How 7-Figure brands can win in Q3

[00:00:00] Richard: Okay, yeah, a-actually let's, let's make that more explicit. So, okay, because Joy loves doing this so much, the next five CPG brands that reach out to us, so you can either email me, richard@com3co.com you can comment on the YouTube channel, and we'll-- Joy will do this for you for free.

[00:00:18] So reach out and and we'll make that happen for you.

[00:00:21] Hey, folks. Welcome to the Ecommerce Playbook podcast. I'm your host, Richard Gaffan, director of digital product strategy here at Common Thread Collective. I'm joined today for another deep dive into the world of seven-figure e-commerce with Mr. Joy Sharma, who of course is our director of seven-figure strategy here at Common Thread Collective.

[00:00:40] And Joy, what's going on, man?

[00:00:43] Joy: Everything is good

[00:00:45] Richard: Everything is good. Hey, that's what you wanna hear. I know you're, you're back you're back home, right? In back in Dubai?

[00:00:51] Joy: Yep. Home

[00:00:52] Richard: for those who don't know, Jo- Joy has been itinerant for some time here and he's finally back home. He's got his professional setup, so, we're glad to see that.

[00:01:01] But we're gonna go ahead and jump into an-- as always, a really interesting and very specific topic here for seven-figure brands. So we're thinking through the idea of how seven-figure brands can win in Q3. We talked about that a little bit, I believe, last week with Randall when we talked about our Cash Machine July program.

[00:01:16] This is a very crucial time, Q3 to prep for Q4, and so we're gonna talk a little bit about what it looks like for a seven-figure business to do that. And Joy has sort of put together essentially a two-step process to well, basically, like, this, the, the sort of most important two steps that you can take, I think, as a seven-figure brand to prep or put yourself in the right position for Q4.

[00:01:39] So Joy, why don't you talk a little bit through your thought process with this kind of two-step process and and then we'll go from there.

[00:01:46] Yeah, it's like the same idea as the one thing, which is like the one thing I can do in this quarter to double my business, and I think it's a two-step process in figuring out that is. But the, the answer to that is number one thing that as we take on more clients and I see more P&Ls and their Statlas accounts and stuff like that, what we're starting to realize is that people are just optimizing for the wrong thing, and that's why this two-step process is important, which is step one is you need to understand the game you, you should be playing.

[00:02:18] It's not even like what I want to play. It is like what I should be playing. And the way you calculate that is basically there's this story that I think Terry used to say a few years back, which is like if, if I'm a deodorant company, like I'm not bidding against people like who just randomly try new deodorants every month.

[00:02:37] There are people-- Like the people I'm bidding against are like people who just want Old Spice. They've been using that for 10 years. They're gonna continue to use it every month. And the amount of times I will need to sh-show an ad to that customer is going to be very high. That's why my cost to acquire that customer will naturally be high because I'm in an industry where, well, first of all, my competition understands that how sticky that product is, so they all are bidding very high CPAs.

[00:03:01] And CPAs is basically end of the day, the reason a CPA is high is basically Meta doesn't charge on CPAs, they charge on impressions. So a high CPA just means you need to show that a lot of times to a person. So in that particular instance, which is like if he's using Old Spice for 20 years or 10 years, if you do convince that person to go and buy from you, you will have a high LTV.

[00:03:21] But also the upfront cost is very high. And that is just like a concept which applies to so many industries, and I think the number I would say is anything like that has more than 50% LTV uplift in a year, you're in the LTV game. But the reason I say that is basically people need to understand because almost everyone who wants to be profitable all the time, ev- like every time.

[00:03:43] I, I remember Aaron J- when he used to work here, he in the e-commerce playbook, he's like, "Rule number one is you need to tell me in what time horizon you wanna make money." And if the answer is every day, all the time, then that's not, not a strategy. Then you just don't win. So that is I think the first thing is like people need to understand at what time horizon they should be making money, not what they would like it to be, but rather when their competition is making money.

[00:04:08] Which is like if I go-- I think this Twitter brand that I sent you, they, they were talking about a new brand which sells ch- I think chocolates with dates. Like that's an industry that I just know that it will be incredibly hard for me to be first order profitable on that industry because that's like not a game any of my competitors are playing.

