The Machine: How We Back-Check Every Q4 Plan Before BFCM

not some of the smaller figure stores or even seven figure stores is definitely

“can be more extreme, but even some of the larger eight to nine figure stores, close to 50%”

of their revenues coming from you for and sometimes even higher. So the point is like more than half of the year is revenue potentially, and a huge chunk of the contribution margin is coming, you know, three month period and really even more concentrated around that. This episode of the e-commerce playbook is brought to you by outer signal. If a celebrity bought from your brand tomorrow, would you even notice? Probably not. Most brands have no idea who's actually in their

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so I did my first ever podcast with JAR, not too long ago. And here's the second one. The first one I see it like went pretty well, but here we are, Garrett Horde. I guess I should have should even ask them my saying Garrett Horde. I'm a new guy, so I don't even know if I'm saying my name right. You got it, Ben. Oh, I got it. Oh, sweet. Yep. And then it's my understanding one of the longest

“10-year-old people at CTC. Is that fair to say? I think so. It's actually funny today is my eight-year”

anniversary on the day. So September 17th, 2018. And most of the people that were at CTC or on that note, but a large part of the core group back then are still here today. I'm loved enough to be one of them. So you've seen it all, 2018 roughly is when you started? Yep. Yeah. So the commerce in 2018 wasn't super easy at the time. You know, like 2015, 2016, it was relatively easy. And then you had the COVID boom in 2020 and then the COVID doom in 2020. So you've seen all sorts

of landscapes and everything's kind of stabilizing now and we're actually seeing some really good operators emerge. So you've seen it. You've seen it all. Totally, Ben. It definitely fell a lot easier back then, still a bit with account on Black Friday and then it does to it. Yep. And one of

“these things that I really kind of live with is I go, I'm sure you've heard the quote that like”

the more you learn, the more you realize you don't know and like the harder things actually get. And me kind of living in the COVID doom, the boom area, or boom the doom era, I really had to put my head on and really learn. And then as I was learning, I was like, man, I really don't know anything. And then I'm thinking to myself, am I just making this more complicated than it needs to be, or does it really need to be this complicated? But yeah, so anyways, I'm going to start

you off with a with kind of like this, I guess this hook, I guess this could be a marketing hook.

But the idea is is that in in life, we we constantly make big decisions and we always run

those big decisions by by some sort of third party before actually diving into them or getting into them. And then there was kind of this realization that Q4 from a business perspective is the big decision, Q4 carries the biggest decisions that a business is going to make. Millions of dollars of inventory, millions of dollars of ad spend beefing up your op-ax and the idea is that your internal team or your agency goes and builds this plan of what

Q4's going to look like and then nobody back checks it. So then from there and I'm going to the point here, but from there, I thought to myself, okay, who's the guy at CTC that seems to shit over time and all fingers pointed towards you. And so we created this thing called the machine, that essentially the brand takes their Q4 plan, they put it through, they put it through the machine and the machine outputs a better Q4 plan or where it could be soft or where it could be

strong and then they go and execute against that. So the idea here is to take your all the shit you've seen over the past eight years and try to point towards patterns

it's it seems as if that black Friday cyber Monday, let's just start there, even though Q4

doesn't necessarily start there, but let's just start there. It seems like there's this trend that happened that that's happening in the commerce that everybody is trying to pull that revenue forward. They're they're starting black Friday as soon as November 1st hits the pulling black Friday cyber Monday forward. Is that a trend that you see on your side? What's the

“upside of that? What's the downside of that? Is there a better way of going about that?”

What's your point of view on that? Totally. Yeah. Yeah. It's a good set up. I think before I

jump into that specifically, yeah, I just want to reiterate like for some brands that we work with

even larger ones, not not some of the smaller eight figure stores or even seven figure stores. This definitely can be more extreme, but even some of the larger eight to nine figure stores close to 50% of their revenues coming from Q4 and sometimes even higher. So the point is like more than half of the year is revenue potentially and a huge chunk of the contribution margin is coming, you know, three months period and really even more concentrated around that.

Yeah, to treat it like any other month or a period or product launch would obviously be not

putting enough effort relative potential impact. So totally agree with that. You know, we try to

“start adding so per Q4 and black Friday and I think that that sort of hits on the point, right?”

It's like we're not planning for it in October. We're planning for it starting in July, really. Yeah, what's interesting is that we started deep diving into the numbers and we found that 50% of revenue and 50% of contribution margin actually comes from a 30-day stretch with. And I think it's November 13th through like December 13th. Would you have my understanding of why it was called black Friday to begin with was to become profitable on the Friday after.

