27: Life After Crowdfunding: e-Commerce Basics
In this episode, we’re circling back around to our extremely popular “Life After Crowdfunding” series with perhaps our most practical episode in the series so far, which is about how to turn your website into a cash machine. Let’s dive right in!
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1. Entrepreneurs should reject “entremyopia” to embrace realistic expectations, including that all startups will face challenges, but that greater challenges can potentially precede greater rewards.
2. It’s good to offer your product/service on your website, but it’s better to enhance that website with effective analytics code, optimized sales media that emphasizes your unique selling proposition (USP) to maximize your website’s conversion rate (which is typically 1%-4%), and both SEO and persuasive marketing (which will be harder to do profitably for cheaper items) through ads, e-mail, affiliates, et cetera, to help draw paying traffic to itself.
3. Collecting customers’ e-mailing addresses and then remarketing to them via e-mail can help you to build a beneficial long-term business relationship with them while obtaining additional sales from them at low cost, all of which can maximize their lifetime revenue to your business.
4. Your initial business goal should be to achieve profitability through a breakeven CPA at minimum, which will be worse than it was on Kickstarter and may require you to spend capital at-a-loss for a while to build a sizable-enough customer base—and you should wait until your business is more mature before starting to develop its branding, which yields results that are harder to quantify.
5. Your business can grow better by offering multiple products/services through multiple channels with multiple payment methods, et cetera, and offering cross-sells, upsells, et cetera.
[02:23] Zach and Thomas assert that, in e-commerce, simply offering your product on a website is a start, but it’s not enough—you need to choose a platform, set up effective analytics code, optimize your media, engage in marketing, et cetera, to effectively help your product to sell.
[05:55] Thomas and Zach advise rejecting “entremyopia” in favor of realistic expectations.
[08:37] Thomas and Zach state that entrepreneurs should expect lower costs-per-acquisition (CPAs) on their own websites than on Kickstarter and/or Indiegogo, because the latter enjoy both “organic” traffic and positive externalities.
[10:26] Zach and Thomas advocate rendering your Unique Selling Proposition (USP) immediately visible to people who visit your website, along with who you are and what you do.
[12:59] Thomas observes that it’s harder to draw profitable traffic for lower-priced items, as typical website conversion rates are perhaps 1%-4%.
[15:06] Thomas recommends that entrepreneurs learn the typical CPAs for their industry.
[15:53] Zach notes how Uber initially operated at a significant loss slowly building its customer base until it finally attracted enough customers to become profitable; he also reminds listeners about customer lifetime value (CLT), and urges the importance of offering customers multiple products through multiple channels so that you can earn more from the same customers.
[17:19] Thomas adds that entrepreneurs need to spend money to make money, that (due to customer lifetime value) obtaining a customer at-cost or even at-a-loss isn’t necessarily bad, and that (like Uber) sometimes you might want to spend capital to grow at a loss until you become profitable.
[18:33] Thomas observes that it’s common for Kickstarter creators to only offer one product/service but that they usually need to sell multiple products across multiple channels, and Zach conveys the example of The BASICS Wallet that helped to create NOMATIC.
[22:03] Thomas reiterates that obtaining a customer at-cost who enjoys a good experience with his/her first purchase can then be upsold or cross-sold to buy more.
[24:32] Thomas stresses the importance of developing multiple channels for selling things, such as brick-and-mortar versus online, plus a variety of payment methods, and Zach conveys the example of RooSport.
[32:09] Zach references our podcast episode about the Pareto Principle.
[32:24] Zach and Thomas introduce e-mailing lists as a virtually-costless means of drawing traffic to your website, in addition to search engine optimization (SEO), advertisements, and affiliate marketing—and he mentions that MailChimp provides benchmark e-mail statistics for various industries.
[36:13] Zach remarks that social-media sites can disappear, but that you can own e-mailing lists, and that such lists are the most powerful assets that any business can own—and he cites Indiegogo’s newsletter as an example of successful e-mail marketing.
[38:44] Thomas speaks about the long-term power of branding for established companies, which is hard to quantify, unlike direct-response marketing that can be analyzed.
[42:27] Zach and Thomas counsel entrepreneurs to focus on profitability initially, especially your products-and-prices, and branding eventually.
[43:44] Zach summarizes this episode’s content about maintaining proper expectations, setting up your website properly, work to achieve a breakeven CPA or better, multiply your offerings and channels and such, and embrace e-mail marketing.
[44:09] Thomas notes that all startups face challenges, and that greater challenges also provide greater barriers-to-entry to competitors, which may increase your chances of success.
[45:26] Zach and Thomas present this episode’s Projects of the Week.
Zach Smith: (00:00) Funded Today Nation, welcome back to Get Funded Today the premier podcast on Crowdfunding, and all things small business related, in our last Masterclass Thomas interviewed Greg Mercer of junglescout.com, that was a one on one interview, and Greg dropped all of his secrets about how to dominate Amazon, so you’re going to really want to give that one listen if you haven’t yet. Now today, we got a really hyped-up title for you, but we think it’s absolutely accurate “How to Turn Your Website into a Cash Machine”, let’s go.
Announcer: (00:32) The Funded Today podcast is brought to you by fundedtoday.com. Funded Today, is a premier marketing and video agency, from start-ups to Crowdfunding, to Amazon and beyond. Funded Today has helped their clients generate hundreds of millions of dollars in revenue. If you’d like help launching or growing your business visit www.fundedtoday.com to speak with one of their experts.
Zach Smith: (00:58) Welcome back to “Get Funded Today” the Funded Today podcast I’m Zach Smith.
Thomas Alvord: (01:03) And I’m Thomas Alvord.
