185: The 80/20 Rule Of Sales And Marketing With Perry Marshall

The 80/20 Rule Of Sales And Marketing With Perry Marshall

Today, I’ve got an extra special guest on the show. Perry Marshall is one of the world’s most sought after business consultants and is the author of many bestselling books in the PPC advertising industry including the Ultimate Guide To Google Adwords and the Ultimate Guide To Facebook ads.

He’s consulted in over 300 industries and he’s known as the godfather of PPC. Enjoy the show!

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What You’ll Learn

  • The 80/20 rule in action and how it has helped many of Perry’s clients.
  • How to directly apply the 80/20 rule to your business.
  • How to decide which PPC ad platform to use for your e-commerce business.
  • The pros/cons of the major PPC platforms.
  • Where to focus your energy when you have limited resources.
  • Perry’s guidelines on how to market your business.

Other Resources And Books


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.

Ignite.Sellerlabs.com – If you are selling on Amazon and running Amazon Sponsored Ads campaigns, then Ignite from Seller Labs is a must have tool. Click here and get a FREE 30 Day Trial.
Ignite Logo

Kabbage.com – If you run a physical products based business, sometimes you need a short term loan to buy inventory to meet demand, especially during the holiday season. Kabbage helps small business owners access simple and flexible funding right away. Click here and get a $50 Visa gift card upon signup.

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


You’re 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 today I’m thrilled to have Perry Marshall on the show.

Perry is one of the most sought after business consultants when it comes to pay per click advertising, and he’s known as the godfather of PPC. And today we’re actually going to pick his brain on how to grow your business with the 80/20 rule.

But before we begin, I want to give a quick shout out to Klaviyo who is a sponsor of the show. Now I’m 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 them for over 20% of my revenues. Now you’re probably wondering why Klaviyo and not another provider.

Well, Klaviyo is the only email platform out there that is specifically built for ecommerce stores. 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 out to everyone who purchased a red handkerchief in the last week, easy. Let’s say I want to set up a special auto-responder sequence to my customers depending on what they purchased, piece of cake, and there is full revenue tracking on every single email.

Klaviyo is the most powerful email platform that I’ve ever used and you can try them for free at mywifequitherjob.com/K-L-A-V-I-Y-O, once again that’s, mywifequitherjob.com/K-L-A-V-I-Y-O. And if you’re interested in starting your own online business, head on over to mywifequitherjob.com and sign up for my free six-day mini course. Just enter your email on the front page, and I’ll send you the course immediately. 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 an extra special guest on the show. He is one of the world’s most sought after business consultants, and is the author of many bestselling books in the PPC advertising industry including The Ultimate Guide to Google AdWords, and The Ultimate Guide to Facebook Ads. He has consulted in over 300 industries, and he’s known as the godfather of PPC.

Now does this man sound familiar? Well it’s none other than Perry Marshall. And with that welcome to the show Perry, how are you doing today?

Perry: Great Steve, it’s a delight to talk to you and you’ve got a pretty great story. We were talking earlier about your story of living in Silicon Valley. Living in an expensive city is no day at the beach.

Steve: It is not yeah, but there’s perks, you can’t buy the weather anywhere else, right?

Perry: Right, right. Well, I live in Chicago and our weather isn’t always that great, but it’s a great city. So you have these tradeoffs, like well are you willing to pay to live in a world class city, and all the things that — and I think it’s worth it. I think the connections that you have and the things that you can do, and so probably a lot of your listeners live in expensive metros, and have to thrive in the competition, right?

Steve: Absolutely.

Perry: It’s a pretty new topic.

Steve: So hey I actually know your work because I think back in 2007, I think I picked up your Ultimate Guide to AdWords. But for the benefit of the listeners, can you give us like a brief background story about how you got into PPC in the first place, and then eventually what led you to focus on like the 80/20 principle of sales and marketing?