Yeah, there's just as much of a revenue expectation as there is a profitability one as well. But yeah, to answer the question about falling revenue forward, I think over the last two years, part of our like CTC, sort of external or starting place, you know, so many of our strategies for

“our clients are obviously nuanced in case by case, depending on a unique situation that needs”

businesses in. But we also, of course, from a sort of leadership level down to all of our teams have the sort of like CTC, I don't know, go to market playbook. I guess for Q4, black Friday on a yearly basis. For at least the last two years, gosh, maybe maybe even longer than that, we've sort of taken our four peaks theory that Taylor and everyone had talked about for probably close to eight years now since I've been around and even sort of broken that out into different peaks throughout Q4,

but typically. So we're definitely aligned with the idea of pulling revenue forward. But really, the idea isn't just to pull revenue forward out of black Friday, it's obviously to add incremental revenue and contribution margin. The reason we have recommended and then why we can change the it be impactful and actually incremental rather than just again, like moving revenues for up, November 27th, November 15th is there's these different points throughout the calendar,

throughout Q4, really zooming in on on Q4 that you start to see conversion rate at a really have macro level increase as the demand starts to pick up. People launching sales early, people wanting to do holiday shopping early. And so, you know, that's black Friday's highest conversion rate day of the year or five or one day for both brands, one of the two, they're oftentimes very similar. And there's these other points around mid to early November the week before

black Friday or the week of black Friday as well as the and after cyber Monday around shipping cutoffs and the sort of like holiday gift buying season where in the conversion rate data, we can see there's so much opportunity to launch something, whether that beach is taking your black Friday sale and launching it on the Monday and set up the Friday or launch an additional sale that isn't as good of an offer as it is on black Friday and cyber Monday, but it takes

advantage of the opportunity that we see in the conversion rate data, which is people are just

where it's really the conversion rate increase starts climb and if you're not willing to, you know,

have an offer something compelling at that time, the chances that a competitor is is extremely high because people, you know, brands are getting, you know, or noticing the trend and obviously major retailers as well are on sale like all of November all the. This episode of the Ecommerce Playbook is brought to you by outer signal, outer signal identifies the real person behind every order, flags the celebrities influencers and VIPs in your customer base and groups everyone else into

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when you upgrade. Once more, outer signal.com/thread to discover the VIPs buying from you. So, could it be fair to say that kind of the collective? It's like a mob mentality. Everybody starts pulling these promotions forward and it kind of moves to consumer into the mindset of let's buy now and if you're not kind of moving yourself into that, as people are moving into that mindset, if you're not moving your brand and to be in good position to take a

advantage of that shift in mindset, you might miss out on revenue opportunities or profit opportunities.

“Totally. Yeah, I think for me, I, you know, it's almost like the opposite of like”

when is, we sag, you know, like I hesitate to just look at what other brands are doing and

say we should do the same thing for most of my clients because I don't think that's always the

best strategy or to just copy what the big brands are doing. But I do think this is a big scenario where if you're not willing to do something compelling, it doesn't have to be sale, but most people are running sales at that time or just have to be a site-wide sale, right? It could be strategic. It can be on specific inventory that you have excess of or is better margin or, you know, it can be gift with purchase, whatever the case is, there's so many ways to be strategic about

an offer that is a, a slight white discount on on your best-selling product or a product that doesn't really actually have the margin to be able to be on sale for that long of a time. But

“yeah, I think, I think the point is like, people are ready to buy things at that time and if they're”

not going to buy it from you, they're going to buy it from someone else who has a more compelling offer and your chance to get that new customer or get that margin from an existing customer is has sort of diminished, right? Because there's a finite amount of purchase or money that they're willing to spend that whole of the season. Yeah, right on. Completely understand, I saw a text message in July that said Christmas in July is here, take advantage of our black-fired Friday deals now

and I said, what a slippery slope this is. But I get it, I completely understand because for the reasons that you outline a majority of the revenue or at least half of the revenue is blowing then during this time and when it's time to eat, it's time to eat. I lived it completely understand. Okay, so yeah, what I would add, sorry to interrupt. That's the sort of like, there's a good way to do it in a bad way to do it or a strategic way to do it and not a strategic

“to do it, right? So what I always try to do is like, I think the Christmas in July is apples”

a good one where it's like, okay, are you just going to launch at 25% off-site whites to ill and call a Christmas in July? Like every other brand is doing like, that's probably not actually maximizing the impact of what you could do if you were to just think about, okay. The point is people are people are shopping, there's a certain new train, maybe it's around primed day, maybe it's whatever it is, Prith and July, right around 4th