Zach Smith: (01:04) In our last episode Thomas had a one-on-one interview with the Greg Mercer of junglescout.com revealing how you can gain a distinct advantage over your competition on Amazon. If you’re on Amazon right now, if you’re planning to launch your product on Amazon someday soon, you want to go back and give that podcast a listen, go back and review it and remember we do have our ultimate “Crowdfunding Success Guide” available now fundedtoday.com/guide according to one of our beta testers earful he said about our guide. “The Funded Today Crowdfunding Guide unilaterally blows away any other guides that I’ve seen with respect to quality of content”. Hopefully, you our faithful podcast listeners and the market at large will agree. Download it, read it put the tips in practice and let us know of your successes because we can’t wait to hear from you and we put a ton of effort into that guide I think you’re going to love it. And finally if you ever got anything help to love our podcast so far, to help us continue helping please rate us on iTunes it only takes a few seconds, but it makes a world of different stiffs, and leave a comment or two on our website fundedtoday.com/podcast telling us what you think about this episode, other episodes and what you’ve like to learn more about in future podcasts that we will have. We’d really appreciate it every Five Star Review really helps us spread the tips, tactics and techniques we personally us to make a ton of money, and create great lives for ourselves with you and others. So thank you so much for that we’re really loving this podcast and hope you’re getting a lot out of it as well. Now today, we’re circling back around to perhaps our most popular series “Life After Crowdfunding” and this maybe the most practical episode in the series so far. The title “Life After Crowdfunding”, “how to turn your website into a cash machine”. Thomas what do you have for us?
Thomas Alvord: (02:40) It’s an interesting question, because we have worked and consulting with so many different businesses, entrepreneurs and I think often the idea is I’m going to create my product, I’ll put it on my website, and I’ll go make money, and so often that doesn’t happen it’s important to know, what are the elements that are going to allow you to make your website a cash machine, where it can make you $100,000, a million dollars plus every year. To get it out of the way at a minimum you got to set your website up the right way, that is not going to be sufficient right, just doing that’s not enough but it’s important to make sure you get your website setup the right way, “meaning it needs to be professional” “it needs to be optimized”. You need to make sure you have your tracking setup with “Google Analytics” and your “Facebook Pixel” your “Google AdWords pixel” to get your hosting setup, and it doesn’t really matter if you’re on WordPress or Shopify that doesn’t matter as much.
Zach Smith: (03:49) It’s important you say that too Thomas, a lot of people seem to get bogged down with details, myself include I remember 10, 11 years ago when I was doing a lot of different e-commerce related marketing even before Funded Today I would spend so much time being like “Oh! do I need this WordPress plugin” not even think there was Shopify really doing much back then, but nowadays Shopify has so many different add-ons and plugins and all these other upsell options, and it’s like what should I do, what should I have? And you can have analysis paralysis instead of like you said “get the things done that need to be done”. Get your Google Analytics setup, get your Facebook pixel setup, pick WordPress, pick Shopify, pick something set it up, it doesn’t matter that much, what matter is your optimization, your professionalism. I think that’s huge takeaway for a lot of people because it’s very easy to pretend to play business I call these people entrepreneurs and you just spend your whole life wanting to be an entrepreneur, faking like you’re an entrepreneur, but you’re never actually doing things entrepreneurs do, you’re just building and tinkering away, and never creating anything of value. In fact, I would probably say most entrepreneurs fall into that, I even had past business partners and they will just build, build, build, build, build, and never sell, sell, sell, sell, sell and never do anything related to actually turning their idea into something you could be proud of, it was always just an idea that kind of stuck in their head or “whatever their vision or dream of what that idea could become and they never really brought it to the world” whether because of analysis paralysis and all these choices, or because it’s just easier to build than it is to actually take action. So site your website up the right way.
Thomas Alvord: (05:18) And I love what you say, don’t just focus just on your website because you can optimize, optimize, optimize but if you’re not looking at other elements that are actually a lot more critical than you’re going to fail, meaning you can run A-B test using experiments with Google Analytics, or you’re A-B testing your traffic seeing what page converts better than the other page those are critical, those are important, and I don’t want to dive into those because those are the things that actually make your website a cash cow, make your website generate sales right. Really I think the first thing that people need to be looking at is having a realistic expectation it seems like we work with hundreds, even thousands of entrepreneurs and they haven’t really thought this through about what their expectations are, thinking in terms of what is my “CPA” or what is my “Cost per acquisition” and CPA can be an acronym that could apply to different things right. “You could have a campaign where you’re running traffic and you’re getting people to opt in to your list, and you could have a CPA metric in that regard. What’s your Cost per acquisition for a new email? In this case I’m talking about what’s your Cost per acquisition to generate a sale or to generate a new cost.
Zach Smith: (06:49) Now, Thomas backing up just a second here you know how much I love “Social Triggers and Behavioral Psychology” so just a thought do you think people have such unrealistic expectations because of Funded Today because -- and by the way huge milestone today, so give us a shout out we have just crossed $250million raised for nearly 3,000 campaigns across the world. Today was the day we hit it a couple of hours ago I believe $250million so is that why? Is that why people have unrealistic expectations or they’re just because everybody thinks they’re babies the cutest darn thing in the world and it can’t possibly be ugly and the market can’t possibly not want it what happens with these unrealistic expectations where do they come from?
Thomas Alvord: (07:27) I think its “entre myopia” which I’ve talked about before right it’s.
Zach Smith: (07:31) I love that word.
Thomas Alvord: (07:32) Entrepreneurs who are myopic and thinking their product is the most amazing thing, and they can’t see outside of that right. So I think that’s part of it right, they just assume “I’m going to launch this, everyone’s going to love it, it’s going to go gangbusters, and I’m going to make millions” and that simply is not the case. Look at the great companies of today Amazon, Google look at how many new ventures they’ve rolled out that have completely failed right, flat on their face even with their resources, their branding everything.