Perry: Well, I want to quickly start by connecting with the name of your show. So my wife quit her job when our first was born. And a few months before that I had gotten laid off from my engineering job and gone into sales, which was kind of being thrown in the lake and see if you can swim. So I’ve lived this man, and it was a good two years of bologna sandwiches and rum and soup, dialing for dollars and pounding the pavement, and so man I totally get it.

And look I think that when you take on that extra burden of being the breadwinner, and of course it could be the woman being the breadwinner, it could be the guy being the breadwinner. But I think there are just situations where you put yourself in the situation, it’s almost like a movie, like what is this character going to do anyway. And well he’s got a battle ox, and he’s got to go through wars and battles and go on ships in the stormy sea, but you end up being a lot stronger and having a lot more moxie.

So I say there’s two kinds of people in the world. There are poodles and there are or are wolverines. And the way that you become a wolverine is your wife quits her job if you have to make it work. So that’s like the early back-story.

Steve: Was that the last time you did engineering by the way, because I know we’re both electrical engineers, was that the last time you did electrical engineering?

Perry: Well, in a sense I still do it, which is a whole another story, which if you want to get into we can talk about, but actually I feel like in engineering background is a liberal arts education for the 21st century.

Steve: Interesting.

Perry: It’s really helpful, and so I’ve always had a hand in — and I mean I even regard a lot of what I do now and what we’re talking about as engineering. Like all of these marketing problems are really engineering problems with a whole bunch of human psychology mixed in. In fact I think part of my job — I got this customer named Ari Galper. He lives in Australia and he does not have an engineering or a mathematics bone in his body.

But he said to me the other day, he goes you know Perry, you actually did teach me to think like an engineer, and I can put on that hat when I need to. And there are times when it’s really called for all the way from, hey I get this agency and they want to manage my clicks, all the way to somebody wants to buy my company, or somebody wants to sell me their company, or they want to sell me their website or any of those decisions.

There’s a little engineering problem, like well is the money going into the black box and coming out with more dollars than went in? Those are all engineering problems.

Steve: Okay interesting. Okay so I didn’t mean to interrupt you. You were talking about — you left off on I guess the meat of the story how you got into PPC.

Perry: Yeah so after a couple of years, I started to find my way and I discovered direct marketing. And I worked in a company that sold industrial hardware and software, and the company got sold and I got some stock options, and I hung out my shingle. It’s like dude, now you’ve got like make this thing work, and you’ve got to generate leads. And Google AdWords came out about six months after I quit my job. And I was trying to generate leads, I had this little CD I would mail out called guerrilla marketing for high tech sales people.

I was looking for people to fill in that form and request the CD. And Google AdWords came out, and after about three days of playing with those I was like, oh my word, this is the coolest thing I’ve ever seen in my life, this is amazing. And so I grabbed onto it and for about a year it was my little secret, it was like I’m not telling anybody about this, a seeker fishing hole.

But then Ken MacCarthy who ran the system seminar for internet marketing, which as far as I’m concerned at the time was the best seminar for marketers on the internet. He said, hey you know Google AdWords, why don’t you come and speak at my seminar on Google AdWords. And all of a sudden I found myself in the Google AdWords business, which I didn’t even really know was a business, because it kind of wasn’t at the time.

And then what happened over the next couple of years was it just exploded and went crazy, and I found myself on the inside of every business that you can imagine like seeing their numbers, seeing their clicks, seeing their conversions, how it works, every kind of product you can imagine. I mean I remember when my first customer sold Japanese maples trees. And there was another guy who sold a summer camp, and there was all these people selling different things, and some of them were physical products and some of them were services and you just had this vast thing.

And well, so fast forward and here we are and all this stuff is normal now. In fact direct marketing is normal and tracking conversions is normal, and all this stuff that Claude Hopkins wrote about in scientific advertising in 1918, which is 99 years ago, is normal, right? And so, massive paradigm shifts.

