E217: Reviving a Dying Ecommerce Business
We received this rather dismal email from Ryan Barr, one of our Premium members:
My business is dying. I'm getting pretty desperate. I was at 1.6M Rev in 2016 and this year I finished at 850,000. I'm not sure what to do. Seems like everything I'm doing makes things worse. Conversion rate keeps slipping. This is an awful and scary time.
This email led to Ryan being on the podcast today. This is not an uncommon situation and I'm hopeful that the lessons in this episode will help others in the same boat.
The strong start, the plateau, then the decline
Ryan started his business around 2011. He enjoyed explosive growth in the first few years, starting from 50k in his first year, to 200k, then 500k.
In 2016, he hit $1.6 million in revenue.
After he hit his $1.6 million high, things began to plateau.
Things didn't get better from there. In 2017, sales declined to $1.3 million, and then last year, it dropped to $850k.
Reviving the business
Ryan and I start by diagnosing the problem. We talk about what worked for him before and trace where things started to go wrong.
We talk about actionable advice that he can implement immediately to recover from the slump:
- Firing his ineffective SEO and PR company which are only costing him money with zero returns
- Going back to doing PR himself, then transitioning the process to a Filipino VA
- Dealing with negative emotions brought on by the decline
- Increasing margins to have more advertising dollars
- Creating a referral program and building a hand-curated list of referral accounts to avoid bottom feeders and coupon sites
- Reaching out to influencers
- Taking advantage of paid ads, specifically Google Shopping ads
- Getting to know his customer and creating a customer avatar
This is a special Under the Hood with a Premium member. If you want to be in your own Under the Hood episode for free, click here to sign up.
Thanks for listening! Check out our Youtube channel for more content.
Until the next one, happy selling!
Full Audio Transcript
Intro: This is Mike and welcome to episode number 217 of the EcomCrew Podcast. I got to tell you guys something, this is a rare thing. I've had to record this intro more than once. We usually get these with one take, but I may two fumbles with the podcast number and who was on it and all kinds of stupid stuff I think maybe because I'm still a little under the weather, or maybe because Dave and I haven't spent too much time together, I'm a little bit rattled, who knows what's going on. But this is in fact Episode 217.
I want to thank you guys for joining us today. We're back with another EcomCrew Premium member on the Under the Hood segment. I love doing these. It's interesting when I meet people in person now, this is one of the things that people bring up at these Under the Hoods is to thank us for doing these, and it helps relate people to all sorts of other businesses. And if you want to be on your very own Under the Hood, just go to EcomCrew.com/UndertheHood. One more URL I throw out you, which is EcomCrew.com/free. If you haven't had a chance to check out our free mini courses yet, go over there and check those out.
Again, 100% free content, three free mini courses and we have a secret fourth one coming up pretty shortly here in Q1 of 2019. So, if you go over to EcomCrew.com/free, you can check out all those free mini courses. All right, right after this introduction we're going to get into the Under the Hood segment with Ryan Barr from EcomCrew Premium. Talk to you guys on the other side of this intro.
Mike: Hey Ryan, welcome to the EcomCrew Podcast.
Ryan: Thanks for having me, Mike.
Mike: No problem. This one is going to be a more difficult one than typical. We'll talk about a little bit why, but let's just let people know what's going on here before we get into the whole meat and potatoes. We've been doing this segment called Under the Hood now for a little bit over a year, and this is kind of a modified version of Under the Hood. We've been asking EcomCrew Premium members to submit for the segments in a little bit of a modified version of Under the Hood where we go under, get into some more detail about your business and how you got there and also still try to do some things that can help our students.
But if you're interested in being on your own segment of Under the Hood, if you're not a premium member, you can go to EcomCrew.com/UndertheHood. And again Ryan, what we’ll be doing here is spending let's say 10 minutes here kind of introducing yourself, what your business is, and kind of how you got to where you are, and then hopefully we can spend the rest of the episode talking about ways that we can help you kind of in your case, right the ship or kind of give some foreshadowing because some things have not been going great for you. But as always, let's get started with the question of how did you get started in e-commerce as I always find that fascinating?
Ryan: Yeah. So a few years back, I just wanted to start a business. I had been working in a variety of different industries, and I read 4 Hour Workweek, which I think a lot of people do. And yeah, decided to, maybe that was a good way to sort of dip into business without too much risk, so very inexperienced and very green. So I started a website and started selling some accessories based mainly towards men and it started to get a little traction from there. So, that was the beginning of everything.
Mike: Got you. And what year was that?
Ryan: That was 2011, 12, something like that.
Mike: Okay. And I assume when you first got started with it, you were selling other people's products or something along those lines; it wasn't something that you sourced yourself, or was it?
Ryan: No. Yeah, it’s something I developed myself yeah. So, I had started with one skew and yeah, I just sort of build out from there.
Mike: Got you. Okay. And so since 2012, I mean we're about six years on now, let's talk about how things have kind of evolved over the last six years.
Ryan: Yeah. So it grew pretty quickly. So I think the first year I did maybe about 50 grand or something like that. And then 200 and then 500, then made the jump to a million where it plateaued a little bit and then went back sort of high watermark at 1.6 million, which is two years ago. But since then, it's been on a pretty steady but sloping down or decline since that high watermark, and that's why we find ourselves here today.
Mike: So the 1.6 million was in 2016?
Ryan: That's correct.
Mike: Okay. And so last year was 800k you said, is that right?
Ryan: Yeah, for 2018, maybe 900 or something.
Mike: I'm sorry I missed you there. I'm still getting used to the fact that it's 2019, so 2017 was 800k?
Ryan: No, no, no, no, so gross revenue for 2016 was like 1.6.
