Achieving High Conversion Rates in a Saturated Market

Founder of PureChimp, Dean Legg.

Instead of going on a gap year, Dean Legg started his second business after selling his first. Honing in on his interests, Dean launched PureChimp to showcase matcha and natural skincare through commerce and pledges 5% of profits to charities that provide care for chimpanzees. In this episode of Shopify Masters, we chat with Dean about social media ads and how to achieve high conversion rates in a saturated market.

For the full transcript of this episode, click here

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Show Notes

    Scaling up for more freedom: how hiring helped this business owner go remote

    Felix: You had originally planned to use the startup capital for this business for a trip but you started a business instead. Tell us about that decision and what went into it.

    Dean: That's correct. I had a company before setting up PureChimp. It was my first real strong business adventure. I sold that and then I planned to go to Australia. I had a visa and everything. I paid for a visa but I couldn't resist. I just couldn't resist setting up another business and so I had the visa to go, decided to set up PureChimp, and haven't looked back since to be honest. We’ve just done our sixth year. Been some real hard work initially but it's paid off. Yeah. I would say I don't get time to think about it but I'm proud of where we are now and what we're doing.

    Felix: You originally had plans to be able to go remote with your business. Tell us about how you're able to set that up.

    Dean: That's quite a recent development. I have been in Sweden. I've been there for one month. Really, the biggest thing was employing our first full-time member. That's really helped to clear up my time for other things and enable me to work remotely. I found a guy who was awesome. I was like I've got to offer him something attractive to keep him on board and managed to do that and since then the business has just gone from strength to strength and it's also enabled me to work remotely if I would like to. That's been a real plus point and it's sort of taken five years to get there but it's been worth it. 100% worth it. Just carry on, putting the effort in, moving forward, and eventually, you will get to where you want to get, where you want to be, and I'm lucky to be in the position I'm in now to do that.

    Felix: Let's talk about the idea behind the business. Where did that come from?

    Dean: I've always been a health-conscious person and that really started from when I was 15. I had really bad acne and I kind of turned to looking after my body, exercising, et cetera, to try and keep on top of my skin. It helped me a lot. It also helped to keep my mind and everything fresh, which was another plus point.

    Felix: You are always focused on health. How did you decide on Matcha green tea and natural skincare? What made you gravitate towards that niche? 

    Dean: With Matcha green tea, I was actually at work, working for a business and we were on a training course and the guy came in. His job was to energize teams, get people with healthy lifestyles, so in turn they wouldn't take time off sick and their productivity would be good. He actually recommended Matcha. That was the first time I ever came across it. I had already been a green tea fan. I managed to get hold of some Matcha, find a supplier, and we started to sell it. I was like, "Okay. This is going well" and it kind of just grew from strength to strength there. We continually were looking for improvements and ways we could do things better, listening to customer feedback, and that's helped to get to where we are now. Like, initially, the Matcha was from China, the quality was not as good. It was very cheap. Now we're paying three times as much for the product but the product is miles better for our customer, the quality, the tests involved are a bit stronger. Yeah, we just have a great relationship with our supplier as well. That was a big positive change. That made a huge difference. Sometimes it's not all about getting the cheapest product possible. You have to also think about the quality and where that product comes from. That made a huge difference to us.

    Felix: You mentioned that you had sold your first business. What was that business?

    Dean: It kind of makes me laugh when I look back but it was all steps to get to where we are now. That was a skincare business. You know the laminate you use to put on your books when you were at school? Essentially, we had the skincare product that was homemade in my mom and dad's kitchen and then the labels were not waterproof so I used to laminate them and also print the labels off an InkJet printer and then I went to a market in Cambridge and tried to sell it to the public there. I think a lot of old ladies used to buy it from me just out of their pity, some very kind old ladies. That was a big learning step for where I am now.

    A selection of 5 matcha flavours offered by PureChimp against a pink background.
    Energy without anxiety through drinking matcha led Dean Legg to start selling it and launching PureChimp. PureChimp

    Felix: What exactly was the product that you were selling?

