E-commerce Funnel Metrics (w/ Connor Gross, co-founder, Respoke Collection)
Matt: Hello, and welcome to another episode of the Growth Podcast. I am your host, Matt beauti. And today I am really excited to have a friend, Connor Gross, here on the podcast. Connor is a co- founder at Respoke Collection. He is a serial entrepreneur, started a bunch of projects, businesses sold one for a whole bunch of money and today... So, he focuses mainly in e- commerce stuff, as well as some other things. But today we're going to focus on e- commerce and we're going to talk about strategies from top to bottom, how you can launch and run and improve and grow any sort of e- commerce thing that you got going on. Whether it's your business, or maybe you're thinking about starting something on the side. So, Connor, thank you so much for joining the podcast.
Connor: Matt, it's a pleasure to be on, and I'm excited to be on specifically during the time of the year too. You caught us in, like the playoffs for e- commerce. If the playoffs in The Super Bowl and stuff like that are coming up, we got Black Friday and Cyber Monday just around the corner. So I am full heads down at this point, kind of running through everything that we're about to chat about.
Matt: Love that, trying to figure out how you capitalize on it the most?
Connor: Yeah, absolutely. I had a call earlier on today with a couple different entrepreneurs and they're all in the e- commerce space, pretty similar industry. I was like," Honestly, guys, you don't share the number, but give me a percentage. What percentage of your revenue for the year are you making in the next month?" And they're like," Easily over 50%." I was like," Wow, that's scary." So I think right now, and I'm starting to see it on our own sales numbers too, they're really starting to ramp up. I think people are spending a lot more right now. And so if you're running an e- commerce store at the moment, you've got a really fun next 30 to 60 days.
Matt: That is awesome. I love that. Why don't we just give folks... I mean, I gave you a quick intro on you. Why don't you fill in gaps on things that people might want to know about you before we jump in?
Connor: Yeah, a hundred percent. So really it can be summarized down in a minute or so. I graduated from school about 18 months ago, so back in 2020. My co- founder and I, we started an e- commerce business in the Amazon space back when we were in college, inaudible cell phone accessories, a company called Cardly, which is stick on cardholders to the back of your phone. We scaled that up to doing a little over a million a year and sold it shortly before graduating college. Since then, now we've bought two other e- commerce businesses. And then myself and my other partner, Nick, we have now started two other e- commerce businesses as well. So total of four brands really at the moment, and they're all off Amazon. I've played the Amazon game for a long time and quickly realized it might be a race to the bottom. And I think a lot of people might disagree with me on that, but just from experience, it's a lot of trials and tribulation. And being able to do your own marketing own your own customer experience, all of that kind of stuff is a lot more fun for me now. So I'm running Respoke Collection, which is an automotive artwork brand, that lets you go and decorate your garage, office, living room, whatever, with really high- end quality automotive decor. We just launched a boat version of Respoke as well, just the other week that we're starting to get off the ground too. And I run a couple digital product businesses in the photography space and tiny house space that we do some eCommerce stuff for as well.
Matt: Love it. So you've gone through these cycles a few times now, building and launching and running e- commerce companies. So, we're going to talk about top of funnel stuff, middle of the funnel stuff, bottom of the funnel stuff. So why don't we just start at the top? How do you think about top of funnel? How do you think about driving awareness? And then we can talk about some strategies and tactics that work for you.