Zach Smith: (08:08) Even their current ventures I mean look at Tesla their quarterly earnings statement was again a huge loss of millions and millions of dollars, I think the time the quarter before, and the quarter before that they had some profit, but even when they’re successful suddenly now they’re not successful again and they’ve just lost millions of dollars on a product that kind of was revolutionary in some ways, even though that’s their core business the electric car, and these are the greatest companies in the world like you said Thomas, and even they sometimes struggle for break even, and look at their brand appeal, and look at who they relate to and look at their marketplace.
Thomas Alvord: (08:38) Exactly, I think part of it is when we work with somebody on Kickstarter or Indiegogo and we then transition and we’re working with them on Amazon, and on their website we run into a situation where the “Cost per acquisition, the cost to generate” a sell both in terms of the marketing that was directly tracked meaning we spend $10,000 in ads, and directly tracked from that ads we generate $40,000 in sales. Or we spent $10,000 in ads and overall maybe only $10,000 was tracked via ads, but overall the campaign or the products raised $40,000. It creates this idea that you’re always going to have that return, when the reality is you’re always going to have your best returns in terms of ad spend, when you’re on a platform. When you’re on Kickstarter, when you’re on Amazon because you’re basically tapping in to a community that’s giving you additional traffic, organic traffic that’s why you launch on those platforms, that’s why you place you place your product on those platforms. So you have to realize your Cost per acquisition on your website is always going to be lower, and I think a lot of people don’t realize that.
Zach Smith: (09:56) That’s well said, if you ever work with Funded Today you’ll hear us talk about “Positive Externalities” all the time. You might spend a dollar to track for a dollar but overall you might track for $3 or $5 or even $6 or $10 if you have something its converting really well but that extra $2, $3, $9 whatever it is in addition to your ad spend is that positive externality that comes because of like what Thomas mentioned being on a bigger platform Amazon, Kickstarter, Indiegogo on that sort of thing. And there is one more thing that I want to hint on this topic and Thomas and I were actually analyzing a couple of client campaigns, I believe it was yesterday and we were going through some different campaigns and we talked about a “USP” your “Unique selling proposition” and here was a takeaway to set your website up the right way, and Thomas correct me if I’m wrong but I believe you said like this “You need to be able to look at that page the top fold picture or newspaper back in the day it was called the top fold because the big headline was right there on the fold before” you open it up and that determines whether you want to read the newspaper or open it up or continue reading or just throw in the thrash or recycle it whatever, anyway your website on the top fold so before you even scroll right when you see it I think that’s mobile, iPad, desktop whatever it needs to be optimized for that as well nowadays because so many people are mobile. On the top fold your “Unique selling proposition” has to be readily visible available and clear, what are you selling? Why does it matter to me in the first three seconds, 10 seconds what is it Thomas?
Thomas Alvord: (11:25) In the first three seconds.
Zach Smith: (11:27) Three seconds.
Thomas Alvord: (11:28) What is it, what’s the benefit and it also depends but this is especially useful for a startup, for a new business that doesn’t have a brand reputation. If you got to McDonald’s website you don’t need to know what McDonald’s is, everybody knows right. If you go to Apple’s website it doesn’t need to say “Hey we create cellphone gadgets and earbuds” right everybody knows that already, so depending on where you’re at and how much the industry knows about you and who you are is going to influence what your messaging is going to be.
Zach Smith: (12:02) I just did a test just to see and I just typed in apple.com just now here’s their top fold iPhone XR, all-screen design, longest battery life every in iPhone, fastest performance, studio quality photos that’s pretty darn good Unique selling proposition for the iPhone XR and that’s what they’re featuring on their page.
Thomas Alvord: (12:19) They’re doing what you just said not about their brand or company but about their latest products.
Zach Smith: (12:25) It just a particular landing page to feature the iPhone XR.
Thomas Alvord: (12:27) Because we’ll look at websites, okay they sell watches, what’s unique, what’s different and you can’t really tell, and I’ve actually come across websites and again it comes back to the branding and who your audience is right, if you’re B2B and your audience knows who you are then maybe it doesn’t matter. Sometimes I go to a website though I don’t even know what they do or what it’s about and I go Google their name and try to find on Wikipedia about then maybe to see what they are or I go to their “About” page to see what they do because I can’t really tell from their “Homepage” right away. You need to build a good website and going back to this idea of your CPA one thing a lot of people don’t realize because you were asking before Zach, why do people get it wrong? A lower-priced item is actually harder.
Zach Smith: (13:15) And what’s low-priced Thomas, is there a certain figure you could give to our listeners or is it okay.
Thomas Alvord: (13:18) Sure imagine if you have a product that sells for $1, you would have to be able to run pay traffic for less than a dollar, and then even if you had a 10% conversion rate, incredible conversion rate, a typical e-commerce conversion rate would be maybe 1% to 4% depending on your price point.
Zach Smith: (13:40) And just to recap what Thomas means by conversion rate, that means if you had a 1,000 visitors come to your page and you had a 10% conversion rate a hundred of them will purchase your $1 product.
Thomas Alvord: (13:50) That’s right.