Mike: Got it.
Ryan: 2017 it went down to like 1.3 and last year it went down this past year, which was 2018 into like 900.
Mike: Got you okay. Got it, so 1.6 million in 2016, 1.3 million 2017, 900k 2018. So basically, a 20% or so drop from 2016 to 2017 and like a 30% drop from 2017 to 2018. And this next question I’m afraid to ask, but a lot of times when you get in this situation, the net margins are off even a greater percentage. Is that the case here or were you able to keep your net margins as a percentage about the same?
Ryan: They're off a little bit but I'm not losing money now which is good.
Mike: Yeah and is this a full time gig for you?
Ryan: It is a full time gig.
Mike: And let's talk about like percentage of sales, I mean is 100% of this — because you have your own website, you shared the URL with me, we're going to keep that private just because I understand people not wanting to yell all over the internet, here's my brand and go copy it, and copy all the good things. So we'll keep that a secret, but is this 100% of your revenue or you also sell on Amazon and other channels?
Ryan: No, that's 100% of my revenue.
Mike: Got it okay, and what's the platform? Are you on Shopify here or BigCommerce, WooCommerce?
Mike: And in terms of repeat business, how has that been changing over the years? I mean, is it pretty consistent over the last three years, or where's the drop coming from? Is it because you're not getting enough new customers; is your repeat business down? What do you see is the trend here?
Ryan: I think it's new customers. If I look on my Shopify dashboard, I'm looking at this past year and I have a returning customer rate of 27% and that says up 16% from the year before, so repeat customers seems to be doing okay.
Mike: Yeah, makes a lot of sense, really good. That's pretty strong. I mean, I think that we have like this anomaly with ColorIt where it's 45%, but that's just like really unheard of. But to get 27% for the — we didn't really talk about the exact product itself, but it's these high end fashion accessories. So these are not cheap products. These are not the types of things that you need to buy over and over again because they're higher end products and once you buy, like a really nice whatever it is that fashion wise it should last for very long time. So, you're getting people to buy a different accessory or not the same thing over again, which is harder. So to get to 27%, I think is actually pretty strong.
Ryan: Okay, that's good.
Mike: So, it sounds like the bottom line is that — and we'll dig into maybe why this is, but it sounds like you're just having a harder and harder time getting new blood in the door.
Ryan: Yeah, yeah, like traffic continues to drop and then also conversion rates a little bit as well. But mostly it’s just my traffic seems to be just going down and down as time goes on. Yeah.
Mike: And so let's go back to the good old days of 2016. I mean, if you look at the 1.6 million you did there, what were the traffic sources? I mean was it organic; was it Facebook ads, Google Ads, influencers, where was all that traffic coming from?
Ryan: Yeah it was all organic. So basically, I mean we did a little Google Shopping but I mean it was almost all direct and organic revenue, a decent amount of referrals too, we get some pretty good press as well. But it was all pretty much people coming to me.
Mike: Okay and now for that, I mean is it people typing in your brand name or was it people typing in like men's leather belt or something and then finding you through a particular organic search?
Ryan: Yeah especially mostly brand terms yeah.
Mike: So they were looking for your brand? I mean like they were all…
Ryan: Yeah, so yeah there was some a lot of good press around that time, so a lot of blogs and things like that which tapered off as time has gone on with that, but I wasn't ranking really high. I mean, looking back at the console and looking things wasn't like I was killing it for a cowboy hat generic term or something like that, and that just fell off, so yeah.
Mike: Okay. So let's dig into the press things. What I always try to do in these types of situations is look at where things were going right and can it be replicated or fixed? So, a lot of times with what you're saying is you may be kind of got like a lucky break somewhere along the lines and that that's really hard. It's hard to repeat luck, right. So I mean, what were the best things that were happening and how did that come about?
Ryan: Well, I used to reach out a lot of blogs and I don't know if I was lucky, it wasn't like I was on Good Morning America or Oprah's book club or something, but there would be consistent mentions in blogs and things like that. And I wouldn't say, I don't think it would be anything like that, but those things sort of like beget more traffic after a while because some blogs will post value and then others will pick up the content and it'll sort of like have a little bit of virility to it. But yeah, I don't know if it was like I was lucky because the revenue is pretty stable for about three years there and getting things like that, and then I think that played into building search terms for brand and product and whatnot.
Mike: Okay, one thing you just kind of said there was you used to reach out to these blogs. Is this something that you've stopped doing or you just don't have the same success with it, or you ran out of blogs to reach out to?
Ryan: Well, I used to do it personally. And then when things got going, I stopped doing it and then the last which I think happens quite a bit, you get successful doing something, then you stop it for some reason. But as things have began to decline, it kind of brought me back to what you’re doing now is like when you were successful was happening. So, I have hired someone to do more PR outreach, and they're getting some links and things like that, but the referral traffic continues to climb year over year. And at the same time, I was looking, so I was asking myself this very question like, okay, things are declining both organically and referral which had been the main driver, so what should I do?
And my thought was, I hired a PR person and I hired an SEO company and put them to work over this past year and it's just been negative returns like things continue to decline whereas it seems like the more effort I put in there, it is getting worse whereas back then it seemed a little more casually easy to I guess get press links and organic traffic.
Mike: Yeah, unfortunately this is a story that I've heard over and over again. I mean, including from myself, I was foolish enough to hire a PR company again thinking maybe the results will be different this time. It was someone that was highly recommended to me, but eventually the person who recommended it to me, they ended up in the same bucket I was which was, it was the biggest waste of money ever, because the company had hit the ground running pretty good for the other company and they never did a good job for us.