Connor: I think it's probably easier just to set the scene for anyone listening to this right now. Well, again, I'm oversimplifying things, but there are only really three important metrics that you ever have to think about when e- commerce, if any of these metrics are zero, you are in big trouble. And the goal is try to make these numbers as high as possible. So, the metrics really are broken down into traffic. Times that by your conversion rate, times that by your average order value, and that gives you everything you need to know about e- commerce. So when you hear people talking in e- commerce about growing their sales or, they're really scaling up their business, their overall goal is to increase one of those three numbers. And usually a lot of the times it tends to be the traffic, and then you optimize things with the conversion rate and the average order value. But starting at the top of the funnel, that's all about traffic. How do you get people to your store? Really, for anyone listening to this right now, if you ever watch anything e- commerce- related, you're going to say," It's just Facebook ads." But plain and simple, that's pretty much the way that 95% plus of e- commerce store owners and operators tend to go and get people to their stores and with how everything's been going with iOS 14 and all the updates that Apple has rolled out over the past couple of weeks. There's definitely been a big shift in that landscape, but I'm first hand to be able to tell you it still definitely works. I've chatted with enough e- commerce operators who know that you can still be profitable off that first sale. It's just a lot tougher these days. And so the way I typically go and think about top of the funnel, getting people to the store is from most of the brands I start, I try to go into starting Facebook ads right away and build everything else in the backend. And the other ways are really aside from the ads like influencers and a lot more organic stuff, whether that's SEO focused content or finding ways to go and give out ebook, things like that as well, to try scale up the brands, but on the ads side specifically, the main three things that I focus on are just regular ads. So that's usually overall local audiences based on who I've been selling to in the past. And I'll try to go and scale those out with a couple different types of ad creative. The ones that we kind of always joke about in e- commerce that are typically most effective or just using UGC ads. So those are user- generated content. And the way I like to think about that is I have literally chatted before we spend$20, 000 on making a super, highly edited, really quick cut kind of advertisement film that does not convert. And they each out with another person who's like," Oh no, man. Like I just took a video of my dog wearing this leash that I'm trying to sell on my iPhone. And I just made$ 100,000 last week." And so thing I would say the most is when you're making these creative, that you're running ads on, is you don't want it to look overly edited to the point where people are going to scroll in their timeline and see that's an ad. Let me skip that. And so what I've seen personally, and if we want to kind of dive into the actual details of the creative is the things that work best, really three things. One, gets something that's going to capture their attention right away. If you want specific examples of this, go to the Facebook ad library and you can search up any brand and see any ad they're running. The one that I always kind of reference is like adsense, I think it's called doctor Sasquatch or something like that. It's like a men's like company. crosstalk They have some ridiculous catch phrases that like, as you're scrolling down, you instantly stop. Because you're like," That's too ridiculous of a thing to say, like who was this company?" And then they get into the whole pitch. It's about 10, 15 seconds of like, oh cool. Now that we got your attention, we're selling soap. Here's why our soap is so great, whatever. And then at the end, the thing I always recommend is always have some kind of offer, even if it's free shipping or shop now and save 10% or buy it before the end of the month and join our VIP list, whatever it is. Have a reason for them to go and click your ad, so that way they can actually go and get on that product page. So that's the first one. And then the other two ways from an ad standpoint specifically, really your see a higher return is all in the reach targeting front, you're hit rehitting people who have either clicked your ad before or visited your website in some capacity using a Facebook pixel there. And the last way, you don't have to go in too much of a tangent here with the ad stuff, but the last way that I've actually heard a lot of people reducing it. I personally have not tried it enough yet, but if you ever see things like the one I get a lot in my timeline is advertisements from Kevin Hart, promoting a company called fab ox, which is like, I think a Lululemon competitor, a lot more brands these days are starting to partner with celebrities and influencers to actually white label their ads and sell their products through their account. So like a typical example, like I said, this Kevin Hart one, I know the rock does it as well, where you'll literally see a, an ad in a timeline that says from the rock and then you'll see like paid partnerships with like cuts or like, you know, some clothing apparel company. And those actually convert extremely well cause kind of builds up trust right away with that audience.
Matt: So when people are thinking about getting started or doubling down on things. Were they aside from spending tons of money on creative that probably could be done with like a hundredth of the cost, were there other things that you have seen or you have done where you just like dumped the money into it where you just wish that like next time you did it, you were like that that was a waste of money. I'm absolutely not doing that sort of thing again?