Zach Smith: (13:51) If you had a 10% conversion rate. So what happens when you have a lower price point, it’s harder to be able to generate traffic profitably, and on the flipside let me give an example, let’s say you have a product that you’re selling for $3,000, and you’re able to get clicks or traffic for $0.30 per click, you could spend $1,000 in marketing and generate 3,000 clicks and you can have less than a 1% conversion rate if you just get one sale you generate so much money and revenue. And so the lower the price point the harder, typically under 20 it makes it a little bit harder it’s still feasible and that’s where you need to think about okay, how can you have bundles or up-sells or cross-sales which will get you in a second. If you have a price point that’s $50, $100, $200 it’s going to be easier, again if you have something $10, $5 it’s going to be really hard if that’s all you’re selling, because you can’t really spend money to make money. By the time you spend $5 you might have to spend $10 to get enough traffic to generate one sale, and if you’re selling it for $5 it just doesn’t work. Now if you’re selling it for $50 then it could work. So people need to realize okay, what’s my product currently selling at and another thing people I don’t know how many entrepreneurs look at this, but what is your typical CPA for your industry, that’s a metric that’s not always going to be readily out there, but it’s something you need to look at and go evaluate. For example, if you’re selling Uber as a service right, not of product but as a service, your Cost per acquisition and again they don’t really have these numbers public but you need to know are we going to spend maybe $5, $50, $100, $200 to get a new customer, what is that Cost per acquisition?
Zach Smith: (15:54) It might be hard to visualize what you and I were looking at yesterday Thomas when we were studying a little bit on Uber but it was that trough right, where they spend, spend, spend, spend, spend and their negative net revenue, negative net profit forever but then they reach that the trough the tipping point where they’ve acquired enough customers now to handle their ad spend, to handle their Cost per acquisition, and because of their residual income, in this case Uber falls under a “SaaS” because even though people aren’t necessarily paying a monthly fee they’re using the right service several times per day, so it acts the same as a “software-as-a-service” or a residual income model, and eventually they, they reach a break even and then even a tipping point where they start to become profitable from a revenue standpoint, and I think that’s important to consider as well. What is your customer lifetime value? You might -- it might cost $100 to get that customer but how many SKUs do you have, how many different products do you have and I think that leads pretty well unless you wanted to finish anything off with this topic in terms of “multiples”, and the strategy that you need to do as an e-commerce business by thinking in terms of “multiples, multiple SKUs, multiple channels, multiple products, customer lifetime value”, where else can I create value for my customers so that they’ll open up their pocketbooks and give my business more money instead of just selling them one thing, because once you’ve sold them one thing there is nothing else to sell them if they don’t need it again if it’s not reusable or residual in nature.
Thomas Alvord: (17:21) And I would add Zach, just finishing up with the CPA entrepreneurs, business owners need to think through and recognize what CPA am I aiming for? and what’s my industry going to look like, what is my product going to look like because if you can generate a new customer at cost that’s not necessarily bad, depending on your strategy what your growth goals are. Also going back to Uber is your strategy for growth right now, because if it's not profit because you have capital and it might be to dominate a market then you’re just going for growth. But if you’re just bootstrapping it and it’s all about profit you really need to be cognizant about what you’re doing, because you don’t want to be in a spot where you can’t spend money to make money otherwise you don’t have a business. You do not have a business if that’s the case because you can’t spend money on Facebook Ads or Google AdWords, drive traffic to your website and get new customers and make it profitable.
Zach Smith: (18:27) It's what about max in the front of the -- and it’s worth repeating, if you can’t spend money to make money you don’t have a business.
Thomas Alvord: (18:35) Yes, and that’s where one of the greatest difficulties that I’ve seen Zach working with people coming from Kickstarter right, if you’re working with other businesses that have an established business, and they’re coming to us, and they have multiple products already selling on the website, it’s a much different story, but very often the Kickstarter creator has an idea to start a business but only has one product idea in mind. And one of the key takeaways if there is one from this podcast is that entrepreneurs, business owners, they need to think in terms of multiples like you were just saying right, “multiple products, multiple channels, multiple sales”.
Zach Smith: (19:23) And credit to the entrepreneurs who are listening this podcast, I’ve been working with a pretty close friend just yesterday he and I were chatting for a little bit on Skype and he said “hey I’m thinking of changing my name of this product that I’m inventing to a different name because I believe what I’ve created here could lend itself well to multiple SKUs, multiple different types” and I said wonderful, where did you -- that’s great absolutely do that, and it made me think of other people that we worked with in the past I remember when we worked with “The Basics Wallet” it was just “The Basics Wallet” and for all we knew that was all they were ever going to create, but they rebranded probably a little bit late and became nomadic, and they became a lifestyle brand and now they have a wallet, a watch, backpacks, travel gear all kinds of other things because they realized you can’t necessarily make a living selling one product. I mean a wallet it’s pretty ubiquitous, everybody could potentially use one, but even still you need that multiple SKUs, so it credits a lot of the entrepreneurs who are thinking like that up front before you’ve ever even sold one of your products, what else can I sell? Where else can I bring value to this idea that I’ve created, I’m actually thinking of our Product of The Week that we’ll introduce a little bit later but basically it’s a “Q-Tip”, a Swab and it’s the “LastSwab” you’ll ever use, it’s a reusable cotton swab called LastSwab, I look at that product and I say well what’s going to be their next product if we’re thinking about multiple SKUs, and in the case like this just now I realized that maybe the anomaly, that’s one product where that might be all you need if that’s all you have and that’s all you sell because every person on the planet has probably used a Q-Tip or a cotton swab before right, the thing you stick in your ear clean your ear or apply makeup or what not, probably everybody has used on of those before and they are dealing with a very, very, ubiquitous market, and if you remember “our formula for success” “its ubiquity, plus innovation or tech, plus a cool compelling story gives you a huge chance for success” well they’ve got the ubiquity covered everybody and their dog could use a cotton swab, they’ve got the innovation covered because now you literally can use the same cotton swab forever instead of buying that pack of 1,000 that everybody usually buys, and the story is pretty amazing too because they’ve created a product where they are trying to improve the environment and make it so the landfills are filled up with used closed cotton swab. So most the time with perhaps the exceptional last swab, but even they probably have some ideas for a future product or something that can go along the lines of great ideas, innovative products that protect the environment, but are also solving huge problems and then creating multiple SKUs, multiple products based upon whatever that brand or company that you want that you want to create has so.
