← Perpetual Traffic
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- [00:00]
Lauren E. Petrulo
There's a lot of things that need to be considered that anyone that's listening where you're like, oh, I see my Google Ads declining, I'm seeing my new customer growth declining. You have to be prepared because it's only going to get worse as we get closer to Q4.
- [00:14]
Ralph Burns
What would be your advice to them when it comes to paid media and or business metrics?
- [00:20]
Ricardo Powells
If they want to grow their way out of this, they will have to.
- [00:25]
Lauren E. Petrulo
You're listening to Perpetual Traffic.
- [00:29]
Ralph Burns
Hello and welcome to the Perpetual Traffic podcast. This is your host, Ralph burns, founder and CEO of Tier 11, alongside my amazing co host, Lauren E. Petrulo, the.
- [00:40]
Lauren E. Petrulo
Founder of Mongoose Media.
- [00:42]
Ralph Burns
So glad you joined us here today. And today we are going to be digging deep into what not to do. I love these kinds of examples, Lauren, because everybody wants to show how great they are. I kind of sometimes want to show like the mistakes that we've made. We're not perfect. Although, you know, we get it right most of the time. The point is, is some of our, some of our clients aren't perfect either. Surprise, surprise. I don't know if you've had any imperfect clients. Have you had any, Lauren, in your experience?
- [01:14]
Lauren E. Petrulo
You know what? Anyone who's listening, that is a current client. Anyone that's listening who's a past client. You are perfect and beautiful in every single way, shape or form. Any future clients, I will think the same thing publicly.
- [01:25]
Ralph Burns
That is such a politically correct answer, which I was not expecting considering so who you are. But anyway, no, at the end of the day, it's bad considering who you are.
- [01:34]
Lauren E. Petrulo
You mean because of my sense of humor?
- [01:37]
Ralph Burns
Your sense of humor. And you're just, you're not a bullshitter. Like, it's like that's, that's who you are. But anyway, no, we love our clients, these guys. We actually really did our best. We did our damnedest. But sometimes you can't help a business with paid traffic and creative and digital marketing strategies if there is a, shall we say, flawed business model and also antiquated ways of looking at data. And that's kind of what we're going to be talking about here today. And not to pick this company apart because they shall remain nameless. However, it's a lesson for all of us on what not to do. And if you are working with an agency or you have an internal team, let's say you're a director of marketing and you're director of marketing, you know, you get reports every single week of how Google is doing and Meta and Amazon and email and organic and it's all siloed. You're looking at it all wrong because they all work together and that was something that we couldn't quite get across to this particular client here today. And so we have the subject matter expert, the one that did an astoundingly great job on this client, Lauren.
- [02:56]
Lauren E. Petrulo
Yeah, I'm excited.
- [02:58]
Ralph Burns
I know. None other. He's never been on Perpetual Traffic before. Nobody knows some of the like these wicked smart people behind the scenes at tier 11. Well today he's coming out and he's even wearing the tier 11 T shirt today. So without further ado, welcome to Perpetual Traffic. Growth strategist extraordinaire Ricardo Powells. And I probably pronounced it incorrectly.
- [03:21]
Ricardo Powells
Thank you. It's good to be here.
- [03:23]
Ralph Burns
Great to have you actually. It's good to have some sanity and some smart people on the show. Finally. It's been a while. The point is fired. I know. Yeah. Shots fired. Health. I'm on the show with you. I know, I know. No, actually Ricardo is. You've been with tier 11 just a little bit of a background. It's so many years. I can't. I can't even remember.
- [03:45]
Ricardo Powells
Just over three years.
- [03:47]
Ralph Burns
It's been three.
- [03:48]
Ricardo Powells
Oh my God. What did you do before?
- [03:51]
Ralph Burns
Yeah, time flies. While you're having fun. While you're. While you're dealing with these sorts of things we're talking about right now probably to actually time slows when you have issues like this because the fun ones usually it's the time flies. But what did you do before getting hired at tier 11? I forget your background just to give the folks a little bit of a.
- [04:12]
Ricardo Powells
Background on who I started in Digital Marketing about 10 years ago. I used to have my own Shopify store. Initially started doing just dropshipping. Learning everything myself from Facebook ads to Google Ads. Email marketing. Conversion rate optimization had two people that I hired for customer service and order fulfillment. So I did that for about three years. That's why I learned the most about all different kinds of work and expertise that comes with having a Shopify store. And after that I joined the agency world first with a different agency just for meta ads or Facebook ads back then and then quickly grew into kind of a growth strategist role they called it differently at a different agency but was pretty much anything we needed to do to help clients grow whether that was true. Facebook ads, Google Ads conversion rate optimization creative strategy also did and I joined tier 11 three years ago. Different sets of clients that I work with here a Lot more complex, I would say, usually bigger businesses, which is great for me because I love to tackle like the bigger challenges as opposed to just a small store that runs traffic on one channel, which is pretty kind of easy to solve for. And that's what I've been doing since.
- [05:33]
Ralph Burns
That'S a great background from my standpoint. Like if when you're running your own Shopify store, when you're doing drop shipping, I wouldn't say it's typical, but I would say it gives you a much broader sense as to what's out there in the digital marketing space, as opposed to just pure. Let me go into the Facebook Ads manager or the Meta Ads Manager and just start buying media. It's like that is one component of all of it. And you've got that breadth of experience which actually came in handy in this particular case study that we're going to be talking about here today. But it's like that type of background is essential. I think if you don't have that, it's harder to look at things the way that we do, like with the marketing performance indicators, which you can get over@tier11.com MPI by the way, which is a broader way of looking at how to do digital marketing now. So it's like you rely on that experience pretty heavily. And I know you did for this one, because the strategies that we were going to be, you know, that we deployed but also tried to get deployed, maybe didn't do such a great job at convincing the client to be able to do them comes from that background. Would you agree or disagree?
