It generally costs a lot less money and time to sell to existing customers than it does to acquire new ones. That's why marketing shouldn't stop when a customer makes a purchase—not when you can onboard them to help them realize the full value of your products.
In this episode of Shopify Masters, you’ll learn from an entrepreneur who believes the most important activity you can do to generate repeat business is to onboard new customers after they purchase.
Patrick Coddou is the founder of Supply: an independent online retailer of premium grooming gear for guys that demand the best.
If they didn’t make a second purchase within 60 days we probably lost them as a customer in terms of making repeat orders.
Tune in to learn
- How your approach to business transforms when you are able to work on it full-time
- How to onboard new customers with emails so they can get the most value out of your product
- How to catch the attention of vieweres in the first 5 seconds of a YouTube video so they don’t skip your ad
- Store: Supply
- Social Profiles: Facebook, Twitter, Instagram
- Recommendations: ShipStation (Shopify app), Inventory Planner (Shopify app), Quickbooks, Zapier, Klaviyo (Shopify app)
Felix: Today we’re joined Patrick [inaudible] from Supply. Supply is an independent online retailer of premium grooming gear for guys that demand the best. It was started in 2015 and based out of Fort Worth, Texas. Welcome, Patrick.
Patrick: Thanks, Felix. Happy to be here.
Felix: Yeah, one thing you told us before we got going in the pre-interview was that you quit your cushy six figure job to build your business full-time. Tell us about that experience. What did you see in the business that made you take this jump?
Patrick: Sure. Yeah, that’s actually a great question to start because I’m constantly looking for the right metrics to inform me on the health of our business. And that was a really important thing when I decided to kind of make the leap from the corporate world to doing this full-time. And for me it was just at that time … the metrics we track now are very different, but at that time it was the growth that we were seeing month over month, it was the demand for the products that we were seeing. We grew slowly, we can get into this later, we were a Kickstarter company basically at first. We launched on Kickstarter.
But as we started to see more demand for our products online, I figured that we really had something. And really, frankly, it just came down to I was doing this on the side and I was working full-time, and it got to the point … I always told myself when it got to the point that I could no longer do both jobs to my full capacity and to where I was proud at the end of the day having done my best at both jobs, then it was time to make a decision. And I was getting to a point to where the work that I was doing on the side was really starting to get to the point where it was affecting my day job. And so that’s when I really knew I needed to make a decision to kind of leap or set things down.
Felix: Yeah, I think this is a situation a lot of entrepreneurs are in where they are doing this on the side and then it just kind of carries on for a long period of time where they’re just spreading themselves more and more thin and don’t realize it. Were there certain things that you looked for in your performance either on the business that you’re running on the side or in your full-time job that made you recognize, okay, this is the limit of what I can do, maybe juggling both, and I’m just gonna take the jump into the business?
Patrick: Yeah, specific things, gosh, I’ve gotta think back. A lot of them were personal to me. I was traveling internationally a lot for my full-time job. And at that time it was just me and my wife running the business. And so we were packing orders. There were real physical limitations to being in a different time zone and having to pack orders and answer customer emails, so that was real personal to me. But I think the real kind of number that I came up with that I make a distinct decision of it’s okay and it’s time to jump was I kind of looked at my personal finances, I looked at how the business was doing, I looked at how much cash we had in the bank, and I kind of made some back of the envelope calculations of if things don’t get better than they are now, then at the very minimum I can last about a year, kind of giving this one really good shot. And that’s really kind of what it came down to for me was if I don’t give this my all and just really go after it, I’m gonna regret it forever. So that was kind of a mental decision also based on the numbers, trying to figure out if I’ve got a year to give it to this, we’ll see in a year if we’re successful, and if not, then we’ll shut things down.
Felix: And I think you told us too that you did this last year. So has that year come yet?
Patrick: That’s correct, yeah. So I left my full-time job actually February 1st of 2017 was my first day. So we’re coming up on maybe two years of doing this full-time. Yeah, we decided this is working and we’re gonna keep on pushing. We continue to grow month over month about 10 to 15% a month. And so we’re excited for the growth that’s ahead.
Felix: Very cool. What recommendations do you have for people that are still in that phase where they are bouncing between their full-time job and running something on the side?
