailing from the beautiful Salt Lake City, Utah. With that, Joseph, welcome to the show, and how you doing?

Joseph:

I'm awesome. Thanks for having me on the show, Brett. I'm excited to be here.

Brett:

Yeah, really excited to be digging into this topic. For those that are watching the video, they can already tell, your studio is legit. We see screens, and we see speakers, and we see this beautiful condenser microphone with a screen, so you've got a killer setup. Are we actually looking at the studio where you film a lot of your commercials?

Joseph:

Yeah, yeah. Just through that door is a big, 3,000 square foot studio, with big, high ceilings. But it's kind of interesting. We don't use it as much anymore. As you've seen in our videos, we love to go out on location. But yes, we're in the studio today.

Brett:

Awesome. We're going to be talking about today, eight steps anyone can follow to make a funny sales video, so we're going to be walking through that, going to be very actionable, very practical. But before we get into that, Joseph, would love to hear your background, because how does one stumble into becoming the funny sales video guy and funny sales video team? I hear you did a little bit of TV in a previous life?

Joseph:

Yeah, so not to get too far into my background, but I grew up in London, as you might be able to hear. I sound a little bit different. My dad was in the advertising agency industry. He was a photographer, did a lot of the big campaigns, for big companies back in the day, worked for Vogue Magazine, did the Queen of England's personal portraits. That's pretty-

Brett:

Wow. That is-

Joseph:

That was probably the highlight of his career.

Brett:

That's a unique calling card right there. Very few people can say that.

Joseph:

Yeah, so I grew up kind of with it in my blood, so when I finished college, I started graphic design, and I started working in marketing, and it was when the internet was getting to the point where it could support video, and my boss said, "Hey, we need to learn some video stuff. Let's send the graphic designer on a course." That was really the beginning. So I started freelancing on the side, and then my very first client as a freelancer was Little Giant Ladders. They're hearing me talk-

Brett:

Little Giant Ladders? Okay, wow.

Joseph:

Yeah. So I was part of a three-company production, producing that infomercial, that did over $200 million in sales, just... I mean, talk about starting with a big hit in your pocket. And I really milked that for all it was worth, and approached other companies, and said, "You know, let's do some infomercials," and the first 15 years, that's really what we did, was long-form and short-form, direct response television commercials, and then a bunch of web videos on the side. But the problem is, I don't know about you, Brett, I literally cannot remember the last time I turned on a television.

Brett:

Yeah, just to watch like a major network.

Joseph:

Yeah.

Brett:

Other than maybe a sporting event for some people. I mean, that's usually-

Joseph:

Sports or news.

Brett:

... if I'm tuning into major networks, yeah, sports, yeah.

Joseph:

Yeah, but you certainly don't flip through the channels, which is how we used to get you with our infomercials. So as you can imagine, our clients started saying, "We can't keep spending the same amount of money on production and getting lower and lower results, because nobody's watching TV." So it was about 15 years ago... And the funny thing is, before that, when a client would call us and say, "Hey, we saw this really funny video online. We want to do something like that," we would say, "Sorry, we don't do funny. Go find someone else." Because the worst thing you can do is try to be funny when you're not. And we didn't have the team around that-

Brett:

Then that's just sad, right? That's just sad, it's just embarrassing. When you try to be funny and you're not, it's like, "Oh. Nice." Yeah.

Joseph:

I mean, it's cultural egg on your face.

Brett:

Totally.

Joseph:

It wasn't until about four or five years ago that we really said, "Okay, we've got to pivot. We've got to figure out where are these viewers watching, how are they watching, and how do we create videos that get the results that we used to get on TV?" We really started to look at my hero, the Harmon Brothers, and other-

Brett:

Yeah, yeah, worthy hero too. That group, those guys are just fantastic.

Joseph:

Yeah, absolutely geniuses, and kind of put the flag in the ground for what really good content, that not only engages but converts to sales, looks like. And this was before they launched their Harmon Brothers University. It was about a year before they launched it, and we said, "Okay, we need to assemble a team of really good writers." We knew how to shoot and edit, but we didn't have the skills to script it. To give you a compare and contrast, before this, our biggest video that we'd ever got in 15 years online had 100,000 views. We thought that was pretty good.

Brett:

Sure.

Joseph:

Our very first campaign that we launched after we started Funny Sales Videos, with this team of new, really good writers, and I can talk later about how we assembled that team, and how your listeners can do the same-

Brett:

Would love to hear about that, for sure.

Joseph:

Yeah, so our very first campaign was for a super, super, niche of a niche client. We didn't know if it was going to be successful or not. We did three videos for them, and between them, we did seven million views. So compare those two, 100,000 views versus seven million views, and more importantly, views don't mean too much unless they translate to sales, this very small company did over $500,000 in sales from those three videos. So we knew we were onto something, and then we can talk more, but fast-forward to today, as you know, our biggest campaign today, between three or four videos, we're about to hit 90 million views. That's Tru Earth.

Brett:

It's just crazy, yeah for Tru Earth.

Joseph:

Yeah, nutty.

Brett:

Yeah. At OMG, we're running the YouTube side of that, so we get to see that firsthand. We got court side seats, as we're running these videos, and they're just doing a fantastic job. Not only are they racking up the views, and these videos are three-and-a-half minutes long, but the engagement rate is crazy, and the conversion rate is great as well. CPAs, cost per acquisition, or CAC, customer acquisition cost, is all fantastic. These videos are really, really working. So, a couple things I want to point-

Joseph:

And I'll just say-

Brett:

Go ahead.

Joseph:

... I have one more thing.

Brett:

Yeah, please.

Joseph:

We didn't want to just be a me-too agency, right?

Brett:

Yeah.

Joseph:

There's a lot of companies out there that are trying to do the same thing that the Harmon Brothers did. We kind of put our flag in the ground and said we want to be the agency for the company that doesn't have the kinds of budgets that bigger agencies are charging. I mean, when you watch these videos, you can tell they take months to produce. They're very expensive, and they're still not cheap, but we like to say, you know, we're the guys to call when you can't afford to call the guys who really do it right.

Brett:

I love that. But yeah, some of the videos you're watching and some of the Harmon Brothers productions are half a million dollars, a million dollars, or more, so they're big-time productions. A couple interesting things I want to point out. One, I love that you started with infomercials, because I think that is just the best place to start, to learn how to sell with video. I've shared on the podcast before, but one of my earliest memories of when I thought, "Hmm, making ads would be interesting. That'd be interesting as a career," was when I watched the Ginsu knife commercials, and I was just enthralled with it. I watched the whole thing, and I was a kid. I wasn't going to buy knives, but I was like, "This is so cool. It's cutting the Pepsi can, then it's cutting the tomato," and it was just blowing my mind.

Brett:

But then after that, as I got into advertising, I used to watch infomercials, and would just watch the cadence, and the pace, and the speed, and how they're tackling objections and things like that. It's just the best way, I think, to watch sale on video. I think it goes back also to a David Oglevee principle, which I'm a big David Oglevee fan. He always said that it isn't creative if it doesn't sell, right? It's not creative if it doesn't sell, so you guys then have mastered...

Brett:

And I also like the idea, because there was this time when people didn't do funny. In fact, another, to kind of back to one of the classics, Claude Hopkins would say, "Funny doesn't sell," right? Don't be a clown in your ads, but that was like a more serious time, right? Now, we're finding that funny does sell, if you do it the right way. And the Harmon Brothers did kind of pave the way with that.

Joseph:

Yeah.

Brett:

But before we get into these eight steps, I want to talk about kind of mistakes that people make. What do you see, as you're evaluating videos that clients already have, or you're watching other advertisers, what are some of the mistakes you see people make, either in approach, or ideation, or execution? What are some of the common things you see?

Joseph:

Well, I mean, I'll be honest, I'm a bit of a snob, so I-

Brett:

And you should be. You should be a snob, yeah.

Joseph:

I see videos all the time that make critical mistakes, and you would think, being a production guy, I started out behind the camera, stressing out on the details, and you would think I would say, "Oh, people are trying to film it themselves." That's actually not the biggest mistake I'm seeing.

Brett:

Totally.

Joseph:

I mean, literally, for those that are watching, I'm holding my iPhone in my hand. This would have cost $50,000 when I started this company, to get a camera... In fact, a camera didn't exist when I started this company 20 years ago, that does what your iPhone does today.

Brett:

It's insane.

Joseph:

It creates beautiful pictures. Now, that doesn't mean that you're going to go create a masterpiece unless you know how to use it, but the picture quality isn't the issue anymore. In fact, I would say sound is way more important than picture if you're going to film with an iPhone, because I iPhone will give you great picture. It won't give you great sound.

Brett:

Correct, yeah.

Joseph:

So there's just a first tip, is if you're going to film something, figure out how to get really good sound. You know, get another microphone, just like you can see the two of us are sitting in front of great microphones. People will forgive a bad image quicker than they'll forgive bad sound. There's one tip, but really, there's eight steps that we take every project through, and the two that I would say you cannot try to do yourself, or you shouldn't try to do yourself, are the scripting, so the writing, and the acting.

Brett:

Yeah.

Joseph:

Everything else, I think is forgivable. Everything else, I think is accomplishable on a much smaller scale, but those two things, you really can't fake, really good writing and really good acting.

Brett:

Yeah. Totally agree with that. I think there are some, especially if you're doing this type of video, right? If you're trying to be funny, you're creating a funny sales video, likely, it's not going to be you in the video, or if it is, you may not be writing the script or putting it all together. I think there is a place-

Joseph:

Totally.

Brett:

... for the owner to be on camera, speaking about the product, and that video can be useful. You know, I go back to the Wendy's campaign from days gone by, of Dave Thompson, I believe was the founder, and they did studies, like him on camera, talking about why Wendy's burgers are great. They just outperformed everything else. He's since passed, but... So there's a time and place for that, but I agree.

Joseph:

Yeah, Dollar Shave Club is another example. That's an exception. What a lot of people don't understand was that guy was actually an improv-

Brett:

Stand-up comedian.

Joseph:

... comedian in his college days, so he had the skills. If you have those skills, by all means, you can be your best actor, but unless you're a trained actor, don't try and do one of these kinds of videos. But just like you said, marketing is like a salad. You should have all sorts of kinds of videos. For this kind of video, I just don't see it unless you are one of those characters that are really good in front of the camera.

Brett:

Yeah, totally agree. I like having kind of a founder's story video, and that should feature the founder, but then like these hero videos, these funny videos, these are going to be kind of a different feel. So, great stuff. Let's actually dive into the eight steps. Let's take it away. What's step number one, and go in whatever order you want to go?

Joseph:

Sure. Step number one is, it's really marketing 101, doing your research. Imagine if you're writing a letter to somebody. Would you write a letter to them and then decide who you're going to address it to? I mean, that's madness, but yet people sit down and start to write scripts, or sales emails, or-

Brett:

You can start with a very personal opening of, "To whom it may concern." I always love letters that start like that. You're like, "Oh, this is personal. Thank you." Yeah.

Joseph:

Yeah, or underscore F Name. That's always my favorite. But anyway, you've got to understand who is it that's going to watch this video. Who do you want this video? What are their big problems? I'm not talking about high-level surface problems. I'm talking about deep underlying needs that they have, and the best way that you can do that, and you'd be amazed how many CEOs I work with, and they tell me, "Here are the top three selling points," and then we'll go away and do our research, and go through the steps I'm about to talk about, and we'll come back and say, "You need to completely change your marketing. You're singing the wrong song. You're drinking your own Kool-Aid. Stop, and go ask your customers why do they buy."

Joseph:

The best way to do that, and I learned this in one of the Harmon Brothers University courses, is to read a ton of reviews. The number one comment that we got on that first Tru Earth video was, "That actress is me. That actress is just like me," or, "I want to be friends with her," or, "I just feel a connection....

Brett:

She's kind of become like a mini celebrity since this ...

Joseph:

Yeah, she absolutely did, and guess why. It's because we literally lifted lines from customer comments and put those in the script. So the things that she was saying were the things that the customers were saying. So the more detailed, the more granular you can get in building your customer avatar before you ever put pen to paper, the more you're going to hit that target. That's the first thing, and there's five steps in my eBook. I can't take the time to go through each one, but really understand who your customer is. We had a client, Pela Case. I don't know if you know those guys.

Brett:

No.

Joseph:

They're up in Canada. They do a similar space to Ryan. They're an eco-conscious phone case that is compostable. When they sent me their customer avatar document, it was so detailed, down to, "Here's her name. Here's what she orders at Starbucks. Here are the radio stations she listens to." I mean, with data like that, it's so much easier to be able to write, to connect with that person. So think about that in all of your marketing. How do you get down to that level?

Brett:

Yeah, and really that response that you guys heard from that first Tru Earth video of, "I want to be like her, I want to be friends with her, she is me," that is the goal. That's what you're trying to accomplish. One of my favorite quotes when it comes to marketing, and I can't remember who I heard this from, but it's, "You should enter the conversation taking place in your customer's head," right? There's fears, concerns, problems, issues that people are trying to solve, and are bouncing around in their head, and really, your job is just to enter that conversation. And what better way to do that than with lines extracted from customer reviews, and customer comments, and customer feedback? Yeah, just fantastic, and really, there's nothing worse than an ad that just falls flat and is totally irrelevant, right? That doesn't speak to the customer at all, and I think that's the issue that some executives can get into if they're too removed from their customer, or too removed from their audience, so okay awesome, fantastic place to start.

Joseph:

And it also, that information, Brett, is going to give agencies like yours way more detail to be able to say, "Okay, where are these people spending their time online? What platforms are we even building this video for?"

Brett:

Yeah, what channels do we target? What audiences do we build? How do we structure these campaigns? Yeah, really without that, we have to do a lot of experimentation and guesswork, but with that information, we can really get off to a great start, with proper audience testing. That's fantastic. All right, that's step number one. What's step number two?

Joseph:

Okay, step two is the fun one, brainstorming. Now, a lot of people, that word terrifies them, because it literally means start with a blank sheet. And what we do-

Brett:

That is scary for a lot of people, for sure.

Joseph:

Yeah, yeah. I mean, it's still scary for us sometimes, but what we tell people is start out with zero judgment. Start out with zero expectation, and we do an exercise where we basically say, "Okay, here's a blank sheet. We're not leaving this room until there are 50 concepts on the page." Now, a concept is just two things. Who is the hero of this video? So, in Tru Earth's case, it was a mother who has two kids and cares about the planet, but isn't an extremist, right? So she's just a regular, real mom. And the second thing is what is their problem, and how do we make that fun? Right?

Joseph:

Before you worry about fun, though, just throw out 50 concepts with those two things. Who's our hero? What's their problem? The more story you can add, the better. We will literally get out a piece of paper, and we'll just start throwing it out, throwing it out. Nobody's judging the ideas. Nobody even cares if they're good or bad. In fact, a lot of the time, the worse the idea is, the better, because it'll give somebody else the chance to think, and say, "Well, okay, what if we did it slightly differently?" And you can get tangential ideas that are better than if you had never thrown out that bad idea.

Brett:

Yeah. Too often in a brainstorming session, and even in other scenarios or other situations too, we're too... We have too tight of a filter, right? We want to make sure like, "Well, I don't want to share this unless it's really polished, or unless it's a really good idea, or unless it's totally going to work." But you don't know that. That's not the point. Like, brainstorming's just to get any idea out there, because who knows what that salad of ideas is going to lead to?

Joseph:

Right. I mean, think about that brainstorm room where the Harmon Brothers said, "Okay, we're trying to sell Squatty Potty. What if we did an English prince and a pooping unicorn?"

Brett:

Yeah.

Joseph:

I mean, who's going to say yes to that idea? But the most successful viral video of all time, I think, still, if not-

Brett:

I think you're right, yeah.

Joseph:

... one of them.

Brett:

Yeah. The pooping unicorn.

Joseph:

Don't filter your ideas.

Brett:

Right.

Joseph:

But at some point, you have to say, "Okay, now we've filled the page with 50 ideas." And as an agency, typically what I'm doing is I'm bringing my top five to the client. You don't want to overwhelm them, and you also don't want to give them the option to pick terrible ideas, which sometimes clients will do if you give them the chance. But, we'll come back to the client and we'll say, "Okay, here are our top five ideas," and we'll get some feedback before we tell them which one we think is right, because we want to involve them in the process. But eventually, you want to go with the idea that just resonates.

Joseph:

Now, how do we pick that? I really can't tell you that. It just feels right. Now, the one thing I can tell you, and step seven, I'm skipping ahead, step seven is testing, at every single level. What you really want to do, ideally, you want to have a small group of sample clients or customers, right? Some of my customers, we'll send out an email to the best customers and say, "We'll give you a free voucher for our stuff if you participate in this process, which is simply we're going to send you four or five emails, and you're going to give us your opinion." You want to send a sample in person ideally, or just send out a SurveyMonkey to a few customers, not too many, 10's probably the most I would do, and just get feedback on every level.

Joseph:

No one customer is going to give you the answer. It's the wisdom of the crowd that you're looking for. Who generally likes it? Now, as a marketer, you have an informed opinion as well. You want to guide it in the way that you think it should go, but ultimately, I've had my mind changed when I listened to these customers. Oh, that actually wasn't the best concept. This is the one that they're resonating with.

Brett:

Yeah.

Joseph:

So that's basically the step two, is pick your number one concept, and again, you're not... All you're picking is who's our hero character, what's their problem?

Brett:

And then what's their problem? One thing that I'll chime in on, when it comes to what resonates, I heard this interview with BJ Novak, who was one of the writers for The Office.

Joseph:

Oh yeah.

Brett:

Brilliant guy, and he talked about humor causes a physical reaction. If you're pitching a joke, and he did a lot of stand-up comedy, if you're telling a joke, you're watching for that physical reaction, right? People can't help it. If something's funny, they move, they lean in, they laugh, they tear up, all kinds of physical reactions, so I think you have to watch for that. And I've done this before with our team, when I'm showing a client video, especially if I've seen the video a few times. I won't watch the video. I'll watch the room, and I'll see like, is there a spot when people move, or laugh, or is there a spot when they check their phone, or start to look out the window, or have this far-off look in their eyes? Because we're losing them, right? So what is the physical reaction, and do you... When you watch it, are there points in the video where you're feeling emotional, or where you're hearing this and you're like, "Oh, this is great," or, "Oh man, I want that"? Like, is it causing an emotional reaction? That's key.

Joseph:

I love that. We actually used to do that in infomercials. I remember, with the Little Giant Ladder, we literally hired a focus group company to fill a room with 20 people, and we were behind a one-way mirror. They had a dial, and it could only be on "I like it" or "I don't like it," and they would constantly switch it back and forth, and that gave us clues in the edit, where to cut, where to expand. And we can talk about this in the editing step, five, but you've got to edit your video to take out anything that would cause them to change the channel, proverbially.

Brett:

Yeah, anything that will slow them down, anything that doesn't get to that solution of this problem, anything that causes their eye to glaze over, even a little bit, is deadly. Okay, we have-

Joseph:

Yeah, so step three-

Brett:

Step three.

Joseph:

... scripting. You've got your concept, but it's only those two details. You've now got to create... Most of our videos are around three, three-and-a-half, maybe four minutes long, and a lot of people say, "Well, that's too long for the internet." People don't stop watching videos because they're too long. They watch Netflix for two hours. They stop watching because they get bored. They stop watching because it's irrelevant. They stop watching because it's just has no value to them. So your job is to create a script that is packed full, from the very first second to the last, and obviously, there's going to be an attrition rate. You're never going to get a video... I think the Harmon Brothers have said publicly, even their videos get like a 5% watch-through rate, so 95% leave the video before the end, but if you've got a video that's getting tens of millions of views, 5% of that is huge.

Brett:

Yeah, and often, even the person that watches to two minutes, so if it's a three-and-a-half minute video, the person that watches to one-and-a-half minutes or two-and-a-half minutes, they're going to be way more sold than someone who only watched a 30-second video. And we've tested this a lot. 30-second version of a video versus like a minute-and-a-half version of a video, and the minute-and-a-half version usually has 10X the conversion rate of that shorter video. So it kind of depends on what you want to do. Do you just want to rack up views or do you want to get conversions? And the cool thing is, if you do it the way you're talking about, you're going to rack up a lot of views too, while you're driving conversions.

Joseph:

Right.

Brett:

So on the script-writing piece, and please feel free to dig into any other details there that you want to, and I want to point people to your eBook in just a minute, but I'm also very curious how you assembled your team, because I would totally agree with you. I even know people that have been in advertising their whole adult lives, and they suck at writing scripts. Writing scripts is so hard, so any tips you want to give there? And then I would love to hear how you assembled your team.

Joseph:

Again, the wisdom of the crowd. If you go to FunnySalesVideos.com, watch some of those videos, there's not a script there that wasn't touched by at least eight writers.

Brett:

Wow. Wow.

Joseph:

We actually go through three phases of scripting. Phase one is the marketing copy points, which was pretty much done in step one. When you're doing your customer review exercise, you're picking out what are the five key points that you have to deliver for people to buy this product? Point number one is going to get mentioned way more than point number five, but in about three minutes, you can get to about five selling points. So you've got to create a marketing flow of we got to say this, we got to say this. If there are objections you need to overcome, you've got to address them. An unresolved concern will never lead to a sale.

Brett:

Totally. Totally.

Joseph:

And also a confused mind will never lead to a sale, so you've got to clearly clarify exactly what the benefit is that your customer's going to get by clicking below, what the offer is, and again, if your price is too high, and if you're going to mention your price in the video, which is a whole nother subject, you've got to address why it's high. Your competitor might be half the price, but breaks four times as many times, so you only have to buy one as opposed to four. You've got to figure out, if in that reviewing of your customers, there's a key theme that comes up over and over again, you've got to address it.

Brett:

Yeah. Yeah, and I love that. I don't want to get on too much of a tangent, because I think we can make a podcast all about price and the psychology of price, but yeah, there's ways to do it, like you make a... If maybe you're more expensive than your competitors, make an indirect comparison, right? "Sleeping on our mattress is way cheaper than going to the chiropractor three times a month," right? Or whatever. You make an indirect comparison, or you do kind of what the Harmon Brothers did with Purple Mattress and talk about... They kind of did this value stacking thing, and they also talked about, "Hey, you know, really expensive mattresses are five or $10,000, but these aren't even $4,000," so they're comparing it to the high end of the market. There's lots of things you can do with psychology of price, and sometimes, you don't even mention it. Sometimes, you want to mention that on the lander, but again, that's kind of a whole nother topic, so-

Joseph:

Exactly.

Brett:

Yeah.

Joseph:

Once you've got your marketing framework, then you bring in somebody with a different set of skills, which is a storyteller, a creative writer, a script writer. However you want to frame it, and just to let you know, I don't have any full-time writers on staff. I use 100% freelancers. You can go onto sites like Fiverr, and Upwork, and freelancer.com, and you can find really talented, really good writers, that maybe are full-time writers at big companies, that they're just looking for extra income on the side, and you can ask them to give you a quote to help with your script. Now, after four or five years of doing this, we've gone through a lot of bad writers to get to the good, but even a bad writer will add to the process, and hopefully, on every video, and this is something that makes us different. We're very small. I personally am the creative director on every video.

Brett:

That's awesome.

Joseph:

Now, that doesn't mean I do any one thing. I just oversee the whole process. You have to have somebody, maybe that's you or maybe that's somebody that you hire. You've got to have someone that's going to protect the story from beginning to end, because a great comedian could come in and write a joke that's going to make you pee your pants, but if it doesn't further the sale, it has to go. You need somebody that's protecting the brand, protecting the project from beginning to end, so multiple people need to be contributing on this. But ultimately, the second kind of writing is the creative writing, that takes the character, the problem, or the marketing points and puts a story together.

Joseph:

Now, it's not funny yet, but it's creative. It's fun. I'm still not going to show it to the client. Personally, I don't like doing that until it's ready to be shown. That's step three. I will bring in at least five trained comedy writers, so these are typically people who do improv comedy in their spare time, or full-time comedians. I have a couple of people that work on cruise ships. That's their full-time gig, so guess-

Brett:

Interesting.

Joseph:

... what they're doing during the day? They're sitting on the beach in Saint Johns, writing for me. They're filling their time, or they're traveling from one city to the next to do stand-up in a club, and on the plane, they're writing for me. You guys can do the exact same thing. Just reach out to them. You'd be amazed. They're kind of a starving artist, so they love it when businesses say, "Hey, let me give you money for time." But again, no one comedian is going to be able to write a funny sales video. You want multiple comedy writers on each project, and one person collating it, because we do it virtually, so we use Dropbox Paper, and everyone gets to see everyone else's notes, and the best stuff makes it onto the sheet, but the best stuff isn't necessarily the funniest. It's the most relevant-

Brett:

The most relevant, yeah.

Joseph:

... that advances the story.

Brett:

Because if something is really, really funny, but it diverts... You know, something can be so funny, and too different from the story, or out of place in the story, and it may cause a belly laugh or may cause you to pee your pants, but if it distracts you, then you want to avoid that, right? That's where that person that oversees all of it, that creative director, is so key, because you have to stay on point. I would rather be a little less funny, but relevant, than to be super funny and irrelevant. ...

Joseph:

And last point on comedy, it has to hit the avatar. Imagine-

Brett:

It has to be funny to them.

Joseph:

... we've done videos. Yeah-

Brett:

Doesn't matter if it's funny to you.

Joseph:

... exactly, exactly. We've done videos for CXO, SaaS companies that are targeting CXOs. They're not going to think that the same humor is funny as a video targeting teenagers with an acne cream. Two completely different senses of humor, so you got to test it. Again, back to creating that customer avatar brain share that you can email out and say, you know... Ideally, I love your comment earlier, ideally, I like to sit people down and just watch them as they read the jokes. You can't always do that, but you've got to test at every step of the process, or else again, you're writing a letter to somebody that you don't know who it is. So step four is adding the comedy. Those are kind of two... Yeah.

Joseph:

Step five is production. This is where the rubber meets the road, and I want to say do not proceed to step four until you've done all of the steps before, and have a script that you're 100% happy with. Now, it's never going to be perfect, right? Version one is better than version none. If perfection was the goal, we would have a stack of scripts and no videos online. But, you don't want to waste money producing a script that really isn't working, so that's the longest part of our process.

Joseph:

Typically a video, in Funny Sales Videos, if you were to call us and say, "Let's do a video," minimum it's going to be four months. Two of those months are just working on the script, so it's definitely the longest step in the process, but you can't rush it. You can't try to go to production and say, "Oh, maybe this'll be funnier once we actually see it, and the actor delivers it." No, you've got to be laughing at the script before you think you're going to be laughing at the actor. Yes.

Joseph:

You would think I would say the most important part of production is a great camera, and great lights, and beautiful sound. It's not. It's casting. It's picking the right actor. A lot of businesses don't understand that auditioning actors, even very professional actors, is free. Does not cost a penny. We are very picky with the actors that we choose. It's something that we take a lot of thought and time with. We will typically audition about 50 actors for each key role.

Joseph:

Now, what does that look like? In the world of post, hopefully, COVID, it's way easier, because what you do is you send out an email to your local top two, or three, four acting agencies, you give them a portion of the script, don't give them the whole script. Pick out maybe three or four paragraphs that are the most challenging, that you want to make sure this person can nail, and say... You want to give them the rate that you're willing to pay, because you don't want to waste their time if you're thinking, "Oh, I'm going to pay this much," and they're thinking, "I'm going to get hired at this much." So you want to be transparent. You also want to let them know roughly when you're going to be filming, because actors are booked up, and they're a one commodity, their time.

Joseph:

When you send it out, you'll get video auditions that'll come back to you. Watch through those, and I typically pick my top four or five, and then I'll set up a callback. Either they'll come here physically into the studio, and my clients, if they're local, will be here, or we'll get them on Zoom to watch, and we'll not only go over those paragraphs that we've just done in a virtual audition, but I'll throw other stuff at them, and I'll see, "Can you do that faster? Can you do it a little bit slower? Can you put the emphasis on this word? Can you deliver this joke a little bit differently?"

Joseph:

What you're looking for is are they coachable? Are they directable? You're also looking for, and this is why I love working with actors that have experience with improv, comedy. I'm looking for what are they bringing that I didn't write? Your scripts should never follow the same format as the finished video. It should always be better. During the production process, you don't want to be so focused on getting it exactly the way that it's scripted that you don't allow your actors to play. A lot of the time... Absolutely. Yes. Yeah. Yeah, and picking actors that have experience, they should give you things during the filming, that you're just like, "Well, I never would have thought about that."