- [06:41]
Ricardo Powells
Definitely. So I would say the financial side, for the most part, sometimes clients need help on the financial side. What are the cost of goods sold overhead. So if you have that background and you used to make your own kind of spreadsheets with like profit and all the costs, kind of know what comes with scaling a business and how like fixed costs and variable costs play a role. So that's a big help right now.
- [07:09]
Ralph Burns
Yeah, yeah. And these guys didn't have a whole lot of profit to play with, I think, which was one of the problems. Why don't we just get right into it? So this is a case study in the consumer niche and specifically in the gardening niche. And they sold a lot of products that have a ton of competition and specifically Seeds was one of them, but they have a lot of other products. So tell us about sort of the background of this client and sort of where things started and give us an idea of like what the original strategy was and how we kind of started to work together and then we can get into some of the specifics after that.
- [07:51]
Ricardo Powells
Sure.
- [07:52]
Lauren E. Petrulo
So this client, they came through weeds specifically, Ralph.
- [07:55]
Ricardo Powells
Right.
- [07:55]
Lauren E. Petrulo
Get into the weeds.
- [07:56]
Ralph Burns
Get into the weeds. That's good. Not the flowers, the weeds. Right.
- [08:00]
Lauren E. Petrulo
We have the growth expert who's trying to flower their bank accounts.
- [08:09]
Ralph Burns
It doesn't need to. We just want, we just want flowers. Like bright sunny flowers. Anyway, go ahead.
- [08:14]
Lauren E. Petrulo
For car Miley Cyrus.
- [08:17]
Ralph Burns
Right.
- [08:18]
Ricardo Powells
So this client, they came to us end of 2024. We were launching our own strategy in January 2025. Initially, I think there was a bit of a mismatch in expectations and they had growth goals. They wanted to grow by X percentage year over year. And only two, three months in, we realized that they were a declining business. They had been declining for by three to four years. So the goal wasn't really to grow. The goal was to stop the bleed and help them reverse that trend. Initially we looked at of course their traffic split. They were always spending a lot of money on Google Ads. Meta ads were responsible for about 5% of their big media and because that hadn't been working for them for years, we wanted to push more on meta and decrease their ad spend on Google and and funnel in more new customers. So the majority of our strategy was centered around new customer acquisition. So we introduced NCAG nmer, started tracking and measuring those metrics and then initially started scaling up our meta ad spend in January. Because it was a seasonal business, it was difficult to compare using our new metrics kind of year over year with the reporting tools we were using. But in the first couple of weeks we gradually built up the budget on meta. But unfortunately this client was used to looking at just overall more overall store ROAs and channel specific ROAs. So they were stuck in just look at those two metrics and they saw the top line MER go down and the Google specific ROAs go down as well. That was before we figured out that they were a declining business and before we knew about the split between new customer revenue and existing customer revenue. So they quickly kind of grew anxious and had us pull budget away from meta again and push it towards Google, essentially forcing us to look at last click attribution because that was what they were used to looking at and that is what they were reporting on to their higher ups. And in about February we started getting their numbers, meaning like the new customer revenue versus existing customer revenue. Took some time to get that information, but that's when we uncovered that 60% of their revenue was coming from existing Customers and that had been declining year over year as well. So you can imagine if we are doing our best to increase the new customer revenue and make that part of their business more efficient, but at the same time they are bleeding money on the existing customer side. Even if we were to generate an additional 50,000 in new customer revenue because of the percentages, they were losing like 100,000 in existing customer revenue and therefore because they looked at the top line roas or more, that number just went down over and over again and we were kind of being punished for it. That then turned into a couple of months back and forth testing strategies and them having the belief that there was so much more to do with Google Ads while not recognizing some of the bigger business issues that were at play. Because we were running Google Shopping campaigns, it is very price competitive and it's a commodity that they were selling. So you can imagine you have the listings up top with different prices that we were simply not winning. And based on reviews, we weren't winning either. So for the user, there wasn't a great reason to pick us over the products of their competitors. We did share that information with the client. Of course they, I think acknowledged the issues, but didn't quite understand the weight of those issues. And we tried to fix it with paid media, but it was just too big of a decline in new customer revenue and existing customer revenue to make up for it with just Google Ads optimizations.
- [12:36]
Ralph Burns
So for those of you who are listening and who aren't familiar with this, the, the primary methodology for acquiring or, well, for acquiring customers or for selling their product was through Google Shopping. And as we know with Google, if you're not familiar with Google Shopping, but basically it comes at the top of the page and you're listed against everybody else in that space for whatever that keyword phrase is, let's say it's Zinnia seeds as an example. And you would have, you know, all of your individual panes right there of images of the product and then you would have price, maybe even quantity, some kind of value proposition and sort of an abridged sort of, you know, little snippet. But if you are not price competitive and there's no superior mechanism for your particular product, most people are just going to choose either the cheapest option or the Amazon option in many cases. And obviously Google Shopping isn't necessarily on Amazon, but sometimes it is. The point is like, or they just go, wait.
- [13:49]
Lauren E. Petrulo
Amazon pulled out from appearing in Google Shopping a week ago.
- [13:53]
Ralph Burns
Yeah, I, I know, okay, sorry.
- [13:55]
Lauren E. Petrulo
I, I was like Oh, I was like, wait, wait, wait.