Patrick: That’s a good question. Almost two years can make you forget things real quickly. I guess one of my biggest recommendations would be invest in tools, as long as you of course have kind of the margin in your budget. But the most you can, invest in tools that ether automate or take care of all the manual things that you should be doing. That’s really kind of what helped us manage not only a full-time job but a part-time job. So everything from customer service … at the time we were doing kind of a chat box that would help our customers kind of do self-service, to all the amazing tools that many of your listeners are probably familiar with, everything from how Shopify plugs into Ship Station and Inventory Planner to plan your purchases, and QuickBooks. There’s all these kind of connections that we’ve really built a foundational kind of software stack that really manages a lot of the manual stuff so that we can actually think about growing the business and not spending so much manual time doing all those tedious tasks. So I think that would be my biggest suggestion is really think long and hard about what processes take you so much time and how can you automate those. Another thing I’d mention is Zapier is also a great tool that we use that helps us do that as well.
Felix: Yeah, definitely Zapier is one of my favorites as well. So once you were able to quit your day job, what were you immediately able to do that maybe you weren’t able to do when you were balancing both? What was something that you hit the ground running because now you had the x number of hours freed up and x number of brain capacity freed up to focus on the business?
Patrick: Yeah, I won’t say it changed overnight but it really … within the first couple of weeks of doing our business full-time it really changed how we operated. First of all, I got to think more strategically about our business and what I wanted coming over the next anywhere from six to 12 months. So that led to a full redesign of our product line and a full redesign of our packaging. It led to what we called our version two of our razor that we launched on Kickstarter actually just a few months after I left my full-time job. That Kickstarter campaign raised I think between both crowdfunding platforms, Kickstarter and Indiegogo, I think we raised a little over $300,000. And so that was a really … I credit the development of that campaign and the thinking through our strategy with actually having clarity of mind to kind of think about what we wanted to do and who we wanted to be as a brand. So our website got immediately better with better product photography. Our social media got better. Our products got better. Our customer service got better. And it’s all just because I was thinking ahead and being more strategic about how I wanted to build our company and more importantly build a brand rather than just kind of reacting to what happened during the day while I was at work and trying to put out fires at night if that makes any sense.
Felix: Right. So you moved from this reaction mode to being able to see things at a higher level and be more strategic and plan quarters ahead rather than just how can you tackle this week or this day. So, let’s talk a little bit about the first kind of products you sold. We talked about you as an independent online retailer of premium grooming gear. Did it start with multiple products? What was the very first product or products that you were selling througH your store?
Patrick: Sure. We view ourselves as a wellness and lifestyle brand that sells beautiful, high quality products direct to our consumers online. We like to say that we solve real problems for real men. So that’s the big lofty kind of vision statement. But the way that works kind of on the ground right now is through our shaving and our grooming product line. And so we started with the razor, so we sell a solid stainless steel single-blade razor. It provides a supremely close and comfortable shave without the irritation and ingrown hairs that often come with multi-blade razors. And a large percentage of men, many men that I talk to, either struggle with irritation, ingrown hairs, or just frankly a dissatisfaction with their shaving ritual in the morning.
And so we’ve always viewed the fact that if we can prove to our customers that we can deliver a fundamentally better experience when it comes to shaving, ten we’ve won a customer for life and we can continue to sell them other products that we believe will solve additional problems in their life. So all that to say we’ve got a foundational product line that is just these premium shaving products, and we view that as our foundation to build future products on top of. So we’re currently planning an entire skincare line, body care, hair care, and additional products in the future that will continue to build out that product line and that brand that we’re trying to build as a brand that men can trust, as products that are effective and powerful and solve problems that they’re experiencing in their lives.
Felix: And what’s your background? How did you come across this niche or how did you choose this niche?
Patrick: So, my background’s in engineering. I’m a mechanical engineer by study, and I spent eight years in the aerospace industry, about half of that was in the Skunk Works, which is kind of this infamous aerospace division of a company called Lockheed Martin. Some of the world’s most advanced fighter aircraft were made in that division. I spent about half of my time there and then another half of my time there was spent on a fighter aircraft called the F–35 Lightning Two, so stealth aircraft. And so that background, coupled with this actually very interesting interest in shaving kind of came together to make the products that we have today. I designed our razor, if you look it up it’s pretty modern and futuristic looking. I kind of took some inspiration from vintage razors that I had used and found off of forums. So believe it or not there’s a forum for everything. And whether you know it or not, there’s forums for vintage shaving. And members of these forums where guys get together and talk about their vintage razors that they use, and so I got into this style of shaving that our grandfathers used to shave with these style of razors.