July or around that time. Like, what's the thing that is relevant to our brand or product or our community of people who engage with our brand or product and how can we tell like some sort of

more interesting in compelling than just a site-wide discount, Christmas in July, right? So I think

“that's obviously the easiest way to do it. Maybe that's all that's possible, but I think there's”

also ways to be again more strategic and just think about it relative to your brand or product a little bit more in depth. And so I'm new to CTC, I've hired agencies to do, I get on a call with Garrett and Garrett says, it's hard to live in this nuance of like zooming in, then zooming out, zooming in, then zooming out and like we've got, we've got a sprinkle on a promotional thing here, we've got to pull this forward, we have to win the day, but also we don't want to lose the business

for the year or for the decade or the five years. So let's just say theoretically, I'm working with you from a brand side. Are you helping me come up with that strategy based on my inventory position or are you kind of like listening to what I'm saying and coming up with the best game plan on a high level, then coming in at a really close level, or are you kind of just

“taking my direction and just running with it? Totally. Yeah, I think there's always a sort of,”

you know, I guess pushing pull collaboration aspect for sure. And I think to more that we can as as a partner to our clients, you know, sort of provide the macro data that they don't have

access. I say, here's what's been the most impactful across our portfolio of brands.

Here's what the brands that are winning are doing. Here's what we think that could look like for your business and then sort of go from there based on exactly what you're saying, which is like, okay, we get that we can't just always be on sale or because long term from a brand perspective, leadership is not comfortable with doing that or the unit economics don't actually support running a 30% off-site white sale on some of our products. So here are the things that are

working from CCC's perspective. How can we design, create strategies for a based on exactly, you know, inventory positions, actually economics of specific products and the brands appetite for four different things at different points in time, I guess. So yeah, that's certainly something that we're bringing to the table in the sort of like, yeah, hey, quarterly, monthly planning flow and then yeah, it's very rare that we recommend something we run with, you know,

there's always going to sort of collaborative, yeah, again, like I said, kind of push and pull

between the brand priorities, what we think will perform the best and aligning aligning the two things, I guess, ultimately with their business objective and other priorities that they might have. Yeah, what I'm finding interesting is I can deep dive into Slack and I can say, hey, when this is happening with another brand, what did the conversation look like and then tie that back to stateless, use our stateless MCP and see how it showed up in the data. I'm assuming that when

a brand that approaches you and is, hey, here's the lay of the land, not only can you lean into one, the eight years of you being at CTCs to just a collection of people that are on the front lines every day, three Slack history, four stateless history, and you're able to just pull in all this different parts of just information that are not that's number based, language based, and you're able to come up with some sort of game and that maybe other people might not be able

to put their finger on when they're just so close to their own problem. I know I live that

where like you stare at the same issue for for way too long and you're never going to solve it.

You do need a second opinion. So I'm looking at Q4. I say, okay, I'm a brand owner. I'm looking at Q4. We're in September right now, maybe approaching the end of September. What is it that you feel like if we're looking at this from a high impact, but minimal effort, or maybe even a lot of effort, but they're still going to be a high impact? If I'm doing $20 million a year and I'm looking at my Q4, what should I be doing right now? What should I be looking at? Give me something

“tactical that I could be doing right now. Yeah. Yeah. Totally. Yeah. I think there's a few like”

big buckets. I would say that I sort of have thought about recently in terms of, you know,

we're really probably talking November and December. So I think the lead-up to November and December,

these like sort of big buckets of if brands are able to do them well, November and December, typically end up being very successful, or brands don't do these in July, August of Timber October, achieving November and December targets really much harder and less and less likely if they don't do them. Oh, I think. Yeah. I get, I can, I can just sort of go through these buckets.

“So I have in mind and then maybe we can zoom in on specific ones if that's how I'm good. So”

one is like having a large acquisition moment and I think there is still time from this or for this

before Black Friday is like one of the biggest high leverage things that a brand can have in

September and October. What we historically, this is maybe the most common thing that I've seen in the commerce in the last eight years is that the short-term LTV of the October cohort of the customers is the highest of the year for 99% of the brands that I've ever worked, potentially a hundred percent. So the new customers you acquire in October are more valuable in a 60-day window than any other cohort because you acquire them right before the month before Black Friday. It's the

fresh new customer who then you're going to have a biggest year, Bernie to 60 days later and they're ready to buy again in that time. So whether it's in September on October or November,

