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The Unstoppable Marketer®
Trevor Crump and Mark Goldhardt bring you quick marketing and entrepreneurial tips, tricks, and trends for DTC business owners, entrepreneurs, and marketers. These are lessons they've learned through the years of being right in the thick of scaling dozens of businesses. Whether you have an established business looking to grow, just starting your business journey, or trying to become a digital marketer, this marketing podcast will not let you down.
The Unstoppable Marketer®
Efficiency vs. Effectiveness: Navigating Marketing Metrics for Growth
In this episode of the Unstoppable Marketer Podcast, hosts Mark and Trevor discuss the crucial difference between efficiency and effectiveness in marketing strategies. They explore how focusing solely on efficiency metrics like ROI or CPA can hinder business growth, especially during challenging economic times. The hosts emphasize the importance of balancing efficiency with effectiveness, urging marketers to consider long-term profitability and customer retention when making decisions about ad spend and scaling.
Please connect with Trevor on social media. You can find him anywhere @thetrevorcrump
if you can just zoom out of the situation you're in, you will probably make way better decisions. But in COVID everyone shut ads off without thinking for two seconds of oh, everyone is sitting at home on social media.
Speaker 2:Yeah, like this is the best time to actually run ads.
Speaker 1:Ads are crushing. Why are we going to turn them off, Like just because of the quote? Uncertainty of buying behavior, buying behavior over time. Well, it's like it is what it is until it isn't.
Speaker 2:Yo, what's going on, everybody? Welcome to the Unstoppable Marketer Podcast. With me, as always, is Mark Goldhart. What's up, Mark? How are you, sir? Good Goody, good Goody, goody, here we are, here we are Tuesday afternoon. I'm actually excited about what we're going to talk about today, personally, so I'm excited for the episode. Yeah, yeah yeah, any news. The Pope died, you see that.
Speaker 1:Yeah, the Pope died. Watch out for whoever JD Vance visits next.
Speaker 2:I watched a whole like I had no idea how they select the next pope you did not know I had no idea.
Speaker 1:Oh, it's pretty yeah, they all get locked in a big giant chamber and it's like assuming there's some toilets in there, though black smoke.
Speaker 2:If it's, if they've come to this decision or no, if they haven't. If they haven't, white smoke comes out of the if there is chimney, if there is yes I don't know.
Speaker 1:That's a good question I mean it's in a lot of movies. Producer asked if it was in sherlock holmes, it's there. There was a lot to it, it's more than just the top cardinals and I don't know how many cardinals yeah go in. I think there's a hundred and I actually think I do know the number. I think it's like 140 Cardinals.
Speaker 2:Well, that's news right there.
Speaker 1:I should look it up really quick.
Speaker 2:Also other news. I saw Trump signed an executive order to this one's awesome. Personally, as somebody who's had kids before, there's nothing worse than like getting the bill.
Speaker 1:Only 135 Cardinals. You said 140?. Yeah, nice Are eligible to vote in. It's called the Conclave.
Speaker 2:Yeah.
Speaker 1:And crazy. They released a trailer for a movie called, I think, the conclave.
Speaker 2:Really no social. No phones can be there. No, nothing like they're.
Speaker 1:They're legitimately cut off yeah, like they are in there debating and I don't know how long it lasts, like I wonder, and to be fair, I'm not catholic, so I don't know if debating is the right word, but yet, yes, they have to come to a consensus.
Speaker 1:Deliberating deliberating, that's the word I'm looking for, not debating so I think there's like each, there's like a few sects that like bring forth, like maybe like the person they think. Yeah, I'm sure it's not like everyone is like I'm the pope, yeah, vote for me. I wonder if it has to be anonymous. I don't know. I'd be really interested to find out, though. Yeah, I mean, that's a person who I mean. What is there? Close to a billion Catholics? I don't know how many Catholics are there.
Speaker 2:I don't know that's a lot of people.
Speaker 1:It's an important world figure.
Speaker 2:Yeah, that's a very important world figure. I'd probably say one of the, you know, at least one of the most well-known world figures 1.4 billion. Catholic or not? You know, everyone knows who the Pope is, wow. The other thing I was saying is Trump signed an order. I heard where you know how you go to the hospital. You have a baby for example yeah.
Speaker 2:And you have no idea what the bill is going to be. Ugh, nor do have a baby, for example. Yeah, and you have no idea what the bill is going to be. Oh, nor do you like when you get the bill, nor is it like itemized as to what it is.
