Childhood friends Chip Malt and Jake Kalick are the complementary co-founders behind Made In. With Chip’s experience in ecommerce and data analytics and Jake’s third-generation expertise in cookware manufacturing, the duo created a company that disrupted the kitchenware industry.
In this episode of Shopify Masters, Chip Malt of Made In shares his insight into key metrics to monitor, why showcasing the makers behind products was important, and how the cookware industry was disrupted.
- Store: Made In
- Social Profiles: Facebook, Twitter, Instagram
- Recommendations: Retention Optimizer (Shopify app), Looker, Segment.io, BlueShift
The foundation that led to Made In
Felix Thea: What was your experience prior to starting Made In?
Chip Malt: I was at a company called Rhone, which does high end men's athletic apparel. We were a Shopify Plus customer. Was employee number four or five there and really helped build out their eCommerce brand and we did that all through Shopify.
It was kind of a classic tale of a young company started that realize that the branding wasn't up to par with kind of the products we were selling. We're selling a price point that was one and a half to two times the price of Nike and the branding and look and feel of the website had to match that. So about a year and a half into the company, with a Shopify partner and updated the user experience for the whole website.
Felix: Based on what you're kind of seeing in the ecosystem right now of other stores, what do you think people should probably focus their attention on?
Chip: I think kind of outside of UI, UX, and layout, would be beautiful imagery. Photo and video are becoming more popular. Videos on product pages are becoming more expected. Depending on the product you sell things like 360 views. And really to give that user who's expressed an interest a real good idea of what they'll be purchasing. I guess the pro and con of a DTC model is you are speaking directly to that consumer. You do have that one to one relationship but they don't have the ability to touch and feel that product. So anything that you can do from the photo and video side to make them feel comfortable with what they're going to get in the mail five days later is super important.
Then there's some kind of low hanging fruit functionality, things like always having a call to action visible on the screen at any point in time. So whether they've decided to scroll down the page and look at reviews, whether they've scrolled down the page to look at kind of the nitty-gritty details, descriptions, maybe FAQ, there's always that quick opportunity to just add to cart. It's super important.
Felix: What gave you the itch to venture out on your own?
Chip: I was a computer science major in college and started a few businesses with some of my roommates in college around web design. So I think that itch has always been there and ended up going back to business school doing a lot of courses in the computer science department and big data analytics. I had a really cool role at Rhone. When I was there, I was very cross-functional, everything from demand forecasting, website analytics and behavioral analytics, demand forecasting, and customer acquisition. So got a really good cross-section of the entire company. My past experience and knowledge in the web design domain, then the experience I got at Rhone, it was encouraging to go off and branch out and do my own thing. And I actually had a really good childhood buddy I grew up with since I was five in Boston and he had spent his life in the kitchen industry and we were seeing at that time, how well Casper was doing in Brooklyn and the home was really becoming a place where people were starting to invest in. People were really excited about investing in pillows and sheets and the kitchen just wasn't touched.
And my childhood buddy's grandfather in 1929 started a business outfitting and supplying high-end restaurants with kitchen supplies. So I called him up and said, “I have this great experience from the web, mobile and analytic side plus the experience at Rhone. Do you think we can create a brand, you have the product knowledge in this space to speak to the people who want to outfit their kitchen and feel attached to a brand in that space.” And he was like, “absolutely. This is a no brainer.”
Noticing a marketing opportunity
Felix: How did you know that the kitchen was the next place to disrupt?
Chip: We saw this huge behavioral divide and how the modern consumer is behaving with respect to food. So our age group the 30-year-olds they're going and they were spending so much time curating perfect recipes on all these great recipe websites. They're taking Masterclasses taught by Thomas Keller. They are investing in cooking as a craft, not a chore. They were going and they were spending 30 bucks on a grass-fed steak at a Whole Foods.
We did interviews with customers or potential customers beforehand. Ask them how they got their cookware. Do they even know who makes their cookware? And what we found was that the brand affinity in this space. Brand awareness in this space was super low. So for us, it was a different challenge than we had at Rhone, at Rhone people always are in the market for a new workout short, a new fashion item. For us, it was about creating a brand that people finally cared about in the back of the house kitchen.
Felix: When there is no true brand affinity what kind of marketing did you have to do?
