E294: An Interview with Drew Sanocki–Running AutoAnything, Post Pilot, and the “Whales and Minnows” TheoryDecember 9, 2019 in Ecom-Crew-Podcast
If you’re in the ecommerce circle you probably know–or at least heard of–Drew Sanocki. Drew is a veteran in the field, having started, led, and invested in several ecommerce businesses over the years.
He is currently the CEO of AutoAnything, a 9-figure online retailer of auto accessories. He also recently became the owner of a postcard marketing app for Shopify called PostPilot. He blogs (and used to run a podcast) about online marketing and running a business on Nerd Marketing.
I first met him in Nashville during the first ECF Live I ever attended. He talked about the “Whales and Minnows” theory which has stuck with me until today, and is still completely applicable in today’s ecommerce setting.
The theory is basically about focusing on whales (your most important customers) vs minnows (low-value customers who just order once). Below are some conversation points that explains the theory more, plus some other topics we talked about:
- The differences between a “whale” and a “minnow” and the importance of focusing on one vs the other
- How to attract more high-value customers
- The difficulties of running AutoAnything
- How things are at Nerd Marketing
- Why postcard marketing brings in more loyal customers and more money to the business
Drew was kind enough to give EcomCrew listeners a discount for his postcard marketing app PostPilot. Just use the code CREW15 and get 15% off your subscription.
Hope you enjoyed listening to this episode! Until the next one, happy selling.
Full Audio Transcript
Mike: [00:00:00] The timely and practical information the Ecomcrew podcast delivers is only outdone by the host, Mike Jackness’ easy to recognize, sincere desire to see fellow entrepreneurs succeed. Thank you, Mike and Dave. No, thank you, Don and now on with the show.
Mike: [00:00:16] This is Mike, and welcome to Episode 294 of the Ecomcrew podcast. Got a great episode lined up today with my buddy Drew Sanocki, finally getting him on the podcast. And as I talk a little bit about here in the podcast and I don’t want to get too much into it in the intro, but I’ve known Drew for a while, I first met him at Ecommerce Fuel Live back in Nashville, the first live event that I went to for Ecommerce and got to know him a little bit there. But over the years we’ve become friends. He was a guest judge on Five Minute Pitch and just one of the most brilliant minds in Ecommerce. He bats on another whole league. He’s running $10M companies, $50M, now a $100M company. And it’s really cool to get a perspective of somebody like that. And he’s also doing some other software ventures. And so we talk a little bit about all that. And so there’s a little bit of everything in here. It’s a bit of an entrepreneurial journey of graduating from doing your own store to now, running a $100M company to some of the trials and tribulations of being an entrepreneur. Just a bunch of really great stuff in this episode. Little bit of everything from my man, Drew Sanocki.
Mike: [00:01:26] Before getting into that, I do want to mention our Amazon Domination book, which is still available at Ecomcrew.com/book. It’s our Ecomcrew free plus shipping offer so if you are looking to get started on Amazon or if you already sell on Amazon, but want to be able to do things in a white hat way and test things out in a way that isn’t high risk because it’s really for beginners or for people that are looking to change their black hat or grey hat tactics and figure out a way to do things white hat, long-term and be able to launch products in 2020 and beyond without having to play a bunch of games. And that’s really what this book is about. So Ecomcrew.com/book, go pick that up today. Again, it’s 100% free, except for the shipping, we ask you to cover that, which I think is $6.95 and that is exactly what it’s costing us to ship that thing out. So Ecomcrew.com/book, we look forward to shipping your copy out today. And right after this break, we’re gonna get into it with Drew Sanocki.
Intro: [00:02:25] Welcome to the Ecomcrew podcast. The Web’s most transparent podcast, from two seven-figure sellers who share the good, bad and the ugly about running an ecommerce business. You’ll learn how we build our brands, find products and develop marketing strategies that will help you start and grow your own million dollar ecommerce brand. And now your hosts, Mike Jackness and Dave Bryant.
Mike: [00:02:50] Drew Sanocki, welcome to the Ecomcrew podcast, man.
Drew: [00:02:54] Thank you very much, Michael. It’s good to be here.
Mike: [00:02:56] Yeah, it’s been a long time coming. I first met you at an Ecommerce Fuel Live event. The first one that I went to, I’m trying remember what year that would have been, but it would have been at least 4 years ago.
Drew: [00:03:06] That was Nashville, right?
Mike: [00:03:08] Nashville, exactly. I was in Nashville, Tennessee, the first ECF event I ever went to, and you did this talk that I can’t forget. Can’t get it out of my head. And it’s very unusual because I go to a lot of conferences and most of the talks are pretty uninspiring and just kind of have one or two takeaways. But your talk was about whales and minnows, and it wasn’t just the content of the talk, which was amazing because I’m an analytical guy. But you had this whole like whale and minnow voice, like you could have been a Disney narrator in Finding Nemo or something.
Drew: [00:03:37] I remember that. I remember I did like impersonations during the talk.
Mike: [00:03:40] You did! It was a great talk! It was really good.
