How to Build New Revenue Peaks

[00:00:00] Richard: Hey everyone, welcome to the E-Commerce Playbook Podcast. My name's Richard Gaffen, your host. I'm joined today, as always by the CEO of Common Thread Collective, Mr. Taylor Holladay Taylor, how are you doing today? 

[00:00:12] Taylor: It's doing good. I'm back in my house after a week in the office. I'm gonna be at home when I'm doing our recording and content creation, so I feel energized by having left the cave and now I return energized and ready to bring a great episode.

[00:00:24] Richard: Beautiful, beautiful. The cave always looks better when you come back to it. So today what we wanna talk about is a piece of CTC philosophy that we've actually revisited a few times over the last couple of years, but at this particular time of year and in this particular year, it's especially important to think about and that is this idea, or we call it the four peaks theory.

And to sketch it out, or in summary, it's the idea that generally speaking, most businesses have two natural peaks in their marketing calendar. One is some sort of early year gifting holiday, and the second is Black Friday, Cyber Monday, like for everybody else. But our idea is that you should actually attempt to generate two more peaks in their calendar. 

And on its face, I guess that seems obvious, like when you make, or when you run a sale around a specific event or a promotion around a specific event, you tend to get better conversion rates, more sales, more revenue, whatever, but nobody actually seems to do this very much.

So the question here to start off with is what gives and why do so many businesses make the mistake of sticking with a 2P calendar and how can they move past that? 

[00:01:34] Taylor: I think that those peaks, they didn't even bother to take the time to create themselves. They just so happened to occur culturally. And what I think it is it's the lost art in the D2C e-com, Facebook ad engine growth cycle, everything's up until the right. That those businesses don't build the core competency of building a marketing calendar with intention. They're on this hamster wheel of just like always trying to beat the last ad that you ran.

And so like how much you've grown in that month is well, did I beat that old ad? Did it get more volume? Did my ads go down or up? And it's just this ongoing game that's disassociated from the broader, spectrum of what's happening in the world, right? It's just this very internal process cause that's how you started.

But as your brand matures, what happens is that you reach a point where, let's say over the course of seven years of running Facebook ads the odds are that if you were to plot all those ads on a bell curve and you were to rank them from the average to the 90th percentile to the 10th percentile, like you probably have already created your best ad.

Like it's highly unlikely that seven years in this next year after making thousands of ads, you are going to create an ad that will outperform every other ad you've ever made. That becomes a taller and taller task over time, but that's like really hard to process from a data standpoint, this idea that the more data that I accumulate, the less likely I am to produce the highest bound outcome.

And so what happens is that strategy for growth sort of breaks down. And often what forces, this is also like retailers exist on a marketing calendar where they wanna know, what are you doing to help me with back to school? What are you doing to help me with these key moments that their calendar is built around?

So it tends to be an inflection point where brands mature into this thinking, but there are a lot of reasons why I believe that the earlier that you take on this idea of building a marketing calendar and designing for peaks, is how you unlock more profitable growth. And if you just start from the axiom that like why was Black Friday called Black Friday? Well, it was because that moment of purchase volume, actually everybody was in the red the entire calendar year up until that one moment. So what does that teach us? Well, it teaches us that the normal course of business in many of these cases, Isn't actually profitable or is minimally profitable.

And that's actually what I see for a lot of brands where we think about the sort of an output of EBITDA or profit as like a linear translation across a calendar, but that's not true at all, right? What's actually true is that many months there's small or no profit or negative profit, and then in these key moments you realize a ton of value, that's much more common. 

Now, maybe some brands it's like profit and a lot of profit, some brands, it's no profit and then some profit it differs, but it's not linear for most brands. And so as you begin to explore oh, okay, why does that happen? What is occurring in those key moments you begin to unearth trends. 

And then like we have so many years of looking at historical Facebook ad performance and figuring out okay, why for APL a low standing customer of ours? Do they have these two spikes of Facebook, ROAS same people, same creative team, same media buyers trying every day to improve the ad account, but for some reason there's these three moments when, everything's better than the rest. 

