223: How To Scale An Ecommerce Business to 8 Figures In Just 2 Years With Kevin Chen

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How To Scale An Ecommerce Business to 8 Figures In Just 2 Years With Kevin Chen

Today I’m thrilled to have Kevin Chen on the show. Kevin is someone who I randomly bumped into at Traffic and Conversions and I’m lucky to have met him.

He runs Freedom Laser Therapy which is a company that sells a laser hair growth system to treat hair loss. Not only is the product cool but what’s even more cool is how he has successfully scaled to a 8 figure business in just 2 years.

In this episode, we’re going to talk about his exact strategies. Enjoy!

What You’ll Learn

  • How Kevin manufactures his hair loss products
  • The challenges of selling on Amazon
  • Why Kevin decided to focus on selling on his own site
  • Kevin’s Facebook ads strategy
  • An in depth description of Kevin’s funnels

Other Resources And Books

Sponsors

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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.
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Pickfu.com – Pickfu is a service that I use to get instant feedback on my Amazon listings. By running a quick poll on your images, titles and bullet points, you can quickly optimize your Amazon listings for maximum conversions. Click here and get 50% OFF towards your first poll.

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: Welcome to the My Wife Quit Her Job Podcast. Today, I’m thrilled to have Kevin Chen on the show. Now Kevin is actually someone who I randomly bumped into at Traffic and Conversions, and it actually turns out that he’s the cousin of Grant Yuan, who I actually had on the podcast last year. So, I guess entrepreneurship runs strong in that family. Anyway, Kevin runs Freedomlasertherapy.com, which is a company that sells a laser hair growth system to treat hair loss.

Now, not only is the product cool, but what’s even more cool is how they’ve successfully created an eight figure business. And today, what we’re going to do is we’re going to talk about the exact strategies they use to grow so quickly. And with that, welcome to show Kevin, how you doing today, man?

Kevin: I am doing awesome. Thanks for having me Steve. I’ve been a big fan of the podcast. So, it’s really exciting to be on here.

Steve: Yeah, that’s one of the things I really like about conferences, like you just run to these random people. And, we chatted for a little bit, and as soon as I heard your story, I knew I wanted to have you on.

Kevin: Yeah, and likewise, I saw you roaming around I was like, oh I got to go talk to Steve, I know that guy. So, I’m glad we got to connect, that was a great conversation.

Steve: So since a laser hair growth helmet is a little bit random, tell us how you got into this business.

Kevin: Sure. So basically, how we started was that back in 2003, my dad and his partner Craig had started a business in laser therapy, but that business was actually not for treating hair loss. It was treating nicotine addiction. So, it was a physical clinic in Los Angeles, where people would go into the clinic. There would be a beautiful girl there to treat you. And for 30 minutes, you get audio therapy, tranquilizing audio, and laser treatments that were intended to stimulate endorphin responses similar to that of when you inhale a cigarette.

So, there was a limitation with what you can do with a physical business, because you can only treat so many smokers in Los Angeles before you exhaust your demand. And so we sought out other options for us to expand the business. And one fortunate trip to Canada, my dad’s partner, Craig had actually found out about laser therapy for treating hair loss. And that was done in the clinical setting. So you went to a clinic, there would be a big machine, you put that over your head, and you get treated by low level laser therapy. And over the course of three to four months, you’ll start to see your hair grow back.

But the problem with that, of course, is when you have a clinical setting, you needed to go there weekly, most likely two to three times a week. And that was a — that’s a big hassle for someone to drive in there. In addition, the cost of going to a laser therapy clinic was so foreign to build up. So, we knew that there had to be a better way. And with that the iRestore Laser Hair Growth System was conceived. The brand was developed to serve that same market, but make these same solutions and technology available in their home whereas before it was only available in a clinical setting.

So, we recognized that there was an opportunity for us to take this online and ship this to every home so people can have this kind of new novel non invasive and side effect free solution. So, with the advent of platforms like Shopify and Facebook, we were able to take this opportunity and start sending out Laser Hair Growth helmets to people’s homes. So that’s how we got started. And it’s been about two years since we started iRestore brand.

Steve: So Kevin, how do you source these products? Are these like unique designs that you own like a patent for?

Kevin: Yeah, so with a product like this, you really have to go through a long and tedious process. So, with any medical device that has lasers in it, you need to go through the FDA. It’s considered a class of 3R device, which means you have to submit a FDA 510k application to get it cleared. That process is about anywhere from three months to 12 months. We actually had a submission previously that was rejected so we had to resubmit. So that was kind of a painful process, because it’s not easy. There’s a lot of paperwork, a lot of tests, a lot of all kinds of things that you don’t even want to think about you have to deal with.

Steve: Okay, so, I mean, there’s high barriers to entry for this particular product, because of the certifications.

Kevin: Exactly.

Steve: Okay. And you managed to scale that to eight figures in just two years, which is really impressive. And so what I was curious about is what have been your primary sales channels? Like are you selling primarily on your store or on Amazon?