So I had this real passion for that kind of niche, but then I wanted to bring it into a kind of modern day design. And so I kind of combined that passion with my background in engineering and designed this razor. And put it up on Kickstarter and here we are today three years later, still going.
Felix: Can you say how large you’ve grown the business since the beginning?
Patrick: Yeah. It’s hard to compare where we are today with where we were when we began because for the first year and a half really we were just kind of Kickstarter only, which is a complete contrast to where we are today which is almost entirely direct to consumer through our website. So I really view growth metrics over the past kind of year that we’ve been in business really online fully. So we’re seeing about on average 10, closer to 15% monthly growth. And then year over year we grow about 2x every year so far.
Felix: That’s amazing. Did you ever imagine when you first started the business that it could get to this point? Or were you just kind of looking to start something on the side and kind of keep I there?
Patrick: Never. I never imagined … I always hoped, this has always been a dream of mine, to run and operate my own business. So I always hoped, but I never imagined. It started with kind of a passion project. Like I said, we got our start on Kickstarter. Our first campaign when we launched our razor, it raised $80,000. I was on top of the world then, but I never could have imagined that it would turn into more than just kind of a project and actually turn into a real business.
Felix: Yeah. I’ve heard of entrepreneurs using Kickstarter as a way to validate the market, validate that product market fit. Did you use it for that same purpose or were you able to validate that there was a fit for your product in the market prior to Kickstarter?
Patrick: Yeah. So we launched in August of 2015, and that was kind of … So it’s interesting how Kickstarter has changed over the years. Kickstarter kind of tends to be more of a sales platform now than maybe kind of product validation or actually crowdfunding. But at that time, I was really interested in crowdfunding and validating if this was even a good idea. I had done zero research ahead of time, zero market research. This was just something that I thought was cool and that I hoped other people would like.
Our goal was $20,000, and I really viewed the campaign as market validation. I figured if we could raise $20,000, then there might be something here. Like I said, we wound up raising $80k, so that to me was really the only market validation we did.
Felix: Yeah. And how much time or money did you invest in the business or in the product before you went over to Kickstarter?
Patrick: We started in January of that year, so it was about eight months of research and development and prototyping and design, and then of course campaign preparation before we actually launched the campaign. I can’t say whether or not that’s typical for other creators, but there was a solid eight months of prep for the campaign, including actually designing the product. That’s from idea to actual campaign was eight months for us.
Felix: Right. So you mentioned one of the strategies that you’re taking for marketing is that you will get them to use that initial product, that razor, prove to your customers that you can deliver a better experience, and they’re gonna get a great experience if they use other products of yours. But how do you get the ball rolling on this? First of all, how do you prove this? And then how do you get them to give you a shot to prove it?
Patrick: Sure. So that’s definitely one of our challenges is convincing customers to try our products, or specifically to try the razor because 95% of the time that’s the first product they buy from us and then they continue to buy other products. So it’s casting this vision through advertising, through content marketing-
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Patrick: This vision through advertising, through content marketing, through social media of really we’re trying to convince men to wake up from this myth that they’ve been told all these years and that corporations have poured literally billions of dollars into advertising them to believe that you need five blades in a razor to get a better shave. And it’s absolutely not true. And I know you’ve had other founders on the show, both men and women that have caught onto this in that you don’t need five blades to get a better shave and in fact with a little bit of practice and time that you’re willing to put into the process of learning how to use a single blade, it’ll give you a far closer, more comfortable shave than any five blade razor you can imagine.
So there’s a lot of content advertising and then branding that we build behind that message that we’re trying to tell our customer. And it’s definitely an uphill battle when you’re battling ingrained customer behavior that has been developed over the past 20 years, that people believe you gotta have. A pivoting head and a luth strip and five blades and vibrating handle to get a better shave. And it’s simply not the case.
Felix: Right, and you solve this, you tackle this problem by education and through contact. Can you talk a little more about this? How do you know what kind of education or how you should be educating your customers when you are not just selling them a new product, but then selling them a new way to think about using products like yours?
Patrick: Yeah, I mean, that’s a great question. And it’s something that we are constantly thinking about and constantly trying to get better because education is one of our biggest challenges. So we do it through, and I like to consider it, there’s two phases. There’s acquisition of a customer, so educating them to be interested in purchasing the product and then there, once they purchase the product, there’s the onboarding of the customer. So, there’s certain techniques they have to learn and it’s really simple. It’s nothing really to be scared of. But there’s a relearning of the shaving that they need to do.
