Welcome to Q5: The Most Important Quarter You’re Ignoring

[00:00:00] Taylor Holiday: Okay, welcome back to another episode of the Ecommerce Playbook Podcast. We're sitting here, it's about 24 hours till the Christmas season shopping, shipping cutoff is upon us, and so that means it's over, right? That means that there's nothing left to sell and we can all just go and rest and enjoy the festivities.

Oh no, is that's not true. In fact, what the calendar just does is flip to Q5, baby. So today I brought in the two greatest supplement sellers I've ever met in the history of my life, and we're gonna jam on all things Q5. Let's dive in. Joining me today, I've got Dean Brennan. CEO of Heart and Soil, and Dave Huffman, CEO of the Fifth Hammer and 1000 Supplement brands filling your Instagram feeds.

And we're here today to talk all about the Super Bowl of health and wellness. That is Q5, and we're gonna talk about that. But first, let's get an intro from these gents. Dean, I'll go to you. Who are you and what are is the health and wellbeing that you're selling me?

[00:01:09] Dean Brennan: All right. Appreciate you having me on again. Dean Brennan been on the pod before and you might notice I have a little bit of a different haircut here. Shaved the hair off about four weeks ago. We don't need to go into that. Anyways, yeah, I've been with Heart and Soil supplements since the beginning, 2020. The supplements we sell, they're beef organs. They happen, in my opinion, they're a tool. We really sell what I call radical health which. It's gonna be a fun conversation about Q5 'cause that's when people's identity transforms or they wish it to. So it's a really good moment for us.

[00:01:43] Dave Huffman: Dina, I was gonna say, you're gonna challenge Taylor for the top spot of Madonna of ecommerce. But Taylor hasn't changed his look 

[00:01:49] Taylor Holiday: know I need to, I need to, I need to

mix it up. I was just thinking about that the other day, Dave. I'm really getting boring.

[00:01:56] Dave Huffman: I think you gotta get a, like a handle like a handlebar mustache next. Like, 

I think that'll be good. Yeah. So I, I'll go next, I guess. Huh? Dave Huffman. I'm the I'm a partner and co-founder in a group called Fifth Hammer. We we think of ourselves sort of as an accelerator studio for consumer health supplement brands. But I've been in the space since about 2015. I've worked with dozens of, of health and wellness brands across the space, even into personal development. So, Q5 is something that, you know, I have thought was cliche in certain moments because it feels overused, but it's, it has maintained its impact over the years.

So we lean into it pretty heavily across our entire portfolio. We, we specifically work with founders to help them achieve their ultimate outcome, but that's also just to make greater impact in the world. So that's why we lean into this space. We've seen a lot of people genuinely change their lives with supplements and this journey that people go on from Hope and Health and you know, that's why, that's why we do what we

[00:02:53] Taylor Holiday: So the reason this is such an important episode, we had a sort of a client webinar pre-Black Friday, Cyber Monday. And I got on and I, I was struck and reminded by a bunch of people telling me, yeah, yeah, like Black Friday is super important, but we're not really a gifting business. We're actually starting to think more and more about January and how our industry, ecommerce can get sort of lumped into these like patterns where everybody's on the same rhythms.

But the reality is for a lot of businesses, the most important time of year starts, right? Freaking now. And this idea of Q5, and as Dean you even talked about it, people begin to. Consider changing their identity. I like that phrase. That's like always a great impetus for purchase. You know, I've seen a lot of the data of like people's shopping, behavioral patterns change a lot when they get divorced or they buy a new home.

These major pivots lead to identity change as an impetus for purchase, and that's part of what makes January so powerful. But on top of that, one of the other major reasons I was just looking at a graph, and Corey, let's throw this up on the screen. It is our tracking of meta CPMs. That throughout the year for the last two years, and we are about to experience what is a consistent regular pattern every single year that the absolute bottom of the advertising pricing market begins about December 23rd.

And then it just scales up the entire year. So you have this pattern of, that's cyclical every year where you have a bottoming out of a inventory on December 23rd, and then the price of ads go up all the way through Black Friday, Cyber Monday, Christmas through the end of the year. That's functionally how the CPM pricing market works.

And so for brands, we, we, and this, this applies to supplements, health and wellness, also to beauty. We experienced it at Bamboo Earth January in this period of time where your conversion rate remains higher. And CPMs are depressed because for a lot of brands, they remove spend down represents the biggest opportunity to acquire new customers and grow your business all year.

So today I'm gonna have these gentlemen talk a little bit about how they each approach it. I think they take slightly different approaches. Each of them, Dean and Co, have been running a very specific program for multiple years where they invite all their customers into a challenge. And Dave, as he likes to describe himself.

Goes much more Tim Duncan turnaround jumper off the backboard. So you're gonna hear about both today, but if you are in the space where these next six weeks are your Super Bowl, stick around 'cause this is going to be everything. So Dean, I'm gonna come to you first. Tell me what, how heart and soil approaches this moment and give us some data about how it relates to the rest of the year in terms of impact for your business.