Steve: So given that, so one of the common questions I get asked, I mean you’re familiar with all the PPC advertising platforms. So most of the listeners are on the e-commerce space, and one of the common questions I get asked is hey I just launched this site to sell physical products, and I really don’t know where to start with generating traffic, like should I go with Google, should I go with Facebook, should I go with a marketplace? Like can you kind of walk me through like the thought process on how you advise a client when they come to you with such a question?

Perry: Yeah, and this is a really good question, and so let’s just start — let’s try to keep you from getting eviscerated, okay? So first off you can’t master six PPC platforms, and like there’s this whole sort of social media guilt trip like, oh you got to be on LinkedIn and Pinterest and Facebook and Twitter, and [inaudible 00:11:04]. Like you can’t, you just can’t, and especially if the person who’s asking this question right now, there’s no possible way.

Here’s what you can do. You need to master one form of traffic and one form of conversion. And before you go doing anything else or get distracted by anything else, that’s what you’ve got to do. And so you need to pick a platform that’s appropriate to you, and I’ll get to that in just a minute, but then you need to really just hone it in and narrow it down, find probably some niche within the niche that you can master. And just like ruthlessly knuckle down on that one thing.

And it’s almost like do not pass go [ph], do not collect $200, do not skip around, do not get distracted. And I mean if there is anything that is just the mortal enemy of most people today, it’s just in the list, distraction.

Steve: Yes.

Perry: And it just it robs people of their whole life. So now you got to pick a platform. Well, I got a few things that might help. On our website, well we have a few interesting little websites. So is Facebook for me, is AdWords for me? And you actually get a score. So if you go to is FB for me, isfbforme.com, you can answer a dozen questions in about 60 seconds, and click the button, it’ll give your score on a scale of one to ten. How suitable is Facebook for your business?

You can go to is AW for me, which is AdWords for me dot com. And same thing for Google, and it’ll tell you not only Google’s search, it will also give you Google display, it’ll also give you a competition index of probably how much are you up to.

Steve: Can we talk a little about how that works?

Perry: Sure, sure, sure.

Steve: So like what businesses are more catered to Facebook, kind of like on a high level versus AdWords, versus the display network?

Perry: So really oversimplified summary is Google is the yellow pages, Facebook is the coffee shop. If what you sell is cultural and emotional, and relational and identity oriented towards the tribe that you belong to, then Facebook is really up your alley. If what you sell is more analytical, if it’s more business to business, if it’s more propeller head or more technical, Google is probably better. I mean just think of it from the standpoint of what is the state of mind of a person who is on Facebook versus what is the state of mind versus they’re on Google.

They’re using different sides of their brain really, and the whole entire platforms really reflect a different side of the brain. And so now both — there’s a lot of overlap between the two. Another thing about Facebook is Facebook is easier to make a splash; it’s easier to just go make something happen today right now. You could come up with a good ad and you could post it, and you have people responding in seconds.

But it tends to wear out, things you do in Facebook tend to have a limited shelf life. Whereas Google is a more — if you can get dialed in and optimized, which might take you months, it will run in run for a long time. So it’s kind of like a freight train. It takes a while to get going, but the momentum is tremendous. And so, there’s pros and cons to all these platforms.

Now, here is another thing that I think can be very powerful. Remarketing or retargeting which is when you go, you look at a dress on eBay or Amazon or somebody’s site, and then all of a sudden all these little dress ads are following you around. I think everybody has seen that. That is actually an underrated form of marketing that people have a lot of skittishness about. And they’re kind of resistant to do it, they’re like, well that’s creepy, I don’t really want to do that.

Plus those people even visited my website; I don’t want to have to pay to bring them back again, like that doesn’t seem fair. Well, all of those are reasons why you should actually do it. And what I want to say to you is that it’s probably the first thing that you should do before you go do everything else. If you have any traffic in your website, now if you’re starting, if you just bought your domain name yesterday, you have zero traffic; it’s going to do you no good.