- [13:56]
Ralph Burns
Crazy to think about. But anyway, so the point was, is like this was prior to that. So they were being price shopped for the keyword phrases that you guys were all managing you and Russia, as I recall. And it was just like you could see it right from the start. It's like, what are we? How can we win? You know, there was no particular, like our seeds are better because they do X, Y and Z versus everybody else. End of the day, they were seeds. So how can we differentiate in Google Shopping? And we realized that's a, it's really, it was a bloodbath. And the reason for the decline was that there was no differentiator at that particular moment of that, you know, that, that, that zmot, that zero moment in time where somebody actually makes that decision. And that's what you were sort of facing at that, at that particular, like you didn't have any control over pricing, you didn't have any control over the product itself. And there was competitors. It was a large competitor that came into the space and just outbid everybody with huge volume, you know, massive ad spend, as well as maybe a better mousetrap, sort of, kind of, but maybe not. The point is, is like you're, when you're trying to compete in that type of space, my immediate response is get out of that bloody ocean as much as you possibly can or minimize it and look at other sources where you can do more interruption marketing and then differentiate yourself without the comparators on either sides of you on Google Shopping. Is that, was that your assessment as well?
- [15:37]
Ricardo Powells
Yes, definitely. That's also why we steer more towards meta, because then at least our ads are not right next to the competitor's ads. So even though we were more expensive, people might not see it and might not Google the brand. So at least we had that part going.
- [15:53]
Ralph Burns
So talk about the pricing here. Let's talk like this is something that we discuss a lot when we're in the discovery phase of understanding, okay, what is your pricing versus the competition? Also, you even referred to some of the NPIs, like your NCAC, like what's your NCAC? What's your allowable NCAC for on a global sense as well as your naov, your nmer, your nltv, like all of those different factors. How did you break that down? And I think that breakdown was something that they didn't really have a true grasp on at that particular moment. And that was all part of this sort of discovery phase when we realized, oh my God, this is going to Be really hard to win at Google Shopping based upon the metrics and the business metrics behind the actual products itself.
- [16:44]
Ricardo Powells
Yeah, I'd say pricing. The pricing issue was quite unique for this client because it's not like you're comparing a $20 product to an $18 product where the difference is quite small. And you might Simply pick the $20 product because you like the brand a little bit more. Uh, we're talking about seats, so they come in quantities and people were outbidding us, so they had a lower price for four times the amount of seeds. So that's simply four times as expensive, at least. So there's a significant difference. Going Back to the MPIs, we started tracking that from the start. But it was definitely a challenge to educate the client on the role of these MPIs and explain that we could still grow the new customer revenue efficiently while their existing customer revenue was still going down. That might not have anything to do with our paid media. We did see amount for the ANCAC and NMER both improved, so we were more efficient in acquiring new customers through paid media. But because the top line metrics got worse because of the loss in existing customer revenue, they still saw that as a loss and did not allow us to kind of push through with that strategy.
- [17:59]
Ralph Burns
So I'm actually looking in an incognito window right now for a couple of the keyword phrases. I don't see them being advertised at all, which is good because people on the show here will probably start looking for this. And there's a reason for that, is that, you know, some of these were all right, get it for $4.99 for. I forget the amount like 10 seeds versus 4.99 for the competitor and get 40 seeds. If there's no differentiator right then and there, it's like, well, why should I buy from the guy who's, you know, literally 10x more expensive? We didn't really have any answer for that. And Google Shopping just sort of highlights that deficiency in the product itself. And not saying that this isn't a great company with great products. The point is, is competitively, they were at a competitive disadvantage for whatever reason. Cost of goods sold there was sort of like Chinese competitors that we kept sort of talking about. Obviously there's the incursion of Amazon. Like that's a, that's a bloody mess over on the Google side when you don't have a major competitive advantage if you've got something that no one else has. And as a big differentiator and your Price premium. Okay, you've got a reason to be on Google Shopping. But in this case it was like all the strikes were kind of against them. And so it was a platform that we really struggled with early on and then got some of the numbers from the business on the back end that sort of backed a lot of these decisions up. So the next strategy was all right to pull back a bit, but what was your recommendation? Once we sort of realized that a lot of these metrics weren't really working.
- [19:44]
Ricardo Powells
So we went through a couple of different phases. So initially we tried bumping up our Meta budget over the course of a couple of weeks, making that 5% split for Meta to like 35ish percent. That only gave us essentially like three weeks to see if that made an impact on the top line metrics, which unfortunately it didn't. It was a quick scale up and we did not see any signs back then that numbers were improving. But we also didn't have the opportunity to compare year over year because of the reporting we were using. We could only look back at the previous weeks and only see kind of the top line mer year over year. So that was a bit of a limiting factor there. After that, we decreased Meta's budget again and they stopped creative production. So that was another challenge because creatives were not produced by us, but by them. So that's a good learning point too. Then we went through that phase of trying to make it work with just Google Ads, which they tried to do the last three to four years, that did not work either. No difference at all in performance. Slightly worse performance actually. And then afterwards, because we were pushing a new customer acquisition strategy, they were thinking that we were not going after existing customers at all, that our ads were not showing to existing customers, which isn't true, of course, because the brand ads would still show up. Meta's exclusions are not perfect. We were not excluding customers that aggressively either. So existing customers would still see our ads. It's just that we were not going after them very aggressively or actively. But at that point they believe that we should do that. So we open up our exclusions, started putting, putting a little bit more ad spend behind an existing customer audience. That made things even more inefficient. That just didn't work at all. Because for this product, it's not like people buy it week after week after week. They buy it once, maybe twice a year. So you're not getting anywhere by keeping your ads in front of them over and over again, especially not if there's no added Benefit of branding, you're not building a brand. It's simple commodity. Like if they shop again next year, they simply google the product name, look around for the best price and then buy from that brand. So that did not work either. And then we finally got approval to increase the meta budget again. That's when we saw a little bit better performance. We saw, there was a month where we saw NKEG and NMER improve so we were more efficient on the new customer front. But their existing customer revenues still kept going down and we could not make up for that gap. And because they were still stuck in looking at just overall MER or roas, like the store roas, they didn't see that as a win either. So we did not get the approval to keep going with that strategy, keep making the new customer site more efficient. They needed to hit a certain like top line more and therefore we had to drop our budgets again.
