Ep 645: DTC Rundown: "Don't Run Ads Until $10M?," Evergreen vs Campaigns, and Sites Built for the Wrong Customer

The DTC podcast is brought to you by Palatouse, the performance agency behind some of the fastest-growing DTC brands in the world. Creative, media, and customer journey all under one roof, performance and brand without the trade-off. Every Friday, we hand the mic to a Palatouse operator to break down what's actually working in their space right now. Want a team that treats your growth like their own? That's Palatouse. Head to Palatouse.co, and now on with the show.

“There is absolutely no reason you should touch paid ads until you're doing 5 to 10 million in revenue.”

What's your take on this fellas? The biggest issue that we see is people are spending money talking to customers they already have, or warning going to make a purchase regardless of whether you serve that ad or not. When you're doing a good job in reaching new people, your metrics should get worse. Not better, because you're reaching the heart to reach people.

If you're in the lead, sail with the same wind. As the other leaders, don't try something crazy unless you're already losing. This episode is brought to you by TripleWail, the AI operating system for e-commerce. Just a quick gut check for brand owners and media buyers. Have you started your Black Friday Cyber Monday planning yet?

If the answer is not yet, you're not alone, but the brands that win BFCM aren't the one scrambling in November.

They're the ones planning right now, and here's why it matters. BFCM keeps getting more expensive.

“Last year, ads been climbed faster than demanded, CPMs went up, and the season stretch from a single”

weekend into a full month of promotions. Show up unprepared and you spend more to reach the same shoppers right when your margin matters the most. TripleWail built a free resource to help the BFCM hub. It's like a command center for planning your most profitable Black Friday with everything in one place. Real benchmarks from tens of thousands of brands so you know what performance should actually

look like for brands just like yours. Free tools, to set goals, and forecast outcomes. Strategy guides and checklists covering ad performance, retention, and conversion. An AI powered tactics you can put to work before BFCM weak hits. The best part, it's completely free and there's no log in required.

Go to triplewail.com/bfcm26 and start building towards your most profitable Black Friday Cyber Monday today. It's all killer, no filler. I'm Eric. This is the DTC podcast and we're actually doing something a little different today. Something I've wanted to do since the beginning of starting this podcast.

I don't know. I don't even know if this show is still on anymore, but I've followed this sport show called Part in the Interruption. PTI were essentially they have their hosts and they basically go through the major topics of the day. Everyone gives their take. Sometimes there's disagreement.

Always ram bunk just always fun. Decided that I could just code this up on Claude and just jump

right into it with two eminent leaders on the pilot house side. We've got Jordan Gordon host of to a burp. The world's best email and retention podcast. He leads post-click and retention at pilot house and we've got Rafael Guise, a newcomer on the pilot house podcast scene but is rapidly rising up the charts. Works heavily in partnerships and client strategy. Welcome both to the first ever episode. We have so many titles now of the all-killer no filler

DTC podcast. The rundown we're doing it live and it's all happening. Welcome guys. Thank you. Nice to be here. Nice to be here as well. All kick it off because this was a topic that came up. I just got back from a beach vacation and I saw this tweet that was just absolutely blowing up on Twitter. It was from Cody Sanchez who was an operator in this space and

“this is what she said. I'll die on this hill. There is absolutely no reason you should touch”

paid ads until you're doing 5 to 10 million in revenue. Learn how to create demand organically

through content partnerships and outreach first. That's enough to take you to that 5 to 10 million

mark. Then once that engine is running, layer ads on top. If you do it the other way around, the risk is getting eaten up by rising ad costs before your margins can absorb it. Quite the hot take 1 million impressions on x, which is insane. 766 comments with marketers just freaking out about this concept that they shouldn't be doing their jobs until a brand has hit this critical mass. What's your take on this fellas? I'm the free traffic guy. So I'll take the

free traffic start of this discussion. I do have some nuanced thoughts on both sides, but I'll start with defending this. I've worked in ECOM for 26 years now. I think that the purpose of online marketing is to ultimately drive free traffic. If you think about like, let's say you're ultimate, you know, you're total margins 20% and 20% of your traffic is organic. Well, basically that that organic traffic, that's your profit. Everything else is paying to just build up that

organic where your profit is. Those are obviously some big numbers I'm taking. But if you are not ending up with people coming to your site for free, right, typing you into the domain or