Speaker 1:It's just like you owe 12 grand, yeah, for having a baby, you're like well, what's also a joke about it is they don't tell you what the insurance like, because if you pay in cash it's often cheaper, sure, but then it won't count towards your deductible. But for some reason, you have insurance like, sometimes, if you do have a high deductible, it's more expensive than if you paid for cash. It's like a total mess and you don't know why or what. Like you said, it's very like. The itemization is often strange. Yeah Well, trump signed an order. Doesn't make any sense To say like before you leave.
Speaker 2:You have to know exactly what it is Like. You have to know exactly what it is Like they have to tell you. This is what it's going to be.
Speaker 1:Oh, so you don't have to wait for two months and it's not an estimate Like this will be between six and 10 grand.
Speaker 2:This is the bill. You must know, and what it is and why, which I think is actually really cool.
Speaker 1:I wonder what that does to price action for medical care. So Hopefully it simplifies it yeah. It's a waste, maybe too Like cause I always feel like I remember how much I paid for my first kid, because they, for you know, maybe shame on me cause I didn't go through all my insurance documents, but we thought like the extended stay was covered. Uh but then it wasn't Ouch. So we were there for two days or three days, but each day is a lot of money.
Speaker 2:I after the first kid our next two. I was out of the hospital.
Speaker 1:Like as soon as possible, right.
Speaker 2:This. People are going to get mad at me for this. But like I over pushed, almost like my wife, like let's just get out, like I will take care of you at home, as long as everything's fine. Right, the birth went fine. As long as it's like, just like a baby's fine Wife is fine, you know, because it's just like there was nothing more miserable than sitting there and my wife and I are not people to be waited on, you know, so that that part of the hospital was not beneficial for us.
Speaker 2:Right To have that baby taken from us so that we can get some. You know, it was more like my wife wanted the baby or I wanted the baby, right? So if I need to sleep, she has the baby if she needs sleep, you know. So we were like one day and just like let's get out of here as quickly as humanly possible.
Speaker 1:I don't, but I just hate hospitals. So I do have to say it is not fun, no, but I think, look, we had a good guy on our, we had a good guest a while back. I want to read something that he posted. His name is Preston Rutherford, very prestigious name.
Speaker 2:Oh yeah, co-founder of Chubbies. Co-founder of Chubbies the swim trunks.
Speaker 1:That sold for, I believe, over $100 million right yeah, I believe so, so you could say maybe he knows something about growing businesses, right?
Speaker 2:I would say yes okay so shout out, preston, you're gonna paraphrase this right, because normally these things are like yeah, I'm gonna paraphrase it, but I'm.
Speaker 1:But I'm opening up the post because I do want to credit him, because we've been talking about something like this a lot and it's something that you should be talking about, depending on the goals of a company.
Speaker 2:We're wearing the same pants today, just a different color Shout out Standard Issue. Yeah, look at us.
Speaker 1:The Resort Collection Limited limited, limited run. We didn't make these ever again.
Speaker 2:Look at us the resort collection Limited, limited, limited run.
Speaker 1:They didn't make these ever again. So look what Preston does on LinkedIn is he has these pretty helpful conversations that you know these. What do you call it Like role-playing conversations between a CFO and a CMO? Yeah, it's generally between a CFO and a CMO yeah, Sometimes it's the CMO and the CEO.
Speaker 1:Correct, yeah, between a cfo and a cmo. Yeah, sometimes it's the cmo and the ceo, correct? Yeah, and the what he, what he talks about in the one that resonated recently because we've just had this conversation a few times yeah, is it's basically the cfo is saying hey, our row as our roi our efficiency metrics are down are down or you know whatever, and they're know he's getting after the CMO.
Speaker 1:and the CMO has to kind of go through this dialogue of saying, well, yeah, but if all you're focused on cause like efficiency, the line that I grabbed from it is efficiency is not always effectiveness right For your company, totally so. If you're incentivizing your marketing team to go after efficiency, they will, but that's going to include a lot of stuff that's not growing your business in the way that you might want to be growing.
Speaker 2:Right.
Speaker 1:Some businesses don't want to grow like that, and that's a totally different conversation. Right, like you have different goals for different kinds of businesses, but efficiency is not effectiveness. Right, like you have different goals for different kinds of businesses, but efficiency is not effectiveness, right? Right, it doesn't mean they don't overlap.
Speaker 1:And it doesn't mean you should look at efficiency, depending on what your business is and the shape of your business and the unit economics and so on and so forth. But the conversation basically is cool. Well, if the goal is to grow and the company wants to grow from X to Y to Z, then we cannot be focused on efficiency. We have to be focused on growth and you know unit economics and how you can actually. You know economics of scale, unit economics and how you can actually. You know economics of scale, like how do we get to this place together? But we have to come up with a new unit, right, or kpi, of what success is.