Drew: [00:03:42] So, yes, that was one of my better talks. I think I was trying to share what I learned across, at that point, it must’ve been 15 years in ecommerce and now, I’m saying 20 years, but whales and minnows was a big part of that.
Mike: [00:03:54] Yeah, and I think that we’re gonna talk a whole bunch of different things today, but that talk is still applicable today and I think maybe just spend a couple minutes, let’s chat about what that talk was about and why it’s so important to ecommerce businesses, no matter how big or small you are.
Drew: [00:04:10] Yeah, I think it’s just this general idea that all customers are not equal, right? That for any business you might have 20% of your customers that drive 80% of the revenue. So you’ve got– those are the ones I call the whales. And, they typically buy more often. When they do buy, they have higher average order values compared to the minnow. The minnow might be your one and done customer, kind of rolls in, orders the cheapest thing you have and then tries to return it. So any business has both whales and minnows, which that in itself is not that surprising. But where it gets interesting is when you realize that the cost of acquisition of a whale and the cost of acquisition of a minnow are often the same. So if you’re going to spend money to acquire customers, which we all do when we advertise, why not spend it to acquire the whale customers as opposed to the minnow customers?
Mike: [00:05:01] Yeah, and so the presentation that you had and obviously we only have so much time to talk about that here. But you were talking about how to use Google Analytics and some data to find where those customers are coming from and try to put more ad dollars towards that.
Drew: [00:05:14] Yeah. I mean, you if you’re good with GA, you can get in there and figure it out or if you’re logging your transactional data, but you’ll notice that every ad, every keyword in Google Analytics sorry, in Google AdWords or every ad on Facebook drives disproportionate numbers of minnows and whales, right. So, the example that I talk about a lot is Bonobos. They figured out that the guy who comes into the store and buys the suit first, you know, or like the suit is in the ad. It pulls in the customer who buys the suit. That customer typically spends $10,000 a year with bonobos vs the guy who sees the ad for the swimsuit and comes in and buys a swimsuit. It’s $35 and that’s it. So Bonobos, what should they put in the ads? They should put suits in their ads, right. So it’s probably the same for your business.
Mike: [00:06:04] Yeah, definitely. Really good stuff. So Google Drew Sanocki also go over to NerdMarketing. He talks about this over there. If you’re an ecommerce fuel member or if you’re not, this is a great reason to join. But the talk that he did is still there. And it’s still again, it’s still relevant today.
Drew: [00:06:19] Yeah. I think you Google like, “Sanocki Whales and Minnows”. It’ll show up, yeah.
Mike: [00:06:24] (Laughs) There might be a couple inappropriate links of Drew holding Whales and Minnows but besides that…
Drew: [00:06:29] As I said that, my mind quickly went to like what else could possibly come up. But I think I’m safe.
Mike: [00:06:36] I feel a good Steve Chou, Mike Jackness collaboration of a page that we put up of Drew Sanocki with whales and minnows and get some Photoshop work done.
Drew: [00:06:45] Yeah, just like any body image things that came up. No, I think I’m clear if you Google that you will end up at ecommerce fuel.
Mike: [00:06:53] It’s safe. OK, so it’s for work too.
Drew: [00:06:53] You’ll be perfectly safe. Yeah, your kids can Google that.
Mike: [00:06:55] Ok. Good. So since that talk, I mean, we’ve kept in touch. We’ve become pretty decent friends. And you were nice enough to come do Five Minute Pitch with us, which was awesome. Thank you again so much for doing that.
Drew: [00:07:07] Yeah. You were nice enough to go on. You were my first podcast guest, I think.
Mike: [00:07:11] Yeah, I did. I came on NerdMarketing and then we were just having dinner and drinks the other night and realizing I never returned the favour and it definitely wasn’t on purpose but somehow some of these things get lost in the woods. So it’s good that you’re coming and doing this now. And I think it’s a good time to chat as well. Cause there’s a lot going on in your life. And, since that presentation at ecommerce fuel live I’m talking about, which was like four years ago. You’re kinda like this bench guy that, you always talk about here, you’re the bench guy for private equity firms when they need someone to come in and and run a high eight-figure, or nine-figure company that you come in there and help with that. And that’s been your thing now with the brand new company. So let’s talk about that for a little bit.
Drew: [00:07:50] Yeah, and I’m the bench. You know, it’s like put Sanocki in. We found this busted big retailer that is got some legacy tech problems and is getting their ass kicked by Amazon. So who is on the bench? And then the camera pans over to the benches. It’s just me on the bench.
Mike: [00:08:08] You’re the only guy left. Everyone else solved this and then they ran back into the locker room.
Drew: [00:08:13] Everybody else just kinda like gets off the bench. So then I get called in. But in this case, we bought this company, AutoAnything from AutoZone. We being Kingswood, which is a value fund up in LA, it was a corporate carve out, so they buy it out of AutoZone. I guess AutoZone had bought the company 5 years prior, commodity dropship retailer in the aftermarket automotive space. And despite the fact that it is commodity and dropship, it’s a big, big company. So, $100M-$150M million in revenue. But, you know as most commodity dropship retailers are experiencing some issues, trying to carve out a new existence, competing with Amazon and you know, how do you differentiate the products in the brand and the service? And so bought the company, And I came in as the CEO and now we are in the process of turning the company around.