Connor: Yeah. I would say be very careful on how you scale ad spend, we've gone. We've chat out some people before who are like," Nope, we actually weren't able to see a real profit level until we started spending$ 5, 000 a day because that's when Facebook... Effective at targeting." And so we were like," Oh cool. Let's ramp up our like thousand dollars ad budget of data, like 5, 000 days, see what happens." And we just burned like thousands of dollars like in a week. And we're just like," Okay, let's go and scale this back down." So what I would say is when you are targeting the typical rule thumb is about 20% a week. And when I say typical, go rule of thumb, like there's no golden answer to any of this kind of stuff. Every brand's going to work differently, but I would be very skeptical on just raising ad spend to just raise ad spend. I think you have to be a little bit more strategic about it. The other thing I would also add is that I've chatted with a couple brands now at this point who only have one winning ad. When I say one winning ad, they have run this ad for four years and all the way back in 2017. So all the way today in 2021, it's still their best performer. But what they all say is they tested a hundred different ads before then, and they've tested a hundred different ads since then. And something about just this one ad really clicks with people's mind and make them understand the product and resonate with it and stop on their feet to go and check it out. So the only other thing I would say here really is, keep on testing ads. Even if you think you have like a slight winner, keep on testing more until eventually you'll find that one that just outperforms all of the other ones by 10 X.
Matt: But then don't get complacent with the fact that that one performs well still spend time.
Connor: Always keep testing it. And I think that's one of the things that we do if we kind of want to move down into the middle of the funnel now, is one of the things that we start testing now is we actually have an email that goes out after any customer has gone purchase in the past where we say," Hey, can we give you a refund in the subject line?" It's got to ridiculously how eye open rate, like 60, 70% and the sub... The email's basically a plain text email being like," Hey, we would love it. If we can give you a 15% refund on your order," which is like super effective, especially comparative to a coupon code, say, all you have to do is send us a photo back of you holding up our product or using our product, whatever. And we have a decent amount of people who do it. And then we take all of that material and just funnel it right back into our ad creative, which has been a really effective way to kind of lower that cost proposition. Because if you're trying to go and buy a product and all you see are so many different ads of hundreds of people constantly by using that product that you want to buy psychologically, you're like," Okay, if they're all doing it, I should probably do it too." This isn't just like gimmicky marketing. People are actually buying this kind of stuff.
Matt: I absolutely love this tactic so much. And it spans like I could think about how it spans to different industry industries and use cases. You are reaching out to your current customers, offering them some of their money back if they basical do the marketing for you?
Matt: And why do you think that's so much more effective than... I don't know any other way that you can get creative and add content?
Connor: Well, the way I like to think about it is like, okay, I can go pay somebody on upward$ 400 and they can make me a custom graphic or whatever like that. Or if my average order value is a hundred dollars and I give back$ 15, like it is 20th of the cost, essentially of being able to go and actually scale up that creative. So you're paying next to nothing with what you would normally pay and then a thing for a lot of people, the idea of a refund versus a discount on a future purchase is way more powerful. Because they're like," Well, I haven't spent that money, but now I can get that money back." I think that's why our open rates so high and why so many people tend to go and go for that offer.
Matt: I love that one. Anything else around top of funnel acquisition stuff that you want to cover before you onto middle?
Connor: The only thing I would also say is there are a lot of friends that I have who are making a ton of money on ads and their bread and butter and they're killing it. But just as we've seen in this last quarter, that Facebook ads suddenly start getting a lot of really messed up. It's not going to be around forever and the algorithms can change the way that you can or people can change. And so one of the things that a lot of my friends tend to go and do now... Like I've got a buddy who runs lunch pack. Festival backpacks and all that kind of stuff. And his entire top of the funnel strategy is entirely centered around building community at the top where he'll go and any festival he'll go and sponsor and he'll get ambassadors who are all wearing his merchandise and products on his festivals. And this is his main sales channel because though we can't maybe attribute it so much that like Zu was the one that drove this$10, 000 worth of sales. It's very obvious to him that he's got this huge ambassador program that they all promote it through their channels. So all I would say is while Facebook ads might be one of the easiest and quickest ways we get up running, make sure that you're investing in other channels, whether that's organic ambassadors influences, whatever else to make sure that you're not reliant on just one main source of revenue.
Matt: And I think this kind of ties back to your earlier point that like Amazon is a race to the bottom, but if you could build your own brand than a community around that, you can have even greater levels of success. You could command a higher price point and all that.
Matt: Middle of funnel. How do you think about the middle of funnel?
