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An eCommerce Podcast Hosted by Brett Curry

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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

   - Via LinkedIn

Tim Lewis

   - Via LinkedIn


Kim & Tim Lewis Instagram

- Instagram

CurlMix

   - Website

   - Wefunder


Blue Ribbon Mastermind

“Influence” by Robert Cialdini

“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

   - Via LinkedIn

   - Via Twitter

   - Via Instagram


Kynship

Kynship Shopify App: Influencer Seeding

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 LinkedIn

- 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

Via LinkedIn

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

- Website

- Amazon

- Facebook

Blank Wines

Ryan Daniel Moran

Capitalism.com

“12 Months to $1 Million” by Ryan Daniel Moran

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

Ezra Firestone

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.



















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

Ralph Burns

Austin Brawner

Dan Kennedy

Sarah Still

Ryan Daniel Moran

“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.














Episode 180
:
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!

Chad Maghielse

   Via LinkedIn

   Via Facebook

Mentioned in this episode

Ryan Daniel Moran

Ryan Daniel Moran’s Podcast

“The 4-Hour Workweek” by Tim Farriss

Kevin Rizer’s Podcast

Capitalism.com

Coran Woodmass

99designs

TheFBABroker

Tom Wheelwright

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

Via LinkedIn


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

Via LinkedIn


Little Voice Public Relations

Mentioned in this interview:

Moiz Ali

Native Deodorant

Sara Blakely

VINEBOX

Adweek

TechCrunch

Hero Cosmetics

BOOM! by Cindy Joseph

Usual Wines

Live Bearded

Everyday California

Clubhouse

Retail Brew

Marketing Brew

Morning Brew


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.

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

Justus Murimi

Via LinkedIn


Capitalism.com


Mentioned in this episode:

Ryan Daniel Moran

https://www.capitalism.com/

“How Google Works” by Eric Schmidt

“What Got You Here Wont’s Get You There” by Marshall Goldsmith

“Who Not How” by Dan Sullivan

Blue Ribbon Mastermind

Poo-Pourri

Episode 176
:
Is & Kelsey Moreira - DoughP

Lessons in Branding, Pivoting and Handling Insane eCommerce Growth Rates

Who doesn’t love eating cookie dough with a spoon? Having a tasty product that customers crave is helpful.

Who doesn’t love eating cookie dough with a spoon?  Having a tasty product that customers crave is helpful. That’s part of the reason Doughp (pronounced like dope) has been so successful.  But for the real reason behind Doubhp’s amazing growth, look no further than the co-CEO team of Kelsey and Is.  Not only are they co-CEOs, they’re also married.  And they produce some addictively good cookie dough that’s shipped directly to your door 


There’s a lot we can learn from Doughp both from a branding and eCommerce growth perspective.  


Here’s a look at what we cover:

  • When you get your branding right, marketing becomes easy
  • How to detach and make unemotional decisions
  • How to be fun, relevant and also have a serious mission side to your business
  • How and when to pivot 
  • How to scale operations from $50k per year online to over $350k per month in one year.

Iz Moreira

Via LinkedIn


Kelsey Moreira

Via LinkedIn


DoughP

Via Instagram

Via Facebook

Via TikTok


Mentioned in this episode:

ShipScout

PayPal Store Cash

Sean Frank

The Ridge Wallet

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. Today we get to hear a founder's story. We get to see behind the scenes of a really rapidly growing eCommerce brand, a brand that I'm really excited about that I'm a customer of. I can't wait to dive in and let you hear the origin story of this brand and also what they're doing now and how they're growing and excelling.

Brett:

I think there's going to be lots here for you to learn from. I think it'll be a lot of fun, as well. Today, I am delighted to welcome to the show the co-CEOs of a company called Doughp, and that's spelled like dough, like bread dough or cookie dough with a P on the end, so Doughp. Co-CEOs Iz and Kelsey, guys, how's it going? Thank you so much for taking the time.

Kelsey:

Yeah. We're good. Thanks for having us.

Iz:

Thanks for having us.

Brett:

Yeah. Just a quick and I want you to tell the full story. But Doughp is cookie dough that you order online and eat. I don't know if you're like me, cookie dough is just as good, probably better than the actual cookies. I was telling you guys I made a mistake. I word some Doughp, to be careful how you ... what audience can say that, too.

Brett:

But I ordered some Doughp from you guys from your website. Tried s'mores, chocolate chip cookie dough, it was your sampler pack was ..

Kelsey:

Yeah. Cookie Monsta, Fairy Dust.

Brett:

Yes. All of those, Fairy Dust, Cookie Monsta, the s'mores was good. I made the fatal error of letting my kids know, not in camera, if I told you Iz, but I've got eight kids.

Kelsey:

Wow.

Brett:

I made the mistake of letting my kids know about the Doughp and they totally dug in. It's fantastic. Kudos to you guys for that.

Iz:

Great to hear that.

Brett:

Yeah. Yeah. Yeah. Let's hear a bit of the origin story then we'll dig into lots of fun stuff related to the business. But how did Doughp come to be?

Kelsey:

That's awesome. I love origin story. I feel I'm an X-Men Origin story, Do you think we're going to whole ... I do have movie trailer that's like "And then," it should be awesome.

Brett:

When I tell my kids, I was talking to the founder and the co-CEOs of Doughp. They're going to be like, "What?" You feel like a superhero to them for sure.

Kelsey:

Oh, that's awesome. So cool. Yeah. Origin story for Doughp. I'm the founder of Doughp. We are co-CEOs running it today. But I was by my lonesome four years back. We just had our fourth birthday for Doughp. This crazy idea that people might like cookie dough as much as me. I had been working in tech for 10 years, had not any experience at all in the food industry aside from working at Nestle Toll House Cafe.

Kelsey:

Being a cookie cake decorator when I was 15, jumped into corporate America with my time at Intel and really just dove into that and had lost a lot of those outside passions, the stress and anxiety of corporate life. I leaned on alcohol and ended up developing a really unhealthy relationship with it over those years and lost sight of all those other things that I loved in life. I got sober in 2015, which was like the best decisions.

Brett:

Congrats.

Kelsey:

Thank you.

Brett:

Amazing.

Kelsey:

It is so cool. I really feel I got a second lease on life and got this opportunity to take the reins and see what do I really want to do. Is this what makes me the happiest? In the discovery outside of work, nights and weekends for my day job. What was I loving? It was really being in the kitchen. I was baking every day and bringing in stuff to the office and ..

Brett:

Baking was therapy for you, or just a hobby, passion type thing?

Kelsey:

Like meditative. Yes, still is. When I'm in the kitchen, time flies by. I feel like ...

Brett:

Beautiful.

Kelsey:

Yeah. If I have an afternoon ... we get some afternoon free or something, a weekend he'll play some guitar and I'll be in the kitchen baking something.

Brett:

That sounds like a really ... Now just as a teaser, if anybody's listening only and not watching. I don't know if it's because you guys are based in San Francisco and just all of a sudden get this vibe. But Iz, you have a short-haired John Stamos. Maybe it was the guitar. But you said guitar. I'm picturing you in a San Francisco kitchen. It's like Full House from my youth or something.

Kelsey:

I love it.

Iz:

I'll take it.

Kelsey:

Yes.

Iz:

I'll take it.

Kelsey:

We love it.

Iz:

However, we moved from SF. Now, we're based in Las Vegas.

Brett:

Oh, got it. Okay. It's still cool.

Kelsey:

I mean like a Vegas thing. He's like a Stamos impersonator on the script.

Brett:

It's the Stamos impersonator.

Kelsey:

Yeah.

Brett:

You can do it, man. You can totally do that on nights, on weekends.

Iz:

Cool. I appreciate it.

Kelsey:

Incredible. Yes. It was in SF when I started the company. These nights and weekends baking and loving it and bringing stuff into the office. I had been moved down to San Francisco for a new job inside Intel. I was like, "What am I going to do? I can't be a baker. There's world-renowned pastry chefs in San Francisco. Let's just do it for myself on the side still and for friends and things."

Kelsey:

But going to SF, I decided to try and be a vegan. But I was really terrible at it, because I love butter way too much. The recipes had butters in them.

Brett:

It was always butter. I wasn't so much meat. It was the butter that tripped you up?

Kelsey:

Oh, I just couldn't let it go. I was like, "I didn't mind having all the vegan needs, this and that." But man, when I was baking, butter is the good stuff. I was using butter but no eggs. Then these cookie recipes, I made for a really long time, were safe to eat raw. I was like, "Not only the one spoonful I would have always have over the years."

Kelsey:

Now I was like, "Oh, I'll just save half of it in a bowl for the week to eat some bites out of it and bake the other half of it." That just clicked. I was like, "This could be my thing. I could start a business. I could do this." All those people at work and things that have been saying, "You should sell this." Kind of thought, "Well, entrepreneurship, so that farfetched. I'm just going to climb this corporate ladder and that's what it is."

Kelsey:

But sobriety really gave me that energy and focus to say, "I could do this." I put myself towards it. For 2017, I took 100 pounds of cookie dough out to Dolores Park in San Francisco. We sold out in three hours and I was like, "All right."

Brett:

All right. This is a business. This is a real business.

Kelsey:

Yeah. How do we go from here? Yep.

Brett:

Now, tell this part in whatever order makes sense. But we'd love to hear how you guys met, because not only are you guys co-CEOs and you look great together. But you're married as well. Let's hear how you met. Then did you go eCommerce after you guys started working together? Kelsey, did you go eCommerce first?

Kelsey:

Yeah.

Iz:

Do you want to tell this yourself. It's way funnier when you tell it.

Kelsey:

Yes. We have like ... Now, we went from origin story, hardcore beginning, to romance novel of how we met. We're diverging a little bit.

Brett:

You guys have to read a book at some point ..

Kelsey:

eCommerce tips coming later, love now. Okay. We were in San Francisco. I had really focused on brick and mortar in the beginning. It was six months into the business that I got an opportunity to open a store on Pier 39, famous tourist pier in San Francisco. I've gone there as a kid. This idea that like, "Wow, I could have my own concept on this famous pier, I'm all in."

Kelsey:

I had done that, started to build up some staff. We had a co-working office. We were in a co-working office in downtown San Francisco. It was this guy. I was very busy running my company. I just had this running joke with my employees and staff and whatnot that there's this cute printer boy that sits near the printer.

Kelsey:

You're just going to jump, there's a printer boy here, because he sat near the printer in the office. He'd walked by and I pretend to faint or something if we're working in the common areas.

Iz:

Like, "You look just like John Stamos."

Kelsey:

I said that, right? Yes. I thought he was so cute. But just when you're ... This is what they always say to women in particular, because we're all excited about meeting the love of our life. It's like when you're not looking for them, you'll find them.

Brett:

Yeah. Yeah.

Kelsey:

That's absolutely what happened. I was just so ...

Brett:

When you're baking cookie dough and no one is watching, you will find the ... Actually, everybody was watching at that point.

Brett:

Full story. You're baking. You're running a company. You're managing employees. You get your dream location on Pier 39. Yeah. We got to get to eCommerce. I want to know who made the first move here? Who really ... Do you guys remember? I assume you do.

Kelsey:

Yeah. I mean, I think.

Iz:

I mean, yeah.

Kelsey:

It was him. He said ... We were eating lunch by chance, the same day in the co-working office, co-shared lunch space. He said, "Can I take you out to lunch tomorrow?" after we had chatted while we were eating. I was like, "Is this a business thing? Does he want like Doughp to cater for their company or something?"

Iz:

I wanted to keep the mystery going.

Kelsey:

Yeah.

Iz:

I'm not going to be super clear to hear about my intentions.

Kelsey:

Yeah.

Iz:

Let's go and see how it goes.

Kelsey:

Yeah.

Iz:

Sure enough, it was great. But a quick ..

Brett:

You're trying to get the easy "Yes." Just ask a simple question, just lunch. That'd be good. Lunch. Then we ...

Iz:

Listen, you don't know until you ask. That's why a customer research, market research is so important. You don't want to be asked, don't ask.

Brett:

The job is ...

Kelsey:

Yeah.

Brett:

Kudos to you.

Iz:

Yeah. But it was really interesting, because I was born and raised in Brazil. I moved to United States in 2017. After having an incredible career in civil engineering, I went to school for civil engineering and became a project manager for a construction firm. But I was just tired of Brazil. I wanted to raise a family somewhere else. I decided, "Okay. I'm going to study at Berkeley."

Iz:

I came here to study at Berkeley for a year. Got a job offer in SF and that's where we met. It was a really interesting, serendipitous moment for both of us.

Kelsey:

Yeah. Both of our lives took us to SF right at that time.

Brett:

Very cool. Iz, you clearly have this organizational, operational skill set. Kelsey, you're very creative and very passionate and you make all this stuff. Seems like a really beautiful match there. Talk about what's the day-to-day of Doughp look like now and how do you guys work together?

Kelsey:

Yeah. I mean, I think that path you mentioned, going from brick and mortar to eCommerce was absolutely prompted by Iz joining of the company, join into the company. It was these skill sets that we saw on each other, naturally, as we were in a relationship and then married. The conversations were really awesome to say anything I had a question on that was ops or finance related, that was totally his wheelhouse to jump in and help me.

Kelsey:

Those are the spots I feel weaker on. It became really natural in late 2019 to say, "What do you think about just coming on over and just joining this Doughp thing and seeing what we could do together, and put our eggs in this basket." But we really thought we could create something great. That organization lines, he was able to say, "Okay. We're doing catering and wholesale and the storefronts and a little eCommerce." What do you say, 2020? It's going to be the ...

Iz:

"2020 is the year of focus," that's what I said in November of 2019.

Brett:

Oh, wow. You didn't realize how wide you would be?

Iz:

Yeah. One of the things I always do when I join organization is to really understand where the resources are allocated. As she was saying, she had a lot of resources allocated everywhere, which means you're spread too thin. You basically cannot serve everybody very well. What we just did was a brainstorming analysis, considering ROI, barriers to entry, and other factors in each of the channels.

Iz:

We decided, "Okay. 2020 is going to be the year of focus on having the brick and mortar locations operating. But we're focusing on eCommerce. eCommerce seems to have the greatest potential for growth, and the least barriers to entry for us right now." That's what we did. November of '19 was the decision, and March of 2020 was when the pandemic really hit and we had no longer brick and mortar locations.

Iz:

Thankfully, we were super ready to go. We grew from November 2019 to March of 2020 a hundred X in sales on eCommerce.

Brett:

100X, that's insane. 100X in sales online or 100X ...

Iz:

In eCommerce, online. That's it.

Kelsey:

Yeah. Online only. For reference in 2019, all together, we did $50,000 online of $1.2 million for the company. As you can see eCommerce is like ...

Brett:

Yeah ..of the company. Yep.

Kelsey:

Exactly. Really like an afterthought. Then in 2020, 2.5 million of 2.7 million was eCommerce. Two and a half million dollars from 50 grand. It was a wild roller coaster to even be able to sustain the fulfillment side of that. I'm sure eCommerce folks listening know the challenges that come from doing 30 boxes a month to 3,000 boxes a week in the span of four months.

Brett:

Yeah. Your product is not super simple to ship. It does have a long shelf-life. But it's still food. You have to protect it slightly differently. It's shipped with ice. Dry ice was in the container if I remember correctly.

Kelsey:

Ice packs. Yeah.

Brett:

Ice packs. Yeah. Yeah. Can you talk a little bit about that? What was that process of ramping up a hundred X your orders online? Was that just a lot of sleepless nights for Iz and a lot of baking?

Iz:

Literarily. A lot of sleepless nights because at the time, we were using graveyard shifts with our staff to mix the dough and pack the orders of the following morning.

Kelsey:

From our store staff, in the physical brick and mortar ...

Brett:

Yeah. Yeah.

Kelsey:

... overnight.

Brett:

Yeah.

Iz:

It was literally a lot of sleepless nights. I cannot say it was smooth. It was not smooth. It was a lot of learning. But I think one of the greatest trades that we have as a company is to be really nimble and be really good at pivoting and learning and figuring it out as we go. From November until March, we were ready to ship all those 3,000 orders a week. It wasn't easy. But we were ready to ...

Brett:

Yeah. Yeah. What were some of the successful pivots you guys had to make? Obviously, the pivot from being mostly dependent on brick and mortar stores, to being fully dependent on eCommerce was a major pivot that you were planning on doing anyway. But the pandemic certainly forced that to happen at a much more rapid pace. But what other pivots did you guys make that ... Looking back, you said, "Wow. This is really cool that we did that."

Kelsey:

I mean, all the elements that came to fulfilling that, or following through on the decisions from it. While we didn't expect to shut down the brick and mortar side, we thought we'd get ... eCommerce would be a nice sizable channel. Because of the pandemic and the slow traffic after that, we made the decision to close down our final storefront in October of 2020.

Kelsey:

It's just those real cut and dry, look at the numbers. Put the emotions aside and say, "Does this make sense to keep doing?" Yes. I put my heart and soul in the storefront. I mean, it was so beautiful. We built it from the ground up. Loved it. But it's down 82% year-over-year. It was just not going to make sense for us to stay there in the long run.

Kelsey:

We needed to not let that hurt what was working. Yeah. I think other than that, it's been the partners that helped to come through, learning who the right partners would be in fulfillment, and who the right partners would be in marketing, advertising. It's such a hard game to get. We're still a marketing department of one. I'm trying to hire a director of marketing right now. We've really relied on agency support to make everything come true.

Brett:

That's awesome. Yeah. Finding the right partners is key. I want to dig into one thought there that you mentioned. You alluded this in the beginning. Hey, that Pier 39 location, that was your dream location. It was iconic. It's where you went as a kid or whatever. I think we have periods in time like that, as entrepreneurs, not always pandemic related, but where we have to make a really logical choice to move away from something that we maybe have a lot of nostalgia or a lot of emotion wrapped up in that.

Brett:

What was that decision like? Did you guys labor over that? Or was that just a clear cut easy decision?

Kelsey:

I think it was someone who's more removed from the emotion of it. It was quicker for him to say, "We should definitely close the store if we can." I'm like, "But maybe we could keep it. What about if we were able to convert them into eCommerce customers, and use it as a marketing engine." There is all this other dreamy lens we could have put on it. But it does take having that checks and balances.

Kelsey:

I think of if I was still a solo founder, no co-CEO by my side, it would have been really difficult to make that call on my own. I do, I think, and recommend to anybody else have counterpart that can really tell it to you straight and bring the numbers to the table where it's hard to say otherwise. Yeah.

Brett:

That's awesome. I think one of the ways we learn best is seeing what other people got right, and also learning from other people's mistakes. Let's start with what do you guys get right from the beginning? What do you feel like you, just right out of the gate, you nailed and that's helped propel you and keep the success going?

Iz:

I mean, the product. We can start with the product.

Kelsey:

Yeah. The products, yeah, haven't changed the recipe in four years. Yeah. That's ...

Brett:

.. the recipe in four years. That's awesome. Now, are you adding new flavors or did you launch with all those amazing flavors?

Kelsey:

Adding new flavors, we've had the core four, like the one you've got in sampler pack. Those four have been around pretty much since day one. The base of the recipe and how we make our dough from the start has not changed the whole time. We do always come out with new seasonal stuff, like red velvet cupcake for Valentine's Day.

Kelsey:

We're always releasing new unique flavors. But sometimes we can't pull that one because customers are so upset when we .. They're like, "Bring it back." We did a nostalgic flavor in January from the '90s. Did like a Dunkaroos inspired cookie dough and ...

Brett:

Okay. Okay.

Kelsey:

When it sells out, tear the walls down, people are so upset. When are they coming back?

Brett:

Don't take away my Dunkaroos. How dare you.

Kelsey:

Yeah. They're very upset. Yeah. That's been good. I think the other strong thing that ties in with the products has been the brand, really being so firm from very, very early days on why we exist, what we sound like, what we look like. We want to talk to you like a friend. It's all about authenticity, and our mission around mental health and addiction recovery. It's a commodity. Cookie dough something you could make at your house.

Kelsey:

But we're really trying to wrap a bigger purpose around it and each purchase goes to support these issues and there's just so much more to it. I think that's really resonated with customers from the start.

Iz:

Yeah.

Brett:

Your brand is amazing. I mean, first of all, I love the name Doughp. It's really cool and just selling your homepage, edible, bakeable, and ridiculously tasty. It's just got this fun vibe. Yeah. You just nailed the branding. As you read stuff on the site and as you even ... I remember the card that came in the sampler pack was really relatable and fun and talked about the fact, how long would last, and how you can enjoy.

Brett:

It was a really fun experience. Yeah. I would totally great. Product, brand nailed those. Any times you feel ... What's that?

Iz:

I mean, I was actually going to say another thing that was really good from the start. My background as a civil engineer, I've always focused on numbers. I've always done financial analysis and production and operations analysis. Unit economics was something in my DNA. When we first started, instead of trying to ship one container of cookie dough, we've always shipped kits of container.

Iz:

There's always this analysis of like, "What does make sense to ship considering the cost of the shipping label and whatnot?" That strategy was right from the start. I think most eCommerce brands do that strategy. They can't just ship by unit product. They have to make sense on the unit economics.

Brett:

Totally makes sense. You guys have always done packs. You've always done four packs ...

Kelsey:

Yeah. Four packs. It used to be like six packs back in the day. We had these tiny jars before we moved to the situation we're in now.

Iz:

Yeah.

Kelsey:

But yeah, always like a kit. It helps on most of the part of a new person coming in. It helps to decided for them. Here's the best ones to try and that's the bestseller pack. But then the build your own pack is super popular. That's the most common second step in repurchasing. They're coming back to be able to customize theirs. Say, "Okay. From that, I love these flavors. Here's the ones I want to get, and mixing and matching pints in a two, three or four-pack."

Brett:

The sampler pack did make it very easy, because I didn't have to think about, "Okay. All these flavors sound amazing. It'd be great to try them."

Kelsey:

Yeah.

Brett:

Have you had many people say, "Hey, I just want to order one?" Have you had pushback on the four packs? Or has it always been fairly smooth?

Kelsey:

Yeah. We get that pretty frequently. In support emails, tickets or social media, on comments on our ads saying, "Oh, I just want to buy one," or the comparison where they're like, "Oh, at the grocery store, I can get Nestle's for $3 or whatever." It's like, "Yep."

Brett:

You sure can.

Kelsey:

You sure can.

Brett:

But is there homemade cookie dough? No, it's not. Yeah.

Kelsey:

Yeah. It does taste really not that great. They tried to make an edible one, about two years after I had launched. It's so different than their core product. It seems they really couldn't get this stuff to just turn the taste of the regular Nestle into a safe to eat ones. It's very, very different. Yeah. It is at a very low price. Then there are massive, massive conglomerate out there.

Kelsey:

They're always going to be able to beat us on price. But like I said, that's why it's so important to have such a strong focus with the brand and what our business is enabling to happen in the community around these issues. That's a lot more than you could say for buying a pint of Nestle. I think we looked at and started offering the two pint packs.

Kelsey:

Shipping just two pints, which is more approachable than requiring that you get four if you're going to do it.

Brett:

Right. Right.

Kelsey:

Yeah. We've made some steps down. It seems environmentally, not smart to send one. Even we're going to have insulation price for one. Just explaining that to the consumer that's challenging for these times. Yeah.

Brett:

It is challenging, because there's always people that don't want to think about the big picture and only want just to lower their cost, which is understandable. But I think from your perspective, kudos to you guys for saying, "Hey, this is what makes the most sense. Economically speaking, this is how we need to do it. We're going to present it in a way that's easy and fun."

Brett:

Then get as many people as we can to take advantage of this, knowing that there'll be some people that don't understand, but that's okay. We'll work through that. Awesome. Then what about mistakes you've made, because I know it's not always fun to talk about mistakes, but that's often how we learn the best and learning from other people's hiccups can really be useful. Learning moments.

Kelsey:

Yeah. You're going to talk about the last spring, last summer?

Iz:

Yeah. As we were mentioning, we were growing super fast, a hundred X in three, four months. We were desperately looking for a way to reduce our shipping costs. Because when you first start shipping ... I'm sure most of the listeners are going to agree with me here. When you first start shipping, you don't have enough volume to come to a carrier and say, "Hey, I want a discount."

Iz:

There's not enough track record to come and say that. You have to pay higher prices. You have to make sense on the economics, like I said. The way that we envision that happening was, "Okay. Let's spread out our distribution. Let's have three major distribution centers across the country, because our customer base is so spread out across the country." So we did. But there's a lot of consequences to that.

Iz:

For starters, you have to spread out your inventory. There's a lot more cash tied up to inventory. Also you have to trust who you're moving with. We just learned the hard way that you have to have one person managing everything and that person has to be in touch with all the boxes to make sure that everything goes according to plan. It's just so easy. There's just so many steps that can be lost along the way.

Iz:

That just loses the entire customer experience along the way. We just don't deliver what we promised here. That learning was, "Okay. We need to centralize everything, make sure that we know this person. We're close to this fulfillment center. We know exactly what's being done." It was incredible. In September last year, we started with a fulfillment center here in Las Vegas, which is amazing.

Iz:

Because if anything happens, I can just literally drive there and see what's going on and fix problems on the ground.

Brett:

That's awesome. Yeah. You identify an issue or an opportunity to improve customer experience. We need to distribute our shipping. But that creates some challenges as well. But it sounds like you ...

Kelsey:

Yeah. Too big, too fast.

Iz:

Yeah.

Kelsey:

We spread out too wide, where it was a little bit out of reach without knowing those warehouses closely enough. Yeah.

Iz:

Yeah. In September, we already had the track record to come to shipping carriers and say, "Hey, here's what we have now. Here's how much we're shipping." Then we were able to centralize everything from here. I think it was a really interesting learning experience that I would like to share. Please don't spread out your inventory too thin too early.

Brett:

Yeah.

Kelsey:

Yeah. Before you need to.

Brett:

Actually, with your inventory, because it's perishable. I assume that could maybe led to some issues as well.

Kelsey:

When we were getting the inventory back from this widespread ordeal, we literally had a dry truck and a frozen truck. One was supposed to get the boxes and insulation, everything that was supposed to get the cookie dough loaded backwards at the warehouse. They loaded it backwards and shipped it out from the East Coast with our cookie dough in the middle of the summer in back of a dry truck.

Brett:

Nice cool boxes and not cold cookie dough ...

Kelsey:

They're like these boxes showing up cold, doesn't seem a good sign. Yeah. It was wild time. We went through some real remorse. One of our first expensive mistakes. I made a lot of small things here and there over the years where it was like, "Oh, shoot. I wish I had done a different cart for my catering thing or something." It's just so small. These really gotten to some serious times where you're talking hundreds of thousands of dollars that can be in jeopardy.

Brett:

Yeah. Which is super painful, and then can be sometimes mentally, emotionally crippling, but sounds like you guys pivoted nicely from that. Now you've got your warehouses in order, and you've got your discounted shipping. You moved ahead. Obviously, you want to avoid stuff like that if you can, but we can never avoid all of it. She's got to learn from it and then move forward. Any other takeaways from that?

Kelsey:

No. Yeah. I think that's the biggest takeaway from that experience.

Iz:

Yeah. I mean, it's not from this experience. But another thing that I would like to share that helped in this experience and other experiences is contracts. Contracts are just the life of the business. Most entrepreneurs that I know don't like reading contracts. They think it's long, there's a lot of legal stuff. Yes. That's true. But at the same time, that's what's going to regulate the relationship you have with your vendors and clients.

Iz:

If you don't pay attention to it, and don't negotiate the material points for you, you're going to be in trouble in case anything goes wrong. It may.

Kelsey:

Yeah. It's likely to. I think I had such glossy eyes at the world. I really thought like, "Oh, no. These people seem great," or "I got referred to work with them." I really, before I joined, I'm ashamed to say this, because no one else would do this. But I didn't read a single contract that I signed probably in those first three years of the business, before he jumped in. Even the Pier 39 lease, I really don't even think I had a lawyer look over that lease.

Kelsey:

I was just like, "If I need this space, this must be what I need to sign." I signed on to a personal guarantee, and all these things that now with his eyes looking at a contract would just never go. That ties in with a nugget of advice I would have, too, is like don't wait too long to bring someone to the table at the same stakes as you. It's really easy for founders to be hoarding, and just wanting the company for themselves and not bring on a co-founder.

Kelsey:

I created it, so I can keep doing it alone. But just through the years, we've couldn't find someone for what we were able to pay that had the experience and dedication that I really needed. That caused some issues on certain areas that he's really strong in now.

Brett:

Yeah. I know that bringing on the right strategic partner can make a huge difference. I'm really glad you brought up contracts, Iz. I'm really glad you're transparent there, Kelsey, because I tend to ... Now I understand, we have 50 people on our team, and then lots of things going on. We pay close attention to everything. But I tend to be more like you Kelsey, where it's like, "Nah, man. We're building stuff. We're growing. We're making deals, and it's all going to be fine in the end."

Brett:

You can do some really stupid things if you focus on that exclusively. You got to understand your contracts, because almost all contracts are negotiable. Even that Pier 39 contract, you could have negotiated that.

Kelsey:

100%.

Brett:

But it worked out okay.

Kelsey:

Yeah. Yeah.

Brett:

That's awesome. Cool. Any other mistakes? I know it's painful to talk mistakes. But in any other learning points that you want to highlight? That was a great one, by the way.

Kelsey:

I think some of the agency decisions, when I think about advice I pass along for that. It's like, "Go with your gut." We've had some times where we went with someone, and I was like, "Huh, I'm morally opposed to this person as a human, but they seem to have good performance. Let's do it." Then it's like, "That was an awful idea." I think, we've just been proven when you feel like, "Wow, this seems like a really good person, I would want to, I mean, virtually, hang out with every day."

Kelsey:

They become your best friend. You should really feel they're good people that you would want to spend time on the phone with. Just trusting that gut and being like, "Hmm. If I don't even like being on these sales calls, I really shouldn't sign up with these people, no matter how good they say the performances is." There's just something that will always be off in the relationship. That's another ...

Brett:

Yeah. I totally agree. As an agency, co-founder and CEO, we feel the same way on this. There are these times where we talk to a client and we think, and I love that brand, and I love the growth potential. But something about them, something about the person we're going to be working with just doesn't fit right. That usually then ends up being a not great relationship. Then the same can be said on the client side.

Brett:

You think, okay, the track record, performance is good. I want to grow my business. I want to do the logical thing. But yeah, if your gut is telling you, no, then you got to look at something else. Because if somebody else has got the track record and the personality, too. Yeah.

Kelsey:

Yeah, totally. Yeah. Aren't advice to follow in the moment. When you're in a pinch, you make bad decisions.

Brett:

Yeah. Yeah.

Kelsey:

Needed to hire an agency or a person or whatever. We've always not made as good of a decision is to try and give yourself the lead time to say, "It's okay, if this one doesn't work out. Let's keep interviewing. Let's keep searching." I've been interviewing for as director of marketing position for how long?

Iz:

Two months? Yeah.

Kelsey:

Yeah. Just over two months, I think.

Brett:

Yeah. Good. You're being patient. We're actually looking to hire a marketing coordinator right now. If anybody is listening, hit me up. But yeah, or hit up Doughp as a marketing director, hit up Kelsey and Iz there. But this is totally accurate. Well, we look for hiring an account manager or Google specialist or Amazon specialist or whatever. We will try to make that list thing earlier than we need to.

Brett:

I mean, you can't have discipline and when you're under the gun, still really wait to say yes to someone. It's a lot easier if you just don't have that pressure when you have the time. One of the things I heard this quote. I think it was on the Tim Ferriss podcast, I can't remember who said it. But they said "If it's not a hell yes, it's a no."

Brett:

They were talking about anything in your life. We started implementing that on the hiring side. If it's not a super enthusiastic yes, then it needs to be a no.

Kelsey:

Yeah. It's awesome. It applies to the fundraising world as well. I think about it with trying to find the right partner. If you're waiting to raise until you, "Oh, my gosh. Need the capital." You're freaking out if you don't get this. You're going to seem desperate. You probably won't even be able to get an offer, or you might close with a partner that wouldn't be the best partner for you.

Kelsey:

The fundraiser side, whether it's an Angel or a VC, or who is it, they're going to be a partner in your business. It's more than an agency. They're going to have a piece of your whole ...

Brett:

They get married right there. I mean, it's the business equivalent of getting married, for sure. Yeah.

Kelsey:

Totally is. When you're in a pinch, you make bad decisions. That's across the board.

Brett:

Yeah. Yeah. Awesome. Really good advice. Well, let's get into a couple tactical things, just for fun. I do want to underscore how much I love your website. I know I said that already. But the branding is on point. It's easy to shop. It's easy to browse, just really, really like it. I would like to dig into maybe some traffic, things that are working right now for you. Then some conversion tips, potentially.

Brett:

Let's start with the website. What are some of the things you guys have done over the last year? I know you've been growing hair-on-fire type speeds. But what have you done to increase conversions, to improve checkout, anything along those lines?

Kelsey:

Yeah. I mean, overall experience stuff on the site. I would say maybe six months ago, we started to think of a couple other areas to really bring in the mission into it. When you click Add to Cart on the bestseller pack, it literally shoots confetti out from Add to Cart button and says like, "Your purchase before it's addiction recovery." These little reminders that ... That's we're all in eCommerce trying to make sure they get to checkout and that they complete the checkout.

Kelsey:

That Add to Cart moment, adding a little bit of excitement and a little reminder of what this purchase will help do. We have that at the bottom of the mini-cart as well, some support that they'll have. Having a mini-cart was a decision, too, to try and reduce friction from being on the site shopping to get into checkout.

Kelsey:

In the mini-cart, we've got some upsells. This was a custom built solution by our dev. Not for anything that I can recommend there. But just different products get served a different upsell opportunity. Right now we are with shipping threshold to get free shipping on orders over 65. We tried to line up all of the upsells to get them there. The hope is that for most of the scenarios, adding that next upsell there will get them to free shipping.

Kelsey:

They're more incentivized to add a two-pack upgrade, get an extra two cups with your order, or double up and save, and that sort of thing. Getting a discount on something if you get two of them. Little things like that in the cart.

Brett:

Yeah. I really like that. It looks really cool. I'm looking it right now. I added the bestseller four-pack to my cart. Just below it, it says "Double up and save," and you get the nice, we'll say 5% and the original price marked out, the new price there. It's handy. When you added that, what lift did you see for your AOVs? I'm putting you on the spot. If it's rough ...

Kelsey:

No. It's totally fine. I mean, I definitely from when we first launched this new site with this mini-cart in general. We had a two-pack upgrade with like two pints serving offered on any order, anything that had been put in the cart that was already cookie dough so that we weren't adding the complication of insulation and ice packs for someone who bought a sticker, or like ...

Brett:

Yeah. Yeah. Yeah. Yeah.

Kelsey:

... some merge. For that and that was 25% of orders we're doing that two-pack upgrade. It's pretty significant.

Brett:

Nice. That is really significant. That's awesome.

Kelsey:

Yeah. That was a $12, I believe at the time?

Iz:

Yeah.

Kelsey:

Yeah. I think it was like 12 or 15 to get the two-pack. That was great extra bump. We had been really around like a $43 AOV, pre-new website. Then once the new site launched with that, we were up at 59.60. Really good movement there. We've juggled back and forth with the shipping. There's this option to bake some of it into the price and have free shipping or what we need to do on the entry skew to make that more affordable for an entry purchase.

Kelsey:

There's an app. This is a fun app tip that we're going to start using called ShipScout, a way to A/B test.

Brett:

ShipScout. Nice.

Kelsey:

Yeah. A/B testing prices.

Brett:

Ooh, I like that a lot. Yeah.

Kelsey:

Right. It's these little incremental things. Because if 7.95 versus 9.95 has 20% higher conversion rate. Great. It's totally worth it. We just have to figure out what that trade off is and how significant it would be. But that's a great app. Some complications you'll need a devs help for if you have other areas around your site that are mentioning free shipping over X amount or what the shipping price is. But all doable with some help of the amazing wizard developer.

Brett:

Yeah. Yeah. It sounds like you guys have been playing with not just the number of cups in a shipment but also the size of the cups. I see 5 ounce cups, 16 ounce pints. Any learnings there? Did you launch which is one size originally, or any learnings you've gained from that?

Iz:

We've always had two sizes. Yeah. When we first started this, like I said in November of 2019, we still use plastic jars. She had already started to do these plastic jars at the store. What I did was, okay, we already have these. Our staff has already trained to do this size. Let's try and do these two sizes. She already had the 16 ounce and was it four point ...

Kelsey:

It was 4 and 12. Yeah.

Iz:

Oh, it was 12?

Kelsey:

The little squared glass looking jars. Yeah. Yeah.

Iz:

Well, there you go, 4 and 12.

Kelsey:

Plastic, but yeah.

Iz:

It worked quite well. Everybody already knew. Everybody that knew the brand knew the sizes that we use to serve in. It worked. We just moved to a 5 and 16 ounce because it is more widespread use off the 16 ounce cup and a 5 ounce cup versus the 4 and 12. It's easier to get the packaging and easier to source. Also in the minds of the consumer, it is easier to assimilate the 16 ounce pint versus a 12 ounce. What is this? Is it big? Is it small? How many servings?

Brett:

Yep. Yep.

Kelsey:

Sixteen, people are like, "Oh, like an ice cream pint?" They get it.

Brett:

Exactly. Yeah. The pint really clears it up, for sure. Yeah. Curious. I noticed you had Shop Pay on the site and I buy from a number of Shopify stores. Of course, I enjoy using Shop Pay as a consumer. When you guys added that when that came out. Did you guys see a bump at all and do very many people utilize that?

