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148: How We Grew Our Ecommerce Store By 22% In 2016 With Steve Chou

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148: How We Grew Our Ecommerce Business By 22% In 2016 With Steve Chou

My wife just closed the books on BumblebeeLinens.com for 2016 and I’m happy to say that we had another year of double digit growth. In this episode, I go over in detail how we grew and what’s in store for 2017.

What You’ll Learn

  • Why it was a tough year for my shop
  • Our revenue and profit numbers for the year
  • The main contributors to growth for 2016
  • Why conversion optimization is so important
  • Why you need to keep an open mind
  • The importance of a mastermind group

Other Resources And Books

Sponsors

Klaviyo.com – Klaviyo is the email marketing platform that I personally use for my ecommerce store. Created specifically for ecommerce, it is the best email marketing provider that I’ve used to date. Click here and try Klaviyo for FREE.
Klaviyo

Privy.com – Privy is my tool of choice when it comes to gathering email subscribers for my ecommerce store. They offer easy to use email capture, exit intent, and website targeting tools that turn more visitors into email subscribers and buyers. With both free and paid versions, Privy fits into any budget. Click here and get 15% OFF towards your account.
Privy

ReferralCandy.com – If you’re already getting steady orders every month, adding a refer-a-friend program to your store can give you a new sales channel. And ReferralCandy is the best in the business. Click here and get a FREE $50 credit towards your account.
referral candy

SellersSummit.com – The ultimate ecommerce learning conference! Unlike other events that focus on inspirational stories and high level BS, the Sellers Summit is a curriculum based conference where you will leave with practical and actionable strategies specifically for an ecommerce business. Click here and get your ticket now before it sells out.
Sellers Summit

Transcript

Steve: You are listening to the My Wife Quit her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not with their businesses. I’m Steve Chou, and today we’re doing another solo episode where I break down how my online store performed last year and all of the strategies to increase sales for my online store, but before we begin I want to give a quick shout out to Privy who is a sponsor of the show.

Now I’m super excited to talk about Privy, because I use and rely on Privy to build my email list for both my blog and my online store. Now what does Privy do? Privy is an email list growth platform, and they manage all of my email capture forms, and in fact I use Privy hand in hand with my email marketing provider.

Now there is a bunch of companies out there that will manage your email capture forms, but I like Privy because they specialize in ecommerce stores. Privy is easily the most powerful platform that I’ve ever used, and you can trigger sign up forms based on any primers that you desire. So for example let’s say you offer free shipping for orders over $100, well you can tell Privy to flash a popup when the customer has $90 in their shopping cart to urge them to insert one more item.

Here’s another cool use case, if someone has item A in their shopping cart, I can easily tell Privy to display a unique and special coupon code for that item or display a related item for purchase. In terms of email capture, right now I’m showing a different email lead magnet depending on what product a customer is browsing in our shop.

So bottom line Privy allows me to turn visitors into email subscribers, which I then feed to my email provider to close the sale. So head on over to Privy.com/steve, that’s privy.com/steve, try it for free, and if you decide that you need the more advanced features, use coupon code MWQHJ for 15% off. Once again that’s privy.com/steve to try it for free.

I also want to give a quick shout out to Klaviyo who is also a sponsor of the show. Now I’m also blessed to have Klaviyo as a sponsor because they are the email marketing platform that I personally use for my ecommerce store, and I actually depend on Klaviyo for over 20% of my revenues. Now you’re probably wondering why Klaviyo and not another email marketing provider. Klaviyo is the only email platform out there that is specifically built for ecommerce stores, and here’s why it is so powerful.

Klaviyo can track every single customer who has shopped in your store and exactly what they bought which makes it extremely powerful. So let’s say I want to send an email to everyone who purchased a red handkerchief in the last week, done. Let’s say I want to set up a special autoresponder sequence to my customers depending on what they purchased, piece of cake, and there’s full revenue tracking on every single email as well.

Klaviyo is the most powerful email marketing platform that I’ve ever used and you could actually try them for free at mywifequitherjob.com/Klaviyo, that’s mywifequitherjob.com/Klaviyo. Give them a try, it’s absolutely free, and it’s a no brainer, now on to the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m doing another solo episode, and last week I reported on the earnings for my blog, and so what I thought I do is report on the earnings for my ecommerce store as well. So those of you that know me know that I also sell handkerchiefs along with my wife at a store at bumblebeelinens.com. If you guys have never visited our site and if you’re getting married go over there and I’ll hook you guys up, but that’s bumblebeelinens.com. If you want to check it out and kind of follow along with what I’m talking about today.

Anyways my wife just closed the books for Bumble Bee linens, and it was another double digit growth year end. This actually marks the ninth straight year of double digit growth, and if you want to put that in perspective, when I was working my full time job not too long ago towards the last several years, I was lucky just to get like a five to eight percent raise.
So when you compare that to our store where we’re consistently getting double digit increases in revenue and profits, it’s not even a comparison, and it just goes to show that the only way to make life changing money is with your own business. If you’re working a day job and unless you have a lot of stock options, it’s probably not going to happen.

So we’ll get into the numbers a little bit, but 2016 was actually supposed to grow even more with our online store, and I was actually planning on devoting a full half year towards expanding our linens business. But as I mentioned in the last podcast, I ended up officially declaring that I was quitting my job on June 1st, but ended up staying on part time until October 1st.
Now in addition to that I also decided to run my own ecommerce conference and it was the first time that I had run my own event and it ended up being a ton of work. Now I kind of went in knowing that it was going to be a lot of work, but again I didn’t know to what magnitude the level of work was going to be. So that ended up taking a lot of time to plan.

And speaking of conferences, I thought I just do a little quick plug for the 2017 Sellers Summit which is my conference; tickets are on sale right now at sellerssummit.com. I’m not going to talk at length about it, but here is my 30 second value proposition for my conference.

Now for those of you who know me I’m big on action and not really on inspiration. Every speaker that I invite actually gets his hands dirty in ecommerce, and will cover actionable strategies to actually grow your business. I’m also not a huge fan of large events where you can kind of get lost in the crowd. So my events will be small and intimate. Last year we only sold 100 tickets, and this way everyone gets to know each other and all the speakers as well.

I’m also not a huge fan of speakers kind of like hiding in their rooms during the event. Last year all the speakers were accessible and approachable, and that’s kind of one of the main value adds for my event. So go check out the conference site at sellersummit.com, and hopefully I’ll see you guys there. But anyways despite the conference, and the fact that I actually kept working until October 1st, I still made some major improvements to the site which I’m going to share with you guys today.

So first and foremost here are the numbers, so revenues went up 22%, operating profit went up 24%, traffic was flat and increased just 1.7%, but the desktop conversion rate went up 29%, tablet conversion rates increased by 18%, and mobile conversion rates increased by 88%. So a couple of things to point out about these statistics, the traffic was flat, and I actually did not really focus that much on customer acquisition. Instead this year – or last year I should say, I mainly focused on conversion optimization.

So all of my changes were aimed at making more money with what we had, and I’ll go into a little bit more depth about that a little bit, but I also want to take a quick moment to talk about the pain. Now 2016 was filled with turmoil, so let’s get some of the low lights out of the way first, because I honestly felt that we could have grown more had Murphy’s Law not taken place. One thing that just really sucks about ecommerce is that you got to feed the machine, you got to buy physical inventory, unlike digital products everything takes up space.

Towards the latter half of 2016, we were actually at max capacity in our warehouse, and by max I mean that every single nook and cranny was filled with linens, and we had so many that I debated whether to just use our linen like as napkins in everyday use because we just had things just like lying around all over the place.

And here’s the thing, we knew our lease was going to run out in 2016, and we knew this ahead of time so we actually negotiated month to month for it to stay, but here is what ended up happening. We had this huge container coming in from China, and we basically had no place to store it because we already were at max capacity in our warehouse and basically this gave us two options.
We could stay at our existing office and basically move a good portion of our business back in our house like a 24 container back in our garage and probably in our office or wherever, we had to find a place to store at our house, or we could just quickly speed things up and move into a larger office, and sign a longer term lease. What ended up happening is we had to make this decision in a hurry and ultimately we decided to move as that was the better long term solution.

So here is the thing, back when we moved into our first office it was really simple, because we didn’t have that many linens, but this time around it actually took six guys an entire weekend to move our stuff over. And because we were kind of in a rush like this container was just literally coming in pretty soon, we didn’t actually label everything properly, and as a result things were just really disorganized post move.
There were linens everywhere, we had problems finding everything, and to make things even worse we had the holiday season kind of rearing up just around the corner and it was kind of a disaster. Reluctantly my wife asked me to turn off ads, and I didn’t want to turn off ads because that’s just like leaving money on the table, and so I thought about it and I didn’t want my wife to go nuts, and so I reluctantly complied.

What’s funny is I just remember the conversation. I was like, “All right we can turn off ads, cool, so how about we turn it off for just like an hour, how about just two hours or four hours, you just need a half day to get back in business, right?” And my wife would come out to me, she’s like, “Have you seen the office, plus we have two brand new employees to train, there is no way we can handle all this business right now.”
So I didn’t want her to go crazy, I value my marriage and my family and my life and so I said fine. We left some money on the table by turning off ads for a while but eventually everything got organized, but that period of I would say three weeks really, really sucked when it came to our business.

I want to take a moment to thank ReferralCandy for being a sponsor of the show. Now in this day and age word of mouth is a huge driver of business for most ecommerce stores, and the best way to amplify word of mouth marketing is through a referral program. And this is where ReferralCandy shines, with just a couple of clicks to the mouse you could add a referral program to your ecommerce store and reward your customers for telling their friends about your shop.

And this tactic works wonders, and in fact it is not uncommon to get a ridiculous return on investment. So for example Greats Footwear, who is a ReferralCandy customer is currently seeing a 20X ROI, and referral word of mouth marketing is also useful for building up your social media presence as well, because everyone is talking about your company with their friends on Facebook and Twitter.

And the best part is that ReferralCandy is a set it and forget it service, requires no technical setup and they are giving My Wife Quit Her Job listeners 50 bucks to try them out if you go to promo.referralcandy.com/steve, once again it’s promo.referralcandy.com/steve to get a $50 credit to try out the service risk free. Now back to the show.

Well let’s talk about the improvements really, so those are some of the main low lights, but I did get a good amount of work done to actually improve the site, and the biggest change was that I redesigned our entire site. And here is how that kind of came about, because whenever I take on huge projects like I say redesign, it really has to make sense for me to do it.

So here’s how it went up. A bunch of us were in a mastermind retreat and we were doing hot seats, and basically what a hot seat is, is you go around, people ask questions and then everyone else tries to help you improve your business. And so when it came to my turn I was like, hey guys, my store the conversion rate is great, it’s like we have a 3%, I’ve got a ton of stuff on my plate and I’m wondering if redesigning the site should be one of those items that I should prioritize for this coming year.

The response to that was very harsh and very immediate, so Mike Jackness was like, you know what, I’m looking at your site, and I don’t see how you’re making any sales at all. I mean this site looks like it was designed in the 90s. A couple of other guys David and Jason were like, you know I think it needs a new logo, I think it needs brand new pictures all over the place. Dina was like these are the sites I like to buy and improve because there is just so much head room.

But the comment that actually impacted me the most was Kevin Steckel when he said, you know what dude; I actually wouldn’t buy your class based on how your store looks alone. And so this roasting actually went on for a good 30 minutes, and I just wanted to crawl up in a hole and die. We were actually in Montana at the time at the Ski Resort, and I just wanted to take the ski lift to the top of the double black diamond and just go straight down.

I tried my hardest not to get defensive which is actually something that I’ve been working on for many years now. When I’m getting constructive feedback, I try not to just argue with the person, I just take it, I just take the abuse. And so I just kind of sat there quietly and I ended up taking lots of notes. I didn’t necessarily agree with everyone’s comments, and here is actually my philosophy on website design.
Just because something looks pretty doesn’t mean it makes sales, functionality and usability is what determines sales. One of our largest competitors actually has a heinous looking site that does really well. But that being said, there were a couple of principles that I was not doing that I was actually teaching about in the class, and I didn’t want there to be this disconnect between what I was teaching and what I was actually implementing. And I actually do believe that you do have to have a minimum threshold and anesthetics on your site to not turn away customers immediately.

So ultimately it just comes down to trust, does your website design inspire trust in people that are actually coming to your site so literally as soon as the abuse or I mean the feedback was actually done, I ended up contacting my web designer that day and I started drawing out sketches in my mind about the improvements that I want to make to my site. And as soon as I got back from the mastermind, literally the day I hoped off the plane, I shut the door and I cranked out a 100% redesigned site in seven weeks.

Now it was a little bit bulky at first, but within a couple of weeks I had worked out the kinks and then I sent that site back to the people at the mastermind for another round of roasting. This time around the comments were much less severe, and it was obvious that it had made a difference based on the conversion rates that I was getting. So within the first couple of months, the uplift that I was getting was pretty dramatic, so desktop conversions were 46%, tablet conversions were 25%, mobile conversions were up 21%.

I was actually getting a lot of positive comments from customers as well who would email me saying, “I love your site, it looks beautiful.” Now once again how pretty a site doesn’t matter as much as you think, you just have to be kind of on par with your competitors in this department and just do things better. And so you have to express your value proposition very clearly, you have to make things very easy to find and navigate, you have to reassure the customer and establish trust, a customer has to trust you enough to hand over their money to you.

I posted about my site redesign and I’ll post another link in the show notes, but I wrote about everything that I considered in my site redesign in very great depth. But if there is anything to be learnt here, it’s that when people are bashing on something that you’re doing or trying to actually help you by providing constructive feedback, do not get defensive. Instead listen, pick what you agree with and what you don’t and then take action immediately while the iron is hot, and when you feel like jumping off the top of a mountain and crawling into a hole and dying.

All right, so back to the income report. One of the things that actually surprised me the most was that the mobile conversion ended up being 88% up in the latter half of the year, and there was actually one very minor change that I made to accomplish this feat which in retrospect I was a complete idiot for not doing this a lot earlier. That one change was actually implementing PayPal one touch.
Now what PayPal one touch is, is it allows a customer to log in to PayPal and all of their information is just magically imported into your shopping cart during check out, so they don’t actually have to type out anything. And so also if they happen to be logged into PayPal, the transaction literally is like one click check out on Amazon. And so as you can imagine if you are on a mobile phone, you don’t want to type anything, right? It’s much easier to just go through, have everything imported from PayPal and you just have to click one button and then check out.

And so this one single change removed the friction off of mobile transactions, and probably was the largest contributor to that increase in conversion rate on mobile. Now I made a couple of other changes as well. The other major change I made was to my Google shopping campaigns after talking to Daniel Packer who I’m actually having on the podcast very soon to talk about Google shopping. Right now Google shopping is the highest converting pay per click ad platform that I personally run on, but I discovered that I wasn’t doing the last 5% to maximally optimize my shopping campaign.

So for example my feed wasn’t optimized, I wasn’t uploading my reviews to the merchant center, I wasn’t using structured mark up on my pages. These things incidentally had been on my list of to dos, but sometimes it takes a kick in the butt and talking to somebody to actually get things done, and again I’ve written about this also which is all included in the show notes after this is done.

Now the other thing that I did which had a pretty good effect as well is I added several new email autoresponders using Klaviyo. Now what’s nice about email autoresponders is they are set it and forget it, so for example I wrote new post purchase sequences. Once again these are sequences after someone has purchased from us, and I segmented them based on what they bought. So for example if they bought hankies I sent them a custom post purchase sequence based on handkerchiefs. If they bought napkins, I sent them a very specific sequence based on napkins.

I also put in win back campaigns by sending email to customers who had purchased in the past but had not within a certain amount of time. So for example someone hasn’t purchased in 60 days, I sent them a 10% coupon, they haven’t purchased in 90 days, I sent them a 15% coupon. And so by sending them gradually increasing coupon amounts and this incidentally is called the discount letter, I’m trying to get customers back to make that second purchase, because it’s much easier to get a customer to buy again as opposed to acquiring a brand new customer.

I also put in this nifty abandoned new sequence that basically emails customer suggestions based on what they were browsing. And if you shop on Amazon you’ve probably noticed this in the past, if you’re looking at a certain item, within a couple of hours if you don’t buy anything Amazon will send you an email with suggested products that were very similar to what you were actually looking at on your site review.

And then finally I made a bunch of miscellaneous usability fixes that I actually discovered while answering phones on Cyber Monday and Black Friday. And yes business was so good during that period that I actually had to take one for the team and answer customer support calls so we could actually have the other members of the team focus on order fulfillment. Anyway so just to give you an idea of what some of these customers are like, a lot of our repeat customers are over the age of 55, and some of them can actually barely surf the web, and so answering phones for the first time in a long time was actually pretty eye opening for me.

So for example some of my customers could not figure out how to remove items from their shopping cart. What they ended up doing is they were entering zero for the quantity, and the way I had my set up before was I had a specific button to actually remove the item from the cart, entering in zero in the quantity was not removing items from the cart.

And so I fixed that, and other people couldn’t figure out, like these were 55 year olds or 65 year olds on their mobile phones. They couldn’t figure out where to tap, and the reason for that is I have pictures of the products and item description and the price, but there is no real call to action like add to cart under each item. And so I’m actually still in the process of making all the products and the pictures more obviously tappable on mobile without making the site look ugly, but these are just some of the things I discovered while answering phones and talking to some of our older customers.

But yeah bottom line sometimes you just have to pick up the phone and talk to people to find out what’s wrong with your site, and it actually gives you a chance to understand what your customer base is really like and what the pain points with your site actually are. But overall I’m really happy with the 22% increase in revenues, and this year I’m going to do a lot more work on the customer acquisition front now that the foundation is in place and my focus has mainly been on Facebook ads.

Naturally I’m going to report on my progress as more data becomes available, but I wanted to end this Facebook live and podcast episode by addressing a common question that has been brought out to me by several readers, and here’s how it reads, “Steve I saw your income report and how you made a million dollars with your blog this past year, congratulations. My question for you is should I go into ecommerce or should I blog? Because you have to actually carry inventory or deal with physical products it seems like running a blog and digital products is so much easier.”

So here is my answer to that question. If you need money sooner rather than later, then sell products online, but if you have a three to five year time frame, then in the long run maybe starting a blog makes more sense. To give you some perspective, I didn’t actually make a dime on my blog until after a year, and I didn’t make anything meaningful with my blog until after three years, and if you contrast that with my online store, we made six figures in our first year, because we were actually exchanging a product for money, whereas with blog and content it can be a lot more ambiguous unless you create a digital content.

And so today I actually run both because both businesses actually complement each other. I treat my ecommerce store like a laboratory where I try all these new things in ecommerce, and then I report on the results at mywifequitherjob.com and my training class at profitableonlinestore.com. I also report these results at my conference at sellerssummit.com. So my advice to you is no matter what you decide, just do something, and stop sitting round pontificating about it. And just depending on what your income goals are in the near term or the long term, pick a business model that is appropriate for you.

Hope you enjoyed that solo episode and I actually want to ask a favor of you. If you wouldn’t mind leaving a comment in the show notes and let me know if you would like to see more solo episodes, and because I do them live on Facebook, it’s actually good practice for me for my public speaking skills as well. For more information about this episode, go to mywifequitherjob.com/episode148.

Once again I want to thank Klaviyo.com for sponsoring this episode. Klaviyo is my email marketing platform of choice for ecommerce merchants, and you can easily put together automated flows like in abandoned cart sequence, a post purchase sequence, a win back campaign, and basically all of these sequences that will make your online store money on auto pilot. So head on over to mywifequitherjob.com/Klaviyo, that’s K-L-A-V-I-Y-O and sign up for free. One again that’s mywifequitherjob.com/Klaviyo.

I also want to thank privy.com for sponsoring this episode. Privy is the email capture provider that I personally use to turn visitors into email subscribers, therefore email capture, exit intent, and site targeting tools to make it supper simple as well. Now I like Privy because it is so powerful and you can basically trigger custom pop ups for any primer that is closely tied to your ecommerce store. If you want to give it a try it’s free, so head on over to privy.com, that’s PRIVY.com/steve. Once again that’s privy.com/steve.

Now I talk about how I use these tools on my blog, and if you’re interested in starting your own ecommerce store, head on over to mywifequitherjob.com and sign up for my free six day mini course. Just type in your email and I’ll send you the course right away via email, thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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147: How I Made Over One Million Dollars Blogging In 2016 With Steve Chou

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147: How I Made Over One Million Dollars Blogging In 2016 With Steve Chou

My wife just closed the books on MyWifeQuitHerJob.com for 2016 and I’m happy to say that I hit 2 major milestones this past year. In this episode, I go over in detail how I managed to make over a million dollars blogging and what’s in store for 2017.

What You’ll Learn

  • The 2 milestones I hit this year
  • Why I decided to quit my job
  • Why it was so hard for me to quit
  • The income report for my blog
  • How I hit the million dollar mark this year
  • My Facebook ads strategy
  • Should you start a blog or an online store

Other Resources And Books

Sponsors

Klaviyo.com – Klaviyo is the email marketing platform that I personally use for my ecommerce store. Created specifically for ecommerce, it is the best email marketing provider that I’ve used to date. Click here and try Klaviyo for FREE.
Klaviyo

Privy.com – Privy is my tool of choice when it comes to gathering email subscribers for my ecommerce store. They offer easy to use email capture, exit intent, and website targeting tools that turn more visitors into email subscribers and buyers. With both free and paid versions, Privy fits into any budget. Click here and get 15% OFF towards your account.
Privy

ReferralCandy.com – If you’re already getting steady orders every month, adding a refer-a-friend program to your store can give you a new sales channel. And ReferralCandy is the best in the business. Click here and get a FREE $50 credit towards your account.
referral candy

SellersSummit.com – The ultimate ecommerce learning conference! Unlike other events that focus on inspirational stories and high level BS, the Sellers Summit is a curriculum based conference where you will leave with practical and actionable strategies specifically for an ecommerce business. Click here and get your ticket now before it sells out.
Sellers Summit

Transcript

Steve: You are listening to the My Wife Quit her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not with their businesses. Now I’m Steve Chou, and today we’re going to do a solo episode where I break down how I made over a million dollars blogging in 2016, but before we begin I want to give a quick shout out to Klaviyo who is a sponsor of the show.

Now I’m actually super excited to talk about Klaviyo because they are the email marketing platform that I personally use for my ecommerce store and I actually depend on Klaviyo for over 20% of my revenues. Now you’re probably wondering why Klaviyo and not another email provider. Klaviyo is the only email platform out there that is specifically built for ecommerce stores, and here’s why it is so powerful.

Klaviyo can track every single customer who has shopped in your store and exactly what they purchased which makes it extremely powerful. So let’s say I want to send an email to everyone who purchased a red handkerchief in the last week, boom, let’s say I want to set up a special autoresponder sequence to my customers depending on what they purchased, piece of cake, and there’s a full revenue tracking on every email too.

Now Klaviyo is the most powerful email platform that I’ve ever used and you can actually try them for free at mywifequitherjob.com/Klaviyo, and the way you spell Klaviyo is K-L-A-V-I-Y-O. Once again that’s mywifequitherjob.com/Klaviyo.

Now I also want to give a quick shout out to Privy who is also a sponsor of the show. Now what’s also cool about Privy is I use and rely on Privy for both my blog and my online store. Now what does Privy do? Privy is an email list growth platform, and they actually manage all of my email capture forms, and in fact I use Privy hand in hand with Klaviyo.

Now there is a bunch of companies out there that will manage your email capture forms, but here’s why I like and chose Privy. Privy is easily the most powerful platform that I’ve ever used, and you can trigger sign up forms based on any primer that you desire. So for example let’s say you offer free shipping for orders over $100 in your store, now you can tell Privy to flash a popup when the customer has $90 in their shopping cart to urge them to insert one more item in their cart.

Here’s another cool case, if someone has item A in their shopping cart, I can easily tell Privy to display a special coupon code for that item or display a related item or offer. And in terms of email capture, I’m showing a different email lead magnet depending on what product a customer is browsing in our shop. So bottom line Privy allows me to turn visitors into email subscribers, which I then feed over to Klaviyo to close the sale, so head on over to Privy.com/mywifequitherjob and try it for free, and if you decide that you need the more advanced features, use coupon code MWQHJ for 15% off. So once again that’s privy.com/mywifequitherjob, now onto the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I have a very special guest and that special guest is actually me. Since my wife just closed the books on mywifequitherjob.com, I thought it would be good to kind of give a little recap of how I did and everything that I did this past year to reach the one million dollar mark, which is really cool.
I hit two major milestones this year, so first one I just mentioned I made over one million dollars in revenue which is something that I never thought that I’d be able to do with my blog, with my store certainly but not with the blog for some reason because it still feels like kind of funny money to me in a way.

The second major milestone that I hit was that I finally quit my job after 17 years of working at the exact same company. Now out of both of those milestones I would have to say that quitting was actually more difficult to me than making the money, and the reason why it was so hard for me is you got to understand when you are at a company for 17 years you build a lot of these friendships, and my entire identity was carried along with my profession.

And here’s the thing about me, I don’t know if you guys know this about me but I’ve known that I’ve wanted to be an electrical engineer since the age 10. My dad was an electrical engineer and really bottom line as an Asian; I really had only three choices to begin with. I could be a doctor, a lawyer, or an engineer, so naturally I chose an engineer because my dad was one.

I’ve actually designed micro processors for over 20 years, and so a lot of my brain power over the years has been dedicated to designing micro processors, and if you’ve done anything for that long, you probably know that it’s really tough to give something up like that, it was a part of my identity.

And here is the thing, so I was just up at my buddy’s engagement, and one of his friends came up to me and asked me, “Hey what do you do for living? I had already quit at that point and honestly I didn’t know what to say, am I a blogger, am I a writer, am I a podcaster, am I a conference thrower?

And so what I ended up telling that guy was, “I’m actually unemployed right now, and just kind of doing my own thing.” The guy was like, “Oh man okay that’s tough, if you ever need any leads or help getting a job, I can hook you up.” I said, “Oh no, no, that’s good, I’m just doing my own thing, it’s not a big deal.

I ended up just feeling a little awkward at that conversation because in the old days I could just say that I was a hardware engineer, a micro process designer and that would be the end of the conversation, because no one would ever want me to go into more depth about the technical stuff. Now if I say I’m a business owner or a blogger or a writer, the follow on questions are, oh yeah what do you write about, what do you sell and what not.

To be honest sometimes I don’t want to get into all that, and it was just so much easier back in the day just to say I’m an engineer, no one wants to know any more, and that’s that. I did want to talk a little bit about what it’s been like to quit, because it wasn’t like an amazing thing when I first quit and perhaps it’s because I was just kind of slowly leading up to that point.

I wrote a blog post back in June saying that I had quit my job, but that was actually slightly a lie. I did announce my resignation during that point, but the company gave me this really sweet offer to stay just two days a week, gave me full health insurance and there were some other line items to that deal which I don’t want to disclose publicly, but in a nut shell it was an offer that I could not refuse, and so I stayed on working two days a week, and then I finally left cold turkey on October 1st.

It’s just been okay, and one of the reasons why, and you guys might be thinking that I’m crazy for thinking this way, but I’ve got too much time on my hands right now. So right now I work until noon, I usually have lunch with my wife, then I usually work out in the afternoon, then I pick up the kids and that’s it pretty much. There’s just very little social interaction outside of Skype, I’ve got my Skype friends and that sort of thing.

What I found to be difficult about quitting is that it’s really hard to stay motivated in a way. In the old ways when I worked my full time job and I still run my blog, my podcast, and my store, I only had like a really small amount of time to get my stuff done and I had to plan my day really carefully. Now that I have so much time, I don’t feel like I have to plan anything and so big blocks of time can pass before you know it, so I’ve had to be a lot more diligent about planning my day.

But it has also allowed me to kind of figure out what makes me happy in life, and I’ll probably get into a little bit more about that in a future podcast episode, but having all this time has caused me to think about a lot of different things and what actually makes me happy. Anyways I don’t want to bore you with those details, let’s go ahead and jump to the numbers real quick.

So revenues for my blog increased by 46%, as I mentioned before we hit one million dollars. February was the highest month where I made over $125,000 in a single month, the traffic to my blog increased by 15%, the profit margins for a blog of course are astronomical, 90 plus percent. I just want to say this, what I really love about blogging is that it’s really highly scalable, and I can honestly maintain my blog in just 15 hours a week.

I’ve got it kind of down to a system, it takes me three hours to write a blog post, and I write one blog post per week. It takes me roughly two hours to put together a podcast, it takes me 10 hours roughly to manage my course and my email load and so overall it’s very scalable, and that’s what I like about blogging. Now what’s funny about all of this also is I routinely get a bunch of entrepreneurs on my podcast and even though the blog is doing really well, I still have my insecurities so to speak.

Now I recently interviewed someone who is really high profile and if I told you who this person was you would instantly recognize that person, world renowned author. He basically flat out told me that my blog was just a job and not a business. At first I was going to argue with him and debate back and forth, but he is right in a way, the blog and everything I do that’s related to the blog cannot function without me being there, like I got to be the one to write the blog post and that sort of thing.

Of course I can probably contract it out but it just wouldn’t be the same if I wasn’t putting out that content myself. So instead of trying to argue with the guy I just let it go because honestly at 15 hours per week it’s not really a bad gig and a million bucks is nothing to sneeze at either. But anyways you probably noticed that the traffic to my blog went up only 15% and the revenue actually went up 46%.

For 2016 my intention was actually not to grow the blog that much. I was going to focus all my efforts on my ecommerce store and what ended up happening was I didn’t end up focusing my time on my blog or my store all that much because I ended up working until October, that was kind of unplanned. But I did want to talk a little bit about how I did grow my blog that 46%, so one of the things that I did was I ran more webinars.

I just want to take a little bit of time to give a quick shout out to Grant Baldwin and Toni Anderson who kind of pushed me towards giving webinars a try because I did not want to give them at all. I can be someone anti social at times, I like to hide behind the computer and do coding, I don’t really particularly like doing webinars.

The space for blogs is a little bit different because it’s a little more off the curve and I can just talk about whatever, but I was reluctant to try it, but then Grant sent me this spreadsheet of all of his profits that he was making with his webinars, and then Toni kept nagging me to give it a try. Nagging is probably not the right word; she kept urging me to try because she knew that it would be big for me.

So I ended up doing one and I made $60,000 in 90 minutes of work, and then I just sat there I was like $60,000 in 90 minutes of work, all right, it’s not bad, I can do these, I can do even once a month.

I want to take a moment to thank ReferralCandy for being a sponsor of the show. Now in this day and age word of mouth is a huge driver of business for most ecommerce stores, and the best way to amplify word of mouth marketing is through a referral program. And this is where ReferralCandy shines, with just a couple of clicks to the mouse you could add a referral program to your ecommerce store and reward your customers for telling their friends about your shop.

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And the best part is that ReferralCandy is a set it and forget it service, requires no technical setup and they are giving My Wife Quit Her Job listeners 50 bucks to try them out if you go to promo.referralcandy.com/steve, once again it’s promo.referralcandy.com/steve to get a $50 credit to try out the service risk free. Now back to the show.

And I still don’t completely enjoy doing them, so I just do them once a month, and what’s cool about these webinars is that it’s like instant cash, so during the month of November my wife told me that I was short of my million dollar goal by about $30,000, and I was like don’t worry about it I’ll just do a webinar. And so I just did a webinar a couple of weeks later and that webinar ended up doing $50,000 and so I hit my goal in early December actually.

Now the funny thing about webinars is I don’t really know how they work. When I get on a webinar I’m certainly not an expert but it just converts so well, and I think it really has to do with like the real time and personal nature of giving a live webinar. I always stay on till the very end to answer as many questions as possible and for all of you guys who know me, I’m not really a sales guy, I’m not a sales person by any means.

So what’s funny about all this also is I started having these successive webinars, and I ended up giving two speeches about webinars at FINCON and Digital CoLab which are two awesome conferences this past year. If anyone is interested about how I ran my webinars, I could be coaxed into doing a Facebook live session or even a podcast about it if you guys are interested. If you guys are interested leave a comment in the box for me.

The other thing that I did to grow my blog this past year is I ran a lot of Facebook ads. Now for all of you guys who aren’t quite familiar with what I sell, I sell a course that retails for about $1300. Now no one is going to spend $1300 dollars with me on impulse, and you got to get people to like you, you got to get people to trust you. Very few people will actually even sign up for your email list unless they trust you.

And so what is started doing this past year is I started running ads to some of my best content. These are great blog posts that I had written in the past just to get a little bit of mind share and then I ran ads to these posts. When you ran ads to posts, it ends up being really cheap. Some of my best posts and ads, I’m paying like nine to 13 cents per click which is really good.

And then what I do, for all the people who actually land on that page and read the article, I retarget them to an email sign up page, and because they are already familiar with my work, they’ve read a blog post, they are much more likely to sign up for my email list and as a result I’ve been paying between one and two dollars per email sign up for those people who’ve actually experienced my content in the past.

I’ve also tried running ads straight to a sign up form but I end up paying a lot more money when I do that, sometimes on the order of five or six dollars. So just by sending people to content first and then a sign up form, it ends up being cheaper and much more effective. So right now I’m not really scaling these ads, but I plan to this year in 2017, and I’ve got a strategy plan for this year that I’ll probably talk about publicly a little bit later once I’ve implemented it and once I know that it actually works.

Ultimately the key to all of my course sales is email. Email is the backbone of my entire blogging business. Now for all of you guys who are unfamiliar with that, I offer a free six day mini course on how to start your own ecommerce store, and if you’re curious right now you can head on over to mywifequitherjob.com, there is sign up form right there on the front page and I’ll deliver that course to you via email.

Now I’ve given a bunch of talks about my email sequence in the past, but I’ll just quickly summarize a little bit. The first nine lessons of that free six day mini course are hard core teaching lessons and I actually don’t hold anything back. I teach you everything that it takes to get started in ecommerce, so it’s a 30 email sequence, and the remaining 20 or so emails are what I call get to know Steve type of emails.

What’s funny about this is I have separate emails targeting females and separate emails targeting males in particular to just kind of get them to jump on the Steve band wagon so to speak. So for example for the women I have an email that talks about when we had our first born and she couldn’t stop crying. I talk about the story how I felt so prepared for my first baby.

I was reading all these baby books and I just got really cocky about being able to calm down a baby, but when my baby girl finally came out, she ended up crying uncontrollably and all that book knowledge that I had amassed was worthless. I ended up [inaudible 00:17:57] the baby at last and buying all these toys to help pacify my child, and the point of that email of course is to say that no matter what you read online, and no matter how many books you read, you’re never going to be prepared to start your own business and that’s why you need extra instructions to sign off for my class.

So that email actually goes put to the women. For the guys I have a post on six pack abs and comparing getting six pack abs to starting a business, so it’s really funny. So for both of those posts I always get a lot of comments on the six pack one from guys and a lot of comments from the women about the baby post.

For those later 20 emails I also do a bunch of case studies with my students and needless to say that this email sequence converts really well to get people to actually sign up for my class. Now one other thing that happened this past year which was just really incredible for me was on May 19th, 2016 I started my own conference which is called the Sellers Summit.
Here’s the thing about the Sellers Summit, I had always wanted to be a keynote speaker, but no one was willing to let me become a keynote at any of their conferences, and so instead of kind of begging people to let me be their keynote, I decided to start my own conference instead. And once again I want to give a special thanks out to Toni Anderson for pushing me to do this, and she is actually a partner with me in launching this conference.

Anyways this conference was actually the most fun that I’ve ever had outside of my wedding reception just in case you’re listening Jen, and I had a blast and I decided to throw another one and I’ll probably do a separate FB live on this. But the reason I started the conference of my own, and there are other ecommerce conferences out there, it’s mainly because I was just tired of conferences with just inspirational speakers.

I wanted to start a conference that was more strategy focused, based on strategies and low level tactics and kind of avoid all the inspirational stuff, because I don’t know if you guys know my personality but I don’t need to be inspired, I just need to learn. And I was just betting that a bunch of other people out there had the same philosophy. And so as a result, I only get hardcore ecommerce [inaudible 00:20:17] to actually talk in my conference.

These are entrepreneurs who are actually getting their own hands dirty. There is a huge difference in actually doing something versus having high level knowledge about something or even contracting stuff out to other people. I like to get speakers who are kind of deep in the trenches and doing everything and getting their hands dirty. And so the summit was actually designed to provide very actionable content.

The other thing that I was just kind of tired about other conferences was going to like multi thousand person events, like you can get really lost in the crowd when there are just so many people there. And so I purposely made my conference very small and intimate, so I could actually form some meaningful, intimate relationships, and so those are some of the cool philosophies why I decided to start my own conference besides wanting to be a key note of course.

I just want to give a quick shout out; tickets are on sale right now for the Sellers Summit. Go to sellerssummit.com, the price is actually going to go up on February 1st, so be sure to get your tickets before the price goes up.
Now the other thing I did, or I should say that I’m constantly doing is I am always improving my class. Now here’s the thing about courses, if you don’t update them, they’re going to get stale and what’s ironic is that the more work that I put forth on improving my ecommerce store; it actually improves my training class because it creates a lot more material for me to teach.

And so I spend portion of the year improving my online store and I’m not going to go into too much depth about what I do for my store because incidentally the next podcast is going to go over the year and recap for my ecommerce store. But I’ve been updating my course constantly with all the latest things that I’ve been doing to improve my online store.

So a couple of these things are I completely revamped the email autoresponders for my store, I experimented with a lot of Facebook ads for my store, I talked a lot about conversion optimization, I invited more guests to the class, industry experts to come talk to the students about areas of their expertise. I also sent out the survey and was very pleasantly surprised by the results.

Here’s what’s really cool, 56% of the students who have been with me a year and launched their own product are now making at least four figures per month, and 9% of these students are making more than $50,000 a month in revenue which is really awesome, it makes me feel really good, I’m going to try to get some of these students to come on the podcast to talk about their experiences.

You probably have already heard from Jen Depaoli who runs showercurtainhq.com, you may want to check out that episode if you haven’t listened to it, but right now I have two other students lined up to tell their stories as well. So given my results in blogging and the fact that I made over a million dollars this past year, does that mean that you should go out and start blogging or should you start an online store, and I get this question a lot because I’ve been successful in both areas.

The answer I always give is it depends on your long term goals. I’m going to be upfront and say this, blogging is a slog, it actually took me three years before I made any sort of meaningful money with it and it can be hard to do something for three years and not have anyone really reading your or making any money, but it’s really incredible once the money does start rolling in because it ramps up really quickly.

Contrast that with my store. I actually ended up making six figures right away, but in the past couple of years the growth has slowed. It’s still in the double digits, we’ve maintained double digits since 2007, but it’s not as high as the blog. So bottom line if you want to make money sooner rather than later, you want to sell something online, and so if you want to make money soonest, go with the online store because you have a product you’re putting it up there and someone is exchanging you money for an actual product.

But if you have a three to five year time horizon I would say I would start a blog, maybe a podcast and really build your own personal brand. So of the two businesses that I had today I feel like the blog has much higher barriers to entry because no one can take my identity away from me. I’ve built up a personal brand, and this is despite the fact that my mom constantly asks me, why are people reading your stuff? I told her my results actually, I told her that I did a million dollars, and she is like what, why are people buying your stuff? And so at least now it’s gone from why are people reading your stuff to why are people buying your stuff.

In the Asian land that’s like a huge upgrade in terms of place. Anyways that’s pretty much all I had to say about how my blog performed in 2016, going forward I don’t know if I want to take on any additional products, projects just yet. I do have a software product that I’m hoping to release later on this year, but for now I’m just going to focus on making my existing properties better.

Hope you enjoyed that solo episode. Next week I’m actually going to be talking about how my ecommerce store performed in 2016, and discuss all the changes that I made to make that happen and grow that business as well. For more information about this episode, go to mywifequitherjob.com/episode147.

Once again I want to thank privy.com for sponsoring this episode. Privy is the email capture provider that I personally use to turn visitors into email subscribers, therefore email capture, exit intent, and site tagging tools to make it supper simple as well. Now I personally like Privy because it is so powerful and you can basically trigger custom purpose for any primer that is closely tied to your ecommerce store. So if you want to give it a try it’s free, so head on over to privy.com/mywifequitherjob.

I also want to thank Klaviyo, which is my email marketing platform of choice for ecommerce merchants. Now you can easily put together automated flows like in abandoned cart sequence, or post purchase flow or win back campaign, basically all these sequences that will make you money on auto pilot. So head on over to mywifequitherjob.com/Klaviyo, once gain that’s mywifequitherjob.com/Klaviyo.

Now I talk about how I use these tools Privy and Klaviyo on my blog, and if you’re interested in starting your own ecommerce store, head on over to mywifequitherjob.com and sign up for my free six day mini course. Just type in your email and I’ll send you the course right away, thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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146: How To Grow From A Company Of 1 To A Company of 1000 With Michael Gerber Of E-Myth

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How To Grow From A Company Of 1 To A Company of 1000 With Michael Gerber Of E-Myth

Today, I’ve got an extra special guest on the show. He’s an author who I’ve followed ever since I started my first business.

He is an amazing speaker, author, and business consultant who has coached more entrepreneurs than anyone I can think of.

His book the EMyth Revisited is considered required reading for anyone wanting to build a business of their own and changed my way of thinking about small business.

He’s the founder of the dreaming room, a 3 month program that introduces you to a new way of thinking about entrepreneurship.

Now if you don’t recognize who I’m referring to yet, it’s the one and only Michael Gerber. Enjoy the interview!

What You’ll Learn

  • The biggest mistake that new entrepreneurs make
  • Why most businesses are broken
  • The necessary personalities of a successful long term business owner
  • How to size up a business
  • The mindset required to build and scale a business for sale
  • Questions you need to ask yourself before you start your business

Other Resources And Books

Sponsors

ReferralCandy.com – If you’re already getting steady orders every month, adding a refer-a-friend program to your store can give you a new sales channel. And ReferralCandy is the best in the business. Click here and get a FREE $50 credit towards your account.
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SellersSummit.com – The ultimate ecommerce learning conference! Unlike other events that focus on inspirational stories and high level BS, the Sellers Summit is a curriculum based conference where you will leave with practical and actionable strategies specifically for an ecommerce business. Click here and get your ticket now before it sells out.
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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not with their businesses. I’m Steve Chou, and today we’re talking with Michael Gerber, who is the world renowned author of the E-myth series of books. You will learn how to create a company from the ground up the right way so that it’s scalable and sellable.

In other news I want to let you know that the tickets for the 2017 Sellers Summit are now on sale at sellerssummit.com. Now what is the Sellers Summit? It is the conference that I hold every year that specifically targets ecommerce entrepreneurs selling physical products online. Unlike other events that focus on inspirational stories and high level BS, mine is a curriculum based conference, where you will leave with practical and actionable strategies specifically for an ecommerce business.

In fact every speaker I invite is deep in the trenches of their ecommerce business, entrepreneurs who are importing large quantities of physical goods, and not some high level guys who are overseeing their companies at 50,000 feet. The other thing I can assure you is that the Sellers Summit will be small and intimate. Last year we cut off ticket sales at around 100 people, so this event will sell out quickly, so once again that’s sellerssummit.com and go check it out.

And if you want to learn how to start your own online business, be sure to sign up for my free 6 day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business, so go to my wifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email. Now onto the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’ve got an extra special guest on the show. He is an author who I have followed ever since I started my first business, he’s an amazing speaker, author and business consultant who has coached more entrepreneurs than anyone I can think of. His book The E-myth Revisited is considered a required reading for anyone wanting to build a business of their own, and it actually changed my way of thinking about small business.

He is the founder of the Dreaming Room, a three month program that introduces you to a new way of thinking about entrepreneurship, and if you don’t recognize who I’m referring to yet, it is the one and only Michael Gerber, and with that welcome to the show Michael, how are you doing today?

Michael: I’m great Steve and thanks for the lovely introduction.

Steve: So Michael I know your work well, but for the benefit of the listeners who may not have heard of you before, can you kind of tell us what led you to write the E-myth series of books and at a high level what the E-myth is all about?
Michael: Sure, well the reason I wrote the book is because we had been working for seven years prior to the publication of the book with small business owners, and when I say working with them I mean we were teaching them a whole new paradigmatic way of thinking about what they do every day.

And so that came to the whole idea of the e-myth, the e-myth is the entrepreneurial myth and it essentially says that despite the fact that most people believe if you own a small business you’re not an entrepreneur, the contrary is true that in fact very few small business owners are actually entrepreneurs. They are what I’ve come to call technicians, suffering from an entrepreneurial seizure, meaning they simply created a job for themselves, another working for a lunatic.

Steve: Meaning themselves, right?

Michael: Yeah of course. And so our work over the past 40 years, we launched our company in 1977, has been to actually transform the state of small business by awakening the entrepreneur within a small business owner so that he or she can approach the act of business development with a completely different perspective about how to do that work.

We have an expression that I’m sure you know; you’re familiar with my work. It says, “Work on it not just in it,” and 99% of all the people we ever meet are just working in it, meaning they are their business, they don’t own one. And so their business is completely dependent upon them, if they are not there, it doesn’t work.

Steve: Okay, so let’s expand upon that a little bit. I know a bunch of people in the audience have probably read your books, what would you say the biggest mistake is that new entrepreneurs make in trying to actually follow your principles and making your business the product and that sort of thing, why are most businesses broken?

Michael: Well the biggest mistake they make is by not following my principles, meaning they might think they are following my principles but there is no rigor to it, understand the rigor is key.

Steve: Do you have any examples of people who kind of fall into this category of people that you’ve worked with, I know you’ve worked with thousands of businesses in the past, so maybe if there is some things like watch out for that you can talk about?

Michael: Well sure, but rather than talking about the people who didn’t do it, let me just talk about just a handful of people who did do it.

Steve: Sure okay it sounds good.

Michael: A perfect example is a company I’m sure you know, Infusion Soft.

Steve: Yes.

Michael: Infusion Soft is a great example for a company that truly internalized my e-myth point of view and then went on to actually participate in a dreaming room with me, and that is not several months process, it’s a two and a half day process. I now call it the new dreaming room to align it more with Beyond the E-myth rather as it was with the original e-myth books.

Infusion Soft came to me about six and a half years ago, and they were introduced to me by a good buddy of mine, and they wanted to spend two and a half days with me with a large audience, not an audience of them spending the day with me, but an audience they are spending those two and a half days with me in what I call the dreaming room.

Steve: Can we talk about what the dreaming room is first before you go on?

Michael: Sure, the dreaming room is really the first half of a process for creating a company that works, I call the strategic half, and I’m saying that without it, in the absence of that process most companies will fail. The dreaming room really works around the four personalities that exist within a true entrepreneur.

I call them the dreamer, the thinker, the story teller, and the leader. The dreamer has a dream, the thinker has a vision, the story teller has a purpose, the leader has a mission. I’m saying every entrepreneur, no matter what their company aim is, no matter kind of a company it is, no matter what industry they are in, every entrepreneur is a dreamer or thinker or story teller and a leader or they are not an entrepreneur.

And so our first job obviously is to awaken the entrepreneur within every small business owner on the planet, and we do that in the dreaming room and now in the new dreaming room.

Steve: And does that imply that those traits can all be within everybody, or do you need to …

Michael: Everybody, and everybody does ask that question, what if I’m a dreamer but I’m not a thinker, what if I’m a thinker but I’m not a dreamer, what if I’m a this and I’m not a that, and I’m simply saying get with the program. In other words Steve they all have to be there, because without one part of you, there is no venture possible, there is no enterprise possible, you can’t buy that, you have to develop that.

And so it’s a process of you might say personal growth toward the evolution of a great enterprise, and until you’ve done that you don’t really understand what I’m talking about. So you have to simply a measure of trust, the guy has been doing this for 40 years. Everybody speaks about the E-myth. If you haven’t read the E-myth you don’t know anything on and on and on and on, so at least I’m saying somebody got to simply give me a pulse and say okay I’m going to do that Gerber.

Well that’s what the Infusion Soft guys did. When they came in it was a very small company, they didn’t know where they were going, and because they didn’t know where they were going they obviously didn’t know how they were going to get there. They thought they were a software company, in the dreaming room they discovered in fact something significantly different than that, and they discovered their dream, their vision, their purpose and their mission and their minds were blown.

In fact today Clate Mask, the CEO and one of the key share holders of Infusion Soft says that there are three major contributions that led Infusion Soft to where it is today, and one of those was Michael Gerber in the dreaming room.

Steve: Okay, so back when they were a small company or just a software company, which one of those elements were they lacking actually that you helped them with?

Michael: They were lacking all of it.

Steve: Oh really?

Michael: They didn’t really have a dream, they didn’t really have a vision, they didn’t really have a purpose, they didn’t really have a mission. Understand these words, everybody has heard but not in the context in which I use them. So let me give you an example of that, in my case my dream way back then in 1977 when we started out – in short at the very beginning my dream was to transform the state of small business worldwide.

My vision was to invent the Macdonald’s of small business consulting. My purpose was that every independently owned small business can be as successful as a Macdonald’s franchisee, or if they truly get it as successful as a Macdonald’s franchiser itself. And finally my mission was to invent the business development system that was absolutely critical to grow any company.

And that’s how we started out in 1977, and it’s the wager of that, that has created our company and our ability to do the work that we have done and the ability to do what we did with a company like Infusion Soft, like 1-800-Got Junk and on and on and on and on, company after company after company, we’ve worked with over 100,000 clients since we formed our company in 1977.

Steve: Do those aspects of your business, do they ever change over time or are they kind of like steadfast things that you decided in the beginning?

Michael: No they never change.

Steve: They never change, okay.

Michael: My dream is the same, my vision is the same, my purpose is the same, my mission is the same. Some of the how we do those things change of course as new technology comes forward, as the internet has changed, as this has changed, as that … How we do what we do is altered, but the core baseline for what we do and why we do it hasn’t changed at all.

Steve: So is the reason why you need to figure this out because it dictates all of your decisions going forward, is that the fundamental principle?

Michael: But of course, it’s the heart of it.

Steve: Okay and so people go to your dreaming room like Infusion Soft and you allow them to discover for themselves what these primers are with their business, and then what is the next step?

Michael: Well we don’t allow anything; we take them through a rigorous process. The process generates insights, perspective, a paradigm that is an internal experience for the people who are there. We don’t tell them what their dream, vision, purpose, and mission are.

Steve: Of course.

Michael: They do, but it’s the process through which we stimulate and inspire them to discover something they didn’t know before they came in the door so much so that Infusion Soft if you were to walk into their company today which is now doing 100 million in revenue with close to 1000 employees and hundreds of contractors, you discover on their wall, our dream, our vision, our purpose, our mission written explicitly on the wall so that everybody can see it.

Steve: So once you’ve figured these things out about yourself and your company, what is involved next in taking it to a business of one to a business of 1000?

Michael: Well that’s cool; I call this the tactical component of this thing we’re talking about.

Steve: I would imagine most people that come to you are probably interested in tactics, right, is that correct?

Michael: Oh yeah everybody want more sales, I mean that’s all everybody wants, more sales, more sales, that’s why – in fact the primary business service out here on the planet is we’re going to show you how to get more sales, more sales, more sales and we don’t do that at all, because in our case what we’re essentially saying if we will define a way to get you more sales, we destroy your company, because you couldn’t handle them.

Steve: I see.

Michael: And you couldn’t handle them because you’re not organized to handle them.

Steve: Because the process is not in place?

Michael: Right, the system is not in place, so that’s the second half; I call it the job, the practice, the business, the enterprise. What we used to do, we used to fix broken businesses, in other words the whole business of E-myth for years has been fixing broken small businesses. And so we’d start out to fix the broken small business, step one step two and step three etcetera, we’ve stopped doing that. We don’t fix broken businesses any more, we start new ones.

So we’d say to anybody coming to us, look we’re not here to fix your broken business, and we can guarantee you it’s broken and I can demonstrate that in a thousand ways, but that’s not a problem if you do that process right now. Let’s just accept the fact that you’ve got a business that you’re doing whatever you’re doing, it’s producing whatever it’s producing, I’m going to call that business old co.

What we’re going to work on though is new co, we’re not going to fix the business you’ve got, we’re going to create the company you want, so we’re going to start it a new and we’re going to start it a new by discovering what your dream, your vision, your purpose and your mission are. Once we have done that we’re going to start to go to work on your company from step one with a blank piece of paper on beginners mind to first determine what your client fulfillment system is, I call that the job.

So we’re going to go on, on the job to design, build, launch, and grow and turnkey your client fulfillment system, that is what you deliver to your most important customer, turnkey…

Steve: So the concept of Infusion Soft … go on sir … yeah before you go on I was just going to say in the concept of Infusion Soft here the delivery system I guess would be their email marketing software?

Michael: Of course, but not just the software, the whole methodology by which they work with a client.

Steve: So the on boarding process?

Michael: Well the on boarding process, the continuous improvement process, the continuous help that they provide, no not that way, this way, no not that way, this way, the constant process by which they engage their client to become a significantly more functional representation of what Infusion Soft was created to do.

Steve: Okay and then in terms of old co and new co, Infusion Soft, did you tell them to throw away their old or was this…

Michael: No it wasn’t throw it away, it’s never throw it away, just keep and let it do what it’s doing. In the meantime we’re going to create new co over here, and as we build new co gradually old co is just going to disappear.

Steve: Okay I understand, so sorry I interrupted your thought.

Michael: No but a great question. So the job, so first we’re going to create the client fulfillment system, and we’re going to turnkey it, we’re going to document it, we’re going to be able to transfer it to another guy, another guy, another guy, another guy meaning inside of the company the people who are responsible for delivering the client fulfillment system will have a turnkey methodology in order to deliver it with integrity to every single client that they get, you follow?

Steve: Yes, so do you work on all these things before you even get your first customer because the way a lot of people work is they just try to get customers just to validate what they are trying to do first and then put the process into place.

Michael: Yeah, you’re getting customers validating the job, the client fulfillment system, but even if you’re giving it away, you’re testing it, validating it, quantifying it, reassuring yourself that the way you do it actually has the impact you intended it for their house.

Steve: Okay, so this is like ongoing process, it is not something you have in place before you get your first customers, right?

Michael: No it’s an ongoing process, and I describe that ongoing process very, very clearly in Beyond the E-myth book, so that anybody who is listening to us right now, if they get the book, they will be able to understand much more clearly what the dream is, what the vision is, what the purpose is, what the mission is, what the client fulfillment system is, the process by which you do the work that I’m describing here.

Steve: Okay, don’t worry we’ll link all that stuff in the show notes with a link to the book.

Michael: So the next step is practice, and the practice is what I call the three legged stool. Now we’ve created the turnkey client fulfillment system, that’s absolutely critical, that’s why I said that everybody wants to get sales, sales, sales, sales but they don’t have a turnkey client fulfillment system, so even if they got sales they wouldn’t be able to replicate their ability to deliver the result that in fact they are designing their company to do.

So they’re setting it off on a completely awkward and dysfunctional path. So I’m saying these steps are so critical and absolutely essential if somebody is going to create a company that ultimately will become a leader in what it sets out to do. You got to do it, so the three legged stool is lead generation, lead conversion, client fulfillment.

Sure now that we’ve tested, validated, secured the ability of our client fulfillment system to work, now we’re going to put the pedal to the metal and attract more people to buy it, and that’s the three legged stool, lead generation, attracting people to our door, lead conversion, converting them into customers, client fulfillment, converting those customers into clients.

You can begin to see it as the franchise prototype. So effectively the six step in this process is step one is the dream, two is the vision, three is the purpose and four is the mission, five is the job, the client fulfillment system. Six is the practice which is the client acquisition and client fulfillment system integrated into one thing, that’s your franchise prototype. One you turnkeyed that system, you can now put the pedal to the metal and grow your company into a business.

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So in the book you often mention the franchise prototype and when you use the word franchise, are you kind of using it loosely here, because when I think of franchise and you mention this in the book Macdonald’s all the time, when you use the word franchise, are you talking how like the franchise business model or in terms of just making your business scalable and allowing other people other than yourself to run it?

Michael: Franchising is simply a model for expanding the reach of your company, it’s a distribution model. So when I say franchise, note that Starbucks isn’t a franchise, those are all company owned stores, and understand but those company owned stores operate like a franchise, there is a barrister in every single one of them.

Every single one of them are identical to every single one of them so that business model that they have developed is in fact their franchise prototype. Once they roll that franchise prototype to store number two, they were going into the process I’m describing now which is the development of your business, and the business resides in the turnkey systems of lead generation, lead conversion, client fulfillment, but also with the turnkey management system.

Steve: Okay, can we talk about the turnkey management system a little bit; can you talk about exactly what that is in an example maybe in Infusion Soft company concept since we we’ve been talking about that company?

Michael: Absolutely, the turnkey management system is our ability to assure ourselves that every single one of our practices think chiropractor, think graphic designer, think whatever, whatever business you are in, every one of them is utilizing the system we’ve designed, built, launched and grown for the very purpose of replicating ourselves faithfully with great integrity everywhere we live.

The management system determines that in fact that is happening, so it’s the oversight that’s critical if the business is going to have integrity in the operational deliverable that effectively we’ve designed, built, launched, and grown, you get my point.

Steve: So does that imply then – is this all based on metrics that you set up for your company then?

Michael: Of course they are metrics that we set up for our company, but the metrics that we learn as we implement what I’ve
just described and it speaks to us, we’re quantifying it, how many of those, how many of those, what is the conversion from this to that and on and on and on and on. We begin to understand the metrics of our business and we manage to do it.

Steve: So the concept of your company for example, what were some of the metrics earlier that you used when you were going out and consulting other businesses?

Michael: All right very, very simple. We would call on a small business down the street, way back then at the very beginning we had what we called marketing associates who knocked on doors. They would walk into every small business, every business in our trading zone and effectively they had this script and they would invite them to a free seminar.

So we had to measure the number of calls that were made, the number of business owners that were talked to, the number of invitations that were delivered, the number of enrollments that were made, the number of people who showed up at the seminar and the number of people who showed up for the needs analysis that we would do following the seminar, the number of people who having done the needs analysis and on and on and on, you get my point?

Steve: Yes I do, so how do you know what metrics are good, like how do you determine what your goals are or what metrics you should expect to see?

Michael: You make it up at the beginning, you make it up. So as an example we’re rolling the new dreaming room out to 150 markets, and that means we will open our doors in 150 cities and deliver a new dreaming room in every one of those cities once each month. We know that that dreaming room we delivered to 50 participants, and so we’ve set the objective for 50 participants. We know that those participants will pay $3,000 to participate in that two and a half day experience, and we’re projecting that 30% of those participants will enroll in Beyond the E-myth program.

So we’ve set out some goals, let’s call them that and we’ll measure our performance against those, and as we begin to measure our performance against those, we’ll look at what constituted our performance, meaning there is a leader of a dreaming room. Did the leader use the dreaming room system they were trained to use and on and on and on and on?

All of these measures come to bear on our performance in every one of those markets nationally, internationally because we’ve tested them, validated them, and improved upon them every single step of the way through what we call continuous improvement.

Steve: You brought about a couple of interesting points there, but one thing that just was fascinating to me is you are releasing this dreaming room in 150 places, is that correct?

Michael: We will over the next two years.

Steve: So can we talk about your process, I mean do you have a huge organization that handles all these things, like what is your process for just even releasing it to 150 places, that sounds like a lot of places to roll out?

Michael: Yeah indeed it’s a lot of places, but it’s not 250 places or 1000 places, so in one respect it’s not a lot of places, but how do we do that? We do that by growing that and bootstrapping it.

Steve: What is your role in this process, you develop all the materials and then you train a bunch of people or do you train one person…

Michael: Don’t say your role because in fact it’s not my role. I’m doing the first four new dreaming rooms myself. We’re videotaping those, audio taping those, we’re scrutinizing those, and we’re scrutinizing the impact they have on the audience. We also have a lead generation, lead conversion system in place to attract people to come to those dreaming rooms, and we’re testing that and validating that every step of the way as well so we’re preparing to grow.

Steve: So this is the franchise prototype stage?

Michael: [inaudible 00:30:27] that’s what we’re doing; we do exactly what I’m suggesting everybody needs to do Steve.

Steve: Okay and in terms of your lead gen, I’m just curious about your own organization, this book is obviously part of that, but is it primarily through email, word of mouth, what are your primary lead gen mechanisms.

Michael: Our lead gen is everything that you could imagine we’ve done in doing what we’re doing right now, so this very podcast interview is part of our lead gen process. I told you I have done about 30 podcasts, now that’s me, I’m speaking to you and you sharing what I’ve spoken about to your folks and them sharing what they heard with their folks and on and on and on and on.

You do that 30 times, 40 times, 50 times, 1000 times and you begin to understand that what I’m doing is I’m telling the story, I’m the story teller, I’m telling the story. Steve you tell the story, when you do a blog you’re telling a story and when you do whatever you do, when you ask me questions you’re really moving it to a telling a story.

So effectively you started your company for the purpose of doing something that you can define as your something, and the way in which you do it you can define as your way of doing it, and I’m suggesting that’s the beginning of the prototyping process. But to the degree it doesn’t go beyond Steve, it’s not an enterprise, you follow?

Steve: Yes.

Michael: So the whole objective of this is not for Michael to do this work, the whole objective of this is to build an
enterprise that does this work and lives without me, that’s why we say every life a legacy.

Steve: But Michael needs to be very heavily involved in the beginning right to develop the franchise prototype?

Michael: Of course I’m the entrepreneur, Michael was very involved at the very beginning just like I get involved in the beginning of whatever I’ve done…

Steve: This is funny we’re talking about each other.

Michael: But not to build a company dependent upon Michael.

Steve: Right, so let’s say I haven’t done your franchise prototype which is your course and your dreaming room right now, how do you kind of scale from there going on?

Michael: It’s very, very simple. You do a second dreaming room, a third dreaming room, a fourth dreaming room, a fifth dreaming room. In short now I’m in San Diego, then I’m in Anaheim, then I’m in…

Steve: But it’s not you at this point?

Michael: No, no it’s not me, these are certified new dreaming room leaders, and these are people who have learned the script by actually studying the script. And the script is what; the script is me doing it.

Steve: So let me ask you this, you mention the word script, does that imply that these leaders are just going off of a set protocol, or is there room for creativity there?

Michael: There is no room for creativity. Just like there is no room for creativity at Macdonald’s or Starbucks etcetera, there is a business model and the business model says the barrister doesn’t change your name from barrister to waitress; she didn’t get to do that.

Steve: Right.
Michael: Very creative, choosing to wear some stupid outfit, you understand?

Steve: Yeah I understand that.

Michael: It’s absolutely clear, so understand that what we’re doing is creating a template, a turnkey template that we can then expand worldwide.

Steve: So let me ask you this question, I’m an engineer so these are some of the things I think about, so given that people are using a script and everything is a template, is it hard to attract people as part of your organization?

Michael: No it’s easy; oh it’s just blatant simple.

Steve: Okay and what is the process then, how do you convince someone who is really, really out there and wants to do their own thing to come work for you or is that just not the right people that…

Michael: Well you understand it’s a process and so everything is a process. The process is simply a system over time, so understand if I’m going to attract somebody to become a new dreaming room leader, then I’m going to determine what the demographics of that individual or those individuals are, and I’m going to then go out in the market where we are going to open our door to seek out our finalists and we’ll do that using a system. The first thing is this, the second thing is this, the third thing – you follow what I’m saying?

Steve: Yes.

Michael: And all of it is turnkey, so even the process by which we audition these individuals is turnkey, everything is turnkey. Everything is developed, refined, designed to work in a very specific way so that we can be assured that when we get a leader in Cincinnati, that leader measures up to the kind of person we’re looking for and the absolute clear result we’re intending to produce.

So a dreaming room in Cincinnati is the same as a dreaming room in Cleveland is the same as a dreaming room in San Mateo, is the same as a dreaming room in Santa Rosa etcetera. It is, it is, it is, and it is because it’s organized in that way to produce a very specific result we’re looking for.

Steve: Okay so literally…

Michael: Practically so and that is we’re continually working on the new dreaming room even while we’re delivering it, and so there is the system for improvement, for continuous improvement as well and every leader will participate in that. So everybody is getting a chance to work in a harmonious way to continually improve upon what they do to improve upon the results they produce.

Steve: Okay so you have a feedback mechanism in place essentially, right? All of your satellite dreaming rooms you probably get together and you share feedback and then improve and enroll these…

Michael: You’ve got to, you’ve got to, you can’t grow without this, you understand the…

Steve: Yeah totally it makes sense.

Michael: That’s when I say the franchise, the franchise, the franchise, you can’t grow without this. I could send anybody to any dreaming room anywhere and they would have the same experience or be it the same experience given the difference they bring to the room, you follow me?

Steve: No I do follow you, I’m just trying to think of this model in terms of like a software company for example because they aren’t like separate franchises so speak, right? So when you’re talking on the concept of like in Infusion Soft it’s a little bit different because there is only one central area. I guess the way the software is delivered is like a franchise, right?

Michael: No it’s really not different and we would have to get really, really, really specific for you to take that in. It’s absolutely clearly transferable to any kind of company on the planet, and we have done this with every kind of company on the planet and absolutely faithfully, rigorously stood on the platform that I’m sharing with you here, and as we do that you begin to see that it applies everywhere, it’s a universal system.

Steve: Let’s talk about your book for a little bit; this book is targeted to people who are solopreneurs essentially, right?

Michael: Well they don’t have to be, we’re taking that as the worst…

Steve: Worst case scenario.

Michael: Worst case scenario, they call themselves solopreneurs, I immediately diffuse that word by essentially saying it’s contradiction in terms, entrepreneurs are not solo, period. No entrepreneur ever succeeded as a solo anything, so effectively if a guy calls himself a solopreneurs he bought a pitch, and that’s an info marketing pitch. It’s effectively saying creating a lifestyle mentality about being there on your own all alone doing what you do and how splendid you are, and I’m saying bullshit.

Steve: Sorry, this is what I want to ask you Michael, so along those lines how do you coach people to think bigger. Some people just want to create a business that allows them a lifestyle so to speak.

Michael: I got it Steve, I got it and it’s a great question, it really is a great question and the reality is I can’t get them to want more than they’ve got, but I can inspire them to see the limitation of what they presume they want by expanding their availability to something they never thought they wanted, and in the process of doing that something can happen.

And so that something can happen frankly it’s exactly what happened in Infusion Soft, the guys told me they really didn’t want to grow any bigger than they were, understand didn’t really want to grow any bigger than they were, they had no idea whatsoever that they were going to grow to become 100 million and then a billion dollar company when I first met them.

Steve: How did you convince them?

Michael: I’m sorry I didn’t convince them at all; suddenly they woke up to the possibility. It’s waking up to the possibility that’s extraordinary. Have you heard of Landmark?

Steve: No I have not.

Michael: Have you heard of EST [ph]?

Steve: No I have not.

Michael: Okay, so Steve I’m going to sit here as you’re on your way, look up Landmark, they are right there where you are, they are in fact worldwide. Have you heard of [inaudible 00:41:49]?

Steve: I have not; maybe I should make a list of these things.

Michael: Hey Steve man I’m telling you, yeah this is big stuff. Well if you heard of Landmark and you go to the forum, the
forum is an event all about possibility and you walk out of that with completely new framework. You begin to understand that all the “choices” we make are really choices to live in our comfort zone, and I’m saying to live in our comfort zone is in fact the worst thing any of us can do because it prevents us from seeing what’s possible.

So when I look at Steve and I don’t even know you Steve and I don’t have your picture in front of me, but when I look at
Steve I’m saying Steve is somebody he has never even met before. As successful as you are and the possibility of that is a mine blower Steve, that’s what the dreaming room is all about.

Steve: Okay, I have to check out these resources then, are they similar to the dreaming room then or no?

Michael: I’m sorry.

Steve: The resources that you just asked me about, are they similar to the dreaming room?

Michael: No.

Steve: No.

Michael: They are personal growth.

Steve: So Michael we’re coming on 40 minutes here, I want to be respectful of your time. Can you lay out like a roadmap for someone who wants to get more involved in e-myth and your coaching, where should they start?

Michael: Absolutely positively, all they need to do is to go to www.beyondemyth.com and they will be connected, they will be able to get the book; they will be able to read the book. In fact we have a special I think going on right now, what’s that, automated book.

Steve: I’m sorry.

Michael: What’s that automated book you can buy it for $1.99.

Steve: Oh on Amazon you mean the eBook.

Michael: Yeah you get it for $1.99, just do it.

Steve: Okay well that’s a steal you guys.

Michael: Yeah I mean that’s a steal, just freaking do it, and then the minute you do that you’ll understand this much, much better and will begin to pause a question for you, what is the possibility awaiting you, and how do you proceed to pursue it, and many people don’t want to do that, then just forget it since it’s not something we talk about.

Steve: Okay, by the way the book is a pretty quick read and it goes by really quick, so I highly recommend everyone go and check it out.

Michael: Thanks Steve, you enjoyed it?

Steve: Yeah I did, I did, I read on the plane in fact.

Michael: Oh wonderful, give my best to your wife and stay in touch with us. Check out Landmark if only to speak to the whole idea of extreme possibilities, and you discover that in fact you’re going to want to bring stuff like that to everyone you work with and wrench him out of their comfort zone to see the possibilities that are just waiting there unattended to for everybody.

Steve: It sounds good Michael. Thanks a lot for coming on the show, really appreciate your time.
Michael: My delight Steve, thanks, bye, bye.

Steve: All right take care.

Hope you enjoyed that episode. I’ve actually been a huge fan of E-myth Revisited ever since is started my ecommerce store and it was an honor to finally meet and chat with Michael Gerber one on one. For more information about this episode, go to mywifequitherjob.com/episode146.

And just a reminder that tickets to the 2017 Sellers Summit are now on sale at sellersummit.com, the conference that I hold every year that specifically targets ecommerce entrepreneurs selling physical products online. The event will be small and intimate, and I promise you that the speakers will focus on actionable strategies to improve your ecommerce business and not high level BS. So head on over to sellerssummit.com, and check it out.

And once again if you are interested in starting your own online business, head on over to mywifequitherjob.com, and sign up for my free six day mini course on how to start a profitable online store. Sign up right there on the front page, and I’ll send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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145: How To Make 6 Figures With Network Marketing (MLM) With Rachel Holland

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145: How To Make 6 Figures With Network Marketing (MLM) With Rachel Holland

Today I’m really happy to have Rachel Holland on the show. Rachel is someone who I was introduced to by a friend and she is killing it in the network marketing space. Rachel runs the popular site Surviving The Stores where she teaches others how to save money and live healthy on a budget.

She and her husband Ryan run the site together and have turned it into a huge resource. Anyway up until this point, I have not had anyone doing network marketing before on the podcast and I’m very curious how it works. Enjoy the interview!

What You’ll Learn

  • How Rachel came up with the idea for her site and how she got into network marketing
  • How network marketing works.
  • How to get customers to sell under you
  • How to find the right network marketing product to sell
  • How the payouts work for network marketing

Other Resources And Books

Sponsors

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SellersSummit.com – The ultimate ecommerce learning conference! Unlike other events that focus on inspirational stories and high level BS, the Sellers Summit is a curriculum based conference where you will leave with practical and actionable strategies specifically for an ecommerce business. Click here and get your ticket now before it sells out.
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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not with their businesses. I’m Steve Chou, and today we’re talking with Rachel Holland, who was introduced to me by a good friend. Now Rachel runs survivingthestores.com, and the reason why I want her on is to discuss the ins and outs of network marketing.

In other news I wonder that you know that tickets for the 2017 Sellers Summit are now on sale at sellerssummit.com. Now what is the Sellers Summit? It is the conference that I hold every single year that specifically targets ecommerce entrepreneurs selling physical products online. Unlike other events that focus on inspirational stories and high level BS, mine is a curriculum based conference, where you will leave with practical and actionable strategies specifically for an ecommerce business.

In fact every speaker I invite is deep in the trenches of their ecommerce business, entrepreneurs who are importing large quantities of physical goods, and not some high level guys who are overseeing their companies at 50,000 feet. The other thing I can assure you is that the Sellers Summit will be small and intimate. Last year we cut off ticket sales at around 100 people, so this event will sell out quickly, once again that’s sellerssummit.com, so go check it out.

And if you want to learn how to start your own online business, be sure to sign up for my free 6 day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business, so go to my wifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email. Now onto the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m really happy to have Rachel Holland on the show. Now Rachel was someone who I was introduced to by Tony Anderson, and she is killing it in the network marketing space. Now Rachel runs the popular site survivingthestores.com, where she teaches others how to save money and live healthy on a budget.

She and her husband Ryan run the site together and have turned it into a huge resource. Anyway up until this point I have not heard anyone doing network marketing before on the podcast, and I’m just really curious how it works. With that welcome to the show Rachel, how are you doing today?

Rachel: Thank you so much Steve, I’m glad to be on the show with you, I am doing great today.

Steve: That’s good to know, there are just so many questions that I have for you about this space, but let’s just start from the very beginning, how did you come up with the idea for Surviving the Stores, and how did it move into the network marketing space?

Rachel: That’s a great question, so back in 2008 I was a stay at home mom and my husband was working outside the home, and as everyone knows the economy tanked and we were just really, really struggling to meet our budget every month. Gas prices started to rise and it just killed us. So we looked at our budget and we said, okay where can we cut back, what can we do, and we didn’t have people, we didn’t drive a lot and there weren’t a lot of places that we could cut back.

