Marketing Operators Podcast: Episode E033 Summary

Title: Zach Stuck on the Core Marketing Tactics to Drive Growth As You Scale
Release Date: November 12, 2024
Hosts: Connor Rolain, Connor MacDonald, Cody Plofker
Guest: Zach Stuck, Founder of Homestead

1. Introduction

In Episode E033 of the Marketing Operators Podcast, hosts Connor Rolain, Connor MacDonald, and Cody Plofker welcome Zach Stuck, the founder of Homestead, a growth marketing agency specializing in e-commerce, growth marketing, and operations. The episode delves into identifying emerging trends, selecting products poised for exponential growth, and the strategic marketing tactics essential for scaling revenue from $100K to $5 million per month.

2. Zach’s Background and Homestead Overview

Zach Stuck shares his journey with Homestead, recounting how he and his partner Riley Trotter launched the agency five and a half years ago. Initially focusing on customer acquisition and retention, Homestead has expanded to a team of 65 employees. Zach discusses his transition from running a successful agency to building a portfolio of Direct-to-Consumer (D2C) brands.

[04:33] Zach: "I'm the founder of Homestead, a growth marketing agency focused on customer acquisition and retention."

He highlights key milestones, including the acquisition of Public Supply, a notebook company, and the launch of Holo, an alpaca sock brand that has rapidly grown to $20 million in revenue this year. Zach emphasizes the importance of building brands that solve tangible problems, making them easier to market and sell online.

3. Building a Brand Portfolio: Acquisitions and Launches

Zach details Homestead's strategy in acquiring and launching brands:

• Public Supply: A $150,000 B2B notebook business, the first acquisition.
• Home Decor Business: Focused on licensed products, partnering with brands like Anheuser Busch and Molson Coors.
• Holo: Launched three and a half years ago, targeting niches such as cycling, running, hiking, and hunting with alpaca socks. Holo achieved $1 million in the first year, $7 million last year, and is on pace for $20 million this year.
• Additional Brands: Including a sleep accessory brand and a supplement brand, bringing the total to five active brands.

[09:45] Zach: "Holo is obviously still the biggest one in the industry."

Zach shares a lesson learned from acquiring Fray, a laundry detergent business, which had a 35% return rate and ultimately led to selling his shares due to operational challenges.

4. Identifying Trends and Product Opportunities

Zach explains his approach to spotting trends:

• Influencer Monitoring: Focusing on mid-tier influencers passionate about niches like health and wellness.
• Example - Red Light Glasses: Recognizing an opportunity to offer higher-quality alternatives to traditional blue light glasses.
• Collaborations: Working with influencers such as Matt Choi from Ridge to leverage authentic endorsements.

[15:07] Zach: "I'm usually looking at mid-tier influencers that are super obsessed with health, wellness, or something along those lines."

Cody adds insights on trend identification, citing how influential books like Omnivore's Dilemma and Four Hour Workweek have historically shaped industry trends. He emphasizes the power of creators and influencers in driving new trends.

[19:26] Cody: "Breath is just about breathing. It's a direct descendant of people caring way more about the quality of their breathing."

5. Core Marketing Tactics by Revenue Band

Zach outlines specific marketing strategies tailored to different revenue milestones:

a. $0 to $100K per Month

• Static Image Ads: Utilize static ads to test various hooks and angles.
• Problem-Solution Fit: Ensure the product addresses a clear consumer problem.
• Customer Cohorts: Identify and target specific customer segments through effective positioning.

[40:26] Zach: "For the first hundred K, you're running static image ads... trying to find a customer cohort that resonates with that problem."

b. $100K to $500K per Month

• Video Ads: Transition to video content to engage a broader audience.
• Content Creators: Hire content creators from existing customer bases to produce authentic video content.
• Landing Page Optimization: Experiment with shoppable landing pages and A/B testing to enhance conversion rates.

[44:52] Cody: "To go from 100k to 500k, you're building out further, scaling channels."

c. $500K to $1 Million per Month

• Conversion Rate Optimization (CRO): Refine website elements like cart enhancements and post-purchase upsells to increase Average Order Value (AOV).
• Upselling Strategies: Implement significant upsells post-purchase to encourage bulk purchases.