[00:05:31] Dean Brennan: Yeah, I love it. So it's an interesting time period because if, if we scale back and just think about like why people. Buy in the first place, and then why people stick with a product. You always hear marketers talk about identity, right? Appeal to their identity. And Q5 is a moment in which at least, I can't think of any other moment over the course of every single year where it's, it, it's kind of strange actually.

It's just ingrained in the entire culture that we give ourselves permission to change our identity. We give ourselves proactive permission to change our identity. And why that is really, really important in, in the terms of health is you know, usually people don't change a habit or do something like how many people listening to this were like, oh, I'm gonna, I'm gonna do this new, new program starting next week or today because I don't wanna. Wait until the new year. Most people don't do that, right? Like, the reason why, and Dave can actually talk a lot about this 'cause I think this is his area of expertise from a psychological component or a behavior change component. People don't change unless they have something that happens to them, right?

They get diagnosed with diabetes. They I don't know. Their, their wife says, Hey, you're really unhealthy and I can't deal with this anymore. There, there has to be something where the pain is greater

than the actual 

[00:06:53] Dave Huffman: Like a 

[00:06:53] Dean Brennan: Yes. Than that a hundred

percent. So that's usually how it is. And so, given you have this moment come January where everybody, almost everybody, I think like 79% of resolutions are related to health people are proactively saying, I give myself permission to be a new human. I'm gonna be the walker that eats healthy in the morning. Right? And so you have this identity shift that happens at just a mass scale. And so how we approach it is like, okay, we know that most resolutions fail within what, a month, right? Maybe after 30 or 60 days, like 8% of the, the people that started are still actually going forward with what they set out to do to do. We tried to build programs and support around that. So it doesn't just start with the sales moment of like, oh, hey, let's get as many people into this funnel as possible. It's like, what is the funnel itself after somebody purchases? So we do, one of the things we do is a 30 day challenge. We call it the animal base 30 challenge.

And you know, we might have 20,000, 30,000 people. Committing to you know, one goal over the course of 30 days, it might be like, Hey, I'm gonna walk an hour a day. And obviously we have, you know, we placed our supplements which are tools to get healthier in kind of that experience. But that's how we approach it.

We kind of think like, okay, what? Like if we are to do our best to support someone who wants to shift their identity and take out friction in that experience process, how do we do that?

[00:08:26] Dave Huffman: What I love about the challenges that Dean and what you guys do is it smooths out the surge,

[00:08:31] Dean Brennan: Mm-hmm.

[00:08:32] Dave Huffman: like Q5 for individuals. It's kind of happening on a couple of levels. There's like the people thinking about reflecting and looking forward about who they want to become, but really this is mostly crowd driven. The crowd crowds don't think they feel. That's why there's just a huge emotional surge in that moment. Even people who say it's cliche and roll their eyes at resolutions are writing their goals down for next year, right? So what happens is, and you, you can like literally see this play out in the gym like, like even from the personal development space.

I remember this happened in the personal development space. People aren't necessarily going, they're just thinking about their mindset and like what they wanna make next year for a salary. Then we've got people in consumer health that, that have chronic illness, you know, and they don't necessarily aspire to be anything other than what they used to be.

And then you've got people, like, I think a, a, a, probably a swath of, of heart and soils customer base or people optimizing their health. Really healthy, you know, like lifestyle, like really strong lifestyle style. But at the same time, like you can see in the gym, it spikes. In January and then it lasts. It actually lasts until like early March.

You just see everybody just kind of drop off, but that's going to the gym. There's a community there. That's what I love about what you guys do with the Challenge. We don't do a lot of that, which anymore we did at Microbe and Cell Core, the business we exited in 2022. But anyways, I just wanted to jump in and say there's a literally a book called The Crowd that's 120 years old that explains this exact phenomenon that kicks

in 

[00:10:02] Taylor Holiday: so Dean.

[00:10:03] Dave Huffman: of December.

[00:10:04] Dean Brennan: I appreciate

[00:10:04] Taylor Holiday: I was gonna say, so yeah. How, how do you connect people? How do, how do people have the experience of the crowd? Like, I think, like, so I just this weekend my wife and I did our first high rocks. I don't know if you guys have been to one of these things. It is. Un it is insane. Like I remember the peak CrossFit games era, like we were a sponsor.

I was in the middle of all of that, and this feels higher energy than that even. It's crazy to me

what you see and like communal fitness and communal health is like a really, really powerful experience. But I wonder like how do you create that online? Like how do you create a digital version of that? For your people.

So they do benefit from what Dave's talking about in terms of getting a sense that they're a part of something bigger than themselves and connecting broadly.

[00:10:48] Dean Brennan: Yeah. Important aspect. Really important aspect of it in my mind. 'Cause if, if we go back again to behavior change, right? Like part of. Part of what helps somebody actually change their behavior is the environment that they put themselves in. So, and the people that they're communicating with. So we clash everyone together.