Mike: [00:09:06] Yeah, and you and I have talked pretty candidly, I mean, it hasn’t gone quite as well as you had hoped, and it’s been more frustrating than you hoped and I appreciate you being willing to talk about this a little bit on the podcast because one of things I love talking about on the podcast is business is real. It doesn’t always work out the way that you want to. And most podcast and marketing things are all pounding your chest and rah-rah and you know, sign up for my course and sprinkle some magic pixie dust on this and you’re gonna make a million dollars. And it’s often not the way that it works. So, I mean, what are some of the challenges that you’ve run into over there at Auto Anything?
Drew: [00:09:38] Yeah, I think it’s more just like when you buy a company like this, there are a lot of things that come as a surprise. You know, you try to due diligence before you buy a company and uncover all the red flags. And then you put together a– we call it a 30, 60, 90 plan. But like, what are you going to accomplish over the first three months to start to generate some cash flow out of the business or make some basic improvements that typically makes the board happy, makes the investors happy. In this case, we bought the company and I think a lot of our early success was predicated on making changes quicker than ultimately proved to be possible. In particular, this company is operating on like a legacy tech stack that dates back to 1999. We thought, well, hey, why don’t we replatform this to Shopify? That’ll save us a lot of money on tech that are required to sort of maintain the current platform. And that just proved to be a lot more complicated than we thought.
Drew: [00:10:39] I mean, here we are a year later, we’re still on the legacy platform. Shopify, I think is out of the question just because of the complexity of the product data. And we’re still thinking through migrations, but like that’s one example of something that just really hard to plan for. We didn’t see it coming and is proving to be sort of frustrating. I think another challenge is more just– I would just call leadership and management where this is a company, I think when we bought the company, it was not right sized for the revenue line. So I think it had gotten a bit big and bloated and we had to cut it down in size. And some of those cuts came from people. And that’s really hard as a leader. I came in, I think, kind of naively thinking that I’d be in Google Analytics every day and–
Mike: [00:11:27] Right.
Drew: [00:11:27] Just building out some life-cycle emails and I’d call it a day, but, really 90% of my job is leadership and management and it’s like culture, dealing with people, recruiting, deciding who’s on the team, who’s not on the team. And that was a second surprise. I mean, I’ve enjoyed it, but I think I didn’t expect to do that much of that.
Mike: [00:11:50] Yeah, and I mean, no matter what. It’s never easy letting someone go, whether they’re doing a bad job, it’s still hard. But when they’re doing a good job and they’re there through no fault of their own, they’re getting let go and it’s just, the math is simple right? I mean they had this legacy company that owned them that can maybe sweep that under the rug a little bit when you break it off and start looking at the company on its individual merits and it’s losing money. There’s really no choice. It’s not a charity, obviously, and you have no other choice. But it’s still not easy and I know that going through that has got be difficult.
Drew: [00:12:23] Yeah, I mean, it’s not just cutting costs to eke out more cash flow. It is also like I think the wrong people, in some cases, are on the bus. You know, when you’ve been owned by an $8 billion public company, you just get weird like AutoZone, I think took the SEO team and the content team from 10 people down to 0. You know, in the meantime, they built up things like infrastructure, H.R. and Accounting just to a level where it doesn’t make sense to have it at that level for an independent company, right. But you probably needed it at that level when you were part of a big public company and you had to deal with things like public lawsuits and things like that. So I think it was a year of recruiting a new management team and trying to build up those parts of the business where we were thin. And on the flip side, getting more efficient and those other sides of the business where I think we were a little bit bloated.
Mike: [00:13:19] Gotcha. So it sounds like, I don’t know if you’ve ever read the book Traction, but it sounds like a chapter or two directly out of the book there with the right person in the right seat, the exercise.
Drew: [00:13:26] Yeah. I think I mentioned that to you, I love that book. I mean, I’ve been looking for sort of a way to, you know, all this stuff is well and good, strategy is well and good. But like, what do you do each week? What do you focus on today? And traction just gave me a great framework from taking it from the 10 year vision down to the 3 year vision down to quarterly goal. And what are we going to focus on this week?
Mike: [00:13:49] Yeah. Yeah, I mean, it’s definitely been a massive game changer for us as well. There was a couple of things that I just never quite understood why I was having these problems that would come up over and over again in entrepreneurship. And in the first chapter Attraction, it starts talking about the visionary vs an implementer. And they’re often not the same person. They’re almost always never the same person. And that alone was just like an epiphany type thing where you’re just like, “Oh, okay. Well, obviously, this is the problem. I need to get this implementer-type person in there. And then also just realizing, taking a hard look yourself and realizing that there’s not enough planning here, that you’re living a day at a time and just doing whatever comes, the way the firehose is pointing that day and that never works. So having, like you said, the 3 year plan and breaking it down to 1 year than quarterly, if you’re looking at it in a 3 year plan cycle, which we tend to do instead of 10 years is so far out in the types of businesses that we’re running, it breaks it down into like you have 12 quarters basically or 12 periods of this game to play. And it makes every quarter really significant and allows you to slowly chip away at the bigger picture.