It was something like a $20,000 right off for us in 2016 when we hired this awful PR company. Because I'm an SEO guy at heart, I never hire an SEO company because I already know exactly how that ends up because the problem with an SEO firm — and I get it, I understand the position that they're in. The average person that hires an SEO company wants to see results within a couple of months. They're looking at this 500, 1,000, 5,000, whatever the number is in dollars that they're paying the SEO firm to improve their rankings and to get an ROI on their investment. So, the SEO firm is in this position of, I need to make results happen quickly.
An SEO is a very slow process. So, once you have the rankings and you've kind of got to the top of the mountain, it feels great, but getting there is a tough climb. And you can't climb Mount Everest in like one hour, you got to slowly kind of give up and go to base camps and acclimate and things of that nature. It's very similar in SEO. So, SEO firms are constantly up against this. We know we're going to lose our client if we don't produce results quicker and the only way to produce results quicker than the average person is willing to wait is to cut corners — or not, I shouldn't say cut corners. That's not a fair way to say it, is to cheat is a better way to put it, to push the boundaries of what Google deems to be cheating.
And they're constantly pushing the envelope here with that and typically end up causing more harm than good, because they're aggressively going out and trying to get links or do things that don't seem natural in Google's eyes. And the thing is that the SEO company is ultimately not the one that has any risk in the game. They're getting the money from you up front, if they get your site black balled or whatever; it's really no harm to them other than word of mouth PR for them. But a lot of these SEO companies just switch names of their company every six to 24 months as they just kind of kill the fish in the upon. So, I've always been anti SEO companies and PR stuff the same thing.
I think a lot of it; you could probably hire your own employee to do it. This is what we've moved towards. With our Philippines team, the reality is it ends up being significantly cheaper and you get exactly what you want. You can write up a document, spend the time up front to write out exactly how you want to do outreach and how you want to do PR, and go back to the old days of when you were the one doing it and maybe spend one to three months of your time doing all that again so you can be current and understand what the response rates are and all that.
And then, once you have that in writing, hand it off to a Filipino VA or something, and have them do that communication. And they could do that on Philippines time like on their daylight hours. You don't have to necessarily be responding within one hour or anything because this is all stuff that can kind of take its time that go through the system. And then you could have a bar where you want to hit a certain level of interest or whatever, then it gets handed over to you. So you're only dealing with the best opportunities or the things that makes sense for you to get involved with, and all the time consuming, tedious stuff that you probably hated doing, you can pass off to someone who's actually really good at doing that.
Ryan: Yeah, so that's a good idea.
Mike: I mean, it's tough to get your head around doing these types of things when you're in a situation here, because you probably do want to see results really quickly.
But my advice would be to think back to the days of you started $50,000 in year one, then went to 200k then went to 500k, then the 1 million then the 1.6 million. My guess is that during those years, those five years, you had nothing but an emotional high, right. Every year you were constantly hitting a new bar and it feels really good to be going through that period. And the period you're going through now because I've been there, it's like hard to get out of bed in the morning and you just feel like a failure and you're embarrassed to talk to anybody about it. And it's just like all these other like negative emotions are spinning up and it's hard to even focus through the trees of what I need to be doing.
My recommendation would be just step back for a couple of days. Take a deep breath, realize, okay, you're at 900k, you're still doing — you said you're making money which is a good spot to be in, and think about that same growth trajectory that you had in the beginning, right? So, if you were to go from 900K to 1.2 million next year, then the 1.5 or something, you probably would be happy with that and realize that you probably are going to need to spend this — because it took five years right. That's the thing is it takes a long time to kind of get some of these things going.
There isn't — the way that you've built this business, there isn't the magic bullet of well, improve my listing on Amazon or get some outside traffic going there or run some Facebook ads, or something you can just turn the faucet back one quickly and have that magic bullet. It's going to take some time to kind of get things going back in the right direction. I think that you can do that by replacing the dollars you're spending on a PR firm and SEO company, I would just fire those guys. I mean personally I mean…
Ryan: Yeah, yeah, I have…
Mike: So you’ve already done it. And then you can hire one or two full time Filipinos for 600 bucks a month, maybe $700 a month all in with when you pay their benefits and stuff which I'm sure is way less than you're paying the PR firm and just tell them what you want. Like have a procedure, I would again suggest that you go back and do that yourself for the next one to three months kind of get back into the weeds of some of the stuff because – you go back to the bread and butter of what made you successful to begin with. I mean, it sounds like reaching out to blogs and doing PR and those types of things was helping you build this business because the people were typing in your brand name and that was your number one search, and that's when you've won.
That's when you’ve — especially what you were doing and that's I see the same thing with ColorIt, that's our number one search term. So people are out there talking about it whether its current customers talking about it because they're happy with it, or other blogs talking about it because it's a good product and they like it, going back and working on those types of things and doing it in a way where it doesn't become tedious and miserable for you. Because if your personality is anywhere near like mine, it would seem like fun to begin with for the first three to six months doing all this outreach and seeing all this press come in, but pretty quickly it's like oh my god, this has become such a chore having to deal with all this. And you can just get someone else on your staff that that works for you that will listen to your explicit instructions on how to do it.
So, it'll come basically in your voice. You can even have it come from your own mailbox that you can have the Filipino either use your current mailbox or make another mailbox that sounds kind of like you that you share, maybe it's a RyanB at your company name instead of just Ryan at your company name, and that’s just the mailbox you two share and it comes from your voice, and they're just kind of doing it as a — and they're just sending out the email that you've already — because you're probably sending out the same email to everybody. That's how I did outreach.
It's you go find the websites and then you copy and paste the same exact email every time and then you change one or two sentences around a little bit to just mention their name by name or their company and maybe say I really love this one thing about whatever. But you can have that Filipino VA do all that work for you.