Speaker 1:Sure that incorporates some efficiency into it, but if all you care about is this efficiency number that got you to where you are now, it's not going to get you to where you want to go. Yeah, right. So, like you have to readjust your frame of thinking. Yep, If you go from let's just make up some arbitrary numbers, right. If you're a seven figure brand and now you're an eight figure brand, right, hey, that's great. Yeah, but if you want to be, if you want to go from 10 million to 50 million, a cpa of 80 dollars might not get you there it's probably not going to get you there and maybe it doubles, or maybe it increases by 50 percent or yeah.
Speaker 1:So you got to think about it like you're pushing up against not only like more competition, but total obtainable markets. Now, instead of having your uh, like, your penetration into a market being like organic word of mouth, possibly, or your organic social, it's now going to be more ads that are introducing people to your brand.
Speaker 2:It's going to be at a higher scale at a higher scale yeah, yeah, you still might have the organic, so let me give you a good example.
Speaker 1:So naturally, efficiency is just going to go down. It is what it is and, yeah, go ahead.
Speaker 2:I'm going to give you numbers. I'm going to make them less exact and a little bit more general, but this is a client of ours. Nobody's going to know this, so I'm not giving out who it is and what, but we have a client. We use a metric called the return on contribution margin dollar, which is essentially, for every $1 you spend, what is your profitability, based off of variable costs? So variable costs meaning like revenue minus cost of goods sold, minus shipping and and ad spend Correct. So not looking at like your OPEX, right, we oftentimes will look at this metric. So when we first started with them and we do like to include OPEX.
Speaker 2:Of course, yeah, OPEX is awesome. Of course. You know, obviously, Because you got to know. Hey, what do you need to make in order to stay in business?
Speaker 1:But OPEX tends to grow as you grow. A little slower, sure A little slower, sure Than the variables do.
Speaker 2:Yes, absolutely.
Speaker 1:Well, yeah, generally it's a little more.
Speaker 2:It's like a little more constant, if it doesn't, then you're probably not doing OpEx right, yeah? So when we first started they had like a seven. I mean it was awesome Like they were crushing it, and it's because they had their cost of goods sold. Their margins are unreal, like unreal margins. Okay, they were like a six or a seven when we first started, but they were making like $30,000 to $40,000 in overall profitability, not revenue. I'm talking at the end of the day. After all's said and done, we're profiting $30,000 to $40,000 a month. Okay, rewind or fast forward maybe 12 to 18 months later. Their return on contribution margin dollar is like a 2.5 or three. Okay, so significantly less, which means that their CPA went from like $30 to like 70 or something like that. Okay, and I might be getting that off. It doubles essentially Okay In in most people's mind. If we're looking at efficiency, that cfo is like whoa, bestie media. What are you doing? Pump the brakes.
Speaker 1:You're nuts like our cpa, has gone from you are doing it all wrong.
Speaker 2:10 to 70 or whatever, right, yeah but when you go and look at what their overall profitability is on the month, they went from 30 40k to like 200 300k yeah, they're profits, profits.
Speaker 1:So yeah, they, they went from it's a forty thousand dollars in profits to over two hundred thousand.
Speaker 2:What a massive mistake that would have been by the cfo if they would have said stop what you're doing right now.
Speaker 1:Because efficiency looks bad.
Speaker 2:Because look how inefficient we are. Yes, and that's what Preston's talking about is efficiency doesn't always mean it's the most effective thing to do for the business, yes, or the most profitable thing to do for the business.
Speaker 1:Now, by the way, we're not advocating. Sometimes it is necessary, depending on what your product and industry are, but for most it's not necessary to lose money on your first customer. But what we are saying is, depending on your growth goals, you need to consider not making money. Sure, so like, approximate profit for your first customer, you know might not be what you think it should be. Yeah, because you have to start looking at things as hey, what is? I know there's a lot of hot takes out there, but you do. You have to look at things as what's your LTV right? What's your returning customer, and then you can create a game plan off of that.
Speaker 2:Totally.
Speaker 1:And we're not saying that you have to look at a LTV of 365 days out of each cohort and yeah, I mean you can literally do it that simple. It's like hey, here's my cohort analysis. What is my average return? Yeah, over four months or three months, maybe it's 90 days, maybe it's 180 days. I don't know what your cash flow situation looks like. So, depending on you, your company, yeah, you'll, you can adjust it and that's a really good thing.