Kevin: So our store was started after our Amazon business. Initially, we had started on Amazon and then we used that cash flow to finance our off Amazon business, which is on Shopify. Our primary channel for growing has been Facebook. So, our approach has been to set up a multi channel approach with typical things like Google hopping, Google AdWords, YouTube, Display, all that kind of stuff. But on the scaling side, it’s been all Facebook really for us, because as you know and your audience knows, with a platform like Google, its intent based, so there’s only so much demand that we can capture from Google.

Steve: Sure.

Kevin: Whereas something like Facebook is contextual marketing. So you’re allowed to market to a billion people if you had the budget for it. So that allows us to scale our business from there.

Steve: Is your business 50/50, Amazon, your own store? And you started on Amazon; I was just curious why you didn’t decide to just press the Amazon channel? Why did you decide to start your own store?

Kevin: Yeah, I mean, for many reasons. One is there’s only so much demand on Amazon, although that demand is growing year over year, and we’re thankful for that. There’s still a finite number of searches with buying content on Amazon, whereas on Shopify, if we drove demand off Facebook, we essentially have unlimited access to the roughly 80 million Americans that suffer from hair loss. And the second reason, of course, is to diversify, because if your business is all Amazon, that’s a very scary thing for you. As we all know, Amazon can drop the hammer any day and just suspend you for no reason.

And in fact, they have suspended us for about two weeks for basically no reason. And we have no recourse. You can you can frantically call them or sending messages, but seller support is one of the least helpful support out there. So, what can we do?

Steve: So your Shopify store makes more than your Amazon side, right?

Kevin: Correct.

Steve: Okay. Okay. So that’s really interesting. Let’s talk about your Facebook ads. I know you kind of hired a company to help, but I’d love to hear about how you’ve managed to kind of scale these ads. So first things first, like when you first approached this company, were you running any ads whatsoever at that point?

Kevin: MM-hmm, yeah, we’ve been running ads for since our first year. And initially, we had started off with another agency. But that didn’t work out so well, due to the relationship and I think just there was a mismatch there in terms of their strategy and our approach. So, we had gone to a different agency with the understanding that they were going to take on our account with a different approach. We have learned about them through another podcast. So thankfully, we were able to find a successful partnership there.

Steve: So can we talk about what were some of like the first steps when you started launching this campaign when it was successful? Like, let’s pretend you started out with nothing, like what did your creatives look like? What did your top of funnel look like?

Kevin: Mm-hmm. So I think the biggest thing on Facebook is that everyone has to understand that a great video creative is worth 1,000 images. If you can get a really good creative in there, whether it’s a minute or three minutes, and that really takes them through the process of understanding the problem, your product and your unique selling proposition and what it’ll do for them, as well as a good guarantee and offer, that really allows you to, in one video, take someone from a cold prospect to someone that may have by intent, or at least be very, very interested in continuing to stay in contact and hear from your brand again.

So, I think that’s been key for us, because we had a two minute commercial that we’ve been running since day one. And we still run it today successfully with a positive ROI, and that video has done really well for us. What we’ve done initially, since it’s so expensive to produce a video and so much time put into it, we’ve done the thing where we created many, many different variations of that same video. For example, you can create a shorter version that you can run on Instagram sub one minute, or you can have a longer version for Facebook, and then you can take advantage of the different ad formats available.

So for us in the beginning, it was all about leveraging the power of Facebook to the Facebook newsfeed to continue to show our ads to different audiences, a lot, a lot, of split test with different audiences and copy which is of course the first step to scaling anything, but essentially on Facebook, that’s super important. So for us, just testing nonstop and then finally adding more creative to the mix as we continue to build assets from our customers, or from testimonials, or even something more recent, where we had a clinical study done with a doctor who conducted a formal study with our product and that creative.

Steve: Can we talk about that first video? And was it professionally done? How long was the video? What was the content of the video, what did it look like?

Kevin: Sure, we produced the video ourselves, and it was a two minute video. Basically, we talked about the problem for the first 10, 15 seconds. Then we went into the product, talked about the certification with the FDA, and anything that helps us to build more trust with our audience. And after that, we went into the how to portion so how it works. We did a 2D animation and a 3D animation. We worked with one editor on this. So it was all done in-house. And from there, we went into the money back guarantee and the offer, and so that was about two minutes, and we walked them through the entire process.

Steve: Was there a lot of talking, or was it like caption based to express the value proposition?

Kevin: There was audio.

Steve: There was audio, okay.

Kevin: There was voiceover yeah. I think that makes a big difference. If you don’t have the budget for it, I think not having audio is fine, too. But to me, it’s really a different kind of feeling when you have someone talking.

Steve: I guess what I’m asking is did you rely on your voice to express the value proposition, or did you also have captions next to your images? I’m just trying to get an idea of how this video was created. Was it like a slideshow? Was it a high budget affair?

Kevin: It wasn’t a high budget affair, but it was certainly not a slideshow. We had — the audio was talking the whole time. We had text call outside in. So that helped to reinforce certain things. And I think the animation really helped to make it a really good video to explain how it works in a digital kind of way.

Steve: And what was your offer, your initial offer?

Kevin: Our initial offer — so in addition to a six month money back guarantee, that was a full money back guarantee, we offered a discount, which varied at different points anywhere from 100 to $200. Just to give you some context, our product generally sells for about $600, so that’s, you get the idea.