Where we saw that we could cut back was in our grocery budgeting because we were just spending crazy amounts. So I actually started Surviving the Stores as a way to keep myself accountable in grocery budgeting. It has moved from that through the years to end up being a full time income for our family starting in 2010, 2011 and I was able to use that blog as well to launch a network marketing business even though I had no intention of doing that at all. I was actually pretty against network marketing in general.

Steve: Okay, I’m just curious, are you friends with Ellen Chase because that grocery budgeting stuff is like [inaudible 00:04:17] early too?

Rachel: Yes, Ellen and I are very good friends, I love Ellen.

Steve: Okay and so did you start Surviving the Stores to make money in the beginning or was it just a way to document everything?

Rachel: Not at all, it was very much just a way to document everything.

Steve: Interesting, so how did it gain traction?

Rachel: You know the news media printed up in our local Dallas Fort worth area, and then it ended up being on a segment with Good morning America…

Steve: Oh my goodness, okay.

Rachel: It took off from there, and people found out about the site and grew that way.

Steve: Did you do anything to get those media mentions?

Rachel: I did not, I mean I know there are classes now at blogging conferences about how to get in the media, but no, but he ended up just finding me.

Steve: Okay wow, that’s incredible, okay. So how did Surviving the Stores and not talking about the network marketing stuff just yet, how does Surviving the Stores make money?

Rachel: We make money through several ways, the first one being through just general CPM ads, and so and all possible clicks, so Google Adsense or just in ads that when you make money off of impressions to your site, so take photos to really generate a good income. You have to have a lot of traffic to your site. That’s always been a very significant way that we have made money, but also through affiliate links.

Since we were a deal site for so long, we would find good deals, and then we would have affiliate links that we would – let’s say Kohl’s [ph] had a good deal online, then we would have an affiliate link over to Kohl’s and say here is how you get this at the best price, so we would make money that way as well. As you can imagine, the fourth quarter was always our best quarter for that for sure.

Steve: So this is all physical product affiliate links?

Rachel: For the most part, yes.

Steve: Okay, because I know you told me earlier prior to this interview that you had grown this blog to six figures without the network marketing stuff, and so this is mostly affiliate and ad revenue?

Rachel: Yes. I never did a lot of sponsored posts, that wasn’t something that I – I wanted to blog because once I did start making money blogging, I wanted to be on my own schedule, on my own timetable and so I know a lot of bloggers also make money through sponsored posts and that was not something that we really did often.

Steve: Okay, and in terms of finding these deals, like how would you find them?

Rachel: Research, lots of research. There are deal forums out there where people get on and search for deals and post deals that they have found, and then others get on and search for it. So basically as the deal blogger, I would get on and look through to see which ones were the best ones, because it’s just a mess I these forums, it’s an absolute mess. So you get on and you search for what the best deals are, and then you can post them as a blog post in your blog.

Steve: Interesting, so it’s a manual process, it’s not automated?

Rachel: Absolutely, it was completely manual.

Steve: Oh wow, so what is the typical affiliate cut then for like Kohl’s you mentioned for example?

Rachel: It depends, it depends, anywhere from – there are some affiliates where I’m not going to name any names, but some of them are at 1%.

Steve: Wow okay.

Rachel: You know what, surprisingly those don’t get posted that often on blogs, but then anywhere up to 4, 8, 10%, and then if you work with other bloggers as an affiliate for example you mentioned Ellen Chase. She has several different programs that you can be an affiliate for, and so she pays a much larger percentage than say Kohl’s or Best Buy or any of those.

Steve: So would you say that your audience were people that did not have a lot of money?

Rachel: You know it’s really surprising because there were some who were in that same place that I was where they just were struggling to make ends meet, but then it’s very interesting because a lot of the people who are looking for deals and who are looking for coupons, they have very good, very established salaries. They are just not trying to make ends meet, but they know how to be smart with their money and save.

Steve: Okay and in terms of – outside those major media mentions that you got, what were some other ways that you got traffic to your site?

Rachel: Networking, absolutely networking with other bloggers.

Steve: Like face to face?

Rachel: Yes, blogging conferences, lots of blogging conferences, just networking with people, doing projects with other bloggers where you post about them and they post about you, or you do a series together. I did a series with Tony, actually a few series with Tony over the years, then just think of like that where you are – it’s a reciprocal thing you just, you help them by sending your traffic to them and they help you by sending their traffic to you, and it’s just a great relationship.

Steve: Interesting, so when you start out though and you have nothing, like how would you approach someone with a lot more traffic than yourself?

Rachel: That’s a great question.

Steve: Just curious.

Rachel: Just build a relationship with them, for me it was meeting people in person and talking to them, getting to know them, learning about their site. In a lot of ways very similar to what you do with network marketing asking them a lot of questions, learning about what they’re doing, their passion behind blogging, why they’re doing what they’re doing, what their blog is about, what they want their readers to come away from their blog feeling, or just getting to know them, really developing those relationships.

Steve: So you could not have gotten your blog to where it is without these face to face in person relationships that you built over time?

Rachel: No way, there is absolutely no way.

Steve: Okay and so I know prior to this interview we chatted about how you’ve gone away from being a deal site and you’ve moved over to network
marketing. Can you describe that transition?

Rachel: Yes, so I was actually pretty against network marketing for a long time, all of the stereotypes that you hear about network marketing, those were things that I believed because I had experienced it back in college. When I was in college I was a freshman in college and I was looking for a job to make just some extra income and I looked in the paper, the classified ads, that’s before you would just look online or on Monster. I looked at the classified ads and there was an ad that said make your own hours, unlimited income potential, call for an interview, must be a self starter.

I said, yes absolutely, that sounds like me, I can do that. So I called and they said, oh we have an interview spot open and they brought me in, I even took a little test on the computer and they brought me back into the back room and said, you seem like you would be a great fit for our company, all you have to do is buy this starter kit, it’s commission only. And so I was then ready to start selling the best knives ever.

Steve: Was it Cutco?

Rachel: Yeah, it was Cutco, I wasn’t willing to mention the brand, but yes it was Cutco.

Steve: The reason why I ask is my friend used to sell those knives when I was younger, yeah.

Rachel: They are great knives, I mean their scissors really do cut through a pinning and I don’t know of any other scissors that will cut, they are great scissors. But I lasted about two weeks in the company and it was when they told me to talk to my family and friends while I was brand new in a college town, I didn’t know anyone. And they said, well here you can have the records of anyone who had bought previously and I could go to their house, or I ask them if I could come to their house and clean their knives, and then while I was there I could show them the new product catalog.

I did that and then I thought, you know this probably isn’t the best idea for me as an 18 year old college freshman going to people’s house asking them if I can clean their knives. I ended up saying this is a bad gig, this is not something that I want to do, I never want to sell anything ever again, I am done. That’s where I ended off and so for me it wasn’t just a seamless transition into network marketing.

Steve: Can we define what network marketing is, I’m pretty sure a lot of people out there listening don’t even know what it is?

Rachel: Yeah so network marketing and there are all kinds of wrong definitions out there, but really network marketing is a way to create a residue income that not only can last through your lifetime, but I know with the company that I’m a part of we can actually will our business to our children and they can continue to receive that residue income, but a way to receive a residue income through sharing about a product that you love, and then you believe other people will love. So I would say in a nutshell that’s a good definition of how it works.

Steve: So to summarize what you just said, you sell something or you have people that are selling on your behalf and you take a cut of what they sell, and they can recruit their own sellers as well, is that how it works?

Rachel: That’s correct and the way that I like to share with people is I talk a lot about sharing because really that’s what it is. Whenever I’ve tried to sell it doesn’t work out so well, just sharing about what I’m doing and if you’re passionate about it, people will be asking you how do I get this, what do I do?

Steve: Interesting, okay. And so you mentioned synergy before, you were talking about how transitioned from Cutco and then you had a bad experience there, but then what changed your mind about – you’re doing essential oils now, is that correct?

Rachel: Yes, that’s correct.

Steve: Okay, so how did that transition take place?

Rachel: Well I ended up getting – I was researching essential oils and I had settled on where I wanted to get essential oils from. I had always – you’ll see lots of posts dating back to almost the beginning of Surviving the Stores on natural remedies. That was something I was already interested in; I wanted to get started with essential oils. So I researched several different companies then ended up deciding on one specific company.
I knew that I wanted to get started with them but just for the essential oils. I had no interest at all in doing the business in any way and I even told the person that I signed up through. I said my plate is already full, I’m blogging full time, I do not want to end up with marketing again, so I just want to get these products.

So for a year I stuck to that and for a year I just got the products, but because they have been so beneficial for our family and because it fits so well with the blog, I started blogging about them, I started sharing on Facebook my experiences and how they were benefiting our family. So people either from the blog or from friends on Facebook would message me saying, okay tell me more, I want to sign up.

Steve: Interesting, so actually can you just describe what essential oils are for just the people who are listening who might not know what that is?

Rachel: Absolutely, so essential oils are plant extracts and they are essentially the life blood of plant, they are what go through the plant, they give the plant its smell, they do amazing things for the plant, and I believe that they are what God created to work with our bodies, to help our bodies do what they’re supposed to do.

Steve: Okay, and so it’s mainly for medicinal purposes?

Rachel: Health and wellness.

Steve: Health and wellness, okay and so you started writing about the essential oils on your blog and then people started becoming interested in what you were talking about, and they wanted to buy their own, is that how this all started?

Rachel: Yes, exactly.

Steve: And then you hadn’t signed up or anything to sell these things, did it just fall into your lap then?

Rachel: Well so one of the things that’s great about certain companies and this is true for the company that I’m with, whenever you get a starter kit with this company, you are not required ever to sell anything, but you do have the ability to share and get a referral check from the company essentially.

So we call them a thank you check, so you get a certain amount whenever somebody else purchases a starter kit through your link, it’s like an affiliate link. You can earn through that, through sharing with other people and they purchase, and then you get a bonus or a commission off of that.

Steve: This is different than the cut of the sale; this is just a flat commission?

Rachel: For their initial kit yes, it’s a flat commission.

Steve: Can we talk a little bit about what this starter kit is, like you’ve mentioned it a couple of times but I’m not sure what goes inside of that?

Rachel: Inside this starter kit for essential oils there are 11 of the most popular, most used essential oils, because really the world of essential oils can be very overwhelming and anyone who has dabbled in it can say, oh my goodness there are so many things out there. So what the company that I work with which is called Young Living Essential Oils has done is they have put together a kit that has the most popular essential oils, the ones that people would be using every single day.

Steve: Okay but if you want to buy a certain set, like do you have to buy the starter kit or can you buy the individual oils that you want?

Rachel: You can buy the individual oils as a retail customer, so there are two different things that people can do when they sign up, they can either be a retail customer and they pay a 24% mark up, or they can become a wholesale member by buying a starter kit and then they get a 24% discount forever, and they also get that ability to share with others and earn that commission if they choose to do that.

Steve: I see, so how much does this starter kit cost?

Rachel: It costs $160 which is absolutely incredible for starting a business. If somebody does go into that saying yes I want to start an essential oils business, for $160 they can, which is an incredible price.

Steve: And if I were to just buy like a few bottles of the oils that I wanted to, like how much is each individually, you said that starter kit has 11 you said?

Rachel: Yes, it really depends. So you can get certain oils for $5 and then there are oils that are almost $200, so for example rose oil. Rose is just extremely delicate and expensive to distil the oils out of the rose plant, so it really depends on the oil itself.

Steve: Does that rose oil come with the starter kit though?

Rachel: It does not, but there are some frankincense stuff and frankincense is an extremely amazing and much more expensive oil. So everything in the starter kit, if you were to buy it all separately, it would be over $350, so the starter kit is actually just a really good deal in and of itself for getting started for the essential oils.

Steve: I see and it sounds like it gives you like – it’s like a variety pack for example if you’re just starting out it makes sense to get that regardless?

Rachel: Exactly.

Steve: Okay and so now you have the starter kit and you’re using these oils yourself, so how did you transition and how did it work in terms of selling these oils?

Rachel: What I did was I created a few Facebook groups and really Facebook groups have changed the game for network marketing. I mean it just really has because even 10, 15 years ago, or five years ago network marketing was done over the phone and that was it, and through emails, emails, snail mail, over the phone.

Facebook groups have changed the game because I created, one of the first things I did when I started the business was create a few Facebook groups, and I have for example a Facebook group that’s specifically just for education where people can ask questions about essential oils and how to use them on their family, on their kids, on their pets, all of that, and then another group specifically for those who are interested in learning more about the business.

And so in a sense I created like a little bit of a funnel system through Facebook groups which has been really neat and fun to do, and that’s one of the things that I learned through blogging was how to do that. So not only do I have that through email but also in a sense through these Facebook groups.

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How did you build the Facebook group?

Rachel: Just on Facebook there is a little thing that says group…

Steve: Oh sorry, I meant how do you build members, like how do you add a whole bunch of members?

Rachel: Once somebody signs up, I email them and get their email address that they have, and most people, the majority of people have a Facebook account. So I email them and I get their email address that they use for Facebook, and you can add people to the group with their email address.

Steve: So this starts from your blog it sounds like then, right?

Rachel: Either from my blog or people that I know personally, either way. I’ve built both ways; I have several people that I know personally and then blog readers as well.

Steve: So would you say you got most of your downstream people through personal relationships or through your blog?

Rachel: Personal relationships for me.

Steve: Interesting, so can you describe how that works, how can you get critical mass doing things that way?

Rachel: Because everybody knows people, so I have a certain number of people that I know, but then each of those people has a different sphere of people that they know, and then each of those people has a different sphere of people that they know. So everybody has their group and so let’s say I end up signing someone up and they get their starter kit, they love the oils; they are interested in the business. And I say it in that order, because whenever somebody tells me okay I want to get a starter kit because I’m interested in the business, I kind of back up a little bit, because I want them to truly love the products first before they jump into the business side.

So once somebody does that, let’s say I enroll somebody who decide that they love the oils and they do want to get started in the business, and if their network is also a large network, then that means that my team and their team grows more quickly, they want to sign someone up who has a smaller network. Really that’s a big part of why it’s called network marketing or relationship marketing.

Steve: Okay and how do the economics work, like let’s say you sign someone up, like what is your cut and what is their cut?

Rachel: So if I sign someone up, and it really varies from company to company. Every company is going to have a different compensation plan, and that’s one of the things that I tell people whenever they say they are interested in a network marketing business. I tell them to look at the compensation plan, look at the income disclosure, every network marketing company is required to have an income disclosure up there at least I think every couple of years.

So take a look at that and see if these are the incomes that you are comfortable with, so every company does it differently. The way that Young Living works which is the company that I’m with is that I earn a commission when somebody buys the starter kit and that commission is $50, and then there is a bonus during their first three months for what they buy during their first three months, and then you get just general commissions depending on the level that they are on after that.

So starting in month four you get just regular commissions. The thing about essential oils and really any consumable product, because I would highly recommend for those who are considering network marketing to make sure that it’s a consumable product that you love, that you use daily, that you would use whether or not you are making money, because other people will do the same. So there are – I mean over 90% of the people on my team are not building a business, they are buying these products because they need them every single day.

So I just want to commit to anyone who is considering this that that I think would be a very crucial thing in deciding which company that you go with.

Steve: Interesting, so for the first three months you get a commission of what your person consumes and then afterwards like if they…

Rachel: You still get a percentage.

Steve: You still get a percentage, but then if they go on and sell starter kits, you also get a cut of that as well, is that correct?

Rachel: Correct.

Steve: And how does that work, like what are the economics like there?

Rachel: Again it varies from company to company. If I enroll someone and then they enroll someone else, I also get a percentage from that enrollment, and then up to a certain level. So all network marketing companies will have let’s say either five levels or six levels that you get paid on. Really there is so much in here, different network marketing companies even have completely different commission chapters like some will do uni level commissions, others will do a binary system which is just kind of I don’t understand that level.

Steve: How do your levels work, like I guess I don’t understand how that works, what does it mean to be in a level?

Rachel: So let’s say I sign up four people and they are on my level one, and then let’s say each of those people sign up four people, then each of those people will be on my level 2.

Steve: I see, okay.

Rachel: And then if those people sign up people, they would be on my level 3.

Steve: Got it, got it, okay so your level one people then I guess what commission do you get off of them with your current company?

Rachel: With my current company after those initial three months it is 8%.

Steve: 8% okay and then the level 2 guys what is the cut, it’s a smaller cut I would imagine, right?

Rachel: Yes 5%.

Steve: Okay and then it just trickles down?

Rachel: And then four, four, four, correct.

Steve: Okay and then how many levels can you have, infinite levels?

Rachel: Well so this is where you get into the tricky parts ins and outs of the compensation plans, so there is uni level commissions, and then with our company we also do generation commissions which is when you get to a certain rank, you get an extra percentage off of your team, the what is going on within your team.

Steve: Okay this is fascinating, so what is that, like I didn’t quite understand what you just said actually. So after a certain point you get extra commissions?

Rachel: Correct, so in my company for example whenever you reach the rank of silver, you get an extra, well that’s called a generation commission off of everyone, off of the entire volume of your down line.

Steve: Oh my goodness okay.

Rachel: And then whenever people under you get to higher ranks like so let’s say somebody under you gets to silver, then you get an even larger amount of commission, so what’s really, really fun about it is that it benefits me for other people to grow…

Steve: To do better.

Rachel: Or to even just to pass me, like it’s wonderful to watch, and I get to be a part of other people having these financial successes and residual income for the rest of their lives.

Steve: What does it take to achieve silver like you mention like these different levels, how do you achieve that?

Rachel: With our company to achieve silver you have to have to have a certain group volume which is just overall sales essentially in the group. And then you have to have two people on your level one, on your first level who also have a certain amount of group volume. It will vary from company to company and I see people all the time getting to that silver rank within a year. At silver rank the average income is $1,700 a month.

Steve: Wow, okay and can you give me an idea of what volume is required to hit silver?

Rachel: 10,000.

Steve: 10,000 okay a month or?

Rachel: A month yes

Steve: A month, okay, and just for clarification what level are you at right now I’m just curious?

Rachel: I’m at the diamond level.

Steve: And then what are the advertised incomes for that level?

Rachel: That income disclosure says that the income for diamonds would be 20,000 to 50,000 per month.

Steve: That’s amazing, okay, and so even though – like even if you just stop doing this altogether, you would still get that income from month to month?

Rachel: So we essentially did that.

Steve: Okay.

Rachel: Last fall we had this crazy idea to pack all of our things in storage and buy an RV and travel the East Coast in RV. It was an amazing experience, I mean just incredible, we got to go to DC and Williamsburg and [inaudible 00:32:25]. It was so much fun, and I thought that I would be able to work more on the road, but I was not, we were just busy the entire time.

I was still diamond during those months, I still made those pay checks during those three months, and three months was as long as we lasted and we said get us out of this thing and into an apartment. We wanted to do a year but no, that was not going to happen with four kids.

Steve: So is there any maintenance that you have to do then?

Rachel: There is, it really just depends on what you want to do, so I still teach classes because I love to, I love helping people get started, so I still teach classes, I have weekly calls for my business builders. Any of the people on my team who are interested in building a business, I have a weekly call with them where I share with them just something encouraging to help them, and then we do a question and answer time every week so they can bring me their questions and we just talk through those things and brainstorm together.

And then in the Facebook groups I post often, different whatever the specials are that month or different things for business, but then I also for people who are interested in the business, I’ve put together a two week boot camp to help them get jump started. It’s actually called the jump start boot camp to help them just start their business, to know here are the things exactly what you need to do to get started on the right foot in a network marketing business, and specifically in this network marketing business.

Steve: I was just going to ask because if your downstream people don’t make any money, you don’t make any money either, right?

Rachel: Exactly, and that’s the beauty of it, me being successful means that so many people on my team are successful, and there are multiple people on my team who are making six figures as well.

Steve: Okay wow, so in terms of your Facebook groups, it sounds like that’s where you do the majority of your marketing, why not just your blog and email, why is Facebook groups better than just like an email marketing list?

Rachel: Because I love getting to know the people, I mean I’ve built friends through this, through Facebook groups. Everyone is on Facebook constantly, I mean we’re always on our phone; I mean people even eat dinner on their phone scrolling through Facebook. It gives them a notification when someone posts in the group, they see it through their feed, it’s an easy way for people to ask questions, and also it’s way that I don’t have to personally answer everyone’s questions.

So I’m not getting all of the emails, somebody can ask in this Facebook group and then there are other people who can get on and answer those questions instead of me being the one that has to answer all of those questions.

Steve: Interesting, okay, and so I think I’m starting to understand how this works now. So getting them to just buy the starter pack is just like the beginning of the journey, right?

Rachel: Exactly.

Steve: And so the way to thrive in this business is you really have to put in the work to get to know everyone and teach them how to sell the stuff
themselves, is that accurate?

Rachel: Yes and there are systems like for example the boot camp. I run it through a system where it automatically posts on Facebook, and I run the boot camp also through a Facebook group, that jump start boot camp. So there are definitely systems in place that can help you, a lot of people use a scheduling software like HootSuite or something to schedule posts in their Facebook group.

There are so many different systems that I learned as a blogger that have come in handy during building a network marketing company, but yes getting to know the people is such a huge part of that and it’s one of my favorite parts, I love that.

Steve: Are these boot camps that you run, are they free or do you charge for them?

Rachel: I do not charge, no not at all. I can’t imagine myself ever charging for my team members to go through a boot camp to do something that yes benefits them but also benefits me. And I know that there are some network marketers out there who do that, who will have people sign up and say, now for only 3.99 you can buy my system to show you how to be successful in this. That’s just not me; I don’t want to do that.

Steve: So whenever you refer to your team members, are these like your level ones and your level twos?

Rachel: And level 20s and level 50s and anyone who is on my team anywhere, it does not matter where. I am a part of helping them get their answers.

Steve: Here is a question I had, so let’s say you get to like level – like your 20s for example, is it much harder for your level 20s to make money?

Rachel: No, not at all, I’m someone’s level 20. There is a good friend of mine who is actually at the highest level of the company, she’s also a former blogger, her name is Alyssa Francis. She’s at the highest level of the company which is loyal crown diamond, and the loyal crown diamond income is 100,000 plus per month so she is there. She is there, she signed up a year before me, and the person right above her is actually still just a silver, so those who are on your team can rank up faster than you, it really just depends on what you do.

Steve: The reason why I asked that question is because there is a cut that happens at each level, but pretty soon doesn’t that exceed 100%?

Rachel: It does not because there are some cut offs down there.

Steve: Oh okay where people don’t make any money if there is a sale or?

Rachel: This is where you get in to the really complicated ins and outs of the compensation plan, but yes eventually there is a time where there are some people may be on your level 13 or level 30 or something like that where you would not make anything off of what they bought, but if you are at a certain rank no matter what if I am a diamond I’m going to be making on average 20,000 to 50,000 per month.

Steve: And that’s from – so that number, like what determines where that range you lie on the diamond plan for example?

Rachel: A lot of it is determined on how many leaders you have on your team, so for example a leader would be considered silver and up with Young Living, so a lot of that is determined by how many silvers you have. Some of that is determined by how many people are in your levels one through five, but I would say the biggest portion of that is going to be determined by how many leaders you have under you, those other people who have reached silver.

Steve: Interesting because you mentioned that other example with your friend who was the ultra diamond or whatever rank that was, the person above her was just silver, like how is that possible?

Rachel: Because she didn’t do what needed to be done to get to the higher rank, so it’s not like everybody above me is a higher rank than me at all.

Steve: Interesting okay, so what does it take — so you mentioned with silver you needed to have multiple silvers under you, right?

Rachel: To get a silver you have to have two groups, essentially groups we call them legs, two groups under us that have an overall volume of 4,000 per month.

Steve: 4,000 okay and then what’s the rank right after silver?

Rachel: Right after silver is gold.

Steve: And then what does it take to become gold?

Rachel: To become gold you have to have an overall volume of 35,000 per month and then you have to have three legs under you, three groups under you that each has 6,000 of volume.

Steve: I see okay, so that one silver person probably just had that major leg which was your friend?

Rachel: Right and then another smaller leg and that was it, she never worked on creating those other legs.

Steve: I see okay, so going forward with your business right now, you mentioned that you had the opportunity to go on this really cool RV trip. So going forward like what – do you have incentive to continue to sign on new people?

Rachel: Absolutely and I would say even more than money. It is because I have seen these oils change people’s lives, and that truly is my incentive is that I want to get these oils into more people’s hands, because they are what were created to work with our bodies.

Steve: Okay interesting and so even today you continue to blog about these oils, you continue to run your groups and your boot camps, and at this point what would it take for you to reach that next level past diamond?

Rachel: At this point what it will take, so I have all of my legs in place for the next level, it is just a volume thing right now, so it is just gaining more volume, helping more people learn how to share and sharing with their friends in their network.

Steve: Interesting, so is it in your best interest then to give special treatment to your legs?

Rachel: As opposed to?

Steve: As opposed to just random people like focusing more on the people who are actually on your team, does that make sense?

Rachel: Sure yes, so one of the things about network marketing is that whenever somebody buys a starter kit, let’s say within Young Living, they are automatically a part of a team somewhere. So that way everybody is able to be helped by someone, so my responsibility within the company is to help those who are a part of my team.

Steve: Okay.

Rachel: And not that I don’t help overall, I mean I love talking to others and brainstorming with other leaders who are not a part of my team or even not a part of my up line, that is so much fun, I love doing that. I love having what’s called those cross line relationships; they are not your up line or your down line.

Steve: Okay I think I’m kind of understanding how this all works now, so the way you build your business is you ensure that the people under you are successful, and then you get these bonuses which push you up to the high bend as opposed to signing up as many level ones as you possibly can.

Rachel: Exactly, yes.

Steve: Okay that’s an interesting business model oaky. You mentioned earlier that it’s in your best interest to sell some sort of consumable and I don’t know, you probably don’t even remember this, but how does Cutco work, like most of the times when you buy certain knives you’re done, right?

Rachel: Right oh yes. I could use some more knives, actually I still have my set, but it’s been goodness almost 20 years since I bought my first set. So you’ll see those big ticket items where they are pretty expensive like the vacuum cleaners, I mean how often do you need a Cabby vacuum cleaner, or do you even need one, do you even need a $2,000 vacuum, I don’t know.
So a lot of people have that in their head, you know the people that come around to their door and say, hey I just want – I’ll shampoo one room of your carpet for free. A lot of people have that in their head, but yeah it’s just such a different experience now.

Steve: Okay and then I had a couple of more questions relating to oils, and so going forward, like your friend who is at the highest level, is she doing the same things you are?

Rachel: She is absolutely; she is still very involved with supporting people, because she wants to see as many people succeed in this as well.

Steve: Okay, and is she at the highest level?

Rachel: She is yes.

Steve: She is okay, and so really it sounds to me at least that you don’t go into something like network marketing unless you’re a true believer of the product?

Rachel: Yes, and I have had people join my team before who were just interested in the money and I tell you what that it faded very quickly, because they were not passionate about the product. So now that is just something that I tell people upfront that the business will not work unless you are truly passionate about the product.

Steve: How often do you actually go in person and have like parties so to speak, or is it all done online at this point?

Rachel: It depends, there were different seasons for me, there were times where I was doing in person things a lot. We are in an apartment right now and while we’re building a house, and so right now it doesn’t work out super well for me to have in person classes at my house, but I’ll do webinars and then when we move I will certainly have events at my house, but just because I love it.
I was at a retreat this past weekend, it was actually the silver retreat for everyone who had reached silver in the company, they invite them to Salt Lake City and you go see the lavender farm and everything, and there was a loyal crown diamond, again that’s the top level on the company. We spoke from the stage and she never taught one single class, she completely built online and got from – bought her starter kit to get to the highest level of the company in 18 months.

Steve: Wow.

Rachel: And that’s without teaching a single class and building all online, so it really can be whatever fits with you and with your personality and what you have time for, what you want to do.

Steve: Have you ever bought ads for any of the stuff or through your blog, like how did you get people to read the essential oils articles on your blog?

Rachel: I had a pretty good email list for my blog, and so that was definitely a part of it. We did run some Facebook ads, that helped back when Facebook would actually show your posts to people. That was good because we had a pretty, we had over 50,000 fans on Facebook and so that was great.
Then Pinterest, I would say by far Pinterest was the main traffic generator and sign up generator to our posts, so people would see a post on how do I use essential oils, or essential oils for a healthy immune system, or essential oils for a healthy respiratory system. So they would click on that post, come and read about it, and then decide to sign up to get a starter kit from there.

Steve: And to sign up is just a link that leads to some landing page where you can put in a credit card, right?

Rachel: Exactly.

Steve: And so for all these people who are listening who are interested in getting into this, what are some of your recommendations?

Rachel: To get into Young Living specifically, of course my recommendation would be to come to survingthestores.com…

Steve: Yes sure, of course.

Rachel: And click on the essential oils tab, and I would love to help you get started, but really I recommend whatever company you end up choosing
because I really do think that everyone should have some kind of residual income, and whatever that is, whether that would be investment properties or whether that’s network marketing, but to really develop some kind of residual income, to do your research before jumping into a company. Can I just say one little quick thing about residual income?

Steve: Yes, absolutely.

Rachel: With our blog, with Surviving the Stores, I thought that we had found residual income. There was one post that we had that we ranked really high in Google for, and we were making $1,000 per day off of that post, and I thought oh my goodness this is it, is this really going to happen? Well Google changed their algorithm, and we ended up on page two, and now we’re making about $5 a day on that same post.

And so the things that I thought were residual income ended up not being residual income, and so I love that this, that network marketing really can be true residual income for people and that’s what it has been for us. It allowed us to take those three months off last fall and so on, and I would say ask if you’re interested in a network marketing company, ask if it is something that if your income can be given to your children, if it can be willed because with Young Living the income is willable. That was huge for us; I love that part about our company.

Steve: Would you say that a blog is necessary or helpful?

Rachel: No not at all. It can be helpful for growing more quickly, but I have plenty of people who are making solid incomes and on their way to making a solid income just from teaching classes and sharing in person with their network. But I would say that whatever avenue somebody uses to grow their networking marketing business, they have to have a network.

And so whether that network is online, whether that network is at work and mums at the soccer field or wherever that network is, there has to be a network, there is a reason that it’s called network marketing. And so if somebody just wants to stay inside and not build any kind of network at all, then they are not going to be successful in network marketing, but there are many different ways to expand that network of people.

Steve: Okay, hey Rachel I learnt a lot today. If anyone out there has any questions for you where can they find you online?

Rachel: They can find me through survivingthestores.com. My Instagram is @Racheleholland, on Facebook I am Rachel Holland and again you’ll see Surviving the Stores, you’ll see Young Living. I also have another website called howtohomeschoolforfree.com, just because we’re also a home schooling family, and I put free resources that we find for home schooling. So any of those places you can find me there.

Steve: Is there a contact form on those sites where they can actually reach you directly?

Rachel: Yes there is on both of the websites, yes.

Steve: Awesome and are you on Twitter as well.

Rachel: I am on Twitter, it is survivingstores.

Steve: Survivingstores, awesome. Hey Rachel, really appreciate your time; all of this stuff is fascinating to me, because I haven’t had anyone on the show doing network marketing before, so I appreciate it.

Rachel: Thank you so much for having me; this has been so much fun.

Steve: Thanks a lot for coming on, take care.

Rachel: Thanks Steve, you too, bye.

Steve: Hope you enjoyed that episode. I’ve always been skeptical of network marketing and MOM, and it was actually good to hear from someone who is actually making significant money from that business model. For more information about this episode, go to mywifequitherjob.com/episode145.
And just a reminder that tickets for the 2017 Sellers Summit are now on sale at sellersummit.com, the conference that I hold every year that specifically targets ecommerce entrepreneurs selling physical products online. The event will be small and intimate, and I promise you that the speakers will focus on actionable strategies to improve your ecommerce business and not any high level BS. So head on over to sellersummit.com, and check it out.

And once again if you are interested in starting your own online business, head on over to mywifequitherjob.com, and sign up for my free six day mini course on how to start a profitable online store. Sign up right there on the front page, and I’ll send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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144: How To Make 6 Figures Teaching People About Rideshare Services With Harry Campbell

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How To Make 6 Figures Teaching People About Rideshare Services With Harry Campbell Of TheRideShareGuy

Today I’m thrilled to have Harry Campbell on the show. Harry is someone who I just met at the financial blogging conference in San Diego and we actually met playing basketball.

A few conversations later and I knew that I wanted to have him on the podcast. Harry has an interesting story. He started his site TheRideShareGuy.com in 2014 when he was a full time aerospace engineer and part time Uber and Lyft driver.

And seeing as how ride share services were starting to take off, he decided to create the ultimate ride sharing resource. Today, Harry has quit his engineering job to work on the site full time and his mission is to help drivers around the world. Enjoy the episode!

What You’ll Learn

  • Harry’s motivations for starting the ride share guy
  • How RSG makes money
  • How Harry built traffic to the site early on
  • Which strategy has been the most effective in terms of revenue growth
  • The best forms of traffic and how to build it
  • How Harry gets people to sign up for his course
  • The primary difference between Uber and Lyft

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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not with their businesses. I’m Steve Chou, and today we’re talking with Harry Campbell, who is someone I met at FinCon this past year. Harry runs therideshareguy.com, and you’ll learn how he turned blogging and podcasting about ride share services Uber and Lyft into a six figure business.

In other news I just want to let you know that the tickets for the 2017 Sellers Summit are now on sale at sellerssummit.com. Now what is the Sellers Summit, it is the conference that I hold every year that specifically targets ecommerce entrepreneurs selling physical products online. Unlike other events that focus on inspirational stories and high level BS, mine is a curriculum based conference, where you will leave with practical and actionable strategies specifically for an ecommerce business.

In fact every speaker I invite is deep in the trenches of their ecommerce business, entrepreneurs who are importing large quantities of physical goods, and not some high level guys who are overseeing their companies at 50,000 feet. The other thing I can assure you is that the Sellers Summit will be small and intimate. Last year we cut off ticket sales at around 100 people, so this event will sell out quickly, once again that’s sellerssummit.com, and go check it out.

And if you want to learn how to start your own online business, be sure to sign up for my free 6 day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business, go to my wifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email. Now onto the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m thrilled to have Harry Campbell on the show. Harry is someone who I met at the financial blogging conference in San Diego just a couple of weeks ago and we actually met playing basket ball, and a few conversations later on the court, and I knew I wanted to have him on the podcast. Now Harry has an interesting story, he started his site The Ride Share Guy in 2014 when he was a full time aerospace engineer and part time Uber and Lyft driver.

Seeing how rideshare services have started to take off, he decided to create the ultimate ride sharing resource and community. So today Harry has quit his engineering job to work on the site full time and his mission is to help drivers around the word. With that welcome to the show Harry, how are you doing today man?

Harry: I’m doing well; I think I’m just about recovered from the conference, so a perfect time to come on the show.

Steve: I’m not quite recovered yet myself, and you picked an early morning – oh it’s not early morning slot, it’s 8 AM right now, but I’m still a little groggy.

Harry: We’ll ease into it.

Steve: So Harry you are a successful aerospace engineer, so my first question is why the heck did you decide to drive for Uber and Lyft in the first place?

Harry: It’s funny you’re mentioning that in the intro and honestly it seems like a long time ago that I was an engineer, and I don’t know if that is a bad thing or a good thing, but yeah you’re right, I used to be an aerospace engineer for Boeing, and really I guess I’ve always been attracted to side hustles and just honestly easy ways of making money. For me I heard about people driving Uber and Lyft and doing it on their spare time, and some of the drivers were telling me, and this was a few years ago when Uber and Lyft paid a lot more, price has come down since.
Some of the drivers were telling me they are earning 30 to 40 bucks an hour, and I was thinking to myself, hey that’s more than I make in my day job so I should probably check this out even if it’s only for a few hours a week.

Steve: Interesting so an engineer the Uber and Lyft position was making more than your day job?

Harry: I would say that in limited capacity yeah, I drove a couple of big holidays like July 4th on average $50 an hour, but on the regular I think when I first started I was earning $20 or $25 an hour, so it was less than my day job. It was like that feeling where, hey I’m doing something that’s actually pretty fun, when you do anything zero to ten hours a week it’s a lot more enjoyable than something you do 40 hours a week, right?

Steve: Okay yeah I know absolutely. So this is just basically in your spare time you had nothing better to do for that day and just this was just earn some money, right?

Harry: Yeah and honestly I really blame my wife, because my wife was in medical school at the time and that meant that I had a lot of free time.

Steve: Oh yeah absolutely, actually you probably still have a lot of free time right, because she has to go through residency and all that stuff?

Harry: Yeah I guess so, she’s actually so she’s just starting to apply to residency, so I’d say that that’s the one thing that I guess has benefited my business because in a lot of ways I just had a lot of free time to figure
out ways to make money, figure out ways to work and do all that good stuff.

Steve: So what was the motivation for starting The Rideshare Guy then?

Harry: Well honestly I went out there and started driving for Uber and Lyft, and I was expecting it to be super easy and super fun and it was sort of all the above, but at the same time it wasn’t as easy as it seemed. It’s combination really of dealing with customers, safe driving and navigation and also running your own business too, because you’re 1099 independent contractor for Uber and Lyft, you have to do things like tracking your mileage and file a schedule C at the end of the year.

A joke I make is it wasn’t rocket science like my real job, but it definitely wasn’t as easy as it seems, so for me I started goggling and went on YouTube and I said, hey there’s got to be some people giving advice and tips for basically how to maximize your income, and the crazy thing was that I couldn’t find a single blog, not a single blog about rideshare.

I reads a few articles here and there just about people doing like a one off experience type article, but I couldn’t find a single blog, and at the time Uber was worth $10 million and there’re 100,000 drivers in the US. This light bulb went off in my head that hey there’s nobody doing this, so I either have a really good idea or a really dud idea here.

Steve: Can you give me an example of a piece of information that you were looking for but you couldn’t get online about Uber, I mean to me in my mind right now you just pick up the app and you start driving, right?

Harry: For me honestly I was really concerned with how much I was making, so obviously I’m an engineer like you and I was doing just these detailed really natty spreadsheets. I would import all of my ride data and I would go in and calculate by the hour and by the ride and just see where my down time was, because obviously you don’t make any money during your down time as a driver.

So I was just trying to figure out ways, hey I’m making $28 an hour right now, how can I go make $35 an hour, what are the opportunities, even something as simple as texting your rider so that they’ll come down faster can maybe save you two minutes on every single ride. I was looking for stuff like that those like really more in-depth strategies that would help me earn more money and I couldn’t find anything close to that, so basically I decided to create it myself.

Steve: Okay, so basically maximizing your Uber driving experience?

Harry: Mm-hmm.

Steve: So when you started The Rideshare Guy, was it with the intention of making money or did it start out just as a purely informational site?

Harry: So to be honest I would say that it was a combination of both, I definitely didn’t have a completely altruistic view, and I said, hey I want to start this because it is cool and I enjoy it, but I knew a few things. I knew that I enjoyed it; I was really interested in just taking the technology behind it and the whole start up that seemed really like sexy and fascinating to me because I worked this boring day job as an engineer.
Then at the same time I also saw the huge potential business opportunity. I didn’t think that I would make a ton of money in my first year and I didn’t, but I knew that it was probably a good bet that Uber was going to keep growing, and if I can establish myself as this go to person for the drivers, then there would be a huge opportunity.

I should also say that I did have a little bit of a head start because how I got involved in the whole of personal finance bloggers conference and everything, I did own and I do still own a couple of small personal finance sites that I started like 5 years ago, and those were purely for hobby, but that’s how I got into everything and saw the potential of guys like Jim Wang at Bargaineering and those types of guys who were selling their blogs for lots of money and the kind of I could basically, hey my site was maybe getting a few hundred page views a day but I could extrapolate.

I could see that if I could get to that point in maybe that niche or a different niche, I could probably make some real money.

Steve: I see so but in terms of your personal finance blogs, did those ever go anywhere?

Harry: Not really, I would say so I started a couple of – actually more three or four and two of them still exist today, but honestly though they are still making about $500 a month net and right now it’s 100% passive for me. I have a couple of people that completely manage it, all we do are just these simple sponsored posts and we do one article a week, so I’m not doing any work on those.
It’s very low traffic, may a 1000 page views a day which is very small for a personal finance site, but I could see that if I can grow that audience even whether it’s in the personal finance niche or another niche I think that I can make significantly more. It’s less what I saw with Rideshare, I was coming from this very saturated niche of personal finance where it was harder to break through. For me now I’m going in Google and I can’t find a single blog and I’m getting all excited, because…

Steve: Totally, I’m just wondering how much time comes into play here, because when you started your PF thing, it was already pretty saturated.

Harry: For sure, I mean I think that’s definitely one of the big things, timing and honestly just getting lucky is important, but I think what really benefitted me is that I was continually putting myself in that position to start something. A lot of people were saying to me, hey you work as an aerospace engineer; you get paid a lot of money, why would you go and drive for Uber and Lyft?
For me it was just about just trying it out, I didn’t know that I was going to try it out and then start a blog and then quit my day job to focus on the blog full time and then have this big business, but it was just like continually putting myself in that position, because you really never know what’s going to happen. But one thing you do know is that nothing will ever happen if you don’t continually try stuff, so that’s what it really was about for me.

Steve: Okay and so how does the Rideshare Guy actually make money?

Harry: Right on, so I’m surprised it took you so long to ask me that question. Literally the first question I ever get asked by anyone regardless of age, sex, and anyone they always ask me, so it’s funny. So we actually have a few different revenue streams and some are a little bit more traditional that your audience is probably familiar with, but really what it boils down to is one of our main sources of revenue is driver referrals so signing drivers up for Uber, Lyft [inaudible 00:11:04] that’s the most obvious one.

We also do direct advertising, so with any advertisers that have products or services that are looking to cater to Rideshare drivers. An example of that would be Intuit in their QuickBooks self employed product, so they’re one of our biggest sponsors and basically they’re looking to get drivers to track their expenses and use them for trouble tax and all that good stuff.

Then we also have a video training course that we sell, very traditional online marketing 101 training course, and then we also have a really unique one that’s an insurance market place since Rideshare drivers need a rideshare insurance. We actually have worked with – we have over 30 individual agents signed up on our site in this big directory and two companies at the corporate level, and so that’s another big revenue stream for us, because as you know insurance is a high commission product.

Steve: Yeah absolutely.

Harry: Honestly I wish I could take more credit for that one, but literally agents started reaching out to us and asking if they could come on our site. Someone wanted to give us money, so we had to figure out a way to accept it.

Steve: So you get paid per lead for that?

Harry: We actually don’t get paid per lead but we do a monthly, basically we charge them a monthly fee and honestly I don’t think I have the insurance marketplace as optimized as it could be, but it’s really simple on our
end. We basically have a directory by state, and then the different companies available in each state and then we list one agent per city.

So it’s super simper, super rudimentary to be honest but at the same time we drive traffic to it every month with an insurance article and we’re really well optimized as far as rankings and things like that. So we’re doing well for all the insurance key words and it works, lots of agents sign up and we have about a 95% renewal rate for our insurance agents.

Steve: Wow, that’s awesome, so of all those income sources that you specified, which one is the top one?

Harry: I would say probably – actually the income sources, I’ve worked really hard in 2016. It used to be all driver referrals because honestly driver referrals were the easiest and most natural fit, we would be writing about Uber and say, hey here is our experience at Uber, go sign up. Pretty natural and pretty easy to mention, we would tell drivers you can make more money by driving for Uber and Lyft, go sign up for both of them, stuff like that.
That was the most natural fit and I would say in 2015 that was by far probably 75% of our revenue. In 2016 though I made a really big push to build out our direct advertisers and affiliates, so I hired a guy full time to handle that and then I have another guy part time that does the insurance marketplace, so honestly driver referrals is probably about 30 to 40% right now, but then the rest are pretty evenly matched.
Our direct advertising and affiliate, our video quarters and our insurance market place all pretty even when it comes down to that.

Steve: That’s cool man. I’m just curious what is the pay out for a driver referral?

Harry: Well, that’s the crazy thing is first of all it’s funny that it really varies, so I’m going to say a number and you’re going to say that sounds pretty high, but in some cities it’s a lot lower. So in a top major market it might be like $500 to $750.

Steve: That is crazy.

Harry: LA, San Francisco, it’s $500 to $750 and obviously it varies, it goes up and down a little bit. This month it actually dropped to 250 but over the past year in a major market honestly it’s been averaging around $500, and the crazy thing is that it’s double sided, and I’m simplifying it a little bit. Basically what happens is if I’m an existing driver, I can go refer my friends, we each get $500 after they do 75 rides in 30 days, and that’s the gist of the program.
There a lot of small to mid size cities that might be anywhere from like 10 or 25 bucks to a couple of hundred bucks but still it’s definitely high amounts for driver referrals.

Steve: So they have to do 75 rides in 30 days, so do you do anything post sign up to encourage them to do that or?

Harry: That’s one of the really unique things is that I actually don’t have a direct affiliate program set up with Uber and Lyft even to this day. I’ve had my site for two and a half years, I’m probably one of the top referrers by volume with Uber and Lyft, yet I actually use the same referral code that I used when I first started and it’s my driver referral code, so I have…

Steve: Interesting, okay.

Harry: Isn’t that crazy? I have no tracking, I have no ability to follow up or anything like that and I’m also doing very high volume, and you’re right it’s actually a big problem for me because Uber and Lyft don’t have – it’s funny because these companies are also big, but they don’t have any of the affiliate tracking or anything like that you are probably used to with some of the more established companies with more established programs.
For me I actually only get about a 5 to 10% conversion from the people that sign up using my link to the people that actually end up driving and getting me paid a bonus.

Steve: Okay but the dollar amounts are so high; I guess it doesn’t really matter.

Harry: Exactly, so the dollar amounts are still so high when I really try to focus and honestly I’ve never been that in love with increasing conversions and worrying about all that even though it’s funny because I’m an engineer, and since I started blogging I really kind of just attacked the top of the funnel and said, hey I like writing articles, I like doing content.
If I spend more time on content, I can increase my top of the funnel and I end up doing something that I like and then do that way and by that way I can actually increase my pay out down the road as opposed to down the funnel increasing my sign ups to conversions by 12%. I would rather just focus on the top of the funnel because that’s what I enjoy and also that’s what I think my skills are at too.

Steve: Okay and so when you made this shift to go again to steer your business away from the referrals more, did you focus more on your course or the insurance part?

Harry: Honestly I wish I could say that I took more credit for the insurance, I sort of stumbled upon the insurance, but at the same time we did the course I would say I spent the most time on the course. I would say that I spent the most time on direct advertising and affiliate stuff and then the insurance marketplace and then the course in that order, because that was what when I first started really trying to expand the income, that was what was already producing the most income in that order if that makes sense.
Really I felt like the course was going to be tough to boost that income, basically it’s like, hey here’s the channels that are doing well, I want to double down on those and spend more time on the channels that are doing well, that have the more potential, that’s how I focused and allocated my time.

Steve: So in terms of the course, how much do you charge for it?

Harry: I charge $97 a pop for the course.

Steve: Okay it’s just a lump sum, right?

Harry: Yeah, one lump sum and then they get access to a bunch of videos.

Steve: In terms of your direct advertising model, do people come to you or do you have like a team that’s going out to these companies and approaching them?

Harry: That’s one of the nice things; we talked earlier about there not being a lot of competition right now. If you’re looking to advertise to Uber drivers, my site is probably one for the best places that you can go. So honestly all of our advertising deals that we do come from inbound leads, we do very, very little, almost none, no outreach.
So everyone is coming to us, we have a little process that we put them through, if they are a huge advertiser, we’ll hold their hand and talk to them, but otherwise we make them fill out an inquiry form and then I have one of my guys go and reach out to them and send them our media kit and things like that and take things from there.

Steve: Okay and then I know you have a podcast as well, is that all part of the advertising equation, is it for the podcast or is it for the site more?

Harry: So I have a blog, podcast, YouTube channel, and video training course, so those are my four main mediums and the four main ways that I distribute content. It started with my site two and a half years ago, I did the
blog and the podcast. It is a no brainer; hey I’m catering to all these Rideshare drivers that are going to be in their car all the time, probably I should start a podcast, right?

Steve: Right, yeah absolutely.

Harry: What I found was that my blog growth was just eclipsing my podcast growth, so right now I’m at about 10,000 total downloads a month for all of my episodes every single month for the podcast and the website, the blog is actually – so this past month, in the past 30 days, we did 800,000 page views last month.

Steve: That is crazy.

Harry: Yeah so you can see that there is a pretty big difference there, right?

Steve: Yeah, so you’re focusing more on the blog?

Harry: I would say yeah we’ve definitely spent way more energy and time on the blog, but at the time I enjoy doing the podcast, so we do sell advertising spots on the podcast, but it’s not anywhere near one of our main forums, one of our main outlets of revenue. Actually what I’ve been really surprised with is the YouTube channel is I started the YouTube channel about a year and a half ago and it was really to promote our video course.
I said to myself, this is how I think, right? I’m going to start a video training course, we’re going to have videos in there, I should start a YouTube channel because then people who will like my YouTube channel will maybe buy my video training course, it’s pretty simple thinking, all right. Actually what happened was that our YouTube channel started doing really well, we now release two videos a week, and it actually has grown to 10,000 or 11,000 subscribers, so that’s been one cool thing.

I guess in order of how well our outlets are doing I would say the blog is definitely our number one advertising outlet, and then YouTube below and then podcast way down below.

Steve: Interesting, that’s not what I would have expected.

Harry: Yeah I know it’s interesting, pretty funny too because the YouTube channel I just started on a whim and it’s actually been pretty close to the blog in terms of growth.

Steve: In terms of getting traffic, what is your primary traffic source?

Harry: My primary traffic source is search, so we get about 67% of our traffic from search and it’s all organic. I mean I guess I’ve done some Facebook boosted posts here and there but never more than like $50 and that’s only really started in the past year, but when I was first growing my site everything was all organic, and it was really kind of – yeah I mean that sort of – to answer your question basically 67% organic.

Steve: Okay and then what about the other 33?

Harry: The other 33 is going to be mainly direct, actually it’s really mainly direct, and then referrals, so I could probably pull up the numbers for a little bit more in-depth of the top of my head.

Steve: No that’s okay, I was just curious.

Harry: Actually I do know, so it’s mainly direct and referral. One area that’s really low compared to other sites is actually social, so I think social is 4 or 5% of our overall traffic which when I talk to some of my other friends, I think they told me that their social stuff from Facebook, Twitter, Reddit, whatever is a lot higher, but our social traffic is actually very low.

Steve: Did you do anything deliberate to get all that sort of traffic?

Harry: Oh yeah definitely, I mean like I said I’m not an SEO expert or conversion expert or anything like that, but I think one thing that I’m really good at is establishing relationships with people, and so for me I saw the media as a huge opportunity to really help grow my blog. I was doing a ton of organic stuff, I was out there in Facebook groups, I was out there taking Uber rides, I was having my friends talk to Uber drivers.
I was doing everything I could organically word of mouth, but at the same time once I started to get traction with my site, I looked at these huge media sites and said, hey with one link or with one article mention or something like that, one quote, I can probably drive hundreds or maybe even thousands of views to my site. For me at the time Uber and Lyft and even today are still really hot in the media, everyone is writing about them.
For me I really started to try to establish relationships with everyone that was covering media, so I had all of these media outlets like The Verge, Business Insider, all the big tech publications, they all have at least one or two people dedicated to rideshare, dedicated to the whole Silicon Valley space. So I started finding them, identifying them, trying to develop relationships to them, just become a really good source for them so that when they did need a quote, they would know that I am the one they should talk to at least.

Steve: Can you talk about some of the things that you did to get on their radar?

Harry: For sure and this is where I think it really helped me having a little bit of experience blogging in the personal finance niche, so back in the personal finances and I don’t know if people still do this anymore, but everyone would do these weekly roundups and I’m sure you’re familiar with these.

Steve: Yeah of course.

Harry: It’s basically a bunch of friends or even sometimes not even friends, the [inaudible 00:23:24] or whatever they would call them, and each week you would feature maybe five or ten or sometimes 10 or 20 different articles from your friends, and then you would share them on social media and you basically all link back to each other. For me I took that strategy and applied it to Rideshare, and the reason why I thought that it would work so well is because no one else was doing it. First of all I was one of the only rideshare bloggers…

Steve: Right exactly.

Harry: Then second of all I said hey – so I started featuring about five to ten different articles that I found during the week, and I would post them on my Facebook page and see which articles were most popular with my audience. So I was posting probably 20 or 30 articles a week on my Facebook page every week from like big outlets, like reputable outlets like CNN, a lot of the tech blogs which people may or may not be familiar with, The Verge, Business Insider, all of those and I would see which ones would do the best.

Then I would feature them in my weekly roundup on Saturdays, and after that I would have my virtual assistant go in and she would find all those authors, find the publications and she would tweet them and say, hey – first she would follow them and then she would tweet them. She would say, hey @stevechou, at My Wife Quit Her Job, we just featured your article on the Rideshare Guy, and then we would link to that article.
Now they sort of, first of all we were stroking their ego a little bit because one thing I found is reporters love Twitter, and that’s one amazing way to get in contact. You may not get a response from them, but I guarantee they’ll see it, every single reporter is on Twitter, I don’t know what it is but they all love Twitter, and then now we’re featuring them, so we’re stroking their ego a little bit.

Then they maybe come to our site and see that, oh hey this guy actually has a blog, he has this little branding, the Rideshare Guy, he’s a driver and so now we’re starting to establish those relationships with them and just interacting in general with them on Twitter, so that’s really how I started reaching out to a lot of people. Of course I saved all their names, all their emails as we were featuring them.

Once we’d established a little bit of relationship, I think I reached out with an email and said, hey I’m Harry, I’m the Rideshare Guy, I’m an Uber driver, I know this, I know X,Y, and Z, here is why you should listen to me. If you ever need anything – I didn’t ask for anything, I just said if you ever need anything, here is my cell phone, here is my email, I never sleep, I’m available at all times of the day.

I really just tried to be a valuable resource to them, because one thing I found with reporters is that they just need – they don’t really care where they get the source from, they just need you to be credible, they just need to make sure you’re not a wacko, that you can get back to them quickly if they’re on deadline, and that they are not going to quote someone who turns out to be crazy or psycho or anything like that. For me I was just trying to put myself in that position to help them.

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Okay and so once you establish initial contact – so how many roundups did you do? Are we talking about like a handful of these or do you do this every week?

Harry: I have done them every week for about two and a half years, I still do it today, it still works really well I think.

Steve: And each time you reach out to another group of…

Harry: I don’t email any more, but now what I do is every week on Saturday I publish a roundup, but now we do about maybe five to six articles featuring the top stories of the week. Then I have my virtual assistant go in the following week and tweet them, say hey reporter X at the publication, we feature the article on my blog and then we follow them.
That is what we’re doing now to continually find a lot of these reporters and now I will say when people – a lot of reporters find us to be honest we put the badges on our site to show them we’re a little bit legit where I have been featured and things like that. It’s a little bit of a snow ball effect now, but when I was first growing my blog that was really how we did it and of course I also did the low hanging fruits to help a reporter out, things like that.

Steve: Do you ever have any luck with hello [ph]?

Harry: To be honest I have a pretty interesting hello strategy, well not interesting hello strategy, but I have a little strategy with hello too because I have a lot of friends like you that are bloggers that are media that use hello and so I ask them. I ask them, hey what is in a good hello request? So what they told me was that you need to be first, because some of these hello requests get dozens or hundreds of responses, you need to be first.
So I set up little alerts in my Gmail, basically anytime a hello request comes in with like an Uber, Lyft, Airbnb, any type of those mentions, now it’s mainly Uber, Lyft rideshare that I look for, it stars it in my Gmail so hopefully I’ll see it pretty quickly. Then I have a canned response that is custom tailored, and then I custom tailor just the middle section of it depending on the hello request.

Then usually these hello requests will tell, sometimes they put anonymous but most of the time they’ll say a letter from – so like I just did one for New York post and the reporter’s name was Christian. I found him on Twitter like I said Twitter has been my best friend when it comes to dealing with reporters. I found him on Twitter and I sent him a message, I said hey I just sent you a hello request about I’d love to chat, and sometimes I’ll send them my contact and sometimes they’ll just reply to me on Twitter and we’ll just do it right there.

So that’s how I do it. I try to just get them multiple touch points, because you could imagine how many people are responding to those hello requests, how many people are also tweeting them. So now when they go and see 100 hello requests, if mine was first, hopefully they’ll be like Harry Campbell Rideshare Guy, I think that guy just tweeted me and maybe open mine first.

Steve: Interesting, so do you pay for the hello service because you get earlier alerts right?

Harry: Oh really, I didn’t even know that, maybe I should be doing that, but no I don’t pay for it, I just wait till it comes into my inbox, and I will say since Rideshare isn’t as saturated a niche as personal finance I am 100% sure that there aren’t nearly as many people responding to these hello requests as in another niche.

Steve: That’s probably true, yeah okay. Like one of five maybe.

Harry: Yeah honestly one of five, but at the same time it’s kind of all goes back to me picking this niche and trying to establish myself as a go to person in a smaller niche although I guess I will say that it’s grown a lot bigger than I would have ever thought.

Steve: Right now so you’re reaching – you do your initial outreach, do they usually reply at this point or you just keep following up with them?

Harry: Hello, are you talking about hello?

Steve: No, not hello, your other strategy with the roundups.

Harry: My other strategy with the roundups, well my other strategy with the roundups is really just about establishing a relationship so that when they do need a source or when they do need someone they think of me first, that’s what I’m trying to get because you can imagine like these reporters – I really try to do honestly like the opposite of what everyone else is doing.
These reporters are getting dozens, hundreds of pitches asking me, hey come on, hey I have this story for you and anyone who has ever written for Forbes or Business Insider, or Huffington post knows that if you put your email anywhere on the site you are going to get dozens or sometimes hundreds basically really crappy PR pitches, and so for me I’m trying to provide like the opposite experience. I want to find them around Twitter; I want to establish my relationship on Twitter.

If I do email them I don’t want to really ask for something, I want to say, hey I’m here to provide you value. Sometimes especially when I was first starting, I was looking for really interesting stories and sending them to reporters. I was looking for like things going on in rideshare and then sending them to that as opposed to feeling like, hey write about me, write about my site.
It’s like the strategy of really like I was trying to provide them value in the sense that they were looking for good stories, and it’s also about knowing these reporters. I talked to one reporter at [inaudible 00:32:03] who told me she had to get 2 articles a day, that’s a lot.

Steve: Yeah I know totally.

Harry: So for them if they can find anything that’s in the realm of a good story and they trust you, they’re going to be really thankful to you because you’re always feeding them good ideas and helping make their job easier, so that’s the type of stuff I was really looking for.

Steve: Okay, would you say that getting mentioned in these publications is one of the main reasons why you are ranking in SEO?

Harry: I would say that it has to be, I’m not an SEO expert but at this point I think I have a page on my site that we can probably share on the show notes, but I just call it my around the web page and I think that I’ve probably been quoted, featured, linked maybe 300 to 400 times or more and these are publications.

Steve: Oh wow.

Harry: These are everything from New York Times, LA Times, Wired, San Francisco Chronicle all the way down to like I just did one for like the Boston College, I don’t know some Boston college newspaper because that’s the other thing, I take every single – no media request is too small for me and there is literally a reason behind that too.

Steve: Okay, just curious I know a while back, a whole bunch of the bloggers started removing their roundups because of panda, like [inaudible 00:33:12] the articles, has that had an effect on you at all or do you care?

Harry: Honestly I don’t really care and that has always been my strategy. I know what I’m good at, like I’m good at creating content, establishing these relationships. Honestly I don’t know crap about – I know what Google panda update was, but I guess I didn’t see a big drop off from that, and so for me I’ve never really trusted what Google said. I just look at the numbers, like hey if my site is still doing well I’m going to keep doing what I’m doing; I’m going to keep trying new things to try to push the envelope.

If crap starts to hit the fan, then maybe I’ll hire someone to try to sit down and reassess. I think at the same time though I think it really depends on what a lot of other people are doing. If everyone is doing roundups and it’s the spammy way to approach things, then it does make sense that it’s not as valuable, but for me if I’m curating all these articles.

I actually will say in the text face especially, just the sheer fact that there’s so much content these days, a lot of bloggers and a lot of journalist are actually moving to this curated newsletter format where they may not publish it on their website, but once I’m subscribed to a bunch of newsletters from really top people in the tech and rideshare industry, and they send out weekly newsletters basically challenging the top content, because there is so much info these days.

Steve: Interesting, have you done any paid advertising at all?

Harry: I really haven’t done — I mean I’ve done hundreds of dollars but not even thousands in my two and a half years of doing this, I’ve probably spent no more than one or two thousand dollars. So paid advertising is not something that I’m good at, and also I just honestly feel like anyone can do – no I shouldn’t say anyone can do paid advertising, but I feel like it’s a low barrier to entry.
I feel like anyone can really go and spend a bunch of money and try to get return on their site, but I feel like it takes a lot more work and a lot more strategizing and brain power to think about how to develop these relationships with the media, how to get free things and things like that. Those are what I enjoy doing, because I think it’s a lot more challenging and I think that the value and return is a lot better.

Steve: It sounds like your primary strategy is just put out lots of content in all different channels and get linked up, and then just get all of your traffic organically, right?

Harry: In a nut shell that’s honestly exactly what I do.

Steve: In terms of just content creation then, how often do you post to your blog and the YouTube channel and the podcast?

Harry: For sure, so I’m actually extremely consistent with the blog, and I think that’s one thing that’s been super important. I’ve done four articles a week I think for the past year and a half, Monday, Wednesday, Friday, Saturday and before that I was doing three articles a week. On the blog I’ve basically almost always done four articles a week. On the podcast I do one every two to three weeks, and then on the YouTube channel I do two new videos every single week.

Steve: How do you promote your articles on your blog since you’re posting almost every day?

Harry: Right on, so I’m posting four times a week, so every time I do a new post I release it at 9 AM Pacific, Monday, Wednesday, Friday, Saturday and then I also have my – it’s called like blog to RSS set up, so it automatically goes out. I’m a really bad blogger, I should probably know what that’s called, so it basically sees my RSS feed that a new post is out and then at 10 AM it sends it out to my email list.
They get the entire article in the email and we actually have – so that sends out and then I’ll post it to Facebook and I use co schedule to basically post it four times after that and I go from there. So that’s really all I do every time I release a new post.

Steve: Interesting, so do you send out four emails a week then?

Harry: Mm-hmm.

Steve: Okay, and do you have another email strategy like do you follow those people to your course or towards Uber referrals, do you do anything else besides just sending out the article?
Harry: Yes so I would say the email is one area where I did a lot of work on right at the beginning because I was hearing all these big people that are smarter than me were saying, hey you need to build your email list. I said okay I want to build my email list, so I used all of the SumoMe plug-ins, the drop down on the top bar and then basically all the basic ones. So I’m collecting I think about 40 to 50 emails a day right now using those basic plug-ins, and I don’t even think I paid for it actually, just the free plug-ins.

So it seems to be working pretty well on my end, so I’m adding about 1000 to 1500 new subscribers a month, our email list is at 18,000 or 19,000 right now. According to MailChimp we have a 30% open rate although it does seem like most articles get opened in the 20 to 30% rate, so we’re in that kind of range. All that I do though with my email, I have about a ten email autoresponder.
When they sign up I send them this ultimate guide which is honestly is like a15 page PDF but it’s more like an ultimate guide to my site. It’s like getting here, they’re getting started, and then I throw in an affiliate offer and to go through and provide some value and then pitch in an offer and things like that. Then I highlight my top blog post and then I highlight my top YouTube channel in the autoresponder, I introduce some to my various channels.

I will say I’m literally looking at my to do list right now and on my to do list is the build out like a three month autoresponder that has 50 more emails, so that’s on my to do list, that’s the one thing I haven’t done a good job of, but it’s definitely something I need to do.

Steve: I’m just curious how you get the sign ups, is that just naturally through affiliate links in your articles or is that part of your autoresponder?

Harry: How I get signups for…

Steve: The referrals for drivers, the ones that pay out 700 bucks a pop?

Harry: Honestly those are mainly from my site, so I’m not doing a lot of email conversions, I guess I will say that obviously when I send a blog post out obviously if there is anywhere to include relevant links or anything like that I’ll do that in emails. But in my autoresponder it’s more about introducing people to the various areas where they can find me, like I’ll highlight my most popular YouTube video and I’ll say, hey go subscribe to the YouTube channel, go check it out.

I’ll highlight one of my most popular podcast or highlight my video course and I’m not doing as much sales from the emails although I probably could and should and will be in the future. Most of my conversions are actually coming straight from the blog and people finding me and converting there and clicking on my links all over the site, because I have on my other resources page, I have a sign up bonuses page, I have an insurance market, all of these pages on my site, so I’m getting most of my conversions from my actual blog.

Steve: Okay and then your email sequence it sounds like just introduces the reader to all those different channels where they can just pick and choose what they want to consume?

Harry: Exactly, now that we’re talking about – I am a little embarrassed of my email autoresponder series, because I think I’ve heard it up there for about a year and a half and it should definitely be a lot longer, so maybe after this call, I’ll go set it up.

Steve: I was just curious because you have this course right, you get to keep all the cash too, and the payout isn’t bad 97 bucks, so I was just curious if you actively market it?

Harry: I would love to talk about the course because for me the course is one area where I started it just because it’s like that online marketing 101, everyone saying, hey you got to do this course, obviously it’s nice because it’s very diverse, it’s like mutually exclusive from driver referrals. If driver referrals I don’t control that, one day if Uber said hey we’re not going to pay you any more, my income goes from X to zero.

With the course that will likely never happen, if anything it might be a slow drop, but for me I’ve always felt – I haven’t felt bad taking money from drivers but honestly Uber drivers don’t make a lot of money. So I would rather find ways to extract money from direct advertising or find rideshare insurance product that they need to get anyways and monetize that way as opposed to – I still do a lot on my video course, we just spend a lot of time building out an affiliate program.

We actually now have a blog on, so we have the course hosted on a separate site called maximumridesharingprofits.com, which is probably one of the longest URLs you’ve ever heard. But we actually added a blog and we started transcribing so I use this transcription service called Speechpad that’s only a dollar per minute, and we started transcribing all of the content from our YouTube videos over to the MRP blog.

So we took out top YouTube videos, the ones that basically were doing the best and we transcribe them and now we do one post a week on the MRP blog, and we’ve actually been able to get the traffic up completely organically to around 75,000 page views a month on that separate site, just on transcript and we obviously have one video that is about how to enter multiple destinations on your Uber ride and that’s doing 25,000 page views a month.

It’s definitely for me one other area that I really have been focusing on, it’s kind of leveraging my content across different platforms, because we spend a lot of time, we only do four articles a week which might sound like a lot, but I obviously have other writers that help me. We spend a lot of time and a lot of research and a lot of effort into these articles and one thing that we’re finding is that our audiences are very mutually exclusive.
The podcast listeners don’t read blog articles, the YouTube viewers don’t do the other two, so what we’re trying to do now is not necessarily repost the exact same content but figure out ways to leverage a really big blog post, maybe there is one paragraph that we can go more into detail on a YouTube video, and we are already very familiar with it, and it might make for good YouTube video.

So we try to leverage that content so that we’re not coming up with completely original content across every channel because honestly we have a very different audience, so it’s not like someone is going to see the same thing in three different places.

Steve: So it’s not just a straight transcription, you’re taking that transcription and you’re turning it into a post, is that right?

Harry: No it’s basically a straight transcription, we’ll add headers and put a neat little intro but honestly it’s more of a transcription than a blog post and we try to make it pretty upfront. We’re pretty upfront about like hey here is a video we recorded, because actually a couple from people complained and they said your blog posts are amazing on Rideshare Guy but your MRP blog posts suck.
I said well first of all if you think these are blog posts that’s probably a problem on my end, so we just try to make it really clear that, hey this is a transcription of this video. People seem to – we haven’t got a single complaint since we started making that a lot more clear and it seems to be working pretty well.

Steve: In terms of revenues for the Rideshare Guy, are you going to hit seven figures this year or?

Harry: Not quite at seven figures but hopefully at some point in the future.

Steve: Okay, that’s amazing. This is just a question that I have that I was just really curious about, what’s the difference between Uber and Lyft?

Harry: That’s actually one of my most popular YouTube videos.

Steve: Is it right, okay.

Harry: Honestly for me I’d say the biggest difference is that Lyft tends to be more of a driver friendly community. They have a lot of features, once you become a driver they have a lot of features that are just more friendly to drivers, they have enough tipping so passengers at the end of the ride can leave a tip in the app, Uber doesn’t have that. If you do a certain number of rides, Lyft will actually – if you do 50 rides a week, they’ll give you 10% of your commission back, things like that.

I would say that Lyft has typically has more of a community and more driver friendly features. Uber on the other hand they are like you know what you’re going to get. Uber you’re always going to be busy with Uber, you’ll probably going to make more money with Uber than you will with Lyft, but you also at the same time know they don’t really care about you, it’s like you are a number on a spreadsheet to them, they are like strictly business.
Lyft is like this friendly alternative that really cares about you. You kind of support them even though you don’t make quite as much money but you support them because you like them.
Steve: Interesting, so if I’m driving though and I have both those apps, I’m just going to use the Uber app right?

Harry: Yeah I mean honestly that’s one of the strategies we talk about on the site, if you sign up for Uber and Lyft during slower times, it makes sense to turn both the apps on and just take whichever request comes first. For me I’ll always take a Lyft request over an Uber request if it comes in, because the rates tends to be a little bit higher, the passengers tend to be a little bit friendlier, and you also have the option of getting a tip on the Lyft app.

Steve: Okay and then in terms of one completely demolishing the other, do you foresee both of these services co-existing going forward?

Harry: Yeah, I mean I definitely think that going forward – I mean the funny thing is that Uber is obviously this huge $68 billion company and Lyft is often thought of as an afterthought, but at the same time Lyft is a $5.5 billion company. I think a lot of people forget that, but if Lyft were to stand on its own, it would be one of the biggest tech companies out there today, but since they are in Uber shadow they pale in comparison.
I think just because of that I don’t know that Lyft is going to be able to really ever come close to Uber as far as market share. I think Uber has about 80% market share right now in the US, but I do think that Lyft can definitely coexist, and 20% of a trillion dollar market is still a really good business.

Steve: So going forward Harry, what plans do you have for your blog to grow even more for the latter half of this year and next?

Harry: Definitely, well I would say that for me my goal by the end of 2016 I would love to hit a million page views a month, so that’s just one number that we put in our head at the beginning of the year. For me honestly I definitely like the growth, but one thing I’ve found as I’ve gone on is that it’s not all about growth for me, I really like the balance of life and work, I mean I’m married, no kids yet, but at some point in the future I’ll probably have kids.

For me it’s about continually growing the business, but at the same time really figuring out the areas where I can optimize and make things more efficient, because like I said right now there’s probably the insurance market place for example, I think we could probably increase the revenue by 20 to 30%, but I think it would cause a lot of extra headache and a lot of extra hustle for me, so I don’t know that it’s worth it.

For me it’s really just finding those low hanging fruits and just exploring things. I really like taking on challenges that I haven’t done, so like for example right now I’m in the process of launching a consulting business to help some of these startups who are doing products and services for drivers. A lot of people who are doing how to start a rideshare company type stuff, because I have a lot of this industry expertise and knowledge, and honestly if you don’t work directly at one of these companies, there aren’t a whole lot of people that you can go to.

So for me those are the types of challenges that I’m looking forward to and trying to really grow other businesses and leverage everything I’ve done, leverage my audience and my expertise to diversify into other projects.

Steve: In terms of quitting your job, how much was The Rideshare Guy making when you quit?

Harry: The Rideshare Guy was making about, I think $30,000 to $40,000 a year.

Steve: My goodness, okay.

Harry: We were probably on track to make $30,000 or $40,000 a year, but I could see the writing on the wall. I mean we weren’t optimized, I talk about we aren’t optimizing some revenue streams right now. When I quit my job we weren’t – I literally had not focused – for the first year of the blog; I didn’t focus on making money.

I really just focused on building that audience, I really wanted to get to 100, 000 page views a month because from talking to other bloggers, and talking to other people it seemed like that was the level where you could start to eke out a full time living and really start to turn it into a business. For me in that first year of running the blog, I was really just focused on growing it.

If someone came to me and said, hey we want to give you money for this, great but I really didn’t even consider any of those small monetization opportunities, because for me I looked at it like, hey I might spend an hour on this ad deal right now and make$250, but if I can grow my audience to two or three X in a year, then I can charge $750 and it’s still going to take that same one hour.
So it’s like trading that hour now for trading it later and I will be able to make more money, so I was just trading my time for the hopes of making more money which ended up working out.

Steve: Yeah, I’m just shocked, because you quit when you were only making 30 or 40K and you live in LA, and I imagine your aerospace engineering job paid pretty well.

Harry: Yeah so I was getting around I think 70 to 80,000 as engineer but obviously plus all the benefits and bonuses and everything like that, but honestly for me I wanted to do personal finance blogs. You can imagine I’m a big saver, I worked for six years as an engineer, and I was always doing side hustles and always making extra money on the side, so I had a pretty large – I mean I had a six figure emergency fund saved up.

It wasn’t as big of a risk, I think from the outside I think it looked like a lot bigger risk than it was to me. Honestly for me it didn’t seem like a big risk to me. When I quit my job my boss said, hey if you want to come back just let me know. He was like I don’t know what you want to go do but if you want to come back, just let me know, I’ll have a job waiting for you.