So, in acquisition, it’s, frankly it’s Facebook ads, it’s YouTube ads, it’s Instagram ads and in these ads there either videos or images. For example we’re running one right now that it shows side by side the difference between shaving with the single blade and shaving with three blades and it’s a little graphic, video graphic, we’ve created where the three blades, the pull the hair up and the cut the hair and then they cut the hair under the skin and that’s what causes ingrown hairs. And a single blade instead cuts hair at the surface of the skin and avoids ingrown hairs.
And so that’s an example of an education we’re trying to do and then once we actually acquire a customer through those efforts, then there’s a whole series of emails that we send the customers to help onboard them, so they get a better expanse with our products. Everything from our packaging to our instructions to the inserts we put in our boxes. Those have all been really meticulously thought through to try to make sure that once a customer actually gets our product they know exactly how to us em.
Felix: Yeah. I like his approach of onboarding a customer because a lot of times people make that sale and that’s it, that’s the last time they talk to them. But there is such value in being able to continue the conversation and get them to be able to get the most value of that product because now they recognize that they are getting a great value of your products and they wanna buy from you. Whether that means more of the same product or more or different products because they have that trust that they’ve given you. So during this onboarding process, especially through emails, can you talk a little bit about how you educate through there? Should you be sending 20 minute long videos, should it be short, to the point? What’s the structure of these onboarding emails?
Patrick: Sure. So the minute somebody places an order they obviously get the Shopify order confirmation email but then they get an additional email from us. It’s actually direct from me and it’s just a letter from me. It’s nothing fancy, it’s not like this flashy graphics, it’s a letter from me telling em some of the things they need to pay attention to in using our products and then at the bottom there’s a link to actually a video of me, pretty much saying the exact same thing but in video form. And that’s something we always try really hard to do is make sure that people can consume the content we send them in multiple different ways. So, in that email, it’s text and it’s video. And some people wanna read the text and some people wanna watch the video and so I include both of those in that email. They continue to receive order updates over the next two to three days. All the default Shopify email and in all of those emails I think there’s a, your order is shipping, your orders out for delivery, you order’s been delivered.
Each of those emails, which hopefully no surprise to any of your listeners, which are the most opened emails that your customers will ever open. The very first thing I have them in is a little note for me, hey check out these tips for getting the best shave out of your brand new razor. Right at the top of that email, before you even get to the tracking information, which is what everybody’s looking for in those emails. And then three days, I think it’s three days, actually it’s seven days. I’m sorry. Seven days after they get their package they get a followup email from me saying, how’s your order? Is there anything I can do to help you? Oh by the way, if you’re having a hard time, let me know. I’m here to help you. You can sign up for a one on one consultation or if you love your razor please leave us a review here and then they can click a link to leave a review.
so it’s that kind of process, which by the way, we get tons of replies to that email, that last one. That’s how we get the majority of our reviews, with that email.
Felix: That’s cool. I was gonna ask about the one on one consultation. How does this work? How does the consultation work with the customer?
Patrick: Sure, yeah, so we actually don’t have a whole lot of people take us up on it. But it’s just you can book a Skype call with us and so there’s a face to face. Sometimes you just can’t accomplish shaving trouble shooting over email. And so sometimes it’s just best to hop on a quick video call and that’s how to help our customers out.
Felix: When do you promote that next product that’s in your catalog? At what point do you present it to them or market it to them?
Patrick: Actually we’re starting to get better at that right now. We’ve recently overhauled our email program. So we switched over to Klaviyo right now, and we are setting up all these flows actually right now to start to nurture our customers after we, after they have purchased from us. So, and this goes back to what we were talking about at the beginning which is really being data driven in your approach to making decisions. So, we know on average, a customer will lapse. If they don’t make a second purchase by around 60 days, I think that’s probably pretty standard for eCommerce. It they don’t make a second purchase within 60 days we probably lost them as a customer in terms of making repeat orders. Of course that’s not true across the board, but that’s on average. You wanna be able to get a customer to make a repeat purchase within 60 days.