Connor: So middle of a funnel is almost exactly what you just said there, where if one is a race to the bottom, how can you own your own audience and middle of the funnel? The way I'd like to think about it is a lot about conversion stuff. So it's going to be your onsite tactics is going to be, how can you create as little friction as possible on your landing pages to get somebody to go and purchase? How can you go and add more testimonial support on your copy and on your landing pages to get people to convert. But the biggest thing overall is really email and text. So two providers that we've set up and sort of using for these guys for email, we use all clavia for text. We use all attentive. And basically what we'll do is we'll just set up a bunch of flows and campaigns. So that way, whether you're abandoning cart or just signing up through a popup on our site, we now have you in a funnel. And I think for a lot of people who aren't e- commerce, they'll probably hear the word popup and think" oh, those are the annoying things that I dismissed when I'm on the site for e- commerce you need it." It's not even a question of, should you have it? It's a more of a question of where should you have it on your site? Because the fact of the matter is unless you're selling on black Fridays, never Monday, most of the traffic to your store is not going to convert like the average store conversion rate on an e- commerce store. It's about 2%, which means a hundred people coming, knock on your door, take a look inside and 98 of them leave. And if you're not capturing their email, you're not capturing their phone number. It's AB like it's really impossible to make money. I would say, or at least very difficult. And so the way I typically think about conversion is get them into either a funnel where you've got seven to eight emails laid out either with an offer your story, a couple different products they might have not seen on your site and kind of try to drive conversion that way or do the same thing through to text messages and what off messages where you can kind of go and start promoting yourself a little bit more.
Matt: And how do you think about... you're just talking about popups being like a requirement, essentially. How do you think about the... I give you X for your email, like discount code or, percentage code dollar off whatever else it might be free X in your part how do you think about the different versions of what you can offer to a visitor.
Connor: So you definitely have to test it. I think a lot of brands these days default doing," Hey, here's 10 or 15% off can I get your email hours as a result?" But now you're starting to see a lot more brands as well, turn around and say," No, we don't want to be a dis count brand. We want to be a premium product. We don't want to go. And like just shave off bucks to get an email." so if you want to start looking to some alternatives on how you can go and do that, I think a really popular one that we've started using as well is a get X when you buy Y if you give us your email. Right? And so let's say that you're selling... Trying to think of a good example here. I mean, the example I gave you on the call yesterday was water bottles, right? Let's say," Hey, whenever you buy a water bottle, you'll get a free lid included." And so, that could be like an easy way to go and get people's emails, especially if that accessory that you're adding onto their purchase is low cost to you, but high perceived value for them. That's kind of like the real sweet spot that you want to find for them at. But I've also seen a lot of companies start to go and do other things. So, one company that I've seen that I kind of look up to a lot, especially because they're in the home decor space is something called house of spoils. So they do a lot of really cool modern artwork for your walls. And the way that they do theirs is it's a membership. They say like," Hey, join our membership. Here's what happens when you join our membership one, you get free shipping two, you get membership reduced pricing." So that's an interesting way of phrasing the discount. It's not," Hey, you don't get a discount, you get membership pricing. And then the third thing that they do is early access to exclusive drops because since they are home decor product, they typically come out with a lot more photography and stuff like that over the months and weeks. So you get early access to that, which is just an easier way for them saying cool. Now we have a pre- sale for the rest of our products coming out. So I really like that position. A lot of, of calling income membership.
Matt: I think the membership thing is huge. Because you're driving like this sense of ownership. Like I am a member. I recently became a member of the company italic that do high end manufactured goods. And so I became a member which comes with its own... Like you were saying early access to stuff. I get credits each quarter that I could spend on it. But now it's because I'm a member. I just think about it like," Oh, we need a new comforter for the bed. Let me go check Italic." It becomes a place I go to versus if I just got 15% off of that jacket that I bought in the first place.
Connor: And it's a great example. Because they're basically building like the Costco V that I think, but like maybe a little bit more high end version, I think. But do you pay for the membership there?
Matt: The membership, the way I know they've tried a lot of different versions of the membership over the years, the current membership is it's$ 60 a year, but each quarter you get$ 30 in credits. So I give them 60 upfront and then I get$ 120 to spend over the course of the year.
Connor: That's actually really interesting. Because then from their standpoint, that's the equivalent of saying,: Hey, here's our 10% off flash sale once a quarter or whatever it is." I'm sure they did a math where it's like, we're losing the same amount of money, but from a membership standpoint, it's psychologically a lot easier to understand. I know. I think that there's another company that does a very similar thing that I'm totally blanking on the name actually.