So we pull people into our circle community. It's something that we've built on the Circle platform. And we have, you know, we've engineered this to kind of facilitate the challenge in January and then after they graduate from the challenge they get. Put into the larger space where we've got, you know, 50,000 people in there.

Much of 'em are active, people are sharing recipes all kinds of stuff. So yeah, we clash 'em together. We put 'em in a, in a cohort. We have a few, few, things that we've designed in the experience. We're like a kickoff call, and so we try to incentivize like, Hey, we know if somebody joins that kickoff call. One of our leads Steve, he's great. He is our podcast host. He leads the call. If we know that they show up there, then they're most likely to take the first module in the course. There's a self-paced course that goes along, and if they do that, they're gonna interact in the community. So we just try to clash people together and one, educate them or help them you know, become educated on their next step, and then clash 'em into the larger community when they

finish 

[00:12:08] Taylor Holiday: breakdown. How does the journey, it sounds like, okay, so you're gonna join this community, there's a 30 day challenge. How does it relate to the product and the offer and the mechanics? Of what you're actually trying to sell them in this moment. Give me, take the people through a little bit. Like what is the relationship between the challenge, the offer, and the ongoing community?

I.

[00:12:30] Dean Brennan: Yeah. So people will enter the challenge in one of two ways. One is they might come through the challenge funnel. Somebody else might have joined and it's like, Hey, you know, like, wouldn't you love it if you have a couple of friends that would, you know, benefit from this? Share it with them. Or they might see an ad, you know, around the New York Times be like, oh, it might be something I want to try.

So they might come in through wanting to do the program, or they might come in through buying a product, right? They might. Have heard about us, they might buy beef organs and then you know, that follow up email after they purchase or sequence of emails, they might get introduced to the challenge. So they're gonna pop, they're gonna go in there.

We try to keep it really simple in terms of like, what action somebody should take after they join. We don't want to give 'em a list of like, here's 20 things. And so we do some things on the tech side where they automatically get their account set up and everything to where they could just. Easily. They get, they already have the password. They just go like straight into the community. There's no additional friction steps there. And we have an offer right at that point, a product offer. It's our, it's a pretty appealing offer. We, we try to get folks on subscription through that and it's, you know, it's all embedded in you know, transform your health in the next year, like. We, we discounted we, we actually add in-store credit. This year we did a little bit different psychology there. And then there's another offer at the end of the challenge as well. So you keep, you keep people engaged and then we give 'em a, a bigger kind of incentive if they complete the program, the steps right at the

end.

[00:14:04] Dave Huffman: I was gonna say, the other way to think about aligning offer is we've got a, we actually do have a challenge on one of our brands, but it's, we don't lean into it for Q5. It's just like an

[00:14:12] Taylor Holiday: Perpetual Evergreen offer. 

[00:14:14] Dave Huffman: we run traffic to it year round. Yeah. It's just evergreen. And the way I think about it is, you know, at least of all the brands I've worked with over my career, most of the growth comes from light buyers. So people

who will never buy more than. Two times, right. But 20 to 30% of 'em will go on to become heavy buyers. So I just think about it in terms of penetrating the total addressable market with something that's more behavioral driven and not as much like, you know, the supplement.

And then we, from that group of people that we've sort of indoctrinated into the brand. And then just the way that like we think we're, we're dripping the offer throughout, but then I, we will make more, we'll, like, make an offer at the end. But it's, it's more about just brand alignment and then. And just taking people from hopeless and unaware, igniting some hope, making them, and then that at that point, we're genuinely just marketing or remarketing to people who are a problem and, and solution aware in the

[00:15:08] Dean Brennan: I was gonna make the quick point that our offers are designed more to be retention focused. I've found, you know, people are really excited to invest in themselves in the new year. And so in terms of

taking the, the kind of the psychology of Black Friday and like deep discounting things like, I think that's a, a really poor thing for a health brand to do.

So I, I feel like if you focus on kind of your offer in terms of transformation and those behavioral components and set up your offer to be retention focused, you'll have way more success and customer value over the course of the year.

[00:15:43] Dave Huffman: Yeah, I love it.

[00:15:45] Taylor Holiday: Dave, I wanna go back to something you said that I think is an interesting, unexpected data point. You said growth comes from. The light purchaser, the casual purchaser was the phrase that you used. So in other words, the bulk of your customers won't be these large LTV they'll purchase once or twice.

Tell me a little bit more about that. That might be counter to what I think people would assume in a business like this.

[00:16:10] Dave Huffman: Well, it's funny. I, I would've thought the same thing. I think, you know, there's always some exception to the rule, but every I, I'll just give you like the, the broader example I. What do you think Coca-Cola's buyer frequency is meaning over the course of one year?

[00:16:31] Taylor Holiday: I know mine. 7,000, I don't know. I don't know what it is. Really high. Really high.