So, we’re trying to educate them about additional products that they should be buying and selling them additional products that we think they would like. So for example, if they buy the razor, there’s a stand for the razor they can buy. There’s a case, leather case for the razor they can buy. There’s of course shaving cream and after shave and all these additional grooming products that they can buy. So we’re education them about these products and then occasionally asking for the sale. So it’s, we’re not always asking for the sale but we’re trying to educate them on how the additional products will really improve their morning experience.
Felix: So you mentioned to me as well, about how you had a baby and then of course we talked about how you had a full time job while doing all of this. Based on what you’ve learned so far, learned through this process, if you were to do it all over again, how would you spend your first 30 days, especially when you had all these things going on, to actually make the most impact with each day?
Patrick: The 30 days after I left my corporate job?
Felix: No just the 30 days, if you were to start all over, start a business all over again. How do you recommend people out there, if they’re in this situation, how should the be spending their days to accomplish, [inaudible] how would you recommend they spend their days?
Patrick: I would spend a lot, a lot more time thinking about how do I acquire customers and how to I retain customers over time. Which could also be translated to, what is the lifetime value of my customer? And I had no clue what either of those words meant but customer acquisition cost and lifetime value are the most important, two most important metrics that any entrepreneur starting a business should be thinking about. And they don’t have to have all the right answers, but the sooner you can think about, what’s it cost to acquire a customer and how many times are they gonna continue to buy from me over time the better off they are and I wish I had thought about that much sooner in my entrepreneurial career.
So let’s just say I was starting a razor business all over again, I would think real hard about what channels am I gonna use to advertise and to promote my products. It’s probably gonna be Facebook, Instagram, Google, YouTube. How much do I think it will cost to acquire a customer on that channel. If you have no clue where to start, there’s plenty of articles out there you can google on acquisition costs for similar companies like yours. Depending on the product it could be anywhere from 15 to 50 dollars. And then how are you gonna keep that customer coming back over time to continue to purchase products from you. And what are you going to do to encourage that because left to their own devices customers, unless you just have some crazy, amazing product and they just can’t stop thinking about you every second and every day, most customers are just gonna slowly forget about you ’cause they’re just bombarded with so much noise in their feeds and just in their everyday lives. We’re all so busy that you gotta really think about how are you gonna retain that customer and get them come back and continue to buy from you over time.
So, I would think a lot harder about what’s it cost me to acquire a customer and what’s the lifetime value of that customer after I acquire them.
Felix: And are you saying this because you spent a lot of money on channels that were ultimately unprofitable because you didn’t go through this exercise?
Patrick: No. I’d say for me in particular, our acquisition cost has been pretty steady across the board over the past year so it’s always been good enough for us. What personally we failed to do until just recently is, think more critically about lifetime value. And that goes back to the previous question you asked which is how are you educating your customers and getting them to continue to buy extra products from you over time. And so personally we didn’t do a great job of retaining customers towards the beginning of our company ’cause we were more focused on, okay can we actually sell these razors? Will people actually buy them? So that’s what we were spending all our time thinking about and less time about what do I need to think about to get customers coming back to purchase our products. Because the first thing that people go to is, well they gotta come back and buy razor blades. And that’s true but one of the problems with our business model is currently every razor comes with 20 blades and so those blades last them roughly six months, even longer. Sometimes up to eight or even 12 months.
So we’re starting to rethink about, if they’re not coming back for blades then what are they coming back for? And so that’s what I would go back and tell myself to think a lot more about.
Felix: Right. I see what you’re saying. I think this is a stage that you’ve reached where you recognize that we’ve certainly not optimized that front end revenue, front end profit, but now how can we extend this and have these back end offers and have these more upsells and get them to extend their lifetime value. Do you think it’s, do you think that it could have been too overwhelming if you had, you start off on thinking this all the way through. About how can I get them to buy the razors but then also how can I get them to buy razors which might not have yet, do you think that there’s a certain time for that kind of focus?
Patrick: With the benefit of hindsight, I think the time to think about that is from the very beginning. And again, if you’re a small company like we are you’re not gonna have all the resources nor the knowledge to implement all the systems that you gotta implement to build out a really robust customer retention program. And frankly to build a brand that people identify with and wanna continue to shop with over time. If you’re a one person, two person show that’s really hard to get all that in place up front. But the time to start thinking about it is from day one because the worst thing you can do as an entrepreneur is waste 12 months on a business model that really has no legs. That’s the last thing I wanna figure out is, 12 months from now, well I didn’t really think through the fact that it costs me a hundred dollars to acquire a customer and I’m losing 50 dollars on every sale. You just lost 12 months figuring that out. You really need to think about that upfront.