Steve: Yeah, that’s a pretty significant discount there. So was your — so this ad that you’re running, like which audiences did you initially choose, and how did you narrow down which audiences were working?

Kevin: So I think this varies with each product and market, but especially for us and hair loss, the distinction was pretty clear to me. It was going to be a gender distinction and an age distinction. So how you speak to an older woman is different than how you speak to a younger man when it comes to hair loss. So that’s the way we went about dividing and testing. We would test with older females, younger females, older males, younger males, and then within each of those groups, we would have multiple ad sets with different types of copy.

For example, some people would be in early stages of hair loss, so you want to speak to them, as sort of stop your hair loss before it gets worse, whereas for some other people, it may be more advanced. So it’s more about re-growing back your hair so you can look younger and get your hair back where it used to be. So I think that conversation is different when it comes to different audiences. And it’s important for us to split test the copy and create it too.

Steve: Was this with your first initial video that you did this, or? I just want you to just kind of rewind to like the when you only had the video and you were just starting out. You weren’t using different creatives then for the different age groups, right, when you only had that one creative.

Kevin: That’s right. Yeah, we just had that one creative. So it was more of a copy test.

Steve: Okay. And then how did you know like which audiences did you try first? And during this testing phase, how much money did you put behind it? And what were some of the metrics that you used to kind of determine whether something was working or not?

Kevin: To be honest, at first it was a segments that we talked about with male and female, young, old. And the metric that we were looking at initially, was always revenue purchase conversion value on Facebook. But since then, we’ve kind of changed the way that we look at things. But initially, it was all about ROI for us.

Steve: So you were just targeting like blanket males of a certain age group, like no interests or anything, it was just like…

Kevin: Oh, yeah, there would be interest and the main groups would be male, females and age, but we would — over that was interest like on the hair loss brands, or on hair care products. But the problem with that is on Facebook, you really aren’t able to select hair loss as an audience, because it’s such a vast audience. And there’s no specific targeting for that.

Steve: Okay. I was just — the reason why I was asking that was like Facebook is actually really smart now about conversions. And so I was just wondering whether you could just target an age group in male and still do okay and just let Facebook do the work?

Kevin: Mm-hmm. Yeah, back then it was really more of that kind of segmentation with demographics and overlaying with interest. But now we’ve really refined our approach, of course, with a larger customer list and email list. We build look alikes, and we overlay that with all the different attributes that we have. And that’s been performing better for us. So, if we were starting out, because hair loss is such a big audience, we kind of went really broad on it, and then niched down from there.

Steve: So with these ads, so you had your offer and it’s still a really expensive product, and it’s not an impulse buy, right. So I would imagine your — was your top of funnel profitable, like right off the bat?

Kevin: Yeah, I mean in the beginning, we really didn’t have much of a funnel to be honest; it was just let’s show this video to our audience. Let’s see if they buy something. And that was it. It wasn’t that advanced in the beginning.

Steve: Okay, but it was no, that’s fine. No, that’s fine, because a lot of people who are just starting out are similar situation. I was just wondering if you saw conversions right away with that ad or whether you had to just really work for it on the backend?

Kevin: I see. Yeah, we did see conversions from the very beginning. I mean, the ROI wasn’t super high in the beginning. But we had an email campaign to go with it, and continued to nurture them. So originally, the strategy was just to show them the same creative over and over and over again, that was our only strategy at first.

Steve: And what was the landing page? Were you trying to collect emails or was that just going straight to it like a product page?

Kevin: We took them straight to our homepage.

Steve: Okay. And so how were you collecting emails, and was it just like pop ups and that sort of thing?

Kevin: Yeah, we were using Privy and I was popping on giving me on the offer.

Steve: Giving him the coupon code.

Kevin: Yeah, yeah exactly.

Steve: I see. Okay. And so when you were first starting out, your ROI wasn’t that great but then you were converting on the back end with your email sequence as well?

Kevin: Yeah, our email sequence was a key contributor to our success in the beginning, for sure.

Steve: Okay. And so once the agency started taking hold of this, like what are some of the things that they did like right off the bat to scale your ads?

Kevin: Yeah, lots of things. I think the biggest part in partnering with a new agency was that we started to view our advertising and funnel as broken down into top, mid, and lower funnel. So, we started to look at campaigns holistically rather than watching every single ad set like a hawk, which is what I used to do. And I think that was incorrect approach. With something like Facebook, you really have to look at your account as a whole, by first understanding that you’re going to lose money on the front end, or maybe break even on that in order to get the customer pixels or get them as a lead on your website, and all kinds of things.

So, we started shifting the way that we structure things into cold campaigns and warm campaigns. And in the cold campaigns, we would identify the video creatives that made the most sense to lure the customer to our brand and product. And there were a couple creatives and one of them was the commercial that we continue to run. The other one was a clinical study video, which I referenced earlier. We had a doctor talk about our study. And the third one was a more creative one, where the whole goal of this video was to get someone’s attention. And what it was it was a collection of user photos. So, if you imagine a bunch of people wearing the helmet, it’s running up in red, it’s moving around a lot in your newsfeed.