[00:16:39] Dave Huffman: so my, my, my business partner Ryan, used to drink like three a day. So when I first was asked this question, I thought, man, it's probably a thousand. It's 12.

[00:16:48] Taylor Holiday: a year, once a 

[00:16:49] Dave Huffman: More than half of Coca-Cola's customer base buys one to two times a. So when you go and you look at, like, when you look at buyer frequency numbers across any brand I've ever worked in and like health and wellness brands, it's between two and three. And that's driven down mainly by the light buyer who buys maybe once or twice ever, but maybe once in, in a, in an entire year. It's called the law of buyer Moderation. It's a, it's a legit thing. I don't know that I've ever audited a brand. The, the, the, the one, like there was one brand that sort of broke the mold and they were like, they were still 60 40. 60% light buyer, 40% heavy buyer. Heavy buyer, defined as someone who's purchased three or more times ever. And this brand had people who had purchased 80 plus times. Right? So this is why I say I like more. I love what Dean does. I think what what Dean does is what I think is, is it's, I we, we do that. I love it. But I think sometimes we think too much about acquiring the heavy buyer. And then we cut off all the other people. Like brands grow by penetrating the total addressable market. It's by getting every buyer in that market you can possibly get. And the fact is most of those are gonna be light buyers. So that's why price matters.

That's why friction matters. That's why you need to make it as easy as possible, because there's also something called the law of Double Jeopardy, which says the more customers a brand has, the more loyal they are. And that's because that 20 to 30% heavy buyer ratio actually holds over time. So it's really just like a, it is just a function of math at the end of the day is the way, at

least how we look at it. 

[00:18:30] Taylor Holiday: And think about, okay, then overlays in my mind with. The depth of penetration and the cost of reach. And part of why this moment becomes so important then, right, is that if we want to drive the broadest awareness into the total market as possible, the cost to do that right now, you have an advantage in that arena.

And so, this is an area, so Dean, you had some numbers though about volume and LTV in this period for you. And then Dave, we'll use it to jumping me off to sort of contrast that with your approach in terms of what we see. So Dean. How does that community and challenge engagement translate to business?

Impact for heart and soil?

[00:19:09] Dean Brennan: It for us, it's about an 8.2% increase to customer

value over the course of a year. Volume wise though, January's not our highest volume month. Now there's a few reasons for that and I'm actually curious your take Taylor since you're familiar with our brand. I think last year we. Might've made the mistake of like, cutting some of our ad budgets in January.

More was so high. But maybe that was the time for us to lean in a little bit more into the acquisition moment. But yeah, so we see purchase frequency about 10% higher. Customer value about eight, eight or so percent higher. What's really interesting though, if you dig into the cohort data is month two and three actually performs. Less than the other cohorts. So it appears like there's something where they get really excited for this new habit and they might go through the program or whatever and then they kind of like lose it. But the cohort will come back in like month four or five and then they outperform all the rest of 'em in terms of customer value by 12 months.

So there's some really interesting stuff there that. We're kind of looking into our retention strategy and seeing if there's anything we can do there to

[00:20:23] Taylor Holiday: Yeah, it's really interesting, I think, I think there is this contrast with the challenge offer that it's actually like such a high bar that from a volume standpoint, it's the opposite of the frictionless purchase, right? Like, come join a community for 30 days and engage heavily. It's like a really high ask, right?

And so it would make sense to me that

like sort of, that would be. Higher LTV, lower potential volume versus like making it as simple to just try it. No, you don't have to go do all these other things. Like, so there's, there is some, I think, way in which I wonder if there's a way to pair these things together in a way that.

I know for me sometimes the ask feels really high to engage or enter a community is like, man, I wish there was a way to like sample it or like to, to see if I wanna, before I have to commit to a 30 days of participating in something. Like is there a lower barrier moment to get into the thing that would be easier for me?

So, I think there's probably some balance there to, to think about the distinction between those two things.

[00:21:22] Dean Brennan: Yeah, totally agree. And I think we, we do run some funnels like that. Don't point to. The program as well as well. And then we try to droop that in and we converted our 30 day challenge, the animal based 30 challenge into an evergreen moment as well. It's 'cause we're kind of like, we're looking at the LTV data for folks that go through it and we're like, wow, if, if someone engages with this, the LTV is like way higher.

So, we're trying to do that from an evergreen standpoint throughout the year as well and see kind of what, what happens.

[00:21:52] Taylor Holiday: So that's awesome. So Dave, let's juxtapose this because for most of your brands and, and tell us how many there are that you guys are currently working with for you. This is the highest volume moment of. The year in terms of new customer acquisition for most of them. Is that correct?

[00:22:07] Dave Huffman: Yep, that is correct. I think we have some other sort of like peak moments where we, we will do a little bit more, but they're, they're based around events, you know, like where we have a, like a big health event, like biohacking conference or something that we'll go to. We'll take a brand to. We don't quite have a thousand brands.