to be as profitable as the next guy and the next guy's going to win. I personally, I'm torn because I like the sentiment of the tweet, but not necessarily the facts around it because the sentiment is that ultimately don't build the business that relies on paid media to drive the majority of the revenue because at the end of the day, all of your sales are going to instantly have a, you know, negative margin impact, right, because you're paying for every purchase. But there's a reality that

exists, you know, where business can wait to get to 5 to 10 million. Because generally, like as soon as you're hitting a million, about a million bucks, you can see that there's product traction, good strong unit economics. Once you start reaching about that 5 meltmark, there's other copycats out there, you know, so you're already competing for attention and paid media, ultimately, that's the job of accelerating customer acquisition. You know, if you have a good product,

paid media helps like grow. If you have a bad product, you know, paid media, it's just going to make that business fail quicker. It's just an excellent, right? So I guess I sit in the middle where I agree with the sentiment, if she means, hey, make sure that you use paid media to support a strong business, don't rely on paid media to fund your revenue. 100% agree. And we won't jump to the next topic, but it is yes and which is kind of the situation here. This is a yes and situation, like you

all the, all the brands that come on the D to C podcast, all the ones that have these amazing stories, most of them have really found incredible product market fit, found their community, have built an organic engine, but not all of them, especially in the pre iOS 14 era, there was that ability to really gain a lot of traction just from that. And I still think that exists today, but again, you can't be putting all your add dollars into a bucket filled with holes, which is why you need

“to have that, you know, that organic side of things. What were you going to say, Jordan?”

Yeah, like this is a long lines of what Eric was saying, which is, you know, here's what's real,

okay, I work for companies that were financed. And the investors are like, this is how big you need to be. And five years, you know, or I don't know, we're a bunch of these covenant circuit of kick-in who knows, right? It's like you better get this big. And so I didn't see the tweak coming into this, but whatever the, the person who tweeted it, like they're speaking about, I would say a truth in marketing, but marketing is downstream from business, right? And business is

downstream from markets. And so it's like, it's not necessarily going to be your decision, right? That the decision on your, on your marketing mix is going to be based on so many other things, still though remaining the deeper truth, like, you know, if you're not doing SEO, SEO, SEO, however many EOs there are these days, if you're not doing that stuff, you know, you can't scale a little email. If you're not driving significant low-cost traffic, then you better have

damn efficient ads. If you're going to have damn efficient ads, you probably just need to have a really hot product. And we do see these people who have like really hot products, they just for whatever it's magic. And they just boom, scale right on ads. Don't try this at home kids. If you, if you don't

have a magic mix, you could end up in a really bad spot. If, if, if free traffic isn't a critical

“part of your plan. And when I think about this, it's like, okay, first thing you want to do is,”

you know, you get your, get your sights set up properly, get your thing, get yourself converting properly. Then, hey, build out the next part of your, of your post-click, get your, your flows, and everything set up. We're talking about scaling DTC here, right? You know, get your whole post-click environment working well, so that when you do advertise, you know, the ads are going into something efficient. And then what do you do? Then do your, do your keyword research and,

and, you know, work on some intent bearing ad spend, because it's going to be more efficient. And then the last thing you do is go super, super large. So you, you would want to space this,

you would want to space this out and always have the free traffic sources as part of the plan

as you kind of work your way up the funnel, right? Yeah, I love how you're kind of talking about this system and it just kind of sparked a thought for me. For me, the other piece is, I love it as a hot take, you know, obviously, it's the internet, so people are going to say things together. It worked with a million of questions, going to code this, and it definitely worked. And then when you brought up the hot take, I looked up on LinkedIn and her whole branding is being

contrarian. So, you know, Cudos, Codia, on being on brand there, but I think the big thing that also popped up to me as you, you know, if you take an operator mindset, the other risk is if you're not spending an ads, you're not going to be able to really scale as a business over time. It's,

“it's, it's, it's still said that you have to learn within the organization, right? So if you're”

waiting till, you know, you're five to ten mill to adopt that workflow, then you're really

internal knowledge base. You're not building the culture, you know, building the workflows.