- [22:51]
Lauren E. Petrulo
What would have been the ideal amount of time? You wish that you could have seen the consistency behind those numbers come down. So like, I'm thinking if someone's just listening to this and they're also like, because let's be real, those Chinese competitors that we've talked about, like, there's big brands like Temu and Shein, like they've entered the market with buckets of money and in completely lower cost products. So the substitution cost was ridiculous for a lot of these brands. I'm sure there are some people here that are in this like mousetrap of I can't compete in shopping because I don't have the reviews because I don't have the previous spend and volume and I don't have enough real estate to provide usps, it's just commoditized at that price point. But when you're seeing those, you know, those marketing performance indicators that are showing you progress towards growth, especially of new customer acquisitions and decreasing costs for acquiring new customers, which can increase brand value. What timeline would have been ideal for that client to have understood to see that this is not an isolated incident, but this is a trend. Like, at what point for someone who's listening being like, ugh, I don't want to bleed because it's still a bleed. Like, the reality is the client was like, they've been bleeding for a really long time, right?
- [24:02]
Ricardo Powells
And they're looking for you all of.
- [24:04]
Lauren E. Petrulo
A sudden like, yeah, they're like, I'm not ready to amputate. And you're like, okay, well we have to amputate some way. Because like you've been talking about how they're just squeezing the juice out of the existing customers. Like you, you have to, you have to stop the bleed and you're like what is it cauterizing where you're like putting the metal on it. But like at what point do you know that it's you. You stopped the blood loss and you can recover the limb. Like how long would that have been and how long did you have where their expectations, you said earlier on like might have been a misalignment. What was the time period that they looked at and what would have been the time period to show that you can like get out of the weeds and get back to a stable place? Because earlier you were saying like you just had to get back to net zero versus you want. They wanted to go from red to green, you wanted to go from red to black. What was that timeline been correct?
- [24:54]
Ricardo Powells
I would say to see the first signs that our study year was working at least a month because there was quite a lot of volatility week over week as they were running a lot of promotions. So one week it was great. Then there was like a sales hangover. Next week was just poor again. So at least a month. So in my opinion there were some signs that that strategy was moving in the right direction. When we had a mountain for NCAG and Ember improved. But to recover, if we're talking about this client to get back to black, that would have taken at least like three to four months depending on how quickly we would have been able to scale up. But they would have had to accept that if we were to push more money into it, kind of fueling their new customer growth, the top line more was going to suffer because that, that part of the business is not as efficient as the existing part.
- [25:49]
Lauren E. Petrulo
Yeah. And this you're talking about, this started in January and at the time of recording this we felt like half a year through. And I'm sure the same for you Ralph. For us, any contracts, relationships that we start with clients that are intended to be less than two years is a short term solution because we're trying to make long term growth. I mean even just on the episode we had with Corey, right. Like he was talking about how he was able to 10x over the course of 7 years. Like it, it has growing pains and there's this like level of sustainability. So in a six month look back period asking for miracles to happen, it has happened. You guys definitely have had incredible miracles and you're putting in the playbooks that have worked time and time again. But again it's just that, like, short term focus. For me, short term is two years or less. That's in my opinion. I don't know, Ricardo or Ralph, if that short term focus changes for you.
- [26:41]
Ralph Burns
Guys, I, I wouldn't disagree with that because, I mean, I think this. You're in a really hard situation here because you've got major brands spending enormous amounts of money. And I look at like, I was in the market two, three weeks ago for weed killer, all right, like, related market, but we've got like a bunch of crabgrass.
- [27:03]
Lauren E. Petrulo
This Ricardo's new title weed pillar.
- [27:09]
Ralph Burns
Oh, he is, he's a, he's a cat killer. He kill. He kills it so it comes out careful.
- [27:16]
Lauren E. Petrulo
That Boston accent might sound stranger.
- [27:18]
Ralph Burns
Watch out. But that Boston accent, I might screw it up.
- [27:21]
Ricardo Powells
I'm not going to use the F bomb there.