Kelsey:

Yes. A lot of people utilize it. I think we're 70% Shop Pay checkouts, and then the probably 20% is PayPal, maybe 25%. Maybe a little bit more on PayPal. Yeah. PayPal does the Store Cash Campaign. I don't know if you've ever heard of any vendors. But this, they have some comment on our site, like a snippet on there that identifies if someone visiting the site is a PayPal customer or not.

Kelsey:

They'll get an email saying like, "Here's $5 to use, $5 Store Cash to use it to have cookie dough if you want to go back and make your purchase."

Brett:

Nice.

Kelsey:

That's fun. Pretty amazing.

Brett:

What does that call?

Kelsey:

Store Cash Campaign. Yeah. PayPal's Store Cash. I remember just by chance, seeing it as an option like, "Oh, do you want to turn this on?" I'm like, "Sure, whatever, five bucks. Go for it, seems cool." Then when I log in, it's like, 1,128% row as. Like, "What?" It's pretty cool. Yeah.

Brett:

Yeah. When you get 20% of your shoppers are using PayPal anyway. That only works ... If someone visits the site, it's detected they use PayPal, they leave that buying. It's almost like a remarketing campaign, then they're getting the $5, or it's regardless what they do on the site?

Kelsey:

It also does it if they have purchased and it's incentivizing them to come back. It's like, "Here's $5 to come back to Doughp." Yeah.

Brett:

Beautiful. Which is great for you guys, because consumable, sending a coupon after the fact is great, too.

Kelsey:

Yeah. We have to think about all the different ways to incentivize that repurchase, different ways to use the product. We're working on a digital cookbook to send out. Being able to offer this probably as a post purchase upsell, but a digital cookbook, here's all these recipes to go through ..

Brett:

Increase consumption. Absolutely. Yeah. Gets you even more. You start ordering more. Yeah. I want to get into some traffic, too, where we just have a few minutes left. But what about other loyalty things you're doing? Are you looking at subscriptions? Are you doing anything else special to get that repeat purchase? What are you doing there?

Kelsey:

Yeah. We have a rewards program, our Spoonlicker's Club.

Brett:

Spoonlicker's Club. Yeah. I love that.

Kelsey:

Yeah. In February, it's only as good as it's marketed though. It is hidden on our site right now, somewhat of a soft launch, if you will, while we got all the rest of the email flows and everything in place for that. A birthday bonus point email and things that will come out in that regard. There's a little bit more tight knit integration that we need to do to really make it come to life on the site.

Kelsey:

At every point, you're excited about coming back and knowing how many points you're going to get for purchase. Subscriptions are interesting. It's been this debate of how much cookie dough is feasible to get delivered to your house every month. What we did release, it's literally down in the footer. It says Curious with the question mark. It's a secret cookie dough club.

Kelsey:

We've been doing this to our own audience to share out that they can join this cookie dough club. It's going to be a post-purchase email as well for those after their first purchase to know they can get this. It's 29 instead of 39 for 2 pints. It's free shipping. It's every month getting to mystery pints. It's a surprise box. So far, really great reviews.

Kelsey:

We have only one person gave a four star, the rest of them five stars, which is super awesome. They're like, "I love the mystery of it." Someone literally said, "I've been wanting to order Doughp for six months, but just could never decide which flavors to get. This mystery box was perfect for me." I'm like, "Yes."

Brett:

Yeah. That leads to consumption and maybe you find, "Hey, it's this s'mores that I love the best. I'll just keep order more of that, or four-pack of that." It's really great.

Kelsey:

Yeah.

Brett:

You'll start promoting that thing in your post purchase email series, or you considering the idea of putting that in the cart as an upsell or mentioning it elsewhere, or you still working through that?

Kelsey:

I think it'll be after your first purchase. We like this idea of, "Okay. They've gotten to try it. Now, here it is a little bit broader." Then it's also we're open about it on our social media. If you're starting to feel, you'll see it. Then if you're on our email list at all, you'll get occasional updates with that, still available.

Brett:

Awesome.

Kelsey:

We did a fun, very mysterious email blast for that. It was 20% of people who opened the email clicked through to the link. We put just full on Curious and all this mystery and stuff. Take a look. You had to like click into that and understand what it was. It was pretty fun. We doubled our ...

Brett:

... people up to I got to find out and ...

Kelsey:

Yeah.

Kelsey:

Doubled our subscriber base that single day. It was pretty cool.

Brett:

Wow. Let's transition and talk traffic just really quickly. What are some of the traffic wins you've had over the last year or so? What's working and what do you kind of excited about for the future?

Kelsey:

Physical traffic, we're stoked to be in Vegas because it's much lighter than traffic in San Francisco. We have leaned on ads to really drive traffic to our site, historically, since we started ... It's late 2019, it's historic now. But the real game changers have been organic stuff that's happened. Jason Derulo posted a TikTok with us.

Kelsey:

For seven days in a row, we had 25,000 in sales. It was just really got this crazy push. We were seeing it was all from search people leaving TikTok, Googling Doughp, finding us. It's really neat to see when you're feeding this funnel, how effective everything else works. It does take that push on organic stuff that takes place like that, which is awesome. I don't know how you found Doughp. But that's super cool.

Kelsey:

Chrissy Teigen just posted with Doughp yesterday, two days ago? Yeah. I think it was two. Those weeks have been a blur, on Tuesday. It's super cool to see what people are willing to do when they just see someone they love with it, they go out and search for it and do it. I mean, we had way better success with any of the organic stuff that's happened than honestly most of the paid influencer work we've done.

Kelsey:

We're pushing into a bit more with press this year. We just hired a PR agency. I think that's the best thing for us. The driving traffic to the site is getting really interesting things for people to talk about, where it's exciting and unique and gets more eyeballs on our site. Because then Google and Facebook, they can all work their magic, granted iOS 14 is trying to ruin our lives. But ...

Brett:

It is. It is.

Kelsey:

I said on LinkedIn the other day, I'm like, "Does anyone else feel like iOS 14 is our Y2K for eCommerce managers?"

Brett:

Kind of feeling like that. I mean, things are still going well here. Obviously, we're just a few ... At the time of recording, just a few days into the iOS 14.5 release. But things are going to probably get weird for a little while. We'll see what happens there. But yeah, a couple things there. I think your brand is perfect for influencer marketing. We don't do influencer marketing. It's not my area of expertise.

Brett:

But I've interviewed a few people on the podcast that are great at it. One is Sean Frank from Ridge Wallets. He's got an amazing influencer approach that he teaches. But who doesn't love cookie dough? Also it's so fun to talk about cookie dough. I think influencers could be lining up. Is that something you're planning on, is pursuing some influencers potentially?

Kelsey:

Yeah. We are working in that realm. I think one tip I have for anybody trying to do this, find people that are really excited about your brand. I was just talking to a new another eCommerce founder who's literally just goes through the Explorer on Instagram. Someone showing up in reels and stuff, they always have pretty good engagement. Search for your topic related to your store. See some of them.

Kelsey:

He just DMs each of them paid promo, paid promo, paid promo. Some of them, though it's a heavy lift to do this, many of them was pretty good engagement or like, "Oh, how's 10 bucks." He literally is like, "I can't close for $10 or free product alone." They're just willing to talk about it and that you get all ...

Brett:

Just spend me some cookie dough and 10 bucks ..

Kelsey:

Yeah. Way higher ROI than like, "Oh, $15,000 for this feed post." We just sit there praying that enough people go and click the link in their bio. I think there's a scrappier way to do this. I'm also not convinced that landing pages are the end-all, be-all for influencer in particular. I think consumers are getting pretty savvy that you've been sent to this trickery page that you can't click out of.

Kelsey:

It's like, "Here's the code, 50% off, go to doughp.com." This next round of influencers, we're going to try a little bit looser like that, instead of everybody going to a landing page, because we're just not seeing the results we want. But if you've got the time or marketing person on your team that could do the paid promo, quick DMs, and see who's down to talk about your brand. That's awesome.

Kelsey:

Because the people that I've sent free product to and they're willing to post by me, Addison Ray, we got her address to send her some free product by chance. She posts, I've got 4,000 followers in a day ...

Brett:

It's amazing. It's amazing.

Kelsey:

That was great. There is just some ... You got to stay scrappy. Even as you get big, stay scrappy.

Brett:

I love that. Yeah. Even when you're generating some nice profits and growth is there and you have paid channels that are working. Did you ever put anything on autopilot? But if you got your agency running, you don't have to think about it as much. But you should never stop with the scrappy, creative hustle type stuff because it adds a nice extra percentage to the business that compounds over time, that really can be a massive difference maker immediately, but also in years to come.

Brett:

Curious. On the operation side, what's ahead for you guys? Any tips or suggestions or ideas there?

Iz:

Well, great question. Now is actually the time for us to go into a bicoastal distribution model. We got the volume and the demand is there. It now makes sense. We're also in a better cash position to tie up more inventory, to have more cash on inventory. This is what's ahead now. We are actually on the hunt for a co-manufacturing facility on the East Coast now.

Brett:

Nice.

Iz:

Anyone's listening, interested.

Brett:

Co-manufacturing. Yeah. If you're listening, if you know people, Iz and Kelsey, or hit me up I'll connect to you and such we get stuff. Well, guys, this has been a ton of fun. I love hearing the story. I could keep talking to you guys all afternoon. This was a lot of fun. But I'm sure that we've made people's mouth water a little bit. Not just for good eCommerce growth, but for some cookie dough, for some Doughp.

Brett:

If people are listening or watching and they say, "Okay. I got to give this a shot." Where can they go to get themselves some Doughp.

Kelsey:

Yeah, doughp.com. Thank you for spelling it out in the beginning, because people do get confused listening to this. It's D-O-U-G-H-P. It's dough with a P on the dot com. We're @Doughp on Instagram and Facebook. We're on eatdoughp on TikTok, which has been super fun.

Brett:

Oh, man. I would love to hear that some other point, TikTok. Just really quick, 30 seconds. How was TikTok going for you?

Kelsey:

TikTok is incredible if you have something other than just pushing your product to talk about. For us, tons of the mental health stuff, there's sober talk, there's a whole sober community on TikTok. Really leaning into that, I mean, the comical funny stuff has done great, behind the scenes has done incredible. In our fulfillment center will love that.

Brett:

I'm not a huge TikToker, but my oldest son is for sure. There has to be. You guys have to do with TikTok, Iz with you playing the guitar. Kelsey, you baking in the kitchen. There's got to be some concept there that would really work

Kelsey:

Yes.

Iz:

I like that.

Kelsey:

Yeah. It's really a storytelling place. The algorithm rewards you for telling a story and having something interesting that people want to see. Yeah. The ones of ... My story, have done some green screen in front of the Shark Tank clip and stuff.

Brett:

Nice. Yeah.

Kelsey:

People like to know there's someone behind the business. Put your face out there. Get funny. Do weird shit. See how it goes.

Brett:

Exactly. I love it. I love it. Guys, this has been an absolute pleasure and a blast. Thanks for taking the time. Then thanks for being so open about Doughp.

Kelsey:

Yeah. Great to meet you. Thank you.

Iz:

Thanks for having us, guys.

Brett:

Absolutely. As always, thank you for tuning in. We'd love to hear from you. Would you like to hear more of on the show, and if you haven't already, we would love that review on iTunes that helps other people discover the show. With that, until next time, thank you for listening.

Episode 175
:
Chris McCabe - ECommerce Chris

Protecting Your Brand and Preventing Amazon Suspensions and Takedowns

So how do you protect your Amazon business from all the forces trying to kill it? My advice is to learn from Chris McCabe.

Amazon has always been a jungle for sellers.  Battling sabotage from unscrupulous competitors, protecting yourself from listing takedowns, and avoiding account suspensions are all enough to keep you awake at night.  So how do you protect your Amazon business from all the forces trying to kill it?   My advice is to learn from and get to know former Amazonian Chris McCabe. Chris used to work at Amazon in the policy enforcement team. Now he works daily with sellers to mitigate issues and fight suspensions.


He’s been so effective at helping sellers that he’s been awarded the nickname ECommerce Chris. He’s also the host of the podcast Seller Performance Solutions and speaks at leading Amazon events like the  Prosper Show.  Chris is a guy you need to know.


Here’s a look at what we cover:


- Top reasons listings get taken down and what’s in your control.  
- Reasons for listing takedowns that most sellers don’t know about.
- What it was like working at Amazon
- The leading reasons for account suspensions and how to protect yourself
- Top strategies for brand defense and fighting sabotage.
- The best strategies for preventing problems and getting listings and accounts reinstated.

Chris McCabe

Via LinkedIn

ecommerceChris

Seller Performance Solution Podcast

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 this is a special episode for all of you Amazon sellers out there. This episode will probably both strike terror into your heart, potentially give you nightmares, but it will also bring peace and comfort and give you hope in the midst of the storm. Today, we're talking about listing take downs and suspensions on Amazon, both how to avoid them and/or mitigate them, and then how to get things back up and going when you do face either a listing take down or a suspension.

Brett:

My guest today is an absolute expert in this category. You'd be hard pressed to find someone with more experience on this topic. I have joining me today, Chris McCabe, he's the founder of ecommerceChris. I want to hear how he got the nickname ecommerceChris, that's an awesome nickname and the name of his company. He was a former policy enforcement team member at Amazon. So the stuff we're talking about today, he did at Amazon back in the day, so I want to hear maybe a couple of good Amazon stories while we're at it. And so with that, Chris, welcome to the show. How you're doing? And thanks for coming on.

Chris:

Yeah, thanks for having me. That's an excellent introduction. I loved it. I loved it.

Brett:

Good, man. Yeah, I really appreciate this. I've heard good things about you. I think your nickname/company name alone is a good reason to have you on the podcast, ecommerceChris, you go there. But if you would talk a little bit about, what was your experience like at Amazon? When were you there? And just in general, what did you do? And what was that like?

Chris:

I worked on this so-called seller performance teams, the performance evaluation and policy enforcement teams. What you said about the nightmares that sellers might fear after this episode, I'm numbed to those nightmares. I went through six years on the Amazon side of it, I've been doing this for six years, so about 12 years total at this point of the day-to-day, hour in, hour out of, "How do I appeal this suspension?" That's what all these sellers are afraid of. When I worked at Amazon, yes, we were reviewing accounts all the time, every hour, sending warnings, deleting listings, sometimes canceling all their listings if they hadn't been properly, put together, broke rules, and of course, suspending accounts.

Chris:

The flip side of suspending accounts was we got to reinstate them if we found that they had submitted an acceptable appeal that hit all the right points and addressed whatever shortcomings we had previously identified. So that was the day-to-day of the job. In terms of interacting with other Amazon employees and managers, Amazon's just a heavy duty place to work, there are high expectations, they want you to be quick, they want you to be smart, they want you to be good, and you have to perform. Just the way sellers are evaluated with performance metrics, so were we, and if your number is wavered, then you'd have a little sit down.

Chris:

I ended up getting promoted and mentoring others because my numbers were good and my accuracy was good. That's the shorthand version of why I excelled in my position. Towards the end of my time at Amazon, I got what you've maybe heard from other books and articles about Amazonians getting burned out a little bit. But I think by the end, I already had a sense that I wanted to do this for a living and not stay in Seattle, but also not stay working for Amazon. I wanted to help sellers from the other side of the fence.

Brett:

That's awesome.

Chris:

The pace, I was used to it, but years and years of that pace does grind you down, that's a fact.

Brett:

I could totally see that. All right. Well, I want to unpack a few things. So Chris, tell me about the grind because I hear stories all the time, I know several former Amazonians. I've heard the Jeff Bezos quote that, "Hey, you can work long, smart or hard, but at Amazon, you can't choose two out of three, you just get all three." And so, what was the grind like?

Chris:

Amazon's a company where you're supposed to feel honored and privileged to work there too, so they don't give you a lot of freebies or free meals or they don't coddle you. People know about the Google cafeteria and working at Facebook and all these perks.

Brett:

Yeah dude, I've been to several Google campuses and it's like a playground. And they expect the people to work hard too, but they really take care of their people unbelievably well. The food was just fantastic.

Chris:

Yeah. Amazon is more workplace where it's believing in their mission, being excited with their goals, which has taken over retail. Let's be honest, what are they trying to do here? It's not just about ecommerce, they've already done that. You're there to put your brains to work, you're happy to be there. Their attitude towards a lot of employees is kind of, if you don't like it, leave. So you're not coddled. There's good parts about working there. I wouldn't have stayed there as many years as I had without enjoying most of it, but it's not a place where dissent is really tolerated. And they don't reflect that in their core principles when they say like be open to disagreement and discussion. I never found that to be the case. It was a top-down hierarchy.

Brett:

Oh really? So they were not open to disagreement?

Chris:

Yeah.

Brett:

And that's so interesting. So we're actually, as a company at OMG, we're going through some of the Amazon leadership principles, like the 14 Core Leadership Principles, and they're fantastic, but that's really interesting that they don't... So they preach dissent and disagreement, but they don't necessarily welcome that from everybody?

Chris:

Well, you have to be open to being wrong if somebody disagrees with you, but proves you wrong with either data or experience or examples that I think you have to be willing to admit that you misjudged something, maybe not made a complete and total mistake. But I didn't get that sense from manager or above types, they seem to say like, "We're being measured on these very strict goals, we have to meet them. We've decided how you're going to help us meet them and that's the end of it." A lot of stuff just started not making sense towards the end of my tenure there, especially my last year at Amazon, I was being asked to do things that made no sense.

Chris:

And not only does it kill your morale, but it makes it hard for you to do your job if you don't even believe that what you're doing is accurate or useful or necessary. If it's just like, I don't know what an example would be, somebody who's just asked to push paperwork around but they're not really doing anything with their day, the old fashioned corporate people who were numb to that. And there's just so much room for improvement with what Amazon's doing. As much ass as they're kicking right now in terms of ecommerce and the growth of the marketplace, there's so much they could be doing better with sellers in particular.

Brett:

Yeah. I'm sure there are a lot of sellers listening right now that are giving you a virtual fist bump...

Chris:

Yay.

Brett:

... Chris, that Amazon could be treating their sellers way better. And I'm sure that is true. I know that's true. And yeah, it's one of those things where you can handle long hours and you can handle the grind and you can handle the pressure and the expectations. If you agree with what you're doing and you feel like you're serving a purpose, but then when there's incongruency or being asked to do things that don't really line up or make sense, I can totally get how that would fuel burnout, speed it up and just make you... If you are thinking about doing something else anyway, that's going to likely speed up your time horizon and make you want to exit the whole cluster.

Chris:

Amazon's expecting you to consider your job the number one thing in your life. You can have a family, you can have other things in your life, but you have to be able to juggle them all or balance them all. That's on you, they don't consider it their role to make that juggling act easier on you. That's up to you to figure out.

Brett:

Yeah, that's what I've heard from. so many.

Chris:

It's fairly consistent. Yeah.

Brett:

Yep. So then, where did the nickname ecommerceChris come from? Do you remember the actual story? Obviously, it makes sense, you're in ecommerce plus all that.

Chris:

I didn't want to have Amazon in my company name, just a basic legal angle there. But beyond that, when I first started, I wasn't planning on only doing Amazon, and for the last six and a half years, I have only done Amazon. That wasn't my original intention. So I didn't want to be Amazon centric, I wanted it to be ecommerce, maybe even I would learn about some of these other marketplaces. I was researching Etsy and handmade and stuff like that just to educate myself on other kinds of sellers that I wasn't maybe used to dealing with. But then as soon as I updated my LinkedIn profile and said what I did at Amazon, the flood gates opened and I just had all these Amazon sellers constantly asking me for help.

Brett:

Yep, totally makes sense. Two million Amazon sellers and growing, and the problem you address is a growing problem, it's real, it's painful. And so, yeah, I think you've got all kinds of room to grow and expand just doing what you're doing.

Chris:

And I didn't even know that really at the time. I knew the marketplace was growing, I knew some of the basics. When I left Amazon and took a year off to travel, probably over a year. And when I came back, I wasn't 100% sure what the state of the marketplace was or how they were dealing with sellers. I had to go through some of the messaging that sellers had, which back in 2014, the messages were much higher quality. They weren't great. That was one reason I left, I didn't think Amazon could communicate with sellers anymore, but they were much better than they are today.

Chris:

So I didn't really know that until I started helping sellers with Q&A and writing appeals and, would it be reviewed properly on the inside? I wasn't sure until I tried it, really.

Brett:

Yeah. I want to get into some specific tips and tactics and things to avoid. And I think this is going to be an extremely helpful podcast for people. But I think part of the problem, part of the reason why Amazon doesn't communicate well with sellers is just the growth is too fast and they're not able to cope with it, or is there something else there that's causing this?

Chris:

More specifically, I think they're having trouble marrying their automation to human investigation. Their machine learning hasn't caught up to all the things that are going on. There's a lot of abuse of their tools, of their algorithms. A lot of people gaming the system. I don't think their machine learning's caught up really, whether it's reviews abuse, something like that, or buyers.

Brett:

Yeah, it's just I think such a huge problem. I know people with legitimate reviews that are getting dinged and then you see some listings and you just know that it's been manipulated and they're not real reviews.

Chris:

They're still catching up. They're finally adding more head count. The reviews abuse team is a good example, PRA. Product reviews abuse has by some measures tripled their head count. They finally added more people, but it's not syncing up enough with their automation to make it meaningful. So they're still struggling with standard operating procedures, different systems and processes that they're trying to put in place to make the scalability of the work more within their grasp, and they just haven't gotten there yet.

Chris:

Unfortunately, I think people who are looking to abuse the system or cheat their competitors out of some revenue are aware that Amazon is way behind on some of this stuff and so they're manipulating things for their own ends. And it's unfortunately creating not just bad seller experiences, but I don't know if the wider public understands that this creates more negative buyer experiences.

Brett:

It totally does.

Chris:

You mentioned Jeff. Jeff's number one goal with creating Amazon was to create the best online buying experience-

Brett:

Yeah, the most customer-centric company on the planet.

Chris:

Most customer centric, but no one's really connected the dots to how negatively impacting buyer experience some of these tricks and gaming the system and some of these fake out moves that sellers are doing are hurting buyers too.

Brett:

Yeah. And it just makes you question your next Amazon experience too. If you do get duped, you buy a product that's not as great as the reviews say it is or doesn't really live up to the description and things like that, it really questions your next Amazon purchase. So obviously, Amazon has identified it as a problem, but the AI and the human efforts just are not in alignment yet. Hopefully they'll be able to fix that soon.

Chris:

Maybe this is Andy Jassy's big move when he comes in this summer, he's going to figure out how to take machine learning and combine it with a human account reviews, manual investigations and make them 10 times more effective.

Brett:

He'll end up appearing before the Senate. He's going to be the anti-trust stuff. But yeah, that's a really good point. Andy Jassy, he was the head of AWS, potentially no better person to be running Amazon to work on some of the AI problems and automation problems, so super interesting. Well, let's dive in here. We're going to talk about listing take downs, we're going to talking about suspensions. The two are related, first comes to the listing take down, you get enough of those which will then the suspension happens. What are some of the common causes of a listing take down? And if you can share any of your experiences while you were at Amazon, if that's still really relevant, that's great. But why do listings get taken down?

Chris:

They changed a few things after I left around this concept of product quality, item quality. So the number of investigations and listing take downs around authenticity exams or item condition complaints. Item quality complaints or item condition complaints are the big thing right now. A buyer's complaining that they got something that's not what they paid for, not worth what they paid for, not the same quality they expected, not the way it was described on the detail page, any of those things.

Chris:

Obviously, condition, if you're buying something and you get something that looks and feels and sounds used, you're unhappy automatically. So they're drilling down into those types of complaints. They are unfortunately just copying and pasting things around. A buyer might not understand a product or they might not have read the product detail page closely, but they still might blame the seller for, "Hey, you didn't represent this right on the site," or this word of inauthentic gets thrown around. Items might be inauthentic. Well, that means the buyer probably didn't say that it was fake, sometimes they say that too, but they probably just say it wasn't the quality they expected for the price, or it wasn't the kind of item they expected.

Chris:

Those are the main reasons why listings are suspended and why they're asking for a plan of action. Lesser known causes would be like expired products, expiration dates and compliance issues, which I know you and I have had conversations about compliance before. But if Amazon thinks you don't have the right documentation, whether it's FDA documentation or safety testing documentation to list and sell those products on the site, they err on the side of caution and remove those listings until you can prove otherwise.

Brett:

Yep, totally makes sense. So clearly, if the condition is not what you advertised or if it's not the right quality or people are thinking, "Man, I got ripped off, this was not worth what I paid for," then you're going to be in trouble. It seems though, and I'm part of several ecommerce communities and forums, and of course, talk to a lot of sellers, we're all on the growth side, the ad side, the listing optimization side, things like that, but it also seems like there's some good sellers with good products that get their listings taken down. Is that going to be on some of those lesser known things that you mentioned, the perceived compliance issues? When do good products and good sellers get impacted by this?

Chris:

They've had a lot of trouble separating good apples from bad apples, real problems from fake problems, so they're applying the same principles to all sellers, whether or not they match the situation. That's what's scary. If you want to talk about what's scaring me and our clients it's that people who don't really have that many buyer complaints about the products are sometimes being nudged by Amazon to send in an appeal, maybe not a plan of action, but just, "Send us an invoice, we want to look at your supplier. We want to hear what you're doing for better due diligence, better quality control to make sure the product is sound."

Brett:

And that's always scary. Amazon says, "Hey, send us your supplier." "Okay, yeah. Thank you Amazon."

Chris:

Yeah. That's another thing, they're very interested in your supply chain documentation for a variety of cases, whether it's compliance, whether it's proving authenticity, or it's a buyer complaining that you didn't send them something new or you didn't send them something authentic. Amazon is very interested in letters of authorization and invoices that they can accept. They've tightened the criteria around which invoices they can accept. We have some clients that are their own brands making trademark registered brands, and they're wasting a lot of time trying to communicate to Amazon that they are the brand, they are the manufacturer and the invoices shouldn't be rejected for non verified because of what? They tried to call some factory in China and nobody picked up the phone. That doesn't make any sense.

Chris:

But you shouldn't be spending a lot of time defending the authenticity of your products if you are your own brand.

Brett:

Exactly. Yeah. So let's talk about prevention here. And we talked about this when we were doing our prep call a few weeks ago that the old adage, "An ounce of prevention is worth a pound of cure." Sometimes we think the cure is just easier. I think in this case, we're all pretty scared and we want to make sure we are preventing. So what are some of the steps that good sellers need to take to prevent as best they can or mitigate or reduce the likelihood of a listing take down?

Chris:

In terms of the compliance documentation, make sure you have it and have it ready to go. Some people contacted us when they got these alerts from Amazon and they didn't have any of the tests done, they had to find labs, things like that.

Brett:

Is a good resource your site or somewhere where we can quickly get the compliance-

Chris:

You know what, that's one of the big problems in the space. I can say as a consultant that we haven't had solid bonafide... I made a recent connection to Tyler Israel, I don't know if him?

Brett:

No.

Chris:

He is one of the people I met recently, but over the past few years, there wasn't a go-to person for this. There wasn't a firm that was like, "Yeah, we do all sorts of compliance documentation and testing for all kinds of categories of items." That's what we've been missing. It's not something I do. We handle the appeals process. It's the same as legal issues, I'm not a lawyer, but I handle the Amazon side of the process when for legal reasons, the listing is taken down or an account is suspended, I handle the plan of action, part of the appeals process.

Chris:

Same thing with compliance, you need a compliance expert who understands those types of things. And I had a conversation with Tyler, which was really good. It's unfortunate that it took me a few years to find the right person, but documentation is essential. And make sure wherever you're sourcing it, this applies to any kind of seller, reseller, your own brand, you've got a supplier who answers the phone, describes their business relationship with you if they're called, doesn't act like they don't know who you are. They give you invoices that don't look like they were written with a crayon on the back of a newspaper, really acceptable, clean, easy to read.

Chris:

Because sometimes the appeals that we do for people are accepted but then Amazon will reject it based on the invoice or they don't like the supplier and they say, "We looked at your supplier's website, it doesn't look like they make items like what you sell." And they'll reject it for that reason. So make sure that the supplier... Essentially, you have to prepare now and you can't just wing it because-

Brett:

Prepare thinking that a listing take down is coming, right? That's the way we have to think-

Chris:

Well, because an appeal can be rejected for like four or five reasons now. It used to be they just didn't like your plan of action, there was really one reason that they wouldn't take it. Now, there's at least a few. So there's no point spending all your day, lots of energy and research and writing and rewriting a plan of action and then the appeal and they bounce it back because they're like, "Well, we did a Google search and we couldn't find your supplier anywhere, so we don't think they're verifiable and we can't accept this."

Chris:

It's unfortunate that that happens, but like you said, some people don't take that seriously. They get one listing taken down and they take their time getting it back. I don't know, I've seen a lot of sellers not acting with urgency unless that's their top selling ASIN, but they don't understand. I understand account health and your risk score at Amazon is algorithmic, but they don't understand that if you have a few ASINs that have been suspended and you're taking your sweet time getting them reinstated, your risk score is suffering.

Chris:

And account health now has that dashboard, they finally made it easy for you to eyeball it and say, "Hey, I'm in trouble." In the old days you were just looking at reams and pages of performance notifications and you had no idea where you were or what your status was.

Brett:

Yeah. So, let's talk a little bit about that account health dashboard. Where should we really be paying attention? What are the numbers that may matter more than others? And when should we start to get concerned as we're looking at that dashboard?

Chris:

Yeah. Again, algorithmic, so what's a five for one seller is not the same as a one for you, you want zeros across the board. If you have a policy warning, you want to appeal that with all the links to policy pages you've gone over and new procedures you've put into place to make sure you're enforcing that policy internally. You want to appeal that sooner than later, but appeal it well, of course. They have product, condition, item quality, or authenticity complaints. You want to get those resolved because Amazon doesn't want to believe you've got piles of inventory sitting in FBA that could easily, if left unresolved, result in many more complaints.

Chris:

That's a big part of what the appeal process is all about. They want to make sure that you're taking measures now to prevent complaints later or bad buyer experiences later. And then beyond that, obviously, anything intellectual property related, received IP complaints. You want to follow up with those, even if they look like BS, and follow up with the rights owner. It could be a so-called rights owner, but you want to message them, find out the nature of the complaint, what they want from you to resolve it. If it's not a legitimate rights owner complaint, then there are ways of disputing them.

Chris:

There isn't a lot on the dashboard that I wouldn't take seriously except for some restricted products messages and some like food and safety complaint messages, go out to sellers just so Amazon can tell every seller selling that item, "We don't want this item to be sold on this site anymore." That's really all they're saying. They're not expecting you to necessarily appeal it because it's not specific to you, they don't want products with that particular ingredient sold anymore, so they're just telling you all, or they don't want products for whatever other safety reasons, other reasons.

Chris:

There's a lot that goes into that decision, obviously, product recalls, compliance issues. But the bottom line is they're telling everyone that they don't want that to be sold, it's not something you in particular are in trouble for.

Brett:

Cool. So, what other preventative steps would one take? So we're going to be watching our account health, we need proper documentation, we need to have a good relationship with our manufacturer and they need to be someone that visible on Google through Google search or visible on the web through Google search and they answer their phone and those things. What else can we do to hopefully prevent this from happening?

Chris:

And don't blindly ship product sight unseen from your manufacturer to FBA without having some samples at least sent to you, maybe a percentage of each batch or a percentage number of the units that you deal with monthly go to you so you can open them up and make sure that they're exactly as you described them on the site. Because some people I think get in the habit of not seeing product and they just ship to FBA. This is what Amazon is afraid of, that you're never seeing this stuff and that you're not even familiar with the item quality. So when buyers are complaining about it, if you go back to them, "Well, we have a vendor, we're drop shipping. We never see this stuff."

Chris:

I'm not saying you would phrase it that way, but if they get the impression-

Brett:

You can apply that.

Chris:

Yeah. If they get the impression that you're handing the responsibility off to somebody else for quality control, for auditing, picking and packing processes, what the packaging itself is like, the likelihood the item's going to stay secure in the packaging and show up in FBA still in good shape, if they think you're outsourcing all of that or not paying attention to it, then they more or less believe that you're guaranteeing certain amounts of buyer complaints.

Brett:

Got you. So if they get that impression, they're much less likely to reinstate your listing or to resolve it?

Chris:

Yeah. And also I've seen those appeals that sellers write for themselves. They tend to deflect blame like, "Well, this is our manufacturer. They have an agreement with us and they'll inspect product before it leaves the factory and they didn't do it." And there's lots of them. Sometimes people also rephrase it, like, "Well, we hired the wrong employee and it was the employee's fault. And they're the one who was supposed to stay on top of it, and they're the ones who weren't doing it."

Brett:

And really if you think about this, like just leadership principles or the way it sounds is that to Amazon, to the policy team or to anybody that's thinking with a critical eye, it sounds like you don't know what you're doing. You're in a tight ship.

Chris:

Managerial like taking ownership has to be a part of any appeal. We failed to monitor our employees. We didn't manage this process appropriately. That's what root causes are in a plan of action. We could talk a whole other show about how to write a plan of action, but the bottom line is you have to show that you diagnose the problem from an owner or managers perspective. If you're just finger-pointing, honestly, they stop reading and they kick it away.

Brett:

Yeah. Which makes sense, because if Amazon truly wants to be the most customer centric company on the planet, and I think they do, then you better have that mindset as well. And that means you're taking care of the customer, well, not my fault, I can't be held responsible for this way, then you're not going to be selling.

Chris:

A lot of sellers have been doing this with product reviews abuse, suspensions, "Well, we hired some marketing company, I don't know what they're doing. They said they followed the rules." Or, "We used the messaging sequence and I showed it to somebody who says they know compliance in Amazon, they said it was okay. It's like, you're the one who's in charge, the buck stops with you. So if you hired a service like that, Amazon blames you for not vetting them appropriately. You can't blame the service. So I'm not sure why I'm reading…

Chris:

I still read these appeals where people are like, I'm not going to name companies right now, but, "These guys said rebates were okay. We did 100 % giveaways. We did all these." It's like, "Well, you believed them. Whose fault is that that you believed what they were telling you?"

Brett:

It's like telling the officer, "But my neighbors that was okay if I went 100 miles an hour on the street."

Chris:

Or my speedometer doesn't work, so I don't know how fast I was going. So that's okay, right?

Brett:

Right. It always works. That line always works for sure.

Chris:

Don't try this with cops, it is not going to work.

Brett:

Yeah. For sure. That's great. Super helpful. Then let's talk about suspensions. And I'm sure we'll circle back to some other thing, take downs too, but when do suspensions occur and what do we need to keep in mind there?

Chris:

The easy, short answer is watching your account health, and you see a lot of crooked numbers. They used to say about baseball, fucking numbers on the scoreboard for like a high scoring game. If you're looking at your account health and you're not seeing a lot of goose eggs, then there's a problem. You're either not moving fast enough or you're not taking those indications seriously that there's an appeal that needs to be submitted, you're letting it fester over time. If you accumulate more of those, typically these days, they've got that visual display now, you go from green to yellow, to red.

Chris:

Well, by red, you're probably already suspended. It's the people in the yellow range at risk. You have figure out why you're still there. If you appeal something and they accept your appeal, but the numbers don't change on the dashboard, Amazon's tools are ancient. So sometimes the dashboard doesn't, not sometimes, often it doesn't update in real time.

Brett:

Got it. So you may have successfully won an appeal, things are moving in the right direction, you're maybe actually green, but it's still showing as yellow. That's common?

Chris:

Or you shouldn't be at zero for product condition complaints, because you've successfully appealed to them all, and it still says one, two or three or four or something like that. It's because the visual display hasn't updated yet. The important thing is you've got the notification saying, "Yes, we've reinstated you to sell ACE and blink. That's what matters because if you ever get into a call from account health, which you were saying, what happens? How did these suspensions happen? These days a lot of them, you get a call from account health, they gives you 72 hours to write a plan of action to prevent a suspension.

Chris:

So at least then you're still in the game and you can still appeal to prevent it from happening at all. But what are the account health guys looking at? They're looking at your dashboard. On that phone call, you would have to tell them, "Look again, we've successfully appealed a bunch of these, the numbers haven't updated. Maybe you didn't see that in our account annotations." But they don't always just suspend you out of the blue anymore. Amazon had a lot of heat for that. So you should always put your-

Brett:

So you're saying there are more warnings now, there are more that's 72 hours?

Chris:

The Account Health Services, AHS for short, gives a lot of sellers a call, a heads up, "You have 72 hours. Here are the problems in your account. We're calling to discuss them with you." Sometimes it's in writing, it's not a call, if they call you and you're not home or you don't pick up. But a lot of those do turn into full account suspensions because the plan of action that the seller sends in isn't complete, a lot of those get rejected.

Brett:

Got it. Let's just play your nightmare scenario here. We get the dreaded call, it's AHS on the line. You'd rather like talk to the IRS or somebody else probably.

Chris:

Yeah. Same idea.

Brett:

It's the AHS. You got 72 hours. What do you do at that point, Chris?

Chris:

First, get whatever information from them while you have them on the phone or have to call them back about the ASINs. What were the complaints on the ASINs? We looked in voice of the customer, we looked in return comments, we looked in buyer messaging. We didn't see negative feedback for this agent. What are the complaints that flag these on the Amazon side? You want to get that data, you want to get factual information from them. They also exist to help you write a plan-

Brett:

Are they forthcoming in providing that information? Are there are they trying to hide that from you?