And you go back and you look and you're like, oh, international Women's Day, this key moment that they created their only other sale of the year, they do the McLaren drop for a limited edition product and Black Friday Cyber Monday, and you're like, oh, okay. So all of the best performance came out of these imperatives for purchase that were designed as marketing initiatives not created out of some sort of tactical, creative media buying wheel.

[00:05:06] Richard: So it seems like there's two things going on here, one is an over-reliance on maybe giving too much credit to advertising as the reason that you're succeeding because in doing so, you ignore the outside world in general, right? And that's definitely a tendency that we have, which is if we, if I find the best evergreen ad, that's what's going to win.

Disregarding the fact that people are purchasing because it happens to be summertime and they need new clothes. And then the second part of it is that potentially what it sounds is that these peaks are already happening for you, even if you haven't generated them. So obviously the two ones or the two peaks that most people have, we know they're there but, in digging a little deeper into data, you may find that other peaks exist for you 

[00:05:48] Taylor: already. 

That's right, and you're gonna notice maybe a month where things were more efficient or, things like that, that are built around your brand. If there's, and there's some really obvious ones in our culture, right?

So if you are a men's brand, it's likely that Father's Day is a big part of your promotional opportunity. A lot of men are fathers, and so there's opportunity to sell product. Women's brand, it's Mother's Day. Or maybe if you're a product that fits in gifting, it's Valentine's Day, right? Like these Nat or back to school you mentioned, or if you're a swimmer brand, it's the summer.

There's these natural, like when we're running igloo, it's Labor Day cause it's everybody's getting ready for the summer and they're buying their, like somewhere in the natural cultural behavior around purchasing in your product category, are these moments to drive outsize returns in your calendar.

[00:06:32] Richard: Yeah. So maybe what I'm saying is if you see that bump in your ad account, the first question to ask is not what happened in the ad account, but what happened in the actual world.

[00:06:41] Taylor: It's so funny, like one of the things that I like, media buyers are so weird. We wanna be responsible for everything, but but at the same time, we'll say something like, for Black Friday and Cyber Monday, just run your evergreen ads. And it's like that, if you were a media buyer who has ever said that, then you need to accept this reality that the outsized return is not actually about you at all.

It's about that there's a cultural movement towards increased conversion that didn't make the ad suddenly a better ad, it just made the purchase likelihood greater on the other side of the ad. And so I think that illustration to me is the point here, which is that if you just had your Evergreen ads and we were to say that we're gonna run a media strategy where we set lifetime budget for the year and we're just gonna go away and come back at the end of the year, there's gonna be moments where that a's going to perform better and worse, and I think if we ask why we can start to unlock opportunities to deliver our message into the most effective moment. 

[00:07:36] Richard: I'm reminded of Eugene Schwartz and the book, breakthrough Advertising makes the point that if you, as an advertiser believe that you are controlling or creating the demand or the desire, that's like a nuclear physicist thinking that they are creating nuclear power rather than harnessing something that they'd have no, no real control over or ability to generate. Which I think then raises the question. What can you control? Like how do you lean into those moments and take advantage of them and approach 'em more intentionally? 

[00:08:03] Taylor: Well, so I think here is a moment to potentially address a reality about the Facebook ad algorithm and , what they call total value score. So we know that the Facebook advertising platform is an auction for users feeds, okay. Richard, let's just pretend you're the guy on earth who buys more things on Instagram than anybody else in the world.

The competition for your feed is fierce, and the brand that produces the highest total value score wins access to your feed and likely gets a purchase. And the way that they win access, Facebook's very transparent. They give you the formula, it's an estimated it's a bid price, so like how much you're willing to pay on a CPM basis, times the estimated action rate, which for most brands is a combination of CTR and conversion rate, times user score.

So in other words, how likely you are based on their historical data about you, Richard, to engage with this kind of product. And so at all times we should be thinking about how to, increase our total value score as advertisers. Okay? And if we think about the primary mechanisms of control there, it's the estimated action rate.

It's the estimated clickthrough rate and conversion rate that makes, that is in within our control. Now, CTR is one of those that, yeah, you can do that with a great ad, but sometimes there's this weird inverse relationship between CTR and conversion rate, where the more clickbaity the ad is, the less likely that you are to do conversion.