[00:04:26] So I can't go and be like, "I want to make more money on the first order. I don't want to play the game the way other people are playing it." Like that-- You just don't that choice. You, you need to go and enter an auction and play the same game that your competition is. So

[00:04:40] Joy: that's step one, which is like

[00:04:41] Richard: yeah, so I think, yeah, it's important to maybe just sort of review a couple of the things we've, we've talked about maybe, I guess like on last month's podcast when we talked, which is the idea that like, so the reason that you're constrained by your industry in terms of how you or, or whether like h-h- the time horizon with which you make your money.

[00:04:59] So you're pointing out, like if you go into deodorant, you're going to have to play an LTV game. If you're going to chocolate with dates, whatever, like you're also gonna have to play an LTV game because of the nature of how the meta algorithm functions. Which is to say that like if all of your competitors are bidding high because this is a an LTV play where they know that they can lose money on first order or whatever, or breakeven or whatever it is, then you, in order to even get your ads seen, let's say in the most simple way, you have to bid the same amount that they're bidding.

[00:05:28] So you really don't have a choice. You're not going to be able to choose to be first order profitable in a business where by and large all of your competitors are playing an LTV game.

[00:05:37] Joy: Those are also extremes though. Like I'm trying to point out to the fact that like these are, these are different extremes of the world, which like if I'm selling mattresses, like I wanna make money on the first order because that is the only time I'm making money. And then like the, the other end is the exact extreme.

[00:05:50] What I'm trying to tell people is like you are in between some that-- some of that range, and people do default to some extremes. It's like that is just the wrong way to play the game, and you need to exactly know what your competition is doing. So spend time, money, ener-energy, resources, everything to go and find that.

[00:06:07] That is the most important piece of information you can find about your business landscape, I would say.

[00:06:12] Richard: Yeah. Okay, so how, how do you go about identifying that information? Let's just say practically speaking, what do you need to do?

[00:06:20] Joy: That is like the step two, right? Which is step two is once you do understand what people are optimizing for, then it's like what exact value is it? Which is, for example, let's take a random industry which I don't know. Cologne, I, I don't think they are making all the money in a year. I think they could make money up front.

[00:06:38] I have no understanding of that industry. I don't play in that industry as well. So what happens is they, they will be in that range somewhere. They don't make the most money today, they don't make the most money in a year, they're in between that. Now we can look at our data set of clients, and we can find the market CAC, but like that's basically when the second eye of the market CAC comes, which like I do understand there are people playing this game on not making the most money on the first order somewhat later.

[00:07:02] Then it's like how much later? Are they optimizing for a one-month breakeven, two-month breakeven? What, what is a breakeven? So if you don't have the data set that we have, which is like we are grateful for you should go to your competitor and look at their ads, and you will basically be able to go and find their AOV, I would say.

[00:07:17] Like you would not find their CAC, but you will find their AOV to a certain degree. And you should see on average like y- you understand your data. It's like if I sold that product, how long will a customer stay with me? I would take their average return on invested capital of fifty percent, which is what I would do is I would go and click on the product they're merchandising for.

[00:07:35] This is important. Like people like to go on their website when they're looking at their competitors and just compare the products they have up. Like no, you should compare the products that they have as the best seller. So like the first two products that they have in best sellers, those are the ones they are merchandising for.

[00:07:48] Take that, find-- have an assumption of cost of delivery. If they're bigger than you probably assume it's gonna be better a little bit. Take that and then consider fifty percent return on invested capital in a year. Take that as the benchmark. So if they have a fifty dollar product, let's say you understand that the LTV of your product is say a hundred percent in a year.

[00:08:04] That means fifty dollars upfront produces additional fifty dollars in a year. That means it's a hundred dollars in the entire year. I need to make a fifty percent return on invested capital. Let's say the cost of delivery was twenty percent for this brand, which kind of seems fine for that industry.

[00:08:18] That means I make eighty dollars in net profit in the entire year on that. If I want a fifty percent return on invested capital, that means my contribution margin needs to be at least half of what my CAC is. That means if I do end up paying w- whatever, like one third, I think. Terrible. There's like-- I'm breaking my rule of not doing public math here.

[00:08:37] But let's say like I think it's gonna be what? Fifty something fifty-five or something. If I pay fifty-five dollars in CAC and I need to make what? Twenty-seven point five back and twenty-seven point five along with that is like fifty percent of the ROIC. So something like, like round numbers. That, that is the overall math, which is when I do achieve that, that is great.