Chris:

Yes and no. It's hit or miss. A lot of these teams at Amazon, the training's very inconsistent, the execution is very spotty, but I think that sellers that are savvy about this stuff can push them a little bit to give you the right kinds of information, and maybe that'll make up for some of the shortcomings on the Amazon side when it comes to sharing information.

Brett:

So, ask good questions. You've got them on the phone, don't leave that phone call without getting all the info you need.

Chris:

Yeah. The reason we can debate whether or not this is a real reason, the reason they're cagey about it sometimes is because either they can't see it, they can't find it or see it themselves for their own chaotic reasons, or they are pushing you to go through voice of the customer that in talking to you, they don't think you've done any research, ASINs level research in your account. And they think you don't know what's going on with buyer complaints or brand complaints. It depends on what they're calling about.

Chris:

Complaints about those ASINs, they think you're behind the curve and that you need to do some catching up and they don't want to just set it all up on a platter for you. They want you to tell them in a plan of action, what you could have done better, what operational or deficiencies you failed to correct.

Brett:

Sure. So maybe as you're asking those questions, you're phrasing it, not in a way that's defensive, but in a way that, "Hey, we take these problems very seriously. We want to get to the bottom of this. We want to make sure the customer's taken care of." Rather than getting combative and getting emotional and being defensive. You might not get as much cooperation at that point.

Chris:

Exactly. And that's the root causes that I was talking about a moment ago, you have to nail the root causes, which causes are just what caused the complaints. They don't care about the causes, they already know the causes. And they probably know that you have a good idea what the causes of the complaints are. Root causes, where did this come from? Why did it happen? How did it happen? Why didn't you catch it? What was the failure that wasn't identified and rectified before there were buyer complaints? That's what root causes are all about, your analysis of what went wrong, but in detail.

Chris:

And a lot of sellers miss that chunk, and then the root causes are generic rapport, and then the rest of the POA doesn't matter. Plan of action in terms of... Yeah. Sorry.

Brett:

Just to clarify, we have the phone call, we ask questions, we try to understand as much as we possibly can from the agent. Then from there, we're now seeing our job as get to the root cause. So the where, why, how it happened and how to fix it so that we can map out from there?

Chris:

You're presuming that they gave you some info on the buyer complaints. The nature of them, maybe not how many they were, because they don't necessarily have to be a lot, but the nature of them. In theory, there were some consistent complaints about those products. If you can't figure out what they're telling you in terms of what went wrong and you address the wrong root causes, then your POA, your plan of action is way off and it doesn't have a chance. So you're using them for information, not so much to coach you through the POA writing process. You can do that too, but that should be secondary to getting facts and data from them. Once you nail the root cause is-

Brett:

Your plan of action to be way off base, so it's clearly going to be rejected.

Chris:

Because some people are just guessing because I say, "Well, there's nothing wrong with my products. And we haven't even had that many buyer complaints and account health reps didn't really tell me anything. And I looked in voice of the customer and I saw the usual scattered random stuff, and we took care of those buyers. What's the problem?" One thing you definitely don't want to be is defensive where you say, "Nothing's wrong, what are you talking about? This is BS. Get away from me." That's like rubber stamp denial. We all have things we can improve. I have things I can improve in my due diligence on consulting side.

Chris:

Every seller has something they could improve or maybe they just had a couple of bad luck incidents where things were damaged in transit. Maybe it's a good opportunity to look at the quality of your packaging to see if items were properly secured inside or if they were just banged around and were defective from the damage. If it's really just about the quality of the detailed page content, your images, the written content on the page, there's loads of services out there that help you optimize by clarifying what the heck it is you're selling and getting you better images, making the messaging very clear to any potential buyer that will reduce the likelihood of complaints on the other side.

Chris:

Amazon knows this, I know it. Brett, you're a smart guy, you know it. But people who have manufactured their own products, they're sometimes missing the forest through the trees. They're a little bit too close to it, they're more subjective than objective. Sometimes that's really what it's about, buyers not understanding this description of the product and you have to amend the detail page and that's what needs to go into the plan of action.

Brett:

Yeah. It's one of those things where, "Hey, my baby's not ugly," sort of thing, or to use the Amazon language from their leadership principles, my body odor doesn't stink, some elite leaders don't believe that, is an Amazon principle. So that totally makes sense. Now, how big of a problem is it? And it seems like this is maybe a growing problem where just like we talked about earlier with review quality, people getting fake positive reviews and sometimes thousands of them and it looks totally phony. Or what about a competitor saying, "Huh, I see your listing, it's having success. I'm going to bombard it with fake negative reviews."

Brett:

We have we have a client that we just launched on Amazon, pretty big brand. They're very successful off Amazon, we help them advertising off Amazon as well. And they got a couple of just, you could tell it was folk fake results. It was like, "Oh, the product was way smaller than advertised. And it ran out too quickly." There's no way they could have even used it all. The listing hasn't even been up long enough for someone to consume all of this particular product. And so how big of an issue is that? And is there any way to combat that, people that are just trying to sabotage your listing?

Chris:

Sabotage is rampant and omnipresent. So how bad is it? It's gotten worse and it's become pervasive. It's become commonplace unfortunately. The good news is there are better ways of combating it. There are more places to report that. There are starter email queues that you can try, and sometimes people get results from those, but often they don't and they have to kick it upstairs and see if somebody, manager level or VP level do something about it. The good news is, again, that there are VPs who are dedicated to reviews abuse, and to this kind of bad behavior.

Chris:

Again, their machine learning and their algorithms and their AI isn't quite up to snuff to just identify that stuff easily and delete it before any buyer see it. Often you have to report it, but a lot of systems work that way at Amazon, they're reactive, not proactive. It's reports based, they don't get to it first.

Brett:

One thing I've heard is that sometimes it's hard to get a bad review taken down, and then I've also heard that you can seen negatively if you complain about reviews too much, or you make too many requests for negative reviews to be removed. Any insights on either of them?

Chris:

I certainly wouldn't spam them, especially if you're just giving them conjecture and casual observation, "We think this is fishy." They'd throw that away, they always have. Trying to determine some patterns. Obviously you can't just throw a bunch of data at them and expect them to say, "Yeah, you're right, the math checks out. These reviews are all fake." They have to do their own investigation, but it's good to give them facts and data. And this is entirely implausible. We can't show you exactly who the people are behind these buyer accounts.

Chris:

I've worked with some sellers who were able to trace back some of these reviews to reviewers and get the reviewers banned. When the reviewer is banned, all the reviews they left are gone too. That's a good approach that people weren't doing last year or the year before, but also sometimes they trace them back to a certain Facebook group, which the entire purpose of the group is just a fake reviews or an entire company.

Brett:

We'll pay you four good reviews or bad reviews or whatever the case may be.

Chris:

Yeah. And some of that is just by doing some research on what your competitors are doing to fake the reviews. Sometimes it's as easy as buying from them, looking at their product insert and following the link back to whatever group they created to help you get free products.

Brett:

Yeah, shop your competitors, which you should be doing anyway. Well, you should be looking at some of your competitors' products just to QA it and to get ideas and to see how they're marketing, but yeah, follow their steps and see how they try to market to you to leave a review or whatnot, and then try to catch them. Any other little insider tips like that you can give related to any of this?

Chris:

For reviews or for brand abuse? Because what we're dealing with a lot, is people have their listings taken down because of competitor hacked into their brand registry. That's a big problem.

Brett:

Let's talk about brand abuse, because it does just seem like, obviously Amazon's always been a bit of a jungle and there's always been things that you're playing whack-a-mole with problems that come up, but this sabotage from ruthless competitors is really popping up. So talk about the brand defense there.

Chris:

Yeah. A lot of backend keyword abuse is happening where people have their listings flagged because an elicit term showed up in their backend keywords, but they're not the ones who put it there, somebody else inserted it there.

Brett:

How's that happening?

Chris:

Somebody overrode their flat files with their own, synced that up to the API and overwrote that listing content, which if you're in brand registry, you would think that wouldn't be possible. Unfortunately, it's entirely possible.

Brett:

Interesting. Just a quick side note, I used to do a lot of SEO back in the early days of OMG Commerce, we were primarily SEO. And for a while, there was some negative SEO practices that would go on, where you learned that, oh, if somebody gets too many spammy backlinks, Google the Index as your hard stop, do that to your competitor. And so it was nasty, well, still is, I guess.

Chris:

Similar concept.

Brett:

Google had to create parameters to not penalize you for that.

Chris:

Similar concepts. And then there's just people who buy from their competition and say, "This is fake." Or, "This is unsafe," just to try to trigger some-

Brett:

It ran out, it's too small, silly things. Got it.

Chris:

But things are turning a corner. I hope they continue along that. Two years ago, there was no way to really troubleshoot this stuff. I didn't offer any services about this two years ago because Amazon didn't seem interested in the reviews abuse or the brand abuse, but now brand abuse is everywhere, and reviews abuse has continued to expand. So they had to do something and they're starting to do things that are helpful. So that's a good sign. What that means for you hopefully is that you've got numerous places where you can communicate what's happening to you so that somebody higher level don't open cases with the support, don't stay in the lower level range with this too long. That's just a big waste of your time.

Brett:

So opening support tickets or staying lower level support is not worth your time?

Chris:

Open one ticket so that you can reference a case number when you start complaining elsewhere that nothing's happened. That's it. Don't expect anything from support. Don't really expect anything from initiating a complaint about something in seller central. They've got mountains of those just resulting copy and paste responses that are very watered down, very murky that have very little meaning. Unfortunately, Amazon is still a marketplace where anecdotally things are escalated and that's where the lion's share of correct work and proper review is done.

Brett:

So you've got to escalate things before any work really gets done, before the solution is found?

Chris:

Right. The good news, more good news, we don't want people walking away afraid waiting for the next nightmare.

Brett:

We want to sleep at night.

Chris:

You mentioned the antitrust investigation and around that, and other public stories have brought to light high-level management at Amazon, people that you'd find on LinkedIn that you'd know by name. They might be somebody who doesn't respond to you personally if you emailed them, but they've got staff that they delegate to... Their email might not be public, but maybe you can send them a message on LinkedIn. So these people are known, they're well-known, and you can find out what they do.

Brett:

These guys are switching trends, now are like big time execs, leaders at companies that are pretty well known because they're famous in some cases. And so that hopefully pushes them to take the right action.

Chris:

And if you testify in front of Congress, then people are automatically going to know your name and be interested in finding out how to reach you and show something to you.

Brett:

Yeah. So this was great. And understanding that the brand abuse and review abuse, that creates negative customer experiences as well, and so it has to be addressed. I'm happy to hear that Amazon is working to address it. Couple things I'm curious about from your perspective, one, I'm going to get the name wrong, but there's a program where you can have like a dedicated rep for lack of a better term from Amazon, like dedicated support personnel or whatever. Do you know the program I'm speaking of? And is that worthwhile?

Chris:

I know the strategic account managers.

Brett:

That's it, yes.

Chris:

And then they call it SAS core, but it's essentially strategic account management. Those are the people who have managers who are supposed to be helping them grow, helping them troubleshoot problems. Sometimes that can help with the abuse related work, sometimes they can help introduce you to a category manager. That's what we're spending a lot of time on now for people who are growing and growing, doubling and tripling every year in a category, but still haven't met or interacted with the person that manages the category. That can pay off with growth, with your sales.

Chris:

And just being in the know. I think we've gotten past the point where brands can just happily sell off in the corner and do their own thing and ignore everything that's going on around them. I don't think Amazon hosts that kind of marketplace anymore. So I think you really have to just be with it on trends and what's going on, and what competitors are doing to each other. Not being in the know can really hurt you.

Brett:

Yep. It is one of those classic scenarios of it's what you know, but it's also who you know, and knowing the right people at Amazon, or at least knowing how to get connected to the right person at the right time is super critical. What advice would you give there on how do people stay in the know? Do they follow you at ecommercechris.com and get all your information? Or are there other podcasts or news sources or group, anything you'd recommend so that people stay in the know on these policy issues?

Chris:

I have my own podcast, Seller Performance Solutions. We're covering a lot of how to, and a lot of hot topics on there. And also having some interesting guests for things that sellers might be interested in, but might not impact their day to day so much, but it shows the overall marketplace and how things are going. Also, yeah, ecommerceChris, I've got my blog on the website and I do quite a bit of videos there just covering how to write a plan of action, what to do if you're stuck in the appeals process. I talk a lot about escalations, and that's obviously because I used to work on the escalation teams, but that's the kind of strategy you need to be clued into. It's not just copy and paste.

Chris:

I think sellers that are out there using templates and generic content are falling way behind the times. That stuff doesn't work beyond maybe a single digit percentage of times. It's just not a good use of your time.

Brett:

Awesome. Well, I highly, highly recommend people go check out ecommercechris.com, get that information, listen to the podcast, understand how to go through this appeals process and the escalation process and all of these things. Any other asks you have, Chris? Or what if someone says, "Okay, this sounds good. I feel more educated, I feel like hopefully if I go check out some of these resources, I can sleep a little better tonight." Or what if they just say, "Yeah, but I'd rather just work with Chris if I have an issue." What does that look like? And how do people get started that process?

Chris:

Again, ecommerceChris, my services page, we have a wide variety of levels of service and also different services on there. Some people just want me for an hour, they want to tune things up, they want to do it themselves, they just want some guidance, coaching, suggestions, and so forth. So I have one hour consults, my calendar is open to the public. People that want to hire us per se, to run the project, I'll work until they're reinstated, there's a flat fee, project rates. It differs of course, whether it's ASIN level or account level. But the concept is the same. We manage your appeals process and we write them up, go over it with you.

Chris:

Of course, there's quite a bit of interaction with our clients to make sure nothing's missed. All the Is are dotted, all the Ts are crossed because you want to reduce the likelihood of a denial of any appeal that you send them. And we're easy to find, we're working most of the time. We're not-

Brett:

Yourself, and not just to make Bezos and team more wealthy.

Chris:

We're running a tight ship, but we're also around and reachable and communicative. So if you have a problem, we can at least give you a sense of what we think you need to do to fix it, whether or not you have us fix it for you, we can figure out later. But we understand it's a stressful, frustrating experience. We also understand that if Amazon ran a tighter ship, you wouldn't have the need to call me as much. So it's a tight spot to be in when you've invested that much in your business.

Brett:

Totally makes sense. And just as a quick plug, we know a lot of people that have used Chris and team, and that's why he's on the podcast because my Amazon team said, "You need to talk to Chris." And had several good referrals and recommendations. And so this has been really good, this has been really educational. I feel better for our clients and we also invest in brands and other things. I feel better knowing this information, better knowing you as well. So Chris, man, really appreciate the time. This has been super helpful. I'll link to everything in the show notes, maybe some of those specific resources as well, but go to ecommercechris.com. And then links to the podcast are on ecommercechris.com?

Brett:

Yeah. Sellerperformancesolutions.com if they want to go there, but yeah.

Chris:

Cool. All right, Chris. Awesome stuff, man. Thank you so much.

Brett:

Thank you. Thanks for having me.

Chris:

Absolutely. And as always, thank you for tuning in. I hope this has been helpful and instructive. And hey, here's my ask for you. If you know someone that this podcast will be useful for, share it with them. We'd love to grow our audience. This is really just so we can connect with the community, and so I can meet smart people like Chris. And also want to hear from you, what else would you like us to cover on the podcast? Any guest suggestions or anything like that? And connect with us on the socials. I would love to chat with you there. And with that, until next time, thank you for listening.

Episode 174
:
Tom Worcester - Lunchbox Packs

Building Community and Leveraging Anchor Videos for eCommerce

Tom Worcester is a tremendous success story.

Tom Worcester is a tremendous success story.  Grit, determination and the ability to pivot he has in spades.  He started his ecommerce business lunchboxpacks.com in 2018 to cater to the festival and event-going crowd.  He hustled and used in-person marketing at events to help his theft-proof hydration backpacks (think a camel back, but with security features).  The products took off.  Then the pandemic hit.  No festivals. No in-person events.  But Tom knew his customers still craved community.  So he continued to build community and he helped build another business - Create with Carousel that helps eComm brands build great video content.  

Here’s what we dive into:

  • How to build community online for an ecomm brand in record time with a unifying topic 
  • How to positively create echo chambers for your brand
  • What hooks you need to use to build community
  • Creating incentives to grow your community
  • 3 layers of a product to consider when you craft a video ad…most people only think about the first two layers
  • How assuming you’re wrong can help you get it right with video ads
  • When and how to best use CTAs in your video ads

Tom Worcester

Via LinkedIn

Via Twitter

Via Instagram


Lunchbox Packs

Create with Carousel


Mentioned in this interview:

Smile.io

Weatherman Umbrella


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, we're talking about two fantastic topics, we're talking about building community and what that means and what that can do for you, and then we're talking about one of my favorite topics, building long form video content, video content that converts. And so my guest today, just really excited to have a chance to sit down and chat with him and pick his brain.

Brett:

I've got Tom Worcester on the show here today. He's the founder of Lunchbox, lunchboxpacks.com, check it out, we'll talk more about that in just a minute. And then he's also a partner in Create with Carousel, a creative agency creating some amazing anchor videos for eCommerce brands. We're going to dive into video content, which like I said, is one of my favorite topics. So with that intro, Tom, welcome to the show, man. How you doing? And thanks for coming on.

Tom Worcester:

Absolutely. I don't have as buzzy of a line as OMG CEO, but I'm definitely glad to be here. I appreciate the time today, Brett.

Brett:

Absolutely, man. Yes, thanks for coming on. We had a great chat, I guess it feels like it's been forever ago now, back in March where we were talking about stuff, talking about Lunchbox, talking about your videos, and like, man, we got to do a podcast. So here we are finally making it happen. And so I'm just thrilled to dive in.

Brett:

So you're a master at creating community, and I want to dive into that, because I believe that in the future, as Amazon continues to grow and as opportunities on Shopify and other platforms continue to grow for people to create brands, those that win, those that really become something special are going to be the brands that create community and they create a true brand, not just a product, but a brand and a community. So we're going to dive into that. But before we do, talk about what is Lunchbox, again, it's lunchboxpacks.com. What is it? Where did that idea come from? And then we'll dive into community.

Tom Worcester:

Yes, absolutely. So back in, let's see, 2018, we're 10 years after the Great Recession, we're seeing a golden age of experiences and events popping up. We're seeing almost 40 million Americans a year going to festivals in the States, we're seeing concert goers increase in volume steadily by almost 8% year over year. And so, almost generationally, what we're seeing is that people, especially Gen Z, millennials, were putting the experience economy first. What's the experience economy, Brett? It's where all of a sudden, instead of aspiring to the Rolex, or the Porsche, or an even fancier watch, instead, you've got people who are investing in travel, their experiences, the memories that they're going to preserve.

Tom Worcester:

This is partially fueled by the rise of social media, people want to show where they are as a form of .. But all of a sudden, people are looking to really invest in their experiences. And so back in 2018, we realized that while people were investing heavily in their experiences, nobody was really addressing the space of ensuring that experiences were great across the board. And so we, as a team, went to a couple different events, festivals in 2018. Over the course of one day in Miami actually, we had our friends get pickpocketed in the crowd, we had people standing in hour long waterline because people use hydration packs at these events and they're not quick refills, it just takes a lot of time, so backs up the whole line. And finally, we encountered different security rules at the security guard letting people into the venue or they'd compensate bags for being too big, too small, that one's purple, what are you going to do?

Tom Worcester:

So out of this experience, we looked around and we saw people who were investing hundreds if not thousands of dollars to get to an event, to a city for this peak moment, this idea of a peak moment. And we realized that they were drastically underserved. So Lunchbox came about in 2018 when we launched the antitheft hydration pack, which was meant to be a cure all to the festival experience. We patented a way to refill the bag that lets you get through waterlines in less than 30 seconds compared to traditional Camelback or hydration packs that takes three, four minutes, we made it very easy to access for you, but we inverted the entire design. So there was no external facing zippers, so nobody can reach in and steal a phone or a wallet, which can strand you at the end of the night. And we basically built this whole thing to be customizable, so to reflect the identity of those people who were looking and seeking for experiences.

Tom Worcester:

And so all at all, we were trying to solve the issues and pain points of the festival event experience outside of the web.. So that was the genesis of Lunchbox. And since then, we've brought together this community of events' goers of people all around the world who are simply looking to invest in experiences. Just like Cannon serves the photography market or maybe Osprey serves the adventure packs market, we were starting to realize that there was this identity forming around experience junkies, people who really wanted to be around people and invest in these very amazing peak moments.

Tom Worcester:

And so since then, we've become a live events company, where we go in and we create antitheft fanny packs, antitheft sling packs, we make it easy to stay hydrated at your events, and we make sure that you have a great event no matter what. And so coming out of that, the brand really attracted a certain type of person into our community, which is I guess our buzzword of today, but it attracted a certain type of person who invested in experiences, who was interested in meeting other people and socializing, and was also interested in making sure that the quality of those experiences was preserved.

Tom Worcester:

And so here we are later with a team of six full time and we're getting super excited to have everything ramp back up as we come out of the pandemic. But yes, we've seen experiences get suppressed for the last year, and so, it actually taught us a lot about how to build community, and how to build loyalty, and how to really build relationships at scale. But I think the thing that you nailed most is that community really separates the difference between product and brand.

Brett:

Yes, it's so true. And kudos to you guys for hanging on and weathering the storm of the pandemic, because I think your timing was perfect initially where that 2018-2019 events and this experience economy was booming, but no one predicted the global pandemic. And so, the good news is though, there's a lot of pent up demand, and you and I were talking about that before .. There are people just itching for that next concert, that next big outdoor event, and they are coming. And so they will need the gear to make those events better.

Brett:

So let's dive in a little bit then, how do you build community? And let's talk about maybe some of the early stages, what you did with Lunchbox in the early days, I'd love to also hear the creative stuff you did during the pandemic too, I'm curious. But what did you do in the beginning to build community?

Tom Worcester:

Yes. So I like to think about this in a couple different phases. I think it was the prelaunch phase in 2018, the first year in market phase in 2019, and then the no physical phase of 2020, which actually I think taught us the most. So in 2018, even when we were validating the product, the way that we got people to respond and look at the actual product was by literally walking around campsites of popular festivals with the next version of the prototype that we had.

Tom Worcester:

So we had something like 11 versions of this thing. And so it was hand to hand combat, right. It was go to every single campsite, hey, put this on, what do you think? How does it feel? How does it fit? And it basically became this giant ball of user interviews as we moved..

Brett:

It's like guerilla marketing from back in the old days.

Tom Worcester:

Yes, guerilla marketing, but even free product. And so what this did was two important things, Brett. The first was that it showed us exactly the features that we needed to have that would drive interest and referral later on. And number two, every single person we met, they were an event goer, they were an experienced junkie, all of a sudden, they were following our Instagram, and they were tagging along with us on Facebook, and they were keeping up with us. So this actually formed our initial push of the people who were interested in prelaunch. So that was phase one, right. Going around, getting feedback, getting people invested and co-creating this. And so even through the events later on, by asking people what they thought, and this is going to be an important hallmark of community, they actually now became materially invested in the outcome, which is really an important element.

Tom Worcester:

Now fast forward to 2019, so we've got product in the field, we distribute the first couple thousand units into the season, pre-May and debuted at a major festival called EDC Las Vegas, which has hundreds of thousands of people attending from all over the world. And so we finally had all of our product in the field for the first time and we needed to try to find a way to connect the dots of all these individual customers who had followed us on social, who had backed our original Kickstarter campaign, who had been with us since day one.

Tom Worcester:

So what we did was that we said, okay, we need to come up with a way to identify Lunchbox owners in the crowd. And the packs, they light up, they are distinct, you can tell one person who's wearing it from the next 10 people who aren't. So that festival, over the course of three days, hopped up on a lot of Red Bull, we ran and found every single Lunchbox in the ground, and to every single person we walked up and we said, "Hey, every single time you see another Lunchbox, you gotta go, hey, what's up Lunchbox fam?"

Tom Worcester:

And so after hitting, I kid you not, over 200 people at this event, tapping them on the shoulder like, hey, I love your pack, where'd you get it? Thanks so much for supporting us. By the way, the next time you see a pack like this, you gotta yell, hey, Lunchbox fam. And so-

Brett:

And talking about all the other people that are hearing this standing next by and what is this little community of crazy people yelling lunchbox, oh, and that is a cool pack, really brilliant marketing, yes.

Tom Worcester:

100%. And there's nothing quite like when you hit somebody in a group, a tight group standing in a circle of eight people, you hit them like, hey, Lunchbox fam. You walk away, and then all seven people in that group turn to that person and they're like, oh, so what's lunchbox? What just happened? And they're looking for an explanation.

Tom Worcester:

So weirdly enough, that turned into an immediate countrywide trend where almost every festival in the States or in the ensuing months, had some form of that Lunchbox call out. And so all of a sudden, what this did is this created the ground floor of people identifying each other in our community, and then building relationships on top of that. And then once that happened, you saw people sharing photos, tagging posts the people they met, talking about the music they had experience, Alex from Los Angeles meets David from Colorado, they went to go see an amazing house set together. And so they started to facilitate this sharing.

Tom Worcester:

This is where we started to say, okay, we want to hit as many events as possible in 2019, it's the first year that this is really in the market. So what we started to do was we partnered with local influencers who were going to the event and started to host meetups of people who had Lunchboxes incentivizing them with accessories. And we've got these little panels on the front so you can change the design. So we got free skins. But we would do all these little games to make it more fun. And so all of a sudden, people were now going to a festival, identifying with other people in the crowd, going to a meetup that was hosted by us, getting the group photo, sharing the group photo on social media, bringing all their friends in as natural followers. And so we start getting bigger, and bigger, and bigger, right. Identification, now we have group coagulation, and then we have the formation of digital identity, which is where we are at the end of 2019.

Tom Worcester:

So here we are in November, the meetup that we're holding at EDC Orlando is hundreds of people, everyone's got a Lunchbox, everyone's excited. And at this point, we're active on Instagram, we treat our purchasers' email list like an events newsletter, where's the fun been this month? And so going into 2020, we had a lot of momentum, and we had people who were willing to host meetups, and a lot of people would be creating content, a lot of people are genuinely excited about being a part of it.

Tom Worcester:

So fast forward, pandemic hits. So now all these people who have had an amazing first year of experience, who are telling their friends about, you got to bring Lunchbox to your next festival, they're going to drop the link to the brand in their group chats. All of a sudden, we're in March 2020 and then connection goes haywire. The whole world shuts down, COVID started slipping out of the East in December, January, and boom, the event season is done.

Tom Worcester:

All these people, these experience junkies, needed somewhere to go. All of a sudden, that physical meet up and that physical connection needed to go somewhere. So over the course of 2020, we really defined our digital community. And so we have a Facebook group of 100, I think now thousands of VIP members where they will plan and meet up. And at this time, there were a lot of online concerts, so people were having viewing parties together, people would get on Zoom happy hours, we were hosting a regular happy hours just to check in on the community. We hosted and actually threw a live stream two day event with almost 48 hours of straight music on Twitch raising money for two amazing charities in Canada and New York.

Brett:

Amazing idea. It's amazing because people that love events, that love obviously doesn't go away when you can't travel, and so shifting that digitally totally makes sense. And even if they maybe didn't need to buy a Lunchbox right then, I bet that still had an impact on the business even last year.

Tom Worcester:

Yes. And so I think what we saw is that people needed connection, we gave them a safe place to be, we made sure that they were okay. I think just showing that we cared was a pretty big element. And then while everyone was looking for connection, we were also still developing new products, bringing them in, getting them excited about what was still to come. And I think the most exciting part about all of this is that even in the middle of last year, people are planning meetups together a year from that point.

Tom Worcester:

And so this started when we started to realize that we had a such an engaged community that we wanted to really be intentional about rewarding them. So this was where we started to start to build out our infrastructure for loyalty programming, you get rewards for referrals, rewards for attending meetups, rewards for engaging on social. And so all of a sudden, on the back of this digital community we were starting to see coming together, we were building incentive structures to really drive specifically organic referral, which is one of our most important and track metrics.

Tom Worcester:

So then leading into 2021, finally, the modern day, you've got a community with a big identity behind it, there's real action you can take, we have a way to pair people up at peak moments in their lives, there are people really happy at events, this is their vacation, this is the thing they've been looking forward to, and then they come back and they associate that with the brand, at which point then they're rewarded for sharing the brand with more people, and so the organic flywheel continues. So it was a really iterative process from 2018 to now, and community is one of those things where it's like, you can't build it overnight, right? You can't build it in just a month, it's a grassroots game, and the earlier you accept that, the earlier you can build a community that's going to last.

Brett:

Yes, I think that's what a lot of people just aren't willing to do is some of the grassroots hustle, going from 10 to 10 at the live event or whatever, and then talking about Lunchbox, and having people try it on, and getting feedback. Some of those things that I've mentioned on the podcast before, but sometimes to scale, you have to do things that don't scale, right? You have to have that one on one with individual prospects and customers to get feedback to help you improve the product to build community, and things like that.

Brett:

But you mentioned another one of my favorite concept, the flywheel, right. So if you've got the right components of this flywheel, you will build momentum over time and the community will really hit a tipping point and take off. And so let's unpack that just a little bit. So when you talk about this organic referrals being a big KPI for you, a big focus for you, how are you driving that specifically? Can you talk about some tips or some tactics there?

Tom Worcester:

Yes. So I think the organic referral element, at least for us, comes from a couple different things. So there are things that drive people talking about your brand and then the ways that you capture that value in a business sense. So the ways that you can drive organic referral is a lot of, actually, content creation, right. What questions does your customer have? What problems are they running into? How can you both validate and answer that? How can you be a resource for them? What are the unexpected or unintended question that they have, that you can answer, where they relate that back to you?

Tom Worcester:

So that gets them talking about you, right. They've had a great meetup, they've had a great experience, they maybe watched a video on how to prepare, you've been a material part of their experience getting better. And then on the back end of that is coming up with mechanisms that make it really easy to share, right. One click sharing, or pre-populating text messages, or WhatsApp messages, or Twitter messages, making it really easy to refer with one click, making it really easy to share a link with one click, making it really easy to forward an email and say, hey, you guys should get this. So it's all the mechanisms on the back end that actually help you to convert on all the value driven content.

Tom Worcester:

So when we think about our email marketing and our social channel, we think about, how much value can we drive? And then how can we put little asks embedded within that where you're opening the email because of value? You know you're going to learn something, you know you're going to see something fun, but then through that is, share Lunchbox with a friend, would you like to expand this? And would you like to simply welcome somebody new to the fam and get rewarded for it? So again, having mechanisms on both sides to drive and capture is the main tip and trick here.

Brett:

So cool. And it's critical, obviously, that you have a brand that's fun, and that people want to share, and you built this personality that people connect with and stuff, but then you got to make it easy, right? And then can you talk a little more about incentives? How are you incentivizing the sharing?

Tom Worcester:

Yes. So we basically built an interesting loyalty program where we've got different tiers, and at different tiers, you unlock different levels of engagement. So one of the things that we're constantly focused on is that all members of our Lunchbox fam, as we call it, they're all the same, but the levels of engagement are different, so that becomes a differentiator. Somebody who has joined in the first month and maybe hasn't hit their first meetup yet is pretty different in terms of how they engage and interact than somebody who has been to 15 meetups, and has hosted a meetup, and has submitted 10 pieces of UGC, and so it's different.

Tom Worcester:

So we basically paired our loyalty rewards with different tiers that distinguish those people, while still making sure that everyone is still valued within the community. At our bronze tier, you get birthday gifts, you get some early deals, but that's it. And moving up to our silver, builds on that a little bit, early access to products. Our gold tier is where it gets interesting, you actually are invited to group camps with the team at major camping festivals around the world, you get Zoom happy hours with the team where we talk about new products. And then my personal favorite, if you have enough referral points, where again, you get something like 200 points, which is equivalent to a minor marketing cost for us, but 200 points for referring a Lunchbox, if you accumulate enough of those, you can actually spend that on concert tickets.

Tom Worcester:

So now, we've connected you being part of Lunchbox to you getting to that next event. So if you're an experience junkie, so the flywheel continues to spin.

Brett:

Yes, I love that.

Tom Worcester:

Yes. And then finally, then our Platinum tier, you've got all the above, now you can spend your points on actual festival ticket and you get to join our product testing lab where we send you early access to beta products to give feedback. So at every step, you're getting free product, you're getting value, you're getting access to content, you're getting access to the team, you're literally camping with us. We'll see what happen in three years when the group camps grow to thousands of people, but that's a problem for 2023.

Brett:

Yes, cross that bridge when you come to it.

Tom Worcester:

Yes, but I think a lot of loyalty programs are just, okay, refer for a discount, and I think we wanted to add a much deeper layer to that, and it's like, how do we reward the community members who are the most engage? And for us it's like, how do we get them to more of those experiences that they're really happy about?

Brett:

Yes. And I think that's the key, right, is you're coming up with incentives and rewards, how does your market want to be incentivized or rewarded? And for your market, it's events, right, it's experiences, it's community. And so you're pairing the preferred activity, the desired activity you want the customer to take with some rewards that they're going to absolutely love.

Tom Worcester:

Mm-hmm (affirmative).

Brett:

So any tips on how to structure that, because I know as you get into loyalty rewards and stuff, if it's too complex, how are you accumulating points and things like that, then it becomes almost demotivating or just too confusing for people to want to think about, too much work.

Tom Worcester:

Mm-hmm (affirmative).

Brett:

And then you also need to automate it. So any tips on how to make it simple and any tools you use, any recommendations there?

Tom Worcester:

So I think loyalty programs are not created equal. Like any channel needs to be evaluated as a channel that works for your business, you're selling a very niche car part that somebody is only really going to need to buy one time in their entire lives, you probably don't need a loyalty program.

Brett:

You don't want to create a meetup with those people, they probably don't want to ..

Tom Worcester:

Exactly. Like, hey, guys, does anybody else have a crankshaft from their 2017 Chevy Tahoe?

Brett:

This is brake pad group over here. Okay, that's fun.

Tom Worcester:

Exactly. But so I think step one is evaluating whether it makes sense as a channel, right? Are you either seeing repeat purchases or are you seeing recurring engagement with the brand that justifies it? And then on the backend, working ... I mean, right now, there's so many different providers out there that provide great loyalty program, I'm a big fan of smile.io for affordable ..

Brett:

Yes, I know those guys at smile.io, yes, it's a great product.

Tom Worcester:

Yes, they're really becoming the loyalty layer of the internet. I think you've got a couple expensive options like Yapo, where they're trying to make it simple as well. But what you fundamentally see is that you see these apps enable shareability, I don't think you need to go build this up from ground zero. And then in terms of structuring, it's really making sure that you understand, what are the things you can give away and what are you getting back for what you give? So if you're giving away a 20% discount on something, is that because you expect that the discount plus the underlying profit on that next order is still going to be profitable for you? Is that customer going to refer a recurring customer or is it one off? I think it's understanding the math behind it.

Tom Worcester:

And then in terms of keeping it automated, I go the other way is like, this is my channel, right? I am in loyalty more than anything else, right? And we do annual budgets, we've got a big block of funds that just goes right into loyalty, it's not necessarily an automated thing. So I think while some brands can look at it as an automated endeavor, the fact that we do get so many meaningful one on one touches is almost like hand to hand combat at scale, provided you have a team behind it. So I think it just depends on the business, is it viable? Does it make sense? And do people want to also be together and engage together? Are some of the three key question, but it's hard to generalize when it comes to loyalty because it is a case by case basis.

Brett:

Yes, I love that. I want to make sure we leave time to talk video content and long form video content, and your company, Carousel. But just any last tips on building community, either tips on how to do it or tools to use. I'm assuming you're probably relying heavily on Facebook groups to facilitate some of what you're doing here with community.

Tom Worcester:

Yes. So I mean, Facebook group for us is just because everybody who buys one of our packs has a Facebook account. And one of the things that I think it's important to realize is, especially if you've ... There's two elements, right. There's the first of, does your company or brand have a uniting topic? So maybe for a way, that's travel as your uniting topic. Is it magnetic blanket boards that teach your kids how to build things? And can you build a community of moms around that? Is that the uniting topic? For us, it's music and events.

Tom Worcester:

So first off, do you have the presence of a uniting topic that gets people excited and engaged? If not, I'm not sure that this is for you. If you do, okay, lean in. The second part of it is deciding where it's going to live. And so if you are a community that improves people's business lives and they actually see a growth in their income, then they're more willing to join a Slack community or a discourse community because of what you're offering. If you are offering something that's a lower touch where, maybe I'll join, I'll use an existing Facebook profile to join and talk about music, but I'm not going to create a whole forum profile for it. I think it's understanding like, how far do you think that ask can go? And where can you create a critical mass of people where it creates an echo chamber of people talking about your brand? So I think determining those two things is important.

Tom Worcester:

And then finally, building on that, what are the hooks that you have pulling into your community? Right. How do you post purchase flows, post somebody in? How do your in person events recruit more people? What are the ways that you are socializing that this community exists and it's worth being a part of? Because the more people that you bring in, the greater the echo chamber grows, and the more likelihood that you're going to be able to discover people who are real super contributors to your community. So with those three pieces in mind, you knock all those down and have a solution, and hey, you may have a community that's going to keep growing.

