Happy New Year and happy Sunday!
If you’re reading this, I hope you’re sitting on your couch (or at your desk), hydrated, relaxed, and ready to hear a spicy rant of what NOT to waste your time on.
Every time I talk about things that I believe are overrated or tech that is not necessary to build and scale a brand, I get upset messages from so many companies. Today will be no different, but in the famous words of Connor McGregor, “I'd like to apologize... to absolutely nobody!”
I hope your year has started off with a bang. From conversations with my friends in the venture, private equity, debt, credit and finance world, everyone is excited for 2025 and sees it as a bull year. Access to capital will get easier, money will be flowing, and it should be a rising tide that lifts all boats.
Vendor of the Week
Now that the dust has settled from BFCM and the holidays, your brand probably spent a lot of $$$ to acquire new customers. Now, in Q1, it is time to take your repurchase flows to the next level so you can turn one-time buyers into repeat, loyal fans of your brand.
Black Crow makes it super easy to do this.
Imagine you had a crystal ball that told you exactly which products to recommend to which customers on which channel at the right time for 2025. This is what Black Crow does — They aggregate your Shopify, email, SMS, and paid ads data to create individualized predictive models unique to your brand.
With that data, they identify the best timing and actions to engage prospects and customers across the customer journey, automatically triggering the workflows that convert best to hit your growth goals. With their software, you automatically recommend high-converting products via the highest-converting channel to drive more sales without humans involved.
For the new year, Black Crow is offering Shopify brands with $2M+ in GMV a $122 gift card just for taking a demo. Their email product (linked above) is also how we achieve a 15% opt-in rate for email addresses on client websites.
Sign up for a demo with Black Crow here, get a $122 gift card AND generate more revenue from traffic already coming to your website!
Limited Supply
Limited Supply is coming back with a bang in 2025. Catch up on any old episodes before the new season starts. New format, new content, new set... I’ll see you on Apple or Spotify soon.
Overrated & Underrated Places to Spend Your Resources
One of the reasons second-time founders usually find traction quickly is they know exactly what to focus on, what to avoid, which vendors to work with, what events to sponsor, which influencers to partner with, etc. Lemme, David, Jolie, Feastables, TrueMed... they are all founded by second-time founders, and they know exactly what levers to pull and what to ignore.
There is so much noise, and if you work at a brand, then you know from the 30+ cold email solicitations you receive, there is a lot of things you can do. Don’t get me wrong, there is absolutely a time and place for something like sponsoring a beach volleyball tournament in Long Beach, CA that will air on ESPN, but it doesn’t mean you need to be spending your time on investments like that.
For today’s newsletter, I wanted to put together a list of immediate things I believe are overrated, and not a good use of your time. Most of the things you should be focused on are accurately rated (acquisition, retention, subscription, engagement, etc). And then to finish off, I wanted to add a few items that I think are extremely underrated, that when you do/implement, will show immediate return. If there’s anything you’d add to be overrated or underrated, reply with it and I’ll add it to the final published copy.
Overrated
Top-of-Funnel (TOF) Facebook ads. Unless you’ve fully exhausted your potential with conversion-objective campaigns or you’re spending an absorbent amount of money ($7M+ on digital advertising), there’s no reason to run Reach & Frequency campaigns. Yes, there are points as you scale your spending where you find diminishing returns, but even in those cases, just running in-platform TOF doesn’t necessarily fix that, and you can still run “TOF” ads optimizing for different custom conversion events, reflective of an upper funnel prospect.
Programmatic display ads. 99% of programmatic ad tech companies are lying to you about the numbers in their reporting. They use long attribution windows, view-through-based reporting numbers and will often times arbitrage the inventory cost itself, resulting in trashy inventory for your ads to be displayed in. If you run with a vendor and they have a 90-day view through window, they’re going to get credit for almost every conversion! In very specific and rare circumstances do programmatic display ads make sense. Let companies like Pottery Barn continue to spend their dollars there, while you focus on social, search, and maybe one other channel.
Loyalty and referral programs. Unless your business model is a marketplace (Best Buy, SEPHORA, Nordstrom) or you have multiple SKUs/variants/flavors, no one truly cares for a loyalty program. The points customers have with the shampoo or foot cream company they use isn’t a priority for them. If you analyze the incremental profit generated, compared to the time and investment of the program, many times it’s never a great result. Instead, platforms that turn your customers into a community or turn them into ambassadors for the brand, with ease, have a much better return on investment.
Paying for influencer management software. Don’t overpay for a database of influencers and don’t lock yourself into 12-month agreements, with no out-clauses.
Honey, Capital One Shopping and coupon sites. In 2020 I emailed Honey telling them they are scammers and their own employees couldn’t defend themselves from it. Honey and Capital One Shopping both reload customer checkouts at the final stage and register that order as an affiliate order that Honey brought in, when the customer clicked and ad or an influencer link to get there. They promise you eyeballs in front of their publisher network, but it’s all smoke and mirrors. When coupon sites sign up to be an affiliate of yours, deny!
Most paid UGC is garbage. If you open Reels or TikTok yourself, you’ll quickly realize how good the average piece of For You Page content is... that is what you are competing against. You cannot pay a random “UGC creator” $50 for a video where they pretend to love your product and try to sell it. Consumers today know a fake ad or fake endorsement from a mile away; then you’ll blame “ads” for not working.