[00:08:56] Now work your math backwards, like what are, what is the CAC you are paying? And then you will compare that and y- people always find wild differences when they do that. And this is, this is important for seven-figure businesses. It will not be for eight-figure businesses because they have reached a market sophistication where the way they reach that is because they did this exercise knowingly, unknowingly, I don't know.

[00:09:16] But it needs to be an intentional exercise that you do, which is where you find your market CAC. When you find your market CAC, you now have the number, which is I now exactly know what their CAC is, which if you are taking it from us, we can tell you the exact number. In this instance, let's say fifty-five.

[00:09:30] That's the fifty percent return on invested capital in a year. I guess that's what my competitor is bidding for. Just consider that to be true. It's like now if the job of the CEO here is to figure out how can I bid that amount. That as a dollar value will not change. As a percentage or ratio is where you have all your have fun, but on a dollar value will not change, which is like you need to go and bid fifty-five dollars to extract value from this customer.

[00:09:53] Now play the game. It is the exact opposite approach of how people play it right now, and I think that is the difference. Like right now, people are like, "I have a product, I have LTV," and that based on this-- like this is what CDCI logic was for the longest time, which is like you tell us your fuel profit, we'll bid that in the ad account, and we'll tell you what the volume is.

[00:10:11] I'm saying if you take that ideology to the extreme, which is now you are telling... Because this is what happens. People come to us, they're like, "These are all my metrics, and I also want you to spend a hundred grand." Like, but that goes against the ideology because you should be happy with whatever you're getting out of your fuel profit.

[00:10:25] So what I'm doing is the opposite. Like I'm telling you at this number, infinite volume is available, so go and figure out a way to afford to bid this number. And then that is the entire job of offers. So like it comes into... I think I told you this is like last time we built Marketing Moments. It is going fucking phenomenal.

[00:10:42] We are doing great. And the reason for that is I told you that it's going to be the most valuable service we ever did because we did this, right? Like we went to and we said, "This is the market CAC. This is what we're gonna build an offer against." Like it is the best service we have ever done. We are literally sold out, and the reason for that is because it produces this value, which is I can unlock infinite volume at a certain CAC, and then my job as the CEO is to build the product and the merchandising.

[00:11:04] Like my business needs to run around it, which is like my business needs to run around what the market is willing to pay if I'm going to go and build my entire business on Facebook. The only instance in which I'm wrong is if you are driving a lot of demand out of Facebook. But if entire, entirety of your demand is coming from Facebook, then just build a product that's optimized for Facebook, which is this is how you do it, which is like you find the market CAC, and then you build bundles and subscriptions and all these things and like get people into the funnel at a CAC, which all of your competition is paying.

[00:11:32] I get to go and pay the same thing, and we scale a bunch. So that is

[00:11:36] Richard: Yeah, no, that, that makes sense. So, there's a couple-- just to sort of summarize what you're saying. So one, I mean, I think it's, it's worth reiterating that like, like we mentioned last time we did a pod together we put together a product called Marketing Moments, which is like you're saying, it's about constructing offers to allow you to hit your target CAC.

[00:11:53] And we're gonna j- talk a little bit more about that as we as we go along here. I think what we'll do next is kind of jump into actual live building some examples, which I think would be interesting to do. But just to then reiterate too, like the f- the fundamental job that you have as the CEO is to figure out how much you need to pay for a customer, and then figure out how to match it, and figure out how to afford that in any way possible.

[00:12:14] So obviously, like adjusting the offer is one way to do it, thinking about cost is another. But a- as long as we're sort of like focused on... Yeah, yeah. R- right. Sure, right. That, that those things tend to be a little bit more fixed. And so where you really have the lever of control is on how you construct the offer.

[00:12:30] So, okay. So I-- Yeah, go

[00:12:32] Joy: how you play that differs by industry. So a lot of people that when we s- bring this idea initially, they will be-- I think this is a limiting belief. It's like they're in their belief system of like, "I don't think I can do X, Y, and Z things because that's not how it works in my industry." And I think I want you to play this out, and everyone needs to play out, which is like e-commerce is basically two different industries.

[00:12:52] It is an industry where it's CPG and subscription, which is easier to do, and then there's the other industry, which is apparel, e-com furniture, and stuff like that, stuff where there's high AOV. And then there are all the people in the middle. I would say The industry of CPG inherently understands the value of this.