And we kind of took that approach of having a really attention grabbing short video as well, 15 seconds. And we just showed that a lot to people. It wasn’t necessarily converting, but the relevant score was extremely high on that because people would make fun of it, they would tag a friend, they would share. So, that was our portion on the other top funnel.

Steve: So for these videos on the top of funnel, were you just running engagement ads or were you running targeting for conversions for the core?

Kevin: We actually tested this out where we ran — yeah, we tested this out, we rent on video views, we rent conversions. So different campaigns, and actually made a big difference. And I can tell you from our tests; we spent a significant amount of money and at the end conversion still won by far.

Steve: I see, over the engagement. I’m just curious because I talk to a lot of people who run Facebook ads, and some people run like the video for engagement for us just to get a lot of social proof, and then they turn that same ad and target for conversions to their cold audiences. And I’m just kind of curious, everyone has a different approach. And so you, it sounds like you tested engagement ads versus conversions. And for your conversions, were you doing purchase conversions or add to cart conversions?

Kevin: We tested both, but the one that really performed was purchase conversions.

Steve: Okay. And this is on the top of funnel, right?

Kevin: Correct.

Steve: Okay. And I’m just kind of curious, what does your return look like on the top of funnel?

Kevin: Top of the funnel typically, we weren’t looking for a high ROI; we were looking at 100% or 150% ROAS, which is just getting your money back.

Steve: Like breakeven yeah, okay.

Kevin: Exactly.

Steve: Okay, so you’re running those to a whole bunch of audiences, what does your middle of the funnel look like?

Kevin: Yeah, the middle of funnel is where it gets very interesting because we — one of the key strategies for our success has been to leverage social proof. So, we have a ton of customer testimonials. We’ve worked with a lot of influencers on YouTube and Instagram and we own the rights to most of those assets. So, what we do is typically once they watch commercial and enter into the funnel, we’ll split the creatives that we have into the different age groups and gender that we talked about earlier. Then we would follow them around Facebook and the internet essentially with those influencer or testimonial content. So, obviously an older man will see an older man testimonial, younger woman, younger woman.

So that was our strategy. And in addition, we took the same top funnel creatives and we continued to show them at the middle funnel. And you’d be surprised; sometimes people need multiple touch points of the same thing to convert. So, as we mentioned earlier top funnel, we’re just really looking at breakeven, but middle to the bottom funnel is where we’re really looking to convert. So, with the middle funnel, we also have things like DPS, dynamic product ads, which is super, super profitable. I mean, if anyone’s not running DPS and they’re in e-commerce, they need to be doing it.

Steve: I consider DPS bottom of the funnel though. So, you’re classifying that as middle of the funnel here.

Kevin: Yeah you’re right, that’s more of a bottle funnel.

Steve: Okay so it sounds like the middle of the funnel, you got testimonials from influencers, and you’re just showing them video testimonials to everyone who clicked on one of your top of funnel ads?

Kevin: Mm-hmm, and that’s on the video side of things. So in addition to that, we actually run other campaigns in the middle of the funnel, and I’m happy to go into that, too.

Steve: Yeah, let’s talk about it. I think — yeah, go ahead.

Kevin: Yeah, so one of the offers that we run is a free plus shipping campaign. Our core product is the laser device, which is that six, $700, but we had a suite of products that compliment, so we have a supplement; we have a shampoo, a serum, and now a vitamin hair gummy. So we ran a free plus shipping campaign for our supplement. And that was intended to be a lead generation campaign. But also, of course, we can convert them into even a low dollar amount customer; it was worth it for us. In addition to that, we’d also run giveaways. So we use Gleam.io to run giveaways. Basically, every month we give away our products.

Steve: Is this for middle of the funnel, or is this top of funnel for these offers?

Kevin: This is both top and middle. So we tested out both.

Steve: Okay. And what had worked well for you for these offers, like the free plus shipping…

Kevin: Middle of the funnel.

Steve: Middle of the funnel, okay. So, you’re getting people who are kind of already familiar with your site to take part in these offers.

Kevin: Yeah, exactly. The cost per lead is way lower on that.

Steve: Okay. I’m just curious for your free plus shipping offer. Are you actually making a profit on that or are you just trying to break even on that?

Kevin: We’re just trying to break even on that.

Steve: Okay. Okay, so when you’re calculating ROI, for example, for your free plus shipping offer, you have to look at like your email funnel and your back end as well.

Kevin: Mm-hmm. Yeah, we’re using Klaviyo. And basically, our main metric for free plus shipping is just cost per lead. However, the interesting thing that we noticed was when we run our free plus shipping campaign for one traffic. A lot of times they would just end up buying the kit anyways, because I think it just reminded them of the brand. And maybe they had it in a car or forgot about it, or something.

Steve: I see, okay.

Kevin: So if you look at it that way, our free plus shipping campaigns actually, we have a pretty good return on ad spend although that was not the intended goal of that campaign.

Steve: I see. So you’re free plus shipping offers — they’re kind of like ours. Like, we’re doing that too. And they end up getting the free one and then they buy other stuff, which makes it like slightly profitable in the end. Is that what happens with yours also?

Kevin: Exactly.