Brett:

Yes, that's fantastic. I love it. I know we can talk a lot more about community, but I want to make sure we dive into our next topic for at least a few minutes. So let's talk about video content. And obviously, anybody who's been listening to the show for a while, you know I love video, big YouTube guy, we do this all the time. But talk to me a little bit about, why did you start Carousel and what do you guys do? And then we're going to get into some of your tips for video creation.

Tom Worcester:

Yes. So during the pandemic, we started to run into our own problems at Lunchbox where we historically have always had our team meet up and create a month's worth of content, then the next month, we meet up and we create a month's worth of content. And the pandemic completely halted that. And for other eCommerce owners, even though their businesses were growing, they couldn't get to a local photographer, local studio, local videographer, it was impossible. But all of a sudden, we were seeing people work from home through Zoom and other digital tools, so we asked the question of, could creative production go remote too?

Tom Worcester:

So Create With Carousel is a bunch of eCommerce experts that have gotten together both on the marketing and production side to figure out, number one, what is the content that is most likely to convert for your brand? And number two, how do you produce world class shoots without having to leave your computer, especially in the video space? So that was the underlying foundation of how we wanted to establish Carousel and how we wanted to grow that.

Tom Worcester:

And where we quickly found ourselves pulled was actually towards more difficult video where it was highly narrative and like anchor ads that brands could use to really explain a product, but really do it in a long form and engaging way. The brand that's holding 90 seconds of your attention on a three minute video, that is a lot more of a purchase intent behind it than somebody who watched three seconds of a 10 second video.

Tom Worcester:

So the person who's the better storyteller around an already great product is creating this opportunity for conversion. So we very quickly gravitated towards these more complex narrative anchor ad that were fun, and goofy, and interesting, but most of all had layers of call to action through them. So we had not just one shot to convert customers, but three or four shots to convert a customer. And then you would click on it, hit on the landing page where all the assets on the landing page corresponding to the ad, so it's just a very tight campaign through and through followed by, of course, retargeting assets that nailed specific objections.

Tom Worcester:

So we started to think about the full funnel of marketing for eCommerce brands rather than individual, here is your ad, good luck. And so I think combining the ease of production without having the stress of having to do all the things that make a production great, as well as thinking full funnel strategy, emphasizing long form content, especially in a world of iOS 14.5, which Brett can tell you about, we realized that there was an opportunity for us to just tell product stories but better.

Brett:

Yes, I love that you guys did this. And like I mentioned, I'm a big YouTube guy, big video guy, supporter of that for sure. And what we're seeing on YouTube is that long form content does work. That the videos that are scaling from 10,000 to 20,000 a day in spend are typically 90 seconds or longer. And I'm even hearing from some of our clients who saw on Facebook that even though Facebook is pushing for shorter form videos, we have one big client, great friend of mine, where they're scaling on Facebook now with a three minute video. So I think it goes back to what you said, storytelling, and are you keeping someone engaged in? And do you have multiple layers of CTAs? And we've got a whole formula we talked about, I want to dig in and get your formula or philosophy as well.

Brett:

But yes, and you mentioned an anchor video, we would call it a manifesto, where it's this video that really tells the story and separates the product from all the other competitors, and that's what works great at the top of the funnel, and then you have other videos that you can run at other stages of the journey and whatnot. So how do you guys approach creating an anchor video? And I think this will be useful because there's probably some tips in there that people can grab hold off.

Tom Worcester:

Yes, so I think there's obviously a couple of components here. The first is that we assume we're wrong. And what I mean by that is, it's not our opinion as a marketer if a video is great, it's not your opinion as a founder if the video is great, it is ultimately the market that determines whether something's great.

Brett:

100%.

Tom Worcester:

So what we do is we build everything with modularity in mind. So when we write our introductions, we don't write one introduction, we write four introductions and you're going to run the one that's going to perform the best based on who's watching the first three seconds. When we write our main body, like the main meat of it, we write it so all the blocks are interchangeable, so that we can deliver editing variations where maybe if you're selling great umbrellas, for example, maybe block one is that, it's a sturdy umbrella, block two is that you've got Bluetooth tracking, and block three is that it's reflective at night. You can interchange those blocks based on what different consumers are going to respond to and make the content itself more modular.

Tom Worcester:

And then finally, we wrap up with conclusions and CTAs that hit at the end of each block. So hey, if you care about reflective, yes, after this block, we're going to put a CTA that says, oh, so if you don't want to get run over tomorrow, get this umbrella at website here, or if it's, hey, if you don't want to get blown away in the wind and keep throwing away crappy corner store umbrellas, get this. And so you attach CTAs to specific benefit statements rather than at the end of a video where most people aren't getting there anyway.

Tom Worcester:

And so I think on top of that, after we've come up with a bunch of different introduction to get into the video, a bunch of ways to recut the middle of the video so you have the most options, we also think about, what happens after the video? And what we mean by that is, why is somebody not going to buy this product?

Tom Worcester:

So for example, one of our recent clients had a standing desk, great standing desk, goes up and down, automated, it's got lights, got speakers, this whole thing is souped up. But what are some of the reasons that somebody may not buy that? So in the same shoot that we're doing the anchor, we'll shoot these mini assets where it says, okay, worried about the cost, well here are all the reasons that the cost is worth it, or worried about the setup, here's how you set it up really simply, or worried about how it's delivered, here's how it's delivered. And so we think about not just the ad, but the response to the ad that basically builds on top of that, making sure that you're hitting each individual objection.

Tom Worcester:

So I think the big first part of it is, think holistically and assume you're wrong and give yourself enough variability to then edit and adjust. And then the second part of it is, don't just think the ad itself, think about the response to the ads. If you've got somebody on the hook, how are they going to go from on the hook to a fish in the barrel? But I think those two things are pretty big parts of our strategy when we're thinking about how to properly construct this type of narrative.

Brett:

I love it. And then I've talked to a few other video production companies or at least one other that thinks that way where we're saying, hey, we're not just going to take a chance on one hook, right. There may be one hook, one opening that you as the founder like, and that we as the video people like, or the media buyers like, whatever, we're not just going to base the whole thing on that, because what if it doesn't work? What if we're wrong? A lot of times we are, right?

Tom Worcester:

Yes.

Brett:

In general, we're going to find something that works, but having this modularity or these different blocks that you can stack and change I think is critical. And the beautiful part about what we do here with digital marketing and anything that's Facebook or YouTube or whatever, is we can test it, right. We can test these different mashups of a video, and we may find that, hey, this opening A with problem solution statement C, that combo really works for this audience, but another combo works for another audience, or this combo works for a top a funnel but another combo works for lowering the funnel. And so I love that you guys approach it that way, that's just awesome. Cool.

Brett:

And then what are you thinking about as you look at a product? And this is cool you mentioned the umbrella, is that a real product by the way, or did you make that up on this one?

Tom Worcester:

No, that's a real product that my friends over at Weatherman Umbrella, which unbelievable DTC company based in Brooklyn.

Brett:

Nice. Nice. Very cool. So what else are you looking for to bring out the best story about a product? Any tips or ideas you have on, how do you uncover the golden nuggets in a story behind a product?

Tom Worcester:

So I think there's three layers to any product use, and I think a lot of people get trapped in the first layer. So obviously, when you're looking at a product, you've got the product features, right, the literal descriptions of what this thing does. And then you can bring those features to life in the next layer, which is your benefit layer, right. So back to the umbrella thing, well, if the feature is, it can withstand 55 mile an hour winds, right. And then the benefit is that, if it's an awful rainstorm, your umbrella isn't going to invert.

Tom Worcester:

So the consumers generally relate to benefit statements far more than a feature statement. But the next layer, and I think that you can take it even further, and again, we've talked all day about the experience economy, but the next is the experience layer. So what is it like for someone to experience that benefit in the real world? And so that's where we really like to focus on our narratives, where it's like, we like to build scenes that don't just say, hey, your umbrella is going to blow away in the wind, we're going to show you that scene of a 40 year old woman who just finished a 12 hour day at work and her umbrella is fly away, and then in the next shot we're going to show you the comparison. It's not about highlighting the feature necessarily, it's about showing, what is the end user experience of that benefit.

Tom Worcester:

And so I think that really bringing those benefits to life through a variety of different experiences helps you to hit a wider target market and also just really bring the story to life. Show, don't tell. And the experience layer is the best way we found to really bring that.

Tom Worcester:

Now, if somebody is comparing a product, if they're looking at two different mattresses, Casper versus Purple, they're going to be looking at the feature, they're going to be looking at the price point. But if you're introducing a product, you want to make the case of, how is this going to make your life better? Why should you care? And you do that at the experience layer.

Brett:

Yes, it's so good. And it's one of those things where you want a prospect to envision themselves using and benefiting from the product. You want them to feel that experience like, hey, that could be me. And so I really like how you broke that down. And you're right, if someone's comparison shopping, then future benefit that's going to probably win the day, but if someone's just being introduced to it ... And I think even if they are comparison shopping, they still need to experience it, feel it and picture, okay, this is what it's going to be like when I own this umbrella, or this mattress, or whatever the case may be.

Tom Worcester:

Yes. And that's why you see unboxings do so well, because people are like, what it's like to open a package. I know what it's like put that in for the first time. And that's why testimonials do so well, because they see themselves in the person.

Brett:

That's right.

Tom Worcester:

I think the term is almost visual empathy, right. How do you get that person to stand in somebody else's shoes through video storytelling? I mean, that's the goal, right?

Brett:

Yes. And it's so interesting I think a lot of times, and this used to be, probably is till today with some big ad agencies is they think, oh, unboxing, that's a tired idea, right. We don't want to do that idea, it's played out. Or testimonials, everybody's on testimonials, that's old school. No, we're going to do something super new and creative. But that stuff just works, right, good testimonials properly executed from real people that are saying compelling things, they work. Unboxing videos at a certain stage of the buying journey, they work, people want to see it, they're interested. That's why there are a few search for the latest iPhone unboxing videos, some of those have 12 million views, people want to see unboxings.

Brett:

I think there's this pull or this drive to make something super creative when that's not really the point, right. It's about telling a good story, and in some cases, following formulas and setting yourself up for testing like you mentioned.

Tom Worcester:

Yes.

Brett:

And so, we're just about out of time, I want to wrap up. If someone's listening and thinking, all right, I need to talk to Tom or the crew at Carousel, how do you guys work and where can they find out more about you?

Tom Worcester:

Yes, so you can reach us on www.createwithcarousel.com. We've got a bunch of different services ranging from mail in photo shoots, to studio sizzles, to my personal favorite, which is anchor ads just because they're the most fun. And we can get in touch at the bottom of that website. And if you're looking to stay in touch on social, I am, TZWOR on Twitter, or realtomwor on Instagram. So I'm one of those guys where I love to D2C, I love community and I love talking about this, so always be willing to take the conversation a little further.

Brett:

Awesome, man. And I will link to all of that in the show notes. And then also, mention Lunchbox as well, because I think two reasons people will want to visit that, one, maybe you're listening and you're dying to go to the next music festival and so you want to get a Lunchbox, or two, you're another eCommerce store owner and you want to watch someone that builds a great community and does great marketing. So how can people find out more about Lunchbox?

Tom Worcester:

Yes, so we're at Lunchboxpacks on all channels, you name it. And then our website is lunchboxpacks.com. And then we have our Facebook groups are private to members only which, again, part of the whole thing, but we often cover our community on our YouTube channel. And again, our website features everyone that you'd be interested in checking out, so lunchboxpacks.com.

Brett:

Awesome. Tom, this has been fantastic, man, been a ton of fun. Thanks for taking the time. Thanks for coming on.

Tom Worcester:

Awesome. Thanks so much, Brett.

Brett:

Yes, absolutely. And thank you for tuning in. Hopefully you enjoyed this as much as I did. And hey, I would love to hear from you, lets connect on the socials, let me know what you think about the show, would love any feedback, any guest ideas, topic ideas, fire them my way. And with that, until next time. Thank you for listening.

Episode 173
:
Brett Curry, Chris Tyler, & Amber Norell - OMG Commerce

Amazon Holiday Prep 2021: The Cyber 5 and Beyond

Getting the most from the Cyber 5 and beyond will really boil down to three things.

We’re all but guaranteed to see another record holiday season on Amazon this year. But that does not guarantee that you will have a banner holiday season. This year is sure to be challenging for online sellers. More shopping will take place in stores than last year during the height of the pandemic. Ad cost are also on the rise. Combine all of that with increased competition and you see why success this holiday season won't be easy. Getting the most from the Cyber 5 and beyond will really boil down to three things:

  1. Covering the basics. Proper inventory levels. Understanding  key selling dates and Amazon’s deadlines. Getting the right badges. Having listings optimized.  Without the basics in place, you’ll be seriously behind this holiday season. We’ll help you get ready.  
  2. Getting an edge. This year is sure to be uber competitive for Amazon sellers. Do you have your lighting deals and coupon strategies ready? How’s your storefront, A+ content, and Amazon posts?  Is your Amazon ad strategy primed and ready? We’ll uncover the tips you need to get an edge.  
  3. Going full-funnel and leverage what’s new. This is the year to go full-funnel with your Amazon advertising efforts. It’s also the year to fully leverage new offereinces from Amazon including new sponsored brand video targeting, Amazon’s customer engagement  beta, new display options and more. Plus, it’s time to consider a few off-Amazon strategies that only a tiny percentage of sellers are leveraging.  

We cover it all in this episode. Check it out and then share this with your team and other sellers you know who might find it helpful.  


Chris Tyler

Amber Norell


Mentioned in this episode:

Amazon Posts

Amazon DSP

Amazon Customer Engagement


















Episode 172
:
Matt Slaymaker - OMG & Vanessa Carvajal - Google

Holiday Prep 2021 - 7 Ways to Maximize Sales with Google + YouTube

Are you fully prepared for Holiday 2021? This year is sure to be unique.

Are you fully prepared for Holiday 2021?  This year is sure to be unique.  While eCommerce is still growing, it’s growing at a slower rate than last year.  Stores are opening, and, for now at least, shoppers are spending more money on experiences than they were during the height of the pandemic.  So how can you maximize your online holiday sales this year?

In this episode, we listen in to the recording of the recent webinar we hosted that covers 7 ways to have a record holiday season including:

  • How to leverage the latest YouTube ad formats to get more exposure and more conversions at a lower cost.
  • What you’re likely missing with your current search and shopping ad structure and how to fix it.  
  • Why now is a great time to consider Google Smart Shopping Campaigns
  • How to deliver the right holiday message at the right time
  • How to combat rising ad costs
  • Plus more!

Matt Slaymaker

Via LinkedIn

Vanessa Carvajal

Via LinkedIn


Mentioned in this episode:

The Ultimate Guide to Google Shopping

eE 157 Arri Bagah

eE 170 YouTube Virtual Event

Groove Rings

Original Grain Watches

Native Deodorant

BOOM! by Cindy Joseph

Eddie Bauer

Google Smart Shopping

Google Discovery Ads

TrueView for Action

Google Merchant Center

Wicked Reports

Rocker Box

Northbeam.io


Episode 171
:
Dylan Carpenter - Co-Host, Rich Ad Poor Ad

What’s Keeping You from Scaling with Facebook Ads

On today’s episode, I wanted to hear from an up and coming Facebook ad manager and co-host of the Rich Ad, Poor Ad podcast Dyland Carpenter.

With iOS 14 and privacy updates throwing advertisers for a loop and increased ad costs making reaching your ad goals harder than ever, scale on Facebook may seem illusive. 

On today’s episode, I wanted to hear from an up and coming Facebook ad manager and co-host of the Rich Ad, Poor Ad podcast Dyland Carpenter.  Dylan specializes in eComm media buying and is fanatical about testing, experimenting and finding ways to scale ad accounts.  Here’s a quick look at what we cover in today’s episode:

  • Common mistakes keeping you from scaling with Facebook ads
  • Why creative is everything and how to approach creative testing
  • Finding the winning campaign formula - learn how Dylan uses controls and tests to always be leveling up.
  • Thoughts on iOS 14 
  • Budgeting for scale and how to be aggressive without breaking the algorithm 
  • Plus more!

Dylan Carpenter

Via LinkedIn

Via Facebook

Via Twitter


Koality Media 


Rich Ad Poor Ad Podcast


Mentioned in this episode:


Zach Johnson

FunnelDash

Google Unskippable Labs

Promo

Billo.app

Animoto

Nick Shackelford

Geek Out

Billy Gene

Neil Patel

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. Today we're talking about scaling on Facebook ads and how things are shifting and changing and how you should be scaling right now with your e-commerce business. I've got a guest today that I think you're going to absolutely be blown away by, both in terms of his podcast skills and in terms of his Facebook ads skills.

Brett:

I'm delighted to welcome to the show, he's the co-host of the Rich Ad Poor Ad Podcast. Love that title. One of the greatest podcast names out there right now, in my opinion.

Brett:

He's also the owner of Koality, and that's like the koala the bear and TY, Koality Media. Does a ton on Facebook. With that, Mr. Dylan Carpenter. What's up, Dylan. Welcome to the show and really stoked to be chatting with you, man.

Dylan:

Yeah. Brett, man. Thanks for having me on. I'm getting sweaty listening to that intro. I'm like, "Man, hype."

Brett:

I love throwing out a good intro. You've earned it. You've got a great business. You've got a great podcast. So, yeah, I'm excited about this chat. But you and I, we get to record a podcast. I'm going to be on your podcast either in the future or in the past, depending on when someone's listening to this. But we had a blast with, "Hey, let's flip this. Let's get you on the eCommerce Evolution Podcast and talk Facebook ads." So here we are.

Brett:

But tell me, Dylan, just a quick background, how did you become a podcast host and how did you become a Facebook ad specialist in e-commerce? And so, just the quick story, if you can.

Dylan:

Yeah. So for the podcast, we just fell into it. Zach and I were looking for something to do, to be honest, and he had a huge audience already. So we..

Brett:

Yeah. Shout out to your business partner, Zach, and a quick plug on Zach.

Dylan:

Zach Johnson, FunnelDash. But yeah, we had one called The Benchmark first. It was really metric-oriented. We wanted to know your CPA, your CAC, your RoAS, break even points. But it was a little too personal for businesses to share. So Rich Ad Poor Ad came out. It was a lot harder than I thought it was going to be to launch a podcast. But luckily, we have a good team behind us. We've got three people who do the video editing, the transcription, the website, the blog posts, the copy for all of us. It's pretty -

Brett:

It's pretty labor-intensive, man. It really is a lot more work than I thought. When we first started, we were like, "Oh, you just hit record and then post it and then see." He's like, "No. If you do it right, there's a lot that goes into it."

Dylan:

Yeah. So we fell into it. Luckily, is we've got 115, 116 episodes recorded right now. We've launched about 60, 65-ish. It's getting good traction. We've had Billie Jean on, Neil Patel. So a lot of big names. For Zach, it's a good funnel for FunnelDash. But I mean, on my side, I just love to talk to badasses like you and network myself further and get more out there to build my authority, essentially.

Brett:

Yeah.

Dylan:

But yeah, it's about 80 to 100 bucks an episode to cost us right now. It's slowly racking up, and we're fixing to launch some ads for the podcast actually too.

Brett:

Nice.

Dylan:

That'll be cool. But when it comes to my bread and butter, Facebook ads, I actually randomly fell onto it on indeed.com. I graduated from Texas State here in Austin May of 2017. I did marketing with a sales concentration, and I almost moved to Orlando, Florida to be custom suits tailor at Tom James to pitch suits and sell suits. I played ice hockey. I loved suits. They looked fly.

Brett:

Which, by the way, for someone watching rather than just listening, two things. One, you're rocking a killer stache right now. So I've got to give respect to the stache. You need to watch it to see that. And then also, too, if you look in the background, you've got a picture of the Miracle on Ice, which you've seen the movie. Miracle writes a great one. You play hockey. Is that your favorite movie of all time? I mean, you've got the mural thing, so it's obviously important.

Dylan:

It's up there. My dad won that in a poker tournament, to be honest, and I just loved it. But it's signed by the whole team.

Brett:

Wow, that's awesome.

Dylan:

I couldn't sell it for a hundred K, but I'm probably never going to sell it. It's so sentimental at this point. I'm a hockey-

Brett:

1980? When was that?

Dylan:

Yeah.

Brett:

Okay.

Dylan:

yeah.

Brett:

That's amazing.

Brett:

You were going to move to Orlando, be as suit tailor. Then you thought, "No, I'm going to do Facebook ads instead."

Dylan:

Yeah. They flew me out. I didn't like it. My brother worked at Accenture. I looked on Indeed, Accenture sales job, a random sales job popped up. I applied, got a call. It was for Facebook. I went to interview there, got a job literally two hours after my interview. So I started as a marketing expert. Knew nothing about Facebook ads. I'd boosted some posts in college just to get people to come to our hockey games, but I didn't know what I was doing.

Dylan:

Yeah, after three months there, realizing what I was learning, I was like, "Oh, this is lucrative." I became a sponge, took like 10 pages of notes and journals and stuff, and really just asked a ton of questions. After being there for a year, I left. Started Koality Media, and do a lot of freelance work. It's been history ever since.

Brett:

Yeah. I love it. One of the reasons I want to have you on, one, you're an awesome podcast host, also an awesome guest. But I love getting different people's perspective on how to run Facebook ads. As you know, I'm a YouTube guy and a Google guy and also Amazon ads. I don't play in the Facebook ad space, but I understand it decently well. It's obviously a huge part of most of our clients' media mix.

Brett:

We will get into some of the new changes and iOS 14 scares. Depending on when you listen to this, it could be heating up or it could be all in the past. But definitely want to address that as well. But I love getting different people's perspectives. And so, as we look at scale, because that's what every e-commerce brand wants, whether they're looking to sell their business or hold it and just grow it, increase the value, you want to achieve scale. How do we achieve scale on Facebook?

Brett:

Like you and I were talking about, lot of people listen to the podcast, already running Facebook ads. They're just looking to take it to the next level, or maybe things have stalled out, or maybe they are dealing with iOS 14 issues. From a creative perspective, so the ads themselves, what do we need? What do we need to be thinking about so that we can really achieve scale?

Dylan:

Yes. Creative's everything. I know we're going to talk about ad account structure, campaign structure, which will tie into this at some point, but creative is everything. It's not about the audiences, the bids. It's all your creative, basically. What's really helped us scale, I think is, creative -

Brett:

Just one quick thing I think I'll add to that. Sorry to interrupt. Google put together study. They've got a group called Unskippable Labs and they study YouTube ads that people don't skip and stuff. But they came up with the statistic that 50 to 80% of your success on YouTube is driven by the ad itself, and then the rest is media bids, budgets, stuff like that. Obviously, it's hard to quantify. Some been made up, but I don't know.

Brett:

So you think that's probably somewhere on Facebook, like 50 to 80% of your success is the ad itself and then the rest is media? Your expert opinion, how would you frame that?

Dylan:

It's a really good question. Now, this is where it gets tricky. It depends on your product and your conversion cycle. If I have a quick product that's pretty cheap, under maybe 30 bucks, then I want my ad just to... It's terrible to say. We always optimize for purchase, but I want my ad to make someone click to go to the website to learn more and then buy the product.

Dylan:

Now, there are other brands we have that are a little bit more high ticket, to where we have to go more in depth on the ads themselves, to more or less... Not seldom in the ad, but just reel them in. Then of course we have other hefty ways of retargeting. But it varies, to be honest with you, because it really depends on that conversion cycle. What was the question again? I'm sorry.

Brett:

What percentage of your success is determined by the ad itself? You said the ad is everything. I was just giving a little quantification there from Google's perspective that they say 50 to 80% of your success is the ad and not the media and the campaign structure and stuff like that.

Dylan:

I would say the same thing.

Brett:

Yeah, yeah, yeah.

Dylan:

I have so many accounts that I even run ads for where the click-through rates were killer, the cost per clicks are killer, but hey, there's a product page issue. So I would say it's probably similar to Google there, to be honest.

Brett:

Yeah. Yeah. Okay, cool. Awesome. Sorry, I derailed you, but ad is everything. What do we need to be thinking about in terms of getting our ads to scale?

Dylan:

What kind of budget you have basically, because, I mean, for the account we have spending 70K a month, I'll dive into, versus somebody spending 10K a month. For the 70K a month, we test 10 new creatives every single week. That could be three or four different creatives, different thumbnails, and then mixing some copy there. But I want 10 different creative variations every single week being tested, basically.

Dylan:

If somebody's spending 10K a month, I would probably say two to four creatives a week to test out, because everything dies. It's like life. Your creative's going to die, so you always need to be testing. Depending on your budget, I always allocate 10% of our budget strictly for testing. That way, I'll have our winning ads, testing ads. I feed our testing ads into our winning ad campaigns, which will go more into the structure side. But it's just having a control versus a variable substance for the most part. So it's case by case there.

Dylan:

But what you need is not crap loads of content, but relevant content. I've gotten myself in trouble here before. It's where I was telling clients, "Send me as much content as possible. The more the merrier," when in reality, that wasn't really the case, to where I just had a crap load of content to really go through and it wasn't the most relevant. So I had to take a step back and rephrase everything I was pitching to clients more or less and be like, "Cool, we want a lot of constant, but it has to be relevant to the angle of the product and the audience themselves."

Dylan:

It can't just be, "Hey, we got 10 different images here. They're all the same. One's black and white, one's colored. One's got a red button. One's got a green button." I want different angles there in different actual creatives where it's not just a color change, and I want to see how it impacts there. That's probably the biggest piece of it, is actually properly testing.

Dylan:

I always do this down rabbit holes, but I love creative testing campaigns versus control campaigns. Our control campaigns, they have all of our winning creatives in there basically. Those take up probably 70, 80% of the budget because I have retargeting, creative testing as well. But I like to have two or three control campaigns, which I just scale up the budget with. I don't even touch the budget, basically.

Dylan:

Then for the other campaigns, it's simple there to where I'll have a campaign for each creative test. Maybe it's every single week, maybe it's every single day, to where we just do broad targeting tests, two different creatives per ad sets, maybe three, to gauge what works best there. After it's spent to statistically relevant amounts, it's gotten some sales, we'll then bring our creative testing ads into our control campaign, because the control campaign, it'll die off at some point, just because the ads get creative fatigue. So this will be swap it out there.

Dylan:

But it's very important to keep those separate, because there's no reason to... If it ain't broke, don't fix it. So I would say it's more of how you're structuring these creatives versus throwing an abundance out there and seeing what sticks, because another point of this is... And I had a call about this earlier, but with one of my clients, is we had two ads. We were testing them both. One was getting really good sales. It had like maybe 20 sales and a terrible click-through rate, a terrible cost per click, but it was profitable.

Dylan:

The other ad we had wasn't profitable, maybe only had three or four sales, but it had a way better click-through rate and cost per click. Now, in Facebook's eyes, it was pushing more budget to the crappy ad because it had better front end metrics when that wasn't the case. So you had to go micro -

Brett:

Because that's what Facebook looks at, right? They're measuring more of the engagement, depending on the goal you get of campaign. But-

Dylan:

Spot on. Sometimes Facebook's not always right, and I'm sure it's the same with Google and YouTube.

Brett:

Yep.

Dylan:

But it's good to have some spend thresholds and actual goals to say, "Hey, I'm not touching this until we get 10,000 impressions," to gauge if it's relevant or not. Eight to 10,000 impressions is our sweet spot to gauge, does this work or not, for the most part.

Brett:

You're running an ad almost regardless of performance in terms of generating sales to about eight to 10,000 impressions to really give it time to show what it's going to do.

Dylan:

Yeah. That can range anywhere from probably 250 bucks to 500 bucks per actual creative, to tests.

Brett:

Yeah. Yeah. Totally makes sense. Okay.

Dylan:

If it's a lower price product like for a cosmetic brand, AOV is 40, 50 bucks, that's perfect. Now, for the other brand I'm spilling right now, our CPA goal's $140, which is a lot more than hoping for a $20 CPA. For them, I'd simply give them a lot more time. I look at our creative differently versus impressions to gauge... Our goal is $140 CPA. I multiply that by three or four. And if we don't have a sale by that spend, I'll shut it off completely, because I know it's a little bit pricier. It's going to take a little bit longer. So I like to give it a little bit more lead time, I should say.

Brett:

Makes sense. We're talking about, and depending on budget, and it does make sense that the number of creatives you need is somewhat dependent on your budget because more impressions, the more you spend on an ad, that the quicker it's going to potentially burn out. How do you approach that though? How do you approach, man, that 10 new ideas a week, 10 brand new ideas, or is it 10 variations? When you work with a client, where do you start, and how do you set up this testing structure, and what are you thinking about in terms of the creative part of the ads?

Dylan:

Yeah. Luckily, I have a better team now to help me align this because it was getting messy with folders of hundreds of assets. I had my team helping me out to where he'll find five of his data creatives, he'll match those up. Then I have a copywriter who writes 10 pieces of copy every single day. They actually mix and match these together and said, "Hey, here's for this week, here's for this week." And that's been the biggest game changer because I hate saying it, but I mean, I didn't have accountability. So maybe a week, I didn't want to do it, unfortunately, but now I'm sticking to my guns there. So it helps us -

Brett:

you don't feel inspired or something, and so you just don't get the headlines written and... Yeah. Yeah. Makes-

Dylan:

Exactly. But you need to have some sort of framework. I don't keep track of tests in an Excel sheet, but that probably would be helpful. But all of our creatives are so different in different angles where I can gauge. But if I were to hand over all of our work to another agency, they would have no idea. But I'd be able to give them a layout of what's working right now. If I get a new brand or account, it depends if they're established or not.

Dylan:

If they're established, they'll typically have a creative team in-house where I can work with them hand in hand. Also, in them, I have a drive, about 500 ads that I've made with other brands and I'll be like, "Cool, here are the best converting ads. We can take any of these, replicate them, use our product, et cetera, et cetera." That's one good way, while also...

Brett:

Love that.

Dylan:

Oh yeah. If they're already doing good, I'll reuse their ads. I mean, there's no reason to reinvent the wheel. I'll get traction with their ads, better structure, get better profitability. And then I'd incorporate my ideas to where I'll be scrolling inspiration ideas. I'm never like, "Hey, we need three more ads that convert." I'll send them actual examples like, "Yo, I saw this one. Let's totally test this one out."

Dylan:

They really don't come up with too much, to where I usually provide the inspiration there to an extent. But they usually have some assets to get the ball rolling.

Brett:

Makes sense.

Dylan:

Now, if they're brand spanking new, that's a whole nother ball game. All refer them to Promo or Billo. It's where we can send a product, get a free influencer video for 60 bucks for something. I kind of-

Brett:

What were those resources you mentioned, and are those good for a brand that has a little traction too? Or are they just mainly good for startups?

Dylan:

I think they're both killer for either, to be honest, and they're really cost-effective. Promo is stock video footage. You can add overlay tag. It's pretty cheap too. I wish I used it more, but I just have a lifetime membership, so I'm stuck with it. That's a great option there. But then Billo, B-I-L-L-O, I think it's dot app, I would jump on this train. We're testing two of their creatives right now and it's working really well. The reason I say that is user-generated content, where it's at, it's different for YouTube probably-

Brett:

Sure.

Dylan:

But people love seeing a guy like you and I on an ad versus, shit, Tom Cruise. I mean, it's more relevant to them. User-generated content is where I think the platform's going. So you don't always need to have professional footage. I mean, on our podcast, we had Truff Hot Sauce. We had a 20K video versus a free video. The paid video, substantially when it comes to actual sales and whatnot. So you don't always need to have professional quality stuff, as long as it's relevant. You can just do iPhones-

Brett:

Billo is going to allow you get user-generated content?

Dylan:

Exactly. You send a product to somebody, they record it for 60 bucks, and boom, it's usable for ads.

Brett:

Nice. Yeah. We see, on the YouTube side, we talked about this one when you interviewed me, but you can still use user-generated content. You just can't use one 15-second UGC video by itself. You need to do a UGC mashup or a UGC mixed into a slightly higher production value video. So it does look different, but yeah, I love that resource. I'd never heard of it before. Yeah, we talk to clients all the time. You need good UGC.

Dylan:

It's nice. Yeah. Because, I mean, creatives, it's what moves the needle. I mean, a good way to put this, and I talked about this a little bit earlier on a separate podcast, but you don't always need new creative. It could be new angles, to where we have a sleep product. I think I may have talked about this on our podcast together, but what we're currently doing now is, hey, fall asleep faster. Boom, that angle's hidden. People love it. People have so much trouble falling asleep.

Dylan:

Now that's going to hit a cap. At 3K a day, we really can't scale past that. So what we did, exact same creative, but two new angles. Angle one is fall asleep and stay asleep and no more tossing and turning. That's pretty scalable too. Exact same audience, different subsection within the audience, essentially. The third angle is tired of getting up in the middle of night to go pee. That's a fricking huge one. So rather than us trying to get innovative and have different crazy creatives, the creative tests for that specific week, we're just testing different copy angles.

Dylan:

I'll be honest, when it comes to creative tests, I picture creative as more of the ad itself versus the static image or just video, to where it sometimes is the copy side of things. That's a great example of diversifying the different angles with the existing and creative we have that's already working pretty well.

Brett:

Yeah. And then, so first of all, love those headlines, those, really directed at a problem-solution type of structure. And so, that's just a proven winner as well. That's always worked in advertisement. Problem-solution has always worked. I love that, and this is something important to remember, is that sometimes you get these audiences that convert. But there are subsets of those audiences where one angle really works better than another. And if you're not testing and not properly testing, you don't know that.

Brett:

Sometimes you may have, oh, hey, the fall asleep faster like, "That's working. Let's just do that." Well, but if you hadn't tested the you're already tired of getting up in the middle of night to go the bathroom, then you wouldn't know that, hey, actually, there's a subset that that converts a lot better for. So yeah, really thoughtful.

Dylan:

Yeah. I mean, what's working best is broad targeting. I'm not going in for sleep interests or snoring interests. While those do work for quick wins, I don't think they're scalable and consistent, just depending on how Facebook looks at it or even we look at it. But I love having three or four active ads per audience, and I'll throw in different angles there because depending on who's clicking on the ad and converting, Facebook knows that.

Dylan:

I mean, somebody who clicks on the one from peeing in the middle of the night, to having tossing and turning, those are complete different people. So Facebook will find people similar to them based off those ads. So it's not only optimizing at the campaign ad set level. It's also the ad level, depending on who's clicking on it.

Brett:

Yep. That's awesome. Let's talk a little bit about campaign structure then. You alluded to a couple of things a minute ago, that I want to dive into. You talked about using 10% of your budget for testing and 60 to 70%, I think you said, to controls, and you've got remarketing in there. Break that down a little bit. I know every client's going to be a little bit different, and when you see results, you're going to push or shift or whatever. But what does that budget breakdown typically look like?

Dylan:

Yeah. Basically, if we're spending a thousand bucks a day, 30K a month, I would... Trying to think what those ratios are. It's a shitty one. We'll say a hundred K a month, basically, to make it easier. So if we're spending-

Brett:

Yeah. It's way easier to do percentages when you're based on a hundred of something. Yeah.

Dylan:

I know. I was like, "Why would I pick 30K?" But yeah. If we're spending 100K a month, I'll easily allocate 10K of that to testing, and those testing campaigns, those maybe a hundred bucks a day, and I can have multiples of those. So it's pretty snazzy there to where you have enough wiggle room to... Because if I'm spending a hundred bucks a day, that's 3K a month. I could have three or four hefty tests with that basically.

Dylan:

That's typically my sweet spot. Now, with the retargeting, I'll push 20% of my overall budget to that. We've got a hundred K. We took 10K for testing. Let's take another 20K out for retargeting. This depends on the conversion cycle, of course, and how much volume you are bringing for your colder audiences, because I do have one account where we only spend 10% for retargeting just because anything more will break it pretty much. So it's case by case. But I think a good rule of thumb is 20% of your overall spend. Then, of course, the other 70%, I would say all for cold audiences.

Brett:

Yeah. Very similar when we run YouTube as well. Then the re-marketing could vary if it's a long sales cycle versus couple of days sales cycle. Then those re-marketing percentages could shift a little bit. So yeah, that's really cool. We got the budget breakdown. Then what are you doing now in terms of campaigns structure? What would you add to that, now that we've got our budget parameters laid out?

Dylan:

Yeah. I typically have two or three control campaigns, and one will be... I'll put one in the ad set in it, to be honest. I'll test out one, which is wide open, maybe age breakdown. If it's no one buys under 25, I'll just make it 25, 65 plus. I give the algorithm full room to just do its thing. It's really just creative at that game. We just input every other week, depending on what hits for the creative tests. The control campaigns, I don't touch ever. The only thing I ever do is bump the budget up 20% or add in some fresh creative from our creative testing campaign that's proven itself.

Dylan:

With those control campaigns, they have really big audiences. As mentioned, we'll go broad with literally zero. So it'll be 70 million plus. We'll do 10% look-like audiences. Those are really, really fat. Those are like 20 or 30 million people. Then we'll use an interest-based campaign which could have one or maybe two or even three ad sets with interest stacked, based off what we're looking at. But those are all 30 million plus audience size as well.

Dylan:

So the bigger the audience size, the more consistent and scalable it is from what we've noticed. We don't even really touch those as mentioned, unless we're doing 20% budget increments daily, which I love to do daily. Anything more, it usually breaks it to an extent for a couple of minutes.

Brett:

So maybe scaling up budget as much as 20% a day. If you go faster than that, you're probably going to break something.