Speaker 2:I'm glad you said that, because one thing because you're gonna have some people who are gonna be like well, my cash flow. Of course cash flow. Sometimes you don't have the ability to lose the way that you could in the early stages, from the most effective way to market, so that that is one thing right. There's a cash flow issue. That can always happen, so we get that, but barring that, efficiency is not always effectiveness.
Speaker 1:It's one variable amongst many.
Speaker 2:The way you should look at efficiency, if I may, is that should help you understand how to better Tactical, how to better optimize your tactics, not meeting like okay yeah yeah.
Speaker 2:We put it on a bunch of new ad creative. Was that? Was that the ad creative that maybe did this? Or is it just the sheer fact that we are getting to larger numbers and so effectiveness is going to go down? So I think you look at efficiency to help you with the levers that you're pulling, but it doesn't necessarily mean that you say let's, let's ask what we're doing, let's decrease spend, let's drop it all down because, because it's- not efficient, like the way it was Exactly.
Speaker 2:Because I guess I mean we've seen it enough with our clients.
Speaker 1:Because, again, the thing about the efficiency is often what happens is you'll see this, this scaling effect right, like all of a sudden you start capturing low-hanging fruit, like you scale up, things look like they're going really good, but efficiency will start going down yeah and things are still going good.
Speaker 1:If you're looking at profits and if you're looking at certain metrics, so it's just like, hey, what are you going to prioritize? Like, if you want to prioritize, you know a 30 cpa if that's what you were getting, but now it's going up, yeah, but if you're getting the right kind of new customer into your mix, where your profits are growing, yep, then you know it is what it is.
Speaker 2:I'm going to make a but, if you don't want to scale totally different conversation, I'm going to make a bold statement Brands that that make their CPA their lead metric always fail. Oh yeah, over time, over time, always. It's not only have we seen it, we've seen it with dozens of businesses that we've worked with. This is actually the number one reason a client leaves us. If I can get this transparent, this is actually the number one reason a client leaves us. If I can get this transparent, the number one reason a client leaves us is because there's this disconnect and maybe there's a shame on us for maybe not being able to educate and articulate a little bit better, which I think we generally do pretty good at, but it is oftentimes one of the number one reasons is when that starts to go up. Yet things are still going good from a profitability perspective. There's this chokehold struggle to give that metric up or a little bit more grace, and what happens is oftentimes those businesses will leave, will part ways, and six months to 18 months later.
Speaker 1:They're always going down and they're going down fast. We use a tool called Particle and we can look it up months to 18 months later they're always going down and they're going down fast.
Speaker 2:We use it, we use a tool called particle and we can look it up to see how people are doing and it'll it'll show us revenue, it'll show sales and and they're headed down. You know, or we hear from the inside somebody saying, hey, we wish we, we wish we would have done xyz, it happens all the time.
Speaker 1:Or sometimes they come back yes, and say hey, they they prioritize efficiency as the lead metric. You just can't grow. When you do that, you're not going to grow. No, I mean, I think the hard truth in marketing is the company that wins is the company that's willing to pay the most for a new customer.
Speaker 2:And the company who has balls.
Speaker 1:And can pay the most. So, they're like again's opex things here, like we're not saying run yourself into the ground, just going getting a and being done.
Speaker 1:Five roi on a new customer but we are saying that you got to zoom out like what's your goals long term, short term? You know what is the priority for your company. If it is profit, over time we'll look at compounding effects of of new customers on your business. Um, but yeah, if you're not willing to like someone else is yeah, period. Like someone will try to pay more than you A thousand percent and that company will win. So you got to figure out how to a charge more. Bundle right, get more out of your customer to justify certain kinds of costs to acquire them Yep or what Expand it Like.
Speaker 1:What's the window that you're looking at? Is it month zero to month three in a cohort analysis? Is it month zero to six?
Speaker 2:Or start doing things like if you can't increase AOV, like you were talking about, or increase conversion rates, then you have to find a way to increase your traffic outside of just paid, which is oftentimes organic right to make that dollar go further. So, rather than you having to reach 20 million people in a month to generate x amount of sales, yeah, um, paid, maybe you can reach 15 million, and you know paid and 5 million organically, you know anything to eat into that as well.
Speaker 1:Yes, which, again, like you should be doing all those things, but like, ultimately, like you're not. If you're trying to grow at certain types of velocities, like you're just, you just can't. You cannot expect to have the same CPA. So if you're working with an agency or you have a media buyer on your team, whoever you're working with, like I'll bet that most people who listen to this are guilty of prioritizing ROI to the point where it is effectively handicapping them from growing their business Again, growing their business in a profitable way. A thousand percent said, it takes guts because there is this. There is this point where every company gets where it's like they see growth but it's like, oh, it's a little harder now. It's like, yeah, guys, guess what? Like if it was so easy to just spend more money and make more money at the same efficiency rates as you were when you were a small business.