Felix: Are there tests that you can run upfront to determine this. Because let’s say that you are just starting out for the time and you don’t know if you’re going to be able to have a low enough acquisition cost or high enough lifetime value that there’s margins for you to take. Is there a test that you could run if you’re just testing out new product or testing out new business to determine if it’s going to be profitable in the long run?
Patrick: Sure. So the two are, I’ll take the two separately. Acquisition and lifetime value or retention. The first is relatively simple to test. And I’ve listened to episodes of, on your pod casts, where plenty of people have talked about this before. It’s teaching yourself how to use Facebook ads, how to use Instagram ads. If you have the skills and the chops, I’d recommend testing YouTube ads. Those do very well for us. It’s teaching yourself those platforms and then running small tests that I’m certainly not the person to give anybody a tutorial on how to do that. But it’s relatively a straight forward process to test acquisition costs without having to spend tens of thousands of dollars. So, that’s the first part.
But then the second part, there’s really no way to know if people will come back and continue to purchase products from you so I would recommend, make a thesis and then test it. If you’ve got somebody that purchases a product from you, what’s your thesis of what they’re gonna come back to continue to buy and how are you gonna get them to continue to buy it. So I would recommend, if your thesis is, and by the way, it’s gonna happen within the first month or two that they’re gonna come back and purchase from you if not sooner, and so it won’t take long to figure out if people are gonna continue to buy product from you. So what’s your thesis. If I’m selling a razor then
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Patrick: … from you so. What’s your thesis? You know, if I’m selling, then I want to make sure they come back and buy my shaving cream, you know, test that. In Mail Chimp, you know, it’s an email send, two weeks after they purchase the raiser. And what’s your conversion rate on that? If you’ve got a decent amount of people that actually click through your emails and purchase those additional products then that’s a good sign. And if not, then you may need to rethink and make a different thesis and test that one, as well.
Felix: Based on your experience, if the numbers don’t look great, maybe they’re just at break even or something, can they get better over time? Or can they get better by much over time? Or if you were to do this, which do you want to see, the metrics get blown out of the water in a sense that you’re going to kill it in terms of a low cost of acquisition and a high retention rate before you move forward? Or is there some kind of acceptable threshold for you, if you were to do this again, is there an acceptable threshold for you before you move forward with a business after this kind of testing?
Patrick: Sure. If it were me and I was starting over from scratch, as far as acquisition costs go, they never go down, they always go up. Anybody can tell you that. So hopefully, you’re better than break even on some of your acquisition costs. I mean, they will improve the more you get to know your customer, or the better you figure out how to convert customers on your website. So there is the phase towards the beginning of your business in which they will improve. But as you start to really scale, acquisition costs never go down, they always go up. So I don’t know if that’s a helpful answer.
Felix: Yeah, I think so, I think there is, like you’re saying, there’s a learning curve where you have to learn more about the market. But if it doesn’t look good from the beginning, then it might be worth your time and investment into something that’s going to look great from the beginning. And why not, right, when you’re just starting off? Why not try to find something that is better than just break even from the beginning?
Patrick: Yeah. And I would never discourage somebody from hey you ran two weeks of Facebook ads and you didn’t break even, so go find something else. You know, I would never discourage anybody from that. We’re constantly running new campaigns that don’t pan out. And we actually kind of know what we’re doing now. So just because some kind of acquisition channel didn’t work, doesn’t necessarily mean it’s a failure. It just means whatever you did failed and try something new. And keep trying until you think that you’ve got an answer on whether you’ve got a good product or not.
Felix: Mm-hmm(affirmative). And you mentioned that if you have the skills and the chops to do YouTube ads, that’s something that’s worked well for your business. When it comes to YouTube ads, what do you need to learn that’s different? I think a lot of the audience is familiar with running ads on Facebook, for example. When it comes to YouTube ads, what are some new things that you need to learn to be able to do that successfully?
Patrick: Sure, yeah. I’m almost hesitant to share this, but I’m real big on YouTube. As Facebook costs go up, I think YouTube is going to continue to be a more attractive place to advertise. Now a lot of e-commerce brands are doing that right now. So I’m real big on YouTube and we’re going to continue to invest in that channel. And when I said shops, all I meant was can you film a video and edit it. And that can be anything from, actually, you had a great episode a little while back about how lower budget videos sometimes perform better. And we’ve found that kind of to be the case in our business. We don’t have these really polished commercials that we run. They’re certainly not junky iPhone videos either.