Joseph:

Anyway, that, step five, is the production. Now, if you're a small business, you're trying to do this yourself, I already mentioned, make sure you have good sound, or go out and hire a relatively low cost local production company. Yeah. Right. And it's about visually being disruptive. The most important part of your video is the first five to 10 seconds, because nobody's going to watch anything past that if you don't visually disrupt them, and the better you can do with your visuals, both from a what am I actually showing, but also how good does it look, how different does it look to the next video that they're scrolling past?

Joseph:

If everyone is showing videos that were filmed on their iPhone, your video's going to look just the same. If you go out and hire professionals, that's where they earn their money. They're going to make it look different, and therefore disruptive compared to the other videos, and obviously, any of these Harmon Brothers videos that you've seen, there's details in every single shot, that you just won't get if you try to do it yourself. But, version one is better than version none, so if that's all that you can afford, by all means, go out and do it yourself.

Joseph:

Step six is the editing. That's where the rubber really hits the road, because if you've done all the previous steps right, you'll have a great video, but you can make it a great video better with good editing. The same line delivered by an actor feels completely different if you put the cut here as opposed to the cut here. After they deliver their line, do we go straight into another line, or do we let that line breathe? I can't tell you how to do that. A good editor just feels it. Comedy is about timing.

Joseph:

As you know, Brett, we also edit our videos a whole bunch of different ways. We'll do a long version, a short version. We'll format them for square, widescreen for YouTube, square for mobile, so back to production, you've got to make sure that you have your guides on your monitor, so that you're not filming something where the critical detail is on the outside edges of the frame, because that's going to get chopped off when you version your square video for mobile.

Joseph:

Editing is key, because you can speed things up, and cut out pauses, and overlap dialog, and anything to keep this feeling exciting, engaging, nothing that's going to get borning and nothing that gets confusing. Again, you want to test different versions of your edit with your sample audience, or with people... Like, literally here at the studio, when the delivery man comes, I'll say, "Can you watch this for a second? Give me some feedback," or clients will come, and I'm always looking for feedback on the editing, so test out what works, what doesn't, and a great editor's really going to help.

Joseph:

Totally. Yeah, it's just like a music track. If it was just (singing) the whole time. You've got to have the bridge, and let things slow down and then speed up. That's how you keep people's attention. Now, I mentioned this earlier. We also edit different versions with different content, so typically, we'll do three different opening hooks. That's the first five to 10 seconds. The rest of the video is exactly the same, but the opening hook is completely different, and we test it to see which gets the bigger watch-through rate, which gets the better click-through rate. With some of our clients, we do the same thing with the offer. One of the offers could be... Same video, just a different offer. One could be buy one, get one free. One could be get 25% off. One could be click for a free eBook, or whatever it is. You want to test as many different combinations to get to the ultimate, highest-converting version. You can do that with good editing.

Joseph:

Step seven, we've already spoken about, testing. You can speaking about that on multiple podcast episodes, but have somebody... And we don't do this. Have somebody on your team, whether it's an agency or an employee who really knows how, to take all of these multiple versions of your video, and find out, without spending too much money, and that's the key, how to find out which version of this video you want to start funneling, and opening the floodgates, and really getting out there. You don't want to waste your money on a version that isn't the highest-converting version. You also want to test your squeeze page, and all the copy on your squeeze page, and different upsells and cross-sales. That's where a really good marketing agency will take a great video, which is really only 50% of the process, right? My job is to get you to watch this video to the end and then click through, but that doesn't market client the money. The money really comes on the backend, where you take that click and you don't waste it. You put it in a well-oiled funnel. Yeah.

Joseph:

Yeah. Yeah, and one thing that we worked on together, that previous to doing these kinds of videos, I wasn't aware of, is the retention curve, understanding that you can still make edits after you've launched a small test, with the data that you get from that retention curve, which is basically showing you how the majority of people, where are we losing them? Where are they dropping off? You can literally say, "Okay, at one minute and 30 seconds, there's this big drop in viewers. People are bouncing." Now, that's normal to some degree, when you introduce the product, because really, what these videos are are sketch comedy pieces, or ads disguised as sketch comedy pieces, so whenever somebody finally realizes, "Oh, this is actually an ad," it's only natural that you're going to see a lot of people bouncing.

Joseph:

But, if there are other places where it's not when you're introducing the product, and you're seeing a big drop, you can go back into the video and say, "Okay, I need to cut this section out," or, "I've got to speed this up," or, "I've got to reorder this video so that we're not losing people," and with a really good marketer that can get into that data and tell you, working together with an editor, it's not video delivered and here it is. It's a work in progress, to refine and tweak that until it's the best version, and then again, you open up the floodgates and spend a bunch of money promoting it.

Joseph:

Okay. Yeah, so step eight, real quick, real simple. Forget going viral. It's all about creating a conversion video. It's about, when clients come to us and say, "We want to hire you," when we swap out the creative that they're doing with ours, they see a high increase on return on ad spend. Don't think that going through all these steps is going to get you a video that when you put it on YouTube, it's going to get you a million views. That's not what it's about. It's about the whole way, saying, "Okay, this is a business. We're not going to plan on a flash-in-the-pan lightning strikes, and one time, we get a big viral boost." No, it's about repeatability, consistency, and something that you can plan and forecast based on. So forget viral. Reprogram your mind that this video is going to be a conversion video, that when you spend X amount of dollars, you're going to bring X amount of dollars back in return. Those are my eight steps.

Joseph:

That's why we're on video seven for Tru Earth. Yeah, just go to FunnySalesVideos.com. It's just a simple page that shows... You can see some of our videos. You can see some more case studies. Then scroll down to the bottom, and you'll see a big icon that basically just shows how you can download the free eBook. Yeah. Yeah, so we started it about six months ago, and really, what we do on the podcast is we interview people that have had a video quote-unquote "Go viral." We always laugh that the title is kind of clickbaity, How to Make a Video Go Viral. Yeah, you do. That's a hook. That's our opening grabber.

Joseph:

That's right, yeah. We've interviewed Ryan on the show. We've interviewed four or five other of our clients, and then we've also reached out to other companies, that we didn't work with, but we want to learn what it was like? How did you do it? We basically just interview anyone that has marketing videos that have over a million views, and have been profitable, and go into much more detail on the things that we've talked about today. On all the regular podcast, or you can just go to howtomakeavideogoviral.com. Sure. Yeah, sure. It's been a blast.

‍

Episode 183

:

Daniela Bolzmann - MindfulGoods.co

3-Step Amazon Listing Optimization Formula

Most Amazon sellers miss several key tactics that severely limit growth. That’s why I was so excited to talk to Daniela Bolzmann.

Growing your sales on Amazon really comes down to three things:

Getting found on Amazon by improving your organic rankings or paying for ads.
Getting more people to click on your listings once they see it.
Convincing more shoppers that your product is the one for them.

It sounds simple enough right? But most Amazon sellers miss several key tactics that severely limit growth. That’s why I was so excited to talk to Daniela Bolzmann founder of Mindfulgoods.co. She is a PRO at making products on Amazon stand out. She’s so good, in fact, that Amazon created a case study featuring her work.

Here’s a look at what we unpack on this episode:

How to maximize your SEO efforts for launching new products on Amazon
How to integrate and tweak existing listings that already rank to get them to rank HIGHER
Leveraging your 6 images for maximum conversions
What to do with A+ content to make your product nearly irresistible
How Yes Bar gets it right with their listing optimization and storefront optimization
Top Amazon listing mistakes sellers make and how to avoid them

‍

Mentioned in This Episode:

Daniela Bolzmann

Via LinkedIn ‍

MindfulGoods.co‍

Mindful Goods Course: Launch Ready Listings‍

In mentioned order:

Helium 10‍

Jungle Scout‍

Viral Launch‍

Yes Bar‍

PickFu‍

eE 73 John Li - PickFu‍

RX Bar
Mindful Goods Course: Launch Ready Listings‍

YouTube Course with Ezra Firestone and Brett Curry‍

A+ Content on Amazon‍

Yes Bar Storefront on Amazon

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 Amazon listing optimization. I love this topic. It's a topic that will probably never go away, right? As long as there's Amazon, as long as we're trying to maximize that channel, we have to think about listing optimization. And so my guest today is someone who came highly, highly recommended to me. We had a great chat kind of prepping for this, and so super excited to dive into this chat with Daniela Bolzmann. She's the founder of mindfulgoods.co the one-stop-shop for Amazon listings done better. This female-led agency supports passionate brand builders to step up their Amazon game and they provide done-for-you services to help you sell more. So this is what she does day in and day out. She's got a very simple, straightforward, but powerful three-step approach to optimizing listings, and that's what we're going to dive into today. So Daniela, how's it going and welcome to the show.

Daniela:

Yeah, thanks for having me. I'm excited to be here.

Brett:

Really excited we can make this happen. I think after a few reschedules and other craziness. We're both busy. But thanks for being flexible and thanks for being here today. And so before we dive into kind of the three steps to optimizing your listings, what's your background? How did you gain this expertise in the Amazon world? Was that your dream from the time you were a small child?

Daniela:

Actually, I've always been very entrepreneurial-minded. I've always been a creative. I come from a 10-year-plus marketing background and I actually had a tech startup before this. So, very different. I was in logistics and decided to-

Brett:

So logistics, tech startup, and marketing. That's a great combo.

Daniela:

Yeah, a lot of that has carried over. I used to be what I'd call a Jill of all trades, where I'd dabble in a bit of everything because I'd like to understand it, and then manage a team. But what I noticed is with remote working is there's this whole migration happening of, I had an office with 20 employees and I felt like I was in my '20s, but I was a mom and loved my company, loved what we were building, but realized in this next iteration of what I wanted to build, I wanted to have a remote team. And so I wanted to focus on e-commerce and around the same time was when Amazon had bought Whole Foods. My family has a CPG business, so I had asked them if I could learn the Amazon ropes by way of their product.

Daniela:

And once I went through that process and realized how hard it was for me, a seasoned marketer and entrepreneur, I realized that there was going to be some huge learning curves for other smaller teams, other brand builders, emerging brands out there, right? So I started getting into just regular retainer agency work, had a small team, and then realized that we were turning away a lot of brands that just needed help getting from A to B on Amazon. They didn't necessarily have the funds to go out and hire a full service agency. So we kind of flipped our model, and now we just do done-for-you listing optimization to help brands get that first step on Amazon.

Brett:

That's awesome. I love it. Love that background. And yeah, I think that it's just the most natural way to build a business, right, is you experience a pain point yourself and you figure out the solution, then you realize, "Hey, there's a lot of other people that need this solution as well." And that's what you did. And so, let's dive right into it. So let's talk about these three ways to optimize Amazon listings. And why don't you kick us off with step number one, and then I'll have several questions and we'll dive into that.

Daniela:

Sure. Actually, we have a very in-depth version of this that we call the buy-now method, but we tried to make it as simple as possible and just get it down to three simple steps so that everyone can feel like they can accomplish this. The first step is actually getting found through your SEO. And while every Amazon consultant out there is going to tell you as a brand builder that there's 150 things you need to be doing at all times, when you're first getting started on Amazon and you're setting up your listings, these are really just the three things you need to focus on. So the first one is SEO. Amazon is a search engine, and so I can't tell you the number of clients that have come to us and they've copy pasted from their website, gotten their listing up and running, but they're wondering why are we getting no traffic?

Daniela:

Why are we getting no sales? Well, if people can't find you on Amazon, it's most likely because you haven't done your SEO research. So that's the first step, right? And so there's a number of different tools that are out there that can help you get this data quick. And then once you start running your advertising later, you can then optimize even further. But 80% of the work can be done in advance with lots of different tools. You really only need a couple of them, but they all kind of do the same thing, right? Helium 10, Jungle Scout, Viral Launch, all of these great tools will basically help you do all of this research, aggregate it into some sort of spreadsheet, and then figure out which keywords are most relevant so you can infuse it into your listing copy.

Brett:

Yeah, I love this. And I don't want to give away the other two steps, right, but I love the simplicity of thinking about it this way, that there are really kind of three things to do here. Because if you are not selling what you want to be selling, if you're not growing at the pace you think you should be growing, it really is going to come down to one of these three things. Right? And then, there could be dozens of, or hundreds of little tweaks or things you could do related to each one, but think about this in big topics, I think really helps you know what kind of action to take.

Brett:

And so, yeah, the first step is, are you found, right? Amazon is a huge marketplace. And primarily, people still interact with it by searching, by using search queries to find the product they want. So if you are not being found, then nothing else really matters. So our first step is kind of identifying keywords by using these tools. And yeah, we like to use kind of a combo of those. I think maybe the favorite at OMG Commerce is Helium 10, but I love the other ones as well.

Daniela:

We actually just switched to Helium 10, to shout out to them. But we actually use a combination. We like to do a two-step process of a reverse ASIN first. And we do that-

Brett:

Can you explain what that is for those don't know?

Daniela:

Yeah, so a reverse ASIN is basically a little bit of a cheat code, right? So with a tool like WordTree, or any of these other tools too, we use WordTree for this one, but we'll go and grab the ASIN, which is the specific SKU number that Amazon is giving your product that shows up in your URL and on your listing. But that ASIN and your competitor's ASINs, let's say, up to 10 of them, you can drop into this tool, and it'll go and scrape their listing and tell you which words are most frequently used on those listings, which ones are used in common across the listings, and which ones of those would be most relevant in terms of volume and density of search.

Daniela:

So those that's really the first step that we take. And the reason why we do that first is because we just need something quick, and a base to go off of when we're doing the listing copy. Because when we're writing the copy, initially, we're really writing the listing with a sales-forward approach, right? We're writing it in the tone and feel of the brand. And then we want to use persuasive sales copy throughout. And then we want to infuse a base of keywords initially that it is going to be our competitor round up in that reverse ASIN search. And then once we have that, we'll go through and do a second pass with the deeper dive of SEO research that we've done within one of those other tools, like a Helium 10.

Brett:

Nice. And so would you do that second pass of SEO research, that's after launching the listing or that's before ...

Daniela:

No, no, no. That's before. It's all before. But it's just our process, because when you're working with our team, we're dealing with multiple people. We have a person that's just doing SEO research and a person that's a professional copywriter, and those two minds have to come together. And so that's the process we came up with to help them have their meeting of the mind.

Brett:

It's really smart, and, typically, someone who's a great copywriter doesn't want to be confined to the world of keywords to a certain degree, and then someone who's into keywords is a little more analytical. And so yeah, a process to get those two to come together is critical.

Daniela:

Right. And the client, at the end of the day, they just want their product to sound like their product. They don't want all these weird keywords in there, even though that's what helps you get found. So you do have to have that mindset going into it. Cool.

Brett:

Now, do you have any advice, so that's if you're launching, right? And I know the process is similar if you're just optimizing, but take a seller who is already established on Amazon. What should they be considering or looking at here to see, but maybe they're not being found like they would like to be, what would the process look like for them?

Daniela:

Okay. So they should still do the same process. There's a caveat here, though. If you're already selling well, which you're saying they're not, but if they are, you have to be careful about how much you are updating your listing and where you're updating your listing. Because if you're a seasoned seller, you've likely already been indexed by Amazon throughout your listing. So you don't really want to change too much. And when you do make changes, you want to make them sparingly, and in places that won't de-index your entire listing. So that being said, that would be like, let's say, you have title that's performing well. You would put maybe some extra keywords that you see are converting from your search term reports in the back side of the title. You wouldn't just-

Brett:

Right. Keeping the title mostly intact. You're just adding to the end of it.

Daniela:

Yeah. Don't delete the whole title and then put in a new one. Leave the title, maybe delete some of the extra words that you weren't finding relevant or weren't seeing conversions on, and then replace them with some other keywords that you're trying to rank for, right? Same thing in the bullets. Back end, yeah, same thing. So, now, let's say you're not selling well. If you're-

Brett:

Well, just as a quick note, if you're selling, then the rule number one should be, goal number one should be do no harm, right? Let's not go backwards. Let's take little tweaks, little iterations, to hopefully gain some momentum.

Daniela:

So what we do, actually, on seasoned sellers is we'll do a reverse ASIN on their listing, and we'll just try to find out, okay, what are they ranking well for, don't touch any of that. And actually, there's a good amount of brands that came to us last year during COVID, when they were switching their budgets from in-store to online. They basically said, "We've been selling on Amazon, but we've been neglecting it. So we want to double down and refresh our listings." And so we had to take that approach with a lot of clients. We had to just play it safe in certain areas. And then for some clients, they just weren't performing well after a while, because new competitors enter the marketplace, they didn't really keep their listings fresh, or maybe they didn't update it, or looking at your search terms reports to see what is converting and then adding it back into your listing. It's just that ongoing maintenance stuff.

Brett:

How often should you do that? So if you're not keeping it up to date, is that a monthly, is that a weekly, what would you typically recommend for adding keywords back in?

Daniela:

If you're running a significant number of ads, I guess it would depend on your ad spend, right? If you're running tens of thousands of dollars of ads, I wouldn't see why you wouldn't do it monthly. And that's a simple thing that your ads manager could probably pass off to you so you can update into your listing or that they can manage for you.

Brett:

Totally. Yeah. And so as an ad management company, we do the same thing with campaigns, right? We're looking at doing broad match or phrase match and finding, converting keywords and adding those back into the campaigns at the ad level, to further optimize and perform. But it totally makes sense to then add those back into the listings, as it makes sense. Obviously, there are space limitations to a certain degree and stuff like that.

Daniela:

And then there's certain brands that come to us and like you said, they're not selling well at all. And in that case, it's just a matter of ripping off the bandaid and just doing a clean refresh.

Brett:

Yeah. Can't really hurt it if it's broken already. So let's make bigger movements. Yeah. If something is broken, making little tweaks isn't going to get you there, right? That's too slow of a road. You need to make more dramatic changes at that point. Yeah. Awesome. Okay.

Daniela:

Yeah. So in that case, we'll update copy, we'll update graphics, we'll update everything across the board and just won't even look back.

Brett:

Cool. Now I know, back in the day, the priority was product title, then bullet points, then back end keywords. Is that kind of still the same priority order or anything you would add to that?

Daniela:

So we do backend search terms and subject matter, because we found in certain categories, subject matter is indexing. But yes, title first, obviously.

Brett:

Cool. Cool. Awesome. Great. So step one, getting found. What's step number two?

Daniela:

Step two is the fun one. It's the one nobody likes to talk about for some reason. It's the one that's-

Brett:

I don't hear many people talking about this, but it's so important.

Daniela:

Honestly, it's the lowest hanging fruit in the Amazon marketplace. I feel like it's the neglected piece that can make such a big difference. And we worked with a company brand called YES Bar. And within two weeks, they saw an 11.8% increase in clickthrough traffic. And so that's just one emerging brand. Imagine if you have a larger portfolio, the returns on that. It's huge. So what does this mean?

Brett:

And Amazon loves that increased clickthrough, right? I mean, that is music to their ears. Obviously, increased conversion rates really music to their ears. But if you're clicking, you're going to get more conversions. You're going to move up in the rankings. It's a no brainer.

Daniela:

Yeah. So this one's a fun one. It's actually my favorite one to work on, because I feel like this is a thing that everyone can do. This is a thing that it doesn't cost you very much, and you can see significant gains from it. So what this is is basically when you show up in the search results and you see your product next to everyone else's, what can you do to your main image to make sure that people are looking at you first and then clicking on you, right? Yes, price. Yes, reviews. All of that, that happens over time, but you don't get that right away. So what can you do right now to make sure that people are clicking on your listing, right? And so in the case of YES Bar, let's just break down what we did for them, right?

Daniela:

So what they had was a beautiful image. It was a case pack of their product with a stacked closeup of the snack bar. The problem with it was there was a lot of white space around the edge. So it looked smaller than everyone else's products in the search results. And it was kind of diluted in terms of resolution, so it wasn't popping off the page. It didn't look crisp and clear, and it didn't draw the eye, right? They did have what I would call eye candy, which is the closeup of the snack, right, which, anytime you can add eye candy, it's a win. So I always recommend adding some kind of eye candy and a post-edit, if necessary, to clarify the purchase. So a post-edit would be something like showing is it a six-pack or is it a twelve-pack, right? Or is it-

Brett:

So calling that out with superimposed text or some kind of little graphic or something.

Daniela:

Yeah. And here's where you have to be careful, right? Because, you're not trying to manipulate the buyer. You're trying to aid the buyer in the process. And so that's what it comes down to in the Amazon world. Amazon wants to know if you're aiding the buyer or manipulating the buyer. You never want to be manipulating the buyer. You never want to show something in the photo that's actually not going to show up to the consumer. You never want to make your product look so fake that when people get it, they're like, " This isn't what I ordered." So renders are a touchy subject. We do renders. I think, personally, some products just show better in renders than they do in photos, so we do very, very realistic renders on a lot of products and have seen increased performance.

Daniela:

So in that case, in the case of YES Bar, you would have a version that's polished of the case pack that is taking up the full frame of the photo, that has a post-edit showing how many bars are in there, that has a post-edit showing the main things that people are searching for in relation to that product. So is it vegan? How many grams of protein, or whatever the things are, right, put that on the box. And then a super crystal clear closeup of those snacks so people can see what they're actually getting, because with food, people want to, they want to taste it. They want to smell it.

Daniela:

The next closest thing is you have to show them a closeup. And then how do you make sure that all of that on the page is working together and it's enticing people to look and click on your product? So, that's where you can have a little bit of fun with this. It's a creative process. So what we do is we come up with two, maybe three different variations of what we think could be interesting. We'll go and look at different categories to get some ideas. We'll look at their exact competitors to see what's showing up in search. And then we'll just do really low fidelity testing on a tool like PickFu, which if use the code-

Brett:

PickFu is a great tool. I know those guys they were actually on the podcast. It's been about a year.

Daniela:

Yeah. And FYI, if you use the code, I think it's PickFu MG, you get 50% off your first poll because we're an ambassador agency and we love them. But we actually run this with almost, I think, every single client project that comes in, because it has such huge benefits. So we'll run a split test.

Brett:

And so quick explanation, you can go back and listen to the PickFu episode if you want to, but, basically, you're submitting images and real people are reviewing them and giving you feedback. And so it's a way to get feedback on images-

Daniela:

Amazon shoppers.

Brett:

Yeah, Amazon shoppers.

Daniela:

Amazon Prime members. You can target Amazon Prime members. You can target within your very specific audience, too. So if you have a pet product, you can target pet owners. Baby product, parents. You can target by age, you can target by gender, everything. It's phenomenal, and you get the results usually within an hour, which is fantastic.

Brett:

Yeah, it's so cool. And I love this step, this getting clicks and really focusing on the image, because this is really all about merchandising, right? If we're thinking about the digital shelf, we have to think more like, and this is, I think, one of the things that's lost with a lot of digital marketers, is we maybe get too nerdy and too focused on SEO and rankings and algorithms and keywords, and all those are important, right? I've been doing SEO since 2004. I love it. But we got to think like the consumer, right? This is comparison shopping on a digital shelf, and appearances matter big time. And so remembering that someone is trying to solve a problem or trying to meet a need or fulfill a desire or whatever, and how does the image communicate that and show that? Exactly. That's why we simplified this process into get found, which is SEO, get clicks, which is your main image, and then get sales, which is everything inside the listing. Right? And what sells, is imagery. I think there was a stat that said 90% of what we take in as humans is visual, right? So if you're looking at a listing and you're trying to understand if you want to buy something, you better be enticing people through all of the visuals, right?

Brett:

Yeah. So, fully agree. The image is so important. And you mentioned YES Bar. I'll mention a competitor, just because I think what's interesting about this company is a lot of the innovation is with packaging and simplicity. So if you look at RXBARs, right, which they've now become popular, you can buy at Walmart or whatever. What's that?

Daniela:

That's solid branding, right there.

Brett:

Solid branding. And what was their innovation? They put three or four ingredients, they put it on the front of the package. It's three dates, two almonds, three egg whites, that's it, right? And so wow, how cool is that? Very simple, very visual, and it works, right? That's why I bought the product in the first place. Then I heard the whole brand story and it's cool, and the product is great.

Brett:

But, yeah, think about visual merchandising, right? We talk about this a lot. We do a lot of Google traffic and Google shopping. We're a big Google shopping agency. And we run into this all the time with Google shopping. Clients will come to us and say, "Our products are showing up in Google shopping, but we're not getting the return or the volume we need." And I just had a skincare company that we started working with recently, and their product packaging is black and they put the product on a black background. Okay. Well this is not going to sound like rocket science, but I think we found the biggest problem here, and it's people can't see what they're clicking. Anyway. So it's simple stuff like that. Merchandising is super important. So, that's fantastic. Any other tips or suggestions? I love the PickFu example. I love the call out ...

Daniela:

Do the split test. I mean, really, within that step, we broke down all the things that we do, like with the post-edits, with the eye candy, all the different types of eye candy. We actually have all of this in little tutorials inside of our mini course on our website. It's called launchreadylistings.com. But yeah, it's 37 bucks. And literally every single thing that we're talking about right now, there's little tutorials that go with everything. So if anyone wants to do this themselves and doesn't want to hire us, there you go.

Brett:

Sweet. 37 bucks, can't beat that. I'll link to that in the show notes as well. What's at URL one more time before we go to step number three?

Daniela:

Launchreadylistings.com. And actually, we train our designers on that, too. So other designers could be doing this.

Brett:

So hey, if you ... internally, means it's legit. That's right. So I did a YouTube course with Ezra Firestone. We send all our new YouTube specialists through that course. We believe in it. So it's good stuff. Eat your own dog food, right? What was that, a Purina thing or something? They literally had people eat their own dog food. Anyway.

Daniela:

I would not eat Purina. Sorry, Purina.

Brett:

And then Google adopted that though, too. They always say their thing is say, do we eat our own dog food, do we test our own products and stuff? Anyway. It's a bit of a rabbit trail there. Okay. So we got get found, get the click. What's step three?

Daniela:

Step three is once you've gotten them inside your listing, how are you getting those shoppers to convert, right? And so this is a matter of figuring out what are the types of graphics and persuasive copy that need to be layered in a show and tell format. Some people call it lifestyle infographics, but it's basically, what is the way that you're visually showing, and telling at the same time, the same thing that you're trying to say in your bullets, right? Because people can skim the bullets and that's what they probably do, but they're not sitting there and reading every single thing that you're putting in your listing, right? So you really want to make sure-

Brett:

They're scanning, right? They're scanning and looking for answers to questions or looking for something to kind of jump out at them. And then maybe they're ...

Daniela:

Right. They're skimming. Yeah. So it's really a matter of going through every single thing that you're trying to say, and trying to think of how you're going to visually show that on your listing.

Brett:

So I love this, too. And again, let's take an offline example or metaphor here. So I'm in the store and now I've picked something off the shelf, right? The packaging did enough to make me want to pick it up off the shelf. Now I'm examining it more closer, right, or I'm pulling this item of clothing off the rack or whatever. So I'm digging a little bit deeper. So, that's the PDP. That's the product detail page. What are you doing to close the deal, to seal the deal? And it really is what questions do people have? What use case are they going to be using product like that?

Daniela:

Right. Answer every single question they could possibly have. So an example, any food product, the first question people have right now is what the heck is in this? That's what everyone wants to know. What do most brands do? They upload a photo of the back of the bag that is really crappy quality, can barely read it, and even if you zoom in, you're like, "Oh, this looks terrible." It just looks terrible. So what can you do? You can call out every single ingredient. Let's say you have a clean label. YES Bar is actually a good example. They have very simple ingredients in their label. Just list it out and make it so easy for people. This is the only stuff in our product. If you want the nutritional facts, it's right here next to it.

Daniela:

And by the way, it falls into all of these dietary categories. If you're looking for paleo, if you're looking for this, that. Put little icons so that people can easily understand what this is and what it isn't, right? Those are the questions that people want to know right up front. So if you know those things about your consumer, think through those and figure out how you're going to address all of those at once, right? So, that's your product images on the left. Some of the things that I see that's really powerful for brands that you could be doing is an us versus them image. Those are super powerful on Amazon, right? Because you're saying, "We only have these things in our product. Other brands do all of this, which is icky."