[00:13:11] They do do more offer testing than the normal average people. They also reap bigger awards. Like that's their entire business, right? They can just go and update that and their business will twice or three X in, in value. On the other side, people don't spend as much time and like this is where you are actually very impactful recently because-- To lay this out, which is the way you solve for this problem of a market CAC.

[00:13:33] Let's say you were right now, let's say you were either of the industry, you were paying $20. I did the analysis and let's say it's $55 the market CAC for both industries. The industry of CPG will go and find out a way to f- produce that value on the back end. The other industry needs to find the value to produce that CAC on the front end.

[00:13:50] And then on the front end, people have all these beliefs of like, "I don't think I can charge more. I don't think we can have a bundle that's $200." And like these conversations just open up, which are just fundamentally not true. And to break everyone's belief about this, this comes from a personal story, which is like, it's a story I've just carried with me for the longest time, which is in my earlier part of the career, I used to work with a mushroom company.

[00:14:12] Like they-- mushroom powders. They're, they're huge, I would say. They were backed by more money than anything you can think of. So, so I was, I was at a dinner with a, with the investor of that company who was like a really smart dude. And when I brought this idea to him, I was like, "Hey, we need to figure out..."

[00:14:30] This was like a conversation on Black Friday. I was like, "Hey, this is the market CAC. We need to bid more." And he just said this and it, it changed how I thought about it. So it was like he said, "Okay, then why don't we take everything we sell and we call it an annual bundle, bundle. So we take everything we sell and their 12 month subscription values, and we put it together as a single AOV bundle and we give 50% discount."

[00:14:51] I'm like, "That is $1,000 of a bundle for a coffee company. Who will buy that?" And he's like, "But you just told me that if the statement that you just said is true, which is like the market CAC is $55, then you can sell it all day and you should sell me out." And that was the first time I was like, he actually challenged that premise and that is right.

[00:15:13] And we did launch it, and we sold very few of those. We sold like 50 of those in, in the Black Friday, like the day of Black Friday. And those 50 produced 50 grand worth of value. And I was like, "This is, this is like exactly what people should understand." It's like-- And then Taylor brought this idea I think a year later after, which was like, this is the same way casinos work, right?

[00:15:32] Like you treat your whales very differently. There are whales, like you send out private planes, you get-- you basically fly them out, you give them the best hotel treatment to go and come and spend money here. And every brand has that. And that is the difference. Like you need to go and build different AOV and like AOV can be anything.

[00:15:47] This idea that it needs to be limited to certain value is just not true. As long as you can beat the conversion versus the AOV graph, you will win.

[00:15:54] Richard: Yeah. All right. Well, so I think like then what would be helpful is to actually like let's do some, just some live examples to kind of illustrate what you're talking about and like the frame-- the, the way that you would think through this problem for a specific example. So let's, All right, maybe let me share my screen, and then I can go through.

[00:16:13] Let's hope. That?

[00:16:14] Joy: This is gonna be fun. I've never seen you share a screen on a podcast

[00:16:18] Richard: There we go.

[00:16:19] Joy: All right

[00:16:20] Richard: So we're on CPG Wire so obviously, like, we're-- we've just got a bunch of different examples of... I mean, it seems like mostly food and bev here at the first, at the beginning part. But anyway, let's, So how do you

[00:16:31] Joy: These are all good.

[00:16:32] Richard: Okay

[00:16:32] Joy: think we can just like if, if we-- if the-- I was running this brand, how would I basically have the front-end offer? So this one I don't know what this is. Like is this a bar with dates in it? If that is

[00:16:44] Richard: Yeah, I mean, it looks like it. So, I mean, we, what we could do is

[00:16:47] Joy: That's fine. Like I think there, two of these are same. So let's just consider that two or three.

[00:16:51] Like this is a chocolate bar. Let's say they have a couple of flavors. In that particular industry, I would always go do a sample pack. The things that I would love to do here is do one flavor of each. People love starting with a sample. They would like to have a lower bar to entry. Now it depends on like how good the taste is, right?

[00:17:08] Like for this brand, what will happen is we can go through the website also. I don't know how it looks like right now. But the people usually in this industry, what they default to is they will try to sell bigger packs of the same thing because they need to because the shipping is higher. And what my take on this is like what if I just did the opposite?