“So you might see some cash upfront, but if, you know, one of the, you're one of the few”

unicorns that can get to that five to ten million dollars in a very short condensed period of time,

when you get to that ten million dollar phase, you're going to have to re-learn and rebuild your culture and your team and resources to account for this as a cost as well as a skill set that you're team of thoughts, you know? So it's really, yeah, it's just a bit blunt, right? So yeah. Do we run into brands in our audits that do find themselves, and this is another tweet I saw a few weeks ago, just about like the percentage of your revenue that you're spending on ads,

and if you're over a certain point, you might as well just take a job and finance or something, because you're spending, like I say, into into a bucket with a lot of holes into it, and do we, do we run into brands that have not figured out the math where they are losing money as they scale? All the time, because there's a bit of a lack on spend discipline, and what I mean by that is the juggle point, a big part of what makes a business successful is that

repeat purchase rate. But one issue that we see very often, you know, we're auditing anywhere from 10 to 15 businesses every single week, plus all the clients that we work on. So we see a ton of brands across multiple categories, but, you know, the biggest issue that we see in terms of wastage is people are spending money talking to customers they already have, who are already going to make a purchase regardless of whether you serve that ad or not, then they're using the

performance of those ads that converted and existing customer to optimize their creative. So it becomes a self-fulfilling prophecy. And the crazy thing is, if you look at the attribution ads for businesses like that, they might look healthy on a balance sheet for a short period of time, but when you look at the audience delivery and attribution, one thing that we see quite often is most of the revenue attributed was not generated via a click, it was just a view through impression,

meaning I'd observed the precedent ignored it, they purchased that anyways,

platform took the attribution. So like you're, yeah, they're basically spending the people that

would already purchase you, then you're using that false positive signal to optimize your creative, you know, and then it just gets you into a high frequency hole where you're wasting money talking to people that would already purchase you. Any burn your cohorts? Yeah. Speaking of organic and paid, yes, and we're going to our next topic, which is you brought this to us, Wrath, which is, yes, and a lot of times people talk about evergreen versus campaigns. Today, we're talking

“about yes and evergreen and campaigns frame this up for us. Yeah, 100%. I think the most exciting”

projects that we tackle at Pala House are businesses that are going through some sort of transition. And from a revenue scale perspective, you know, one of the ones that are really fun to work on is, you know, those businesses are going from seven figures into that ten figure. And usually the dynamics we see, it's, you know, single-skilled product, right, differentiated, you know, create scale,

they attract a new customer base, and then they rely on product differentiation and first-time

profitability. Competitors come in, copy them, you know, new colors, slight modification, because of the increased competition, ad costs rise, profit get impacted, and they have started introducing, you know, new products or new moments, and getting people to think about, but they keep running evergreen ads, you know, and bottom of the funnel ads, specifically in that evergreen cycle, and talking about muscle, it's like a new muscle that you

need to learn, right? So instead of reacting to what your bottom of funnel media accounts are telling

“you, you need to think about how to create the man versus capture. So what we mean by, yes, and”

is as you start scaling past that seven into eight figures, you have to think about how do you do evergreen to capture that product differentiated the man and how do you create artificial the man through partnerships, new product releases, so you can extend the LTV throughout the year if that makes sense. And that becomes a new muscle because if you don't plan for it, and you react to it, it will mess up, for example, your account setup, right? Because you're introducing a whole,

you set a variable, you know, new products, you have to update landing pages, set up email sequences. If you're not planning out for that, it will create chaos into your workflow. So it's making sure as you reach that scale, think about how you start structuring both. And be proactive rather than reactive about the campaign side of things. It makes me think of my buddy Brandon Haroho, Montana knife co, when he came to our event in 2023 or 2024, just showed us his product drops

your audience and to potentially reach new audiences with each of those drops, and it just sort of punctuated the year and gave them the momentum that they could use that they eventually had all these evergreen campaigns that caught people, but it was those moments that they were creating with their campaigns that was driving all the momentum. Yes, I love that you said that because one of the lines that I like to use in our conversations is we need to shift our thinking from tests to bets, right? You get,

you get to 10 million, like you have something, right? Like what's the rule of thumb? The hardest

thing is to get to 10 million dollars in revenue once you hit 10 million, you're likely to succeed in the skill path that increases significantly, right? From there, like you've got to shift your minds from scarcity to an expert, right? So instead of testing things, not knowing what's going to work, relying on the platform to tell you what's working, you've got to start creating some bets. Here's the moment, the campaign, whatever that might be, that I know I'm going to bet on,

that's going to get me net new eyeballs because I have learned all these lessons from getting to 10

“mil, you know? But again, the hardest thing for any human to do is change, change is hard, right?”