Dylan:

That's per campaign. If I have three top of funnel control campaigns at 500 bucks a day each, I could easily add on an extra 300 bucks that day. If you're doing that every single day, that you can scale pretty quick.

Brett:

Yeah, yeah, yeah. For sure. That compounds pretty fast.

Dylan:

Exactly. I mean, a good example. I had one account I launched last July. Month one, they spent 5K. Month two, they spent 10K. Then 15K, then 18, 24, 42K. We got the ad account shut down, only spent 40K the next month. But then this past February, spent 70K and then we're planning to spend 140K this month. That's how we're scaling it up. I can make those bigger increments hinges now that we're spending 70K plus a month. But it's a little bit more risky with the smaller spends because Facebook fluctuates so much.

Dylan:

That worked really well for us. So if you are looking to find a scalable model, and this is a subscription, by the way, so it's not like a three X or anything. It's like a 1.2X, just because -

Brett:

That's all you need when you've got long lifetime value and good recurring monthly revenue.

Dylan:

Exactly. That's how we're scaling up that account. The biggest way we're doing it is I'm straight up duplicating every campaign and just adding in new creative, basically. I'll just have creative tests week three one, and then that will just run for the week. Sometimes it works, sometimes it doesn't. If it's working, I'll scale that baby up. But I started out at a hundred bucks a day, and still go to 120, then 140, then 160, and then all the way to 200. Then I go to 240, 280, and vice versa there.

Dylan:

And so, you can't scale it up somewhat fast. But if I just get a little thought that this could be a really good one, I will start testing. But it's at 500 bucks a day, just to see what happens so it gets that data faster. Then I'll shut it off in two days if it doesn't work. So it depends on how much wiggle room I really have.

Brett:

Sure. Totally makes sense. When you encounter a prospect or a client that's plateaued or stalled a little bit, what are some of the common mistakes, some of the common reasons that you find that, hey, these are the reasons why this account is not scaling like it should be?

Dylan:

I would say retargeting and exclusions. The retargeting should always do way better than your top of funnel. So, I mean, whenever I see a top-of-funnel campaign getting a four or five X, I'm like, "They're not excluding." I can almost guarantee that.

Brett:

Yeah. The funnel campaign is actually there's a section of it that's remarketing.

Dylan:

I see that a lot.

Brett:

I do too on the YouTube side. Yeah.

Dylan:

That's a big one. I think even ad formats. The amount of accounts I audit to where they're only using carousels, only using videos or only static images, I'm like, "You're throwing all your eggs in one basket, praying for the best," to where I could have the same copy, which I love to do, and I'll have that same copy with a video static and a carousel ad. But these different ad formats have different placements in the ad auction. So sometimes adding in a different creative format could lower your CPA like 10%. It's fricking bananas.

Brett:

Really? Do you have any rules of thumb for, "Okay. We're running this percentage of carousel ads, or this percentage of static ads, this percentage of video," or it's just all dependent on what's working?

Dylan:

It's depending on what's working, I would say 5% carousel ads though, 30% video, and the remainder being static ads, because I'm supposed to see-

Brett:

Yeah. I was going to see, and I'm not on Facebook, a ton. Not always a fun place to hang out these days. Great place for advertisers though. Static... I mean, I'm sorry, carousel ads, I don't see them that much anymore, like re-marketing mainly. But not beyond that necessarily. Okay. Super interesting.

Dylan:

Good little case study for that is I literally audited somebody last week and all they're running are carousel ads for their food. I just straight up said, "Make a slideshow using the same images," and that lowered their CPA 15%. And it took two days. So that was a quick win. Didn't change anything. Just took those images, turn into slideshow, and boom. Now it's converting like crazy.

Brett:

Nice. So slideshow. That's the type of thing that doesn't work on YouTube at all. But so, when you do that, are you using something like Animoto or another tool like that, just create a slideshow or...

Dylan:

I don't do it very often because I don't like the Facebook creative tools. But yeah, you would just select the images and you can make a slideshow with it, within Facebook natively. So they didn't even have an editor or anything, and it's like, "Hey, just take those five images in the carousel and put them in here." It did it for them basically.

Brett:

Nice, nice. Very interesting.

Dylan:

It's cool. But ad formats, exclusions, and I wouldn't even say too many campaigns.

Brett:

Okay.

Dylan:

Facebook pushes 50 conversions a week. I think that's blasphemy. I don't believe it personally. But I do think you can spread yourself too thin to where those cosmetic-

Brett:

Facebook, yeah. Can you explain that really quickly? They push 50 conversions a week. What do you mean by that?

Dylan:

50 sales. If you have a campaign, if want it to get-

Brett:

At the campaign level, so a campaign needs to be doing 50 sales a week?

Dylan:

Exactly, when using campaign budget optimization. That's when you set your budget at the campaign level. But if you're setting it at the ad set level, the ads, it has to get 50 conversions a week. A conversion can be anything in Facebook size, depending on what you're optimizing for. But of course purchases where it's at.

Brett:

Interrupt and talk about that for a minute. So 50 conversions, are you saying you actually think it could be less than 50 and does well or ... Okay. Got it. Yeah.

Dylan:

Yeah. We have like $20,000 products and we only get like three or four of those a month.

Brett:

Yeah.

Dylan:

I mean, the learning phase is a myth, in my opinion. But with those 50 conversions, where I was going with that, is if you have 20 campaigns and they're all getting five conversions, it's going to take forever to get out of that learning phase and longer to optimize, which isn't that big of a deal. But if you ended up having three campaigns instead of 50, where they had 50 conversions in each one, you're going to get a way better bang for your buck. Facebook will optimize faster.

Dylan:

It's basically, if I had some campaigns that's 10 bucks a day, or I could have two campaigns at 50 bucks a day. The 50 bucks a day ones are going to do way better any day of the week, just because they're getting data faster. You can optimize faster, make decisions faster, versus the others.

Brett:

Yeah. I agree. Then sometimes having fewer campaigns and you're really pushing and scaling, it's just easier to manage and easier to pull levers on. I think there's a lot of benefits that go into that. That's awesome. All right. Let's pivot a little bit. Let's talk about everybody's favorite topic, or depending on when you're listening to this, it maybe the worst topic that you could ever have imagined, or it could be like, "Oh, this is no big deal." I don't know. Let's talk about iOS 14. What are you telling clients now related to iOS 14? How are you preparing? Let's walk through that a little bit.

Dylan:

I changed up all my pricing because of that, basically. What we're seeing on Facebook, I'm only seeing this in one account right now, but I mean, we're getting a hundred sales a day, and we used to show 85 to 90 sales attributed to Facebook, but now we're only showing 45 to 50, if 50. So it's dropped about 40, 50% in tracking for that specific client when everything is business as usual. So I don't really have an explanation for that except this, but there's no way to gauge if that's it or not. So it makes it tricky.

Dylan:

But what we're telling all of our clients is, hey, we're going to be looking at Google Analytics a lot more now, to look at seven-day windows and day-to-day spend in revenue versus-

Brett:

Are you guys using UTMs to track, or you're just not going to-

Dylan:

Exactly.

Brett:

Okay. Yeah.

Dylan:

We went way harder with UTMs where we implemented it for everybody, basically, just because Facebook's not showing the true monetary value of most things. So rather than even doing reporting in Facebook, we do it all through Google Analytics. The other part of this is we're probably going to see less results than we typically do because Facebook looks at 28-day click one day view versus seven-day click one day view.

Dylan:

Now, that's not much. It could result in a few extra sales. A lot of people don't convert too quick. To combat this, shouts out to Nick Shackelford, this is two for the day for you.

Brett:

Yeah. That guy's awesome, man. He and I have spoken at the same event, some events. Nick Shackelford, real deal. I believe, I believe a good soccer player too. So anyway, for what that's worth.

Dylan:

He's a goalie, I think, because I'm a goalie, and I think-

Brett:

Oh, is that right? Okay. Okay. Oh yeah, yeah. But you're a hockey goalie. I'm getting totally sidetracked here. My daughter's playing lacrosse. None of these sports I've ever played, but lacrosse, soccer, hockey. I was a basketball guy. I always had that. But fascinated by these other sports that I have less experience with.

Dylan:

They're fun. But yeah. Nick Shackelford, I'm meeting him in a couple of weeks coming to Austin for Geek Out, shouts out, Geek Out. But yeah, he created a 28-day click multiplier. Essentially, I would go in through all of our ad accounts, look at six to eight months of data, gauge what's our revenue on a one-day click window, seven-day click, 28-day click? And that's for cold and warm audiences. So you're basically looking at past data to gauge, if I had a 2X on a seven-day click window, what would I be on a 28-day click?

Dylan:

You would have to multiply this by 1.23, for example. So we have all those figures of what it could be. But what I've actually found is that the last year has just been a fricking mess, so the COVID, the elections, the freeze that hit Texas. I noticed sales were down 40 to 60% in Texas, and some of the weeks.

Brett:

Yeah, yeah, yeah, yeah. No away around that.

Dylan:

So there are a lot of other variables involved to make it trickier to gauge if that's really the case there. But the 28-day click multiplier, that's one part of it. But I think the biggest thing is we're looking at more blended metrics, ecosystem metrics, with UTM codes, to gauge, hey, Snapchat's doing this, Facebook's doing this. There's probably going to be some overlap here, but not too much.

Dylan:

So we just changed our whole reporting model to stick with percent of ad spend versus return on ad spend and CPA because we just don't have that info like we used to. I'll probably go to it in the future once all the kinks get worked out. But we haven't seen much change on our end. I usually always look at stuff on a one-day click and seven-day click window. I mean, for those accounts that have that, nothing's changed pretty much.

Dylan:

I think the hardest part is for how I'm relaying it to clients, is having to have them get their domain verified, set up specific pixel events and stuff to where it's a pain in the ass. So it needs to be done in order for the Facebook pixel to attract this stuff. But Facebook didn't make it easy. I think the hardest part of all of this is the grunt work I have to deliver to my clients to be like, "Hey, you just put this [inaudible 00:35:50] tag code in your website somewhere. I don't know where, but it's supposed to go there."

Dylan:

I think the implementation side is probably the hardest part, but we were just proactive. We had a lot of resources involved and had calls with all of our clients to give them expectations, to play it safe to say we're proactive. But at the end of the day, the big stuff hasn't even been released yet. I mean, I think it's just the beginning.

Brett:

It totally is. And then, we're doing a similar thing. We're sending out news information from Google to our clients and helping them get ready. We're not seeing any major changes yet, but I really like a few things you talked about there, one, blended metrics. We're going to have to get more creative about how we track and attribute and how we look at overall sales lift because, yeah, there's going to be some cases where Facebook maybe isn't given all the credit that it deserves, or YouTube is not given all the credit it deserves, but we need to be able to get some blended metrics to get a better idea.

Brett:

I love that 28-day click multiplier. We do something similar, but reverse where we're looking at like, "Hey, based on a one-day CPA, here's what we expect that CPA to be in seven days or in 30 days." So it's similar thing like, "Hey, if the CPA today is a hundred, well, that's cool because we're expecting it to be 50 by the time we get to 14, 15 days," based on what the historical data and stuff.

Dylan:

The other cool part with this is I have access to every channels marketing efforts now. So I get all the reports from the Google Teams. If I start noticing some discrepancies, I don't like throwing people under the bus. But when someone's not transparent and unethical about it, I have no problem throwing them under the bus there to where... I've had it happen twice where they were totally looking at the wrong KPIs, and turns out, they burned over 70K in cash and thought they were profitable. They weren't.

Dylan:

I was like, "Dude, they have been giving you the complete wrong figures. Let me do this for you. I'll take it over." It got me some clients. It's helped out in a way there, but I like seeing other people's marketing efforts. I mean-

Brett:

Yep. Yep.

Dylan:

It's interesting.

Brett:

Sure. Yeah. The blended metrics and digging in and yessing all the channels tied together, that's super important. I think it's actually going to reinforce one of the first points you made, which is the ad is everything. As privacy issues become tighter and there's less transparency or less ability to track, the ads are just going to become more and more important, like what you say, how you say it, how you deliver that ad is going to be more and more important. So get it right now. That's for sure.

Dylan:

Oh yeah. Something I spoke about in another podcast is I didn't know this would affect our ads, but what words you're using. If you're using, "Hey, buy this today," you could be like, "Hey, grab goodies today," or something. So specific-

Brett:

"Buy this today," sounds salesy and pushy, but "Get your goodies today," sounds fun.

Dylan:

Exactly.

Brett:

Like playing around with that. Yeah

Dylan:

But yeah, it's an auction. If a million ads with "Buy this today" versus "Get your goodies today," you could convert better at "Get your goodies today". What I've noticed is whenever we're using different lingo, our CPMs are about 10 to 15% cheaper, which on a massive scale, that's fricking huge.

Brett:

That totally impacts the rest of the math down the line. So if you're worried about RoAS and CPA, which you should, impacting your CPM can definitely impact all the rest of it because that's the leading metric there, leading versus lagging. Awesome. Dylan, this has been fantastic. We are officially running up against time here, so want to wrap up a little bit.

Brett:

But two things. One, plug the podcast. Why do you enjoy doing the podcast? If you have any recent takeaways from the podcast, and we've already shared some, so no worries if nothing else. But talk about the podcast a little bit. And then, I want you to tell people about your company and how they can learn more about you there.

Dylan:

Yeah. For the podcast, Rich Ad Poor Ad, check it out. I think you just go to Google and type in Rich Ad Poor Ad. It's all under FunnelDashes network, essentially. We have a lot of great guests who spend 50K a day, a dollar a day, organic affiliate marketers. We have brand owners talk about their brand directly, agency owners, media buyers. We have literally a bit of everything on there and it's not from beginners, Billie, Jean, Neil Patel, for, again, Brett Curry.

Dylan:

We have some legends on our podcast. I mean, there are a ton of actionable things, because we talk about what's working, what's something that crashed and burned, and some financial tip. So it's 20 or 30 minutes of good, valuable golden nuggets to be dropped. As mentioned, I do it just to network. We're probably going to monetize it. I didn't think I would ever say that, but I'm doing it strictly meet people like Brett and just level up my personal game as well.

Brett:

Sweet. Love it. Love it. So yeah, check it out, Rich Ad Poor Ad. Then your company, Koality Media, how can people learn more about your company? Any resources? Anything you want to plug there?

Dylan:

I would say find me on Twitter at marketerdylan or Facebook, you're going to search Dylan Carpenter. The website is called Koality Media, K-O-A-L-I-T-Y, media.co. I had an intern a free three years ago. I don't use it, but there may be some goodies on there.

Brett:

Hey, that's often the sign of the like, hey, you're just a practitioner. You're just doing it, man. You're running the ads. You don't care about your own website. You're out there making it happen.

Dylan:

Exactly. Yeah, if you have questions, I'm an open book. Ask me anything, but not too crazy, hopefully. But yeah. Find me on Twitter or Facebook and I love having conversations.

Brett:

Sweet. All right, man. Dylan Carpenter, ladies and gentlemen, rocking it. Thanks for taking the time. This has been a lot of fun. Really excited to see where everything goes with iOS 14 and all these changes. But you dropped some amazing golden nuggets that are going to help people no matter what happens here in the future. So really appreciate it, man.

Dylan:

Nice. Appreciate it, man. I loved it. Thanks for having me on.

Brett:

Absolutely. As always, we appreciate you tuning in. Hey, we'd love your feedback. Let us know what you'd like to hear more of, what you'd like to hear less of. If you have not done so, and you feel so inclined, we'd love that review on iTunes. With that, until next time, thank you for listening.

Episode 170
:
Brett Curry - OMG Commerce

The Winning Formula for Scale With YouTube Ads

Are you ready to crack the YouTube ads code?

Are you ready to crack the YouTube ads code?  Ready to learn how to win now and into the future even as privacy issues are causing media buyers to pull their hair out?

Here’s the Audio from a recent, wildly popular webinar I presented at.  We had just over 2,000 people attend to hear our Winning Formula for Scale for YouTube ads for eCommerce.

This presentation is fast-paced and full of practical tips and examples.  Here are 3 reasons to listen:

Learn how top eComm brands are profitably spending $500k per month on YouTube ads.  Many were spending $0 on Google ads just a few months or years ago.
Diversity.  In a world of tracking issues, algo updates and constant uncertainty - you need to diversify your customer acquisition channels.
Understand how creative, campaign and audience strategies work hand-in-hand to deliver stellar results.

Brett Curry

Via LinkedIn

Via Facebook

Via Twitter

Via Instagram

Via YouTube


Mentioned in this episode: 

Kurt Elster

Ethercycle

Smart Marketer

Molly Pittman

Ezra Firestone

John Grimshaw

eCommerceFuel

Andrew Youderian

Spotlight Social Advertising

Wavebreak

Conversion Crimes

BOOM! by Cindy Joseph

Grammarly

Volvo

Harmon Brothers

Poo-Pourri

William Painter Sunglasses

YouTube Ads Guide

Episode Transcript:

Brett:

Hey, what's up? Brett Curry here. Welcome to this virtual event, YouTube Ads for E-commerce: The Winning Formula for Scale. I am absolutely delighted that you chose to spend a couple of hours with us, and I'm excited because I've seen the power of YouTube for good brands. And now is not the time to be dependent on just one traffic source. Now's the time to diversify. And if I may be so bold, you need YouTube ads to grow your business.

Brett:

And whether you're just starting on YouTube ads, you're just considering it, or maybe you're running YouTube ads but you want to step your game up, our commitment to you is we want to deliver the goods with this event. We want this to be practical, helpful, actionable, and hopefully we can have a little bit of fun along the way. Hey, I know what a commitment it is to join a virtual event. And so I want to keep this fast paced and make it well worth your time.

Brett:

So with that, I want to dive right in and get to the good stuff. 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 sponsored 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:

So we're really looking at three steps. This is a three-step formula, this winning formula for YouTube ads. And just to break it down really quickly and then we're going to dive into each of these. It comes down to creative strategy, and then audience strategy, and then campaign strategy. And you need all three of these and you need all three of these working in harmony together and that's when you get fantastic results.

Brett:

And we've done this dozens of times now, taken brands from zero on YouTube ads up to a thousand a day, 10,000 a day, 20,000 a day, all while hitting a CPA target. And that's what I want to show you how to do today in this event. Now, you might be asking, why are we doing this event? Well, first of all, we want to help people. We are an agency. So we run these campaigns for clients. We also enjoy helping people.

Brett:

And this kind of came from an in-person event, if you remember what those were like, just before the initial lockdown. So we were invited to the YouTube LA office. This was me speaking on stage at the YouTube LA office to a packed house of e-commerce brands and laying out here's how you grow on YouTube if you're an e-commerce brand. Quite a bit has changed since then. A lot has changed favorably for e-commerce, but a lot of shifted with YouTube.

Brett:

So this is an updated presentation. That event went so well, we had people saying, "All right, when are you doing your next event? Where's the next event going to be? We got to attend." So this is the next event, right? We still can't meet in person fully and so we're doing this event virtually. But this is part two to that event. It's updated, it's expanded, it's deeper, and it fits now for where we are with e-commerce and YouTube ads right now.

Brett:

So just a little bit about OMG Commerce and we're diving right in to the good stuff. So we are an e-commerce agency. We focus on Google ads, YouTube ads, and Amazon ads. I'm very proud of our team. We've hit the Inc 5,000 list. Now, the last three years in a row, we've made Inc Best Workplaces and Local Best Workplaces in one of our main cities where we work. We've got about 50 on our team, so we're expanding and growing. And then we have both the media side, so the campaign structure side, and the creative side in our agencies. We can help with both.

Brett:

And we are one of the top spenders on YouTube ads. So everything I lay out here, not based on theory, not based on ideas, it's based on stuff we're actually doing for clients on a daily basis. And so you can rest assured that this stuff actually works. So let's talk about YouTube just really briefly and set the stage. I'm talking like 30 seconds here then we're diving into the content.

Brett:

So 2 billion plus users. I started speaking about YouTube ads probably four or five years ago now. And at that time, it was not even a billion users. So YouTube has experienced tremendous growth. It is the world's second largest search engine. And it's not a search engine. It's a video sharing site, a social media site. But more searches are conducted every day on YouTube than on any search engine not named Google.

Brett:

It's also the world's second most visited site, again, right behind Google. So you want scale, Youtube absolutely has scale. And that's what I want to do. We want to help you scale on YouTube and reach your goals and really expand. Now, what's interesting is adults 26 to 35, 77% of them use YouTube on a regular basis. And 80% of parents of young children. I fit this category. We have a lot of kids at our house. My kids only watch YouTube. That is the social media platform that they want to get on.

Brett:

They love YouTube influencers. They always want to watch YouTube, whether it's on a tablet or on one of our TVs. They want to watch YouTube. And viewers 18 plus on YouTube, 42 minutes per day on the platform. That's huge. According to several studies, that's even a little bit more than what most people spend on Facebook. Now, I'm not going to just stop with YouTube ads because YouTube ads certainly it's super duper important, but you also need to have a good landing page.

Brett:

So I invited my friend, our buddy, Kurt Elster, the man. He runs The Unofficial Shopify Podcast. He also runs an agency called Ethercycle. He has a presentation here during the event, talking about how to optimize for ROAS with better landing pages. I love this presentation. It is absolutely good. It's amazing. And so it's going to be fantastic.

Brett:

Also, you're going hear from Vanessa Carvajal directly from Google. This presentation rocks as well. The ABCDs of creatives for YouTube, all based on research, all based on Google's data, show you exactly how to approach YouTube creatives. And then you're going to hear from our expert panel. We debated on whether we're going to do this or not because, hey, our experts are busy, man.

Brett:

They're out running campaigns, they're getting stuff done on a daily basis. And so, do we want to have them all free up their time to record? And we decided we did, one, because we want to showcase how awesome they are. And two, because they're going to deliver great value to you. But these are six of our best. These are OMG Commerce team members. And so I'm going to grill them with questions, all the burning questions you have about budgets and ads and what to do if things go wrong and all kinds of stuff, and they're going to lay it all out there.

Brett:

They're going to share with you their examples and lessons from their experiences on YouTube ads. Also, a big thank you to our sponsors. We could not have done this without our sponsors. A special thank you to Ethercycle. Kurt Elster, smart marketer, my friend and our friend at the agency Ezra Firestone and Smart Marketer, Molly Pittman, shout out. John Grimshaw, that place is awesome. eCommerceFuel and our buddy Andrew Youderian, thank you as well. And all of our sponsors, Gorgias, Spotlight Social, Wavebreak, Conversion Crimes. Awesome sponsors. Thank you so much.

Brett:

So let's dive in. So let's talk about step number one. Step number one of the formula to scale on YouTube, it's creative strategy. And I got to say, guys, this is the most important step in the formula. If you get this wrong, nothing else matters.If you nail this and do really, really well, you can actually do okay on the other elements and still be all right. But you get this wrong and you are toast.

Brett:

So this is a stat from Google and from a group called the Unskippable Labs. But they say, hey, 50% to 80% of the ROI of a YouTube campaign comes from the ad itself, comes from the creative. We've seen this over and over again, where we're really good with campaign structure. We're really good media buyers. But if you have a junkie ad, it's not going to work, right? Where you take the same structure with a mediocre ad, campaign limps along, you inject the right video and that structure takes off. So super important.

Brett:

Well, we found, and I believe this is the present of digital marketing, it's also the future, and that is the machine, Google's SmartBid algorithm and their AI and machine learning and Facebook's machine learning plus smart humans. That's where it's at. Bringing our creativity and our strategy, business savvy, combining that with AI and ML. And that's where you have a powerful combination.

Brett:

So I want to walk you through six must have elements of a winning YouTube ad, and this will help shape the way you think about creatives. I want to preface this by saying one thing to keep in mind, and there are multiple differences between YouTube ads and Facebook ads, but one is the video has to do all of the heavy lifting on YouTube. There isn't these blocks of copy around the ad like you have on Facebook. It's the video.

Brett:

The video has to do everything. Everything that you need to do to convince someone, the video itself has to do that. Okay. So let's talk about these six elements. The first one, it is the golden thread or your one thing. I went to this copywriting course years and years ago, and they talk about having a golden thread. What's the one thing you want to keep going back to again and again? It's a combination of what you do best and what your audience wants most. And then you highlight that.

Brett:

So let me give you a couple examples. So let's talk BOOM! by Cindy Joseph. Ezra's company, we've been the Google and YouTube ads partner for BOOM for about four or five years and I've seen tremendous success with YouTube. But their one thing is they're pro age. It's look your best, but embrace where you are. It's not anti-aging. Don't try to look like you're 20. No, you are a powerful woman.

Brett:

We want to make you look your absolute best, but embrace this stage in your life, right? Cindy Joseph, the founder, co-founder, silver hair, but absolutely stunningly beautiful. So look good how you are. Don't try to turn back the clock, just look great the way you are. Grammarly. Spelling and grammar errors can sabotage your success. We fix those errors for you automatically as you go.

Brett:

One of the examples I thought of earlier, and we talk about this at the panel, actually. But Volvo used to, and this is an old example, but Volvo would just talk about safety. Always they would go back to safety. These are safe vehicles. That was their one thing. So what is your one thing that should be weaved throughout the video? Number two, the hook. This is super duper important. Those first five seconds, that's magic moment.

Brett:

After the five second mark, the magic skip ad button appears and likely when your ad comes on, someone's hovering. They're hovering over that skip ad button and they're about to press it. And so you've got five seconds to convince them otherwise. You have five seconds to talk them off the ledge and get them to stay and watch your video. And so this is a screenshot, of course, from the Harmon Brothers class. Shout out to the Harmon Brothers.

Brett:

Poo-Pourri, you got get the petite, cute British ladies sitting on a public toilet, in a dress, and she's talking about bathrooms smells. Now, you don't have to use shock and awe and humor, but if it fits your brand and it fits your product, it can work really well. You see her on a toilet, you hear what she says, you're hooked, and you're likely paying attention from there.

Brett:

So the idea is we want to hook the right audience and repel the wrong audience, because there's actually a benefit if the wrong audience skips. If someone who's not going to buy your product anyway, if they skip, that's actually good for you because you don't pay unless someone sticks around for 30 seconds of your video or unless they click through to your ad. So you want unqualified prospects, you want people that are not likely to buy, you want them to skip. Move along, right? We're not going to pay for them anyway.

Brett:

So what else could you hook with? If you're not going to use bathroom humor, which you probably won't want to, what is your biggest benefit? Bring that right to the front. What is the reason someone buys your product? Highlight that right up front. This was the beginning of an ad for a leg bronzer. And so it opens with, "Hey, did you know you could get gorgeous, flawless legs in a matter of seconds?" Big promise, gorgeous legs, matter of seconds. Okay. If this was what I'm wanting, then I'm maybe going to stick around and watch.

Brett:

You could lead with the biggest problem. What's the biggest problem that your product helps overcome? This is actually the opening to the Flex Seal infomercial. It's a pretty great opening. Again, a New Jersey accent, "This repair would cost thousands of dollars to fix." And so it's like, hey, what is the biggest problem? Let's lead with that. Or it could be, what's the biggest question your prospects are asking?

Brett:

We're advertising for a percussive therapy device that has become all the rage over the last couple of years. But we started with a question. This was a question people ask if they're looking to buy this is, "Hey, have you seen one of these devices and wondered, do they actually work? And if they do, why do some cost $600? What's the difference?" So what are the biggest questions someone's asking related to your product and related to your industry? Lead with that.

Brett:

Lead with that question. Let someone know you're speaking directly to them and you're going to answer their questions. Number three, the supporting cast. We don't just have one benefit. There's not just one main benefit. You buy a product, you should focus on one thing, like make the one thing the thing that everybody remembers, but you can have supporting cast.

Brett:

What are the other cool things that support that one benefit and maybe tip the customer over the edge and cause them to say yes? So my buddies at William Painter sunglasses, the glasses are titanium and they're basically unbreakable and they look just cool, man. You wear William Painter sunglasses, it ups your cool factor big time. But they also have the hook. The hook helps you pop bottles and look like a model. And it's just fun. It's an extra thing and it's an added benefit. It's supporting cast. It makes the other stuff come to life and makes you want to say yes.

Brett:

Number four, objection busters. People are watching your videos and they've got their arms folded. They're saying, "Yeah, I don't know. I've seen this before. I've heard this before. And I don't know that I believe him. In fact, I probably don't believe him." I'm from Missouri. Missouri is the show me state. We're very skeptical people, I guess, in Missouri. But it's like, hey, you got to show me before I believe. You need to think like a Missourian as you're building your YouTube ads.

Brett:

But what resistance does your prospect have to buying your product? And you have to overcome those objections. So if you end your video and you haven't addressed properly the big objections in someone's mind, or at least indicated that you will overcome those objections, if they click through to your site, then you're going to really face them severe headwinds. You're going to have some headwinds facing your videos. So people are thinking, "I've seen this before. I've been let down before. I doubt it."

Brett:

You can say things like, "Hey, you may be thinking X, Y, Z. You may be thinking this is too good to be true. You may be thinking this will never work for you, but here's what we found." So address those objections head on. My buddy, Peter Goodwin at Groove Life, awesome rings. I'm wearing one right now. They talk about, hey, it's silicone wedding rings. You're worried it's going to snap, break, you're going to lose it, whatever. No BS, 94-year warranty. Just overcome that objection right out of the gate.

Brett:

Number five, proof. We want some proof that this is going to work. So credentials, testimonials, endorsements, reviews. We want to see these proof elements to make us confident, confident to at least say maybe, maybe I'm going to believe you. But this should be fun. This shouldn't be like a term paper. It shouldn't be like a legal case. It shouldn't read or feel like a term paper. It should be fun.

Brett:

Again, this was Harmon Brothers. But this was Purple Mattress. Goldilocks lowering the 300 pound sheet of glass onto the bed frame and there's raw eggs in between, but the eggs don't break because the mattress supports it. So think fun. Think visual. But we need proof. And then finally, number six, the offer. What is the offer? Why should I say maybe? Why should I say, "Okay, I'm going to look a little bit further?"

Brett:

So what is that offer going to be? You can think of bundles or discounts, especially if you got a product that people consume over and over again, supplement, skincare, beauty products, food. Anything that's consumable, think about bundles or discounts. But also think about, hey, just click here and see it in action. Learn more. See if this is right for you. Let's take that next step. But some kind of offer that's pretty irresistible, but tell someone to take action.

Brett:

If you don't tell someone to take action, guess what? They won't. They'll just keep watching. They'll stick around for the YouTube video they came to watch if you don't tell them to take action, if you don't make it compelling for them to take action. Now, I'm really just scratching the surface here on creative strategy. There's so much more we could talk about. Vanessa from Google is going to talk about creative strategy a little bit more.

Brett:

I also created this resource and I highly recommend you download it. It's totally free. On our website, under resources and guides, this is the top YouTube ad examples and templates. It's like 16, 18, something like that, of our favorite YouTube ads with links to them explaining why they work. So check out this guide. I think it'd be a huge help to you. And then also a serious X-Factor in your videos are testimonials and video testimonies from customers.

Brett:

I'll show you how to get those testimonials that they give us on the guide section of our site, a guide to authentic customer testimonials on video, whether you're remote or in person, eventually we'll be back in person again. But here's how you get them. That's free as well. I highly recommend you get it. Okay. Step two, audience strategy. Who are we speaking to? So the creative is super important.

Brett:

But let's face it, if you've got a brilliant video and you present it to the wrong people, you've got this boom video that's aimed at it's a pro age cosmetic and you're targeting teenage girls, they're not going to buy. The message doesn't line up. So audience strategy is really, really important. And audience strategy is also different. It's different on YouTube than it is on other platforms. And I think in a lot of ways, it's better on YouTube.

Brett:

You've got more options on YouTube. Really, the possible audience combinations are limitless on YouTube. So let's dive in. So I do recommend you start with remarketing. You need that foundation of remarketing. If you want to fill in a lot of people at the top of the funnel, you want to hit a broad, cold prospecting audience, it needs some remarketing there to help seal the deal, to help close the deal and get someone to take action.

Brett:

Because when you're reaching someone at top of the funnel, it's probably the first time they've ever heard of your brand. The first time they've ever seen your product. And so the likelihood is they're not going to buy it right then, but you want to get them back through your remarketing efforts. So I highly recommend you set up remarketing audiences first as a foundation.

Brett:

But then you want to go beyond that. That's what this event is about, it's about scaling on YouTube. So we recommend some of your first prospecting audiences to scale are intent-based audiences. So what does that mean? What does it mean by intent-based audiences? Well, YouTube really has the ability to tackle and target intent-based audiences like no other platform. And here's what Google has seen. So when you target an intent-based audience versus just a demographic based targeting, 40% higher purchase intent.

Brett:

Now, that 40%, that's going to maybe translate into hitting your CPA goals versus not hitting your CPA goals. So starting with custom intent or with intent-based audiences is huge. So what do these audiences look like? Really, two main audiences. The first is custom intent, based on someone's YouTube and/or Google search behavior. The second is keyword. Keyword is actually more of a contextual targeting, but at least indicates what people are watching on YouTube.

Brett:

And that's going to indicate, hey, if they're watching videos about this, then we know what they're interested in. We know what they're researching, we know what they're planning, we know what they're trying to do. And so now's the perfect time to sneak in our message and hopefully get them to click to our site and eventually become a customer. So customers intent. This really is the precision of search with the power of video.

Brett:

One thing that's really increased in recent years is people shopping on YouTube, people looking for product reviews on YouTube, or hey, I'm looking for best fill in the blank, best noise canceling headphones. That really shot up in the midst of the lockdowns and things like that. But best noise canceling headphones, best hypoallergenic pillow, best whatever. People are searching on YouTube. They want to see reviews. They want to see unboxed things. They want to see influencer content. They want to know what to buy. People are shopping on YouTube. So looking at keywords very, very powerful.

Brett:

So our advice is start with intent-based audiences. Start with people where you know what they're in the market for, what they're shopping for, what they're researching for. Start there and then go broad. And YouTube gives us all kinds of examples, all kinds of ways to go broad. They have kind of some off-the-shelf audiences. They'll auto create some audiences for you after you start getting conversions, you start to some data in your account.

Brett:

And then you can continue to build some other custom audiences. There's a type of audience called custom affinity, which is sort of like a lookalike audience. You give Google some inputs and then Google's going to say, "Ah, we know kind of who you're looking for. Here is a lookalike audience kind of based on those inputs." Once you have those intent-based audiences and you start to get conversions, that's when you can begin to open things up a little bit and go broad and really hopefully start getting some volume.

Brett:

All right. Let's spend some time on campaign strategy. So this is where we're putting structure around everything, right? We know we got to say the right thing. We got to be compelling. We know we have to reach the right person. But what's the structure we put around this thing so that we're hitting our targets, and so this makes financial sense, and so we're building our bottom line, and so we're actually growing?

Brett:

And so this is where we're looking at leveraging smart bidding. So again, we're using the machine. We've got our smart humans. We've got our machines learning and AI that we're leveraging. And it really comes down to three things: campaign structure, bids and budgets, and then measuring and optimizing. You do these three things and price is part of your campaign strategy, good things are going to happen.

Brett:

So we're going to kind of break that down. One thing I will mention, it is required. It's not a maybe, it's not a this was better. No. It's a must. It's a requirement. You need to use the Google Ads conversion code, just like on Facebook you use the Facebook Pixel. You're not using Google Analytics for Facebook. You're not using Google Analytics for YouTube either. Now, you may cross-reference with Google Analytics. You may look at some of the user metrics and on-site engagements, a few other things with Google Analytics.

Brett:

But tracking conversions and feeding your campaigns, you need the Google Ads conversion code. It's a must. You just absolutely have to use it. What's cool, though, here is now you can create different conversion actions, add to cart, purchases, other things, and then you can specify at the campaign level what you want that campaign to focus in on. That's really quite cool.

Brett:

Now, we've developed an approach that we call AMP. So this is our approach, is we've been thinking about, okay, how do we build the best YouTube and Google ad campaigns? And not thinking about campaigns as silos, but thinking about campaigns like a team, like a portfolio that work together to deliver amazing results. And that's what AMP is, Accelerated Marketing Portfolios. These are a portfolio of campaigns that work together to really grow your business.

Brett:

Because you're going to run into trouble if you think about YouTube the same way you think about Google search, or think about YouTube the same way you think about Google shopping, or if you think about top of funnel YouTube the same way you think about remarketing YouTube. They all serve a different purpose. They're all reaching someone at a different stage of the shopping journey.

Brett:

They work together and we got to hold them accountable, but they all are doing different things at different stages of the journey. So you need better ads. That's what we talk about it with our AMP approach. You need better measurement. You need better campaign structures. Let's talk about this. So we hear this a lot, right? Well, a lot of people come to us, D2C e-commerce brands, and they want to hit a portfolio ROAS of 200 to 350. Maybe it's higher. Sometimes it's higher.

Brett:

But that's what they want to hit as the return on ad spend as a whole. Now, when we come to them, and what a lot of people think is, okay, I need to be at 300% return on ad spend. So I need YouTube top of funnel to be at 300% return on ad spend. But that's not the right way to think about YouTube. That's faulty reasoning because 80% of people that say they watch a YouTube video in the shopping process say they do it first thing. They say they do it early in the process, not later in the process.

Brett:

So it's going to be very common for someone to click on a YouTube ad, watch a YouTube ad and then not buy for a few days. And maybe they're going to click another ad before they actually purchase. So the way we like to look at it is, hey, top of funnel YouTube, the ROAS there may be like a 0.5 to a 1.5, maybe even as high as a two. Mid-funnel ROAS, so that's like search and shopping, and there's maybe a couple of YouTube campaigns that are mid funnel, three to four ROAS.