    Dean: That was a natural skincare product that was made at my mom and dad's home. It was all homemade. I was self-taught - with the skincare, I just read books and went for it. I just took the step and that was the small initial first step to get to where we are now. We started to sell it online as well on eBay. Originally, on WordPress. This was just all building up my knowledge. That's what you've got to do. You've just got to put yourself out there, keep learning, listening to podcasts, read books. Just do it basically. It's all developing yourself and your business- and maybe not this business but future businesses. That eventually led us to Shopify and Shopify was amazing. I know it's a Shopify podcast but I would 100% recommend it to anyone that's on an online business to just go for Shopify because it takes away a lot of the stress for yourself of “do I need to set up a certificate for security, payments?” Worrying about the hosting, the updates, all of these things. You don't really want to be worrying about that. You want to let someone like Shopify - a trusted, successful business - deal with that for you. I haven't been paid to say this or anything. That's genuinely my point of view.

    Felix: What were some of the lessons that you learned from that first business that you made sure to apply when starting PureChimp?

    Dean: There were many things but the biggest thing is to every day improve, improve yourself, and try to improve your business. Just to realize that it takes time as well. That took a while to get some sales and get to where it was. Then I could apply that to this business. It took three years for me to get a full-time wage from it. If I were to set up a business now from scratch, an online business, I would say get the foundations in place first. Get a good website, get a good product, focus on one product first, have a hero product, have that product where you can put all of your advertising, et cetera, into that one product. Then you can grow from around that in the future, that's fine. I would also say understand you're not going to build a website and then get loads of people coming to your website and making loads of sales straight away. That's not how it works. There's a growth for it and it takes a lot of commitment, a lot of dedication. Focus on getting the website built, get a great product, and then make it trustworthy, get reviews, maybe give some products to bloggers, ask for them to review it, et cetera. Once you've got those foundations, go for social media ads, I would recommend Google Shopping ads, something where you get real-time feedback. We've spent a lot of money on things like TV ads, magazine ads, It's a big gamble. For example, a TV ad. We paid 14,000 pounds but that was an upfront cost. That's just a roll of the dice. Is it going to give us any return or not? Who knows. That's just a big upfront cost. It's the same for magazine ads. With social media ads and Google Ads -in particular, Google Shopping ads - as entrepreneurs, online entrepreneurs, we're very lucky where we can maybe test a 50 pound budget on an ad and see how it performs and if it's performing great, awesome, we can put more money into that and let it work its magic. If it's not, we can just turn it off. We're just very lucky. If you are setting up an online business or have an online business, it's great times, to be honest, and a lot of good opportunities. 

    Daily improvements to run a successful online business 

    Felix: Can you give some examples of improvements that you have accomplished on a day to day basis? 

    Dean: A good example of this is I have a weekly to-do list that's just like a chart and I tick it off every week. These are just all small steps that help to improve the business, grow business, and get us to where we want to be. For example, that could be checking the Google ads every day for the keywords, adding negative keywords, that's just one example. Responding to all customer and social media comments, that's another daily task. That's on my weekly chart. There's so many. There are so many things. 

    Felix: When you say you want to improve the business these are processes that you set up that you are committing to every single week and by just going through, executing on those processes, you know that will move the needle at least a little bit for your business.

    Dean: Yes. Exactly. Then within that, I'm also sort of listening to podcasts when I get the time, reading books and when I'm doing that I'm normally getting new ideas to try for the business. Outside of that, I'm always coming up with ideas and new things to try, et cetera. Those ideas normally come from learning from other entrepreneurs and speaking with people, talking to your customers, and all of these things. We've always been a company that will try things and some things will work. 90% of the time they probably won't work. That 10% of the time that it works, that really helps to move the company forward.

    Felix: So you mentioned that it took you three years to get a living wage, what advice do you have for people out there who are in the struggle right now, who aren’t seeing the returns they were hoping for? 

    Dean: That's a good question, a tricky one because it varies from person to person. Take a step back and think, "What can I do to get this business to where I want to be?" Try these things, try, try, try, try all these different options, and see if it helps to get you to where you are. I was in quite a luxurious position because I was still living at home so I could afford to live off a very low wage at the time. If you're in the same position then great. You have that luxury. You're in a very good position where you can try all these things and keep going until you find something that works for you. It's probably going to be finding that advertising that works for you, a lot of the time.