Steve: That’s awesome; Harry thanks a lot for coming on the show. If people want to reach out to you, I know you answer every single email you get is that what you said?

Harry: Honestly I test people, so a lot of times people just email me to say hi and to ask me if I check email, so yeah feel free. It will be me, it won’t be a virtual assistant and shoot me an email Harry on his site or obviously you can find me on therideshareguy.com or on Twitter @therideshareguy. I keep it pretty simple, so keep that…

Steve: Everything is the rideshare, he’s got a YouTube channel too.

Harry: Yeah it’s at the Rideshare Guy

Steve: Rideshare Guy yeah. Cool man well thanks for coming on the show, really appreciate your time.

Harry: Yeah awesome, I really appreciate you having me on and I look forward to talking more.

Steve: All right Harry, take care.

Hope you enjoyed that episode. Harry is the perfect example of someone who found a market that wasn’t being well served and then jumped on it, and his story just goes to show that you can make by providing value to those who are looking for answers. For more information about this episode, go to mywifequitherjob.com/episode144.

And just a reminder that tickets for the 2017 Sellers Summit are now on sale at sellersummit.com, the conference that I hold every year that specifically targets ecommerce entrepreneurs selling physical products online. The event will be small and intimate, and I promise you that the speakers will focus on actionable strategies to improve your ecommerce business and not any high level BS. So head on over to sellersummit.com, and check it out.

And once again if you are interested in starting your own online business, head on over to mywifequitherjob.com, and sign up for my free six day mini course on how to start a profitable online store. Sign up right there on the front page, and I’ll send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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143: How To Make 6 Figures As A Food Blogger With Bjork Ostrom Of PinchOfYum

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143: How To Make 6 Figures As A Food Blogger With Bjork Ostrom Of PinchOfYum.com

I’m really happy to have my friend Bjork Ostrum on the podcast today. While Bjork and I have not met in person, we have mutual friends in Erin Chase and Jim Wang, both of whom I’ve had on the podcast in previous episodes.

Bjork runs the very popular site Pinch Of Yum where he blogs about food. And when I say that his site is popular, I mean that it is crazy popular. Last month he had 2.7 million visitors to his site. He has 91,000 Facebook fans, over 227,000 Instagram followers and almost 100K Pinterest followers.

Enjoy the interview!

What You’ll Learn

  • Bjork’s motivations for starting his food blog.
  • How long it took for the blog to take off.
  • Bjork’s early traffic strategies
  • Bjork’s Pinterest, Facebook and Instagram strategy
  • How does PinchOfYum make money?

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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not with their businesses. I’m Steve Chou, and today we’re talking with Bjork Ostrom, who is one of the most successful food bloggers I know. Now Bjork runs pinchofyum.com, and you’ll learn how he makes between 50 and 100K per month running a successful food blogging business.

In other news I just want to let you know that tickets for the 2017 Sellers Summit are now on sale at sellerssummit.com. Now what is the Sellers Summit, it is the conference that I hold every year that specifically targets ecommerce entrepreneurs selling physical products online. Unlike other events that focus on inspirational stories and high level BS, mine is a curriculum based conference, where you will leave with practical and actionable strategies specifically for an ecommerce business.

And in fact every speaker I invite is deep in the trenches of their ecommerce business, entrepreneurs who are importing large quantities of physical goods, and that’s some high level guys who are overseeing their companies at 50,000 feet. The other thing I can assure you is that is that the Sellers summit will be small and intimate. Last year we cut off ticket sales at around 100 people, so this event will sell out quickly, so once again go check it out at sellerssummit.com.

And if you want to know how to start your own online business, be sure to sign up for my free 6 day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business, so go to my wifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email. Now onto the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m really happy to have my friend Bjork Ostrom on the podcast today. Bjork and I have not actually met in person, we both have mutual friends in Erin Chase and Jim Weng, both of whom I have had on the podcast in previous episodes.

Bjork runs the popular website pinchofyam.com where he blogs about food, and when I say that his site is popular I mean that it is crazy popular. Last month he had 2.7 million visitors to his site and this incidentally is the slow season for them, he usually gets a lot more traffic. He’s got 91,000 Facebook fans, over 227,000 Instagram followers and almost 100,000 Pinterest followers.

What’s cool is that they actually publish monthly income reports and last month Pinch of yam generated roughly 60K. So if you’re interested in how to make money with a food blog, you’ve come to the right place and you’re listening to the right episode. And with that welcome to the show Bjork, how are you doing today man?

Bjork: Hey, I’m doing great Steve, thanks so much for having me on the podcast, truly appreciate it.

Steve: Yes, so was I accurate about those traffic numbers, usually they are like double that, right?

Bjork: Yeah summer is a slow season for food blogs especially if you have any bend towards like nutrition type content, because the pick season will really be January, February where people are wanting to find healthy recipes and things like that. So this is actually perfect that I’m on this podcast because I want to say this right off the bat, my wife Lindsay did indeed quit her job, and she does Pinch of Yam, and I want to make sure like in terms of the content side of things, those traffic numbers and the social media following, like all credit due to Lindsay for building those up.

However, I definitely have a role in the business, but I’m more like behind the scenes and Lindsay is very front face things, so I want to make sure that she gets credit for that, and that we can have this super synonymous relationship in terms of the actual content that we are talking about in the name of the podcast, right?

Steve: And there my friends is how you stay married for very long.

Bjork: Yeah.

Steve: So give us a quick – I should have been interviewing Lindsay instead, I don’t know?

Bjork: No, I think this will be good, I think you’ll be able to get a lot of awesome content from it, but I wanted before we got into it, I wanted to make sure and say that on the content side of things, she drives that forward, I have a really good understanding of it, but I just want to make sure to give credit where credit is due.

Steve: I think we have similar roles; you are more in charge of the tech and that sort of thing?

Bjork: Yup exactly yup, I love the behind the scenes element of it for Food Blogger Pro, a membership site which we might talk about a little bit later. We’re going through some design updates, so I’m looking at like the check out process on different pages and updating what that looks like or I love the idea of doing like AB tests and things like that. I work a lot with the servers, ad networks; think a lot about like critically about how can we create income from the site itself off of the traffic and engagement that Lindsay has brought to the site.

Steve: Yeah we‘re very similar, like my wife is like the brains and I’m like the marketing and the tech and that sort of thing, that’s cool man. We have to compare notes later.

Bjork: Yeah, it’s a fun relationship because both are needed, right? So like you can’t just have content without the business side of it and you can’t just have the business side of it without the content side of it. So I feel super blessed and thankful to be married to somebody who is also somebody that is in a sense a business partner, but that is really capable and awesome and super skilled at the content side of things, because that allows me to do what I do.

Steve: Absolutely, so give us the quick background story, how did you guys come up with the idea For Pinch of Yam and how did you get started?

Bjork: This was six or seven years ago and I was the one interested in online business and technology and computers, and I would geek out on podcasts and audio books and things like that. So I was listening to Gary Vaynerchuk’s book Crush It, and for those that have read it or are familiar you know that he talks a lot about this idea of a personal brand and building a personal brand, and how possible that is because of the internet.

The example he gives is if you’re really into worms, like you could be the expert on worm farming and you could write a worm blog, and then there will be people that have worm farms that sell them, they want to come to you and work with you because of your expertise in worms.

As I was listening to that audio book just stuff really clicked, and around the same time Lindsay had been interested in recipes and food, and we were recently married, so she for the first time was cooking for two people and really enjoyed that process. We were sharing things on social media and felt like, you know what, I wonder if there is a better place for this to live.

Those two things came together at the same time, I was listening to this book; Lindsay was going through this processing of enjoying food and food content, but not really knowing where that would live. So we had this meeting and over the years it’s grown into this mythological meeting that we don’t even know if it actually happened or how it happened, but basically was the sit down conversation of maybe there would be a better place for this.

The first step was creating this blog, and we created on Tumblr at the time, and was the place where Lindsay started posting content, and that’s the origin story for us, that’s where things started.

Steve: So why did you choose Tumblr?

Bjork: At the time that was one of the suggestions that was made, I think Gary Vaynerchuk had built his personal blog on Tumblr, and at the time I don’t think WordPress was quite as established. Well I know it was, and it’s just such a behemoth today. I think it was still established obviously, but it wasn’t until like a year in that we said, you know what, this isn’t the best platform for a food blog, or for really a blog in general with the type of content we were creating. There is just so much that you can do with WordPress as you know, so we made the switch, we switched over, and it’s a WordPress blog now.

Steve: What year was this?

Bjork: Started in 2010, April of 2010.

Steve: Okay, right. Oh around – I started a year before you I think.

Bjork: Sure with the ecommerce site.

Steve: No, with the blog actually not the ecommerce site.

Bjork: Okay, ecommerce site was before that, a couple of years before that?

Steve: Yeah ecommerce site was 2007, the blog was like 2009.

Bjork: I should know this because I just interviewed you for our podcast.

Steve: Yeah I know it’s funny, we just spoken.

Bjork: I didn’t study my notes before I started.

Steve: Were you guys both working at the time?

Bjork: Yeah, so Lindsay was a teacher, she’s fourth grade teacher, and I was working at a nonprofit. I would say this would be like a tip or a little jump for people that are listening that are thinking about making that transition, one of the things that I knew at the nonprofit that I was at was there was some flexibility in my role, not a ton but a little bit.

I was really interested in web sites and web design and online businesses and I was working at a nonprofit that actually partnered with schools. We would go into schools and we would do retreats. Like those who are familiar it would be like a weekend camp parked into one day, and we would talk about things like respect or courage, kindness, things like that. It really came out of this idea that there was a need for schools to have these conversations, incredible organization called Youth Frontiers.

Anyways what happened was I knew I was interested in this business side of things, so what I did is they had a position open for like a 10 hour a week IT person, and I said I would be super interested in filling that because of my interest. So as much as possible if you can, for those that are listening find ways to like own little tiny pieces of a job that you might be interested in an area that you might be interested within the company itself, and maybe that is even volunteering for something.

I think that’s a huge way that you can make steps towards moving towards your goal without having to super burn the candle on both hands. There is obviously a little bit of that that has to happen, but as much as you can roll that into the job itself, that can be a huge win and that was one of the ways that I curved my teeth initially with understanding WordPress and web design, and even just like IT stuff in general like what is a server and how does it work.

Steve: I see so those skills directly translated over to Pinch of Yam?

Bjork: Yeah for sure 100%, and I think it’s not something I went to school for, I didn’t have any experience with it. It was all on the job training in the sense that I said I know I want to do this and I know I want to do it [inaudible 00:10:42] perform on our own, so I’m going to see if there is any way possible that within my normal day to day that I can start training in on this wherever I am.

Steve: That’s good advice, so was your wife trained in food or cooking I should say?

Bjork: Yup, that’s a good question. Lindsay doesn’t have any formal experience with food or food prep or recipe development or anything like that, just a general interest with it and I think really a skill, this is something that we’re starting to learn, another little takeaway here, but I think that everybody has some type of background that they can shift and maneuver in a way that applies to what they’re doing.

For Lindsay, she is an awesome incredible teacher and she is able to take that and she’s a really good communicator as well, and so she is able to take that, adjust that and apply it to this niche where it’s not 100% food, it’s also communicating how to create something or story telling or communicating with a group of people. She’s been able to take that and apply to it, she’s also just from seven, eight years of making recipes, and testing and learning about it, she’s really good with food and recipes and content, but a lot of her skill set also applies to her background of teaching.

I think everybody has that previous experience in something that they might not think applies to maybe an ecommerce site or developing an online business, but better if you really critically think about it, you can adjust and maneuver that and apply it in a way where you can leverage what you’re doing more efficiently because of your previous experience in whatever area it is.

Steve: Absolutely, arguably the communication and the personality is much more important than the actual thing that you’re talking about, right?

Bjork: Mm-hmm.

Steve: Whether it be food or quitting your job or whatever. I’m curious though, so you started out on Tumblr, how long did it take for the blog to take off, did it off on Tumblr?

Bjork: No, well and that’s all relative like when you’re first stating, it feels like it’s taking off when you have 100 visitors.

Steve: Okay, sure.

Bjork: It just like scales up appropriately to however much, like as soon as you get 100, the next time you get 100 it’s not as impressive, like you know how that is whether it is page views or the income you’re able to earn from it or whatever it is. Let me pull up a stance real quick here and see, it took a really long time to get to a point where I was like, now we’re moving along fast and have a lot of momentum, it’s one of those things where I would say it’s you work hard for three, four, five years and then you’re an overnight success, right?

Steve: Sure, sure, but you know what’s funny is I had Erin Chase who is a mutual friend, and her blog took off in like three months whereas it took me three years, so I was just curious what your trajectory look like.

Bjork: Yeah so if I were to look back, and this is on a month to month basis, I would say it “took off” probably at the beginning of 2013, and that’s where we’re starting to get like 500,000 sessions a month pretty consistently. There was also rump time where in terms of as a business we were starting to make comparable income to what we had in our normal jobs, and granted it was like teaching in a nonprofit, so it was not like we were Wall street bankers, but it was at the point where we said, maybe it would make sense for us to switching over to doing it as a full time job.

Steve: Did you guys both like your jobs?

Bjork: We loved them and that was one of the reasons why we had this like super slow transition out of them, and to paint that picture what it looked like is, and this is maybe a takeaway as well like we didn’t burn the bridge and jump off. We did make this very slow transition, and I know your story is a little bit similar where we would have been able to switch out, but we cut back to like three, four’s time.

So we’d spend one or two days fully dedicated to our own businesses, and then it switched to like half time. Lindsay was able to get a job where she had reduced hours, it wasn’t a classroom teacher, she was helping out kind of in a more specialized subject, and then I was going in a couple of days a week. And then it switched, Lindsay left and then I went into like a consulting role where I was doing maybe a few hours per week, and then eventually transitioned full time two years ago.

Steve: That sounds exactly like my story, it’s crazy.

Bjork: It felt super comfortable and we knew that we had a foot in the door in these other jobs and it allowed us to comfortably make the transition where we could see, hey in general the trajectory with these is up and at any time it’s like you always have a little bit of that feeling of like well everything could crash and burn and it could, but I think with two years of feeling that tension of, yeah I could be leaving my job but I haven’t yet. It really feels good to like draw that tension out, so you just feel really ready and at the point where it makes sense, you’re mature and it’s like the decision is ripe, it’s like ready to be picked and it feels appropriate to move on.

Steve: Can we talk about those first three years leading up to the hockey stick so to speak, like what were you guys doing those first three years and what was it like?

Bjork: Sure, so it was a lot of like mornings, evenings, weekends, and lunches. So we would feed the content side or just the work in general into early mornings or not necessarily even late nights but evenings, and then for both Lindsay and I pretty consistently like over lunch we would work on stuff and then weekends. That was just the norm for quite a while and…

Steve: Is this just content production?

Bjork: It’s content production for Lindsay, so it’s recipes, photography, writing the posts. For me it’s behind the scene stuff, so it would be maybe working with ad networks or thinking about affiliate type stuff that we could be doing for the blog. Eventually it moved into me focusing on Food Blogger Pro. So a for a long time the vast majority of the work those first years in terms of Pinch of Yam itself, the food blog, that was Lindsay, 80%, me 20%.

Then once we got to a point where we said, it might make sense to build this membership site for food bloggers, that’s where things really went up for me in terms of my time and my energy, because I shifted and I was focusing really heavily on that to really ramp that up. But those first few years it was just like you just fitted in where you can, and it feels like you’re doing two jobs because you were, right?

Steve: Sure of course.

Bjork: It can be a little bit overwhelming and it can feel like we’re doing so much because you are. I don’t think it always has to be that way, but if you’re doing like slow transition and building up, bootstrapping a business I think it has to be like that for some time where you sacrifice on sleep, or social activities.

It doesn’t have to be extreme where you feel completely burned out, but I think there is a little bit of that where you have to pay your dues in order to get to a point where you make that transition and shift and are able to focus on a full time.
Steve: How did you increase traffic, was it just putting out content and did people naturally find it, what are some things that you guys did to promote your content?

Bjork: In the early stages there were food sharing sites, so FoodGawker, Tastespotting. These are sites where it was kind of served the role what Pinterest does now where you would post your recipes, it would be your photograph, people would like it, they would click on it and they would come to your site. That was really early way of doing it and you need to have really good photography, but that was an important piece of it.

Steve: Those guys are still around?

Bjork: They are yeah, but in terms of like actual impact that they would have on traffic would be less than maybe focusing on Pinterest or just SEO in general.

Steve: Okay, sure.

Bjork: SEO is such a long tail thing like a long term and long tail, so we really start to see that now, that’s one of the primary traffic sources for us is search, but in the early stages it was more of that promoting content. Not in the sense that it was paid, but you were exchanging your photograph on a site, and that allows you to get traffic for them to use that photograph to be able to build these visual representations of recipes.

Steve: So back then Pinterest wasn’t around, there was SEO, did you guys do a lot of link building?

Bjork: No, that was never something that we were super intentional about doing other than being open to people using the photographs for Pinch of Yam or a list of the ingredients, so relatively we grow in terms of allowing people to use the content on Pinch of Yam. It can’t be the full recipe, but if people said, hey we would love to link back to this recipe and use the photograph; we’d always be open to that.

Or there is editors at BuzzFeed and if they’ll reach out we say yeah you have open access to use any of the photographs that we have here on the blog, because we know that that not only is a traffic driver but they are also dropping a link in the BuzzFeed which is a good thing.

Steve: Interesting, so early on then I’d say for the first couple of years was the majority of your traffic from these sharing sites?

Bjork: Early on it was probably a combination of like social sharing and then starting to get into some SEO stuff, it was a mix of that and then some direct traffic as well. So people that are coming back and maybe they bookmark a recipe and they come back to it. And then when things really started to pick up and become influential was like when it tipped over into Pinterest, and that was a huge traffic driver and still is, it’s the second most popular source of traffic for Pinch of Yam, but for a while was the number one source of traffic.

Steve: So in terms of SEO did it take a long time for that to kick in, like did it take years for that to kick in?

Bjork: Yeah it took a long time. Obviously right off the bat you’re getting some search terms, but it took a while in order for that to really kick in and become an influential factor in the traffic. I don’t know the exact dates and what they look like, but even like I’m pulling up here and looking at real quick.

From December of 2012 we would get maybe 7 to 8,000 visits a day, but it’s like if you go back to that first year even after the first year was maybe like 500, 600, 700, which sounds like a lot especially for people that would bend towards having some type of business related site or ecommerce site, but the reality with like a strictly content based site where to advertise, it’s monetize off of advertisements and sponsorships primarily. That’s not a lot of traffic and engagement just because you need so much in order for that to get to a point where it’s influential.

Steve: Okay, so would you characterize your early traffic strategies then was just like putting out really good content and then taking advantage of these social sharing sites?

Bjork: Yeah for sure and to be honest I think a huge part of it was not really having a super strong strategy, it’s not like we came in and said we’ve got to think about link building, or we have to think about doing guest posting or anything like that. It was really just Lindsay producing content and trying to figure out the best possible way to get good photographs that represent the recipe, good recipes like finding those.

Then there was the intention where I heard of like these food sharing sites, but to be honest like early on we really focused less on traffic and more on content. When I say we I mean that was Lindsay, she was really focusing in on that and there wasn’t really an intentional effort by either of us to say like, hey what are some strategic things we can do for link building or building social media following or anything like that.

Steve: So if we would fast forward today and you were to start from scratch today, what would you be focusing your efforts on?

Bjork: I think it would be smart to think about within the content that we’re producing and we’re starting to think about this now, like what are the sub niches within it. Pinch of Yam as a food blog is a little bit of lifestyle and then food and recipe which is a very big category, so it could be anything from chocolate chip cookies to like a healthy salad.

We have a really broad range of content that we can produce, but that also means like it’s a little bit more of the titanic versus a speed boat. It takes so long to get going and to move when you have a huge range of content that you’re producing. If you have a little niche, you’re able to get traction with that a little bit quicker and also you’d have a better idea of what your offering is as opposed to a site that’s a little bit more of a catch on in terms of the content.

I don’t know if I would necessarily niche it down what it is, but within that be intentional about thinking what are the things I want to be known for, what are the niches within the food category that we’re going to really claim and own, and then how can we produce offerings whether that’s the free content or paid for content within those little niches or areas of focus.

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In terms of – you mentioned Pinterest was like your number two. In terms of like Pinterest, Instagram, Facebook, and SEO, how do you allocate your resources today?

Bjork: It would be SEO, it would be Pinterest, and then to be honest there is this interesting sub category of social media and I think is something that I’m just starting to understand a little bit better, that we’re starting to understand a little bit better of like it’s not about traffic, it about engagement on those platforms.

A great example that I love to refer back to all the time is BuzzFeed. BuzzFeed isn’t trying to drive traffic; they are not trying to post something on social media, like they are not posting a story on Snapchat for instance, and then including a little link back to BuzzFeed to get you to opt in to their free download. What they’re doing is they are entering the room and saying what is the vibe here in this social setting, and then they’re feeding in to that and having conversations with the people in the room.
That feels really natural as opposed to like coming in and being like, hey guys, now that I’m here everybody come with me and go in to this other room that has a different feel, and we’ll take you out of the context of where you are. One of the things that we’re trying to do is figure out how can we be having — creating content that lives really naturally on these other platforms and remove the idea of traffic.

So we’re not thinking how do we get people back to the site, how do we get people to download stuff for free. It’s more about how do we produce something that fits really well for this platform, that engages people where we can build the following. One of the huge things that we do is then work with companies in a sponsorship relationship, and so they’ll maybe sponsor a video and you’ll see that with BuzzFeed as well, they are a great example of a content driven site that does that at a really high level.

Steve: How much traffic do you need to get like a sponsorship?

Bjork: I think it depends on the niche, so like last night I was reading Modern Dog magazine which we subscribe to and get, and which is a great case study in and of itself, but as I was looking through it I thought, there is probably not a lot of people that subscribe to this magazine like thousands, maybe not tens of thousands, but they have so many opportunities to do sponsorships or in this case again advertise on the magazine, because they know that it’s such a specific niche.

I look at these products that are in there and it’s like, oh yeah I’m interested in not all of them but a lot of them, because we have a dog and we love our dog. And so when I look at these products it’s like I can see how a small magazine with a small subscription base how they can make it even like an actual print magazine which is crazy.

The idea being that you can have a really small audience if you have a super specific niche because those people out there sponsors or companies or whatever it is that are interested in working with you will know that and understand that the audience that they are serving that content to is really aligned. An ad in Modern Dog magazine while maybe isn’t as expensive as it would be in Time magazine is potentially just as effective because of the audience that they are advertising to. My official answer is that I think it depends.

Steve: In terms of Pinch of Yam, you guys mention it’s advertising and sponsorships, when were you guys able to attract both?

Bjork: Sure, advertising you can do right off the bat, and the reason is because the primary way that ads are served right now for a content site, so if you are running traditional banner ads or pre-imposed or video ads, those are programmatic ads, so essentially what’s happening is you’re not working directly with a handshake deal with another company and saying, hey you can show this ad on our site for $3000 this month and then they show them.

What’s happening is there is these, it’s essentially micro transactions that are happening on the back end server side where there is an ad buyer and an ad supplier and those are talking to each other, and based on cookie behavior from somebody. People I think understand that in general even if they don’t know advertising, because they go and look at a basket ball hoop and then three days later they see an ad for a basket ball hoop even though they are looking at a coffee site.

The reason is because you’ve been cookied and so then that ad shows. The thing to know is that when you’re browsing, what you’re doing is essentially building up a profile, and so they start to understand potentially what your age is, where you’re located, what sites you’ve looked at, what things you’re interested in and that profile is then wrapped into something that ad buyers can say I want to buy $10,000 worth of ads against this type of buyer and they’re making those micro second decisions.

Long explanation to say if you want to run ads you can do that relatively early on, you could use something like Google Adsense and get up and running pretty quickly, but the payoff that you’re going to get isn’t very high especially if you don’t have a decent amount of traffic.

Steve: What do you guys get paid out?

Bjork: I would say like in this past month so July would be anywhere from 25 to $30,000 based on…

Steve: No I meant CPM sorry.

Bjork: At this point overall we’re getting probably like seven to eight, I think it was eight.

Steve: That’s actually pretty good.

Bjork: That’s really good, but some of the things to know is that that’s like the cumulative like wrapped up total for like video pre-imposed, it’s the ads that we have injected on mobile and desktop, so it’s not just like one ad, that’s cumulatively like what do we get like on 1000 visits.

Steve: I see for all the ads encapsulated?

Bjork: Yes.

Steve: Okay got it.

Bjork: So it’s not like one individual ad unit which then adds up so we’re getting like 40 or 50, it’s for 1000 visits on average what will the site earn from advertising.

Steve: Okay and then in your experience, which networks have provided the best payout?

Bjork: There is a couple of networks and these are specific in the food niche, so the two that I think of that are the most popular right off the bat, they are most common I would say, the company we work with is called AdThrive, and they are going to be a company that comes and both of these are as far as I understand holds your hand and gets you up and running.

They have a minimum page views and I don’t know what that would be, you would have to go to their site to check it out and there is another one called Mediavine which operates in the same way. On Food Blogger Pro, those are the two most common that we hear from people using. Then after that I would go into there’s thousands of individual ad companies, but they are usually less of like, hey we’re going to come and partner and more of like we’re going to give you the script that you put on your page and then we collect off of that. Mediavine and AdThrive are a little bit more involved in the process.

Steve: Okay and in terms of when you were able to attract these offers, you mentioned like there was like a minimum page view limit, were you guys running Adsense early on and then gradually shifted over?

Bjork: Yeah, well it was comparable to ad, so we had Adsense and then we had some food specific sites or companies that we were working with. There was one called Foodie Blogroll, there was another one called Gourmet Ads. These are companies that are ad companies with the focus on food content, but the thing is just with the shift to programmatic over the past few years, you see that becoming more generic in the sense that it’s not like a food related company is going to be working with other food companies as much, because of programmatic.

They don’t care as much about who are the blogs they’re working with, they are more focused on who is the actual individual and what is the ad that we’re serving them. So to answer the question, we started out with some individual ad networks like Adsense, Foodie Blogroll, Gourmet Ads, and then eventually you start to work more. So you have a handful so you can an ad stack that you’re running and you’re playing around with which ones work better and which ones show first and things like that.
Then eventually we started to slowly shift over towards having a partner advertising company take over and really run with that.

Steve: I see, do you still do private placements on your site?

Bjork: No, and we never really did.

Steve: You never did?

Bjork: No. And to do that is totally possible, but I think it’s becoming less and less common to do actual like display placements, so like somebody would buy something on the side bar because of the shift of programmatic advertising. What is really common and becoming much more important is, it ties into what I was talking about before like the BuzzFeed thing where you partner with and work with a company and they say we want to sponsor this post that you’re doing and this video on Instagram.

We will work with a company that does let’s say chocolate, and they want to focus on having their content in a video and then include it in the recipe, so there will be like a product shot of it. It’s like an online version of America’s Got Talent, drinking Dunkin Donuts.

Steve: Sure got it.

Bjork: Whatever it is that they are doing.

Steve: Like a TV show is they are embedding like car commercials practically.

Bjork: Yes exactly and it’s a more transparent version of that, so it’s not trying to hide it necessarily, it’s more saying, hey for this post, for this video we’re working with this poster company. You’re letting people know and there’s rules and regulations around that, that you have to be transparent in that and we’re pretty intentional at doing that, but the basic idea is the same where you have an audience and you’re exposing that audience to the product in a way that isn’t a traditional ad.

Steve: Are there ROI goals on their end for that and how much is that pay compared to your regular CPM ad?

Bjork: Yeah, so it’s less CMP based and it’s more – there is a negotiation element to it and there is also just a – I think kind of a – like you scale up with more traffic and engagement obviously. So I wouldn’t be able to say CPM, I think the ROI is a little bit difficult because they are not necessarily tracking sales.

If you have a company that is selling Ketchup, they are not selling that online, and they’re not like using a coupon, usually not using a coupon to encourage people to use that, so then they can track the sale of it. So it’s a little bit towards like PRish in the sense that it’s awareness as well as…

Steve: Their branding place basically.

Bjork: Yeah right exactly.

Steve: Got it, okay.

Bjork: I think in terms of what you will be able to get for that, for us like at this point we’re looking at anywhere from maybe like — I wouldn’t even know and it depends on the package, but I would have to check with Lindsay because she does more of the client relationship stuff like this. But I would say it won’t be uncommon if you have a site let’s say with a million page views to get somewhere between – this is a total guessing, lots of variables and this would like what type of content is included in social promotion and stuff, but maybe $1,000 to $3,000 for that type of sponsor content.

We know people that for instance like they don’t show any ads on their sites, so just super clean site and they don’t have a ton of traffic engagement, but they’re charging $10,000 to work with the brand, to do a video on a post and promote on social media. A lot of it depends on your strategy and how you’re presenting the content on your site, and also negotiation probably.

Steve: Okay, you know what I’ve had other food type of bloggers on the podcast, and I have friends that do that too and they’ve all been telling me that just the whole ad revenue model is been decreasing over the years. Are you guys experiencing that as well and what have you been doing to combat that?

Bjork: Yeah for sure, and it’s interesting because it decreases and then – I was just thinking about this the other day and then it changes. So like people figure it out and they catch up with it and then the industry changes and then people figure it out, they catch up with it. I think in general, display advertising is on this trend down, it’s becoming less effective, and I would say that in sense of like traditional display ads like banner ads.

But it’s interesting because as tracking becomes more effective, then I think the value of that comes up, so we’re starting to see an interesting shift where tracking is becoming a lot more capable, and programmatic is becoming more effective, so I think, I don’t totally understand the deep, deep intricacies of the industry. I think what happens essentially is that as tracking becomes better; people are willing to pay more because it’s more effective to serve those ads to a targeted market.

I think that there is an element to that. I think in general it’s a little bit like trying to swim upstream, you can make progress, but it’s not as easy as swimming downstream. The other element of display advertising is – and this a little bit of a shift, but video ads are in such high demand that there is a really high CPM on video ads right now. That’s one of the reasons you see this shift towards videos, not just because that’s how people are consuming content in general.

But for content sites whether it be CNN or Mashable or the StarTribune [inaudible 00:40:01] whatever it would be you see them starting to include a lot of video and running ads pre-imposed against that, because it’s such an effective way to monetize content right now. The interesting thing with that is sometimes you’ll even see on some of these new sites that they’re showing videos that have to do with the report but not necessarily. It’s almost like they’re just trying to figure out ways to include video content so they can run an ad against that even if it’s not directly related to the story; maybe it’s remotely related to it.

Steve: Does that mean you’re focusing more on video content today?

Bjork: Yeah, so we just hired a full time video person, so she is shooting and editing and then we have a part time person that we call a shooting assistant and is handling all of the food side of it. So it’s not necessarily Lindsay every time that’s going to be doing the video, it’s traditional like you see on Facebook a lot of times these food recipe videos where the person isn’t necessarily front center, so we’re doing a lot of those and starting to include those on social media as well as within posts and things like that. We’re really leaning in to it; we’ve hired a full time person and somebody part time.

Steve: In terms of Food Blogger Pro, that was my way of trying to segue in to Food Blogger Pro by the way.

Bjork: Yeah nice good, because there is videos on there as well.

Steve: So you have ad revenue and you had all your eggs in that basket, so can you tell me about how you thought about doing Food Blogger Pro?

Bjork: Sure, so that was three years ago now and it really came out of us – so we did these monthly business reports where we said, here is what’s happening, it’s pretty typical for what you see with like income report or transparency report or whatever you want to call them. Here is what we did this month to create an income, here are some of the expenses, here are some of the things that we learned.

As we started to do those more and more, naturally we had people reach out and ask questions about it, and it just started to become this like a rhythm of everyday we’d have a handful of people asking XYZ, so…

Steve: Was that the reason you had the income reports by the way or no?

Bjork: It wasn’t intentional at the beginning and to be honest when I think back to when we first started, it was way in the beginning and it was before the blog was really anything, so we were making maybe $20 from it or $100 the next month. So I don’t think I would like to think that I was that intentional to begin with, but I don’t know, I don’t think I was.

Steve: Okay.

Bjork: It’s one of those things where you look back and it’s almost kind of funny really knowing what it was. I think there was truly, we started out by saying it was the food blog money making experience – experiment. So I think that’s really what it was and in a way I think what happened was I had like two people on my shoulder, so the classic like angle, devil situation, where on one shoulder was people saying like you can do anything, you can create one blog and have that be your full time thing.

On the other shoulder are these articles that I had read where people were like of you’re going to do this especially in the food space you have to do it out of passion, only passion because it’s never possible to turn it into something like to make a business out of it. For me it was – and for Lindsay I think too was an experiment in saying like is this possible, is this something where we can build this into something that we’re actually able to create an income from.

That’s like the purest form of what it started out as. I think as it got to the point where did start to get – some people that would follow along with them would be interested in them. It was at that point where we said, maybe there is a little sub category that we can build or sub community of people that are doing similar things, or interested in doing similar things and that’s where the idea of Food Blogger Pro came about.

Steve: Is that course primarily marketed through Pinch of Yam?

Bjork: Yeah and then we have some affiliates, we have some pretty awesome affiliates too and those are, I would say 99%. Everybody that I know of are people that are members of the course and then promote it to their readers. The nice thing is like the audience that we serve there is also people that have audiences, so affiliate marketing makes a lot of sense for us because we can just work with people that are members, and it’s natural for them to talk about it and promote it.

That’s the really other big piece of it, but in general it’s something that’s tied to Pinch of Yam, like if we ever wanted to sell Food Blogger Pro, which we have no intention of doing especially not in the near future, nobody would be interested in it because they would be like, well it’s essentially attached to Pinch of Yam, it’s not necessarily a standalone thing.

Steve: Got it, can I ask you like how you decided on pricing, it’s a membership site, then you have a yearly membership versus like a onetime fee, so I was just…?

Bjork: That’s a good question, I think that I liked the idea – personally I really like doing small incremental changes over a long period of time, I’m more – especially at the time, not as much anymore. The idea of building something up and then doing a big launch was a little bit intimidating to me, and having like a high price point for it. I really liked the idea and still do of this recurring revenue as opposed to like a really big launch and then waiting.

That being said, I think there is space for that and I think that it makes sense to have that type of offering in your sales funnel, or your offering list or catalog or whatever it is that you want to call it, and at some point we’ll probably start to have things like that. But it wasn’t like a super intentional thing to be honest; it wasn’t like I sat down and weighed the positives and negatives of having a higher price point.

Steve: But you guys still do launches, right for this product, like right now it’s closed?

Bjork: Yup, so that’s one of the things that we’ve changed and that’s why I was saying previously especially when I first got started, the idea of a launch was really a scary thing, but as we got into it, one of the things that we realized is like I was growing weary of like always promoting and always encouraging people to sign up. We worked with Stu McLaren who is connected with or was at the time Platform University and has done a lot of membership site and stuff.

That was one of the recommendation that he had is both for marketing sake like it’s easier to market when there is an open and close and also so that you’re not always weary from promoting it. It makes sense to switch to kind of like a college or university, where you’re doing a longer period, people join and then they are part of the community. That was a big change for us and felt really good in the sense that we could step back a little bit and not always be in promotion mode.

Gary Vaynerchuk talks about jump right hook, so you’re giving, you’re giving, you’re giving and then every once in a while you’re like; I’m going to promote this. That feels really good to have that rhythm, and also it’s just better for marketing, it’s something that I think people are used to, so there is big movie premiere and you see ads for it and everybody goes and they watch it. You have a long period like I said for college or university and it starts at this date, and everybody joins.

There is a natural rhythm to it especially with something that’s community oriented I think versus I would say if it was a SaaS app or like an application. Obviously it doesn’t make sense to have an open and close for something like that, but that shift has worked really well for us. I don’t know if I would have been able to do that to start as much just because I wasn’t as comfortable.

Steve: I mean it’s a ton of work which is why I don’t do open and close launches, instead I just have an email sequence that’s really long that teaches a lot, and then presents the offer and then teaches some more and then presents the offer.

Bjork: What is your reason, is that something you tested or it just felt like a good fit for you?

Steve: I don’t like doing launches just because it’s just too much work and pressure just all once and you have to do it – I would dread doing a launch every time I do it basically.

Bjork: Sure, sure.

Steve: And so for my personality I thought it was just better to just leave it open and let my email sell it for me.

Bjork: Yeah for sure.

Steve: But I also do webinars too which is kind of like a launch but not really. I just do those once a month.

Bjork: Okay once a month and is that only – this is like switching the interview a little bit, is that because, or is that only to new people to the list like who do you email for that webinar?

Steve: Yeah people who have been to the webinars before, people who have expressed interest in certain pieces of content that I have, and people who are new to the list.

Bjork: Got it, okay interesting.

Steve: But what I found also is that people will attend multiple webinars, like there’s been people who have attended every single webinar that I have given even though it’s the same content sometimes.

Bjork: Right, right, interesting.

Steve: So Bjork real quick, in this interview I was hoping that you would be able to provide a piece of advice to somebody who wants to start a food blog, because we were both bloggers and I know that can be a slog especially in the beginning, right?

Bjork: Yeah for sure.

Steve: What would you recommend for these people?

Bjork: A few things here, I think it’s really important to figure out something that you’re going to you’re going to enjoy regardless, so there’s all types of income, so there is the income that we think about and that’s income where it’s like literally dollars into the bank account. But there is also these income sources that we don’t talk about as often it’s emotional income, like how do I feel when I’m working on this, am I excited, does it feel like a good fit, is this something I’m passionate about.

There is relational income, so if you’re somebody who is naturally extroverted and you’re wanting to be around other people all the time, maybe starting a blog where you’re like having to be by yourself all the time and work on content in this closed room isn’t going to be a great fit. If you do know that you want to do a blog and you are super extroverted, think about ways that you can shift that so that you’re working with individuals more or working with other people, if relational income is a really important thing for you, that you’re factoring that in.

So that specific item is think about the types of income not just like the primary money income which is what we normally think about, there is all these other ways that you could be creating an income. I think the other thing especially if you’re going to be going in to something purely content driven where you are eventually going to want to work with advertisers or sponsors or things like that, to know that it takes a really long time, and that’s why that first tip or takeaway is so important.

It just takes a lot of time to get up to speed if or get to the point where you’re creating enough monetary income for that to replace your job or to be significant enough that it makes an impact, so to be patient. We call that 1% infinity, this idea that you’re improving a little bit 1% over a long period of time infinity, but doing that each and every day, that’s a really important thing.

Specific to the food space, I would say it’s really important to think about what is it that you’re going to own in terms of the niche which we talked a little bit about before, and you’re able to get a lot more traction if you start out with a specific niche. The interesting thing here is that there has to be a balance between claiming a niche, but also restricting yourself long term to only that niche.

I think that would lean into the name side of things, so I think you can have a name that is flexible enough, that allows you maybe to claim that name and then have maybe a tag line that defines the niche a little bit more. So down the line you’re able to open it up a little bit once you do have that traction initially that you’ve gained because you’ve claimed this niche, because that’s such a common thing is eventually you get to a point where you want to niche out. Amazon didn’t want to sell books forever, Zappos didn’t want to sell shoes forever, their names allowed them to change because of the flexibility of that. If it was a shoesite.com, it would have been really hard for Zappos to switch down the line.

I would say the third piece is think about a niche that you can start and that you can really claim, but always be thinking about the reality that later on you might want to open that up a little bit and to be intentional on how you’re structuring it and naming it and branding it to allow that to happen.

Steve: I think dashofyam.com is available too?

Bjork: Oh yeah, there you go, yeah.

Steve: There you go, hey Bjork you’re good, thanks a lot for coming on the show. If anyone has any questions for you, where can
they find you?

Bjork: If people wanted to reach out, probably the best way, I’m not super active on Twitter, but if people wanted to reach out and connect with me on Twitter I’m on there, Bjorkostrom, and then we’re just at Pinch of Yam and Food Blogger Pro. So if you want to follow along with what we’re doing, you can go to Pinchofyam.com, and then the membership site is foodbloggerpro.com, and we’d love to connect and hear from you, so that’s it.

Steve: Cool, thanks for coming on the show Bjork, really appreciate it.

Bjork: Thanks so much Steve, appreciate it.

Steve: Take care.

Hope you enjoyed that episode. As I mentioned before Bjork is one of the most successful food bloggers I know, and is the perfect example of someone who took an interest and turned it into a thriving business. For more information about this episode, go to mywifequitherjob.com/episode143.

And just a reminder that tickets for the 2017 Sellers Summit are now on sale at sellersummit.com, the conference that I hold every year that specifically targets ecommerce entrepreneurs selling physical products online. The event will be small and intimate, and I promise you that the speakers will focus on actionable strategies to improve your ecommerce business and not any high level BS.
So head on over to sellersummit.com, and check it out now.

And once again if you are interested in starting your own online business, head on over to mywifequitherjob.com, and sign up for my free six day mini course on how to start a profitable online store. Sign up right there on the front page, and I’ll send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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142: How My Student Jen Makes 6 Figures Selling Shower Curtains Online

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142: How My Student Jen Makes 6 Figures Selling Shower Curtains Online

Jen DePaoli is a student in my Create A Profitable Online Store Course and I’m really happy to have her on the show today. Jen runs ShowerCurtainHQ.com where she sells shower curtains online.

What I love about Jen is that she hustles, she’s constantly finding new ways to expand her business and she’s not afraid to try a variety of different business models. Just like the other student interviews that I’ve conducted, this podcast provides a very realistic, in the trenches account of someone who just started their online store.

Enjoy the interview as there are a lot of details that Jen shares that can help anyone get started.

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Create  A Profitable Online StoreDid you enjoy listening to Jen’s story? If you would like to create your own profitable online store and join a community of like minded entrepreneurs, then sign up for my full blown course on how to create a profitable online store.

My course offers over 100+ hours of video and includes live office hours where you can ask me questions directly.

If you want to learn everything there is to know about ecommerce, be sure to check it out!

What You’ll Learn

  • How Jen came up with her niche
  • How Jen got started without investing a large sum of money on the business
  • Mistakes Jen made in getting started and how to avoid them
  • How Jen attracted customers to her store early on
  • How to leverage marketplaces like Houzz and Amazon

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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast. If you are new here, it’s a show where I bring in successful bootstrapped business owners to teach us what strategies are working and what strategies are not. Now I don’t bring on these famous entrepreneurs simply to celebrate their success, instead I have them take us back to the beginning, and delve deeply into the exact strategies they used early on to gain traction for their businesses.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start your own online business be sure to sign up for my free 6-day mini course, where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin, I want to give a quick shout out to sitelock.com for being a sponsor of the show. SiteLock is the leader in website security, and protects over 8 million websites by monitoring them for malicious activity 24 hours a day, 7 days a week. So here is the thing, most online business owners never think about security until they get hacked. Now my online store got hacked long ago, and it was the most miserable experience ever.

I basically lost thousands of dollars as I frantically tried to patch the issues, and get my store back online as quickly as possible. In the event that you get hacked, call sitelock.com, and they will help you out, or even better protect your site before you get hacked. Right now you can get 3 months of SiteLock free if you go to sitelock.com/mywifequitherjob. Once again that’s sitelock.com/mywifequitherjob. Now on to the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m really happy to have Jenifer Depaoli on the show, and Jen is actually a student in my Create a Profitable Online Store course. Now it’s been a while since I’ve heard a student on the show, but last week I actually sent out a survey to my class of about 2000 students and was very pleasantly surprised with the results.

It turns out that 56% of students you’ve launched a product and have been here in the class for at least a year are now all making at least four figures per month, and a whopping 9% of students are actually doing over 50K per month. Anyway Jen runs the awesome store showercurtainhq.com, where she sells shower curtains designed by local artists.

And I’ve had the pleasure of having her in the class for over a year now, and Jen is doing really well with her store where she makes money selling on both her site and on Amazon. And with that welcome to the show Jen, how are you doing today?

Jen: I am doing great Steve, thank you so much for having me.

Steve: Yeah it’s been over a year since we last chatted on Skype I believe, and a lot of things have happened since then.

Jen: Yes, they absolutely have. I took your class and I have to tell you by the way, I found you because of the name of your website My Wife Quit Her Job. I was working at a pharmaceutical lab, and I was very unfulfilled, very miserable, I wanted to just quit and stay home, but the money was good. And I found the podcast through Pat Flynn, he opened up my eyes to making money online, and so I just became obsessed with learning how to do that, and I came across your blog and I was hooked ever since.

And I found your blog and then I wanted to buy your course, and my husband who is like my biggest fan and my biggest skeptic, I remember showing him the course, I was like, “Honey I want to buy this guy’s course,” and he was like, “I can already tell you that looks like a scam.” And I was like, “No you don’t understand, you got to visit this guy’s blog, his wife got to quit her job, they sell stuff online.” He’s like what do they sell online? And I’m like wedding linens and they make a lot of money doing it.

So he finally just said, do whatever you want but I don’t know, it doesn’t look like it would work to me. So I was like [inaudible 00:03:54] determined just to prove him wrong. So I started drop shipping shower curtains, it took me a long time by the way to find my niche, but once I found my niche …

Steve: Yeah, can we talk about that real quickly?

Jen: Yeah.

Steve: Talk about the process of finding your niche actually.

Jen: Yeah, I was one of those people where it was kind of like paralysis by analysis for a while, I don’t know if that’s what you call it, but I had a really hard time. I had already bought Market Samurai, and I was just going back and forth, I couldn’t find the right niche, but then – and I would always think about while I was just taking a shower, okay what’s going to be my niche?

I finally just realized, okay shower curtains, unless you have a glass enclosed shower you need a shower curtain and it usually sets the tone for the bathroom, then you know what color to paint the walls and what waste paper basket to get and light fixtures. And a lot of people need to get them, and they fit the metrics that you taught of shipping something small and it’s not an electronic.

So I was like you know what, I’m going to just email Steve and ask him a few things this is a good niche. And I remember you emailed me back right away and you said I already did the keyword research for that for somebody else and I know it’s a good niche, but the good news is, is that person picked a different niche, so you would the only one in the class that is going to do shower curtains.

So finally I just said you know what, I‘m going to do shower curtains. But I was still a little bit afraid to import from China, so I started out drop shipping, and so I just cold called this company. I just started cold calling companies that I found on Etsy and asking them if they would drop ship, and the third company I called it was really cool.

It was a husband and wife team, and they were like, oh yeah we could drop ship for you, how about if we gave you a 30%, we’ll give you a coupon code, and then you can pick out which ones you want, and you can put them on your side. And so I started out drop shipping and I remember my site was live for about a week and then I finally got like that little update on my phone from Shopify that I had made my first sale, and I was like, oh my gosh.

It was like I couldn’t remember, it was like early Sunday morning and I run into the room and like to show my husband like, look I made a sale on my website. And after the site was live for about a month, I remember thinking, okay this class that I took it just paid for itself.

Steve: Awesome. I know you have an interior decorating background somewhat, right?

Jen: I do.

Steve: I just want to ask you this, and this is a question I ask a lot of people, are you passionate about the products that you sell or is it just strictly a money thing?

Jen: You know what that’s a really good question. I do pick products that I would want to put in my own house, and now I’m actually importing shower curtains from China. And again I just keep an eye out on the market like what patterns are hot, what’s trendy, and then if I see something that I think might work, then I go and do the key word research on it to see if it would sell.

I also go and see if there is other competition out there. So I guess — but the answer is yes to both. I also have a sales background, so I want to get paid if I’m going to work hard, and I want to have a type of lifestyle where I can go on vacation with my husband and my daughters and go whenever I want.

Steve: How important do you think it is to like really be passionate about what you’re selling, just in your words?

Jen: You hear different opinions on it. I think that it makes it easier if you’re selling something that you’re passionate about. I mean you’ve had so many entrepreneurs on your podcast that they’re selling something – you’ve even said yourself it’s not like you’re passionate about wedding linens, but your wife is, I mean you guys have a really cool story about how you chose that niche too. So I think there should be some connection to it.

Steve: Okay and you mentioned that you keep up to date with what you think is going to be popular. Let’s say you find something that is popular, how do you go about figuring out whether that particular curtain style is going to sell?

Jen: Well I was able to find some vendors in China that would send me smaller quantities where I can test the market, and then also I have a printer that I have teamed up with. So if I have an artist that will sell some [inaudible 00:08:22] art, and I can put that on a shower curtain, I will try first drop shipping and see if it sells really well that way.

In fact I have two styles that sell really well on my website and then houzz.com, which is a really great market place if anyone sells anything home décor related, and I sell a couple of those styles a day. So I need to just contact the artist and see if I can buy the rights to that and order that one particular style in bulk, because I think that would do really well, actually I know it will do well on Amazon. If people are willing to pay $100 for a shower curtain on Houzz for that style, then I’m sure that if I bought it bulk in China, they would be willing to pay $20 for that same style.

Steve: So back when you were trying to get drop shippers, did you say anything special? So you went on Etsy you said to find these people?

Jen: Yes.

Steve: And then you actually mentioned that you print your own shower curtains as well, how does that work?

Jen: Yeah, that was my second step. So I was drop shipping just strictly drop shipping for a while, and at a 30% profit margin, I didn’t really have any money to do any sort of marketing, so I just figured, okay what’s the next step? I need to find my own printer that can print my own styles.

And so I finally was able to find a printer and I teamed up with an artist who gave me some styles that I only I sell, so own styles they can only get from me from either my website or my brand on Houzz. So it’s still is somewhat of a drop ship business model, because I don’t hold any inventory even though I have my own printer, and my printer isn’t in my garage, the printer is in Kansas city. But then also my husband is a graphic designer, so I was able to have him draw up some really cool patterns that I’m able to sell as well.

Steve: So this printer actually prints on shower curtains, meaning like they stock shower curtains and they just print whatever design that you want on them?

Jen: Yeah. The process is dye sublimation and so this printer they will print shower curtains, they’ll print pillows, they will even print leggings if you want to design your own leggings they’ll print those. I just mostly focus on shower curtains, I also sell a few pillows with the same designs on Houzz, but again the only reason why I’m selling the pillows is because I can drop ship them, I don’t have to hold those inventories, because that would take up a lot of room in our garage.

Steve: Okay and you mentioned how several times now, a lot of people out there they are selling on Amazon, they’re selling on their own site, but very few people have talked about Houzz, so what is the process on selling on there like, what are the margins, how much do they take, and how easy is it to use?

Jen: Okay it’s extremely easy thing to use, and I know that Houzz is really trying to build their market place, and so if you get started selling, you could actually talk to a person live for free where they help you get your whole store set up, and they take a 15% margin every time.

There is no monthly fee, it’s just every time you sell they take 15% of it, and the traffic there is unbelievable. If you talk to any other person that sells on that site, it’s highly worth it. They do recommend that you offer free shipping, so again it’s beneficial if you’re selling something – not like a piece of furniture or a table where it’s going to be expensive to ship. So yeah it’s extremely a profitable hub, anything that you would use in your home, but I’ve even seen stuff that won’t use in your home, I’ve seen baby products being sold on there as well.

So I will say this that the customer that buys off of Houzz is very – I don’t know if the right word is picky, but I do get more returns if the product isn’t completely perfect, they’ll right away and want to return it.

Steve: Okay and they don’t do any sort of fulfillment for you, you always have to sell and fulfill all the goods?

Jen: Correct, yes as of right now.

Steve: Are there any guidelines like they enforce on shipping times and that sort of thing, like how do they keep you guys in line?

Jen: Well the biggest guideline they want is they want the picture on a white background, because it’s an interior designer website, so they really want the pictures to look very professional. I think if you submitted a picture and they didn’t like it, they would say you need a better picture.

And then when you are setting up the listing you need to give a window of time when the order will ship, and since my curtains are – since most of them are made on order I say please allow six to ten days before the order is shipped, and it has not been a problem. The only time I think that they would get upset is if somebody ordered a return and you didn’t respond to them right away, they want you to respond within 24 hours when someone messages you.

Steve: And in terms of the market place, is it just list it and forget it or like are there ads for the platform or anything like that?

Jen: I believe you can buy ads, but I have not, I’ve been able to get enough traffic that it hasn’t really – it’s just hasn’t been something I’ve done because I’m also selling on Amazon and working on my own website. But you can buy – I will tell you this though, they do have newsletters that they send out to their readers every single week.

And there was one time when one of my shower curtains was featured, and I did not know that they were going to feature it, the person just found it and said here’s a new product and it also happened to be the weekend before Thanksgiving. So I think Christmas season was already starting, and I remember selling 30 of those same shower curtains in one day and these were $100 shower curtains.

Steve: Nice.

Jen: So those are really, really nice things.

Steve: So let’s talk a little bit about just – go in to a little bit more depth about some of the more difficult parts about getting your business off your feet. So you mentioned early on that you drop shipped by contacting Etsy vendors, when did you make that decision that you need to go to China to get some stuff?

Jen: It was – okay so I talked to you right after I got laid off from my pharmaceutical job. I was home for about four months and I was researching China vendors, and I knew that if I ever was going to make this the type of business where I was making money in my sleep, I could go on vacation and not have to worry about it, I was going to have to import from China.

I had made that decision, but I hadn’t pulled the trigger yet. I remember I was about to put an order in and I was still in between jobs, and so I could tell that my husband didn’t want me spending $6000 with some folk I never talked to before, I was just emailing.

So I finally told him, I said okay I will get another day job, but once I start getting money coming in from my job I’m going to take the money I have made from my shower curtain business and I’m going to import from China. And he said that’s fine, do whatever you want. So I got a new job, totally new industry where I worked from home, I’m an independent contractor so I can make my own schedule but I did have money coming in.

So I found two vendors, put in the orders – and I will tell you this, the first order from China is always the scariest, you wire the money, it’s so scary, you are like I hope that these people don’t scare me, but then the second order that you put into China it’s also scary, it’s just a different scary because it’s not going to get here on time, and you’re going to run out of inventory. So yeah.

Steve: So did you have any problems with quality control at all initially?

Jen: You know what I haven’t, I’ve not gotten one, I’ve been very lucky, I just ask a lot of questions. Usually though whenever you put in a smaller order, they don’t want to accompany with packaging. So these three new styles that I’m launching, they said we’re not going to do any sort of insert cards.

So I’ve had to order stickers and my mom was over yesterday helping me put stickers and labels and barcodes on these new shower curtains, but as long as they’ll sell well and I do a reorder, then they’ll do the insert cards and everything else that I want. No the quality control has been really good, I’ve been very lucky.

Steve: Okay and in terms of your initial orders for testing like how many of these do you buy, like for these three new products that you’re launching?

Jen: Yeah, I bought 300 of each.

Steve: Okay, 300 of each, okay and then usually you start with that quantity and then once you know that it’s going to sell then what do you usually step up your order to?

Jen: Well obviously the more you order the less it is, so as long as it sells a couple a day my second reorder for this one product that’s selling really well – my first order was 1200 because that vendor was not going to do any lower than 1200 for the first order, and then the second order was 3000. Obviously it’s less per unit and again I’m afraid I’m going to run out of inventory by quarter four, I’m going to need to order before Chinese New Year.

Steve: And what’s your turn around time, I’m just curious?

Jen: My turn around time for my website or Amazon or Houzz?

Steve: Oh no, not for fulfillment, just in terms of getting product in your warehouse or in Amazon’s warehouse?

Jen: Oh when I order from China?

Steve: Yes.

Jen: It took about a month, I did everything by sea, I’m cheap so I just figured – once I got that sample and I was comfortable with the sample, I just had everything ordered by sea and it took about a month.

Steve: Okay and then what would you say like your margins are from the products that you order from China, are they north of like 70%?

Jen: Yeah the stock that I had to reorder the style, it sells on Amazon for about $19.99 and I was able to order it for $2.50.

Steve: Okay, so it’s much more than drop ship, like significantly more than drop shipping?

Jen: Oh my goodness yes, yeah.

Steve: Okay, so today I’m just curious do you still drop ship any products?

Jen: I do actually, some of the ones that have sold really well, I’ve cut them on my website, and my website has been around long enough where it has some organic traffic from Google, and if somebody orders a shower curtain that I have to drop ship, I figure okay all I have to do is send an email to order the shower curtain and it’s 20 bucks, I make 20 bucks for an email that takes me two seconds to put the order in for, so yeah.

Steve: And in terms of just your site versus Amazon versus Houzz, like what does the revenue split look like?

Jen: I would say most of my profit right now does come from Amazon and then Houzz would be second and then my website would be third. However, I am working right now, my focus is building my website, because you talked about it on your last podcast Steve that Amazon is very cut throat, I’ve had a lot of piggy backers on some of my styles, and then I have to send them a nasty letter.

So that was the best advice that you gave me was don’t put all of your eggs just in the Amazon basket. Sell on Amazon, sell on your website, have a lot of different revenues and platforms that you sell on. So where I will spend my marketing dollars will be on my own website.

Steve: Before we actually started recording we had talked about certain products that you had on Amazon, have you had any products that were easily found on let’s say like Alibaba where you’ve actually ended up losing margins or having a lot of competition for?

Jen: Yes, the one that sells the most I had that, and what I have zero tolerance for is another vendor selling underneath my listing, I will immediately send them an email and say, “I created this brand from scratch, I don’t know what type of curtain you’re sending these people, but you’re sending them a counterfeit, so I will report you to Amazon if you don’t take down your listing immediately.”

But what you can’t control is that I’m selling a shower curtain and if it’s a cool style and it’s got a bunch of reviews, people are going to know that people want it, and so some people can make their own listing and copy it, and there is nothing I can do to really control that which is why I also need to also sell on other platforms, and I need to continue to launch new products as well.

Steve: So would you say that you’re focusing more on your own designs at this point?

Jen: Yes.

Steve: Okay and with your local artists, can you actually take their designs and sell those on Amazon as well or are you already doing that?

Jen: With my local artists, the only way I would sell them on Amazon is if I could take their art and have it mass produced in China so that the profit margin would be good, and I would pay them for that and it would need to be something that we would agree to. But as of right now the only designs that I’m getting mass produced are the patterns that I’ve either found on Alibaba or my husband has designed a pattern, because I said, hey I like this pattern, can you design me something like it.

Steve: And just as an aside, has your husband come around, because I actually have a lot of students in the class whose spouses aren’t on board when they first launch, and I’m just curious has your husband come around?

Jen: Yes he has. There was someone that I once heard on the podcast describe their spouse as their biggest fan and their biggest skeptic, and I immediately thought, oh my gosh, that’s totally my husband. But yes, he has come around. My advice for anyone where their spouse is not on board with their ecommerce dreams is you just got to show them the money.

Start small, and you can start small, there is no risk in putting up a drop ship store, it’s a great place to start, just know that that’s not where you’re going to make quit your job money, but show them the money and just show them how hard you’re working and then they will get on board. Now my husband is always asking, hey how many shower curtains did you sell today?

And it is fine too because we built our dream house and he built this great big garage to put all of his tools in, and right now there is 3000 shower curtains also sitting in this great big garage that we need to send them to Amazon. So I definitely converted him and I think he’s a lot more open minded too that it really is possible to make money online with this gift that we have of the internet in the age that we live in.

Steve: Just curious, how much money did you invest in this business to start out?

Jen: Initially, well the cost of your course which by the way is worth every penny, you could double the price and it would still be worth every penny and then some, but then to start my website I was — I don’t know like I think I spend 300 bucks a year on Shopify. So that was, I mean there 30 bucks a month to get it started.

Steve: So practically nothing basically?

Jen: Yes.

Steve: Okay, can we talk about your site a little bit, you got your first sale on your sight Right?

Jen: Mm-hmm, I did.

Steve: What sort of marketing were you doing just for that first sale, do you remember?

Jen: Yeah, I was trying to do as much free marketing as possible because I’m cheap. So I set up a Facebook page, I’m addicted to Pinterest, so I would pin everything. I took Pat Flynn’s be everywhere approach, I don’t know if he still sells, but I put it up on Instagram, Facebook, Pinterest. I even put it up on Twitter, I remember my brother like texting me, like stop putting shower curtains on Twitter.

So it was a lot of free marketing. I would even like sometimes comment, which I don’t do anymore because now I realize that that was annoying and spammy, but sometimes I would comment on articles, on blog posts and say, oh that’s a really cool shower curtain, if you want another cool shower curtain, come to this website. I stopped doing that.

So I have done some Google advertising, but again I shied away from it at the time because I was only drop shipping and so I felt like the profit margins were so thin it wasn’t worth the investment. But now that I am importing my own goods from China and there is a higher profit margin, I am going to reinvest in Google marketing. Is that where you still suggest the best place to go when you’re marketing your own site?

Steve: Yeah, I mean it really depends on the type of product that you sell, like if it’s a well searched product then Google is pretty good, but if it’s something more noble or more unique where you want to give it a little more originality, then Facebook marketing actually works really well.

And now that your margins are really high yeah you should definitely go and try those out. There’s a little bit of a learning curve, but once you get it, it’s like this channel that you can just pour more money into it and max it out.

Jen: Oh that’s awesome, yeah.

Steve: So what has worked for you, you mentioned a whole bunch of things there, which one worked the best in terms of getting sales, do you remember which channel actually produced that first sale?

Jen: I think it was Pinterest.

Steve: Pinterest, okay. And in terms of your Pinterest strategy, is it just, like how often do you, how much time do you spend every day pinning?

Jen: You know not nearly as much as I used to. When I started my new day job, there was a learning curve to that as well, and so I took some time off of the business, because the curtains had already been ordered and put inside in there, so fulfillment by Amazon so that’s what my focus was. So not very many hours on Pinterest [inaudible 00:25:25].

Again, another strategy though that I did do that I believe you taught me was just long tail key words. I think that those helped me a lot. When I bought your course I had already owned Market Samurai, and so I was just trying to find all of the long tail key words that work with Amazon. Black and white shower curtains is a highly – you know stuff like that.

Steve: So search is probably a good source of revenue for your site, do you know when it kind of kicked in?

Jen: It probably took about six months before I was getting…

Steve: Six months, okay.

Jen: Really good organic traffic.

Steve: Okay, so let’s talk about Amazon for a little bit. You started selling on there when, maybe 16 months ago?

Jen: Yes, September of last year.

Steve: Okay, yeah and how did you get started there and any particular launch strategies that you want to share for your products?

Jen: Yeah, my biggest launch strategy on Amazon was getting to the fulfillment center, set up a listing and then give away enough to get free reviews. And you know I had already practiced on Amazon before, I forgot to tell you this, before I imported from China. I did do a pretty big wholesale purchase for a company that was going out of business, and so I just said you know what I’m going to use this as my experiment on Amazon.

So I had already had a little bit of experience on Amazon before I imported from China, but I remember you told me that there were certain thresholds that you wanted to get in terms of reviews. So once you can get ten reviews that’s the first threshold, and then you want to get 25 reviews, and then once you get up to 100 reviews it’s pretty much organic traffic on Amazon and you don’t have to worry about it.

And so that’s where I’ve gotten my first two styles is they have enough reviews so I don’t need to pay for any clicks, but you give away enough free products and just ask them for an honest review. And then if the product is good, the cream rises to the top.

Steve: Right, and have you ever had any duds that you threw up on there that you just ended up taking down?

Jen: Not yet, no.

Steve: Not yet, okay, so that means you have good taste?

Jen: Yeah, I think so.

Steve: So there’s a lot of questions here that just people who are out there who are just kind of on the side lines probably want to know. So you already mentioned that you spent like $300 to start this business, how long did it take you to put up your site, and did you have any struggles with that?

Jen: You know what, I remember watching the video that you have on your course about how to code, and I remember thinking okay there is no way I’m going to know how to code. Then you came up with another video saying this is why Shopify is my preferred platform, if you’re not going to code yourself, use Shopify.

And so I immediately set up my Shopify cart and I remember setting up my website and almost thinking that I did something wrong because it was so easy. I am not tech savvy at all, and I think setting up my initial site was less than an hour.

Steve: Oh wow, that’s easy provided you had all your images of course right for your products?

Jen: Yes.

Steve: And in terms of your images, did you get professional photography or are they like letterings [ph] that your husband has done?

Jen: You know what; they’re all letterings. Because I was drop shipping, all the curtains are made on order and so at the beginning I was drop shipping, and they were made on order. And so they were computer letterings of the art work on a shower curtain, and so those were the pictures I was using.

Now that I actually have a physical product, I do need to get professional photos taken because I know people like that as well, but it’s amazing that what a really good graphic designer can do with a basic pattern just on picture of a white shower curtain. They can put that pattern on a shower curtain; it would look better than a photograph.

Steve: Yeah you know what’s funny is a lot of people use letterings over photographs because it’s hard to get like all the white balance and everything correct and consistent across your sites. So it’s funny that you say that because I think artist letterings are the way to go if you’re displaying shower curtains in the same way for example all across your site.

Jen: Absolutely and at first I struggled with is this the right thing to do, but if you look at any other really big store that sells home goods, all of the pillows, all of the shower curtains, all of the rags, they are probably all computer letterings over white rug and then they put that pattern that they’re selling on that same picture

Steve: Absolutely, and in terms of finding your niche, how much did you struggle with that, and do you have any tips for people who are out there who you just can’t figure out what to sell?

Jen: Yeah it probably took me about a month to figure out the niche, and I remember – are there ever people that take your class and they never take action because they can’t find their niche?

Steve: Yes.

Jen: Yeah, I think I almost fell victim to that and finally I was just like okay I just keep coming back to shower curtains, and I shot you an email and you said it was a good idea. The advice I would give to people is do your research but then just take action, because even if you try something and it doesn’t work, well you’re going to learn so much on that process and you’ll figure out along the way.

But don’t not take action because you’re scared, you’re probably going to make some mistakes here and there, and that’s okay. But take action because if you don’t take action nothing is going to happen and then you’re going to be just working your nine to five job that you hate forever.

Steve: And how much time did it take for your launch, so you got the idea let’s say after a month, and how long did it take you to get the vendors together and then actually launch your site and get your first sale?

Jen: Well, okay so once I figured out the niche, then I started researching, that took about a week. I remember writing down five people that I was going to call, and the first three people told me, no, drop shipping is not really something I’m interested in doing, and then the fourth person that I got a hold of told me yes.

They had so many products because they were contracting with artists as well that they had enough products that I could launch my store on that. And so all I did was drop ship for probably the first four or five months of the store being live.

Steve: Okay and then in terms of just some of the challenges that you had, what would you say was the hardest part about getting your ecommerce business off of its feet?

Jen: I think I waited way too long to import from China, because I made my first sale and then I got complacent, and then I did the math and I would have needed to sell eleven shower curtains a day drop shipping in order to make up for the income that I was making doing my day job, and there was no way that I was going to get to that point without doing marketing, but I didn’t want to do marketing because the profit margin was too low. So it was I was kind of stuck in that cycle, and so I wish I would have pulled the trigger earlier on importing from China.

Steve: And in terms of finding your Chinese vendors how did you find them?

Jen: I followed the video that you have on your course to a T, just the exact verbiage, just found the ones that had good reviews, where they trade the facility and pretended to be a buyer, which I’m not really pretending, I am the buyer for my store, and I would send them all an email asking for the products and what their minimum order quantity is, and they all get back to you right away.

And so a great time to talk to the Chinese vendors is at night after your kids go to bed, I was emailing them. And I remember it took a couple of months for me to just go back and forth of course balance with people before I found two that I really trusted.

And what’s funny was because my orders were so small, the people that I worked with, they were brand new to their company. They ended up telling me after the fact like you are the very first customer, you are my very first order, I’m so excited, we will help you.

Steve: Oh my goodness.

Jen: I think they figure out pretty quickly when you only want to order 500 of something that you’re not Home Depot or you are not Pier 1.

Steve: Sure, sure, sure. And in terms of getting samples and that sort of thing, like how many vendors did you contact in the beginning until you narrowed it down?

Jen: I probably got samples from maybe five or six different vendors, and that was another place where the cheap part of me didn’t want to take action because – and Scott Walker [ph] talks about this all the time in his podcast, he says that people don’t want to spend $50 on a sample, but you got to just look at it as the cost of doing business.

I would rather lose $200 and find out that that’s not a good vendor to work with, than invest all of this money and then realize after the fact that it’s not a good vendor to work with. So just know that that’s going to be initial a couple of hundred bucks, be willing to spend that, get a really good sample and your vendors will take care of you.

Steve: Okay and then have you had any issues just getting the product over via sea shipment, because that can be a little bit intimidating as well?

Jen: Yes, that process was another – I would say that that was another place that I procrastinated on because I was just – all of the logistics really scared me, so I ended up using a third company, Coppersmith was the company that I used and they are fantastic. So I think that when it was all said and done it cost me $1300 for them to just take care of everything, and I’ll probably just use them moving forward, because or me that’s worth it.

Steve: And you always have everything shipped to you first before you send it off to Amazon?

Jen: I do, I don’t know if I’ll always do that, but whenever I’m launching a new product, I will definitely have that.

Steve: Okay and there is a lot of people on the sidelines who are looking at this interview, or they’re listening to this interview, and they’re probably a little bit hesitant. Do you have anything that you can say to them to just encourage them to even just get started?

Jen: Yeah, I would say this; I would say action cures fear. What’s really weird Steve is my new day job I am a sales coach where I talk to sales people on the phone and encourage them to do the things they know they need to do even when they don’t feel like doing them, and one of the things I always tell them is action cures fear.

Whatever they’re afraid of, the anticipation is way worse than actually having to go through it, and whatever you’re imagining is way worse than any challenge you’re going to come across. So just take action, whatever that next step is do it, because you’re going to regret it if you don’t take action.

Steve: Do you recommend people take your route as well which is like dip your toes in drop shipping, or do you recommend that they just jump right in and just start importing?

Jen: If they’re really scared, then try drop shipping; you really honestly have nothing to lose other than 30 bucks a month to set up a Shopify store. But again that’s one of my biggest regrets is that I didn’t import from China sooner.

Steve: Well hey Jen, thanks a lot for coming on the show, I know that a lot of listeners are going to be inspired by what you’re saying here. If anyone has any questions for you either about the class or your store or just your experiences, where can they find you?

Jen: You know what I’m on LinkedIn all the time, so if they want to find me on LinkedIn, or if they email sales@showercurtainshq.com, that goes right to my Yahoo account, and yeah I would love to talk to them.

Steve: Oh yeah I know one thing that I actually did want to ask you is when did you start realizing the importance of having your own brand and your own products? Was it when you started getting piggy backed?

Jen: Let me see, that’s a good question. So I guess when I realized I needed my own brand was when I wasn’t making – I knew I wasn’t going to make really good sustainable income just drop shipping because when you’re drop shipping you’re selling other people’s brands. So that was when I realized, but again yeah the first time I got piggy backed, I realized also the importance of having my own store, so they really are mutually important.

Steve: Okay, well Jen thanks a lot or coming on the show, I really appreciate it.

Jen: Thank you so much or having me Steve, and thanks or your awesome course.

Steve: All right take care.

Jen: Okay, bye, bye.

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141: How To Launch An 8 Figure Ecommerce Brand With Ryan Deiss Of Digital Marketer

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141: How To Launch An 8 Figure Ecommerce Brand With Ryan Deiss Of Digital Marketer

Today, I’m happy to have Ryan Deiss on the show. Now I’ve actually been following Ryan for quite some time. He is the founder and CEO of Digital Marketer and over the last 3 years, he’s invested over 15 million on marketing tests, generated tens of millions of visitors and sent over a billion emails.

He is an expert when it comes to online marketing and brand building. He runs a major conference called Traffic and Conversions every year. And he recently started a new conference called Content And Commerce which I attended in Florida.

Today, he’s going to teach us the right way to market your business. Enjoy the episode!

What You’ll Learn

  • Ryan’s first set of experiences that set him off on his journey.
  • The traffic source that Ryan always experiments with first
  • The most important aspect of running a successful ecommerce business
  • How to launch an ecommerce brand with limited resources
  • Ryan’s recommendations regarding selling on Amazon vs your own website
  • How to come up with a content strategy
  • The hierarchy of advertising that Ryan uses for his own ecommerce brands.

Other Resources And Books

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Transcript

Steve: Welcome to the My Wife Quit her Job Podcast. Today I’m excited to have Ryan Deiss on the show. Now I’ve actually been following Ryan for quite some time, he is the founder and CEO of Digital Marketer, and over the last three years he’s invested over 15 million on marketing tests, generate tens of millions of visitors, and sent over a billion emails of which end up in my inbox every single day.

He’s an expert when it comes to online marketing and brand building, and he runs a major conference called Traffic & Conversion every year, and he recently started a new conference called Content & Commerce, which I actually attended in Florida.

And let me tell you he was a hard man to get on the podcast. Here is what I had to do to get him on, and in fact for everyone listening here is a free blueprint for getting Ryan Deiss on your podcast, and I’m not exaggerating. So first off I went through his friends’ list on Facebook and reached to five of my friends that knew him, and so I had guys like Noah Kagan, Andrew Warner, Maneesh Sethi, Laura Roeder, Billy Murphy, Eric Siu, Neville Medhora email him all at the same time to intro me.

Actually I split it apart, only I had like five of those guys email first, and then I saved the other guys in case he didn’t respond. And by getting bombarded with multiple emails all at the same time, it made me look much bigger than reality, and I finally conned him into coming on the show.

Anyway the reason I wanted to have Ryan on the show is to teach us the right way to market your business today, and with that welcome Ryan, how’s the going man?

Ryan: Thank you for having me, the funny thing is I had heard about you and the show, so you could have just emailed me.

Steve: What?

Ryan: But there was no doubt that when you get that many emails at the same time, I’ve never seen anybody else do that, it was tremendously effective, so kudos to that, and then all the difficulties of us connecting after that were just me being really busy and disorganized, so I really appreciate the work that you do.