I think I would be fully bald if we did that. We, we, we've got, I think we've got a portfolio of five at this point, but we, we only really, we, we, not only we, we directly work in one. So I'm actually the chief revenue officer in one of the brands. We've hit the Inc 5,002 years in a row now, actually hit top five for supplements in, in 2020. Four. And then the rest we've made, we've made investment in, and we kind of sit as advisors. But across the board you see January as the highest new customer acquisition month. We take, I, you know what's interesting? My, like Dean, Dean alluded to this. My whole background is in psychology. I worked as clinical psych for a while.

I thought I was gonna go be a psychologist. But I take, I've taken more of an engineering approach. To growth over the years and just purely like, almost mathematical. I mean, even when, when we were first, when I first think about Q5, sometimes I actually kind of roll my eyes a little bit, even though I know all of these things to be true and, and I start going towards, well, the reason why they're the super cohort is 'cause they made the earliest purchase in the year so that there's a, there's a time since purchase.

Timeline where you actually look. If we look, even though we've, we, you know, we have more new customers in January, they will, if our buyer frequency is like three, the people in January will buy four times. They have more time to buy throughout the year. But also I do believe they're sort of more, the more motivated.

So across the board, we just try to go out and, and acquire as many buyers as possible, knowing that most of them are gonna be live buyers and they're not. If they don't purchase again, it has nothing to do with us because. We do believe that retention is sort of table stakes. Good product, good support, good education you know, experience that's congruent with the product.

So all that stuff is table stakes. And then we go an over index where, to your point Taylor, about making it easier to purchase, we're looking at smaller pack sizes at a lower price, but still great margin. I'm not above an extreme discount as long as I've got good margins. I don't, I think premium is table stakes.

I don't think discounting erodes brand at all. I've never heard. Somebody complain about getting a cheaper supplement to help you know them achieve their goals, right? Or talk about how the brand is not what they thought it was because they got it at a discount. So we really look at January as we're just going all in on new customers, and then we sort of what we call acquire and harvest throughout Q1, where we'll run another promo like in February or March to try and get that second purchase. If we can get a two, two and a half in that first quarter, we know like throughout the year that that LTV in in our flagship brand Stemer, in that one year LTV grows, like it's coming up on close to 200% and it's really, I'm just playing those numbers and just making sure that the experience, they're having a good experience with the product. I'm okay if they're not gonna make more than two purchases at a time, I'm just gonna go get more of them. And it's just, it's, it's, it's the reason why I say it's Tim Duncan, turn around banks, shaws off the glass. Is there's, it's, it's really simple at the end of the day when you think

[00:25:31] Taylor Holiday: Yeah, and I, I, this is part of why I wanted to have you guys on is that there is a contrast in the approach here, like a little bit in terms of the way you think about this period of time and what you want to try and generate out of this group of customers. And I think either one, you guys both run wildly successful businesses, but, and it's funny, like.

What I experience is that it follows your disposition as leaders. Like dean's preference is always to sort of start, he's a creative by definition and he starts in this like empathetic state of the customer and trying to create this communal connection towards this identity change. Like you heard him talk about it, that's like very real for who he is.

And Dave, you and I first bonded over a formula, a set of numerical inputs that generate an output. And I think

each approach, has its merits and opportunity. Dave, let's talk about some of the tactical offers. I liked the things you're describing when you think about creating entry points to supplements.

One of the things I always struggle with is I have a cabinet full of supplements that I'm not totally sure if it worked or not, or how I create impact is that these things are they're not all icy hot. They all don't give us a tingling sensation the first time that we use it. What is the experience?

You're trying to create. When you think about the offer design for somebody that allows them to have the experience that you want with your products, like how do you think about the overlap of that sampling initiative versus like, how long do you really need to engage the product for it to actually matter?

How do you think about that when it comes to designing an entry point for customers?

[00:27:04] Dave Huffman: I would have Dean go, I'm gonna really probably disappoint you with my answer.

[00:27:07] Taylor Holiday: Well, disappoint me first and then Dean can bring me back to life.

[00:27:10] Dave Huffman: This is gonna sound bad. Okay. So I, I like when I say this, people's faces go blank, but I, I don't care. Like, and this, this is what I'm, this is like my hard contrarian take. I don't care because I know most people, no matter how good the experience is, they, they're, they don't care either. My wife just recently ordered a supplement maybe a three or four months ago, and she said it changed her life. Okay? You know how many months in a row she took it? Three.

[00:27:39] Taylor Holiday: She had had a,

[00:27:44] Dave Huffman: But, and then it's, she stayed a subscriber and it started

stacking up in our cabinet, and I finally went in and it canceled the subscription. So my, my point is it like there's only so, like you can't do anything about that. Like, that's why I say it's table stakes. So do, when we first start working with the brand, do they have clinical trials behind their products? Most supplement companies are, no, but, but, but a lot of them have done enough like work. There are, there are companies you can do like small study groups with this, like to actually show that it does what it says it does. So does the product do what it says it does? Do we have good education? Do we have good support?