Speaker 1:Everyone would do it, everyone. Everyone would have a hundred million million brand right now.
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Speaker 1:Everyone would be Ridge wallets right, like everyone would. If it was that easy, then just spend money like cool. But it's hard for two reasons. A, yes, like you do have to figure out what profitability marks at what point in the customer purchase cycle or journey work for you. Uh, the other hard part is what you mentioned earlier is it's scary, totally, and and most people don't. What we have seen is most people don't fail because they all of a sudden?
Speaker 1:are so unprofitable that they can't function Right. We see most people fail because it's just so uncomfortable.
Speaker 2:They pull back and what ends up happening is their profits start to become lower than their OPEX, then they have to start firing, and then what happens is they don't have the manpower, pos and marketing dollars to then scale back up. Yeah Right, so there, and and this all hits even this hall hits 10 times harder. I actually don't even this is not what we were actually going to fully talk about today. I actually don't even this is not what we were actually going to fully talk about today. I actually don't even think we go into what we were going to talk about today. Let's save it for another episode, because I think that, like this is actually super important, and I can go on for like 15 more minutes with this.
Speaker 1:Yeah, we can talk about it another day.
Speaker 2:So when times get harder, aka right now, I would deem now as a hard time for two reasons. One, we've had economic uncertainty for the last three years. Well, for a while, yeah, right, yeah, now, even more so for the last few months. Okay, and then you add tariffs to that, which makes it even harder for businesses. So let me give you four dates that have happened in the last six years may 2018 what happened in may 2018 was the pay-to-play model that meta put out.
Speaker 1:that's when it, like, really kicked in meaning yeah, when you say put out, it's just that's when. That's just like may 2018, when the algorithm was no longer chronological, like you weren't getting shown to your followers the same way we would post something and we would make yeah, we would make 10 grand that day from a post, not even ads and then all of a sudden, and then overnight in may.
Speaker 2:I can't remember the date in may, but I know may 28th, may 2018, because I was looking at analytics, google analytics. Okay, that was a time that freaked everybody out. And what did a lot of brands start doing? Pulled back, pulled back on spend because they were no longer getting the efficiency from the organic that they once were. So, and what happened is, you see, a lot of people who went under between 2018 and 2019 yes, okay, well, and, and that was the so.
Speaker 1:So what I want to emphasize here is what happens when your cpas go up as you scale. A big part of that oftentimes not every time, but oftentimes depending on how how good your organic was before but but it's not because you're paid is actually going up at the rate that you think it is. Yeah, it's just that you're paid is becoming the primary and last touch point totally for a customer first and last touch point Right.
Speaker 1:In a way that it wasn't right before. Yeah, yep, exactly. So again, take a step back and realize, like we have conversations with clients all the time of like, hey, if my CPA has gone up like things aren't working anymore, and it's like, well, your CPA was never that actually.
Speaker 2:Yeah, for sure, your true CPA. Yeah, like your.
Speaker 1:CPA probably never was 35. Like, and then we're pretty. We try to be honest about it, yeah, but sometimes you don't see certain variables, for example, Sometimes you don't see it for months. Yeah, for example, we don't know, like you're organic, okay, if you have really good organic presence, like you're going to have a really low CPA period, yeah, like you just will. Until you reach a point. Where your paid starts over your paid is the one introducing everyone to your brand.
Speaker 2:And then all of a sudden it looks like a box to 28 bucks. It is way more than I thought it was, it's like yeah, guys, that's just life.
Speaker 1:No, no, again, you can, you don't have to girl like that. Yep, so if you're just using paid as like this kind of Balanced lever, yeah, on the scale of, hey, like we're just using this to, yes, get new customers but, like, ultimately operate at a total efficiency rate of this, because this is what we're comfortable with and that's this conversation isn't for you. Yeah, that's fine, you can do that. Yeah, now your business will struggle in the long run Totally, but you can hum around and if you're super profitable and it works, then just do what you're doing.
Speaker 2:Yeah, yeah, for sure.
Speaker 1:Right, but this for for the brands that want to grow and need to grow, then this is the conversation that you have to be having.
Speaker 2:Yeah, and you gotta be brave because it is. It's scary just in a normal month, right, but we're in a crazy time, right. My other dates I was going to say was you got, you got May, march, of all about. Like, if you can just zoom out of the situation you're in, you will probably make way better decisions.