Steve: I contacted him right before his conference which was a bad idea, so like I would probably modify that strategy for everyone who is listening; don’t bother him during times of like pick stress like right before a conference.

Ryan: But it was good, that was good and obviously it worked, and I’m happy to be here, so thanks for the invite.

Steve: So Ryan, you’re really well known online but everyone is going to start somewhere, so before we begin with the gist of the interview, I’m just curious to know how you got started in the very beginning with Digital Marketer.

Ryan: Oh gosh, like how far back do you want me to go? I mean so really this whole thing kind of started in 1999, that was when I made my very first sale online, and I was a freshman at the University of Texas and I decided to make some extra money. It started off interestingly enough; I really wanted to do something on the internet, right it is 1999 is when dot coms had blown up in some cases like literally, totally imploding I guess.

But I knew I wanted to do that, so I wound up getting a job with this kind of internet startup that quickly went under, but one of the things I learned to do there was some basic web design. I was terrible at it, but because I was bad, I only knew how to design really simple web pages, and I remember one of the very first websites, it’s kind of embarrassing to remember one of the very first websites that I ever created for a client after I got let go from this company, because they went out of business.

My first client was a lactation consultant, no joke, and so I’m sitting here building this website to – like build this website for her and I’ve got all these like breast pumps and all these like stuff under saying nice things, and my friends were like, dude what are you into, this is super weird for a 19 year old guy to have all these images of breast pumps or something like that on his sight.
So I go on and build this website for her and she wound up not paying me, so I had this website and I had all this stuff going, so I didn’t really necessarily want to sell like breast pumps online, but one of the things that she had me produce was this little e-book on how to make your own baby food. I was like I bet I could sell that.

And so I remember I built a simple web page for it and started selling that product, and dude I just made some extra money, and then I wanted to meet the girl, one I decided pretty quickly that I might want to marry this girl, I need to make a lot more money.

Steve: It always starts this way you know yes.

Ryan: Yeah, it’s always [inaudible 00:04:24] but yeah I know I mean really it kind of started just to make some extra money, and then it started to make a lot of extra money so I can buy her engagement ring. And long story short by the time I graduated, I was engaged, the ring was bought, on her finger and I had about a couple of a hundred different little websites, selling crazy little products.

Steve: That is very nice, you’re actually smart to marry young, because as you get older the ring size and the diamond size is expected to be larger at least.

Ryan: Yeah I mean at the time it seemed like it was a lot of money in the world, and I had told her we can go back – I can get you a new and we can swap that diamond for a ruby one, dude you look better, she’s like no I like this one, I like this one.

Steve: Were you getting started on Digital Marketer?

Ryan: So funny enough Digital Marketer started raising its head inversably this year, so Digital Marketer I tend to think we started back in 2011, and that’s because I never really thought about the teaching of marketing as being a real business. So Traffic & Conversion Summit are events, that is actually older than Digital Marketer the company.

Steve: Interesting okay.

Ryan: I just started, because I was doing it, that’s the thing that’s always kind of separated me and others company from I guess other people who talk about marketing is I always just did it, I was out there selling stuff, building websites, digital products, physical products. It didn’t really matter.

I got asked to speak at some conferences by people who knew that I was doing cool stuff, and I remember I would speak at these conferences and when I was done everybody was like what are you selling, like nothing. Do you have a book, do you – and people would ask me like if I could do consulting, like no I can’t, I’ve got these businesses that I’m running over here, I don’t have time.
But I realized when enough people asked I should do something, so I would occasionally produce some products and I had a little email list, and I would tell my email list, “Hey I’m going to do this six week thing.” One time I had to do that to pay a tax bill, because I didn’t know, early on like the first year I made a lot of money, I didn’t really know how taxes worked, seriously like this is so unbelievably embarrassing to admit, but I had like a quarter million dollar tax bill and I didn’t have the cash.

I had invested in other things and just not planned well, and so really I said hey I’m going to do this thing or I’m going to teach this class, and it’s going to be six weeks and pay me now for this thing, I’m going to do later, because I kind of got to write the check now. That was back in 2006, 2007.

So I started selling products and then we decided to an event just for fun really to get – Traffic & Conversion Summit started just as a way, it’s like that high school party where you invite a couple of friends over, because your parents were out of town, and next thing you know like the whole school is there.

That was sort of like at Traffic & Conversion summits, everything just sort of happened. I remember it was at Traffic & Conversion Summit number three which – you can do the math; I’m not mathing particularly well today.

Steve: That’s okay.

Ryan: But 2009, I guess 2008, 2009 when I looked out at this – 2009, I remember looking out at this crowd of 1000 people and thinking to myself, this is a business, I should call this something. That’s when we acquired the digitalmarketer.com domain name, still it took way too long to get it launched, but yeah that’s how Digital Marketer was born.

Steve: That’s cool, so Ryan you talked about selling a lot of products online, a lot of these listeners out there, they are in ecommerce, and they want to sell physical products online. So I thought it would be interesting to get your perspective on how to get traffic and sales to a brand new ecommerce store.

I know when I was at Content & Commerce, you talked a lot about merging content and commerce together, but you’d already had all these large content companies that you had acquired. And so I thought it would be interesting to start from ground zero, and to make this a little bit more difficult let’s talk about this ecommerce store that you’re starting from the perspective of selling something hard like jewelry or clothing, so what traffic sources would you experiment with at first, and what would be your main focus with limited resources?

Ryan: You see the first question that I always want to answer before we even look at traffic or anything like that is who? I’m a big believer, every business that I’ve ever started whether we were selling digital products or physical products, and we incidentally make a lot more money selling physical products than we do digital products, so I love physical products, I love selling stuff.

I’m best known for Digital Marketer and for the digital stuff, but there is a big building for the people that focus on selling hard goods. But in every business, and this goes all the way back to literally when I sold my very first e-book on how to make your own baby food, every business I had ever started was market centric, I think this is so critical especially for ecommerce people.

They decide that they want to sell something, I’ve got this product or I found this cool thing that I can get a good price on, and so they want to build a store around it. And more times than not I see this mistake happen especially in ecommerce, people define the business by the products they sell, when they should be defining the business by the people they serve.

You don’t define your business by the products you sell, you define it by the people that you serve, and that’s so unbelievably critical.

Steve: So what are some exercises that you can do to figure out the who?

Ryan: Well, I mean I think a lot of it is kind of intuitive, right? I mean it’s an A, you just – sometimes it’s really simple, you know that a certain someone is going to want to buy this, so I mean we sell a lot of knives and stuff like that, so we know people who are in the camping and outdoors are going to want to buy that particular item.

Does that mean that a soccer mum would never buy a knife? No, of course not, they’ll buy knives too, but I think in the beginning what you have to force yourself to do is to niche arbitrarily, and that’s the hardest thing in the world, because everybody says, oh everybody is going to love this, but I would just kind of reference and point to Facebook.

When Facebook first launched, granted it was – works for everyone, but Mark Zuckerberg said we got constraints here in terms of server loads and stuff like that, so this is only open to people who are at Harvard, that’s it. People who are at Harvard, this is who we’re going to serve, then it expands to other I believe universities, then all universities, then all universities and high schools and then finally kind of every man, woman and child on planet earth.

So in the beginning I would say look at your product and say who is the most obvious customer for this product, and get it as narrow as you can stand it, because you can always go broader, you can always go broader. Wal-Mart started in just a really small town store like these tiny little stores where they stood out by offer the lowest prices and stayed open longer than anyone else and then once they established that foothold, then they were able to grow and expand.

So I think that’s for steps is just niche down arbitrarily, so let’s give an example where you’re looking at clothing, right?
Steve: Okay actually I have a perfect example like I started with handkerchiefs, and we started with just that one product line, and we became the largest supplier of handkerchiefs, and then we gradually expanded to other linens.

Ryan: Yeah, but I would ask myself like who is most likely to buy a handkerchief, right? Do you know in the beginning the people who were actually buying it?

Steve: We targeted brides, and that’s it actually.

Ryan: Yeah exactly, so brides, so you’re saying brides and I’m guessing that they’re buying a handkerchief specific for the wedding…

Steve: For the wedding.

Ryan: Or selected gift to the groom, or was it some handkerchief that they used.

Steve: That they used actually.

Ryan: Okay so bridal?

Steve: Yeah.

Ryan: Great, bridal party handkerchief, so you’re going to start there. So what you’re saying initially, and this is what’s so beautiful about this whole thing is you can say right now today I’m going to start selling this item to this group. Now at some point you will have a choice that you can make, and the choice can be both, but then you have a choice that you can make, okay you’re going to start off selling handkerchiefs to brides.

Now you could say, okay I want to build a business around a certain thing brides and wedding parties, you can go that direction. Or you could say no, no who else buys handkerchiefs, I want to expand laterally, I want to expand and take this product into other markets, but you always have to pick somewhere, because just like you said, and just like you alluded to in your initial question, where do you start, where do you begin?

And I think this is where people blow it. They are like, okay so I have the internet. Let me narrow that down to Facebook, God it’s still too many people, and if you go on to Google and you say I want to target everybody who searched into handkerchiefs, if you’re just getting started, you’re going to get obliterated, you won’t break through, there’s too many other people that have gone before you.
Never forget that at the end of the day, here is somebody who is able, and willing to spend the most to acquire a customer, they are going to win eventually. It’s not about who has the best product, it isn’t really about who has the best marketing, it’s who is able willing to spend the most to acquire a customer.

If you’re just getting started, you’re on a shoe string budget, you don’t want to go head to head on Google AdWords against – I don’t know who the biggest handkerchief supplier is now on Google, but you don’t want to go head to head against them. So that’s where you have to come and pick a niche within a niche so you can establish that foothold and begin to generate some revenue and learn a little bit more about the customer.

So it’s always, always, always answer the question of who, who am I going to serve today? With understanding that it may change tomorrow, you may expand that, it’s all fine, but today who are you going to serve. Then I tell people always start on Facebook, that’s where we begin every single business, I don’t care if it’s B to B, B to C, no matter what you’re selling, you’re always selling it to humans, it’s always H to H, always human to human. If you want to target humans, humans are on Facebook.

Once you’ve answered the who question, now targeting on Facebook becomes much, much, much easier. And so that’s always where we begin from a traffic stand point.

Steve: Okay, let’s go into a little bit more depth about Facebook, and maybe we’ll use your knife story as an example from the very beginning. So you know who you are marketing to, you picked a very small niche, what does your first Facebook ad campaign look like?

Ryan: So what it always starts with is – let me say this, it almost always never starts with a store, it always begins with an item, a single product, and that’s for multiple reasons. One, a store is more complicated to build, a store is more expensive to stock, but we also found, again if we’re targeting – if we think about the who, there is one particular thing they want more than anything else, somethings that’s going to be super awesome.

And what I want to do, my goal is to acquire a customer, it’s not to make a sale, it’s to acquire a customer, that’s always that initial goal, not how do we sell this thing.

Steve: That means your customer is someone who actually pays money, or someone who signs up for an email list?

Ryan: Someone who pays money.

Steve: Okay, got it, go on.

Ryan: I want someone to actually buy something, so that first item is usually going to be something fairly inexpensive, or it’s going to be something incredibly expensive where I’ve gone in the same margin I’m looking to make very few sales but spend a lot. I don’t want to be someone in the middle; I don’t want to be selling commodity type items.

I even want to be selling something ultimately desirable, like something that’s really cool but really cheap, an impulse buy item, or I want to have the ultra premium luxury item. I want to go way up above the market, and I want to go way below the market, there is room in both ends, there is almost no room in the middle.

So when we first went into the knife space, we came out with this credit card knife, which now it’s been like a knock off a billion times, they have advertisements in every Canadian airport saying don’t bring this knife on the plane, because we sold so many of these knives.

We advertised it as, hey this is the coolest knife in the world if you’re into every day carry.

It is not going to necessarily be appealing to the soccer mum, but it is going to be appealing to the market that we want, people who like to walk around with a knife at all times for personal protection or just it’s nice to have a sharp thing.

We’re speaking to our audience that we want, we’re not just not targeting them in Facebook but we’re speaking to them in the message we bring, does that make sense? We’re speaking to them in the messaging, because I just don’t want to sell a product, I want to acquire a customer. the customer I want, the one that loves knives so I’m going to use that messaging on the landing page, and in the ads to speak to the customer, and then have a really low dollar item in there to acquire them.

Now what we were able to say once we knew that worked, we were able to say, on the next page down in the sequence; hey you just got the coolest little knife in the world. Now we would like you to have the coolest big knife in the world, check this out, this top glittering knife, here is everything it does, blah, blah, blah, but we didn’t develop that large, premium item, until we knew we could acquire a customer base.

That’s always – just again I don’t care what business you’re in, the most important, the most critical question every business must answer is how you’re going to go about acquiring customers and ideally at a profit.

Steve: With that credit card knife, did you guys give that away, or was it just ridiculously cheap like free plus shipping or was it just like a really low dollar value item?

Ryan: We had a bunch of different variations of the offer, but if they just paid $2.95 in shipping and handling on the low end which I would still consider that person to be a customer, because they have gotten out the wallet, they have done something to acquire it even though it’s free. We tried to bunch it at different variations based on where we were selling that item.

Steve: And just curious, who exactly were you targeting with that first promotion?

Ryan: We were typically targeting people who were interested in outdoors camping, hunting, fishing, survival preparedness, those kinds of things.

Steve: And I’m just curious, of those people who took advantage of that offer, how many of them took advantage of the more expensive offer when it was presented to them?

Ryan: Anywhere from 15 to 30%…

Steve: Okay, wow.

Ryan: It depended on the price point and where it was offered. So in some cases if somebody bought it, and they didn’t receive that as an immediate upsell, it would be less, maybe you’re talking like 8 to 10% of the people we get to send at some point in the future.

But yeah I mean you can make that immediate offer, that immediate up sell, just like what Amazon does, people who bought this also buy this. It’s always going to be more effective, and 15 to 30% wasn’t uncommon depending on a traffic source.

Steve: Okay and then let’s talk about what you do with the people that don’t buy, and how do you nurture them to eventually make a purchase?

Ryan: Yeah, when you find out where they live, you steal their cat, and you tell them that you’ve got to come back and buy.

Steve: You stalk them on Facebook?

Ryan: Yeah, it’s kind of like how you got me here. I mean it’s exactly what you said, it’s nurturing, it’s continuing to add value in advance, sending them content, continuing to talk to them about the stuff that you know they are interested, and that’s why I said the who is so important, because if all you do is sell them knives, and you don’t really know who is buying it, then what are you going to talk to them about.

If you don’t know the who, you don’t know what you’re going to talk about, and content marketing is why so many people have such a difficult time with content marketing and starting a blog is because they don’t know who their who is, and so they don’t know who they’re talking to, and so they have a hard time talking.

So yeah we have a newsletter about personal preparedness and we did product reviews and content how to use one of the things and every now and then we run a sale or we introduce a new product or offering and maybe somebody who wasn’t interested in the big knife, maybe they were interested in a cross bow or something else we’re selling, or maybe there is this really cool watch that we have.

When you have an audience, when you’ve already aggregated the attention, then building out a product line just becomes fun and easy. It’s much easier than doing what a lot of people do which is just, okay I want to have a store, and I want to sell knives, because I like knives, so let me go and find out about knives.

Okay I feel like if I’m going to have a decent store I need to have about 15, 20 items, let me go and figure out what these things are, write the product descriptions, put it up. Okay now you got a store and you drive the traffic to it, nobody buys anything. Nobody buys anything, because the knives you’re selling aren’t any better at least as far as the picture and description are concerned from this same knife they could buy a brand they’ve heard about, or from a retailer they know already.

If you’re going to compete coming out of nowhere, you got to have some differentiation, and then eventually I believe you got to build a community.

Steve: Let’s talk about that for a little bit, so when you’re first starting out, were you selling other people’s knives or did you have your own line from the start?

Ryan: No, starting out we were always – we always begin with one item, one item and then along the way we’ll steal other people’s stocks, and if it works, if people buy it, then we’ll go to those people and say, hey we want to private label it, so we want to label it, or if they won’t play then we will develop our own. If it’s something that we feel like we can do and improve on the product.
If somebody truly has just a far superior product and the patents on it is protected, then we’ll continue to sell their thing. We’re not going to come out with a worse product than something that’s already available in the market just so we can call it our own, because then it’s not serving your audience.

But yeah the way that it grows is we’ll start off, we might buy a batch of somebody else’s products and just wholesale it and have real too thin margins but find out, wow people really liked this. So while we didn’t make any money, we also didn’t risk and locked up a bunch of cash going over there, doing direct importing or custom manufacture bringing some of those kind of things. I always want to know that people are going to buy it before I write a big check.

Steve: Okay, yeah I was going to ask you like how much price compared to this in the factory in here if you’re selling other people’s products, but it sounds like your main goal here is not necessarily to make a profit in the beginning but to gain like a list of customers that you can market to later, is that accurate?

Ryan: Yeah, I like getting paid to do market research.

Steve: Okay and in terms of like just getting their emails, I know you do this for Digital Marketer where you give away a free piece of content, but for those people who don’t use the triple R, they don’t pay you any money, what do you do with those people?

Ryan: We’ll continue to follow up and as we come up with additional offer, we’ll take them off the first offer. So maybe they weren’t interested in the little credit card knife, but they did go ahead and still subscribed for our newsletter, because most people do totally free offers as well, it’s totally free accounts and offers, special reports, those kinds of things, and we’ll just offer them something else.

Just because they didn’t like this doesn’t mean that they’re not our market fit, and that’s the difference between – you own it let’s say message to market fit and product to market fit. You could be speaking to an audience with the right message, but then when you put the product in front of them that corresponds to that message, maybe they say, I don’t like that.

It doesn’t mean that they didn’t agree with your over arching message, the over arching message could be if you’re a responsible adult, it makes sense to have a knife on you, right? Whether for personal protection or just because you need to cut off one of those like obnoxious electronics cases when you buy something you know that everything is in.

It’s handy to have a knife with you, so if that’s the message then you say; hey do you have a knife, so that’s where you might want to check out the credit card knife. They maybe look and they go, that knife seems too small and it’s too thin, I don’t need that, it’ll probably get lost, so maybe they’d say no, but maybe I come back later and I say it’s handy to have these things on, so check out this watch.

This watch has all these other things built into it, it’s got a little cutting blade here that you can pull out, it’s got this thing over here and then they go, oh cool I like that. So you can nail the message but miss some of them, have the message to market match but miss on product market fit with some of the market. That’s why you just – if they didn’t buy this thing, lets’ come up with this, that’s merchandising, let’s come up with new things that we can put in front of them that they will buy.

Steve: So just to summarize everything that you just said, it sounds like you have a pool of people that you just try and get to spend any money on them at all, and you are constantly trying different offers to get them to spend even a little bit of amount of money. And then the people that do spend some amount of money, you send them an offer to that something larger, and for the people who take advantage of the larger offer, you can continually sell to those guys, because they are loyal customers, is that kind of accurate what you said?

Ryan: Yeah, the easiest thing in the world to sell and the thing that will always have the highest conversion rate is more or better than what somebody just bought. So a lot of times we’ll say, hey you got one of these, how would you like to get three more at a discount. That could be a logical up sell to increase your immediate customer value, and the product line expands as the intricacy of the audience expands.
And then eventually one audience can birth another audience, it’s how we’re able to spin off from survivallife.com, which is a branch of survival and preparedness people into homestudy.com where we have pioneers etcetera, because we knew that there was an audience.

We looked at it and we said, wow, oddly enough we do have a lot of soccer mums on this survival and preparedness kind of thing. What they were liking was the home improvement stuff, the vertical gardening stuff that we had, things on color preparing, family emergency patterns and those kinds of things, the responsible stuff.

So we spun off and created a separate property for them, which now allows us to talk to that audience in addition to the one we’re talking to, we just create another property for them. We’re able to advertise now a whole product line developed around that.

Steve: You know one thing that we did not talk about so far is Amazon. What is your take on people who just start on Amazon and stay on Amazon, is that a strategy that you would recommend? How would you proceed with Amazon?

Ryan: I think starting on Amazon is really, really smart especially if – I mean because it’s a built in audience, and there are ways to hack at Amazon, it is not as easy as it once was, but there are still ways if you’re willing to drive, to prime the public just a little bit through some advertising to drive your sales up on Amazon. And if you have a good product, and you can push it to the top, it’ll tend to stay at the top, so I think that’s great.

So I think starting on Amazon is fine, the only thing you have to be careful of, and I learned this the hard way is if you don’t have all of your logistics in place, and if there are some quality control issues, you’ll get slaughtered on Amazon.

So we sold some chemical products that were actually in the equine markets sold to horse owners, and it was a great product but in the shift to Amazon some of the shipments didn’t make it to Amazon to do with the fulfillment, so people bought stuff and things were delayed.

People got really, really upset and then when our factory was trying to speed things up, they made some mistakes on the formulations and things didn’t work quite right, it was just a big mess. It was out fault, we messed up, but the scary thing about Amazon is you can make an honest mistake and you can fix it with the customer, but those reviews will linger there.

And so the danger to launching on Amazon is if you don’t have your ducks in a row, you can get nailed on the reviews, whereas if it was on your own website you make a mistake, you apologize, maybe you get a refund, you send them cookies; you do whatever you got to do to make it right. Mistakes are going to happen in business, but at least they are not leaving a review on your website that’s going to hurt you moving forward.

But absolutely, launching on Amazon is like if I wanted to come out of the line in a barbecue sauce or something like that, and I just asked Wal-Mart, hey can I set a little table out in front of the Wal-Mart and start my barbecue sauce, and they are like yeah sure go ahead and do it. You would be crazy not to take them up on that, because if they see you’re selling a ton of barbecue sauce, maybe they put you on their shelf.

So I think it’s smart, but to stay on Amazon, and to only be on Amazon is dangerous, because really what you are then is you’re a wholesaler, Amazon is a retailer. You don’t own the customer relationship, that is Amazon’s customer. So we like to be on Amazon, and we’ll drive traffic to Amazon and do all that, but we still want to be building our own communities, and maintaining our own customer relationships.

Steve: The reason why I asked you that question is because when I first asked you about starting out, you mentioned go on Facebook and promote one product first. Would that order still be the same, would you still proceed on Facebook and develop your own audience first and then go to Amazon, or the other way around?

Ryan: That’s what I would do and that’s what we have done. We’ve started on Facebook, buying advertising to sell a certain item to build an audience, and then once we knew it had a pulse, then we would expand and put those products on Amazon as well, because for us what it came down to was just inventory management. We didn’t put a lot of our products on Amazon, because they sell out really quickly.

And so I can sell them through our own channels and make a much better margin, or I could put a bunch of stock in Amazon, and not have too much to sell through our own channels, and when you’re doing really big volume, but you’re a self funded company as we are, I kind of imagine the cash flow is a bit interesting.

So my recommendation and what we do is start off selling through your own channel some individual items through your own store whether it’s a Shopify store or just a simple web page, and then quickly move to Amazon once it’s clear that you got a good product that people like, because if you are effective at advertising it, people are going to go to Amazon to look for the product.

I have a friend of mine who is former VP of media and acquisitions for Beachbody, big infomercial companies selling fitness products, and we’ve told him for a long time, Ernie you need to get your stuff on Amazon and he didn’t want to do it and the higher ups at Beachbody didn’t want to do it either is because they were afraid that it was going to cannibalize their sales.

What they found was that the people who bought through the infomercial, the people who bought through the website did that, but then there was this tall giant audience out there, this massive customer base that had no desire to buy off an infomercial and had no desire to buy from a website, but they would buy on Amazon. So when they put it up on Amazon, it was just a whole lot of free money, like hundreds of thousands of dollars in free money every single month.

Steve: So when you have your audience in place, do you market to both at Amazon and your store then?

Ryan: Yeah, we’ll kind of mix it up. If we start to see our Amazon rankings dip a little bit, just because of lack of sales, maybe sales a little bit slow over there or maybe you got a new competitor coming into the marketplace, bringing a lot of energy, then we will divert a portion of our ad budget instead of sending it into our own page, sending it to Amazon.

And we’ll also give people on certain websites the ability to buy from us or buy on Amazon, and you usually that’s enough to keep it up in the higher listings where we want it to be. But for the most part our advertising is designed to drive sales to our own channels

Steve: Okay, and in terms of your favorite ways to get in front of customers, did you say it’s email and Facebook retargeting, or do you use any other methods?

Ryan: I mean Google, when you get going I think you’re crazy not to do especially as your branded search goes up, people start searching for your products by brand, you’re smart to buy Google ads and to get out here. And so we’ll always start with Facebook, once we build our retargeting audience, obviously spend more on Facebook retargeting as we build our email list, and we’re sending regular email operations, the next step that we go is to Google.

And then you start playing with – depending on your market, you might go up to affiliate networks. It makes sense to put your stuff in Commission Junction or ShareaSale or some of those other ones, or have your own affiliate program. It can also make sense to try different content, just get on every platform, so Outbrain, Taboulleh, those types if you have content going. It doesn’t work for everything, it can be expensive, but we found in broader markets like beauty and things like that it can work well.

Steve: What about Facebook Messenger marketing, are you using that a lot yet?

Ryan: Just getting started testing that, so I can’t say that we’re using it a lot. I’m very, very excited about Facebook Messenger, and the ability to create lists essentially in it to do follow up, so we’re doing some testing there. I don’t have enough data to report back, but I can’t see how it’s going to be a bad thing.

We’re testing ads in Facebook Messenger, and all those stuff to build our Messenger audience, and I’ve also – it’s funny but apps, if you can build a store, having an app would be – you can do push notifications. I think the future is coming up with ways to communicate with your audience outside of email. I’m not saying email is dead or dying, but just give me multiple ways to communicate.

Retargeting is a way to communicate with your audience and to talk to them. Messenger, different messenger apps is a way to do that, having your own apps, you can do push notifications and things like that, it’s big.

Steve: Interesting.

Ryan: And all these.

Steve: What step in the hierarchy would you even consider an app for yourself?

Ryan: I think it’s pretty far down the road, I think you have to have a pretty significant customer base to following — building a big brand, and you probably won’t be able to build an app around a product. I think an app is going to be built around the audience. So I think Survival Life could have an app for survival and preparedness enthusiasts.

Hoffman Richter which is our knife brand, I don’t see why anybody would ever download a hoffman richtor app, but if people go on there, consuming your content, maybe through your blog or a podcast, I know we’re launching this for Digital Marketer, because we have a lot of content on our blog, and we email out some of the content, but I know that people would love to consume it in app form, they told us that, same with our podcast. So if we give people the opportunity to listen to podcasts in the app and receive content there, that’s great, because we also have an opportunity to communicate with them through that app.

Steve: That’s awesome Ryan, hey I want to be respectful of your time, I know you got a meeting in like a couple of minutes, so let us close it right here. If anyone wants to get a hold of you or learn more about you, where can they find you, and tell us about your conferences in your bed that’s coming up?

Ryan: Yeah I mean definitely digitalmarketer.com, check that out at digitalmarketer.com/blog. You can get some of our free content and yes we will at that point retarget you, so you will get some more retargeting ads and action, and we have a 15,000 member community called Digital Marketer Lab that there is an opportunity to request. It’s an invite only community, but there is an option to request and invite there on the home page, so definitely people should check that out.

And then if you’re in the business of marketing stuff I think you’re crazy not to be at Traffic & Conversion Summit, trafficandconversionsummit.com. Check that out, it’s in San Diego, California in March, I think it’s March 9th through the 11th, but trafficandconversionsummit.com, check that out. We’re expecting 4500 people this year, so I keep saying it’s the largest conversion conference in North America and nobody has called me on this, so I’m going to keep saying until somebody tells me it’s not true.

And then you mentioned Content & Commerce Summit, the one we just did a couple – back in – when was that, September, and it seems like forever a go, yeah and I think longer but yeah, so we just did our first Content & Commerce Summit in September, and we’re planning to do another one in September 2017.

Really the whole idea behind that conference is to bring together digital media companies, people who are building audiences, we have ecommerce companies, because I think that these two groups need to know one another, they need to hang out a lot. I think they are one another’s or should be one another’s best friends, so yeah.

Steve: And as a foreword they put a little plug too, like if you guys want to know how Ryan Deiss operates, you can just sign up on any one of his lists on email, and you’ll notice that he’s trying to get you to buy something really small like $7 or whatever and that will take you on to another funnel. So it’s just really interesting if you go ahead and just buy some of these things and just watch how his funnels are working.

Ryan: Just know we do screw up a lot of times, so if you see something that looks weird, there is a good chance we’re testing something that’s failing miserably. So I tell people, do as we say not always as we do, because sometimes we do stuff that just doesn’t work.

Steve: All right man, so thanks a lot for coming on the show, I really enjoyed it man. Thanks a lot.

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140: How To Bootstrap A 7 Figure Webinar Software Company With Omar Zenhom Of Webinar Ninja

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140: How To Bootstrap A 7 Figure Webinar Software Company With Omar Zenhom Of Webinar Ninja

Today, I’m really happy to have Omar Zenhom back on the show. Now Omar is someone who I met at a private mastermind meeting led by John Corcoran and he was actually a guest on the show already back in episode 88 when we talked about his award winning podcast, the $100 MBA.

But along with his podcast, he’s been working on another project, Webinar Ninja, which is a software company that he founded last year which is already doing 7 figures.

What’s also cool is that this project was self funded. If you follow my blog, you’re probably aware that webinars have become a pretty big revenue driver for me so they absolutely work. Enjoy the interview

What You’ll Learn

  • Webinar Ninja’s unique value proposition and why Omar decided to go into such a competitive space
  • How he got his first customers
  • Why he decided to launch his product to a small set of customers first
  • How much he leveraged his podcast to advertise his software
  • Why he bootstrapped the project and how much it cost him to start
  • How he put together his team.
  • Interesting webinar statistics gathered from his software

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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not with their businesses. I’m Steve Chou and today we are talking with my buddy Omar Zenhom the founder of webinarninja.com. Now in this episode you’ll learn the keys to running a successful SaaS business, and best practices for an online webinar.

Now before we begin I want to give a shout out to sitelock.com for being a sponsor of the show. If you owned a brick and mortar business you would secure it, right? Alarms, cameras, the whole deal. As an online business you may not think about security as much, but you should because your customers are. And did you know that one third of consumers hesitate to purchase online due to security concerns?

Protect your business and your customers with site lock website security, offering malware scanning and removal and industry leading web application firewall and more, SiteLock acts as your personal security team. So visit sitelock.com/mywifequitherjob for more information and get your first three months free. Once again that’s sitelock.com/mywifequitherjob.

And if you want to learn how to start your own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to mywifequitherjob.com, sign up right there on the front page and I’ll send you the mini course right away via email. Now onto the show.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m happy to have my buddy Omar Zenhom back on the show. Now Omar is someone who I met at a mastermind SF long ago, and he was actually a guest on the show already back in the episode 88, where we talked about his award winning podcast $100 MBA. But even back then Omar had a SaaS project brewing in the background called WebinarNinja. I think he launched it in 2005, correct if me if I’m wrong Omar. But he is already gone out to become one of the best webinar software packages out there and generates seven figures per year.

Now WebinarNinja stands out to me because it was completely bootstrapped. And what’s also cool is that Omar works together with his wife Nicole to run the business. Now as I have mentioned in the past starting a SaaS company is on my list of to do’s. And so with that welcome to the show Omar, how is it going man, how are you doing today?

Omar: I’m doing well man; I always get time for my [inaudible 00:02:51].

Steve: So did I get that right, did you guys start in 2015?

Omar: We actually started in 14; it was still in beta back then. We were just seeing if there was a market for it, really we were just – and we opened it up for a launch a couple of times for like a hundred users at a time. And when we sold out we realized okay maybe this is a viable idea. We officially kind of went browser based, and were more of a competitor in 2015.

Steve: Yeah I remember. I think I first interviewed you, you guys were still doing betas, like you had just released like a paid product or something at that point?

Omar: Yeah.

Steve: So how did you come up with a webinar software, because off the top of my head I can think of maybe six or seven just off the top of my head. Isn’t this like a super competitive area to be in?

Omar: It’s very competitive yeah. Well I kind of was a early adopter of webinars. I really loved webinars, because for those who know me a bit I was a teacher and educator for over 13 years at the high school and university level. And for me it was just a great medium for me to teach for my audience to give workshops, to do Q&A. I just thought it was a great like technology, this is a great idea.

I started doing them for our community at the $100 MBA and just to support our members, but it was also like almost not sure that it was worth because it was so clunky. The software that was out there or you had to like hodge podge yourself with like plug-in this video thing here, and then you have a separate chat area, then you go create your own landing pages. And then you have to create an email auto responder, and like they all have to work together and they are not really meant to work together. And it just didn’t seem holistic.

And then a couple of other software started to creep up. I didn’t like what was out there in terms of one either it was two for lack of a better term scummy looking. Like it was just not — it just looked like you just wanted to — it was all about like marketing and pushing and selling hard. And I know that marketing and sales is a big part of business, but the reason why webinars work is because they are there to build trust with your audience, for you to teach and to earn trust and build rapport, that should be at the forefront of the software. Or it was just expensive, or you had to download software, it was just kind of still not there.

Still it was like there is a lot of areas of innovation that can happen in there. So I purely just created a small version, a beta version for myself so I don’t have to dodge punches. So I don’t have to deal with all these moving parts or use any of these other like softwares that were currently out there.

And I just started doing webinars with it and my audience members who were on the webinar were like hey what are you using for this? I was like oh it’s just something I put together. I knew a little bit of PHP, HTML. I got a coder to clean it up for me like a freelancer, it wasn’t even a fulltime hire. And then they asked me, hey can I buy this? I was like oh I guess so. And like give me a few minutes to put up a sales page.

Steve: Wait so you coded the first version, I didn’t know that?

Omar: Yeah it was primitive, it was very small. And it was probably really like poorly coded I mean. But I had somebody clean it up for me in terms of — they had some bugs and I had to really read it out. But I kind of was self taught, I self taught myself PHP. I knew a bit of HTML, CSS just from design websites for clients and things like that. But yeah so that was a lot of fun but I’m known — I wouldn’t consider myself a developer.

In fact I’m challenging myself in the next couple of months to learn or master ruby on rails. It’s just something that I always wanted to do just kind of really feel like I know what I’m doing, and work my way around the code. But I always been a kind of person that like hey I’ll give it a try and I’ll get some help if I need some help. There is experts around me I don’t need to be expert at everything. And then some people just said hey I want to buy it.

So I just talked to Nicole my business partner and my wife. I said hey what do you think about this? And she is like let’s give it a try. So we just kind of packaged it up, and we only opened it to beta members and just a hundred members, we said we are going to see if they sell. If it doesn’t sell then forget it. And we sold out in 24 hours, so we were like okay great.

Steve: Amazing.

Omar: Yes so we were like okay there is a response, we opened it up again a few months later for another 100 and sold out. So then we were like okay we need to really think about this is a viable business. How much time, how much money are we going to invest into making this what it really needs to be really? And that’s kind of how the ball started rolling.

Steve: So a couple of questions for you. You said something interesting that you were trying to learn ruby on rails, but yet you are still trying to run this company. And for me at least my listeners and my readers have often criticized me for wanting to do all the technical stuff and run the businesses as well. So how do you kind of like balance the time for that?

Omar: Well first of all I’m not learning it so I can code my own software. The project now is way beyond my scope, like I would need a few years. Because it’s not just coding, it’s design, and there is all these different types of — I don’t know server administration, I don’t know SQL, I don’t know PHP, I don’t know Node.js, I don’t know web RTC.

There are so many things that go into the software that I need somebody who is — I need people, not somebody lots of people to be experts at it. But I’m learning it so I can understand the thinking process of developers; understand the logic behind so I can communicate more effectively with them.

So I can be able to understand — two heads are better than one. I see the business point of view things, sometimes we can troubleshoot through issues, or challenges we’re are having. Or maybe we want to develop a new feature but we are not really sure how we are going to build upon what you have existing right now. And I just want to understand how things work in terms of their world. And…

Steve: That makes sense yeah.

Omar: And I also think in a way it’s like learning a new language. It’s like learning Mandarin or learning Arabic or whatever it is. Something that’s completely foreign to me and I’m just jumping in, and I’m just challenging myself to be a learner again.

Steve: I think since I was the tech industry before like I know firsthand it always helps to have someone who understands the tech aspects when they are planning the project, because they know what’s realistic and what is not. So just curious how much did it cost you to start this business?

Omar: Well I never actually — I don’t believe in like dipping into savings or kind of getting funding or something like that when I start a business. I really think that you should get the money first, and I pre-sold it. I didn’t actually use it — I pre-sold those 100 beta members — they didn’t have any access to it. And the next 100 didn’t have access either.

We were still like — they had like limited access some of them just tried it out to give us feedback. But they didn’t have like full access to the software, there was a launch day and they knew what they were getting. Those very lucky numbers have lifetime memberships. So they basically formed webinar ninjas today. So I actually got the money first and funded it that way.

And I grew my team slowly. When you have a user base of under 500, you can do customer service yourself. You can do — or you can get one person. You can — you may need software like I didn’t use [inaudible 00:10:31] I just used Gmail with a business email which costs $2 a month.

Steve: Interesting, okay. So what was your value proposition just curious, because there were a bunch of other options out there at the time, right?

Omar: You’re right, so I wanted to make it a lot easier for people to create webinars faster, simpler. And I also like one of our core values is one to be easy and simple, but also two for them to focus on the content and not worry about the technology. Too much is going on, on other webinar softwares. There is too much things to worry about, do I have to record, do I have to do this? Where is my chart, how do I go back to that screen?

If it’s too confusing it should be intuitive, it should be easier follow. So that way you can just focus on your slides or whatever you are talking about on camera answering questions. So that was kind of our main focus to really make learning — like learning central.

So and on top of that I wanted to make sure that it’s all inclusive, meaning if you notice a lot of webinar softwares out there, they only offer live webinars, or they have a completely separate software for every webinar. So they have something else that’s just for anytime webinar. So I just thought that was foolish. I just thought that hey like I want to solve all the problems.

I want to be able to say hey you want to run live or evergreen or whatever in one package and I’m not going to up sale you, and I’m not going to charge you more for that. So we wanted to kind of just be all inclusive solution. So ease of use, interactivity, and making sure learning is the priority as well as making sure it’s an all inclusive package.

Steve: Is the email portion of that included as well?

Omar: Yeah all our email notifications and reminders are included. We send those out on your behalf. You also can broadcast emails, so like if you want to send out emails that follow after like create new emails like after the webinar or before the webinar. As long as they are on your — they’ve reached it for the webinar, you can email them.

Steve: Okay and you mentioned that you coded the first version, how did you actually find your first engineers to help you develop this? Like where did you find them, and what were kind of like the terms of having them on the project?

Omar: I basically went on freelancer.com which I was familiar with, because I used to be a freelancer as just a web designer. I used to do like WordPress sites, things like that. So I just looked for a PHP developer that had some experience with creating apps, and I just said hey, I just interviewed him on Skype. I have to say like my first hire wasn’t the best hire. We didn’t work out a couple of weeks after into the project, I had to fire him.

I took a couple of hires and then I found somebody that can help me out. But I realized that okay this person’s their knowledge or expertise only can take me so far, I need to up my game. And I need to get a better developer that can have a wider scope of what we are doing especially when we went browser based.

And then I continue to do that now even today like we have to improve our team all the time, like I want to push the envelope constantly. So we just hired new developers to join our team and we just hired new DX designer. So it’s just always trying to figure out like when I’m I going to hit that ceiling with the talent I have, and I need to get more talent, I get to get better talent.

One of the things I love to do is I love to read books. I love to read biographies of great entrepreneurs. Obviously one of my favorites is Elon Musk, and that’s one thing I really took out of his book is that he just really invested in his team. He got the best people whether it’s SpaceX or Tesla or SolarCity, he really invested in getting the best talent to get the best product.

Steve: So for your first hire though that didn’t work out, are you still getting your talent from the same place?

Omar: No.

Steve: How did you kind of refine your engineering? Yeah so where do you get it now, or where have you gotten your best hires from?

Omar: So it depends on the hire. So if it’s development I use a service called Toptal, they are actually sponsor of our podcasts, and so full disclosure, but that’s kind of how I found out about them, they approached us, they said, hey, we would love to be a sponsor in your show. I said what is this? It’s like; oh we’ve had the best developers and designers.

I was like, okay cool I’m looking to hire. And they said hey — we worked out a dealer, I was like, hey I want to use you so I can have a better read on my show. So I want to be able to hire somebody and talk about my experience. So when it comes to yeah designers and developers I use Toptal.

Before that I used Upwork, I used Hired, I used Freelancer. I have used all these different sites and some of them are more successful than others. If it’s customer service you have, it’s a lot of work to just find somebody with good communication skills, technical skills, but right now I would say half the hires we have come from referrals.

A lot of times we give incentives, we give bonuses for those who make a referral, and if that person is a great hire, and they pass the probation period which is 3 months, then the person who referred them would get a bonus, a cash bonus. It’s a good way to get somebody that will understand the culture of our business and our expectations, our level of communication, what we expect from them, things like that.

Steve: For your early hires at least did you provide an equity state to keep them motivated, like how do you keep them motivated for just your company?

Omar: I have never offered equity till this day.

Steve: Interesting, okay.

Omar: I’ve been approached a few times in terms of investors and I’ve turned them down just because I want be as boot strapped, I want to continue to be boot strapped as long as I can. As long as I’m profitable, as long as I’m able to grow the team the way I want to, and if I can keep in control of them, like I can still have control, full control, then I’m going to remain that way.

That’s a good question about motivation; we do a lot of different things with our staff, with our team to motivate them beyond monetary reasons. It’s just a fun place to be in terms of like, it’s all remote, but we also support each other with our slack channels, we help each other out. You know praise is a huge thing, making sure people feel valued, giving a project that challenge them, they can feel that they are working towards a certain goal, promotions, things like that, work experience.

Some people are just happy to be a part of something they have autonomy with, for example Rena who is our UXUY designer, she is excellent, she is great, and I mean she is a new hire, she has just been with us about 2 months now, but she loves working for us because we give her so much autonomy. I tell her, “Hey I’m going to give you my input, I’m going to tell you what I think, I’m going to tell you, by the end of the day you have a call, you have a last call because I hired you as the expert in this area, and I’m going to trust you in your expertise.”
Most people are not used to that, most people are used to just being told what to do, and in some way they have feel they have equity at least in terms of, and a creation or in terms of contribution to the project.

Steve: Interesting, okay, and so everyone is completely remote, like you don’t have a physical office, right?

Omar: No our whole team is remote.

Steve: Okay, so can we talk about those early beta users for a little bit, like how did you get those guys?

Omar: Well I had an existing audience with $100 MBA program as well as we were growing an audience with our podcast. I put out some fillers, I threw out an email, you know I did the whole thing where I talked about it with blog posts, I did some guest posting as well in other blogs talking about what I learned through doing X amount of webinars, hundreds of webinars, and what I’m trying to do to improve the weather and our experience with our software.

I tried to get it on as many podcasts or video shows as I could, and I thought if I could just give value, show people how to do well with webinars, how to win with webinars regardless of what software they use. This is something I do on regular basis with our webinars; I do on WebinarNinja 4, the software.

I do give offers with the software on the webinar, but I try to give as much value, like there is a lot of people out there talking about, “You can make all this money with webinars.” That’s true, you can make out money, and we have users like Johnny Dumas who’s made over 4 million dollars a year off webinar sales which is great, incredible, but the point here is that he hasn’t have a success because he’s some sort of charismatic person.

He has a formula, he has presentation skills, he crafts a great presentation. One of the things I did at the start to try to get as many users is to become an authority when it comes to how to actually craft a great webinar, how to put together a great presentation, how to interact with the audience, how to have on camera presence. These are things no one was talking about.

People were just talking about, “Use this tactic, or use red buttons or whatever.” That doesn’t really — you know the funny thing is that like what makes a great podcast, or what makes a great show or makes a great blog is the content. So if you can deliver great content, and I say deliver great content, it’s not only the content that’s important, but the delivery is important as well, like you can’t be a snooze fest, and those webinars that are engaging and exciting, they are engaging and exciting for a reason, they were designed that way, and you can do it too.

That’s what I try to explain, and that’s how I got my foot in the door and became an authority in the area of webinars in a different angle rather than talking about how to create your sales funnel with your webinar. I really just talk about how to give the most value, and so people can say, “Hey I actually got a win from this webinar. Maybe I’m not ready to buy, but when I am, I’m not going to shop around, I’m going to buy from this person because they gave me so much value already.”

Steve: So the webinars that you were running prior to WebinarNinja, were they about webinars or were they about some different topic?

Omar: It was a different topic, a business topic, but as I started to develop WebinarNinja, I started to think, you know half of the equation is the technical aspects of webinars, like people don’t do webinars because they don’t really fully understand how to use the technology.
The other half is I don’t know what to do on this webinar, what I’m I supposed to teach, how I’m I supposed to present. How do I make sure that people actually stay on, and they come back for the next webinar or tell other people? I wanted to have relief all that anxiety, I have control over that, I have a lot of expertise to that, I’m a trained teacher, I should be able to do this. That’s what I was trying to do with WebinarNinja is try to supply that training as well as supply the tools so that I allow that to happen.

Steve: Would you say that your best customer acquisition channels have been webinars themselves to your customers?

Omar: Yes, I would say so, yeah definitely. I would put that out there along with the content that we give, like we have a free course on WebinarNinja on how to plan a launcher for webinar which in some way it’s what we teach in one hour, but this is a little bit more in depth. We go from A to Z about the technical aspects to the hardware you need to how to actually sell, how to market, how to make sure that you have attendees, all that kind of stuff.

Steve: How do you get people to sign up for that?

Omar: Sign up for the actual webinar or the course?

Steve: The course, like how do you get traffic to the sign up page?

Omar: We do a variety of things, so one we actually have a little mini podcast on webinars called WebinarNinja that we started when we actually launched WebinarNinja talking about the creation of the software. We got experts, it’s a narrative type of podcast that we weave in interviews in, and that generated a lot of leads to the website.

I again did a lot of guest posting on different websites, talking about how to utilize webinars, but we also used paid advertizing, we used a lot of Facebook ads, and I had a bumpy start with Facebook ads at the start. I realized quickly that I need somebody who really knows what they are doing. I started to try to figure out myself.

There is a lot of things that are involved in Facebook ads, not only getting the right audience, and targeting the right audience, and also like pitching the right copy and all that stuff, but there is also the graphics, there is also the whole process of getting them to convert, so I started to hire an expert to help me out, which again a great expert helped me out, started to get us leads, wanted to take it to the next level, found somebody who is just a little bit better at it than now I’m on my 3rd hire.

Not that the other 2 hires were bad, I just hit my cap with them, and now I am more where I need to be in terms of the level of marketing and our money that we are using on Facebook ads.

Steve: In terms of your best converting Facebook ad, what does that look like, what is the ad and the landing page look like?

Omar: Well we have a lot of them, we have a whole bunch of them, but I really believe in trying to have a long term vision with things, and try to build rapport and trust. Most of our ads go straight to the course, or we talk about something in particular about the course. The more specific the ad, the better, like what are they actually going to get out of this course, like get a template on how to create your workshop, that’s a very clear understanding of what I’m going to get, what am I going to get out of this course?

And that goes into the course of course, and then they consume the course, they may sign up after the course. They get follow up emails, they may not, but then I invite them to a live webinar of that course. At the webinar I will teach a topic whether that’s how to grow your audience with webinars, or how to increase sales, or how to grow your business or whatever it is, and at the end of the webinar I will give an offer.

Even if they don’t sign up for the offer I continue to give them great content whether that’s blog posts or tips or research we found from our own company, like we do a lot of research on when the best time is to run a webinar based on our users, you know we extract that information depending on what country, and all that stuff and region. We try to support them as much as possible, but you have a better conversion rate when you have that several steps along the way rather than straight to a webinar, straight to an offer.

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I was going to ask you actually what is considered like a good cost per acquisition for you guys, for Facebook ads?

Omar: That’s a tough question because Facebook is slowly and slowly getting more expensive, [inaudible 00:26:35] slowly slowing it down. It wasn’t, it’s not as cheap as it used to be, the short term of it or the sure way of saying that. You know for us we have different plans of starting from $45 a month, we have different offers, things like that.

So for us as long as we can get a user for under that amount it’s a win, because that’s, it’s recurring revenue, and all our plans come with free trials, so they have 14 days to try it out before they’re even charged. For us it’s holding them on for that first 45 days, because you get the 14 days plus the month. Then for us we just know that if they give us a trial they will love it, and they will hang on, and we will have a long term process.

Steve: I’m just how you can track like the Facebook ad if it’s such a long term funnel sometimes, in attribute to the ad, and like how much you are willing to pay like for one of those Facebook leads going to the course.

Omar: Well, we track it with; you know we actually have tracking code on each page of our check out pages to figure out if they are actually converting from the ad. That way we know how much the advertizing cost is costing us, versus how many paying customers are getting. That is relative depending on the campaign and things like that, but we are talking about roughly $15-20.

Steve: Okay, you know since we are on the topic of acquisition, recently I saw an AppSumo deal where you guys were giving away lifetime memberships to the basic plan for a pretty low fee, and I want to talk about this promotion because it seemed a little counter intuited to me, and I want to know the rationale behind it.

Omar: Well the rationale behind it is we wanted more people doing webinars on our platform. I have known Noah just like you know him for some time, and I know Imen [ph] who run AppSumo’s deals for Noah, and they even talked to me about it, “Hey we really want to get a webinar software on AppSumo, and we really like yours because it is our hang out base, and it’s got a different angle, I like it.”

We have been going back and forth for about 9 months on this discussion of running this deal. I told Imen, “Hey man if I’m going to run this deal, I’m going to make it the best deal you ever heard.” He said, “Okay, great wonderful.”

I crunched the numbers, I went back, I took a look at our analytics, and the thing is, is that I realized that with our start up plan you have up to 100 attendees, live attendees, you have unlimited evergreen or replays or unlimited registrants, but you can have up to 100 people show up live. I looked at those users, and looked at how many webinars they actually create, I talk about, and I realized that that cycle of being a starter doesn’t last too long because once you get some sort of traction and success with webinars you are going to surpass 100 users pretty quickly.

It doesn’t matter from the users end, because they we getting an ROI. They are making money off the sales or making on the webinar, so for them it is a great deal for them to continue to do webinars and pay for our software which is a fraction of the price that they are making on sales. One of the things that is interesting about our software or our business model is that the more webinars that are done, the more viral marketing happens.

So every time you attend a webinar and you see that it’s been run on WebinarNinja that’s just another signal that WebinarNinja is a competitor there. That’s a choice, that’s an option for you if you ever want to run webinars, or if you are currently running webinars and you are not happy with your solution. So there is a lot of SEO benefits of running webinars.

So I crafted a deal with AppSumo that made sense for us from business sense in terms of our cost. And we also made some special deals for those who want to upgrade later on to a higher plan. And it just worked out fine. And luckily we did very well and I got an email from Imen saying that our deal on AppSumo was the best selling deal in the history of AppSumo, so I was like…

Steve: Really, holy crap okay.

Omar: So for us that was a great win. And also it was just also a chance for us to get people that are — that have been wanting to do webinars but haven’t. And I love taking on people that are – the first time they ever listened to a podcast and it was through our podcast. Those that never subscribed to a blog and they subscribed to a blog, those people are very loyal, because they feel like you’ve really influenced them in a strong way. So I love that kind of customer, so for us it was a great investment.

Steve: So if I can just summarize what you said, the whole point in giving it away is to kind of get them pregnant with the tool. And the ones who are successful will tend to upgrade to a higher plan whereas the ones who don’t would probably fizzle out anyways, right? So there was like a win-win?

Omar: Yeah, if you’re not using the software it is not really going to cost us much. It costs us obviously storage space and things like that, but really the big cost is when they run a live webinar, when they are using the video technology, the live broadcast. So if they are doing webinars, then they are going to start growing and passing 100 attendees is not too hard. A lot of people think that’s intimidating, but if you are you are making money and you are seeing an ROI, so for us it’s a win-win for both parties.

Steve: So given what you just said, how do you actually encourage people to use the tool and kind of how do you reduce churn on your product?

Omar: Well there is a few things that we try to do. We try to one, educate them on one, how to get started. A lot of people just don’t know how to get started, they’ve never thought about doing a webinar, they are not really sure what to do, so we do tutorials, we give them videos. We follow with email sequences, we do live webinars just Q&A with our members only.

When we release new features we show them how to use it on our Q&A webinar where we just say hey we just released a new feature, LeadPages integration, you go to LeadPages, this is how you do it. And just being open for questions, I try to be on as many webinars as possible; live webinars to keep people engaged. And at the same time I also like to kind of share the business logic of it.

A lot of people, they want to do webinars because they see their mentors doing it, but they don’t realize that you need to incorporate this in your marketing strategy. And I try to write articles or do videos on that topic, or share podcast episodes I do on that topic where it shows them, hey if you can invite people to webinars, X amount of people and X amount convert.

That’s like being able to just turn on a tap and say I want sales, let me do a webinar. So if people don’t realize that, some of them they don’t understand like it’s actually that much of an equation. They just kind of feel like oh I’m supposed to be doing webinars because that’s what people are doing.

Steve: I actually just started doing them last August, and they’ve been just an incredible revenue generator, it’s like ATM machine almost. It’s crazy but since we are on this topic also I know — since you run WebinarNinja you probably have a ton of statistics from all the people who use your tool. So I was just kind of curious, and I’m sure the listeners are curious too. Like some of these questions like what’s the best time of day to run a webinar, or what best day it is? Like what’s the average attendance rate and that sort of thing, can you provide some statistics?

Omar: Yeah sure, it all depends on your geographical location. But North America the best time to run a webinar are Tuesdays through Thursdays so Tuesday, Wednesday, Thursday. Tuesday being the most attended day. And the time range is between noon and 3 PM.

Steve: Interesting, okay Pacific Time or Eastern Time?

Omar: It depends on — see if the attendee is Eastern then that’s the Eastern Time. So it depends on where they are located. So that time range, so even if you just do 1 o’clock that kind of covers pretty much the time zones in every area. I’ve run webinars at 4 PM PSC which is 7 PM EST, and you get a different crowd.

You get people come back from work, it’s good to experiment, it’s good to try out. But in terms of just raw numbers that’s been the best time that we found, Tuesday from 12 to 3 in North America. Funny enough it’s different in Europe, they actually attend during the day, maybe at work or something. Like the numbers are completely different. It’s 10 o’clock in the morning to 12 noon is a sweet spot in Europe. So yeah so it depends.

Steve: Oh 1 to 3 is technically work also, isn’t it?

Omar: Yeah it is it’s true, but usually it’s like a lunch hour. Usually some people — I also think of people that are in existing businesses, or working from home. Usually you’ll do your work in the morning, like you do your production in the morning, and then in the afternoon you’ll have time at lunch or afterwards to attend a webinar. At least for me that’s what I would do. But it’s just interesting depending on the geographical location.

You also have to remember that your global — I have to constantly remind myself that we have audience members in Australia, New Zealand, and all these different areas have opposite time zones and sometimes you have to have a webinar at 10 o’clock at night, so you can suit that audience. And you’ll be surprised a lot of those audiences are hungry because they are not served.

Steve: Interesting, and then what would you say like the average attendance rate is across the board?

Omar: It depends on how many webinars you’ve done. So your attendance rate is actually very much correlated to how many webinars you do. So if you’ve done between one to three webinars, like you’ve anywhere between one, three webinars your average attendance rate is 43 people, just not that high 43, right? But once you start doing more than three webinars, from three to 10 webinars, you start to have an average rate of about 89, so it doubles, right?

So then after you’ve done a whole bunch like this is average. And a lot of people don’t do any marketing; they have low list well things like that. But once you’ve passed 10 webinars, then it starts to become exponential, once 10 webinars hits, then you are well past 150 and 160 attendees. We have a pretty large list and we regularly get 500 to 600 people on. And I do a webinar a week, so like there are plenty of times I miss and go to the next one. So and that’s with zero ad straight to the webinar, that’s just through content and just through emails to a list, we usually only invite people that are already in our network, or in our contact list.

Steve: I guess what I meant was like what percentage of signups actually attend?

Omar: Oh the conversion rate yeah. So the average conversion rate is 25% actually. And this is something that we try to really help people with. Features like add to calendar, features like our follow up emails. I also talk about the copy that you put in your emails leading up to the webinar. You have to…

Steve: Can we talk about that a little bit actually?

Omar: Yeah definitely. So one of the things I really recommend and I have worked on this on my own webinars. And I’m happy to say that my conversion rate now from registering to attendee is now surpassed 55% which is really good for…

Steve: Yeah that is incredible.

Omar: And a lot of it is that portion where now I’m trying to — there is two sales processes. There is one where you are sending an email to get people to register. And once they are registered, now you need to make sure they attend. And this is the part where people drop the ball. So we have these templates that go out automatically that you can customize. They are about five reminders, so there’s the one that’s a confirmation email when you signup.

Then there is one that says your webinar is tomorrow, your webinar is today, your webinar is an hour to go, your webinar is starting right now, right? So you can customize it and I really like to incentive people to show up to the webinar. And I do it in all different ways. So I’ll give something for free like a template or an eBook or a downloadable.

Or I tell them there is going to be an incredible discount, I’m not offering to anybody else except those who are live. On the replay the offer is going to be different. So that could be one incentive to show up live. Two, I incentivize them by doing something funny or interesting or personal. Or I say, hey I’m going to showing a video when I was four year old when I was dancing to Michael Jackson; you are not going to be able to see it. You got to show up live, you are going to love it blah, blah, blah.

Three like send me your questions right now, reply to this email, send me your questions and I’m going to answer them the first thing make sure your questions are answered right away. And a lot of people they just have questions and they want an answer. And it’s not about the products; it’s about your topic. And they want to know — they want to make sure their answer is going to be — their questions are going to be answered.

I just try and incentivize them as much as possible. If I’m having a co-host on right, I tell them, hey I’m going to have Steve Chou on, on this webinar, we are going to do a webinar together, we are going to have a lot of fun. In fact I’m going to ask Steve three embarrassing questions, and I put them boom, boom, boom.

Like a part of this is entertainment. People have to be incentivized to show up, and be like this is fun, this is different, this is interesting. So you have that portion of selling them to get on them on the webinar. But then when they are on the webinar you have to have a great webinar. You have a fun webinar that will keep them on. And keep long enough for you to be able to make them an offer at the end, right?

Steve: Yes, so what are some of your tips to kind of encourage someone to stay all the way to the very end?

Omar: One of the things I do and I have a lot of fun with this. I actually did this recently with a webinar I did with Jason Zuck. We were doing a webinar for our course, easy course, and at the start of the webinar, you know we talked, “Hey this is Jason, this is me.” We have a lot of fun, we joke around, and then we give the menu, like we say this is what we are going to cover in today’s webinar.

We just flipped the script, like no one does this, so we just said, “Menu number one, we got to tell you, warning, like we are going to sell something to you at the end of this webinar, so I want you to put your wallet in your freezer, give it to your cat whatever you got to do because you might buy something.” Obviously we are being sarcastic, we are joking, and then right before we are going to talk about the product for sale, because we are entrepreneurs, we are going to warn you, and say, “Hey we are going to start selling now, so if you want to leave, you leave now.”
No one has ever done that on a webinar, so there is like surprise, it’s intriguing, what the heck is this, like, “Don’t worry guys we will tell you when the work drops over and the selling start. That’s when we are going to start forcing you to buy something.’ People laugh, and it gets funny, because it’s like obviously we are not trying to force them to do anything. We are just trying to help them take whatever, or teaching to the next level and be able to do it in a structured manner.

When we get to the point where it’s okay we have done the workshop, “Hey guys, thanks for all your questions, now we want to show you something that we’ve been working on that we are going to sell to you for a special offer only for people on the webinar right now. So if you don’t want to buy this or you can afford it or whatever, don’t worry about it, please leave now, it’s okay, we won’t be upset, we are just going to be quiet for the next 30 seconds, and we are just stop talking on the webinar.”

Steve: Interesting.

Omar: It’s the funniest thing because our attendance numbers start to go up because we are seeing the attendance numbers going up because people start sharing this, like this is incredible, what’s going on in this webinar, you have to sign up. Then we just broke the silence, and said, “Okay guys, obviously we are joking, and things like this, but really we want to be able to give you something that is of value, obviously we are going to want money in exchange because that’s what we do for a living, you guys are not idiots, you know that.”

People are refreshed by the idea that you are just being honest with them, and you are just telling them how it’s going to be, and just selling from the start, “Hey there is something that I’m going to give you for sale.” To be honest with you people are actually with that because they are under the impression that they might buy something, they know that, people don’t hate shopping, people like to buy things, but they just don’t like to be sold. They don’t like to be like cajoled into it, and feel like they didn’t make that decision.

By being honest, by transparent, by doing these funny things where you are just being just yourself and just doing things a little bit differently, they feel like, “Okay I’m in control, they are not pressuring me, and if I buy, it’s my choice.”

Steve: What would you say is a good attrition rate from beginning to end?

Omar: A lot of people show up late, a lot of people, lateness is a problem on webinars because there is nobody taking roll, but I would probably say if you can keep it up to about 60-70% that would be very good, but don’t be so hard on yourself, if you are first getting started. Just focus on the value, and focus on making sure that they feel like they got something out of the webinar.

For me that’s really what it is, I don’t think that I can say something or do something special to make somebody buy. If they are ready to buy they will buy, if they can afford it they can afford it, if they can’t they can’t. For me all I’m trying to do is have them leave the webinar and say, “Man that was really good, I’ve never been on a webinar where I learnt so much, I took down so many notes, this is fantastic.”

I just become something in their head, a memory, a thing to remember, so whenever they do want to do a webinar, so whatever I’m selling on the webinar they come back to me, they are not going to shop around, so that’s really what I’m trying to do.

Steve: Actually what I found with my webinar is that sometimes it takes like 2 or 3 attendances of the same webinar for them to buy, do you find that happens to you with yours?

Omar: Yeah, definitely, I think a lot of the times is, I learnt a lot of different things in terms of how to handle questions, because a lot of people they have questions, and some people, a lot of people do Q&A at the end. I actually try to do Q&A periodically throughout the webinar, so I will break 15 minutes into the webinar and take some questions on a certain aspect of that webinar.

Steve: Interesting, okay.

Omar: Like we’ve covered 15 minutes of this topic, any questions, pop them in, and I answer questions, and then some people they have just a burning question, like do you have a paying plan, or like does this integrate with this, they just want to know something and they have just been waiting the whole webinar, and they don’t want to wait to the end to figure it out, they are ready to buy, and sometimes they just give up, and then they will show up to the next webinar, and maybe their question will be answered then, so that’s a technique that has helped me.

Steve: Okay, and then in terms of the post webinar follow up sequences, what are some things that you do with that?

Omar: Well I do a limited replay, so I only offer for 48 hours. I do give the offer, and allow the offer to stand for the 48 hours, but I also give a bonus for those who are on the webinar, so if you buy live on the webinar or during the webinar, you will get something extra, you will get something that is of value that comes along with the purchase, but that bonus wouldn’t come if you bought after the webinar, but the discount or the promo will still stand for 48 hours.

We do follow up emails that’s integrated into WebinarNinja system that really helps follow up and tell them, hey, and we have specific, like our system detects if they were on the live webinar or not, so you can send a specific email that says, ”Hey I know you missed the webinar, no problem, here is the replay. We actually have a great offer, this is what it is. It is only available for 48 hours. If you have any questions, reply let me know, we would like to answer any questions you have.”

And then if they did attend, we say, “Hey thanks for attending, this is the offer,” and just remind them again that this is the offer that you have. You know it’s funny that even though we send a few emails, we send about 3 emails after the webinar, we still get people that ask for the offer when it expires, so like the day after it expires. You never can over communicate a lot, like wow 3 emails after the webinar, yeah, but some people literally just don’t open their emails on the weekends, they are busy, that’s normal.

Steve: That’s interesting, so just through doing webinars and Facebook ads, you have managed to grow WebinarNinja to thousands and thousands of members overtime. Has there been like one thing that has catapulted the number of users for WebinarNinja?

Omar: I have to say that we create a lot of content, like I can’t ignore that Steve, like I do a lot of guest posting, I do a lot of writing, and I have a daily podcast. I have over 740 episodes on the $100 MBA show, so like I’m constantly trying to build new relationships with new people in terms of that podcast, and try to get more listeners.

It helps us a lot to have that consistent content going out, you know trying to build that rapport. I probably would say that’s the strongest thing. Most of people that show up to my webinars, heard of me in some way other than just off an ad. The ads work, but I think they click on the ad because they know who I am.

Steve: Okay, that makes sense, so it’s just you have just leveraged your presence so to speak, and your name, in helping to build up WebinarNinja overtime?

Omar: Yeah, I would have no business without the audience. Everything I have is due to the fact that I have spent some time to…

Steve: Your podcast?

Omar: Yeah, growing their audience, yeah.

Steve: Okay, cool, well hey where can people find you if they want to learn how to put together a good webinar?

Omar: We have a course like I mentioned called the ultimate webinar course, and they can find that at webinarninja.co/course. If they sign up for that course, they have access to over 14 videos, it’s a 7 day course, there are some audio lessons as well. We have some cheat sheets that people love.

They are really well done PDFs, they are downloads, and they’re just these great sheets that you can have handy on your own webinars, so remind you of what to do and things like that. And then if you are on our list, then you will be invited to the next webinar that we do, so you can definitely ask questions live on live webinars.

Steve: One thing I also wanted to ask you was you have a conference too on webinars once a year?

Omar: Yeah we ran WebinarNinja live which was a really, really fun conference that we ran. It’s just been a fun journey, because I’m trying to help people out in this weird world of webinars, and the small world of webinars, and it has been like a really fun journey, and one of the things I loved about the conference is just meeting the people that I have seen on webinars, meeting people that do webinars that are really good at it, and learning from them, people like [inaudible 00:48:55], people like John and Kay from Entrepreneur on Fire, John Cochran.
These people have done some tremendous work with webinars, and it’s just been fantastic together, and just get to know them in person. There is something about the live experience that’s so impressive.

Steve: Yeah totally. Cool man, well hey if anyone has any questions for you personally, what’s the best way to reach you?

Omar: Twitter, my handle is @TheOmarZenhom on Twitter. That’s the best way to contact me; I’m pretty good at that in replying.

Steve: Cool man, hey well thanks for coming onto the show Omar, I really appreciate your time.

Omar: Thank you man.

Steve: All right take care.

Hope you enjoyed that episode. Now if you follow my blog, you already know that webinars have had a huge effect on my businesses, and in fact the first time I gave a webinar, I made $60,000 in 90 minutes, yes it is that crazy. For more information about this episode, go to mywifequitherjob.com/episode140.

Once again I want to thank sitelock.com for sponsoring this episode. If you have an e-commerce store, go there right now, and find out how long it takes to load. Does it take more than five seconds? If so did you know that 60% of consumers only wait up to five seconds before bouncing from a site, never making a purchase?

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And once again if you are interested in starting your own online business, head on over to mywifequitherjob.com, and sign up for my free six day mini course on how to start a profitable online store. Sign up right there on the front page, and I’ll send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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139: How To Make 7 Figures Selling T-Shirts Online With Kevin Stecko

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139: How To Make 7 Figures Selling T Shirts Online With Kevin Stecko

Kevin Stecko is someone who I met at an ecommerce mastermind retreat earlier in the year. And as luck would have it, I got stuck on a ski lift with the guy and we were forced to chat.

Anyway, Kevin runs an awesome site called 80stees.com where he sells tshirts from the 80s. I was on the site the other day and it brought back memories of youth.

In fact, I used to watch Robotech when I was a kid and I was pleasantly surprised to find Robotech t-shirts! How cool is that? (my wife is shaking her head)

Kevin is one of the very few t-shirt vendors that I know who have been in business for a very long time. Enjoy the episode!

What You’ll Learn

  • Kevin’s motivations for starting this business.
  • Should you carry inventory or print on demand?
  • How the licensing process works and is it worth it?
  • Kevin’s primary source of customers
  • How to rank in search for ridiculous keyword terms.

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Transcript

Steve: Welcome back to another episode of the My Wife Quit her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not with their businesses.

I’m Steve Chou, and today we are talking with my buddy Kevin Stecko, the founder of 80stees.com. Now in this episode you’ll learn the keys to running a successful e-commerce store selling t-shirts online.

Now before we begin I want to give a shout out to sitelock.com for being a sponsor of the show. Now if you owned a brick and mortar business, you’d secure it, right? Alarms, cameras, the whole deal, and as an online business you may not think about security as much, but you should, because your customers are. And did you know that one third of consumers hesitate to purchase online due to security concerns. Protect your business and your customers with SiteLock website security.

They offer malware scanning and removal and industry leading web application firewall and more. SiteLock acts as your personal security team. Now visit sitelock.com/mywifequitherjob for more information and get your first three months free. Once again that’s sitelock.com/mywifequitherjob.

If you want to learn how to start your own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to Mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email. Now onto the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job podcast, today I’m thrilled to have Kevin Stecko on the show. Now Kevin is someone who I met at e-commerce mastermind retreat early in the year, and as luck would have it I got stuck on a skid lift with the guy and we were forced to chat.

Anyways Kevin runs an awesome site called 80stees.com, where he sells t-shirts from the 80s. And I was actually on the site the other day, and it brought back memories of when I was younger. I used to watch Robotech when I was a kid, and just out of whim I decided to search for Robotech t-shirts, and I was pleasantly surprised to find them there, so how cool is that?

However when I pointed out to my wife that I was going to pick these t-shirts, I’m going to wear them, she started shaking her head. Anyways Kevin is one of these very few t-shirt vendors or store owners that I know who have doing this for a very long time.

And if you remember back in episode 122 when I had Derek Pankaew talk about his t-shirt business on Teespring, well Kevin’s business model is entirely different, and in my opinion is a lot more sustainable. And with that welcome to the show Kevin, how are you doing today man?

Kevin: I’m doing great, thanks for having me Steve, and I think we have to change the name to my wife is now allowed to give me clothing advice instead of my wife quit her job.

Steve: Actually I was also looking for this t-shirt, there is like this like obscure cartoon I used to watch when I was a kid, it was called Pandemonium. It only had like 10 episodes total. If I had a t-shirt like that I would totally wear that.

Kevin: Pandemonium, I’ll have to check it out, but it doesn’t even ring a bell for me.

Steve: You probably don’t even remember that cartoon; it only lasted one season, a bunch of [inaudible 00:03:30].

Kevin: I think you might have mentioned that on the skid lift.

Steve: Oh still talking about that ha, yeah. So Kev, I’m curious how did you come up with selling t-shirts, it’s like a really hard saturated business model?

Kevin: Right, well actually when I started it was not at all, so it kind of goes back to my college days. There was this little, I guess you might call it a hedge shop in a back alley that I used to walk by to go to class, and they would always have these boot leg t-shirts in the window.

I actually didn’t even know what boot leg meant at the time, but he had a hellion t-shirt and I was like that’s me, I’m getting it. So I wore it around campus and because everyone else at school also sees the same store all the time, no one ever asked me about it or thought it was special in any way.

But when I went home for the summer, I went to the amusement park and like 6 different people came up to me and asked me where I got it, and this was in 1999, summer of 1999. At that point I just had this kind of an idea, and I graduated in December of 99, and basically took a deal with this guy to buy in bulk from him.

I wasn’t even really getting a good deal, but I know I used to make a [inaudible 00:04:50], then I went to Penn State and tried to indoctrinate all of the students in to their software, he gave us free copies of like office to full suite, and so I was able to use Frontpage to create a website.

Steve: And did you sell that initial lot right away?

Kevin: Yeah, and it really wasn’t that many, I mean I had really no money except for just whatever I was able to make part time, so I might have had like 20 shirts that I bought, I think I was paying 13 each. So it wasn’t even cheap, and basically those sold out really quick, yeah.

Steve: So Frontpage didn’t have e-commerce features back then, right? How were you collecting money, just curious?

Kevin: The very first version of the site, it was like eBay in its infancy but less convenient. Basically people would fill out a form that I would get emailed to me, then I would send them instructions on how to mail me a check.

Steve: Oh wow okay, amazing and you sold 20 t-shirts. Were those t-shirts boot legged?

Kevin: They were, and like I said at the time I didn’t know, and they even had low trade mark thing that would indicate that they weren’t, but as I got into the business further I found out there are companies – those were pretty well known Bootlegger.

Steve: Okay, so how did that evolve into 80stees?

Kevin: So my email – I’m sorry my eBay username was 80stees, because it was him and he showed and then I bought like transformers and thunder cuts. I was just basically like well I want to have sort of a theme here, and I was totally an 80s kid, and that basically was like well I’ll do what I loved as a kid as a theme for the tees.

So I launched on eBay, and then had like a not even a real domain name, it was 80stees.hypermark.com, there was a free Frontpage host, and then March of 2000 I registered the domain 80stees.

Steve: Okay, and then what was your first platform then?

Kevin: So it was literally Frontpage, and then it kind of evolved. There was a gold rush in late 1990s for all these free software services, and one of them was an ecommerce platform called bigstep.com.
And so I had the most hacked together thing you could imagine which was using my Frontpage site which ranked well for search terms, and then I would link to this BigStep cart, then I would link back to the Frontpage site. So it was literally like going cross domain from one site to another, but it ended up working, we sold pretty well on there.