Do we get 'em to their product fast? All of those things. And then I just know like no matter what, like I try to, we try to set expectations like it's probably gonna take 30 to 60 days, but also some people have taken our, like our products and felt something immediately. So judge for yourself. So we have like return windows, like you can return the product after 30 days.

We've got like a 60 day guarantee on one of them. But the reason why I am in over-indexing on light buyers in the past couple of years and what we do to do that and decrease that friction is. Smaller pack sizes so they don't have to, you know, one of the most genius things I've ever seen was Element took their pack sizes from 30 to 18, and guess what?

I order that thing every month and I'm out by week three. And you know, like hydration is, maybe there's some different consumption patterns there, but that's, that's my take. When I was, I was recently pitching like smaller pack sizes to a brand and they said. Well, how do we know? Like, how is that long enough for somebody to experience the product?

And I said, I don't care. And they're, they just went

white.

Like, how could you say that? 

[00:29:24] Taylor Holiday: Well, Dean, are you going white? Are you turning white? What do you think?

[00:29:27] Dean Brennan: I actually don't di like, I don't disagree with Dave much. You know, he's right. There's some realities that are very difficult to engineer through, I guess. But what is funny is like on the back end of Dave's answer, he gave some pretty practical things that one can do to increase that purchase purchase frequency, which. You know, an elements case is probably people are using it, right? They're using it and then they're buying again and again. Again, I, I just think from a philosophical perspective, if there's like two types of audiences, again, like one is, one is someone who has an actual problem pain point that is so painful that they will do. About anything or they'll try about anything to try to resolve it. So I think if we engineer our touchpoints as a brand and the product to try to resolve that and support that person, we're gonna be in a much better place than if we don't, you know, from, from that standpoint. And the same goes for the new year, knowing that people are trying to, they're giving themselves permission to try something new from a health perspective.

I'm like, if, if you can play a little bit of a role in, in helping them. Change that identity and be successful. Then even if they let their product stack up, they might pause their sub subscription rather than cancel it, or they might cancel it, but they're gonna return again the next

January because they trust you and they like the product.

[00:31:01] Taylor Holiday: I like it. So there's, there's definitely something for you, the listener, to wrestle with about what you believe about your capacity to modify human behavior with your product. Seems like we've got one market taker and one market maker here in terms of a little bit of how that's approached. But here, here's another question that I think.

As brands think about the trade off between volume and efficiency. How do you think about what is the opportunity cost to scale in this moment and to go acquire as many customers as possible at maybe the best prices you'll have opportunity all year. And so argument one would be. Take as many of them as you possibly can, even at the cost to some short-term profitability because this is the cheapest available acquisition for some period of time.

So go and reap that harvest today and push that CAC up maybe higher than you would normally be comfortable with, or. Is this period of arbitrage about the efficiency of that acquisition and we're building our contribution dollars today. Where do you guys sit, when you look at this market, what do you think the opportunity is for a business?

Let's, let's sort of set aside, let's make this an X level debate. So we'll set aside the nuance of capitalization and all of the things that go into that decision reality. But just generally as you approach it, do you see it as an opportunity for volume or is it an opportunity for efficiency in this moment of time?

Dave, I'll start with you. I have a guess of where you're.

[00:32:28] Dave Huffman: Well, it's, it's volume for me all day, all day, every day. We, I'll scale into my, at least in our 60 day LTV, in this moment. I'm cool with, even in this moment, scaling into our one year LTV. I don't wanna do that all the time. We also have some brands that are, that are, that are, have some funding to rely on. We don't like to do that. We try to grow these businesses you know, not to rely on that funding, but I will. I, it's volume for me. I will get a little uncomfortable as we are scaling into those lt, like 60 day, one year LTVs, but. The, there's like, there's like two of our own like laws that we've, we've come up with one we call, I call the Riley Law of November, and it's like where your November is a good proxy for where your business might be in a normal month within the next six months of the year. But also there's like a law of of January where like January really does, as I think we were saying earlier, set the tone for the actual year. So if we can over index in that month, you know, we just, with enough volume, we set ourselves up good for, you know, a

good rest of the year.

[00:33:34] Dean Brennan: Oh man, it's what I'm struggling with right now. Last year we chose the efficiency equation. There's a couple reasons for that. 

[00:33:40] Dave Huffman: I.

[00:33:41] Dean Brennan: one is we, you know, from a cashflow perspective, we wanted to build our inventory up more for. The QQ three, Q4 moment 'cause we, we were a little light the year, year prior, and so we wanted to make sure that we had enough cash to do that we're a hundred percent cash flow. And so that was part of the reason is we didn't, we wanted to preserve enough cash to be able to do that in kind of the middle of the year. And then. We also kind of know the margin degradation towards the end of the year in, in Q4. And so for us to hit the goals that we set out to, to hit, we just were like, you know what?