[00:17:24] So like a great offer here is basically what if I took every single flavor that they have and I put them together into a sample pack and I gave a hundred percent gift card on it? Which is like go and try all of these for free and you'll try-- Like it's not technically free because you have a gift card.

[00:17:40] You need to come back and buy the flavor you like with the gift card, which is like the real journey here should be a sample pack with a hundred percent gift card and the gift card is applicable when you come back and buy the flavor you like on a subscription and that is the offer I would run. And so right now what they will be doing is they will either have a basket and they will be optimizing.

[00:17:57] They will try to make all their money on that order which is like they will try to break even and then have no understanding of the people who's gonna come back or not, which is like I would not do that. I would in this instance every time I have a sample pack at the front end people love that. People want to try that.

[00:18:10] Like if I visit the website like I don't know which flavor I like. I want to try all of them a little bit and then buy the one that I like on a full pack and end of the-- I just read it's like high protein and creatine powder and all that stuff which means people do want it on subscription. There is a requirement and need because people who are going to gym they want it to be taken at a particular time every day similar to supplement and so I would give that option.

[00:18:32] And so just optimizing people would default here to let's take a product and just give it on subscription or they will take one flavor and let the person choose the flavor and then give it on subscription. That is a bad way to make a person enter into this funnel. That's it. Like that's what I would do here

[00:18:47] Richard: Okay. I mean, do you wanna have a look at the at their website, see if it... give them a grade, see how they're doing?

[00:18:52] Joy: They launched like 12 minutes ago. I don't know. Let's see

[00:18:56] Richard: Let's, let's have a look here. All right, this is their site right now. So, okay, so they got the, We can see what they're actually doing, which is doing the my- mystery discount, which looks like it's probably going through. Okay. it. But here's what they got.

[00:19:14] Joy: I also have a bunch of other products, to be fair. There it is. Shop the Daily Burn. So try buying it

[00:19:25] Richard: Free gift with subscription order, free shipping. Let's see

[00:19:31] Joy: Add more, save more. So like see, like this is, like this is basically, this is what everyone's website looks like right now. It's just choose a flavor, get it on subscription. Like why would I? Like here in this instance, the reality is I would need to buy both of them to know the flavor of it. I don't wanna do that.

[00:19:46] And most of the time, if you ask their product R&D map, it will be like, "Yeah, we are gonna li- launch five more flavors," and stuff like that. It is bad. Like I don't know the flavor. Why would I get it on subscription? And then they're, like they're right. As I told you, like the game here is to actually sell more products together.

[00:20:02] So it's like add more, save more, but like why? I don't even know which one I like, and you're forcing me into a subscription. The beautiful thing about this business is I think if it's like five bars or something, oh, I will run this up so fast. Let's say, let's say I have five flavors, and I get one bar of each.

[00:20:19] I will finish that in five days. My returning revenue actually comes back within the month. Like the efficiency that I will be able to afford on a sample pack that has a hundred percent gift card, and then you can use that for subscription is through-- I would run it at a point five and make more money than the person selling this on a monthly subscription.

[00:20:36] And I will out-compete him every day

[00:20:38] Richard: Interesting. I was just gonna think too, like from, from just the perspective of somebody who buys protein bars, like if, if this indeed has 20 grams of protein in it, which is like really, really dense for a bar of this size, then-- and I try one of these and I like it, all of a sudden I become dependent on it basically, which is like in order to hit the protein goals you need to hit, you have to eat so much protein.

[00:21:00] And if this tastes good, which is the number one blockers because they usually taste like shit, right? If th- if this tastes good and I get a taste of it, then I-- you're hooked basically. It's like giving the first taste away for free essentially is what we're talking about.

[00:21:13] Joy: Exactly. That is it. And if you, if in CPG, if your product doesn't taste well, you just don't have a business. Like that is the reality

[00:21:20] Richard: Yeah. Yeah, yeah, totally. I mean, yeah, so it's d- so dependent on the product, but you have to allow, yeah, allow the product to to live and die on its own merit, so you have to get it in people's hands. But okay, let's

[00:21:30] Joy: I see you are.

[00:21:31] Richard: let's skip to something else.

[00:21:33] Joy: Beverages hurt in B2C so much like that beverages make their most money on Amazon. No, that is a bad industry. That's what I'm saying. Like the amount of-- I have not seen a lot of beverages work to be very fair in this industry. Brezz work, you can look at their, you can look at their offers.