Steve: Interesting, so what are you on today?

Kevin: Today we’re on Shopify.

Steve: Okay, and so was it from BigStep to Shopify or there was a bunch of carts in between there?

Kevin: Yeah there was some carts in between. There was something called Storefront 5.0.

Steve: Oh my goodness, okay.

Kevin: And that was dot SP platform, and we ended up actually using that for a long time and modifying it extremely to the point where you wouldn’t recognize it, and then we actually got hacked when we were on that platform. I then switched to a company which due to a legal agreement I’m not allowed to mention, because they completely underperformed, under delivered, and then from there we were on Shopify.

Steve: Okay, just so you guys know who listening out there, Kevin has been doing this for a long time. I would say almost 20 years.

Kevin: Yeah, I’m getting close.

Steve: Something like that.

Kevin: I mean 1999.

Steve: 16years, 17 years yeah. So I’m just a little curious about your t-shirt business, so do you stock your t-shirts, or do you print them on demand.

Kevin: We stock.

Steve: You stock, okay. So that actually opens up a can of worms, so first of all why did you decide to stock that versus just printing on demand with I guess this – I don’t know [inaudible 00:08:53]?

Kevin: Okay yeah so at the time really I was selling licensed t-shirts and I wanted to do it the legit way. So there were a few companies, I think there was only a company like Slapon or something like that that were doing heat [ph] transfers, but for the most part you had to go the sole screening out.

There was no such thing as like a direct government print, so it was pretty much based on — the business model was based on what I had to do in order to offer licensed products.

Steve: I see, so you can’t — I know there is places at the mall where you pick what you want on the show, and then they just press it on right in front of you.

Kevin: Yeah, those are almost guaranteed boot legs.

Steve: Oh really?

Kevin: Yeah, if it was a license product…

Steve: Like if it’s like a sports team?

Kevin: Oh yeah 100%. And the reason that is, is because these are [inaudible 00:09:48] wants complete control of the final product, and if they sell an officially licensed heat transfer, you could put it on whenever, and they lose complete control at that point.

Steve: Interesting wow, so in the mall, so they can get away with it, so does that imply that it’s not really policed that heavily or?

Kevin: Yeah, I think that if they’re getting real with it either it’s generic enough that’s it’s actually not infringing or yeah they’re just not – they haven’t been caught.

Steve: Okay, so does that imply – so everything that you sell today is all licensed, right?

Kevin: Yeah, I mean it’s like 99.9%, there’s a few things that just didn’t need a license.

Steve: Okay, and so by having this license it implies that you can’t print your own t-shirts, like you have to actually just buy them the
way they are?

Kevin: It’s we either buy from companies that have the license or we obtain our own license. So if we had our own license, then yeah we could do print on demand, that’s a model that could work, but to obtain all the…

Steve: Okay can we talk about all…

Kevin: Oh sorry, go.

Steve: No, no finish your sentence.

Kevin: I was going to say to obtain all those licenses though for one company would be extremely expensive.

Steve: Yeah, I was just going to ask that, so what’s the process for obtaining a license, how much does it cost and what are the terms of a deal?

Kevin: It all depends in terms of the costs, so like if you’re talking Star Wars, like which would be the big banner industry, you’re talking hundreds of thousands of dollars that you would have to guarantee and potentially even hundreds of thousands that you would have to pay upfront towards the guarantee.

Steve: No way, because you guys sell a bunch of Star Wars shirts and they are all licensed, so does that imply that you’re paying six figures?

Kevin: No, that implies we buy from companies that have done that.

Steve: Okay, all right got, got it, okay.

Kevin: So we use some control on that aspect, but the good news is we do move a significant volume, so we have vendors that work with us to get us exclusive designs, and so really it’s actually beneficial for us now to have a license in a lot of ways, we don’t have any of that in this sort of overhead.

Steve: Do you have any licenses where you have like full rights to print stuff?

Kevin: Yeah, we do, and there is really no such thing as full rights, so every design has to be concept approved by the brand, and then they have to sample approvals and production approvals. You’re still limited to what they’re going to say is okay, it’s like you wouldn’t be able to put on like a swear word on a transformer shirt or something like that.

Steve: Right, okay that makes sense.

Kevin: In terms of what the shirt shows a typical license deal is you have a time which will just be the length of time that you’re allowed to sell a product. You have the properties, which just clearly defines what properties are on the case like we have Hasbro license, so it defines like transformers 1980 style guide type thing.

So like I couldn’t make the new movies that come out t-shirts, I can only do the 1980 stuff. It also defines the loyalty percentage, the payment terms on that and the territory, so like United States, UK, online, that type of thing.

Steve: What does the loyalty look like?

Kevin: Typically it’s 10%, but it can be higher. I know like NFL was notorious for having a pretty high loyalty. It all depends on…

Steve: Sure, I was just trying to get a range, so 10 to something percent. Is there an upfront fee also?

Kevin: Yeah, it’s not a separate fee from the loyalty, but what it is, is it’s a guarantee towards the loyalty, so like if it’s say that I said I was going to pay – I was guaranteeing at a cost to you or said I’ll pay $10,000 in loyalty. Some companies in order to take you seriously might want to all that 10,000 upfront.

Steve: I see.

Kevin: But then after you pay that off, so let’s say you had a really good first year and you sold $100,000 worth of stuff at a 10% loyalty, so that whole first year you’re not actually sending them a check. You’re just banking that money you’ve already paid them, and doing the accounting later, okay well we owe you $3000 loyalties this quarter, but we already paid you 10, so now we owe you 7.

Steve: I see, so everything is negotiable it sounds like?

Kevin: Yeah, it all depends too on the property. The bigger the property the less negotiating room and the knowledge of the structure is going to be. Throughout we do have a Robotech license actually.

Steve: Sweet.

Kevin: Those guys are – it’s a fairly less structured deal compared to others, and I think that’s primarily because that’s their only property, and they don’t have like a huge team, whereas Hasbro is a public company, and they’ve got a huge licensing team and so everything works a certain way.

Steve: So over there contracts are too expensive like Star Wars you mentioned you buy the t-shirts from a vendor who has a license, and what are the margins on something like that like when you buy shirts from someone else?

Kevin: Well it depends, so if we’re buying like small runs where maybe they’re using the DTG method, the margins, well I mean I guess…

Steve: So what does DTG stand for?

Kevin: DTG is direct to garment, so it’s like literally like an Intel printer for t-shirts, and a new mess in Teesprings for like – Teespring originally was also screened and there always like a fairly high minimum, and now they actually spot the DTG model, so you can really sell one t-shirt via Teespring with that DTG method.

But yeah, so I mean we try to maintain margins of about 60%, but that can get better for instance let’s say we’re able to buy 600 pieces or 1200 pieces, then we start getting a little bit of discount on our products.

Steve: Okay and then you have to stock all these?

Kevin: Yeah we try to avoid the pain of stocking to an extent with the crowd fund model that is very similar to what Teespring does which is basically it’s a fancy pre-order.

Steve: So how do you make the decision on whether to stock something, whether to license something or whether to crowd fund something?

Kevin: Okay, so these are a little different things, so we pretty much bring everything in the stock to ship eventually. So I guess if we take it one piece at a time – if I were to say how do I start the licensing? It would really be a situation where it’s either a huge strategic advantage for us to license it, because no one else is going to do what we’re going to do with it, or going to be able to do it.
So like for instance Robotech, no one else had a Robotech license at the time, and it just made a whole lot of sense for us to be deep placed to go for Robotech t-shirts even though it’s a fairly small fun base.

Steve: Got it.

Kevin: Now Hasbro, I got the license in 2007 and now it’s because at the time our vendor for transformers t-shirts was letting the license expire, and there wasn’t anyone else who was going to pick it up immediately, and as you might imagine for a company called 80stees that’s also had a cartoon t-shirts we needed transformers t-shirts.

Steve: Yeah for sure.

Kevin: So that was a situation where I was I’ll find – I’m really looking at potentially not having a huge important part of my catalogue.

Steve: Okay, and when you have the license, you’re printing these shirts on demand. Do you do those in Asia or do you those in-house?

Kevin: We don’t do a whole lot of on demand; we’re just actually just starting to work with a partner company now. We do domestic printing for all of our stuff though.

Steve: And the reason for that is just control?

Kevin: Yeah, by the time you’d get something printed in China and bring it over, I don’t think it’s that – it’s going to be that big of a cost savings based on freight and everything. It’s just so relatively inexpensive.

Steve: Okay, so I think can we talk a little bit about this crowd funding that you do?

Kevin: Sure, of course.

Steve: How does it work?

Kevin: Okay so yeah we were inspired by all these guys that were showing up on Facebook, and saying, “Hey there is three days left and we have to hit a minimum of 60 shirts or this design won’t get printed,” and that was literally pioneered by Teespring. The reason that they did it that way is because of the print minimums, so they wre only doing self screening and literally it wasn’t worth any one’s time or money to take an order for five t-shirts.

So these sellers had to get a minimum quantity, and so they built their page to basically become a campaign for a certain amount of shirts or a minimum amount of shirts for a limited time. It just had all these nice social signals to it where people kind of feel part of something; it’s similar to kick starter in a way, right?

Steve: Sure, yeah, yeah.

Kevin: You’re part of something bigger than just buying a product, and having the time limited is always nice because that gives the urgency. I love the book the Psychology of Persuasion.

Steve: Yeah, Cialdini.

Kevin: Yeah exactly, it basically in one ecommerce page you hit quite a few where he talks about are the most persuasive things to do for selling. So we’ve said well we can do this type of thing, and what we do is we put the design up, we set a minimum, we set a time limit, and then as we watch for people to take a chance, because literally we might not make it if we don’t hit a minimum, we give them a discount for placing the order during that time period.

Steve: Okay, so literally is a kick starter pretty much?

Kevin: Yeah.

Steve: And this is all hosted on your site?

Kevin: Yes.

Steve: Okay is that a large percentage of your business?

Kevin: No, I mean, I guess it is in terms of the number of products like we have thousands of products but only 20 to 40 on crowd for any given time. So I guess like those 20 to 40 do make up a decent number of sales relative to the size of the catalog entirely.

Steve: How do you decide what to crowd fund?

Kevin: You know it’s really just most new products nowadays. I have learnt that products that I think are awesome aren’t always awesome, and sometimes products that I don’t think are awesome, people think are awesome. So it’s just been a situation where well we put it put there and see how it works, and we really minimize our inventory risk that way.

Steve: Let’s talk about that a little bit, because there is obviously even if you’re just selling transformers, there is a like a bajillion varieties of transformer t-shirts, right? So how do you test to see which ones are going to sell, do you just buy a bunch and then just sell them out there?

Kevin: Yeah, I mean we always have like a hypothesis of we need new transformer shirts, so what character haven’t we not done in a while or what are we missing? And then we make the design, we get it approved and then we put it out there, and then literally the crowd tells us whether it’s good or not.

Steve: How much is like your first run during a test?

Kevin: You mean how many do we have to order or how many do I have to print?

Steve: Yeah how many do you order, so not talking about crowd funding for a second, like let’s say you just put up a shirt on your site, how many do you order for that initial run just for testing purposes?

Kevin: Well just in a more [inaudible 00:21:49] process we do in this crowd funding model, but…

Steve: Oh I see, okay.

Kevin: So if we just list the product without a crowd fund, chances are we can buy it direct to garment and we literally might only buy like 1 or two pieces of each size, and chances are we’ve pre-sold it before we even got it.

Steve: I see okay, so you do it in a way that it’s very little upfront monetary risk?

Kevin: Yeah and we might say, like let’s say we have a design that we sold, I don’t know we might have set a minimum of 30 pieces because we want to at least know that it works and maybe our pre minimum was 144 pieces, but let’s say like it was a home run and we sold 300 of them or 600 of them or something like that.

At that point then now we start thinking, well do we want to get a little more aggressive with how many we order to hit a price discount from our vendor. So it’s literally every single product is a decision unto itself as to how many we’re going to buy.

Steve: What is considered a dud versus a home run?

Kevin: It kind of depends on the property, I guess a dud transformer shirt might be like 20 sales and then a…

Steve: Within like a month you mean or?

Kevin: Yeah, and then a dud of like chips which is a new license one of our vendors just got and we have no idea if we will sell any, like so literally we probably have to sell zero to give up on that entirely. Part of the reason for that too is because we don’t have that fan base to email out and say, “Hey you bought this other chip shirt,” so you have to start from somewhere, so like that’s which we had a bit of the audience over time.

Steve: So yeah, let’s talk about advertising next, because in your case it doesn’t sound too bad to advertise, but in general marketing t-shirts can be really difficult because competition is so tough. So what are the channels that work the best for you?

Kevin: Yeah I mean it can be brutal. Pretty much we spend our money on email marketing, on Google AdWords and Bing to arrest matters as you said and on Facebook.

Steve: Okay, and so can we talk a little about each. So if you are on AdWords, are you doing Google shopping, are you doing just regular AdWords?

Kevin: Yeah so our AdWords are in a bit in a state of flax right now, but I mean shopping is one of the budget.

Steve: Okay and do you – how do you run your shopping campaign? Do you just list all of your products on shopping and then…

Kevin: Yeah, that’s historically – I think we may be pull some stuff based on inventory availability, so that’s one of the problems of stocking products is you might end up with like your most popular sizes out of stock at a point in time. So I think we might pull some stuff out like that, but we’re actually working with a new vendor, and we’re going to try and really tweak the shopping out. I’ll be honest with you we haven’t been doing it very well, and just from looking at the competition they aren’t doing it well either.

Steve: Okay, but it’s mainly been shopping, do you guys do any display ads for Google or?

Kevin: We tried in the past with very limited success.

Steve: Okay, yeah that one tends to be a lot harder. I would think that Facebook would work really well for you, like I would be like your prime customer if I wasn’t married.

Kevin: Oh man the namesake of the blog stop sale, oh my goodness. Yeah Facebook is pretty good for us; we spend quite a bit of effort trying to stay up to date. It literally changes weekly as to what the strategies and tactics are, and I think…

Steve: Can we talk about one that has worked for you?

Kevin: I’m sorry what’s that?

Steve: Can we just talk about a Facebook campaign that has worked for you in the past?

Kevin: Yeah, let me think of one specifically, yeah a specific campaign that has worked for us. Well I guess I can talk about maybe a more general, because that’s kind of our secret sauce is we’re not putting all of our eggs in one basket, where a lot of times it’s spending a few dollars a day advertising like the crowd funds, and just really being – how do I say this, like not passive but the opposite of aggressive with our bidding.

So like we’re going to – and budgeting, so we’re going to say, okay maybe we’re only going to spend 10, 20 bucks a day advertising as our daily budget for a particular product. That way we can – I guess the way we’re doing is we’re not – how am I going to say this, it’s kind of hard to describe I guess.

But by being more conservative with our bids, we’re getting hopefully the crème of the cup, and the most targeted people, because we’re not saying Facebook we want you to spend a whole lot of money. We’re saying, hey we want you spend just a little bit of money, and here is our awesome prospect that we describe for your targeting and everything, and then hopefully they give us the crème of the cup that way.

Steve: So that implies that you are bidding by click then?

Kevin: I usually do CPM a little bit

Steve: Interesting, okay because then you can’t really control your bid, right?

Kevin: Yeah, we control it via the budget more so.

Steve: The budget, okay. And do you typically only run ads for crowd funding campaigns?

Kevin: Yeah, that’s the majority of it just because we do have those social signals on the pages there, but we haven’t tried to do some more collection based ads just because we really want to spread ourselves around the entire catalog as opposed to just in the new products.

Steve: Because I would imagine that’s like a lot of ads that you would have to manage, right?

Kevin: It is yeah, so that’s definitely one of the things that we spend some time on like we think a lot about creating imagery and everything in terms of when we create a product. We’re always creating like a Facebook image at the same time.

Steve: Okay, and then the landing page is just a page to join the crowd funding campaign?

Kevin: Yeah exactly, it’s just a product page, sorry about that phone Steve, that won’t happen again.

Steve: No it’s okay, it’ll get edited out. Interesting, okay so you have a bunch of these campaigns that just lead to a product page. Traditionally the way we have gone on Facebook as well because we take them to like a content landing page, where we either thoroughly describe our value proposition or do a freebie of some sort, but it sounds like you’ve had really good luck sending people directly to a product?

Kevin: Yeah, and sometimes we don’t though, that’s – we kill our crowd funding products pretty frequently, so this is like the – our model is get it out there and see if it works, and then if it doesn’t let’s move on right away to something else. So it allows us to experiment, so yeah I mean there’s times when something just absolutely doesn’t work.

And even though we might say we’re going to crowd fund it for 30 days, like if a couple of days have gone by, we spend a little bit of money on Facebook or we emailed it out to the customer base and they haven’t responded, we’ll just tell the few people that have ordered or maybe even no one has ordered, we’ll just say like, sorry this one had no traction, it was not going to hit the minimum, so we killed it now rather than have this like walking dead products on the site for 30 days.

Steve: Okay, so let’s switch gears, you just mentioned email, do you have like your email list like segmented out by TV shows, and cartoons and what not?

Kevin: Yeah we use Klaviyo. So there is all of our purchase history there, and we actually recently completed uploading old transactions in the Klaviyo. So now we actually can — if you ordered from us three years ago, and you ordered us a Spiderman shirt, then we can specifically target you based on that.

Steve: Okay, and so whenever you release a new shirt let’s say it’s like a Spiderman shirt, you’ll just email everyone who has purchased a Spiderman shirt in the past?

Kevin: Yeah, we try to keep it pretty relevant. We do send out blasts just probably like every other ecommerce company. But those would be less targeted more broad as opposed to like yeah the Spiderman example would be, hey — the subject line would probably say something about Spiderman, and they would specifically be for that product.

Steve: So how much of your email marketing is automated versus broadcast?

Kevin: Well it’s kind of like there is a mix between — so it’s not really broadcast whenever we do the Spiderman one, but it’s not automated either. So it’s like a segmented broadcast I guess you might want to describe it.

Steve: Sure yeah that’s what I meant. So do you send those out — so outside of sending those out when you have a new product, do you have like a monthly broadcast that you do?

Kevin: It’s weekly, we try to do at least one yeah.

Steve: Okay what does one of those email sound like?

Kevin: A lot of times they are based on a forum and it just looks the same. And it’s just an overview of all of the crowd funds that we’ve released. But then every once in a while if we have a special offer or a discount that’s what we’ll post, but basically we don’t email out like, hey don’t forget about us random generic emails. There is always some kind of offer in the email.

Steve: Okay interesting, so most of your campaigns are not automated then? Like when someone purchases like a he-men t-shirt, they don’t have like a he-men specific sequence?

Kevin: No, that’s really good idea though.

Steve: Oh gosh that’s interesting, yeah true it is.

Kevin: It’s awesome, it would take us forever to build, but I can see some value there.

Steve: Or like your best ones like your Star Wars shirts or something like that. Yeah people would eat that stuff up I would think. So do you do any Pinterest work?

Kevin: We do, and I have never been able to get Pinterest to work consistently. I have had occasional blips of success where I get excited.

Steve: Okay.

Kevin: I have never been able to keep it running.

Steve: Okay. So I was just — part of what I do whenever I interview someone is I do the ACM [ph] rush, and I go through their site and see what’s going on. And you guys rank really well in Google for a lot of really hard keyword terms which is pretty amazing. And I know you guys have been around for a long time, but is there anything specific that you do to rank for these keywords?

Kevin: Yeah, I think it all started out way back when I lost with Frontpage. And…

Steve: So is that the tip for everyone use Frontpage?

Kevin: Well maybe the tip is I have no idea what you are doing with the database, because I didn’t. So my page is entirely folder based, and it was entirely hand generated html. And well with data Frontpage of course. But so what I had to do was I had to categorize these pages, so I knew how to find them easily. So I ended up creating like a folder in Frontpage that was 80s cartoons.

And then where do I put the transformer shirts, so I put the transformers page and I used cartoon folder. And then on the transformers page is where all these specific transformer shirts end up, but what it ended up was human readable file structure. And I think that was probably one of the biggest things is that the file structure look great, whereas everyone else that was trying to have like a database driven site, their URLs just look like the gobbledygook.

And obviously nowadays no one looks like that anymore right, like that’s in the past. But I just feel like by having such a strong start at it, we’ve just managed to continue on the same pace. And I’ll be honest with you I don’t do a leak of what most people might call SEO work. Like I don’t pay anyone to build links, I don’t do outreach for links.

And in fact I get really confused when I even think about doing that kind of stuff, because when I think of where can I get a link I can’t even think about of a place worthwhile because most of the blogs like their links disappear over time. And like everything is on social media nowadays.

Steve: I’m going to have to disagree with you there Kevin, because I was looking at your link profile. It seems like you guys have done some contests that have gotten some pretty good links, do you guys still do those?

Kevin: No, when was that?

Steve: I don’t know, I was just looking at it. There were some really high domain strength sites that were linking to your site, because you had done some sort of giveaway or something like that.

Kevin: It’s possible that I mean that might have been something way back when – but I’ll be honest I don’t think it moved the needle.

Steve: Okay and you haven’t done any of that stuff since?

Kevin: No, contests just get your people who want to join contests.

Steve: No but there was the link from that site that was pretty…

Kevin: Yeah I get what you’re saying; yeah there is some value there.

Steve: So if you were to — so of all those traffic sources that we just talked about, what would you say would be your top source, would it be SEO?

Kevin: Yeah, I mean that’s definitely the majority of it. And that’s a little confusing now since Google hasn’t shared as many other keywords. And since we do have quite a bit of brand build up over time, so there are a lot people that literally just use the URL part of typing the 80stees, and is that technically a search? I guess so, but it’s really then just trying to get to us.

Steve: Yeah I mean you guys have really established your brand at this point. From what it looks like you do get a lot of typing traffic for 80stees which is pretty awesome?

Kevin: Yes.

Steve: How do you deal with like inventory and all the sizes? Like you have like eight sizes, the same type for every shirt, it sounds like a nightmare.

Kevin: It is a nightmare. Yes straight up it is a nightmare, and that’s something that we are always working on trying to figure out how to do it better. The crowd funds are something that we try and kind of project like if during the crowd fund we sold a certain ratio of smalls, mediums, large, extra large, we are probably just try and project that same ratio into the future when we do place a print around the order. But you always end up having some kind of other stocks, so it’s just impossible to avoid if you keep stock.

Steve: So how do you manage that? Do you have any special strategies for getting rid of the sizes that are unwanted and that sort of thing or?

Kevin: We’re not too great at that, no actually. What we’ve been doing lately is if the product is something we like we will actually launch a re-crowd fund of it. So we might have say smalls and five XL on stock or whatever. And but we’ll still launch a crowd fund to hit a goal number which will allow us to sell all the sizes as well as give us a nice head start on our primal run.

Steve: Interesting okay. Yeah that just sounds like it can get out of hand real quick unless you have like a really good backend to maintain inventory and projections and that sort of thing. Do you guys use any software, or is it all homegrown?

Kevin: We are using an auto management system that I would not recommend to anyone I suppose, so I won’t mention it. But I think I would probably say the same thing about most auto management systems from what I have heard in different forums and stuff. But yeah we do have a lot of homegrown software that we’ve built, and it’s constantly in development and trying to make our job easier.

Steve: Okay and in terms of vendors like let’s say someone else wants to sell t-shirts and not necessarily 80stees. Like where do you start when you want to find someone to sell your t-shirts?

Kevin: Yeah I mean if you are talking like something that basically you are saying like you want to be a buyer of other people’s products and not do your own development at all, probably go to like Magic Apparel Trade Show in Las Vegas.

Steve: Interesting okay. Like if I wanted to sell like NCWA T-shirts, is that like a huge can of worms?

Kevin: You just have to find the right vendor that will work with you. The hard thing is going to be that like with sports stuff especially it’s all channel separated, so like you probably can’t just go buy NFL shirts if you want to sell them. You might have to have like a shoes store or some — there is going to be some level of authentic business that you already have in order for someone to even sell to you.

Steve: Okay I see, and so like the larger the organization the more red tape you have to go through?

Kevin: Yeah and really what it comes down to is the more the higher percentage of revenue that a business makes from apparel or licensed products in general the tougher it’s going to be.

Steve: Okay, do you find yourself moving more towards like the print on demand model where you don’t have to carry the inventory, you just go to the vendor and say, I want a print like five shirts, so whenever you make a sale?

Kevin: Yeah that’s — a lot of our vendors are going that route. So we are trying to work with them and do that more and more. The great thing about that model is there are no inventory. The terrible thing about that model it’s really not scalable, and it stinks at Christmas time, right? Because it’s great to say well I don’t have any inventory, but then on December 15th you have to stop taking orders, because you’ve literally exhausted your capability just shipping time.

Whereas on December I’m not sure what day Christmas is this year, but like the last shipping day possible to go next day before Christmas most of my inventory would be available for sale, and could get there.

Steve: Is there any quality difference between silk screen versus the printing — the different printing methods?

Kevin: Yeah for sure. Silk screen is definitely the best. But the other print methods do have some advantages in terms of like the color blending and everything you can do is a lot easier with that model, but those prints tend not to last as well. One thing you can — if you hit the right design though you could purposefully just dress it. So if it washes out a little bit then it might actually even be okay.

Steve: So do people copy your stuff?

Kevin: Yeah, I mean it definitely happens on – so Bootleggers do it. They’ll sell on Teespring, it happens on Amazon, there is I’m sure you’ve heard of all the Chinese counterfeiters on Amazon, and we are definitely starting…

Steve: Start with Chinese people, yeah. So but well can you do anything about it?

Kevin: On Amazon I suppose you could, but it’s like Wykamol, it would be a pointless game to play. And if it’s something that we’ve made for one of our licenses we will ask them to send us cease and desist, but it’s even a little bit tricky for us, because we can come up with our own unique transformers design, but we don’t actually own the rights, so it’s not like I can really police that I have to get Hasbro to do that for us.

Steve: Okay, I’m just curious because it seems like I can go on your site and I’ll see a shirt for like 18 bucks, but then hey I’m walking through the mall and I’ll see something for like 10 bucks right. And so do you even bother trying to fight those things, or you just run your business?

Kevin: Yeah, I just pretty much run the business. We are such a small cog in this machine that we don’t have the resources to do that.

Steve: Okay, and then this brand that you’ve built up, is there anything special that you’ve done over the years to instill the fact that 80stees is the place that you need to go for t-shirts?

Kevin: I mean I think it’s really just the concentrated collection of it. I mean you can find a lot of products that we sell other places like Amazon or Target or whatever, but you are not going to find as many at a physical store for sure. Like as many wrestler wrestling shirts or transformer shirts. And if you go on Amazon you might find that, but they are just not concentrating at that niche level like we are. So it would be a little bit harder to navigate at the very least.

Steve: Actually that was my next question; do you guys sell on Amazon at all?

Kevin: We do sell a little bit on Amazon; it’s not a focal point for us due to all the counterfeiters who will come from an unnamed country.

Steve: Plus they charge a lot of fees, right? Is it generally pretty profitable to be selling on Amazon, like if you could, let’s say there were no copy cats?

Kevin: Yes, so we do merchant fulfilled to avoid the FBA fee as well as tax implications, but that 15% definitely takes a huge cut.

Steve: Oh yeah for sure okay. So yeah, so it doesn’t sound like Amazon would be that great of a channel regardless, because of just the nature of how many fees that they take.

Kevin: Yeah, I have competitors though that I mean they do all the Amazon things that you need to do to be successful. They are investigating which products have the best seller ranks and they are doing the FBA. And I feel like they are spending $10 in inventory to make a dollar after the end of the transaction. But I guess they are doing enough transactions that they think it’s worthwhile and since the FBA model have low overhead they can justify that. So I wouldn’t say it’s impossible to make it work, because these companies probably would have gone out of business by now.

Steve: Sure, sure.

Kevin: But it’s just not for us.

Steve: Is there room for creativity in the t-shirts that you have? Like are you allowed to modify designs for your t-shirts? Like can I stick like [inaudible 00:44:49] on a t-shirt and make him say something funny?

Kevin: Yeah to an extent. So we can be creative, and then we have to get it approved. So it’s — we do run in some of that where we think we have an awesome idea, and it just doesn’t fit like the brand. They are like well this is — they are literally called like off brand, this is off the brand message, so we can’t do this.

Steve: Okay, what’s funny about this is I get a lot of emails from people who actually want to sell t-shirts or some sort of printed shirt. Do you have any just advice for those people on just getting started in the t-shirt business?

Kevin: Just getting started. I mean honestly if I wasn’t — if I didn’t already have the resources and stuff that I have, I would pick a different industry, and apply my knowledge there. It just so happens that we are making it work because of the head start. But yeah I would say the thing to do would be to have a [inaudible 00:45:48] of your brand as opposed to like be the prevue of funny graphics shirts right? Because that’s just — there is a million of them.

Steve: That sounds like a nightmare.

Kevin: Yeah exactly.

Steve: I mean I like your niche because 80stees, I actually did some searches for 80stees on Google just to see what the other — what your competition was like. And it seems like you have the largest collection, from what I could tell at least.

Kevin: Yeah I mean we definitely try to be that way too, and we literally look at it like we have to have coverage of a specific category. So like with super Mario we’ve got to have the super Mario two and the super Mario three shirts, because those were also released in the 80s that type of thing.

Steve: Yeah for sure. Cool man, well that’s really interesting. I always wonder how business owners in pretty competitive industries manage to make it work. And it sounds like you found like a really good niche that’s really profitable that you’ve made it work. So thanks for your insights Kev. If anyone can find you who wants to ask you any more questions about the t-shirt business, or if they want to buy some 80stees, where can they find you?

Kevin: Well the domain starts at 80stees for the actual site. And then I’m going to have a site up at Kevinstecko.com if anyone wants to just personally get in touch with me.

Steve: Cool, I actually did not know about that site, I’ll have to check it out.

Kevin: It doesn’t exist as of the time we are talking, but it will.

Steve: Okay all right, it will be up by the time I publish this?

Kevin: Yes.

Steve: Cool well thanks Kev, thanks for coming to the show man, I really appreciate it.

Kevin: All right man, thanks Steve, take care, bye, bye.

Steve: All right, take care.

Hope you enjoyed that episode. If you remember I had another guest on the show Derek Pankaew to talk about his t-shirt business, and it’s just interesting to compare Kevin stories with his, because they operate completely differently.

For more information about this episode, go to mywifequitherjob.com/episode139. Once again I want to thank sitelock.com for sponsoring this episode. If you have an e-commerce store, go there right now, and find out how long it takes to load. Does it take more than five seconds? If so did you know that 60% of consumers only wait up to five seconds before bouncing from a site, never making a purchase?

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And once again if you are interested in starting your own online business head on over to mywifequitherjob.com, sign up for my free six day mini course on how to start a profitable online store. Sign up right there on the front page, and I’ll send you the course via email immediately. Thanks for listening

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequiteherjob.com

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138: How To Make 6 Figures And 30K Email Subs From A Virtual Summit With Navid Moazzez

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How To Make 6 Figures And 30K Email Subs From A Virtual Summit With Navid Moazzez

Today I’m thrilled to have Navid Moazzez on the show. Navid is someone who randomly reached out to me to take part in one of his virtual summits. And because we have a ton of mutual friends like Natalie Sisson, Grant Baldwin, Jd Roth among others, we started chatting.

That’s when I was introduced to the amazing world of virtual summits. Navid is a virtual summit expert and he makes a living putting on online conferences.
If you’ve been following me online, you probably know that I had my first live event in May called the Sellers Summit which was a huge success.

But after talking with Navid, he has really opened my eyes to the world of virtual events and hopefully he’ll blow your mind as well.

What You’ll Learn

  • How to get speakers to agree to take part in a virtual event
  • How to get people to attend
  • How to make money off of a virtual summit
  • The exact flow from start to finish for one of his events.

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Transcript

Steve: Welcome to the My Wife Quit her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not with their businesses.

I’m Steve Chou, and today we are talking with Navid Moazzez, the founder of navidmoazzez.com and an expert on virtual summits. Now in this episode you’ll learn the keys to running a successful online conference, and how to leverage a virtual summit to blow up your email subscribers while earning lots of money at the same time.
Now before we begin I want to give a shout out to sitelock.com for being a sponsor of the show, and as an ecommerce business owner your website is your business. But very few people actually protect their websites, and on average it takes 197 days for retailers to detect a data breach. Yes, that’s 197 days before you realize that your customer’s data has been stolen.

Now you can prevent data breaches with sitelock website security. Site lock offers a comprehensive suite of cloud based security solutions for ecommerce of all sizes and budgets. From malware scanning and removal to an industry leading web application firewall, site lock has got you and your customers covered. So visit sitelock.com/mywifequitherjob for more information and get your first three months free. Once again that’s sitelock.com/mywifequitherjob.
And if you want to learn how to start your own online business be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to Mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email. Now onto the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.
Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m thrilled to have Navid Moazzez on the show. Now Navid is someone who randomly reached out to me to take part in one of his virtual summits. And because we have a ton of mutual friends like Natalie, Susan, Glen Baldwin, J. Roth among others who I have already had in my podcast we actually started chatting.

And that’s when I was introduced to the amazing world of virtual summits. Now Navid is a virtual summit expert, and he makes a living putting on online conferences. And if you’ve been following me online, you probably know that I had my first live event in May of this year called the Sellers Summit which was a big success.

But after talking with Navid he has really opened my eyes to the world of virtual events, and hopefully he’ll blow your mind as well. And with that welcome to the show Navid, how are you doing today man?

Navid: Thanks so much for having me, it’s a pleasure to be on.

Steve: Yeah so give us the quick background about just your online endeavors, and then how you got started with online summits in the first place.

Navid: Yeah, so it kind of kicked off in 2013 around mid June, and I started actually interviewing people. And the first interview I ever done was with Pat Flynn, I had no experience going into it. But one thing led to another, started interviewing more people and as you hear I’m not native US citizen, or native English speaker.

So what I did was to actually interview people, it felt much better to just learn how to put together these interviews, and also pretty much the document that on my blog in the very beginning like my entrepreneurial journey pretty much. And that led to me putting on a podcast kind of it because I heard a lot of people doing this. John Dumas had a lot of success with Entrepreneurial on Fire around that time. And then I — it took me a little while to do this, but in 2014 I launched Lifestyle Architects Show.

And it was good in the beginning, it built some great relationships and also then it led me to pretty much stumbling across virtual summits. But it was because I didn’t grow my email list that much from my podcast, and I didn’t really generate that much money in the first place from this, but it was as I said good for relationship building. But then I hosted my virtual summit, I just learned a lot about the process of putting one together.

I had no experience with it, but it took me a few months to when I somewhat crossed the summits first with health summits kind of that’s how I got into it, because they were actually making a lot of money, but also growing their email list at the same time and that was very compelling to me. And then I learned about it, and then in November of 2014, not forgetting my first virtual summit, the branding summit more or less because I wanted to position myself as a personal branding expert.

But that I can talk a little bit about it, it was quite broad, if I would have done it over today; I would have probably gone way more niche than I did there. But the essence of it was that I interviewed some people pretty much like my podcast, and then put together this event and people could sign up for free, but then in the backend I sold them all access pass.

That’s how it was in the beginning and I got some great results even from this first one. Before the summit I only had from about 18 months of blogging and podcasting, I had a round 900 to 1000 subscribers. And they were fairly engaged, but then with the virtual summits it took things to a whole another level.

I grew my list, the first one there about 3000 subscribers, and I generated $20,000 in profit, which was just mind blowing to me, I had never had that success ever before. And then it enabled me to quit my job and move abroad, that was late 2014. And then moving into 2015 I got to leave this lifestyle I’m living now, and at the time of this recording I live in Cancun, but I have lived in Barcelona and some other places. I have been in the US, that’s how I got connected more with Natalie as well lived in San Diego for a little while. So that’s how I got started.

Steve: So when you first started interviewing let’s say Pat Flynn, you said that was your first interview. Did you have like a business at that point or were you just designed to put together a podcast interviewing people?

Navid: Yeah, it was not the best, I can I mean kind of in my mind I thought okay I’m having a business, I told people I’m starting this business. I guess more of a side project because I had a part time day job. I was working part time at the bank, I also had — I was in law school actually, but I then a few months after I started my site I dropped out.

And I didn’t have nay success with my business really at that time more than building relationships and making an affiliate sale here and there in 2013. But I still decided to drop out and just have my part time job at a bank, and that just paid the bills, it was not anything fancy. And then I took it from there pretty much, that’s what I did in the early days.

Steve: So if we step back a little bit, given that you didn’t have any prior success or a really large audience, how did you convince someone like Pat for example to go on your show?

Navid: Yeah, in the beginning actually it was I guess I looked for an opportunity there, I think that’s a good way to see it. He actually needed some people to interview him. He actually invited people from his audience to interview him for — yeah his book coming out, his first book Let Go. And he invited people, and I just — I didn’t think he would get back to me. I just thought he would probably get a lot of people reaching out to him.

And I’m sure he did, but he still accepted my invitation, I just was very genuine with my approach. I told him I have been following him for a while. I’m sure he recognized my name since I had been commenting quite a bit on his blog too to just show that I actually read his stuff. I knew what it was all about.

And then I interviewed him, I had no experience. I was like kind of put together the interview. I probably should have done some practice rounds before, but I hadn’t. So it was just like going into it, and I guess that was a good thing that I did. I got just a head start, I didn’t even have my site before I reached out to him. So it was he put the pressure on me to actually launch, because I had been procrastinating for quite a while before that.

Steve: So what are some of the benefits of putting on an online event as opposed to a live event? Like what are some of the pros and cons? Because I have done a live event now, and I’m just curious did it ever cross your mind to do live as opposed to virtual?

Navid: Not at that stage, now I’m more and more. I mean I have actually had a mastermind and stuff like that. So I see the power of live events too, you can connect in person, all that kind of stuff. So it’s very good, but in terms of like the business growth and growing your email list, I think a live event would be very hard to see the same results there for growing your list.

I mean that’s one of the biggest benefits I think of why you should even consider hosting a virtual summit. You can be at the very, very early stage of your business, or you can even be more seasoned. I mean I have helped people starting from scratch grow their email list to a thousand or a few thousand people, where even people like Henry Both takes his — he had 12,000 subscribers when he came to me. And then from his summit he got over 30,000 opt-ins.

Steve: It’s crazy.

Navid: So yeah so it’s like email list growth is one, but also like you can create — I mean the problem is if you are starting out you don’t have a product, but from this virtual summit you can actually bundle up the recordings with some irresistible bonuses and sell that. So that’s like creating a product pretty fast without you doing the heavy lifting. Well you have to put together the event, but you just have to pull out great information from your speakers.

Like when I interviewed you for my upcoming summit listing building school. I mean we just had a great conversation, I just asked whatever I wanted to know for the summit, and that’s what you have to do for it. And then you bundle this up, yes people can you watch it for free during the summit for a limited time, typically like 48 to 72 hours. But then when this time is up you still sell the recordings and you can also — what I do even when they signup they still on this thank you page right after they signup they have the opportunity to purchase right away.

So you actually generate money before the summit even started which is pretty cool. So I really like that too about summits, also the relationship building I guess that goes both hands. When you are doing a live event versus a summit you can still build the relationships. But I guess you can do it on a bigger scale with a virtual summit if you have let’s say 20 to 30 speakers for your first one, and also like the affiliate partnerships you build.

I saw firsthand what happened when Chandler put together his summit. He had some decent launches before, I mean they were not bad. But then with the summit he actually got more people entered word to promote him because it’s easier at least from my experience to get people to promote three events like a virtual summit, than it is for someone else to promote your course, that’s a big benefit I have seen.

I see this first hand now when I’m reaching out to people, it would probably be harder for me to get someone to promote my Virtual Summit Mastery program rather than promoting my upcoming summit list building school. It’s just what I found I have way more partners onboard for this summit than I have for my course.

Steve: I guess one question that I have is let’s say you are like a nobody in the beginning, right? And you want to put together a virtual event, like how do you get speakers to agree to take part?

Navid: Yeah that’s a great question. I mean you have to think a little bit from their perspective, like what do they really want. Of course it’s harder to make it a really big way and you cannot say hey I’m going to promote you to my email list and all that. That’s a little bit harder. But if you have an authentic approach and like you are reaching out to them, like you are building even a relationship beforehand I always say build authentic powerful relationships before you actually need them.

I think that’s something I have done from the very beginning, so when I actually came to the branding summit I didn’t have that much experience leading up to it or that much of success. But then a lot of people like Natalie Sisson, like Selena Soo and a lot of other people, they lined up to promote me, because I’ve added so much value to them beforehand so….

Steve: So give me an example of — so how did you approach both of these people in the beginning?

Navid: I mean for example with Selena Soo it’s interesting because I reached out to her, I think it was in 2013, I wanted to interview her. Actually she said no a few times there, I reached out, followed up again, follow up again I believe she didn’t have time for some reason, she was doing other things. And then I got her onboard for an expert run up post, that’s kind of the first time actually she said yes.

I think I got an introduction there too. And then one thing led to another and I guess it wasn’t around a few months out for my summit she saw what I was putting together. And then she first said she has to check her schedule. And then she finally said yes, so I guess patient, a little persistence followed up and then she said yes eventually, because I added value to her, I like reached out to her, I sent quite a bit of traffic her way this expert run up post I put together.

Same with Natalie, I actually took her 30 day blog challenge on very early stages and shared my results with that, and always that was a good pretty much case study for her. A case study is also a great way to build a relationship with someone that you think it very close almost like a friend if you are building rela — and even if it’s a more of a busy person like Ramit Sethi you can build a relationship if you are like a case study for whatever they are doing, because all influencers are out there they need more case studies for whatever they are teaching, whatever they are selling, right?

So that’s one way I did it quite a lot. And also just finding ways to add value wherever I could pretty much, that’s what I did. And obviously some of the people I reached out to they were also cold, but when you have some people may be getting some introductions for a summit, then you start to snowball, because then you see a friend on the list there. And then you say yes eventually to more and more people getting on there. So that’s kind of how I started, and then eventually for this first summit I got 88 speakers onboard, it was…

Steve: That’s crazy okay. Yes so I noticed like in the email that you sent to me you said these people had already agreed to do it. And then I noticed some familiar names that I knew personally. And so that influenced me to agree to it as well. So it sounds like you are really good at social engineering, have you met any of these people in person before asking them to speak?

Navid: Yeah, a few let me see who I – Yeah Selina Soo I have met in person. I forgot exactly how to reference, but there is a few — most actually I haven’t, I’m pretty sure I haven’t like for example Ryan Levesque, I haven’t met him in person. Ryan Lee actually I met him in person once. I think that helped a little bit to get him on board, but then actually he followed me a little bit even though from a far kind of, because he was in the very beginning doing a lot of virtual summits, and now he is endorsing what I’m doing which is pretty cool.

So he is in my community, he is helping out there from time to time. So it’s been good to get his endorsement, also it was easier to get him on board this way. And also it helps I guess to get other people on board by having such strong names, right?

What I advice to new people is just something I call the ladder strategy. Start with people you know first, or if you have someone in your network that knows someone, get introduction, that’s always the easiest way. And then work yourself up this ladder and then eventually you can get to even bigger and bigger and bigger names.

And it’s not always — you don’t need that many big names if you are just starting out. Actually it’s sometimes better to have some B&C. Let’s just kind of it’s not really that just like a ranking among them, but it’s just like it’s pretty clear, it’s the A list is everyone knows someone in your industry. So they might be harder to get, they might only need two, three maybe four of those, and they will be a big driver for your summit.

But the B&C list is they are more likely to share your summit with their audience because they are not as busy, like an A list is you might you want to build a relationship for years sometimes. And sometimes they will share it, it just depends on how much they connect with your message, or how much of a good fit this is to their audience. And obviously their busy schedule, some of them schedule their promos like six to 12 months in advance.

Steve: Okay, and so what are the benefits to the speakers for example?

Navid: Yeah, so one thing I will do a lot of the times at least, they can for example share a freebie on the summits, that could be a one way if they are not selling something…

Steve: Like a lead magnet you mean?

Navid: Yeah, pretty much a lead magnet so they can grow their list from it. I’ve seen depending on obviously how popular the summit is and also how well this lead magnet is featured. Like that’s also good for a summit host to actually make this lead magnet stand out a little bit, so they can actually — people can actually click on it and make sure the links works.

I’ve seen summits where actually my link didn’t work to my lead magnet, and that’s — then people can’t even check out my website which kind of sucks. But so that’s one way to just do that, and I’ve seen summits where they also let the speaker sell. Like Morrison [inaudible 00:17:16] had summits where they had like a presentation, and then at the end they had a really great offer so they could sell there. And that works also well, obviously that’s typically works best for live summits though.

What I recommended in the very beginning is to actually to be pre recorded mixed in with some live elements like maybe a kick off hangout where you do a live session. And then maybe a closing webinar or keynote where you can maybe summarize the summit or sell even a course which we can get into, but that’s one benefit.

Also another thing I do for my upcoming summit, if it’s a good fit then I pretty much talk to the speakers. I get on a pre call with them, I think that’s pretty much would be the two just to see if it was a good fit, or we could talk about, but also if it sounds — because if it’s a really good fit, then I try to do some training afterwards whenever it works with my schedule and their schedule.

And that’s also a pretty good benefit to them if I can promote something to my entire audience afterwards. That’s how I got some of the bigger names to much agree to promote the summit. So that’s…

Steve: If you have no audience to begin with like how do you convince the speaker that — yeah?

Navid: That’s a good tip, but I think what you can do is to actually say I’m growing my audience with this summit, and then I would be happy to promote whatever you are selling afterwards. And obviously you have to make sure that it’s a good fit, so you don’t do that to everyone. But if it’s a really good fit and you really want that speaker, I mean if you are growing your email list with thousands or few thousands of people from this per summit, I mean you have an audience to promote this influencer too.

And I’m sure they will be happy for you to promote the launch or maybe a webinar to your audience, and that’s something that can work I think really, really well when you are just starting out. In some cases some influencers what I found they also want to give back a lot of the times like Ryan Fishkin, I had him on for the branding summit. And he said like if he doesn’t say yes to someone just starting out in some cases, there might not be another moss.com.

So he actually wants to give. Some influencers they are more strict with that, but he obviously has a multiple of eight figure business, and he says yes to a lot of people which I really respect, because he is the one who started out, so he wants top give back. And that’s why I think it’s just good to reach out in a very authentic way.

Obviously don’t just reach out to everyone. Don’t mass email everyone like you just got to make sure that it’s very authentic. And something can work well and my student got Seth Godin on this way. And she sent video invitations, and she made sure she read pretty much every set of books. And it was just in a very good way.

Seth he says no to pretty much all summits, at least from what I’ve heard of. He even said no to being on my podcast in the beginning, so I know that for a fact, and then I think her approach was just good. He could I guess feel that she read his books and all that stuff, I think that matters a lot, and then he said yes even though maybe he didn’t get too much out of being on her summit, but still he said yes because of her approach which really matters.

Steve: Okay, so how do you get people to attend then?

Navid: Yeah, so the big thing there is actually to — especially if you are starting out, you don’t have a big budget for Facebook ads and all that kind of stuff is to get some of your speakers to promote to their audience. And I think that’s not the first thing you should think about, the first thing you should think about is to have this — make them feel that this summit is really good, like think about the design, it is going to be killer, you know think about the speakers you have on there.

Also think about how you are presenting them on the summit, how the ink you use, or the presentations on the summit. They are going to be really good. I think if the sessions are great, the speakers are more likely to share it, because they are doing pretty much the audience a disservice by not sharing it.

I’ve had many, many examples like that when a big name, he said, “I can’t promote this time.” And then after our session he is just, ‘Hey is there a way I could share this to my audience?” I mean that was after the interview, I didn’t really push him, I don’t really require speakers to promote to their audience. I actually make it pretty low key for them to decide if it’s a good fit for their audience or not.

I usually want the speakers on there because I mean I’m curious to know more about whatever they have to say on the topic not because they have a big audience. That’s pretty much how a lot of people approach it though. They have a little speaker contract, and a lot of fine line in that contract where it says, “Hey you got to promote to your audience in order to be part of it. You need a minimum of 5,000 subscribers to participate.” I mean I never do that; none of my students do it either.

Steve: That would be a big turn off actually.

Navid: Yeah, and I think even speaker contracts, I mean there is a big debate on this, like you know you own your content or not. I mean I’ve never had a problem with this, and I don’t really put together speaker contracts anymore. I don’t like it, and I don’t even sign them anymore. I spoke to Ryan Lee about this recently. He says they are kind of dead.

I guess it depends on the industry, if you are like in a more professional field like you know maybe a lawyer or attorney putting together a summit, yeah you might want to think about this, but I find at least in my industry it is more about the relationship rather than making it so transactional, so you have to sign a lot of contracts.

I pretty much treat it more like a podcast interview. That’s how I think I make the speakers feel more welcome to be part of it and not just being part of something bigger pretty much, so I think that works well.

Steve: When you send out the virtual summit stuff and get people to attend, it is free right?

Navid: Yup, it’s totally free to attend, and that’s kind of — we have a landing page. We have some information there on the landing page, and then you would have a thank you page, and that’s when they actually is thank them for signing up obviously, and then we have a page there with they can purchase the recordings. They can also purchase there some of the system bonuses.

I think where people make a mistake these days is to not have a strong enough offer. I mean already they positioned their summit completely the wrong way. I think that’s when it doesn’t convert, because we’ve seen conversions anywhere from 5, 6% in online marketing space up to even 20% sometimes for the all access pass, and that’s from people who sign up for free.

Let’s say we have 30,000 people sign up for the summit, that would mean if you have a 6% conversion rate, 1000, 800 people will buy, I think. If I’m not, my math is not bad there, I think that’s correct, and so yeah, so that’s pretty good conversion rate. You probably wouldn’t get that from a regular launch for just if you have 30,000 people on your list, it would be very high to get 6% to purchase right, so …

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Can we back up a little bit. So you structured so that the content is free, so what are they paying for exactly?

Navid: Yeah so they pay for like getting access, this is limited time. If you want own the entire package with recordings, audios, maybe transcripts, and transcripts is optional. I didn’t do that for my first summit, but it could be a good idea if you have some extra money to put on transcripts. Then you have also some other bonuses, let’s say from speakers, let’s say a Facebook group can be other things too, I mean I have of courses even from some speakers.

I even trade, I had like my old summit, I spoke to one of my speakers, and she had of course a lead magnets. Like okay, you can use my branding summit for your brand. She has like a branding course, it was a perfect fit, and she just gave me her lead magnets course which is a few hundred dollar value. My summit is a few hundred dollar value, was a great fit, and then I could include into her course for my summit, so it is a good swap if you can do that, that works pretty well.

Even some — I was on Teachable summit, they actually got speakers to just contribute. I didn’t really get anything out of it, I mean at least from what I can see. I mean I got some conditions from the sales I brought in, but other than that I just offered pretty much my course for free on their summit, so I guess that works sometimes to just ask someone, and they might do it.

If it’s a good fit, maybe they have something they are not really actively promoting so much out there. I wouldn’t do it with a flagship course though, but I have definitely got speakers to just contribute their courses and other things, books, and different things they have to offer.

Steve: Interesting, so the people who attend, they get it free, but they have to watch live right?

Navid: Yeah doing so, exactly, so let’s say we start promoting it to your own list, you will start 3 to 4 weeks out just to, if you are doing Facebook ads or you know letting your list know a little bit earlier, that’s always nice, I tend to do that, and then with affiliates and other partners I ask like speakers, then I start around 2 weeks out. That’s what I’m doing for my upcoming summit.

I started like 2 weeks out to promote it, and then it ran since you have like running the affiliate promotion, and then people are going to sign up. If it is a pre recorded summit they can get access. If someone purchased this even on the thank you page before it even started, they can get access to everything that’s available currently in a membership area, so that’s how we do.

It is like a course in membership area and then when the summit starts, yes then it starts you can maybe have a chat or Facebook comments below the pre recording, introduce that. That works really well, we have seen that. My next summit is actually a hybrid; I’m doing live sessions plus a lot of some pre recording sessions as well, so that’s how I’m doing it a little bit differently.

Steve: The money that you make is by selling the all access pass, is that correct?

Navid: Yes, that’s one way to make money. I have a student who made like worth $20,000 in sponsorship. It’s like he made half sponsorship in addition to everything else he made, yeah like I think 70,000 from all access pass, and $20,000 in sponsors.

He was in the insurance space, he had no email list when he started out, grew his email list by 3,500 people, and then from the all access pass I think he got like 460 plus sales or so which comes out through on $70,000 and then 20,000 was in sponsorships, and some other things, but he was in the insurance space, and they tend to pay quite good money.

Also another thing there he was the first to market through the summit, so for professionals it is a fantastic opportunity to do summits like I guess real estate agents, like even attorneys, and different things like that. They can do summits, and just crush it now because a lot of people they are not doing it.

Steve: Okay, so let’s — I’m sure some of the listeners out there aren’t really that familiar with like the flow of virtual events, so personally I’ve never actually attended one. So can we just walk through the exact flow from start to finish for like your last event for example?

Navid: Yeah totally, so I can just tell you what happens, so let’s say you would promote this to your audience, and then your audience they sign up. First they go to a landing page where they can sign up. There is an opt-in form there, they sign up, go to a thank you page, and they are there, they have the opportunity to purchase. They can also pretty much say, “Okay I don’t want to purchase right now.”

They have the option to actually watch the summit sessions live when they go live during the summit, but then after they sign up they get a welcome email. That’s the welcome email thanking them for signing up, and they have I guess you’ll have some information there, maybe the sessions page.

You also have – you’ll have another link to the all access pass, maybe having some reasons why they should even consider it. I mean they can watch it right now, that’s a big benefit if you are doing pre recorded, so that’s how it starts. Then you might have a sequence, a little sequence when they have signed up, you know having a few emails there, how can they get the most out of this summit.

That would be one email, maybe if you have some surprise gift you can share that with them. That’s always good, and also even when they sign up you can also have maybe an e-book or something you want to give them just for signing up. That also tends to do pretty well, so they get something for signing up initially. That tends to convert a little bit better from what we have seen, and then …

Steve: Just curious before we go on, what is the advantage of pre recorded versus live, like why even bother doing the live stuff?

Navid: Yeah, I mean it depends I guess, if you have done really well with pre recorded once for Chandler for example. We did pre-record for the self publish success summit. I mean we had a live kick off hangout like the initial like the Sunday before we start interviews and all that on a Monday, we had like a kick off, and we tend to get a lot of sales there. That’s where we mix in some live elements like a kick off, and then we had at the end like a live element.

That’s it, other than that everything else was pre recorded, and we did around 30,000 opt-ins and $370,000 in revenue. That was last year. I think this year he did even more following the same system, so that works really well, but I think with the live one it just — I think it creates — people can like ask questions right there. It’s very powerful, and if you let’s say you want to have some kind of offer or something else on the session, or like do something fast action bonus, it just works better with live.

I was still very compelled when Teachable did theirs live, and I saw a little bit what they were doing. They did like massive classes, like presentations, like webinars pretty much, but tailored to their summit. They also have some panels, so people can come in there and ask questions live, and I think I really like it.

It is just a little bit more time consuming to do it this way because you have to also plan all the sessions. It’s a little bit tricky to make sure, okay can this person do it this state, and some people might change it as you go, so that’s what I’m seeing now a little bit, but I really enjoy it. I think I have even more to report after I have done my first one. I did it for a client not too long ago for Jesse Klinger, and he worked really well.

People can like come in there, they could ask questions in the chat, and they really enjoyed it, so both can work. It just depends on your preference, but if you are signing out, definitely do pre recorded first with you know just one or 2 live elements, and then that’s about it. You can still do pretty well there.

Steve: In terms of the live stuff, what platform do you use? Is it just Google hangouts or?

Navid: For me I like Google hangouts, it works for the most part at least. I haven’t had any real hiccups, some people have more than I do I guess, but it works great, it’s free which I like, so you can pretty much embed that on a page to codes for the YouTube video. You just embed it on a page and that’s about it. You can stream it; you can have a chat below like chat wing or something like that, it works great.

Steve: In terms of the membership part, like obviously all this has to be behind the pay wall, so what do you use for that?

Navid: I use WishList Member and I have also Infusionsoft. Obviously, so I use that for my shopping cart in affiliate program, but just recently I was in talks with both Teachable and Thinkifics, so they have this course platform. What I’ve seen is that you actually can put all your interviews in there too, like all access pass of your summit.

You can actually just have it on let’s say Thinkifics, and it’s pretty easy to set this up. They also have a simple affiliate program, they have shopping cart, and the only thing you need other than that is an email service ride like ConvertKit for example, and you are good to go. That can be very inexpensive.

Usually these platforms you probably find a deal or something like with Thinkifics or Teachable, and you can sign up there and do it. I mean that’s the best way for a beginner, because you don’t have to think too much about the tech then. The only thing you have to do is to have your free summit, that would be I guess on a WordPress website, and I even created for my students like a template for this because I have found that was a big hurdle like a tech and making sure the design was good.

So I just have my designer like design a good template, and now they can use that with like Thrive content builder. I think Thrive is great because it is so easy to just create the pages in there, and it is also very affordable rather than use something like ClickFunnels where you have like a monthly fee. It can also work, but again you have to pay it monthly, and if you are starting out maybe you want to limit your cost a little bit.

Steve: Okay, and so let’s say I want to throw one of these myself, what is the step by step here? Do I first go after the speakers?

Navid: Actually that’s definitely not what I recommend right away. That’s a mistake you will make to just, “Hey I’m going to start reaching out to my speakers.” First get really clear obviously in your topic, define your profitable virtual summit theme. Make sure it is specific, make sure it is niched. That’s the first step there, and you know something for you would be pretty easy I guess since you already maybe do something like the Seller Summit but taking it online, that would be a good idea.

Then the next thing is to position your summit for success like seeing if there are other summits out there. I mean if you are the first to market or first in your industry to do this, it is a little bit easier like the insurance agent summit. I mean he crashed it because I think one of the reasons at least, it was a great event and all that, but he was first, so people were like really excited.

The speakers they shared a lot, and he had other affiliates, some people on board to just share this out in this industry, so that worked really well like having a great hook. If there is other events in your industry you can think about how you can have maybe different speakers on board, maybe a slightly different hook like for example with Chandler some it was pre recorded.

I did one similar with Jesse Klinger, a book business and brand building summit, and it was a live summit, it was a little different hook there, you know a little different way we marketed it, and what it was all about. Essentially people could get similar value from them, but it’s like people could attend live on his, so it was so different, and the funny thing they ran about the same time, but both were pretty successful, so that …

Steve: How many people actually get to attend 10 live versus buying the pass?

Navid: You mean on the free one?

Steve: Yeah just curious.

Navid: Okay, so if you have like a lot of people, let’s say a big summit like Chandler’s, like 30,000 people, I think you get per session, it dips a little bit, it dips from the first session you typically have the most people attend. There you would get at least a few thousand people watch, I mean in total you get a few thousand like 5, 6000 people watch. We have data a big summit, and then it goes down a little bit.

When it comes to buying the pass as I said, if it’s 30,000 opt-ins they can get at least 1000 plus people buying the pass. I mean that’s — then obviously you have a pretty good conversion rate if you do that, and if you even have a back end they can increase that conversion rate even more, because that’s where we saw like for example $370,000 in revenue didn’t only come from the all access pass. About $110 to 120,000 worth from the all access pass in that case, but then the rest was from his course, so that’s …

Steve: Okay I see, so you had other offers.

Navid: Yes, so it was kind of at the end we had a very aligned offer with the summit, and people would just upgrade or took the offer there, yeah.

Steve: Let me ask you this, so if your things are pre-recorded, but you are displaying them like conference star where it is only on a specific time, do you have software to manage that, or are you just like cutting and pasting YouTube onto a page?

Navid: Yeah, so if it is live obviously then I use the Google hangouts just in embedded, but if it’s pre-recorded, I tend to use Vimeo. People associate YouTube sometimes with free, so I tend to like to upload it to Vimeo, so it only works on that page I want to display it on, or this website. I would have it during this time, and people still — I haven’t had any problems with people complaining over this or anything like that, and people still purchase the pass even though they are available for let’s 48 hours doing it.

You are not saying that hey this is live sessions or anything like that. You can have it like different times you want to go live, but I suggest keeping it simple. Make all the sessions if it’s pre-recorded, go live let’s say in the morning in like 10AM eastern or something like that, and then you just let them go live, and that’s it. You can monitor the comments a little bit, but that’s an easy way to do it the first time. Don’t complicate things too much.

Steve: Okay, so just everyone has access to everything for 48 hours, and then you shut it down, and then you sell the all access pass.

Navid: Yeah, but the all access pass is always available even from the beginning when you start promoting the summit. That’s kind of I guess how we did a little bit different to then. So a lot of people they might start selling the all access pass later, but when people — right away when people sign up, they are prepped to their deal, they are excited, and they might purchase right away that we see a big turn of people actually purchase right away when they sign up from the free one, and they just upgraded right away because maybe they don’t have time to watch everything.

Maybe they just want to own the pass because they see the value from it, and we tend to start either 67 to 97 dollar offer, and with a caveat you have to know your market. So if you are in a different market, you can even charge more, or maybe have to charge less depending on what people are willing to pay for an all access pass.

A great example is the insurance market, they actually can pay more than let’s say 67 to 97 dollar. They actually value it way more if you charge let’s say start with $147, but in another market maybe you have to start at $27 or $47. That’s just good because the pricing is just very strategic so I cannot give advice to everyone there.

Steve: Sure, so people can’t possibly watch all these in 48 hours right, and so that’s why …

Navid: I mean they could, I have people from my first summit, they watched 88 sessions, and they took notes the 88 sessions. Some people are hardcore fans, and some people do that, and they still might upgrade. I had this guy who watched every single session, he still upgraded to the all access pass actually, so because he may want to own it, maybe he may wanted to go back to watch it for some reason, so you can still get some of those people to buy, and it doesn’t really matter.

It’s good to get as many viewers as possible. It is good for your speakers to get; sometimes they get emails from them. That’s good for you and they might get clients from it, it’s also good for you as a host, so all these things are just beneficial.

Steve: In terms of the work involved are you the moderator for all these sessions, or do people just send you the recordings of the videos?

Navid: Yeah so you mean when I’m doing the interviews with someone obviously then I have to …

Steve: So you interview them?

Navid: Yeah that’s it even if I would do like a presentation typically I would be there even if it’s a pre-recorded presentation like with slides, I would be there because it is just more engaging that way. Otherwise it feels like oh they just sent this recording, there is no person there really, so I like to do it that way, and also for a live one obviously, you be there, you ask questions, take questions from the audience.

Steve: Okay, and, hold on, what do you do with this content after the fact? Like you mentioned you had 88 speakers and then it sounds like 88 presentations, and then now you have this. Do you keep the doors open for the ticket sales forever, or do you shut it down, and if you do shut it down like what do you do all this content that you have now?

Navid: Yeah that’s a great question, and I think there’s different things you can do, you can have like a sequence for it. The reason I didn’t do that for my first summit was because I kind of shifted gears a little bit afterwards, so I generally see that as a big part for my sales funnel which is important too.

If it’s not part of your sales funnel then because I thought first of all I would actually go into doing something with personal branding, then I happened to get so many questions about summits, so I created a pilot, and that became my main focus. But what I have seen some people do they give away let’s say 5 of the most popular sessions for free, and they can have a little sequence there like 5 emails or 6 emails.

You have a great sequence on your website, so they could do something similar like that, and then have sprinkling some pictures for the all access pass. Maybe have a great offer again, maybe lower the price to let’s say $97 or something, so you get some sales for new people coming in the door.

That’s a good way to just build, share some value, you have 5 interviews for free there or even like a PDF with some takeaways from the interviews. That can also be a great way to have from this landing page. You modify the landing page a little bit, and then have a sequence for it. That’s a good way to keep getting sales.

Obviously you have to get traffic to it, so you can mention this when you are on podcast, when you are writing guest blog posts, or maybe drive some pay traffic there if it makes sense to you. That could be ways to keep monetizing the all access pass, but other than that I also include my summit as bonuses. I can include it for future summits, and I’m going to actually do that for my list building tools, so if they purchase that they can get my first summit for free.

Also I include let’s say if I’m promoting something as an affiliate then I will include the summit, just like great content include that, because there is a lot of value, but the list keeps going there. I have seen a student, he published a book based on the summit interviews, obviously he polished it up, transcribed it, all that kind of stuff, but it worked well. It was called I think app or [inaudible 00:43:39] playbook.

She did app summit like in the app space, and they did really well. She became a bestselling author, obviously not too hard to do on Amazon, but still was great for her authority to do that, and that’s the way to do it. Also repurpose this when you are writing blog posts, you know if you want to horn in into that market, now you have a lot of content to just repurpose in other mediums.

Even put on YouTube some short videos, keep driving traffic to your summit. The list goes on and on there; you can do a lot with this content. I think, you know even I, I don’t do enough with it, it’s just like you should be doing more, especially if this is summit that directly ties into whatever the main thing you are selling.

Steve: Let me ask you this, and this is just something that just came to mind, like I have this podcast where I interview people obviously. It sounds a lot like the virtual summit that you are already doing, and you have a podcast you said too, right?

Navid: Yeah, I did it before, now I’m not doing it as much anymore.

Steve: You are not doing anymore, but I’m sitting on like 130 interviews for example, isn’t that like a virtual summit in itself?

Navid: It’s like a virtual summit, I mean as you hear it like your interviews are I guess more actionable than a lot of other people’s. Like in this space a lot of people they focus on like the story too much I think, and then it wouldn’t work as well for a virtual summit. I mean that’s worth a lot of practice too, and I think virtual summits they’ve got to be more actionable if you are all paying for this content.

Also maybe in your case you would focus on a specific topic like maybe you wouldn’t have me on your Sellers Summit obviously because I haven’t had an e-commerce store, so yeah it would be a little bit different. You can still do a really high quality summit, and maybe even do a little bit different so you would have let’s say people coming and teach with slides because you have the relationship, maybe it’s easier for you to ask them to do that.

That’s something you can definitely differentiate from a podcast even though you think, “Okay this might be similar.” It’s still not going to be similar when you do it, just doing in a different way for your summit and then you would be good to go.

Steve: In terms of a virtual summit plus a live event, the two don’t really mix right?

Navid: How do you mean there exactly?

Steve: Meaning like if you are going to do a live event you probably do not want to do a virtual event, would you say?

Navid: That’s interesting, I mean I’ve seen for example Social Media Examiner, they have Social Media Marketing World, that’s a big event in San Diego once per year. And they also have in the fall they have social media — I think it’s called Social Media Success Summit. And both really successful, I guess at least they are offline events that brings in millions of dollars in revenue.

And then they have their online event. At least from what I have heard they get like 3000 people, so purchase the pass because that’s actually a paid virtual summit or an online event. So they are doing that, I think it’s because they are not — simply maybe they are not interested to use the free model.

I would argue that if they used the free model they could actually get more people to obviously grow the email list more. Yes they have a massive email list, Social Media Examiner so it wouldn’t be — maybe that’s not their main goal. It’s always important to think what’s your main objective, what do you want to accomplish here.

So maybe they don’t want to dilute it with having the free one simply. But I think by having a free one they would get not only more email subscribers signing up for it, they will also get way more people to watch it and more customers.

Steve: So they charge right off the bat right, you can’t even — okay.

Navid: You cannot attend. So it’s like they have live presentations, and I think they have like customized presentations and all that kind of stuff, but you can do that for a virtual summit too. I mean you could do that for example if you have great relationship with your speakers and all that kind of stuff. And you can ask them that, maybe you wouldn’t be able to do that right off the bat when you are starting out, but definitely it’s something you can do later on.

And then you could do maybe have an offline event, but a lot of people they can’t attend that offline event. Maybe they can’t afford an offline event. And then you’re making it more affordable to people, you can reach more people and more people can watch this content. But then you can also have some great bonuses and stuff like that you’re bundling up. So you just mix the value even most people take action and they purchase, a very high percentage will purchase the all access pass or the premium pass of your summit.

Steve: Interesting. My last question actually involves piracy. Like what’s stopping some of the just downloading all the videos on the first 48 hours?

Navid: Yeah, I mean they could, right? I mean it’s not — if someone knows how to do it, it’s not that hard. I mean just plugging and all that kind of stuff to do it. But I think the people have some integrity and they really want to build a relationship with the host, or at least they value what they have created; I mean it takes a lot of time and all that kind of stuff.

You have recorded this and spending the time to do this, they will purchase if they can afford the $67 or $97 or whatever you are charging. You might also increase the price during the summit but initially it’s very, very inexpensive for the premium pass.

And I think people should just get on there. I have even problems with people. I have found my summit on some other sites they are selling and it’s just nothing — I mean you can do something. You can get your attorney or like some…

Steve: Yeah, it’s probably not worth the time.

Navid: Yeah it’s not too much worth the time for what it is, I mean if it’s not a big problem no.

Steve: Okay well cool Navid, this is very interesting and we’ve been chatting for quite a while. Where can people find more about what you do, and then learn more about how to run your own virtual summit?

Navid: Yeah definitely, I mean I have my personal website navid.me or navidmoazzez.com, you can just go there. I actually have I think by the time this goes live we’ll have like a free virtual summit course, you can just go through that. Signup, check it out, it’s going to be very valuable, it’s pretty much the process we just walked through here. And you also get my sevens step cheat sheet with just kind of the process all my students go through in my programs and so on.

And also I guess something you are part of Steve is my list building school, the virtual summit I’m hosting. So I guess you can have – I don’t know if you have your own link, I mean you can have — just make up your own link and where you can send people there if you want to the summit.

Steve: Okay yeah we’ll do it definitely. I’ll definitely put all the stuff on the show notes.

Navid: Yeah, sounds good, I’m looking forward to see some of you there as well too. Check it out, actually that’s a good way to learn how to do summits even though you might not be interested to get in my course or whatever it is right now. You can at least attend the list building school, this virtual summit Steve and many other Ashpa [ph] [inaudible 00:50:17] Patel, Ryan Lee, Ryan Levesque. We have so many great speakers on there. So you just check it out how it is, how I am running it.

Steve: Cool man, well thanks for coming on the show Navid.

Navid: For sure, thanks so much.

Steve: All right take care.

Hope you enjoyed that episode. Well I just threw my first in person conference at the sellersummit.com, I had no idea how powerful virtual summits could be. And perhaps I will give it a try sometime going forward. For more information about this episode go to mywifequitherjob.com/episode138.
Once again I want to thank sitelock.com for sponsoring this episode. Now if you have an e-commerce store, go there right now, and find out how long it takes to load. Does it take more than five seconds? If so did you know that 60% of consumers only wait up to five seconds before bouncing from a site, never making a purchase?

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Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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137: How To Get Free Traffic And Sales To An Ecommerce Store With Neil Patel

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137: How To Get Free Traffic And Sales To An Ecommerce Store With Neil Patel

Today, I’m excited to have the Neil Patel on the show. I’ve actually been following Neil for quite some time. In fact, I remember when I first discovered him back in 2008, I dropped him a comment on his main blog which was QuickSprout at the time.

In fact, just for fun I actually went back through my archives to check. I emailed him on September 19, 2008 about his post on 10 timeless business tips. And he replied in like 10 seconds, checked out my blog and actually gave me some tips.

Anyway, Neil is the founder of many multi million dollar companies like Crazy Egg, Hello Bar and Kissmetrics. He’s helped tons of companies like Amazon, NBC, HP etc.. Grow their revenue. He’s been doing this since he was 16 years old and he’s one of the foremost experts in online marketing.

What You’ll Learn

  • The traffic sources Neil would start with for an ecommerce store
  • How to run a successful ecommerce store blog
  • The keys to content marketing
  • The optimal posting schedule
  • Neil’s strategy for ranking a store in search.

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Transcript

Steve: Welcome to the My Wife Quit her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not with their businesses. Now I’m Steve Chou, and today we are talking with Neil Patel the founder of Crazy Egg, Hello Bar, and Kissmetrics. Now in this episode you’ll learn the keys to running a successful ecommerce blog, and how to generate free traffic to your online businesses.

Now before we begin I want to give a shout out to sitelock.com for being a sponsor of the show, and as an ecommerce business owner your website is your business. But very few people protect their websites, and on average it takes 197 days for retailers to detect a data breach. Yes, that’s 197 days before you realize that your customer’s data has been stolen. Now you can prevent data breaches with SiteLock website security.

Now SiteLock offers a comprehensive suite of cloud based website security solutions for ecommerce businesses of all sizes and budgets. From malware scanning and removal to industry leading web application firewalls, SiteLock has you and your customers covered. So visit sitelock.com/mywifequitherjob for more information, and get your first three months free. Once again that’s sitelock.com/mywifequitherjob.

And if you want to learn how to start your own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email. Now onto the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job podcast. Today I’m excited to have Neil Patel on the show. Now I have actually been following Neil for quite some time, and in fact I remember when I first discovered him back in 2008. I dropped him a comment on his main blog which was Quick Sprout at the time.

And just for fun actually I went back through my email archives to check, I mailed him on September 19th 2008 about his post on 10 timers business tips. And he actually replied in less than a minute, checked on my blog at the time and actually replied with some tips. Anyways Neil is the founder of many multimillion dollar companies like Crazy Egg, Hello Bar, and Kissmetrics.

He’s helped a ton of companies like Amazon, NBC, HP etcetera grow their revenue, and he’s been doing this since he was 16 years old. And he is one of the four most experts in online marketing. And with that welcome to the show Neil, how are you doing today man?

Neil: I’m doing good, how are you?