Steve: Okay. Okay. And then the — I’m sorry, what was the other campaign that you’re running, the giveaways, and that is…

Kevin: Contest.

Steve: The contest, right. And that is to your existing audience that works well, as opposed to top of funnel?

Kevin: We’ve done both, we’ve done top of funnel to cold traffic, and we’ve done it to warm audiences. But the problem with that is, I think when we have a cold audience campaign, there’s going to be a lot of freebie hunters. So, especially with a product like ours that’s worth $700, you got a lot of people signing up that may not actually be interested. So in addition to that, we just had a better cost related, we ran into warm traffic in the middle of funnel.

Steve: Interesting, can we talk about how your giveaway is structured so that it eventually turns a profit.

Kevin: Yeah, so we have a landing page setup with a Gleam.io widget, then we will run an ad, whether it’s static image or a gift. And one advice here is if you have any movement, whether it’s a gift or video, it’s going to perform so, so much better and it’s worth the time to invest into. And once someone enters the Gleam.io campaign, we would then opt them in to an email sequence. And in that email sequence, which is a flow in Klaviyo, we will talk about of course, the contest first and welcome them, then we will introduce them to our USP, unique selling proposition, then we will go into the core offering the products. And then at the end of that contest, which is run every single month, we will give them an offer, so a 10 to 15% off offer so we can hopefully convert that lead into a customer.

Steve: And so when you’re running Facebook ads for this giveaway, your conversion is just for a lead, is that correct?

Kevin: Correct.

Steve: What I’m trying to get at is like, there’s all these complicated things going on here. And it seems like the ROI calculation; it gets a little bit more complicated as soon as you start mixing Facebook ads with email, or whatever you have in your back end, right?

Kevin: That’s right. Yeah, I mean, the truth is, at some point it’s kind of impossible to get an exact calculation on these things, that’s why you have to look at everything holistically.

Steve: So let me ask you this. So what goals were you — what did you have for like cost per lead for both the free plus shipping offer as well as your giveaway? Like, how do you come up with these metrics?

Kevin: So our goal for cost per lead is under 250, and we kind of just backed into it by doing some math about what we think what number of people will convert into an actual customer. But I think the other side of this too, is that with a product like ours, we felt like awareness was a big component of it. So we also looked at things like cost per click. So, if we’re able to get people to share this and talk about it, and comment on it, we felt that there was a lot of benefits to that too, in addition to getting the conversion, because we understand that not everyone will have hair loss but certainly everybody knows somebody that has hair loss so that that kind of played into it.

And being a data driven person, it kind of sucks to not be able to attribute everything correctly and exactly, but I think there’s intangible amount of value from people just seeing and sharing that contest with people.

Steve: Yeah, I think your product is actually really well suited for Facebook, because it has a very clear value proposition and a huge number of people have this problem. And people tend to talk about it, because so many people have this problem. And I’m guessing that’s one of the main reasons why ads are working so well for you as well, because everything’s just so clear, at least in my mind.

Kevin: Yeah, I think we got lucky, certainly when we started the business, we didn’t know all these things, check the boxes. It was, of course vanity sales, right? Everybody wants to look good, look younger, look sexy, attract the opposite sex. The other thing too, is it’s a high ticket item but it could be an impulse buy for somebody because there’s a natural sense of urgency built into the product, because you’re going to keep losing your hair over time. I mean, you’re going to have less hair tomorrow than you do today. So there’s kind of a natural sense of urgency built in and that works to our advantage, of course. And it’s just vanity; people are willing to pay a lot more for it. And it’s something that you can see. If your dad’s balding, you’ll see his head, you’ll recommend something like this to him. So, all these things were top end.

Steve: So are your dynamic product ads, are those the ones that are creating most of the conversions?

Kevin: I wouldn’t say that they’re creating most of the conversions because we do have a lot of video creatives running. But in terms of return on ad spend; those are the highest performers by far.

Steve: Sure, okay. And in terms of scaling, like when people scale their Facebook ads, sometimes they’ll increase the budget, and then all of a sudden the conversions go down. What was your formula for scaling these ads to as high as you have to run an eight figure business? Are there any tricks or any tips along those lines for scaling?

Kevin: Mm-hmm. Yeah, for us as you scale, I think the key thing is that you can’t continue to show the same thing to a small audience. So, in the beginning, when you’re starting out, you can have a smaller audience because your AdSense is not that great and you’re really trying to find your absolute best audience. But as you start to scale out, you need to go out to broader audiences. And that is going to require a lot of playing around with different interests and targeting. For us, what we did was, we would take look alikes and essentially expand out from 1% or 2% to 5%, and then we would combine different lookalikes into a larger pool of audiences. So, initially we, we might have had a few hundred thousand. And now we’re scaling out to audiences of a few million and letting Facebook do its optimization.

Steve: Are look alikes performing better for you than other audiences?

Kevin: Yeah, look alikes by far are the best performers.

Steve: Okay. And so when you were developing these look alikes in the beginning when you had nothing, can you kind of talk about the progression? Were you just looking for, like video views in the beginning and followed by add to carts, like how were you creating these lookalike audiences?