But most people already have some traffic. And what’s happening on your website right now is three or 5% or 10% or 1% are doing whatever it is you want them to do, and the other 90% aren’t. Now out of the 90%, probably 70 or 80% will never do what you want to do ever, ever, ever. But there’s this like top like you already skimmed the cream off the top, but then there’s the top of what’s left that you can get to engage with you if you use remarketing, but you will lose them if you don’t.

Now, here’s why I’m actually telling you this. The reason I’m telling you this is because this is a great way to start either Google advertising or Facebook advertising. It could even be a way you get into You Tube where if you’re in a really competitive market and the clicks are expensive, and it’s hard to get a conversion for an acceptable cost, start with three marketing. And draw little concentric circles and make them wider and wider until it’s actually working with cold traffic.

And so remarketing becomes like a clutch that you let out so the engine doesn’t stall. And I just think, that’s probably going to help some people really…

Steve: When you’re talking about remarketing for AdWords, are you talking about just bidding higher for the people who already visited your site for your search terms?

Perry: Oh okay. So there’s several kinds of remarketing. So there’s remarketing lists for search ads, RLSA, which means you can bid very differently for people who already have visited your website on Google search than for people who didn’t. But there’s also remarketing on Google’s display network, which is an entirely different thing. So, all the banner ads on The New York Times, and in everywhere on the internet, in text ads.

So one of the problems with remarketing is people just keep seeing the same thing over and over again, they become banner blind. Well, you don’t want to do that, you actually want to take maybe your five best campaigns and put them all in rotation, so that the person who visited your website is now being introduced to multiple angles on what you do not just this one thing. And that makes the advertising interesting instead of boring and repetitive, and it makes it less creepy and more relevant.

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Can you comment a little bit about like the major differences between Facebook ads versus the Google Display Network?

Perry: Okay, so Facebook is always based on targeting some fixed audience. I mean pretty much any context like; well okay I’m targeting fans of a certain TV show, or feeds of a certain website or even some custom audience. It’s a finite audience which you are saturating. Well, Google Display Network is not like that. Google Display Network is always a passing parade, there’s always new people coming through. And so that makes Google Display Network much more evergreen.

So on display network, you can have text ads, you can have banner ads, there’s an enhanced ad where you actually load up all these different bits of text and images, and Google actually try different combinations for you. So all of these all these things exist.

Steve: There’s a reason why I’m asking these questions Perry. So I do, I run all the ads, all my own ads in all these platforms. And the only ad platform that I’ve never quite gotten to convert that well is the display network outside of dynamic retargeting.

Perry: Oh? Okay.

Steve: Yeah and so originally when I got you on here, I wasn’t going to talk about this, but I’m just kind of curious now since I do have you on. Of the clients that you’ve had gotten the Google Display Network working for like kind of what has been your strategy?

Perry: All right, so there there’s a bunch of strategies because there are a bunch of different ways that you can target. And so here’s kind of how you need to think about it is what’s going on for the most part on the Display Network is that there are a bunch of advertisers who have gotten locked in. And when you have a locked in, it is a magic carpet, right? It is and there is — like if you have a mass consumer product that could appeal to lots of people, there is gargantuan amount of traffic on Google Display Network, I mean you can hardly believe it.

Well so what happens is, what a lot of advertisers do is they use cost per action bidding and they lock in on a certain set of websites that give them an acceptable return on investment. And so now they have a very tight feedback loop, so they’re saying, I’m willing to pay $3 a conversion or $30 a conversion, or whatever the number is, so Google just show me these sites that get me these conversions. And so when you do that, you have to pay your dues at first, but once you start to get it locked in, it gets super locked in.

And then those sites become very difficult for other advertisers to wedge in on, because the existing, the incumbents are already in there, and Google always favors an incumbent. It’s just like elections; it’s actually for all the same reasons. And so the really like dreadful part about Google Display Network is that there’s millions of sites, and Google is prone to show your ads on sites that are full of all these people that are just doing ring tones or really low quality traffic.

