Happy Sunday!
If you’re reading this, I hope you’ve had a very relaxing weekend, you’re starting to feel the holiday festivities, and you’re excited to talk about my favorite P-word. No, it’s not puppies, and almost, but not entirely planes... it’s PROFIT!
This past week at a holiday party I went to, you wrote your name and one thing you love. I wrote PROFIT. The only thing that matters. Our past week’s episode of Limited Supply reiterated that clearly, talking about how True Classic handled Black Friday 2023.
I know this might be the third email about Black Friday, but I think it’s important to find the learnings and continue to talk about them. This coming week’s episode of Limited Supply (the last episode of the year), we recorded with Cody Plofker, and we again talked about lessons from his BFCM at Jones Road Beauty. Cody has become one of my best friends, and I learned so much just listening to how he set up his team, his campaigns, how he handled operations, etc. I’m excited for it to come out.
If you haven’t read the 8-page email I wrote last time I talked to Ben Yahalom, the President of True Classic ($250M in revenue this year, bootstrapped), then I recommend going back and reading it. If you don’t have it, or you signed up AFTER I sent it out, just reply to this email, and Rameez will find it in my inbox and forward it to you.
Every time I talk to Ben, I get so fired up hearing how he thinks about certain things or even his rationale for why he does things a certain way. Almost nothing that Ben does is something you would find authored somewhere or spoken about. Ben literally worked at Meta, in the Disruptors Program, an invite-only accelerator, and still today invents his own metrics, which allow him to run the business more efficiently. He’s a savage, and I’m grateful to learn from him.
Today’s email is going to break down a few things I thought were interesting from our podcast episode together:
“Name the Number”
As Ben says, the job of a great media buyer is to continually make predictions about the potential yield of more spend. The primary metric that Ben tracks is what he calls “Marginal, incremental, contribution profit” which I wrote an entire 8 page email about earlier this year. If you want to read it, just search “Lessons from Ben, the President of a $250M bootstrapped business” in your inbox (or email me if you don’t have it).
In short, Ben and his team want to understand the incremental impact on the bottom line, AKA profit, of every marginal dollar spent (i.e the last $100,000 or the last $500,000) in their campaigns vs everything else that they do.
As a brand thinking about how to operationalize this, you just need to ask yourself, if you absolutely had to spend another $500K this month (or during your BFCM campaigns) which product, offer, channel, and creative would add the most net-profit, not just revenue, with every new dollar spent? How do you know this and what math do you have to back it up?
So with that in mind, during BFCM, Ben and his team set their high-level revenue and profit goals, and then monitored their spend and on a channel-by-channel basis. The team met every two hours on Friday (starting around 6 am) to review performance and make real-time adjustments based on the predictions that they collaboratively made.
Beyond simply trying to spend more, Ben encouraged his team to “Name the number” and make a firm prediction like, “I believe that if we spend another $100,000 on Meta on this specific offer/campaign before 2pm, it will yield another $150,000 in profit” etc.
Essentially, they make the prediction, implement the spend change, monitor the results, and hold themselves accountable when the numbers don’t add up.
I love this approach because it trains you to get better at forecasting which is, of course, the hardest thing to do in life. If everyone could forecast everything perfectly, the entire world, economy, and brands would be in a very different place. That said, if you can forecast correctly, it’s like having a magical power that allows you to predict the future before it happens. Ben’s team exercises this muscle often, which benefits everyone.
If you want to get better at the skill of forecasting, you need to name the number, make the prediction, and measure the results in real time, as well as how that number shakes out with outside factors.
Interestingly enough, Ben ended up pulling back on spend after naming a number and seeing that the results were different than his prediction.
That’s another thing that I really respect about Ben. He didn’t decide to spend more just because he thought that there was a “BFCM opportunity.” He stood by his principles and focused on efficiency and profitable spend, not just top line growth.
Anyone can buy revenue, not profit.
Near the end of the episode, Ben said something that really stood out. He said “Everyone can buy revenue, but can you generate a profit?”
And this is incredibly true. Technically, any brand can unprofitably buy revenue for their business during BFCM or otherwise. I mean most brands that started the venture craze for DTC brands proved this exact point! Generate $10M, while raising and burning $15M to get there.
From my POV, in the early days of launching a brand or going from 0-1, sure, you may need to do this to get the flywheel started and get to market while learning how to acquire customers more efficiently and effectively over time. But it’s in an effort to learn what messaging works best for your product, or how should you change your creative. But at scale? If you’re not focused on contribution profit, then why are you wasting your time on the business?
The best brands in the world want to buy profit, not revenue, and it should be the focus for nearly all brands in 2024.
I thought it was a great one-liner from him and the main takeaway is that if it’s not profitable or if it won’t be profitable soon, it’s not sustainable over time.
Start the sale earlier.
I have talked about this a bunch and a more brands did it last year. This year Ben started running True Classic’s BFCM offers on November 2nd.
For the brands we saw at Sharma Brands, they just had more days with higher revenue. It wasn’t that the demand fizzled out quickly, as many would think.
It’s clear that “Cyber Week” has now transitioned to “Cyber Month.” As long as you focus next year on building true brand awareness and intent, your Cyber Month will greatly benefit. If someone hears your brand name, and can associate it with the product they’re excited to buy, you’re in a good spot. If not, then that should be the goal for all your pre-BFCM efforts.