[00:21:48] They are actually pretty good at offers. They're like one of the most sophisticated offer makers ever. But what they did is they basically-- Their business model is pretty good. They would discount the first product. Again, like the aim of that, we entered in CPG again, just so you know, which is the aim is to get the product into their hand.

[00:22:05] And then what they did is basically they found something that is specific to them that is valuable as perceived value. And what I mean by that is they had their product, which basically was like buy it on fifty percent discount or whatever it is for the first time subscription, and then we'll bill you full price.

[00:22:21] That price increase helps a lot. And I remember there was an offer that they ran, which I, I don't know the backend economics of it, and I can go and ask and check. But basically, they had this part where it was like free shot glasses and somebody was explaining to me, which is like the sh- the measurement of a shot glass is actually different in different states or in some states are different than others.

[00:22:42] And what happens is because it wa- it had CBD in it, it actually had to have a particular dosage to feel the same effects. So having a standardized shot glass w- actually was very valuable in that, and they added that as a free gift. So like-- And then it was, you get that if you let it get rebilled, which is actually high perceived values.

[00:23:00] Like I do want that. I would let it get rebilled and now it's valuable to me. And then they will rebuild the thing also. And then they had like-- they would add free gifts that will get rebilled again on the back end if you like the free gift. Like that goes into bottom line Grayhat. But look at their business.

[00:23:14] Like their business actually was great at making offers in this instance, like discount on the front end, a perceived value higher because of free gift that is very valuable and in some instance even rebuild the free gift.

[00:23:26] Richard: What's the... Sorry. Real- what was the, what's the brand name?

[00:23:29] Joy: I, it's like the CB tribe Breeze, I think. Drink Breeze. It's a Shacks company

[00:23:35] Richard: Oh, yeah, yeah, yeah. All right Oh, yeah, yeah, yeah. I've, I've

[00:23:40] seen this

[00:23:42] Joy: they, grew, I think, a lot two years ago But like even like what happened with this business is they had a cash issue. At least that's what I read. They had a cash issue because like this is like not-- You don't make money on drinks on e-commerce. You make a bunch of that on Amazon, and most of that comes from retail, and that's what they're focusing on this year onwards if you read the posts, et cetera.

[00:24:10] Which is right, like

[00:24:13] Richard: Interesting. But so, but you're saying that, like, they were able to at least find some initial success on e-com

[00:24:18] Joy: Oh, they grew it to 50 mil or something, I think, within a year or two. It... Because they

[00:24:24] Richard: constructing a, a range of offers around, like, free gift as opposed to just the product itself. That's interesting. Okay, cool. Let's let's do maybe one or two more here.

[00:24:34] Okay, let's go back to CPG Wire, and let's find something that's not food and bev. Okay. Well, we're gonna get a lot of supplements here. Okay. Okay, how about Apothecary? You wanna talk about these guys?

[00:24:51] Joy: Explain to me the product, though. Can you open their website so I can understand what this is?

[00:24:56] Richard: Yeah, I was gonna say that's a little a little obscure

[00:24:59] Joy: Is it skincare? Is it drops? Like what are we selling here?

[00:25:03] Richard: Interesting. It's like, Yeah, it's drops, but hold on. Okay

[00:25:12] Joy: That is a bad offer, to be fair

[00:25:15] Richard: Okay. So yeah, it's essentially supplements, herbal drops.

[00:25:20] Joy: Can you go into shop and click on bestsellers or something? Yeah. Let's see what they actually sell the most. Also, I see quiz as a funnel type. It works for some businesses. I don't know how well it works for them. Looking at this Blue Burn AM to PM duo, that's interesting. We did this exercise, and everyone who has these multiple different angles should do this exercise.

[00:25:44] The-- Most of them, the brand owner wants to sell the AM, PM drops. This always happens, and it's like, it's funny to notice this happen, which is like people want to sell the AM and PM drops because they believe that is the biggest and the most impactful thing a person will experience on their site. Like the person who will come in and let's say a person wants to buy something, he will experience the most effect of, of this brand, and that's why they should enter through, through this.

[00:26:10] I wanna force people into this. Whereas the reality is, and we looked at the numbers, people just prefer one of them. Which from looking at this like I don't know what Blue Burn is, but I'm guessing that's the PM version of this, and they don't want the AM version of it. They don't want the stress to it.