Speaker 1:But in COVID everyone shut ads off without thinking for two seconds of oh, everyone is sitting at home on social media.
Speaker 2:Yeah, like this is the best time to actually run ads Like ads are crushing.
Speaker 1:Yeah, why are we going to turn them off? Like just because of the quote? Uncertainty of buying behavior, buying behavior over time. Well, it's like it is what it is until it isn't.
Speaker 2:What's what's number three, may 2021. What happens May 2021? What happens may?
Speaker 1:2021 remember may 2021 yep ios big ios update so that's ios 14.5 with privacy.
Speaker 2:Yeah, and what does everybody do? Because cpas automatically shoot up, right, yeah, well, yeah, so ever you get another group of people, so you people lose. In 2018, lots of people go out of business 2020, tons of people go out of business 2020, tons of people go out of business right or their businesses have never recovered since, yeah, exactly 2021,.
Speaker 2:another group of people Massive, massive. Now, that one was kind of hard because that was also during the time when tons of people had turned off their. That one was way sucky because tons of people would turn off their budgets for covid. They all got their pos delayed and then they all came like spring of 2021 and so they like had all of this product that they couldn't sell inventory. You know, yeah, so that one hurt, and then we're now sitting at I forget about the supply chain crunch there that's finally recovered barely.
Speaker 2:You know that one's. That's a the supply chain crunch there. That's finally recovered barely. You know that one's. That's a tough supply chain's different right that one's, that one's rough but now that's a type of black swan that is really rough. Yeah, yeah, but but now we're in this other state of place, state of mind right now, where it's like recession. You know, I was. I wasn't around in our risk in, I mean, I wasn't possible recession I wasn't a business owning marketer in 2008, you know, during that recession.
Speaker 1:Like the housing. Well, that's a total financial crisis.
Speaker 2:Yeah, like I don't. I like my dad survived, luckily, you know, in his stable.
Speaker 1:So I don't really know much.
Speaker 2:I was on my. I was on my morning mission during the time so I didn't really like much. I was on my Mormon mission during the time so I didn't really like I was at the?
Speaker 1:U I don't even remember. Yeah, I just I didn't like, I don't remember it actually happening.
Speaker 2:Yeah, I was so kind of like I'm sure my dad was stressed, yeah, sheltered from it, because of where I was gone.
Speaker 1:Luckily my dad didn't have most of us in the house at that point.
Speaker 2:So that probably we're in this looming recession and what's going to happen is a lot of you guys are going to pull back. Spend now because things aren't as efficient, but where you're going to really feel it may not be right now, but you're going to feel it three to six months from now. That's when you're going to really get beat up.
Speaker 1:Yeah Right, and potentially won't ever be able to recover, and so the point everything in life is a game of momentum is what I've come to well, it's, and it's so contagious too right, like if you're, if you have momentum and you like you got to think real hard about killing your momentum.
Speaker 1:Yeah, like you better have a really good reason oh, a thousand percent, bro, for for shutting down momentum. Like a very like this is a red fire, red alarm, yeah, red alert scenario that. But this is again. We're not saying it's easy to make these decisions, like if it was so easy, everyone would make it. But what we are saying is, oftentimes those decisions are made because people are too focused on an efficiency metric, when that efficiency metric is not, like Preston said, an effectiveness metric. Yeah, so take this with some salt. You know, like, depending, this is contextual. This might not apply to your business, sure, but even if this situation does not apply to your business, you should always, in your business, come up with what are you balancing your roi with?
Speaker 1:yeah, yeah, what is the, or your cpa, you know, because people use roi or cpa, like if you have a lot of products and different SKUs.
Speaker 1:And then, like, rois, get might will be better. Cpa isn't great, for, you know, if you have SKUs that are $10 and SKUs that are like a hundred dollars, that changes things dramatically. But but, um, yeah, overall, like, if you're marketing uh, effectiveness, you to just take a step back and say, cool, this is our ROI or our CPA or whatever, um, that's great, but what are we balancing that with? Yeah, it's, it's got to have some kind of profit. That you're balancing it with Right, and like if this goes down, it's okay. If this is going up, right, right, it's not okay.
Speaker 2:If every like I mean if everything's just crashing, if roi or roi decreases or cpa shoots up, but profits go down too immediately which will happen if you are a I mean ridge wallets is pretty open about this right, like they're in this category of first time customer.