“I think the point is still the same. If you're able to create a really large new customer acquisition”

moments in September, October or November, or you can really fuel new customers and sort of have this massive spike in new customer acquisition before Black Friday. It leads to a really, really big increase in returning customer. Black Friday inside the Monday because that most recent cohort of new customers are the ones who are who are their short-term LTV is so high. Massive new customer acquisition moment in in September or October, ideally, some brands I work with do like in November,

where it's not quite like an in early Black Friday sale, like for example, who we talk about a lot, they have Veterans Day, which is around like 11. And that is a huge new customer acquisition moment for them every year. It's not promotional, most of the time it get back related, they pay off that are in debt and it's this huge surge in new customer acquisition literally two weeks before Black Friday and it just leads to so much returning customer revenue three weeks later that not having

something like that makes it really, really challenging and limits what you can do on Black Friday and Cyber Monday because a lot of the time so much of the revenue expectation, the target revenue in contribution margin, Black Friday is going to come from returning customers and if you're not, if you're not sort of fueling the new customer file at two months before that, it's just harder and harder to hit it right because more of your customers are lapsed or at risk of lapsing rather

“than having a really large, fresh pool of new customers. And so what I think I hit down here in”

you said is go for the double dip really good zoomed in on the 60 to 90 day window of what is Q4 and go hard as you can to acquire customers before that big spike thumbs you can just double dip and just bring them back when that big spike shows up. 100% yeah have some sort of spike in

ideally October or college September through like first week of November and specifically

new customer acquisition. What we don't want to do is like have this big sale moment that just squeezes the sponge too much and doesn't actually lead to new customer revenue increasing because then all we did was like tap our existing customer file early and then come Black Friday the same people are might not be ready to buy again on Black Friday. So super specifically a new customer position moment like a lot of brands do sweepstakes or giveaways around this time like

that's probably the most common thing that I've seen which is like some sort of massive sweepstakes in September or October to really incentivize people to buy at that point in time. They can be entered at the sweepstakes to possibly when you know act wire or z-thing from whatever the brand is. Yeah and most ideally after you get that initial spike and then you're going into

something that CTC does not control but if you can iterate product and those same people you can

bring them back based on this iterated product or even an innovation of a product having new product releases right then and there is definitely for sure yeah yeah yeah and you know that that could that could be an oftentimes it is one of the most impactful acquisition strategies as a you know strong product or category launch which also the heart is to pull off and the most goes into it and the most resources into it so yeah the strong product or category launch in September

October I've seen be a really really strong or really impactful sort of pre-block Friday acquisition moment and maybe this is a little bit more of a difficult question. I know you had you said

“you had a couple buckets here but yeah like like that's what people should maybe consider doing”

what should people consider not doing like yeah where do you see mistakes made and totally I think there's a couple things one is like I sort of hinted at it which is like

they squeeze the sponge we call it which is basically just like really pulling revenue forward and just

like pulling too much revenue from your returning customer file pre-block Friday and you're not refilling the sponge with customers or giving those returning customers enough of a reason to come back around Black Friday and holiday again and so if there is this big moment of like hey we were pressured we need to hit a revenue card it's September or maybe a talktober and like maybe the gut knee-jerk reaction and most impactful lowest lift thing to do is

add a side-wide bail or some sort of promo to the calendar and that you know it gets sent out to the whole list or ever the case is and so okay there's pressure to hit this number we hit we end up hitting

the number because we added this promotional moment but we didn't do the thing where we focused on

new customer acquisitions specifically all we really did was like really truly pull revenue forward not in the way that we talked about earlier around Black Friday where sure we're pulling revenue forward but we're also adding incremental revenue because we know people are ready to shop at different points in the month versus like let's hit September October we you know have a strong offer goes to everyone including existing customers and then by the time Black Friday comes around

maybe don't have something more compelling than that or that that September October moment impacted our ability to then all go hit our our no-zember goals and then I would say the other thing

“who is like this is honestly probably the most common which took so much more that goes into it but”

I think let me say one thing about what you have of course because I've I've lived this where I I say to myself okay do I do do I do 30% off and and in the middle of October or do I wait another month for the calendar to turn over and when the calendar turns over is conversion rate going to go up and I'm actually going to I'm like get more contribution margin from these from these customers and so like this shouldn't be theoretical you know obviously things go up and down

and things change and you change the plan but like this shouldn't be theoretical this should be tapping that should actually be planned and I think that's I think that's the the point here is like just don't come up with discounts in the middle of October because you want to pull in forward have a plan of what that actually looked like moving forward totally yeah yeah I agree for sure and I would say what happened is really truly what's what brands are experiencing in that moment

is their new customer acquisition probably isn't as strong needs to be because they're really tough months you know like July through October and fourth July post Labor Day obviously which we just experience like there's really not a lot post back to school like there's really not a lot of these super obvious low fruit marketing new customer acquisition moments that just