Thomas Alvord: (22:06) And the real power Zach and the reason behind this if you have one product that you’re selling, if you can acquire and generate a sale at cost, meaning you spend $50 on marketing and you’re able to generate a sale for $70, but then you have maybe $20 and COGS your Cost of Goods Sold, your manufacturing, shipping etcetera and so you’re are a break even, you’re not making any money but you just generated a sale, that is a valuable, valuable thing to now have that contact, to have that email, to then be able to sell them additional products if that customer likes your brand and likes your product.
Zach Smith: (22:53) And that’s our “customer lifetime value point” I think it’s really important that you added that caveat and the end, “if they like you, if they resonate with your brand, if they like your original product because now you have the customer lifetime value”, you have a customer who is free to you to sell whatever else you want to sell in the future that’s probably going to trust you because they had a great first experience with your brand or company.
Thomas Alvord: (23:12) And right away you can offer an upsell or a cross-sell and the difference between those an up-sell would be the same product but just a higher quality, it would be like going and buying a new car but they upsell you to the next model up or the next model up so it’s still the same car, it’s now you just have automated windows or you have a better engine right, that would be an upsell. And then a cross-sell would be they sell you “hey you can get carwashes for life for an extra $200 or whatever often they just throw like a carwash in and sometimes.
Zach Smith: (23:47) Easiest way to think about some cross-sell for me the way Thomas explained it is for example you’re going to buy a car and maybe you want to buy a Toyota but they you a Lexus, that’s an upsell then once you bought the Lexus they say hey we’ll give you this leather protector and unlimited carwashes and oil changes and tire washes for life that would be your cross-sells.
Thomas Alvord: (24:07) Cross-sell isn’t the same product it’s just something that’s complementary and you want to have those in your business and you might not know what they are right away, you’ll discover what those are overtime. The iPad did not exist when Apple came out with the iPhone, iPhones didn’t even exist, smart1phones didn’t exist when Apple first came out with the Personal Computer right, so those complementary products will continue to evolve you don’t have to have it all at once, but you need to be thinking about that, and then another thing you need to be thinking about is multiple channels, you never want to have just one of anything, just one credit card processor or just using PayPal because what if they freeze your account and all of your sales dry up because you can accept payments or you’re funds are frozen.
Zach Smith: (24:48) Just Google, “PayPal Nightmares” and you’ll see lots stories of that happening.
Thomas Alvord: (24:52) So multiple channels right, you want to be in retail brick-and-mortar if that’s part of your strategy on your website on Amazon etcetera.
Zach Smith: (25:02) Even Indiegogo InDemand might be a good spot to mention for them since our “Life After Crowdfunding Series” Thomas we had a whole episode on that I think it would be important to be on there as long as you can really, it’s another channel.
Thomas Alvord: (25:12) That’s true yes, and part of this right is discussing how do you make your website a cash machine? How does multiple channels affect your web sales? Because in a way you might think well won’t that detract from my web sales, because if I’m selling -- if people can purchase this elsewhere, then my web sales are going to suffer and in a way yes you could look at it because your sales are going to be distributed across multiple channels. But let me give just one example one of our customers or clients which is the “BauBax Brand” the travel jacket didn’t have hands but BauBax we helped raise $9 million on Kickstarter, they got picked up and were placed in airports all around the US maybe even international I’m not sure about internationally though, what they were able to do is, they were able, and this is only when they had one product, now they have multiple SKUs, multiple products, they were spending money, driving traffic to their website even though it was at a break even or even at a little bit of a loss, because they knew we’re running so much marketing, we’re gaining our brand in front of so many people, and yes directly tracked on our website we’re not generating a lot of money, but if we look at what’s happening in the retail stores it’s actually increasing our sales, and again there is not a one-size-fit-all because if I’m not mistaken I should check because I read this a while back if I’m not mistaken I think Nike actually had an opposite strategy right -- their brand is so prevalent and so strong that instead of running marketing to try to drive people to retail locations they were really focusing in terms of increasing the profit to their own website, because they have a much bigger margin instead of selling their product with the 50% markup that retail would have if they’re selling it directly “direct-to-consumer” on their website they’re capturing so much more of that profit but again it comes back to what’s your strategy? “Is it growth or is it profit” and in this case with Nike they already have the brand, everybody knows who Nike is so that growth and that branding yes it’s still important, but it’s not as critical for them, and saying “hey, how do we increase our profit in this day and age where brick-and-mortar stores are going out of business, where malls are going out of business, what’s our new strategy, what’s our new game plan, well it was let’s take the stuff and drive more of the traffic back directly to us”. So again, what’s your strategy, but having multiple channels is what will allow you to be able to have your website be a cash machine. If you only have your website with one product it’s going to be incredibly hard, if you’re selling just one wallet on your website it’s going to be super hard to really scale up your marketing for your website.
Zach Smith: (28:14) It’s one of our criteria for working with people right Thomas, if they only have one product and all they have is a website most of the time we say it’s not going to work if you’d like we can do a due diligence test, it’s going to cost you X-number of thousands of dollars, but quite frankly your chances are about one in a thousand of having this workout.
Thomas Alvord: (28:32) Unless it’s a unique niche that has demand and there’s low competition then, then in that case it could work, but if you’re a me too and you’re competing on Google AdWords with a lot of other advertisers and it’s only a one-time purchase like a wallet right if it’s like toilet paper that would be more like an Uber strategy right it’s the customer acquisition yes toilet paper is not that amazing right.
