Limited Supply Podcast: Season 11, Episode 5 Title: Scaling at the Bottom of the Funnel: Deep Dive Part II Host: Nik Sharma Release Date: February 5, 2025

Overview

In the fifth episode of Season 11, titled "Scaling at the Bottom of the Funnel: Deep Dive Part II," Nik Sharma continues his in-depth exploration of scaling Direct-to-Consumer (DTC) brands by focusing on the critical strategies required at the bottom of the sales funnel. Building upon the previous episode's discussion on top-of-funnel tactics, Sharma delves into optimizing digital ad execution, creative and audience testing, enhancing the commerce experience, and effective measurement techniques. This comprehensive episode serves as a valuable guide for DTC brands aiming to refine their conversion strategies and maximize revenue.

Key Topics and Discussions

1. Proper Digital Ad Execution

Sharma emphasizes the foundational importance of a well-structured ad account. He identifies common pitfalls that brands encounter, such as:

• Poor Account Structure: "Whether you're spending $70,000, $700,000 or $7 million a month, you need to have a very tightly run ad account. And poor, poor ad account structure leads to poor results." [02:15]

• Outdated Customer and Exclusion Lists: Maintaining up-to-date lists is crucial for targeting and retargeting efforts.

• Lazy Naming Conventions: Ad accounts should have systematic naming to streamline management and analysis.

• Lack of Testing Methodology: Without a structured approach to testing creatives or audiences, brands miss out on optimizing their campaigns effectively.

• Not Leveraging Post IDs Across Campaigns: "Not leveraging post IDs across campaigns is the worst mistake because it's the easiest to mitigate and do." [05:30]

Sharma asserts that rectifying these issues is relatively straightforward and can significantly enhance ad performance.

2. Rapid Creative and Audience Testing

Sharma advocates for an aggressive creative testing regimen to identify high-performing ads. Key strategies include:

• Creative Testing: "Most ad accounts that I'll open up have anywhere from one to three or four ads that run the majority of the spend... focus on putting out more ad creative and testing what can work." [07:45]

• Iterative Improvements: Once a successful creative is identified, iterating on its elements (e.g., text, imagery, hooks) can lead to further optimization.

• Audience Testing: Continuously experimenting with different audience segments—broad, lookalikes, and interests—ensures that campaigns reach the most responsive groups. "Testing new audiences is one thing that a lot of people don't do... It's worth constantly testing all three of those." [10:20]

3. Individual Product Page Funnels

With the rise of catalog ads and the necessity for optimized product pages, Sharma outlines essential components of effective product funnels:

• Answering Core Questions: Each product page should address why the product is sold, its consumer benefits, delivery speed, impact on the consumer's life, and how it compares to competitors. "Every good landing page answers five questions..." [12:10]

• Integration with Tools like Marpipe: Utilizing tools to create scalable and optimized creatives can enhance click-through rates and overall ad effectiveness.

4. Commerce Experience (CXP) Optimization

Sharma introduces the concept of Commerce Experience, focusing on enhancing the user journey through strategic landing pages and website optimization.

• Landing Pages: Tailoring landing pages to specific consumer segments or campaign messages increases relevance and conversion rates. "Landing pages should speak to different groups of people... shoppable blog pages would allow you to have an article with a shopping module within it." [15:00]

• New Customer Offers: Crafting irresistible offers for new customers can significantly boost conversions. Examples include discounted bundles or trial offers. "These offers, you know their product is good. All these offers get you in the door." [17:30]

• Website and Checkout Optimization: Continuous A/B testing of website elements—from homepage modules to checkout processes—can uncover opportunities for incremental revenue gains. "One test I remember... generated an extra 50 grand in one week from a tiny test." [20:50]

5. Subscription Optimization

A robust subscription model can drive recurring revenue. Sharma highlights the importance of:

• Clear Value Proposition: Clearly communicating the benefits and reasons to subscribe is essential. "Make sure that your website clearly demonstrates the benefits, the reasons to subscribe..." [22:15]

• Customer-Centric Messaging: Tailoring subscription benefits to align with customer shopping behaviors enhances appeal. "It's actually just the fact that it's more convenient to get shipped to your house than to go to the store..." [23:40]

6. Email and SMS Opt-In Strategies

Building a robust communication channel with customers through email and SMS is critical for retention and upselling.