So can it have a negative offsetting effect, but the best way that I have seen to arbitrage the Facebook ad algorithm is to create sudden changes in conversion rate relative to your expected conversion rate. What that means is that you'll be bidding at a certain CPM, but producing a higher conversion rate than Facebook's anticipating, which will lead to a more efficient ROAS.

So the question we're asking is how do we create sudden changes up in conversion rate okay. We're not talking about a CRO tactic here, or the evergreen machine again, we're talking about imperatives for purchase now. So this question I'd like to ask in advertising is, why does somebody need to buy today right now?

Not generally. Why do they need to buy your product? Why do they need to buy it today? And that's where the following things become really helpful. Product releases, get it first. Now it's just happening. This is your moment, limited edition products, things that are scarce, they're gonna disappear over time.

An offer that is time sensitive. If you don't do X by Y time, it disappears. And then promotion here, we're running a, sale for today only, those things or cultural moments. So I use the example, like earlier with Igloo, it's Labor Day, we know it's a three day weekend, everybody's going to the beach, that moment's gonna pass, and so really delivering into that increased purchase intent, is an opportunity that's gonna fade.

And so all of those designed moments become opportunities to produce outsized returns, both in efficiency and volume in your ad account, and capture more margin. And it's true for your business generally.

It creates an opportunity to communicate via organic, social and email, and like through influencers, all the other marketing channels become supportive of the same idea at the same time, and so it makes everything more efficient because you're delivering that message consistently across the brand.

[00:11:13] Richard: Yeah. 

Maybe one thing that's important to point out here too is that the instinct to create urgency to get revenue in the door now is definitely not lacking, but the issue is that, what happens is that people generate sales for no reason all the time.

In order to bring some of that revenue forward and, stealing tomorrow's happiness and bringing it in today, or whatever you wanna call it, and, we're talking about here is that you have to do the legwork to link that urgency creation to the moment of greatest opportunity.

Rather than just whatever we're gonna do 30% off for three days today because we just need the money to make a number by the end of the month. 

[00:11:50] Taylor: And it takes work, to create, continuity for your customer that this one moment every year, there's the classic like Macy's, annual sale idea, like this idea that you create an expectation of your customers at this specific moment every year, there's a behavior that you can expect from us that you can plan for, and so the best brands I've seen have committed to specific moments, and I use the example of APL doing International Women's Day is this is our pillar moment that we're gonna commit to every year and we're gonna tell stories about our customers and we're gonna, have this once a year promotion, no other time during the year.

And so you build up expectation from people about the opportunity to engage with you, and the more that you can tie that to something that already exists in culture, Like Labor Day, like International Women's Day, where you're putting your brand into a moment that there's already energy around that people wanna pick up from a PR standpoint, that there's already increased search volume, looking for your things, the more effective it's gonna be.

Cause it's really hard as a brand, especially early stage brands that actually affect culture to really change human behavior and a meaningful, substantial way. It's much better to attach yourself to something in the zeitgeist already.

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[00:13:53] Richard: So let's talk then about maybe specific strategies to fill the gaps. So we've discussed like there is the tendency, let's say, or the perceived tendency anyway of marketers to like, okay, we're gonna invent a holiday that's not actually a cultural moment, and pretend that's something that's worth running a sale for or whatever.

But actually there's a lot of ways that you can strategically. Harness some of these moments. So let's talk through some of the strategies that you would use maybe in real life to fill those gaps. 

[00:14:21] Taylor: Yeah, so I think the thing to start with is to do the thing that we just talked about first so I like to draw the calendar out online to think about this In four Peaks, I want you to think about, you're gonna draw a line from January to December and you're gonna start with a marker and you're gonna, right now you can go look at Google Analytics, you can look in Shopify if you wanna look at your historical curve.

But I want you to just, Okay. And I want you to see which natural peaks exist. There's likely one in Black Friday, cyber Monday. That's the case for brands. Like I said, if you're a men's brand, there's Father's Day. If you're a nutrition or wellness brand, it's probably January. Like you can plot, those lines.