Ryan: Yeah, that sounds like a good idea.
Mike: That's coming from personal experience with having used these guys to do that stuff. And again, a different mindset, these guys enjoy doing this stuff. They take pride in doing that stuff. That's their skill set. That's what they enjoy. That's what they're good at. It took me a long time to get my head around the fact that people like doing this stuff for me, it's just like me, we're all wired differently. So it's different. The other thing that I'm thinking about here as we're talking about this in particular, you mentioned referrals, but do you actually have a referral program where you pay people…
Ryan: No, I submit them in the sense of like a Google Analytics sense as far as like referring websites. But I do not have a referral program.
Mike: What about the idea of doing that? I mean, would that be something you would consider?
Ryan: Possibly. I mean, I'm sort of open to everything now. I mean yeah, have you seen people execute that successfully?
Mike: Yeah, especially if you're doing this type of outreach. If you're expecting free press, it's a lot more difficult to get people to want to write about stuff for you. And you can certainly go about things that way. But I think that if you have people in the past that you've worked with, trying to strike those relationships back up and offering them a percentage, giving them a dog in the fight, giving them a reason to want to do it. We didn't talk about margins yet. So this is probably a good time to talk about margin, so I need to understand if you have the money there to do that. But I mean, if you sell $100 worth of accessories, what's your cost of goods on that?
Mike: Okay, so 50. So, I would say the first thing here is that your margins aren't like really good enough for ecommerce. I mean if you're buying and reselling, that's Keystone margin. If you're doing your own stuff, that's a little bit on the thin side in terms of margin. I like to see that be a third or a quarter, so somewhere between 25 and $33 cost of goods because that would give you the opportunity to spend more money on advertising. If you're buying something for 50 and selling it for 100 and you got to cover free shipping in that equation as well which is going to be another 10 to 15 bucks…
Ryan: I’m including that.
Mike: Okay, so your actual costs are probably like what 33, 35 something like that.
Mike: So you're paying $15 for shipping, okay. So that's not quite as bad as I was originally thinking here, but still I like to see a little bit better margins so you have more dollars in there to spend on advertising to try to another angle of getting people to purchase from you, whether it's Facebook ads or Google Shopping ads, Google AdWords, but also affiliate program, a referral program. If you were to offer let's say, 10% to someone for anything that they bought, I mean if your average order value is 100 bucks, I'm assuming it's higher. We didn't talk about that yet, either. I guess we can throw that number out real quick, do you know what that number is?
Ryan: $205, oh, well, it's really high.
Mike: Okay. So, let's say you offer a 10% referral program, you're talking about $20 per sale for someone for a referral program, they're going to be pretty interested in that. If you put together like a one page kind of synopsis or bio about your company, and why they should work with you, this would be a part of the things I would put in there. So it's like my company, we've been around since 2011 selling high end fashion accessories, blah, blah, blah, this is why we're better and we're different. Our average order value is $205. We give 10% of all sales as a part of referral program. This is a bio that you can send out and get people interested in wanting to work with you because bloggers, they need to make money too, right? I mean like there are certain things that they'll do for free because they need to produce good content.
If they particularly already have bought your product and really like it without you interjecting in the middle of that, they're very likely to go out and write about it. But otherwise, they're going to write about the things that make them money. They're going to write about topics that are high search volume that are going to get good click through on ads and get good Adsense revenue, or they're going to work with products and brands that are paying them a sponsorship or have a good referral program. And if you're offering nothing other than, please write about me because I asked you nicely, that makes it much more difficult than if you're saying hey, look I'll give you a $20 CPA every time someone buys through your link, they're going to be much more interested in working with you. That's just the bottom line.
Ryan: Got you, got you. Have you had success with the program?
Mike: We haven't, not with ColorIt. We did try it for a while, we didn't really put a lot of effort into it in the way that I'm suggesting that you do because we haven't really needed to. ColorIt, we've run about in a little bit different angle and I'll talk about that here in a second when we do outreach. The thing that didn't work for us, and the way that we went about it was kind of dumb actually. We set up the referral program; we just emailed our current list and said, hey, we have a referral program now; we publicized it on our website. And what ended up happening is the biggest referrals we have were like these coupon sites.
Ryan: That's a good — I did a referral code briefly, and then it just ended up being a bunch of coupon codes like optimizing for my brand terms plus coupon code.
Mike: Exactly. So what I would recommend in that case is to handpick the referrals and approve them. So, you're reaching out to a particular blog or someone you've already worked with, your referral program has like approval only where it's not just open sign up to where, like retail me not, and all these guys hop in. And you basically, you're building a list of referrals that are that are handcrafted to you and not just people that are looking to be bottom feeders off of your brand name because that's what ended up happening to us. So I think that if you went about that way, you you'd find a lot more success.
And if you were individually approving accounts and individually looking at the referrals that were coming in and making sure that these are new customers that weren't just looking for your brand name plus coupon term and kind of policing that, I think you'd find a lot more success especially — I mean the reason that we didn't really have success that we were hoping for is because our average order value is $30. I think that that has a lot to do with it, and our products appeal to a different type of audience. So we were able to go to influencers and just offer free product to them in exchange for doing stuff for us, and that that has worked really well for us.
Ryan: Okay, got you.
Mike: So, on that same line, I would suggest also trying that angle as well. And that's another thing that you can use a Filipino VA to replicate once you kind of find a good process for you. So I mean, I would be out there reaching out to Instagram celebrities or — I guess celebrity is probably the best or personalities whatever and YouTube as well. And so for us, what we had a lot of success in is going to a YouTube channel that was not too big, you get these sub quarter million subscriber YouTube channels that aren't high on themselves as a lot of them once they get to be a million subscribers and more, they have an agent and they're very difficult to work with a lot of times.