- [27:24]
Ralph Burns
So anyway, so I'm in there, I'm like, all right, well, which weed killer do I want? And Ortho and Roundup spend gazillions on like, paid media tv. Like, look at any sporting event in the United States, Ricardo. It's like, it's like every other one is either insurance company or something about beer or, or like lawn. When it comes to, like, springtime sports, like, geared towards my demographic, of course, you know, guys that actually watch tv. But the point is, as opposed to like watching everything on my phone, the thing is, is, like, when I was there, I'm like, which one do I trust? Like, who's built up the most brand equity? Cause they were all basically the same price. I'm looking at them right now on, you know, on Google Shopping, there's one that is a little bit more premium, and it's almost like, you know, 30, 40% more than the rest of them. And I believe that's the one that I bought because I had seen enough commercials. And it's Ortho, by the way, because it's like crabgrass and dandelion, because you got to kill the dandelions first. The point is, like, they built up a brand equity using hundreds of millions of dollars in advertising. So it put a position in my mind that this, this business was actually better in a largely commoditized market. And you're asking a very good question, Lauren, which is, how long would it take? Ortho and Roundup have taken decades, decades to build that up. And here you are going into a space thinking you can compete with everybody else. Maybe not was like the big brands, because there are some big brands that are in here. When I'm looking up Zinnia seeds here but not huge. But all the prices are basically equal. But we had price the same and in essence 10x more expensive. It's like how do you compete? And so the question then becomes how do you put the brand at the forefront of the consumer's mind to say oh well I will pay 10x more because that brand has higher quality. I'm not going to get the roundup, I'm going to get the ortho instead.
- [29:29]
Lauren E. Petrulo
I think one small caveat because you talked about you being the demographic you are in a different income level than someone of a different generation. And so I just want to be mindful of like one piece to it is that gen zers traditionally lack loyalty and it's an absolute race to the bottom.
- [29:50]
Ralph Burns
Interesting.
- [29:50]
Lauren E. Petrulo
And when you're in shopping that's what you're competing against. So I'm just being mindful of like you talked earlier again about the, the if you're not dominating in reviews you have to dominate in price because you don't have differentiated. I mean I would like want to think like hey if someone's looking at why is this 4 times 10 times more expensive? This could be better and you have that luxury premium stuff. But then I'm going to click and I'm going to be curious. So my click isn't a conversion, it's a curiosity driver. And then I'm expecting your sales product page or the PLP product landing page to tell me why this is premium and convince me yeah for that possible consideration of a conversion. But for the most part I'm going to do a curiosity click if I am comfortable going for value and better in quality rather than price. But that's where it's like I'm like mindful Ralph that like you're watching tv. You're aware of this. Gen zers traditionally have been assumed as the most disloyal generation of consumers. Yeah but gen zers and millennials are taking to gardening I believe way faster than previous generations because it's just a part of like a like anti screen lifestyle. It's a how do I get grounding? How do I, how do I have this type of non device dependent hobby? So in that I'm just, I'm mindful of like when Ricardo and team again like where I'm saying like two years is really short term. Anything less than two years is short term is you have to look at how is this positioned across the multi generations. You're going after the regionalization of those areas like maybe where ortho's headquarters. Oh, man. Good luck. Like everyone, Ortho's a big company, so like maybe half of a town is supported by Ortho in that capacity. Like, so there's so many things that you need to look at, but when you're inheriting a new account, we always say the first 90 days are the worst because you have to learn so much about the brand and the history of the brand. You came on record and you said you didn't have full visibility to a lot of the, the numbers that could have empowered this decision making to happen earlier on, you were reduced by the number of creatives that are happening. It's just, it's a lot of stuff where you were on a fire sale and you're, you're fighting. Like you said, you have sales hangovers, you've offer fatigue. I mean, everyone, well, not everyone, many people are aware of, like, what happened to J.C. penney, how they were just offered out and they went from being a place to go after to a place you're just. If you don't have a coupon, you don't go. So there's a lot of things to that where. I'm just saying, like, if you're listening and you're like, oh, how you feel, you're in the same space, like, I, I'm just gonna be honest, take a look at what are your expectations and have some mindset. Like, do you have a roadmap of how you're going to overcome this in two years? And if you don't, I invite you to look at one. And you need to have a budget with the expectation that you're gonna suffer your MER in the beginning so that you can grow a brand that will be sustainable, which is what, Ricardo, you were working towards. But you only had such a short period to raise the dead.
- [32:55]
Ricardo Powells
Yeah, yeah.
- [32:55]
Ralph Burns
Because they're, they're in a steep decline for three years. And you were just trying to get back to baseline.
- [33:00]
Ricardo Powells
Yeah.
- [33:01]
Ralph Burns
You know, that was like the immediate need. It was like a fire sale every day. Not because they were doing sales too, but the point was, is it was a frantic chase to get back up to where maybe they were the year before. You know, utilizing ncac, utilizing acac, like, trying to get the returning customers, trying to get new customers. And it was just this constant uphill battle. And, you know, due to the.
- [33:28]
Lauren E. Petrulo
But he had wins. It was a battle and he was going to win the war. You lost some battles, but you were constantly fighting and you were working towards. We started the. In the Green room. Right. We were talking about the battle of My Mama, Mama Naivegan.
- [33:42]
Ricardo Powells
And there we go.
- [33:44]
Lauren E. Petrulo
Eddie Van Halen. Van Halen.
- [33:46]
Ralph Burns
Eddie Van Healing. Yes, yes. He was not born there, but he moved to Pasadena from there. So Ricardo has some kind of, you know, the guitar history there in the town of Nijmegen, which I will visit someday and we will hang out. Anyway, the point is, is yes, there is a battle there and I think we won a lot of battles. And actually one of the battles that was starting to win was when the, when the budgets were shifted over to Meta, we started to see the algorithm actually starting to work because we weren't being compared side to side with the other competitors that were 10 times less expensive on a volume basis. However, you want to sort of slice the, you know, slice the apple there. The point is, like you started to get wins, but then the patience because of the urgent need to save the business was so much, it's like they couldn't wait any longer. Am I paraphrasing that or am I accurate there? Because that was my understanding.
- [34:50]
Ricardo Powells
No, that's pretty, pretty accurate. And we were trying to fix business issues with just big media with very limited tools. So when I mentioned like the three to four month timeline, I was just talking about hopefully getting their new customer revenue up enough to get back to black. But if we're talking about creating true brand loyalty and getting them to a place where they're not competing on price and reviews, we're definitely talking years, not months.