    Felix: What gave you faith that you should keep on going at it?

    Dean: I don't know. To be honest, I've never actually stepped back and thought about that. I've kind of just been in the business and just working hard to make it happen and then over time, eventually, it did. Just continuing to develop myself as a person, develop and improve the business, and it just happened. For someone else who is in that situation, if you're in two minds, maybe talk to people, talk to friends, talk to family, talk to other business people, actually other people with an online business could be a great option, because they might have some golden nuggets for you to take away and use or they might also say, "You know what? I think you've given it a great shot but maybe it's just not the right product. You're perfect, you can make another business work but maybe it's not the right product." They might say to you, "You know what? This is fantastic. There's definitely a market for this but you just need to keep improving things." Maybe your branding is not on point or maybe the advertising channels that you're using are not on point.

    Pay to play: leveraging paid ads to grow your business

    Felix: You mentioned in the early days you tried all the free options like posting on social media, talking in forums, talking to friends and family and you mentioned that you soon realized that you really need to pay to get new customers. What led you to realize that you have to pay to play?

    Dean: A big ‘aha’ moment with that was on Instagram and on Facebook, we used to get quite a lot of organic exposure. I noticed Facebook changing their strategy, asking are you a business? Same on Instagram. As soon as they know that, they want to pay for you to get that exposure, which is fair enough. They're monetizing their platform. In the early days, it wasn't monetized. There weren’t really ads on Facebook and Instagram but that changed. With that, everyday people that don't have a business on Instagram or Facebook they're not going to pay to get exposure. Facebook and Instagram are aware of that and I noticed they were gathering their information and our organic exposure was going down as a business. I realized, okay, these platforms are excellent for business and to get eyes on your business. This is the modern way. It was a bit organic and now this is turning into, okay, to get those eyes you have to pay for it, which is perfectly fair enough from Facebook and Instagram. They're a business. They need to monetize their product. That's fine. We kind of went with them on that.

    Felix: What recommendations do you have for anyone out there that is getting started for the first time with Facebook ads for their online store?

    Dean: With Facebook ads, I would say, okay, find a target market for your product. That's very important and that's quite easy to do on Facebook. We do it on interest. Interests relating to our product and also we narrow it down by age and also sex and location. That's what we do. Also, over time, Facebook has this awesome thing where they can do a lookalike audience. We also use that. That's from the Facebook pixel that you have on your website.

    A glass of matcha latte with foam made with PureChimp’s matcha powder.
    Understanding demographics and experimenting with social ads were important for PureChimp’s growth. PureChimp

    Felix: Out of the vectors of the location, the interest, the gender, the age, which one of those is the most important to get right that will narrow in on your actual customers the most?

    Dean: For us, it's been interest. Because we're a six-year-old company and we have had the pixel on our website for a long time and Facebook has the data, we now use the lookalike conversion audience a lot like a fantastic feature on Facebook. I recommend it. We set that to 4%. You have the option to do that in the ads and that's been very successful for us because what we've found when we narrow down our audience by interest, it was perfect, it was working, but when we have ads that are really good and we want to put more money into them we found that target market was too small. That's where the Facebook lookalike pixel comes in. It's fantastic when you want to expand your reach with an ad and also add more budget to the ad and spend. That's what I would recommend. Then the ad itself is very important as well. What we tend to do is use a video. You only need one, two videos and then you can kind of edit those videos and test which one works, which one doesn't, and how I'd edit that, I would use an app called In Shot. I think the annual subscription is maybe 10, 20 pounds. It's sort of $25 and it's awesome because you can add a backing track to your video, which you can test, see which backing track works the best. You can also add a text onto the videos as well, which is important because you've got to think a lot of your customers when they're on Facebook or Instagram they're not always going to have the volume on so having that text is very, very important. 

    Felix: What's in the text itself? Is it like subtitles of what people are saying? What are you including in the text on the screen?