Chip: What that meant for us was dictation to creating the actual products. And that's actually what drove the name Made In. So what we realized was that food is a place of your life that there's a huge emotional attachment to. So whether you're home for Thanksgiving and gather around the table with your family or you’re recreating a grandma's recipe from three generations ago, food always has an emotional attachment. A lot of people you talk about the latest travel or vacation they took and all they talk about is the food that they ate. And so what we wanted to do is to recreate that emotional attachment on the product side.
What that meant was creating and developing an authentic supply chain. Take our knife, for instance, our knife is made by a fifth-generation maker in central France. Our goal with Made In is that the products are made in the best places in the world with the best craftsmen in the world. And our goal is that you have just as much of an emotional attachment to the product that you cook the food with as the food and experience you have.
Putting the makers at the forefront
Felix: How were you able to start the process of sourcing from craft makers?
Chip: My co-founder, Jake Kalick, was a third-generation kitchen supplier, so he had a lot of industry connections and he's able to talk in a language that a supplier appreciates. He's very like very knowledgeable about what makes a pan really good versus mediocre versus bad. He came in with this really great industry knowledge, which helped us to talk the talk when we got the opportunity to talk to manufacturers. But to be honest, there was a lot of ground and pound. We talked to maybe 50 manufacturers before we had two that were potential. A lot of people said that no one's going to buy kitchen supplies online. A lot of people said we've been around, “we've been making cookware, knives for 500 years, why should we take a bet on spending our resources on a startup?” It was a lot of convincing. It was helpful that we had an industry tie through my co-founder. But we were lucky to find partners who really believed in us and took a chance with us.
Felix: So once you have the supply chain with the products made from historic parts of the world, how do you use that to your competitive advantage?
Chip: The craftsmen have a large part of that story. From an ecommerce and direct to consumer perspective, that gives the consumer the acknowledge and comfort that the product they're purchasing from anywhere from $89 to $155 is going to be worth it. And it's really made to last. It's a requirement for us if we're launching into a major vertical, whether it’s stainless clad pans or knives, that we're able to take a camera into the factory, show the production process, talk to people who are actually producing the products and so in the future and we can showcase that to our audience.
Felix: Did you hire an agency or company to help create the videos or is it something that you did on your own?
Chip: Our fifth hire was a full-time videographer and I think that's unique for a company our size, but betting on what we thought was an emotional attachment to a product and kind of a differentiator for our brands. We wanted storytelling to be an important part of our brand. And so that meant that we brought that in-house a lot quicker than I think most brands would at our stage. And that was probably one of the best moves we made. We go on the road together, three or four of us and we're able to capture manufacturing videos, partnership videos with chefs instead of going through a lot of the back and forth with agencies.
Felix: How do you use videos tactically in your marketing?
Chip: Everything from the about us page. If you want to dive deeper into how our products are made, who's making them, those exist on the website and that's something we'll continue to do. We do outbound marketing on Facebook or Instagram the factory and stories play a large role. We do cut downs for those onto Instagram stories and make sure to include those as part of our marketing mix because we really want when people hear about Made In and go in and click on our Instagram to what your brand stands for. We want to make sure that the factories always have a presence there.
How endorsements naturally occurred
Felix: You also have a whole section of your site that’s dedicated to tutorials from famous chefs, tell us about those collaborations.
Chip: That was completely organic, to be honest. We struggle with trying to tell our consumers how we're not paying to work with those chefs. I think people are so used to paid endorsements in our field that they assume that everyone that we feature on that site is from just like a contractual agreement. But what actually happened with that and which was super interesting was a lot of these chefs approach us because they heard about the manufacturing stories. They said things like, “I've been around and for 10 years had been turning down sponsorships from kind of the name brands because they didn't really stand for anything. And I've been waiting for a company like you guys to come along.”
That brought a lot of inbound interest from chefs starting with Tom Colicchio at the end of 2018. He was our first chef ambassador. He invested in the company. And then over the next year three or four more high profile chefs invested in us. Grant Achatz and the Alinea group, invested. Brooke Williamson in out of LA Top Chef winner, she invested as well. We think we love to have one to run relationships with these chefs and make them a part of the meeting community.
Felix: What did you focus on first when setting up the business?