But if you have the type of product that you think would appeal to fashion accessory type channels, you could offer them free product just to do a review. So we've had really good luck with that with ColorIt where we've gone to a YouTube channel and say, look, we don't have a referral program, we don't pay anybody anything ever to do stuff for us because we think we have a good product, but we're happy to give you as much product as you want basically. Pick whatever you want, we'll send it to you. And if they're big enough channel, we’ll also offer a giveaway for their audience so they're even more motivated to talk about our brand. And I think that's something that could work well for you as well. I'm not sure…
Ryan: It's a little more difficult with such a high ticket item. I guess I'd be curious what the thresholds would be because there used to be for sending out product to blogs, you could kind of get traffic and get a good feeling that, okay, we know we're going to generate at least a couple of sales or a sale and break even if they post about this through just referral traffic alone. Or I guess I don't understand this metrics within YouTube or an influencer as much. We have never really done any of that sort of marketing to, all right, what is say my cost of goods is $100 on a product, what is worth sending out?
Mike: Yeah, I mean I would say that it'd be the same math if you got one sale off of an influencer talking about it, it would make it worth the while, because if you…
Ryan: Yeah, I guess I don't know what level of influencer can provide that sort of traffic. So I guess I don't know what subscriber base equates to the traffic to website.
Mike: I would be targeting YouTube channels that were between like ten and 100,000 subscribers. That seems to be the sweet spot for us really between 10 and 50,000 is where we've seen the most success. And basically, at that point they're big enough that they can help you not just kind of wasting your time. But they're not so big where they're going to be highfalutin and not want to work with you.
Ryan: Got you.
Mike: And I think if you found five or 10 YouTube channels to do this with over the next few months, you're looking at a $500 to $1,000 project. Thinking about what you might have paid the PR company or SEO company I'm sure it was more than that, and using those dollars towards this type of thing and just seeing how it goes. And worst case scenario, you got someone on YouTube with ten to 50,000 followers talking about your product, and that's not so bad. It's the same thing that you're already familiar with when you were doing this as blog outreach. It's kind of a needle in a haystack, you keep on trying until you find one that works well, because very rarely is it like, every single blog you contact or that writes about you that produces a ton of results for you.
It's usually one in five or one in 10 end up producing the best results. And I think that YouTube has been very similar for us as well. Most of the things that we do, we get very little sales from, we see nothing that moves the needle, then we work with one YouTuber that just produces 100 to 200 sales or something stupid because their audience is super engaged, and they do a really good job with the video for us. And that's all a bit of a crapshoot ahead of time, because you can't guarantee what's going to be the results when you work with a YouTuber. But I just kind of again, I look at the macro sense of all of that.
And again, if you get one sale on average per one that you're doing and you're having a Filipino VA do the outreach for you and most of the work like we are, what ends up happening is you're spending very little of your own time, this thing is kind of happening on autopilot in the background. And over time, you're building a footprint of getting your name out there more, getting more inbound links and traffic and eyeballs on your site. And there's all these things you just can't quantify, kind of almost like we were talking about earlier, the first five years as you were building this stuff, you weren't quite sure necessarily where all that success was coming from in terms of pinpointing it down to the one blog that you worked on or the one company you talked to or whatever, but it definitely over the body of work made a big difference. And I think it's pretty similar here.
Ryan: Yeah, for sure. Appreciate that. What are your thoughts on paid acquisition through like — one thing I've never really done is top of funnel for anything paid so Google or Facebook. Is there still opportunity there or is the space too crowded, or my margin is a little tight to acquire customers, because that's one thing I've seen leads to real decline in traffic overall over time and degradation of that, so I'm curious your thoughts.
Mike: Yeah, I mean one thing that's continued to do really well for us is Google Shopping. So that would definitely be something that I would hang up the phone and write out the words, and go work on because that's still something that we see really great results with. It's kind of shocking actually how well Google Shopping continues to do. It makes sense, if you think about it logically, you got someone that's typing in men's leather belt or whatever it might be, they're looking for something right then and there. So, you got a highly motivated buyer and they're looking through a catalog of other products.
Yeah, I think that they would do well for you, I mean things like colored pencils do really well for us, gel pens, adult coloring books, and all these shoulder ice wrap, ice wrap, all these terms that do really well for us in Google Shopping, because you can see how people are finding your products, they do incredibly well. All those products are doing really well for us. So, I would break things up in the category, the different types of accessories that you have and have ad campaign and Google Shopping for each category so you're not just — because you can advertise your whole catalog is one campaign.
I would break it out one by one. It looks like you have maybe nine different categories or maybe 10 on your website, and I would break out each product, put it in its own category and then let Google Shopping do its thing there. You'll probably find that somewhere between like, three and six of those 10 end up doing really well and the rest of them don't convert. You can just turn those off and let the ones that are doing well do well. That's certainly how it's been for us with our stuff. I mean, there's a couple of things I don't understand. Like, it just doesn't do well. But something like colored pencil which I just mentioned, those things do incredibly well with Google Shopping for whatever reason, and we don't complain because they’re cheap sales. So that would be something that I would definitely set up and be looking into here as you're kind of contemplating 2019.