Daniela:

So it's like, we're better. Here's why. So how can you visually show this? The other thing is helping people identify with your product. So people want to see themselves. They want to identify in some kind of way, right? So is this a product for moms? Let's show some moms. Is this a product for dads? Let's show some dads. Let's have fun and show people. And you don't have to have an expensive photo shoot to do this stuff. There's incredible stock photography sites that you can pull from to create these very realistic images of people holding your product and using your product to help people identify with your product.

Daniela:

So product in use. So showing is there specifics on how to build this, how to clean it, how to assemble it? Whatever the things are, write a list of all the things, narrow it down to the top six, make beautiful image that show and tell at the same time. What I see often is either people uploading just stock images on white of every angle of their product, which I don't understand why people do that.

Daniela:

Or we see people uploading a bunch of lifestyle images that don't tell you anything, which it's cool. It's pretty. Okay, it's probably on your Instagram, too. But it doesn't tell the shopper anything. And the shopper has questions that need to be answered. So layer some text on there and get it done. So, that's product images. And then when you scroll below the fold, for anyone that doesn't know what that means, it's basically when you scroll down on the Amazon listing and you don't see the product images at the top anymore, there is one more section that brands can take advantage of that's called well, it's called A+ content. You can get it if you're a registered brand with Amazon, which basically means you have a trademark or you have a trademark pending. And so if you get access to this, you can basically upload an entire nother section of beautiful imagery to help sell your product.

Daniela:

Amazon themselves has said that this section alone can lift your sales by 5% or more. And that's taking into consideration even the brands that are not doing it great. And then there was a study that came out a week or two ago, I think it was DataHawk or somebody said that they were seeing, I think it was 20 to 200% increase in sales lift from brands going from zero to adding A+ content. So, I mean, that's super powerful and this is an analysis across hundreds of thousands of listings.

Daniela:

So I mean, A+ content is something that I feel like every brand should be doing. I think that there's brands that do it well and don't do it well. What I'd recommend doing is, or what we do, is we do basically stacking these huge banners, one on top of the next, to create a landing-page-like effect, rather than doing all of the other Amazon modules that are really text heavy, and then it feels very hodgepodgey. So if you want to see examples of this, actually, it's all over our website. And actually, Amazon recently created a guide from some of the work that we did with a brand called Bowery Farming. And they actually highlighted all of these things that we're talking about today in terms of showing and telling with your graphics and using big banners, and that was pretty exciting.

Brett:

Yeah. I love this so much. And one of the things I heard long ago in a marketing course or from a really sharp marketing person was, going back to images, the saying is an image speaks 1,000 words, right? An image is worth 1,000 words, but the key is what thousand words? What are you trying to communicate? And I think a lot of people don't think about their photo enough to say, "Okay, what am I trying to accomplish with this photo?" Because I think, to your point, people either go, "Hey, it's just a plain old image of the product," or it's just a lifestyle image, and we have no idea what this means. It's a family in their front yard. What are they doing? Where you really need to see, show me the product in action.

Brett:

Show me that it will hold up in this use case. Show it doing what I want it to do. And so, yeah, you got to tell a story with those photos and then also with A+ content. And we see this a lot, too, as we're evaluating. I think just a lot of people, and I don't want to say lazy, although I think that's sometimes it. We're spoiled, because Amazon has so much traffic. And if you have decent reviews and okay images, you'll sell on Amazon. But if you think about this like merchandising and like someone building a brand, you can do so much better. If you maximize all these spaces, your six product images, your A+ content, your bullet points, get it all working together, man, it can have a huge, huge impact.

Daniela:

The other thing is that, remember, there's still a camp of people out there that are very anti-Amazon. And so those people may never shop on Amazon. But as there's more negative press out there about Amazon, there's ways that you can counter that and help educate people around you that you are a brand in this neighborhood, who is creating this product and selling it on Amazon, so it is your livelihood, right? And so I notice a lot of people kind of hide behind their product and are afraid to put themselves out there and say, "Hey, we're a female-owned business. We support animal welfare." This, that, and the other, right? But that kind of stuff is so powerful for the end consumer, for the shopper to know that there's a real human behind this that has a family, that's supporting other families, and they care about these things in the world. And that makes the buying process feel so much better than just I'm shopping on Amazon. Right?

Brett:

It does, yeah. And, excuse me, especially when you do everything else right as well, right? You've got good images and a good headline, and you look at and you think, "I want this product." Then when you can marry that with this is a female-led company and we're focused on these initiatives, or we've got these environmental initiatives where we're doing 1% for the planet or whatnot, then that makes you feel so good about making the purchase.

Brett:

I think you can't lean too much into that. If your listing is broken or if you got bad reviews or other things, then that doesn't matter. But if you can add that on top of everything else being great, it's fantastic. And I love how business is moving in that responsible way and kind of cause-driven marketing. I do enjoy that. I'm glad that's happening and that's a trend. Awesome. Cool. So we got these three ways. So being found, getting the click, getting the conversion. Anything else you would add to that, kind of as we're wrapping up? And it's perfect to have three, but any other tips, suggestions, ideas, anything else you would add to that?

Daniela:

Well, I know anyone listening is probably wondering what about storefronts? So I will say that a couple things that we're really excited about with storefronts recently is that Amazon has this feature called background videos, which I don't know if you've had a chance to play around with those at all, but you can have up to four of them on your product page or, sorry, on your storefront. And I hope they roll this out to A+ content, because I think it's a really engaging way to shop, and I think it's a lot of fun.

Daniela:

But YES Bar's storefront is a really great example. We put two of them in there. You can have up to four. But they basically are videos playing with no sound that just are on a loop. So what we did is we created these animated gifs and play them as a video. And it's just this really fun, engaging content to break up all the static, still images that are on the page, right? And so you're able to kind of reengage the shopper and keep them in that environment, and tell them all the things that you want to tell them before they're getting to the next section. So, love that.

Brett:

Yeah, this looks fantastic. I'm looking at the YES Bar-

Daniela:

People forget about media mentions.

Brett:

I'm looking at the YES Bar storefront right now. Really great. Such fun branding.

Daniela:

Really fun, right?

Brett:

Yes, I see those videos ...

Daniela:

Their name is a mantra, so we just went with it and had a lot of fun. People forget about media mentions. If you have media mentions within 18 months, you can put up to four of those in your A+ content, and I don't think there's a limit on storefront. So you might have to put a little footnote to get it approved by Amazon to say when the most recent publication was, but they have to be within 18 months, and then you can put up to four of them in your A+ content, and what a great way to build trust and validate for the shopper. So that's huge. I always recommend doing that. And this is a little iffy, but we always try to build a testimonial image into the product images. So that's a little fun bonus one for you.

Brett:

Yeah. So putting an actual review, or a customer saying something in the images.

Daniela:

Yeah. And I think this is a wishy-washy area, because sometimes Amazon says you're not allowed to have testimonials. But we've gotten feedback from Amazon that you can, as long as it's verifiable in your comments, in the reviews. So if it's a real Amazon shopper's review and that's in your reviews, just take the tidbit that you love and build it into a beautiful testimonial image so people see it right when they hit your page. They don't have to scroll all the way down. Because you know everyone, once they get a couple questions answered, they just scroll right down to those reviews. So give it to them. Yeah.

Brett:

Awesome. Well, Daniela, this has been fantastic. Your company, Mindful Goods, mindfulgoods.co, check it out. I'll link to it in the show notes as well. But why don't you, one more time, talk about that course. Sounds like an amazing value and a great way to dive in. And then any other ways for people to connect with you, who you work with, that type of thing.

Daniela:

Sure. So this is for the DIY brand-builders out there, any designers at agencies that are looking to pick up more Amazon work. This is a great little mini course that we created with our exact three-step process and tutorials for all the process to show you how we do this. It's at launchreadylistings.com and it's just $37. So you can't beat that.

Brett:

Cannot beat it. All right, Daniela, thank you so much. This has been a ton of fun.

Daniela:

Thank you.

Brett:

Highly insightful and motivating, as well.

Daniela:

Thanks so much.

Brett:

Awesome. Thanks, Daniela. And thank you for tuning in. We'd love to hear back from you. Let us know what you like about the show. Give us some topic suggestions, connect with us on the socials. Also, if you find this episode helpful, share it with a friend. Don't be bashful. Let's get other people involved in the show as well. And with that, until next time, thank you for listening.

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Episode 182

:

Dave Bunch - Growve

The Rise of the Brand Aggregator

So why the rise of aggregators? What makes that business model so attractive? Why are brands selling to aggregators?

In the first half of 2021 alone, $2.5 billion in capital has been raise by brand aggregators all looking to acquire eCommerce brands.

Currently there are over 100 aggregators just in the eCommerce space. A few months ago, I met Dave Bunch at Ezra Firestone’s Blue Ribbon Mastermind in Miami. We were both speaking there and when I heard his story, I knew I wanted him to be on the podcast. Dave is the President of Growve a $250 Million dollar aggregator with close to 25 brands under one roof.

So why the rise of aggregators? What makes that business model so attractive? Why are brands selling to aggregators? Those are all questions I wanted to ask Dave.

Here’s a look at what we talk about:

Why right now might be a good time to take some chips off the table
The benefits of rolling equity vs. full buyouts
Why you should be weary of large offers
When deals go bad - how to better prepare for the issues that always arise when closing deals
What’s the end game for aggregators including going public through SPACs, selling to Private Equity and selling to strategic investors

‍

Mentioned in this Episode:

- Dave Bunch
- Via LinkedIn
- Website
- Facebook

MENTIONED - in interview order
Blue Ribbon Mastermind
Ezra Firestone
Moiz Ali
Native Cosmetics
Procter & Gamble

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 are talking about the rise of aggregators. And if you're not familiar with the space that may sound like the name of a Star Wars movie or something like that, the rise of the aggregator. But it's a really important topic and aggregators are certainly not evil. It's not like the Empire, these guys, most of them good.

Brett:

So I think this is just such an interesting time in the e-commerce space, where good time to potentially sell if you're a brand. Good time to partner with an aggregator, all kinds of interesting things to consider. This episode of the eCommerce Evolution Podcast is brought to you by OMG Commerce Resources. That's right here at OMG Commerce, we want to help make sure you're educated and in-the-know to capitalize on the latest tips, tricks, and strategies to help you grow your e-commerce business.

Brett:

So if you go to omgcommerce.com and under Resources, click on Guides, we have some cutting edge free information for you on things like, how to dominate with Amazon DSP ads or how to use Amazon sponsor brand video ads, and how to craft the perfect ad. We have several guides on how to capitalize on YouTube ads, from creating the perfect ad to knowing when you're ready to scale. Plus there's the newly updated Google Shopping guide, plus more. Check it all out at omgcommerce.com and click on Guides under Resources. And now back to the show.

Brett:

I get to meet my guest today, Mr. Dave Bunch at Blue Ribbon Miami. So as a Firestone's event, he and I were both speaking at the event. And Dave just had such a wonderful presentation, really down to earth, super smart guy. So Dave is the president of Growve and that's G-R-O-W-V-E. Fantastic aggregators, just growing like crazy and has a wonderful reputation of being just a great group to work for and to work with. So I wanted to pick Dave's brand. I want to know more about aggregators as well and more about what these guys think about the space of e-commerce and where we are right now. So with that, Dave, welcome to the show and thanks for taking the time.

Dave:

Yeah. Thanks Brett. Yeah, appreciate it. It was fun meeting you at Blue Ribbon and getting to know you better and we've admired you and what you're doing as well. And it's great to be on with you today.

Brett:

Thanks man. And we both have an affinity. We have large families, correct? How many kids do you have?

Dave:

That's right. I think you've got me beat. I have seven ... Oldest is 23 and youngest is seven. So our house is always a house full, but we love it. At least I do. For sure.

Brett:

Yeah, we do too. So we've got eight. Our age range is almost identical to that. You're just about three years ahead of me, but 19 and four are oldest and youngest at the Curry household. So it is crazy times always.

Dave:

Yeah. And I've always told people once you have a few, it's almost the same. So people say that's got to be hard, but once you have two or three, it's about the same as having seven.

Brett:

You have to start buying bigger vehicles, bigger washing machines, bigger house. But there is the benefit... So I did notice for sure, after six, seven and eight, I don't know, didn't notice. But the older kids do help with the younger kids. That's a selling point...

Dave:

That is true.

Brett:

...for large families, which is nice. So we didn't come here and talk about big families. Although there probably there's a correlation between having a big families and running a brand aggregator. I would think there's somewhat similar. Lots of brand children running around as well. But before we talk about Growve and what you're doing now, Dave, you've got a pretty awesome background. So first of all, kind of tell us where you're from and then tell us the pre-aggregator story briefly of kind of what your background is.

Dave:

Yeah, sure. So I grew up in Utah, I'm based there just in the Salt Lake City area. And pre-Growve, I did my education at Utah State, then did an MBA at Brigham Young University. And started in 1999, so I'm getting up there, I'm pretty old. But started for another aggregator called Nutraceutical. And Nutraceutical was an aggregator in the health food specialty channel.

Dave:

There's lots of mom and pop health food stores throughout the country. And there was a consolidation occurring within the brands and it's ongoing today. So we felt like at the time there was opportunity to go in and buy a lot of these brands and bring them together. And we can talk today about some of the reasons behind that.

Dave:

But I was there for 21 years, led the M&A team. We did almost 60 acquisitions while I was there. For most of the time, we were publicly traded on the NASDAQ. We ended up being acquired by private equity in 2017. Then in 2019, our private equity firm sold 40% to a couple other private equity groups. At that time, the valuation was just under 650 million. And at that point I decided, if I'm going to do something a little bit more entrepreneurial, that it was the time to make a jump and wanted to stay in aggregation and in kind of the same industry, but something where I had even more decision making and in a place that's more e-commerce focused, maybe than Nutraceutical was at the time.

Brett:

Yeah. That's great. What a cool story. So I do want to look at why is the aggregator model so popular, but I guess for those that don't know what is an aggregator... And is an aggregator just a private equity group or is it different animal? So what is it? Then why are they so popular right now? Or is just, maybe they're getting more press and more air time right now?

Dave:

Yeah. And I think if you, if you go throughout almost any industry, there is consolidation that takes place as big companies come in and say, "Well, if I can group together several brands, there's an opportunity, there's a savings," because there's duplication in a lot of different functions-

Brett:

Centralized operations. So there's some cost cutting, cost saving measures that you can take.

Dave:

Absolutely. Then just bringing in maybe a high level of expertise in running a business and the efficiencies that come from that. So if you go throughout time and you look at industries, consolidation happens and right now, if you look at the Amazon world in particular, there's over a million and a half active sellers on Amazon. So it's very fragmented. There's lots and lots of Amazon sellers. And most of us know many of them, and they're doing a great job. And they're actually, in many ways, outperforming a lot of the large consumer product companies.

Dave:

As things move more e-commerce, bigger companies like Growve and others are looking at, here's an opportunity to come in and to do some consolidation and realize some savings and also provide some expertise to these brand owners that they're good at very good at Amazon, but there's some other areas that they may not know as well. If you look at things like traditional retail and diversifying off of Amazon. So companies like us can come in and provide some additional expertise. There's several reasons to do it.

Brett:

Yeah. It makes sense. So consolidation is beneficial because of cost savings because of leverage expertise. It just happens in industries where there's a lot of growth and where they're maturing a little bit. But then what's the exit or what's the bit of the endgame for an aggregator, isn't it meant to kind of either package up groups of brands and sell them to someone else or sell off the whole portfolio? Talk through that a little bit. What is attractive at the endgame with an aggregator?

Dave:

Sure. Yeah. And if just on aggregators themselves, if you look at... And I added up, I've got a list and I know of over a hundred aggregators...

Brett:

Just in the e-commerce space.

Dave:

...that are specifically focused... Just in e-commerce, primarily Amazon, but D2C e-commerce brands as well. And there's been a lot of money raised, there's a MarketPulse article recently that suggested in the last quarter, four months that two and a half billion has been brought in terms of capital into these aggregators ...

Brett:

Over what time period?

Dave:

Just the last four months. Yeah. So lots of money right now. So aggregators are getting the intention of a lot of investors and they're raising a lot of money at this point.

Dave:

So as aggregators, think about it, what's the endgame for an aggregator? And there's a number of things. One possible exit could be going public through a traditional IPO or a SPAC. SPACs have been kind of the buzzword-

Brett:

And that's a special acquisition corporation or company?

Dave:

Yeah. That's right. So it's a way to go public in a little different manner than a traditional IPO. That's a possibility. Another is you're going to see aggregators gobbling up other aggregators. At some point there's going to be aggregators that succeed and some that go away over the next few years. Definitely is not going to be the number that we're seeing today. The other thing is-

Brett:

It looks ... quickly and not to get us too off track, but those that fail is it going to be because potentially they're over leveraged and they don't gain those operational efficiencies or growth expertise or things like that? A failed aggregator, is it like a leverage problem typically? Or what would be your thoughts there?

Dave:

Yeah. It could be that. I also think just having the right team and really being able to manage the brands. It's challenging. In concept, it sounds like a good idea. The growth is coming from e-commerce, let's grab some brands and bring them together, but then running of them, it can be challenging. And do you have the right team in place to really grow them? So I think a lot are raising money based on a concept. The question is, are they going to actually be able to perform?

Brett:

And it is essentially we're kind of joking around. We accidentally kind of made the comparison of having a big family, lots of kids and being an aggregator, but you're bringing on these brands and into your group and they'll have different personalities and they have different teams and they have different styles. M&A is messy. It could be very good, very lucrative, but it's not just cut and dry, like, "Oh yeah, course. We buy this brand, save some money. Bingo. We're making money." It's complex.

Dave:

Yeah. And think about it too, a lot of aggregators, they buy the company's outright, then the founders who are passionate about their brands, they go their separate ways. So how do you replicate that passion? ...

Brett:

That entrepreneurial energy, the product design, the creativity. Keeping that founder around really makes a lot of sense, for sure. So cool. That was a little bit of a tangent, it was related.

Brett:

So exits, we can go public through a SPAC. Aggregators will buy other aggregators, because some aggregators will fail. Talk about additional exits or endgame.

Dave:

Yeah. A few others would be private equity groups are very interested in acquiring aggregators and adding them to their portfolios. Then another, and we've had interest from some of these groups as well is strategics, especially for aggregators that are focused on certain categories. Strategic may come in. Because if you look at some of these traditional CPG companies, they are having a hard time, they're not growing they're not seeing the growth from the e-commerce. They're seeing these 1.6 million Amazon...

Brett:

That are kicking their butt ...

Dave:

...outperform them. Yeah. They're interested and they want buy and they want to gain that expertise. So they're another option in terms of an exit for an aggregator, especially ones that focus on specific categories.

Brett:

Totally makes sense. We saw that recently. Actually, we get to hear him at Blue Ribbon, but Moiz Ali's a friend of mine, Native is a long time client of OMG. But that was a similar thing. Native built up this amazing direct-to-consumer natural deodorant brand. And they've since added body wash and toothpaste and sunscreen and some other cool stuff coming your way. But that was a strategic buy on P&G's part. P&G was thinking about building their own and they actually ended up doing that, but they wanted to strategically acquire Native for over a hundred million dollars. So it worked pretty well for Moiz and company, and it has worked great for P&G as well.

Brett:

So totally makes sense. Well, let's do this Dave, lots more questions about aggregators in general, but I want to talk about Growve specifically. So what do you guys do? Where do you focus and how are you guys different than maybe the average aggregator, if there is.

Dave:

Sure. So maybe starting out with where we're focused and just high level kind of where we're at today. We have 24 brands, or we will by the end of June. We're closing on four companies this month. We're about 250 million in revenue, close to 50 million of EBITDA. We're actually out and doing it and we have a proven track record. So we've done 13 acquisitions and 12 of the 13 are up. We can go to potential companies we were looking at acquiring and said, "Look what we've done historically in really growing businesses."

Dave:

But we're where we focus our time is... A lot of aggregators are agnostic and they'll buy almost anything. And for us, we decided fairly early on that we wanted to be focused on certain verticals. And that way we could kind of build our backend in all of our team around those categories. Then, like we talked about before, if we're more focused, we felt like an outcome selling to strategic would make more sense because the strategic doesn't want something that is participating in every category.

Brett:

Well, also, we go back to kind of the first thing we talked about, economies of scale and shared operations and leveraging expertise. Both of those are more effective if you're focused in a specific category versus you've got brands that are all over the place.

Dave:

Yeah, absolutely. So the six verticals that we're participating in, dietary supplements, pet nutrition, kind of personal care and beauty, healthy foods, active nutrition and kind of sports nutrition. Then we have household items, hard goods, but that are related to wellness and beauty.

Brett:

Got it.

Dave:

So if something falls in there, we have interest and we get lots of inquiries from companies and it gets tempting, "Oh, this is a cool business, but it's not in one of our verticals." And in those cases, we'll pass them off or give them references to other aggregators or other businesses that might be interested, but we've really tried to stay disciplined, even though it can be tempting at times because there's a lot of cool businesses and a lot of verticals.

Brett:

No doubt. Once you get pretty good at this process, you're good at the M&A process, you begin to see the potential in a brand that's maybe outside these categories and you're like, "Oh man. But if I just had a hold of that, I could make it grow." But just like with anything, discipline pays off. And for every potential home run, you might get by being undisciplined, you're going to have some stumbles and falls and some pain if you're not disciplined there. That's great.

Brett:

So looking at a couple things, recently, and this was probably just people that I'm hanging out with, but I think this was happening more and more, we're seeing people take exits or partial exits, I should say. So at Blue Ribbon Miami, this was one of the topics and several people on stage, several, which are actually clients of ours were just recently sold part of their equity. So they're taking some chips off the table now, but they're rolling equity and they're looking for an exit later. So kind of talk about what that structure typically looks like and kind of how you approach this with Growve, because you kind of alluded to it a little bit ago, right? Keeping the founder on, keeping that creative vision, that entrepreneurial energy, that product design genius, whatever that might be. What does that usually look like when Growve is acquiring?

Dave:

Yeah, sure. Because there's really a couple of options. There's a lot of aggregators that'll buy you out a 100% and that's probably more of the standard model, including from the biggest. Then you have the option of just kind of running your business and growing it on your own. And we made the decision early on that we wanted to be more of a hybrid. An approach where an owner could take some money off the table, de-risk themselves, but then also participate in the upside.

Dave:

So we allow founders to roll equity in their businesses and stay involved. And there's a few reasons they may want to do that. One, it allows them to de-risk but also capture some of the upside. As an aggregator, we believe that we can help brands grow through our expertise and the services that we provide and accelerate that in a way that they may not be able to do on their own.

Dave:

Then in most cases, we also think that brands will get a higher valuation by being part of Growve than they would on their own. And in most cases we think significant and we allow them to share in that upside. So some aggregators, they want to buy out a 100% because they want to capture all the upside and we say, "We're okay in sharing because we think that we'll do better by bringing the founders along because they bring the passion." That was really the thought process behind why we allow founders to roll equity.

Brett:

Yep. I love that. And it just seems like it's a pretty good time to do this. The multiples are pretty high right now. We talked about that a minute ago, Dave, it's just common knowledge right now. A lot of people buying e-commerce businesses. E -commerce has been exploding. It was growing before the pandemic, saw the huge spike during the pandemic and it's still growing now. So it's a hot place to be. So it kind of makes sense. If you can get a partial exit now, partner with somebody like Growve, grow more. Grow, maybe more than you would've been able to on your own. But then also later get a multiple that you wouldn't have gotten on your own, have a chance for a second exit makes a lot of sense. It can be pretty attractive.

Dave:

Yeah. Pretty compelling. You talk about it. I mean, there's over a hundred aggregators and by virtue of there's a lot of interest in acquiring brands. I don't like to say it a lot, but for sure it's increased the valuations that are being paid. That's just natural. That's a positive for people thinking about maybe wanting to do something. And there's also-

Brett:

Yeah. When you think about their 2.5 billion raise in the last four months. They can't just sit on that cash. It only works if they're going out and buying businesses. So you got some aggressive buyers potentially right now.

Dave:

Yeah. They're willing to do it. And on that note, it's always good too though, to be careful, there's a lot of offers that are getting thrown out. That could be pretty high valuations. One word of caution is just making sure it's from someone that can really execute. Because a lot of times someone will throw out a big offer to kind of get you under term sheet and locked up in exclusivity, but they aren't someone that can really execute on the deal.

Dave:

So it's always good to do your homework and make sure when you agree that you really know who you're working with before. Just a word of caution, because we run in that all the time, "Oh, I got this huge multiple." Then three months of diligence and going through the process and that buyer wasn't able to actually close on the business. So just something to be cautious.

Brett:

It's such good advice. I didn't get permission from this friend and client. I won't mention the name or the category, but long time friend and client of mine gone through about a two year process, I think of trying to sell. Just did do a partial exit and it was great. But before that had another experience that was not great. And it took like 12 months and he confessed after the interview, he was like, "I wanted to quit the whole business. It was so exhausting, so draining and then we didn't have a deal that I wanted to quit. I just wanted to quit the whole thing."

Brett:

I think that really speaks to what you're talking about. Don't just be attracted by a large offer because it's got to be the right partner, because there's just a high probability won't work out. Then you're just going to spin your wheels and go through all this time and end up frustrated and disappointed.

Dave:

Yeah. And maybe one other thing to mention, always ask for referrals, "What deals have you done? Let me talk to the founders and get their feedback." And we actually encourage that, because we try to be really good partners because we're going to be working together for a long time. And a lot of the deals we do actually come from referrals. So it's important to us.

Dave:

Another step I would recommend is whoever you're going to work with ask them about some other deals they've done and get some referrals and talk to people.

Brett:

Yeah. Really makes sense. I like that piece that's built into your model and I know a few other aggregator owners and one in particular I'm thinking of they just do full exits or full buyouts. That makes sense. That's kind of the norm. But when you are allowing an owner to roll equity, it's a partnership. You want this deal to be structured well, because you want that person to be motivated and that they're sticking around. So not trying to take advantage for sure.

Dave:

Yeah, absolutely.

Brett:

Cool. While we're kind of on this topic, what else should a seller be looking for? So if a seller's considering an aggregator, what other questions should they ask? Let's see some example or get some referrals, that type of thing, but what else should they be looking for asking?

Dave:

Yeah, I would say if they're wanting to roll some equity and stay involved long-term, give us some examples on how well businesses that you've done have performed afterwards. Like I mentioned, we've done 13 acquisitions, 12 of the 13 or are up. So how is their track record? Then what are some things that they can do to bring value? So we at Growve have built out a lot of different services that we offer sellers.

Dave:

So we have a traditional retail team. We're a vendor of record and most major retailers from Target, Walmart. All the drug, we have our own regulatory, we have manufacturing. We manufacture gummies and powders. We're vertically integrated. In most cases, save on their product costs, we can diversify where they're at and, and get them into other channels. So really thinking through, "Okay, if I partner with them, what do they bring beyond what I already you can do? If I'm really good at E2C, e-commerce or Amazon...," if that's all they can do, maybe they're not going to provide near the value that someone else. So just think through, "Okay, how can they help me from a value standpoint," especially if you're rolling equity, because you're going to be in tandem and working together and you want to make sure that they can actually add value.

Brett:

Yeah. 100% makes sense. Great. So what are you guys looking for? When you're acquiring a brand, because at OMG Commerce, we work exclusively with e-commerce brands, so high growth e-commerce brands working on the Amazon side, but also Search Shopping, YouTube, that sort of thing.

Brett:

Almost everyone that we talk to, they have a goal of an exit at some point. They want to sell at some point they may not exactly know when, they may not exactly know how, but they do want to sell. So I think it's beneficial for everybody to know what is an aggregator looking for. So as you're evaluating brands you want to buy, what is your criteria?

Dave:

Yeah, so a number of things. One and almost first and foremost for us is because of the rolled equity pieces, the type of people we want to work with. There's lots of deals out there and there's lots of ways to make money, but we want to partner with people, we feel like will be good partners back. We like to spend time with them and it's been a little bit harder with COVID and it's opening up more and more. Zoom is great, but let's get out there in person and get to know one another. That's a big step for us.

Dave:

Another would be, there's a lot of, what we call black hat. There's ways to manipulate Amazon that aren't within kind of terms and condition and those-

Brett:

Yep. So it's making the news right now, two big Chinese sellers getting shut down for fake reviews and such.