Speaker 1:Like you don't have a big returning customer cohort that's coming back, so like they can't yeah, they still play this game by the way, because they have, you know, they, just they play the scale game well, yeah and now they're profitable on first purchase.
Speaker 2:Well, and where ridge wallets wins, if I like, I mean my guess they win in a lot in a few ways sure they win in.
Speaker 2:But ridge wallets operates with one of our like favorite like. This has been, like, I would say, our mantra for the last like six months. We say it all the times like the more you sell, the more you sell, yeah, right. And so ridge wallets has this organic untrackable I shouldn't say it's totally untrackable, because you can do it through post-purchase surveys where, like, their product is so unique that when somebody sees it, it's a very like where did you get that? Or it's very much like, oh, you have wallet issues. You got to get a Ridge wallet. It'll be the last wallet you ever buy. Yeah, best quality product in the entire world. And they last forever. They do last forever, yeah, you know.
Speaker 1:And so they win because, yes, they, they spend millions you sold me on it, I'm gonna go get one I'm actually surprised I haven't bought one yet um I have only not bought one yet, because the wallet I have has a sentiment. You got a sentimental wallet right yeah, like it has like an your kids give you a wallet, yeah well, I don't know what you do like. Yeah, they burned in like a stamp or something, a picture and letter from my kids.
Speaker 2:Yeah, I don't know why I haven't.
Speaker 1:That's the only reason why I haven't but I'm actually thinking of taking that out like the little thing and like putting it in my somewhere else in my office, like almost like a little picture thing.
Speaker 2:Yeah yeah, I did. This is just a side note. I actually have the hard, like the the hardest.
Speaker 1:There's a couple products but I never take my mom.
Speaker 2:I have a really hard time buying. I don't know why my mind has a really hard time spending money on something where I put my money I think every guy does and I think bridge talks about it yeah, it's like it's such a mind once you buy it, like you never guys don't go buy wallets all the time.
Speaker 1:It's like you buy a wallet and you just like my wallet was given to me. Yes, you know and that's how I believe wallets should be like.
Speaker 2:I believe everyone should gift someone a wallet, yeah, and not have to buy their own.
Speaker 1:But but again, ridge is one of those companies where they accept lower profits as they scale, but they can't be unprofitable on first purchase. Yeah right, or else they'd lose my assumption yeah, and he's come out and said that. I think so I don't think that's you. So again, this might not apply exactly to you, but again like they're not expecting to get the same return on spend as they were when they were a 10 million.
Speaker 2:Yeah, they're not expecting probably a four ROI.
Speaker 1:And I love how open he is about how hard it is to get to where they are too. It's not like oh, we just simply spent more money and everything worked, and it was just a rainbow road of lollipops and gumballs all the way to a hundred million dollar company. Right, just so easy.
Speaker 2:So so easy everyone yeah, we're kind of making it sound like this is very simple, like in no ways. In no ways is simple well, it's hard for.
Speaker 1:If here's the reason why it's hard, one fear oh yeah, that's scary, like you go from you go from like thinking your efficiencies mean something to oh, but I'm spending. I'm now spending two, three, four times more than I thought I was spending. Yeah, so that's hard to get over.
Speaker 2:And I'm only making. I'm only making 30% more, X more amount. I'm doubling my spend, but I'm only making 25% more X more amount and I'm only making 25% more or something, and that that that mentally is, even though I'm still profitable, in fact more profitable. It's hard, that's like a wait.
Speaker 1:I remember when I had that first my like one of my very first marketing lessons when I was you know we learned this lesson together because in one of my first gigs, uh-huh efficiencies were at whatever and they're like oh, let's just spend more, double spend. Yeah, and so we doubled, tripled spend and I'm like Efficiencies stayed the same.
Speaker 2:Yeah, it's like nothing's happening, we weren't making more revenue.
Speaker 1:There's no new there's no new customers, yeah.
Speaker 2:Yeah, it's, it's a. It's interesting, right, you?
Speaker 1:you have this kind of thought where it's like and like returners went up a little, but like not, it was like, okay, everything's not working because we're focusing on this ROI in the in the platform in 2018, so it's a little different. But yeah, because we were so focused on roi instead of like what actually moves new customers, then we learned that lesson of like oh, like it, the only thing that matters for us in this type of funnel is new customers. Right, because of the industry that we were in. Yeah, we learned that lesson together and it was. It was a good lesson to learn because very quickly, it was like oh, nothing's happening right, yeah.
Speaker 1:Yeah, I stayed the same too. It said everything was going great, especially in platform.
Speaker 2:Yeah, I met. It was like everything's the same.
Speaker 1:It's like what.