Kevin: In the beginning, we were using conversions, of course, but we didn’t have as much data. And then we were using video views. That was a big one. So anyone that viewed 50, 75%, we would group into one audience and build a look alike off of that. As we matured our business, then we started adding different data points into that equation. So things like a larger email list and reminiscing with — I mean, crossing that with our page likes or video views. So basically, we would mix a bunch of different lookalikes together to build even larger audience. And then we would continue to do that, as we found more success with individual groups.

Steve: I guess one thing that’s still not like clear in my mind is like you started out right off the bat with this two minute video and it immediately started returning like 100 or 150% return on ad spend. That sounds a little unusual to me. And I was just wondering if there’s just any iteration in the beginning, did you get these results like right off the bat, or because the video was just so good?

Kevin: I mean, I think the video is pretty good, yes of course, but the one thing that we did now that you mentioned I remember is we tested out a lot of different creatives in the sense that it was all the same thing. But in the beginning, first five seconds, we would test out a ton of different things. So, we tested out something like a red screen, it flashes a red screen. So, the video is automated so you want to get their attention. So we tried different tactics to get people’s attention. And then once we got their attention, we will have text slide in the initial three seconds. And we tested a lot of different texts in that initial screen.

So, we would have things like money back guarantee mentions versus questions versus different types of things. So, that was our initial strategy was run a bunch of video creatives with different intros. And then once we found something that worked, we would then split test all the copy for it.

Steve: And can you talk about like some of the click through rates that you were getting, what metrics were you kind of using to determine whether something was working or not? Or was it just straight conversions when you’re comparing the different ad variations?

Kevin: Yeah, back then I didn’t know anything about Facebook. So we were just looking at revenue and conversions, to be honest.

Steve: Okay. And then, I guess what was the fundamental shift when the agency took over that really allowed you to balloon your revenues?

Kevin: Yeah, the fundamental shift was nothing thinking about ROI, at least not short term ROI but considering our business as this ever growing thing that is going to continue to build a list and pixel audiences and generate momentum from there. So, we started looking at things like cost per click, cost per view, basically anything that meant that we earned an opportunity to talk to the same person again, whether that’s getting through our website, or on the email list or watching a video. So, I think that was the biggest shift for us was looking at cost per pixel, especially for those front end campaigns, and then perhaps not only hanging on conversions only for the lower funnel campaigns.

And we didn’t really have all these middle of funnel campaigns that we talked about earlier, with contests and free plus shipping. And so we signed along with the new agency. So that also contributed to a lot of the winners campaigns that we started to get through. And in addition to that, we started scaling up our influencer efforts. And that’s been really, really good for us, because as you know, influencers that have a very, very in tune on audience, they’ll buy anything that they say. In addition to that, we always made sure to negotiate in a way that we can reuse assets. So it’s a win-win for both parties.

Steve: How did you find your influencers? Did you use any service or did you just do straight outreach?

Kevin: Yeah, we actually had a PR agency that did the outreach for us. But what we found to work a lot of times was just to go to YouTube, and type in all these hair loss keywords, and then look at all the videos. Eventually, you’re going to get suggestions from YouTube on all the hair loss videos, and you just reach out to all of them. That’s what we did. And the one thing that I will suggest, at least it worked for us was that we would always reach out to people that actually have the problem of hair loss instead of just someone with a million followers, because we felt like there was more authenticity, if someone was speaking from a true problem that they had, rather than just an advertisement for our product.

Steve: Yeah, no, that totally makes sense. So, it sounds like the fundamental shift for Facebook ads is like not straight ROI. But that implies that a bunch of your ads now and your campaigns are actually losing money, right? And just collectively, they’re making money and collectively they do really well. But so is that true? I’m just reading in between the lines here.

Kevin: Yeah, that’s right.

Steve: Okay. And so you have to have faith then in those ads that are hemorrhaging money or losing money, that it’s driving your other ads at the bottom of the funnel, and making those convert better with a higher return on ad spend.

Kevin: Yeah, you hit on spot.

Steve: Okay, so how do you — okay, so my next question is how do then whether that middle of the funnel add that might be losing money is actually having a positive effect overall?

Kevin: Well, the thing about Facebook is that it’s really hard to know to be honest, because last click attribution is not everything. I think anyone that’s been at Facebook knows that they only track back last day, and they only track for 28 days. So we’re not able to only look at return ad spend and make a decision off of that. So, as an advertiser that’s not in there day to day, I really am looking at it from the campaign level, and then also on account level. So, what is it that we’re comfortable at losing money for this middle of the funnel campaign? And how much money are we making back on the bottom funnels, and then holistically as a whole count what kind of ROI are we getting?

So that’s been really the key for me is not really looking at the ad sets so much. I mean, of course, we have individual goals for different campaigns and ad sets, but at the end of the day, we are looking at return on ad spend. And we’re also looking at things like outside of Facebook, right? How is stuff performing outside of Facebook, we know that Amazon business has been growing because of the Facebook ads spend, there’s been a direct correlation there. So, it’s really hard for me to say this one metric, or this exact number is what’s contributed to our results, and this is what I look for, because it’s really not perfect in attribution.