Dave:

Yeah. We want to shy away from brands that have done a lot of that. Brand owners need to know when you're selling, most buyers are going to the make you... They're going to require reps and warranties. They're going to require you to rep that you are compliant with Amazon's terms and conditions. So if you're doing a lot of black hat things, if it doesn't come up in diligence and you close and there's issues after the fact, and you're making a representation that you've been within policy, it could cause some issues even post close.

Dave:

So we spend a lot of time really vetting that. And we understand that, with Amazon and just the e-commerce world, there's probably some grays, not completely black and white, but there's some that are out there deliberately doing things that they know they're not supposed to be doing.

Dave:

We like to look at categories that we think are emerging. Just to give you an example on the dietary supplement side. So we look at the data and one of the interesting things we've seen with the data is over the last 10 years, the gummy delivery form has grown double digits and...

Brett:

Even with adults, which is really interesting.

Dave:

Yeah. People are wanting to take the traditional capsules and tablets. So we saw that trend and actually, this last year, it's up over 40%. So we spent a lot of time working on ways that we could provide innovation within that gummy delivery form. And we have a new brand that it's fruit-based gummies called Fruily that we just launched and marked-

Brett:

Which I've tried, by the way. I think you sent me some elderberry gummies and man, really good. Very tasty.

Dave:

You liked those?

Brett:

Yes.

Dave:

Good. Yeah. So the gummy 90% of it is real fruit. Most gummies are either the first ingredient, sugar or glucose syrup. I bring that up because for us, we're looking for things that we feel like have a lot of upward potential in terms of growth. And that we can even take them even beyond. If they're just on Amazon, we can take them beyond because it's more than just kind of a product. And I'm good at hacking Amazon that there's actually some viability in the brand, in the products.

Dave:

Those are some of the things that we really look at, as we do our analysis.

Brett:

Is it important to you that someone be on Amazon and off Amazon? Are you totally comfortable with an FBA only business? How do you guys look at that?

Dave:

Yeah, that's good. So more and more, we like brands that actually, as well have a direct-to-consumer component that they're great with their Shopify and things they're doing, Facebook. Just things that they're doing to drive traffic, beyond just being on Amazon. Amazon loves organic traffic and I think from an algorithm standpoint, you're favored if you have that. So we've actually invested and are investing a lot in kind of building out that infrastructure on our side, that it's not just about Amazon. We really want to be good just from a D2C component. So we're really trying to build that out.

Dave:

And we have an example of a brand, which they started just on their Shopify account, and it's really fed the other channels. I mean, it's fueled Amazon. We don't spend a ton on Amazon because we have all this organic traffic that Amazon loves. Then it's also helped us to take it into traditional retail. So I think the brands that are going to succeed and do really well long-term have to really be thinking about that D2C play. It's not just about Amazon anymore.

Brett:

Yeah. But thinking about that Amazon success, how do we parlay that to success with the Shopify store or BigCommerce or Woo or whatever the case may be, but your own D2C website and then getting into retail, having all of those channels makes you a much more attractive business. Much more sellable, ... multiple all of those things when that happens.

Dave:

Yeah. There's no question. Just if you can be everywhere the consumer is, and all of those touch points, you're going to command a much higher multiple, where you're just kind of single focus, single channel on Amazon, there's more risk. If you think about it from a buyer standpoint, if all you are is Amazon, what happens if your account gets shut down? Or...

Brett:

Exactly. Which-

Dave:

...maybe they ban that ingredient or a product? Then everything's gone. So there is risk with that. And that's why you see lower multiples for brands that aren't as diversified. So I think as brand owners, you think about that, "How am I able to diversify myself? If I'm just Amazon or I'm just Shopify, or I'm just traditional retail, how do I diversify myself into some of these other channels?"

Brett:

Great. Dave's been amazing. Just probably a couple more questions here. Been super insightful. And I love this topic. When deals go bad, when deals don't pan out, what is usually the reason or reasons why deals don't work out?

Dave:

Yeah. And we have those, they have many actually. We had one that we thought was going to happen that ended up not happening as of yesterday. And sometimes it's in diligence as... So we agree generally pretty upfront on general business terms, things like purchase price. Then before we actually close, we're going to spend more time doing diligence. And there may be things that come up, that we weren't aware of.

Dave:

And to give you an example, we were looking at a brand that offered gummies, a different brand. And they were getting all of their products, all their gummies made in China, but they weren't putting on the label, "Product of China." So they're getting away with it, but it's not compliant. So for us, there's no way to do that deal because we look at it, "Okay. We could make those gummies ourself, but it's going to increase their cost structure by 40%." So we would automatically jump in and their income would be significantly lower.

Brett:

Immediate impact to EBITDA. It would go down and that's a negative, obviously.

Dave:

Yeah. I would say, just if there's things out there that you know that maybe aren't quite right, be upfront because they're going to get discovered throughout the process. And it costs kind of both sides, not only is there a cost component and time. A lot of times there's ways to work through them, if you're upfront. In this case, we looked at it and said, "Okay, can we make them in the U.S.?" It was so much of a cost differential that we weren't able to do. But a lot of times, if you're upfront, we can work through the issues. But those are a lot of reasons why we end up not closing.

Brett:

You kind of need to air the dirty laundry, so to speak. Just get it out there because... Well, first of all, buyers hate surprises. You want to know up front. And if you know up front, you can likely work around it. Every deal has dirty laundry's the right word. But there's always negatives or there's issues or things in the business that potential buyer needs to be aware of. But if you bring it up front, usually a good thing. That's awesome.

Brett:

Dave, this has been fantastic. Couple things. One, do you guys have any resources or materials or should people just kind of follow you guys on social media and see what you're doing? How else can people learn?

Dave:

Yeah. So we actually have been pretty quiet as a company in terms of, we've stayed under the radar and kind of intentionally. And as of late, we've been more aggressive just in talking about ourselves. So you can definitely follow us on social media channels. You're welcome to email me if you have questions. I mean, you don't even have to be in the category if you've got questions. My email is dbunch@growve.com.

Brett:

Awesome. Thank you.

Dave:

I'm happy just to, you've got a question on something, just want some advice. I mean, we about helping people as well. You don't have to worry that, "If I reach out to Dave, he's going to try to pitch something on me," we're about helping people and we really help each other. Over the years I've kind of learned, I've got lots of friends in the industry and that's good to run things by each other and kind of work together. So we have that mindset.

Brett:

Yep. I love it. And just from meeting you and some of the other partners at Growve, genuine people, just down to earth, super solid. So really enjoyed getting to know you guys. Where can people find Growve online? Website, social media? Where can they fin them?

Dave:

Yeah. So we've got our Growve website, so just growve.com. All the social media, we're pretty active, especially places like LinkedIn that have a lot of business owners. So we can be found there. We generally now are doing, some press releases announcing various things. We just brought on a pretty high level advisor to the team that has sold multiple Amazon brands, a good friend of mine that we brought on. So you can kind of stay abreast of what we're doing by following us that way.

Brett:

Yeah, it's super great. I'm particularly interested in following aggregators one because I have a few friends that run aggregators, but I mentioned this at least in part on the show I think, my business partner and I, Chris Brewer, we're looking at potentially acquiring some brands, buying some smaller brands, helping them grow and then potentially selling to an aggregator. That was actually an idea that a friend of mine gave me. We've been talking about it for a while, but such an interesting space.

Brett:

I'm just grateful to be in e-commerce, where things are growing and the trends are right. And it's a lot of fun too. It's just a really fun place to be.

Brett:

Awesome. Well, Dave, thank you again for spending the time. It's been really great and we'll have to do it again some time.

Dave:

Yeah. Thanks, Brett. Really appreciate you having me on.

Brett:

Absolutely. All right. And as always, thank you for tuning in. We'd love to hear your feedback. Leave us that review on iTunes. Shoot us a note, connect with us on social media and with that until next time. Thank you for listening.

‍

Episode 181

:

Deacon Bradley - Sharp Business Growth

Growth Multipliers vs Growth inhibitors

In this episode we talk about Growth Mulitpliers vs. Growth Inhibitors. Some of these might surprise you.

Deacon helps founders & CEOs create profitable, scalable business growth through coaching and consulting programs at SharpBusinessGrowth.com. He's led teams overseeing $50 Million in marketing campaigns, and delivered revenue growth results recognized by Inc. 5000.

If you look at wildly successful DTC brands compared to the rest, you definitely find some differences. But those differences aren’t always what you think. Sometimes really great products fail. Sometimes insanely smart entrepreneurs never reach their full potential. Sometimes great marketing tactics alone just aren’t enough. Deacon Bradley is one of those guys that you feel smarter just from one conversation with him. In this episode we talk about Growth Mulitpliers vs. Growth Inhibitors. Some of these might surprise you.

Missing the connector of brand and strategy that make your team and your agencies to be successful
The story of an awesome DTC product that never fully figured out who they were
The power of Vision and commanders intent
How to be a visionary that integrators love to work with
What “knowing your numbers” really means and really looks like
How to avoid being a “genius with a thousand helpers”

Deacon Bradley

Via LinkedIn ‍

Sharp Business Growth
Sharp Business Growth Podcast

Mentioned in this Episode

Tier 11

“Rocket Fuel” by Gino Wickman

“Traction” by Gino Wickman

Justus Murimi

“Vivid Vision” by Cameron Herold

“Dare to Lead” by Brenê Brown

Craig Groeschel

Episode Transcript:

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, I have a fantastic guest. This guy I've known for a long time. And I was just thinking about how do I best describe this guest? And I believe my guest today, Deacon Bradley, is one of those guys that you just feel smarter after you have a conversation with this guy. You feel smarter, you feel better equipped to tackle business issues, you feel like you've got things figured out a little bit better, you're ready to charge ahead.

Brett:

Deacon and I first worked together, maybe a couple years ago now, we were both serving the same client, but from different agencies. So OMG Commerce was helping this client with Google and YouTube ads, Deacon at the time was with Tier 11 and Ralph Burns. And so they were working on the Facebook side and I was like, "Man, this guy is smart." And then we reconnected in Austin just recently, had a chat, and we thought, "Man, let's just do a podcast together. Let's talk about some interesting things." And so our topic today, we're looking at growth multipliers versus growth inhibitors. So how do we multiply growth? And how do we identify these things that are really tripping us up and keeping us from growing. And so with that, Deacon, welcome to the show, man. How are you doing? And then thanks for coming on.

Deacon:

Awesome. I am pumped to be here. And I pumped about this topic. And Brett, I remember, this comes up when we were in Austin hanging out, we had talked about this stuff, and really it comes up any time I talk to somebody who is really involved with an agency, so they're behind the scenes of tons of different brands, they get to see all the stuff. And as soon as we started talking about growth, things that are really accelerating growth and things that are inhibiting growth, it's like we're both just so engaged and fired up and both excited and frustrated at the same time as we're seeing all these businesses. So I'm really excited to just let people in on some of those things that we see that really make the difference, because it's not always the things that the gurus are telling you.

Brett:

Yeah, it's so true. And then what's interesting, that the agency model, and you're on your own, you're independent now, you're consulting, you do a lot of cool things which we'll dive into. But being in this agency world, we see a variety of businesses. We're working with just high-growth, rapid-growth businesses, great brands. But sometimes you really get a clear picture, it becomes clear, that growth isn't just about having the best product, and growth isn't just about having the best marketing, it's also the founder behind the company and how the team operates. It's not about who's the smartest per se. So anyway, we're really excited to dive into this with you. Yeah, you and I were having a chat in Austin, and we were like, "Hey, this conversation would make for a great podcast. Let's try to recreate this thing."

Brett:

And so, let's talk about a couple things. What are some of the growth inhibitors you see right now? And I know you've had some recent conversations with CEOs where you're like, "That's going to inhibit your growth for sure." But what are some of the top lids to growth, the growth inhibitors that you see?

Deacon:

Sure. Funny you mentioned that, I literally just got off the phone with a CEO right before this who is running a multimillion dollar business, they've been successful in the retail, they've been successful online, and the CEO is working to figure out how to take things to the next level. And in the process of this, they're reengineering some things. So they're bringing in agencies, they're sending other agencies away, they're bringing in new team members and trying to put the pieces together. And when it comes down to it, though, I'm looking at it from the outside a little wary, and part of me is like, "I don't want to be discouraging." I'm like, "You are missing something really important, and that is, you're looking at these pieces that you're bringing in as like, oh, and then I'll bring in a Facebook agency, and then I'll attach the Google agency, and then the Amazon agency plugs in over here, and growth." That's it. That's as far as you've thought.

Brett:

Yeah, like ingredients in a cake. I'll just throw a little flour, a little sugar, a little butter, hey, presto.

Deacon:

Exactly. And Brett, now that I'm saying this out loud, you and I were talking before we hit record about another CEO that both of us had talked to about this, and I think they're looking at it the same way. It's like these are ingredients in the cake, a dash of Facebook, a little bit of Google.

Brett:

Let's go grab my marketing over here. How hard can it be? Just come and do this thing.

Deacon:

Yeah, and so I think that's one of the biggest inhibitors that I see is just that perception of what agency, or it's almost like it's a fantastic tool but you're using it wrong. If you're just plugging them in and it's like you're putting too much on them as far as what they're able to create, what their responsibility is, stuff like that. It's just I often see it's a great tool that's used wrong.

Brett:

Yeah, and obviously, we've both been in the agency world, and I love it when a client says, "Hey, I could really use some Google and YouTube help. I'm going to talk to OMG." We love that. But just plugging in pieces doesn't fully work. Getting an agency or a director of marketing on your staff that really understands what you're trying to do and that's a good fit for you, a good personality fit and all that, that's super important. But what's the connector that you think people are missing? Because it is good to find the best Facebook agency and the best YouTube agency and the best Amazon agency and plug those in, but what's the connecting piece that's missing? What's that growth multiplier that needs to be there for that to work?

Deacon:

Oh yeah, this one, I don't see it done often, but when it's done, it is such a huge difference maker. And I don't want to put a job title on it, because then people will just go put up a job post with that title, and they use it just like one more ingredient. So it's not a job title, it's really just a mindset, and a role, and what this person's seat is on the bus. So imagine you've got, just to simplify, let's say we've got Google and Facebook going. The person that is missing is, these are usually two different agencies, even if they're one agency doing both things, you still need this person, which is-

Brett:

It's usually different people, right? You don't have the same...Facebook and Google. It's a different head space. It's usually with a different person even if it's the same agency.

Deacon:

Yes. So what I've found is that typically, it is so difficult to run paid media these days that you have to be a real expert on that platform. And so Brett, like you were saying, it's two totally different people. And if you have never been one of those people, let me just let you in on a secret, they are heads down figuring out the algorithm, looking at stats, they're deep in the weeds of operating this thing.

Deacon:

What they're not thinking about is your brand or your customer journey or all of these things that are actually the secret sauce to making direct to consumer work. And so this role that I'm describing is like, "Oh, this is the growth multiplier," is somebody who's thinking about that stuff, who's saying, "Hey, this is the product that we're selling right now, and we know that we want to be selling it because it's a great customer acquisition product. And when somebody buys it, I know I've got an email team lined up that's going to sell them the next thing, and in 30, 60, 90 days, then I'll see my profit so that I can grow and scale again." That is a level or two above where a typical paid media buyer is thinking.

Deacon:

And so, the growth inhibitor is hoping your agency's going to think of that for you, the growth multiplier is taking ownership of that and putting someone in that chair who spends all of their time and effort just thinking about it. They understand your products, they understand your margins, they understand your customers, and where you can acquire customers, and actually grow your business in a strategy that all works together.

Brett:

Yep. I love that. And I think the right agency, even if their focus is more on the media buying side, they can give you insights, they can give you suggestions, they can maybe let you know when, "The brand message here isn't really jiving or this isn't really connecting for me." But usually, they're not the one driving the strategy. And so you need either someone on your team or you need an agency or whoever that can say, "This is an ownable space in the market. This is our position in the marketplace of what our product does and who it's for, and where are we going, and who are we serving, and what is this brand going to be." And then your agencies can just help you get there faster and help you accelerate that growth.

Brett:

But we experienced this with the shared client. Obviously, I won't name names or disparage anybody, because this client that we worked with together is super, super smart. But they even had an issue with this. They had three or four or five products, and we're like, "Well, what product do we buy when? And how do these products ... Is there a journey? Do I buy this product first and then I graduate to that product?"

Deacon:

Yeah, we were making it up.

Brett:

"Or do I use this product on this?" And they're like, "Well yeah, we're ..." And then like, "We never got an answer." And I think the bottom line was, nobody knew.

Deacon:

And you know what's funny about that situation, Brett, is that your team and my team were on calls together without the client. And we were essentially trying to fill in-

Brett:

We were trying to figure it out.

Deacon:

... this role that we just described because nobody was doing it.

Brett:

Yeah. We could feel it in the ads. There were some great ads. We were spending a lot of money on ads profitably, but we were like, "This is missing something, so let's see if we can inject it." And then we couldn't fully, but yeah, it was super interesting. So I love that. What are some other growth inhibitors? What are some things that keep entrepreneurs and D2C brands from growing?

Deacon:

Another one, and this is from the last call that I was on, and as he was talking through it all, I was like, "Man, how do you not know this yet?" And then I thought back a little further, and I was like, "Oh, this actually comes up all the time." And that's just not knowing your numbers.

Brett:

Yeah.

Deacon:

This is a hard topic. A lot of CEO leaders are what you would classify as visionary. And that's a fantastic, it's an amazing gift. It's not a gift that I have. I'm the integrator in most partnerships. So visionaries will often either just totally skip this numbers part, or they'll look at it too, they're zoomed out too far. So for example, a CEO I'm on a call with is like, "Oh, well, we ran the numbers for last year and we had a CPA of 28." I'm like, "Okay, I'm not sure what to do with that. That's really big because you sell about a 100 different skews at price points from $25 to $500. And I'm not sure what to do with a CPA ..." Oh, and that was also blending multiple channels together, so I was like-

Brett:

And blending cold and warm and remarketing, but that's blended, blended. That is a number that's meaningless.

Deacon:

Yes, exactly. And the sad part is somebody went to a lot of work to compile a lot of channels to come up with that number that's not very helpful. And so by not knowing your numbers, I would consider even though this CEO had a specific number when I asked for it, I don't consider that knowing your numbers. Because what I'm really after is, well, let's talk new customers, somebody who's never bought from you before, how much does it cost to acquire one of those? Or interestingly, what I want to know is, so Brett, you and I and agency land are interested in how much does it cost for us to get one of those? If I'm the CEO on the other side of the wall, the way that I'm thinking is, what can I afford to pay to get one?

Brett:

Yeah.

Deacon:

And that's the reverse. It's like, "Hey, Brett, or agency that I've hired, I can pay $100 to get somebody to buy this thing." That's knowing your numbers because you know that when they buy the thing, you're either going to profit a little bit right away and a lot later or however it works in your business model.

Brett:

Break even now and profit later, whatever the case may be.

Deacon:

Yeah.

Brett:

And I remember this fantastic Dan Kennedy quote from back in the day where he said, "He or she who can afford to spend the most to acquire a customer wins." And that if you unpack that a little bit, that's not just saying, whoever throws the most money on a problem wins. That's not what it's saying. It's saying the person that can spend the most to acquire a customer wins. And then what that means is, I can profitably, you can only spend $80 to acquire a customer because your back end and your upsells and your lifetime value is low, but because well, mine is structured, I can pay $120 profitably to go get a customer. So I've got more channels, more tools, more at my disposal, and I can scale a lot quicker than you can. And so that's an interesting way to look at it for sure. But you've got to deeper than that. "Yeah, my blended, blended, blended number is $28 CPA," that's email and that's organic and that's YouTube and Facebook, and not a helpful number.

Deacon:

You're reminding me of a moment, or one of my big takeaways. So the event that we were at in Austin was essentially an event for an investment fund, lots of ecommerce brands there, and so there's lots of investors there. These are people who had put their money into a fund, and the ecommerce brands that received the investment were there, and we're all working together to collectively grow. And so, one of the things that I thought was really interesting was, a big takeaway that I kept hearing over and over was, it was so fascinating to hear these investors saying things like, "I want to free you up to stop trying to make a profit on your first sale, because that is killing you."

Brett:

It kills your growth. It totally kills your growth, yeah.

Deacon:

So the growth multiplier, I think is, it's knowing your numbers and then also that component of that mindset of, "This is how my business works. I break even on the first sale, I go into the whole X amount on the first sale," whatever it is for your business, and then just really committing to that and just relaxing into it that, "This is our plan, and I know that it works, so let's go do it."

Brett:

Yeah, it's interesting. I think sometimes there's maybe this tendency, I know I've done this as a CEO that, I want to go after the hardest problems, the most complex things. And I really like media, I still get into some of the weeds, even though I'm running the company, I'm still the CEO. I've got a great integrator, like you Deacon, we have Sarah Still on our team who is an amazing integrator, so need that, but I'm still casting vision in high level growth.

Brett:

But I like to get into the weeds of things. I like media, I like YouTube, I'm still tinkering and coming up with new strategies and stuff. I tend to go to the hardest problems, and on occasion, I think sometimes the numbers seem disarmingly simple or they're like, "Oh, that's just addition," or "I'll mold it." It's like, "That's easy. I don't need to focus on that. I'm going to focus on this problem." Or, "We're thinking high level and just doing the fun stuff." But the numbers and knowing the numbers at the level you're talking about and that we're talking about, that is the business. That you have to know that.

Brett:

And then once you do know that, and you're comfortable then yes, settle into it. We've got a client who's so good at this, where they look at, they can acquire a customer for about $120, and the initial purchase is less than 50, but they know they just get their systems dialed in, that that's going to be a very, very profitable customer two or three months down the road, and so we can just hit the gas pedal and go. But a lot of people aren't at that, aren't at the level they're at in terms of knowing the numbers.

Deacon:

That's awesome. Yeah, so they're going well under the whole $70 roughly, and they hadn't even figured out the other stuff, but yeah, that's really cool that they have that dialed in.

Brett:

So sometimes it's like the initial offer is 50, but they have some upsells that gets the AOV then they usually AOV up, but they just know their LTV even over the next two to three months, and so, going hard on that, which is-

Deacon:

I would just point out to everybody listening that, Brett, this came to mind, and I can see Brett's face light up as he's talking about this, this sounds like a fun customer to work with. So not only is this a well-run business, those are numbers, but it's energizing everybody on the team, everybody. Brett's not even on the team, and he's like, "Yeah, listen to this guy."

Brett:

No, actually I'm still on these calls because they're so much fun. But we were bringing some of our account managers, which in our company our account managers are more like the quarterback for the client. They're coordinating communication and reports and meetings and stuff, and so I suppose we'll bring in new AM just to listen to these calls, because they're blow your mind, and we get so deep into the numbers, and they've got this cube that they run, and we're triangulating data from multiple sources. It's super fun, actually, super nerdy. But yeah, I do light up a bit about that stuff.

Brett:

Cool. So, we've got to have this overarching strategy to connect our agencies, that's a growth multiplier. We can't just plug things in and hope that they work, we got to know our numbers. What are some other growth inhibitors that we need to switch and use a growth multiplier on?

Deacon:

One that comes to mind to me is, vision. And this can get a little, it can sound a little fluffy or unimportant to the hardcore business person, but the more time I spend around high-level, high-growth businesses, really successful business leaders, the more evident it is to me that vision is the critical component that all of the things we've been talking about, they all rest on that.

Deacon:

And so as a growth inhibitor, it's very clear now with the amount of experience that I have at this point, I can tell when I walk into a business and it's lacking that vision. And a lot of those symptoms include things like, surprise, surprise, not knowing your numbers, or not having a clear marketing plan or idea, or not having a vision for, "This is exactly where this business is going. Here's how we're going to get there. And here's what it's going to look like. That's how we'll know that we're there." When you're missing those things, it's a huge inhibitor to everyone on the team, but also we've been talking about some of the little specific things up until now, and I think a lot of them just are a symptom of lack of vision.

Brett:

Yeah, where are we going? What is the goal here? What is the roadmap? And people need vision. You're integrators and guys like you need that vision, agencies need that vision. I remember you were mentioning that Ryan Moran, Ryan Daniel Moran is one of the best that you've been around at this. You can unpack that a little bit. I think you guys had a conversation in Austin, well, you both live in Austin, so it was probably there, but you guys had a conversation recently that where you were like, "Wow, that is a perfect example of vision." I know you probably can't get into too many of the specifics for confidentiality purposes there, but describe that. What does a good visionary look like?

Deacon:

Sure. I was sitting down with Ryan and we were talking about one of his ecommerce brands. And this is a brand that has really, really high potential. This could easily a 20, $30 million a year business. And so that's the far off destination. What I just described to you though is, people go, they either go, "Wow," or they roll their eyes like, "Yeah, everybody says that." Because it's not a vision, and I wouldn't even consider it a destination. But what Ryan does so well that gets people like me, the integrators, really excited. And if you're wondering what we're talking about, by the way, with visionaries and integrators, I love the book Rocket Fuel, that unpacks that whole model. I don't know if it originated there.

Brett:

Is that a Gino Wickman?

Deacon:

Yes.

Brett:

Is he the same guy that wrote Traction?

Deacon:

That's right.

Brett:

Yeah.

Deacon:

That's right. So I'm like a textbook integrator and Ryan's like a textbook visionary. And so, what I just was really enjoying in that conversation was, I can see the down the road the big $20 million, whatever, but that's real fuzzy and fluffy and nobody knows how to get there. But what Ryan was able to do so well with a clear vision was, unpack like, "Six months from now, this is what the business is going to look like. This is the business model. This is how we'll acquire customers. We'll use these products. They lead to these other products." And so, while there might be like 10 or 15 skews, he was even lining up like, "These are the customer acquisition methods. This is about how much we'll be charging for products. This is how many people we'll have as customers, and is going to result in this kind of revenue." And so as he's saying that six months out-

Brett:

"These are the kind of influencers we need to work with...

Deacon:

Yeah.

Brett:

... was thinking about that level, yeah.

Deacon:

Exactly. And so as the team is hearing this, what we're able to now envision is, "Oh, okay. I know who needs to be on the team. I'm starting to envision like, how I'll need to be testing ads or what kinds of funnels need to be involved here," all of this stuff. And that was six months out. He backs it up, "So three months we need to be here, at two months, we need to be here." And so by the end of that conversation, I could have walked out of the room and hired the next three people really confidently.

Brett:

Yeah, you could have started running that company from that one conversation pretty much.

Deacon:

Yes. And what I was getting a sense from this, Brett, from what you were just describing about the customer example you gave a minute ago about knowing their numbers, to me, they must, I bet they have a really clear vision and know exactly where they're going.

Brett:

They do, they totally do. Yeah, and it's pretty exciting. Yeah, and so we talked about this a lot. I mentioned Sarah Still, our COO, she and I talk about like, "How does this role break down? What does this look like, visionary versus integrator?" And really the visionary or the CEO is often more about the what. "This is what we need to do and where we need to go." And the integrator is about the how. "Okay. Well then this is the who behind it, and these are the tactics, and this is how we get there." But yeah, you got to have that clear vision and it's just super, super important.

Brett:

Any advice there? Any tips or strategies, or resources? We mentioned Rocket Fuel, also the book, Traction, same author, great books. Any other resources for the vision piece? Or anything we've talked about so far, any resources, podcasts, tools?

Deacon:

Yeah, so Justus Murimi, who, I think it was on this podcast also ...

Brett:

Yeah, I interviewed him a couple weeks ago. I don't know when that will be released and you know all that stuff but yeah, that dude's awesome. I love that guy.

Deacon:

I love Justus too. I talk to him almost every day. Him and I have talked about this a whole lot as well. And one of the books that he turned me on to that I thought was helpful, was Vivid Vision. That's, I'm totally blanking on his name, Cameron Herold. So Vivid Vision is a good book. I found it shockingly detailed if you're reading it, and you're like, "Wow, this is a really detailed vision." But it was also really helpful because it gives you that picture of what does a good vision look like?

Brett:

Nice.

Deacon:

And the other thing I would mention is, this isn't necessarily a resource, but I am, and I feel like I'm swimming in a sea of visionaries and they're all looking for integrators. And as an integrator, it's interesting though, because the integrators are really good at figuring out which visionaries they want to work with. So if you feel, if you're identifying like, "Oh, I'm a visionary, and where do you find these integrators?" One, I'd say they're everywhere, but two, the thing that they're attracted to is your vision. So stop asking for integrators would be my advice and start sharing your vision and places where you're stuck in places you could use help, and integrators will just pop up, because we love to solve problems and help move things forward.