It's a philosophical change, you know, to go from tests to bets. On the bets, the other really important thing to keep in mind is when you reach a certain size, you're actually trying to change consumer behavior. So, so the running that test, you can be testing about to people whose behavior you've not yet changed because you have not yet conveyed your idea to a large enough mass of people in the region you're targeting or, you know, kind of whatever. So, you know, testing is for an existing

market, but our job is to make new markets by explaining services and products. People didn't even realize existed and how they relate to them. What I wanted to add to what you were saying, though, was so similar to what happens once they pass through advertising and move into the kind of

post-click in the email and retention world. I've always seen advertising as vertical and email

estimates as horizontal. We're speaking to people over a long period of time, but we also face similar problems or challenges in how to mix, you call it evergreen campaigns. Let's call it, you know, evergreen and launches, we'll call it for email, right, because all these things are campaigns. Got it, by the way, I've got an episode of everybody in the world's best thing on

“retention podcasts where I talk about essential, so you can go back and read further on my thoughts”

on that. But what's important to do is somebody enters into your funnel from the email side. Yeah, of course, introducing to core product. Some of them are evergreen messages in a welcome flow, but also after that, people, they wander through your life cycle and then nine months later, they get pulled back in because they hit a new ad that's launched or they like a campaign that goes out and they enter back into your kind of core post-click world. At that point, you also must

resell your core product and revisit that evergreen. You can't only have someone just in your newness because not everybody needs all your newness. You've got, you've got some product that is a cornerstone of your revenue. And so we have to also make sure we have the right mix as people

repost through our system of reintroducing them to evergreen. It's really critical because if they

don't want your small purple widget, they're going to just want one to off if you need a medium-sized red and blue widgets. That's a really good example. I feel like we see that quite often in like supplement and beauty type of businesses, right? Because oftentimes in supplement and beauty businesses, there's two ways you can enter generally. You can enter through an acute need. For supplements, I have, I don't know, some flare up or something that I need to treat. So you come in for an acute

need and another way to enter is potentially somebody who's like, you know, I have acid reflux, so I want something that helps with my digestive system. It's not acute fix, but it's something I need to take on a routine basis, same thing with skin. You might have a flare up that you want to treat or you want to do get a new daily whatever screen skin routine. So to your point, depending on the entry points, there's an opportunity to cross the, if they come in through the acute product,

how do you cross the routine? And if you bring them in through the routine, how do you cross

“all them in the acute. So like that's what that muscle in coordinating and thinking about every green”

and campaigns are important, right? Because if you're a routine grad and then you're introducing acute products through campaigns, you have to coordinate with email. So you have a system that allows you to feed that new customer based on the purchase them. They, they made into the product opportunity based on their historical purchase, right? So that's the, that's a complexity that a lot of operators underestimate. The way that we think about that on our end is largely campaigns are for

that launches based on the product that someone viewed. It's often just triggers off of product. It's harder. We had that recent version. We're like, hey, how do we sit and send an email at the right email to the mallet guy and then the right email to the preppy guy? That's that's trickier with the email. It's usually based on the product that someone enters on. What I'm interested rough is so, you know, we have this breakdown and it's kind of, it's like a technical breakdown.

And what I wonder is how you, how you control for the amount of evergreen or campaign that someone is going to see, you know, through advertising, considering your advertising funnel might be like three weeks,

but people are going to enter it multiple times and you, and you don't always know who it was

from time to time. So how do you kind of think about controlling what, what they see that high up in the funnel? That is a very good question. I guess if we're, if we're talking about let's say

“eight figure businesses to nine figure businesses, I think the most important thing, at least, you know,”

from the work that we've done, Jogo, that I see, that's a really tangible and tactical, is being able to define your audiences across all your channels, who is existing, who's engaged, and once you have those to find, you could truly prospect net new. I find that in that pocket of, you know, eight to nine figure brands, there are very few brands who have the technical discipline,

to keep those audiences clean. And I think, unless those audiences are clean, you cannot truly

remove wastage in your media spend, right? Because if you don't have your engaged audiences defined, right? So you're engaged audience, as somebody who has learned about you, visited your website, showed some sort of intent, you know, visited PDP at the cart, but hadn't purchased. And message that is going to convince them to click check out and buy, it's different than somebody who has a problem, doesn't know about your brand, and we want to convince them to consider them.