Brett:

Bottom of funnels. So branded, remarketing, some real bottom of funnel campaigns, those are maybe going to convert at a 400% to 800% return on ad spend. So then when you put it all together, total money spent, total return, yeah, you're going to hit that 200% to 300% return on ad spend, and we would aim to hit whatever goal you have and that's what you should do as well, whether you're doing it yourself, from a media buyer, however you're doing it.

Brett:

But here's the difference. Do you want that portfolio to be big? Like, we're getting a big total return, right? We're getting a lot of volume at that 200% to 350%. Or do you want a little return? Still the same percentage, still hitting a 200% to 350%, but do you want it to be small or do you want to be large? And that's what YouTube can do. And that's what we see time and time again is when we inject YouTube at the top of the funnel of those early stages of the shopping journey, then we can blow that thing up.

Brett:

YouTube itself might not hit that 2X to 3X goal, but it's going to feed other campaigns. And collectively as a portfolio, they're going to hit that 2X to 3.5X or whatever your goal is. We can get there. And so one thing I will mention is your optimizing in the platform or you're optimizing in Google Ads, you're running your YouTube campaigns in Google Ads. So you're measuring there, you're optimizing there. You're optimizing there, so you need to measure there as well.

Brett:

But consider a little money in and total money out. And I'm about to talk about a topic that's a little bit too big for this event, and we could get super nerdy and it could take three hours and you don't have that kind of time for a virtual event. Attribution. Well, isn't YouTube and Facebook and maybe Google Shopping all taking credit for the same conversion? And the potential answer is, yeah, it's going to happen.

Brett:

So at a very simple level, we have to look at performance in the platform and we have to look at total money in and total money out. And that's how we can determine success. There are other tools, other ways to look at attribution, but at a base level, this is what you got to look at as well. So you need to know your KPIs in platform that translate into the total money in and total money out goal.

Brett:

So maybe you think your goal is a 2X return, but maybe it's like a 2.5 and that's going to get you to the global numbers that you want to be at. Now, let's talk about something. I geek out about this stuff. It's super fun and interesting for me. I'll try to not make this super nerdy. My wife's sometimes, when I'm talking to her and explaining what we did this today on YouTube and I'm explaining some of these concepts, she just looks at me and gets kind of sleepy and dozes off. Hopefully I won't do that for you, but I want to talk about brand lift, lag, and lifetime value.

Brett:

So let's dive in. This will be really helpful for you, I think. So brand lift first. This is a screenshot from an actual client who was doing a lot on YouTube. Now, prior to them starting with us, they were a six figure a month Facebook advertisers. They were doing a lot of volume on Facebook, multi, multi six figures a month on Facebook. This is a screenshot from Google Trends showing the number of people searching for their brand name.

Brett:

Okay. That little arrow, that's when we started YouTube. And we dialed up YouTube pretty fast for them. And you can see search volume for their brand almost doubled. And this was an established brand in the automotive space. And we helped really create some brand lift. So that's powerful because a lot of people will see that YouTube ad and think, "Hmm, that's interesting. I like that product. I like that brand, but I'm not ready to buy right now." And they're going to buy several days later, several weeks later, whatever.

Brett:

But this showed kind of this brand halo effect, brand lift effect for this company. All right. So that's brand lift. We get that. We get that that's going to happen. There are a few ways to measure it. One is by looking in your branded search campaigns and looking at Google Trends and things like that. But one of the other things I want to mention is lag. And so let's talk about the way Google Ads handles when they attribute a conversion.

Brett:

When does the conversion show up in Google Ads? Now, if you have an aversion to being nerdy, and this was like, "Man, I like talking ads. I want to see campaigns." Okay. You don't have to totally understand this, but I think you will. So let kind of use this as a scenario. Let's say that today is day one. So today's day one, a user is served an impression of your YouTube ad. Now, today, the prospect's busy, man. They see the ad, they're a little intrigued, but they move on because they're not quite ready.

Brett:

Day two, all right, now they're seeing it. They're hooked. They've maybe got time. Not only are they hooked with the ad and they watch it, but they click through to the site. But busy, they were doing other things, they don't purchase. Day three, they don't purchase. Day four, nothing, not purchasing. What's happening, then, if you're running these campaigns? You're starting to panic. You're starting to ring your hands a little bit. You're watching Google Ads. You're thinking, "Okay. Is anybody going to buy?"

Brett:

Finally, on day five, the person says, "You know what?" And then they're another impression. They're served to think, you know what? I do want that product. I do want that supplement skincare, product, device, whatever, new microphone, whatever the case may be. Okay. I want it, so buy it. All right. So then on what day does that campaign show up in the conversion column? For which day of campaigns will that conversion tracking show up?

Brett:

This is audience participation part. I can't actually hear you. But when does it show up? It actually shows up on day two. Day two is when the click happened. That's when Google's going to give credit. So click happened on day two. Conversion happened on day five. Credit is given back to the campaign on day two. So we're swimming along here. We're at day four. We're looking back at day two's performance and we're thinking, "Eh, not so great." But we just wait a day or two and the performance on day two looks way better.

Brett:

Let me show you a couple of other visuals to really help this come home for you. This is a view that's available now in Google Ads. So you look at any time window in Google ads and you can drill in and see this data. This is for an actual client. I won't show you who it is or what the vertical is. But looking at a couple of week window or so and Google will tell you, hey, for that window, we expect an additional 130 conversions to come in for the window you're looking at right now for a total of 505 conversions for that window, another way of saying it.

Brett:

You're looking today at this particular moment in time and we're saying only 74% of the conversions are in for that window. So we're looking for the last two weeks and Google's saying, yeah, that's only 74% of what we think is going to be attributed to that window. You wait another two or three weeks, it's going to be at the 90%. 29 days it's going to be at the 99%. We started creating these reports for our clients and they absolutely love them. Super helpful.

Brett:

This is for an actual automotive client. So if you look at their account today, direct conversions from YouTube, 97 conversions. You wait a day and look back at yesterday, in this case, you looked back at that day, 115 conversions. You wait seven days, now that 97 conversion day has now grown to 127. You wait 14 days now, 97 has turned into 129. The reverse is true for CPA. You look at the day of performance, $30. You go back in seven days and look at today, well, it's all the way down to 23. 14 days and it's all the way down to 22.

Brett:

So now maybe we were a little bit outside of our range initially, day of, but you wait a little bit of time and these numbers look fantastic. And think about it, this is the way people shop. It's the way people buy. It's the way you shop. We see an ad. We're intrigued. We don't buy it today. We buy in a few days. But Google gives credit back to when the click happened or when the view happens, depending on how you have view conversions set up. Okay.

Brett:

So as we look at our AMP approach, Accelerated Marketing Portfolios, we talk about these stages of the buying process. We talk about awareness, consideration, purchase, loyalty. Those first two stages, that awareness and consideration, that's prospecting, right? We're reaching new people. We're reaching people that have never been to our site. They've never joined our list. They've never bought our product. So those are prospecting audiences.

Brett:

Below that, at the purchase and the loyalty stage, a lot of that is brand traffic or remarketing traffic. So this is the type of traffic that something else had to trigger it. Something else had to introduce someone to your brand and now you're just sealing the deal. Now you're just closing that initial sale or you're closing that repeat purchase. So this remarketing and branded and the like.

Brett:

So what should the budget breakdown be? This is something that people ask us all the time. And there's not a one-size-fits-all answer here. It does depend on your brand. Let me just give you kind of a breakdown. Typically, if you look at a YouTube budget, whatever you're going to be able to spend on YouTube top of funnel or on YouTube in general, 70% to 85% of that YouTube budget should go to prospecting. That's where YouTube shines. 80% of people that they interact with YouTube on their purchase journey, they do it early in the purchase journey.

Brett:

So 70% to 85% of your total YouTube budget should be on that prospecting stage. And then depending on kind of the way your business works, if you look at your total Google budget, then maybe YouTube is 20% to 50% of that, right? Maybe higher. But 20% to 50% of your total Google budget is allocated to YouTube. Now, what about remarketing? Well, I think you can overspend on remarketing. I think remarketing is very important.

Brett:

If you sell multiple products, loyalty campaigns, cross-sell, upsell, bought X not Y, those campaigns are super important. But we say, hey, about 20%, maybe as low as 15% of your YouTube budget, on up to 30% of your YouTube budgets should be set aside for remarketing. And that's probably going to be about 10% to 15% of your total Google budget. When I say total Google budget, I'm talking search, shopping, display and YouTube, right? So looking at that total budget for the Google ecosystem. Okay?

Brett:

And then another thing to think about is, hey, if our goal is to grow, if our goal is to scale with YouTube, then 10% to 20% of your YouTube budget, it should be spent on experimenting. It should be spent on trying new things and going after new audiences and testing new creatives. You need to set aside some of that budget where you say this budget may fail. This budget may be a complete die or maybe a winner, and it's going to unlock scale for us.

Brett:

So one of things to keep in mind is that for any brand, for your brand, you have dozens, if not hundreds, it's almost always hundreds, of audience combinations to test. So as you launch, or if you work with an agency and as you launch, maybe the first few aren't going to be home runs. We're just looking for wins. We're looking for successes that we can build upon and really scale upon.

Brett:

So have dozens, more likely hundreds of audiences that you can scale with, and also you always have new creatives to test. So we have new prospecting creators we want to test. You want to build a manifesto. We try and outline that in that guide or an explainer plus UGC. Or maybe on the remarketing side, it's more user generated content or a longer explainer or quick reminders. There's more content that you need to test in the process as well.

Brett:

And so one thing we recommend is you should always be testing five ads per ad group, different CTAs and different headlines as part of those ads so you can always be optimizing and growing. And then as a bonus, we'll talk about this because it's a YouTube event. But people will watch your YouTube video and then if they don't buy, one of the next things they might do is search. And so then you want your search ads, your shopping ads to show up.

Brett:

And so one of the things you can do, and this is what we've done for BOOM! by Cindy Joseph, is we'll target people, specifically who've watched a YouTube ad, we'll target them in search and shopping. Just check this out super quick. This is a shopping campaign where we target only people that have viewed a YouTube video but have not purchased yet. $5.78 CPA, about a 863% return on ad spend.

Brett:

You can kind of see how this campaign can really bolster your portfolio performance and help you scale and reach those goals. So we do have Q&A in the chat. We're going to keep kind of moving right along because we have a lot to cover. And I know virtual events, it takes energy to listen. And I appreciate you listening and being so engaged. But do type in questions into the chat.

Brett:

We'll answer that now or we'll get to it very quickly. Or go check out the guide that I've mentioned. Or, hey, if you want to chat, like even if you just want second opinion, if you want to just see how our agency works or bounce some ideas off of us, if you go to the website, click on the 'let's talk' button, fill out that strategy session request form, and we'll be in touch.

Brett:

We'd love to look at your account, potentially do an audit, potentially take a closer look and see how YouTube could work for you. And as I mentioned, we actually handled this soup to nuts. So from creative strategy, building out, shooting new videos, editing existing videos, to audience, to campaign structure. We manage that all. So we'd love to chat with you.

Brett:

But we also want to provide great education. So if you do this yourself or do this with someone else, we want you to win too. We want you to succeed that way as well. And so with that, thank you so much for tuning into this session. But we are just getting started. And so just a really quick transition here, and then we're going to move into a session with my buddy, Kurt Elster, on landing pages that I think you're going to absolutely love. So let's get started and let's get...

Episode 169
:
Joe Valley - Quiet Light

How to Sell Your Business for Top Dollar by Becoming an EXITPreneur - with Author Joe Valley

Several of my successful eComm friends are selling all or a portion of their businesses right now.  It makes sense.  Ecommerce valuations are at an all time high.  Also, when you consider that entrepreneurs make 50% or more of all the money they will EVER make from their business when they sell it - you have to be thinking about when and how you want to sell your business.  

In this episode, I interview my friend and expert M&A advisor, Joe Valley.  Joe is a partner at Quietlight Brokerage, one of the leading online-focused M&A advisory firms in the world.  Before joining the team in 2012, Joe sold his own business through Quiet Light. Since then, he has helped facilitate nearly a half billion in online exits and now is the author of the bestselling book, The EXITpreneur’s Playbook - How to Sell Your Online Business for Top Dollar.

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

  • What is an EXITpreneur and why it pays to think and operate like one
  • Why you should start “training” for an exit now
  • What if someone says - I love my business…I don’t want to sell.  
  • Top mistakes to avoid when selling your business
  • Real life business selling horror stories
  • Plus more!

I do highly recommend Joe’s book. You can get your copy today at EXITpreneur.io and begin to understand the true value of your business - and how to get maximum value for it whenever and however you decide to exit.

Joe Valley

Via LinkedIn

Via EXITpreneur


Quiet Light Brokerage

The EXITpreneur’s Playbook by Joe Valley

Mentioned in this episode:


Gino Wickman

Traction by Gino Wickman

Ezra Firestone

Andrew Youderian

Peter Lang


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, man, I could not be more excited about both the topic and the guests. The topic is extremely relevant to me, although maybe not in an immediately obvious way, which we'll get into in just a minute. But my guest is a friend of mine, guy that I've gotten to know over the last several years. And he's the real deal, and he's an expert in his field.

Brett:

So I'm delighted to welcome to the show today Joe Valley. And Joe, he's a partner at Quiet Light Brokerage, which really if you've ever looked at buying an online business or selling your online business, you've heard of Quiet Light. Everybody talks about Quiet Light Brokerage, but more exciting than that, and more timely than that, Joe just released a new book that's already hit the Best Seller list. And the name of his book is The Exitpreneur's Playbook, How to Sell Your Online Business for Top Dollar. It's received endorsements from the likes of Gino Wickman, author of Traction, which is also a great book, Ezra Firestone, Andrew Youderian. The list goes on and on. I endorse the book, not quite finished with it, but I've dug in, and it's absolutely fantastic. It's not only interesting and enlightening, but it's also extremely well-written. So we're going to talk today about what to think about if you're going to sell your business, all the planning and the things that go into that, or what to do if you're in my boat we're looking to buy some businesses. And so with that, Joe, how you doing man? And welcome to the show.

Joe Valley:

Fantastic, Brett. Thanks for having me, man. I appreciate it.

Brett:

Yeah. Thanks for coming on the show. We go way back. I think we connected at one of Ezra's events, I don't know, maybe three, four years ago.

Joe Valley:

At least, yeah.

Brett:

I'm bad with dates, but it's been a long time. And so Joe is just the guy who everybody like looks up to, wants to have a beer with, wants talk to, just really trust your insights. And so, Joe, I got to ask, because I know this process is painful, I know from being an author, not of a book, but of other things, of guides and of courses and things that I've done, that's hard work, man, like blood, sweat, tears, sleepless nights. So why write a book?

Joe Valley:

It had to be done, man. It had to be done. And I had so much information, or misinformation, out there about business valuations in the online space, what the process is like, and all this stuff. Historically, it's just been information from investment banking and private equity firms, but never from somebody who's sort of been an entrepreneur first and foremost, like myself. I sold my last e-commerce business in 2010. Since then joined Quiet Light, touched about a half a billion. And I can't believe I'm doing that with a B now, bruh, but I have billion-

Brett:

Amazing.

Joe Valley:

In online exits over the last decade. And I just had to write it. I've had 5,000 plus one-on-one conversations with entrepreneurs, and you know there's a lot more out there than that.

Brett:

Absolutely.

Joe Valley:

And I can't reach them all, and I can't talk to them all. And even when I talk to them one-on-one, it's a limiting conversation. So I had to put everything I knew and everything the team knows and put it in the book so that it's, as Sam says, you mentioned Sam says, "It's the definitive guide to selling an online business."

Brett:

Yeah. I love it. And what's so cool about it is, yeah, you can only have so many conversations, but there's so much misinformation or lack of information on how to get your online business ready to sell and how to do a proper valuation and how to train for exit, which we'll talk about in a minute. And I know from our perspective, as I look at creating content, and I create a lot of YouTube ad courses or Google ad courses or other things, my thought is hey, I want to help people, but also then if somebody who wants to work with us and they've already gone through the training, they're ready, they understand game and it's smooth and it's easier from that standpoint. Yeah, so the book is fantastic. Kudos to you. I was telling you before we hit record, it's not just informative, and I've read a lot of business books that are informative. It's well-written. It's an enjoyable read. And I like the written word, so I'm a bit judgy when it comes to things like that. And you did a fantastic job.

Joe Valley:

I appreciate that because writing a book about selling a business could be pretty damn dry. There could be details in there that could just make your eyes bleed. And that was the biggest challenge in writing it, was making sure that it was fun and interesting and something you'd want to come back to because you keep getting such good nuggets out of it.

Brett:

Yeah, yeah. Yeah, absolutely.

Joe Valley:

Thanks for that.

Brett:

Yeah, absolutely. So let's dig in just a little bit. What is an exitpreneur?

Joe Valley:

Well, that's a good question. I guess I had to define it, and I think did somewhere in the book. An entrepreneur is what we all are. First we just bootstrap and say the heck with it, man. I got to work for myself, and I'm going to go ahead and launch this business because I want a different lifestyle than going to work and working for somebody else every single day. An exitpreneur is that, but they also understand that the greatest value that they get out of their business monetarily is actually when they sell it. And so they've always got a mind towards selling the business eventually. And look, let's not pretend that we're not all going to exit our business someday. It may not be... For you, you love what you do. You might be doing this for another 30 years or 50. Who knows? But you're going to exit it someday.

Brett:

Yeah, at some point, right?

Joe Valley:

At some point. So you want to put it in the position of being ready for that well in advance of when you decide to do that so that in your situation if you're going to pass it onto your kids someday, that they're inheriting something that is a well-oiled machine and growing and not full of problems, and if you're going to sell it elsewhere, to somebody else, that it's got an incredible value so then it will help you and your family on your next adventure as well.

Brett:

Yeah, that's fantastic. And right, and I'm in a place now where I love running OMG Commerce. I enjoy the industry and the business and the team. And so yeah, no plans to sell, but you still got to get ready. And I remember one of the things you and I talked about before is even if you're not selling for a decade, preparing your business for sale now will make it a better business. It's just going to run better, and you're going to get more from it.

Joe Valley:

That's the absolute truth. That's so true. Well, you understand what the current value of your business is and what makes it more valuable. And we're not talking more clients and more revenue. We're talking about the other aspects of it that really blow up the value. Those really tough days that we all have as entrepreneurs get a lot easier because you know you're building towards something. So I think it's really important. Whether you're ready to sell or think you might sell or think you may never sell, I think it's really important to go ahead and put an exit goal out there and say look, in 10 years I want to exit for X amount of dollars. And then the next thing is you've got to understand where you are today so you know how close or far you are from that, because as our buddy... You're friends with Mike Jackness. I think yo know Mike, right?

Brett:

Yeah, I know Mike. Mike's a great guy.

Joe Valley:

Right, so Mike said to me, "Look, Joe, I knew what to do, and I was just going to get to it some day. And then I woke up, and some day was here." And by then it was too late to exit the way that he wanted to. He had four brands in one account, wanted to sell them all, wasn't able to sell all of them. So preparing for it, or as we say, training for it... Because nobody wants to do exit planning. That's just boring as hell... training for it is what the book is doing and getting you ready for.

Brett:

Yeah, it sounds like doing your taxes or something like that.

Joe Valley:

It's awful.

Brett:

Nobody wants to do their taxes, right?

Joe Valley:

It's awful.

Brett:

So what does that look like, then? What does it look like to train for exit?

Joe Valley:

Well, I had to put it all in writing so it's something that you can absorb over time, because if you're going to go out and run a marathon, Brett, most people are not going to be able to just go out and go to the gym or get out on the road and start running and just do it without any plan or focus. So the first thing we're doing is helping you understand what's going to be left over after the sale. And it's ballpark numbers because it always changes, changes every four to eight years with the political environment, because we're talking about capital gains taxes here.

Brett:

Yeah, yeah, exactly.

Joe Valley:

You may be paying more or less. You're not paying personal income taxes. So when you do the math on that potential exit, you got to figure out what's left over. So we're doing a little bit of that. So you're setting an exit goal, and then you're figuring out where you are today. And that exit goal, you can say 10 million bucks, but really it's what are you keeping is what the objective is. So we're talking about that. And then we're going through absolutely every aspect of the preparation and sale of a business, from valuation ranges to what buyers want to what scares the hell out of them to LOIs to deal structures, negotiating with aggregators. What the hell is a stability payment? Look it up. You're never going to find it. Now it's in the book. They made that up. All these different things that-

Brett:

that was made up by the aggregators?

Joe Valley:

Yes, made up by the aggregators. It's really an earn-out.

Brett:

So quick side note. What is a stability payment?

Joe Valley:

Stability payment is an earn-out, if you really want to just call it what it is, but they do earn us... And they do the stability payments. They call it a stability payment because FBA businesses are so risky that we're worried it's going to fall off a cliff after closing, so therefore, we want to hold back 10% in escrow, and we'll pay you that in 12 months if we're within 90% of the revenue at closing. It's pretty smart on their part. It lets them keep more of their money and buy more businesses.

Brett:

Yeah, yeah. Very interesting.

Joe Valley:

So just like if you are going to go run that marathon or just a 5K... Let's start with that.

Brett:

Okay, that sounds much more attainable. Thank you.

Joe Valley:

Right. I think you and I could both get up and go run a 5K tomorrow morning.

Brett:

We could survive it, yeah, yeah.

Joe Valley:

Exactly. We'd survive it. It would hurt a little bit, and then for the next few days it would hurt a lot more because we'd be recovering, right?

Brett:

Exactly.

Joe Valley:

It's the same thing. If you train for it, you're going to do well, and the recovery is going to be nothing. Same thing with a business. When you get prepared and you train for it, when you were in the process of exiting, it's going to be a whole lot smoother, a whole lot easier. You're going to get more money, a better deal structure. And then when it's all done, you actually will sleep at night, and you'll sleep better, as opposed to having lots of pain and a terrible deal structure where you're worried if you're going to get paid on the back end and all that sort of stuff.

Brett:

You'll experience the business equivalent of the runner's high. You'll be basking in the glow of the success.

Joe Valley:

I can't tell you if I've ever had a runner's high, to be honest with you.

Brett:

It's been a quick minute for me. I did run cross country, not well. I ran cross country in high school because my basketball coach made me. And so yeah, but I-

Joe Valley:

I was number five.

Brett:

What's that?

Joe Valley:

I was number five on the cross country team. And my kids hate the story of-

Brett:

Dude, that's intense.

Joe Valley:

No, no, no, no, no. I was the fifth runner on the team and only the top five score, Brett. Let's get this clear. I was not a good runner. And the coach... I was running too slow one day, and during a meet, he was like, "Valley, we need a number five." And I picked up my hands, and I started running faster, and I became number five.

Brett:

I'm number five.

Joe Valley:

And I've told my kids. My kids hate that story, and everybody else here does now too. But anyway, yeah, I'm not a runner, but you got to train.

Brett:

You too could be number five. This is awesome. So let's talk about what are some of the mistakes that are made? So let's take someone who's the opposite of an exitpreneur, because you've experienced lots of horror stories, sadly enough, tales of woe, which you've experienced firsthand as an advisor, but what are some of the common mistakes people make that you're trying to help them avoid?

Joe Valley:

Yeah. A lot of these are detailed in the book. And just for the record, I do change the names, yeah, and I use first names only. Look, the first one is really easy. People are not using proper accounting software. They're just winging it. They bootstrap the business. They're thinking about themselves. They're pulling enough out to get by, to grow, to buy a boat, whatever it is they want, but they're not using QuickBooks or Xero. And they're doing the accounting themselves. For the cost of a really, really nice car lease, you can get an e-commerce bookkeeper to do all that ugly stuff for you.. And that's what you should be doing. That's what you should be doing.

Brett:

Skip the car. Get the-

Joe Valley:

Skip the car. Exactly, exactly. And actually, you know what? If you get an e-commerce bookkeeper, you'll probably be able to afford that car a lot more quickly.

Brett:

Yeah, that's true.

Joe Valley:

So that's the number one mistake. And they're doing cash accounting instead of accrual. So it's impossible to initially at a glance calculate their discretionary earnings, because you got to take the time to flip it to accrual instead of cash. And that's true for content and SAS businesses as well as e-commerce physical product businesses.

Brett:

So in order to get ready to sell, you need that accrual-based accounting system?

Joe Valley:

Yeah.

Brett:

Yeah. So just to clarify, does that need to be the way someone files their taxes and does their taxes? Or it's really just they need to be able to have those reports, those-

Joe Valley:

You know I fell asleep in accounting class. I'm not going to tell you how to file your taxes. I'm pretty good at it now though.

Brett:

I did too. That was almost one of the only classes I fell asleep in in college. jazz class, astronomy, but I slept regularly in accounting class, yeah.

Joe Valley:

I think you're supposed to fall asleep in jazz class, just for the record.

Brett:

Well, yeah, and so quick side story. We had this professor who was great, passionate about jazz. And I actually liked after the class too, but we were in an auditorium. Lights were low. Jazz is playing. How can you stay awake?

Joe Valley:

Exactly. Yeah, yeah. So your tax advisor's going to do something differently.

Brett:

So that part doesn't matter. It's just can you produce accrual- based accounting reports?

Joe Valley:

Right. And look, most people... And I'm going to say most now is only probably 51%. It used to be 90%... people are growing up in this industry and get getting much smarter and much better and much more sophisticated. But half the people can't. So when I get a P&L and it's in cash and they have not done accrual accounting inside of QuickBooks or Xero, you just don't push the accrual button and have it flip. That's not the way it works. But it can be done after it's exported to Excel, as long as you've got beginning and ending inventory by month, quarter, or year, preferably by month. So beginning and ending inventory is ideal for that.

Brett:

Got it. Got it. Okay.

Joe Valley:

We got into the weeds there, folks. Sorry about that.

Brett:

Yeah. It's okay. Hey, we'll stay high level. Occasionally we'll we'll swoop-

Joe Valley:

Dip down.

Brett:

And get really into detail.

Joe Valley:

Okay. As long as we get our snorkel on. We got to breathe.

Brett:

Exactly. So what other big mistakes do you see people making that you highlight in the book?

Joe Valley:

They wake up and they just say, "I'm done, man. This is too much risk. I got to move on." And then they call me, and they say, "Hey, I want to sell. Hook me up."

Brett:

And you're like, "What?"

Joe Valley:

"Really? No, we can. What are you looking for? Ah, yeah, it's not worth that." So they wait until they're emotionally exhausted, worn out, tired, stressed, and just have to move on to sell instead of getting trained for it, planning for it a little bit. Six, 12 months out and thinking, you know what? I'm going to have a conversation with an advisor. I'm going to see what my business is worth today, and I'm going to march towards a goal. And then when you do that, you're happier, you're better, Your business is stronger, and you have a better exit in the future. But if you're not ready in 12 months, just move the goalpost. That's all you got to do.

Brett:

Just forget the business. You've been making these changes. It's probably going to be healthier, so-

Joe Valley:

You're going to love the business more too. I see that all the time. When they go through the process, they're ready. We go through the entire process, go through all the weaknesses and strengths of the businesses and get it prepared to sell and ready to list, and then I hear, "Joe, you know what? I feel like I'm leaving so much money on the table. I should've done X, Y, and Z, like you talked about. I'm going to hold it, and I'm going to come back in a year." And I think Good for you. Smartest move ever.

Brett:

Yeah, absolutely. And do you ever find like when someone... So somebody maybe comes to you, and they're a little burned out or maybe on the borderline of losing the passion for the business, they've started to implement some of the things that you advise them on, some of the strategies, do you ever find that that almost rekindles they're enthusiasm?

Joe Valley:

Absolutely.

Brett:

And then they're like, "Hey, maybe I should hold this for another year or so and get a bigger, a multiple."

Joe Valley:

Absolutely. I was at a e-commerce fuel event years ago and-

Brett:

Shout out to Andrew Youderian?

Joe Valley:

Shout out to Andrew. So I was sitting down with somebody. We talked about the deal, the deal structure. We got it all under LOI, going through due diligence. And this individual decided to be really difficult in due diligence because this individual... You notice I'm not saying he or she... decided they didn't want to sell because they were so much more excited about the business because of what they learned. And this was five or six years ago. That individual still owns the business today, and it's killing it. So it was a good decision for that person. And they've learned a lot. Eventually, that person just moved the goalpost much further down the line, but it's still in view.

Brett:

There's a really interesting concept. Do you know Peter Lang, by chance?

Joe Valley:

I know the name. I don't know him personally.

Brett:

Uhuru Network, I believe. Anyways, he was referred to me by a friend of mine, Tom Shipley, but Peter does a lot of teaching and training for people that want to acquire businesses. So he calls it systematic or programmatic M&A. And one of the things he talks about, which I really like this phrasing, he says... I don't know if it's originally him or not, but he said, "You always hear people talk about do you want to work in your business, work in it or work on it?" And so people talking about, "Hey, you don't get stuck in it. Work on it." And he said, "Really, what I think you should do is work above it, work above it like an investor. Think like an investor would think." And I thought that's a pretty interesting way to look at it. And if you look at your business like an investor would, you remove some of the emotion and you can begin to look at it objectively and say okay, I still love parts of my business. I can't fully detach the emotion from my business, but I'm seeing it and thinking about it now like an investor would. And I think in some ways that makes the game more fun for you now, but it also prepares you for that exit.

Joe Valley:

Yeah, I love that. I thought you were just going to stop with working on your business, not in your business. And I'd be like yeah, I've heard that. But now I love that. Think about it-

Brett:

investor. That's good-

Joe Valley:

Go above. I like Peter Lang. I need an intro.

Brett:

I will make that happen. I'll make that happen for sure. Cool. So then I want to talk about valuations for a minute. And you know this, and I mentioned this maybe on the podcast a couple of times, I know I have, we're looking to buy some businesses. I'm on the other side. I want to acquire some businesses potentially. But the valuation game is tricky. That's the thing where the seller thinks the valuation is one thing. The buyer thinks that it's worth another thing. What are some common valuation mistakes that are made? And kind of what are some tips on proper valuations?

Joe Valley:

Yeah. So for buyers... I wrote this book for sellers, but if buyers read and absorb the material in this book and they go out and they find a business on their own, they're probably going to find some pretty serious, what I call ignorance discounts, meaning the seller didn't do a proper job in calculating seller's discretionary earnings. These businesses are listed as a multiple of SDE, seller's discretionary earnings. And the biggest mistake that sellers make is they don't properly calculate that. The number one thing that, aside from being truly underinformed, misinformed... Ignorance discount is not the proper phrase, but is when somebody lists their... It's a rapidly growing e-commerce business, and they list it for sale using cash accounting. That's going to depress the age out of discretionary earnings.

Joe Valley:

And if you're a buyer and you can find a business like that listed by somebody individually, you're going to get some pretty serious instant equity, because discretionary earnings is probably a heck of a lot higher. The other one, Brett, that so many people don't do when they list the business on their own or with an inexperienced advisor is if the owner of that business is using a cash back credit card, and they're not having it put on their P&L, which so many don't, they're like that's a nice perk. I'm going to take that. And it's sliding over, or they take the rewards... We get the rewards here... that's an owner benefit. And that goes to the bottom line. If it's not in the P&L, you can put it in the add back schedule. So if you're getting a hundred thousand reward points every month, that's a thousand bucks a month? Or is that 10,000? Yeah, it's 1% on American Express.

Brett:

Yeah, it's thousand, yeah.

Joe Valley:

So if you get 12,000 bucks added back just because of converted reward points, it's black and white, math and logic. It's no trickery. It is what it is. It's an owner benefit. And if you're at a four-time multiple, a three-time multiple, it's $36,000 to $48,000 added onto the list price of the business. So as a buyer, if you're looking at a P&L, look for cash back or converted reward points. If it's not there, find out if they're using it. If they're spending money on advertising, odds are they're using their credit card. And then that credit card has some points. So that's instant equity that I see most people when they sell on their own, they give it away. They give it away.

Brett:

Yeah, that's awesome.

Joe Valley:

You know what's tricky... I don't want to get too far into the weeds here, so stop me, but one of the things that you can look for as a buyer, or make sure you don't do as a seller, if you've renegotiated your cost of goods sold in the last 12 months, let's say six months ago, and your cost of goods sold went down by, let's do simple math, a dollar a unit, and you sell 10,000 units a month every single month, you've got six months where that new price, that lower price, is not on the books. That benefit is going to carry forward to the new owner of the business. So you need to take 10,000 units a month times that dollar. That's a $10,000 adjustment or an add back, because that's going to carry forward, that reduction. So it's 60,000 bucks right there that should in the add back schedule. 60 times, again, that's $360,000, $480,000 legitimately added to the list price of your business. You got to look for that. And as a buyer, you want to look for the opposite. You always-

Brett:

What are some add backs that are likely missed, or some of that carry forward that was potentially missed by the seller?

Joe Valley:

Yeah. Well, you always want to ask, I would say as a buyer have your cost of goods sold gone up or down in the last 12 months? And you really try to find out if they went up, because if they went up, you've got to make an adjustment too.

Brett:

Yep, yep. Super, super interesting. That's great. And what have you seen... So you mentioned aggregators for a little bit. I have some friends that work for aggregators, and it's really an interesting thing in the space right now, not that consolidation is a new thing by any means, but there has been definitely a rise in aggregators in recent years. In fact, I just recorded a podcast the other day with an aggregator talking about the rise of aggregators, but what have they done? So your and others, what have they done to valuations of e-commerce businesses? Have they shifted the landscape at all?

Joe Valley:

Absolutely. No question about it. And they're so well known, and they're getting so much press that FBA business owners are realizing, going, "I can sell this thing." So I remember being at an event maybe six years ago when I had a little booklet. Now I have a real book, but my little booklet was called 10 Steps to Selling your Amazon Business. And the person that was putting on the event got up on stage, and he talked about the survey that he did with his group. And it was like 80% weren't even selling on Amazon. They were so proud. They were Shopify and WooCommerce sellers. And who needs this Amazon stuff? Well, he did it again last year, and it was just the opposite. 80% of them are selling on Amazon. That's where most of their revenue comes from. Now six years ago, the the perceived risk, I should say, of buying an Amazon business was incredibly high. So therefore, the multiples were lower. Today people that are a lot smarter than you and I, that have raised billions of dollars, have proved that it's not as risky as you think. And the multiples are climbing because of that, and because of the competition among them, the multiples are climbing too.

Joe Valley:

So it's a great opportunity to sell an FBA business, because these aggregators are fighting tooth and nail over each other. Brett, we've had an average of four and a half offers on every listing year to date.

Brett:

Wow.

Joe Valley:

Every one of them. 62% have gone at or above asking price because of the competition-

Brett:

That's crazy.

Joe Valley:

When it's an FBA business among the aggregators.

Brett:

Yeah. But it makes sense a lot of these areas have raised $400, $600 million to be investing in other businesses. And they can't just have that cash sitting there. They've got to go acquire some stuff to create the return. And so that, yeah, maybe they're going to pay a higher multiple than would've been expected a few years ago.

Joe Valley:

Yeah. They don't like to. When first started out, they were buying them at two times at best. And now Brad just put one under LOI yesterday. I think it was 5.4 before inventory, like a 6.3 with inventory.

Brett:

And this was an FBA-only business? Or was-

Joe Valley:

Yeah, it was, well, I call it FBA business when it is 85% FBA. Yeah, so, yeah. Yeah, and it was a substantial business. The larger the business is, the lower the risk, therefore, the higher the multiple. If you've got an FBA business doing $100 thousand in revenue, I'm sorry, you're not going to get that five and a half time multiple. But if you're doing a million and a half in discretionary earnings and you're growing like crazy and it's fully transferable and all these other things, it's possible. It's possible.

Brett:

So once you exceed the three, three and a half times multiple, it's because you're diversified. It's because you've got larger SDE, which is perceived as more valuable, and because you've got a growth trajectory as well, I would assume.

Joe Valley:

Yeah. It's all because the growth, the transferability of the business, the documentation, it's all great, great branding, maybe some recurring revenue. Buyers love recurring revenue. Whether it's B2B where they're constantly buying your product or supplements of some sort, it's trackable, and it's just money that shows up in your account every month.

Brett:

Yeah, Which is beautiful for sure. So I think everybody gets hung up on multiple. They want to-

Joe Valley:

Way too much.

Brett:

They want to brag about the multiple. They want to talk about the multiple. They get all upset if they don't get offered the multiple. But there's more that goes into that, right? I even heard a savvy buyer say one time, "I don't care what the multiple is. If they want to hire multiple, I'll just figure someone else out to make the deal work in my favor." So when I heard that, I was like all right, well, there's something there. It's almost like the car dealers like, "Just tell me how you want your monthly payment to be, and I'll figure out a way to make it work So anyway, what needs to be considered other than just multiple?

Joe Valley:

You want to look at... We're talking about a buyer or from a seller standpoint?

Brett:

From a seller standpoint, yes.

Joe Valley:

From a seller standpoint. So we've got a couple of chapters, probably three chapters, 13, 11, and 15, I think they are, on negotiating with the aggregators, what they're looking for and how to work with them. They're all good people. And I say that-

Brett:

Yeah, yeah, yeah.

Joe Valley:

Most of them are really good people.

Brett:

Good people, yeah.

Joe Valley:

They're smart.

Brett:

but good people.

Joe Valley:

Yeah, yeah. Look, they're not bad people. They've managed to raise $500 million, they're probably pretty likable.