Ryan: Okay yeah, great. And what about Facebook as well, have you…
Mike: I think Facebook is going to be really tough for you here. I have a hard time in my mind imagining how — I keep on using a leather belt as an example because I don't want to give away too much stuff about your brand. But let's just use that as an example to continue down that path, how do you advertise that? How do you put that on Facebook to get you a positive ROI? I think it's really tough because I have a leather belt. I had a leather belt like literally because I don't dress up very often. But it's not something that I'm looking to replace anytime soon. When the thing finally falls apart in 10 more years, that day when the buckle falls off of it, or the thing just looks cracked and I want to buy a leather belt, I'm going to go out and buy one that day, or that week. And so, the window of time to be able to buy that or convince someone to buy is really small.
Ryan: Yeah. I guess also my thinking there is being able to get in front of with creating lookalike audiences, creating brand ads or whatever for top of funnel that are reaching people, like the people who have purchased from me.
Mike: How many customers have you had total?
Ryan: I mean thousands.
Mike: You might be able to build a lookalike audience. You really need 10,000 to get a good lookalike audience. I mean you can definitely try it, I think you should definitely try it; just my gut is that it won't work as well as Google Shopping ads. Now, I've been proven wrong lots and lots of times before, maybe the lookalike audience in this particular case is an outlier that just performs super well where you can put together a really great 30 seconds to a minute brand video for yourself which you can use as a YouTube remarketing ad and a bunch of other things. The money you would get, because you definitely want to be doing retargeting and remarketing ads both on Facebook and YouTube anyway. That goes without saying, if you aren't doing that; I would definitely be doing that.
So you could use that video at a minimum just for that. It probably would increase your ROI off of what you doing there pretty significantly and it would pay for the video over time. And you can get those videos done really cheap with something like Animoto, which I've talked about a lot on the podcast before, we can talk about that more if you'd like. But yeah, you could put together — you have the type of product and brand here that would work, really it's just like all lifestyle right. So you can have a male model. Is it all meant it all men, it all men.
Ryan: Yeah. I have some women.
Mike: So you could have just people walking down the street using your products and show this stuff in a very great marketing way or whatever. And people would be like, oh man; I'm looking for something as a gift or for myself for whatever that fits that style and that whole persona that you're kind of looking for there. And maybe I'd be surprised that that would work. The thing that I can say that's great about this as you will know within probably 100 to $500 in ad spend. So you don't have to make a huge investment to know whether or not it's going to work. That's the great thing about Facebook. So you don't have to…
Ryan: Have to know.
Mike: Yeah, I mean develop the video.
Ryan: Yeah I guess…
Mike: Sorry go ahead.
Ryan: Yeah, so my thing was that yeah, I guess I've had about 30,000 customers, so I might have a good lookalike audience based on them. And if I could do a brand post similar to how people have found me in blogs and whatnot that perhaps there would be a chance to reach people that way. But yeah, I don't know, maybe…
Mike: My recommendation for that if you're going to go that route would be to have a landing page just for that traffic, like not send them to your homepage. I would make either with Zipify Pages or some other page builder, build a really beautiful epic landing page for that traffic and have some type of scarcity and call to action that makes them want to convert quickly. So that can just be today only 10% off, or 25% off, or whatever, then you want to throw at them. Or maybe it's an individual product which I think is less good, I think you have a pretty wide variety of stuff here. But that landing page can highlight the 10 different categories of stuff and also offer this coupon or some type of special offer, maybe it's like they spend over $100 and they get some other accessory like cufflinks or something.
Ryan: A bundle free.
Mike: A bundle, yeah, whatever it is just something that you can mention in the ad and it goes to a landing page, and the message is consistent rather than just sending them to your homepage and hoping they buy, because I think that that would be tough.
Ryan: Okay cool.
Mike: And again, you never know. Maybe it's hard. This is why I always say, always try everything. You never know what's going to happen because what ends up happening in life a lot of times, if you can't relate to it, it's hard to imagine someone else doing it, right? So like for me, I can't relate to being a customer of a lot of this stuff because I wear jeans and a t-shirt and hats and I'm happy about that because I used to wear a suit and tie to go to work every day. So, my rebellious phase of I work for myself now was like I'm never going to wear that crap over again. I've turned into the anti customer of yours.
If I was still going to a job where I needed the stuff, the first thing I would be looking at is probably these types of products because they're just absolutely gorgeous. I still appreciate them, just my stuff is made out of nylon instead of leather these days. I know I'm going to get a dirty and want to go hiking with it or something instead of go to the office. So, maybe people that are in New York City on Wall Street or something, like if you think of the stereotype of the typical customer that you might be — maybe they're just buying stuff more readily than I think and maybe it works. So, it's always worth it.
And again, in the Facebook land, if this was back in 1980 or you were having a conversation of your options are to spend $25,000 or $50,000 on an ad spread in some magazine or 100K to do a minimal ad spend on a commercial spot on the local news, I think it's a stretch. But seriously on Facebook man, you will know the answer to this with 100 to $500 on the very top end within the first $100 of ad spend, you'll know whether it's working or not. I mean, that's the bottom line. I mean you're looking at a $200 average order value, your acquisition cost you can probably afford to spend and make sense of something like 60 bucks to acquire a customer. And that's taking into account the fact that you have a 25% repeat business which I think you want to make sure that you're thinking about.
Within the first $500 of ad spend, if you haven't acquired A customers whatever that works out to, then something is not working, I mean you'll know. And maybe you've acquired four and maybe you can tweak things from there. But you'll know within a pretty good range of reasonability of Facebook ads that are going to work for your brand.
Ryan: Yeah, it's worth testing.
Mike: Another thing I would test too, not just the lookalike audience although I think that that's a really good place to start, that's actually exactly where I would start is building a 1% lookalike audience. And are you familiar with how to do that by the way?