“exist on the calendar and so I think what's most often probably happening in those moments is”

they're not actually hitting the new customer acquisition targets that they need to hit their goal and so the easiest thing to do is just okay let's offer discount that just end up squeezing the sponge and then really the underlight shoe was well our acquisition wasn't where to be to one hit our Q3 sought out over goal at the two to the port what our gold are on black Friday and in December

points of like what people do or don't do that I consistently see which is I think like

“I think people are very comfortable and this is I think where we come in effectively a lot of”

the time with the way that we do things with Dallas and Ali Targ it's in managing to our plans so sort of clearly I guess is like people are really comfortable or can be really comfortable sort of missing target and changing the plan July through October right which is like oh the goal was too aggressive let's just put more of a higher higher expectation on November and December we'll get it back in black Friday you know like that's the time of the year when the actual

opportunity exists like let's sort of kick the can down the road to use the cliche so to be and so I think like that's the easy thing to do right like okay July August September October let's just change the plan let's put a higher revenue expectation on November and December

would really like those months are so critical to November and December going according to plan that

the certainty or the urgency rather should should really be there to change the plan in a way especially in the earlier months July August September where we have to do whatever we can to hit specifically especially the new customer acquisition targets that are going to allow us to hit our our block for a day and and for targets that's probably like one of the most other most common things I've seen which is like I it's super rare to go hey we just struggled for October or August

September and October we didn't hit our plan new customer acquisition is aware we need to be but things are going to just do a complete 180 in November and December we're going to exceed our original plan by we know we're going to close the entire gap from the last three months

“extremely rare to see that happen I think it's the sort of early indicator that okay if we're missing”

plan now and not filling the sponge not doing all the things that are going to support our plan later like the idea that we're just going to have a bigger number in December is typically not actually

how it played out I think it's I think it's mission critical to have people in your corner that

will have that real conversation with you as well totally I've lived alive for a long time and somebody on the on the ad buying side eventually look me in the eyes and said hey man we ever thought about your numbers just don't work like this and I'm like no no I've just always kind of just put the blame on everybody that they can't figure it out but sometimes yeah you get two or three months into each two second half and you go you go work well things aren't looking

good here let's refort classes and let's actually make the most out of what we can actually make

the most out of I think that's fantastic advice and I think it's I think it's critical that you

don't necessarily have yes people around you all the time and you need a little bit of the head

“in the sky but also you need to feed on the ground so okay so I think I think all this is super”

valuable and I think that I think it makes makes a ton of sense of what you're saying and I think that obviously you've seen a lot of cycles here 2018 through now and that's just through CTC here's my final question for you what season of the commerce are we in and what what what's the layer of the land and who's going to survive for the next five years oh god I wasn't I was prepared to be put on me it put on the spot like that yeah I God it's tough I feel like

things are just changing so quickly and I struggle with this all the time we're like a lot of times in my life and you know in the commerce like I I've done things in such a specific way that I a lot of them have worked so I want to continue to do them in that way like and things are just changing so quickly and I just think it's the people who are willing to go to the new thing the fastest and really place like the smart it's bets on the new things as quickly as

possible and like have a sort of tolerance for brisk yes you know some of them are going to work

know the sort of base book ads arbitrage if you were in that cohort if you will of brands like

“the value that was came out of being early to to that was massive and I think you know whether it's”

people who are early on TikTok shop or people who are early on yeah I mean whatever the

cake would be I just think I think we're in the like that's the era and that's not a concise a concise

or buzzy marketing term for the era but that's sort of what I felt recent kind of a sense stay dynamic

“one that are most dynamic are going to be the ones that win totally I think the brands that I've seen”

do the best in the last three years especially a lot of their businesses look completely different right now then they did years ago and the brands that have struggled or had had the hard time

“the business more or less looked the second than they did three years ago and I think that's just”

going to become more and more important amen to that I completely agree with you well you're at happy eight years at CTC thanks thanks for this and if anybody's interested in the machine where we take your cue for plan put it through our system and tell you where you're soft and where you're strong I'm sure there'll be a link somewhere or there somewhere on this video go ahead and click it and let us let us get our our teeth something to get it congrats do it let's trust in assumptions see

if we're if we're actually set up to to hit the plan or not love it all right see you later and welcome thanks Randall yeah see me