Drew: [00:14:50] Yeah, we bought this company where there was no discussion of quarterly goals, yearly goals, kind of where the company was headed, because it was sort of the bastard stepchild of AutoZone. Autozone is a brick and mortar retailer. I think they bought this hoping that they could “learn about how to sell online” and they never really figured that out or leveraged the company as much as they had anticipated they would. And so, it was just left here and really like the employees did not know, did not have the freedom to kind of focus on the things that would grow the company. And we implemented OKRs – Objectives and Key Results, and then moved quickly from that to Traction, which gave us more of a holistic framework and it’s been a game changer. We implemented things like work from home, and it’s not about butts in seats. It’s about just getting the job done. And the job is defined by the things that we think are going to grow the cash flow of the business.
Mike: [00:15:45] Interesting, so I mean as a part of the three year plan with a business like that, because we’ve done lots of episodes about dropshipping and just kind of the challenges that present themselves there. Where do you guys see yourselves going as this new entity that you’ve bought? Obviously at some point, you’re going to phase yourself out and put another another CEO in there. But how does AutoAnything compete against Amazon and in this crazy world of ecommerce these days?
Drew: [00:16:07] Yeah, a lot of questions. I think it’s– I’ve had to separate the entrepreneur mentality from sort of the private equity mentality where the private equity mentality is just they want a good return on their investment, right. So it’s very dispassionate. They’re like, “It’d be great if you could compete with Amazon but we want a return on our investment”, right. So in other words, I’m not saying that’s the case with this company, but many private equity funds would buy a company where there’s cash flow. If you are able to maintain that cash flow over a certain number of years and take dividends out of the company, then you could pay yourself back for the initial investment and get a nice return, right. And whether or not you’ve actually beaten up on Amazon is sort of irrelevant. So I think as an entrepreneur though, and as the CEO, you want to win and you want to beat Amazon, right. So there’s a little bit of a disconnect there that I’ve had to bridge. But I think if you look for the next three years, what keeps the board happy is maximizing the long term cash flow of this business. And then me, as the entrepreneur and the CEO says, “OK, well, in order to do that, I think I need to differentiate some and compete with Amazon”.
Drew: [00:17:14] In part, I can get there by getting more efficient. I can run the business with fewer people, with fewer resources. So all those things really helped me run the business more efficiently. But as you and I both know, that’s not going to create an advantage that will last forever. So in order to get some growth, we’re talking about things like private labelling our own product, distribution partnerships with other brands, just things like that, launching new brands where we’ve got the majority of the product is private label. So things like that, just taking directly from the direct to consumer playbook that I think a lot of people here who listen to the podcast are applying to their own business. That’s how you compete with Amazon.
Mike: [00:17:07] I actually think that’s setting opportunity for AutoAnything, because you have all the data. You know what’s selling already and you can’t private label everything because obviously there’s certain types of components of things you’re selling that name brand means too much in the auto field. I mean I think that maybe I don’t know if brake pads are a great example, but high-performance parts are definitely an example. So if you’re selling high-performance things where race car drivers or weekend warrior type race car drivers are using it. They want the name brand thing. But if it’s a generic brake pad or air filter or oil filter, anything like that, it’s a great opportunity to private label. And you already have the data of what’s going to sell, you just plug your product in and you should have instant success, I would think, with better margins.
Drew: [00:18:32] Yeah. I mean if you say the average product margin’s 25%, it’s not. But something like that. When you private label your own product or when you go directly to the factory, we’re typically seeing three times that, you know. So is that, in a year, could we get to 5% of our products through private labelling? In three years, could it be up around 40%? I mean, something like that materially impacts the bottom line of the business.
Mike: [00:18:57] Yeah. And then at some point, those private label products hopefully become well-known within the auto industry and people are going there as a destination to buy those branded products, which could be a pretty cool opportunity as well.
Drew: [00:19:09] Yeah, I mean, this is the Sears Craftsman strategy, right? From like 10 or 20 years ago.
Mike: [00:19:11] Mmhmm. Yeah.
Drew: [00:19:12] You could also put those brands on Amazon, right. So right now, if we were to put our existing brands that we dropship on Amazon, I mean, you’re just– it’s a race to the bottom because there’s a zillion people who could put those on Amazon and price wherever you want. And we don’t have the margin to do it, right. You know, Amazon takes, whatever, 15% off the top. It just makes it hard to run a business, right. But if you had that private label product with your own brand, you could put it on Amazon.
Mike: [00:19:41] Right, it makes a lot of sense. Cool. Well, I want to shift gears because we have two more gears to shift into because you’ve got a lot going on. See what I did there?
Drew: [00:19:46] Nice. I like it.
Mike: [00:19:51] Bit of a bump up.
Mike: [00:19:52] But I want to talk about NerdMarketing a little bit because you run this amazing blog and is the podcast still around or is it just the blog these days?