Zach Smith: (28:57) It’s ridiculous.
Thomas Alvord: (28:58) It doesn’t sound like an amazing business but yes it’s ubiquitous and it’s something if you had a brand that people like they could buy again and again, and again for 50 years or more right including their kids, if people even have brand preferences for toilet paper, but the point is if you had that you have a lifetime value, whereas if you have a one-time product that once people buy they’re not going to buy it again and you’re only selling on your website, it’s going to be hard, that doesn’t mean you can’t still make it a profitable business right, because perhaps on Amazon that would be a place where because of organic traffic and SEO you’d be able to rank higher and get that, get that traffic. So again every strategy is different, but the key takeaway think in terms of multiples.
Zach Smith: (29:43) Now Thomas can I share one example as well kind of in this same line of thought?
Thomas Alvord: (29:48) Of course.
Zach Smith: (29:49) So our very first client at Funded Today the “RooSport” Brenda and Earl Brundage they actually even today literally Thomas can attest to this, because they were at the Boston Marathon, and they ran into my uncle who happened to be there supporting, my cousin who was running in his First Boston Marathon. Anyway long story short, the “RooSport” essentially since inception has leverages the power of Expos, Expositions, Tradeshows, to sell their product, and by doing so and I know this because I’ve been there e-commerce consultant forever their website, their Shopify Store, their Infusionsoft setup all of that actually generates a spike at the end of every single expo it’s crazy might be a couple thousand bucks, I’ve seen it as high as $10,000 before, the reason is because they give a little coupon code, I think it’s 10% off, or 5% off something depending, and is just a little insert “hey did you like this RooSport, you know somebody else would like one hears our website” and so they get a pretty good return. I think they may be two to one return, so if they sent $10,000 on expo they might make 20,000 over the weekend. But then they get that huge spike at all these expos and after you’ve been to 500 Expos which I think that’s even understating how many they’ve been to, maybe they’ve been to closer to a 1,000 I’m not sure. I know there’s at expo like every other day and Thomas could attest to this, but their website is constantly getting sales from all over the country, even in international now in Canada and some other places where they’ve been because of all these little coupon codes that they’ve distributed around the world, and just because there foot traffic from all these expos and tradeshows, and so don’t discount some of these old-school strategies of expo, to website, to long-term customer value, because they can be very, very, beneficial and the “RooSport” has create a really good brand name by leveraging the type of strategy.
Thomas Alvord: (31:37) And going along with that if they only were selling on their website I think they’d been in a very tough spot.
Zach Smith: (31:43) Oh! Absolutely, absolutely.
Thomas Alvord: (31:46) So the multi-channel multiple channels, multiple SKUs, multiple sales, customer lifetime value that’s the power of creating a website that is a cash machine, and you’ll notice were not diving in, we mentioned it but it’s not how you optimize this or tweak that, their much broader items that you need to be thinking about in terms of your business to be able to have that.
Zach Smith: (32:13) Go back and listen to our “1820 Episode” for why we think this way because if you do just these things that’s the 20%, that’s going yield you 80% of your results and that’s really what every business owner wants and dreams of. Now Thomas to wrap up the episode today I want to get into kind of just bringing it all together, so we’re wrapping up, bringing all these topics together for final topic. “Embrace Your Email List” what does that mean and how does that relate to creating a website which is absolutely dominates and prints cash for you? How can you leverage that properly and what does that even mean “Embrace Your Email List”.
Thomas Alvord: (32:52) As I see things, there are maybe four ways well a handful of ways that you can get traffic to your website, or perhaps to your App right. The first would be if you have a brand like Facebook, or Uber, or Amazon it’s a service or even though amazon you’re buying things it’s a service to help you with shopping right, and so it bring -- people just naturally comeback because of what you’re providing. If you’re an e-commerce store, selling a product, or selling a service that’s probably not the case right, there is not some utility, some value that they come back or just for that that’s free, but there is that right. And then after that you have you SEO, depending on how your ranking for certain keywords for a new startup, for a small medium size business, usually an SEO Strategy which will go over in some future episodes is going to take longer to buildout. So really what you’re left with is paid traffic as well as your email list as two additional ways I guess you could talk about affiliates, but again that’s totally hit or miss and not a huge thing for most e-commerce sites. So your traffic, we’ve already talked “paid traffic”, we’ve already talked about a lot. Your spending for clicks whether it’s on Facebook, Google, Pinterest, Twitter anywhere else, but you’re paying for the clicks to get to your website that cost money yes it’s “Guarantee Traffic” but is guaranteed to cost you money. So one of the most guaranteed ways to drive traffic back to your website at virtually no cost is your email list, because once you have that email on your email list, yes you’ll have attrition, yes people will might not be interested or ought out, but generally speaking you will be able to send out an email and different industries will vary, you might have between a 10% to 20% open rate, and Mailchimp if you Google Average Open Rate, Average Click Through Rate, and include Mailchimp in the search Mailchimp has pages were with millions of customers, and billions of email sent for different industries they’ll show you here’s benchmarks, here’s what you can expect.
Zach Smith: (35:09) We should to that in the show notes that’s a really cool thing.
Thomas Alvord: (35:11) Okay yes, we’ll do that, so if you have say an email list of 10,000 people, and you know you have a 2% click-through rate, you know, okay if I send out an email I’m going to drive 200 visitors to my website. You know, on average, 5% of your past customers will buy then you can say okay I know I can send out an email, I will generate 10 sales on average, and maybe my average price points $200 bucks, and I’m going to generate $2,000 from every email that I send out. Now, this is where you also need to have multiple products, multiple SKUs, because if you just have one product, and all you do is send out an email saying “hey checkout this product and maybe if you have a wallet, you have different design “hey we just came out with this new design”, or “hey it’s Christmas we’ve have this promo” but different campaigns that you can run with email marketing, but the power of that email once you’ve captured that email, you can continue to market to that individual, to that customer or potential customer again and again and again and your cost is virtually zero.