But if those audiences aren't set up, then on meta, meta doesn't know. Are you talking to a new customer or are you talking to an existing customer? Yeah, and it'll just, it'll just optimize for the existing customer, right? Because it's going to optimize towards the customer that's low in the funnel, but you've already paid to convince them to come to your site. So you kind of wasting money, and also once they convert, you're not getting the right signal to optimize ads to new customer

acquisition because it's largely based on engaged customer converting, right? So it creates this

“false dynamic. So to answer your question, I think directly, tactically, it starts with audience”

definitions, because until you define your audiences, then none of your tests are truly valid.

They're always going to show that you're creative, that speaks to people lower in the funnel,

engage in existing, perform better. And that's where you get stuck in that cycle where, over time, your repeat customer revenue is going to outpace your new customer revenue, and then when you burn your cohort, and I know this is something that you're passionate about, through Jogo once you burn that core, because every cohort has an LTV, then your business tanks, like bottom's out. It doesn't matter if it's Jordan, Raph or Eric, like there's a Max LTV

to lifetime LTV to any customer. My LTV is half because I'm super cheap. Q4 is coming, and if you've ever run holiday ads, you know that it's the most expensive quarter of

“the year to advertise, and budgets get tight real fast. The good news, Universal Ads is giving away”

$30,000 to cover one lucky brand's TV campaign for all of Q4. Black Friday, Cyber Monday, holiday promo is all of it. No strings attached, and you don't even need a TV ready ad to enter. Just head to universal ads.com/Q4-contest, check out the official rules for eligibility and enter today. Even if you're not the winner, every eligible brand that enters gets $500 in matched ad credits, so entering is a win either way. Don't wait, the clock's ticking.

Enter at universal ads.com/Q4-contest, no purchase necessary, see official rules for details. One more quick point to the audience was, "Hey, make sure you go into Clavio and Meta and hook your segments up, because those segments can give you some control over whose senior brand." Exactly. And that's across over there, too. With cookies disappearing, Shopify has server-side data, Clavio also has some great engagement data that will allow you to split and divide your

engaged customers as well, too. Just to encapsulate this one before we move on, what are the hallmarks of a brand that has this dichotomy between evergreen and campaigns wrong? What's happening in their business if they don't have this ratio correct?

let's say, on a call with a client. It's our group this long now. Then when you strip out, let's say they're growth, let's say it's like 15%, 12, 10, 3, you know, collapses, then let's say you put those growth numbers in one chart. Then underneath, you map out the ratio of new customers to existing customers. You'll see the inverse flipping, right? So at the, you know, 15, 20% growth mark, maybe it's at 55, 45, you know, then it starts going 52, 48, 50, 50, 40, 60, and then it starts collapsing.

Yeah. As you turn and burn through your chords, yeah. Which side do they have, Matt? Is it sort of they're not doing well on both or is it quite often, as you may be described in the intro a little bit like everyone's got their ever growth, but they're not being as intentional about their moments and their campaigns as they need to be? Yeah. So I think once you hit 10, you know,

past 10 million generally for most categories, you're past that early adopter phase,

you know, where you have differentiated product, people looking for solution that doesn't exist, meets it, acceleration growth, right? You're kind of past that entrance command. But the

“most important thing to keep about, I think about it, you know, you're filling about it, right?”

So the, uh, it's the more people you have to feed, the bigger the pool of water food, you know, has to, has to be, right? So ultimately, um, if you're only spending on evergreen, you're limiting the amount of opportunities for you to make an impression and get in front of your customer. So over time where this DSN perspective comes in is, don't let go of the learnings and

the operational strength you created to convert existing demand that's going to be important always,

but you have to layer on additional skill sets. So on the evergreen side, it's about demand capture, but also demand creation, you know, how do you communicate to somebody that wants your product, not that it's in a mature, you know, category that's competitive, and how do you introduce your brand as an option, as an option, to be considered to buy. The example I was like to use, I worked in automotive at a certain junction in my life, uh, for quite a few brands. And one of the

interesting things is, you know, car companies, you know, have ad running all your on TV and radio, it's probably like turn on the time TV, you go to your, I don't know, to the doctor, just something, you just look up by whatever TVs there, there'll be a car ad running. The reason why that is is because in a car purchasing cycle, it's so complex. So unless you are one of the top three car and model types that somebody's considering and thinking about, they're not even going to

purchase you. So it doesn't matter how much revenue you have or how famous you are, if you're not in one of those three competitive sets for car and model type, they're not even going to look at you. That applies for every category. So do your evergreen spend now, you know, when you used to be the only player, it's fine, you're the only player that coming to you. It's just our harvest efficiently. There might be some alternatives, but there's nothing exactly like you.