And so FC Goods as an example, so when we ran FC Goods, it was Father's Day and Black Friday, Cyber Monday, and we had two peaks. And that was part of the problem with the brand is that it was very difficult. So now what I want you to do is I want you to look at the gaps, in between those peaks.

Okay. And what do those gaps represent? Very practically, they represent challenges in cash flow. They represent lower revenue than you'd like. They represent also the complexity that you have to place the order for that peak. So you have to buy a love inventory in a valley when cash is the most difficult to access.

Okay. So now I want you to look at those gaps. So let's say, I'm gonna use FC Goods again. We've got black Friday, cyber Monday, and we've got Father Day. So when we were thinking about this before we sold the brand, there was a very obvious cultural moment that we were beginning to think about planning for, which was the start of baseball season.

Okay, this is March, and so the next step is in those valleys, go look at we have one of these on commonthreadcode.com, a blog of what are all the cultural moments in the calendar for that time? What are all the days, what are all the things people celebrate? What key cultural moments are happening?

And start to look through them in the valley and figure out is there any of these that we could co-op as a brand to create a moment, right? And now ask yourself. What do we have to offer into that moment? And the two that I would start with is, number one, I would start with product releases.

Do you have any planned product releases that you could use to deliver into one of those moments? And the reason I wouldn't put a product release into. those other peaks is because one, those tend to be promotional moments and you don't want to discount new product especially I would really try to avoid that and I want to use this new product to create a spike for myself to create an expectation.

We have a brand born primitive that does this really well. Every February and every June they brought drop their new collection, and that's the exact antithesis of their marketing calendar to create these two peak. In those valleys. So now you raise one of those valleys. Okay, so that's an obvious one, is this like product release plan.

And then the second is is there a, annual promotion that you could do in these moments? One of the ones that I've seen people do is that there's an annual like clearance sale where it's just we're gonna liquidate excess inventory and it's gonna be this moment, it's a warehouse sale. We're gonna invite people to our thing.

That's another opportunity to think about a mutually beneficial spike in revenue that helps to serve the balance sheet maybe a little bit before I turn some inventory into cash ahead of a big inventory purchase. So there's all sorts of ways to and I would say, okay, can I get to four peaks?

So this is where the idea of Four Peaks theory comes from, is how can I create an opportunity? And now the wider your gaps are naturally, I would say the more important this becomes. If there's real doldrums or down periods this becomes really important for you to consider, but those would be the steps.

Start with the ones that are built in. Identify the valleys, create in those areas, what culturals like guys moments exist? What could we build around? How do we plan product releases? That's the basic steps. 

[00:17:49] Richard: Okay, this might be a dumb question, but why four not six? 

[00:17:51] Taylor: Yeah, like many of our rules at CTC like four quarter accounting or these other things, they're never the rule.

They're intended to really prove a point, which is that most are at two, we're trying to be progressive and help you move towards an idea. The best brands have something to say every month that is compelling, that has an opportunity to create a spike. And so as you mature in your marketing calendar process, you should be answering the question every month, what am I saying?

If I'm running a skincare brand, what is the unique value proposition of my product in January? Is there anything I could connect that to that would really help create a spike or a moment because you can make up moments like you could launch a new campaign, you could do anything really at any time.

And so I think it's a great question, Richard, about why four, not six? One they tend to require a meaningful amount of planning, right? Like effort, creative development, production. So part of it is just a resource question. How much time do you have to produce? How much stuff? And so what is the rhythm?

You as a business have the capacity to do it. If you can make it six, by all means make it, and like little peaks that I think are really more impactful. So I mentioned limited edition product, well, limited edition product usually isn't going to be a big revenue driver for you, right? If you release only a hundred units of x.

What you're gonna do is generate a bunch of marketing and attention, the best CTR ads capture a bunch of emails, so it could be a little spike, but it has a broader marketing purpose ahead of one of your bigger spikes, right? This sort of like progressive peaking, we call it, where you want to think about your peaks as being bigger and bigger over time because you're capturing a bunch of new customers, you're building up that demand, and then you're realizing their LTV again and again as you go. 

[00:19:33] Richard: So let's go through then, what are the most, maybe some of the most common examples of three non-holiday peaks. So that would be, let's say, a peak in essentially Q1, Q2, and Q3. Where do most brands find success there? 