We're gonna focus on efficiency here. We had a pretty high target in terms of volume, but man, the other side of me thinking like Dave is like, if we really would've pressed spend the amount of customers that we could have acquired in January would've been unbelievable. And so maybe that was a missed opportunity for us, and that's what I'm, you know, struggling with going into this year is not that it has to be on each any extreme to that you know, question, but like, where, where are we gonna fall this January? And I've only got got 15 days to figure that out.

[00:34:54] Taylor Holiday: All right, so, so Dave,

what would you say to convince him? Convince him that he should substantially increase the volume of acquisition in January for heart and soil.

[00:35:07] Dave Huffman: I had say he already knows the answer.

[00:35:10] Dean Brennan: I think you're right. 

[00:35:11] Dave Huffman: truth, experience is more impactful than truth told.

[00:35:13] Taylor Holiday: We're, we're on a podcast, Dave. All we, we, we can't give 'em the experience we gotta give 'em. Truth told here. Come on.

[00:35:21] Dave Huffman: no, but, but no, I think it's in kind of what we're saying. Like look at if. So, so go go into your January cohort and look at the, and then, but look at the, the, the, so take your total customers from January and the total orders they made throughout the year. I bet it's higher than any cohort throughout the rest of the year, which means the more customers you have in January, when you really start cranking on, you know, sales and, and, and offers in Q4, you give yourself a greater chance to harvest more of that later in the year, which will. Offset the media degradation towards the end of the year, and this is why we call it acquire and harvest, is we acquire as much as we can and then we will harvest them throughout the year. And even though Ibel, you know, I'm over indexing on this light buyer talk, et cetera, et cetera, 20 to 30 per like 30 Dean you're is probably like 35 to 40%.

'cause I remember what it was when I worked at this at your sister brand,

right? It it is a little bit higher because this is a food-based supplement. So I mean, I don't know if that helps convince, but I would, that's, that's what I would say.

[00:36:24] Dean Brennan: It does, it does help convince, I think I, like you said, I think I know the answer already, and there's about 10% more orders you know, over the course of a year with that cohort compared to any other. So it makes sense

to, to 

[00:36:37] Taylor Holiday: This is no different than my business, right? Like when we look at. We have a new customer revenue goal for 2026 for CTC. If you miss January and February, it's really hard. To get to that number because every new cohort you're gonna acquire has less time to contribute to the total. Right. And so hitting January and February, there's sort of this like rule and age service business that by March, like, you know, your year, because you know, usually your, your retention is on a calendar basis.

So you know. Okay. How many of your customers did you retain coming from December to January? And how did you do in your January, February new business cohorts? Like so much of your business is baked? After that period of time. Now, of course there's a ton of blocking tackling to get all the way through it, don't get me wrong, but for the most part, those cohorts are so long with so much contra contributing dollars throughout the year that you have to press all the gas in January and February, and it feels like this is really no different for these subscription high LTV businesses if you don't go out and get those January, February cohorts, like the July cohort just doesn't have enough time to save you on an annual calendar basis.

It just doesn't.

[00:37:44] Dave Huffman: Right, right. Well, the July cohort's gonna kill you anyways. I mean we, I overstack Q3 so hard. People think I'm crazy and it just for a little bit more lift, there's like hardly anything you can do. But if you've got a huge crop from Q1 I, I over index so hard to crush Q1. Also, just for the confidence of the team and the founders to know we're rolling through the year and it's for that same thing Taylor, as we get into April, if I've hit or exceeded forecast four months in a row. We're, we're on a roll and I know once, once we get into half of the year, I can miss in Q3 and we're good. I'm telling a good story because we've got a, and it's really, really just comes down to we're just, we're harvesting as many new

[00:38:24] Taylor Holiday: Yeah, it's a momentum game. Like so you, you're taking advantage of. We have a cultural imperative, which is people are, Dina, I'm stealing this phrase. They're giving themselves proactive permission to change their identity. You're benefiting from an advertising mechanic around the inventories, price of arbitrage, and then you have a game to set up.

Momentum for all 12 months of the year in this business. And so this is it. Time to press the gas and go in these periods of time.

[00:38:50] Dave Huffman: Early momentum lowers

future friction, early

momentum, 

[00:38:54] Taylor Holiday: Also, who's Riley and how did he get a law named after him in November?

[00:38:59] Dave Huffman: That's my business

partner, Ryan Riley. You've met him before? He so I, it was like six years ago I heard him say, I, I should name it out for myself. 'cause he, I joke with him, he steals all my ideas. But he, I heard him say to the team. Hey, we're gonna hit a million dollars this month. And you know what that means probably about six months million dollars.

This is gonna be the month. And I started just paying attention to that and I just named it the Riley Law of November. Because every brand ancestral supplements that I've worked in, like across the board, every brand that I've seen, if we, no, what we do in November ends up becoming a proxy for a normal month within

six 

[00:39:35] Taylor Holiday: like that. I like it.