[44:57] Cody: "Increasing AOV via upsells is crucial at this stage."

d. $1 Million to $5 Million per Month

• Partnerships and Whitelisting: Collaborate with creators for whitelisting deals, allowing their content to run as ads.
• Performance-Based Incentives: Offer creators a percentage of ad spend to incentivize higher performance.
• Storytelling in Ads: Focus on narrative-driven ads where the problem is introduced before the product solution.

[46:08] Zach: "Our secret sauce is finding creators that are very good at talking to the camera and storytelling."

6. Channel Diversification and Scaling

Zach discusses the importance of diversifying marketing channels as brands scale:

• Meta (Facebook & Instagram): Continues to be the primary channel up to $1 million per month.
• Connected TV (CTV): Recently expanded into CTV using platforms like Applovin, achieving 2.5x - 2.6x one-day click ROAS.
• Cost-Efficiency: Emphasizes using top-performing creatives across multiple channels without overcomplicating the approach.

[52:24] Zach: "Spend on CTV as a platform called Applovin has been really, really interesting."

7. Team Structure and Scaling Operations

Zach highlights the lean structure of his team, optimizing high revenue per employee:

• Current Team (7 Members): Includes heads of growth and operations, designers, and directors of e-commerce and performance creative.
• Outsourced Services: Utilizes Homestead for email and sometimes SMS marketing.
• Future Hiring Plans: Aiming to add dedicated roles for growth and operations to manage scaling from $20 million to $50 million.

[60:51] Zach: "Our OPEX is looking very good, giving us room to spend on acquisition."

Cody praises the team’s efficiency, noting how a lean team can handle significant revenue due to high leverage strategies.

[63:43] Cody: "You're sitting at almost 5 million per head. That's the highest number I've heard."

8. Mentorship and Learning

Zach underscores the value of mentorship in scaling:

• Fractional COO: Hired Trey Sisson, a seasoned operator, to refine financial modeling and operational strategies.
• Continuous Learning: Collaborates with experienced operators and mentors to avoid common pitfalls and optimize business processes.
• Agency Experience Advantage: Leveraging insights from managing 250 brands to inform strategic decisions and avoid repetitive mistakes.

[37:23] Zach: "Trey was instrumental this year... He helped us rebuild our financial models from scratch."

9. Future Growth and Potential

Looking ahead, Zach envisions substantial growth:

• Scaling to $100 Million: Plans to achieve this milestone with a team of 15 people, spreading revenue across three brands.
• Focus on Single SKU Hero Products: Believes in the potency of single-product brands for targeted marketing and operational efficiency.
• Leveraging Offshore Talent: Utilizes high-skill offshore team members to maintain a lean and effective workforce.

[64:41] Zach: "I think we can do a hundred million with 15 and split it between three brands."

10. Conclusion

The episode concludes with Zach sharing actionable insights on scaling e-commerce brands through strategic marketing tactics, trend identification, and efficient team management. The discussion emphasizes the importance of a lean team structure, leveraging agency experience, and continuously adapting to emerging marketing channels to drive substantial revenue growth.

[67:37] Cody: "I'm super excited to see how teams get built over time and how big some of these brands can scale."

Notable Quotes

• Zach Stuck ([04:33]): "I'm the founder of Homestead, a growth marketing agency focused on customer acquisition and retention."
• Zach Stuck ([15:07]): "I'm usually looking at mid-tier influencers that are super obsessed with health, wellness, or something along those lines."
• Cody Plofker ([19:26]): "Breath is just about breathing. It's a direct descendant of people caring way more about the quality of their breathing."
• Zach Stuck ([46:08]): "Our secret sauce is finding creators that are very good at talking to the camera and storytelling."
• Zach Stuck ([60:51]): "Our OPEX is looking very good, giving us room to spend on acquisition."
• Cody Plofker ([63:43]): "You're sitting at almost 5 million per head. That's the highest number I've heard."
• Zach Stuck ([64:41]): "I think we can do a hundred million with 15 and split it between three brands."

This comprehensive summary encapsulates the key discussions, strategies, and insights shared by Zach Stuck on the Marketing Operators Podcast, offering valuable takeaways for marketers and e-commerce operators aiming to scale their businesses effectively.