- [35:18]
Ralph Burns
Yeah, yeah.
- [35:19]
Lauren E. Petrulo
Because you have to revolutionize how you're with your competitors and like all of your existing, like, what's your referral strategy? How are your current comms, how are you talking to new customers versus how you're talking to existing customers and VIP customers. Like, this is a full holistic approach that cannot be solved. And saying this to a lot of listeners, because I know you think that Meta and Google are ATMs, that when you put a dollar in, you demand and expect many dollars back. I love that for you. That's very cute. And it works a lot of the times sometimes, but sometimes it does. I like, I just can't emphasize more of like Ricardo, you obviously did your, like, we, you can never promise and guarantee results. We'll say like, we cannot guarantee results, but we can guarantee you that we will put our full effort in and that we will try our best. There's outside factors that you can't control. But the component of why I think this is such a good case study to talk about, like we're off. Like, hey, yeah, like, we learn. We learned. I mean, the biggest learning here was there was probably a misalignment and of expectations and potential fit as a customer for your team. Because what you guys can do is amazing, but you can't always create miracles. You have. But in this time, like, you weren't necessarily set up and no one could have been set up for great success in that capacity. The biggest thing, though, is that, like, we're coming onto Black Friday, and if you're even close to this scenario, you're gonna have the worst margins and the highest costs. So if this is resonating for anyone that's listening, where you're like, I just, I keep feeding in. What was the number, Ricardo, of return customers that they had for the top line?
- [36:47]
Ricardo Powells
I was about 60%. Yeah. 50.
- [36:50]
Lauren E. Petrulo
Okay. That's, that's a lot. And they're going to be expecting, like, a lot more. Like, I mean, 40% new customer growth. I don't know what the subscription size of it, but there's a lot of things that need to be considered that anyone that's listening where you're like, oh, I see my Google Ads declining. I'm seeing my new customer growth declining. You have to be prepared because it's only going to get worse as we get closer to Q4. So what's really good is if, like, you, you take in some of those things and the, the mpis that Ricardo's been talking about and how his team is looking at how to accomplish red to black, then go black to green. I'm just. You've got to be mindful of seasonality. You talked about volatility. This is a seasonal forward item, especially in different regions. I don't know if this was international, but, you know, you're not planting new seeds in Chicago in January. So there's those types of components. So I'm just asking you to look. And like, if you take nothing from this episode other than that, like, sometimes everyone does their best, but you need a longer roadmap and a longer Runway. And unfortunately, a lot of that Runway may be dependent on money. And you're competing against VCs and international firms that are pumping in money with right away. So some of the best things you can do is ensure that your brand and your foundational things are tight before you just start spending money to solve business issues. And by spending money on paid media.
- [38:09]
Ralph Burns
Well, paid media will never, ever solve a fundamentally flawed business model. I wouldn't say it's a flawed business model here because I don't want to cast aspersions on this client because they've got a very solid business. They sell solid products. They sell great products. But the competitive landscape has changed dramatically the course of the last three to four years. We came in at the tail end of it, hoping a paid media strategy would at least get us back to break even. And rarely does that ever work. I mean, but it's trying to.
- [38:43]
Lauren E. Petrulo
You started to show it.
- [38:44]
Ralph Burns
Did it? Did. I mean, like to turn around an entire business based upon a paid media strategy. Like, yes, absolutely. Does it have impact? Ricardo and the team made major impact there. The timeframe had to be extraordinarily short though, because there was a. Remember, this is a incredibly seasonal product. Like it's March to May. June really is like their hot season as I recall. And then that's why they get like one purchase per year on average. Like their NAOV and their LTV was virtually the same. Zyracall is like maybe 10 or 20% higher on the LTV side. But the point is you've got a very narrow window of opportunity and we were like scrambling the whole time and.
- [39:29]
Lauren E. Petrulo
We have opportunity to capture the conversions. But they're a huge opportunity for them to build a brand because I. Yes, I would bet if we look in the Facebook ads library, they're not doing a lot of brand building initiatives now. So that when you're in your super bowl season you have super bowl superiority. My. Yes, that's my assumption. Based off of the cutback on Creatives and the decrease of spend on meta, shifting only towards that bottom of funnel race to the bottom purchase for new.
- [39:55]
Ralph Burns
Yeah, last click attribution, the whole thing. So I guess in summary, like Ricardo, give me like your analysis on what would be an ideal scenario. Like if a client, like there's plenty of people, plenty of businesses that are listening to this show that may fall under this scenario. Maybe not exactly like this with the seasonality, et cetera. Like what would be your advice to them when it comes to paid media and or business metrics? Because you figured out all their business metrics and their NCAC numbers and their NAOV and all. They didn't know any of that. So what would your advice be if you had to start on this all over? What would be the strategy from your standpoint?
- [40:39]
Ricardo Powells
I think it starts with setting the right expectations and to really do a proper assessment of your business. Like, are you declining? Are you growing? Are you still profitable? That changes the strategy completely in my opinion.
- [40:52]
Lauren E. Petrulo
For what time period are you growing? What Time period are you declining? Like what point is a trend?
- [40:57]
Ricardo Powells
Ideally year over year. If they have like a couple of years of data, it's not always possible for clients, but if it's not a seasonal business, it can be month over month. So either year over year or month of month.
- [41:10]
Lauren E. Petrulo
But you would look at at least six months or like what time period of at least looking at it. Because if you're like month over month and it's like three months good, three months bad, like does that neutral out in your opinion or where is that?