Matt: I think it's also such a good move because it creates this forcing function where now I'm basically going to buy something from the minimum once per quarter. And then my cart value is always going to be more than$ 30. So either they're getting revenue from me essentially. No matter what.
Connor: Actually, now that I'm thinking about it, the company, I was just thinking of isn't even an e- commerce business, it's the credit card companies. Do you have a chase Sapphire or anything like that? Yes I do. Yeah. It's like, okay.$ 550 a year, but we'll give$ 300 some free credits. And you're like, okay, I guess it makes it not as bad. And obviously I'm going to travel for$ 300 or whatever like that. But yeah, I completely agree if you can make it a membership thing, even if it's not, even if it's not like a paid membership, like house spoils is doing, if you say like, as a membership, you get$ 60 in credits every year. That's super easy and you feel guilty for not using it as well.
Matt: Right. Because I've given an upfront commitment that I'm a member. Whether that's a dollar commitment or not. Any other stuff on middle of funnel that you want to talk through here
Connor: You've got to make sure that you're capturing this kind of stuff, because even if you're thinking about the end of your e- commerce business and what the goal is, if your goal is to sell, if your goal is hold it, whatever, whatever it is, the more phone numbers, the more emails that you can have, it just becomes a bigger asset and over the years, so it just becomes more and more valuable.
Matt: Awesome. Let's hop to bottom of a funnel. How do you think about bottom of a funnel? Driving cart size, repeat, purchase, all that.
Connor: So for us the biggest one is like, we're we typically tend to be a one off buy customers. Aren't coming back and purchasing a ton of stuff. At least for our product. Typically in e- commerce you can either play the LTV game, the lifetime value game, or you're selling like a food and beverage product. And you want to go and focus on that second and third order as much as possible, or you're playing the AOV game or the average order value game, which is basically, they'll probably going to buy from us once. Let's make sure we get as much as we can out of it on that first order. And so for us, we're the AOV game and what we typically go and do is we'll have as much cross selling as possible on before the actual checkout. So like if they're buying a portrait, we'll say like, fantastic. Do you want a digital download of this as well? Oh no. Do you want your order to be rushed for an extra 9 99? Oh no. Do you want like, a mug or something like that? I can go with it and we'll try to go and get a lot of accessories on there as well. The important part on this is that you don't want to add too much friction to the actual buying process that it hurts conversion rate. So I want to make sure you test it a lot. And if you want to go and find like the easiest way, in my opinion, to increase your average order value, that will not impact the conversion rate at all is through post purchase upsell apps. And the one that I use today at least is called one click upsell by Zipify. And so what it is and how it works is that basically they'll go, they'll complete their purchase and they'll check out 16 digit credit card number press by now. Great. The credit card just went through now from Shopify standpoint, the orders actually on a hold, because now they see another page where it says" Fantastic, you bought this just as a heads up 56% of the customers who bought that also bought this, do you want to add this to your cart? You won have like a 20% opt- in rate there as well or something like that." And that's a really easy way to go and increase your average order value as well. Because that way, that you're not going to sacrifice any orders in the process, because it's still super low freshen to check out, but they're spending more at the end of the day because you have that up sale option at the end,
Matt: Right? And you, you get the momentum of I'm in the mode. I'm here buying something like I, I just spend$ 120. What's another$ 15 accessory on top of it.
Connor: Right? And the way, the way to think about that too, is like, think about it when you go restaurant and especially well specifically for American listers here, right now you go to a restaurant, you see a hundred dollars steak, fantastic. You, you eat that a hundred dollars steak, you order whatever. And now you're finishing paying, you're paying$ 120 because you're tipping that 20%, but psychologically you never think that it's$ 120 stake, even though it is the entire time. It's the same way with this post purchase off sale stuff. You have a hundred dollars car value. Fantastic. I checked out, oh, this thing's only an extra$ 20. Cool. I'll add that on. Now. You're not thinking about 120, you're just thinking about two separate transactions and it typically tends to go and cover a little bit better.
Matt: Yeah, totally makes sense. Any other bottom of the funnel things you want to touch on?