Steve: Yeah, I’ve asked you for selfish reasons because these are some of the same issues that I face with my ads, right. There might be something that’s losing money and I have to debate with myself whether to continue doing it. I mean, it’s driving people to buy things and I know that I have their contact information, I have their messenger and I have their email, and they’re going to buy again later on. And it’s just hard for me to correlate and decide whether to continue with that ad, or scale it or not. And so that’s why I was just trying to glean some insights on like you how you’ve been able to I guess, take that leap of faith with your ads, that there’s a general positive correlation with everything else when you’re running these ads. Does that make sense?

Kevin: Yeah, yeah, it makes sense.

Steve: Okay. And I did want to talk a little bit about Amazon, since I know you’ve had a bunch of challenges. First of all, when you’re on Amazon, you’re selling an expensive product, right? You said it’s like 600 bucks.

Kevin: Right?

Steve: You can’t do giveaways because it’s just cost prohibitive, right. And so I was just curious how you managed to seed your listings early on when you first launched there.

Kevin: Yeah, it’s another one of those things where when we started out, it really was a very rudimentary basic strategy with our product, hopefully, they will buy it, maybe they won’t. So, in the beginning, there was really not any kind of strategy to drive any traffic towards Amazon if I’m being honest. But fortunately, we were in a category where there was a high barrier to entry, and there was not a lot of stuff being done by the competitors. So, once we started getting some PPC running sponsored ads, headline search, and product display, we were able to gain some traction. And once we gained some traction, we really made a big effort to make sure we reach out to customers to get reviews and make sure that there’s a lot of social proof on there.

And from there, we really saw the conversions start to go up, and our rankings go up. And pretty soon, we were number one for all the niche keywords. So to answer your question, we really didn’t have an advanced strategy. It was more just to sell things, do all the standard stuff that everyone else recommends.

Steve: Well, I mean, I think there’s a lesson to be learned in what you did, right, you chose something that was kind of a pain in the butt to get approved, get FDA approval and certifications, right. And just by nature of putting more work up front, that has made your product much more unique and have less competition overall. Whereas I see a whole bunch of other people right now, they’re just choosing like really simple to source products that have a whole bunch of competition. And it makes the launch — it makes the getting the product part easier but then the launch process so much harder. And so I don’t know if you had the foresight of doing this by just choosing something really difficult, but it seems to have worked really well for you.

Kevin: I wish I could say that. But the truth is we didn’t. We just got really lucky. But I absolutely 100% agree with you on that. I definitely, I think the days of private labeling and selling me too product is over. You really need to differentiate on Amazon. And if you’re not able to have a product that is yours, you’re really just trying to squeeze some money out of people for a few months. And that’s not going to be a sustainable listing because you’re not building a brand if you’re not differentiating and creating product that’s difficult for someone else to create.

Steve: Yeah, can I ask whether you’re using any Facebook Messenger marketing right now?

Kevin: We are, but we hadn’t got a lot of success with it to be honest. One of the things though we’ve done is just we’ve done an abandoned cart with messenger. That one’s performed pretty well. So if you guys don’t know out there, you can — there’s an app, I think it’s called ShopMessage that you can install on your store. And basically what it is, it’s a below the add to cart button, you would have an opt in box. And if someone checks that box and adds to cart but they don’t purchase, they’ll get retargeted with messenger ads. And you can follow up I think up to 48 hours after the abandoned cart. So that’s done really well for the little amount of time we put into it. I think that’s the best return on ad spend, I mean, return on investment that we’ve ever had.

Steve: The problem is you can’t have that box checked by default anymore. Facebook took that away. They grandfather people way before.

Kevin: Exactly. Yeah, so we unfortunately got grandfathered in, but what you can do is give them an offer and then they’ll opt in something like that.

Steve: Yeah, that’s how we’re doing it right now with our site. Just curious, with your dynamic product ads, are you doing anything special with those, like are you splitting them up to like 1, 3, 7 day, 14 day time periods and doing different offers for each?

Kevin: The dynamic product ads we’re not really splitting up into different offers, it’s really the same offer that we’re showing. We do split it up by time since last visit. One thing that we’ve done though that’s very interesting is that we’re able to — I actually saw this in the news feed about a month ago, and I wanted to test it out was we put gifts into the DPS.

Steve: Yes, I’ve heard about that. Yes aha.

Kevin: And that’s really performed well for us. I don’t have the exact numbers here. But you can imagine having something move around in a carousel or whatnot, really grabs their attention.

Steve: So you went ahead and switched out all the images in your product feed with gifts for your products?

Kevin: We didn’t switch it out; we just added it to the mix.

Steve: Okay, in one of the custom primers.

Kevin: In addition to that.

Steve: Oh okay. And so far, that’s been really positive for you?

Kevin: Yeah, it’s been great for us.

Steve: Interesting. Okay, what else do I have to ask you about DPA? So, you said you split out into different time periods, what are those time periods?