Furthermore, there’s click fraud and like all these like scammy, spammy sites that run Google ads. And so there’s a whole lot of swamp land in Google Display Network, and so you actually kind of have to double down to figure out where to target. And Google Display Network — I mean I can’t even keep track of it, my co-author Mike Rhodes actually keeps official track of all these things. But I think there are something like eight to ten different targeting methods on Google Display Network.

So you can target by keyword, you can target by website, you can target by something called in market, which might be a good place to start where Google can figure out this guy is trying to buy a refrigerator right now. This whole group of people that you can target, all appear to be buying refrigerators in the last two weeks, and so you can target them. You can upload lists to Google, and you can create similar audiences, which is not as effective as Facebook’s version, but it does exist.

Steve: So do you recommend starting with keywords or these different audiences that you’ve been talking about, like in market audiences?

Perry: I would start with the less commonly used methods. Now, we have some chapters about this in our Ultimate Guide to Google AdWords book, and we also have a course center website called Display Expert Series, which is a real deep dive into how you do it. And if you’re going to spend money on Google, I would suggest availing yourself of a resource.

Another method that can be affective is category targeting. There are about 2,000 different product purchase categories on Google. And so if you’re selling baby stuff, then you can target baby clothing and things like that, and zero in a lot closer, and you need to take a mentality like — I call it toehold, foothold, stranglehold. You don’t try to kill the whole elephant all at once. If you can get a few whether it’s keywords or websites or categories, if you can get a few sites and a few targets that lock in, because you’re going to end up with certain pages that convert at an acceptable price.

And once you get into that virtuous cycle, then you can continue to expand. And you have to — especially at first you have to spend a lot of time eliminating all of these sites that don’t convert. It’s just this huge game of elimination.

Steve: So what I’m hearing is basically you want to go really narrow and maybe even pick specific pages on the web that you think are going to convert and just get those pages, and just kind of gradually build up your…

Perry: Okay, I don’t really go so granular that you think you know what the pages are going to be. That’s really dangerous. In fact guessing that I found is almost impossible. But what you can do is you can limit your exposure, you can pick some narrow band of some topic or some keyword, and then you can find some pages within that, that convert, and you can ruthlessly eliminate the rest. And once you start to have some that convert, then finding similar ones, it just becomes a lot easier.

Steve: Okay, so when it comes to someone who is brand new, and a lot of these listeners are probably just getting started with their sites, which platform would you recommend they start with? And I know it depends on the nature of their business, but so I kind of teach AdWords, not the display network obviously, but I mainly tell people to start with Google Shopping and Facebook depending on what type of stuff that they sell. Like what is your kind of recommendation, and if you have any sort of clients that you’ve — client examples that you’ve used to advise them, that would be great.

Perry: Well, I would certainly start with this is AW for me, is FBfor.com. I would start with the scoring, and I would at least start with what gives you the best score. And then I would shut out all the distractions, just try to hunker down, and I would start with remarketing which exists on all those platforms. And then I would expand outward to colder and colder forms of traffic. And the Holy Grail is that you actually get it to work on completely cold traffic instead of traffic that in some way, shape, or form has already been warmed up before they got to you.

If you expand out in those concentric circles, that’s the best way to ensure you don’t lose your shirt. Like if you’re just retargeting people that already visited your site in the last three days, it’s almost impossible to go broke or wake up the next morning having spent $2,500, and feel like you have a hangover, which is you really don’t want to have a bad experience right out of the gate, and then be soured to the whole thing, because PPC is like crack cocaine if you can get it to work right.

Now, I want to make sure — I mean answering your — you talked about Google Shopping. Google Shopping is definitely one of the less picked over, less competitive compared to a lot of other — so like compared to Google search. So Google search if you’re like in the local market is usually pretty reasonable, but a lot of national markets it’s very, very competitive, whereas Google Shopping is more reasonable for most people.

Like I have a client right now, and they were experimenting with, well they’d been doing Google search for a while, and they never could quite get it to convert an acceptable ROI. I started working with them, we did some aggressive experiments for a little while, they got a little bit of improvement, but not all that much, and basically we switched all of our efforts to Google Shopping, and that appears to be working better. And now they can hang out there for a while, and they can develop that.