Steve: I am doing good. You know Neil you are really well known online, but before we kind of begin with the gist of the interview, I was just curious what your story was and how you got started with online marketing in the first place.

Neil: Sure, so think of it this way, back in the day I started a website. It was a job I would call Advice Monkey. And I thought when you pop up a website it naturally gets traffic; little did I know I was wrong, I learned that really quickly. I learned what SEO was, I paid a few companies, I got ripped off, got no results.

Through my frustration and from being broke I did not rest but to learn how to do marketing. And funny enough I got better at the marketing part than actually creating online business.

Steve: But you started Crazy Egg, right? Did Quick Sprout come first or did Crazy Egg?

Neil: Neither, Crazy Egg came before Quick Sprout I believe, but before that it was Advice Monkey then which doesn’t exist anymore. Then ACS which was ad agency that we owned, Crazy Egg came out of the ad agency.

Steve: Okay, I think that was the email address that you emailed me from actually, ACS something online or whatever?

Neil: ACSSEO.com.

Steve: Yeah, that’s the one, that’s the one, crazy, this is back in 2008, right?

Neil: Yeah, and the ad agency is no more ad agency, right.

Steve: So where do you focus your time now?

Neil: Honestly just emails, meetings, phone calls, blogging. My life is very boring, it’s just meetings and emails.

Steve: So no more — are you involved in those other companies anymore that you started?

Neil: I am, we have an awesome team that helps out. I do work for all of them, but you have to keep in mind like I’m answering emails for those companies, right? Like it’s really weird when someone would be like, hey we want to partner up? I’m like okay let’s jump on a call or it could be a sales [inaudible 00:04:38] like a big corporation might say, hey we have XYZ customers, we want to see if we can work out a deal with you or maybe, but it’s just my life revolves around my email inbox.

Steve: So it’s less dated A stuff more like strategic and then partnerships and deals, that sort of thing?

Neil: That’s correct yes.

Steve: Okay, and what were kind of some of the first set of experiences that set you off on this journey. Like why did you even start the advice site?

Neil: The Advice Monkey site?

Steve: Mm-hmm.

Neil: I was trying to find a job and I couldn’t find one. So I went, I created a job board because when I was browsing monster.com I realized they are publicly trading company making hundreds of millions of dollars. I’m like if I make 1% of what they make, I’ll be rich.

Steve: Okay, and then that kind of evolved into Crazy Egg, and then after you started Crazy Egg you decided that you wanted to teach others?

Neil: Well so we had — Advice Monkey failed miserably, got to marketing, started ad agency or internet marketing agency whatever you want to call it, started blogging at that point. I was using blogging because I didn’t have enough money to pay advertising like let me see I can generate customers through blogging. First blog was for an advertising, it was technically 100 top blog, did well, I got tired of blogging and marketing, created Quick Sprout which was on personal branding at the time.

And then I started writing again on marketing on Quick Sprout and I realized that I loved marketing, so it was like a full circle, I don’t why I gave up on product advertising. When I gave that blog away I literally just gave it away, it was getting over a hundred thousand unique visitors a month.

Steve: Crazy, so what is the goal with neilpatel.com then?

Neil: So Quick Sprout we are building a software that helps people with their online marketing initiatives and it tries automating everything. Not marketing automation like you are thinking like a Hubspot or Marketo, but more marketing automation like, oh we noticed these SEO errors boom, we just automatically fix them. Now the software won’t do all those kind of things at the beginning, but eventually we want to get there. And it will do that for all types of different marketing campaigns, social media, SEO, content marketing etcetera.

And the problem when you create companies from a blog, and it’s not attached to your name, eventually but sells or something happens I hope not, but if it does I won’t have a blog anymore, right? That’s mine. So creating neilpatel.com, and I should have used neilpatel.com first, but I didn’t own the domain name.

Steve: Really?

Neil: And eventually I was able to get the domain name. Now I’m trying to get patel.com, but the guy who wants to sell it, I offered 150 grand and…

Steve: That’s crazy.

Neil: He won’t sell it, and he does nothing with it.

Steve: So obviously neilpatel.com is not a site that you are ever going to sell, right?

Neil: Exactly, and that’s why I started the blog there. But with Neil Patel I do a lot more experiments. My latest experiment is international expansion to see how well it does and so far so good. I would say within the next two months I’ll get more traffic in Brazil than I will in United States.

Steve: So talk about with international expansion what do you mean? Specifically targeting other countries as opposed to the US?

Neil: Yeah, so I write content in English which is regarding the people who are online. I know people like oh more people speak mandarin etcetera, but you know why if you look at most of content published on the web it is in English.

Steve: That’s correct.

Neil: And when you think about the overall numbers, majority of the population doesn’t speak English as a primary language. So we started expanding into different languages. Right now we have Portuguese; we are going heavy into Spanish, heavy into German. We are slowly studying Italian, we are going into Arabic within the next 30 days, and we are also going to French in the next 30 days.

Steve: I assume this is not just like with Google translate; you are actually really translating it with humans, right?

Neil: I have a team of translators; I think we are like 55.

Steve: Crazy, okay.

Neil: We are cracking out roughly 250,000, 300,000 words per week.

Steve: That is nuts, okay. So Neil a lot of my listeners are in ecommerce, they sell physical products online. So I thought it would be interesting today to kind of get your perspective on how to get traffic and sales to an ecommerce store. And just to make this a little bit more difficult, let’s talk about this from the perspective of let’s say me starting an online store selling something very difficult like jewelry or t-shirt or something like that. What traffic sources would you personally experiment with at first, and what would be your main focus assuming that you have very limited resources?

Neil: Yeah, if it was me the first traffic source that I would go with is social media. So if I was selling like t-shirts, I would go and just try to get free shirts to people on Instagram, have them wear and post a picture and talk about my site. It’s branding, it does extremely well. If it was MVNT watches, movement watches, those guys I believe they are doing over $10 million in our Shopify store. They generate a ton of sales by getting people to just talk about it.

Steve: So watches, do they give those away as well? Like how would you — let’s say they are too expensive to give away.

Neil: But watches are affordable, their watches don’t cost a lot of money to make.

Steve: Okay.

Neil: But in general most ecommerce products if you look at unless you are selling TVs they are pretty affordable to give away, right? It’s like 5, 10 bucks; it’s cheaper than paying for ads. If someone has 500,000 followers, they post about it, that’s a pretty good deal. If you get that in quantity, it really adds up after all.

Steve: So you would go and you would reach out to bloggers and instagramers?

Neil: I have already yes.

Steve: And how does one do that on Instagram for example?

Neil: You direct message people.

Steve: Okay and how would you frame that reach out email or letter?

Neil: I would just say, hey I’m so and so with X, Y and Z Company; I love your Instagram profile and what you are doing. I want to see if we can send you a free t-shirt if you like, and feel free to post a picture of you in it.

Steve: Okay and with no obligation they — you give them the option of posting or not, right?

Neil: Yeah you talk to them like, oh I’d be interested what kind of t-shirt? If they just say okay what’s the address? I would say like hey this is what it is, do you think you’ll like it, would you be interested in posting about it. And I try to like dive into that deeper, because if they don’t ask any questions, they are just going take the free t-shirt and they won’t care to post about it.

Steve: I see, and what is the typical hit rate when you do something like this?

Neil: Typical hit rate…

Steve: Like what would be a good hit rate?

Neil: If you message out a hundred people you get 10 people you’re doing very well. Five on the low end, 15 on the high end.

Steve: Okay and let’s say some of these people do take these shirts and then they post on Instagram, you get a short burst, right? But eventually that dies down, right? Does that imply then you have to constantly be doing this or?
Neil: Well if you do it for six months straight you actually build up a big brand and then it becomes a trend.

Steve: Okay. So let’s say you don’t have the budget to be giving a whole bunch of these away, what would be your next thing that you might think about trying?

Neil: Sure I would look at SEO, SEO works. It’s long-term for ecommerce, but the strategy I would do is go and go find and use Atrust.com, see who links up to my competition and beg him for links.

Steve: So that implies that you are starting some sort of blog then for your ecommerce store?

Neil: that’s correct.

Steve: Okay because in a traditional ecommerce store it’s just products and categories and there is not a whole lot of content on there, right?

Neil: That’s correct.

Steve: Okay so every ecommerce store in your opinion should have some sort of blog even if it’s just physical products?

Neil: It makes it much more easy, but again you can get people to link back to you even if you don’t have like content, right? You can get people to link back to the actual stocks. You go to Atrust you’ll see everyone who links to your competition. And most of them don’t have products. I mean most don’t have content, because ecommerce sites very few people actually have blogs, so modeling the bigger guys do, smaller guys not so much.

Steve: Yeah so how do some of those guys get those back links, like what are some your strategies to build back links?

Neil: Yeah, let’s say you had a blog and you are linking out two, three ecommerce sites an article. I would be, hey Steve I notice you linked out to X, Y and Z ecommerce site, have you also checked our ABNC site? It covers this, this and the other that those other sites don’t cover. You should check it out, and I think you’ll just love it. If you like it yourself, you are free to link to it, cheers Neil.

It’s that simple. If you could get five out of every 100 emails that you send out to link back to you, you are doing a good job. With cold emails it’s not like Instagram where you can get a much higher ratio.

Steve: Interesting so you go through Atrust, find out which people are linking to the competitors, reach out to those guys and then post and ask them if they’ll update the post with your store?

Neil: That’s correct.

Steve: Interesting, and the hit rate you said like a good hit rate would be like 5% based on what you just said?

Neil: Yup, sheer numbers game.

Steve: Okay, so basically all these tactics are based on like good old leg work is what it sounds like.

Neil: That’s correct.

Steve: Okay, do you contract this stuff out when you do your outreach?

Neil: I used to, but I don’t even do the outreach anyone. It still works, it’s just I don’t really do much of the outreach.

Steve: Okay and in terms…

Neil: Also keep in mind that I’ve been around for so long that I’ve so many links I don’t even really need to have.

Steve: Yeah I know you don’t need to do it anymore. I was hoping that you could take it from the perspective of you having nothing though, you know what I’m saying?

Neil: Yeah, so for example I have a buddy named Tim. Tim sells financial products like ecommerce site, digital products like DVDs like physical DVDs, like he is mailing to you right, but it’s digital. And we do the same thing, we hire this guy and– what’s his name? Is it Anderson, he is a good guy. And he ends up charging $4 an hour, for roughly every 100 people that he emails he is getting around like 3.7 to link back. His English isn’t the best, but it’s not bad.

Steve: No way, okay and this is just random cold emails to people?

Neil: Yeah, but in quantity like sending out like thousands and thousands per week.

Steve: Okay, I was just — I get those like every day and I never read them, but I guess there is always going to be some people out there.

Neil: Yeah, how many people don’t know what you know?

Steve: I guess so, okay interesting.

Neil: Plus how many people are willing to link, it’s crazy.

Steve: Does it matter what quality of publication, like do you have some sort of filtering process?

Neil: No just a relevant site that doesn’t spammy.

Steve: Okay so it doesn’t matter, interesting. Let’s talk a little bit about the blogging aspect because I’ve read a whole bunch of your stuff about just content marketing, and you are definitely one of the experts out there.

How would you run a successful e-commerce store blog, because I see a bunch of e-commerce store blogs out there? All they do is they write about their deals and monthly reports, and I don’t really care about that stuff, so how would you structure yours?

Neil: My e-commerce blog?

Steve: Yes.

Neil: I would write on anything that is educational for people, like okay I know this is crazy and probably not the right thing, but this is what comes to my mind, because I was teaching my niece how to wipe her bum in my– we’re getting party drinks. I’m like, I don’t know if this is true, but there is probably a right way to use toilet paper wrongly, but you sell bathroom supplies, why not have a whole article on like how to make your toilet paper last longer.

That sounds crazy, but probably well, I seriously would, right. I know this sounds crazy, but it’s like educational, informational. It applies to almost every single person in the world other than babies.

Steve: When you come up with topics to blog about, is it very deliberate? For example do you do keyword research on a title before you blog about it, or do you just blog about something that you feel might be interesting without even taking that into consideration?

Neil: I just write anything that I think people will really love like that’s the deliberate part, and I make sure it is relevant to my business. Like think about the topic I just gave you, it sounds crazy right, would you agree with that?

Steve: It does, yes.

Neil: I bet it would go viral.

Steve: Interesting, so you’re going for virility as opposed to search?

Neil: Yes, because virility usually means it’s more relevant to people, I’m just helping them out. The other thing that I do for e-commerce I’m going for search traffic. I go to Quota, and I have taken all questions related to the products I’m selling, because then you see the most common ones sorted by votes, and then I write articles with those questions as a headline, and you find that you get a lot of search traffic after 6 to like months, maybe a year max, but it usually takes 6 months plus.

Steve: Interesting, so without building links you would find that these articles will just naturally rank?

Neil: Yeah because it’s really helpful, when people are typing questions and there is not enough good content that has answers.

Steve: You mentioned like you solicit for back links. Are you soliciting for back links to your store or to relevant posts, like you have to be selective, right?

Neil: Yeah, for team we just do it to the store.

Steve: To the store, the front page or category pages or…

Neil: It depends, if someone is linking to like people are selling financial products, then they’ll just link to his own page, but if someone is linking to training videos and they are selling a lot of them, and they have links to 5 other courses then you would be like, “Oh check out this course, it would be very valuable, here you go.” The cool part is one thing that we have seen that helps increase your ratio if you give him a discount code or a coupon code for their readers.

Steve: Do you, so this friend since we have been talking about him, does he have like a back end funnel as well for sales?

Neil: He does, yeah he has a whole sales team.

Steve: Okay, and so is the goal then to get them on this funnel, or is the goal for this just to get the sale right away typically?

Neil: A sale right away.

Steve: A sale right away, okay.

Neil: Yeah, because if they don’t get a sale then the back end funnel doesn’t work.

Steve: Since we are on the topic of links, what is your view of buying links these days, because I still notice like it seems pretty obvious to me like when I read an article on certain large publications that these links, it just seems a little suspicious to me, and so is that still going on and what is your view on that?

Neil: Yeah, with the buying links it’s still going on. It’s not as effective as it used to be. I’m not a fan, I think it is too short sighted, but people do it. I believe if you can create a good product or service, naturally others will just want to link to you.

Steve: Okay, and so back on that topic of what we were talking about with that blog post. I mean obviously the headlines are very important, right?

Neil: The headline is very important, yes.

Steve: What you just suggested had a really catchy headline, but it didn’t really take into account any SEO keywords, sorry or maybe it did, I don’t know, but do you try and mix the 2 like when you are trying to decide the title tag for example, what is your criteria?

Neil: Something that is appealing and it will get quixed [ph] because people love it. I don’t go for ranking on equipment title types.

Steve: So you don’t purposely try to incorporate search terms I guess?

Neil: Eventually yes, once they start ranking, then I will go on to Google search console, you choose your e-commerce site. Once you click on your profile, you click on searching the navigation, then search analytics which is also on the left navigation. If you want to check 3 boxes, clicks, impressions, position, and the default things that they show you is the keywords, then how many clicks you are getting for how many impressions, and your position.

You want to look for a position 5 or lower, better than 10, and you want to look for a low click through rate. A click through because they also have a CTR box, you can check that as well. I look for a CTR box, CTR ratio, that’s below like 3 or 4%.

Now what you want to do is make sure when you adjust these title tags, those keywords in that title tag, it’s really appealing where people want to click on it, and it’s short and to the point roughly 6 words. So when you do that your rankings will start going up, because your click through rate is higher.

If you can increase your click through rate higher than the person above you, what does it tell Google? It’s hey everyone is clicking on the number 6 result, instead on the 5th result. Well, oh, maybe we should put number 6 before 5, right, that’s what happens all the time.

Steve: going back a little bit, you mentioned that your title should have 6 words in it?

Neil: We roughly do 6 words titles. We found that it gets more clicks, I don’t know why, but that’s from the data we analyzed. It can have more or less, but you don’t want to have like 20 words in there.

Steve: Interesting, can you give me an example of one of your best articles that’s 6 words in the headline?

Neil: Let’s see, they are not always right, but okay one is on quicksprout.com, the beginner’s guide to online marketing, links number one for online marketing in the US, and in different regions. I think Dublin I’m number one as well, Canada I think I’m number one too.

Steve: 6 words just doesn’t seem like a lot, but this is based on the data that you have gathered for your sites, right?

Neil: Yeah, I’m not saying don’t do more. You can do like 7, 8 it’s not a big deal, it doesn’t affect that much Google, 6 is just a general rule of thumb. You don’t want to go 10 because if you start going too many it is going to get cut off, so somebody is going to read your title tag and they won’t be able to see it all.

Steve: So once you post your article, is there anything special that you do to promote it?

Neil: What we do is we go to search.twitter.com, or technically we go to basumo.com.

Steve: Basumo, okay.

Neil: Type in the keywords relevant to our space in that article, see the most popular ones, then we click view shares on Basumo, and this is if you have a paid account, it shows you all the people who clicked out. If you don’t have a paid account, take that URL; go to search.twitter.com, put in that URL for free. They show you all the people that tweeted it out, reach out to them, and letting them know that, “Hey I noticed you tweeted out X, Y and Z article, other similar one coming out, let me know if you want to check it out.”

Then a lot of people will say yes, and then they will share it. If you get like 15-30% of the people tweeting it out, you are doing all right. For me I’m averaging somewhere in the 27, it is above 25%, it is below 30%, a ratio of people who tweet it out from the people that you know.

Steve: Do you think people are tweeting it out because you are you?

Neil: That’s why I’m saying I have ratio for getting above 15, it works well, but I have done it with people I have known in the industry.

Steve: What do they get?

Neil: Usually under 20%, but above 15.

Steve: Interesting, so when you put out a publication or an article, do you have any criteria for it in terms of comprehensiveness, in terms of length and that sort of thing to encourage people to tweet it?

Neil: At least 2000 words which means that is a thorough article, actionable with insights. You have an intro, you have a body with headings, sub headings, you have a conclusion. That makes it easier for people to scheme it without reading it, attractive headline. 8 out of 10 people will read your headline, only 2 out of 10 will read the rest of the article, so we try to make the headline really appealing.

Once we do that we go out there, reach out to people and try to get them to share. We also look at the space, like we go to Basumo before hand, before we are writing which is being as we want to know everyone who’s written an article that has done well, and we make sure our article is more thorough, and better, and higher in quality.

Steve: Okay, and so that encourages sharing?

Neil: That’s correct.

Steve: Okay, so really there is a lot of pieces to this, right?

Neil: Yeah people don’t want to share crap, would you?

Steve: No, absolutely not. In fact if I got a solicitation to tweet something, I almost never do actually which is why I’m asking.

Neil: Yeah, but you are not the average person, most people don’t mind. If you tweet our article that says 10 ways to greater e-commerce sales, and I email you and saying, “Hey I have another article called a 101 ways to greater e-commerce sales, would you be interested in checking it out?’

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I will definitely check it out, but if I didn’t know who the person was, my suspicious radar always goes off.

Neil: Okay, but if you don’t know who the person was and you checked it out, and it was really thorough and amazing, would you tweet it out?

Steve: I would probably tweet it because that is a low barrier, right. I would be a little more hesitant to share it on my Facebook.

Neil: Exactly, that’s why we ask for the tweet.

Steve: I see, okay so you are just asking for tweets.

Neil: Yeah, never ask for the shares. It is too hard to get the share.

Steve: Okay that covers tweets, but do tweets get a lot of traffic for your stuff?

Neil: It does.

Steve: Interesting.

Neil: I think for the last 30 days, July I was like 30 something thousand visitors from Twitter.

Steve: What is your greatest source of traffic?

Neil: Google then Facebook.

Steve: Google just SEO organic?

Neil: Aha.

Steve: Okay, and so for the Facebook traffic …

Neil: Google, email, then Facebook, then Twitter.

Steve: For the Facebook stuff that implies people are sharing your stuff on there, right?

Neil: I also have a proper Facebook page, I have like 300,000 plus fans.

Steve: Okay, there is so many ways you can go with this, so the Facebook page, how did you build it up to so many fans over the years?

Neil: I have a strong brand, I don’t think it’s that easy to replicate, but the real reason my Facebook fan page does really well is because the brand speaking of competence, and then I do a ton of paid advertising on Facebook. I probably spend like 50 or 60 grand to build up the fan page.

I have high engagement, like people look at some of my posts, like oh it gets like 50 shares or 100, 200 shares, some of them get post scale like 3, 4, 500 shares. Images sometimes can get well over a 1000, but what they don’t notice is I have fans in different regions.

For example I have over 100,000 fans in Brazil, you yourself will never see it because you probably don’t speak Portuguese, so posts in Portuguese are only seen by people in Brazil, posts from an English blog are only seen by people who speak English, so my fan page is segmented out. My Portuguese posts tend to get more engaged with my English posts, like more likes, more shares, and more comments.

Steve: Interesting, in terms of actual revenue though, do you find that you are making proportionally more money from your Portuguese people?

Neil: No, by far I’m making more money in English, but it’s adding up. I would say within, it’s going to take a while, but I would say within 2 and a half to 3 years the Portuguese blog will generate more value than the English version.

Steve: For your fan page, are you just posting your own stuff, or do you just post any article that you might find interesting?

Neil: Own stuff or shit about me, it’s one or the other, like in one of my interview I did on Chris [inaudible 00:28:35].com, amazing guy, I loved the interview I did with him. I also love the content that he has on his blog, he is a good chill guy, I shared it. It got him extra 120 likes, 11 shares, and 20,000 people reach. It wasn’t bad at all, it was pretty good.

Steve: No, that’s pretty good

Neil: Especially because Facebook kept screwing up their algorithm. Before they did this I was getting like 200 plus likes.

Steve: Yeah, they keep downing it down lower and lower, so you got to pay for it, right?

Neil: Yeah, and I don’t want to pay for it because paying for likes is like come on Facebook.

Steve: Are you still paying for likes, or do you actually just boost articles or whatever and then get the likes from there?

Neil: No I really pay for likes, I don’t like boosting articles.

Steve: Interesting, so what is the rationale for doing that as opposed to posts?

Neil: I don’t like paying per play, I like paying to build up platform or audience that you can keep leveraging, because if you run out of money at least you can keep going back to the same well.

Steve: Even if that well is constantly getting lower and lower percentage of visibility?

Neil: That’s correct, yes because if you look at the algorithm, the articles that are really good, they still get a ton of play. Even if they reduce the visibility, if something was supposed to go viral, it’s still going viral, and it’s still getting a ton of natural likes and shares.

Steve: Interesting, how much do you pay per like if I might ask?

Neil: Which region?

Steve: Let’s do US because that’s where most of the listeners are.

Neil: A dollar per like, I usually don’t do much advertising in the US though.

Steve: I see.

Neil: Unless in the B to B category. Brazil I’m paying on for a really good like around 11 cents, a shitty like around 3 cents. I don’t optimize for numbers, I would like to optimize for engagement. How can you get the least amount of likes and get the most comments, likes on your shares or on your personal shares, because it increases your idling scores which is their algorithm. If you have less fans but you have way more engagement, it’s much more likely to go viral and for Facebook to show it to other people.

Steve: Interesting okay, so buying likes a dollar per likes sounds really expensive. So that’s probably why you don’t do it.

Neil: B to B category yes, but keep in mind some of my customers are worth over a million bucks [inaudible 00:30:40] on B to B, B to C probably not.

Steve: Right okay, so we talked a little bit about ranking a store in search. Are there any things that you care to talk about in terms of what is working, in terms of search engine optimization today?

Neil: The biggest thing that’s working in search engine optimization today is brand building. People don’t go and say, I want to buy this for like protein powder or making a program as an example.

Steve: Sure.

Neil: A lot of times they just go to Amazon and they type in protein powder.

Steve: Yeah.

Neil: And if you notice the companies with the strongest brands, they’ll just kidnap you the most back links, not just the most talked about the most but they are also ranked highly why? Because when people are searching for stuff and they see Amazon and Google search, they click on Amazon list and view the pack if they know it’s Amazon.

Yeah you are not going to create a stronger brand as Amazon, it’s really hard, but you can still create a strong brand within your space, like the reason neilpatel.com ranks so well, I have a strong brand. 18,000 plus people a month click on neilpatel.com by googling my name each month. That’s how many people search, that’s how many people click, right? That’s pretty good for a personal brand.

Steve: No it’s excellent. So when it comes to — since you mention Amazon, when it comes to Amazon versus your own store what would be your strategy there for trying to stand out. Like have your listing stand out over Amazon? Because obviously you make more money if someone buys directly on your site.

Neil: It’s hard. My buddy has a [inaudible 00:32:21] supplements. He was telling me how he keeps making more money; we were going over his numbers yesterday. His Amazon numbers and he is on ecommerce site. He is like damn it, like Amazon is growing faster than a normal site, yeah it should be.

And he is like why do you think so? I’m like dude the other day I was buying your green powder. They had this vegetable powder that it’s like really help you, you put in water. And he is like, oh you bought it? I’m like yeah I bought it from Amazon; I found it on your site.

And he is like, why don’t you buy it from my site? I’m like oh Amazon has prime shipping. And he is just like you really go to Amazon to buy; I’m like yeah I do it for everything. And he is just like — he started laughing. He is like I actually do the same thing too when I find — I go to Amazon to buy, I’m like that’s the problem, that’s consumer behavior in ecommerce.

Steve: So does that imply then that you would focus most of your efforts on Amazon then if you are an ecommerce guy?

Neil: I would do both, but I would actually focus more on Amazon than my own site, but I would do both. I would probably do like 60% Amazon, 40% focus on my own site.

Steve: Interesting. Just to chase the money now I guess the cash flow money, I don’t know I just seem — I feel like Amazon, they keep changing the rules and it’s kind of like a slippery slope, you know what I mean?

Neil: Not necess– yes but that’s with everything, Google does the same thing, Facebook does the same thing, you have to adapt as a business. The beautiful part about them changing the rules is it eliminates competition too. So the way I see it is if you can build up your own site and your own audience you can use that for Amazon.

When I was talking to my buddy, I’m not going to name his site. It could be [inaudible 00:33:53] it could be someone else; it could be the financial guy. But when they sell stuff on Amazon and they got a ton of bad reviews because people are screwing up their listing, they just do an email blast, and they are usually– it’s like look some people are giving us bad reviews, here are the best ones, upload them, right?

Steve: Sure.

Neil: And it helps like people like him would do better on Amazon because they are doing both, because they are able to leverage their website audience for Amazon as well.

Steve: So I have talked to a couple of other guys who sell mostly on Amazon, and what they do is they take their email list and they blast out for people to go buy their products on Amazon as opposed to their own site. How would you feel about that if you were running things?

Neil: I wouldn’t mind with that, I’ve tested it and I have found that it converts better on Amazon. The other thing that we used to do is when you do the Amazon, we would put in their like you score on Amazon. You search for a keyword that relates to your product, then you scroll all the way down to find your product. Click on it and then when you do the email blast and when people buy, your ranking will sky rocket. They’ve changed it, well it doesn’t work anymore, but that worked really well.

Steve: Yeah that used to work in the past, I think they don’t count that anymore. But you can tell someone to go on Amazon, do a search and then click on your product and then buy it, and that still works.

Neil: Yeah but it doesn’t convert as well, because it’s hard to get people to do that.

Steve: Interesting, so you would probably focus more on Amazon sales as opposed to your own site?

Neil: That’s correct.

Steve: Okay and then in the long-term there is no repercussions for doing that?

Neil: Not that I know.

Steve: Okay, that’s interesting.

Neil: All the businesses I have, I know companies who do $60 million a year in ecommerce sales, and they focus more on Amazon than their own ecommerce site, and they are still doing well, big companies.

Steve: And in terms of PPC what would you use?

Neil: I would use Google AdWords, I would use some Facebook ads, Facebook ads would be number three. Google AdWords and Google shopping or shopping bids number one, handling it all together. Number two is Amazon paid ads. Number three would be Facebook.

Steve: Okay and in terms of Facebook ads, so let’s say for Google let’s say we are selling t-shirts or something. That in general is not conducive to an AdWords ad because the keywords are really competitive, right? So how do you kind of structure your campaigns for that example?

Neil: Wait for AdWord ads or you are saying–

Steve: AdWords yeah no, not shopping but just AdWord ads.

Neil: Yeah people typing in if I’m selling computers like a specific type of laptop, I’ll just hit on them and send it to my site.

Steve: Yes but those keywords will tend to be extremely expensive, right?

Neil: Yeah but landing pages are optimized for conversions, you are fine. And you can use sites like [inaudible 00:36:41] I think it’s called that. And it shows you like other ecommerce case studies, and it talks about people improving their conversions, stuff like you do all that stuff then you should get good results.

Steve: So it’s your belief that if you run your campaigns effectively you can make AdWords work for any demographic or any type of products?

Neil: Almost yes.

Steve: Interesting okay. And in terms of your Facebook ads actually when you run for ecommerce, what is your strategy there? Is it for the sale or is it to get them on some sort of funnel?

Neil: No, I first send people to our landing page that breaks down the case study of like what people use the product for, where they did from, and true one not a fake one that people make up.

Steve: Okay.

Neil: Then from there I get them to click through to like our Amazon page where they can buy.

Steve: Okay, and do you entice them with coupons or anything like that?

Neil: No.

Steve: No, okay.

Neil: I hate doing coupons.

Steve: And there are no email signups or anything like that?

Neil: Email signups on the landing page upon exit where they are scrolling away, you capture email.

Steve: Okay cool man, it’s really good to hear this from someone who has just interacted with so many different businesses like all across the board, right? I mean you’ve dabbled with ecommerce businesses, software business all across the board. So I want to switch gears a little bit, I want to talk about your book actually.

Neil: All right.

Steve: What is it called and what’s it going to be about?

Neil: It’s going to be called Hustle, and think of it this way, right now in this day and age everyone feels it’s harder to just succeed. The rich are getting richer, and the people who are the haves are getting everything; the have nots are getting nothing. Would you agree with that?

Steve: Yeah definitely.

Neil: Okay, and what we found is that’s not necessarily the case. I’ve done okay, I’m not saying I’m the richest person, but what did I come with, I was an immigrant. There are still a lot of entrepreneurs these days that are succeeding that have little to nothing to show when they first start. I didn’t have the best education either, and the commonality is when you look at a lot of these things it’s the actions that they take to succeed. In essence we are calling it a hustle.

How can you — well you have to go from point A to point Z, let’s assume Z is success. And it doesn’t have to be financial success I won’t believe you have to go through A, B, C, D and those all these steps. Not necessarily, you can succeed and there is many different ways.

I’m going to give you example of this. In the book we talk about making your own luck. And one of my co-authors, his name is Patrick. His son was Shane was in this like little creek, and they were looking for fish. Patrick looks down and he is like, oh Shane buddy, let’s go home, there is no fish in there.

Shane looks at his dad; he doesn’t say anything, he jumps into the little creek and start shuffling his feet. In essence he manufactured his own luck, and you know what happened when he shuffled his own feet? All these fish started popping up, and he is like oh daddy, look, look at all the fish. We are teaching people you can manufacture your own luck. People aren’t taking the actions to get the results.

Steve: I think this actually ties in well with this podcast interview because a lot of the strategies that you outlined were hustle based, right?

Neil: Yes…

Steve: Doing outreach for back links, doing outreach for tweets and shares, that sort of thing?

Neil: Yeah everyone was telling me, “Neil how do you start an agency and make money?” I was like, “Oh I called Collins. I’m like yeah I called every single person, I was spending a lot on pay per click, just typing random keywords, just Google the most expensive pay per click keywords, then you just go down the list, you Google for it.

Look at people on page 2, and 3 for the paid ads, not on page one, and you just call each and every single person up.” I was calling and be like, “Hey you want more traffic. If I get you results pay me, if I don’t, don’t pay me.” Everyone is like, “You are crazy.” I’m like, “I landed some contracts, they’ll pay me 15 grand a month when I was 16 years old from that. I was just cold calling.”

They are like, “What do you do by your age or any of this,” well objections you hear. I’m like, “I just speak to the phone, I never told anyone my age. I just called. I’m like people think things through too much and they are not willing to take action. You know what it worked, and after that once I started cold calling the business started growing a bit more, and we started building a brand getting inbound increase, I was like, “I want bigger companies.”

I would just go find everyone who is venture funded, these days it’s easier because you can go to Crunchbase, and I would go through all the results of the people recently funded, and I would email out the VC who recently funded them, and I would break down everything that they are doing to screw up their marketing, and I would just give it to him for free in a pedia.

You know what a lot of those people do, they are adventure guy, and then they are just like bored and they would be like, “Hey you should hire this guy, he seems pretty smart.” I got a lot of contracts that’s way.

Steve: Yeah, I don’t want to get into this whole millennial debate because I feel the same way like people just assume that they are entitled to get things without doing the hustle, and without doing the leg work, because I run a class of e-commerce students. They put up the site and they expect sales to come right away, but in the beginning I remember for myself, my online store, I was on the forms pretending to be a woman trying to get people to come back to my site to buy my handkerchiefs, and so a lot of that early work early on is what allowed us to gradually grow.

Neil: Yes, but you know what, you are scrappy, and most people just aren’t willing to put in the effort, but that’s the whole point that we are trying to make out of the book. We are not just trying to say these crappy book going through all the cons, and teaching you how to do exactly what you are doing while I’m doing, and what other people are doing to succeed, because I don’t care if you are rich or poor, you believe you are book smart or you are not, you can succeed if you put in the effort. Yeah you may not be a billionaire, or you may not even be a millionaire, but you will be better off than where you are right now if you use these tactics.

Steve: How do you convince someone to hustle?

Neil: You can’t convince them, they have it in them. They want to have to succeed; they want to have to do better.

Steve: As part of your book is it mostly case studies then, like how are you going to get these people to…

Neil: I want to say case studies, it breaks down like concepts. For example one of the things we break down in the book is how to find your passion. Most people don’t want do anything or hustle or put in the effort, because they don’t know what they want to do in life. We talk about how to find your true passion in life. Most people believe it’s oh I’m born, and I’m growing up, and I know as a kid I wanted to be an astronaut, so that’s what I’m going to be.

When you find out when you are older, what you wanted to be as a kid usually isn’t the same thing, like when you were a little kid, what did you want to be? I’m pretty sure it wasn’t related to selling stuff on the e-commerce or on the internet.

Steve: Absolutely.

Neil: You wanted to be like a doctor, a lawyer or something or…

Steve: Engineer.

Neil: Engineer, all right. I actually wanted to do one too; I also wanted to be doctor.

Steve: Of course, you are Indian.

Neil: There you go, and you are selling stuff on the web, but you know what most people think like, “Oh everyone just knows what they want to do. It doesn’t matter what your age is, you don’t just know what you want to do as you are older.” But as you try things you learn what you don’t want to do and you figure out what you are passion about, and eventually it leads you down the road of this is what I want to do in life. That’s what we teach you in the book, it’s like a trial and error, and we break down the whole process of this is how you figure out what you like and why.

Steve: Cool man, so just backtracking now a little bit, let’s say someone is out there who wants to start a business because they don’t like their job, what is– if you could sum everything up, what would be the best piece of advice for them, that you could give right now.

Neil: Well just do it, go find something you love, go find a problem that you can solve related to what you love, and from that point go and just do it. You may have a lot of questions, how do I start up a business, how do I do this? Figure out on your own. The reason I say that is if you can’t figure out those basic things, you won’t figure out how to succeed because starting up is the easiest part.

Steve: Do you believe that if you are passionate about something you can find some way to monetize it?

Neil: No, not always, because some things are not monitizable and some things shouldn’t be monitizable. I’m also like a hippy in certain ways like it’s almost passion about cancer research, and they figured how to solve cancer, yeah it’s monitizable, but should they monetize it? Hopefully not.

Steve: Okay, and so it does require a certain amount of research.

Neil: Yeah like it does because– what’s a good example of this? If you can create videos and tutorials on how to be a really good knitter okay, yeah you can try to make money selling knitting products, but you can go to YouTube and find so many stuff for free, how can I do it too well?

Steve: But you could probably tie that into some sort of physical product play.

Neil: You can, and that’s a bad example, but the point I’m getting is you are not going to make a lot from that.

Steve: Sure, sure, okay cool man well we have been chatting for 40 minutes, I want to be respectful of your time since you are a busy man. Where can they find you, when is the book coming out, and what conferences are you going be at?

Neil: I believe the book is coming out September 13th, I could be wrong on the date, but I believe it is around 13th. They can find me at neilpatel.com, the next conference I’m at is [inaudible 00:45:54] in Brazil.

Steve: In Brazil? Cool.

Neil: Well because I do it international.

Steve: Really, are you going to be speaking Portuguese or?

Neil: No, it’s funny, last time I was there speaking which was technically a week ago, last week, yeah some week ago I was in Brazil, and I started my speech, and I’m like I was telling them how I love Brazil. I started in Portuguese which I forgot how to say now, and I told them I was going to do my lecture in Portuguese, and they are all excited, and I’m Like, “Just kidding.” But there is always translators there, and so everyone is wearing headphones.

Steve: Oh interesting, okay so they don’t understand you, so someone else is translating on the fly, interesting.

Neil: Yeah because most of conferences that I speak at are international, and almost in all of them there is translators there.

Steve: Actually why is that by the way?

Neil: Like for me it helps me learn more. I know the US market really well. When you go see other random countries that you have never been to, you see the culture, how people interact, how they buy online, the way their society works, and it’s just refreshing and you actually learn a lot, the world doesn’t revolve around the US.

US is a great country, I love it to death, and the opportunities we have. Even our government people complain about it, but if you go to a lot of different regions, it’s hard to set up a business in certain countries, like the US is very pro, entrepreneurship and business. They are helpful in many ways, but you just learn a lot, like culturally on how different things work, and you realize that there are so many opportunities overseas that no one is speaking about.

Steve: Let me ask you this question to close this interview, you are a successful guy, you probably have more money than you know what to do with, so what is your goal from here on out, like what are your projects that you are going to take part in?

Neil: I will start farming, help others out, and that’s really it. I don’t really have an objectives like I got to do this, I got to do that. I just really enjoy blogging, and helping people out. Like when I get an email from a mom who is running a bed and breakfast and cheese, it’s like, “My son had to work at Home Depot, because we couldn’t afford to send him to college and they didn’t want to do loans.

And she’s like now by reading your stuff, my bed and breakfast is like packed all the time. He was able to quit his job, and I was able to send him to college.” That makes me happy. Is she a rich millionaire? No, but impacting that one person’s life for me it’s satisfying.

Steve: I totally know how you feel, yeah after running the class and the blog too, I can totally relate.

Neil: Yeah, it’s an amazing feeling; it’s not about the money. I’m giving away bonuses when people buy my book right now, and I get people even like oh we can’t afford, I’m like, “Here is the bonuses for free.” When they respond back they are like, “Thank you, this has helped change my life.” I’m just happy, I know this sounds crazy, but it’s not about the money, it’s just about helping others.

Steve: Cool man, hey Neil thanks a lot for coming on the show, really appreciate it.

Neil: Thanks for having me.

Steve: All right take care.

Hope you enjoyed that episode. I’ve actually been a huge fan of Neil for a very long time, and I was thrilled to finally get him on the podcast. The man knows what he is doing, and you have to go and check out some of his monster guides that he has written online.

For more information about this episode, go to mywifequitherjob.com/episode 137. Once again I want to thank sitelock.com for sponsoring this episode. Now if you have an e-commerce store, go there right now, and find out how long it takes to load. Does it take more than 5 seconds, and if so did you know that 60% of consumers only wait up to 5 seconds before bouncing from a site, and never making a purchase.

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Once again if you are interested in starting your own online business head on over to mywifequitherjob.com and sign up for my free six day mini course on how to start a profitable online store. Sign up right there on the front page, and I’ll send you the course via email immediately. Thanks for listening

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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136: How To Sell An Online Business And Why Spencer Haws Sold Long Tail Pro

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136: How To Sell An Online Business And Why Spencer Haws Sold Long Tail Pro

Today I’m thrilled to have Spencer Haws back on the show. If you don’t remember him from Episode 54, Spencer runs the popular blog NichePursuits.com where he teaches others how to start niche online businesses.

He was one of the speakers at the Sellers Summit talking about SEO. He’s also the creator of Long Tail Pro which is one of the best keyword research tools on the market today.

But recently, he decided to sell that business and being the nosy guy that I am, I wanted all the details. Enjoy the show!

What You’ll Learn

  • Why Spencer decided to sell Long Tail Pro.
  • What services he used to find buyers.
  • The pros and cons of using a broker. How much do they charge?
  • The due diligence process.
  • How developer support works when selling a software program.
  • What he looked for in a sales partner.
  • How the sale was structured.

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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast. If you are new here, it’s a show where I bring in successful bootstrapped business owners to teach us what strategies are working and what strategies are not. Now I don’t bring on these famous entrepreneurs simply to celebrate their success, instead I have them take us back to the beginning, and delve deeply into the exact strategies they used early on to gain traction for their businesses.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start your own online business be sure to sign up for my free 6-day mini course, where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin, I want to give a quick shout out to sitelock.com for being a sponsor of the show. SiteLock is the leader in website security, and protects over 8 million websites by monitoring them from malicious activity 24 hours a day, 7 days a week. So here is the thing, most online business owners never think about security until they get hacked. My online store got hacked long ago, and it was the most miserable experience ever.

I basically lost thousands of dollars as I frantically tried to patch the issues, and get my store back online as quickly as possible. In the event that you get hacked, call sitelock.com, and they will help you out, or even better protect your site before you get hacked. Right now you can get 3 months of SiteLock free if you go to sitelock.com/mywifequitherjob. Once again that’s sitelock.com/mywifequitherjob. Now on to the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m thrilled to have Spencer Haws back on the show. Now if you don’t remember him from episode 54, Spencer runs the popular blog nichepursuits.com where he teaches other people how to start niche online businesses. He is also one of the speakers at my first conference the Sellers Summit and he spoke about SEO.

He is also the creator of Long Tail Pro which is one of the best keyword research tools on the market today. But recently he actually decided to sell that business and being the nosy guy that I am, I wanted all the details. So I brought Spencer on the show to talk about the sale and also to see what he is up to right now. And with that welcome back on the show Spencer, how are you doing today man?

Spencer: Thanks Steve, it’s great to be back on the podcast, and I’m doing great. I’m sitting in a new house, we just moved a couple of weeks ago. And so I’m breaking in this office with your podcast here.

Steve: Yeah, we were joking how Long Tail Pro money bought that house.

Spencer: That’s right. Definitely there was a little bit of Long Tail Pro money that helped us decide we should move.

Steve: So we actually covered your bio back in episode 54, and I don’t want to rehash any of the old things that you said. So let’s just jump into the meat of it. First and foremost I am very curious why you decided to sell Long Tail Pro, which was like your baby for so many years right?

Spencer: Yeah absolutely. So I did, I started Long Tail Pro over five years ago. It’s been my baby working on it day in day out for five years. And I am — I was the 100% sole owner. So I decided to sell it for a couple of reasons. One is I had been working on it for a really long time and grown it to a certain point. And anytime that you do that I feel like maybe it’s time — I felt like maybe it was time to take a little bit of money off the tables, right? And just—I had put a lot of effort in and knew that it was a valuable business, and perhaps I felt like I needed to take some cash off the table.

And sort of the other side of that coin, the other reason is when you have so much of your business sort of in one thing, right, Long Tail Pro is doing very well, and I would have hated to see it start to decline. So there is a lot of risk especially when you’re relying on Google, I was always worried — and as business owners maybe we worry too much about things that don’t ever happen. But I always think about what if Google changed how keywords worked and how they ranked websites and that sort of thing.

So I felt like there was risk there. I felt like you know what, I have had a great run, I’m going to take some money off the table, take some risk off the table and hopefully let somebody else take it to the next level. So that was my couple of reasons for selling the business.

Steve: So when you are talking about Google making changes are you referring to just them taking away like the keyword API and stuff like that, that could just totally destroy the business?

Spencer: Yeah that definitely was the prominent reason I would say. If they would have shut down the Google Keyword Planner or yeah any APIs, that’s really where we were getting a lot of the data right? And that would have been devastating to the business.

Steve: Has that happened at all in the past five years, where Google has made some sort of drastic change and you had to adjust with Long Tail Pro?

Spencer: Yeah that definitely did happen. Before the Google Keyword Planner I believe it was just called the Google Keyword Tool, and that was two and a half three years ago where they made that switch. And that was quite a dramatic shift, because we had built our software on the old Google Keyword Tool. So we had to re-program how we were gathering data and everything.

So that’s quite a large change that had me scared for a long time two or three years ago. So I went through that and everything was fine. But yeah there definitely had been changes and we had always been able to adjust along the way.

Steve: Okay in terms of maintenance, was it a lot of work towards the end?

Spencer: In terms of maintenance as far as just coding, or just business in general?

Steve: Just in general like how many hours of your day was devoted to Long Tail Pro?

Spencer: I would say about half my day was devoted to Long Tail Pro, the other half was other projects, Niche Pursuits and my other websites and things like that. I really had setup processes and had people helping me out, a customer support team, I had developers, and Jake had really become my affiliate manager and sort of outreach person.

So really it had become fairly hands off in a way. I just worked on the larger strategic decisions or putting fires out when that happened. So it’s about half my day I would say.

Steve: So from a marketing school were you doing mostly marketing work or?

Spencer: Yeah I would do — that’s probably marketing and then just management overall, right? So marketing, strategic marketing, reaching out to different contacts or setting up special offers. Or yeah just tweaking sales pages and that sort of thing is primarily what I was doing.

Steve: Okay and so can we talk a little bit about just multiples real quick before we get into the guts. Like it’s a software company, and what multiples typically are there for software companies for sale?

Spencer: Yeah definitely there are definitely some standard multiples, and it varies with size usually. And I don’t know the exact breakdown, but typically when you buy a website, whether it’s software or just affiliate website, that on the lower end, so maybe under 100,000 or something like that, right? You are looking at maybe 20 to 25 monthly earning. So maybe 2X annual earnings or something…

Steve: Earnings or revenue – earnings, right?

Spencer: Earnings correct yeah.

Steve: That seems really low considering ecommerce stores get like 3X.

Spencer: Yeah, and it can depend on the size. I mean if — a good market place to look at if people go to Empire Flippers, that was their standard for a long time was a 20 times monthly earnings. They’ve since — because they are primarily dealing with smaller websites under $250,000 and a lot under $100,000. So 20 to 25 is roughly what they sell for. And then as you get a little bit bigger, or just depending on the company it can be 3X or plus, right?

Steve: Okay, can we comment on like where your Long Tail Pro kind of fell into on that spectrum? Because I just know based on my affiliate earnings you are not in that spectrum, so…

Spencer: Yeah mine was just slightly over 3X.

Steve: Okay, all right got it. And was it — so it sounded like you weren’t spending a whole lot of time on it, and so 3X means — so 3X earnings. So like did you ever feel at any time that why don’t I just run this for another 3 years, and then just take the money, because it was relatively low effort, right?

Spencer: Yeah I know it was relatively low effort, and again it just sort of the thing that kept me up at night were just the risks involved. I felt like if Google changed anything, and I also should say that when I had built the application, it was built on Adobe Air which is a fairly old platform. Maybe back in 2010 it was still in its heyday, but now it’s not.

And so there was always some work around with that. So I just– yes I certainly thought about yeah I could just write this and collect the earnings for a few years. And that would have been an okay move, but then the rest just kept me up at night sometimes, and the opportunity arose to sell it, and so I took that opportunity.

Steve: Okay, so let’s say I want to sell my company, like can we just kind of talk about the process involved, like what was your first step?

Spencer: So yeah absolutely, I really didn’t know, I had never sold a large property before. I have sold a few websites here and there, but I had never sold a software company, and this is the first software company I had built. I really didn’t know the process. So my story maybe won’t match up with what other people do, but I actually ended up going to Rhodium weekend it’s a conference primarily for people buying and selling websites.

Steve: What is it called sorry?

Spencer: Rhodium weekend.

Steve: Rhodium, okay.

Spencer: Yeah, and I have been to it before and so I knew that this guy, a lot of web brokers attended this type of conference. So I actually reached out a few weeks before this conference took place and started chatting with Chris Yates, he’s the one that puts on that conference and just saying hey I’m considering maybe selling Long Tail Pro, do you have any tips?

Anyways that sort of snowballed into me actually having a small round table at the conference where we talked about what would happen if Spencer sold Long Tail Pro, and what’s the process. So it’s kind of cool, I got some consulting at the conference right there. And basically the steps for selling your company is typically– especially when you have larger company is to contact a broker to work with them, to go out and find buyers for you, to get your business listed if — and there is a few out there quite like brokerage…

Steve: FE International?

Spencer: FE International, and a few others that would do this for you. So that’s typically going to be the step that people are going to want to take. That’s not actually how it happened for me. I was thinking, okay when I get back from the conference; I’m going to start talking to some brokers and get it listed up. But actually because I talked about it at the conference, word got out, and somebody contacted me privately before I even had a chance to list it…

Steve: Really, okay.

Spencer: And we started discussions there and that person or that group ended up buying it from me.

Steve: Can we talk about like what was going — what are the pros and cons of using a broker? Like why did you decide to go with that person who contacted you instead of getting perhaps like a bidding word going?

Spencer: Yes so there are definitely some advantages to going to a broker, because as you mention they can reach lots of potential buyers. They do charge a brokerage fee, which I was basically able to avoid by not going through a brokerage.

Steve: Do you know how much that is?

Spencer: Well — I should have come better prepared for the percentage, it’s usually a percentage off of the top, and I don’t recall what it is off the top.

Steve: Was it double digits though, or single digits?

Spencer: Yeah it is close — that actually maybe it’s very close to 10%. It maybe 10% like FE International maybe right around that. Don’t quote me on that, but I believe it’s pretty close to 10%.

Steve: So it’s significant basically?

Spencer: Yeah, it is a significant brokerage fee, but they typically do a lot of work. They get all the due diligence, paper work in place and present that to potential investors. I went with the group that contacted me first, because I had also looked at the multiples that similar software businesses were being sold for, and their bid was very competitive with what I believe I would have gotten anyways.

And the process was much quicker going privately just because they had a different and faster due diligence process than maybe other potential buyers would have. So there is a few to less headaches there, because I actually knew the potential buyer — I had known the potential buyer for a few years actually.

So all of those things sort of added up competitive, multiple, less due diligence, smaller brokerage fee, or no brokerage fee, and I already knew the potential buyer. I had some trust there, and I felt like they would do a great job with the business, so I just went with it.

Steve: Can we talk a little bit about the due diligence process, like what are some of the things that they ask for, did you have to do any work involved?

Spencer: Yeah, they asked for all financials, so basically 3 years worth of financials, and in my case for the last 12 months they wanted a breakdown of all revenue and expenses broken down by month for the most recent year, and then just the 2 previous years before that, just an annual breakdown essentially.

Steve: When they ask for this, do they need an independent party to audit it, or is it just based on your accounting?

Spencer: They did it on my accounting, and that definitely could be different based on the potential buyer, so they essentially just asked me, what are your numbers? They did ask for logins, so they were able to login or get screen shots of a lot of different revenues or expenses.

They actually got my affiliate logins so they could see what affiliates were doing what, and those sort of things, so they did verify with logins as well. It was a lot of work, but I believe it is a lot less work than if I had gone with other potential buyers.

Steve: So they go in, and they look at all of your numbers, were there any other factors involved that they were looking for, and let’s talk about those?

Spencer: Yeah, I mean they really want to look at all aspects of the business, and they are thinking about what are the risks here, and one of the risks in my case is they felt like, “Well if Spencer stops promoting or mentioning Long Tail Pro on Niche Pursuits, that’s a big chunk of the business, because definitely nichepursuits.com has always sent a lot of traffic over the Long Tail Pro.

And so there was some clauses in there stating that I would continue to write about and keep all my existing links on Niche Pursuits for the next 3 years. Those sorts of things, and then there was definitely strong non compete clauses, you know I can’t go out and create another keyword research tool for a number of years, those sorts of things. A lot of that due diligence as far as I need to keep putting in some work, because I am so integral to the business, and that I can’t go out and compete directly with the existing company.

Steve: What about your email list and social media properties, are those all part of the deal as well?

Spencer: Yes, that was all part of the deal, and that was definitely a big part of the deal was the size of the email list. I had to turn all that over to the new buyers, and certainly all the social media properties, and really everything associated with Long Tail Pro, and the brand was turned over to the new owners.

Steve: When you turn over something like an email list, are you allowed to keep the people on the list for a separate list, does that make sense?

Spencer: Right, that does make sense, no, I was not. So once I turned over that email list, I was no longer allowed to email them separately for other things. That list is theirs, they own it.

Steve: You mentioned that you looked at other companies who sold at similar multiples, where did you find that resource that you could do such a comparison?

Spencer: Yeah, so actually on FE International is where I found some similar software companies, and in fact on e of those was Hit Tail that was sold not too long ago. They were sold through FE international, so they actually provide– you can get– they provide the basic stats, what’s the multiple, what’s the earnings and those sorts of things. That was actually a very direct comparison, and my multiple was very similar to what Hit Tail sold for as well.

Steve: When you are thinking about this multiple, like what other factors go into it. I would imagine growth, and a whole bunch of things outside the immediate numbers fall into play, right?

Spencer: Right, yeah you are absolutely right, and it’s not an exact science either. I mean it’s something that can be negotiated. Certainly growth, and market potential, and other things that might come into play can increase or decrease the eventual selling price, and it was one of those things where the potential buyers presented a multiple, and then we negotiated from there.

Steve: Okay, what I was trying to get at actually was Long Tail Pro is still growing every single year during the sale?

Spencer: Yes, Long Tail Pro has grown every single year that I have owned it, and it’s still growing.

Steve: Okay, and in terms of marketing, like from their perspective was there any more clauses for you to continue to help market, or did you turn over the marketing all to them?

Spencer: There were some still some clauses for me to continue marketing. For example whenever there is any new major updates, they want essentially me to be available to blog about it on Niche Pursuits, so I have some ongoing commitments. When there is any big changes to the software, I need to mention that and promote that.

For example the change has been going through to make Long Tail Pro cloud based, and so when that happens which should be very soon, I need to blog about that, essentially promote it, and say, “Hey now it’s cloud based, you guys should go check it out.” I do have those ongoing commitments to continue blogging, and doing a few other things if there is any big promotions to get involve a little bit there as well.

Steve: Okay, and any software implications? For example let’s say I run a software company, and I want to buy Long Tail Pro, and I want to make sure that it could integrate in with my platform, were there any discussions about like leveraging your developer? Actually first question before that one, was the developer part of the deal?

Spencer: Not really, they did talk with the developer before purchasing the company to make sure that he would come over, and the reason I say not really is because they had always planned to bring in their own developer anyways. My existing developer stayed on for– it was really only maybe 2-3 months before they had fully integrated their own development team, and transitioned out the old developer.

Steve: Okay, and so did they do any like did you turn over the source code for them to do due diligence on?

Spencer: Yes, we did give them access to view the source code, so they brought in their own developer to view that, and definitely do due diligence to make sure it was clean code, and easy enough to work with, that sort of thing.

Steve: Okay, and naturally you had to sign some sort of NDA to see all this stuff, right?

Spencer: Right, correct.

Steve: Okay, so how was the deal structured? Can we just talk about the negotiation process, like what were the important things that you wanted, and what were some of the things they wanted, and how did you compromise?

Spencer: Yeah, absolutely, so I’m mentioned a couple of things that they wanted, a lot of it did surround me, and me still blogging about it, still being involved a little bit, and maybe I should back up, we didn’t mention this, but I still own some of the company. I still own 20% of the company.

Steve: Okay, I didn’t know that.

Spencer: I didn’t sell all of it because I still honestly I feel like there is tons of growth potential. I think it is a great business, and that was actually positive for them to have me still be a small owner because it aligned our interests. Both of us still want the company to grow, and do well.

That was a lot of what they wanted anyways is for me to stay on. And so we did negotiate that a little bit as far as how much should I be blogging, and mentioning that, and we negotiated as I mentioned anytime there is a large update, what might be considered a large update to the software will be required to blog about it.

Steve: How did you come up with 20%?

Spencer: We played around with a couple of different numbers. I definitely wanted to sell the majority of it. There is really no magic reason, I think we initially started out at 25%, and I don’t know if this gets too much into the weeds, but it was a management group of 3 guys that essentially were leading the investment to buy Long Tail Pro. They brought in a number of other investors as well, to come in on the purchase, so there is about 15 total investors, that bought into Long Tail Pro.

Just the way the numbers worked out, so that the 20% is where it landed with you know the investors and how much money they brought, and how much percentage I still wanted. I knew I wanted more than 10%, and anyways we just ended up with that number.

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In terms of your involvement though, the commitment basically for you for that 20% is just to continue blogging about the tool?

Spencer: Primarily yeah, primarily and to not change anything from old links that I had or anything like that. I couldn’t go out and all of a sudden all the traffic I was pushing to change those links somewhere else, but yeah.

Steve: Are you still expected to be somewhat like the face of the business?

Spencer: No, not really, although they did– this also was another piece is they didn’t want me to talk about the sale for at least a few months, and so you are one of the very first times I have talked publicly about this. I sold the company in February, so it’s now been almost 6 months, so they want me to have a quiet period just so that existing buyers didn’t believe I had left the company.

Steve: Sure, that makes sense.

Spencer: I have been the face still of the company, but I’m going to be hopefully less and less so here now that I’m going to be talking publicly about it.

Steve: Okay, and in terms of what you wanted out of the deal, what were some of the things that you were pretty adamant on?

Spencer: Yeah, so I really wanted Long Tail Pro to go into good hands. I wanted somebody that had a similar vision to me, in that I believe the Long Tail Pro can continue to grow, and continue to serve the user base that we’ve served. There was a lot of little points surrounding that in terms of just the direction of the software, I wanted to make sure that we didn’t alienate our user base.

Those were– the fact that they are moving it over to the cloud, that was something that I always wanted, and so really just a lot of things that they were going to do to the software is really reason that confirmed to my head, “Hey I should be selling it to these people.” In terms of negotiation of what I wanted, a lot of the negotiation was just surrounding the price. Once I sold it they were all on board with this similar strategy, price, and then just yeah my involvement.

Steve: How long did this process take from start to finish?

Spencer: The process for us, I’m trying to think, so Rhodium weekend was in October of 2015, and I started talking to these guys probably at the end of that month, and then it was just early February, so it was …

Steve: Like 5 months, 4-5 months.

Spencer: Yeah maybe 3-4 months of talking and discussing, so relatively quickly actually.

Steve: Yeah, that is really quick actually, and I noticed that they changed the model to a more SaaS based model. Was that something that you were planning on doing anyways or?

Spencer: Yeah it was, it was something that I was planning on doing. It’s funny because I had taken a look at my business, and I was at the point, “Okay how do I take this to the next level? I need to strategize; I need to probably take it to the cloud. I probably need to make it a full SaaS model, so everybody is on a monthly plan.” I came up with a strategy, and then I decided to sell the company. I’m happy to say that yeah, they ran with the same plan, and have moved over to a full SaaS model, and done all of those things.

Steve: Yeah, I remember in the back of my mind at least for the longest time, I was wondering how you could possibly support a single sale purchase model, and support these people, like you almost have to go to a SaaS model especially if Google is going to be changing everything from time to time.

Spencer: Yeah, you really do, I mean had started Long Tail Pro, and it was a onetime purchase really to model Market Samurai, my top competitor at the time back in 2011. And that worked for a while, but I could quickly see that I needed some monthly recurring subscription, so it actually was in 20; I want to say January 2013, beginning of the year that I actually introduced Long Tail Platinum that was a monthly subscription. So definitely having a monthly subscription, recurring revenue was huge for the business, and there is no way I could have grown Long Tail Pro like I did without that piece.

Steve: Okay, cool well you know Spence, let’s switch gears a little bit, and you know you have 50% of your time back, and so I’m just curious what you are up to now, like what are you doing with your time now besides buying houses and moving?

Spencer: That’s right, now that the house buying is settled down, we are getting moved in, I do have a couple of more projects going on. One thing I partnered up with a couple of guys, and we have been out buying websites, and doing everything we can to grow those, and so I’m with some partners that we’ve been building websites for 10 plus years, each of us individually essentially, and so we have a lot of skills.

What we decided to do is well why don’t we train others, give them our strategies for keyword research, and creating content, and doing link building to help us grow these websites, and then they can essentially do the work for us, and in exchange they get all those strategies and skills that they can go and use eventually on their own websites.

This is the model that we have implemented. We have been hiring interns, they come, they work for us for a period of 4 weeks, they go through our training program, and then they help us grow these websites. We call it authority machine internship where we bring on a number of interns and they can learn from us, and work with us on some websites, and help us grow those websites, and then after the 4 weeks they go, and of course hopefully can work on their sites and see the same growth there.

And because we have already set up a whole team to train others, and to give people, we’ve put together video tutorials and all these things. We also sell that package of training to people. If they don’t want to work on our websites and don’t want to go through the 4 week training and work for us, they can just buy the course or the training package, and go through on their own as well.

Steve: This is a virtual training, like is there a live component to it?

Spencer: Yes, it is a virtual training, we do have some webinars, but it is all virtual, work from your own home, wherever you want.

Steve: That’s an interesting model, so you are getting interns, and I imagine they are just doing this just for the learning point where you are not compensating these interns, are you?

Spencer: Right, correct.

Steve: They are helping you build your own authority properties. Can we talk about these authority properties? Are they for the purpose of affiliate revenue; are they for physical product sales?

Spencer: They are all affiliate websites.

Steve: Okay, so the goal is to rank these sites in search?

Spencer: Correct, we are really good at SEO, that’s our background, so exactly we are trying to grow the search traffic.

Steve: That’s interesting, because I remember in our last interview you used to, like way back in the day you had like hundreds of niche sites right, and then you transitioned to software, and then you transitioned over to physical products and e-commerce, and it seems like you have gone back. Would you consider these niche sites?

Spencer: Yeah, I mean, I don’t know what the right phrase is, there are larger websites, but they are. They are definitely focused on one niche, or one area, so I would call them niche sites, but there is something that we hope to grow into much larger properties. I mean to give you an example, one website that we purchased just a few months ago, we’ve since added 500 articles or pieces of content to that in a period of a couple of months, so these are large properties, but they are really focused on one niche.

Steve: I see, so to produce that much content, I guess you are, are you paying people in the US, or are these interns doing the content building?

Spencer: Yes, so the interns are doing the content creation, so that’s the work that they put in, they get all the training, and see the internal workings of our website and our strategies, and then they have to write like 10 articles in a period of 4 weeks, so that’s some of their payment in exchange for the training that they get in working with us.

Steve: Can we talk a little bit about just content creation real quick, so I noticed that the trend is more towards long form content now, as opposed to just quantity, so are these 500 posts, are they like beefy posts?

Spencer: Yeah, so they are all roughly 1500 words long, so fairly decent sized articles. They are not short articles, and we do also create charts, and images, and maybe insert YouTube videos, so they are what I would consider fairly in-depth articles, all of them.

Steve: Okay, and then you have some of these authority sites up already, can you comment on how much revenue they are generating?

Spencer: Yeah, so one of them we purchased a few months ago, and it was making roughly $2,500-3,000 a month when we bought it, and we have now doubled that income, so it’s making $5,000-6,000 a month. We’ve more than doubled the organic traffic in about 3 months to that particular website, and their revenue is increased.

It locks up with that, so we’ve basically doubled that. The other website that we purchased– well we purchased a few, we just barely purchased one a few weeks ago, so no results there, but the other website that we purchased also in April, so a few months ago. We have actually 5Xed the organic traffic coming to that website.

Steve: Really, in what period of time?

Spencer: About 3 months.

Steve: Crazy, okay, so since we’ve been on the topic of selling businesses, can we talk a little bit about your buying criteria?

Spencer: Yeah, so for these websites we are definitely looking for established websites that are doing– we are primarily looking for websites that we know will do well in Google. The way to know that they are going to do well in Google is that they are already doing well in Google for certain key terms. So we look at these websites, we see what they are already ranking for, and we look at the authority of them, so have they been around for a long time, does it look like Google is treating them well?

If they are we feel like that puts you so far ahead of the game already. We come in, we add tons of content, we have strategies for building lots of links to add even more authority, so that’s primarily what we are looking at is where is the traffic coming from, how well is it doing in Google, and how authoritative is this website?

Steve: Of these sites that you’ve purchased, clearly the owners were not doing certain things, so are there any certain aspects that you are looking for? Like the quality of content or I don’t know, what are you looking for that can be improved upon?

Spencer: Yeah, a lot of these websites, it’s not that the web masters were doing anything wrong, they were actually doing a lot of things right, you know to make them Google friendly, but like all of us myself included, we have projects that just fade, right? So a lot of these websites just haven’t been worked on for a year plus, right. People just sort forget about them, they have moved on to other things.

The first website I mentioned that was making 2500 to 3000 a month, the people that owned this website they have much larger websites that they are working on, right? And so these are just little websites. So that is one of the things that we look at is how long has it been since people have added content to this. Is this something that they’ve forgotten about and just not putting any work into? Because that’s a lot of it, you just got to grind and put in the work and if you do that consistently you are going to see growth.

Steve: And in terms of making money via affiliate, are they in some sort of niche that you kind of specialize in, or they are all across the board?

Spencer: Right now they are all across the board, so ranging from health to computers and really kind of just across the board. We do have a couple of websites because we are trying to buy websites essentially every month here as a business. Yeah we are pretty aggressive; we have quiet aggressive growth goals here. But we do have a couple of websites in the works that maybe in the blogging niche itself, right?

And it may give us an opportunity to not only grow these websites that are already valuable, but because it’s in a blogging niche we know there is people that are interested in writing. We actually may be able to essentially hire visitors coming to these websites as interns for [inaudible 00:40:43] right? So it would become this circle of we are actually generating traffic for internship to work on these websites that maybe they came to originally, right?

Steve: That’s pretty ingenious actually, because like the tedious part or the time consuming part is the content. And by getting these interns to do the content, yeah it seems like a pretty good exchange. So how many interns do you have?

Spencer: It varies. So we’ve done a few different internship sessions, four week sessions, and we bring on — I mean like the first one I think we had 20 or so. And this next one we are hoping to have, I believe we are trying to hit 60. So we are bringing in a lot. And we actually have a whole team, there is a group of 10 guys that are happy to manage this whole process that are available via Skype, and are answering individual questions. So we have quite a team behind us making sure interns are taking care of it, going through all the processes and procedures that we’ve set up for this.

Steve: So I’m just curious and this is just kind of me thinking about this, like what’s the incentive for them to just not take the training and just run and not do the content?

Spencer: So the way that we sort of make them have some skin in the game is we do ask them to put down a deposit. So they put down a deposit of a few hundred dollars, and then once their work is completed, once they’ve done their 10 articles we return the few hundred dollar deposit. So that’s sort of our way to make sure they are committed to the process.

And we’ve always returned the deposits and we have no desire to keep their money. Sometimes it takes a little longer than four weeks to get them to finish what they are doing or whatever. Or if they really complain, we just give it back to them anyways. So [inaudible 00:42:42] guys, but yeah that’s our incentive for them to stick around.

Steve: That also implies that they all have to be able to write?

Spencer: Yes, we actually have them go through an application process. So we have them write a very short like 300 word response to the question. And then using that we judge okay can they write well, and if they can’t we don’t bring them on. However we may start allowing some people to come in and train them the process to actually outsource the content, but we haven’t really done that so maybe [inaudible 00:43:19] into that right?

Steve: Yeah.

Spencer: But there is certainly a way even if you don’t speak or write well you can outsource content.

Steve: So they don’t require any domain specific knowledge at all?

Spencer: Correct.

Steve: Wow, that’s an interesting model. And it sounds like the results that you’ve been getting have been fairly quick. Like three months is a very short amount of time in the SEO world, right?

Spencer: Yeah it absolutely is. So we do a couple of other things like I said. Content really is a huge piece of that, but then we go into the website and make sure it’s all SEO friendly and maybe speed up the website and do some other things so it loads faster. And all of those things combined along with some like building that we do to just really boost the website.

Steve: Cool man, so where can people go if they are interested in your internship?

Spencer: Yeah, so people can head over to authoritymahcine.com, and maybe we’ll make sure we have a link so that we can track them back to you. So let’s go ahead and do authoritymachine.com/Steve. If people go to that, we’ll make sure to have a specific page for any podcast listeners here. So yeah authoritymachine.com/Steve and they can see the different options that are there, internship or training and learn more about it.

Steve: Cool man, yeah it sounds like a great way to learn without having to pay any money and actually get some experience in the process.

Spencer: Exactly, and I think what a lot of people really like is the fact that they can see the actual websites, right. They can go to the real domain; they can see what we’ve done to that website. And then of course through the training they learn, well here is what we are going to do to grow the website. And really it can be a great way for people to gain some knowledge and skills to apply to their own site.

I mean the fact of the matter is we really are teaching what works, because these are our own websites that we purchased, and we want to return our money, right? And so we are definitely teaching interns what we believe are the best processes and procedures for doing these sorts of things. So we feel like it’s a win-win, and hopefully the interns that come in feel the same way.

Steve: Cool and in terms of your long-term plan for these sites, are they to sell them like your flipping sites or are you planning on just keeping them?

Spencer: Yeah the long term I mean we may hold on to some of them, but for now at least we feel like probably after a year or so of holding these sites we’ll probably turn around and flip them.

Steve: Okay wow, so you are really embracing this whole buy and sell model?

Spencer: Yeah, it’s kind of fun.

Steve: Awesome, well hey thanks for sharing the details of your sale of Long Tail Pro. I’m honored that this is the first podcast that you’ve talked about it.

Spencer: Yeah absolutely, no it’s been great to chat about it.

Steve: Cool well thanks for coming on the show Spence, and we’ll see if — I’m sure a lot of people listening are going to be interested in the Authority Machine, so cool man.

Spencer: Hey I appreciate your time very much, and I appreciate the listeners are sticking around and let us chat about it. So thanks again.

Steve: Cool man, take care Spencer.

Spencer: All right bye, bye.

Steve: Hope you enjoyed that episode. I have been a long time user of Long Tail Pro, and it’s probably a tool that I use the most often for my online businesses. Now I have had several people on the show who have bought businesses but not sold them. And it was interesting to get the perspective from Spencer, and his motivations behind the transaction.

For more information about this episode, go to mywifequitherjob.com/episode136. Once again I want to thank sitelock.com for sponsoring this episode. If you run your own hosted online store, or any website for that matter that handles monetary transactions, you should give SiteLock a look. They can also help your site with site speed issues as well. Did you know that ecommerce sites that take longer than 5 seconds to load often shed customers?

SiteLock offers a service called TrueSpeed which is a content delivery network that can increase download speeds by up to 50%. So go check out SiteLock.com today at sitelock.com/mywifequitherjob, and get your first three months free. Once again that’s sitelock.com/mywifequitherjob.

Once again if you are interested in starting your own online business, head on over to mywifequitherjob.com, and sign up for my free 6 day mini course on how to start a profitable online store. Sign up right there on the front page, and I’ll send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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135: How To Buy A Company And Use Amazon To Triple Your Profit With Dana Jaunzemis

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135: How To Buy A Company And Triple The Profit On Amazon With Dana Jaunzemis

Today I’m really excited to have Dana Jaunzemis back on the show. Dana is someone who I met through Andrew Youderian and she’s actually in a private group that I meet with on a semi monthly basis.

If you don’t remember Dana, I had her on episode 85 of the podcast where we discussed her strategies for acquiring and growing existing businesses.

Well since that interview Dana has acquired yet another company and we’re going to talk about how she’s already doubled its revenues. In addition, she was lucky enough to attend Amazon’s womens conference last month which we discuss in this interview. Enjoy!

What You’ll Learn

  • What attracted Dana to her latest acquisition and the multiples involved.
  • The specific strategies that she used to grow this company and why it was different from her last company
  • Dana’s primary strategy for growing her new business on Amazon
  • Why she decided to focus more on Amazon vs her own shop this time around
  • Dana’s experience at the Amazon Womens Conference

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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast. If you are new here, it’s a show where I bring in successful bootstrapped business owners to teach us what strategies are working and what strategies are not. Now I don’t bring on these famous entrepreneurs simply to celebrate their success, instead I have them take us back to the beginning, and delve deeply into the exact strategies they used early on to gain traction for their businesses.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start your own online business be sure to sign up for my free 6-day mini course, where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin, I want to give a quick shout out to sitelock.com for being a sponsor of the show. SiteLock is the leader in website security, and protects over 8 million websites by monitoring them from malicious activity 24 hours a day, 7 days a week. So here is the thing, most online business owners never think about security until they get hacked. My online store got hacked long ago, and it was the most miserable experience ever.

I basically lost thousands of dollars as I frantically tried to patch the issues, and get my store back online as quickly as possible. In the event that you get hacked, call sitelock.com, and they will help you out, or even better protect your site before you get hacked. Right now you can get 3 months of SiteLock free if you go to sitelock.com/mywifequitherjob. Once again that’s sitelock.com/mywifequitherjob. Now on to the show.

Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m really excited to have Dana Jauzemis on the show. Now Dana is someone who I met through Andrew Youderian, and she is actually on a private group that I meet with on a semi monthly basis and if you don’t remember Dana I actually had her back on episode 85 of the podcast, where we discussed her strategies for acquiring and growing existing businesses.

Well since that interview Dana has acquired yet another company and we are going to talk about how she has already doubled — I don’t even know if it’s tripled its revenue, Dana you can correctly me later. But she was also lucky enough to attend Amazon’s Women’s Conference a couple of months ago. So I’m pretty eager to hear all about that as well. And with that welcome back to the show Dana, how are you doing today?