    Dean: We're just including bullet points, key benefits really to the product. That's what we tend to do. The video tends to be short so normally 10 seconds is around where we are 10 to 20 seconds. Within that, we'll maybe have five key messages for the customer, which are normally benefits of the product.

    Felix: What do you have in those videos?

    Dean: We tend to have the product and how it's being used. That's what we've done. Our product, our hero product on Matcha tea is quite versatile and it can be used in a number of recipes. We're quite lucky because we can produce content like recipes and we have a few videos like that. Then we can take that and edit it into a message. For example, we have a quick fix Matcha latte recipe video, which is just where we've mixed hot water and cold milk. Certainly, a very quick and easy way to make a Matcha latte. That was originally a piece of content for our Instagram followers. We then turned that also into an ad. We just cut the video down in time. A nice short video seems to work well on Facebook and Instagram and then we added some backing music to that and we also added some text on top. It's kind of different. It is an ad at the end of the day and we're trying to give key benefits of our product in the ad. Then when we're using it for our Instagram, for any organic reach that we get, it's more about giving our customers value by showing them a recipe or a way to use the product. It's kind of a different approach. It is great. You have that content, you can use it in many ways. We're so lucky. Once you have that video, you can cut it to 10 seconds, 20 seconds. You can use the end part, the beginning. You can add the backing music, you can add different text. We're so lucky in terms of being able to try different things.

    Felix: Is your content strategy the same across platforms? 

    Dean: I'll be honest. We tend to use the same content because it has changed recently. Before I would have said you'd have to use different aspect ratios for your ads and potentially different content but now I'd imagine 90% of your customers are probably going to be using their mobile phone when they're browsing social media. Five years ago, maybe people would browse Facebook on their laptop or desktop but because everyone is on their mobile phone, having the square dimensions works on Facebook, also works on Instagram.

    Felix: What's the call to action in the ad?

    Dean: We tend to have a learn more button. Then a shop now button for our retargeting.

    Felix: That usually goes like on the product page or where does it go?

    Dean: Exactly. We take it to our hero product, which is our regular flavor Matcha green tea because that's our best-selling product. It's also where we've got all of our reviews from our customers, well, most of our reviews. That's what we tend to do. We normally sort of say to people, "Link into the button." Often we use the slogan, "Make the switch today" so that would be switching to Matcha tea from coffee. We don't say to customers, "You have to stop having coffee" or stop having energy drinks but just making the switch from one coffee a day to a Matcha or switch one energy drink a day for a Matcha tea and just see how it'll make you feel.

    Felix: How did you know that was going to be the messaging that would resonate with people?

    Dean: One of the reasons was we did do some market research. We did a campaign on Survey Monkey and asked customers, "Why do you drink PureChimp Matcha tea? Why did you buy it from us?" Then one of the big reasons was they wanted to make the switch from coffee because too much coffee made them anxious. A lot of people also wanted to improve their health so that was another kind of thing we'd say, "Improve your health." Matcha green tea is full of antioxidants that are very beneficial to the body. We took the information from our customers and that really helped with our campaigns because it gave us a better idea for why people were trusting our business and trusting our product. That can really then help to resonate with people in your ads.

    Amazon ads: how to use them and what to look out for 

    Felix: Now I want to talk about Amazon ads because I don't think too many people out there have utilized Amazon ads. How do Amazon ads work?

    Dean: That's evolving every day. Essentially, you're paying to get to the top of the search results on Amazon. There's a variety of ways. One of them would be when a customer is searching, for example, for a Matcha tea, our product would appear on the ad at the top and we would be paying for that exposure. Another one is they have banner ads so when people are maybe on a product for, let's say, yoga mats, you might also have a banner ad advertising our Matcha tea. That's been very successful for us. I think a big reason is when people are on Amazon they're in that shopping mode, which is a big thing. They do a great job, Amazon, to be fair. They make it very quick and convenient for people to check out. That helps to get a high conversion rate. Another big thing I would say is this is a good lesson for any sort of opportunities or things you see that pop up in the future, in particular, in the UK, it might be different in the US. It's a new feature that Amazon has added quite recently and with a lot of advertising, if you're an early adopter, you're in there early and you get the opportunity to get the best return for the lowest price because you're on there when not as many people are. That's how their systems work. That's how a lot of people were successful in the early days of e-commerce with Google Ads. The people that were the early adopters got lots of exposure for a low cost and that made them very successful. That's what has happened with Amazon ads. With Amazon ads as well, for your ads to be displayed you need to have the buy box. I mean, if it's your branded products that you're selling on Amazon and you're the only seller then fantastic. You're not going to have any problems. You're going to always have that buy box. That's one thing actually to consider if you are putting your products onto Amazon.