When you have ten millish copycats, both small emerging startups, they're innovating and you're

“category or big guys that are trying to copy you. And besides you, right? So now what you have to”

do is, how do I make sure that not that it built this market, I become the brand that is on top of those three brands that they're considering when they're trying to purchase this type of product. You know, so it's adding in the demand creation, every green layer as well. I think something as people call that brand building, I feel like that comes with a bad name. I like to think about about demand creation for your category because if people don't think about you when they want to buy

you, then nobody's going to come to your site free, you know, traffic to your site, you know.

Yeah, so to add to this, so this is first of all constant impressions, right? Constant impressions

when we're talking about what I want to remember here is unique opens are impressions, and there are impressions for people who couldn't put, they've given you permission. They've been

“on your site. And so an important part of email, like the question, the original question was,”

what does it look like when someone is not doing this right? So on the email side, you've probably too skewed to campaign, not skewed enough to flow, you've got enough flow revenue, because all you're ever agreeing should be automated, it should be coming from flows. When you make an evergreen campaign, it usually falls in its face because when someone's checked out, they only want newness. That's all that interests them. So it's usually about disparity. Also, you can see Clevio revenue is really low

versus Shopify revenue. It was another indication you're doing for them. But that said,

impressions feed into the very top of funnel of people who maybe you need to have them aware throughout the year, even though you're only selling in summer, you've got to have to be aware throughout the year for it's for whatever reason. The opens are a huge part of that email is also for advertising. It's just a layer below below. Yeah, I want to present a degree, right? Because like you can send an email and even if that person's not ready to buy

at that moment in time, the fact that you popped up in the inbox, reminds them. It's like, it's a great connection. Next time I'm going to buy, I don't need jeans right now. Next time I'm going to buy jeans, remind me, I really like those bands. Right? It's just, it's, once someone's

“forgot, how hard is it to get them to be aware of you again? 100% right? And I think that's like”

one of the most important muscles to learn in that structure. So that's your question,

Eric and succinct way, would be on the every green side is layering, not just the night capture, but the migration. And then the campaigns are really opportunity to create visibility for your brand. And there's two components. Yeah, there's moments where there's campaigns that are revenue-driving. There's also campaigns that are just eyeball-seeking. So like, you know, when I Kia, let's say succinct craze on like oversized tote bags, right? And then I Kia made the tote

bags purchase a ball because, you know, fashion runway trends, whatever. That was my lead. I Kia bags are my favorite tote grocery bags of all time. I don't understand. It's not my hat. It's going to be a tiny slice of the revenue, but a huge share of their impression conversation,

right? That campaign is not directly revenue-generating. Basically again, the bags like

five bucks, like it's, you know, and I Kia's AOV is probably much higher than that. So it's going to as a percentage of revenues. It's tiny, but the impressions that created, creative visibility for I Kia, which generated other revenue, right? So when we think about campaigns, again, the mindset is revenue-seeking, demand capturing, but the beauty of the campaigns is also how you create saliency and visibility. You know, and then having the right understanding an expectation internally

of what campaigns are going to thrive saliency, visibility, and eyeballs that will lift the business overall versus what you expect to drive revenue from. Love it. Let's leave that for now. We'll revisit it on the future. D to see the rundown. I'll kill her in a filler D to see podcast. Let's move on to the one that Jordan brought to us, which is some insights from the trenches, some of the things that you've been seeing in chatting with brands in and around the business.

“What do you got for a Jordan? Yeah, Rath and I are working a bunch together now. That's how”

that's how he joined our, now, throuple of three dads who are talking about evil. And so I just brought a couple of things that he both, he and I were both involved in, so we could have a little bit of talk about him. And what I just noticed was we kind of were talking to two brands that pretty much at the same time that both of their sites were like, they were really set up for existing customers, right? And look, I'm working, you know, email retention,

CRO, we do a lot of, a lot of our work is talking to customers and getting customers to repeat. But like your website, in my mind, having a website set up for your existing customers is generally not the play. And so I'll just talk through some of the things that I saw Rath and just jump in if you have any kind of comments on them. One brand was a drink and another brand was a food service that you could order meals like to together. We won't discuss the exact brands, of course.

“But like different categories, different categories, but almost the exact same problem, yeah.”