- [41:24]
Ricardo Powells
I would try and take as big of a timeframe as possible. Say if we're doing year over year, at least like three to four years. If we're doing month over month, because we have some startups as well that just started a year ago in a social, more limited. So then you look at at least a couple of months, but hopefully you'll see some month over month growth. What's also important to keep in mind is the time it takes for conversions to happen, which is wildly different from business to business.
- [41:55]
Lauren E. Petrulo
For sure. You're just saying it depends and a long way of saying it. Which are like the two best.
- [42:00]
Ricardo Powells
I don't want to give that answer. That's kind of the default answer, but that is what it comes down to. But for this client, conversions were happening relatively quickly, but we needed to have that assessment before we started working with them. Like the visibility on new versus existing customer revenue because then we would have seen that their existing customer revenue was declining. That would have made things a lot different from what we knew when we started with them. Because we were under the assumption that they were, I think, growing and they had growth goals. So we were under the assumption that we were taking on a growing client and just needed like a 5%, 10% improvement. And then we have time to work towards it. But that wasn't the case. What I would have done differently for this client specifically is really set those expectations in the beginning. That would have bought us hopefully more time to let our strategy kind of play out and to really explain the difference of the new customer efficiency and the existing customer revenue, that both can be true at the same time, that we can be more efficient on the new customer side. But as long as they're not solving their business issues, they will see their existing customer revenue decrease. And then they simply had to face the difficult reality that if they want to grow their way out of this kind of decline, they will have to accept a lower MER for like months, if not one to two years. And to really work on brand building or figure out a different way to not compete on price and reviews. So that would have been kind of the overarching strategy. And then media buying wise, it will probably still have come down to spending a lot more on meta, less on Google and spending even less than we were spending on brand and remarketing because we were kind of trying to meet in the middle, trying to run some remarketing ads. Probably spend a little bit more on branded than I would have liked to because they were really hammering on making sure that we were getting in front of existing customers, et cetera. But we were just seeing diminishing returns, if any significant improvement at all. So those are the major things that I would have done differently.
- [44:26]
Ralph Burns
So last question here is a lot of people will be listening to this like, well, why didn't you focus on email? If they're, if they had clients or they had customers from a year or so ago or two years ago, three years ago, just rely on email to get them back to get them to buy again. Which I know was part of the strategy but it just wasn't quite that simple. Remember these are purchases like when we talk about ncac and if you haven't listened to our NCAC series, I'm going to leave links in the show notes for that because you have to listen to it. Because this is one of those cases where I think I actually use it as an example. Like you need to look back a year and, or longer. Sometimes it's three months to determine NCAC because you're trying to figure out what your LTV is. But literally like this is a once a year purchase because it's gardening, it's springtime, it's depending on where you are. I think it was largely us. Let's just say it was largely us. So it's, you know, seasonal fluctuations. Yeah. So the point is, is you have to look back. Your NCAC calculations are always going to be different based upon the type of business and this is definitely one where it would be absolutely 12 months. So having said that, to get those repeat buyers, people who have bought before, you have their email address, you have their name, why not just like layer in, like just overload everything on email at the hottest time of the year, which is March, April, May, thereabouts. Like what's your thoughts there?
- [45:51]
Ricardo Powells
Yeah, definitely. And so there's a lot more to it but we recommended sending out more emails which they started doing I think at the end of the season. They were sending out maybe like three emails a day. So they were definitely going very heavy on email, which helps in the short term, but at some point you're just exhausting your list. But their email revenue was also going down year over year and month over month. So it wasn't just the paid media that was getting less efficient, it was emails. It was across the board. Even organic traffic was down year over year. That was one part of it. Another part was feed issues because they were so heavily reliant on Google shopping and they were having product feed issues because unfortunately they were not on Shopify. So their setup wasn't quite as easy. For example, for most products they had like two options, like for example a five seat pack and a 20 seat pack. But if one of those was out of stock, I believe that was causing some issues for the overall product. It wasn't working anymore. So we were also trying to help them with the feed issues. Among other issues like reflect the fact that they didn't have upsells anymore, which they used to have before when they were on a different website platform, store platform. That was not our thing that they needed to improve on. So there were all these factors and kind of missed opportunities. But the biggest issue was still like the pricing, the reviews that even if they find those like 2, 3, 4, 5% improvements across the board, they were still not where they needed to be.
- [47:31]
Ralph Burns
So the email would, which if you're listening, you're like, well that's the easy solution. Just like blast them with email. Oh, we did that.
- [47:38]
Lauren E. Petrulo
Oh, we talked about this on other episodes where you can delete your list and piss everyone off. You're going to have at some point.
- [47:47]
Ralph Burns
You need to reload, you know, you need to get more on that list. And I know that list.
- [47:51]
Lauren E. Petrulo
If the list isn't growing, that's for us. One of the biggest indicators when you were talking about earlier about like looking at growth month over month, year over year and stuff like that, for us at least something that's worked well for us is just saying like, is your email subscriber list growing? If you're not doing any lead acquisition, especially for you E commerce people, you should be doing lead acquisition, especially right now, ahead of Labor Day and Black Friday. But if your email list isn't growing, you have no chance to really grow your net new customers and that you might not even be doing lead acquisition strategies. Do you just have more people signing up in general? If you don't, you're not having people indicating that they're interested in it, but just not right now. So that kind of Stuff like, yeah, you, you'll deplete it. That's hard. You were in a tough spot, Ricardo, and like Ralph, you and your team did everything you can. But like, we have to look long term. If you're looking for quick wins and short fixes, you know, get into the NFT space or the crypto space or drop shipping. I mean, you did drop shipping earlier, Ricardo, which is, you cut your teeth and learned how to do this. But those quick things, like, do you want like a firecracker or do you want an entire show, like, hard. Those are hard conversations.