Dana: Great, thanks for having me Steve.

Steve: So was it double or triple within a year or two?

Dana: I think we are triple right now.

Steve: That’s crazy, it’s crazy. So let’s talk about that latest acquisition. I know you didn’t really want to reveal the product, because it is in a competitive industry, and so we can just refer to it as just like your widget company.

Dana: Okay.

Steve: When you were shopping for companies and this is kind of like a real life case study of what we talked about in the last episode. What attracted you to this company, and what were the multiples like when you bought it?

Dana: So the seller had it priced really high at a multiple of like four on net profits. But I didn’t let that deter me, I wasn’t going to pay for — but I was — it was a listing with an internet broker which is interesting sometimes if they are with– it was with a local broker. So I think somebody he knew from a club or church or something.

So I figured they just were aggressive on pricing. But it took a lot longer to get it under contract because of that, so my first offer was actually — I made my first offer at a multiple of two which I knew was aggressive on my side on a low side. So obviously my first offer was half of what he was asking, he was not happy. Actually he was kind of mad.

Steve: Yeah, that’s what I was going to say, he’s smart to not even want to deal with you at all?

Dana: Well it did in a sense, they went to counter offer. And I called the broker a few days later and like I haven’t heard from you guys, and he goes, well your offer really didn’t deserve consideration. And I said well I think it did if you would counter offer, and he just said no. So…

Steve: Are the multiples still on the order of like two or three for an ecommerce company?

Dana: Yes somewhere between the two and a half and three and a half depending on — it kind of — it gets a little squarely around the size of the — like a lower value site if it’s — like if a site is only making 100,000 a year. Sometimes the multiple can go a little higher at times, because it’s– well let me say it at 50,000 a year the multiple can go higher because it’s a more affordable site if that makes sense.

So then people are like oh yeah I can buy one for 150 at a multiple of three. Which sometimes those it’s not a value issue, it’s just what people can afford. But once it gets over– if the site is making over a 100, what I have noticed 100,000, 150,000 then the multiples are — they are staying in that– well I don’t know, two and half to three kind of range.

And then they might move again after you get– if a site is making over 500,000 actually then the multiples are going change, over a million it’s definitely going to change. The whole way they value is very different, but for average sites making under 500,000 right now, we are still seeing like that two and a half to three and a half multiple.

Steve: Okay and so how did you get these guys to deal with you again?

Dana: I skipped the broker right. I did something very unusual and contacted the seller directly and said, look I just want to touch base with you again. I want to make another offer, but I want to know what you didn’t like about my offer. So I removed the broker from the middle. I knew I could — I had already met the seller so…

Steve: In person you mean?

Dana: I went and visited him.

Steve: Oh interesting, okay.

Dana: Yeah, I was very interested in the business as soon as it was listed. So I went and visited him and my offer came after the visit.

Steve: I see.

Dana: So I called him and that was actually under the advice of my attorney who did a great job of advising me. And she said you just need to remove the broker from the middle. You need to get the seller to talk to you, not to remove him from the process but just this conversation of how we are going to agree on price. So I actually had a conversation with the seller and really found out what his pain points were so that I could address those points in my next offer. Even though my next offer was still low, but…

Steve: What were those pain points that he had?

Dana: He wanted all cash.

Steve: Okay.

Dana: That was his biggest pain point, but I wasn’t asking for financing, because the other people were offering for price, but they wanted financing.

Steve: Financing on his behalf or?

Dana: Yes, they wanted him to hold like 50% of the value.

Steve: Okay yeah that’s not good okay.

Dana: So it really wasn’t apples to apples, but that’s kind of hard to get somebody to separate in their mind. Well they are willing to pay me let’s say $600,000, but they want me to hold 300 but she is only going to pay me 300.

Steve: Right.

Dana: So you are really are, but he was adamant about — I mean in one way you could say that those were the same offers as far as what would happen today. He would get the same amount of money.

Steve: Right but it just doesn’t sound as attractive to me at all, right? So okay so how did you rationalize that then?

Dana: Well I had to increase my offer and I knew I would. But I had to — his other sticking point was valuing inventory. So we had to work through that and — those were the two biggest — I mean the financing was the biggest issue. And then in the second round of offers overall it took — he listed it in January, we didn’t close till May. So it took a long time, this was one of the longer ones to get it under contract.

Steve: Okay.

Dana: But mostly because he started out at way too high of a price. And so we had to let the market bring it down to what was reality, what was going to happen.

Steve: But he was getting offers at that price?

Dana: Yeah I think it must have been a little bit less than that. I think it was actually — it wasn’t full price, I know it was 50% financing.

Steve: Okay, and then so what did end up being the multiple if you wouldn’t mind?

Dana: It was three, right at three.

Steve: Right at three, okay.

Dana: I’m pretty sure, yeah.

Steve: And in terms of the actual product, do you usually care? Like was there anything that actually attracted you to the product itself?

Dana: It was definitely the customer base, it’s a B to B model, and that is my favorite for many reasons. But where we are in today’s landscape of ecommerce, I think B to B has some of the best growth ahead of it. So it’s B to B and it’s a high margin kind of product, I’m just a margin, that’s all I look at. So I didn’t want any business– I won’t even look at a business that’s operating on like 30% or 40% gross profit margins.

Steve: What would you say is your minimum, like 50 then?

Dana: 50 is my minimum, and I want something in the mix that’s more like 70.

Steve: Okay and is this business, are they manufacturing their own stuff or is it a wholesale type of business?

Dana: Wholesale, it’s not manufacturing.

Steve: Wholesale okay. And one thing Dana and I were chatting before this and something that was just kind of interesting is that the way you’ve grown this company compared to your last one which was Home Health Testing for those of you who don’t remember the last episode. How has it been different, and why did you take a different strategy with this particular business?

Dana: Well I mean part of the reason is see I bought Home Health Testing either six or seven years ago now? I think it’s about seven years. I mean the ecommerce landscape has just changed tremendously in seven years. I just find an amazing when you look at seven years ago pretty much our whole mentality was to be like Amazon. If Amazon does it you should do it, you should have everything in your store and we are all long tail converts of have it all. And I think that’s an outmoded way of thinking now.

I think Amazon won that game and they are the everything store model. But I think stand alone ecommerce sites now they really need to have a reason to exist outside of Amazon, and they need to do something that Amazon can’t do. And B to B is one area that still has a lot of those components because maybe it’s just that customers buy differently. So this model I could have grown it easily by just using the same method, but I wouldn’t have been able to grow as much.

So what we looked at when I was looking for a business was whereas a business that is doing well because they are doing something that can’t be done as easily on Amazon. But I also looked for one that had an angle to be on Amazon, because we don’t put Home Health Testing on Amazon. So I wanted something that we could experience what it was like to have some items on Amazon, so this one fit that bill. It was a B to B model, decent margins and had some potential for Amazon.

So what we decided after we converted it or took over ownership and got our feet wet on really understanding our product line, and we would have to rebuild the website that it was selling on, because that was…

Steve: Was it a bad website when you got it?

Dana: Oh yeah it was horrible, horrible. It wasn’t even on a cart, it was HTML straight up.

Steve: Oh wow, and they were still doing pretty well despite…

Dana: Yeah, and that’s always — I think that’s a really strong indicator. If somebody is willing to go to that kind of site to purchase, then that’s a strong indicator for future success. If you navigate that well and convert it to up to date cart and user experience, then that’s — I always look at size that way. If somebody is willing to buy on this site, can you imagine if it was better, so that’s what we did.

Steve: Just curious how come you never took Home Health Testing on Amazon?

Dana: Drug testing is a very different market, very, very different. And it’s very competitive and we just — we actually make our unique selling preposition on our site that we value your privacy, and we’ll never contact you again, and we’ll ship it privately. So we go the opposite tact of saying — and again this goes back to how much ecommerce has changed. If you are not going to be on Amazon you need to have a compelling reason to exist. So that’s what we make, that is our compelling reason is people like privacy in drug testing.

Steve: Okay.

Dana: And then we also have business buyers and I think that business buyers like is knowing your inventory, and knowing the age and the expiration date on your inventory. So we provide more information and consistency of inventory for our business customers right now than Amazon does.

Steve: Okay I see. And then if you were to sell on Amazon though, the competition would just be too fierce, and your value add obviously would not be a part of that?

Dana: Right.

Steve: Right, okay. Whereas with this new company is there heavy competition on Amazon for what you sell?

Dana: Not as much no.

Steve: Not as much okay. And are you continuing to try to grow the B to B side or have you been focusing more on the Amazon side with this business?

Dana: We are growing the B to B just pretty much what’s happening naturally from the site being improved. We are doing online advertising, that was the other thing is previous owner did no advertising at all, so …

Steve: How did he get customers in then?

Dana: The good old fashion organic way.

Steve: SEO you mean?

Dana: Yeah, but it was actually because the site was old, and it’s less competitive, so he wasn’t doing anything on SEO. It was actually because the site was so old and just HTML, there was no extra code on the site, and it was all about this one area. It was just a very informative site, it had good information on it, but it was, I think it was actually doing well just because– however I will say he had been declining in sales for the last 2 years, and that was the other thing.

They had done their multiple based on a year ago sales, or a year and a half ago sales, so we had a lot of things to deal with, and getting the price right was– you are not, you have this high multiple because you are thinking you are still worth what you would have been worth 2 years ago. Sales were declining, and they were declining because now he had run out of his good luck with SEO, and he hadn’t changed his site in a couple of years, so there was no updates, there was nothing new on the site, so it was losing value in my opinion.

Steve: He must have at least had his tags and everything correct even the index, right, so he wasn’t…

Dana: Yes.

Steve: Okay, and when you moved, I’m just curious which platform did you move to?

Dana: We moved it to AmeriCommerce, because we have another site on AmeriCommerce, and the B to B features for AmeriCommerce are good. They are somewhat better than other carts right out of the box. I don’t know if I was doing it today, I don’t know if that’s what I would do, but for the decision, I’m not upset about the decision yet I think. The next few months will tell if I feel like I need to move. It’s going to be dependent on how much AmeriCommerce actually continues to improve.

Steve: Did it come down to with Shopify and BigCommerce in equation at all when you made that decision?

Dana: Yeah, I evaluated those 3, that was my 3 choices.

Steve: Okay and it just came down to B to B features?

Dana: Right.

Steve: Can you give me an example of like one B to B feature that it has that Shopify doesn’t for example?

Dana: Shopify might have a lot of these if you keep adding the add-ons, and then you are just escalating the price of the cart, so a lot of the features straight out in AmeriCommerce are the order history that people can go back in to their order and place reorders, and we have a lot of repeat customers, so they can log in and see their orders, and just reorder from that.

We can track accounts receivable in AmeriCommerce, we don’t actually have to use another, we don’t have to export at all to our accounting and do it there, we can do it in AmeriCommerce. Some things like that, nothing huge, and I’m sure that with Shopify you could add those features with that, I’m sure.

Steve: For the reordering, is that– so do you store like credit card tokens so that you can just hit a button?

Dana: Yes.

Steve: Okay, got it.

Dana: And my model for that was I like U-line, I like the way their site works, it’s not fancy but when you are– if you want to look at your previous orders, and just click reorder and say yes, I mean that one, that one, and that one again. I think U-line has a good model for that.

I think a lot of small business owners go back to it because it’s easy, and you get the same thing. That was the model I was looking for is how could we replicate something like that with clearly not having a custom cart. I’m not going to do that, I want to be on a platform, but I wanted it to work that simply.

Steve: I see and you mentioned that you are considering switching in case something doesn’t change. What is that one thing right now?

Dana: Apple Pay.

Steve: Apple Pay, interesting, do you get a lot of customers who want to pay by Apple Pay?

Dana: No, but I think that’s going to be the next big change in e-commerce, and Shopify announces as soon as Apple releases it, they will get it in their stores. I think it’s going to be big, personally I think it will be as big for on mobile as PayPal for a payment. I think it will be bigger than PayPal for a payment option. I might be really wrong, but if they don’t do that I’m going to say that would be almost a nail on the coffin to say we are not going to be future developers of this platform.

Steve: Interesting, I just rejiggered [ph] my PayPal Express recently, and it boosted my mobile conversions in the double digits again.

Dana: Yeah, isn’t it amazing, I mean it’s a really important thing.

Steve: I mean totally, mobile and tablet, like this tab wasn’t affected, but mobile and tablet was pretty huge.

Dana: Yeah. Do you think Apple Pay is going to make a difference?

Steve: Well, I mean if you have to do Apple Pay you got to do Android Pay too, right? I’ve noticed actually in a lot of places in my area, they have started taking Android Pay, and so, you know it’s hard to say like giving more options always helps, like whatever is convenient where they don’t have to enter any information, and right now I think PayPal is the winner in that department.

Then if you get Apple Pay that’s like, I don’t know how many iPhone users are now, but it’s less than android users. You offer all 3 and then your mobile conversions I’m sure will be pretty good.

Dana: Yeah I think so, and I think whatever carts are working hardest on that whole mobile experience is probably, if I was picking right now today, I would look at that as my deciding factor, because it is amazing how much traffic is coming that way.

Steve: You know what’s funny right now is I think Android is actually, I’m getting more sales form Android users now than iPhone users. It wasn’t like that in the past.

Dana: Interesting, I haven’t actually looked at the user, I just always look at the mobile statistics.

Steve: In a way I actually don’t like offering too many payment options too, because it’s confusing, so I’m just hoping one person just comes out ahead so I can only implement one thing. Moving on, okay so we talked about the cart and you mentioned that you took this company on Amazon, and just from chatting with you prior to this interview you’ve a lot of success there.

So I was hoping to just talk about some of your strategies for growing this business on Amazon. Is there anything, well let’s start from the beginning, when you launched a product on Amazon for this business like what are some of the things that you’ve done that have been working?

Dana: I think our biggest thing is when we looked at the competition, and again it is on Amazon, it is definitely a lower competition, it is partly because it is a boring product, almost like …

Steve: Yes, an unsexy boring product that sells well.

Dana: Yeah all my businesses are very, very boring products, so the competition, nobody really was really making a full listing, they weren’t trying very hard. You know a lot of it was one picture and no details, just really simple listings. So we definitely had been schooled very well by many of my great friends and mentors who were telling me exactly how to do it, and it was just complete titles using every bullet point, writing a full paragraph description, and then use every picture spot.

There was no detail, I mean I was really scraping the bottom of the barrel to figure out what to write, because it’s actually hard to fill it out on boring products, to fill out everything, but we did. We figured out something we could say, you know whether it will be the material it’s made out of, definitely all sizing, colors, anything possible.

Steve: Would you say that the pictures made the biggest difference or [inaudible 00:23:32]?

Dana: I don’t know, you know, I don’t know, how would you know?

Steve: I guess the only way to know would be to just adjust it one by one which you probably didn’t do, right?

Dana: No, we just went at it full force and I think that’s a little bit how I do everything. It’s I’m going to go out full force with everything I know about the platform right now, so I sort out the best knowledge. I have great people advising me, listen to podcasts like yours and others, and just do what everybody says is working now.

Everything that I believe is good for a customer. I think I will take that back, I won’t do everything, like I personally hate all caps in the bullets, I just don’t like it. It’s personal thing, and I don’t think it’s good for the customer, and I think it’s against terms of services, isn’t it?

Steve: I don’t think so.

Dana: I’m not sure, yeah. Anyway I put it through 2 lenses of I go with what everybody who is succeeding is doing now what they say is working, and then I put it through the customer lens of I want to feel good when I look at the listing, that it’s really top notch. That’s how we do it, and we really do not skip any piece of information, we do everything.

Steve: I just want to let you know that tickets for the 2017 Sellers Summit are now on sale at sellerssummit.com. Now what is the Sellers Summit? It is the conference that I hold every year that specifically targets e-commerce entrepreneurs selling physical products online. Unlike other events that focus on inspirational stories, and high level BS, mine is a curriculum based conference where you will leave with practical and actionable strategies specifically for an e-commerce business.

In fact every speaker that I invite is deep in the trenches of their e-commerce business, entrepreneurs who are importing large quantities of physical goods, and not some high level guys who are overseeing their companies at 50,000 feet. The other thing I can also assure you is that the Sellers Summit will be small and intimate.

Last year we cut off ticket sales around 100 people, so this event will sell out quickly. This event caters to sellers of all levels, and if you are a beginner you will leave the Sellers Summit with a product to sell, potential vendors, and a road map for your business. If you are an existing shop owner you will learn proven techniques to take your business to the next level, whether it be through learning advance Amazon selling techniques, SEO, social media, pay per click advertizing, copywriting, email marketing, you name it.

If you are an e-commerce entrepreneur making more than $250,000 per year, we are also offering an exclusive mastermind with other top sellers. The Sellers Summit is going to be held in Fort Lauderdale, Florida from May 18th to May 20th, and for more information you can go to sellerssummit.com, once again sellerssummit.com or just Google it. Now back to the show.

Would you say that your listings are better than all your competitors at this point?

Dana: Of course they are.

Steve: Okay.

Dana: But then the other thing I think that is this is huge, and if you have an e-commerce site, I really feel like your competitive edge on Amazon, if you already have an e-commerce site, because you are going up against a lot of people who are only selling on Amazon, I mean all of us are. The one thing they don’t have, and I consider this like inside or training information, is they don’t actually know in advance how buyers buy, and we know that with an e-commerce site.

If we have one with history, and the site I bought had actually been around for 10 years, so I had a lot of data history. I know how, definitely B to B buyers buy based on our history, so if on Amazon, if there is something selling on there, and it sells in a 3 pack, but I know I sell 100 packs on our e-commerce site all day long, I can put 100 packs on Amazon with confidence that there are buyers for that.

I think that was one of our biggest difference is we had all this sales data from our e-commerce site, and we just used it the same way on Amazon, and that was one area that was probably been our biggest success is we sell larger volume, because we know there is buyers that buy larger volumes, but a lot of the things packaged previously on Amazon were smaller.

Steve: Interesting, so have you found that the competitors have started copying that model then?

Dana: Yeah, definitely.

Steve: Okay, and when you launched presumably you had less feedbacks, and that sort of thing from the other guys, did you end up doing any giveaways or anything in the beginning?

Dana: I think we did 2, and I stopped.

Steve: Two units?

Dana: Two yeah, and I stopped, and I said you know because we were making sales, so we did our model was pretty much, get the listings up, quality listings, turn on automatic ads, and wait until we get enough feedback that it gets better, and just we would use Feedback Genius to get the feedback, and it was really coming in slow, but in my mind I just said, don’t worry about that. We have enough work to do to get our listings up, to get them all written.

So let’s just focus on that, and we are going to let feedback take care of itself on these products. It has, and now, that’s why we are actually, I think we are seeing growth right now, we’ve only have been on for 8 months, so is that now our feedback is catching up with, you know we’ve got enough, and the sales volume is there.

Amazon is seeing good conversion rates, now seeing really enough feedback on each product that there is consistency, but we didn’t solicit any additional feedback other than if they bought it, they got the one email.

Steve: How much stock do you actually keep in Amazon’s warehouse?

Dana: Number of units or?

Steve: Not units, I guess months or whatever, in terms of time.

Dana: Oh time, we’ve been pushing that up, so we were only keeping 3 weeks, and we are trying to get all of our best sellers up to 8 weeks.

Steve: Okay, and in terms of getting additional product to your warehouse, like what’s your lead times usually?

Dana: Getting it into our warehouse before we send it to Amazon?

Steve: Like to making more step — yeah essentially yeah.

Dana: Two weeks is about all.

Steve: Okay so your turn around times are pretty quick, so…

Dana: Yes, very fast yeah.

Steve: Okay so why would you justify eight weeks worth of inventory when you can get stuff into — is it just because FBA is just taking a lot longer now?

Dana: Well going into the holiday, so our goal was to get it up to eight weeks, because we are heading into the holiday season.

Steve: Okay.

Dana: So but what we noticed was we only started with our best sellers. And I don’t have a correlation for this, but we only had three weeks supply and we pushed it — every time we pushed it more supply in, we kept selling more. Like our sales were going up kind of dramatically on the items that we thought we were stocking ahead, but actually the sales were kind of keeping up with it.

So every time we thought we would have four or six weeks in, then we would look at the numbers and we are like what the heck, we are back to three and four weeks, but it was sales velocity. So I’m kind of testing that without being overly analytical about it, and asking some people and different people were telling me that they’ve experienced around eight weeks is a good amount to keep in.

Steve: Okay I heard from Jeff Cohen, he is on the podcast that the more inventory you have, that’s like a signal to Amazon that they can push the sales a little more and not go out of stock, I was just curious. It sounds like you’ve kind of been experiencing that?

Dana: Yeah, we experienced it without me hearing that. So I had never heard that from anyone, we were just truly doing it to get ahead of the holidays, both for our workflow in-house, and because of FBA might slow down later. So we were just trying to be proactive, and then realized that we were getting huge sales bumps in the items that we were doing that on. So now of course I want to do it on everything, but…

Steve: Correct, are you selling as a vendor at all?

Dana: We did for a little bit, yes.

Steve: Okay, why did you stop?

Dana: Partly because I didn’t know — I didn’t set the case pack right, and their orders were coming too frequent and they were too small. So if I go back in — I will probably go back and do it again. But I was getting these like eight different orders a week from Amazon from like three of this, two of that, one of that and it was really annoying. But I realize now, I asked somebody why that was happening, and they said well you didn’t set the case pack. Other than that…

Steve: Can you describe that — sorry what’s a case pack?

Dana: I think instead of allowing them to order one at a time, say that they come 10 in a case or 12 in a case.

Steve: Oh got it okay.

Dana: So then they wouldn’t order that way.

Steve: I see, is it worth the hustle in general though? Your feeling with vendor, being a vendor?

Dana: I think so.

Steve: Okay.

Dana: Yeah, it takes a little bit off your plate; you are not worried about that listing. I wouldn’t do it with the listing I was super serious about. I just — I personally would want that control over the listing.

Steve: Okay and in terms of like the new ad features that you get for being a vendor, has that been worth it?

Dana: They are worth it is you don’t get a lot clicks on it, but they are definitely — the conversion rate on those ads is excellent. But you just — people have the same– those really look like ads I think on Amazon. So people have the same kind of ad blindness, they don’t get near as many clicks.

Steve: I see, okay so just regular…

Dana: In my category. I doubt that’s the same for everyone, but that’s how it is in my category.

Steve: Okay and in terms of this new business, since it’s kind of on the more boring side, I would imagine like social media channels aren’t as big of a deal?

Dana: Right, I don’t — yeah I’m not a big social media. So I think I’ll actually look at businesses that don’t need that kind of attention, but you are right. You could actually do really well on Pinterest with it, I just haven’t so…

Steve: Okay, and so in terms of the time that you are spending right now, in terms of percentages, what percentage would you say you are spending on Amazon versus just the site itself growing the B to B sales?

Dana: Definitively the majority of my time is focused on Amazon so…

Steve: Okay.

Dana: As far as growth time I would say I’m 80% Amazon, and only 20% looking at our own site. I do know what needs to be done on my own site, I have already done the analysis. I know the direction it needs to go, but every time I think I’m going to work on it, I kind of get excited about something on Amazon, I go that direction.

Steve: Because the sales are just coming in a lot faster, right?

Dana: Yeah, and it’s interesting and some of it is just because it’s new to me. So it just makes it more exciting than doing the old hut stuff of writing good quality content on our site and doing videos and things like that.

Steve: Okay and then so you don’t have any qualms about just continuing to go all in on Amazon versus spending a little bit more time on your own property?

Dana: Right now I do not, and the reason is because my B to B site, the ecommerce site is well established, and we have high repeat customers. And I do feel like the transition we made there is probably something to be said for kind of digesting the amount of changes we made in the last year on the site, because we re-platformed it. We changed how we shipped, we changed all the pricing, we changed a lot in the first four months. So it’s probably good that I have something else to work on, and I just couldn’t let the repeat customers get used to everything as it is now.

Steve: Did the site have a negative effect at all? Like did you get complaints from people who were just been long established?

Dana: No, no.

Steve: No.

Dana: No it was horrible; I don’t still even know why they were ordering.

Steve: Okay.

Dana: No I’m sure, and we didn’t get any like loving notes either — nobody said oh this is great, thanks so much for finally doing something, it’s just– but I know they are happier, I know. It was because our site was doing the same thing weirdly, and this is what I just said about using your insider knowledge on your site is our site was putting things in three packs and odd numbers of things, but people were ordering like 57, three packs.

Steve: I see okay.

Dana: And so one of the big changes we made when we restructured the site is to get everything on a base ten so you can order a ten pack, 100 pack or a 1000 pack. And so I think that was a little hair confusing for some customers, but we’ve gotten past it now so — and the site’s growing on its own. It’s up about 25% to 28% this year, so it’s doing good.

Steve: Is that the result of the redesign?

Dana: Well I think online advertising too.

Steve: Okay oh right. He wasn’t doing any ads?

Dana: Yeah we are doing shopping ads.

Steve: Okay.

Dana: And they are not huge, but they are nice, they are doing a good job.

Steve: Are you doing regular AdWords as well?

Dana: Yeah, we don’t get a lot through that. We are doing a little bit yes, but mostly it’s the shopping ads that are bringing in some nice repeat B to B customers.

Steve: Okay, and then once you have one of these B to B customers they just hit the re-order button after that?

Dana: Right exactly.

Steve: Okay nice. Let’s switch gears a little bit and talk about this Amazon’s Women’s Conference that you had the opportunity to go to. Pretty amazing I think there is only 200 women there, right?

Dana: Yeah.

Steve: And you were one of the lucky ones?

Dana: I was.

Steve: So can we talk a little bit about some of the key takeaways that you got from that conference, because I understand there was a lot of Amazon people — Amazon developers and people in charge of a lot of the features there, right?

Dana: Right, so all of the speakers other than one panel of sellers, all the speakers were Amazon employees. So it wasn’t a tactical conference, it was more just an insight into the people and the attitude behind the marketplace. The developers that developed seller central and the seller’s app, anybody that’s doing anything that’s forward facing to the sellers on the marketplace, or the speakers pretty much.

Steve: Okay.

Dana: And then upper level management in the marketplace. So the VP of the marketplace and things like that. So it was really an insight into how Amazon sees the marketplace. And I think my hugest takeaway was just a new respect for how Amazon values the marketplace sellers, and their desire to help us succeed, and I did give you…

Steve: Okay I mean that’s not any evident right now and what they’ve done the last couple of weeks even.

Dana: It is evident or it’s not?

Steve: It’s evident.

Dana: Okay yeah.

Steve: Yeah.

Dana: But sometimes if you only interact in seller communities or forums, you hear a lot of fear and negativity about Amazon, and it’s sometimes hard when you are — since I’m new on it this year to hear a lot of negativity, and a lot of people saying, I’m not going to do business on there, or I have taken everything off of their — and the bad things that can happen.

It was really refreshing to actually just put that down from a seller perspective and hear from the people who are managing the marketplace. And they really are working hard, and making it incredibly useful for sellers and to make it — I mean obviously their end result is the customer, so their prime customers are who is they want to have the big wins, but they know that the market place is part of that.

Since they want to be the everything store, and they want to have every item available in the world, you know a catalogue of everything, they know they need the market place to do that in addition to the other things they do.

Steve: Specifically what are some of the things that they have planned specifically to help sellers?

Dana: Some of the big things they announced, and they said the biggest one that actually got a round of applause when they said it is that there would be brand central coming out instead of a more robust brand registry, and that once you have proved who you are, that you will be able to lock your brand, so other people couldn’t come on the listings, and that will be huge as we all know.

Steve: That’s already started happening actually in the last couple of weeks.

Dana: Right and right now is just for the big brands.

Steve: Correct some of the little guys too actually from what I have heard.

Dana: Oh okay, I didn’t realize that, so I don’t know how that’s going to shake out, they didn’t mention that, but I know on the big brands it’s, I mean you are paying a gating fee is what I’ve read, is that what you’ve heard as well?

Steve: Mm-hmm.

Dana: Yeah, so I don’t know if it is always, if we are going to pay to lock that, and or not, or if it’s just going to be later become something that once you prove it you can lock it.

Steve: Are they doing anything about people just copying and listing on a different skew and listing it as far as you know?

Dana: They didn’t mention anything.

Steve: Okay, but in terms …

Dana: They said that brand owners were the fastest growing population of sellers, and that they were trying to develop tools to help them, and make it a better selling experience.

Steve: One thing I did want to ask you since we are in this topic is that you mentioned earlier that you sell wholesale, but does that imply that you are using your wholesalers brand, or you are putting your own brand on your products?

Dana: We are putting our own brand, because we assemble kits in a sense.

Steve: I see.

Dana: It is not a one off, we don’t buy it as it is and send it straight into Amazon, we actually combine it with something else where the buyers buy.

Steve: Is the wholesaler selling its own products on Amazon as well?

Dana: They are.

Steve: They are, so you are competing against the wholesaler?

Dana: I am.

Steve: Interesting, and they are just not doing as good of a job?

Dana: Right, so again it goes back to that understanding the customer, and I’m possibly going after a different type of customer than they are based on the knowledge of what we know works on our website. I think that’s where a lot of people, they are looking– if you look at Amazon as a standalone place and you try to do your market research there, and you don’t use other information, you are really limiting your success or your ability to succeed.

Since so many of your listeners are e-commerce stores, I mean really look at it through the lens of why are people buying on your site today, and truthfully you know they would rather buy on Amazon, the user experience. Even the best of sites, yours is probably exceptional Steve, but mine is not, my user experience on my site is not.

Steve: Well someone trashed my site at summer tree which resulted in me having to safe face and redesign it.

Dana: Great, but Steve now it is exceptional, yours is exceptional, but just from– let’s just take prime as just this simple, the free 2 day shipping. It is hard for any of us as site owners to compete with that. If you think about your customer from the point of view that they would actually rather complete this transaction on Amazon, and that’s what I think about.

That’s how I looked at Amazon, and I was just, all I was trying to do is replicate the experience of buying on our site as far as what they got onto Amazon. But if I looked at Amazon by itself I wouldn’t see the same products or quantities being sold on Amazon, so I guess I could have taken away from that or I will fail, oh there is no market for this because I can’t, you know when I open Jungle Scout there is no product that matches that. That doesn’t mean it won’t work, because you already have proof it worked on your site.

Steve: Actually it’s funny for our site, and for our products too, we’ve listed some stuff that has had no traction whatsoever on Amazon meaning no one else is selling it, but when we started listing them they were selling. Yeah you are right, just because no one is selling doesn’t necessarily mean it is not going to work.

Dana: No, and especially if you know it is selling on your site. I mean that’s just priceless data to have.

Steve: Have any of the products that you have listed for this new site, has anyone just copied you or your packaging, and have driven the prices down overtime, or you are still on that honeymoon period?

Dana: No, I’m still on the honeymoon period, there are some copies, but we haven’t slid all the way to the bottom yet.

Steve: Okay, any other key takeaways from the conference that are just worth noting for people?

Dana: The B to B side, so Amazon business is truly Amazon’s big push, so they have related it this way. They said there are 3 pillars inside Amazon as far as how they make money; the marketplace sellers, AWS, and their web services, and prime customers. That is what they consider their 3 pillars. They think number 4 will be Amazon business, and they see the B to B market, their number they used is 10 times larger than the B to C market.

That’s accurate if you bring anything else outside of you know from like internet retailer has now B to B division of internet retailer, and they said the same thing, so it’s a much larger market. One thing they said and I found this interesting is the millenials, their prime users, there is 2 times as many millenials as prime users, which makes sense because of that media side of prime. But they are saying when we look at the business marketplace, those saying millenials are now buyers for the government and buyers for big companies.

They are the workforce; the millenials are now the largest workforce I think as well. They want the same buying experience as their prime account. They don’t even understand why if you are a business buyer and you have to go to [inaudible 00:47:19] to get hardware and Office Depot to get your office supplies, and then some other site to get something else because those are your B to B buying accounts, or say Uline.

They don’t want to do that, and they want to go to Amazon, and order at one place and get it in 2 days. Amazon sees the growth of where you can go with B to B, and obviously they tried a couple of years ago, but I think they came back from Amazon supply and they regrouped, and they are going to change, they are going to totally disrupt B to B buying I think. They currently have 400,000 business buyers registered. They are actively feet on the ground going– Amazon is going to trade shows, and doing sales in government institutions, hospitals, universities.

I’ve read recently they said one of their business users has 100,000 users in their account because what they designed on the back end of Amazon business was the ability to have these multi level accounts with structure that allows people to approve other people’s orders. So if you got a maintenance personnel in the field ordering supplies, gets approved by somebody in acquisitions or a PO number gets attached to it.

They are going to majorly change, and if you think about it, if you sell anything, and it doesn’t have to be a pure business product. For some reason at the conference they used the example of a lingerie company, and they were getting these business orders.

Steve: Interesting.

Dana: Yeah, they said, I mean businesses buy gifts, businesses buy everything. So to be registered on Amazon business is you really should be, so right now they said that there is only 37,000 sellers registered on Amazon business.

Steve: I recently registered as a result of you telling me to, and how can I tell if anything has happened, and what are some other things that I could be doing with this business account that I just signed up for?

Dana: You can see it in your reports, but right now we are still seeing, and I talked to one other people on Amazon business about this, and they said they are still seeing a ton of small businesses are still using their prime account. So you won’t see B to B necessarily, but they did break it out in the reports just in the last 2 months maybe, but when you go into any of the reports on Amazon sellers central, you will see an extra column for B to B. It will tell you number of units.

Steve: Interesting.

Dana: It’s right next, they’ve added a column for B to B on units and volumes of everything, so you can see it, and I think right now ours is only running 3%, but it’s going to change. So some of the things they talked about having coming once, right now you can upload different prices for business buyers, which is great.

Steve: Okay, I see.

Dana: Those prices will show up in search results if someone has logged in as a business account, so your regular customers won’t see it, but if they log in as a business they could see a different price. You can include a quantity discount schedule, so buy one of these at this, but if you buy 5 the price goes to this, if you buy 10 the price goes to this.

Steve: You know what’s interesting about this business account is I signed up for, and I accidentally signed up as a business buyer, and it was just completely free, I didn’t have to do anything. So I’m just curious like even a regular user, why don’t they just sign up as a business and start ripping some of the discounts that some of these businesses …

Dana: I think you have to put your tax payer or ID on it when you sign up as a business.

Steve: Sure yeah, but you can also include your social for that, right, so interesting.

Dana: Well if you think about though on the single unit level, Amazon is really competitive. We’re already at a competitive price point for one. I mean I think most people are, you are not going to see huge discounts, all you are going to see it on Amazon business is if you need a 100 or 50. If you buy 1 filing cabinet, if you want to buy that as a consumer with your prime account, there is probably not much room for that vendor to go down in price. We are already pretty, everybody is competitive on price.

Steve: Yeah, so I’m just curious for you, are you listing it at the same price for single unit quantities?

Dana: No we are doing discounts.

Steve: You are doing discounts, just even, okay, interesting.

Dana: I think what we are going to see if you– and it has been a little more time logged in as a business account just to see what the experience is like. I think we are going to see some huge, huge advances on that level, and there is already a lot of features on the business side, you know from POs Amazon has a lending where they will set up finance accounts for the big customers so they can do purchase orders, so I think …

Steve: Yeah, that’s going to be huge.

Dana: There is a lot behind it, and then they also have credentials so you should look at the credentials and see what you qualify for. I think there is over 18 different quality and diversity credentials on the business side as the seller, so like we are a woman known small business, and we are also a small business, so for any government or university institution has to meet their diversity goals. If they have to buy every government, federal government contract is supposed to spend 5% with either small businesses or under different credentials.

Amazon prime or Amazon businesses, you are giving them the ability to see those credentials, and they are working on getting it to– so if I was say buying for Boeing Corporation, and I knew I needed to hit my 5% diversity goal, I could actually on Amazon business say, “Show me, I need to buy file cabinets, show me people who are women owned small business or small businesses so I can hit my diversity criteria.”

Steve: Right and you also get to go to the Amazon’s women’s conference because you are a woman too.

Dana: Exactly, so you would want to put that on there, but the credentialing is going to be huge because it is a nightmare for them to find credential businesses and they have to go through– some don’t go often the ways they do it now. So can you imagine that — and then they are going to get a report from Amazon at the end of the month or at the end of the quarter, end of the year to show how much they spend with small business sellers. It’s probably huge, that’s huge.

Steve: Because breaking with the government is a pain, right?

Dana: Yes.

Steve: Dana, so going forward where are you going to be spending most of your time growing on your business this new one?

Dana: We are going to continue on Amazon, I don’t see that stopping, and we will continue doing what we can on our site. So I have one area that needs a lot of work, one category on our site. So I hope to get to that in the short term.

Steve: Okay in terms, so just mainly more skews?

Dana: On Amazon or on our site?

Steve: On Amazon.

Dana: More skews on Amazon, but less skews on our site actually.

Steve: Interesting.

Dana: I’m a gross margin hawk. So the area that we’ve identified on our site that we think has the most potential is just from looking at gross margins. So we are looking at what’s already selling the best with the best margins. And there is a handful of items all in the same category. I think if I develop that category a little stronger with a lot more information, that we are going to have a big win and we won’t have to increase sales that much on the site, because we are going to be increasing margins more rapidly.

Steve: And then on the flipside you are going to be removing skews that aren’t selling that well, and are you going to be listing those on Amazon?

Dana: No, if we list it we are going to keep them in both places. I do think there are some brand awareness that we are gaining on Amazon.

Steve: Interesting okay.

Dana: So no if — well I won’t have something on Amazon that’s not on our site. And it’s — at that point there is no problem because we have the inventory, so that doesn’t bother me.

Steve: Okay.

Dana: But if I don’t consider it worthy on our site and we are not selling it on Amazon, then it’ll go away from those places.

Steve: Okay, cool.

Dana: Or if it has a pain in the ass kind of factor to it, then it might go away in both places.

Steve: Like kitting like extensive kitting requirements or something like that?

Dana: Yeah or customers don’t understand it, and it just requires too much customer support, it doesn’t work well. So we use a lot of the same Amazon principles on our site. If it causes too much friction and we can’t overcome that friction by making our instructions better or labeling the product, then we might not keep the product.

Steve: Okay and you guys are pretty lean too right; you just have like a handful of people?

Dana: Right.

Steve: Right like three or four or something like that?

Dana: Yeah, it’s five or six now but yeah, but yeah we’re lean.

Steve: Dana we’ve already been chatting for quite a while, and I want to be respectful of your time. Where can people find you if they have any questions for just either on the buy side or the Amazon side, or some of the things that you are working on?

Dana: My blog that I never ever write on is 44ideas.net.

Steve: Wait to advertize that.

Dana: You’ll see like a year or two year old article on there, but I do that is my email, so 44ideas.net, you can find me there. And same place on Twitter and those kinds of things.

Steve: Cool, well Dana thanks for coming on the show, I learned a lot especially about the new Amazon stuff that’s coming along. And basically your thought process in how you grow your business is that you acquire, it’s been great.

Dana: It’s been fun, thanks for having me, thanks for all you do. I can’t tell you how much I’ve learned from the people you talk to, and you as well. I mean just that you bring the conversations out so people can hear these all tidbits, so thank you.

Steve: Thanks Dana, all right take care.

Dana: All right.

Steve: Hope you found that episode useful. What’s interesting about Dana’s story is that she has taken on completely different tactics to grow her various ecommerce acquisitions, which just goes to show that there is never one single cookie cutter strategy. You got to look at your business objectively, and figure out what needs to improve.

For more information about this episode, go to mywifequitherjob.com/episode135. Once again I want to thank sitelock.com for sponsoring this episode. If you own your own hosted online store, or any website for that matter that handles monetary transactions, you should give SiteLock a look. They can also help your site with site speed issues as well. Did you know that ecommerce sites that take longer than 5 seconds to load often shed customers?

SiteLock offers a service called TrueSpeed which is a content delivery network that can increase download speeds by up to 50%. So go check out SiteLock.com today at sitelock.com/mywifequitherjob, and get your first three months free. Once again that’s sitelock.com/mywifequitherjob.

Once again if you are interested in starting your own online business, head on over to mywifequitherjob.com, and sign up for my free 6 day mini course on how to start a profitable online store. Sign up right there on the front page, and I’ll send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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134: Email Marketing Best Practices For Small Companies With Susan Su

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Email Marketing Best Practices For A Small Company With Susan Su

Today I’m excited to have Susan Su on the show. Susan has worked with a bunch of well known entrepreneurs including Ramit Sethi of I Will Teach You To Be Rich and Noah Kagan of AppSumo.

She has a ton of experience with email and content marketing specifically targeting small businesses and is a partner at 500 Startups today.

Enjoy the interview!

What You’ll Learn

  • How to break through the noise given the average person gets 500 marketing emails per month
  • Best practices for improving the open and click through rate
  • Copywriting tips for maximum engagement
  • How to improve the deliverability rate
  • Best practices to improve the conversion rate of emails

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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast. If you are new here, it’s a show where I bring in successful bootstrapped business owners to teach us what strategies are working and what strategies are not. Now I don’t bring on these famous entrepreneurs simply to celebrate their success, instead I have them take us back to the beginning, and delve deeply into the exact strategies they used early on to gain traction for their businesses.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start your own online business be sure to sign up for my free 6-day mini course, where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin, I want to give a quick shout out to sitelock.com for being a sponsor of the show. SiteLock is the leader in website security, and protects over 8 million websites by monitoring them from malicious activity 24 hours a day, 7 days a week. So here is the thing, most online business owners never think about security until they get hacked. My online store got hacked long ago, and it was the most miserable experience ever.

I basically lost thousands of dollars as I frantically tried to patch the issues, and get my store back online as quickly as possible. In the event that you get hacked, call sitelock.com, and they will help you out, or even better protect your site before you get hacked. Right now you can get 3 months of SiteLock free if you go to sitelock.com/mywifequitherjob. Once again that’s sitelock.com/mywifequitherjob. Now on to the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I’m excited to have Susan Sue on the show. Now it was actually pretty random how Susan and I started talking. Recently she spoke at the Unbounce conference and used one of my emails as an example in her talk. And one of my friends who was actually at the conference let me know that I was mentioned by Susan. And so I looked her up, noticed that she was a Stanford alumnus with a lot of mutual friends, and so I reached out.

Anyway Susan has worked with a bunch of well known entrepreneurs including Ramit Sethi of I Will Teach You To Be Rich doing marketing. She’s also developed email marketing campaigns for AppSumo, Noah Kagan’s company, and right now she is at 500 Startups. But the reason why I decided to have Susan on the show today is to talk about email, and her content marketing experience. And with that welcome to the show Susan, how are you doing today?

Susan: I’m doing great, thank you so much for having me Steve.

Steve: Yeah, before we start give us the quick background of how you kind of got started with — I Will Teach You To Be Rich followed by AppSumo, and then how did you guys hook up?

Susan: Well it’s a really funny story. I actually was already — I was in a job at Google at the time when I first met Ramit. And I wasn’t very satisfied with my job like Google. Not that there is anything wrong with Google, but I’m just not a really big cooperate type of person, and I was looking for a new job. And after months and months of what seemed like picking on a part time job of job searching, I finally got contacted by a recruiter for a mid kind of mid stage, I think post series B startup in San Francisco in my dream city.

I was living in South and Silicon Valley at the time. This recruiter said, hey we got a really great job for you, we would love to bring you into the company and so we started talks. A couple of weeks later they had an offer for me and I had been reading this book about negotiation and about how women never negotiates their salaries.

So I thought I’m not going to let that happen to me, I’m going to negotiate. However, because I was very inexperienced and it really was my first time ever doing that, and I hadn’t practiced, I basically botched it. I named — I did the number one mistake which was I didn’t do my research. I named a random number, I don’t know where and I basically lost all of my true confidence and just kind of was very random things random things.

So I went to Ramit for help not because I knew Ramit, but because I had read about him in the New York Times, a trusted source. And I said, “Hey Ramit, you don’t know me, but I also went to Stanford,” and I explained to him the situation and I said, hey is there anyway you can help. And he actually replied within like I don’t know 10, 15 minutes.

And he said I’m willing to help you if you will meet me at the this random dally in the middle of Redwood Shores which for anybody that knows the Bay Area Redwood Shores is not a major upper center of startup activity, it’s pretty in the middle of nowhere. In the middle of the day — Oh sorry it wasn’t a random dally; it was kind of like a diner or a denise type place. In the middle of the day and you will let me record you. And I thought I’m going to do it, this is worth it.

And I guess he was so impressed with my ability to get past his barriers that he put up sort of as test that we made friends, we kept talking, we talked more about negotiation. I did a bunch of free work for him which I always think is really key if you are trying to get to know high potential entrepreneurs and founders. And some months later I ended up leaving my job, and working with him fulltime.

Steve: Okay and then for him what were you doing, were you doing email stuff?

Susan: We were doing some email stuff; we were doing a lot of different tasks. He had just published — he had just finished the book I will Teach You To Be Rich. And I just published it, and had marketed it to become its own New York Times in Amazon and Wall Street Journal best seller.

Not thanks to any efforts of his publisher, but all thanks to his own marketing efforts, which I thought was really incredible. And everybody at that time was saying hey Ramit, when is the next book going to come out? And he would just basically laugh quietly behind their backs, because he could see that they didn’t understand that really it really wasn’t about the book.

The book was actually just content marketing for his bigger business vision. And that vision included doing a lot more online education, a lot more community building into the kind of media and course empire that he is running today. So I was working with him to build up those first couple of products, one called Earn 1K…

Steve: I was an affiliate for that a long time ago.

Susan: Oh yeah there you go. And there is a whole lot like email marketing was a huge component of it, but it wasn’t just email marketing. I mean a lot of it was creating the content itself, trying different continuity programs, trying different landing pages. So yeah it’s when you are very early, and you are just kind of running a lot of experiments at high velocity, usually the teams can’t really afford to have such specialization as like, okay this person only will work on email marketing. Actually it’s more like that person’s got to do email marketing as one of the 10 things they need to accomplish today.

Steve: Yeah, jack of all trades basically.

Susan: Right.

Steve: Yes so but I – the reason why I came across you was you’ve been speaking at conferences lately and mainly focusing on email and content marketing. And so I know for me at least email, the automation aspect is key, because I don’t have much time and I don’t have an army of employees.

And I kind of wanted to talk today about some of the best practices that you kind of talked about, or have been talking about on improving the open and click through rate of emails and also the delivery rate. And I was hoping if you could just go over some of the best practices that you’ve been taking about.

Susan: Sure, I would like to start with the best practice; I think it’s a little bit counter intuitive, one of the biggest enemies to your open rate. And actually I haven’t really talked about this at any conferences or publicly yet, but I think it’s worth noting. And you specifically reminded me of it Steve, because you mentioned the word automation. One of the biggest enemies is actually believe it or not it’s actually not emailing frequently enough.

So many people are afraid at least in a startup world, now I have advised dozens or probably by now over 100 startups on their email marketing. And most of the founders that I encounter are specifically afraid of being too spammy. Those are like that’s their exact words. But is it going to be too spammy if I email them this week and next week, something like that.

Or if I email them twice a month, is it too spammy? Actually what they don’t understand is that it’s much spammier if you email your recipient once in a blue moon, and that affects both your open rates, and well it affects primarily your deliverability rate and it affects your open rates as well, because you are this kind of weird out of the blue unfamiliar sender.

The number one like kind of step zero thing that they find and you can do to help your email marketing efforts, is to set a frequency that’s probably about twice the frequency that you would naturally feel comfortable with, just assuming that most people err on the side of being risk averse.

Steve: What would you say would be the minimum frequency that you recommend?

Susan: It depends on the type of business. It can really vary, but let’s say you are doing an ecommerce, I would say you need to — especially when you first meet somebody, I mean sorry I always think about it in terms of meeting people. When somebody first subscribes to your list to have at least four touches per week, or even five or more depending on what type of category your business is in, and what type of subscribe that is.

But if you are only having one touch with them this week and then one touch with them next week, that’s too far apart for you to stay top of mind. So most people receive over 500 marketing messages in their inboxes per month, and that’s not even your highest value customers. That could be even higher number if you are emailing people that subscribe to a lot of products, or that are really active consumers.

And so to cut through all of that noise, if you are sending one email a week or three emails a month, that’s three out of 500 plus or 600 marketing messages that they are getting. Just the sheer percentage is so, so low. How do you expect to really stay relevant to their experience?

Steve: So this is like the Facebook newsfeed in away, right? Only a small percentage of your messages are getting through, so you want to post more often just on the chance of one of them will actually get through, is that accurate?

Susan: That’s right, and it’s interesting because everybody kind of gets that about Facebook, and well I won’t say everybody, but more people understand that about Facebook and Twitter. I think people are less afraid of posting more often or repeating themselves on those channels.

But for some reason when it comes to email we think we have this — we are in this private room; we are in a one on one conversation with that recipient, which just by the sheer numbers is not true. So it actually in reality resembles something much more like a feed, and much less like that one on one conversation you are picturing. They are not pouring over your every word.

Steve: What would you say would be the average opening click through rate of ecommerce email?

Susan: It depends on the exact category of ecommerce, but if you are doing below 20% you can probably stand to do better, if you are doing above 20% then great. And the thing that I really like to watch for besides just open rate, the sheer open rate is really your drop off between open rates from email to email in your sequence.

Steve: Okay.

Susan: So if you can hold steady from your first email, your second, your welcome email, and your first few emails into your nth email, and when I say hold steady I mean have a delta of less than 10%, then you are doing a great job. Because you are not losing the people that are opening your email, and actually you are still finding a way to market to that same customer and continue to sell them the back end or whatever it is that you are selling.

Steve: So when you are talking about the sequence, are you talking about like the first engagement sequence for an ecommerce store?

Susan: Did you say sequence as the first word there?

Steve: Yeah.

Susan: Yeah, so I always advocate and this is again related to automation, before you start emailing, really map out what your drip is going to be, so that it’s not up to on a Wednesday you think, oh gosh it’s Wednesday again, I have got to email my people, what am I going to send them today? And that just puts up such a barrier, and it also makes it feel like emailing is this like really like pulling teeth kind of thing, and it’s bothering them and all these kind of negative aspects of emailing.

Instead what I advocate is setting up the whole journey as far in advance before hand as possible. And then you know okay when somebody goes into this journey it’s like going into the labyrinth in a positive way. Not the negative way of labyrinth, but the kind of that really makes people reflect more and arrive at some kind of positive conclusion.

And so what I would — and that also helps you to automate your workflow and your operational process for creating the emails. So I would say, okay here is what I know. I know that I have got to send four emails in the first week, and the second week I want to send four emails. In the third week I want to send two emails. By the fourth week I’m going to put them on what I think of as the back pointer which is a weekly digest.

And this would be maybe for like a smaller to mid size earlier type of company, maybe not exactly your Amazons, or your other largely ecommerce that’s going to be emailing at a very high frequency, but yeah but something smaller. And so knowing that you’ve got about 10 to 12 emails that you want put out, just seeing it all from this advantage point before you get started you realize, okay great I have got 12 emails I need to write, that’s not that many.

And try to write them all in one go so that they really form a cohesive journey. It’s not automation per see in that you don’t have to do anything, but the sending of those emails it becomes an automated process once it’s under way, because you’ve already created the content, and then now you can just tweak things like the subject line, the times, and a segmentation.

Steve: So to just kind of summarize what you were saying in terms of frequency, you recommend sending emails out almost like on a daily basis for like the first several emails, and then gradually reducing frequency, is that what I heard?

Susan: I do and that’s just the most basic formulae. I would say if you want to get more sophisticated or if you are more sophisticated, or you have more resources to dedicate to it, I actually would create, I would advice creating segments based on the type of user it is. So if it is somebody that’s really active versus somebody that’s less active, you know people that are less active, it’s probably not going to activate them to send them more and more and more emails.

However somebody that’s really active, you know you probably don’t really need to do that kind of tapering that you would otherwise be doing for your general list. If somebody is really active and they are really into it, and they are opening your every email in those first 4 emails, well why not keep going. Again for each person’s business it really depends on how many resources you have available to get really nuanced, but you can do a lot more with it.

Steve: So you’re basically segmenting people who are clicking on the links within your email, and you are emailing those guys more often, whereas people who don’t open as often you might want to taper back the frequency.

Susan: Yeah, I would certainly based on clicks, based on the actions, and I’ll also even just segments just based on opens. So I feel a lot of times people open but they don’t click, or better yet they open a bunch of times, so if they open a bunch of times, but they don’t click, that is telling me so much information.

That’s telling me they are quite engaged, or even maybe they are forwarding it to their friends, and they are not taking action either because it is not appropriate to the device they open their email on, maybe they are mobile or what not, or maybe they are just a little bit unsure, but they like me. They are opening, so there is more that you can do with that segment as well.

Steve: What about some tips on improving the open rate and the click through rate?

Susan: Well I think the number one thing you can do, the simplest thing that you can do to improve your open rate which will also improve your click through rate by default is to make sure your sender identity is verified. It’s really, really simple, you can tell if the sender identity is verified or not. If you send yourself an email, and then you click, and there is a down arrow, if you are using Gmail for example there is a little down arrow next to the sender name, and it will say who it’s mailed by, and who it’s signed by.
Now let’s say you want to send an email from steve@mywifequitherjob.com, and you span that little down window, and it says, “It’s not actually mailed by mywifequitherjob.com. It is mailed or signed by a different domain, and mailed by different domain.”

That actually affects your deliverability rate, and it actually affects your open rates. So I have seen companies see jumps of up to 30%, they have really bad open rates before, but up to 30%, and very typically 5-10% that’s much more normal, just by verifying their domain. So it is basically saying, “Yes I’m the owner of this domain, and yes I’m authorized to send email from it.”

Super simple, it’s just a technical thing, you need to go into your domain manager, and just you know put in a couple of update or see name records, and you don’t have to be technical to do it. In fact all you have to do is Google your email marketing tool that you are using, let’s say it is MailChimp plus DKIM, or sender verification, and then just do the instructions.

There will be a help center article about it, but a lot of people just don’t know it exists, a lot of really smart people. Even people who consider themselves marketers, they overlook this one simple administrative detail, and they are missing out on a lot of opens through that. So I always recommend you do that first before you think what fancy subject lines you can get going.

Steve: Just for the listeners out there, so SPF and then DKIM, did you say SPF, I was putting words in your mouth, sorry.

Susan: Yes SPF as well, and don’t worry about what it stands for, don’t get too caught up in trying to understand how it all works. Just go to the help center article for your email marketing tool, follow the instructions, and then you will never have to think about it about it again, just do it once and you will never have to think about it again.

Steve: Actually even better, you can just call up like AWeber or CovertKit or whatever, and they will take care of that for you. One thing that I’m putting words in your mouth again, but this is good stuff in your presentation, there is just this place called mail-tester.com where you can actually send yourself a test email to see if everything was actually in fact working.

Susan: Yeah, I always say there are more sophisticated, and paid tools out there, mail-tester is a really great free one. You can just check your sender score on a scale of 1-10. You should be aiming for a 9 or above. If you are not at 9 or above, then there is a lot more that you can probably improve in terms of your both deliverability rates and your open rates.

And the main reason that you wouldn’t be at a 9 or above is if you are getting a lot of hard bounces, you are sending to an unclean list, or you are on perhaps some black list, for you know somebody marked you as spam whether on purpose or accidentally. Hey it happens, but thing is to make sure you clean it up and get off those lists, and you can quickly bring your score up to spike, little bit of decent clean up, you can quickly bring your score back up to a 9 or even close to a 10.

Steve: I’m just curious in terms of open rate, like I get a lot of emails where I see my name in the subject line. Since I send out a lot of emails though, I know that this was just a tactic where I entered in my name when I signed up. Do you recommend people do that today?

Susan: Actually I don’t because you know Steve if we were emailing each other about this podcast, coordinating things, and when you emailed me you cannot write me an email that says subject line Susan doing this podcast. You don’t use the first person; you don’t use the person’s first name in the subject line when you are writing to somebody that you really know, where that’s actually important to you.

I don’t put my mom’s name in the subject line when I write to her, or my friends or my colleagues. It’s very unnatural, in fact now instead of a personalization flag which it’s intended to be, it now works as a promotion flag. You know, okay I get it, this one is a marketer that’s using first name in the subject line, they’re using that first name tag.

Instead I recommend what I call next level personalization which is using things like people’s company name, because a lot of times if you know where somebody works you can use their company name to further personalize the subject line.

Steve: Give me an example.

Susan: Probably an example that I saw once from HubSpot a couple of months ago was, is 500 Startups landing page doing well? I thought, “Oh my God, I need to open this because this is about work, this is about my job, it’s my job to open this.” Actually it went to my personal email address, it went to my Gmail, but it got my attention immediately.

I get tons of marketing messages in my Gmail every day, and that one got my attention immediately, because you know before I could even think about it my brain had already been triggered into that oops work thing, go to open. I was already I think three quarters all the way through the email before I realized it was a mass marketing message.

Steve: How did they pull that off without collecting your info at some point though?

Susan: They do, but so, HubSpot does collect your info, and I had forgotten. So that’s the tricky thing, a lot of times people enter their information in various places. If it is to download a special e-book, you know they have a special webbing page for that, I had entered my email at some point, and I just you know I straight up forgot. Look at me, I’ve got 20 tabs open on my browser right now, how I’m I going to remember if I gave you my company name, or my city or whatever it is?

By the way city is another great way to do next level personalization, because people’s eyes are on the lookout for Miami, San Francisco, Fort Lauderdale wherever it is that they live, they are used to looking for that as a way to look out for content that’s highly relevant to them.

Steve: What’s your view on collecting all this extraneous information versus just getting the sign up?

Susan: I think it’s important to just get the sign up in the beginning. It’s the most important, just get the sign up, and you know just in the HubSpot example they didn’t collect the extra information right up front. They collected it later on when they enticed me with other cool e-books or free content that I wanted to check out, because honest to God did seem really valuable, but in order to access that information I had to add in more details about myself, like my company, my location, my job, my job title and all that stuff.

Steve: Interesting, so what you are suggesting then is to just to get the email in the beginning and later on gradually collect more information by giving away even better offers.

Susan: Right, so don’t make the wall too high in the beginning, and also don’t think that the first opt-in is one and the only opt-in that you’ll ever be going to have in your final. It’s really a series of continually having people self qualify themselves into different segments and different engagement buckets.

Steve: Along the same lines what’s your view on single versus double opt-in?

Susan: You know it’s hard to get double opt-in, it does create an extra layer, but it’s so hard because as a marketer I just want to get that email as quickly as possible. I really want that myself, but on the other hand I do see that when it’s double opt-in the results are outstandingly better, and you will get much higher deliverability rates, you will get much higher open rates.

At the end of the day it’s like, are you really– don’t get pulled in by the vanity matrix. So what is your matrix in this case, is it your subscriber list size, or is it your open rates, or is it– what is it that really matters to you? Does the open rate matter to you that much, does the subscriber list size matter to you that much, or do at the end of the day the conversions or the buys really matter to you the most?

You can have actually higher revenue amount with a smaller list if your list is really engaged, if 100% of those emails are going through, and if 60% of that list is opening your emails. I would rather have that personally than a huge list with low open rates, low click through rates, and dismal engagement rates.

Either way I’m very enticed, it’s just like short terms wins. I want to get the email right now. More and more I’m trying to encourage all the companies that I work with to go with double opt-in. By the way there are some things you can do to encourage the opt-in to complete, so I recommend people to include very clear instructions and motivation on the thank you page after they sign up, after your subscriber signs up to direct them to complete that second level of opt-in.

Steve: What’s a good example of motivation?

Susan: A good example of a motivation is if they sign up to get a download or get some offer gift, just remind them that where it is and to remind them that, “Hey you know go ahead and confirm the email, otherwise we won’t be able to send to you, so you can actually put the offer at the other end of the double opt-in. We won’t be able to send to you your free e-book or your swipe file or your tool kit or whatever it is.”

Another way to do it is also just, I’ve seen more and more marketers do this, I don’t know if you are doing this yourself Steve, but I’ve seen people link directly to the confirmation email search result in people’s Gmail inbox, and their main inbox.

Steve: Oh interesting, okay.

Susan: Does that …

Steve: I have not tried that, no, is that working well? That might be something I’ll try.

Susan: I think it works, I think it also can’t hurt, and it’s really simple to implement, and even if not all of your subscribers are using Gmail, even if it only gets you like 5% or 10% more opt-in, that is 5% or 10% more double opt-in, and I think that’s worth trying no matter what.

Steve: Interesting, okay, so this link only works for Gmail though, right?

Susan: It only works for Gmail; well I think you have to decide. I don’t think it would look good on the landing page to have a bunch of different options on there, and so …

Steve: Yeah that’s what I was thinking.

Susan: You need to make a gut check, and say, “Okay well Gmail is probably going to be the most important one for me, so I’m just going to link it to Gmail and everybody else, or well it won’t work for them, but at least I will get that 5% more Gmail subscribers which are more valuable demo anyway.”

Steve: Interesting, what are your views on using like these trick triggers in subject lines, so for example like pretending like it was forwarded to you or pretending that you are applying to an existing email, what is your feeling on that?

Susan: I think it depends on how you use them, they work really, really well for me personally, but I wouldn’t use them for every type of email. For example, I think it has to be really in context, and it has to make sense; it has to be natural as well. For example if I want somebody to RSVP to a webinar, and the first email, you know I send the first email about the webinar, and then a whole bunch of people don’t see it.

Let’s say it gets an open rate of 40% which is excellent already, but 60% of those people who got that email didn’t see it. I think that would be the perfect opportunity to actually go back and say, “Hey forward, I just want to make sure you didn’t miss it.”
The reason why it makes sense is because in the first place that first email was an invite, and so it’s a natural language, it’s a natural way that we would use our email with our colleagues, with our friends. We would forward invites, and say, “Hey I just want to make sure you didn’t miss this meet up. Hey I just want to make sure you didn’t miss this branch, or this webinar or whatever it is.”

I probably wouldn’t do it if it’s you know something like a direct a sales email, like forward, hey the hard sales here and now or something like that. That wouldn’t really make sense just because it doesn’t fit in with the natural way that we would use forward and RE in our personal email, but the fact of the matter is it does work, as long as you are being genuine and outright spammy, it does work.

Steve: What about in terms of emailing the people who haven’t opened your emails, so first of all 2 questions, one would you use this tactic, and then 2 how soon after the initial send would you send to your un-opens?

Susan: I would definitely retarget the un-opens, sorry, I just call it retarget. I would resend to the un-opens, and I would also, I would — it depends on what you are selling if it’s worth it. But you might try also doing actual ad retargeting to the un-opens. There are a variety of reasons why people don’t open their email, and most of the time it’s much simpler than you think, it’s just because they didn’t see it.

And so it’s kind of like that Twitter and Facebook newsfeed issue we were talking about, and people just miss it, and it’s not because it’s not relevant to them or they are not a great potential customer in the making. But you have to help them along before they can be helped along they’ve got to open your email. So I definitely would resend to the un-opens and I would also use — my basic assumption is people don’t open their email because attention is lacking.

And so if I want to resend the un-opens the main thing I need to optimize for is getting attention right away in the subject line. If that means using a forward where appropriate I would use forward. If that means using RE in a subject line where appropriate I will use RE. If that means using better deal personalization, a company personalization I would do that.

Steve: And how soon after the initial send do you resend the un-opens?

Susan: We try to do it the very next day, maybe not the very same day depending, but it could be due to the time of day, it could be due to another factor, so maybe change that up a little bit and follow it along closely.

Steve: Okay, and then one final question because I know you have to go pretty soon. In terms of split testing your email, is that something that you do and then how — like what’s your procedure for split testing if you do, do it?

Susan: I do, do split testing. I like to do split testing on the subject line, because I have seen some pretty — you always think basically no, I don’t need to split test, I got this, I am a seasoned marketer. But actually the results always surprise me, so I think it’s worth doing whenever you’ve got the time.

And I basically just live it up to my email marketing tool to do it for me. I personally use HubSpot in my current role at 500 Startups. And I wish I could say something smarter, but HubSpot just kind of makes it really easy. I set up my two tests, and I hit go and it sends it out to 5% of the list, and whatever is the winner it sends out to the rest of the list.

Steve: Okay and in terms of just that 5%, you just let HubSpot choose?

Susan: Yeah.

Steve: Okay so there is no specific targeting there?

Susan: No.

Steve: Okay interesting, okay. And before you go what mistake are you seeing a lot of people making with their email marketing that just kind of like a quick wind that you can leave the listeners with?

Susan: Well I hope this isn’t too repeating myself, because I say this in a lot of places. But then again I see the mistake continuing to persist, and that is including large images in your emails is the number one way to make sure your recipients never see that email. And never get attempts to click through of course.

And so this is one thing that I specifically called out Steve’s email marketing for, because I love that although there is a lot of opportunities to include buttons and length, snippets of landing pages and pictures of himself, or pictures of his product, or a picture of a part of a video thumbnail to watch a webinar.

You Steve you successfully resisted all of those temptations, and you’ve kept your emails just text only. Not plain text because they are still being trapped, but text only. And that just gives you the highest possibility of getting through to the inbox, and to the main inbox that you possibly can get, and that’s the most important thing.

That’s more important than branding, that’s more important than your logo, and that’s more important than any pictures. Now if you are in ecommerce there is one caveat that’s a little bit difficult. If you are having a very product focused ecommerce, so you are selling some beautiful product where the picture of the product is really critical to its sale and to its success, and you feel like you really have to include an image, then at least chop out all other potential design elements like all kinds of unnecessary background boxes, borders, logos, headers, footers, all that stuff that you don’t need so that really slim down your email.

If you want to include that picture, include the picture of your product but include one picture, and then let people go to a landing page where they can browse other things, instead of trying out to put the landing page into the email, so that’s the mistake. The email itself is not your landing page.

Steve: Interesting, so you are advising the use of no images for your email if possible even for ecommerce store?

Susan: If you can yeah, I would advise if you can, depending on what kind of ecommerce it is. If you can tell the story with your words and get people — don’t think of the email as doing all the selling for you. The email is just passing the button to your landing page. And on your landing page go ahead and put up all the beautiful pictures and branding and logos that you want, that’s what it’s there for. But the email can succeed in its job of passing a button if it’s all way down like think of a sprinter right, you got to keep it light.

Steve: Yeah I tend to ignore those emails to kind of think of it when it looks like a magazine article, and I’m not in the mood to shop, so yeah I can see that. Hey Susan I know you got to run, so I just want to thank you for coming on the show. Where can people reach you if they have any questions about what we talked about today?

Susan: Well, they can go to my site which is emailforstartups.com if they want to learn more specifically about email, or they can always find me on twitter @susanfsue that’s my first name Susan the letter F as in fantastic. And then my last name Sue, Susanfsue, so that’s me on Twitter, always feel free to send me a message or a mention there, and I’m happy to help out with anything else.

Steve: Cool Susan, thanks for coming on the show, I really appreciate it.

Susan: Thank you Steve.
Steve: All right take care.
Hope you found that episode useful. Email marketing is such a huge part of my business, so whenever I come across someone who knows email really well, I instantly want to talk with him to discover their latest strategies.

For more information about this episode, go to mywifequitherjob.com/episode134. Once again I want to thank sitelock.com again for sponsoring this episode. If you run your own hosted online store, or any website for that matter that handles monetary transactions, you should give SiteLock a look. They can also help your site with site speed issues as well. Did you know that ecommerce sites that take longer than 5 seconds to load often shed customers?

SiteLock offers a service called TrueSpeed which is a content delivery network that can increase download speeds by up to 50%. So go check out SiteLock today at sitelock.com/mywifequitherjob. Once again that’s sitelock.com/mywifequitherjob and get your first three months free.

Once again if you are interested in starting your own online business, head on over to mywifequitherjob.com, and sign up for my free 6 day mini course, where I show you how to start a profitable online store right away. So sign up right there on the front page, and I will send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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133: How Mike Brown Created A Multi Million Dollar Online Coffee Company

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133: How Mike Brown Created A Multi Million Dollar Online Coffee Company

Today I have Mike Brown on the show. Mike is someone who I was introduced to through by Tommy Walker who runs the Shopify Plus blog.

Anyway, normally I don’t interview referrals who I haven’t met but Mike has an amazing story. He runs the popular coffee brand Death Wish Coffee which even has its own wiki page.

His company has been featured in countless publications and even had an ad in the superbowl. Normally, I wouldn’t necessarily advise anyone go into the coffee niche because it’s extremely competitive and saturated, but Mike made it work with a very unique value proposition.

What You’ll Learn

  • Where Mike generates most of his revenue today.
  • The main drivers of traffic to his ecommerce store
  • How his strategy changed after getting on the Super Bowl.
  • The effect of the Super Bowl on sales.
  • How he markets his coffee today.
  • How he built a cult following for his brand.

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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast. If you are new here, it’s a show where I bring in successful bootstrapped business owners to teach us what strategies are working and what strategies are not. Now I don’t bring on these famous entrepreneurs simply to celebrate their success, instead I have them take us back to the beginning, and delve deeply into the exact strategies they used early on to gain traction for their businesses.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start your own online business be sure to sign up for my free 6-day mini course, where I show you how my wife and I managed to make over 100K in profit in our first year of business. Go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin, I also want to give a shout out to sitelock.com for being a sponsor of the show. SiteLock is the leader in website security, and protects over 8 million websites by monitoring them from malicious activity 24 hours a day, 7 days a week. So here is the thing, most online business owners never think about security until they get hacked. My online store got hacked long ago, and it was the most miserable experience ever.

I basically lost thousands of dollars as I frantically tried to patch the issues, and get my store back online as quickly as possible. In the event that you get hacked, call sitelock.com, and they will help you out, or even better protect your site before you get hacked. Right now you can get 3 months of SiteLock free if you go to sitelock.com/mywifequitherjob. Once again that’s sitelock.com/mywifequitherjob. Now on to the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family, and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I have Mike Brown on the show. Now Mike is someone who I was introduced to through Tommie Walker who runs the Shopify Plus blog. Normally I don’t actually interview referrals who I haven’t met, but Mike has an amazing story.

He runs the popular coffee brand Death Wish Coffee, which even has its own Wiki page which I found out while I was doing my research. His company has been featured in countless publications, and he even had an ad in a super bowl which is pretty cool.

Normally I wouldn’t necessarily advise anyone to go into the coffee business, because it is extremely competitive and quite saturated, but Mike made it work with a very unique value proposition. With that welcome to the show Mike, how are you doing today man?

Mike: I am great, thanks for having me here.

Steve: Yeah, so I did a bunch of research on you prior to this interview, but please give us the quick background story, and tell us about Death Wish Coffee, how you got started in the coffee business.

Mike: I was a [inaudible 00:03:03] right out of college, and I worked for the city of New York in the controller’s office, and I realized real quick that wasn’t for me really. I got to study forensic behind a desk all day look inside like bank accounts, so I just took time off. I tried to figure out what I wanted to do and I’ll hang out of coffee shops a lot. I sat there, I decided, hey maybe I’ll try and start my own coffee shop.

Steve: Just randomly or?

Mike: Yeah right away, I wanted to learn about business, learn how to run a business, and the coffee business seemed pretty simple, just making coffee and sell it to customers that walked in.

Steve: So this is a brick and mortar coffee shop, right?

Mike: Right, a brick and mortar coffee shop. I tried to start a couple; it didn’t really work out so well. Then I finally found a company, I found a guy that wanted to sell his coffee shop, this is in 2008 when everything was kind of turning sour for everyone.

I got a decent deal on it, but at the same time it’s not a great time to go on business by yourself, so I started losing money head over face. I learnt that running a business wasn’t as simple as putting products on the shelf and hoping people will walk in.

Steve: Was this because your coffee shop was just like every other coffee shop, and was it like the rent that was pretty much dominating your costs?

Mike: Yes, certainly a grey area, but yeah the rent was high. Actually the employees, that the cost employs it, that was always the highest expense on my books just keeping people behind the counter, and yeah it was like every other coffee shop. I mean we tried to differentiate ourselves a bit by offering fair trade organic products, and some local products, but I don’t think that was enough really.

Steve: Were you selling online at the time or no?

Mike: No, not at this time, it was just solely brick and mortar. I kind of made the big mistake of when customers came in and gave me a suggestion, I pretty much took everyone’s suggestion, I put on the menu. After a couple of years I had this menu that was like four pages long. Buying inventory was a nightmare, and just keeping stock was a nightmare and things would go bad.

It was a big mess throughout; I realized I was going to lose money. It took me long to figure out how to run the business and what decisions I should make to make the business a little bit more profitable.

Steve: At the time it wasn’t called Death Wish Coffee either, right?

Mike: No, it wasn’t, it was called Saratoga Coffee Traders. It still exists in Saratoga Springs New York. The menu is a lot smaller now; really kind of learned to kind of focus on our best products.

Steve: How did that evolve into Death Wish then?

Mike: As I was struggling with making ends meet, I started doing whatever I could to learn more about business, to learn more about making money so I could keep the coffee shop always open. I started reading a lot of books about selling online, and that really caught my interest. I had an idea for this coffee by customers actually coming all the day, and every day and ask for my strongest cup of coffee.

I was always like do I give the dark rose or do I give them the coffee that the most caffeine, which sometimes isn’t the dark rose. When I knew what they were looking for, the taste, but they also wanted the caffeine as well. I put together a dark rose to have a lot of caffeine, and put our scary label on it. I sat down one day after work and made up this website, and I called it Death Wish Coffee.