Yeah, different categories, almost the same problem. And so on on the, the drink, it's, it was interesting because I didn't thought of this until going in, Rath's much more CPG kind of guy, I'm usually so, so much further further down that I'm not thinking about a lot of

things he's thinking about. But a lot of there, even their first-time buyers were actually existing

customers because they're, they're, they're coming in from retail. So there, we even looked at their metrics were like, oh, you know, what are your first-time and your repeat? Even the first time we're generally repeat. And so the site had just naturally morphed into this thing that would only speak to people who already knew what their product was, which actually meant what I saw and why, you know, we discussed some some optimizations to the site, was that they weren't

even explaining like their, their, their USP. They were very lightly explaining their USP on the site. Yeah, there was like no introduction, you know, what they're about, what makes them different, none of those classic components. And that's definitely something we see quite a bit right now. A lot of wholesalers or manufacturers CPG brands are trying to go through the Rath the consumer. It is a blessing and a curse because ultimately, opening up a sales channel means that you

you know, and you open up an e-commerce store, meta is smart stupid, Google is smart, well,

algorithms are just smart stupid. They're going to find the least path to resistance. So what's most likely unhappened is regardless of the ad, the ad is going to serve get served probably in the cities where you have existing retail distribution. It's going to serve that to people that have only purchased here because they're more likely to engage with it. Then you're just cannibalizing the sale versus acquiring a net net

your customer and to that point because the signal is truly a false positive, right? You're, you know, it looks like a new customer because it's a new customer on that platform. You start making creative choices like on your website that are grounded in conversions that are repeat customers. So then you start dripping out content that talks about your brand difference, introduce introduction, education that all gets stripped out because you're like, well, the highest converted thing is,

you know, this direct conversion, whatever page. Yeah, that's because the person already knows you and they purchase from you and they just want to move in as of getting shipped on subscription

“to their house or something. You know, this touches on a core truth. I think this is like, you know,”

one of these, I don't know if it's a universal truth, but it's a truth that you see everywhere in e-commerce, which is when you're doing a good job in reaching new people, your metrics should get worse, not better because you're reaching the hard to reach people, right? And I very often have this discussion on the email side. It's like, hey, why's the click rate going down? Why's the open rate going down? We'll look at the size of the audience. We're reaching a larger audience.

Those are harder to get them to click. So of course, the click rates going down. Look at the clicks. And so the important thing to think about when you're doing this is don't look at the rates, look at the absolutes. What you want to be doing is having your, having your rates go down in a context where your absolutes are increasing. 100% and on, and on the flip side would call that incrementality. And if you have a wholesale business like that, you're oftentimes quite mature

if you're getting distribution at Walmart or Target or Whole Foods, right? And I find oftentimes just because of the operational structure, it's a wholesale-led business. So they're geared towards retailers, right? So the D to C team is almost a set on an island, right? But if you, you know, just strip all of that political complexity out, right? The simple thing should be that your D to C store should focus only on driving customer acquisition in places where you don't have

retail distribution, right? You drop in, spend the ads in there, gets popular, cult following, then your salesperson can go in and be like, hey, you know, have you heard about XYZ, you know, where the hot, whatever direct consumer brand and New Jersey, now, whatever,

“you know, you should take us on as retail distribution. That's incremental to your point.”

It's interesting to absolutely volume. The cost might not look as good, deficiency, because again, you know, you're not harvesting the man, you're creating that in your demand, right? So in those situations, if we oftentimes encourage wholesale brands who really think about like, what's

the goal of D to C, you know, if it's just about showing efficiency numbers, you're never going

to be able to scale income mentality, you know, you're always going to have a tough time building your business case internally within the wholesale business. But if you truly are a business, that doesn't know how to drive distribution and you want to create it, you come site to own your distribution, then focus it on the places where you don't have distribution and work with your retail team to build at the man and then have the sales team close at the man, right? So to that point,

I think, maybe it's kind of goes full circle to our earlier conversation or I know how it's been, I think it really goes back to making sure that your signals are clean, you know, because then if you're optimizing to existing customer signals, you're going to build a site that's, you know, optimize the work, what the algorithm is telling you and the algorithm is smart stupid, you know,