- [49:02]
Ralph Burns
I know. And you're mixing so many analogies here. I'm just, I'm not sure which one to latch onto. But no, you're absolutely right. It's like there's, there's, there's so much, there's so many things going on with this. Now. I just want to say this as a caveat. And first off, I really appreciate you coming on here today. First time on perpetual traffic. It's only been, you know, 10 years or three years. I guess in your case. The point is, is that like your success is far outweigh any of your air quoting failures. Because I don't look at this as a failure. I look at this as like we had a full debrief on what we could have done. And I don't know as if there's any other marketing agency like that could have figured out a better way of doing this because fundamentally there was flaws in a lot of places. And that's no knock on this business. But the point was, is we did everything that we possibly could and Ricardo is one of our top people at tier 11. And this is an exception rather than a rule. But I love talking about failures because failures are where you learn the most. So your successes are like, oh, those are easy. Yeah, we did all this great stuff. We know how to do that. But really, like this made us double down on the filtration process before we actually get to the production and the proposal side to really look into those metrics. And if you have not downloaded your MPI checklist, I don't know why you haven't. You should get it over@tier11.com MPI because that was the key to this whole thing. Marketing and business at the end of the day is just a math problem. Like, if you can figure that out, you can realize very quickly whether or not the business is healthy or it's really on the rocks. And this is what we sort of found with this one. And Ricardo did An amazing job deciphering all that and pushing that in front of the client, which was new news to them in many cases. We're actually doing that call later today. Client. They're like, I don't know what my cost to acquire a new customer is on my, you know, my info site, my membership site and my e commerce site and they kind of work together. And we figured all that sort of stuff out with AI which by the way is going to be a great episode at some point in time. The thing is, is like all of that really matters here and marketing is just a tool to grow the business. And I think you did a tremendous job in this account and I'm just glad that you come on and explain it because I don't think you really wanted to.
- [51:22]
Ricardo Powells
I do, I think it's useful. Yeah, definitely a good learning experience. One more thing I wanted to add is that I think for businesses in this situation where you're maybe getting desperate, try and avoid removing budget from top of funnel campaigns. It's very easy to start getting stuck into looking at last click attribution and assuming you have some awareness campaigns, some just top of funnel prospecting campaigns, some, some remarketing, maybe some branded campaigns, it's very easy to look at any attribution model and see that awareness is just not working. And maybe like top of funnel conversion campaigns aren't as profitable as remarketing and branded campaigns and to start cutting budget from like the top layers. But that's just a race down to the bottom. Eventually you're left with just remarketing ad spend and branded campaigns. And then to Lauren's point, you're not building your email list, has no new customer flow and you're just slowly killing the business.
- [52:24]
Ralph Burns
Yeah, for sure. I wonder what this would have looked like now with the new Advantage plus sales campaigns. That would have been really interesting, you know, using the different ad types that John talks about all the time. I've been on the show many times talking about all that. I wonder if that would have changed much. But still fundamentally you have a product that price wise you're, you're going to get beat on it unless you have some kind of differentiator. But it would be a really interesting sort of in retrospect to sort of run those types of campaigns and what kind of ads is what kind of results we would have gotten with that. But hindsight's always 20 20. So anyway, having said that Ricardo, amazing to have you on today's show. Really appreciate that. Of course you can check out Ricardo and us over@tier11.com, you know, there's your, there's your, you know, shameless plug for what we're doing here. And of course, get those MPIs over at the MPI checklist, which is tier11.com MPI and of course, wherever you listen to podcasts, leave us a rating and review. We try to be transparent here, Lauren, don't we? We talk about our, our not so successes and all our successes, and I think that's what makes this show different than all those others.
- [53:41]
Lauren E. Petrulo
So, I mean, we're not a LinkedIn account. That's just like, hire me. Look at the great things that I've done. All of this life is dandy. Like, we talk often about challenges and how we overcome them and just like wins. Because if you want to see the wins, you can just go to either of our websites and look at our case studies. Or it'll be go over there, hit with all of our ads. This is just more of like transparent, brutally honest conversation, business owner to business owner, with the people in the weeds.
- [54:09]
Ralph Burns
Yeah. And hopefully learning a few things along the way and hopefully, you know, avoiding some of those traps that we talked about here on today's show.
- [54:17]
Lauren E. Petrulo
Yeah, let us spend the money. Let us make the mistakes so you don't have to.
- [54:20]
Ralph Burns
So you don't have to learn what not to do or what to do in particular cases. So anyway, leave a rating, a review. Wherever you listen to podcasts. We get this podcast out to the audiences that we really want to impact and affect and teach people how to do this stuff the right way. So appreciate that when we'll read your review out on air. We have yet to do that for about three or four weeks here, so we're well overdue, Lauren. So, Ricardo, thank you so much for coming on pt.
- [54:49]
Ricardo Powells
Thank you for having me.
- [54:50]
Ralph Burns
Yeah, absolutely. From Nijmegen, Netherlands, Ricardo. And so, on behalf of my amazing co host, Lauren E. Petrulo, ciao till next show. See ya.
- [55:06]
Lauren E. Petrulo
You've been listening to Perpetual Traffic. For more information and to get the resources mentioned in this episode, visit digitalmarketer.com podcast thank you for listening.