Drew: [00:19:59] It’s just the blog these days, I think. I’ve been rethinking the podcasting strategy, I think I shared with you over drinks that I was doing like a solo cast where I would just talk and that was kind of killing me. And especially now I’ve got this incredible day job where I’m the CEO of a company with 100 people. I can’t just– It’s been hard for me to carve out the time to do the podcasting. And I don’t think I want to be, I don’t think I want to just bang out interviews. I mean, I could. But right now, nerd marketing is a bit of a TBD. Like, I’ve got a great body of content there around customer analytics and database driven marketing. I’d like to continue the written stuff. The podcasting, bit of a question mark.
Mike: [00:20:43] Gotcha. Yeah, I’ll share a conversation with the audience here that we had privately, but you were talking and I was like, man, you gotta do more with NerdMarketing. And it’s hard for me to say this because you’re kind of a quasi-competitor in this space. But we’re all just so friendly and I don’t really look at it that way. But it’s so frustrating because you don’t post as much there any longer. But your name comes up more than anyone else’s name as like the thought leader in ecommerce. And I’m like, how is this possible? Like, I’m putting up podcasts every week and Dave’s putting out all this content. No one ever talks about Ecomcrew like…
Drew: [00:21:12] It’s Scarcity.
Mike: [00:21:13] Yeah, maybe that’s what it is, maybe we just gotta like get down to one post a year.
Drew: [00:21:16] Scarcity, man.
Mike: [00:21:18] Yeah.
Drew: [00:21:18] I think– Yeah, I’m probably doing just something a little bit different because I think of myself as this hybrid investor and operator. So that’s probably one thing and maybe because I’m older, I’m in my late forties, I got kids, married. So it’s like a different take on entrepreneurship. And I have– I’ve been in ecommerce for 20 years. I kind of feel like entrepreneurship in my 40s and 50s is buying companies vs bootstrapping them. So it’s a little bit of a different look and maybe that explains the popularity of some of those older, older posts.
Mike: [00:21:50] Yeah, and I think you’re coming at it. I mean, all those things I think are definitely dead on accurate. And I think it’s also that you’re playing at just a higher level. I mean, you’re fortunate to be in a spot where instead of playing in the hundred thousand or low million dollar business, which is a great business to be in, everybody has to start there, we certainly ran in that circle for many years. But when you have a high seven-figure business, it’s a different game than when you’re at the one million dollar business. When you’re running the eight-figure businesses that you’re running are now nine-figure businesses. You see things from a collated perspective and you have data at a scale that you can’t replicate that at a hundred thousand dollar business, you get to see many more transactions and fact patterns and all these different things that then you can write about it in NerdMarketing and talk about the wheels versus minnow type strategies that are still very applicable to the smaller business but us smaller guys like just don’t have the data to be even able to come up with those theories. And so you’re coming up with these theories that are just mind blowing at our level and I think that’s why it does so well.
Drew: [00:22:50] Well, one thing the private equity investor would tell you is it always pays to go bigger. It’s the same amount of work to turnaround or to grow a million dollar business as it is to grow a 100 million dollar business like literally, you got the same hours in the day and typically, you need to do the same things. I need to fix SEO for this one million dollar brand. I need to fix SEO for Auto Anything. So I would say anybody listening to this podcast probably could come into my office and you know, you’d hit the ground running, you’d be familiar with the challenges we are facing, they are probably very similar to the ones you are facing like our product feed went down, I got to fix that.
Mike: [00:23:28] Right. Right.
Drew: [00:23:30] You know, just, I gotta roll out my life-cycle emails. It’s the same. That’s the same work. I think where it’s been different has been probably a couple of things you said like just the scale has been different for me, running one hundred million dollar retailer. You know, we did $2 million in Cyber Monday. It’s just things go down. They usually, the scale kind of messes with you on the downside like phones go down on Cyber Monday for 15 minutes. Like, that’s big.
Mike: [00:23:58] That’s a hundred thousand dollars.
Drew: [00:23:59] Yeah, it’s big.
Mike: [00:24:01] Yeah.
Drew: [00:24:01] So like that has been, I guess, a rude awakening. And then really nothing. You can’t do anything unless you go through people at this scale. And I wistfully think back to the day when I was running my shop and I could just like crank open Dreamweaver and change something on the checkout. Like, oh, that doesn’t make sense. It’s confusing people, I’m going to log in to Shopify and I’m going to change this and checkout, change the messaging like here, that it would just take me going through like five people to get it live. You know, there’s just– I don’t even.
Mike: [00:24:31] And they tell you no.
Drew: [00:24:32] Yeah. I don’t even know where the site lives. I don’t even know where the site lives. I don’t know where–
Mike: [00:24:36] Right.
Drew: [00:24:36] You know, I can’t even like, I could not physically get on it and make a change of I wanted to. So that’s the difference here, is like everything has to happen through people.