Kevin: Yeah, generally with our product, we’ve seen people convert as long as outside of 30 days. I was looking at Google Analytics earlier, I think about 10% of our converters are actually 30 days or more. And because of the way that Google Analytics tracks things, we know that the number is actually bigger in reality. So for us, because it’s a high value product that requires a lot of research, and there’s actually a decision process, we even go out to 60 days, 90 days. But with a lower ticket item, we wouldn’t be showing ads for that long. The DPS, obviously, the highest converting one is going to be the seven days, the 14 days, and 30 days.

Steve: So, does that imply that you’re bidding differently on those? Is that the only difference?

Kevin: On the audiences are for though from the visit?

Steve: That’s correct yeah.

Kevin: Yeah, that’s right.

Steve: Okay. I think I’ve covered most of what I wanted to cover here. I did want you to give like a little testimonial about not putting all your eggs in Amazon’s basket, because I heard you on the EcomCrew podcast with Mike, and you ran into some major issues with one of your listings on Amazon. If you wouldn’t mind just kind of retelling that tail for the audience here just to kind of convince them that they really need to kind of diversify and own their own site.

Kevin: Yeah, absolutely. So, as I mentioned earlier, we started off on Amazon and there were a few competitors on there but really they weren’t doing too much. And as we started to gain some traction and climbed out in the rankings, we noticed that — we started getting hit by a lot of one star reviews, and these were just typical one star reviews. They were reviews with photos, with illustrations, I think one of the reviews was like a huge essay with five paragraphs going into the details of why our product sucks, and that was going on for a few months. And it was crazy because we were just like, oh my god, at this rate, if we keep getting hit with one star every week, or every few days, we’re going to be at three stars or two and a half stars pretty soon.

So, we actually took some measures to reach out to Amazon. We did a few things, so we reached out to Amazon. So, what you can do is you can reach out to Jeff Bezos, Jeff@amazon.com to see if the executive team can do something for you. We also did seller support, we did our performance manager, we did everything that we could. In addition to that, because we read about how Amazon actually will take you more seriously if you get a lawyer, we lawyered up. And we had our lawyer to write a letter, also send it into Amazon. But after all this effort over the course of a few weeks, all they did was remove one review. And that was it, when all these reviews were clearly fake reviews from the competitor.

In fact, one of the reviews was left immediately after purchase before the product even got to the customer. And I pointed that out to Amazon and they didn’t do anything about it. So it was just ridiculous, man. So, the lesson there was that Amazon does not give a crap about you. And you need to kind of defend your own listing and make sure you take the right measures to diversify an off Amazon business in case something happens to your business on Amazon.

Steve: Did your efforts prevent any further one star reviews from happening or did you just have enough reviews to counteract it?

Kevin: Yeah, I mean, it was twofold. One was to continue to get good reviews. The other one was continue to follow up with seller support. I think the truth is, they may or may not have done something, but they just don’t let you know. They just tell you, we received a message and we’ll look into this. And of course, you never hear back. What I’m hoping might have happened was that they might have reached out to somebody that they suspected of doing this and warned them or something. But I don’t think so. So at the end of day, it’s really for us and our efforts just kind of got flushed down the toilet.

Steve: Ah, man, that sucks. Well, Kevin, hey, I didn’t realize we’ve been chatting for like over 50 minutes. And I want to be respectful of your time. Where can people find more about your product? I’m sure some of my listeners have hair loss problem. Where can they find you? Where can they find your product and that sort of thing?

Kevin: Yeah, you can learn more about our product at iRestorelaser.com. And over there, I would definitely recommend any of you guys to sign up for our email list and see what we’re doing there in Klaviyo. And also I can guarantee that we’ll follow you around the internet with our Facebook ads.

Steve: Yes.

Kevin: And you’ll get a chance to watch all the videos that we’ve been talking about, maybe opt into our contest or something. And who knows you might win something. And if any of you listeners out there do have a thinning hair problem, I’d love to give you guys an offer. So, if you guys go to our website and put the device in your cart, and put in the code Steve, S-T-E-V-E, we’ll give you $150 off our kit and that offer will last until the end of April.

Steve: Well that sounds great. Actually you should probably make it last longer than April because this episode is probably not even going to go out until like July or August.

Kevin: Okay let me do the last part again.

Steve: Okay.

Kevin: We’re so sorry.

Steve: No wherever.

Kevin: So we’ll learn more. Okay yeah, sure you guys can learn more about us, and our business at IRestorelaser.com, and from there I would encourage everybody to sign up for our email list. You can see what we’re doing on Klaviyo, we’ll be sure to bombard you with emails every single day. And in addition to that we’ll pixel you on Facebook so you get to see a lot of our Facebook ads that we talked about today and maybe opt in to our contest to win something.

In addition to that, I’d love to offer your audience Steve a offer to our device. If you go to our website iRestorelaser.com and put in the code Steve, S-T-E-V-E, We’ll give you $150 off our device or a kit, and you’re going to try our products as well and see our creatives. Our shampoo is really amazing. So I’ll just use it myself.

Steve: And I’ve seen Kevin in real life, and he has a nice rich head of hair on him.

Kevin: Yeah it’s all…

Steve: Even though you know it.

Kevin: Yeah, it’s all the device.

Steve: Yeah. All right Kevin. Thanks a lot for coming on the show man. Really appreciate it.

Kevin: Yeah, thanks so much Steve, take care.

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