Anything else in terms of channel exploration that you guys do differently? So if this is the month to go out and harvest, we know meta matters. Where else are you guys finding opportunities or pockets in the health and wellness space to drive incremental demand right now? Like what do you, is there anything interesting on your radars that's popping up as being super important or effective?

[00:39:57] Dave Huffman: Partnerships are really big for us. I, I actually use, also use January as a way to explore some new things. I don't know that it do a lot of like. You know, incrementality, testing of new channels and things. I'm usually kind of just doing that throughout the year. But we're gonna, we're really gonna lean into performance PR a little bit more. We're gonna actually work with some CPA based partners. We're gonna, we're gonna run some TV, performance

TV on a CPA basis, so I'm not, I'm not paying for the ad spend unless I get a, a, a new customer. And we, we will negotiate like a rate

[00:40:27] Taylor Holiday: What's the attribution for that, Dave? How, how do you assign credit to that? Yeah.

[00:40:34] Dave Huffman: I don't know yet. I might, I might

[00:40:36] Taylor Holiday: In the, in the most conservative fashion possible. That's how, yeah. That's 

[00:40:40] Dave Huffman: yeah, yeah. But yeah, I think we're just, we're really gonna over index on partnerships. We're gonna get our healthcare practitioner channel more involved. Next year. So we actually, outside of D two C, we have a healthcare practitioner channel.

And I've started to think of 'em like they can actually both grow each other versus in a silo. I've been a little sheepish on doing that because of meta health restrictions. I don't want to be seen as a, you know, a healthcare company and lose my conversions objective, but. You know, a white, white coat syndrome is real, both good and bad.

And if I have a doctor talking about my product, it really helps ignite hope. This is a new, this is a solution. But outside of media channels, it's really meta at the end of the day. We've got a long way to go there on all of our

[00:41:21] Taylor Holiday: Dean, what about you guys? Anything you're exploring?

[00:41:24] Dean Brennan: Yeah, much of the same. Lean, leaning, really hard into partnerships influencers. We also partner with a number of brands on the AB 30 program, and so we penetrate their audiences as well through doing some cross promotion there. And then, you know, our founder is a health voice and he, you know, talks a lot about this come January and gets. You know, the algorithm gives 'em a lot more views and, and new audience this time of year compared to July.

[00:41:51] Taylor Holiday: I've seen, I've seen some like, comparisons against Brian Johnston. Is he like, specifically like going head to head with him on some things right now. There's some interesting content I've come across of those two, kind of contrasting each other over, specifically around the animal-based diet versus like the sort of more vegan thing.

It's been interesting.

[00:42:10] Dean Brennan: Yeah, it's really interesting. They're you know, I think, I think Paul had a little bit, bit of a bone to pick with him months ago. I can't remember what the topic was. It, it wasn't about him personally. It was like one thing he disagreed with and then they ended up connecting and becoming friends with.

They just debate back and forth now, and I, I really like it 'cause, you know, one thing that I can say. About Paul is that he's always trying to figure out what the truth actually is and some people sometimes dog him on that, that he is changed his mind on certain things, but I actually appreciate it and so it's really good dialogue

between them two. 

[00:42:43] Taylor Holiday: Well, there you go guys. It's the opportunity. If this is your moment, if it's Q5 both of these guys I find to be incredibly generous. They're both on X. They'll answer your dms. They would love to pour into the community and offer the wisdom that they have, even if it's, even if it's just the spoken word and you're gonna have to live it for yourself to ultimately believe it, you can at least be able to hear from them and then go back and tell 'em they were right after, after the fact.

But if you need help thinking about the potential scale that's available to you, how much volume is the potential and the trade off that Dean is wrestling with? I know my takeaway from this is to, to go take a look and think about. Go back and look at January, look at our spend a ER model and figure out, all right, where is the threshold?

Where could we press up against that bound to try and make sure that we set the volume of new customer acquisition up appropriately? And one of the things I'll tell you is that if you're coming off of a year where new customer acquisition wasn't up dramatically, this choice is gonna be even harder because you're actually going to experience a little bit of depression in your returning customer base.

But don't let that hide for you. The fact that the engine is the new customer acquisition and you don't wanna end up in that death spiral. So if you need help processing any of that, we're here. As always, hit these gentlemen up. Dean, what's your name on X

[00:43:59] Dean Brennan: Dean c

[00:44:00] Taylor Holiday: Dave, what are you,

[00:44:01] Dean Brennan: pretty straightforward.

[00:44:03] Dave Huffman: Dave

[00:44:03] Taylor Holiday: you guys in these middle initials, man, you just gotta go find, find the original name guys and get 'em back, man.

[00:44:09] Dave Huffman: That I was too late 2009, was still too late to get Dave Huffman for

[00:44:13] Taylor Holiday: Well guys, it's always a pleasure. I appreciate you stopping by. Sorry about the slight audio lags on my side, but I appreciate you both and good luck in Q5.