Mike: Okay. So you're going to want to build that 1% lookalike, that would be the first thing I would target. But then I would also target what you deem to be your avatar, your customer avatar. Is it a 25 to 40 year old male living in New York City that also likes Nordstrom or whatever? I don't know exactly what other brands equate to this. There's probably leather brands or particular accessory brands that if they like them they probably are going to be customers of yours. That would be the other thing I would do because a lot of times as good as Facebook is, I can do better a lot with my targeting than a 1% lookalike audience. Our 1% lookalike audience does well, but not as well as the customer avatar ones that we built ourselves over time.
Ryan: Yeah, you just add certain interests.
Mike: Exactly yeah. And for us with like coloring, it's pretty damn simple. I mean, it's women over a certain age that like one particular interest group that's on Facebook and there's one other filter to it. I forget what the third one is now. I have to go back, it's been a while since we set that but it's relatively simple. We did some really complex stuff trying to lay all these different things, and the reality was that the simpler we kept it the better, but we know our customer. It's pretty obvious after selling millions of dollars worth of product to people, to customers. You're getting in tune with who they are.
So, we know this in a couple of different ways who they are. We know what they — we do a thing called ColorIt Live, so we happen to have a live interaction with our customers on a weekly basis. We give a $20 gift card for testimonials for sending in pictures of themselves with our products which is something else I would recommend that you do and then incorporate those images into one of your videos, your remarketing videos or whatever it might be. But when they're sending in pictures, you get to see who they are, so you no longer have to like — you can tell by the customer name that it's mostly women.
But when we started getting all the photos in, it was obvious that these are all like ARP member type age people, these are 55 plus on average women just by seeing their face, a picture tells 1,000 words right, so that was one thing we also learned. The other thing that we learned is that – and this is sad but unfortunately true, our average customer is pretty poor, they just don't have a lot of money. We've learned this from just tens of thousands of support interactions and then constantly saying like, I can't afford 3.99 for the free plus shipping offer because I live on Social Security, or just eliminate paycheck or limited income.
And you hear that over and over and over again and realize that your customer avatar, your customer is an older a lot of times widowed woman who is lonely and home coloring because they can't afford to do anything else, or they have a disability and they can't physically go do other things. And that's why they're spending their time coloring versus maybe the older woman that's a more affluent retiree that was luckier in life and just more fortunate with their circumstances. They might be out socializing or at the country club or whatever and they don't have time for coloring kind of thing.
These are all things that we learned, the little idiosyncrasies of dealing with our customers over a long period of time allowed us to build a customer avatar that was like really, really dead on to who they were. And I think that you can probably — you've been doing this now for seven years, eight years, and like you said, you have 30,000 customers, you probably have a really good idea of who that avatar is. And I would at least try to build that and use that as an ad set.
Ryan: Okay, sounds good. And I know you're really Amazon focused, that didn't seem like a place where I could really succeed was always my impression. Do you get the same…
Mike: I totally agree. I mean, I’m Amazon focused because the brands that we have bled well to selling lots of stuff on Amazon. And I think that in life and in business you have to kind of meld, be a shape shifter, or whatever you got to do to be successful in your business. And as much as I hate the fact that Amazon is that big of a part of our business, it is because the types of products that we sell these under $50 almost commodity type products, we do a lot of things to make them not commodity products, but the search terms are commodity type search terms.
Your products are a little bit more difficult. Now, I would still put them on Amazon. I think that it makes sense to have a listing on Amazon but it wouldn't be the first thing I would put all my effort into like basically the things we're talking about. I would definitely spend the next three months getting your procedure down for exactly what you want outreach to be for bloggers and seeing what works, because you're going to — the thing that the Philippine VAs are going to have a hard time with is playing things by ear or making judgment calls because they're uncomfortable doing that. A lot of people that if it isn't their own money they're going to be uncomfortable doing that.
So you have to write a really detailed procedure of if they have between x y z followers and ABC followers, offer them this, and if they have between this followers and that followers, offer them that, and spell it all out as granular as you can. Same thing with the blog outreach, maybe using a tool like SEMrush to look at their ranking number of backlinks they have, the amount of traffic they have. If they're in between this and that, offer them this, whatever it might be. Same thing with the referral program, let them be able to do as much as they can on their own before they have to come to you to ask those questions. I would work on that stuff first because that's something that you can automate and get them — because I think you need to get moving on that immediately.
And then you could focus on throwing your best three to five sellers on Amazon just to see what happens. And you never know, maybe some of these things do take off and do well. But the thing is that Amazon's world is not a $200 high end leather, right? These are people that are price sensitive; they're looking to buy something quickly. They're not doing a lot of research. Do those types of products sell on Amazon? Yes, but they're not at the level that's going to necessarily move the needle for you. And I think you'll also get frustrated with some of the other things on Amazon that you'd have to deal with like knockoffs and hijack listings and other things that are inevitable with these types of things because the stuff you have is easy to use a knock off and throw on a listing.
I know a lot of people that have done clothing and those types of things that ultimately got frustrated with Amazon. So, I still think it's worth doing and going through those hassles. But the reason I haven't brought it up to this point is because if it was my business I wouldn't be focusing on that as the first thing right now.
Ryan: Okay good advice. Okay, this has been helpful; this has given me a lot of things to chew on.
Mike: Yeah, I mean I think that the last thing I’ll kind of just mention here is just business advice from one business guy to another that's been through these types of things through periods of my life. I mean I would encourage you not to get discouraged. I know that this sucks being in a situation where there's a downward trend. And there's been times in my life where I just don't want to give up on something because it was doing well then it starts not to do well, and there's these other outside factors that I didn't want to believe that were true that were causing the downturn in my business, and I could eventually turn it back around in spite of all those things. But I don't see that being an issue for you here. I think that, my gut is that a lot of this is because — you even said, I even wrote down the exact words, you said you were doing something successful and stopped doing it.