Speaker 2:You made a hundred thousand dollar, you it would be like you made 500 grand in Shopify. But then meta would be like you made $500,000 in Shopify. But then Meta would be like you made $400,000 of that here. Klaviyo would be like you made $300,000 of that here.
Speaker 1:So what does that add up?
Speaker 2:I made $500,000, not $700,000. Who's lying? Attribution's always been broken.
Speaker 1:Yes, it has, which is why, again, efficiency Overinflated before 2021, underinflated post-2021. Which is before 2021, underinflated yes, 2021 which is again focused too much on efficiency. At that point, totally. If you're focused too much on efficiency and not on, like, the actual effectiveness of your marketing I like it.
Speaker 2:There's efficiency versus effectiveness podcast title yes, shout out to preston. Thank you for thanks for giving us a today. That was not supposed to be the topic of conversation.
Speaker 1:Yeah, but we have been talking about this a lot and I love that. Like I just saw his LinkedIn, post and cool context to it. Yeah, and I was like that's just, that's the best way to probably phrase. It is what he said. Yeah, efficiency is not always effectiveness. And this guys, this this and effectiveness depends on your business goals.
Speaker 2:If you're a subscription business, by the way, and you're listening to this, like this is a fire episode for you because, like, that's where you make all your money is through the subscriptions, Right. And so like if, if there's anybody who should be listening to us right now, this works so good, especially when you have good returning customer cohorts.
Speaker 1:Yeah, I mean whether you can.
Speaker 1:But before we wrap it up, I just want to say like this is harder than it seems, for three reasons, and I just want to like lay this out there so everyone knows, like, what the, what the actual hurdles are to making this happen. And when you want to scale and you want to grow, yep, one fear it's hard. Yes to opex. You're going to have to figure out something on opex, sure, it's hard to find a way to lower margins, to squeeze, you know whatever. Yep, okay. And then three it's how do you improve your customer retention in the short and long term? Yeah, and by customer retention. There's a subcategory there of share of wallet. Like, how do you actually get them to spend more upfront and quicker? Yes, so you're not waiting for it in month two, three, four, five, six, right, yeah, I like it, like that's why it's hard.
Speaker 1:Yeah, it's it Like that's why it's hard. Yeah, it's because not everyone like a lot of some people can operate just off of fixing the fear factor. Yeah, they could. Everything else could remain the same, and if they just fixed how scared they were about it and their mentality, they could just probably rip for another 20, could, 20, 30 million come a hundred million dollar company, you know it's scary because, like what if something changed and we're spending so much money?
Speaker 1:Right, yeah, but a lot of people, especially if you're not in subscription or if you don't have a good returning model or whatever. You're going to reach this point of first-time profitability where You're gonna have to figure out some optics, right.
Speaker 2:Yeah, for sure I like it. I think we can end there personally sweet. So thanks everybody. Well, not the direction we were going, the least navidad next week. This is what, just to give you guys a little precursor as to what is going to probably happen next time. So one of the things that mark and I are talking a lot about is I get this all the time in my social content. I do talk a ton about how important it is for brands to supplement their ad buying reach with organic reach and how most brands suck at it, and that's just a fact. There are very few brands who are good at creating good organic content. And just look at the people you follow. You're not following any brands for the most part, but we are compiling a list, but we are starting to identify people who are absolutely crushing it and who are seeing results In very strange and interesting ways, oh yeah yeah, we're going, every you know.
Speaker 1:Like this isn't necessarily e-commerce. Yeah, we're not just talking about like.
Speaker 2:I feel like brands were always oh, ryanair and chipotle are so good at this kind of stuff. Like that's not what we're talking about. We're talking about brands you've probably never heard of before, who are just crushing it behind the scenes. So we're gonna start bringing them up, we're gonna show them on the screen, we're gonna walk through why they're doing the way they're what they're doing. So, um, we'll have guests on as well to give their take on it. So, instead of kind of doing like a normal guest, where it's like, hey, how did you build your business? And blah, blah, blah, like let's have them rip through it too. So that's what's to come, muy bueno, so all right everybody.
Speaker 2:Thank you so much. We'll see you guys next Tuesday.
Speaker 1:Vamos.
Speaker 2:Thank you so much for listening to the unstoppable marketer podcast. Listening to the unstoppable marketer podcast. Please go rate and subscribe the podcast, whether it's good or bad. We want to hear from you because we always want to make this podcast better. If you want to get in touch with me or give me any direct feedback, please go follow me and get in touch with me. I am at the Trevor Crump on both Instagram and TikTok. Thank you, and we will see you next week.