    A jar of cinnamon flavoured matcha by PureChimp against a green background.
    Trying different ad platforms like Instagram, Facebook, and Amazon allowed PureChimp to find their optimal way of reaching customers. PureChimp

    Felix: That buy box, you're talking about when they want to buy, you are the vendor that will basically complete the transaction. You're saying by registering your brand, by default, you should own the buy box?

    Dean: That’s an important thing and a good thing to mention. You can have people reselling your product on Amazon and they can win that buy box and then that's going to cause you some headaches, to be honest, because you don't really control the price now. That can go up, that can go down. They can win that buy box because they've got more feedback but also your ads will not be displayed, your Amazon ads if you don't have that buy box. I would 100% recommend if your strategy is to be an online business only, I would think carefully about working with wholesalers or just possibly have something in place where they cannot sell your products on Amazon because that's a huge problem actually in the UK. A lot of independent health shops buy from the wholesalers so we sold to a wholesaler and we thought, "Okay. Great. We're opening up our product to loads of health shops, like offline so it's not going to compete with us." Actually what happened was we provided them with a great price and it kind of backfired because we had a lot of Amazon sellers buying our products there and then selling it on Amazon and then we were losing the buy box, we were losing a lot of control in terms of they didn't really care about the shelf life of a product, for example. They would be happy to send a product that's only got a month on it and some customers are not using it within a month. Yeah. It caused us a lot of headaches.

    Felix: Which of the three platforms we've talked about so far, Facebook, Instagram, Amazon ads has the best return on ad spend? 

    Dean: I would honestly recommend trying all three. The Facebook ads, the Instagram ads, and the Amazon ads because we've had a lot of success on them all. Also, what is your strategy? Do you want to have more contact with your customer? If that is the case, go to Facebook, go for Instagram, get people coming to your website, and try to get customers that way. If you're happy to not be able to really have that future contact with your customer in terms of email marketing, just know all the details like how often are they buying, et cetera, and you want maybe the freedom to live anywhere in the world, then maybe you should be pushing Amazon. 

    Felix: Very risky, though, right? Of potentially having all of your customers live on another platform.

    Dean: 100%. That is definitely true and a fair point and that's a reason why we do both at PureChimp because you're right. It is very risky. We've had days where I've woken up in the morning and Amazon ads have been like, "Sorry. Your product is not on your website anymore." What? What have we done wrong? You're right that you give away a lot of control of Amazon. At the same time, it is a fantastic platform and it does give you access to a lot of customers and a lot of people love to shop on there but, as Felix mentioned, bear in mind you're giving away a lot of control. It's so important to also have your own website and your own customers and turnover for your website just in case something does happen on Amazon like that, like happened to us where we woke up like, "Oh, crap. We're in trouble. We're selling a lot on here and this is like 75% of our revenue and that's just turned off. We haven't done anything wrong. We don't know why" but with your website, that's not going to happen. 

    Felix: I want to talk about another advertising avenue that you've taken which is affiliate marketing, tell us more about that, how do you have an affiliate marketing program setup?

    Dean: We use a platform called Webgains and that's been successful for us. It will give you access to a lot of the discount websites, a lot of the money-back websites where customers can buy products and they get 2% back. Also, a lot of bloggers and content creators will use affiliate marketing platforms like Webgains. Once it's set up, there's not a lot that you need to do to maintain it, which is great. Essentially, let’s take a health blogger - they want to talk about Matcha tea and then they want to monetize their blog posts. What they do is they go, add the link that's linked into Webgains and they'll get a commission for any sales that they get for us and it's all automated, which is great. I definitely recommend it because in terms of the time it doesn't take a lot. You can reach out to people within the platform as well if you want to. We use a platform called Webgains. It was very easy to set up and then once it's set up it kind of runs itself really.