Mike: That's another very entrepreneurial thing to do because the thing that you are doing that’s successful is no longer exciting. This has been a huge trap for me, like something I'm working on desperately in 2019, something that a mastermind that I've been a part of the last couple of years has really helped with. It's funny, a lot of times also what happens is you'll give someone else advice exactly what they should be doing but then you don't follow it yourself in your own business. So, I think that part of it is you probably, it seems like you know that part of it. And I think if you can get back to doing what got you here to begin with, and the reason I was asking so many questions around that, what I was looking for is like, has something else changed that's out of your control?
In my case, there's other businesses that I was dealing with. One of them was online poker, and that was — I didn't want to believe that because we lost the US market that we could — I felt like we could grow in other ways in all these other things. And the reality was is that the world had changed and what had made us successful to begin with was no longer there, I couldn't do it anymore, because it didn't exist anymore. I don't think that's the case for you.
Ryan: The space is more crowded now, there's a lot of people who are doing similar things now, I was a little six, seven years ago earlier mover I think. But fundamentally I don't think, you know there's still a massive market in there enough to have a decent level of business I think if I can do things correctly or improve things from here.
Mike: Yeah and I think I mean because I was looking at your products and stuff before the call, I mean, you also make beautiful stuff. I mean, your products like I said, if I was back in that workforce and needed, I would be buying this. I always try to help support EcomCrew Premium members. I actually just bought someone's keto coffee because I do use it. So, whatever is out there, I try to buy and use it, but for me, it's not my thing at all because again, I'm using, but my god, your stuff is gorgeous, I almost want to go back to the office to use the stuff. So, I think that matters.
So I really do, I think that this is the type of thing you can get things going in the right direction like you mentioned already, you're turning a profit, it’s just an emotional stress. And maybe even if you can get away from the business for a week or two, three, or whatever, it is just to kind of clear head, you don't have [overlapping 00:56:46] to do. But I mean like…
Ryan: When the ax is on fire.
Mike: A lot of times it's the best time to take a step back. I mean, you'd be surprised if you could do it. I mean what's going to happen if you just didn't come to work for a week or two? I mean the business isn’t going to shut down. I mean, you’ll obviously fulfill your orders and do the minimum stuff, but just take some time to think. Warren Buffett, actually, I was just watching a thing about him, it was something I've — because I've been working towards the same way, so some of the things that I hear about I filter through. He was just like I have days or weeks on my calendar that are empty just to think. He's a hard working guy but you have to have time to take a step back and really think about things.
And if you are a drowning man, you start to panic and you're looking for what am I going to hold on to or grab? You'll just grab on anything, you'll pull someone else down with you if you have to. That's why I always say, if someone if drowning, you want to get away from them not necessarily go help them. But if you can — and I don't think that you're drowning by any stretch of imagination, you're still doing a million dollars in sales almost a year, that's awesome in one of the most competitive environment. So, I would look at the positives, take a step back and look at what got you to where you are, how can I laser focus on one part of my business or two parts of my business and not worry about all the other things?
That's why I didn't really want to bring up Amazon because I don't think that's the thing that made you successful, and I don't really see that with this brand being the thing that's going to make all the difference and change. I would be looking at what's going to be the one thing which is actually the book I just got finished reading literally, The One Thing. That's going to make a big change in your business. And work on that and be cognizant of the fact as you're doing that, that it's going to take one or two years to make that needle move because that's the type of angle you're going after here the organic SEO side of it, the PR side of it. These are things that take time to come to fruition.
You might strike some gold with some Google Shopping ads, which I think are low hanging fruit, you might strike some gold with some Facebook marketing, but don't let that take your eye off the what will happen there if that produces success. You'll end up spending more time on that and not going and planting the seeds that are really important which I think in this case are the influencer, blog, PR angle because you have that type of brand. I mean this is the type of brand where you need other people talking about it for you. And I think it's important to get back to those fundamental building blocks in my opinion.
So I would definitely make sure that you focus on that, and not be too hard on yourself man, because I don't think that you need to do that here. I think that you've produced an amazing company, beautiful stuff at 30,000 customers, got really good reviews. You're still selling a ton of stuff. If you had asked yourself five years ago if you could be doing 900k, you probably would be happy with that, it's just the emotional of going backwards is always the hard part. And again I've been through that. And I can't just say don't worry about it because I know that's impossible. But just reset some realistic expectations moving forward. I think that'll help you a lot.
Ryan: All right, that's great. Well, thanks again, Mike. I really appreciate it.
Mike: No worries. And of course, you know where to find us. As a premium member, you can always reach out via email or anything and let's do a follow up with this in three or six months and see how things are going.
Ryan: Okay, it sounds good.
Mike: And that's a wrap folks. I hope you guys enjoy the 217th edition of the EcomCrew Podcast, finally got the episode number right after the other takes. I messed up on the intro, but episode 217 in fact is now in the books. If you want to go to the show notes for this episode, you can go to EcomCrew.com/217 where you can also comment on this episode. And don't forget to go over to EcomCrew.com/contest to check out your opportunity to win a free annual membership over to EcomCrew Premium.
We have over 1,000 people that have registered for it this month for the chance to win a membership to EcomCrew Premium which is pretty cool. So, go over there before the month runs out to get your chance to win your very own free membership to EcomCrew Premium. All right guys, that's going to wrap up the 217th edition of the EcomCrew Podcast. As always happy selling, and we'll talk to you soon.
I’m going through a similar situation as Ryan so lots of great insights and tons of wonderful tips and advice as usual. Thanks guys!
Glad to hear it helped!