Steve: What was the website, was this your own personal ecommerce store at the time?

Mike: Yeah it was. It was deathwishcoffee.com, it still is today. It looks a lot different now than it did when I first made it.

Steve: Sure, what platform you were on, just curious?

Mike: I was on Weebly.

Steve: Weebly, okay wow, and then what is it on now?

Mike: Now it’s on Shopify.

Steve: Shopify, okay of course dah, tell me about that.

Mike: I put these websites together, and I made the logo myself and put some software I got at Staples. I had the coffee, I knew what the coffee was going to be, and I knew what– I had the logo online. I didn’t actually have a product at the time put together. It wasn’t until I think a few weeks later when someone actually went on my website and bought the first bag.

I was like okay crap, now I need to put these products together, so I went back to Staples, I got some stickers, I got a coffee bag. I put together the beans out of my coffee shop and I blended them together the way I’ve been testing and I sent it out, and I got a good review. From there I sold a couple more.

Steve: How did that first customer find you, just curious?

Mike: On Facebook ad.

Steve: Oh you were running ads to a site when you didn’t even have a product?

Mike: Exactly yeah. I really wanted just to test it out first to see if it would sell. I did some testing on the product search. I had the product, but actually I didn’t have the packaging or anything, does that make sense?

Steve: Yeah, yeah of course. Okay, so you had already developed this really strong blend of coffee.

Mike: Mm-hmm.

Steve: And you were actually probably serving it in your shop?

Mike: Yeah, I was testing it out on my customers in the coffee shop, and they were loving it.

Steve: Okay, so you run Facebook– can describe what that first Facebook ad looked like?

Mike: It was a sword and cross bones, and I believe it said something along the lines of do you like strong coffee, click here pretty much.

Steve: And it just led to your site, you only had one product on the site?

Mike: Yeah just one product and actually still we don’t have many products. We just focus on our signature brand, our Death Wish Coffee. We do have 2 other brands, Walhalla Java and Belvolene [ph] coffee, but our focus is very more of I don’t know, I guess I want to say a separate basic, they are like a separate project off of the Death Wish Coffee

Steve: Okay and I actually looked around for strong coffee and there weren’t a whole– I mean there is a lot of people who sell coffee, but I couldn’t find a lot of people that specialize in the strongest coffee. Would you say that that’s the main reason why you’re standing out?

Mike: I think so, yeah, because at the time when my customers were asking me for strong coffee, I went on Google, and I was like, hey if I could find I’m the strongest coffee out there, and amaze my customers with it one morning, they are going to think I’m great, and consider even coming to my coffee shop.

When I goggled there was nothing, at the time there really wasn’t any strong coffees available. And the ones that were available they weren’t — I have had them before, and they weren’t that great. So that was the light bulb that went off. I was like; okay I can make this and sell it online.

Steve: So you have your site now and you are driving Facebook ads to it. Meanwhile you are still running your brick and mortar coffee shop, right?

Mike: Right.

Steve: So when did this shift happen and how did it happen?

Mike: So the shift happened when I decided to really focus on — I won’t even say focus, really good consistent on marketing like my new coffee brand. Actually one of my barristers was quitting and I’m like — she said, I’m like what are you going to do? And she goes like, well I don’t have real shares, I don’t want to be behind the counter being a barrister any longer.

And I said, well I got this new coffee project I’m working on; it’s an online coffee company. I’ve got a couple of sales; I’ve got some good reviews I think it can really take off if I really put some focus on it. So if you wanted to just work on the computer every day, and just post on social media, pay attention to the Facebook ads, pay attention to the different social platforms and kind of get a conversation going, I think that would be valuable.

And once she started doing that, that’s when it started to take off. When we started working on it every single day and actually I wrote out a template for her. I’m like here is a template, just a letter. Send it out to influencers, people online that have a lot of followers, or they have a good blog, or that have a good following, and see if they want to review this coffee and…

Steve: Can you talk about what was in that letter or template?

Mike: Yeah, of course I have it somewhere, but actually I know I’ll look it for now. But yes said something along the lines of we’re big fans of what you do. We have this great product; it’s got a lot of great reviews. Our audience is growing and we would like to see if you would like to try our products and possibly write a review. If so we’ll share the review with our audience.

Steve: So these were coffee blogs?

Mike: No actually, never really focused on coffee blogs. We focus more on blogs that had cool innovative products like one of the blogs…

Steve: What was your biggest here, what was your biggest feature at the time like your first early feature?

Mike: Well a blog called Cool Material…

Steve: Cool Material, okay.

Mike: Yeah they wrote a nice piece on us, and then…

Steve: And you pitched your coffee as like the world’s strongest coffee?

Mike: Yeah, we pitched it as the strongest coffee and I’m trying to remember exactly how this went, it’s a few years ago now. And it’s funny after Cool Material wrote about us, all these bloggers and news reporters, I feel like they all follow each other in some way.

So once one big blogger wrote, and I think it was a Cool Material blogger who wrote this blog piece. We started getting phone calls from other bloggers and other news reporters. And then in March of 2013 Good Morning America called, and were like, hey we read about your coffee online, we want to come up to your coffee shop and shoot a report…

Steve: Wait you didn’t do anything for that one, it was just — they just came to you out of the blue because of these blog mentions?

Mike: Exactly, yeah they came to me out of blue, they were like, they called me at 10 am, and I’m about three hours north of New York City where they are out of. And yeah they called me at 10 am and they are there by 4 pm, so I hardly had any time to prepare. And the next morning they actually opened their show drinking my coffee, and gave us glowing reviews and they said how much they loved it.

And then right after that, sales kind of took off right off almost to the point where it’s detrimental to my business, because we were selling a very small amount at that time, maybe 10 pounds a day. And all of a sudden we had thousands and thousands of pounds of coffee that we needed to fulfill. We didn’t have enough bags, we didn’t have enough coffee, we didn’t have enough labels.

I didn’t have enough staff; it was just me and my barrister, my former barrister. So I actually called customers out of the store to help me fulfill as much as I could, like place the orders for more coffee or more bags. It took me 30 days to fulfill some of these orders. I ended up refunding half the money. But what I did do throughout the entire time, I mean even though I got kicked off — I was selling on Amazon at this time too.

I got kicked off of Amazon; I got kicked off in eBay. But even though it took me 30 days to fulfill some orders and I had to give a lot of the money back, I always kept on good terms with the customer, and I was able to capture their information. So I was able to build my mailing list by about probably 30,000 people at this time. So even though the first six…

Steve: Okay hold on, so before the Good Morning America you already had 30,000 subscribers prior to the Good Morning America?

Mike: No, I probably had 20, but I think I gained another 30 right after.

Steve: Okay, so let’s back up then. So how did you get these 20,000 subscribers?

Mike: So one of the — from day one I’ve always had an email opt-in on my website, and I’ve always run campaigns to get people to opt-in to my mailing list.

Steve: These are Facebook ads?

Mike: Yeah mostly Facebook ads, I might have messed around with Google ads at the time. But yeah I was just trying driving people to our capture page, lead capture page. I think I was even…

Steve: So what were you giving away?

Mike: I think I was giving away free samples at the time of the coffee. That worked well, I mean it turned out to be kind of expensive, I mean it probably cost me about $2 for the coffee, and then another two bucks to send it out. So it just cost me four bucks a lead.

So I wasn’t making any money from the coffee, I was kind of investing just about every dollar of sales back into the business. But it’s working, it’s build there a good list and as that list grew I saw my revenue rising.

Steve: Okay that’s really interesting. So you started your list very early on giving away free coffee samples, that sounds really expensive. That’s like $80,000 worth of free samples?

Mike: Yeah, I mean I’m sure they weren’t all free samples, I’m sure some were like organic, that does sound like a lot at that time especially because I was broke.

Steve: Yeah, I’m sure this is overtime but yeah.

Mike: Yeah, that’s over a couple of years.

Steve: Okay so you would drive Facebook ad over to a landing page where you gave out a free sample. And then you would send it out, people would try it, and they would come back for sales. So I’m just curious how did you correlate the sales from those people back to your store?

Mike: I don’t think I understand the question. How did I correlate — how did I track that?

Steve: Yeah, how did you track it?

Mike: I don’t think I did at the time, I wasn’t tracking. But I was seeing growth on my mailing list, and I was — we would offer pretty much a deal just about every week, or we had some type of free giveaway, every week. So we sent out a newsletter. We could see as our list grew the revenue also increased, and we still do that today.

Steve: Who do you guys use for email provider?

Mike: Right now — we were using MailChimp back then, now we are using — I’m sorry we were using Constant Contact back then, we are using MailChimp now.

Steve: Okay and you mentioned that you got kicked off of Amazon, presumably you were doing merchant fulfilled then?

Mike: Oh yeah, yeah I was doing merchant fulfilled. Actually I was doing FBA, but then as my inventory ran out, I didn’t want the sales to stop, so I switched to merchant fulfilled, which wasn’t a great idea. But it took a little bit of time for me to get back on both platforms. Actually eBay was a lot of harder to get back on than Amazon believe it or not.

Steve: Really? Okay so when you get banned what happens? Like so Amazon banned you obviously because you couldn’t fulfill your orders and you had to cancel a bunch, right? So how did you appeal?

Mike: Right, you just write them letters, just call them up, talk to them. We had to put a plan in place. Pretty much draw up a plan that says why will this never happen again. Pretty much I just told them I’m just going to keep on FBA, and I’m not going to switch it back over to fulfillment by seller all the time, but on inventory and they record that.

Steve: Okay and in terms of when you first got started, did Amazon come first or eBay come first, or did your own site come first?

Mike: My own site came first. But if I had to do it over again I would recommend testing out the product on Amazon or eBay first before…

Steve: Okay and so when did you actually start selling on Amazon then, shortly after?

Mike: It is relatively shortly after. I don’t remember exactly but I started in 2000 — end of 2011, I was probably selling on Amazon in 2000. No, I was definitely selling on Amazon in 2012 because I got one of those, I think they sent them out to everyone at the time. But there was one of those cards that said you are a top Amazon seller in 2012 or top holiday seller. I was so thrilled, and then everyone I know now is like yeah I got one of those too.

Steve: Yeah, but you were one of the early ones. So would it be fair to say that your Amazon sales were exceeding your own website sales in the beginning or?

Mike: They were about…

Steve: They were about equal?

Mike: They were about equal. I think the website was a little bit more just because I had that email list, and that’s a lot — I drove a lot of business that way.

Steve: Okay, let’s talk about your email list real quick. So did you have autoresponders, or were you just sending out deals on like a weekly basis?

Mike: I did set up an autorespond program; basically if someone signed up from my list they got a welcome letter, and then a couple like a week later they got a discount probably in the week. I think pretty minimum and it wasn’t based on any — it wasn’t really based on anything. They were getting them whether they bought something or not, you know what I mean?

I think now ours is a little more dynamic where if they don’t purchase, then they’ll get a reminder something like that. It’s sort of more complicated right now, but yeah back then it was pretty just — I think there was like three or four emails in the autorespond chain.

Steve: So I was just — was most of your business derived from email, would it be fair to say early on?

Mike: I would say possibly, I think most of it was derived from influencers writing blog posts about us. We were really able to really crash it early on, because people were reviewing our products and giving us great reviews online.

Steve: Okay so the influence — in terms of finding those influencers was it just basic outreach, did you use any services to do that?

Mike: Yes basic outreach, I would go on make a list of people I saw on like Twitter, Facebook just in news articles. I would go to like BuzzFeed, and I would like find their authors that go to New York Times, Huffington Post.

Basically anyone I could find, I would write — and don’t get me wrong most probably about 90%-95% of people wouldn’t respond at all or would say no. But between like 2% and 5% would respond and only a couple would say yes, and it really only takes a couple of people to say yes for it to have a big impact.

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So I’m just curious you mentioned early on that you didn’t really target coffee blogs. Is it because you were just looking for much larger publications, like what was the rationale for that?

Mike: I feel like coffee blogs at the time and even now they are more focused on really high — they are focused on a different type of coffee, I guess the specialty coffee, the third way of coffee, the high — I don’t know. A lot of specialty coffee is in the market right now. They are like the opposite of what our coffee is.

They try to get like the sweet floral and fruity notes out of the coffee bean where that’s not my coffee. My coffee is like the high caffeinated, you taste it and it wakes you up immediately. And I actually use Robusta beans in my blends. And Robusta beans are looked down upon in the coffee industry for probably the last 20 years. It’s just recently that they are coming around now.

I think it’s because there is such good quality of Robusta beans coming into the market right now. That there is actually Robusta coffee that isn’t even considered a specialty coffee by the SCAA, and only Arabica beans are. So the fact that I was using Robusta beans in my blends I avoided the coffee brands…

Steve: I think I understand where you are getting at, like there is similar things with wine, right? Yeah okay cool. So let’s — okay so how did the super bowl ad thing happen? So you have an email following at this point, you’ve been on Good Morning America. How did the super bowl ad thing come into play because that was huge, right?

Mike: Yeah, this is a giant. In 2014, let’s see 2013 I watched GoldieBlox; it was a company that made engineering toys almost like legos for girls. And I watched them when the super bowl commercial threw into its small business begin competition. And I was like — I saw that and I was like, wow if I could win that with this business, it would be the biggest splash ever of a cool product.

I think it’s the best product in the world, I know I’m biased, but I think it’s amazing, and I think everyone else would too. And in 2015 last year in June they decided to run it again. I saw I had come across my Facebook news feed, and I got my team around me.

Actually a lot of my team that stay with me now are the same people I pulled out of my coffee shop back in 2013 to help me fulfill the orders. But I pulled those guys around, and I hear they are in this competition again. We have a decent online following now, I think we can make a run at this, and they are like yeah let’s give it a shot and…

Steve: So what was involved in entering the contest?

Mike: Entering the contest wasn’t too bad. We had to make a profile like online profile, and join their social network called Own It which is a social network for entrepreneurs. It’s actually really cool and helpful, you should check it out if you are entrepreneurs. And we had to make — I guess two activities such as take pictures of my team, make a video, answer a bunch of questions, take some interesting surveys, and basically make an online profile that when people went to it, they would want to vote for your company.

And it was all about entrepreneurship and who embodies entrepreneurship better than I guess the rest. And it actually would have come — the companies that came down too at the end, they are all amazing companies. And it was almost like a big vote off towards the end where there was 10 finalists, and we all had to see who could get — drive the most people to our voting link to get votes for…

Steve: So let’s talk about that a little bit. So you obviously used your email list for that, but how did you — because I imagine every company at this point has huge followings right, I would imagine?

Mike: Oh yeah, one of the companies Chivies they make short reports. I mean they have a following like millions of followers on Facebook and Instagram, and yeah they have a giant following. We thought they were going to be — were going to run away with it. And as it turned out they didn’t make it into the final three with us.

There was us, there was [inaudible 00:27:57] a brick and motor store actually out of Buffalo in New York, they were in the top three as well. They hardly had a social following at all. They had a few good YouTube videos, but they just had the support of the community around them, around Buffalo and New York. And they had such a loyal following in their community that they were able to just drive consistent votes every single day.

Steve: How did you guys do it?

Mike: So we tried everything, everything, everything, but I’ll tell you what I think works. We weren’t able to see the actual vote count or keep track along the way. So we were able to kind of get an idea of what was going on by looking at Facebook shares on everyone’s voting links. So we could see each person’s voting link and through Facebook we could see how many shares each of those got.

So we kind of used that as a gauge there. We were doing bad in the beginning, and it wasn’t so we just used the strategies that we use to build the business to reach out to influencers…

Steve: Interesting okay.

Mike: So we used Zack Wild, we actually do coffee for – he’s got millions of followers online. We were able to work with him and his Facebook account, and his social media account to push our leading link to his fans.

Steve: Well was there any incentive for him to do that, or was he just doing you a favor?

Mike: No there was incentive for him because we do sell, I’ll probably call it Walhalla Java which is for him and inspired by him, and actually he has all the branding rights on it. So he gets the royalty from that. So if we wanted, it was going to be good for him, and it has been great for him.

Steve: Okay.

Mike: Also Lisa Kelly from Ice Road Truckers, and the whole Ice Road Truckers crew, they helped us out of time and…

Steve: These are like major TV shows right, I mean Ice Road Truckers…

Mike: Yeah.

Steve: Yeah okay. How did you hookup with them?

Mike: Somebody on my team had a good relationship with their manager, or developed a good relationship with their manager. And yeah we started talking and they helped us out pretty much out of the kindness of their heart, there really wasn’t much in it for them. I mean we sent them coffee when they wanted, and we sent them sweat shirts and t-shirts and stuff, but they helped us out at the time, they are really good people.

Steve: So it sounds like a lot of what made Death Wish Coffee successful was like the people relationships that you developed in the outreach if you were to just choose one thing that voted you guys to the top, is that accurate or?

Mike: Yeah, that’s very accurate yeah. And I think right now when I think to have this win as we have some like crazy loyal fans who are amazing, and they are like huge brand ambassadors. They go above and beyond for us and not only voting, but they start their own campaigns and even get their own social campaigns going to try to get people to vote for us.

Steve: How did you get those fans? Was there anything special that you did to get those raving fans?

Mike: I think it was cool like logo cool brand identity, that’s part of it. But also we have pretty much of a no bullshit policy here where our number one value is customer satisfaction. If the customer isn’t satisfied they get their money back right away, and we’ll go over the top to make sure they are satisfied.

So not only that, our customers are always happy one, and we always try to over deliver and under promise. So everything we do we try to just kind of go above and beyond so when a customer gets the product they feel like they are taken care of. And we follow up with them afterwards to make sure they are happy, if they are not they get their money back.

It’s those things that we hear day to day; hey companies don’t do this anymore. They don’t really care about the customers, but you guys do. Like I have a customer service team, there is three of them right now, and that’s all they do all day is they not only reach out to the negative reviews. They reach out to every positive review, every question, every — yeah they are amazing.

Steve: Actually what I was trying to get out was are you guys actually putting out content also that people are consuming that really makes them huge fans, or is it really just about the product itself?

Mike: We put out some content, not enough I don’t think, but we would go over things to put out content. Our customers put out a lot of content which is even better…

Steve: Interesting.

Mike: Yeah they make content nonstop, and there is always — I always see my Google alerts newsfeed like a new piece of content, or a new video that one of our customers created on YouTube or something. And yeah those are…

Steve: So what do they talk about in this content — like if they put out a video, are they are just raving about your product?

Mike: Yeah they are really raving about it, or they are doing some type of challenge with our product like eating coffee grinds, yeah it sucks. Sometimes it’s like irresponsible stuff like how much of this coffee can I drink before, or really like makes me sick or something. I don’t know so they do crazy stuff sometimes. Most of the time it’s just they drink this coffee, and I don’t know like a rainbow shoots out their butt and they fly over the clouds. I don’t know they make some crazy stuff.

Steve: Okay and this is probably just the tribute effect that you have the strongest — you are known as the strongest coffee out there, right? So that kind of sparks off all these interesting pieces of content that people produce?

Mike: Yeah, absolutely.

Steve: Okay, so let’s talk post super bowl. So you get this ad, how do you prepare for it, and how much did your sales spike as a result of it?

Mike: So we found out in late November that we had won the competition. And we were super thrilled, but they were like okay now we really need to focus because how much coffee are we going to sell? Can our website handle this, can we produce enough, can we — there was all these questions. Is customer service going to get overwhelmed? We don’t want to get kicked off of Amazon again.

Since we got kicked off of Amazon in 2013, I had worked to make the business as scalable as possible. So we started working with fulfillment centers. So we didn’t fulfill our own products anymore, we had fulfillment centers do that. So we had to contact our fulfillment center, let them know. I actually made a list of every part of my business that would be affected by an increase in traffic, and came up with a worst case scenario, best case scenario, and probable scenario, and different steps to take at each one.

Steve: Okay, what was the actual scenario and — like first of all what was the increase in sales?

Mike: So the increase in sales once the commercial went live — and actually went live about two weeks before. They released the commercial on CBS This Morning — I think it’s CBS This Morning. Yeah they released commercial two instances before on CBS This Morning, and right from there we saw initial spike in sales.

Steve: Are we talking like 10X, 20X, 100X?

Mike: I think it’s probably about 10X to 15X on that day. But the day of the actual super bowl we did about 25 times of what we typically do on a day.

Steve: That’s crazy okay, and so at this point had you changed your website over from Weebly to Shopify or?

Mike: Yes, yes, yes, we were at Shopify at this time. We called them up, they had a team of 12 just waiting to see what happens when the commercial went live, and to handle any problems. We were able to follow the stats online through our…

Steve: And then you guys had enough coffee, because you had 4 months to prepare for this?

Mike: Yeah, we had to reach out to third party rosters to help us with the roasting process and packaging. But yeah we were able to get enough coffee everywhere our inventory channels where we didn’t run out. At the time of those commercials we had 125,000 people hit our website at the same time.

Steve: That’s crazy.

Mike: Yeah, it didn’t crash, it stayed up. That was a big — we celebrated for that. And then…

Steve: You– sorry go on.

Mike: Then after that sales were so good for — I mean it’s still good right now. They leveled off right around four or five times than they were before super bowl, so I have a business now that’s pretty big. It’s pretty big compared to where it was just a year ago today.

Steve: So wow okay, so the super bowl ad – you had already prepared for by using a fulfillment house. And were you using that fulfillment house prior to winning the contest, or were you still fulfilling everything yourself?

Mike: Yeah, but prior to the contest we were using the fulfillment center. We started using that at the beginning of– probably in the middle of 2014.

Steve: But you guys still have to pack up the coffee right, or were you still doing that yourself?

Mike: Yes.

Steve: Okay.

Mike: Yeah we package the coffee here, we put it in the case packs, and we send it down to our fulfillment center. From there the individual orders come in, and they ship it directly to the consumer.

Steve: So do you have a huge team then to do this packing at your own facility?

Mike: No, not a huge team. A year ago we had six — there were six of us. And now there is 14 of us. And on the production side there are– let me see, there is about seven.

Steve: Okay, I’m just trying to think like if you are getting like 100X sales or 25X sales during that stretch, I guess you had time to prepare, right? So you probably stock piled a bunch of stuff?

Mike: Yeah, we had time to prepare and at that time we were actually working with two third party rosters who were helping us roast and pack. Now we started to bring all that back in-house, we have invested in new equipment, two packaging machines, a new grinder, and we made some improvements on our roaster too.

Steve: Okay, and so a post super bowl like has your strategy changed at all?

Mike: We focused a lot of — a little bit. We’ve been focusing a lot on making those onetime purchasers regular purchasers. We want to get our frequency up, our products sometimes can come across as gimmicky, or I don’t know. I’ve heard some people figure as something you’ll find in Spencer’s and it’s really good coffee, and we really want to focus on getting those repeat purchases.

Steve: So how do you do that?

Mike: Well we started; we put a subscription platform in place.

Steve: Okay nice.

Mike: Yeah both on our website and on Amazon. And that’s a great route to — just in about a year I think we are up to like 6000 subscribers with…

Steve: How does that work? So they pay upfront for like a whole year, or they pay monthly?

Mike: Oh they pay monthly right. They just put in their payment information, and they get charged monthly at a discounted rate. And it just gets automatically shipped to the house, so they don’t have to worry about ordering coffee every month, it just shows up.

Steve: Okay, that’s very nice. And then for the other people who aren’t on the subscription plan are you just sending out emails to get them to join the subscription. Like what’s your strategy for acquiring subscription customers?

Mike: Yeah we have actually – it’s actually not released yet. But other than the discount there is a subscriber only deals that they can get on merchandised ads on exclusive releases that’s only available to them. And we would let our customers know through our mailing list…

Steve: Okay and then all this stuff is all done through Shopify, through some sort of add on?

Mike: Right, yes all done through Shopify apps. [inaudible 00:39:50] is a good company we work with and we have a good relationship with them. And they really do pretty much what we want most of the time, it’s fantastic.

Steve: Are you guys still running Facebook ads and Google ads?

Mike: Yeah. We still find that’s our best — I mean in my opinion that’s — I can’t quote the number here, I think Facebook ads have the best return on investment, other than maybe a super bowl commercial.

Steve: Yeah, other than a super bowl commercial. Real quick though on your Facebook ads like who you are targeting just curious. Like you are obviously targeting people that reach your website, but in terms of new customers how are you getting them?

Mike: We do look alike audiences. We do sometimes even competitor look like audiences, sometimes we do — we are always trying different things out.

Steve: What’s worked the best?

Mike: I mean re-targeting probably is the best, but yeah I mean other than re-targeting I guess look a likes or friends of our customers.

Steve: I’m just curious like when you are running these ads, are you still running them directly to your shop, or are you running them to content pages?

Mike: Right now I do them direct to our shop unless there is a specific goal we have in mind. If we are trying to build a mailing list we can send them two piece of content. But at this exact moment in time I think we are running — I think it’s some retargeting. Or somebody goes inside a product and they don’t buy it, they get retargeted with that product and there are news feeds somewhere.

Steve: I’m just curious are you still giving out free samples, or did you just stop doing that long ago?

Mike: Well actually we stopped doing that yeah. I mean we do it at events and stuff now when we go out like physically to events around the country, but yeah not online. We do have a free or we do have 100% money back guaranteed. If somebody is not completely satisfied with the product, I tell them, “Hey if you just want to try it, just buy it and if you don’t like it let us know, we’ll give you your money back,” it’s not a the big deal on our part. If you are trying the product we like to think that you are trying it to buy it anyway, so there is really no risk.

Steve: I’m just wondering how your Facebook ads have kind of evolved, like in the beginning you were trying to get leads by giving away free coffee. Like how has that evolved, is your brand name good enough now that you just put out an ad and link into your shop and people just buy?

Mike: I think it’s funny though, it’s changed a lot, because I don’t do it anymore and so…

Steve: Okay, so I’m asking all these specific questions around the campaigns, okay.

Mike: Cane a guy that works with me on my team. He handles our Facebook ads and most of our advertising. And we work with a consultant who works with us to try different things out and try to optimize it, so we have the most return on investment.

Steve: Okay, are you guys still doing Google ads or no?

Mike: Not as much, a little bit, but no not as much, they got really expensive.

Steve: Yeah, because I would imagine like coffee keywords is just ridiculous I would imagine.

Mike: Yeah they are ridiculous, and it turns out we ended up — yeah it just seemed like a lot of keywords we were targeting weren’t working out as planned, and like some of them got expensive so – a little bit on the fence. Like for a while we were targeting like our own branded keywords. I mean that seemed to be doing well but…

Steve: You would probably write number one for those anyways but yeah.

Mike: Exactly so it’s always like am I just throwing money away here or not?

Steve: So let me ask you this, so I mean a lot has happened over the years. And if you were to start a coffee business from scratch today, like what advice would you give? Because it is still a saturated niche, so how would you have done things differently, and what things would you have done the same?

Mike: You definitely want to stand out. So I won’t do that the same. I probably would have done more testing in markets that are already setup before I went ahead and created my own website.

Steve: So what does that mean exactly?

Mike: I mean the first thing I did when I started my brand is I went and I spent money to build the website. I didn’t spend a lot of money, because I did it myself, but there was still money like signing up for the Weebly platform. I could have just made the product and put it on Amazon, and done the same thing, and it wouldn’t have cost me anything.

Steve: Okay.

Mike: Definitely I would have started the mailing list like I did, maybe focus on that even a little bit more. I think that’s — I think there is still tons of value there even with the changes that Gmail and I think will be happening in the future, where people will be able to kind of get ads out of their news — out of their email. But I still find there is tons of value there, I might focus a little more on Google ads in the beginning, I think they are so worthwhile at the time.

Steve: What type of ads like AdWords or Google shopping or what type specifically?

Mike: I was using Google AdWords back then.

Steve: AdWords, okay.

Mike: I think we are doing more Google shopping now, but I can’t seem to get results I want with that so…

Steve: Interesting, okay.

Mike: Yeah it just requires more work, a little more work on it.

Steve: So influencer marketing would still be your number one?

Mike: Oh yeah anything free. The free step I think is the best. We do influencer marketing, yeah that’s by far the best. What are some of the free — I had a whole — there is this book actually out there, it’s by Jim Cockrum, it’s called 101 Free Marketing — Online Free Marketing Lessons or something.

It’s by Jim Cockrum. I actually went through that book about six times, and everything I tried in that book was knocking out a product, and it didn’t cost any money. So I mean the return on investment there was surreal.

Steve: Amazing okay, so you didn’t really have to compensate these influencers that much outside of giving product away?

Mike: Yeah no I didn’t pay them anything, I was just kind of showing a new product, giving them some content that they were looking for at the time. I think that the game might have changed a little bit now I think influencer marketing is more of a popular term than it was back in 2012.

Steve: Sure oh yeah definitely. So in terms of — I imagine you were getting back links this whole time also right whenever you got published?

Mike: Yeah, I never focused on SEO or back links. I mean I’ve kind of started to look into it more now, but at the time I was just kind of focusing on my product, my customers. The content I was putting out there wasn’t like — there was no strategy behind it. I was just doing what I thought was best for my customers.

Steve: So is search like a significant portion of your sales, or not so much mostly social influencers and that sort of thing?

Mike: Well we get a lot of traffic from search definitely now, and we just started working with an SEO Company to help us learn how live it more now. They’ll hopefully sign to it because a lot of the content we have is great content, it’s just not like optimized for anything.

Steve: Okay cool man. Well it sounds good, the subscription thing is going to be huge I would imagine. Because then yeah you got this customer, and they are just paying you every month for life.

Mike: Right, the trick there is to get them to stay on, and to continually provide more value month and month out, so that’s been a challenge for us. As many subscribers as we have there is been good amount that’s dropped off, just because all the value must not have been there. So we are revisiting that, and we are putting together a pretty cool platform where they are able to get a lot more for less money.

Steve: And I would imagine once people try your product and it’s really strong, they can’t really go to any other coffee brand after that, right?

Mike: That’s what I hear.

Steve: Because your stuff is like crack.

Mike: That’s all I drink.

Steve: Cool Mike, I have had you on the show for over 40 minutes, and I want to be respectful of your time. Where can people find you, and where can they actually try some of your coffee?

Mike: So if you are located in upstate New York, that’s where I am from, all the New York and Connecticut area, or you just moved in to over 100 price choppers. If you are not in upstate New York, but anywhere else in the world you can go to Amazon, or usually you can just type in coffee, we are usually the number one two or three coffee on Amazon just about every single day. And you could also look through deathwishcofee.com, and signup for our mailing list, you’ll get tons of free stuff with every order.

Steve: That’s awesome mike, well hey I really appreciate you coming on the show, it was great.

Mike: Yeah thank you so much, thanks for having me.

Steve: All right, take care.

Mike: Bye, bye.

Steve: Hope you enjoyed hearing about Mike’s incredible story. And here is the important take away; if you are going to go into a competitive niche like coffee, you better have a strong value proposition. And the reason mike succeeded was because his coffee was the strongest.

For more information about this episode, go to mywifequitherjob.com/episode133. Once again I want to thank sitelock.com for sponsoring this episode. If you run your own hosted online store or any website for that matter that handles monetary transactions, then you should definitely give SiteLock a look. They can also help your site with site speed issues as well, and did you know that ecommerce sites that take longer than 5 seconds to load often shed customers.

Now SiteLock offers a service called TrueSpeed which is a content delivery network that can increase download speeds by up to 50%. So go ahead and check out SiteLock today at sitelock.com/mywifequitherjob. Once again that’s sitelock.com/mywifequitherjob.

Once again if you are interested in starting your own online business, head on over to mywifequitherjob.com, and sign up for my free 6 day mini course, where I teach you how to start your own profitable online store. So go to mywifequitherjob.com, sign up right there on the front page, and I will send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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132: How Ryan Grant Scaled His Amazon Retail Arbitrage Business To 7 Figures

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132: How Ryan Grant Scaled His Amazon Retail Arbitrage Business To 7 Figures

Ryan Grant is someone who I met at the Import Summit last year and I’ve been following his work every since.

He runs the popular site OnlineSellingExperiment.com where he talks about all of his adventures selling physical products online.

Now if you recall way back in episode 17, I had Jessica Larrew on the podcast to talk about her Amazon retail arbitrage business.

Well Ryan has taken that same model of retail and online arbitrage and scaled it to small company with employees.

What is online and retail arbitrage? It’s the process of buying from retail stores and liquidation outlets and selling those products on Amazon.

Anyway, last time we spoke, Ryan had a pretty nifty operation going on and I want to catch up with what he’s up to today. Enjoy the interview!

What You’ll Learn

  • How Ryan got into selling online.
  • Ryan’s motivations for starting his business
  • How to scale a retail arbitrage business
  • How he knows what goods are going to sell.
  • Where he consistently finds goods to sell.
  • How he deals with unsold inventory.
  • The many challenges of running a retail arbitrage business

Other Resources And Books

Sponsors

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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast. If you are new here, it’s a show where I bring in successful bootstrapped business owners to teach us what strategies are working and what strategies are not. Now I don’t bring on these famous entrepreneurs simply to celebrate their success, instead I have them take us back to the beginning, and delve deeply into the exact strategies they used early on to gain traction for their businesses.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start your own online business be sure to sign up for my free 6-day mini course, where I show you how my wife and I managed to make over 100K in profit in our first year of business. Go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin, I also want to give a shout out to sitelock.com for being a sponsor of the show. SiteLock is the leader in website security, and protects over 8 million websites by monitoring them from malicious activities 24 hours a day, 7 days a week. So here is the thing, most online business owners never think about security until they get hacked. My online store got hacked long ago, and it was the most miserable experience ever.

I basically lost thousands of dollars as I frantically tried to patch the issues, and get my store back online as quickly as possible. In the event that you get hacked, call sitelock.com, and they will help you out, or even better protect your site before you get hacked. Right now you can get 3 months of SiteLock free if you go to sitelock.com/mywifequitherjob. Once again that’s sitelock.com/mywifequitherjob. Now on to the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family, and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: All right we’re good now, okay. Welcome to the My Wife Quit Her Job Podcast. Today I’m thrilled to have Ryan Grant on the podcast today. Ryan is somebody who I met at the Import Summit last year, and I’ve been following his work ever since. He runs the popular site onlinesellingexperiment.com, where he talks about all his adventures selling physical products online.

If you recall way back in episode 17, I had this woman named Jessica Larrew on the podcast to talk about her Amazon retail arbitrage business. Well Ryan has taken a similar model of retail and online arbitrage, and he’s scaled it to a small company with employees and procedures. Now what is online and retail arbitrage? It’s the process of buying from retail stores and liquidation outlets, and selling those products on Amazon.

Anyways last time we spoke Ryan had a pretty nifty operation going on, and I want to catch up with him and see what he’s up to today. With that welcome to the show Ryan, how are you doing today man?

Ryan: Doing great Steve, thanks for having me.

Steve: Yeah, give us the quick background story; tell us about your business, how you got started, and kind of what you sell, and how your operation is like today?

Ryan: Sure, so I got started selling on Amazon back in 2008 when I was a freshman in college. I went to the college book store with the text books that I had paid quite a bit of money for, and saw what they were offering for those books, and was quite disappointed with the offer. So I began to explore other options for selling those books which ultimately led me to Amazon.

Then throughout college I would sell my books, I would sell friend’s books, and eventually started buying books from essentially as many students as possible at the university I went in Minnesota. Then we gradually expanded to other campuses as well, primarily focused just on text books. Then I had that going from about 2008, and in 2013, that was about 2 years after I graduated was still doing the text book stuff.

I had a job as an accountant, didn’t really like that, so I decided to see if I could pursue selling on Amazon as a full time income. On September 2013 is when I started my current operation, which is the primary income source for me now, and then that is selling arbitrage products like Steve mentioned in the introduction.

So it’s everywhere from online stores, retail stores, we’ll buy liquidations and close out from companies that are looking to get rid of goods in bulk, and then we’ll buy direct from manufacturers of brands. We don’t try to label anything at the moment, but we’ll buy like tickets. That’s why a company like Mitel for example we don’t buy from them, but we buy direct from those.

The operation currently, there is myself and then there is 7 other people, and they have a variety of roles to running the operations of the business, going out to these stores and some of our sources, and purchasing the goods. Then there is people that are processing the goods for Amazon at their warehouses as well removing price stickers, doing all the things that need to be done to meet Amazon’s requirements.

It’s been a gradual process, but all about the past 3 and a half years, and working at the point where my time isn’t needed to run the business day to day. That goal was pretty much realized in January of this year, so for the past 5 or 6 months I’ve been able to pretty much have things continue to grow without a ton of my direct involvement. There still sometime that goes there, but it’s primarily focused exclusively on growth as opposed to just day to day operations. That’s a quick look at where things are at today.

Steve: Awesome, is the textbook operation still alive or is that…

Ryan: The textbook operation is not currently going; it’s something I might revive now that we’ve got a bigger team in place. It’s something I see out of doing just because it’s fairly capital intensive and very seasonal. There is 2 main times a year to buy textbooks at the end of each semester.

So I switched over to buying products that sell better year round, but now that the business is in a better financial position, and then there is more manpower as well, it’s something that I’m looking to put back into the fold in the near future, most likely in December of this year when the close of the next college semester comes.

Steve: Interesting, I’ve been out of school for a long time, they still use paper text books?

Ryan: Yes they do.

Steve: They do, okay.

Ryan: They try to [inaudible 00:06:47] e-books. Honestly they end up being a lot more expensive for students, because they can’t resell them when they’re done with them. So even if you pay like 200 bucks for a book, and then at the end you can sell it for 120 bucks, you only loose 80 buck. So even if the e-book was 20% cheaper at the beginning, and you paid 160, you come out quite a bit better with the physical book.

Steve: I see that makes sense. Did you ever work as an accountant?

Ryan: I did, yeah I worked at an accounting firm in Minneapolis for about one year and 9 months. I made it through two busy seasons is what they call it or two tax seasons April through January to April. By the end of the second one I knew…

Steve: You had enough.

Ryan: I wasn’t going to stick it out.

Steve: Were you doing your Amazon thing while you were working as an accountant?

Ryan: I was doing it a little bit, so I knew I wanted to quit my job previous, well honestly within the first 6 months I had it. I kind of began planning my exit. One of the big reasons I didn’t quit right away is I just wanted to be in a good financial position to give myself as much run way to try out something new as possible.

One of the things I wanted to do before I quit was to buy an owner occupied duplex which I was able to do, and then I got that in place, and then I started to spend more time on the Amazon business prior to quitting. So I would say like the past six months before I quit I was trying to spend five to ten hours a week at least on the Amazon business.

It was still the point where I was making between $500 and $1000 dollars a month at the point when I quit. I felt that the time investment would scale up to a full time income if I was able to dedicate full time hours to the Amazon business, which ultimately played out pretty well.

Steve: I was hoping you would be able to walk me through the arbitrage business, and how the business works exactly. Back when you didn’t have a full team, can you talk about where you got the products and what the procedure was like, and how you priced everything, that sort of thing?

Ryan: Yeah, we can well do that. Back when it was just me, my main sources initially were just retail source, Wal-Marts, Targets, Toys R Us, things like that, that were available nationwide. Then some of the better sources were some of the Mom and Pop discount type source that were only available in my area just due to people not being able to get their hands on the same products nationwide, it helps to maintain prices online.

The general concept though is you go into these stores, you look for items that are sold at a discount, or might only be available in your region, and you’re looking for items that will be selling for more on Amazon than they are in the stores, or in the store that you’re sourcing in or you’re buying in. Sourcing is the term that’s generally used in the arbitrage world for going and finding products.

You have an app on your phone, now there is one called the Amazon seller app, it’s completely free, and it does pretty much everything you need. You use the camera on the phone to scan the barcode on the products, and it’s going to display all the details on that product. You will be able to see the price it’s selling for on Amazon.

You’ll also be able to see the fees that will come out if you sell it via the fulfillment by Amazon program, so you can see exactly how that compares with the prices at that store. Then you can also see the reviews of the product, and the sales record of the product. The sales record of the products is something specific to Amazon, and it gives you an idea of how well that product sells.

The law of the sales right number, the better the product sells as a general rule, and that number is going to fluctuate over time. Basically you’re looking for products that return the minimum return on investment that you’re looking for. I normally recommend starting out somewhere between 50 and 100% depending on your risk tolerance straight away.

Steve: This is after fees, Right?

Ryan: Exactly, after fees as that gives you some margin for error if prices go down, if the item [inaudible 00:11:16] and things like that. The higher you can stretch what you set right away, the higher the probability of success, and the more things can go wrong, you still come out okay.

The primary things on the app like right away I’m looking at, the number one thing is the net pay out or the net amount that I will get after fees. Then you calculate your ROI percentage based on that, and then I want a sales rank. Generally speaking there is many caveats to this, but generally speaking less than 10,000 is an item that is going to sell relatively quickly in most categories.

One of the things about sales rank is that every category on Amazon has a different sales rank, so textbooks or books is an entire category, and it’s entirely separate from say the health and beauty category in a sales rank of say 50, 000 in both categories is going to sell through in at a vastly different rates. So those are cut signs are some of the things you pick out right away. Starting with looking for items right under 100,000 is a decent way to start, and then as you get sales, you can iterate on that and find out what’s working, and expand those rankings to what works best for you.

Steve: In terms of just a product, like I wouldn’t just walk in to like a Wal-Mart and just start randomly scanning stuff, right? Do you have any criteria, or where you like to go typically?

Ryan: Yeah, typically I like to start with like the clearance sections of the store, and then that works better like local discount stores and Wal-Marts, places that don’t have nationwide clearance. Target for example they typically, if an item is on clearance at one Target, it’s typically on clearance at thousands of other Targets throughout the country, and there is many people who do this.

We issue a lot of competition on the listings, and then the prices go down. Generally speaking I’m looking for either clearance items or items that are discounted, or the other type of category of item I like to look for is regional products, or something that’s only going to be available to my…

Steve: Give me an example of that.

Ryan: In Minnesota there is a leap year soft drink, it’s called Dad’s [inaudible 00:13:32] and it’s only available in certain areas. It’s available for example at [inaudible 00:13:38] usually. You can get a liter bottle for about a dollar. For quite a while you could sell a three pack of them for about $25.

Steve: Really?

Ryan: Yeah, and these even you didn’t have to ship merchant fulfilled, so that’s not using Amazon’s FBA program just because it’s an item that can explode, because of– like that item is only available in Minnesota for example. If people move to another state, and they really loved that product, they’re often willing to pay a very huge premium for it online. That’s the logic for the regional product, and it’s just a little bit more exclusive, and they are let’s say a copy of the board game monopoly, or something that’s going to be available in every store.

Steve: Do you only have an idea of what products you’re looking for when you do this, or is it random like you walk in a clearance section, and you look for regional products

Ryan: Yeah, it depends on what is available in each store. Basically with this model you’ll sell just about anything. It doesn’t really matter if it’s a toy or if it’s a [inaudible 00:14:56] item for example, or if it’s toothpaste.

All that really matters is what it’s going for online versus what you can buy it for, and the sales process. Really it’s not that focused when you’re doing the retail arbitrage. You evaluate the opportunities that exist in whatever store that you are in regardless of the category.
Steve: Amazon has gotten a little more strict about on gating for categories, right? Do you have any comments on that, like food and beverage for example you have to get on gated for that?

Ryan: Yes they are, so if you’re brand new to the count you won’t be able to sell grocery, health, and beauty. You won’t be able to sell like clothes, shoes, luggage, high end handbags, sunglasses, things like that. Mainly consumables and high end products or things that are easily counterfeited are the main products that you can’t sell right out of the gate.

There is an approval process for all of them. It generally involves buying direct from wholesalers or distributors, so those will be buying more high up the supply chain, more direct from the brand or from a distributor of those brands, and then you submit those invoices to Amazon, and then you’ll be allowed to sell pretty much any product in those categories.

If you get the approval once, you’ll get to go to sell all the products in that category. It’s not generally something I would recommend just right out of the gate. There’s tons of categories that are available to sell in upon. But if you give it a go and you have some real success, and you’re looking to expand, then I definitely recommend looking into getting that approvals and spending the time to get that approval, because there is less competition in those products and categories just due to not all new sellers being able to sell them, so it’s a little bit more exclusive.

Steve: Okay, so once you do find a product, and presumably you’re listing it on top of another process listing, right? Another listing on Amazon?

Ryan: Correct, yeah.

Steve: It’s right, okay. So does that mean that you have to constantly monitor your listing to make sure you have the buy box?

Ryan: Yes, so you’re always looking to have the buy box, and then that’s a pretty big topic in and of itself, because there is many components that go in to winning the buy box. The ones that you can easily control are your feedback percentage, your fulfillment method, and what your price is.

Feedback is, you can use tools to make sure that you’re maximizing your feedback and sending follow up sequences to buyers to maximize that percentage. Fulfillment method if you get a bomb going for the buy box when you use fulfillment by Amazon program versus shipping the item yourself. The closer you are to the lowest price generally speaking, the higher the chance you’ll have the buy box.

Steve: When you’re talking about feedback in the world of retail arbitrage, is that seller feedback, or is that product feedback that you’re more concerned about?

Ryan: That would be seller feedback.

Steve: Okay, got it. So does that imply then that your sequences are more focused on getting the person to leave you seller feedback, like the product feedback doesn’t matter at all at that point, right?

Ryan: Exactly, yeah it’s purely to get a feedback for the individual seller.

Steve: Okay, and then are you doing all of your stuff FBA when you can?

Ryan: Absolutely, yeah.

Steve: Okay and I’m just curious how many skews do you have outstanding today across all your employees and everything?

Ryan: That’s a good question.

Steve: It doesn’t have to be exact; I’m just trying to get an idea of what ball park it is.

Ryan: Between three and 5,000 I would say.

Steve: Three and 5,000 skews, okay. So for all those skews you have to monitor whether you have the buy box on a day to day basis, right?

Ryan: Yep, and there is software that we use to do that. It’s called the repricer, and you set up rules to have– basically have them change your price depending on what is going on with these individual listings so that you don’t have to monitor each one individually.

Steve: One thing I’ve always been curious about is if everyone is using this repricing software, doesn’t the price just continue sinking lower and lower?

Ryan: It can, it depends on which rules you use for the repricer. So my recommendation to people and what I do personally is I don’t want you participating in the item continuing to drop in price. So what I want my profiles to do is to maximize my sales value, so generally what I’ll do is I’ll price lately between one cent above the lowest price, and about one a half percent above the lowest price depending on the individual products, and depending on the category.

Rarely am I going to contribute pushing the price down, because I want my price a little bit above, and you’re still able to take the buy box even at a higher price than the other buy boxes. There is many factors that go into it such as the location of the item relative to where the customer is and things like that.

Then the most aggressive profile that I usually do is matching the buy box, or matching the FBA price. So if another seller has it set to consistently beat whoever lowest price is, or they always want to be say a cent below the lowest offer available, then I will sort of contribute to that.

Another important piece with the repricer is you set up a minimum price or a floor price that repricer won’t go below regardless of what the market is doing, but then you have to take action on the listing if you wanted to drop the price further. So there’s quite a few precautions.

But yeah if people don’t know what they’re doing with repricer, it can get ugly and in reality that can create some buying opportunities too, because if two people are every 15 minutes, they are lowering their price by a penny or by 10 cents, that reduces prices very quickly, but then that creates an arbitrage opportunity to ultimately buy the item from those sellers, and sell back at the same listing.

So if you do some tricks to take advantage of those situations for profit still, but to the overall market place when the repricer gets in to the hands of someone who doesn’t know how to use it, it’s a little bit dangerous.

Steve: So you obviously need the buy box to make sales, but from what it sounds like you’re saying is that the buy box can shift multiple times during the day?

Ryan: Absolutely, different people, say someone on the East Coast and someone on the West Coast could be looking at an identical products, and see a different story on the buy box at the same exact time. So yeah the buy box is constantly rotating, and there is reports that you can run in Amazon on kind of individual item basis to see what percentage of the time you are in the buy box, and then that can help you tweak your repricing, and also create a pricing strategies at the minimum.

Steve: So what do you like to see this percentage at, because presumably all your items have other people selling on it, right?

Ryan: Most do. I would say 95% probably have other sellers. Typically the percentage, it purely depends on the demand for the product. Like if you’re selling say one of the top selling toys…

Steve: Like a chiboka mask for example.

Ryan: Like a chiboka mask, exactly. If you’re selling one of those, it might not matter if you only have the buy box one percent of the time if you have say 10 units or less. Then say it’s a book or a home improvement item that doesn’t sell very often, you might want the buy box more like 50% of the time if you can have that.

So I don’t know, it really depends on a per item basis, but at the minimum I usually like double digit percentages on most listings unless– so 10% or more unless it’s something that’s really flying off the shelves.

Steve: Interesting, do you do any bundling?

Ryan: I don’t do very much bundling; it’s mainly selling on existing listings for now.

Steve: Okay, I was going to ask for your opinion on how like Amazon’s cracking down on the bar codes right now, especially for bundling of bigger brands, but it doesn’t sound like you encounter that at all.

Ryan: Yeah, I haven’t had to deal with that juice yet, it sounds like– I mean if people want to be 100% safe, it sounds like you want a GS1 which is the official place, that’s the safest route to go. It’s more expensive, but it ensures your bases are covered.

Steve: Okay and so one question I’ve always wondered about just the whole retail and online arbitrage space is how do you consistently get goods to sell on a consistent basis?

Ryan: With this type of business, it really is all a function of spending. It’s all based on the products you’re buying and buying correctly. Over the past three years we’ve created with my business pretty specific buying guidelines that we’re looking for, and criteria that we’re looking for in products.

So we’re looking for a certain return on investment, we’re looking for a certain sales rank, certain reviews, there is some other things we factor in as well. But when we buy products that fit those criteria, and then when it’s spread out over enough skews, it has a way of being consistent over time.

I don’t know, it’s kind of like the more or less divine guidelines or the formula, if you put the right inputs into the formula, you get the right output. It’s only sure on top of if you buy right, and then if you’re on top of every pricing and making sure that you’re controlling your inventory levels on each individual item, you tend to get pretty usable results.

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The people who are doing the buying right now for you, are they literally still walking into Wal-Marts, or do you have like a more consistent source of goods now.

Ryan: The Wal-Mart piece, some are literary still walking into Wal-Marts, but we also have– like some of our online sources are more sustainable, and then some of our wholesalers are wholesale sources where we buy direct from either the distributor, or direct from the company. Those are products we also consistently buy again and again.

Steve: How does that work actually, so are you kind of acting like a marshals in a way?

Ryan: In the sense of like buying from a distributor?

Steve: Yeah.

Ryan: Sure, in a sense it’s more or less like let’s just say I like using with the game monopoly for examples, so if you can buy that direct from Hasbro I believe they’re– it’s Hasbro or Parker Brothers, whoever makes it. You can buy that say direct from them for 6 bucks a unit, and then you can sell it Amazon for 15, and make I don’t know 3 or 4 bucks.

The way that works is essentially you buy 100 to start, then once you get down to say 25 units, you just call them up and say, “Hey I want another 100 units of this,” then you can keep selling that. So we just do that with various products on Amazon.

Steve: But someone like Hasbro is not going to want to sell to someone who just sells on Amazon, right?

Ryan: Generally speaking no. They would be able to handle that on their own, and Hasbro for example, they probably aren’t going to give someone like me the discounts that I would need to even make a profit. Yeah, this tends to work better with much smaller companies who are looking for more a soldier for their products.

Steve: Can you give me an example so like a much smaller like no name brand or?

Ryan: Yeah like a no name brands let’s say generally yeah– let’s see.

Steve: You don’t want to give away that.

Ryan: I don’t want to give away specific products, that’s kind of one of the unfortunate things about an Amazon arbitrage business is that you can’t directly promote yourself to everyone out there, or it kind of creates problems.

Steve: Well, so it’s not important what the exact company is, but why doesn’t that company just list its own stuff on Amazon?

Ryan: That’s a good question. They might not have the expertise, they might not have all the– the short answer is they should, but they might not for a variety of reasons. Like a lot of companies for example they sell products, they just might sell from a reseller presence for like physical transactions, they don’t do much in the role of e-commerce at all. There is lots of people that really don’t even know that it’s an option.

Steve: For these guys then, are you creating a new listing, or do they already have a listing existing at Amazon?

Ryan: We went only targeting ones that have an existing listing, and it will help them to improve the listing, because we just like to see some sense of demand for the products which is hard to do before it’s on Amazon, and then we’ll have to improve it if needed.

Steve: Wait okay, so they are already selling on Amazon then or?

Ryan: Well someone has sold their product on Amazon previously.

Steve: Got it, got it.

Ryan: Pretty much anybody could create a listing for any product they want regardless of if they are the actual brand or not, and then all people going forward will use that listing to sell for that unique UBC.

Steve: Okay, and so you’re helping the brand with their listing?

Ryan: Well yes, I guess so we would improve the listing which helps the brand. Ultimately I guess our main service though is helping them with sales. The way we do that though is by improving the listing that their products are on. They can go through some steps to register on their own, that’s not always something we’ll have them go through, it’s more or less…

Steve: I’m just curious like I’m that company, you’re helping me do this, after a while I’m just going to be like wow thanks, I’m going to just start shipping my own stuff there. So I’m just curious, like what the turnover is like between the vendors that you use?

Ryan: Most of the ones that we’re targeting, they’re looking to sell wholesale, like they don’t want to go direct to the consumer, they want to sell 100 units at a time, make their hit to the margin, and then they’re happy with that. I mean we don’t see a ton of turnover due to them moving on and wanting to sell the products on their own. A more likely scenario that happens is too many sellers come in that are willing to sell at a lower margin, or Amazon themselves comes in and sells that same products. Those are the bigger things that we run into.

Steve: Then there are guys who are selling you the wholesale stuff; do they have relationships directly with the brands?

Ryan: Yes, they work in direct with the brands, sometimes they represent many, sometimes they represent just one. It ultimately depends on the business and the individual.

Steve: And then do those guys have retail shops as well, or are they purely like a middle man?

Ryan: Most of them are purely a middle man.

Steve: Interesting, okay. I’m just wondering what the incentive for brands to work with these guys are? I guess there is liquidation outlets?

Ryan: Some are liquidation, like liquidation has gone to a whole another ball game. I guess the reason brands in my opinion do it is because they are good at making the products, there’s kind of like a private label or importing any product. They are just the first line of the food chain, like they get all the value with the IP that their brand has, like the components of like a game of monopoly for example costs nothing to make.

If they can sell it in bulk for six or seven bucks to one level, and then they turn around and sell it for 10, and the retailer sells it at 15, everybody gets some piece of the pie, but some of these big companies just don’t want to go through– they got the manufacturer piece, but they don’t want to get involved with the sales.

I agree with you they could cut out all these levels and create a lot of margin for themselves. I don’t think they see it as their core businesses. That’s similar to like where stores like Target and Wal-Mart, they’ll move items on clearance to clear shelf space if they don’t sell on there, so ultimately ship them as liquidators, because they know that that shelf space to them is more valuable than really recouping any value for a small percentage of the products.

It’s ultimately that each process in my opinion is just focusing on their core business and not ruining what they’re good at, at the expense of opportunities that appear to be shining objects.

Steve: Would you say that in the arbitrage game like the Holy Grail is to find these wholesale outlets as opposed walking through like a Wal-Mart or Target?

Ryan: It’s definitely a lot more sustainable, so yes. That’s ultimately the direction I’m trying to go in my business is make it sustainable

Steve: Where do you find these wholesale outlets, like do you just go on the internet, or is there a procedure for finding them?

Ryan: Pretty much we’ll go to like tradeshow websites, and see if we can find people that are looking to sell their products. Then reach out to them if their product is already on Amazon, and see if we can represent them there, or if they’re willing to sell to us, or we’ll sell it on Amazon, but then go to Google and see if we can find a distributor with the arbitrage on to you.

You’re selling a ton of different products, so you know what sells well in some cases, and you might not be able to get it in retail stores any more. You could go and look at the packaging and then go direct to the source, and see if you can find it that way. So there is quite a few different options for finding them.

Steve: Interesting, okay.

Ryan: It really comes down to preference though, like the deals are out there in retail stores, they are out there on online stores; they are out there in wholesale. It’s just thinking which one is your focus, and go on with it. In my opinion resale arbitrage is a really good way to keep and create cash to ultimately find out the things…

Steve: Sure.

Ryan: That’s the route my business has taken. We’ve been doing that for a long time, we’ve got good systems in place, so there is no point of really slowing down, but with the excess cash flow, that’s starting to build up a wholesale business and things that are more sustainable than just constantly going into the retail stores.

Steve: So are you doing wholesaling now then, and private labeling?

Ryan: The wholesaling like the piece where we– I guess the terms that we are…

Steve: Yeah they are a really fussy yeah.

Ryan: Yeah, so wholesale what I talk about there is purchasing direct from a distributor or manufacturer, or a brand. That we’re doing, but we’re not like wholesaling products out to someone else.

Steve: Okay, got it.

Ryan: So my college is there.

Steve: For your staff, I’m just curious like how do you assign them to source, like you got seven guys, right?

Ryan: Yup, and three of them source pretty much all the time, and then one sources some of the time, then the other three are in the warehouse working at wholesale, or working on shipping products out the door.

Steve: Okay, and then in terms of your assignment, so you mentioned you do a little bit of everything, right? So how do you decide like how do you distribute resources whether you want them to go to retail stores versus reaching out to wholesalers, and that sort of thing?

Ryan: Yeah so the retail stores we’ve got schedules for each person, and there are certain stores that we know that we can just historically we’ve done well on. We want to make sure we hit those stores every couple of weeks, so that we’re constantly getting those spaces covered. Then one of the guy’s primary focus is wholesale, because that’s a priority.

We let the cash available at any given point in time; we have a spending threshold that we’re looking to hit each month. Initially we’ll hit our main retail spots, our retail arbitrage type locations, spend pretty much as much as we can there. Then depending on what available budget we have left, we’ll shift the time to wholesale, because the wholesale type buying where we’re buying direct from the distributor or manufacturer, those take a little bit longer to pan out, and they are not as expensive right away. You are in charge of like…

Steve: But you have to put down more money upfront though for those, don’t you?

Ryan: You do, but normally we’re starting with the task order that’s less than $1000.

Steve: So do your workers pull up to like Wal-Mart in like 18 wheeler?

Ryan: They should, but it’s pretty normal occurrence. They actually all have just photos to dance…

Steve: Oh really, okay so we’re talking still pretty small quantities right? Whatever can fit, it’s a done.

Ryan: Yeah, it only calls for services needed, it’s up to them. I have a truck with a topper and stuff, so you can really load up if needed, but most of the [inaudible 00:38:05] there are coming from the source, so you’ll just have regular cars.

Steve: This issue of trust like what’s stopping them from just buying the stuff themselves and doing the same thing on the side?

Ryan: Sure, well we try to build that trust with each one of the guys before turning them over to be able to source. Then we also have like a basic non-compete agreement that says you’re not going to use this strategy for yourself while you’re doing it for me. They are compensated based on how much they buy too, and they only know one piece of the puzzle.

We centralize them based on the amount that they purchase, and then they still only know one piece of the puzzle, like they might see that the items sells for this, but then they’re dropping it off at our warehouse, and the rest of the process is handled for them. Even though they know quite a bit, but they don’t necessarily know everything it takes to actually make the money.

Steve: So the buyers do the buying, and then do you take care of the listing part then, is that like your secret source?

Ryan: No, listing was outsourced now too beginning in January. That’s taken care of too, but each person is fairly segmented, like a sourcer to source, the lister lists and ships, and then the shippers pretty much just process items. So try to make sure that each person right away only knows exactly what they need to, but then as they show interest and aptitude to do more, then we’ll look into moving them into other roles and get them further into the business as it makes sense.

Steve: Okay, and then so do you have like a big warehouse to run this operation then?

Ryan: My warehouse is about 725 square feet, so it’s…

Steve: Okay so it’s tiny.

Ryan: Yeah, it’s pretty much just used as a processing space. We bring the products in and then one of the benefits of having a smaller space is it forces you to get products back out the door quickly, because we’re ultimately shipping them all to Amazon’s warehouse, and then they handle the rest.

Steve: So is your turnaround like a day then?

Ryan: Most of the time that will be our average.

Steve: Okay, so I know for a fact that Amazon is making it much harder for people to arbitrage these days. Can you just comment on some of the recent Amazon changes, and how that’s affected you at all if it has affected you at all?

Ryan: Yeah, so I guess it’s very strange this particular…

Steve: I don’t know, I’m asking that question to you in general yeah.

Ryan: Okay, things that make it harder, there are certain brands or certain product lines that they are becoming stingy on I would say. For example there was a game that was selling extremely well, it was called Pie Face in December, and then Amazon– right away anybody could sell it, you could list it, but then half way through they issued restrictions, so that not everyone could sell it unless you submitted invoices.

The reason they did that was because there were counterfeit sellers mainly from overseas, but some from US as well who were selling on these listings and taking advantage of the demand. So that types of issues happening more and more. With that Amazon is doing what they can, and they are putting restrictions in place. Sometimes these restrictions come into place after you already have the items at Amazon’s warehouses, and then you’re kind of stuck with the inventory, or you have to sell via another route.

Steve: What’s your other route, just curious?

Ryan: Next option for us is usually eBay, and then after that we’re going to look to basically liquidate it. I’ve used liquidation.com before, and then there are some companies locally that will pay you effectively pennies on the dollar for items you can’t sell. So that’s our last stop, but we’re usually able to get rid of most of what doesn’t sell on Amazon on eBay.

Steve: Can you comment a little bit about just arbitrage, the landscape in general, because I know a lot of people are starting to go into it. As a result of that there is more and more people hopping on these listings, so what is your secret sauce so to speak on how to stay above like all the other people who are entering the space?

Ryan: That’s one of the things about an arbitrage opportunity is eventually people come in and try to close– not try but over time they get close. Some of the things that we do, we’re very diligent on our margins, we have very specific buying guidelines, so we can weather the storm if we need to, if the price on an item starts to increase, we’re pretty specific about where we purchase from.

With three years of experience of doing this with many people involved, we know which places are good, which places we can get better than average deals, like in some places we’re getting better deals than are available to the general public. In some cases it is as much as 50% off what the stores generally sells it for. Since we’re buying in such large quantities, we get volume discounts.

Building relationships with the right people in the stores goes a long way, and then just– I mean to the point the business is now at the point too where there is quite a bit of capital available, so we are not forced to sell products at a loss if we don’t want to. There is definitely times where we take losses, but if say we have a lot of stock in, and then because there is like a clearance at Target, it might be 3 to 6 months before that item re-bounce.

Initially when all those sellers come in, the price will go down, but if you look at prices reach outs, and there are a few sites out there that will show you these, eventually items recover. Very few the price deteriorates, and then consistently stays down. So if you are able to weather that storm and hold on until a better opportunity to sell, that creates a lot of opportunities as well, because a lot of people are looking to sell the items within say 30 or 60 days, and then they’ll sell it no matter what the prices after that timeframe.

Generally we’re looking to sell the items quickly too, but we’re not forced to just based on having more capital.

Steve: What’s your goal on moving a particular buy, within 30 days or?

Ryan: Our typical goal is within 90 days, we want to be sold out, and then that’s on some of our like higher quantity, I mean that’s the full quantity we’re buying on like a retail arbitrage buyer. Then we will adjust that too based on what the ROI percentage is. If it’s a lower ROI percentage we’re wanting it to move quicker, but if it’s say a 200% ROI we might be okay holding it for 5 to 6 months.

Steve: When you say low, low is like 50%?

Ryan: Low would be like 25%.

Steve: 25%, okay and normal is 100% for you would you say?

Ryan: I would say about 75% is pretty common for the bulk of the stuff we’re doing, and then once we’re talking wholesale or buying direct from the distributors or manufacturers, that then drops a bit, then it’s going to be anywhere from 30 to 75% range. It depends on…

Steve: Okay, but those are easier to manage, right?

Ryan: Oh yeah, you’re getting started at once, and then until you can keep some of the products as long as you want.

Steve: Okay, so let me ask you this, like how much longer do you think that this whole getting into retail arbitrage and online arbitrage is going to last?

Ryan: I think it’s going to last quite some time, so it’s hard to put an exact time line on it. Just based on what I see from myself and then all the people I know selling on Amazon, I know a lot of people that are doing quite well at it to the point where I’m confident if you know what you’re doing you can do really well.

At the same time I do see lots of people coming in, so I think eventually the gaps are going to close or start compressing. But with enough money or with enough inputs I think there is still going to be a lot of opportunity either way. I mean in reality the fact that you can go in a Wal-Mart and buy something and make 75% return on your investment in a month on products that are generally available on the shelf is ridiculous.

Steve: Yeah, it’s pretty crazy.

Ryan: Yeah, I think it’s got a long way to go. Online arbitrage, there’s tons of tools and services coming out lately that are making it more accessible to get the information you need to make purchases, but if you’re disciplined in your buys, and you really put in the time to get the right items to your research, I think there is a lot of runway for both retail and online arbitrage.

I think it’s a great way to create cash, but then at the same stroke and I think it’s wise to diversify and to wholesale or private label, or another sourcing method that’s going to be more sustainable for the long run.

Steve: So just curious you mentioned that you have really good cash flow from this, how are you expanding going forward?

Ryan: Right now we’re looking, like the primary amount of the new cash will be going to wholesale, so buying direct from the manufacturers and distributors. We will be looking to potentially add either people locally or potentially virtual assistants to help us with a lot of that research, and we’ll do the actual outreach. That’s the primary focus for the near term is to get as much money in the wholesale type accounts as possible.

In terms of financing that, it will just be through the business, like through– because at the beginning is very much to spend [inaudible 00:48:50] pretty much since the beginning I didn’t start. I started with I don’t know three to $5,000, I don’t know the exact number any more, and then use credit cards strategically, never get any interest, and then I’ve just used cash the whole way, and now we’ll do multiple millions in sales this year.

Steve: Do you guys take out loans, or is this just money within the business that you reinvest?

Ryan: I have access to a lot of credit, but I haven’t used it yet, so everything so far has just been finance with cash in the business.

Steve: Okay, that’s cool man, awesome.

Ryan: Yeah, it’s been good.

Steve: Well, hey Ryan I want to be respectful of your time, we’ve been chatting for quite a while. Where can people check out your work, I know you have a blog at Online Selling Experiment, but if anyone has any questions for you, where can they find you?

Ryan: Yeah, the best place is probably the website as you mentioned onlinesellingexperiment.com. You can email me if you want, my email is Ryan@onlinesellingexperiment.com. Twitter is @walkaway50K, and that is on the first blog post on my blog which is titled walking away from 50k, which I did after I left my job.

Steve: This is your accounting position?

Ryan: So that became the Twitter handle, so any of those places are best, but yeah reach out if you have questions.

Steve: Cool, hey well thanks for coming to the show Ryan, I really appreciate it

Ryan: Yeah Steve, thanks.

Steve: All right, take care.

Hope you enjoyed that episode. I find it amazing how Ryan has managed to scale a business model that is inherently not easily scalable, and with all the latest Amazon announcements about brand gating, I’m going to have to follow up with Ryan to see how this has affected his business.

For more information about this episode, go to mywifequitherjob.com/episode132. I want to thank sitelock.com once again for sponsoring this episode. If you run your own hosted online store or any website for that matter that handles monetary transactions, you should give SiteLock a look. They can also help you with your site speed issues as well, and did you know that ecommerce sites that take longer than 5 seconds to load often shed customers.

Now SiteLock offers a service called TrueSpeed that can increase download speeds by up to 50%. Go check out SiteLock today at sitelock.com/mywifequitherjob. If you go to that link you will get three months free. Once again that’s sitelock.com/mywifequitherjob.

Once again if you are interested in starting your own online business, head on over to mywifequitherjob.com, and sign up for my free 6 day mini course, where I show you how to start a profitable online store. Sign up right there on the front page, and I will send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.

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131: Which Ecommerce Business Model Is Right For You With Steve Chou

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131: Which Ecommerce Business Model Is Right For You With Steve Chou

Today I decided to do a solo episode because it’s been a long time since I’ve taken the mic to give some of my own opinions.

A lot of people have been asking for advice lately on what type of ecommerce business model to pursue so I put together a quick and dirty episode to describe all the different models out there and give you enough information for you to make an educated decision for yourself.

Enjoy the episode!

What You’ll Learn

  • How dropshipping works
  • How private labeling works
  • How selling wholesale works
  • The pros and cons of each business model
  • Which business model is the most sustainable in the long run

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Transcript

Steve: You are listening to the My Wife Quit her Job Podcast. If you are new here, it’s a show where I bring in successful bootstrapped business owners to teach us what strategies are working and what strategies are not. Now I don’t bring on these famous entrepreneurs to simply celebrate their success, instead I have them take us back to the beginning, and delve deeply into the exact strategies they used early on to gain traction for their businesses.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start your own online business be sure to sign up for my free 6-day mini course, where I show you how my wife and I managed to make over 100K in profit in our first year of business. Go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin, I also want to give a shout out to sitelock.com for being a sponsor of the show. SiteLock is the leader in website security, and protects over 8 million websites by monitoring them from malicious activities 24 hours a day, 7 days a week. So here is the thing, most online business owners never think about security until they get hacked, and a long time ago my online store actually got hacked, and it was the most miserable experience ever.

I basically lost thousands of dollars as I frantically tried to patch the issues on my site, and get my store back online as quickly as possible. In the event that you get hacked, you can call sitelock.com, and they will help you out, or even better protect your site before you even get hacked. For more information, go to sitelock.com/mywifequitherjob. Once again that’s sitelock.com/mywifequitherjob. Now on to the show.

Intro: Welcome to the My Wife Quite Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family, and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job podcast. Today I thought I do a solo episode mainly because I’ve been getting a lot of questions lately about what type of e-commerce business model to pursue. Every time I publish an article on entrepreneurship that encourages my readers to start their own businesses, I find myself tip-toeing across a very fine line.

On one hand starting an online business, an e-commerce business is pretty simple, relatively risk free, and it doesn’t require a lot of startup capital, but on the other hand running a successful business also requires a ton of hard work, perseverance, and a little bit of luck. The problem is when I emphasize the enormous amount of work that’s involved to launch a company; I tend to turn people away from wanting to start a business. But when I emphasize simplicity, people tend to harbor unrealistic expectations and expect a quick path to riches.

In fact one of the number one questions I do get asked is how long it actually takes to make good money with an e-commerce business. It’s unfortunate and this is a pattern that I’ve been seeing, but a lot of would be entrepreneurs tend to choose the business model to pursue based purely on how easy it is to start, as opposed to considering the actual probability of success. In fact just the other day I was getting emails from people asking me, why they should go through the hustle of selling physical products online when they can just be an affiliate.

Why should they start their own inventory when they can simply drop ship all their goods, and why should they even bother setting up a shopping cart when they can just put up a blog, and sell advertizing? What makes things even more confusing is that these people, they are on Facebook, and they are looking at their feeds, and every time they go on Facebook they see a brand new business guru pushing yet another e-commerce business model.

While a lot of these methods are legit, just the sheer number of choices is pretty overwhelming even to me, like I had to go through, and watch some of these webinars to just get an idea of what some of these gurus were pushing. Now I don’t really consider myself a guru, but I do get quite a few emails from readers asking for advice on what type of business model to begin.

What I thought I do today is go over all the different e-commerce business models that I’ve seen online, and give some commentary on them, and discuss the pros and cons, and let you decide for yourself. Whatever you do you should never pursue a business model simply because of how easy it is to start. Instead you got to make sure you consider other factors like the long term sustainably of the business as well as the probability of success.

Now keep in mind that when you are listening to the business models that I am about to describe, some of these business models are really easy, they have very low barriers to entry, low cost, and lower overhead. Some of these business models are easy to start, but they are super competitive. Some of these business models require a decent upfront investment to start. Some of them require inventory, some of them require that you put up your own website.

So I’m going to discuss the pros and cons of all these business models based on the following criteria, how easy it is to get started, how quickly you can make money, and the defensibility of your business and its long term potential to create sustainable income, and basically how hard it is to make money, and how easy it is for some of them to just go ahead, and all of a sudden launch a competitor to your business.

If you have been reading my blog for a long time, I have this strong belief that the more work and the more effort that you put into your business to be successful, the more sustainable your business will be in the long run, because it will be that much harder for someone to copy you. So that being said one of the most popular business models that I get asked about is drop shipping.

Now if you guys aren’t familiar with drop shipping, drop shipping is basically when you put up a website to take orders, but you don’t have to carry any inventory. Instead of fulfilling the products yourself, what happens is when you get an order, you don’t fulfill yourself, you send it over to your vendor, and then the vendor is responsible for shipping the order to the end customer.

One of the huge advantages of this business model is that you don’t have to carry any inventory; you don’t have to do any order fulfillment. It’s really cheap to start up a drop ship business, because all you need is a website essentially, and infact as part of my 6 day mini course I show you how to set up aside an open cart for 5 bucks a month, and you can easily do drop shipping with just a very simple open cart shopping cart.

It is really simple to start basically, all you need to do is find a vendor who is willing to drop ship for you, and all of a sudden you have a whole bunch of products that you can list on your site. In order to get one of these vendors to approve you, you have to show them that you are legit. Often times you might have to put up your website, and a good looking website, and populate it with mock products before you can even get approved as a retailer, but once you do get approved, you will have access to that vendor’s entire portfolio which you can list in your shop.

What’s nice about the drop shipping with your own website model also is that you are in full control of your store brand, because you own the website, but the downside of drop shipping of course is that the margins are super low. Mainly because someone else is storing all the inventory, an