Brett:

Yeah, and so I'd be curious from your perspective, because I think sometimes there are visionaries and then there are just dreamers, "I just got all kinds of dreams than ideas and wildness and I'm all over the place." What type of visionary are you looking for? So, an integrator is saying, "Ah, that's a clear visionary, that's the type of visionary that I would like to align myself with and work with." What are some of the elements we're looking for?

Deacon:

I love that you described it as dreamer, because Justus and I had a 45-minute conversation recently or where I was asking him the question and I was like, "Sometimes we're talking to these visionaries and I just want to dive out of a window and run down the block." And sometimes I'm like, "I'll work for you for free." And I was trying to figure out what the difference is, I think he nailed it right there, Brett. It's like something inside me is going like, "Dreamer. They view you as the task doer. They're just going to heap tasks on you and more tasks, and it's like going to be this disconnected jumble them lobbying greasy watermelons at you one after the other."

Brett:

Crazy one though, and so ah And I'm a visionary, but I'm also pretty practical, so I think there's some balance there. But I've also been around people that'd be like, "Hey, I got this idea, go do this thing, research these things and do all this." And then integrator or whoever goes and does that, and they come back and then the visionary is like, "Yeah, I don't really care about that anymore. Let's go do this thing." And then they're like, "I just killed myself doing something and now it doesn't matter." Yeah.

Deacon:

Yes. If you're an integrator, that is very disrespectful. That's how that feels.

Brett:

Yeah, like you don't care about my time. Yeah, exactly. Yeah, it's so interesting. And I think that's the difference where, I love this book. I talk about it a decent amount on the podcast, it's called Made to Stick. And they talk about this concept of commander's intent. And a good commander's intent is something that's pretty simple, but also pretty clear, pretty concrete. It lets you know where to go.

Brett:

So the commander's intent is, "Hey, we will control this hill in this region by this time." Commander's intent, clear. Okay. Now there's probably a million things you got to think about on how do we get there, but that's the intent, we're going to go own that hill. And that's not going to be changing back and forth. Maybe your tactics are going to change back and forth. But I think a good visionary is good at delineating that commander's intent would be my thought.

Deacon:

I love that. I never knew where I learned about commander's intent, but now I remember, because I love that book, but it's been probably 10 years since I read it at this point. One of the things that we use the lot with the last team that I was leading was from Brene Brown's, Dare to Lead where she-

Brett:

Brene Brown is awesome. I've not read that book, but Brene Brown, she's amazing.

Deacon:

One of the concepts from that is, she always talks about paint done. And so we had just built into our team culture. If somebody's saying, if Brett's like, "Yeah, I want to be in charge of a hill," I'd be like, "Paint done for me, Brett." And you would describe the thing you just described like, "It's that hill over there, we're going to control it. We're going to, I don't know, build a campfire on it." Whatever done looks like the Brett, is essentially, we built that culture of being, of making it clear of describing clearly what that commander's intent is. And I think that has made all the difference as far as the leader being able to step away, you can imagine that, and actually have your business move forward. And also just have things meet the expectations of where we're all going. But yeah, I love that concept of commander's intent. I think it's really important to actually getting where you're going. And if you're a visionary, develop that, it's hugely valuable.

Brett:

Get crystal clear on that commander's intent and it's going to free your people up, it's going to guide them, it's going to inspire them and motivate them, versus some of the other dreamer type stuff really demotivates the team. So we were talking about team a little bit. I know that's something you mentioned when you and I were prepping a few weeks ago, that you like to focus on the team aspect, what are some of the elements of team that you like to drill into that are either growth inhibitors or growth multipliers? What would you say about a team?

Deacon:

I was talking to a friend about this the other day. So I have just started a consulting engagement with a team that I haven't worked with before. It's an incredibly talented team, but it's just really different than teams that I had operated with in the past. And after I'd been there a couple of days, I was talking to one of the leaders on the team and they were just picking my brain about what I saw, and I was like, well, if I had to describe it, the team is incredibly talented, but it feels like genius with a thousand helpers. And that's where I see a lot of businesses go, and it's-

Brett:

And that's like, isn't that a concept from Good to Great and Jim Collins. I think I've at least heard him use that term before, a genius with a thousand helpers, that's not a sustainable business.

Deacon:

No, it's a recipe for burnout. And so that's often one of the first things that I look at in the business is, how to break that link, that dependency between the leader and the stuff that's getting done. And one of the important tools to that really is what we were just talking about with commander's intent. I think that's an important tool. It's bringing in an integrator, and really just finding ways to, so that you can stay in vision mode as the leader, and then the vision gets carried out and done without you.

Deacon:

And that without you part is always scary and hard, especially for visionaries who have a really clear vision and you're like, "But it has to look just like this." It can if you describe it well and you build a team around you that can actually do it. And so that's really one of my passions and the things that I love is, just unlocking that puzzle and figuring out how to get work done through other people.

Deacon:

And what I've found is that it all starts with vision and it all starts with that leader, and then just assembling the team and getting the right people on the bus and in the right seats, you can solve it for any business. And it's really fun and really rewarding. And Brett, I know you've done a fantastic job over at OMG. You guys are growing like crazy.

Brett:

Thanks man. And it's one of those things where, I really didn't know how to build a team in the beginning. I'd build some ministry teams and volunteer teams and stuff like that, but I made a lot of mistakes, but we have the right people and a good culture. And I think that's the glue that holds it together that attracts the right people and keeps us growing and going forward. But yeah, we're over 50 now and adding people like crazy. I got two interviews early next week and continuing to grow.

Brett:

But this piece is so important, getting the right team in place. And one of the things, I think this actually came up in my chat with Justus, but I'm a big Craig Groeschel fan. He's a pastor of the church that we attend, but also I listen to his Leadership Podcast and his books and stuff. And in his Leadership Podcast, he says, "Hey, you can have growth or you can have control, but you can't have both." And I think I have a tendency at times, dig into all the details and then I become the bottleneck. And it is a little scary and a little weird for this area of the business to be growing. And it's like, you're not doing anything, it's all your people.

Brett:

Weird at first, but then after a while it's kind of freeing, and then you realize, "Hey, my role is just to help them grow, and help them when they're stuck, and bring out the best in them. That's the most productive thing I can do. That's the growth multiplier from my efforts is, not doing it, but helping them do it better and helping them get unstuck and things like that." But it's sometimes tough to release control or going back to what you said of, "Well, no, I've got this clear vision, but it has to be done this way." And that's usually a real lead to growth.

Deacon:

Yes, 100%. I really liked how you were just describing that. Brett, what I've found as I have grown in my own career and just been around other successful leaders is that, and this is one of those things that sounds fluffy to say to somebody who hasn't yet experienced this, but so much of it is mindset and just how you're thinking about things, and what you were just describing there, Brett. When I'm listening to you, I'm like, "Oh, Brett, said that," results through others is your focus right now-

Brett:

Yeah, it is.

Deacon:

... and developing the people, not developing new house, you're developing people. And that's really rewarding and really cool. And your growth speaks for itself that, as you shift your mindset, things are going well.

Brett:

Yeah, absolutely. And it's really fun. And I think it's just a matter of shifting your mindset. I still like to use a Gary Vee term like clouds and dirt. I still like to get in the dirt on occasion just with certain things, but now I'm taking more of the mindset of, I'm not digging into the dirt so that I do it, I'm digging into the dirt so I can uncover something and say, "Hey, did you guys think about this? Did you look at this? Is this helpful?" Again, more looking at, how do I use the detail to further the team and enhance what the team is doing as that's how I'm looking at that.

Brett:

So, awesome. I love team. And this has been my focus and what I've been thinking about a lot lately. And you and I have both come from the agency world, so how do we apply this to a marketing context? So, as we're growing agencies, we're growing these or rather growing D2C brands, I'm growing an agency, but as listeners are growing a D2C brand, what does this look like? How do you successfully plug an agency into what you're doing or how do you successfully plug the right team in? Unpack that just a little bit, if you would, Deacon.

Deacon:

Yeah, I love your thoughts on some of those too, Brett, because as I'm thinking through this, I'm like, all right, well, when do you ... There's two questions. There's, well, when is it time to hire an agency or what's a growth inhibitor or a growth multiplier in this context? One of the growth inhibitors that I see sometimes is actually hiring an agency too soon, if that makes sense.

Brett:

Yeah, it totally does.

Deacon:

And I say this because a lot of times brands will go talk to agencies and they're like, "Oh, sorry, we don't work with people until they're at X level." And one of the interesting things is like, well, you could suppose that they're just too big and mighty to take on customers that are that small at this point, or you could suppose that they have found that there's actually a better way for you to grow at that stage. And I've always been in the second boat. And, Brett, I love your thoughts on this, but I always view it in the beginning stages it's simple enough and there's few enough moving parts that I want you to do it yourself, just to figure out something. Get some traction around messaging and offers and stuff like that. So it's almost like stage zero, I would say, don't hire an agency, go get your hands dirty.

Brett:

Yeah, I really like that advice a lot. And I think there's a few ways to look at it. I think a lot of agencies, we do this, even when we're like, "Hey, you need to be about this level of spend, this level of traction in these platforms before we can really help." And part of that is, "Hey, there needs to be some data there. We can really accelerate growth when there's data. But also part of that is, you've proven you've got a good offer and you've proven you've got a product that people want." And I love this, have you seen the movie Hitch with Will Smith a little bit older now?

Deacon:

Yeah.

Brett:

I love this part in the beginning. He's consulting with this dude and trying to help him so that he can meet a lady. And he's just talking about, the guy that Will Smith is coaching, he's like, "Well, I'm this, or I'm that," and Will Smith grabs him and says, "You are a very fluid concept right now. We need to get control of this." He was slapping him. But I think sometimes businesses are in that stage where it's like, your brand and what you're doing it's a fluid concept right now.

Brett:

And certainly we'll always be pivoting, tweaking, evolving, things like that, but when you're still really trying to figure things out, you're trying to figure out who you are, that's maybe not the best time for an agency. Maybe that is a time to talk to an agency, reach out to a company like ours, we're happy to still chat. But sometimes a good agent will say, "Hey, go do these things first. Really nail this product and an offer that goes with that product, and let's get some other products with it. And once we can prove that out then come back, then we can really help you." Because we do see that. Certainly there's an area where if you're only spending a couple 1,000 a month on ads, our fees are more than that, so why would you do that? But I think there's also this moment where you're like, you need to tinker, you need to experiment, you need to figure out exactly who your audience is, who your products are and things like that.

Deacon:

Yeah, I love that you mentioned an offer that works because that's like, it's really important.

Brett:

It is, yeah.

Deacon:

And you don't want to way overspend to find out that your offer doesn't work, and it's something that you don't have to be a genius at ads to just answer that one question. And what I see a lot of times with business owners in the early stages is, this rush to outsource everything. I'm the CEO, I shouldn't be inserting whatever menial tasks there. But that mindset can also be I think a hindrance to you moving forward. So stage zero I always recommend don't hire an agency, go do it yourself. You're going to move faster, you're going to spend, you're going to save money for your business and you're going to learn a lot.

Brett:

Yeah, exactly. And then once you have that data, once you hit critical mass, you've got some traction, but you know, "Hey, I don't now have the expertise to take it to the next level," that's when you go find your agency, that's got a proven track record of doing that, of taking someone from where you are to the next level. And I think that's exactly the way you approach it. That's beautiful.

Brett:

Awesome, man. Well, this has been a blast. I can keep talking to you for hours. We'll have to do this again sometime for sure. But Deacon, if people are listening and they're saying, "I need someone like deacon on my team, I need to, or at least I need a chat with this guy and see if this could work." How can people find out more about what you're doing? Also, you just launched a podcast recently so talk about that, but yes, talk podcast and also how can people find you?

Deacon:

Awesome. Well, everything that I am sharing, you can find at sharpbusinessgrowth.com. That's my home base for right now. And yeah, Brett, you just mentioned, I launched a podcast with Justus. Justus has done this show.

Brett:

I did not know that ... Now, I've got to subscribe to this podcast and get it going.

Deacon:

Surprise. And a lot of this came from us, when we were hanging out in Austin and we were having all these really just interesting fun chats with investors, with business leaders, with agency owners and all these different people. And this is where I spend all of my time, where Justus spends a lot of his time, and so really we just wanted to create a podcast and just share candid conversations like, Brett, you and I just had right here, because it's not shared enough. It's there's too much like, I don't know, tactics and shiny objects out there, and not enough of ... What I think is really interesting, Brett, is like, when we hang out, it's like businesses would love to know what we're all talking about right after they pitched us. Isn't that exciting?

Brett:

Yes. That's like, if you could be a fly on a wall when someone's unpacking your pitch you just made to them, that's super helpful. So it sounds like that's what you and Justus are doing. And I totally agree with you. And I'm even thinking about this podcast, how do I maybe pivot a little bit/ People still want tactics, right? And that's what sells so to speak. But some of what we were talking about today, this is really where growth is unlocked. This is really where you make changes, the move, the needle tactics, come and go and tactics are important. But yeah, some of this stuff is timeless and the most important. So awesome man. That website one more time?

Deacon:

Sharpbusinessgrowth.com

Brett:

And what's the podcast and where can we find the podcast? All our favorite podcast apps, I would assume?

Deacon:

I believe so. I just pushed it live earlier this week. I know it's up in Apple and Spotify. The podcast is called Sharp Business Growth. And yeah, you'll find it in.

Brett:

Deacon Bradley and Justus Murimi, all right, man. I am super excited to go download the first, it looks like They've got three episodes, at least, that are alive at the time of this recording. I'm sure by the time this is published, they'll have lots more. So check that out as well. Deacon Bradley, ladies and gentlemen, Deacon, this has been awesome. And thanks for coming on. This was a lot of fun.

Deacon:

Thanks for having me.

Brett:

Yep, absolutely. And as always, we appreciate you tuning in and setting aside your time to hang out with us. We would love your feedback. What would you like to hear more of on this show? Do you like conversations like this, where we're talking a little bit higher level and diving into what kind of growth mindset or growth levers do we need to pull beyond just tactics? We'd love to hear more about that. And if you find this podcast helpful, we'd love it if you reviewed this wherever you consume podcasts, so that's iTunes or Google Podcasts or Spotify or wherever the case may be. And with that, until next time, thank you for listening.

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Episode 180

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Chad Maghielse

Keys to a 7-Figure Exit in 2.5 Years

Hear how Chad built his pet brand business and sold it for 7-figures in under 3 years.

Most of the high growth eComm companies I know are all building to sell. Some want to sell once revenue hits $5 million, some $25 million and some $100+. Regardless of what your target number is or regardless of if you even have a number, this interview with Chad will be super helpful.

Hear how Chad built his pet brand business and sold it for 7-figures in under 3 years.

Here’s a look at what we’ll cover:

Tips and advice for sellers
Maximize EBITA as you prepare to sell
Practical tips to “think profit first.”
Tips for prepping to sell your business
Learning from successes and failures
Understanding how self-imposed limits are holding you back!

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Chad Maghielse

Ryan Daniel Moran’s Podcast

Via Facebook

Mentioned in this episode

Ryan Daniel Moran

“The 4-Hour Workweek” by Tim Farriss

Kevin Rizer’s Podcast

Quiet Light Brokerage

Joe Valley

“Profit First” by Mike Michalowicz

Episode Transcript:

Brett:

Well, hello, and welcome to another edition of the eCommerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and man, am I excited about today's episode. I love diving into entrepreneurial journeys, founders' stories, and this one is fantastic, because we're going to hear from an E-commerce entrepreneur who built a business off of a whim, off of a crazy idea, which we'll talk about in a second. Discovered he had a really great business, built it, sold it, had a fantastic seven-figure exit. Now he's investing and consulting and doing other great things.

Brett:

My guest today is Chad Maghielse. Chad and I met a few months ago at Ryan Daniel Moran's lake house. If you listen to the podcast, a lot of you know I've now interviewed several people that I met at Ryan Daniel Moran's lake house, but it was an awesome meeting. I was like, "Man, there's so many cool people that I need to get on the podcast, need to connect with," and Chad was one of them. Chad, with that quick intro, man, welcome to the podcast.

Chad:

Thanks for having me.

Brett:

Thanks for taking the time, and how are you doing?

Chad:

I'm doing great, I'm doing great. Thanks for having me. Yeah, Brett and I met in Austin. We're both investors in a fund there and advise some of the businesses in it. Brett and I just hit it off and said we were going to do a podcast episode someday, so here we are.

Brett:

Here we are. I think we were chatting at Ryan's kitchen table, enjoying a keto brownie or some other goodie from one of the brands that was there, and started chatting about investing and exits, and it was a ton of fun. Let's dive into the origin story of your business, Chad. I love this story, because it's you solving a problem that you had, or rather that your dogs had, but talk a little bit about that. Well, what's your background first, just real briefly? Then let's talk about the origin story of the business.

Chad:

My background was in real estate. I was a real estate agent for a number of years. I'm into real estate investing now, but at the time I was a real estate agent. Years ago, I read the Tim Ferriss 4-Hour Workweek book that probably everybody who's listening to your podcast has read. Kind of the classic, and that lit the fire under me that I want to design my own lifestyle. I don't want to be on anybody else's time. I want to just build something that can provide the lifestyle I want to have. Hard to do that with real estate, because you're always on call, so I started exploring-

Brett:

You're at the mercy of buyer and seller, right?

Chad:

Yeah, yeah.

Brett:

I mean, you've got to cater to them.

Chad:

It wasn't unusual for my phone to ring at like 10:00 PM on a Friday night, and I was...

Brett:

Not what you want.

Chad:

"I'm not doing this long term," so started looking at different business models. I came across, you mentioned Ryan Moran's podcast. There was another guy, Kevin Rizer, who had the Private Label Podcast. I came across their material, and that got me interested in that world. I knew I wanted to create some sort of physical products brand in E-commerce, and I ended up creating a pet supplies company that was based off of my two dogs. I have two French bulldogs. Their names are Brock and Beast, and they're adorable little monsters, but dogs are gross, especially French bulldogs.

Brett:

Brock and Beast. Dogs are gross. They're so much fun, but they're gross.

Chad:

Right, right.

Brett:

You said they're French bulldogs?

Chad:

French bulldogs. Little 20-pound pig-bunny-looking French bulldogs.

Brett:

How old are they now?

Chad:

Oh, man. They're almost 6 now.

Brett:

Wow, okay, so you-

Chad:

Yeah, they grew up fast.

Brett:

You discovered your adorable dogs... What's that?

Chad:

I said they grew up fast.

Brett:

Yeah. Adorable dogs, but you noticed a problem. These dogs had a bit of a problem that you needed to solve. What was it?

Chad:

Well, they had a lot of problems. The most obvious one at first was just they have horrible breath. Horrible breath. That led into actually my first product. I had a list of 10 potential products, and that was the one that I wanted to do, because there were other products on the market that addressed that problem, but the ingredients were things that I and many of the other customers out there weren't comfortable with. There were some that had like grain alcohol and stuff that, you'll hear different opinions from different people, but there was enough concern that some of the ingredients in existing products were dangerous to dogs.

Brett:

Likely not the cleanest ingredients; not the healthiest options for the dog.

Chad:

Yeah, so I wanted to create something that had a different ingredient profile and would be healthier, but then based around my wife and my dogs, and I wanted products that I would use on my dogs. I created this brand that people who see their pets as part of their family really identified with. Somebody that just thinks a dog is just an animal and not a member of the family, they're going to be turned off by that brand, but it really connected with people who truly see their pets as part of the family; as one of their kids or something like that.

Brett:

Yeah, which totally makes sense, because someone that's likely getting close enough to their dog to smell their breath, or to be concerned about how the breath smells, that dog is important to them. The dog is in the house and on the couch and around and stuff like that.

Chad:

Oh, yeah.

Brett:

For somebody where the dog is just something to be whatever, to tend to the farm or something like that, that dog is outside. Who cares what the dog's breath smells like?

Chad:

Yeah. My brand wouldn't have been for them. We ended up with breath products; we ended up with anti-itch products; with shampoos. Treats for anxiety for dogs, and cats too. I mean, most of our products were geared towards dogs, but 10% of our customers were people that had cats.

Brett:

Nice. When did you realize, "Hey, this is a real business"? I mean, you had the luxury of, you had a successful career. If the E-comm thing didn't work out, you would have been fine. When did you realize that, "Man, I'm onto something here; this product can really take off, and could lead to a bigger business, not just a single product"?

Chad:

Yeah. I briefly mentioned this to you in our previous conversation, but when I started the business, I don't think I had the confidence to say, "Okay, this is a million-dollar-plus idea. I'll sell this in a couple of years," and all that. I think it was just a cash-flowing side hustle at first, but I had a pretty successful launch, relatively speaking. A few months in-

Brett:

Was the launch on Amazon exclusively, or on and off Amazon?

Chad:

Started just on Amazon. I think I got one of those like $29 Shopify sites just so I had something off Amazon, but honestly, any sales of any meaningful amount were on Amazon to start with. We expanded to other platforms later, but the launch was mostly on Amazon. I had the goal of getting to $50,000 a month in sales. That was my first goal, and at the time that seemed like a lofty goal, but once I hit that and was going above it, I'm like, "Okay, I want to get to $100,000 a month in sales." Then I really started thinking that I can sell this. As I'm sure all your listeners know, that million-dollar run rate of $83,334 a month, equals a million dollars extrapolated over 12 months; my first month when I hit that $83,000 mark I think is when I really started thinking, "Okay, I can probably sell this."

Brett:

It's a million-dollar business. Yeah.

Chad:

Yeah, yeah. At that point, I was at a business conference. I think actually it was one of the Capitalism conferences, and Coran Woodmass, who is The FBA Broker, was one of the speakers there. I grabbed him at the bar or ran into him at the bar after and said, "Hey, I want to buy you a beer and talk for a minute," and just got talking about the process of what it would look like to sell. He said something along the lines of, "Hey, you just had your first month where you crossed that million-dollar run rate. Your business is not worth that much yet. Come back and talk to me again in six months to a year." We stayed in contact, and I grew the business significantly-

Brett:

At this point, were you still just the single product, or you'd expanded?

Chad:

No, no.

Brett:

Okay.

Chad:

Yeah, I think once I'd crossed like $25,000 a month with the first product, I expanded to a second product, which was a shampoo, and then a third product, an anti-itch thing, and then ended up with six products total when I sold the company.

Brett:

Awesome. That's awesome. Talk about some of the things that you got right initially. Sometimes we just nail something, either because of training or advice we get, or because we've just thought it through. Sometimes we get things right because of blind luck. There's a variety of things. What did you get right from the beginning?

Chad:

I think one of the biggest things that I got right from the beginning was spending some extra time on really getting a great brand, as far as logo, packaging, stuff like that. I know that's counter to some advice that you hear a lot of, "Hey, just get your product to market as quick as possible," but a lot of my products came in these 8- or 16-ounce bottles, and literally all of my competitors at the time just had a standard white or clear bottle with a 4-by-6 stick-on label, and they didn't look very expensive or, in my opinion, very high-quality.

Chad:

I had to talk to 20 different suppliers to get somebody that would do this, but I finally got somebody that did these full-body shrink-sleeve labels, head to toe, and they looked much more expensive, even though they only cost a little bit more. That was able to justify higher profit margins. I think, especially products that your pet is ingesting, like a breath thing, they want to have confidence in the quality of it, and I think, I don't know, the better you can make it look, the more perceived quality is there and the more comfortable a customer is in trusting you with their pet's health. That was something that it took a little extra time to get to market, but I think that was definitely helpful to my long-term success. That was...

Brett:

Yeah, and I want to dive into that just a little bit, because I think it's super important. I think that that mindset of, "Hey, don't spend too much time on it; just throw some packaging on there, sell it and then iterate," so it's MVP, minimum viable product, then test, iterate and go from there.

Chad:

Yeah.

Brett:

I think that's valid to a certain degree, but here's where I believe you win on Amazon, and then in the greater E-commerce game, is with a good brand, right?

Chad:

Totally.

Brett:

A brand that people trust. That's where you can have a great seven- or eight-figure exit is with a brand that has some brand equity, that people trust and respect. Here's the thing. I think you want to take the time to really think about it, and, "Who is my buyer persona? What kind of tone and feel, and what's my brand messaging?" You want to think about that. Don't just slap something up there. I think really those days of just sourcing some product and throwing up a crappy listing, I think those are over.

Chad:

Yeah, that's long gone.

Brett:

Yeah, but I think, to free up a little bit, you don't have to spend so much time into it that this will be your packaging forever. You're still going to test and iterate, and there'll be a V2 and a V3, but still try to get it right. How do you make that good first impression? Think branding; think merchandising. How is this going to show up on the digital shelf? That's super duper important. The days are gone where you can just throw any old thing up there and just expect it to sell because it's Amazon.

Chad:

Yeah, for sure. Especially with E-commerce, people see your photo. That's the first thing they notice, and maybe review rating or something, but you've got to try to visually stand out, and that's hard to do if your product looks like all of your competitors'.

Brett:

Yep. Any tips or advice there? Any resources that you read or consumed, or people you consulted with, or steps you took to really nail that brand and the packaging design?

Chad:

Yeah. I had probably a dozen different concepts for what the brand would look like, and there's different services you can use to split test them. I mean, to even create the candidates in the first place, I used just 99designs, and I ran a few campaigns.

Brett:

Yeah. Yep, it's actually great.

Chad:

It is.

Brett:

You get all kinds of ideas from 99designs. In the early days of OMG, not our current logo but one of our first logos, we used 99designs. It was fantastic, and we got a ton of ideas, and it really helped us shape our thinking.

Chad:

Yeah. I mean, if anybody listening doesn't know about 99designs, you just tell them what you want, and the different artists will compete for your business. You'll get 10 different possible logos or branding things, and then you can narrow that down to a few and be like, "Okay, I like this one. It's not completely done, but I like where you're at, so I want to hire you as a graphic designer, and let's make some tweaks beyond that." Yeah, I would definitely recommend getting other people's opinions. You've got to trust your own gut and you've got to trust your vision, but get 10 different ideas, and then ask your friends and family and your Facebook audience or whoever. Here's another thing: for anybody that's just getting started, I think it is very helpful to document the creation of your brand. Even saying like, "Hey, I'm running this 99designs campaign. Here's my favorite three logos. What do you guys think about this?" Really sharing-

Brett:

Yeah, and sharing that on social, right, and getting some engagements, some buy-in there.

Chad:

Absolutely, because those people that give you their opinion on that may become your first buyers for your first product launch.

Brett:

They'll feel invested in your venture.

Chad:

Absolutely. Absolutely, and one tactic you can do; if you have a Facebook group or something that you create, and then run a poll and say, "Okay, for our first product, we're going to go with one of these three designs. Everybody that votes gets a 10% off coupon or something." Then you can follow up with them. That can be your product launch.

Brett:

Yeah, I like it. I like it. Cool, so you got the branding and the package design right. What else did you get right from the beginning?

Chad:

I think really narrowing down my audience, and it wasn't just people who have dogs. Narrowing down, my audience was people whose pets are part of their family, and also who are charity-minded people, because one of the big things we did that I really think was a pillar of the success of my brand was we had this right on all of the bottles, kind of like an insert card, but literally on the products. We said, "Hey, send in a photo of your pet with this product that you purchased, and we will donate a portion of the profit from your sale to a pet with cancer and reply back to you with a photo of the exact pet that your purchase helped." I had a VA do that, and...

Brett:

That is awesome.

Chad:

It made such a huge difference, because literally, if you bought-

Brett:

That created a lot of social sharing, I would assume, and lots of chatter?

Chad:

Oh, yeah. Tons of user-generated content, and tons of loyal fans or customers or whatever you want to call them that loved our business and loved what we stood for. It was a legitimate thing, and we donated tens of thousands of dollars and literally saved the lives of multiple pets with cancer, because a lot of people just didn't have the money to... if your dog has cancer and you're not in a financial position to do something about it, and you're looking, "Okay, do I pay rent or do I help save my pet," that's a tough position to unfortunately-

Brett:

It's a tough call. Yeah, it's a tough call. You've got to survive.

Chad:

Yeah, a lot of people are in, so we did that, and if you bought one of the products you'd literally get a photo of your pet and this website called the Magic Bullet Fund. It's like a GoFundMe for different pets that have cancer, so we'd donate to the specific pet and be like, "Your dog, Buddy, helped this dog, Ralph. Here's a photo of them together," and my VA would put that together.