[00:26:22] Like we want to sell those things, but people don't want to buy that thing. So in this instance-- Now, I think there's some education r-related needed on why they should do it the way they should do it. So if you open the PDP of the top seller So two packs of 15 servings, 30 servings. I would Okay. Offer is a two-step process, which is like if I have the ability to go and help product development, I will make it into a smaller, like sample pack, which is like, can I have a smaller five-day serving, ten-day serving so that people can try and see. A lot of people have this question in this industry, so they're like, they will not feel the effect, and it is fine, but they will feel some part of the effect in fifteen days.

[00:27:06] And if you're telling me they will not feel any effect, then why would they actually continue for ninety days? So you can either sell a ninety-day bundle, and then you will go and play the exact opposite game of AOV, and you can go and do that, and I'm fine with it. But if you wanna play the play- the game of subscription, then you should act like-- IMA does ninety days now, so, like you can go and look at that playbook.

[00:27:23] But if you want to do the game here, I would probably either, instead of giving discounts, give free samples of the other products that you believe are more potent and they will see the results. This used to happen, which is like whatever is easier to advertise, sell that on the internet and get people in.

[00:27:40] And if you believe there's something that you can add to the pro-- merchandising, for example, if they buy Blue Burn and you want to add the AM product as additionally on top, and you believe people will come back and their AOV will double because using both of them together actually is more beneficial, then give that for free on this purchase or on every purchase or like basically give that for free and that is going to be the best offer because the g- the way you need to objectively measure this is my conversion rate for sure increase if I give that product for free.

[00:28:08] My cost delivery will increase a little bit on the first order, but my conversion rate will go through the roof because it's a free gift. Like I would probably double my ad spend instantly because of that. The second thing is if people do come back, and this is the math you need to do, it's like how many of the people that actually were going to come back now will buy the additional one thing from me, which is like a double the AOV.

[00:28:27] Let's say twenty percent of the people come back and my cost delivery was twenty percent. I made more money e-even in that instance where only twenty percent of the people came back and bought from me and the cost delivery was twenty percent. I made so much more money in that instance, which is-- that is be- that will be the best offer because my conversion rate will improve, my AOV will improve.

[00:28:44] End of the day, the dollar value of the CAC, you know, forward matters so much, which is like increasing the rebill AOV for this instance of this business is going to be important because let me tell you this, which is like their CPMs on the, on Facebook is gonna be more than thirty dollars. And the rule of thumb is your cost to acquire a customer is never gonna be less than the CPMs.

[00:29:04] That means they're already not acquiring on a one. Like that is the guarantee here. So that means they're right now bidding, let's say forty dollars to acquire someone on a thirty dollar subscription and rebilling thirty. That guy would give up everything in his life for the ability to rebill sixty dollars on the back end because he recoups money so fast, and that's why giving that as a free gift would actually produce so much more value.

[00:29:26] And I think that is the reason they also probably are just like giving the duo, like that's what they're pushing. Whereas the reality is if it truly is that potent and that actually helpful and valuable, give it as a sample for free or give the full product for free on the first and then rebill both together on the back end.

[00:29:39] Like that's, that's the model there.

[00:29:42] Richard: Gotcha. Okay, cool. Let's let's do one more because I want, I wanna find one that's like not...

[00:29:47] Joy: CBG?

[00:29:47] Richard: find an example that's like not a consumable consumable. All right.

[00:29:50] Joy: This is CPG buyers here. You're gonna find CPG

[00:29:53] Richard: Oh, this is just-- Yeah, this is all gonna be

[00:29:54] Joy: we also should put an offer on this. Like, this is fun to do, and like I've been doing this for, for so many marketing moment clients in CPG. Like anyone who watches this podcast, like to five of those people, we'll make your offers for free.

[00:30:05] Like let's do something like that.

[00:30:07] Richard: Yeah, yeah. All right

[00:30:08] Joy: email Richard, me, or whoever

[00:30:11] Richard: That's right. Okay, yeah, a-actually let's, let's make that more explicit. So, okay, because Joy loves doing this so much, the next five CPG brands that reach out to us, so you can either email me, richard@com3co.com you can comment on the YouTube channel, and we'll-- Joy will do this for you for free.