Mike: [00:24:46] Yeah. Makes a lot of sense, and so, I mean, I just did a podcast. I think it might have been the last episode, maybe one before this about the next business that I want to buy and the next thing that we’re looking at doing. And I couldn’t agree more with the whole like this one thing that it took me a while to figure this out on entrepreneurship. But you’re right. It takes the same amount of time. Like no matter if you’re working on a $10k business, $100k business, $1M business, $10M business, whatever, there’s only so much time in a day. And so, we’re gonna aim high. I mean, like our next thing is going to be as big as we can comfortably be doing because it’s the same amount of effort no matter what.
Drew: [00:25:18] Yeah. Raising the money is the same effort.
Mike: [00:25:22] Yeah, all of it.
Drew: [00:25:23] Papering over the deal. The legal costs are typically the same. So there’s just a lot that argues in favour of making pulling together a bigger transaction if you can. If you’re talking about buying a business.
Mike: [00:25:34] Yeah, and I think one other benefit that I’m really looking forward to is at that larger scale company. And yeah, there’s a disadvantage if you gotta go through five layers of people. But the advantage is you’re no longer taking care of any of the things that a typical entrepreneur hates dealing with. I mean, the mundane, like kinda day to day paperwork type stuff or employee type issues or whatever, and obviously, you still gotta deal with employee issues. The things that, you know, some Joe pushed Steve in the warehouse type issues type thing, you’re not dealing with that anymore.
Drew: [00:26:03] Yeah, I think you’re exactly– like the benefit if I were looking to buy an ecommerce brand, I would definitely look at like revenue has gotta be 10 million or up. And it’s because a couple of things like you said, at this stage in my life, I don’t want to deal with like the site went down. I kind of want somebody else dealing with that while, I think through strategy. And then the second thing is so you can pay yourself, right? If you go and buy an ecommerce brand that’s doing 300K a year, you go into Flipper or something and you’re rifling through the bargain basement like, what are you going to pay yourself with off that? You know, but if you get a business that’s doing 10 million or something like that, you can carve out a management fee. And so you can make money while you’re buying these businesses right and turning them around.
Mike: [00:26:47] Yeah, I completely agree and and for everyone else out there that’s listening that are going like, “it must be nice to be playing this playground.” I mean, it didn’t happen overnight. I mean, I certainly started on Flippa like looking to buy some things, I bought IceWraps for 50k, it was the next bigger thing I did in ecommerce and it’s all about stair steps and graduating. And you had a site like you said, you used to open up Dreamweaver and do it yourself from day one. So it’s just all about rolling it up.
Drew: [00:27:12] Yeah, I started that for $500 and I think we’ll probably talk about Post Pilot. That was an app I bought.
Mike: [00:27:18] Yes.
Drew: [00:27:18] And it was for the tens of thousands, you know. So it’s not like I’m breaking the bank to buy these things, although now I’m a little bit more enamoured and a little bit more comfortable with the idea of taking down a one hundred million dollar retailer, right. And that’s obviously not always with my own money. You know, and that also has both positives and negatives of like having investors, right.
Mike: [00:27:41] Yep, yep. Well, you paved the way. See what I did there again? For a good segue for post pilot because that is what I want to talk about next and we’re getting short on time already, but you’re in this new phase now of–
Drew: [00:27:56] There’s a time limit to a podcast? Where you get cut off?
Mike: [00:27:58] Well, Dave Bryant yells at me.
Drew: [00:28:00] iTunes cuts you off?
Mike: [00:28:03] Well, iTunes will let me run forever. But I get yelled at by Dave Bryant, he’s like people don’t want to listen to more than a 30 minute podcast and–
Drew: [00:28:09] They’re going to listen to this one, man.
Mike: [00:28:11] Yeah, because it’s Drew Sanocki.
Drew: [00:28:11] Chop it in half!
Mike: [00:28:12] Yeah, we can make it a two-parter.
Drew: [00:28:13] Yeah. Part 1. Part 2.
Mike: [00:28:13] I can really irritate him when I do a two-parter because that’s like his other pet peeve is when we did two-parters, so I get to kill two birds with one stone. I get to irritate him in both ways.
Drew: [00:28:24] I like it. I like it.
Mike: [00:28:25] But Post Pilot. Man, let’s talk about that and the phase that you’re in, cause it sounds like this isn’t gonna be your last software endeavour. And hopefully there’s a few things that we’ll corroborate on as well in the future. None of that stuff’s come to fruition yet but hopefully–.
Drew: [00:28:38] It will.
Mike: [00:28:40] There’s some opportunities in the future to do that. And I’m excited about it because I mean, there’s a lot of SaaS products out there that, they’re kind of like hidden under the rug. And there’s opportunities for influencers like myself to help shed some light on them. A lot of other influencers in the space as well. Again, that’s one benefit of all of us being friends. And you take a perfectly good functioning piece of software or SaaS product that provides value to its audience. But they’re just having a hard time on the marketing side. And you maybe retool it a little bit and you’ve done this with post pilot. And it’s interesting. I’ve talked to several people now that have been using it, super happy with it. And it’s so interesting how marketing comes full circle because the whole thing is now about direct mail, which was like 1980.
Drew: [00:29:23] Yeah.