Building landing pages off Shopify, where you pay for a scaling pricing model, is a waste of money. It’s 2024; you should be building your landing pages inside your main Shopify website, on Shopify 2.0. Why? Everything is a module, and easily editable. Plus, you shouldn’t be paying per visitor or based on a GMV model for a landing page. When we build landing pages for clients at Sharma Brands, everything is built inside Shopify and our clients can edit the pages on their Shopify mobile app.
Sporadic influencer and event marketing. Influencers are constantly flooding brands DMs and inboxes with requests to partner up and work together. Same for events companies — they’re always reaching out for sponsorships. Unless you have a proper strategy of how you plan to approach influencer and event marketing, do not waste your dollars on random posts or random dinners. $1,500 here, $5,000 here, $12,500 here and you’ll end up spending over six-figures with no attributable incremental revenue from it. A trick from when I worked at Hint, we would always reply back to events and offer them free water for the event, in exchange for social tags and content — they always said yes and waived fees!
Non-net-new customer acquisition. Yes, new channels come around and become the talk of the town quickly, but understand how those channels interact with your business. For example, with AppLovin, if you’re generally selling to net-new customers (bedding, leather goods, cookware, etc.), the channel works well. If you sell a consumable, you end up paying for customers you’ve already acquired, so the incremental new customer acquisition number is not that high. As long as you have a product that fully delivers on its promise, you should focus on spending against only net new customers.
Paying PR agencies egregious amounts of money. Instead of spending $25,000 per month on a PR agency to get you into online publications that no one reads, spend that money on an agency that will help you light up 500 to 1,000 videos on short-form content platforms per day. The everyday person selling with video or live stream content is the new PR.
Now... Underrated
Increasing your email and SMS opt-in rate. Klaviyo data suggests the average is 3% opt-in for email. Most brands get to 5-6%. Work to get to 15%. We do it with Black Crow’s email product + Alia for popups. That difference of 15% vs 6% is a lot of low-hanging revenue just sitting there.
Collecting and syndicating your product reviews. Being aggressive to collect your reviews is one thing, but then making sure you are syndicating those reviews across different Shops or marketplaces is equally as important. Make sure when you market about how many reviews you have, you have a collective total you can boast with.
Finding new messaging angles with large TAMs. Testing new messaging angles, new creatives, new audiences, and new offers to find a new pool to go after can be the biggest lever for scaling. Back to Hint, when we found an ad angle for diet soda drinkers, it generated 8 figures in revenue. How can you make your product the obvious choice to solve someone’s problem?
Replying to all your ad comments on FB & IG. When I was running ads myself, I would always respond to every ad comment. There’s a direct correlation between CTR being up, CPM being down, and CPA being down when you’re constantly replying to every single ad comment. Once you outgrow your ability to keep up, hire someone from Oceans Talent to help you keep up.
Optimized marketplace PDP experiences. Whether you’re on Shopify’s Shop app, TikTok Shop, Meta Shops, Amazon, Goop, Nordstrom, or Revolve, it’s essential to make sure that consumers have everything they need on all the product pages, product image carousels, reviews, etc. A bad PDP on Revolve or Best Buy is equally a reflection of the brand itself, not just the marketplace.
Crack the code on LIVE shopping. Brands are garnering 500+ concurrent (at the same time) viewers in a single TikTok Live where Comfrt is selling hoodies, or Divi is selling a hair growth serum. Whether you’re live shopping from the brand itself or building a program for creators to go live and make money, focus on live. It’s here to stay, and it’s going to grow fast.
Optimizing your shipping costs leveraging international trade laws. Companies like Portless allow a brand to deliver a customer their replacement air filter, manufactured in China, then stored in Portless’ Asia facility, within 10 days for a few dollars, including shipping, storage, pick & pack, etc. The customer only sees their order tracking start when the order reaches the port of LA, so they have no idea it just arrived from the warehouse in China. Portless has saved some of my Chinese manufacturing portfolio companies double digital percentages in their logistics costs.
Try licensing. Have you seen Woobles and Minecraft, or Little Words Project and Disney’s collaborations? Not only do they bring a whole new audience to the brand, but they allow you to run ads much more effectively. Your nCPA goes down with collabs, and in most cases, you’re only paying Disney or Pac-Man an affiliate-like percentage per sale.
First-order profitability. This one should be obvious going into 2025, but focusing on profitability in the first purchase is key.
Filing taxes and closing the books properly. Last week, in a shocking turn of events, Bench Accounting announced its closure on December 27th, leaving 11k+ businesses scrambling during the critical year-end period. While Bench was later acquired, I still speak with many eCommerce brands left uncertain about their financial data and year-end closing.
From the time Bench dropped this bomb, our partners at Finaloop have been successfully helping dozens of affected brands transition to eCommerce-focused, real-time financials and inventory tracking.
Through our partnership with them, they are extending this support to my newsletter audience, offering FREE 2024 historical catch-up bookkeeping services to help ensure a smooth transition to 2025, and timely tax preparation.
Lio, Finaloop's founder, has committed to a 1.5-week turnaround for a full 2024 set of financials, cash or accrual. Their service fits DTC, multichannel, multi-currency or wholesale. Resellers and manufacturers. The offer lasts until January 15th and you can learn more here.