Brett:

pretty smart.

Joe Valley:

So we go into the different types of deal structures. So there's a total of six of them. Or really it's 11 because cash is one, and then it could be cash plus cash plus a stability payment, cash plus the seller note, cash plus a working capital peg, inventory seller notes and all these different things. So understanding the different types of deal structures that you could possibly have as a seller. Most sellers want to say no to anything but all cash, but oftentimes having an or seller note or an equity role can give you some peace of mind and some income after the sale. Maybe if this exit isn't enough for you to be done and stop working, you still need some income after the sale. So rather than take a smaller all cash amount, you may be able to get more for the business.

Joe Valley:

Like the one I just mentioned. The cash wasn't 5.8, or whatever the number was. It was cash and then an earn out and a consulting a bunch of other stuff. And it just gives peace of mind after the sale. But again, most people want to say no because they don't know who the buyer is. An uninformed, an ignorant, whatever kind of mind, always says no. Once you get to know your buyer, you may say yes, and it may be in your benefit to say yes, but you've got to understand all of these different deal structures before you want to say yes to any of that. And of course, you got to have a very good attorney to make sure that you are locked in and secured and that you will get paid. But we talk about that, and then we talk about how to properly negotiate with the person that's buying your business. You want to work with good people, right, Brett?

Brett:

Yeah, absolutely.

Joe Valley:

As do I. This is not Wall Street, second place is for losers or whatever.

Brett:

Yeah, not cut throat. It's not like a winner and a loser. You're trying to come to some agreement where it's-

Joe Valley:

It's a win-win. It's got to be a win-win. What I talk about in the book and what I've learned over the years through trials and tribulations, my own successes and failures, is that you don't just build a great business for yourself. You got to have the mindset of building a great business for great customers and a great buyer to eventually take over at a great price. And that great price has got to be for both of you obviously. there's a lot of greats in there. There are no losers in it. So you've got to shift your mindset a little bit and think of your buyer and giving them something that's amazing. And they're going to pay you a higher price for that if you give them something amazing. If you give them a house of cards, they're going to figure it out.

Brett:

Yeah, yeah. So in looking at these deal structures... And this is kind of top of mind because you and I have a couple of mutual friends who have recently done partial exits, so they've equity. They've taken some chips off the table. They sort of sold a portion of their business. They're retaining some equity. They're still working in the business for a period of years, however many that is, two, five, whatever. And then they're going to exit again. Why are deals like that potentially pretty attractive and maybe worth thinking about right now?

Joe Valley:

Yeah, they can be very attractive. They're unattractive if you need to get all of your chips off the table, but if you get 75% of your chips off the table and roll the dice on the other 25%, it could be a much higher exit for you. I think what we're going to see with some of the aggregators, and whether it's an FBA aggregator, somebody rolling out just Shopify sites or whatever it might be, is that they're going to try to do more equity roles. And so if you've got, for example, I'm going to try to do simple math here.

Brett:

And the reason for that is because they want to retain that founder, that visionary, that operator to some of the work, right?

Joe Valley:

Strangely enough, no. They just want to get the deal done. That's what they're fighting for now. Most of the time, they've got the in-house expertise and staff.

Brett:

Got it. Got it. Okay.

Joe Valley:

doesn't need me...they don't need me to operate it. They want me to go away, but if-

Brett:

They want to get a deal done.

Joe Valley:

They want to get a deal done. So let's just simple math though. If I've got 400,000 in discretionary earnings, and let's just say that I'm going to sell it at three times for simple math. Folks, I'm not telling you folks that your business is worth three times here. I'm just giving you an example.

Brett:

Easy math.

Joe Valley:

Easy math. So that's 1.2 million. But if I sell 75% of it, what is that? 85? Now it's not easy math, right?

Brett:

Yeah, it's-

Joe Valley:

I'm going to hold back a hundred thousand of it, 25%. I'm selling 300,000 of it, so I'm getting 900,000. I'm rolling the hundred thousand into the new co that is a bigger company, that's worth a higher multiple. So I'm getting a 300... Sorry... getting a three time multiple on my 300,000. But the moment my hundred thousand goes into the new co, that company's probably worth 10 to 20 times on their exit, like, right?

Brett:

Mm-hmm (affirmative).

Joe Valley:

20 times easily, right?

Brett:

Yeah, yeah, yeah.

Joe Valley:

So my 100,000 now becomes worth a million. It's worth on paper more than my 300,000. That's the benefit of an equity role. The problem most entrepreneurs have with it is the concept of I have to go to work for someone? I don't want a job. And we just saw an-

Brett:

And a lot of entrepreneurs, let's face it, are unemployable.

Joe Valley:

Totally unemployable. I'm unemployable. There's no question about it. But what you can do is just become a strategic advisor to the company, which just means you're going to sit in on meetings about maybe new product launches and share your ideas on where this is going to go. And so you're having a quarterly meeting, and that's about it. That allows the aggregator to put out less of their cash and let you participate in the upside, and they know that they can draw on your expertise and your experience, but you're not working for them. You're just becoming an advisor for them. So I think that is probably something we're going to see quite a bit more of. And if you find the right buyer for your business, whether it's an aggregator or somebody else that you trust, I think it could be a really excellent-

Brett:

could mean a higher multiple. And it's just pretty interesting. And that is another one of those win-win, right, where the aggregator or the buyer gets to put out a little less cash?

Joe Valley:

Yes.

Brett:

They're allowing you to participate in the upside, but it also allows them to win the deals. So, yeah, it totally makes sense. But I love that you outlined this in the book. And what'd you say? Six, seven deal structures?

Joe Valley:

Yeah, I think there's six total deal structures in the book, but when you add cash to each of them, there's now 11, because it can be cash, or it can be cash plus this, cash plus that, or cash plus five of them. It can get pretty complicated.

Brett:

And thousands of different ways to do each one of them six categories of deals.

Joe Valley:

Right, right. exactly.

Brett:

Awesome. Let's just do a couple of quick things here because we're about out of time, but other tips, other little bits of advice for sellers? What should they be doing? Thinking? Now, other than buying a book of exitpreneurs, which I highly recommend, get it on Kindle, hard copy, whatever, what other pieces of advice would you give?

Joe Valley:

Yeah, it's a good question. I would say that you really want to figure out your own level of incompetence, and you want to figure that out pretty quickly.

Brett:

Got to be self-aware, right?

Joe Valley:

Yeah. You got to be, just because we're entrepreneurs. We have an affliction. We think we can do anything. I can do that.

Brett:

And that mindset, that spirit is valuable.

Joe Valley:

It is.

Brett:

But not always. You got to be aware-

Joe Valley:

Not always. So you may be able to get your business to 10 or 20 million, but can you get it to a hundred million? Are you equipped to bring on a staff of 35 and go overseas and work with an overseas manufacturing company once a quarter or once a month? Are you emotionally equipped for that? And do you have the ability to manage a business of that level? Or do you have an interest? Can you? Probably. Should you?

Brett:

Would you like the life that that creates? And you might not.

Joe Valley:

Exactly.

Brett:

Be self-aware.

Joe Valley:

So really be self-aware. Figure out the kind of life that you want to live. Make sure you don't promote yourself to your own level of incompetence, because when you do, your business will suffer, and then the value will go down.

Brett:

Yeah, yeah. It's tough. Awesome stuff. Joe, where can people find the book or connect with you?

Joe Valley:

Yeah, yeah, yeah. I appreciate that. Exitpreneur.io. Exit preneur.io, or just do a search for it on Amazon, exitpreneur, or The Exitpreneur's Playbook. They can find me on LinkedIn. They can hit me up at joe@exitpreneur.io. I keep saying.com, but it's IO. Or at Quiet Light, joe@quietlight.com.

Brett:

Yep. And so huge recommendation for the book. Also recommendation for Quiet Light if you're looking to sell your business. And so just a quick point for Quiet Light as well, Joe. If someone's thinking about it, considering it, at what stage should someone reach out to Quiet Light? An e-commerce store owner, when should they reach out to you?

Joe Valley:

You know what? If they're at least 12 months old, I think it's time. It's time. And the key thing about Quiet Light, just to distinguish who we are and what we do, everyone on the team has built, bought, or sold their own online business. They're all very successful entrepreneurs first and foremost, and then they became advisers. Brad, who you know, rolled up-

Brett:

Yeah, Brad, I know him.

Joe Valley:

With 30 content sites, so the private equity firm. Amanda's been on the cover of Time Magazine for goodness sake-

Brett:

Crazy.

Joe Valley:

For her Pearl importing business. I am a slacker compared to some of the guys on the team.

Brett:

But you got the book, man. You got the book. You can always-

Joe Valley:

I had to write it just to keep up with them.

Brett:

That's awesome, man. All right, Joe, really appreciate you taking the time, man. This was a ton of fun, very informative, and glad we did it.

Joe Valley:

Thanks, man. I appreciate having me on.

Brett:

Yeah, absolutely. And as always, I appreciate you tuning in, and I'd love to hear from you. Give us some feedback on the show. What would you like to hear more of? What topics should we cover? And if you haven't already, I would absolutely love that review on iTunes. And with that, until next time, thank you for listening.

Episode 168
:
Sheila Secrest, Derek Casas, Heidi Sturrock, Greg Maycock, Matt Slaymaker, Bill Cover - OMG Panel

YouTube Expert Panel - Your Top YouTube Ads Questions Answers

In this episode, I’m bringing you insights from some of the best and brightest minds at OMG Commerce.

Nearly every day we have eCommerce companies reaching out to us wanting to know how to grow their eCommerce brands using YouTube ads.  YouTube ads are both exciting and mysterious to most store owners.  

In this episode, I’m bringing you insights from some of the best and brightest minds at OMG Commerce. This is the audio recording from a recent YouTube ads expert panel that I moderated.  This was a really fun panel for me because it was made up entirely of my team.  I brought in 6 of our top YouTube ad specialists from team OMG to answer your burning YouTube questions.  I think you’ll really learn a lot and enjoy this format.  Here’s a look at the questions we dive into:

  • What are the best YouTube audiences to launch with and what are the best audiences to SCALE with?
  • How are YouTube ads different from Facebook and IG ads and different from ads on other platforms?
  • How long does it take to start reaching your CPA or CAC goals?
  • What kind of scale is possible with YouTube ads
  • When things go wrong on YouTube - what’s usually the cause? 
  • How important is production value to the success of your campaigns
  • What new YouTube features are you most excited about?

Sheila Secrest

Derek Casas

Heidi Sturrock

Greg Maycock

Bill Cover

Matt Slaymaker


Mentioned in this episode: 

Kurt Elster

Brett:

Well, hello, and welcome to another edition of the eCommerce Revolution Podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today you get to hear from not one, not two, not three, but six OMG Commerce experts and myself, so I guess that makes seven. But today we're doing a replay of a recent YouTube ads panel, an expert panel with six of our brightest specialists and strategists from here at OMG Commerce plus myself. So I'm grilling this crew with questions about audiences, best audiences to start with, best audiences to scale with. We talk about the differences between ads on Facebook and ads on YouTube. We talk about what should you expect as you launch campaigns on YouTube, when should we get our CPAs or our customer acquisition cost really dialed in and all kinds of other burning questions that I know a lot of you have when it comes to YouTube ads. We answer them in this expert panel, so I hope you enjoy this as much as I enjoyed moderating this panel. So check it out, the OMG Commerce YouTube ads expert panel.

Brett:

This episode of the eCommerce Revolution 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's Sponsored 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 a newly updated Google Shopping guide plus more. Check it all out at omgcommerce.com and click on guides under resources. Now, back to the show.

Brett:

All right. Well, I know this session is possibly the whole reason you attended this event. You want to hear from the experts. You want to hear from those that are behind the scenes, managing campaigns day in and day out. So I've assembled a dream team here. This is the OMG Commerce dream team. This is the team behind some of our biggest wins, some of our fastest scaling accounts. These are the guys and gals managing things and making dreams come true on YouTube. So I'm going to do quick intros and then we're going to dive into the most asked questions we get all the time from prospective clients and clients we're working with and just people we know that are interested about YouTube ads. These are the hot questions. We're going to dive into them in a minute. But, first, I'm going to do quick intros so you know who you're hearing from and who you're learning from. So, first, I'm going to start at the bottom of my screen. Sheila Secrest. What's up, Sheila?

Sheila:

Hey.

Brett:

And so no relation to Ryan Seacrest, but Sheila is nearly as charismatic and she's way better at YouTube ads than Ryan Seacrest. But she's working with some of our fastest-growing accounts, been with OMG for almost five years. She's a rockstar, got good insights. She's scrappy, and really excited to have her on the panel. Going to move up from there, and Derek Casas. What's up, Derek?

Derek:

Hey. How's it going?

Brett:

You've got almost a glow, angelic almost. Your background is bright white light. Derek also is into photography, so he's got a leg up. He's got a really cool set-up, a nice camera, and all that. But Derek has been working in digital advertising now for some huge brands across the US and Latin America for eight years. He's managing some of our top YouTube ad spenders. Derek and I work together a lot, and so, Derek, really excited to have you on the panel. In the middle, in the middle of all of this, is Heidi Sturrock. Heidi, what's up? How are you?

Heidi:

Hi, everyone. Good, thank you.

Brett:

So, believe it or not, Heidi was the first, the very first, Google Ads specialist at OMG Commerce. We have not run her off yet. And that was a solid 11 years ago, 10 years ago? I don't know. That's an eternity. I don't know.

Heidi:

Yeah, I think it actually might be going on 12. We might be going on 12 years, yeah.

Brett:

12, yeah. So I'll go with that. But Heidi knows Google Ads inside and out. She's helped us recruit other great people to OMG. Really, Heidi's just helped with the formation of who OMG is on the Google Ads side. So, Heidi, glad you're here. Thanks for taking the time, really appreciate it. Next to Heidi is Greg G-Money Maycock. What's up, Greg?

Greg:

Hi. How you doing?

Brett:

Greg is our lead technical strategist. Greg knows the YouTube algorithm. Greg knows Google ad campaigns and YouTube inside and out. Whenever we're scaling a huge account on YouTube, we want Greg's input, and so you'll learn very quickly Greg is very, very smart. He's also an entrepreneur. He's owned businesses. He's worked in the travel industry. He's got a really wide breadth of experience. So, Greg, thanks for coming on the panel. Then directly above Greg is Bill Cover, and Bill is specialist turned strategist. And I don't know, Bill. First of all, you look good. I love the beard. Honestly, we're-

Bill:

Thanks. I tried to dress up for you.

Brett:

.. But I don't know, man, something about that outfit just doesn't feel quite Internet marketing enough. It doesn't quite feel like you.

Bill:

Okay. I can go t-shirt.

Brett:

I think you need to go Internet marketing. I think you just need to adjust just a little bit.

Bill:

All right. Well, these are button snaps, so here we go.

Brett:

Yeah. Going Internet marketing, that's what we're going to call that. But Bill Cover, longtime eCommerce guy, worked in the development side of things, has been a specialist, now a strategist, of great insights. Bill, thanks for coming on, and thanks for partnering with me on that cheesy shtick there for going Internet marketing. Then, last but not least, Slaymaker. The play-maker, Matt Slaymaker. What's up, man? How are you?

Matt:

Hey, everybody. Hey, Brett.

Brett:

So Matt is a client favorite. Everybody loves working with Matt. Matt also has experience on Facebook and other platforms, so he's got a really unique perspective that he brings to YouTube and Google. He's just crushing it. He's got a really cool last name, too, so that's part of why we had him on the panel. Then, of course, I'm Brett Curry. I'm the CEO. You've heard from me a lot today. I'll be mainly serving as moderator. I want the brilliance of the team to shine forward. But I have a hard time not saying anything, so I'll probably chime in a little bit as we go. But with that, let's dive right into these questions. So first one, what are the most important elements of a YouTube ad? We're trying to create a YouTube ad that works. What are some of the most important elements? I'm going to open it up to you guys.

Greg:

I've got three things that come top of mind. I think the first thing is the intro. As you know, you can skip a YouTube ad for most ad formats, and so that first five seconds is very critical. In that first five seconds, we want to make sure that, one, we get a branding impression so that if someone does skip, at least we have gotten our brand in front of the viewer. Second is I think you want to make sure that you tease something that is going to be provided in the video, whether it's an offer, a call to action, or a promise of something that they're going to learn in that video to engage the viewer. So the key there is branding impression and engage the viewer. Then I guess I would transition into the core of the video. The key there is to keep engaging and re-engaging. So you cover whatever you need to regarding the product or explaining the product, and there's always something coming next that keeps the viewer engaged.

Greg:

Then I think the third element, which is really where the rubber meets the road, is a outro that includes a clear call to action. People want to be told what to do. If someone's engaged in the video and watched it to completion, they want to know what to do next. So we want to make sure we provide a clear call to action and then, ideally, an offer. So if this is a campaign for a new customer acquisition, then a exclusive offer or something that's discreet and unique to viewers of that video will work very well in driving conversions. To me, those are the top three elements for a video.

Brett:

Awesome. Love it.

Matt:

Yeah. And to elaborate a little bit on what Greg said, what makes a successful YouTube ad all the way through is going to vary so much based on the type of business that you are, the industry that you're in, and the voice of your brand and the way that the messaging will resonate with your customers. So the way that you are going to engage the user immediately, like Greg mentioned, getting them to stay past that five-second mark, will vary. Some brands do this with a question, so asking a question at the very beginning, "Is this you? Do you have a problem with blank?"

Matt:

Then when it comes to that call to action, create some sense of urgency, so don't just say, "Hey, come to our website now." Like Greg said, have some sort of offer attached to that that makes them feel like, "I got to act on this right now. I got to click on this video ad right now or this chance might not come up again." But all the details in the middle, that's going to vary so much based on what you know about your target market, what resonates most with them. So do as much research as you can beforehand and plan as much as you can beforehand in planning out that video ad.

Brett:

Love it. Anybody else want to chime in? Super good..

Bill:

Yeah. I feel like I see a lot of YouTube ads that do the classic Super Bowl television commercial format, which is like, "Here's the teaser and the meat of the thing," and then it's like, "Budweiser," the brand. But a YouTube ad, you can't move that cursor, and people don't have to stick around. So make sure that you're ... As you said, as Greg said, put that brand impression ... Pull that forward and pull that hook and that message forward. You don't want that traditional story arc that has a build and then a climax and then the message. You want to make sure that all of that is stacked at the front. You want to sell that as early as possible and then give a call to action. Then your ad can be two to three minutes, so if someone chooses to stick around and find out more, keep selling. What are some common objections? Supplement that earlier information with more detail, maybe some peer evaluations and testimonial. Give another call to action, that sort of thing.

Matt:

Yeah. And one thing that's super important to keep in mind, what Bill was saying, is that a lot of times you don't pay for the YouTube ad until somebody watches 30 seconds of the video or clicks on the video, so trying to stuff as much important, valuable information in that 30-second mark so if anybody does for any reason hop off, they still leave that video with a lasting impression of your brand. Maybe if they didn't watch 30 seconds or more, they'll come back and do a search for you, and that's equally valuable to us.

Brett:

Yeah. So this has been fantastic, and we've talked a decent amount across the event about what makes for a great YouTube ad. But one of the things you just mentioned, Matt, reminded me of something that we used to talk about in copywriting a long time ago, when you said, "Hey, the guts of the video is going to be different depending on who are you going after on what does your product do well." We always would look for, what's that intersection between what you're best at and what your market really wants most, right? This is two-thirds of a Venn diagram. Anyway, but thinking back to Volvo as an example, this is an old example, but they're all safety, right? Their position was safety not sexy when it comes to cars, and so that appeals to parents, right? So it's like what do we do best versus what our market wants most, where's that overlap, that's what we're going to key in on. That's something important to look at, too.

Brett:

Awesome. Anybody else? We got a lot of questions, so lots of good stuff ahead. But anybody else want to chime in? All right. Let's talk about then ... A lot of people that are tuning in today, their background is Facebook. They spend more on Facebook than on YouTube. As an agency, that's our typical client, someone that comes to us and they're spending six figures a month on Facebook or sometimes 20, 30,000 a day on Facebook and they want to have success on YouTube. So I want to talk about some of the differences, and let's start with audiences first. What are some of the differences between a YouTube audience and a Facebook audience?

Bill:

You get your demographics, you can categorize these audiences into interests and behaviors on both platforms. So all of the demographic tools are there on YouTube and on Facebook. When you look through some of the Facebook default audiences, you have interests like what forms of entertainment are they into, fitness, health, hobbies, et cetera, and then you get what Facebook refers to as behavioral traits, but when you look through the list, it's stuff like do they have an anniversary coming up, what mobile device are they using, browser are they using, political affiliation, which I think is kind of funny they have that, whether or not they're engaged shoppers, but who isn't, we're all buying something at some point, soccer fans, upcoming travel, that sort of thing. All of those things are available on YouTube.

Bill:

Where I think YouTube is able to take it a step further is that YouTube, obviously owned by Google, knows a lot about us and a lot about our behavior, and they are learning to understand very deeply what we are into and what we are about to do. So our behavioral traits on YouTube ... And I think Facebook used to have this, but when Mark Zuckerberg has to testify before the Senate, then things change. So YouTube has very advanced behavioral queues to understand what we are about to purchase, and their machine learning is constantly refining that to understand was it correct, was it incorrect. While we don't see the individual, we see groups of individuals, so privacy is still there, YouTube unblocks those tools so us as marketers, we get to tap into those groups who are about to do X. In eCommerce, that's so valuable because we want to find somebody who is about to purchase X and who is exhibiting these behaviors. So I think that's one of the key fundamental differences there.

Matt:

Yeah. I would love to elaborate on that a little bit because what Bill said is perfect. Basically, what it comes down to is that what Facebook is great at is targeting people based on their interests and who they are in terms of their demographics, and they do have some great targeting opportunities for that. Outside of that, one great thing about Facebook is the lookalike audience targeting. That can sometimes work really well for a lot of brands. But the reason that I've had a lot more success on YouTube ads versus Facebook ads is due to what Bill was elaborating on, where we can build out custom audiences based on what people are actively searching for. So rather than going after somebody's-

Brett:

That says so much about someone's state of mind and what they're trying to do, how they're searching on Google.

Matt:

Yeah, because your long-term interests can be very different than what your short-term interests are. A lot of times, I find a lot of success on YouTube with custom intent audiences or in-market audiences that are built out by Google. But it's going after people based on what they're actively shopping for right now. If they're actively shopping for it as opposed to the longer-term interest, the likelihood of converting here in the short term tends to be a little bit higher. So, yeah.

Brett:

Awesome.

Bill:

Yeah, and-

Brett:

And what about differences in ... Actually, did you have something else to say there, Bill?

Bill:

Yeah. Let me just play off that a little bit with regards to the behavioral audiences and custom intent. YouTube not only gives us audiences that are in-market, someone in the market for running shoes, but the custom intent audience allows us to create a custom profile so that we're not just looking for someone who's looking for running shoes. We're looking for someone who's looking for running shoes for a marathon or for a track race ..

Brett:

Or minimalist running shoes and barefoot running shoes and running shoes to run in the rain, all kinds of very specific stuff that you can try. Yeah. Yeah, really, you're only limited by your imagination in a lot of cases and maybe some privacy things, but you can be very creative with your audience creation efforts on YouTube.

Bill:

Right.

Brett:

Awesome. Let's transition a little bit. So we talked about audiences. What about creative? How are creatives on YouTube different than creatives on Facebook?

Matt:

Yeah, I could kick us off there as well. What it tends to be in terms of user behavior on social media versus YouTube, on social media, it's a lot more short attention span. People are scrolling through their news feed, and shorter, more promotional content tends to do a lot better on Facebook, whereas YouTube, the average watch time for a YouTube video tends to be about two and a half minutes. People are seeking out videos, whether it's a news video, sports video, et cetera, and then they're dedicated to watching that for the next couple of minutes. So to get ahead of them with a longer form video works a lot better on YouTube than it would on social media. So on YouTube we have-

Brett:

Right. I mean, kind of the goal on ... Just to riff on that for a second, the goal with social media is to scroll. That's why I'm on Facebook. I'm scrolling. The goal of YouTube is to watch. I came to YouTube to watch something, and so I'm potentially going to stick around with a video a little bit longer.

Matt:

Yeah. So the opportunity to really tell a story and have a little bit more of a narrative there is a lot broader on YouTube. You have a lot more possibilities there, whereas on social media, Facebook, you might not get that chance. You scroll to it, it charges you, and then they don't even watch it.

Bill:

Yeah. To be clear, I love Facebook advertising. I think-

Brett:

Yeah, me, too. Me, too. Yeah. I'm glad you mentioned that, Bill, because we are not anti-Facebook. Facebook and YouTube together are an extremely powerful combo. I think the reason we're calling out the differences is just because people overlook YouTube, and it's a really powerful complement.

Bill:

Exactly. Exactly. Or don't know the full capabilities of YouTube. So Facebook is a wonderful platform because it's in a feed, people are engaged, it's got the social proof right there. You can design your post. It can communicate your brand. It can communicate a call to action. All those things are really great. Some things about Facebook that are different from YouTube is ... One main thing is the audio. So the audio is off by default when it comes to a Facebook feed. Your audio is on on YouTube when someone gets your YouTube ads, so it's more engaging through both visual and audio.

Bill:

The other thing is Facebook, somebody ... Let's say it's a re-marketing ad, someone who's been to your website, you're trying to re-market to them to get them to come back and buy. I might be reading a post from one of my friends or something like that and the Facebook ad is in my window. One pixel is showing, basically. Facebook regards that as a view, which that's fine. Whatever they want to do to measure their ads is fine. YouTube waits for you to view 30 seconds of the ad before they count that as a view, and you can skip it at any point before that and not pay for that ad. So there's a huge advantage to YouTube in that you know that someone was looking at that ad and watching that ad versus on Facebook you can make assumption they were.

Brett:

Really good. Awesome. A big question that a lot of people ask, I hear this over and over again when I'm speaking at events or talking to people that are new to YouTube, is what about production value? How much do I need to spend? How important is production value? So who wants to kick us off there?

Derek:

I think production value is negatively related to value and content that you're providing within the video. Obviously, there has to be some degree of purpose and intent when editing and putting this stuff together. But if you're providing value and you're providing content to the user, you can get away with certain things when it comes to production value that would be nice to have but can potentially be a little bit expensive. A perfect example is user-generated content, right? Sometimes, brands will ask their previous purchasers to generate a review for them and film themselves doing a review and that is a huge X factor because not everybody knows how to film themselves, not everybody knows the selfie camera, lighting, audio-

Brett:

Not everybody can create an angelic background when they're on video like Derek.

Derek:

Exactly. Yeah.

Brett:

Exactly.

Derek:

Exactly. Correct. Not everybody has the 24 megapixels on hand. So for user-generated content specifically, the goal there is to provide the content and the social proof that the product actually works, and having that in the video provides that kind of validation that you would need for your brand to showcase it as successful and something work investing in or at least worth clicking onto to then go learn more on the website and then make a decision based off of what they learn there versus something like perhaps, like Bill mentioned, the Budweiser Super Bowl commercial, where there's not necessarily too much of a brand new content in there. It's just more so like, "Hey, we're Budweiser, we're awesome, we're a staple of America, but we're not going to necessarily tell you anything new about us."

Brett:

"We have Clydesdales."

Derek:

Yeah, exactly. So it's something a little bit more informative and more providing something for free to the user, which is value, for them to then engage further with you down the line.

Heidi:

Mm-hmm (affirmative).

Brett:

Cool.

Heidi:

And I have to also say, it's never been easier for an advertiser to get into YouTube right now because gone are the days when you had to hire a production company to film your shoot. I had a client last year who filmed some amazing, winning, high quality, high production value YouTube videos using their iPhone 11. The reality is, is that if you have a great script, if you have the right background, you've given it some thought, and you have some wonderfully placed products and images, you don't need to hire the studio anymore. You can really take it on yourself. So the barrier to entry for advertisers to get in there and really start campaigns has never been easier.

Matt:

Yeah. Heidi, you hit on that perfectly because I feel like there's so many brands who are like, "I would love to do YouTube, but I don't have the money to afford a big production company." And exactly what you said, iPhones nowadays have great cameras where you can shoot a lot of that stuff. Production value is not the end all, be all. It's the story and the storytelling, the narrative, having a strong call to action. That's what really sells. I've tested it with my own accounts and then just seen case studies across the board. It's somewhere in the middle. Usually not the highest, most expensive video isn't always the one that performs the best. So you don't need something that's $100,000. Maybe it's $2000 or something like that. It's going to vary based on your brand, but try to get something out there. It doesn't have to be super expensive to be successful.

Heidi:

Mm-hmm (affirmative). And sometimes those native formats, that kind of organic material and content, that's what people resonate for. Because when they're on YouTube, keep in mind, they're on there for a couple reasons. I like social media. As Brett mentioned, you're scrolling, you want to get to the next thing. You're on YouTube to either be entertained or to look up something to learn something in regards to that. So that content that organically lends itself to that type of usage does really, really well.

Greg:

Absolutely.

Brett:

Yeah, and some of the things I'm hearing you guys saying is some of the most powerful elements of your video ad are not expensive to produce, like testimonials, like UGC. We had a client that Greg and I worked on together, an automotive client, that spent millions on the platform, and their core video was all user-generated content. Now, it was edited. They did use an editor at a studio and it looked good, but almost all the video was user-generated, but it was super powerful. So what you say and how you say it is very important. How much you spend to get there is not as important. There are cases like ... Hey, we shout out to the Harmon Brothers, and some of those super high production value videos can work, but they also can fail. So it's better to test and iterate with a smaller budget in my opinion, and then, yeah, maybe you do land on a video that costs $75,000 to produce and you can go to the moon on it, but you don't need to start with that. I think, Greg, you were about to say something?

Greg:

Yeah, I was going to double down on, I guess, one element here, that, as a strategist, I think one of the most important things is to make sure that you have a good messaging strategy, that what you're trying to communicate with that video, one, speaks to the target audience, is compelling to them, and, in particular, is relevant to them with respect to where they're at in their buying process. Where are they at in that conversion cap? Is it awareness? Is it consideration? Or are we trying to convert with that specific video? So I think making sure that you start with a good messaging strategy that'll guide creative development can trump the overall cost and production value.

Brett:

Yeah. I also just want to underscore, we're not anti-studio, right? We've built a creative department now at OMG Commerce. We have a seasoned 17-year veteran in the advertising space running our creative department, and we've got partnerships with video editors that have created hit TV shows and done amazing things. So we have the ability to create some fantastic stuff. But just to underscore our point, you don't have to spend a lot, right, and we can test and iterate. It is more about the strategy, to Greg's point. It's more about what you actually say, to Heidi and Derek and Matt's point. Anyway, there's lots of ways to be successful, and the key to success isn't spending tens of thousands of dollars on production. So great, awesome. Really good stuff, guys. Appreciate that.

Brett:

Let's transition now. Let's talk about those first few weeks of running YouTube because that can be scary, right? We're full of anticipation and nerves, and we just can't wait to see what these YouTube campaigns do after we launch them. It's still one of my favorite times. We get the campaigns all prepped and ready, we have our audience strategy and our message strategy, and we flip those things live. For me, I still just want to sit and watch. I want to watch and see how it goes. But what are some of the metrics in the first couple weeks we need to pay attention to to know are we on the right track, are we moving towards success as we would define it? So what are some of the metrics that you pay attention to in the first few weeks?

Heidi:

We have a couple of metrics that we use. I know Sheila has a lot of information about this because she does a lot of optimization in the first few parts of our campaigns probably better than any specialist that I know. She can speak to some of the metrics that she uses. But, for us, I know those core performance metrics that we look at are definitely the views because those represent the number of times someone's watched or engaged with that video ad that you've spent so hard all that time making. Then, also, the view rate. View rate shows you number of views that your video had received and can be a big part to determine how successful that algorithm is to optimize. The cost per view is also a big one. So those are the core performance metrics that we start with. Then I know Sheila does a great job with the others, so I'll let her speak to some of the others that she works with.

Sheila:

Yeah. So those were kind of the main ones that I was going to mention as well, but I think that really does speak to that there are ... I say look at all of them. I know that's the easy answer, the easy way out, but the ones that-

Brett:

Spoken like a true Google specialist. "All the data's important. I want to see everything."

Sheila:

All of it. But Heidi made a good point that those are going to be your base. I would take it into a scenario where, let's say, your view rate was a little bit lower. I would then dive in a little bit ... No, not your view rate, sorry. You have good views, but you're not really getting the conversions that you were thinking. I think it's important to maybe even take it a step deeper, and you could take a look at your video play to percent to see, whether it be ... I think the labels are 25, 50, and 100. I could be very wrong about that. But looking at where people are dropping off, are they dropping off at that first 25% marker before that, and then being able to see, "Okay, should I be making sure that my hook or whatever is in the first 15 seconds of my video?" Yes, that is going to go into the important elements of your YouTube video, but definitely taking a look into that, how far are people getting into my video before they're dropping off. So if you have a good view rate but you're struggling with your conversions, that could be another place that you could go and look and potentially identify an issue in your video.

Heidi:

And we have the other second part of it, too, which is your click performance. Though, as advertisers, we want people to view our video and then hopefully come to our websites, either submit information to become a lead for us or a customer. So that click performance, those metrics that are super important to look for, the number of clicks, so the number of times that someone's clicked on your video, that's a big one, and then your click-through rates, so the number of clicks that your ad receives just divided by the number of times that had been shown, and that's always shown as a percentage in Google. But-

Matt:

Yeah. And every one of those metrics tells a little bit of a story, so your click-through rate tells a lot about, "Do I have an engaging call to action," not only at the end of the video and throughout the video but the actual button. So maybe instead of saying, "Learn more," I need to say something a little bit more engaging and speaks to the user a little bit more. When you look at view rate, and like Sheila was talking about, you can see what part of the video people are dropping off, and if they're dropping off really early, then maybe we get back to the client and say, "Hey, we need to rework this video a little bit to try to change this element." If it's really sharp at a certain point in the video 50% through it, then that's something you could also look at. Every metric tells a story, so it is important, like Brett said, to look at everything and see what you can pick out there, especially in the early stages when conversions might be low and you don't have a big enough sample size to really draw anything too conclusive.

Brett:

Yeah. Yeah. Really good. Yeah, because, hey, view rate is a little low. Percentage of people served the ad, it's low, the percentage that actually watch it. Well, then maybe your hook needs work or you're not getting ... Going back to Bill's point about a story arc and pulling the climax to the front of the video, maybe you're not doing that well. Or my click-through rate is really low. Well, to Matt's point, yeah, there's not an engaging call to action. You're not compelling someone to click. Or maybe I'm getting a lot of clicks but the conversion rate is low. Well, maybe then it's something about your offer, something about your landing page that's not actually completing the deal. That's where you need to make sure you watch Kurt Elster's presentation on how to optimize your landing page.

Brett:

But, yeah, all the data tells a story, and, ultimately, we're a direct response agency, right? We're all about hitting a CPA target, scaling at that CPA target, so CPA is what matters at the end of the day, no question about it. If my view rate goes down or my cost per view goes up but I'm hitting my CPA and I'm able to scale, then I'm a-okay. But these other metrics do tell the story, and they help you diagnose what you need to improve on and what levers to pull or what changes to make to make things really work. So awesome. Good stuff there. Appreciate you guys on that one. Moving right along. So how long does it take to start hitting your CPA goal, right? Because CPA, that is the metric to rule all metrics when you're talking about direct response. How long does it take to start hitting your CPA target?

Greg:

Yeah, so I will address this and look at it from a bigger picture perspective as well. This is an area where OMG really excels, and we've developed internal best practices, I think, that guide us along a very systematic launch process that helps improve the overall success of our clients. First of all, if you think about YouTube, there's, for all practical purposes, unlimited inventory and therefore potential for unlimited spend. So the first challenge is how do we launch campaigns for a client and manage that so we have a controlled launch, we create the best opportunity for success, and then we also mitigate any potential campaigns and spend that's not performing well?

Greg:

In doing that, the key is ... And this is relative to a client and the budget and what the potential market is for the products we're talking about. But the key there is setting up, one, campaign structures and targeting and testing of multiple versions of creative so that as we launch we have the best chance for seeing early success and being able to look at those metrics that we were talking about earlier and get a pretty good indication of which are going to perform and which have an opportunity to succeed. In the process that we've established with that, we'll basically look at three buckets, so to speak, as we start evaluating performance. We're talking about in a one to two-week timeframe here initially.

Greg:

The first bucket is, "Okay, these are some creative-audience combinations that are obviously performing. The view rates look good right off the bat. We're getting really close to our CPAs early on, and so these look like they're going to succeed. We're going to let them continue." We may even make some early bid adjustments or create an opportunity to accelerate the success there. Then we'll also use some metrics that will create specifically for that client and say, "Okay, if we have other combinations of video, creative, and audiences that are in this range here, they're kind of borderline, they look like they might succeed but we need more time to evaluate that, and they're in a range that we can afford to let them run a little longer, but they're on a tight leash. We're going to evaluate that daily and see where they land." Then there's going to be some other combinations of video, creative, and audiences that right off the bat don't appear to be performing well. We're simply going to pause and cut those in order to mitigate overall cost.