But I’ll have to say, it’s not all that difficult to run YouTube ads, more difficult than Facebook, but you know, you’ve got to think a lot more about what you’re going to say in your video, what’s the point you’re trying to get across. You’ve got to think about all these production value things that you don’t have to think about when you just take a picture of your product and put it on Facebook. So that’s all I meant, it’s kind of a whole next level of thinking through what you want to advertise and how. In terms of actually running the ads, it’s just as simple as running them on Facebook, if not more simple.
Felix: Right. I think the ad content itself requires more production, so more time, and potentially money, to create these ads. And it’s harder to iterate on them. So do you take what works in other channels, like something that’s easier, like the display ads on Facebook, for example, which are easy to tweak and then take what works there and make it? Is that easy to transition over to a YouTube video ad?
Patrick: I’ll give this caveat. We just started doing YouTube, oh gosh, three months ago. So we’re still learning right now, but we use the same content across Facebook and YouTube, personally. And we see better returns on YouTube.
Felix: I’m, sorry, is this Facebook video ads, or just the regular newsfeed?
Patrick: Yeah, yeah.
Felix: I guess the question is what about if you aren’t sure yet what to put into the script, essentially, of a YouTube ad, can you transfer what has worked for you when it comes to just the newsfeed, regular kind of static image copy, and then try to, I guess, replicate that in a form of a video for YouTube?
Patrick: Yeah. I guess you could. You know, you’ve got to think, so the ads were running and they’re the ads most people would recommend you run is what’s called the true view ads, which are the five seconds that you see before YouTube videos. You see an ad that’s five seconds. Or, excuse me, it’s not always five seconds, you can skip after five seconds. And so our ads are actually three minutes long, but you can skip after the first five seconds. So you know, I guess you could. There are softwares or websites where you can upload images and it’ll turn your images into a slideshow video or something like that. You know, I think you could probably test that.
I don’t know that it would really convert all that well. The thing you’ve got to do in those YouTube ads is you’ve really got to catch people within the first five seconds and give them a reason to keep watching and not to click the skip button. And I don’t know that you can really do that by just flashing some product images unless you have some really compelling product that just looks amazing if that makes any sense.
Felix: Yeah, that makes sense. I don’t think that you want to take that kind of shortcut, but I’m wondering if you can just use copy, for example, that has worked, in a static Facebook ad, and then play on that, essentially, in the script for a YouTube ad. So you said the five seconds in the beginning are the most important because that’s the time that people are, essentially, forced to watch it. And then they can skip after that. What tips do you have there for getting people not to skip and to catch their attention in those first five seconds?
Patrick: Yeah. You’re kind of pushing on a hot button topic for me, which is I hate clickbait ads. I don’t like running them. I don’t like anything that comes across as clickbaity or even close to clickbaity. But at the same time, they do tend to perform better than non-clickbaity has because they catch your attention. And they compel a person to click. And so what we try to do, this is just the brand we’re trying to build. As we try to take those techniques, clickbait techniques and package them in a better brand format. So the first five seconds of the ad that does best for us on YouTube right now shows a zoomed out picture of our product sitting on a bathroom sink and you can’t really tell what’s going on. And it kind of zooms in and it’s a little blurry. And then right at five seconds, you kind of see what it is. The voiceover is this is the world’s closest most comfortable shave, don’t believe me, keep watching.
Felix: The curiosity I the thing that you’re trying to pull out of them.
Patrick: That’s great, yeah. Without being clickbaity because I guess that’s not something we want in our brand. But yeah, we’re trying to compel somebody to like well, what is this. I’ve never seen something like this before. And then you’re absolutely inviting them to keep watching. And so that really works well for us and we’re going to continue to test other videos with that kind of theme.
Felix: Got it. So you mentioned earlier about Kickstarter as being a platform that you’re able to validate on, but you’ve returned back to Kickstart a few different times. You’ve launched three different campaigns on there now, raising almost $80,000 on that first one, I believe. And then a quarter of a million in the second, and then $30,000 in the most recent. So I want to talk about this quarter million Kickstart campaign that you raised because you told me that you did this in 12 days. Tell us about this. What was that process like during those 12 days to launch a Kickstarter campaign that raised a quarter million?