Connor: The only other things I would say is, if you kind of take it back to the middle of the funnel stuff, if you are playing that repeat purchase game, I would definitely recommend a set up as many customer win back emails as possible. So just checking in on them after they've received the order, maybe setting a reminder, like I know I bought, I think magic spoon cereal a couple months back, fine cereal, say what you want about the product. But now all I do is I get emails back from them about like," Hey, it looks like you're probably out of stock at this point. Like, do you want to go and refill like here's$ 10 off if you refill today." So I think it's also important there to make sure that you're bringing them back if you are playing that LTV game. Right.
Matt: And that doesn't cost anything as the company to start sending all that stuff.
Connor: Right. And especially like if you're running Facebook ads for your main acquisition channel, call whatever you want,$ 20,$30 to go acquire a customer. Now that second purchase, is just all marching. You it's just your product costs. Right. You know, you have your overhead, which might be like some software and things like that. But like it's just real much higher margin for that second purchase.
Matt: Yeah, totally makes sense. All right. We've gone through top, middle, bottom of funnel. Anything, that kind of crosses all of those or is outside of that, that you want to make sure to touch on to, to give folks context on things that they can either like action immediately or think about how it can transfer out to whatever other industry, your company type that they're at?
Connor: I'm trying to think." No, I think like really the main things are like traffic times conversion times AOV is how you're going to go and make money in e- commerce." There's a million tactics and hacks that you can go and use along the way, and I feel like really for today's episode, I'd wanted to just cover the fundamentals of what to do. But like if you're looking for interesting ways that other customers or other companies are going and running promotions or giving offers or running their email flow, like you can see just from today's call, like I've gone down enough. E- commerce companies funnels at this point to kind of get a better understanding as to what works and doesn't. So if you really want to go and take this to the next level, what I would do is find companies that look like they're crushing it. Matt and I have a mutual friend, Neil, who all he does is just signs up for company updates. So I... Oh can only imagine what his inbox must look like? But that's at this point, what I've done too at this point. And so what I'll do is I'll give my email, I'll give my phone number to whoever wants it solely for inspiration and just kind of start going out of that rabbit hole of buying random products and giving your email and phone number away, and then start building up your own personal swipe files. So when you're eventually launching your own brand or running your own company, you could have a huge swipe file circling from.
Matt: Well, Connor, thank you so much for joining, sharing what you've learned over the years. This is good stuff. I mean, I don't work in e- commerce, but there are plenty of things that I can take from this that I could figure out how I can slot in those strategies and tactics as stuff I'm doing day to day, and I'm sure many listeners and viewers have thought the same.
Connor: Thanks so much for having me on.
Matt: All right. For all of you listening, thank you so much for spending your time listening here. A couple quick things. One, if you're a fan of this episode, hit this subscribe button, check out at the library of other guests that I've had on those are great conversations. Check those out. If you're a fan leaving a review written review, especially would mean quite a lot. We also have an upcoming rev growth for drift. So that is one of our all virtual events. It is December 2nd. It's all about align sales and marketing teams to work together drive pipeline, for your business. It is free to attend and the link to registers drift. com/ events/ rev growth dash align. I'll put the link in the show notes as well, and that will be much easier for you than trying to type out what I just said. So thank you again for listening. I know there's so many things you could spend your time on, working on, listening to, watching, whatever it might be and you're spending it here. And it means quite a lot. My emails', mattbeauti. com, happy to hear any feedback, topic, ideas, speaker, whatever it might be. Send a note and I will catch on the next episode. Thanks.
Connor Gross sold his first company for seven figures when he was in college.
A year later, he's co-founded another company, Respoke Collections, and advises e-commerce companies on how they can level up their strategy.
In this episode, Connor takes Matt through the three stages of the e-commerce funnel and shares the strategies he's found most successful in getting both top-of-funnel ads and post-purchase upsells to convert.
- The 3 most important metrics for e-commerce (3:45)
- Top of funnel e-commerce (4:25)
- Three plays for creative ads that convert (6:11)
- Being strategic in how you scale ad spend (8:39)
- Middle of funnel e-commerce (14:01)
- How membership opportunities can be beneficial to e-commerce (17:27)
- Bottom of the funnel (21:30)
You can connect with Matt Bilotti and Connor on Twitter at @MattBilotti, @c-gro, and @DriftPodcasts.