Zach Smith: (36:16) Now Thomas I want to give a little master takeaway to this point as well, simply because email was kind of my forte, it’s kind of how I started and I’ve spent millions of dollars, and built hundreds of thousands of different email lists over my life in terms of all the people I’ve worked within and the different email list that I own as well, and I want talk about “Ownership”, it’s really easy nowadays to spend money on Facebook, and generate lots of clicks. Before it was really easy to do that on Google and not necessarily spend a ton of money through Google AdWords, (PPC) Pay-per-Click that kind of thing. Facebook’s kind of the new thing there, you’ve Snapchat, Twitter Pinterest, Reddit lot of other places where you can spend money to generate clicks, but like Thomas said it cost money, and here’s the thing you don’t own those assets Facebook could go away as crazy as it sounds, Myspace did essentially go away you don’t see a lot of people spending money on Myspace nowadays to generate traffic and clicks that to whatever, but with your email list no matter what happens, no matter what becomes the next Facebook, or the next Snapchat, or the next Twitter whatever you can take that email list with you, and use that to build up that new community for whatever becomes the next social media platform, or whatever is beyond social Artificial Intelligence, AI, Virtual Reality who knows, the point is a lot of times as entrepreneurs, we don’t think in terms of ownership, we don’t think in terms of assets, and your email list is an asset. Like Thomas mentions in our show notes here and he may have already said this, but just to hit on it again Indiegogo their strongest asset and literally probably the only reason it keeps them in business, all of the thousands of craters that use Indiegogo’s platform have sent millions of backers to their campaign, and Indiegogo smartly and wisely has captured those backers and given them a good experience on the platform and then they email them a couple times a week and say “Hey! I know you backed this campaign, you might also like these campaigns” and a simple strategy like that continues to make Indiegogo hundreds of thousands of dollars every single time that email gets sent out. And we’re the same way, we have lots of different email list us with hundreds of thousands of subscribers and we continue to build our email list because we realize the power of email in the sense that it is an asset that you own, you’re not renting it like you are Facebook, you’re not borrowing traffic like you are from Google AdWords on Pay-per-Click and I think it’s a very powerful distinction and something every entrepreneur needs to do, even in 2019 email is the most powerful asset that a company controls, I would say agree or disagree Thomas?
Thomas Alvord: (38:48) I would disagree slightly.
Zach Smith: (38:51) Okay.
Thomas Alvord: (38:50) I would say and I’m one that hates “branding”, because I don’t think branding matters.
Zach Smith: (38:55) It’s funny you say that too because I know where you’re going, I was going to say that to you know where it’s like we both hate “branding” but we realize there’s something to be said about somebody who spent the millions of dollars necessary to build that “brand” that everybody recognizes and of course that you’re number asset.
Thomas Alvord: (39:11) When you can buy two competing shoes, and one’s Nike, and one’s another brand you go with Nike and it’s not because they have an email list, it’s not because of anything it’s because the brand is so strong, and the trust there is so much trust there that we go and we pay the extra money, we pay the premium to get the Nike or to get whatever the brand might be. I would say that truly is the greatest asset a company has.
Zach Smith: (39:41) We’ve come a long way and realizing that too, if you asked us even a couple years ago we might not say what we are saying now, but now that we realize branding a little more and Funded Today is obviously trying for more of a branding approach as well, we’ve notice the power that comes with branding.
Thomas Alvord: (39:54) But I would clarify right because you want to do it smart as an internet marketer, as a startup, as an entrepreneur, as a small medium even a large business right you want to track your marketing and it’s called “Direct Response Marketing” for every dollar you spend, you want to know how much you’re raising in revenue, and really the genesis of “Direct Response Marketing” was “Mail Marketing” sending pictures, sending letters in the mail right mail catalog orders and seeing what the return was an A/B Testing different copies, A/B testing different envelopes, A/B testing different writing they would they would test all of that because they would know we spanned XML to raise why, and they would test so many different factors and it would be a science and with the web actually take that for granted because back in the day that used to not be the case, you see more and more companies like Google that are trying to build things out saying here is your “Cross-Channel Impact” you spent this much in marketing here, but here’s what the sales did over here, Amazon recently within the last year rolled out some marketing and you could actually see in terms of searches and marketing that you’re running on Amazon how many of those people who engage with your ads actually then went and made a purchase on your website. Again you have Cross-channel Attribution and how that all breaks down, and again that’s a lot to dive into and were not going to hear, but the point is that as a startup as entrepreneur as a business you always want to track what is your Return on Assets? What is your Return on your marketing? And branding historically has not been right, and how do you gauge that right? We put up, and I’m sure there’s ways they do it but here’s another Billboard for McDonalds “what’s the impact on that for the store closest to that billboard, or for the store 150 miles down the road when somebody stopping in Vegas on a road trip right. Those are the type of things that started to become really “nebulous and fishy” and somebody who starting a business running a business focused on profitability it’s just stupidity to focus on branding not even caring how that’s affecting yourselves or your bottom line.
Zach Smith: (42:31) Thomas is stating you exactly what we did to, we didn’t start a branding until probably the last year, year and half, and we are a pretty good company. We were in the Inc. 500, we were the third fastest privately held company in Utah, or number two in Utah, number three for advertising and marketing and so the thing that we did all that without really ever going the branding angle shows that what he’s talking about is true that then if you put the same practices into place you could have similar results.