    Establishing trust: the key to achieving a 6% conversion rate

    Felix: What do you think has helped you improve your conversion rate to a conversion rate of 5%?

    Dean: I should say, it's at 6% now. It's gone up again. A big thing is having trust from the customer. We try to avoid being spammy with lots and lots of different pop-ups, et cetera, and also we have quite a big social following, which makes us trustworthy. We have a review platform called Trust Pilot. I'm not too sure if it's big in America but in the UK it's huge. As a brand, it's quite powerful and it's very expensive. Very expensive but that's helped to get the trust from the customer because, realistically, when someone comes to your website and they've probably never heard of the website before, lots of people have never heard of our website before because we're not a huge multinational brand, one of the big things, why they won’t buy from you, is because they don't trust you yet. You've got to earn that trust and you've got to try and show with your website, look, you can trust us. If you park your money with us, you can rely on us to give you a good product, or if you're not happy we will look after you. We have a lot of feedback, which helps with that. We have a big social following. We also have a taste guarantee so if you have a guarantee, try and relate it to your product. Because ours is Matcha tea and relate it to your customer as well, one of the big triggers for a customer to not buy a product is, "I don't know if I'm going to like the taste. I have not tried the Matcha tea, Matcha green tea. I'm not too sure if I'm a big fan. I don't want to buy the tea and then it is a waste of money." We have a taste guarantee to take that fear away. I would say the branding is also very important with that. We try not to be all about the money as well, which helps with the conversion rate and helps to make us appealing. For example, we donate 5% of our profits to charity. We are a member of 1% for the Planet. We now actually recently on our website, 100% of the products are packaged in recyclable packaging. We’re a member of the Living Wage Foundation, which basically is an independent charity that they decide what the hourly rate someone would need to live a comfortable life and we always make sure we're at least paying that. All of those things combined help to really improve our conversion rate. 

    Serving spoons filled with matcha powder from PureChimp.
    Using additional apps to optimize their store was important for PureChimp to scale. PureChimp

    Felix: You mentioned a couple of services and tools you use, you mentioned Trust Pilot, we talked about Webgains dot com. What other apps or services do you rely on to run the business?

    Dean: For fulfillment, we use something called Zenstores. It works perfectly for us. The price is awesome as well. On the backend, that helps us to fulfill our orders very quickly and efficiently. Then we also use - It was Conversio originally but I think it's now called Campaign Monitor. We use that for all of our email marketing and that's linked to our Shopify website. We have SimplyCost. That's a great app actually just to give an overview of whether you are making a profit because it takes into consideration all your costs. It shows your profit margin, et cetera. Just a click of a button, which is quite a cool thing to have. We also use Orderly Emails. It's an easy drag and drop template and it makes all of your Shopify notifications look awesome and it's just a one-off payment so that's a really cool app that we use. Yeah. That's what we're using at the moment. In the early days, we tried everything. We've had part times where we've had 10 apps going but I would say try not to over-complicate it because if you have many apps running that are also loading in the front end, that's just going to slow things down for your customers. The apps are great and you definitely need some but just pick and choose wisely.

    Felix: What do you think that your plans are moving into the future to try to stand out? 

    Dean: We're continuing to make sure we're doing other things that are not just related to a company making a profit. Recyclable packaging, 5% of the profits to charity. We have more of a meaning and kind of develop a brand that people will love to be associated with. Also because it is very competitive as well, we've diversified away from the Matcha. The Matcha is still our core focus and our hero product but we've started to diversify as well. We have some natural skincare, we have a new caffeine-free Rooibos Matcha. We're always looking for new products. Yeah. If you find the market is saturated, one thing would be to look for products that relate and really link into your current brand. That's a good way to get other revenue coming in.