Brett:

I love that. I think a lot of people are going to hear that and think, "Oh, that's a great idea. You're donating to charity." I know a few of our clients, they donate to 1% for the Planet, so a percentage of each sale or a percentage of the profit goes to 1% for the Planet. Great charity. There's a lot of great things out there like that. What I love about what you're doing, though, is you're making it personal.

Chad:

Absolutely.

Brett:

It's not just, "This is going to help dogs with cancer," but, "This helped this dog with cancer. Here's a picture of your dog, Buddy, and this dog that's the cancer patient." That's so powerful and so emotional and so personal.

Chad:

It was, and it felt good, too. It's like, yes, that helped my business, and I guess there's a selfish gain with that, but it really felt good to know it really did help a lot of other people's lives too. You've got to believe that every... not every, but most people who'd get that photo back of their dog and the dog they helped, they'd post that on their social media. They'd tag my company, or what used to be my company, and it just created this continual momentum of people who loved our products, but loved what we stood for and what good we were doing in the world.

Brett:

I love that, and I think sometimes we're maybe thinking, "Hey, let's keep it on the down-low, the charitable things we're doing," but I think making it more public and more visible actually fosters the mindset of other people being generous and other people sharing.

Chad:

It does.

Brett:

Getting that sharing going actually leads to more giving and more generosity, and it benefits the business, so it's a real win-win and I think you should double down on it.

Chad:

It does. I think we briefly talked about this in Austin, in person, but that was a hard decision for me, because I didn't want it to just be a charity for show thing. I think you and I talked, we have similar religious, Christian backgrounds, and I take that-

Brett:

Yeah, yeah. Yeah.

Chad:

There's that Bible verse about, "Don't let your left hand know what your right hand's..."

Brett:

Right. Yeah, yeah.

Chad:

Don't be braggadocios with your giving, so I think, okay, I'm going to take that perspective to my personal life, but in business I want to foster this idea of... I want to encourage more capitalist companies to do more good in the world and do more charity work, so I think in business that is a good thing to promote. I wrestled with that a little bit in the beginning, but I think that's the right way to go.

Brett:

Totally, and I think if you look at the heart, and not to get on a quick theological discussion, but I think it's important. Looking at that, I think if you look at the heart of it, it's more about, "Don't be boastful, or don't be too high on yourself for giving," but that doesn't mean you can't talk about it. I think this is a real balance of one of those things of, "Hey, I'm actually doing this because, one, it's enriching the lives of my customers; two, it's enriching the lives and actually helping other people; and then it's fostering generosity," so it totally makes sense. Yeah, I love it.

Chad:

Right.

Brett:

That's awesome. Cool. We love hearing those success stories. That's inspirational and fun, but let's face it: we all like to hear about the failures. What did you not get right, or what were those learning moments? Anything you can share there? Mistakes? Places you tripped up? Things you wish you had known?

Chad:

Well, I mean, right off the bat, my company name changed in the first week, because right off the bat I did not do enough research on the company name.

Brett:

Had trademark issues or something?

Chad:

Yeah, had my listing taken down literally a few days into the launch. That sucks, and I guess some people might be tempted to give up at that point, but it was pretty easy to fix, and I was back up and running 48 hours later and ended up having a successful launch. Make sure you truly do all of the research on that, because you don't want to have to deal with that kind of stuff. Make sure you do all of the trademark research. Make sure you do more than just a basic search, which was my mistake. There's that.

Chad:

Also, a longer-term thing where I think I dropped the ball, that I, if I had a do-over, would have done this a lot better: I did not do a good job at keeping my audience engaged in the long term. Our first customer interactions were always super positive, because they usually came from the charities and stuff that we talked about. People would send in a photo of their dog and all of that, so we had great first contact with our customers, but I did not have a good email follow-up sequence built out, where there's just a couple of emails a month that go out automatically. I just didn't do that. Looking back, I don't know why. I mean, I guess there's always an excuse. I was busy or whatever.

Brett:

You're busy with so many other things, but...

Chad:

Yeah, the reality was-

Brett:

It's one of the highest-return things you can do, though.

Chad:

Yeah. The reality was, I was lazy and didn't get it done, and I should have, or I should have just hired somebody else to do it. It sat on my to-do list literally for years. I ran the company for 2 1/2 years and sold it. That was on my to-do list the whole time and never got done. I think I would have sold for a higher amount and would have had more repeating buyers had I done that, so I'd highly recommend, once you're to the point where you're making enough profit where you can afford to have someone create those for you, if you don't have time to do it yourself, do that, because I wish I would have.

Brett:

Yeah, that's awesome. Let's transition a little bit. I want to talk about the sales process, because we work with a lot of high-growth brands. I mean, that's what we do at OMG Commerce; we're accelerating the growth of brands that are already successful, and we're investing now. Most people's goal is, "Hey, I'm building to sell. I'm building to sell, and then I'll go start the next thing or invest in something." Let's talk about how you approached the process of selling. I guess, let's just talk about that first. How did you prep for sale?

Chad:

Well, I followed the guidance of the broker that I used, who was Coran Woodmass. Great guy. Him and his wife Leanne work together on it.

Brett:

What's the name of their company again? I know they're FBA...

Chad:

The FBA Broker.

Brett:

Yeah.

Chad:

I'm super happy with them. Would definitely recommend them. What they had told me was, "Optimize for profit at this point." When you're thinking you're going to sell in six months, that's not the time to experiment and try, "Okay, let's go advertise on Pinterest. Never done that before, but let's give it a shot." When you're prepping for sale, it's not the time to throw things at a wall and see what sticks. It's the time to double down on what's working, .. expenses.

Brett:

You're maximizing that multiple at that point. "Let's get that base, that EBITDA, as high as we can for the purpose of the multiple."

Chad:

Yeah, get the EBITDA as high as you can. I did that. I doubled down on what was working. I did not launch additional products in that last bit of time, and I think that that was the right call. I prepped three products, or I had them sourced and actually had the first inventory order, and used that as a carrot with the buyers: "Hey, I've got your-"

Brett:

Nice. "Hey, you've got your next three products ready."

Chad:

Right. "You've got your next three products. Here's the first sample inventory order of, I don't know, 50 bottles each or 50 units each," so whoever's buying it can take that and run with it. I think that helped attract the buyers, and we got a few offers in the beginning, and I think it was, "Hey, we've got your next step planned out already. You don't need to worry about that." I think that was good. I could have obviously continued to grow the company and sold it for a higher multiple, or a higher dollar amount at least; however, the timing of it was crazy, because I sold it, and literally two months later COVID hits. In the long run, that is a positive. A lot of E-commerce brands saw some substantial growth during COVID, but stress-wise, at least, in the beginning, when just everything...

Brett:

Yeah.

Chad:

You know.

Brett:

In the first couple of months of COVID, nobody was buying businesses. Like, nobody was doing anything.

Chad:

Yeah. Yeah, all of that got put on hold.

Brett:

All deals were off the table at that point.

Chad:

Yeah. I'm happy when I sold. I'm sure I could have, if I waited until now, could have sold and got more money, but I'm happy with the timing of everything. Now I'm moving into investing and consulting and stuff like that.

Brett:

Yeah. I mean, you did well. You had a seven-figure exit. You built a great brand.

Chad:

Thank you.

Brett:

It's impossible to nail the timing perfectly, but you did fantastic, so you've got to feel good about that. If you had to go through the process again, and ideally, you're probably going to build something and sell again, what would you do differently than you did maybe the first time?

Chad:

In the sale process, or in the building process?

Brett:

In the sales process. Sales process.

Chad:

I mean, I don't need the money as much anymore, having gone through a sale, so I think I would probably hold out for an even better offer.

Brett:

Yeah. Why not? You wouldn't be under pressure to sell.

Chad:

Yeah. I think people are realizing that buying a business is a good spot to invest your money a lot of times, because so much is uncertain right now. It's tough to invest in the stock market and real estate right now, because you don't know what's going to happen, and prices are so high.

Brett:

Don't know what's going to happen. It's all out of your control.

Chad:

It is.

Brett:

Sitting on cash is tough because of inflation. That's not necessarily the best idea. Obviously you want to have liquidity, but yeah.

Chad:

Right, so I think knowing that you can go into a negotiation as the price-setter, not like a beggar, and be like, "Hey, no. This is what I want." I'm not going to be rude or anything, but I'm not going to entertain less than that. If you do, "I have a quality business. This is in high demand." You've got to have that level of confidence, and that can probably get you an extra couple hundred thousand dollars if you're negotiating-

Brett:

Yeah, and you've got the freedom at this point and the confidence to say, "I can be patient. I can wait a little bit. I don't have to take the first deal."

Chad:

Yeah, right.

Brett:

I think people can even be disciplined, even with their first exit as well, but it's much easier after you've got some cash in the bank and you've had your first exit. It's easier mentally to do that.

Chad:

Right. Exactly.

Brett:

Let's talk about this. I know you're an investor now. You and I are in the same fund, and have a lot of fun doing that, but you're also investing in real estate. That totally makes sense, because you've got a real estate background, but can you talk a little bit about that? What's fascinating is, when you sell a business, there's a big tax event. That's a taxable event. There's a big tax burden.

Chad:

There can be.

Brett:

You were able to minimize that because of some real estate investing. Do you want to talk through a few of the details there?

Chad:

Yeah. I mean, we're filming this in June of 2021. I mean, who knows what's going to change in tax law, depending on when somebody's watching this, because there's-

Brett:

Right, tax laws. This is true.

Chad:

... a lot up in the air, but I sold in January of 2020. At that time, and it's still true today to the best of my knowledge, you can do what's called real estate bonus depreciation as an investor. What that basically means is, instead of the property depreciating over the course of a number of years, you can depreciate a large amount of it year one if you get a cost segregation study. If you buy properties financed, say you put 20% down, and you get a cost segregation study done, a lot of times that will come in and allow you to have 25 to 30% of not the money you put down, but of the purchase price of the property. If you buy a million-dollar property, put down $200,000, you might get a $300,000 tax credit.

Chad:

That allows you to... I mean, it's not eliminating your taxes, but defer them to later. Greatly reduce it. Even better than that is if you can find a good mobile home park deal. Mobile home parks can have 50 to 60% year one bonus depreciation, so do the math on that; that can save you a lot of money on taxes. I would highly recommend, Tom Wheelwright is a good resource for minimizing your taxes. Real estate I think is the number one way, at least that I know of; there might be better things. Legal way to minimize your taxes as much as possible. Yeah, cost segregation studies and bonus depreciation are the key to minimizing your taxes when you have a big exit.

Brett:

Yeah. I'm not a real estate expert by any means, looking at some different options right now, but there's obviously real estate appreciates over time, and there are cashflow properties and there are different opportunities there, but I think the piece that a lot of people don't consider is the bonus depreciation aspect and minimizing your tax burden, and just some of the tax strategies that can really make real estate that much more attractive. I think it's definitely worth looking at.

Chad:

For sure.

Brett:

If you've made an exit, or if you've got extra profits to invest, real estate should probably be something you consider.

Chad:

Right.

Brett:

Fantastic. Anything else you would mention on things you've learned, or advice you would give to someone who is about to start the process of selling a business? What tips or advice would you give them?

Chad:

Well, I guess first I would say the foundational thing is you can do it. I don't mean this to minimize anybody else's challenges or anything, but a lot of people won't even try because they think it'll be too difficult, or they think they don't have enough money to do it, but there's so much training available to get you started that's for free on podcasts and YouTube, and then you can pay for better training once you've at least started. I would say, if you take six months or take a year to learn some of this stuff, and if you can save $5 a day, you have enough money to get started over let's say a year and a half. I started my company with literally $300,000, that's it, and then sold it for over a million. It can be done. Again, I don't mean this to be demeaning; I mean this to be encouraging. If you have access to the internet and have enough money to smoke cigarettes, you can make a million-dollar business. Honestly.

Brett:

You can. It's totally true.

Chad:

It's completely true, and I recognize that it sounds like bullshit, but it's not. It's completely true, and I don't mean that to talk down to anybody; I mean that to just encourage anyone who might think they can't do it, or don't have the resources. If you can smoke cigarettes and you have internet access, you can do it. I would say that. Beyond that-

Brett:

Smoking your way to millions. Oh, wait. No, that's...

Chad:

That's another business model. I would say that as an encouragement. I would say that, like we talked about, getting a good brand is foundational. Don't take the shortcuts and just use one of the softwares out there to say, "Okay, this product looks good on the demand versus competition thing," because that can change real quick, because other people are also seeing that product, and the competition can change very quickly. Make sure you have a brand that people want to buy. They buy your brand; they don't buy the commodity. Your products obviously are important, but your branding is, I would say, even more important. You need to have people invested in that brand, because their brands they buy say something about them. People that bought my products, it was a statement.

Brett:

Exactly, and that leads to a higher multiple. It makes the exit process better. You're really trying to build multiple products that a group of people can buy. What about someone who's looking to sell their business? They've already got an established brand; they're selling; they're profitable. What advice would you give to them when they're getting ready to sell, or considering selling?

Chad:

Well, I mean, like we talked about, don't experiment. Don't waste money on things that are not proven. Double down on getting your profit margins up. One thing I'd say to test, a lot of people don't test raising their prices, and it's worth a test. I was afraid to do that for a while. I had a product that was selling really well. I didn't want to rock the boat, but I tested raising the price from, I think it was $15 to $17. I got not only an increase in profit; I actually got an increase in sales.

Brett:

Wow.

Chad:

That doesn't always-

Brett:

That's interesting.

Chad:

It is.

Brett:

Price is kind of an emotional thing; it's not as logical as most people think. There are emotional factors to why one price works and another price doesn't.

Chad:

Yeah.

Brett:

You went from $15 to $17, so doing quick math, that's a 12%, something like that; 12, 15% increase. Not only are you making better margin, but you sold more with the higher price.

Chad:

Right, and I think it-

Brett:

Perceived value, I would assume.

Chad:

Right, and I think it was because this was a product that was ingested by your dog, and people perceive that more expensive prices equals higher quality. If it's something that's for your health or for your pet's health, you don't want the discount, cheapest thing possible; you want the quality thing, and you're willing to pay for it. That's not only true with ingestible products. I have a buddy who has a CrossFit products company. He has like a weightlifting belt, and his belt is more expensive than most of the other belts. I think somebody has like knockoffs of his that are much cheaper, but people want to buy his, because it's a good brand, first of all, but also there's a perceived quality. You don't want to hurt your back with some crappy band.

Brett:

Yeah. Clean and jerks, you've got to keep the back safe, and working out in CrossFit, usually it's a group. You're working at a gym. You're concerned a little bit about how you look as you're working out.

Chad:

Yeah, yeah. All that to say, test raising your prices. I mean, test it by a dollar. See how you do. Maybe test it by another dollar after that. Not always going to work. I had one product that I tried that on that it didn't work. It decreased sales and I went back, but more often than not it worked. A lot of people don't think to test that. I would say test that, because obviously the higher the profit margins, the more appealing your business is going to be to potential buyers.

Brett:

Yeah. Would you suggest someone potentially talk to a business broker? Is there a time you would suggest doing that?

Chad:

I mean, I'd have an initial conversation once you hit the first month of whatever your goal price is, so you get your first month, let's say it's $100,000 and you extrapolate that 12 months forward. I'd have that first conversation then, knowing you're probably not going to sell yet, but a good broker, and I would recommend Coran and Leanne Woodmass, but I'm sure there are other good ones as well. A good broker will help give you advice. There's some accounting stuff you've got to get in order. I had to get an accountant to redo my books and get them more organized and all that before I was ready to really present all of that data to potential buyers. Yeah, I'd say it certainly doesn't hurt to have that conversation early and learn at least what you need to do in preparation.

Brett:

Most business brokers are happy to do that, and I hear great things about the group you were just talking about. I know Ryan Moran speaks very highly of them, and so do people in the community. Quiet Light Brokerage; shout out to Joe Valley and Brad and the gang there. They do a great job. There's a number of great brokers. I've found that I think brokers do want to have those conversations early. They don't see that as a burden. They see that as a positive, so once you hit that run rate that you maybe set as your target, have that conversation, and they'll guide you into some more specifics too, and let you know what the current landscape is like and all of those important things.

Chad:

Yeah, and if your listeners haven't thought about selling yet, they might not know this, but businesses in our E-commerce world are generally valued on their trailing 12 months of profit, so it's not like you can have a good three months and say, "All right, I want to sell my business for a ton." You want to stabilize at that trailing 12 months. Ideally, you want to show growth, continual growth, but don't have the growth be just top-line; you need to show growth of profit. People are buying profit, in most cases.

Brett:

Yeah. I mean, and that's such a good thing to underscore. What is someone buying when they're buying a business? Yes, they're buying a brand. Yes, they're buying the products you have. They're buying your inventory and all that, but really they're buying a multiple of your earnings. That's how businesses are valued, and that's what people are buying. They're buying that cashflow. They're buying that profit, because that does speak a lot to the potential. That's what people are purchasing, so you've got to keep that in mind for sure.

Chad:

Yeah. I would recommend also, this really helps when you're... I mean, even before you're ready to sell; this is just helpful for running a business. Read the book Profit First by Mike Michalowicz. That really helps you get organized, and there's even a course, Profit First for Ecommerce Sellers. I'd read the book first and then take the course. That really helps you increase your profits, see where you have unnecessary expenses and do something about it. It's kind of like an envelope system, but for modern-day E-commerce brands. I'd definitely recommend checking that out if you're thinking in the next year or two you might want to sell.

Brett:

Nice. Love it. Love it. That's awesome. Chad Maghielse, ladies and gentlemen. Chad, this has been a ton of fun, man. You brought the thunder.

Chad:

Yeah, really enjoyed it.

Brett:

Brought the value. If people want to connect with you, if people want to say, "Hey, I'd love to chat with Chad," can they connect with you on LinkedIn or on Facebook, or what's the best way people can...

Chad:

Yeah, either one of those would be fine, Facebook or LinkedIn. I'm just under Chad Maghielse on both. I'm sure you can put the spelling of my name in the show notes, but it's M-A-G-H-I-E-L-S-E. Yeah, I'd be happy to chat here and there. I'm open to doing a little bit of one-on-one consulting. I don't want that to become my job, but I do miss this world. Brett and I were talking, we both invest in this fund that helps businesses grow, and when we met in Austin I had a lot of fun getting to give some advice to some of the younger companies. I've hosted a couple of training calls since then, and I miss that, so I'd be open to a little bit of consulting here and there, just not much. I don't want it to become a full-time thing; I want it to be something that's fun.

Brett:

Exactly, and you're an investor, and you're still a busy guy. You're doing a lot of things, but it is fun. It is rewarding. I'm enjoying this stage too, where now we can invest in brands and consult and share our resources and our network and our ideas, and you've got a lot to bring to the table for sure..

Chad:

Yeah. There's a lot of cool ideas out there. I'm really excited about a lot of the brands in that fund we invest in.

Brett:

Me too.

Chad:

There's seemingly an endless supply of great ideas that just need a little help on some of the other things in this business.

Brett:

Yeah, it's so interesting. There's a lot of founders out there with beautiful ideas. Either they're brilliant at product design or product formulation or something, and maybe they need marketing help or maybe they need just funding or whatever.

Chad:

Right.

Brett:

Yeah, it's been a lot of fun to be a part of that and to watch for sure.

Chad:

Yeah, for sure. For sure.

Brett:

Awesome. Well, Chad, man, really appreciate it. Thanks for taking the time, and this was a ton of fun.

Chad:

Appreciate the invite. Thanks, Brett.

Brett:

Absolutely. As always, thank you for tuning in, and we'd love to hear back from you. Hey, whatever your podcast platform of choice is, whether that's iTunes or something else, leave a review there if you feel so inclined. If we're delivering the value and entertaining and helping you, then leave that review. That means a lot to me and to my crew. Helps other people find the show as well. With that, until next time, thank you for listening.

Chad:

All right, man. Thanks for having me. That was awesome.

‍

Episode 179

:

Nick Raccuia - Sinless Snacks

Lessons from the Trenches

Nick Raccuia’s story is a great one, full of insights and inspiration, successes and failures.

KetoBrownie (now rebranded as Sinless Snacks - https://www.sinlesssnacks.com/) started where a lot of great food brands start - in the founder’s kitchen. Nick Raccuia’s story is a great one, full of insights and inspiration, successes and failures. It includes nailing product development on a few products and failure with other products. It covers periods of near burn out followed by the power of partnerships and strategic investors.

Now Nick’s company produces two of my favorite sinless and guilt-free snacks: the original Keto Brownie and the Sinless Snacks cereal bar.

Here’s a look at what we cover:

Knowing your customer is the key to product launches. Learn from NIck’s product successes contrasted with a few painful flops.
The benefits of a strategic investor and how to find them
Not launching on Amazon soon enough
Packaging and transit issues
How obsessing over your customers and products leads to wins

‍

Nick Raccuia

Sinless Snacks (formerly: KetoBrownie)

Via Amazon

Via Instagram

Mentioned in this episode:

Ryan Daniel Moran

Capitalism

‍

Episode Transcript:

Brett Curry:

Well, hello and welcome to another edition of the E-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. Today, we're talking about brownies. We're talking about Ketobrownies, but more than that, we're just talking about e-commerce growth and product development. I always get great feedback from listeners when I interview a founder and we get to hear their story. Today's founder you're going to absolutely love his story, the ups and downs of his brand, lots of lessons to unpack, and fun to be had.

Brett Curry:

It's my pleasure to welcome to the show Nick Raccuia. Nick is the founder of Ketobrownies, some new, kind of exciting in the works. With that, Nick, welcome to the show man. How's it going?

Nick Raccuia:

Thanks, Brett. Happy to be here. Thanks for having me. It's going awesome. I'm definitely excited to hop on and talk Keto Brownie and tell you a little bit more about our story and just the progress over the four, four and a half years.

Brett Curry:

Really excited to dig in. Just a quick story about how we met, I'm an investor with Ryan Daniel Moran's Capitalism Fund, and we'll hear the story in a little bit, but Ketobrownies is now part of the Capitalism Fund. So, you and I actually met at Ryan's lake house kind of talking business and stuff. Before that, Ryan sent out to all the investors and some of the people, some Ketobrownies. I get a box of Ketobrownies. I'm like, "Well, I'll eat anything. I'll try anything." I liked healthy food. There was quite a few in this box. My business partner, Chris Brewer, was out of town. So I was like, "Well, I'm going to eat a few of these brownies and I'll save a few for Chris." It's only fair. We invested in this stuff together.

Brett Curry:

So, I ate the first two and then I decided that Chris didn't need any Ketobrownies. He was gone for a few months in Florida, so I ate all of the Ketobrownies, and I regret nothing. The snack is fantastic, and lots of good stuff in the works, new products, stuff like that. We can talk about that in a minute. Let's first talk, Nick, about where did the inspiration come for this product? How did the idea come to be? Just kind of walk through that story because it's pretty interesting.

Nick Raccuia:

Yeah, definitely. It all happened pretty much in 2016. My background is accounting, so I was in accounting for four or five years. Super stressful, crazy work hour industry. I didn't have good eating habits. I was barely exercising, so I was like 30-35 pounds overweight. It was awful. I had no energy. I wasn't even fitting into my dress clothes. I was always trying to diet and eat healthy, but nothing ever stuck. Then I found out about keto, so I started doing keto in mid-2016, and it worked magically for me. I dropped 30-35 pounds in I think six or seven months, like no problems.

Brett Curry:

Wow.

Nick Raccuia:

Yeah, it was just-

Brett Curry:

Have you been full keto since 2016, or close to it?

Nick Raccuia:

Yeah, pretty much close to it, yeah. There's sometimes where I'll take breaks, maybe holidays or something like that, and just kind of give my metabolism and body a change. No, I feel the best when I'm just eating keto: low carb, low sugar. So, I try and eat that way pretty much all the time. I had great success with keto, but back in 2016 it wasn't even close to as popular as it is now.

Brett Curry:

Right. Right.

Nick Raccuia:

I think there was only maybe four or five brands out there, or at least four or five brands I could find, so I bought all their snacks and tried them all just to help me stay on the diet. But I didn't really like the taste of some of them.

Brett Curry:

Snacking is tough, right? I did keto for a hot minute. It was literally three or four weeks. My wife and I tried together. She hated it. It was not the best overall experience. I did lose weight. Snacking is hard. What are you going to eat?

Nick Raccuia:

Outside of life-

Brett Curry:

.. sugar and nuts even, right? So, you're eating butter

Nick Raccuia:

Yeah, sticks of butter. But yeah, you're pretty limited. It's like some nuts, you can do beef jerky, stuff like that. If you're on the go, it's super tough. Or even if you want to run into a convenience store or something, your options are extremely limited. Back in 2016 there wasn't much to choose from. I tried some of the snacks out there, and I just didn't like any. So, I essentially just started making brownies in my apartment for weeks and weeks on end. I went to the grocery store a bunch of times, got some ingredients and started putting stuff together.

Brett Curry:

Did you find recipes online and then modify them? Or are you just making stuff up?

Nick Raccuia:

It was a little bit of both. I was doing a ton of recipe research. The thing is with keto, there's only so many ingredients you can ..

Brett Curry:

Right, it's got to be pretty simple.

Nick Raccuia:

.. pretty simple.

Brett Curry:

.. few ingredients, yeah.

Nick Raccuia:

Yeah, if you look at most of the recipes online, it's always the same ingredients over and over, just varying quantities or different sweeteners and stuff like that. Yeah, it was modifying some recipes I found, and then just having fun, playing around and seeing what tasted good and what worked. I started doing that and just using that as kind of a snack to keep me on keto, and eventually started with my first manufacturer to kind of the recipe shelf stable and getting ready to be mass produced.

Brett Curry:

That's got to be tough. I will just interject for a minute. These are prepackaged brownies, so you got the chocolate... it's like double chocolate. It's like chocolate with chocolate chip.

Nick Raccuia:

Chocolate. Yeah, chocolate with chocolate chips with almond.

Brett Curry:

Yeah, which is fantastic. It's prepackaged. A couple hundred calories or whatever. You can use it as a meal replacement.

Nick Raccuia:

Yep.

Brett Curry:

You got the perfect blend of being dense, but also not dry, and not too flaky. It's just the right consistency. It tastes very natural, because it is, it's got natural ingredients.

Nick Raccuia:

Right. Right.

Brett Curry:

I love then there's also the peanut butter with chocolate chip. That's phenomenal. You've got the blondie as well. Shout out to the blondie. It's good. I do like the chocolate on chocolate, and the peanut butter better-

Nick Raccuia:

Better, yeah.

Brett Curry:

But yeah, I've been on a kick where I eat about one a day. It's great to eat at either breakfast replacement or pre sometimes a better lunch replacement. So yeah, it's just fantastic. So, you had to work with a manufacturer then to get it shelf stable.

Nick Raccuia:

Yep.

Brett Curry:

What was that process like, and then where did you go from there?

Nick Raccuia:

Essentially I took my recipe and was just like, "Hey, this is what I came up with. This is really what I want as the base, but I know this isn't shelf stable," so we're gonna need to add preservatives and stuff like that just to kind of keep water, and mold and get all that kind of stuff situated to be a shelf stable product, to actually sit on a shelf for six to eight, 12 months. We just went back and forth. They kind of tweaked a few things, added a few things, and sent me samples. Then it was just back and forth from there just making sure it tasted as close to the original as I came up with, but also being good for shelf stability.

Brett Curry:

.. botulism or something.

Nick Raccuia:

Yeah, exactly. No mold growth or anything like that.

Brett Curry:

Right, right, right, yeah.

Nick Raccuia:

Yeah, that process took probably another few months of just back and forth with samples, looking over the nutritionals, making sure it adhered to keto and all that, and wasn't too high in any of the sugars or something like that, and make sure that the fat levels are proper. That was another few months of back and forth testing on the recipes.

Brett Curry:

Cool. Tell me, when did you realize "Okay, I've got a real business here. This is not just going to be tasty brownies for myself, but people want this. There's a real business here"?

Nick Raccuia:

This is the first ever business I created too, so it basically two in one for me. I think maybe when I started my Instagram page around that time, and then I put the first production run in. It was super small. I think only 400-500 boxes. It was around that time where things were starting to get real in my head that "Hey, this is a lot of money I just paid for this product to be made."