Greg:

Some of those fence-sitters then are going to potentially tend to trend that way as well, so we'll pause those but then come back to those and reevaluate. Because one of the things that we have to look at is conversion reporting lag, which means the first week we don't have the conversions that we need to get a good CPA for particular video ad and audience combination because of the reporting lag built into YouTube and Google Ads, where we're looking at conversions based on when the click occurred and not when the transaction occurred. Then we mind find later that week and the following week there are some of those that are borderline that suddenly have enough conversions then that they're in the performance range.

Greg:

So we've got a very systematic, methodical process of determining what's working and what's not early on. Google has a 14-day window, they call, of learning for the smart bidder within these campaigns, but we're not waiting 14 days before we take action. Basically, that first seven days, we're looking at the winners and clear losers, and then that 14-day period is probably where the focus is on sorting out those fence-sitters, those ones that may or may not perform well.

Sheila:

Yeah, and-

Bill:

Yeah, and that takes experience, doesn't it, Greg, to have seen enough success versus failure to just know, "This is headed north, this is headed south," before you get to that 14-day window.

Brett:

Sometimes, and I know all of you guys are this way, you kind of become the data whisperers, where you're like, "Yeah, I've got a feeling about this one."

Greg:

That's right.

Brett:

"It's not there, but I think it's going to get there, or it's not there, and I don't think it's ever going to get there." So you kind of start to get a feel for that. What else have you guys seen? What kind of timeframes are we looking at here? When do we start hitting our CPA target? I know there's a couple of short answers there that we can get to.

Matt:

Yeah, no, it's kind of all over the place. Most typically where I see it is anytime between a week and a month. So, usually, you have some great indicators within two weeks and, like Greg said, can start narrowing in on the winners. So you see ad creatives that are doing well, audiences that are doing well, if you're using topics, certain ones there that are doing well, and you can start to narrow in on that. Usually, I see by the end of month one you start to sit in a pretty good place.

Matt:

But I actually, really quick, wanted to touch on one thing that Greg was talking about, which is conversion lag, because that's becoming a bigger and bigger thing here recently. Think about your own user behavior. A lot of times, you might watch a YouTube video, click on it, go to the website, and say, "Okay, this looks cool. I'll come back to it later." You do come back to it later and maybe you purchase it. Or say you viewed a YouTube video and ended up coming back to purchase it. The reason that there's going to be a conversion lag there is because Google is trying to give more credit to what introduced them to the brand in the first place. So it wasn't from thin air that they just searched for your website. It was because of that YouTube ad.

Matt:

When you initially look at your results today, it might look like, "Hey, this isn't doing so well," but you check back in about a week and it's like, "Oh, wow, I got a lot of conversions from that day." So one thing to keep in mind when looking at your CPA goals and when you're going to reach it is to be patient with it and to understand your own user behavior and that that is what everybody's experiencing. So come back, check on it, see how things have changed, and you'll see.

Brett:

Love it. Well, this question I want everybody to answer. It'll be kind of rapid fire, so this could be a very, very short answer, and it's okay if the answers are duplicated from one panelist to the next. But what is your favorite audience type? You can clarify if you want, like, "This is my favorite audience to launch with, this is my favorite audience to scale with," however you want to do it, but favorite audience. Bill, go.

Bill:

Custom intent.

Brett:

Custom intent, which is? A real quick definition for those that don't know.

Bill:

Yeah, you bet. So it's kind of like in-market. That's a common term across Amazon and a number of pay search platforms. But in-market is I'm in the market for X. Custom intent is you as a marketer saying, "I want an in-market but this specific persona, this avatar."

Brett:

So these specific searches, keywords, in market for these particular things. Yeah, awesome. Slaymaker?

Matt:

Bought X but not Y. Brand loyalty is such a huge thing, and so introducing them to new products that you have that they might not be aware of is a huge opportunity to cross-sell a lot of users.

Brett:

Especially when you have a big audience and a fairly large established brand, you start getting more of your customers to consume more of your products. That campaign type, pound for pound, can do some real damage, and I mean damage in a good way. It can be really good. Awesome. Greg?

Greg:

Custom intent as well. One, the new and improved version has additional inputs that you can use to customize your audience, and that's really improved performance. Then it gives you not only the ability to see early success in launching because it's intent-based audiences, people that are in-market for products, but once you have learned what performs there, you can also use that to scale and identify other places and other audiences that you want to go next. So I think it's early success for launch as well as guiding future success for scale.

Brett:

Sweet. Heidi?

Heidi:

I think custom intent is the way to definitely start off all your testing, but because it's been mentioned a few times, and it's no surprise, it's a really great way to target and get in customers and leads, I also want to mention we had some great performance with customized placement. So what that means is going after certain channels that really resonate with your audience. This one particular client that we had, their customers were known to follow some very specific channels and influencers out there. So when we targeted these channels specifically, so having a campaign for custom intent and then expanding on that with specific placements, we were able to really expand other targeting and do well. It's a lot of understanding who your customer is and who they follow, what they want on YouTube.

Brett:

Yeah. It's sometimes overlooked with YouTube, but it kind of goes back to the ... And I've got a traditional media background, but as a TV ad buyer, you're picking programs, right? "My customer watches these programs." You can do something similar on YouTube. It's very powerful and it's often overlooked, so glad you mentioned that one. For sure, Heidi. Derek? Mr. 24 Megapixel?

Derek:

So I think custom intent is something that is basically the meat and potatoes of most strategies, right? Most YouTube strategies that I've worked on, and I think everybody here, has included custom intent to some extent. But I will say that typically what my favorite is and what gives me pure adrenaline when launching is launching campaigns that are going solely off of basic demographic targets, like gender and age, specifically those two. I will say that with the disclaimer of you need to make sure that whoever's watching that knows what they're doing and they have experience and they have dealt with it before because it really does have to be the perfect storm when it comes to launching something like that, right? It needs to be an account with enough historical data in there. It needs to be the right product, and then the right product also has to be priced the right way, and you have to have the right goals in place, too. So there's a lot of moving parts to it, but custom intent, I think, is my old reliable, but then demographic only is the game-changer for me sometimes.

Brett:

Pretty fun. I like that. Adrenaline, the adrenaline rush. Spoken like a true media expert there. Love it. Sheila?

Sheila:

Well, mine kind of could go well with Derek's. After you get that nice base built up with custom intent that everybody's already mentioned, I will veer off of that because I think they've covered just about every part of custom intent. So going off after that base is built there and you're looking for other ways to really take that brand and show it to people who you might've missed somehow with that custom intent audience, if you're not quite ready to dip your toe in that demographic, very wide, broad audience, you could take on testing topics and really taking some topics and layering them in your branded campaigns and things like that and then seeing how they perform and then taking the ones that perform well and then adding them into campaigns in your top of funnel campaigns.

Sheila:

Just seeing the correlation between, let's say, somebody who they're selling ... Your client is selling instructional videos for working out, whether it be lifting or Brazilian jujitsu, and then randomly your topic of smooth jazz music pops off with a bunch of conversions and you're like, "I would've never thought people who were buying Brazilian jujitsu things were really into jazz, but"-

Brett:

And Matt Slaymaker is a black belt. Do you listen to smooth jazz as you're working out, Slaymaker?

Matt:

Not as I'm working out. Working on other things.

Brett:

But the rest of the time you might. Okay, cool. So I derailed you. Sorry, Sheila.

Sheila:

No, no-

Matt:

But, Sheila, that's-

Sheila:

I-

Matt:

That's such a great idea, Sheila, though, about testing topics out on your branded campaign as an observation audience. It's a no-risk type of thing where you can see, people who are searching for us by name and actually converting, how are these different topics doing. Yeah, no, that's great. Then you can take that information over, layer it onto your audiences. Yeah, I love that.

Brett:

So I derailed you there, Sheila. Just, I thought of the black belt thing all of a sudden.

Sheila:

No-

Brett:

So you're looking at topics, and you've done a great job with topics. That's something as an agency we haven't scaled that many accounts using topics, and you're doing an awesome job with it. Did you want to finish your point?

Sheila:

Just that was it. Thinking about this question, I had lots of time to think, and I was trying to get creative with it. But I just realized when I've got that base and I'm like, "Okay, back to the drawing board, how can we keep spending efficiently, obviously, or keep testing," that's somewhere that I always end up because there's so many pre-filled topics that Google provides. It would be a waste if we didn't at least touch them.

Brett:

Yep. Yep.

Matt:

Yeah.

Brett:

Awesome. Love it. Fantastic. I'll chime in here, too, because I've got to. It's not called this anymore, but custom affinity. I love custom intent, too. But custom affinity, it's sort of Google's version of a lookalike, where you're giving inputs on people that visit this site or this topic or whatever. Build me a lookalike audience, Google, based on that, is sort of what custom affinity is now. It's all just custom audiences. They've dropped the custom affinity moniker. But I love those audiences. With some accounts, those are the audiences that truly scale, but they're not always the best to lead with, although they're not quite as risky or as much of an adrenaline rush as demo only. That's a .. Sorry, Bill.

Bill:

But if you're seeing success on Facebook with an interest-based audience, that's your closet thing to affinity on the YouTube side, so worth testing.

Brett:

Yep. True story. True story. Awesome. Okay. So we are running out of time. Man, you guys are long-winded. Just kidding. This is awesome. But we're running out of time, so I'm going to actually combine the last two questions, and you get to pick one or both in your answer. But what do you do if the first few weeks don't go that well, right? So what do you do if the first couple of video campaigns don't work that well? Then a very related question is what are common hiccups, right? If things don't go well, what usually are the main culprits? So what do we do if the first few campaigns, first few weeks aren't great, and what are the common causes for hiccups or speed bumps?

Sheila:

I think more ... Okay, so I'll be quick because mine isn't necessarily going to be technical. I hate failure. I think most people in business obviously hate failure. But I think it's important when you launch something to realize that this is just a battle within a never-ending war. With Google, there are so many opportunities. Don't take that and don't get discouraged about it. You just say, "Okay, check that off the list, never-ending list of things that I have tried and I can try," and move onto the next thing. Getting a little more technical, I guess I can, is go look at ... Like we talked about, look at your hook. Where is the hook falling in your video, or is there some piece of creative, maybe a character that isn't hitting right with your audience or things like that? I know one of the common issues ... I guess I wouldn't say common, but my most recent failure that I did have with a client was they used a character that was kind of like the beef jerky ... Who's the guy in the woods?

Brett:

Slim Jim?

Sheila:

Sasquatch?

Brett:

Oh, are-

Sheila:

Yeah, Sasquatch.

Brett:

Bouncy, maybe? Oh, okay, got it.

Sheila:

So they used this. But this Sasquatch was terrifying, and the business owner knows. Obviously, he knows, too. He said, "This might not work, but let's give it a shot anyways." He was accurate. So I think going back and, again, analyzing where are people dropping off. Are we even getting the view rates? Then after you do that analysis, take that knowledge, understand there's many more opportunities, and then launch a new ad, launch a new video, test a new audience. There's endless opportunity.

Heidi:

And I think one of the things that we just have to say, for being in this business for as long as we have, first thing, if you do not see conversions populating in your account, what do we do? Come on, guys.

Heidi:

We check our conversion tags. So make sure that tag is working and recording data properly. Once that's cleared up, use those nice metrics we were just talking about earlier to really clue you in as to what to focus on next. So if you're not getting conversions, look at your audience. Is it bringing in the volume of clicks that you need? Do you have enough of an audience to serve ads? If you do and your ads aren't getting great view rates, like Sheila said, look at that first part of your ad. Look at the hook. Is it compelling enough to get people to really view, take that next step, or are they skipping? The other part, look at your CTRs. Is your call to action strong?

Heidi:

If your conversion rate stinks and all those things are good, look at that landing page. What's going on with your offer, with your landing page format? Is it resonating with the video? All those connections can really help you alleviate all those little hiccups that can prevent you from getting to the next spot and go from getting success, like Matt said, in that first week instead of waiting a little bit longer, which sometimes can happen when you're testing them.

Matt:

Yeah, even in the biggest failures-

Brett:

We can't underscore enough the value of conversion tracking, and so you got to set it up properly, got to do test purchases, got to check and re-check. Don't get a week or two into your campaign launch and then realize, "Oh, conversion tracking." All right, well, then you've wasted time and money and all kinds of bad things. Yeah. Go ahead, Slaymaker.

Matt:

I was just going to say, even to go off of what Sheila and Heidi were saying, even in your biggest failures, if a campaign fails, that doesn't mean that every element within the campaign was a failure. Just dig into your data and find out what were those things that did work well. So it's like, "All right, well, we didn't get many conversions, but we had a really strong click-through rate. Let's keep that element. So maybe our call to action is really strong, but maybe it's something with the landing page or maybe it is something with conversion tracking." So try to identify what are those wins, even in the losses.

Brett:

Yeah, or maybe this particular audience didn't work well, but as we drill into some of the segments and combinations, we realize, "Oh, but there was one pocket of this audience that did great," and so now we know what to do as we build our next audience to test.

Matt:

Definitely.

Brett:

Cool. What else? Common hiccups and/or what do you do if the first few weeks don't go well?

Bill:

Yeah. So I see a number of accounts that we don't manage through our sales prospecting process where they're running custom intent, and I know that we sat here and four out of five specialists recommend custom intent. This is just a shell of an idea. It's just a tool, the way you build it, comes down to a little bit of geeking out and expertise. What is happening with these keywords? What do they mean to the robot that's running these ads and finding you an audience? You can't just throw custom intent out because it didn't work. That would be like, "Oh, I hired a construction worker and he used a circular saw and we hate circular saws now." It's how you use it.

Brett:

No circular saws. I love that. That's a good analogy.

Bill:

Yeah. So just make sure you're geeking out on it, testing new ideas within these tools, because you can't just throw out the tool because it didn't work the first time.

Brett:

Yep. Yep. Yep. Because, sometimes, it becomes clearer as you get into that what we thought about the buyer's mindset of people searching for these keywords was actually off, right? We may have thought, "Hey, I want to target buyers of a related product." Then we realized, "That's actually not our buyer. It's actually people that are going over here." So, yeah, don't throw out the tool just because you were using it incorrectly in the beginning. It's a great analogy, Bill. What else, guys?

Derek:

A lot of people also tend to think of ... I've worked with clients in the past where they're like, "Well, just increase this bid or just do this specific thing and that will fix this other metric," and they're not looking at the entire picture and not realizing that YouTube is not necessarily a mathematical equation or a scientific thesis. It's also kind of an art form, right? So understanding that it's both and being able to dive in and look at the metrics and say, "This is what the numbers are telling me," but then also looking at the more human side and artistic side when it comes to, "How does my creative resonate with the user? How do users that are searching X, Y, and Z term fall into a custom intent audience I may or may not have built?"

Derek:

I think that is all something that needs to go into, first of all, the plan that you set up when you're first launching but then your evaluation process in that first and second week when you're taking a look at what the performance may have been. Then, when it comes to just hiccups in general, I would just say be ready for them. Some of our most invested clients, most hands-on clients that you would never think would lose conversion tracking for a day have lost conversion tracking for a day.

Brett:

Developer makes a change, and, oops, they drop your code, and you're like, "Ah, why did you do this?" Well, I'm the developer. I don't care about your code.

Derek:

Exactly. Yeah, exactly. So the more that you can invest on that front side of the art and the science and building the momentum up the right way, the harder it will be for those little hiccups to make a dent into the momentum.

Brett:

Yeah. I would, just to piggyback on that, it's really good advice, Derek, thank you, is that expect hiccups. They're going to happen. If you're building something great and you're trying to scale, there's going to be little hiccups. We try to build the right foundation to minimize hiccups, but you're still going to have them, and you just roll with it and you adjust and you know what to do and you move forward. G-Money, you want to close us out?

Greg:

Yeah. I look at it very systematically. In other words, analyze the data, what's working, what's not. Make adjustments, whether that's campaigns, bids, creative. Then test, test, and re-test. What's unique about the platform is that it is very efficient and very easy and low cost to test multiple variants of the creative, the audiences, the different combinations. So I think the key is revise and re-test.

Brett:

Yeah, love it. I did let everybody answer that, right? Sheila, you started us off, is that right? Okay, awesome. Man, fantastic job. I wish I had a standing ovation sound effect that I would play right here. That was awesome, guys. You brought the thunder. Proud of you guys and impressed anyway, but this was just next level. It's always cool to get you guys all in the same room talking, well, virtually, all in the same virtual room talking. Super, super fun. You guys brought the value. So thank you, guys, well done, and we'll have to do this again sometime soon. With that, our journey is almost complete at this virtual event. Stick around, though. Next session coming up momentarily.

Episode 167
:
Chris Tyler - OMG Commerce

Prime Day 2021 Recap

I brought in OMG’s Amazon Director Chris Tyler to help unpack what we experienced with our clients this year during Prime Day.

Prime Day 2021 was a year of firsts.  It was the first year Prime Day took place in 2nd quarter.  From 2015 to 2019 Prime Day was in July.  In 2020, due to the pandemic, Prime Day was moved to October and became the de facto kickoff to holiday shopping.  

This year was also the first year that Prime Day experienced year-over-year growth of 10% or less.  But when the 2-day event brings in $10-11 billion in sales, any year-over-year growth still represents HUGE growth in real dollars.  

For this episode, I brought in OMG’s Amazon Director Chris Tyler to help unpack what we experienced with our clients this year during Prime Day.  Here’s a look at what we discuss:

  • Some surprises we saw in the OMG client sales data
  • How advertisers may have been more excited than shoppers this Prime Day
  • Prime Day may not be a great fit for every seller - some categories crushed it during Prime Day, other categories were “meh.”
  • Why inventory issues for many sellers influenced the prevalence of deep discounts and likely took some of the urgency out of Prime Day shopping.  
  • The strange shopping behavior we saw during day 2 of Prime Day. 
  • How to maximize Prime Day or holiday shopping by thinking Full Funnel with your ad approach
  • Plus more!

Chris Tyler

Via LinkedIn

Mentioned in this episode:

Amazon Prime Day from Statista

OMG Commerce Blog

Sales Force Prime Day 2021 Recap

OMG Blog Prime Day Prep

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 we're talking Prime Day 2021 recap. What happened with Prime Day this year? Lots of really interesting things to uncover and dissect. I think some things that may be a preview to what we're going to see the rest of the year, and also some things that maybe considered for Prime Year next year, potentially. We're just going to unpack the data and the trends.

Brett:

No better person to have on the show than the Director of Amazon and OMG Commerce, Chris Tyler, a crowd favorite. Chris, how are you doing? Welcome to the show, man.

Chris:

Doing well. Thanks for having me.

Brett:

Yeah, absolutely. So always good to have you on the show. First of all, Prime Day, it has become kind of a summer holiday for us in retail and us, people that enjoy shopping, but today or rather this year, Prime Day was different. And so I thought it'd be fun to do a quick history of Prime Day, like 15 seconds and what we've seen in previous years and then let's dive into this year, because this year was a different beast for a couple different reasons.

Brett:

So 2015 was the launch of Prime Day, and a lot of people don't know it was the 20 year anniversary of Amazon. And it was one of those events fabricated by Amazon really to drive prime memberships, and that's what it did for so many years. You'd have millions of new people signing up and trying Amazon Prime because of Prime Day. And we know that prime memberships really fuels Amazon's flywheel.

Brett:

So for a long time, it was about building prime memberships. Now, it's just a massive sales event. It's bled into other retailers jumping on the bandwagon. You got Walmart and Target, Best Buy and every other retailer imaginable also doing big deals around Prime Day. But this year it was different. So historically, Chris, Prime Day has always been in July, the Christmas in July type of thing.

Brett:

Q3 is not a good quarter for retail typically. So last year was different as well. Last year Prime Day was in Q4. It was moved to October because of logistics issues caused by the pandemic and Amazon just not being ready, the infrastructure not being ready to handle Prime Day in July. So it got moved to October. Nobody really knew what to expect, right?

Brett:

It's the first time the Prime Day has been in Q4 and it really launched the holiday shopping season, likely pulled forward some of the holiday purchase activity last year. So a couple of interesting things from last year and just to show how much this event has been growing year over year. 2019 versus 2018, Prime Day sales grew about 70% according to Statista, but then about 45% year over year growth from 2019 to 2020, right?

Brett:

But again, you're comparing apples to oranges here. 2019 was the normal July date, 2020 was October. So it was Q4, all kinds of interesting things. And then this year, Chris, we got the announcement that Prime Day was moving to June, not July. And even though it's a few weeks difference, it's a different quarter, right? Moving to Q2 instead of Q3, which was the norm and Q4 last year. Did you hear any speculations as to why it was moved to June?

Chris:

Honestly, I did not. We didn't find out till last minute. At least it's better than last year where it seemed like a week before they said, "Hey, we're having it in October." So at least they told us a few weeks before, but I think Amazon kept that close to their chest.

Brett:

Yeah. Our Amazon reps do a pretty good job of keeping us up to date, but, and it makes sense, they don't want word to leak about Prime Day too early because then people wait for some purchases, right? So you want to give enough time to build hype and make it a big event, but not so much time that you kill sales four weeks out from Prime Day.

Brett:

I heard a couple of different pieces of speculation who really knows, but this will help Amazon with their comps, looking at Q2 this year versus Q2 last year, because Q2 2020 just had an amazing spike because of the pandemic, especially on Amazon because stores were closed. So this will actually help Amazon probably comp pretty well Q2 of this year versus Q2 of last year. That's probably not why Amazon did it, but that is an interesting side note for sure.

Brett:

A couple other interesting things as usually and this is in July, you got back to school sales that could be a part of this. It's not really feeling like back to school time, right? This is June. Summer still feels like you got a lot of runway left in summer. So not as much of a back to school event. So just an interesting event and timing and all of that.

Brett:

And so we're seeing numbers that Prime Day 2021 versus 2020 grew anywhere from nine to 11%. I saw one report showing it didn't grow at all, but I think that was a bit of an outlier as far as the report goes. So 10% growth or whatnot over last year, but we're comparing a June event to a Q4 event last year. It's pretty hard to compare this as apples to apples.

Brett:

What were some of the... And one cool thing too Chris, and this is why I had you on the podcast. OMG is big enough now. Our client base is big enough that we have a considerable amount of data that we can look at from our own clients. Advertising data, sales data that really paints a nice picture. It's kind of a microcosm of Prime Day and third-party sellers globally. And so let's dive into this a little bit. What were some of the key takeaways, the big takeaways from Prime Day this year?

Chris:

Yeah. Great question. I don't know. To your point, we've got enough clients advertising, spending data, to understand, "Okay, what are the trends that we're seeing as an agency?" And so the data we pulled was based off of the two weeks prior to Prime Day this year and weekly segments, each Prime Day individually.

Chris:

And then what we're going to do is track the weeks after. And we do have the week post-Prime Day, but I will say in the advertising there's usually attribution lag, so that may be somewhat different in the coming days. And then that is to give us a picture of post-Prime Day versus prior to Prime Day and then obviously Prime Day in between. And we did the same thing last year.

Chris:

So what we wanted to look at, at the start was we know nothing's the same in the sense of last year we had a big COVID E-commerce spike in the summer and then Prime Day was actually like you mentioned, Q4, which really just blasted the last three months of the year. And then this year it was in June, which worth noting that we started to see in April a lag in sales or softness in performance, as well as..

Brett:

April was really strange across the board. Even non-Amazon sellers, April 2021 was pretty soft.

Chris:

Yeah. And that led into May and June being a little bit better, but we're not seeing that E-commerce push that COVID gave us. So then year over year comps are kind of wonky within that. And so what we first looked at then going back to the Prime Day data was year over year, what were the differences?

Chris:

And it was really interesting to see last year, the week prior to Prime Day saw a boost in impressions and traffic between 10 and 20%. This stayed, obviously pre-Prime Day, it saw a big push, but then post-Prime Day it actually increased again, 15%. And so traffic was there and then in the same side, total sales.

Brett:

When we started, Chris, you said there was an increase in impressions?

Chris:

Impressions. So we wanted to figure out, "Okay, is the traffic there? And then within that, what are the sales doing? What's the CPCs? What's our ad spend ratio to total sales?" And we found last year, the impression were boosting even prior to Prime Day and then stayed post. What we found this year-

Brett:

That makes sense because it was the beginning of holiday shopping.

Chris:

Right. Right.

Brett:

And so this is an interesting take. So we've got our line of sight into Prime Day and what happened is really through the advertising lens, right? But if you see a lift in impressions, more ads being shown, it means there's more eyeballs there, right? This is a really interesting perspective. We're seeing what retailers are doing, what advertisers are doing based on response to shoppers, basically.

Chris:

Right. And then for us as advertisers it helps us understand what is the pie we're looking at, and then what tactics strategies we are using to formulate, "Okay. How much can we on that in terms of the goals for our clients?" And then in Prime Day this year, what we found was the impressions and clicks, correspondingly, saw a very small decrease. So in our mind they were flat a week before Prime Day versus that preview period, where last year we saw a boost. And then going into Prime Day-

Brett:

A week before Prime Day this year was flat or potentially down just a tiny bit-

Chris:

A little bit.

Brett:

... to the week before Prime Day, last year. So that leading up period.

Chris:

Yep. Yep. And then even to the week before this year, so if we're looking at June 7th, it would be two weeks prior, and then June 14th would be the week before Prime Day. They were about the same in impressions and clicks. Where last year we saw a boost week over week going into the period right before Prime Day. That said, there's window shoppers, but traffic's coming in, it's building.

Chris:

We didn't get that this year. And so that was a sign that there just was a smaller audience whether it's the fact that it's in June, that with COVID, restrictions are being eased. People are traveling. It's the beginning of summer, people aren't thinking, like you said, buying, where July had more of an impact, I think, than October. It was just... That is the mindset. So we noticed that going into there.

Chris:

And then when we hit Prime Day, I would say that the numbers corresponded to this year. So if I look June 21st and June 22nd, those sales metrics jumped between 108% and 126% compared to the period right before, right? And those are similar to last year's comps. When you look at Prime Day versus the week prior to Prime Day.

Chris:

But what happened, like we mentioned, was the traffic clicks and even total sales were softer prior to Prime Day this year versus last year. So the ratio's there, but that's why we're only getting nine, 10% increase is because it was already soft before Prime Day this year. And it was a lot of data ..

Brett:

.. look at the data, right? We want to see how did Prime Day do this year versus last year, but also how did Prime Day do compared to the weeks leading up to it. Because that is really what you want to look at, is what's the Prime Day lift, right? You got this baseline of sales that happen on Amazon regardless of whether there's a big event and then measuring the lift of Prime Day. That's super interesting. So 108 then 120, is that what you said ..

Chris:

Yeah. So it was around 126% day one, I think 108, 114% day two, which were very comparable to last year's percent ratios though overall the sales just went up a little bit compared to last year, as you mentioned. We did find... And our assumption is this is based on a smaller amount of impressions, is CPC went up about 25% first last year.

Chris:

And this was prior to Prime Day, but especially on Prime Day, I think it was on the high end of 30, 35 and ACoS went up about 10%. And what I mean by that is ACoS went from 30% to 33%, that's a 10% increase, but I don't want people thinking 30 to 40.

Brett:

That's 10 points.

Chris:

Yeah. And so it was much more competitive, less space, but more competitors in that space is what we found. And so we were paying more to get the same traffic. Conversion rates were comparable, but because we had to pay more for each click, that's the relation to why ACoS increased.

Chris:

And then the biggest thing that we want to track ongoing, we're going to do this weekly. We'll put it in our blog. I think it's something that anyone listening to the podcast will want to follow along, is we want to know what happens post-Prime Day, because last year it was amazing, right? It makes sense. It's Q4. And I want to say, even in 2019, the numbers were up post-Prime Day, but it's only one weekend and so I don't want it to be like the norm per se, just yet.

Chris:

But what we have found is looking at 23rd through 29th, that ACoS is higher, that TACoS is higher. Conversion rates are lower, which makes sense than for ACoS and TACoS, and then click through rate is 5% lower, so it's nominal in my mind. And then CPC is about 10 to 15% higher when we look at May and April.

Chris:

And so we're still finding that there's a tail end of that push that everyone made for Prime Day, that it's still there, but the customers are at least at the same level. And so we're paying more for the same traffic and then the sales are not increasing with that. And so it's a more volatile space to look at.

Brett:

So if I had to simplify some of this, advertisers are maybe jumping on Prime Day to a higher degree than customers are this year, right? Prime Day still grew year over year by almost every account, which is pretty significant, right? And we start talking about billions and billions of dollars over a two day period. This is a massive event.

Brett:

And so the law of big numbers kick in, right? You can't grow 40% year over year forever, right? That does begin to slow down at some point. You start to reach some market saturation type points. But I think the data we're seeing is that advertisers know. We're conditioned, we're trained, we know that we've got to be aggressive to not miss out on shoppers for Prime Day. So we're bidding more, right?

Brett:

So CPCs are going up. We're really trying to go get those sales, but it sounds like there's more advertising competition and not the same year over year growth that we've seen on Prime Day. So some things are becoming more inefficient, it sounds like.

Chris:

100% and I appreciate you taking all that data jargon and putting it back in a nice way for the listeners. I would add to that, and this is its own discussion, that in general the space is getting more competitive. Amazon's releasing more placements for ads and there's benefits to them, but it also means that there's more places to spend money and more competitors that will want to do that.

Chris:

So even taking out June, if you look at April, May versus last year, I think CPC was still up 10 to 20%. So it's not strictly Prime Day related, but it is highlighted because the traffic wasn't there. And so then it impacted really everything, especially conversion rate and total sales.

Brett:

Yeah. And then that is just the trend, right? As the third-party marketplace becomes more and more competitive, that does drive up CPCs. Eventually that does self-regulate to a certain degree. We've seen this one on the Google side, we see Google Shopping, Google search for retail clicks. They do hit a top end, right? Where just the economics no longer makes sense. You can't pay $7 per click with conversion rates of one to 2% for an item that cost 30 bucks, right? You just can't can't do it, right?

Chris:

Yeah.

Brett:

So those CPCs will regulate a little bit, but when a big event like this happens, advertisers get aggressive, right? And they just want to go for it. One thing that I think will be interesting to unpack a little bit is the categories, right? Prime Day isn't a huge event for everybody. This is becoming increasingly clear to us.

Brett:

Some of our clients see massive jumps on Prime Day. Others do not. And I was looking at some data. I've got actually the Salesforce recap of Prime Day, pulling it up right now, and this will probably be no surprise, but one of the largest segments of growth, year over year growth, was luggage and handbags.

Brett:

So luggage was up about 74% Prime Day 2021 versus Prime Day 2020. Totally makes sense. People were still not fully thinking travel even in October of 2020 and that is coming back, so no surprise that that grew. But talk about that a little bit, Chris. We saw some real disparity. Some clients crushed it in Prime Day. Other clients were like, "Meh, this is a normal day."

Chris:

Yeah. So I think at the category level, some of the bigger ones we saw jump were gift related items based on price points that I think their AOV was 20 to 40 bucks so that they were able to run some deals with those products that brought in good volume, but also allowed for customers just kind of jump in on, "Okay. Yeah. I can just buy that, right? I'm looking to buy anyways."

Chris:

You've got the two days in Prime Day compared to maybe somebody selling a product for 800 bucks. And I would say categorically-wise though, our best performers were the toy category. We had a couple new electronic space that did see really good numbers. And one of them ran a good amount of deals alongside pairing that with our DSP offering and really had a full funnel approach for that leading up to Prime Day. And they saw a three to 4X growth and they didn't really see a low prior to Prime Day, so those numbers were phenomenal.

Brett:

Yeah. So talk about that just a little bit. That's kind of intriguing. You mentioned a full funnel approach leading up to Prime Day. Some categories you may just try to do a little better over Prime Day but some categories you can really capitalize on Prime Day. What was that full funnel approach just kind of high level leading up to Prime Day?

Chris:

Yeah. And I would just put it out there that we have on our site the blog. I can walk you through what that will look like, if you're curious, after the podcast, but ..

Brett:

What was that blog? Is that the blog that Amber did on Prime Day?

Chris:

Yeah. The Prime Day Prep.

Brett:

Yeah. Prime Day Prep. So search OMG Commerce Prime Day Prep blog. You'll find that also linked to in the show notes.

Chris:

So the full funnel really starts with a mixture of DSP, Demand Side Platform alongside PPC within seller central.

Brett:

Running display ads and then the standard PPC.

Chris:

Yep. And then any external traffic and then obviously product page readiness. And so DSP, that was a factor, especially with this client prepping the audience and traffic two weeks prior to Prime Day. So focusing on competitors that were similar to their products that they were running deals for, that we knew our price was going to slay and so building an audience of those people who viewed the competitor and did not purchase as well as building our own customer in-market audience.

Chris:

People in-market for keyboards or just bought a computer or whatever it might be that they need a corresponding product so that when Prime Day hit, we weren't scrambling to say, "Who are we going to target? Are we just going to update?" So we actually set a plan in motion to have that funnel, build the audience that we wanted to highlight.

Chris:

And then also build correspondingly a retargeting audience then, because anyone who goes to that product page of our brand that we're running and did not buy, we can target again. And really we push the creative and then the budgets during both Prime Days to say, "Here's the deal. We know you haven't bought anything based on the audience we've built." And we found the results there just phenomenal.

Chris:

And then a lot of that does tie... We worked with this client months before to make sure the product page were ready, that they've got a storefront up and running and it's prepped with a deals page and then they've got posts they're going to launch for these products. So it was full funnel on the ad side, but also on the organic side that everything was ready there because you don't want to just use PPC as a weapon. You want it to compliment the foundational piece that you should have in place.

Brett:

Yeah. I love it. And this was a strategy that works for holidays. So as we're preparing for holiday, which is coming up, right? We should be laying the groundwork right now for holiday. We've got a webinar coming up for Cyber 5 Prep, stay tuned for that. But yeah, this idea of, hey, remarketing is always your cheapest form of advertising, right?

Brett:

And so we know, and we just talked about CPC is going up 25%, even the weeks leading up to Prime Day. And on Prime Day, CPC is up 30%, right? So it becomes more and more expensive to advertise during those peak shopping days because the advertising competition is so high.

Brett:

So if you can start to seed some audiences, reach some in-market audiences. We do this on the YouTube side as well, where we try to reach people who're maybe shopping for toys or home decor, or different supplements, whatever the case may be. Seed that audience, get them to visit the site, check things out.

Brett:

Now you've got a big remarketing pool that you can really hit during your Prime Day deals and get them for a lower cost and get them to convert with your product. So thinking full funnel totally makes sense. That's definitely something to file away for next year's Prime Day, but also for Cyber 5.

Chris:

And one of the things I would add to that, it's not new, but it seems like it's new in some of the forums we're having and what we're hearing from advertisers is getting traffic from external sources to Amazon. And we talked about impressions, clicks were lower this year until the thought was, "Okay, where can we get ideally the same CPCs or better."

Chris:

And one of the ones that we highlighted and run as Google to Amazon in terms of running search ads on Google doc to Amazon product pages or storefront. And not to go on a tangent, but there's Amazon attribution, which allows you to track sales return. And storefront also has tags that you can add to that if you run any pages on your storefront.

Chris:

And we found we go after low-hanging fruits, so searches on Google that have Amazon in their query. You can get 10 to 40 cents CPCs, or better put probably 30 to 70% less CBCs than you have on Amazon. The conversion rates are lower, but you're building traffic.

Chris:

I look at it as almost like how DSP has mid-funnel where you're building a retargeting base and you're also building awareness because people are coming to Google to search maybe mirrors on Amazon or a Derma Roller on Amazon. And then, one, I don't know why they search on Google, but they do. The search volume is there. You can ..

Brett:

So people that.. To buy something on Amazon, but they start their search on Google. And it happens millions of times every day. I actually just did a talk with Orange Klik recently.

Brett:

I can link to their interview and Chris you'll help me prep for this, but I pulled data on people who search on Google for bedsheets, but Amazon is in the query, right? So I'm searching for Amazon Prime bedsheets. That was a pretty popular query or whatever. Almost a million searches a month for those keywords related to bedsheets and Amazon.

Chris:

Here's a hack for you. If you're going to do that, just go to amazon.com and put in bedsheets. You're going to figure it out. You're going to get right to what you want to see. I've got a buddy that will put Facebook into the Google search and then click the Facebook link. And I'm like, "You know if you use a dot-com at the end you're right there."

Brett:

So this underscores an interesting consumer behavior, shopper behavior thing. For a lot of people, the web begins on Google, right? That's just where they begin everything. This is where they start. Like, "This is my entrance into the web," and it's hilarious. So one thing I'll underscore here.

Brett:

I think there's been this evolution for Amazon sellers where back in the beginning days of the third party marketplace, you could win by just having a product there and maybe gaming the system and keyword spamming, and doing some stuff to get organic rankings, right? So just have a product, get organic rankings, you make a lot of money, right?

Brett:

Then it became more complex. Now you are having to advertise on... You're doing giveaways, maybe doing a little bit of advertising on Amazon. As things become more competitive, we have to be more sophisticated, right? So what we like to talk about at OMG Commerce is, "Hey, if you're selling on Amazon, you need to have a base of Amazon advertising rights, sponsored products, foundational, sponsored brands, sponsored brand video," I think that is a must now. Amazon DSP for the remarketing side and maybe top-of-funnel.

Brett:

But then you look at other traffic sources. The next frontier that a lot of people are tapping into is Google to Amazon, right? And that's what you're just talking about. It's this incremental growth, it's maybe reaching the shopper before they get to the Amazon category page and before they see all your competitors ads, you can reach them when they're on Google, which is where they enter every site. Thinking about now, this is going to be key for holiday, key for Prime Day next year, a sophisticated approach to marketing and growth versus just, "Yeah