• Increasing Opt-In Rates: "If you're collecting below 7% of your site traffic opting in, then you need to focus on getting more opt ins for emails and phone numbers." [24:10]

• Enhanced Personalization: Using collected data to customize welcome flows can improve engagement metrics like open rates and click-through rates.

7. Review Collection and Syndication

Social proof through customer reviews can significantly impact trust and conversion rates.

• Collecting Reviews: "The best thing you can do is have reviews... a line of copy that says over 100,000, five-star reviews... drives very high trust." [26:00]

• Syndicating Reviews: Distributing reviews across multiple platforms enhances visibility and credibility. "The more social proof, the better it is." [28:25]

• Setting Review Goals: Establishing targets for review collection ensures continuous feedback and accountability. "Set goals on how many reviews you're trying to collect per day, per week..." [29:45]

8. Measurement and Analytics

Accurate measurement is vital for assessing campaign effectiveness and making data-driven decisions.

• Types of Measurement: Sharma outlines various measurement methodologies, including:

  • In-Platform Reporting: Uses data modeled by platforms like Facebook, which may not always be 100% accurate.

  • Multi-Touch Attribution (MTA) and Multi-Market Mix Modeling (MMM): Tools like Triple Whales and Prescient help in understanding different aspects of campaign performance.

  • Incrementality Testing: Determines the true impact of advertising efforts beyond what in-platform analytics can show. "Understanding all these different types of measurement is knowing that they all have different play, different roles to play." [31:10]

• Comprehensive Tracking: Assessing multiple points of sale and advertising channels requires sophisticated tracking to capture the full picture of campaign performance.

Notable Quotes

• On Ad Account Structure:
  "Whether you're spending $70,000, $700,000 or $7 million a month, you need to have a very tightly run ad account... That's like the hardest part or, sorry, the easiest part."
  [02:15]

• On Rapid Creative Testing:
  "It's all a numbers game in terms of figuring out which ones are going to find scale."
  [07:50]

• On Landing Pages:
  "Landing pages should speak to different groups of people... shoppable blog pages would allow you to have an article with a shopping module within it."
  [15:00]

• On Subscription Optimization:
  "Sometimes it's just the fact that it's more convenient to get shipped to your house than to go to the store..."
  [23:40]

• On Review Collection:
  "A line of copy that says over 100,000, five-star reviews... drives very high trust."
  [26:00]

Conclusions and Takeaways

Nik Sharma's in-depth analysis in this episode underscores the multifaceted approach required to scale DTC brands effectively at the bottom of the funnel. Key takeaways include:

• Foundation First: Establishing a solid ad account structure is fundamental to any successful advertising strategy.

• Test Relentlessly: Both creative and audience testing are essential for uncovering what resonates with consumers and drives conversions.

• Optimize the User Journey: From tailored landing pages to compelling new customer offers, every touchpoint must be optimized to enhance the commerce experience.

• Leverage Social Proof: Robust review collection and strategic syndication can significantly bolster consumer trust and drive sales.

• Data-Driven Decisions: Employing a combination of measurement tools ensures a comprehensive understanding of campaign performance, facilitating informed decision-making.

By implementing these strategies, DTC brands can enhance their conversion rates, maximize return on ad spend (ROAS), and achieve sustainable growth in a competitive marketplace.

Looking Ahead

In the closing segments, Sharma hints at the upcoming episode, which will feature an expert in supply chain, tariffs, and international trade, promising further valuable insights for scaling brands in the global arena.

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