So let me give you an example of what they’re trying to do. They have thousands of products. And some people would be tempted just like throw a bunch of mud at the wall. What I told him to do — and like a lot of the stuff they’ve sold, they’ve sold like little tiny quantities of most of it, and they’ve sold large quantities of only some of it. And I said, so what I want you to do, think about — so the way I do 80/20 is there’s the 20% that generates 80%, and there’s the 20% of the top 20%, which is the 4%, that gives you 64% percent.

I said start with that 4%. In other words start with the 4% of your SKUs that have generated 64% of your sales, which is almost exactly what the ratios are going to be. You have about 4, 5% of what you sell is two thirds of your business. It’s almost always true. I said just target those products on Google Shopping and ignore all the rest, and just get those working. That way you’re going to risk less money, and you have a way, way better chance.

And then within the 4%, you’re going to find the 1% that’s probably 50%, and you want to own it. And one of the most important things that I could ever tell you is you want to pick a couple of specific niches and completely own them, and you want to be number one. Being number one on the internet is great, being number four is terrible, it sucks.

Okay so I haven’t heard your whole story. I’m willing to bet money that when your handkerchief website went crazy, and you replaced your wife’s income, it was because within certain platforms, maybe it was search engines or advertising platforms; you were the number one handkerchiefs guy.

Steve: That’s correct. We focused on that, and we were the best, and the largest brand in handkerchief. So we ranked on Google, and our AdWords actually really made us a lot of money in the beginning.

Perry: Right, so you weren’t number one on handkerchiefs at the local mall, but you were number one on here, just on Google. And you’re like oh my word, honey, look at all these thousands of people every day, they’re looking for handkerchiefs on Google, who knew. And she’s like, really, wow, well I do not understand it, but I do accept it. And you’re off on your adventure.

Steve: I just want to take a moment to tell you about a free resource that I offer on my website that you may not be aware of. If you are interested in starting your own online store, I put together a comprehensive six-day mini course on how to get started in e-commerce that you should all check out. It contains both video and text based tutorials that go over the entire process of finding products to sell, all the way to getting your first sales online.

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So I’ll just try to summarize what you said. So for Shopping, pick your highest grossing products and then only bid on those in the beginning for Shopping.

Perry: Well yeah, like whatever the most with the highest margins and the most profitability and the most uniqueness and the best unique selling proposition, and the least me too thing that you have. It’s probably going to be all of those things, and you just leaves are down on that.

Steve: Okay, what is the disadvantage of just bidding on all of your products, but even like at a low bid just to see if you can get in those French clients who just happen to be looking for those products online?

Perry: Well, okay just think of it like this, every single product that you try to sell, you’re going to spend a certain amount of wasted money 50 to 95% of those, and you’re going to find out that they don’t work, okay? And it might be 99; I mean you may have a very low betting average on most products. And so if you have 30,000 products, and if it takes you $10 of advertising to find out that this product doesn’t work, then you could spend $300,000 just to know that 29,950 products don’t work. Like the odds are so tilted against you.

I mean you really; you can’t go into this with a bunch of blind optimism. That is just a recipe for disappointment.

Steve: So you’re recommending is go with the best product and just kind of gradually expand your product base on that?

Perry: Yeah.

Steve: Okay, and I heard you mentioned earlier with the retargeting, what time window do you recommend people start out with for like quick wins?

Perry: Well, it depends on what you sell and what the time — but most people are going to know, do people shop for my product for five minutes or five months, right? And so if it’s a short time window, well the smallest time window that any of the retargeting platforms give you to my knowledge is a day, and it’s pretty hard to risk that much money if your retargeting window is one day. It’s pretty hard to go along with that. I find a lot do well with maybe three days, but of course if you’re selling a $100,000 piece of machinery or something, then you might go several months.

Steve: And in terms of advertising, so once you have the retargeting mail done, what is your strategy for getting cold traffic to convert?