“like you have to own the context. The other brand, the kind of packaged meals, right? The”

interesting thing about that moment through that, like I went through the site, I was looking at

this one not from an email perspective, from a Shopify perspective. And like first, you had to go through

their kind of meal, essentially quiz, like let's just call it quiz, it wasn't really a quiz, but it was a a process, a quiz like process that you went through to build your, your meal plan based on nutrition, lots of really cool stuff. Look, first of all, this drove me crazy, everybody out there, you know, I get, I get, I go into that thing and I'm locked in. Like, I just, I'm just clicking on the site, I just, oh, click, hey, learn more career, whatever the

button was, and then boom, I'm pulled into this thing, I can't escape. The only way I can escape is to go back, which is so frustrating. Like, because I, I've progressed through the site,

you know, tip out there for everybody, like, just don't just immediately lock someone into something they don't want to be in, right? But one interesting thing about that, they, and they weren't selling samplers, is the other thing. So I had to go through this process, I got locked in this process,

if I even went out and I'm like, wait a second, I want to just try this stuff, I'll try this stuff.

“That wasn't possible. The only way was to go basically, you know, hail Mary, get them to buy”

onto your subscribers, save plan, right off the bat, and the kind of deeper problem with that. Well, this is, someone can make a, someone can make a case for it, but the problem in my mind is, we've already got an industry that has settled on what works. Thousands of brands have put together a format that works, which is by the four pack samplers, and then we upgrade you to subscribe and save, and they were just completely against that. Yeah, and, and the interesting thing about this brand

is that there were one of the early adopters in the category. They're the first-centrant, entrance, about 10 years ago, and now this category saturated, but they kept the same playbook. They hit the price, right, at a friction, because they were the only option. If that makes sense. And that acquisition method of work, 10 years ago, when they were the only option, now they're not. And there's new ways to attract and other brands have scaled past that, and that, and then

being their limiting factor. Because, yeah, they weren't, they added so much friction to the first purchase. I'm going to just share the numbers in range, but, you know, over, I think it was over,

I say, over 90% of the people that started the quiz never checked out. We show them that. It's like,

obviously, people are interested. They want to know, you know, not your burning, all this money, getting clickthroughs to people that are going through the quiz, almost getting to the end, so it's feeding the algorithms, saying that, hey, does it that because someone that's attracted, and they're leaving when, you know, you're getting the wrong customer to educate themselves,

“and that's what your funnels built on, you know. Also, because they had a non-standard build,”

this is something I really want to stress for everybody. Look at, look at the, whatever the conversion type that you have, whatever your conversion is, look at, look at what's out there. What's out there is probably what's working. The reason people are doing it is because it's what's working.

This thing was, first of all, it was a custom build, so that meant that it was really annoying,

because we actually couldn't even measure sessions properly. Like sessions weren't measured properly because it was a custom build, but even if even if sessions were being measured properly, because they're doing something totally weird and non-standard, you talk to a professional like me, I look at, you know, dozens of brands who have your conversion type, but I say, oh, I can't even use my benchmarks. I can't even look at your numbers to know if they make sense because you're doing

something else weird, and so if you're in the lead, and they were already a leader in the pack, if you're in the lead, sail with the same wind as the other leaders. Don't try something crazy unless you're already losing, you know. And don't, it was just to close, and we will save my mystery bonus topic for later was a good one. We'll do it next time, so you got to come back, if you like this format. But I was chatting with the friend the other day who works in hospitals.

He works for the health authority in Victoria. He was just talking about how, you also, you're like, your business, you're constantly having to evolve it. You're like, and it's sort of like a foreign concept, I think, to a lot of industries, like everything's changing, but I feel like in our space, it's like, changes the norm, and yeah, if you get stuck in your ways, you're going to

“get left behind a lot, you have to be looking at what's, it's the beauty of being in the space,”

and it's the curse, and we'll be back to talk about it. If you guys like this format, let me know at [email protected]. If you want to be a guest on this part in the introduction, D to C, run down format, let me know. Otherwise guys, this was awesome. We'll, we'll catch up with you in a similar format again soon. So guys, and whiskey next time. Sagaris and Whiskey.

If you're not a subscriber to our newsletter, you can do that right now at Direct to Consumer All OneWord.co. I'm Eric Dick, and this has been the D to C podcast. We'll see you next time. Holiday starts early on Walmart Marketplace, apply to sell and get your inventory to Walmart fulfillment centers by September 15th to prepare for millions of holiday shoppers. Build your seasonal assortment with customer favorites, products Walmart customers love and are

actively searching for. Add eligible customer favorites to your catalog, and you could receive up to 100% off referral fees on those items. Get holiday ready with Walmart Marketplace. Visit Marketplace. Walmart.com/dtcpod and sign up today.