Thomas Alvord: (42:58) It's like we often say will road run marketing that will get a good engagement and people say “Hey! I don’t like that, that’s not my brand” and what you always tell them Zach?
Zach Smith: (43:11) You don’t have a brand.
Thomas Alvord: (43:11) And while it is true, they’re building their brand right now, your focus needs to be on revenue, not building a brand and having some marketing with this flashy branding does not generate any sales, and is going to get you nowhere.
Zach Smith: (43:25) You know you get a good brand generate a lot of revenue to deliver a great product to your earliest adopters that’s how you start to build a brand.
Thomas Alvord: (43:31) Absolutely so yes email list in terms of marketing, I would say unless your this massive brand it is going to be your email list, because once you have that you can continue to market to these people again and again and again.
Zach Smith: (43:48) Well there you have it, set your website up the right way, you got to have those realistic expectations go for a Cost per Acquisition of break even if you can get better all the power to you, think in terms of multiples, multiple SKUs, multiple channels multiple places to sell your product, and then embrace am email list that needs to be the first thing you start doing because that will be your company’s number one asset before you branding comes into play.
Thomas Alvord: (44:13) Even though we talked about it’s not as easy as it might look you can’t just throw it on your website, don’t ever let that discourage you from starting a business. If anything, there’s always going to be hurdles to have to figure out, and that’s the power of starting a business right, because the greater the barrier to entry to a new product, new offering, the better chances you might have to success because of other people being able to get into the space.
Zach Smith: (44:44) In a way I feel we spoke about a handful of things saying “hey you can have one product, one SKU, just on your website, with only one sale, it's not going to work” don’t let that stop you. Let that simply help you think about how do I need to think about my strategy? How do I need to think about my brand? How do I need to think about what I do say on Amazon in conjunction with my own company website? Let these be items like we thinking, just like that entrepreneur I was talking about where he has a one product but he is already thinking now in terms of two, three, four, down the road and creating multiple SKUs and a brand, around just like Nomadic has done with lifestyle brand, or they were just a Wallet, and for all Thomas and I knew that was all they were going to be, but now they’ve got I don’t know 9, 10, 11 different products that they sell. All right it is our favorite part of the show again The Funded Today “Products of the Week” were going to give a little bit of a twist on it this week. Last week Thomas featured LastSwab, this week I’m going to feature LastSwab we both thought it was so cool that we figured it needed multiple features and we want to go take a look at it, because we’re excited about this one. This might be Funded Today’s greatest prelaunch campaign ever at the time of this recording it’s raising thousands of dollars every, every little bit, so it’s exciting to do just go to Kickstarter refresh the page and watch all the pledges coming in. Just a recap of what this product is? This is a reusable pretty much indestructible although it can be biodegradable as needed cotton swab. Think of a Q-Tip, but the last Q-Tip that you will ever need hence the name LastSwab. The reason this is so important is because the environment is getting polluted, there’s about 1.5 billion of these Q-Tip used every year and they end-up in landfills or they end up in oceans and I love the image on LastSwab’s Kickstarter page you to check it out, it shows this fish or the squid or something in it's a Q-Tip like wrapped around its mouth or something and it just looks terrible and sad that says problem that points down the and then a little arrow pointing to the left says solution just as beautifully crafted, mechanically design just absolutely amazing Q-Tip for crying out loud, I know I sound absolutely in love with it but I am and such a good idea. It’s washable, it is very strong, it has medical grade silicone and so it won’t get disgusting as you use it multiple times and you can literally just wash it off, and then just a little bit it's ready to use again. So such a great idea and I love that they’re trying to help protect the Earth and make the world just the little bit better place to live in so check it out LastSwab Kickstarter and I think you will love it, Thomas what you’ve got for us.
Thomas Alvord: (47:29) My product of the week is “The Golden Mylk Chocolate Revolution” by Endorfin Foods. It's a plant-based chocolate bar it’s made with turmeric O guess they call guess they call their signature formula that has caramelized coconut milk and coconut sugar. I like this I’m a vegan myself and have been for almost two years now. You get turmeric cardamom, black pepper, caramelized, coconut milk and has 40% cocoa, so if you’re into it chocolate, organic chocolate, veganism check it out it’s called “Golden Mylk” and milk is spelled with a “Y” “ instead of an I so that’s M-Y-L-K, “Golden Mylk”.
Zach Smith: (48:16) So there you have it “Life After Crowdfunding” we love this series, if you’ve got something else you want to talk about in this series, let us know in the comments. Today’s episode, “how to turn your website into a cash machine”, let us know what you thought about it, and put even just some of these actionable tips in play, and soon you’re going to have a website that you can build a sustainable business upon. If you got something valuable in this episode like I said please leave us a comment on our website, and gives us a review on iTunes we love hearing from you. We get weekly updates and that’s probably my favorite part of the week is reading what you our listeners say about the show, and what’s your learning and how we’ve helped you makes me really happy, we get a lot out of that. Remember next Wednesday we’ve got another out-of-the-box episode for you, we going to be talking about “Freedom” and how you can finally achieve everything you ever wanted to achieve in your business, and your personal life, it's not one of those audacious type titles but we think by understanding this concept of multiple freedoms really, really, impact your life. Not just your business but your life not you’re not going to want to miss this one, and remember don’t wait until tomorrow Get Funded Today.
Announcer: (49:18) Funded Today is the worldwide leader in Rewards Based Crowdfunding on Kickstarter and Indiegogo, combined they have raised over $200 million and counting for thousands of new ideas and inventions worldwide. If you got an idea for a new product or invention, visit fundedtoday.com to speak with one of their expert.
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