Patrick: Sure. So for context, our first campaign with ADK, that was kind of version one of our razor. Version two of our razor was the second campaign, which raised $250 on Kickstarter and then another $50 on Indiegogo. So the preparation process was actually very different. I spent far less time prepping for the second campaign, believe it or not, because I knew a few things by then. I’d been through the campaign process before and so I learned a few things. One of those things I learned was, and I’ll share my experience, I don’t know if this translates to other campaigns. But for us, in particular, the time we put into reaching out to press for our first campaign turned out to not really be worth it. We spent a lot of time coming up with a press plan and the only press that drove results for us, which actually drove huge results for us, we got covered by Uncrate on our first campaign. That was the only press we got that we didn’t actually pitch, so we never even pitched them, they just found us.
So anyway, for our second campaign, we did not spend any time thinking about press. We spent more time thinking about how are we going to activate our existing customers, encourage them to buy version two. And then, on top of that, we spent a lot of time thinking about how we were going to market this campaign. And so what you’ll see, kind of a big secret of all these huge Kickstarter campaigns, typically if you see a campaign that’s half a million dollars, a million dollars, or so, there’s a sizable Facebook advertising budget that’s behind that campaign. And we advertised for our second campaign. We didn’t advertise for our first campaign. And that drove probably, I’m guessing, a third of the revenue for our second campaign. So we spent a lot more time thinking about what’s going to be our plan in terms of how we’re going to spend money, when are we going to spend money, where are we going to spend money to drive traffic to our campaign page.
Felix: Got it. So I want to talk a little bit about the manufacturing process. You mentioned that you have a dozen suppliers from all over the world, and you are managing the manufacturing of all these products. How do you stay on top of a dozen suppliers and manufacturers for your products?
Patrick: It’s happened slowly over time. We are on our second manufacturer for most of our products right now. For example, my first manufacturer for the razor, that went down real bad. He delivered thousands of defective units that we owed to our Kickstarter backers. And so all that to say, it’s not been a rosy process. But over time, we’ve found manufacturers that we rely on, that we’ve built relationships with. I consider most of my POCs at those manufacturers, they’re kind of friends. They’re obviously, coworkers and colleagues, but they’re good friends of mine. I was just talking earlier, right before we got on the phone, I was talking to one of my manufacturers down in Mexico. And I always love hearing from him because he’s become a friend of mine.
So it’s developing a relationship with them over time. And then, kind of like we were talking about towards the beginning, it’s putting processes in place that help you to manage the forecasting and the planning of placing your purchase orders. So for me, in particular, that means using this app that we recently started using called Inventory Planner that plugs into Shopify that really helps us plan out when we’re going to be going out of stock, when I need to be placing new purchase orders, and so on, and so forth. I wish I had done that a lot sooner instead of just tracking that stuff in Excel sheets.
Felix: What would you say is your biggest challenge this week?
Patrick: This week, my biggest challenge is, gosh, I don’t know exactly what it is this week. But what it is, let’s say this month, is planning for G4, big surprise. We’re trying to get ready for Black Friday. We’re trying to get ready for Christmas. Our products are very giftable and so last Christmas was big for us. We’re hoping it’s even bigger this year. And so I’m trying to balance the fact that we don’t like to do a lot of discounting. We’re not a discount brand. With the fact that people really expect discounts during Black Friday. So we’re trying to think through, right now, what’s our approach and our plan to bring new customers into the fold over Black Friday without giving 50% off sales because we don’t want to be that kind of brand.
Felix: Got it. You definitely want to pay attention to how you do that. I think it’s an important step for a lot of businesses to figure out how to navigate Black Friday without having to take these steep cuts. So thank you so much for your time, Patrick. So getsupply.com is the website. Where do you want to see the business be this time next year?
Patrick: This time next year, I’m hoping we’ll continue to grow about 2X every year. I’d like for it to be more than that, but a slow and steady growth is fine with me. And we’re hoping to have a full line of skin care and men’s grooming products by about that time so that we’ll be a one-stop shop for all your men’s grooming and wellness needs. So that’s where we hope to be in about a year.
Felix: Awesome. Thank you again, so much, Patrick.
Patrick: Thanks, Felix.
Felix: Thanks for tuning in to another episode of Shopify Masters, the e-commerce podcast for ambitious entrepreneurs powered by Shopify. To get your exclusive 30-day extended trial, visit shopify.com/masters.