[00:30:30] So reach out and and we'll make that happen for you. But let's do one more, and actually we'll just have you, you pick it, Joy. Pick, pick a brand for us that's in...

[00:30:41] Joy: I don't want to because it'll--

[00:30:43] Richard: don't have anything

[00:30:44] Joy: sure I'll leak like a client. No, I'll leak client data. That's what I know.

[00:30:48] Richard: Sure. Okay, I'm just trying to find something that isn't just purely consumable. But okay. But let's-- Okay, let's maybe say just of, broadly speaking, let's talk about maybe an apparel company or something like that. Like, where's the-- Like, what

[00:31:05] Joy: Shoes, clothing, whatever type

[00:31:07] Richard: Yeah, let's say, let's say shoes. And actually let me think.

[00:31:12] Joy: Okay. Like I'll just talk about it in a sense. So it's a client of ours, no information released. They, they used to sell everything. I think most of the apparel companies sell a couple of accessories, couple of the main products which are like pants, T-shirts, belts, hats, everything. And the way you need to go and sell that one is you need to go and find-- apparel is a little bit different because the job of-- The way you get the highest or the best efficiency in that market because depends on what you want to optimize.

[00:31:42] If you want to optimize for volume, a whole different game, okay? If you want to optimize for efficiency, which is what they are actually optimizing for, like if you learn from Tara about talks about APL, that they have so many marketing moments and stuff like that. Like apparel is mostly optimizing for efficiency.

[00:31:54] That means your job is to find the f-the lowest hanging fruit in different markets. So like different cohorts of people. So like your offer is going to be built, I would say audience-specific. Whereas in CPG, I'm trying to go against the biggest audience and get the most volume. That's why my audience in CPG is like the same person, just bid more.

[00:32:13] Whereas in apparel it's gonna be like how more specific can I be? So in that instance, like can I make sets around a certain type of people? So like for example, let's say I sell athletic gear, okay? Can I make sets for people who do tennis versus people who do a different type of sport and actually make the sets and then talk about those sets during those moments that matter to them and then build the offer against it, which is like accessories like caps don't really matter that much, but can I give it away and call it the tennis set?

[00:32:45] Which is like this is X, Y, and Z things but together. You can do it with veterans if your product is more Father's Day focused and stuff like that. It could be like, it could be veteran's Father's Day set or something like that. Like you need to go and talk about so many different moments and then you will basically graduate them on, which is like, okay, if I know this works on Father's Day as a veteran angle, then it's m-our special veteran set that only runs with veteran ads to only basically a landing page that is for veterans only.

[00:33:12] With-- I think veterans also get like a different discount. So like that, that is a different thing and you can have a marketing moment there and that's like different part of my funnel. In apparel the f-the product is a marketing moment along with some offer of some way shape or form where I can have some arbitrary conversion rate, like buy the T-shirt and this thing and get a hat for free that represents to the thing that you stand for which like people want to be associated in apparel.

[00:33:35] That's what they do in apparel. So some kind of thing that represents the, like for veterans let's say a cap, for tennis let's say a tennis ball printed with something. Like people want to be-- stand for something or represent something. So have that thing as the free gift in the bundle and then go and make it specific to the bundle.

[00:33:52] Run during the marketing calendar moment of the thing and if it works then graduate into evergreen. That is like the best way to do apparel for those businesses

[00:34:00] Richard: Gotcha. Okay, cool. Well, so I think, yeah, I think that's useful. Like you were mentioning before, the next five CPG brands that reach out to us, like, again, you can email me, richard@cometherecord.com, podcast@cometherecord.com.

[00:34:13] Joy: the reason it's CPG is just because I know, like, if we do offer testing for CPG, this is the difference. Apparel will increase their performance by fifty percent. CPG will double their business from the same like work. So that's why

[00:34:26] Richard: Yeah, yeah. It's like the, the amount that you could get out of this is enormous. So again, that's richard@cometheraco.com, podcast@cometheraco.com. You can also go ahead and comment on the YouTube. That might be the best way to do it, and just let us know. The first five will have Joy build an offer for you for free.

[00:34:42] So, cool. Joy, anything else you wanna hit on? Anything else you wanna plug? That's it. All right, folks. Well, that's gonna do it for us, and obviously we'll, we'll be talking to Joy again next month, so tune in for that. But until next time, everybody, we'll see ya.