Brett Curry:

So it's 400-500 boxes, so in each box is like a dozen or something?

Nick Raccuia:

Yeah, exactly. Yep.

Brett Curry:

So then you start posting on Instagram. Did they fly off the digital shelf so to speak? Or was it still ..

Nick Raccuia:

I took pre-orders, and I was just doing basic email opt-ins. I was getting tons of emails, tons of likes and shares, and people just saying "Oh, I really can't wait for this product. Looks so good," and stuff like that. I was just trying to build up an audience and some engagement.

Brett Curry:

Nice.

Nick Raccuia:

I took pre-sales and all that, and I think my first month I only did $2,000.00 in sales, but just out of nowhere it kind of hit it that it was like "Oh, wow. This could be something. You just got to keep working at it and scale it up now."

Brett Curry:

That's awesome. This pre-launch strategy, you're getting people engaged and interested, and email lists and all that. Were you following a formula? Or were you following Ryan Daniel Moran's teaching? Or other people? Or you're just kind of making stuff up?

Nick Raccuia:

I was just watching and reading as much as I could on business and e-commerce at the time, and trying to see what was working at that point. It really was just Instagram with link and bio, opt-in link and bio. We're going to do pre-orders. So I just kept doing that, posting every day. I did a few giveaways once the product was launched, so I gave away some free product emails. That worked really well. It was just basic go to the link, opt-in, and you'll find out when we launch. I was just doing a good job of emailing pretty consistently and just having it really personal and storytelling like, "Hey, this is what's going on with the brand. This is about to launch."

Brett Curry:

The storytelling behind the scenes, here's ..

Nick Raccuia:

Yeah, exactly.

Brett Curry:

The products and stuff like that?

Nick Raccuia:

Yeah.

Brett Curry:

Yeah. Yeah.

Nick Raccuia:

Even to this day, with my email marketing, I just sent one a couple of hours ago. It's just straight text. I don't use any pictures or videos, or anything like that. I want it to be a letter or an email from like a personal friend. I think that's the best way to do it, and just tell stories, and-

Brett Curry:

I love it. If you have the right tone, if you have a tone that really resonates with your market, then just the text only, in the past that was the easiest way to get it delivered. You would include images, you'd include video that the ESPs don't always deliver. That's not as much of an issue now. It's pretty to get images and stuff delivered through email now, but still, I like the plain text only.

Nick Raccuia:

Same.

Brett Curry:

I think it's pretty great. Are you telling stories about the diet and about healthy eating, and about what you're doing, kind of showing who Nick is? Or is it more of the story of the products themselves?

Nick Raccuia:

No, I do pretty much everything, a little bit of everything. Today's I was just looking at some of the Amazon reviews on my product, and I kind of did a "Celebrities Read Mean Tweets". That's what it was, I just picked out a few bad reviews on Amazon and just kind of talked about .. Yeah. That was actually Ryan's-

Brett Curry:

.. one of my favorite-

Nick Raccuia:

Yeah, that was actually a suggestion from Ryan, so I have to give him credit on that. I'll do that. I'll just talk about new products. I'll send a picture of one of the new products I'm developing. I'll be like, "Hey, sneak peek," and talk about the product, when it's coming. I'll do some "Hey, I found out this is the best meal on keto, so this is what I ate today."

Brett Curry:

Nice.

Nick Raccuia:

Yeah, just everything from the ups and downs. I know one time last year I had a good one that it was when Amazon was going crazy with COVID stuff, and they sent me back an entire pallet of my product to my apartment. So, I just took a picture of-

Brett Curry:

We don't want this anymore. There's a whole pallet. Oh, great. I'll just -

Nick Raccuia:

Yeah, in my small apartment.

Brett Curry:

Forklift .. my apartment.

Nick Raccuia:

Yeah, the guy unloaded it on my apartment front doorstep, and I was just like, "Oh man." I had a couple of friends and we loaded 70 or 80 huge boxes into a small room I have here. So, I just took of picture and told the story. It was like, "Thanks, Jeff Bezos. This just showed up." I used that as an opportunity to have a sale to move product quick, like "Hey, get these out of my apartment. Here's 10% off."

Brett Curry:

There's just certain people-

Nick Raccuia:

Yeah.

Brett Curry:

Who love stuff like that. They love that you're kind of the down and out, or obstacle, challenge, whatever. They love to hear when you stick it to the man as well. Yeah, it's a great excuse for a sale.

Nick Raccuia:

Exactly, yeah.

Brett Curry:

Fantastic. Let's talk about a few things about kind of what you got right, what you got wrong. Let's start first with, what do you think you got right in the beginning? What did you nail? I know the product is great. What else do you think you really did well in the beginning stages?

Nick Raccuia:

I think aside from a relation on focus on product development, I was doing that for months and months, going back and forth. I went through dozens of recipes and just focused on making the branding look really good. That was probably the number one. Number two, just knowing the customer really good-

Brett Curry:

Which, by the way, that is the number one, right?

Nick Raccuia:

Yeah.

Brett Curry:

If you don't have an awesome product, then everything else is going to be pretty mediocre.

Nick Raccuia:

Right.

Brett Curry:

Great marketing is only great if the product is great.

Nick Raccuia:

Exactly.

Brett Curry:

Obsessing about product always pays off.

Nick Raccuia:

Definitely. That was kind of obviously main number one. Number two, I'd say is just knowing the customers really well. It helped for me because I was the customer so I know what I was looking for, like "Hey, this is needed to kick my sugar craving," so I know what it needed from a taste standpoint, what the nutritionals needed. If your somebody who's not on keto, it's going to be really tough to make a keto product that tastes good, and what ingredients that go into it, what the macros need to look like, how your blood markers need to look after you eat something like this. Knowing your customer was super vital, and that also kind of ties in with the storytelling and all that too, with the emails. It's pretty easy for me to write keto emails when you're doing keto day in and day out.

Brett Curry:

Yeah. Yeah.

Nick Raccuia:

So, knowing your customer and then let's see-

Brett Curry:

Which I think really that should speak to hey, it's okay if you own a business and you're not the customer. I think it's quite a bit easier if you are. If you are living the keto lifestyle and selling a keto product, that's ideal. If that's not you though, you better with somebody that is. Either partner closely with them or work with them. You need to have that inside scoop, and you need to be able to speak the customer's language, it's on the product for the customer, talk to the customer with your email marketing and social media marketing, and things like that. So yeah, super, super critical.

Nick Raccuia:

Yeah, definitely. Like you said, I think working with influencers could be a big advantage there if you don't have that inside expertise, or finding a partner who maybe is in the food space, or something like that. Yeah, definitely product development, know your customer and then I'd say another big one was I collecting emails and building the audience from day one so-

Brett Curry:

Media that you own. Audiences that you own so to speak is super valuable, right?

Nick Raccuia:

.. yeah.

Brett Curry:

The email list, it's not going away anytime soon.

Nick Raccuia:

Right.

Brett Curry:

And really, it is your business, especially if you're selling a consumable or any kind of product where they're repeat purchasers. You need that email list.

Nick Raccuia:

Yeah. Yeah. I was pretty much focused on that, just building the audience from day one. I didn't sit around and say "Hey, this product's not going to be on the shelf until six months. I'll try and sell when I get it in six months." I was collecting emails from day one and then that kind of just really helped kickstart the launch and it's been one of my strongest revenue drivers to this day.

Brett Curry:

Then it's beautiful for new product releases and product launches .. you can leverage it in so many ways.

Nick Raccuia:

Yep.

Brett Curry:

Let's talk about what did not go so well? What did you not get right? And maybe kind of a question to go along with that is, what do you wish you would have done sooner? You can answer whichever of those you want to answer.

Nick Raccuia:

I think the biggest thing I kind of messed up on was not getting my second and third product out faster. I focused on the bars for the first two years, which is good. They needed the full attention obviously, and I was able to get a couple of flavors out, it went through a couple of reformulations, and new branding and all that. The space was growing so fast and it was still a lot of wide open space, especially for the brownie mix, and the fat bomb mix, and the chocolate nut butter, which were the products I launched after, but at that point I feel like the market was almost a little too saturated, especially for brownie mixes. I was ranked number one for the term "keto brownie" on Amazon for a long time. If I had got another two or three products out there, it definitely would have been a completely different revenue trajectory if I had those up way, way sooner.

Brett Curry:

Yeah.

Nick Raccuia:

It probably took me almost a full year to get another product out. I essentially fell behind a year there. I feel like I could have gotten that out and things would have turned out way, way different.

Brett Curry:

I'm just curious, I think this is always interesting to see the entrepreneurial journey. Were you just too taxed or too pulled to develop a new product? Or why did you develop that second -

Nick Raccuia:

Yeah, I think a lot of it is economics and being a self owned startup. It's like hey, all my time-

Brett Curry:

Bootstrapping.

Nick Raccuia:

Yeah, it's just like all my time's going to the bars. I'm doing marketing myself. I'm doing logistics, operations, customer service. By the time you get all that done, when are you going to have time to develop products?

Brett Curry:

It's a time and capital-

Nick Raccuia:

Time and capital were huge there.

Brett Curry:

Totally. Totally. Tight on both-

Nick Raccuia:

Yeah.

Brett Curry:

Which makes sense. Anything else you wish you would have done sooner? Like, "Man, if I could go back in time until 2016 or 2017 .. something, here's what I would say"?

Nick Raccuia:

I think outside of get on the products, focus more on product development is actually probably looking at investment or getting on some partners to help. I knew I needed an agency or somebody else to help, but financially... especially with an e-commerce food brand, the margin's already pretty tight.

Brett Curry:

They are.

Nick Raccuia:

With the product ...

Brett Curry:

.. lot of people that aren't in the industry don't know, the margins in e-commerce are pretty tight.. the game.

Nick Raccuia:

Yeah. Yep, especially with fulfillment costs and then you have to have an ad budget, and then the product cost, all the shipping costs, all that stuff, the packaging that goes into it all, the extra ingredients that go into it. Yeah, your margins get super -

Brett Curry:

You're paying a dollar for a product and you're selling it for $10.00.

Nick Raccuia:

Yeah.

Brett Curry:

You should be making a ton of money. whole lot of -

Nick Raccuia:

A whole lot of stuff. Yeah, it adds up quick, all the software and all that stuff.

Brett Curry:

Yeah, for sure.

Nick Raccuia:

I'll tell you, looking at funding for sure, because since getting it, it just kind of unlocked so much of my mental capacity, and my time and just . the projects we can start doing and the snacks we start developing.

Brett Curry:

I'm curious, then in terms of... Did you have some hesitancy to getting funding? Because I know a lot of people say, "Man, this is my baby. This is my business. I don't want to give up any equity."

Nick Raccuia:

Yeah.

Brett Curry:

Was there some of that at play? Or was it just "I don't really know how to find an investor." What prevented you from finding an investor earlier?

Nick Raccuia:

I think it was a little bit of all of that. Yeah, this is my business. I don't want to give any of it up. I don't want to deal with a boss, somebody coming in telling me what to do. How do I know this person's actually bringing value outside of just cutting a check, because at that point I can just maybe go to a bank and get a loan or something.

Brett Curry:

Yeah, yeah. Yeah, nobody's going to care as much as I do .-

Nick Raccuia:

Yeah, exactly.

Brett Curry:

I'm buying a partner that's not going to bring me any value. What's the point?

Nick Raccuia:

Yeah. It seemed like it was more headaches than it was worth, but come to find out it's not the case.

Brett Curry:

Yeah. Yeah. It's just so true, getting in a strategic investor, a strategic partner and have huge benefits. I'm not just thinking that because I'm part of the fund that is invested in your brand, and I'm an investor outside of that as well, but I do believe it. If you have the right person, the right investor, the right partner, it can make a huge difference. If you have the wrong one, it's terrible. But getting the right investor and/or partner is huge.

Nick Raccuia:

Is huge, yeah.

Brett Curry:

Yeah. How did that process come to be? How do meet Ryan Moran? How did that all come together?

Nick Raccuia:

I met Ryan a while ago, like five years ago now I think. I actually joined the Online Incubator with another entrepreneur, Billy Murphy, who had a 10 week beta program. I went through his program and that set the initial groundwork for "Hey, this is how you launch an e-commerce brand." And he went over high level marketing and stuff like that. He was really good friends with Ryan, and Ryan actually came and spoke at one of his really small meet-ups. That was the first time I ever met Ryan. From there, we just chatted mainly on Instagram. He always really liked the product, so he would buy some and I would send him stuff, send him new products that I was thinking of making, and stuff like that. I just always connected with him through social media.

Nick Raccuia:

Then back in 2020 I was actually trying to sell the entire business because I was feeling a little burnt out. COVID happened. My main product actually went out of stock and went down, so I had to do a reformulation which going to cost a lot of time and money. I just kind of got pretty beat up last year, so I was trying to sell the whole business. I just texted Ryan and said, "Hey, do you know anybody that'd be interested in buying this brand?" That's when he launched the Capitalism Fund. So, it worked out awesome.

Brett Curry:

I know someone pretty closely, me.

Nick Raccuia:

Yeah, exactly.

Brett Curry:

Yeah. Yeah, yeah. That's awesome. A couple of things to underscore there, I think this is just a great a business principle, getting involved in meet-ups and meeting influencers in the space, and going to events, and staying connected and just being a really cool person. I was an at an event, recently it was one of Ezra Firestone's events. I was speaking at it, and someone gave me free products when I was there. It was an amazing product. It was actually pants for my wife. This is so cool. We connected and I'm helping him, and we're talking and stuff like that. Just making those connections, you never know where that's going to go. Just purely from a networking standpoint, it was awesome, but maybe you want a partner, maybe you want to look for a deeper relationship.

Nick Raccuia:

Yeah.

Brett Curry:

You're going to find those through actual in-person meetings, and then just being a cool person. Awesome. Kind of walk through anything that you feel like is useful or instructive about that process of bringing on an investor. Even though you knew Ryan, and he's a good dude and he's well known, it's still kind of scary to bring on an investor.

Nick Raccuia:

Yeah.

Brett Curry:

What was that process like?

Nick Raccuia:

The main thing that made me feel most comfortable was that he just essentially said, "Hey, I want you to just keep running the business like you run it. We're going to be hands on, but we're not going to be steering the company. That's still what we want you to do because you know how to do it best, you know what products to make. We're just going to be there to support you with financial and capital obligations," and just high level advisory like, "Hey, we'll give you our input, but you have the final say on these things." That was what really made it all make sense. Not to mention, all the networking connections they bring. I was able to get several agencies on board within the first two months of working with them. That was a huge help, just to get somebody running all the Amazon and also the digital marketing, and stuff from that end, web development, all the things that I really hated doing I was doing. It just was making me not enjoy running this business, to be honest.

Nick Raccuia:

So, being able to get some help there and allow me to start focusing on making new products is just a win/win for everybody.

Brett Curry:

Yeah. Yeah. Really, taking the steps to free you up to do what you're brilliant at, because you're a mad scientist when it comes to these new formulas and creating products that taste amazing. You can't do that though when you're running the Facebook ads.

Nick Raccuia:

Yeah, exactly.

Brett Curry:

Which it sounds like you hate.

Nick Raccuia:

Yeah, I hated it.

Brett Curry:

Why do that?

Nick Raccuia:

Yeah.

Brett Curry:

Partner with somebody to do that. Great. What advice would you give to someone if they may be in a similar position as you, either maybe they're burned out like you were and thinking about "I'm just going to sell the whole company" or maybe they're just thinking a strategic investor, what advice would you give them as they're trying to find this person or this group?

Nick Raccuia:

I think what, like I said, is most important is making sure your visions align, and that they're the right fit. So, however much due diligence or research, or networking with them you need to do. Maybe see what kind of other businesses they were in, how they were doing, speak with people they work with. Someone like Ryan, it was just easy because I'd known him for five years and I've been... But at least even if I didn't know him, he's got hundreds and hundreds of YouTube videos and articles, and blogs, and emails, and products he puts out. With the internet age, it's really easy to dig in and see who this person is, what they've done.

Brett Curry:

Sure.

Nick Raccuia:

Yeah, I would say just focus on people who have either done what you want to do, or have a hand in somewhere you want to go, instead of just relying on a lot of these people who just say that they do this, and have no experience doing it right now.

Brett Curry:

Yeah. Yeah, and I think one thing that's really important to keep in mind is that we all hear the horror stories of private equity comes in, fires everybody, changes the whole direction of the company, runs them in the ground. All these horror stories. That certainly happens, but the deeper I get into this game and the more I start investing and meeting private equity groups and stuff, there's a lot of really great people. Ryan is unique, but there are other funds and other investors that are like that, that say "No, I want you to run the business. I want you to execute your vision. We're going to help you. We're going to help you with capital and with our network." So those investors do exist. Yeah, it's probably worth looking.

Nick Raccuia:

Yeah, and if I were to go back in time I would have done this deal from day one. If I ever start another business, I know from the get-go I'm going to look at it.

Brett Curry:

.. investor, yeah.

Nick Raccuia:

Yep.

Brett Curry:

Absolutely. Awesome. Cool, so let's talk about then what's next for the company? I know there could be some things that are secret and under wraps.

Nick Raccuia:

Yeah.

Brett Curry:

We love to have breaking news on the podcast, but also don't want to spill the beans too quickly so to speak. What's next?

Nick Raccuia:

Right now, I'm working on two new stacks, but I probably won't... I already told you before the show, but I'll probably keep it between us for now.

Brett Curry:

I think it's good. Yeah, part of me is "Okay, it'd be fun to talk about, but I'm also investing in the company. I kind of rather nobody copy it."

Nick Raccuia:

Yeah.

Brett Curry:

The snacks sound amazing, and I can't wait to try them. We'll leave that teaser there. These are two, I think they'll be wildly popular snacks, but yeah let's keep it under wraps. Go ahead, continue.

Nick Raccuia:

That's the major focus now, is getting new snacks out, something I haven't been able to do for a few years just with all the logistical and nightmares I've been talking about and everything just being on my shoulders. We have the agencies on board, so we're aggressively scouting marketing now, going into heavy customer acquisition, and then just trying to roll out the new products over the next hopefully two to three months we'll get a few out there. That's just the main goal, just new products, more customers, growing the brand.

Brett Curry:

New customers and going hard new customer acquisition.

Nick Raccuia:

Acquisition, yeah.

Brett Curry:

Now is the time to do that. E-commerce is still hot, even though as we record this the world is opening back up. It's pretty open in my part of the world, my part of the country. But e-commerce is still growing, so now is a great time to double-down on new customer acquisition.

Nick Raccuia:

Yep.

Brett Curry:

Anything you've learned from the agencies you're working with? Has your mindset shifted at all when it comes to new customer acquisition from what it was pre-agency?

Nick Raccuia:

Mm-hmm (affirmative). Honestly, the biggest mind shift I've had with customer acquisition actually came from Ryan during our meet-up last month, where I was just hesitating because self-funded I've always had to focus on profitability, like "Hey if this isn't making money, I'm not going to be able to pay myself or eat, so it needs to be profitable," whereas when you have an investor funding, and you have a customer acquisition model where it's okay to break even or even bleed a little bit up front. You can be a lot more aggressive on customer acquisition. That's been the biggest mind shift probably all for me actually, which is just like we're going to aggressively focus on top line revenue and customer acquisition.

Nick Raccuia:

We understand if we're going to bleed a bit for the first few months on acquiring those customers, like the lifetime value, getting customer information and data, and then new product launches coming down the pipeline. We'll definitely be able to recoup that cash. That's definitely been the biggest shift.

Brett Curry:

Awesome. As an ad guy, I'll speak to this a little bit, we have some clients come to us and say "Hey, we need to hit a 5-6X ROAS," or return on ad spend. "So, for every dollar we spend, we need to get $5.00 or $6.00 in sales." That can happen on some channels. On other channels it's not really possible. What happens you say "Hey, I can actually do it 2X," so spend it all and get two, or even in some cases spend it all and get a $1.50 because you're all about new customer acquisition and growing. That doesn't just allow you to double your spend or triple your spend. Sometimes it's like a 10X increase in volume on what you can get from your ads because to get to that 500 or 600% return on ad spend, you have to be so focused and so narrow in what you're doing that you're really limited.

Brett Curry:

So, if you can, if you have the funding and if you're able to break even on new customer acquisition because you know what your lifetime value is, or you have funding, then you can do some really creative stuff with advertising and grow so much faster. Awesome. Good for you, that you're doing that. Fantastic man. If people are listening and they're thinking, "Man, I'm hungry. Keto or no keto, I want to try the brownie," how and where can they find your products?

Nick Raccuia:

The best place is just either my website, KetoBrownie.com, or Amazon, you can search "ketobrownie" all one word. We have three flavors: peanut butter chocolate chip, blondie cookie dough, chocolate almond. Those are the best places to try it. I would highly suggest you microwave them for 15 to 20 seconds.

Brett Curry:

You know what's weird, I've eaten a lot of these things now. I've never tried the microwave thing.

Nick Raccuia:

Oh, you never tried it?

Brett Curry:

Dude, I don't know why.

Brett Curry:

I think I've heard you mention that before and I've never tried it. That will be next on my list is to microwave the brownie and give it a shot. Also, if they go to your site and sign up for your list, then they'll know about new product releases, and these two new amazing products that are coming out soon.

Nick Raccuia:

Yep. We have a popup for a discount, or you can just go to the footer and sign up for the email list and you'll start getting emails from me.

Brett Curry:

Awesome. Nick Raccuia, ladies and gentlemen. Nick, thanks for taking the time, man. This was a lot of fun. Really excited about the business, and excited about where it's headed. I can't wait to be a small part of it as you continue to grow and take over the world here.

Nick Raccuia:

Yeah, definitely. I appreciate you having me on.

Brett Curry:

All right man. Sounds really good. As always, thank you for tuning in. We'd love to hear from you. What ideas do you have for the podcast? If you haven't done it, we would love that five star review on iTunes. It helps other people discover the show, and makes my day. With that, until next time, thank you for listening.

‍

Episode 178

:

Ali Karsch - LVPR

How to Get Free PR with Ali Karsch of LVPR

Free press can be worth millions to your brand and you don’t have to be as dynamic as Richard Branson to get free PR.

While getting free PR for your brand isn’t easy, it’s not impossible. And the rewards can be huge. Great companies and CEOs have always understood this. From Steve Jobs to Walt Disney to Richard Branson and others. Free press can be worth millions to your brand. And you don’t have to be as dynamic as Richard Branson to get free PR.

Ali Karsch is the co-founder of LVPR, a PR company that works exclusively with cool DTC brands like NATIVE, Cloud Paper, Everyday Humans and many others.

In this episode, we condense Ali’s 15+ years of PR experience into a power-packed interview. We cover the most important topics so you can start getting free PR now for your brand. Here’s what we discuss:

When’s the best time to engage with media?
How to craft a compelling founder story that the media is eager to share?
How the pandemic has made getting PR easier (and harder)
LVPR’s 5 Rules for brands it works with
What is commerce/affiliate PR and how it’s changing the PR game.
Plus more!

‍

Ali Karsch

Little Voice Public Relations

Mentioned in this interview:

BOOM! by Cindy Joseph

Usual Wines

Live Bearded

Everyday California

Episode Transcript:

Brett:

Well, hello, and welcome to another edition of the eCommerce Evolution Podcast. I am delighted that you have tuned in today, and I am super excited about today's topic. This is not something we've ever talked about at length on the podcast, and that was a shocker to me because this is really, really important stuff. Today, we're talking about PR, PR for your e-commerce brand. If you're an agency owner like me or run a SaaS company, we may sprinkle in a couple of nuggets for you as well, but going to focus in on those D2C brands today.

Brett:

My guest today is Ms. Ali Karsch. She is a PR specialist, 15 plus years in the industry. She's the founder of LVPR and been running that company for about five years.

Brett:

We actually shared a client for a number of years, Native Deodorant. Ali and team worked with Moiz at Native Deodorant, as they were scaling and growing on their rocket ship trajectory. That was a fun connection that we have as well. Of course, we run the Google and YouTube for Native to this day. With that intro, Ali, welcome to the show. How are you doing? Thanks for taking the time.

Ali:

Thank you for having me. I'm good. I'm loving the state of our industries right now. I think it's been really fun to see the comeback of the D2C world. I'm excited to chat with you today.

Brett:

Yeah, me too. I love good brands. I love fun, consumer brands. I've always loved media. I love advertising. Obviously, I'm an ad guy, but I've always loved just how good brands appear in the press. I'm super excited to dig into this topic because I don't understand PR that well. Of course, I've talked to a few people, have a little bit of knowledge, but it's not an area of expertise.

Brett:

I partially want to selfishly just ask you questions that I can use for my business, but I'm going to definitely ask you more about D2C brands and we'll all get benefit from this. So if you don't mind, Ali, give me the quick background, how did you find yourself in PR? Was this the dream? Was this the dream since you were a little girl or how did this come to be?

Ali:

No. I think I wanted to be in fashion, probably like every girl. I was in marketing in college, in business and marketing, and thought fashion marketing was my passion in life, and quickly learned it was not after doing an internship in New York City with Giorgio Armani. I learned very quickly, and stumbled into PR and I really loved it.

Ali:

I think the thing I like most about PR is just that every day is different and every client is different. It never feels like you're tired of doing this job. For me, I have ADD and so that just really works well for me. No, I loved it. I started out, my first job was in PR and I've continued since and grown in different capacities. I really enjoy the industry.

Brett:

Your original job was at a PR firm or you were working at a media outlet for a PR firm?

Ali:

I've always worked with agencies only. I've never worked on the flip side, but I have so much respect for the editorial world.

Brett:

It's so interesting that our two worlds are quite similar, PR and advertising. They have a lot in common if you think about it. I love the fact that no two days are the same for me, either. Every client is different, every challenge is different and I've got to have variety or I go crazy. At the end of the day, what we're both doing is telling good stories. We're taking the story of a brand and bringing it to life in our respective medium. We do it with Google ads, and YouTube ads, and Amazon ads, and you're using media. I want to dig in, lots of stuff I want to talk about.

Brett:

The first thing, you had mentioned, as I was getting to know you and getting to know LVPR, you talked about one of the requirements you guys have before you work with a brand, is that there has to be a good founder story. Can you talk about what that is? I think there are potentially some people, who are too humble and they think, "I don't have a good story. I'm just a guy or a gal that started this business and what's interesting about that?" What are some of the elements of a good founder story and what does that look like?

Ali:

Yeah, you're right. A lot of founders don't ever want to talk about themselves and we have to push a lot of them. But what we really do best with is products that came from a purpose. So usually if a product was created by, let's say it's a female product and it was created by a male, it's really hard to tell that founder story.

Brett:

I created this because I wanted to make a lot of money.

Ali:

Yeah, and that doesn't translate.

Brett:

I can get into capitalism too, but that's not a really compelling story.

Ali:

Yeah. We really like to work with brands where they found a problem and developed the product out of a need for a solution. And because of that, they're like emotionally invested in the product. Therefore, the customer base aligns with the product so much more deeply because they realize how invested the founder is.

Brett:

Like a Sarah Blakely, the founder of Spanx, and how she made the original 100 pairs at her kitchen table, and she made it because all of the options were terrible for women at that time. That type of story.

Ali:

Right, exactly. We're working with a brand right now that it's a father that created his product. And it was once he had children and he realized that there was chemicals in diapers, and there was chemicals and baby wipes and they were all working together unfortunately, to be not the safest option for his child, he created a new product out of it. It's those moments of realism that help customers connect to the products, and we like to be able to make those connections and tell that story in that capacity.

Brett:

Yeah. Even Moiz Ali, founder of Native Deodorant, really realizing that there weren't any good, natural deodorant options. He read the label of a deodorant stick and realized, "I don't know what any of these ingredients mean. I don't even know how to pronounce most of them." That was the impetus to and there's some family connections, I think, too. Maybe a pregnant sister? I could be making that-

Ali:

He was trying safe option for his sister and he couldn't find one so he had to make one.

Brett:

Super cool. Then how do you uncover what are the elements that you should talk about? I think there are twos ends of the spectrum. I think there are people that don't like to talk about themselves, they've lived their story so they don't think it's interesting. Then there are other people who don't mind to talk.

Brett:

I have several people like this in my life where they don't mind to talk, but they want to share every detail and really not every detail is interesting. How do we know what we need to share? What's the compelling part of the story that we do need to share?