Chip: That's a good question. We struggled with that when we were starting the business. We ended up settling on not even touching website brand marketing until we figured out the supply chain. We felt like that was going to dictate the brand. So we talked to manufacturers all over the world, we wanted the brand and the look and feel to match the people we were working with, which ended up being our first line, a stainless cladding line out of the United States. It's not a perfectly high-tech polish factory. That's like pristine and looks like a doctor's office or something like that. It's really like kind of old school, American manufacturing nitty-gritty. So when we talk about our brand, it's authentic. It's not 100% refined. It's human. And so I think if we went the other way if we started with a brand, we started with a website, we started marketing and then figured out the product, we would have had a mismatch there.
The process of working with PR agencies
Felix: So once you did get the supply chain set up and then a website set up, where did the first sales come from?
Chip: Besides our moms and dads, we were fortunate enough to have a pretty good press. We were the first mover in this space. There weren’t too many other brands doing it, so it caught a lot of press's attention. PR was one of the first things we invested in. We invested in that about six months ahead of launch so that we could build hype and gift and see editors. Things that I had no idea what I was doing in that realm, and that's kind of been a thesis of our motto. If we have no idea what we're doing, then that should be something we either hire for or outsource.
Felix: If you're looking to hire a PR agency, how do you determine if they are going to be a good fit?
Chip: For us it was, there are two things that were important. One was that they had a knowledge of food or hospitality. We were working with some of the best chefs in the country, so they had to have some knowledge or experience in the hospitality industry. The second thing in the CPG industry, so whether they're working with a company focused on consumer goods and can pitch for both editorial as well as things like gift guides.
Felix: What is the process to come up with more stories to try to get out into PR?
Chip: We have two weekly meetings on that. The first one internally and talking more about the marketing funnel. I think it's the beginning portion of that is reviewing last week's efforts and the analytics behind click-through rates, conversion rate, CPAs, things like that. And figuring out what's working and what's not and in all the AB tests we ran that following week and then building up those. And then the second is a weekly meeting with the PR agency, which it's also a two-way feedback section. what's coming up. Are people interested in this? And then they deliver feedback back on yes or no.
How data and metrics play a big role
Felix: What are some of the most important metrics or reports that you like to look at on a day to day basis?
Chip: That was a big learning curve for us for the first three to six months or six months, cookware buyers behave completely different than my past experience at Rhone. Which as A fashion buyer could be a one-click buy. It could be something that someone's always in the market for and they just it's Tuesday and they're bored at work and they buy it. We do not see that behavior in cookware. People don't walk out of their house on a Tuesday, saying I need to buy a new fry pan. It's a different full-funnel marketing cycle and problem that we have that we solve. And so that means that we have to break down our marketing funnel a lot more granularly. We're looking at bounce rate, qualified traffic, and a lot of metrics around that. And then middle and down funnel, that's where we started to look more conversion-focused. It is a much more, I guess, segmented marketing approach and a much more full-funnel marketing approach.
Felix: What makes shopping for cookware so different?
Chip: What that means also is that we can go up the funnel and not worry so much about conversion and expand our reach into other channels outside of kind of those traditional ones. We like podcasts and TV we've tested and spent money behind those channels because for us it's more about the awareness at that stage. Like we're more pushing up the funnel and looking at awareness and things and then investing kind of at the back end of the funnel as well. It's a different approach than we took with fashion where it was really easy to capture in one channel a full conversion cycle approach.
Felix: What are some examples of innovation versus optimization?
Chip: I'll give you an example. First of the negative kind of optimization for us, early on we were looking at a target CPA (Cost per Action) our advertising and we were working with an agency and what they really wanted to do was test headline copy, test really small iterations of description copy, product on white versus product on red, versus product on this or that. And while those all drove very incremental gains or learnings, it wasn't a meaningful impact in the brand. What we did early on was we made a much larger bet. So let's think about going out and investing in a brand video all about the founders and the storyline. And why we created the product and really humanizing the brand, test that whole vertical versus pure craftsmanship story versus pure product stories. That costs a little bit more upfront to do because we had to produce three videos. It took a little bit more time a couple of months to get those out of the gate and into the world. But instead of driving incremental value, the winners of those, which are the craftsman story, the humanization story drove double-digit gains which would have taken us a lot longer to get if we were incrementally testing.