Perry: Well, so first you need to test a lot of different things. And the number one deficiency of most ad campaigns is they test this really narrow impoverished range of hooks in USPs and graphics and language. So the classic thing that we did in all the early Google Books is we showed people, if you change this one verb, if you change just cheap to free, or if you change half price to two for one, or you do these kind of simple little changes, that’s how you split test.

And so people sit there and then they split test commas and verbs and capitalization and stuff. Well, in principle that’s fine, but really the principle is forest, trees, branches, leaves. You tests like, am I in the right forest, let’s try these wildly different locations, let’s try — so I’m writing ads and one ad is about absolute fear and terror that something horrible like could happen if you don’t solve this problem. Or another ad is just how you’re going to be absolutely in Nirvana if you can solve your problem.

And so one is towards and one is away from you. You test black versus white, you test heavily contrasting ideas. And you see you can do that with retargeting. And so if you test ten radically different ads, you’re probably going to find that the difference between the best one and the worst one is at least three to one. Well, if you do this several times, and all of a sudden you come up with just really fantastic ad sleighs [ph], then you probably got an ad that can convert cold traffic. But 90, 95, 98% of your ads are never going to convert cold traffic, and they’re kind of doomed from the start, you just don’t know it.

Steve: What is your opinion on losing money on the cold traffic, and then making up for it on the retargeting? Do you do you always – let me see how I can phrase this question, do you always assume that your cold traffic efforts are going to yield a profit?

Perry: Well, probably the realistic assumption is that your cold traffic is going to break even, and that you’re going to actually make money starting with the second sale. In most markets that’s roughly the water level of equilibrium is most people are actually going slightly negative to acquire a new customer. And the really smart players, they figure out how to do that, they know that they can afford to do that, and they’re prepared to do it.

Steve: So when you’re calculating like the ROI of your campaigns, do you look at it holistically then across all the campaigns, or do you do it at the individual campaign level?

Perry: Both. So now if I’m going to lose money on the front end to acquire a customer, I’m really going to pay attention to what I’m doing. I mean look, it’s a very common strategy, in fact the bigger the companies are, the more they’re doing it, right? Like Amazon has been losing money acquiring customers for a long time, but of course I think we all know the reasons why they can afford to do that. But you still need to put every individual thing under a microscope, and you need to know, it’s like well, I’m willing to lose 15% acquiring this customer because I know that 1% of these customers go on to buy my $10,000 thing, and it’s worth it.

But you’re always dialing it down. Even after you get a few of those customers to come and spend the $10,000, you start to go, oh you know what, those customers are from these certain kind of suburbs, with these kind of backgrounds or these demographics, and I’m going to turn off all my losing money campaigns that don’t cater to that demographic, because now I know what my high end customer actually looks like, and I’m going to do my loss ladder stuff to acquire those people.

Steve: Okay. This kind of leads me to my next question is how has AdWords evolved over time? Like a lot of people believe today that AdWords is just so competitive and the cost per click is just so high that it’s just really hard to break into the incumbents as you mentioned before. And so have your strategies kind of evolved since that first edition of your book?

Perry: Well, so what you said is true, but there’s a yin to the yang and here’s what it is, is that — and this is sort of true of all the platforms is they are so aggressive, meaning Google, Facebook etc. They are so aggressive in developing new features and new menus and new ways of targeting, and all this kind of stuff. Most advertisers, like 90% of advertisers only use about 5% of the features, and 5% of the targeting methods. Ad it’s actually only a tiny percentage of huge advertisers that take advantage of all the stuff.

Meanwhile, there’s all these nooks and crannies that are on these platforms that in any particular one niche like handkerchiefs, hardly anybody is using at all. And so it’s the principle of the slight edge, it’s like if you’re slightly better than everybody else in six or eight areas and not just one, then eventually you’re going to edge out the competition. And you just you really have to know your numbers, your tracking has to be set up exactly right, it needs to be feeding you the right information.