Ali:

Well, so we do a tactic called media training. That's where we work with those individuals that have a lot to share and we need to help them condense what they need to work on. In that capacity, it's really just writing a narrative for people and helping them stick to their and saying, "What's the point? What are we trying to communicate? What's the end goal? Selling the product." So just really trying to stick to those key message points and not going too far outside of the box because you lose your audience once you do.

Brett:

Have you ever seen the movie Hitch with Will Smith where he's coaching people on how to date, and not be annoying and stuff? I love the line where he says, "People want to see the real you, but they don't want know everything about you."

Ali:

Exactly.

Brett:

Be authentic but don't share too much because we don't care. I thought that line applies to PR, and advertising, and dating as well. Let's talk a little bit about when is the right time to look at PR. If I'm just coming up with my business idea or a new product idea, is that the right time? Do I have to have a certain amount of traction and success before I say, "Now's the time to really consider a PR strategy?" What should I be considering in my business before I go down the path of trying to get PR?

Ali:

This is a great question and I think it's one that we find people come to us the most and don't know the answer to. I'm going to labor on this one a little bit.

Brett:

Love it.

Ali:

There're multiple points, honestly, but brand launch for sure, is the time to invest in PR because it's the moment you tell your brand story from the start. So there's a lot of times where brands will choose to soft launch. While sometimes that's necessary due to funding or for whatever the case may be, you really miss that moment of being able to get out from the gate and say, "Here's who we are and here's what we're doing," so I recommend brand launch.

Brett:

Really that brand launch with the founder story, that combo is pretty compelling. We all like new things, media outlets like to talk about new things so that combo is pretty good.

Ali:

New things and new products. If you're a new category or if you're introducing something that's not out there, that's your moment. Brand launch, for sure. We always recommend if you're wanting to talk about it, if you fundraise, fundraising is a great time to also get out there and talk about some news.

Brett:

Is that typically because business publications will pick up on that? Also, I guess, some consumer pubs will pick up on that too.

Ali:

A lot of times buyers. If you're trying to go into retail and if they see somebody did a large raise, then they know now they have the capacity to produce more product and could be ready for retail.

Brett:

It's way to leverage PR to potentially get in to retail distribution, if that's a goal.

Ali:

Totally.

Brett:

Nice.

Ali:

It's trade press. It's not huge consumer news, but it's definitely traded industry news that could really be helpful in furthering your business. New product launches are always a time when you want to put PR behind your business and then seasonal moments. For us, our biggest time of the year is holiday. We have a bajillion brands that always come in October 1st and say, "We need your support for holiday." And it's like, "Well, you should have thought about that in July because that's when we start pitching for holidays." Just understanding what are your seasonal moments, and when do you need a hard consumer product push, and then working backwards.

Ali:

So to that point, I'll share with you, Brett. If you are a brand that likes print coverage or long lead coverage, which is like magazines, we start pitching for holiday in July. You need to have your assets, you need to have everything. It's crazy, which it's right around the corner. Then short lead wise, so that would be like online gift guides, broadcasts, anything on a shorter timeline, we start pitching in September. You need to have all of your ideas, product development, images ready ideally in August.

Brett:

That's awesome. One of the things that I think people struggle with, at least in conversations I've had, it seems like people struggle with this. When we approach holiday, we're thinking about what promotions are we offering? What discounts are we offering? What is the theme of our event surrounding holiday and what's that messaging?

Brett:

That's not what gets you the press coverage. You're not going to say, "Hey, I'm sending out this press release because we have 20% off for the Christmas and New Year's." Whatever, that's not interesting. What are the angles you should look for? You mentioned something like a buying guide, but can you elaborate on that? What should we be looking for? Almost everybody listing for holidays, huge for them. How do we make holiday newsworthy?

Ali:

Well, it's such a good question. It's one we struggle a lot with, for our brands because well, I'll just say advent calendars have been huge for us the past three years.

Brett:

Advent calendars?

Ali:

Advent calendars. We work with VINEBOX and they do vials of wine, and they have done a 12 nights of Christmas or 12 nights of the holidays' advent calendar every year. It sells out-

Brett:

Let's face it, a lot of us could use a vial of wine for the holidays. You got kids, you got family, you got shopping.

Ali:

It literally sells out in October. It's crazy. Advent calendars, it's become a trend where a lot of outlets will cover advent calendars. We have coffee advent calendars, you have dog treat advent calendars, just like gimmicky things work.

Brett:

Who do you find is picking that up? You may have just made up the dog treat.

Ali:

No, I don't think I did.

Brett:

You didn't. I wonder if there was a story. That's awesome. Who's picking this up? What outlets are discussing the doggie treat advent calendar?

Ali:

Every outlet will do a wide range of gift guides. Refinery 29, Cosmo, Women's Health, GQ, Esquire, all of these outlets will cover this category throughout that seasonal three months. Pretty much, if you do something gimmicky like that, you're pretty much guaranteed you will get coverage, which is great. There're different categories of gift guides, and sustainable products is one that always does really well.

Ali:

Products with a give back, so if there's like a percentage of sales going to something, those always do really well. Bundled gifts, things that are just themed for the holidays do great. You just have to think along those parameters and make sure you're packaging your products in a way that's going to do well in these guides that already exist.

Brett:

Cool. Most of the time when you're showing up in gift guides, these are online gift guides, I would assume like in Cosmo or Refinery 29 and stuff? Are these showing up in print very often or is it mostly online?

Ali:

No, they do and those ones change every year. The biggest one that everyone wants to be in print is Oprah's Favorite Things. That comes out in November every year. They usually put together their lineup in August.

Brett:

Now, is that something you can influence? Are you pitching Oprah's people ever or does Oprah just decide these things?

Ali:

No, you pitch. There's a gift guide editor you pitch, and they're very picky, but Oprah picks everything. There are, I will say, a little trick of the trade. In the past couple years they've been associated with Amazon. If your product is available on Amazon, you have a much better chance of being included.

Brett:

Interesting. Oprah really digs Amazon. Is she doing that because it's easy to do?

Ali:

Because of the commission.

Brett:

The affiliate commissions.

Ali:

That way they earn off of it.

Brett:

Got it.

Ali:

So they get affiliate commission if purchases go through Amazon.

Brett:

Interesting. That actually is a great transition to another question. I know there's affiliate PR and commerce related PR. Then, of course, there's what everybody thinks about, the editorial PR. One thing that was a revelation to me a number of years ago that that may or may not be a shocker to people listening, is if you were to search top whatever product, top hearing aids, top noise canceling headphones, top, whatever. You look at those organic results on Google and you click on some of those. There's a top 10 list, or a top 50 list, or whatever. People are usually paying for all of those positions.

Brett:

Someone has done the expert work to get that page to rank in the search engines. Then they're charging people a couple 1,000 dollars or more to be in that list. They're making money. Oprah, it looks like she's picking the product so she really does like it, but she's also getting an affiliate commission from Amazon. None of that is wrong per se, it's just important to know. It's also important then to understand probably some people, when they hear PR they just think editorial. Can you break down those two worlds a little bit and how should we approach them?

Ali:

Yeah, for sure. It's honestly something that's really evolved in the PR world over the past, I'd say, three years. Previously, affiliate links was never apart. It was very much church and state and now it's different. I get it. It makes sense. I would say 50% of what you would consider editorial placements are commerce placements that means-

Brett:

Paid affiliate placements.

Ali:

They're not paid. In your world, I think people maybe bump them up. In our world, it's more that you are guaranteeing a certain percentage of commission if they use your affiliate link. Let's say they do a roundup on the best natural deodorants, and they pick Native, they pick Curie- .

Brett:

Lume.

Ali:

They pick Myro, whatever, all of these other ones. And each product, in order to be in that list needs to provide an affiliate link. It's either to their D2C site with a percentage of commission, or to Amazon or to Target. And the way in which an editor decides which affiliate link to use, is based off of how much commission the retailer is providing. So we tell our clients that they should always compete with their retail partners, because if Target offers 20% and you're only offering 12 on your site, they're always going to pick Target.

Brett:

Always.

Ali:

So those are just things-

Brett:

People might pick Target anyway, even if the price is the same, because it's easier to buy from Target in some cases. We deal with that same thing all the time where we're running Google traffic, Google shopping traffic, whatever, YouTube traffic, and then sometimes the brand is 20% more than everyone else. We're like, "Guys, this is okay if all you want to do is educate, but they're not going to buy from you. They're going to buy from Target, or Amazon, or one of these other places."

Ali:

Right.

Brett:

Same is true in the PR world as well.

Ali:

Yep. It is. It's okay. We know it's happening and we help our clients make sure they're set up to succeed in that category. It's something that if you are doing PR and you are not with an affiliate network, you're really missing out.

Brett:

Got it. Got it. Totally makes sense. Is PR something we should do all year long? So if I'm a D2C brand, holidays huge for me, but obviously I'm selling stuff year round, should PR just be an ongoing initiative? Or does it become too hard to get coverage in the off season so I just should focus on those seasonal hotspots? How should we approach that?

Ali:

That's a good question. I think it's different for each product, honestly, or each brand. If you're a sunscreen brand although you should be wearing sunscreen all year long, the amount, the majority of coverage is spring through fall. I would maybe-

Brett:

Maybe you can do an interesting piece. Now that I'm talking to you, my PR brain, which I didn't know I had, clicking on. But maybe something like, "Hey, you're hitting the slopes. What a lot of people don't know is you could actually get sunburn while you're on the slopes. Using sunscreen while you're snow skiing," or something like that could be a fun angle.

Ali:

Totally. Listen, I used to work on Supergoop! and I've also worked on Everyday Humans, it's just another sunscreen brand. But the reality is the amount of articles that are published during that time, even if you're pitching those stories, which seems like it should work, they don't run. If a brand came to me, I would say, "Yes, maybe you should prioritize your timeline of PR," but we encourage our brands to have enough to talk about for a whole year so that PR is always on.

Brett:

Nice. It totally makes sense. It also makes sense, I guess, to come up with that annual plan, that editorial calendar, but just know that there's going to be certain times a year when you might not get the coverage you want. That this stuff might just not run because while you can't get sunburned snow skiing, maybe that's not a very compelling story or there's other breaking news. Well, whatever, it just doesn't get run.

Ali:

Right.

Brett:

Got it. Any tips then? How should we get started on this editorial calendar for our PR push? Should we just mainly think seasonally, what's what's seasonally relevant to our business and the PR outlets will care about? How else would you recommend looking at that calendar?

Ali:

So what we typically encourage our brands to do is share with us. Yes, their product dev calendar so that we can align a calendar of our pitch angles to support what is coming in the innovation pipeline. But then, and I think this leads to what you guys do, Brett. Then we also encourage them to introduce us to all their agency partners so that we understand, "Okay, are you running a certain ad campaign during this time? Are you running a really cool SMS campaign? What else is going on in your world?"

Ali:

Because something that's been really effective for us, for a lot of our brands, because I think D2C brands just do the coolest marketing initiatives, is getting marketing coverage. When there's a slow product time, but there's a sick SMS campaign that is just converting like crazy, then we'll go out and tell that story on behalf of the brand, on behalf of their agency provider and-

Brett:

Can you just use that example? You would tell that story to marketing publications, B2B publications that would be interested in an SMS campaign story?

Ali:

Yeah. We'll do Ad Week, we'll do Tech Crunch, whatever the specific initiative is, but we'll go and find the coolest or the most top tier placement for them to tell that story so that it keeps the pipeline full. It also shares just how this company is really growing from a case study perspective that usually brings in investors.

Ali:

There's a lot of just buzz that comes out of it. So we try to make sure that the entire year there's always something we're talking about. When there's a quiet moment on the product side, you focus on a founder story or a brand story, and just really try to keep everything a buzz so the brand never is not top of mind.

Brett:

I love that. I love that. That's super powerful. So I know one of the things you talk about too, it's a requirement to work with your firm. There's a requirement, I'm sure, to show up in media outlets, but you talk about having a good product.

Brett:

I know no one listening here would say, "My product's pretty average. It's pretty, too." Are there any specific criteria you're looking for there? The reason I'm asking this question is just this might be helpful for people to look at their own product and evaluate how interesting is this product to media outlets.

Ali:

Yeah. It's a great question. Honestly, I think it's a personal opinion just from my perspective. I do base, for instance, we used to have a pimple patch brand called Hero and they're amazing. They really dominated the space, they were out quicker. We had another pimple patch brand come to us to, and say, "We want to work with you."

Ali:

I had to turn it away because I was just like, "You're just not as good as what's already out there." I didn't say it that way but at the end of the day, you can't compete with what's already working in the marketplace. You really have to be aware of where are there holes, and how are you solving that problem? If it's already solved, it might not be the best to pursue.

Brett:

Yeah, totally makes sense. What you guys do, again, there are comparisons to what we do. It's a close partnership, and you're pouring your heart and soul into to getting these ads to work on our end, or getting these stories picked up and for there to be traction. And if all you're doing is coming in a little cheaper than what's already out there, and you're not as good.

Brett:

We one time and I'm almost positive, this business is defunct so I think it's okay if I mention it. It was 99 cent razor club. We're like, "Oh, okay." Instead of a dollar shave club, it's a 99 cent razor. Anyway, but there's not a real compelling story there. Nobody wants to save a penny really so there's got to be something compelling there.

Ali:

Right.

Brett:

But it is subjective. What product we like best is subjective. Super interesting. I actually want to go back to a point we were just on, because I think we need to go a little deeper in it. That's coordinating amongst the agencies. A quick example from the ad world and I think this would totally tie into what you guys are doing. So we've had a number of our brands that have appeared on Shark Tank. A lot of times they come to us after they've already had their first appearance, and now they're gaining traction, and they're really growing.

Brett:

But then on occasion, Shark Tank will re-air their episode and we always have to be ready for that. We'll see their branded search terms, as an example, their branded search spend will sometimes three X what it normally is. On the agency side, we've got to get budgets ready, we've got to get bids ready. We've also got to think about, "Hey, when someone sees this episode, what might they be searching for?" They might type in it's this type of bracelet on Shark Tank, or it's this type of baby product. If they don't remember the brand, but they remember seeing it on Shark Tank, what keywords will they be typing in, things like that.

Brett:

How do you recommend and how do you guys typically work with other agencies that are serving your brands, whether that's search, or creative or TV, or whatever? How do you help coordinate with PR efforts?

Ali:

Great question. I'll give you an example because we just did this for Earth Day. We work with Cloud Paper, which is a bamboo toilet paper brand. They were doing this really cool initiative called flush.com.

Brett:

What's flush.com?

Ali:

Flush.com. It was a fake microsite that told people that if they wanted to purchase toilet paper, they should come here and pick which forest they wanted to cut down in order to get their toilet paper because they're all about saving trees. It was awesome. Robert Downey, Jr. and Ashton Kutcher are investors in the brand so there's a lot of comedy that comes-

Brett:

It's called Cloud Paper. Obviously, it's a serious problem.

Ali:

Right.

Brett:

Sometimes though, the way you attack a serious problem is with some humor. Okay, great. You want toilet paper, so which of the rainforest would you like destroy? It's funny, but also really opens your eyes to aha, there is a deal here. Flush.com, I'll check that out. Did you guys help inspire some of that?

Ali:

No, we cannot take credit for it. That was their idea. But point being is that-

Brett:

But you helped them leverage it, and get traction, and get visibility behind it?

Ali:

Yeah. They have a marketing agency that came up with this idea and then they had a social play, we had a PR play. We were all collaborating to break this news basically right around Earth Day. And so we had to put together a marketing calendar that we each affected and put in our timeline, our pitch structure. And so that we all made sure that what we were doing, wasn't going to trump the other person's news, because we did have an exclusive with Tosh Company.

Ali:

Actually, the exclusive was with that company. If anyone went out first before that piece, then it messed everything up. Long and short is we work, we do multiple calls. We all are aligned on the strategy and work together to make it successful. But if you don't sync up, there is a lot of room for error. So I just recommend calling that out from the start when you think something could have PR legs, making sure your PR team is looped in on any of the other agency sides.

Brett:

So this may or may not be an area you guys spend a lot of time in, but I see that there's value in always creating the next new piece, and always getting the next new story to break or to be covered about your business. But I think there's also something powerful about leveraging the same story. Getting the same story told over and over again in multiple, media outlets. So any advice? When do you know, "Hey, let's just double down on this idea and try to show this everywhere versus let's move on to the next idea?" Any advice there?

Ali:

That's a good question. I think it's really case by case. It comes down to what is the media gravitating towards? If they keep covering the same heats of your business or the same component, then don't let it go. Just keep going with it. Then they'll be some new-

Brett:

Slightly different angle, slightly different wording, but essentially the same thing.

Ali:

Yeah. We have a wine brand, Usual Wines, and they're natural. They're sulfate free, there're no sugars added. And as much as we try to branch out from that, that's what everyone is really interested in right now. We just keep going back to that angle, but there's more to them.

Brett:

But that's the angle people care about. Maybe they can sneak in some of those other elements when they're talking about all natural, and sulfate free, and no added sugar, things like that. You got to give the people what they want. You got to give the media outlets what they want. One thing that I'll underscore, is that once you do get a couple of really good pieces you get a TV segment, you're on Shark Tank or there's something big, you can leverage at forever in my world if you want to.

Brett:

As an example, Boom, by Cindy Joseph, Ezra Firestone's company, partnered with him for five or six years now. They still use this ABC one, or ABC seven, I don't remember, story from New York City. An interview with co-founder, Cindy Joseph, on how she broke into modeling late in her career after she let her hair go gray. Then she started the company with Ezra. It's an awesome story. We've been running that story, that clip, for six years and it still works.

Brett:

We're chopping it and doing different things with it. We're about to do this new production that we're super excited about, but we're still going to use elements of that and it still works. So I think that's also the power of why it often makes sense to hire a company like yours, even if you don't get that long of a run of PR. Let's say it's a short lived run or whatever, you can still leverage it forever almost.

Ali:

Totally. Honestly, that's how I started out doing D2C PR was brands would come to me and say, "I just need a really cool headline or I need," we call them love letters, but they're like standalone pieces just so that they could put ad spend behind it. That's all they cared about was turning, flipping their PR hits into an ad and continuing to push it. Yes, that's what we do a lot too.

Brett:

Yeah. Totally makes sense. So I want to talk, people are obviously getting a great insight into what you guys do but talk a little bit about the agency. What makes you guys different and what are you proud about with the agency? Then I want to dig into that a little more.

Ali:

Oh, thank you. What am I proud about? I think we work with really cool brands that are doing good things. And that, for me, when I started at LVPR was really important to me. I didn't want to just work on any brand. I wanted to work on a brand I really believed in.

Ali:

So we have five pillars that you have to check the box on in order to work with us. And they are a strong founder story. If it's a female founder, even better. They need to have passion, or cult-like, passionate followings. They need to be cool brands.

Brett:

I remember we talked about that a little bit in prep, but we didn't dive into it. How would you put parameters or how would you define that passionate, cult-like following?

Ali:

It's hard to put it into words, but I'll give you a couple brands as examples and I think it will make more sense. Glossier, Away, Native is one too. Any brand that starts on a D2C site and then goes into retail and their customers get there quick enough to touch it in person. Those are cult-like followings, where they tell all their friends about it, that they are just so obsessed with the brands and the products. Usual Wines is another one. Every time they launch a new product-

Brett:

I'm sorry. What was the last one?

Ali:

Usual Wines and it's a single serve wine brand. Every time they launch a product, they open it up to their email and SMS space first. No lie, it always sells out because their customers are just like, "Yes, another new something." That's the idea of-

Brett:

That speaks to really great product design. It speaks to community. It speaks to a lot of things. Usually those companies have to be doing something good as well, or else people wouldn't be paying attention. We see the same thing, by the way, with Boom by Cindy Joseph that I just talked about. Another client, Live Bearded, a shout out to the boys at Live Bearded. Great personality behind their brand. They sell out with every new product release just to their list, which is pretty cool.

Ali:

Yeah.

Brett:

It's a cult-like following. Then it's a strong founder story, cult-like following, then what's next?

Ali:

Products that we would use in everyday life. Things that we really like. A charitable give back or a B Corp, so an element of charity and sustainable. They need to have an element of sustainability in them. If they're fully sustainable, even better. But those are the five that we really gravitate towards. And we also, and you will probably understand is that we don't take on toxic clients. We're here to have drama free, really great relationships.

Brett:

Life's too short, man. Life's too short to work with drama queens. Sometimes, drama queens are dudes. Often, they're dudes but we don't want to work with the drama, for sure. One thing I'll speak to about both the charitable element and the sustainable element is not only are those two elements the right thing to do, we should do that.

Brett:

There's such a benefit with your team as well. If you're debating, thinking about it, should we have a charitable component, and even talk about that a little bit, publicly or sustainable component? I think the answer is yes, you should.

Ali:

Totally.

Brett:

I think what the best thing to do is find a charity that fits your business. My buddy, Chris Lynch, at Everyday California, their stuff is about ocean preservation. Because they're right on the ocean and they've got an adventure side and an apparel side so it's all about the ocean. We're an e-commerce agency, we're a business so we actually really believe in microloan programs, and helping widows start businesses in other parts of the country, and helping at-risk teens like get life skills.

Brett:

We've got a couple of different charities that we partner with that resonate with us. And so what happens was your team gets excited about that. There are those moments when you need something more than business to drive you. Having those components for your team is powerful. And then as we share it, it does attract customers or it helps seal the deal a little bit. I think also, as you shared, it encourages other people to give and be charitable too, which is cool. Then sustainable, everybody's looking for that. We need to do that. Why wouldn't we do that at this point?

Ali:

Yeah. I think customers and consumers are holding brands more accountable in these initiatives and they expect an impact. They expect elements of sustainability and if you're not doing it, they ask you why.

Brett:

When you think about it, now this is and we're going to delve into a topic that we've never talked about in the podcast before, cryptocurrencies. I just recently started dabbling in cryptos. I don't know much about it, but I'm still dabbling a little bit. But at the time of this recording now, who knows what's going to happen when this episode actually publishes. The world of crypto could be totally different. Right now, Bitcoin is tanking.

Brett:

It's down like 50% yesterday or something like that. Part of that was driven by Elon Musk and him tweeting. As he tweets, cryptos react but he was talking about the fact that Bitcoin is not very green. The mining process of mining Bitcoins is not environmentally friendly, uses a lot of energy. It's things like that, who would've even thought crypto, it's all in the cloud, it's all make believe some people say. It's not really, but even that is driven by sustainability so it's a big deal. It's just a big deal.

Ali:

Totally.

Brett:

Cool. Awesome. So if someone is listening and they're like, "Man, I've got a cool brand and I fit those criteria," then they should reach out to LVPR and that's just lvpr.com, correct?

Ali:

Yes. Correct.

Brett:

Fantastic.

Ali:

We're here for you.

Brett:

This has been super good. I guess the last thing or things I would ask is what if someone is just really interested in this topic and maybe they want to dive in more, learn more? Do you guys have any free resources that you would recommend, or do you have any favorite books, favorite podcast, favorite resources that could really get someone on top of their PR game?

Ali:

Oh, that's a good question. What do I like to read? I don't read a lot about the industry because I know a lot about it.

Brett:

What do you like to read though? This is just a fun question.

Ali:

I love to read thing testing. I love to read Cassandra. Look, there are a lot of random, trend based stuff, but my recommendation honestly, would be to go to Clubhouse. I just feel like they're so-

Brett:

Clubhouse.

Ali:

Yeah.

Brett:

Really?

Ali:

I just think there's so much knowledge on Clubhouse.

Brett:

Who should we follow on Clubhouse?

Ali:

There's a lot of people who I would follow.

Brett:

I'm totally putting you on the spot here, by the way. This is so interesting and thank you for allowing me to ask you just random questions because I do this, I prep with it. I want to ask you-

Ali:

You caught me off guard. I wasn't ready for that.

Brett:

So I downloaded Clubhouse and I've been on there a little bit. Some of my friends are on there. I still don't really get it. I understand the concept. It's not one of those things where I want to go hang out in Clubhouse. I haven't gotten there yet, but there's- .

Ali:

I don't spend a ton of time there.

Brett:

What's that?

Ali:

I don't spend a ton of time there. The cool thing about Clubhouse is that you can pick clubs. I'm just looking at mine right now, but there's a startup CPG club or there's the commerce club. I follow a lot, there's club CPG, which is a really good one.

Brett:

Club CPG, all right.

Ali:

Yeah. So if you go into those clubs, there's going to constantly be different conversations about different industries. From there, you'll find, you'll see a room that a lot of people are in. Then that's where you want to go. You're just like a fly on the wall of these interesting conversations.

Ali:

If you don't like it, you pop out of it. I have found it's been really interesting. I've listened to a couple marketing conversations about how CPG brand, they're leveraging QR codes right now and they're having sick success. I never even thought of that for my brand right now.

Brett:

It's funny because QR codes are not new. They've been around since before 2010. For a while, people were like, "This is going to be the biggest thing," and then they went nowhere. Now, they're suddenly back, and interesting, and relevant.

Ali:

Yeah. So I don't know. I find it more interesting to just listen in and see what people are talking about, but it's a time suck. It's audio so you can do it while you're working.

Brett:

While you're working, while you're driving, while you're working out, whatever the case maybe. That's fantastic. Any other recommendations to increase our learning about PR?

Ali:

I like reading. I just read a lot because I think it's you can see what other brands are doing successfully. Ad Week, New York Times, Wall Street Journal, all of the big business pubs I think it's really smart to read. Retail Brew, Marketing Brew, those newsletters in the morning.

Brett:

Morning Brew is one of the best email newsletters ever.

Ali:

Totally.

Brett:

It's really funny, really witty, but also, it's a nice digest of the news that's going on. Then there's also Marketing Brew. Retail Brew, I've not paid attention to that.

Ali:

Read it. It's good. Yeah. They're all in the same family, but they're great.

Brett:

Cool. And do you recommend that people say, set up Google alerts or something for their competitors' brands and things like that to watch how their competitors are getting press and things like that?

Ali:

Competitor brands or even just industry terms. If maybe you're in the theater industry and you don't know if the new competitor's coming in, if you just put that keyword in, then you can also get fed that news.

Brett:

Yeah. Awesome, awesome. Ali Karsch, ladies and gentlemen. Ali, this has been so much fun. You nailed it. I will link to everything in the show notes. If you're like, "Man, I need to connect with Ali and team," I'll link to that all in the show notes or you can check it out at lvpr.com. I did get that right, it's lvpr.com?

Ali:

Yeah, you're right.

Brett:

With that, thanks, Ali. It's been a ton of fun. Appreciate you taking the time.

Ali:

No problem. Talk you soon. Bye, guys.

Brett:

See you. As always, thank you for tuning in. I would love to hear from you, love to hear feedback on the show. What other topics would you like us to discuss? And if you haven't already, leave that review on iTunes. Makes my day and allows other people to find the show. With that, until next time, thank you.

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Episode 177

:

Justus Murimi - Capitalism.com

3 Ways to Get Unstuck

Justus Murimi is a guy that once you meet him you’ll likely never forget him. Justus is one of the best askers of questions that I’ve met.

Justus Murimi is a guy that once you meet him you’ll likely never forget him. Why? Justus is one of the best askers of questions that I’ve ever been around. I first met Justus at Ryan Daniel Moran’s lake house in Austin Texas. It was a meeting of eCommerce investors. I was part of a group discussion with Justus and he was asking insightful question after insightful question. Then I had a chance to spend some time with him and we immediately hit it off. He has a knack for understanding entrepreneurs and helping them get unstuck. He’s the Community Manager for the One Percent with Ryan Daniel Moran. He’s also the head coach of the Incubator. Every week he’s coaching, teaching, and mentoring eCommerce businesses at every stage of growth.

I LOVE this topic. While we don’t get super tactical, I believe this episode could prove to be one of the most helpful we’ve ever published.

As entrepreneurs we’re all prone to getting stuck. And it’s not just a one time deal. Depending on the stage or growth your business is in, you could get stuck for a variety of reasons. In this episode, I turn the tables on Justus and fire probing snd insightful questions his way. Here’s a look at what we cover.

How early stage entrepreneurs are most likely to get stuck.
How to overcome overthinking and gain a new frame on failure
Where growing businesses get stuck and how some entrepreneurs develop a messiah complex.
Where business owners fall short when preparing for an exit.
What role does fear play in getting stuck and getting unstuck

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Justus Murimi