Felix: What does it mean to you when you are sitting down and your goal is to optimize the ads themselves, what do you focus on?
Chip: We're focused on every one of our KPIs on each part of the channel. Starting at the top of the funnel and looking at engagement rates, bounce rates, click-through rates, dollar per visitor. And making sure people are interested in those ads that they haven't faded in terms of engagement. So they're not reaching the same people. They're not getting boring, they're still telling the brand messaging. And then moving down the funnel getting more conversion focus. So are these ads doing what they're supposed to? Are people adding to cart? And are people going from initiate checkout to final purchase? So each part of the funnel it's different. But each morning we go through each part of the funnel. Look at every single ad that and how it's performing over the last day and two weeks and a full month and measure those against each other. And then see if we need a refresh creative.
Felix: Which platforms are you focused on right now?
Chip: We focus on podcasts, Facebook, Instagram, and TV right now.
Felix: What do you do when setting up a new Facebook campaign?
Chip: We do light AB testing. We also just do a lot of putting things out in the world and seeing the response into existing campaigns or ad sets. We'd rather fail quick and often and Facebook is a great platform to do that because you can jack up spend and figure out if an ad's going to work in an hour or so. We'd come up with a bunch of iterations on ideas and products and messaging and creative lines and throw those all into the world together and see which ones rise and which ones fall. And really our motto is to kill out quickly. Because anything we can save on understanding if an ad will trend towards where we need it to be long-term, we can invest that back into testing a new concept.
Felix: What metric are you looking at to consider a test a success?
Chip: Return on ad spends is our bread and butter in terms of KPI. So looking at CPA is a little bit of a misnomer because if we're getting a hundred dollars CPAs and only selling a $59 pan, we're going to be out of business. If we get $100 CPAs in our $700 kit it's a great business. So for return on ad spend is really the most important metric we look at.
Felix: You've been able to increase the number of returning customers by 50% year over a year over, what did you do in order to achieve that?
Chip: There's always a hero product that may drive a ton of your sales, but there's also a hero product that is the first product in consumers’ first basket that leads to the highest repeat purchase rate. And that is a super interesting product to look for. Basically the penetration product for your brand that brings the most customers back. And for us, that was a carbon steel frying pan or a saucepan, which aren't really the hero products of ours, but somehow they are penetration products that make people fall in love with the brand and coming back and buying more. That dictates marketing efforts if people purchase one of those products. If we lead with those products it determines our life cycle marketing in a lot of ways. And then in terms of the retention optimizer and other tactics you mentioned there those are super interesting to look at because as an ecommerce business a lot of your money's made in the LTV (lifetime value) standpoint, what people do after the conversion. And for us like anything we can derive any more value we can derive from second, third, fourth, fifth purchases. That's money that we can then spend to go acquire more customers and increase the velocity of our business growth. And so we're lucky enough now to have kind of our early cohorts repeating up to 60% or 70% which was kind of way higher than we thought.
The apps that make data management easier
Felix: What did you do to determine what is that product that will most likely get you a customer that is going to be returning?
Chip: The easy way to look at that is the drag products. There's a feature in Shopify that is called web cart analysis. That is a really good way to see at least the cart makeup and see what products are being bought with other products. And that is a good first step into looking at it. We take all of the exports of our raw Shopify data, we put that into a RedShift database and run SQL queries off that to figure this stuff out.
Felix: Well, what other tools or apps you use to help you run the business or make decisions for the business?
Chip: Yeah, we use Looker as a BI tool. It's a little bit more of a heavy lift in terms of implementation, but that's super important for us to be able to visualize. Everything from revenues down to basket analysis, down to channel analytics as well as marketing performance. That all comes through the BI tool, Looker. We use Segment which is an interface that sits on top of Redshift and extracts all of our data from multiple channels and pushes it downstream into things like the Redshift, which ends up going to Looker.
Chip: So a lot of like the data structured tools are super important to us. I mean, we've invested a lot in the data structure. And then obviously platforms. We use Blueshift which is an ESP and artificial intelligence tool to analyze both kinds of behavioral flow through the website as well as put out our email communications.
Felix: What would you say is the most important metric that you would like to spend all your time focused on over the next few months?
Chip: Return on ad spend. It's the number one thing everyone looks at.