Mike: [00:29:25] Yeah, I feel like we’re back to Columbia House all over again. I’m gonna be getting CDs, 10 CDs for 99 cents. But yeah, I mean, talk about about Post Pilot, and how that whole thing came to be.
Drew: [00:29:35] Yeah, I guess. I mean, there’s probably two stories there, there’s sort of what I did when I said, “okay, I want to buy a company and touch it up and relaunch it”, which is basically the same thing I’m doing at Auto Anything but for a software company. And then there’s actually the fact that this software company is relevant to this audience that’s listening now because it helps you automate direct mail. And so, yeah, I bought this app a year, year and a half ago. I have always been a big believer in direct mail. I used it back in 1999 at Design Public and I’ve used it at every retailer since and the way I use it is just how I use email.
Drew: [00:30:12] If you’re sending a new customer welcome email, you send a postcard. You know, if you use an abandon card email, you could send a postcard. If you’re gonna send an MVP email like to your most valuable customer then, send a postcard. And the reason is because not everybody opens email, right. I mean, anybody who’s listening to this knows open rates are like 20% on email. So that’s a big wide swath of your list that doesn’t open the email. And you got customers who aren’t on your email list because they didn’t subscribe. So that’s why direct mail has always worked for me. And the fact is today it’s becoming more cost effective because the cost of Facebook ads and AdWords are kind of going up constantly as competitors enter the market and yet postage is capped. So it’s a viable option for, I would say, 9 out of 10 retailers.
Mike: [00:31:02] Yeah. So two points here. You mentioned not everyone opens up their e-mail and so, I did a presentation at ecommerce fuel a couple years after we met. I think this might have been in Savannah. And I was talking about– I was gloating, actually. My ego was getting the better of me about how awesome we were at email marketing. We were getting like these 30% open rates and how much revenue we were driving from email and email was the best thing since sliced bread. And I get off stage and this guy walks up to me and he’s like, “great job with getting a 30% open rate. What about the 70% who don’t open your e-mail?”
Drew: [00:31:35] Yeah.
Mike: [00:31:35] I was just like, Oh! like punch in the gut and it really– it was actually a really great conversation because it made me think a lot. And so we got off the laser focus, we can only think about the world of email and started thinking of the world of Facebook Manychat ads and just Facebook bots and push crew and other things like this. And I think that the reality is, is that postcards are a great supplement as well. And as you said, that the costs realistically is cheaper. Not everyone opens their email, but everyone opens up their mailbox like no matter how much mail is annoying, everyone has to check the mail. And having an opportunity to have something physical in someone’s hand and rejog their memory when they’re away from electronic device is so powerful and there’s so many opportunities. It’s not just the abandoned carts, but it could be, you’re running a sale, you’ve got a new product that you’re launching or whatever it might be, and having the opportunity to have just another chance to get an existing customer or a potential customer in the door when you’ve come so far, like you spent so much money to get them to that point and you’re talking about spending a buck or whatever it is to send out a postcard. It’s a relatively cheap way to get the attention of someone who’s a very qualified lead.
Drew: [00:32:49] Yeah, there have been some psychographic studies around this and it showed that people perceive mail, postage mail as a gift from the sender no matter what it is. I mean, it can be TimeWarner, Spectrum, whatever ad, it’s still perceived as a gift where as email is not perceived as a gift all the time. So people open it 80% more than open email, open or look at your postal mail. And we’ve also seen that if you combine campaigns, in other words, if you send the same message through email and postal mail and maybe even in your Facebook remarketing ad, the AOVs are a lot higher. They’re typically like 25% higher. So, you know, the key is not to look at all these things as different channels, really. It’s to just think about the customer. You know, you’ve got a customer. You want to deliver the right message to that customer at the right time. Be it through Facebook, be it through email, be it through postage mail or through messenger bots, whatever. It just doesn’t like the medium matters less than the message right. So just focus on that right message for that customer and then you hit that customer really wherever they are.
Mike: [00:33:55] Yeah. There’s that whole like Marketing 101 thing of it takes something seven touch points to convince someone to be a customer, to get someone to start thinking about you. And this is one seventh of that or…
Drew: [00:34:06] Yep.
Mike: [00:34:06] Maybe even two segments of it, if you’re sending out multiple postcards.
Drew: [00:34:09] Right. Right. It’s really just smart marketing, like if you’ve got email marketing working right now, if you can look at those automated campaigns that you’ve set up in Klaviyo or Mailchimp, just copy them to postage mail and there’s like money on the table like that’s almost guaranteed high ROI marketing if you just copy those same campaigns.
Mike: [00:34:30] Yeah, couldn’t agree more. So if we’ve convinced people out there that are listening, first of all, this is just– I always disclose does, this is not an ad. Drew did not pay to be on here to talk about this. I think it’s great software myself and there’s no affiliate relationship. So we’re not being coppice anyway to talk about this. I always disclose this before we start talking about this thing. But if people are interested, where do they go, sign up and take a look at it.