And then also very few companies are actually methodically systematically testing stuff. Like even just basic A/B tests, very few companies actually do that the way they should, and almost none of them have a master plan for, oh I’m going to — so I have architected these me tricks of things that I’m going to test, and I’m going through all the different contrasting ways that I can present and offer. And so between now and next October, I’m going to go through this whole battery of options here.

And when you start combining those together, you really can win. And I’ll tell you something else just for free. The Google reps, 98% of them are just dialing for dollars. And they give them a script, and Google is a really trusted brand, and they’re friendly and they’re Googlers and all this kind of stuff. Okay first of all, most of them have never spent their own money on any advertising campaign. Secondly, they’ve got a quota.

I’ve got a friend who owns an agency, he won’t even talk to Google reps. His staff is instructed, I don’t talk to Google reps, sorry. Like the Google reps are astounded, like everybody wants to talk to me. Well, look, who’s paying for Google Earth, and who’s paying for all this stuff, right? Who is paying for Google Scholar and like all these other things? It’s you, okay? If I had a dollar for every person who says, yeah the Google rep called me and suggested this thing, and I lost $20,000, and this happens all the time. Google is not your friend.

Steve: This has happened to my student also. Like a Google rep called them, and they’re like, oh yeah, start the campaigns. And they blew by a $1,000 in a day and a half, and then they contact me. And I look at their campaigns, and it’s all display network, they’re bidding on games and all these like wasted areas, so yeah.

Perry: Look, Google is a casino, and they are stacking the deck against you. All the default settings when you open a new account, they’re all tilted in Google’s favor, okay? They’re out to get your money; they don’t care if your business succeeds. You have to sleep with one eye open, and frankly like if you’re not willing to invest in some education, don’t bother. Who are you kidding? You’re going to go into a game that’s existed now for how long, 15 years, and you’re going to play against the casino, and you think you’re going to win without going to card counting school, are you crazy?

I mean really? I mean and I know there’s a cynic who is going to go, oh Perry is just saying that, he’s self-serving. Well, there’s a reason I’ve made a living teaching Google advertising. It’s not like Google is helping me. But hey, if you want to go give your money do a Google rep, go ahead, it’s not my money.

Steve: I mean Google is — the interface is just so much more complicated these days too, like Facebook is just so much easier to teach. I don’t know, you’ve got your work cut out for you there Perry.

Perry: Well, I agree and we teach Facebook too, and I think Facebook is easier. It’s easier at the beginning, it’s in fact frankly it’s a lot easier. Google is this long optimization curve. But the nice thing about Google is once you get the freight train going, I mean it’s really awesome.

Steve: Yeah, it’s I think you forget it almost, yeah. Well hey Perry, we’ve been chatting for quite a while, and I want to be respectful of your time. Where can people find out about your services, what you offer, any books that you recommend, and that sort of thing?

Perry: Well, I think you should go to is AW for me, is Facebook for me, and sign up for what comes next. We have some free courses online, and look, if you’re going to spend any kind of real money in this, I would suggest that you get our Google AdWords professional courses. There’s Display Expert Series, and there’s AdWords mastery for people. Like if you really got to do this, then do it right, and Mike Rhodes and I will teach you how to do it correctly, and it’s at perrymarshall.com.

Steve: Cool. And I’ll link up all those resources in the show notes. Perry, it’s a pleasure having you on, and finally able to chat with you after I guess ten years is when I first encountered your book. Really happy to have you on, I appreciate your time.

Perry: It’s an honor to be on, and congratulations on what happened when your wife quit her job.

Steve: Yeah, and it’s cool. It’s nice to talk to another electrical engineer on the show as well.

Perry: You bet.

Steve: All right, take care Perry.

Perry: Take care Steve.

Steve: Hope you enjoyed that episode. Perry has been doing this for quite a long time, and he’s actually one of the entrepreneurs that I followed early on with my businesses. For more from information about this episode, go to mywifequitherjob.com/episode185.

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

Now, I talk about how I use all 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, 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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