If Ben didn’t start running his BFCM offers early, I don’t think they would have done $30M+ in revenue in November with $4.5M on Black Friday from Meta alone.
It’s clear that their strategy for BFCM was more about how they could maximize all of November, not just the week of BFCM. Given the origin of Black Friday, which was created so retailers can get out of the “red” and into the “black” on their P&L, I think whoever created Black Friday would be proud of True Classic for treating it like Cyber Month.
Lean into Gifting
I do think different brands have different behaviors here but anecdotally, Ben found that many of the True Classic shoppers in November were purchasing their products for end of year, holiday gifts.
They know this through their post purchase survey which asks customers whether or not this purchase was made for themselves or as a gift.
In November, True Classic sees a surge of survey responses that claim they placed an order intended as a gift. The other benefit? Being able to tag and segment customers who are gifters, versus buying for themselves. We didn’t talk about this, but I imagine that they can setup a different EOY promotional calendar for those who have admitted to being grifters.
I generally think brands who know this should lean in, and focus more on gifting creative and language to incentivize more gift-related sales.
Building the BRAND, not just lower-funnel ads.
Another thing that was interesting was that in True Classic’s post purchase survey, they don’t just ask who the customer was buying for, they also ask when was the first time that you heard about the brand.
To Ben’s surprise, many respondents heard about the brand 6-12 months before making their first purchase.
The takeaway here is that the long tail of marketing attribution is really long, and you are often planting the seed in a consumer’s mind at least 6-12 months in advance before they buy.
Many marketers focus exclusively on the direct response KPIs of an ad today, sometimes looking at it on an hourly basis, but the truth is, attribution is much more nuanced. There were likely many other ads, touch points, social posts, etc that played a role in the customer’s purchase journey over the course of months or even years, before someone ultimately converts.
This is something I’ve been seeing lately with larger brands — if you don’t have smart top-of-funnel marketing setup, you virtually have no “organic” buy-in from the shopper. You need them to think you’re cool, interesting, or like they want to be a part of the lifestyle you’re creating.
If Jolie created a shower head in collaboration with The Skinny Confidential, a customer who previously just used to scroll past Jolie ads on TikTok, might actually not click in, read abut the product, its benefits, and then decide they want to buy it. Partnerships, IMO, are the best combination of top-of-funnel marketing AND quickly becoming cool. Emma Chamberlain just did this with Warby Parker... now think about teens who are going to buy their first pair of glasses, you think they’ll go shop from Warby Parker, or some random glasses brand they don’t even know of?
As a brand owner, I think it’s important to know this since it helps to make your performance marketing efforts better. It’s like creatine. You take creatine, and you can get 5-10% stronger. You add partnerships or other smart top-of-funnel, and you make your performance ads so much more efficient.
You might not see the attribution immediately but I’m certain the activities play an important role.
Ok, that’s all for today... If you want to learn more from Ben, I suggest listening to latest Limited Supply episode. One of my other favorite parts was how he thought about merchandising for the mystery gift and his gifts with purchase. This coming week we’re doing the same breakdown with Cody from Jones Road Beauty.
Okay, on to some fun stuff...
Vendor of the Week:
Motion — The world’s best performance-creative analytics tool.
I mean, seriously, I don’t know who doesn’t use Motion at this point. Usually, there are 2-4 different companies for a purpose (i.e., multiple subscription apps or multiple review apps)... but no one has come close regarding creative reporting to what Motion does.
If you spend more than $50k/month on Facebook ads, you should absolutely be using Motion to track all creative performance. Our team at Sharma Brands spends a full hour every morning going through the data from the day prior. A big part of that are the insights derived from Motion. You can see anything from engagement to CTR to conversion rate based on the individual creative.
Motion just launched a newsletter called Thumbstop. It’s a weekly must-read newsletter covering the art and the science of creating winning Meta, TikTok, and YouTube ads.
In the newsletter, they don’t just show you what performed well. Like my newsletter, they will break down the art, the science, and the execution. This way, not only will you see what does well, but you’ll see why it did well and how you can do the same for your own business.
Click this link to subscribe to Thumbstop and join 25k readers (including me!).
LP of the Week:
This week’s landing page shows a slightly different use-case than most. With most of the pages I showcase, they’re going for immediate purchases. In this case, this brand is selling a rug, which requires more intent and education before making the purchase.
On this landing page, specifically, we focused on the runner rugs (the long-skinny ones). You may be thinking, “How do you showcase ‘benefits’ with a rug?” You’ll see sections where we show people how it can fit into their homes, ideally in situations that feel like the consumer will enhance their whole space, not just where the rug is.
If you need a landing page to start the new year off right, book a call with us at HOOX. All these pages I’ve shared are made by our team — we think through the right angle/strategy, handle the wireframes, copywriting, full design and development. You get a live link that’s ready to go. Book a call with us on this link, and we’ll give you a free hero section + shop section that you can A/B test, for free.
That's all for this week
I hope today’s newsletter was insightful for you. If it wasn’t, then re-read it again. You’ll find something!
We’ve got 1-ish weeks left to finish out the year strong before everyone starts to feel relaxed through the end of the year. Get those 9 hours of sleep tonight, eat clean, get a sweat in this coming week.
Next week, I will have that top-of-funnel playbook ready for you. I can’t wait to share it and talk through it.
Have a great upcoming week!