Drew: [00:34:51] Postpilot.com. That’s the name of the app. It’s in the Shopify App Store and works with a couple different ecommerce platforms. Can I offer a discount to your listeners?
Mike: [00:35:02] Sure. Yeah, I didn’t want to put you on the spot but do it, let’s do it.
Drew: [00:35:03] Is that socially acceptable?
Mike: [00:35:07] Well, I mean you can mail in postcard with a discount.
Drew: [00:35:09] How about CREW15? Use like CREW15, and you get 15% off your post-card sub.
Mike: [00:35:12] CREW15.
Mike: [00:35:16] Alright. Don’t forget to make the bonus code now.
Drew: [00:35:18] It’s already made. Just made it.
Mike: [00:35:19] Oh, perfect. Just like bam, look at that, on the fly. He’s good. He has access to this evidently.
Drew: [00:35:23] Yeah.
Mike: [00:35:23] So CREW15 will get you 15% off over at PostPilot. I can even use that code myself when I go sign up.
Drew: [00:35:32] There you go. Yeah.
Mike: [00:35:33] When we get into the next thing that we’re gonna be doing, which I’m excited to talk about when that comes around the corner here. But yeah. Awesome stuff, man. And hopefully on the next one, we can be collaborating together.
Drew: [00:35:45] Yeah, Post Pilot also, we put together a concierge onboarding. So one thing we found was that people have trouble just designing postcards, right. So if you email us your stats, we just do it for you. You know, it just removes that barrier to getting started. So that’s all at the PostPilot.com/URL.
Mike: [00:36:05] So what are a couple more things that you can do with this that you didn’t mention? You mentioned abandoned carts, welcome email. What are some other things you’ve seen success with?
Drew: [00:36:13] Really, anything that you do in Klaviyo, you could do it in Post Pilot. So you can do it, customer buys product A, I want to market product B. Sort of like the cross-sell. Hey, this goes with that. It can be after any number, frequency of purchase like, hey, we noticed you just bought ten times. It can be a win back. That’s relevant now right, around the holidays.
Mike: [00:36:39] Right.
Drew: [00:36:40] But anybody who hasn’t purchased from my site in six months gets a postcard that shows new items. Those are just some examples.
Mike: [00:36:46] So any segment in Klaviyo can become a postcard.
Drew: [00:36:50] Correct.
Mike: [00:36:50] Very cool, yeah. And so very much the way that we run segmented Facebook ads that way where someone’s bought product A but not B, you would send out a postcard.
Drew: [00:36:58] Yeah, it’s exactly the same.
Mike: [00:37:00] Very cool.
Drew: [00:37:01] Right, right.
Mike: [00:37:02] Awesome. So what’s next for Drew Sanocki out there in Drewland?
Drew: [00:37:06] You know, I think it’s keep the press on at Auto Anything. We’re launching a new brand hopefully within the next month in the overland space. That’s really exciting. We’re working on private label there. And on the side, I’m eying a couple other software deals that I’d like to acquire. So stay tuned.
Mike: [00:37:27] That’ll be a good reason to get you back on the podcast.
Drew: [00:37:30] Or buy them with you. You know, I think that’s another thing we should talk about.
Mike: [00:37:33] Yeah, I’m definitely interested. I think it’s very cool. Cool so if you’re interested in finding out about Drew, NerdMarketing.com also at PostPilot.com, obviously. And is there an email address or a Twitter handle to follow you on or something like that to get ahold of you?
Drew: [00:37:48] I’m on Instagram, Drew Sanocki.
Mike: [00:37:50] Drew Sanocki on Instagram.
Drew: [00:37:52] That’s the one thing I check every day.
Mike: [00:37:52] Perfect. Well, I appreciate you coming on and doing this. Happy holidays. All that good stuff and hopefully our paths will cross again soon.
Drew: [00:37:59] Yeah. Thanks, Mike. You too. It was great to be on the crew podcast.
Mike: [00:38:04] My pleasure, man.
Drew: [00:38:05] Sure thing. I’ll talk to you soon.
Mike: [00:38:07] Alright, guys, that’s going to wrap it up for the 294th episode of the Ecomcrew podcast, winding out the end of the year here, just a couple more episodes left before the end of the year. I want to thank you guys for an awesome ride and all your support. We’ll be back next week with another amazing episode. But until then, if you have a chance, go over to iTunes, leave a review. We’d really appreciate it. It means a lot to Dave and I. And so until the next episode, Happy selling. And we’ll talk to you soon.
Outro: [00:38:35] We hope you enjoy this episode of the Ecomcrew podcast. If you haven’t done so already, please head over to iTunes and leave us a review. It helps more than you know. Did you know that Ecomcrew has a ton of free content, including ecommerce courses? Head over to Ecomcrew.com/free to check it out today. That’s going to do it for this episode of the Ecomcrew podcast. Until the next one, happy selling and we’ll talk to you soon.
Michael started his first business when he was 18 and is a serial entrepreneur. He got his start in the online world way back in 2004 as an affiliate marketer. From there he grew as an SEO expert and has transitioned into ecommerce, running several sites that bring in a total of 7-figures of revenue each year.