[00:19:47] Taylor: So I think the obvious ones with the cultural one.

So in Q1 it's Valentine's Day, right? Do you have a product that works as a gifting moment for there? In a subset of brands, January is the most important month of the year. If you're in health and wellness space, January generally is your peak. This is obviously the cultural new year, new you, our commitment to fitness and revising ourself.

You and I talked about our love for a blank slate and starting over. And so again, depending on the product and opportunity, you start to see the summer wear brands, the swimwear, the eyewear brands, the standup paddle boards. They begin to come to life in March. And so there's the start planning for the season kind of moments that exist in those areas.

But those are really the things that in Q1 absorb most of the focus. So Q2, mother's Day and Father's Day are actually really underrated purchasing moments if you're, again, if it makes sense for your brand and you can gift frame the product appropriately. Another one that I think is underappreciated is graduation.

If you can again, frame your product as a great gift for graduates, that's another moment that people get. And then labor Day in the start of summer, right? Really fall into that area where we're beginning to look at, okay, everyone's getting outta school, they're getting ready to go, have some fun.

So if you can add en lightness and energy around that sort of general cultural behavior in the us it's gonna be really important for you. And there's some brands, right? If we think about swimwear or eyewear, where it's really may through August is. 70 to 80% of their revenue. So it's really ramping up in those moments.

But Mother's days and Father's Day are huge moments, labor's day and the start of summer. Q3 is actually, I think, the hardest e-commerce quarter. Really it's the one where it's the least obvious that there is something. In retail, it's why this idea of back to school was created, right?

This is a marketing phenomenon. You wanna talk about things that exist as pure marketing cultural impact. Like brushing your teeth and breakfast like back to school as a big thing that everybody needs to go buy stuff for is an example of what we're talking about here, where retailers had to look at a really bad period and go.

How do we solve this? And so I think this is a great time to think about product releases cause there's less culturally relevant imperatives for purchase in this period in Q3. And so oftentimes we see people do capsule collections and launches in August and September as a way to begin to set up and get themselves through what is a very obvious peak coming in Q4 around holiday.

[00:22:06] Richard: Right, cool. I think that's it. Do you wanna revisit maybe the story about BG?

[00:22:15] Taylor: To wrap this up, yesterday I have a good friend who was just named the CEO of an awesome electronics company that you all have heard of, and he asked me to come in and take a peak at their ad account, and I was looking at their best performing ads over the last year. 

And this is a business that they have great, beautiful content, great product photography. They're a big business, right? They have resource to create beautiful stuff. And over the last year when I went into STAs and I sorted by best performing ads with a minimum of a thousand dollars spent on a seven day click ROAS, right?

Like the core of what we know drives the prospecting engine. And we have the section in STAs, we call it bangers, right? So they're ads that have outperformed the average and four key categories, thumbs stop, average watch time, CTR and ROAS. So these are ads that have outperformed all the average of all the ads in all four of those categories.

And every one of them. So this is what they were a collaboration for an LGBTQ themed product. They were a limited edition product release they were a collaboration with Budweiser, they were a a limited edition gaming product, they were a promotion, and that was it. Like that's what drove outsize returns in the entirety of the ad account.

And if I go brand by brand, this is what I see over and over again is that and that doesn't mean the other ads were bad, to be clear, this isn't the point that you can't make good ads other times of the year, but if you want to look at what's producing the upper bound outcomes, I'm willing to bet it's almost always your Black Friday ads, right? Cultural moment, and then from there, it's things that create this imperative around product releases, limited edition collaboration and promotion, and those are gonna be the best ads in your ad account. 

[00:23:53] Richard: Thanks again for joining us on the E-Commerce Playbook Podcast. Please remember to rate and review, if you're watching on YouTube, I can subscribe, always really helpful to us. If you wanna learn more about creating a Four Peaks marketing calendar, the article that we reference in this podcast will be in the show notes, so go ahead and check it out there. And then of course, if you wanna get in touch with us about helping you build that calendar, we're always available at commonthreadcode.com, drop us a line, we'd love to talk. So until then, happy scaling.