The Playbook Men’s Skincare Brand, Tiege Hanley, is Using to Sustain Bottom-Line Growth → Kelley Thornton

[00:00:00]

Introduction and Business Overview

Kelley Thornton: We’ve pretty much doubled our top line in that timeframe. And we’re, we’ve been profitable every year, except 2022, which is a very difficult year for us.

Challenges and Strategies in 2022

Kelley Thornton: Sometimes the only solution is to throw money at a problem. And I think a lot of businesses were doing that when couldn’t get any product, you were paying exorbitant fees for transportation.

Google’s Q4 Expectations

Kelley Thornton: Google was sharing data about their expectations of Q4. They’re actually expecting a very good Q4. They really expect the consumer to be out and spending money and shopping really hard in Q4. We’re concerned as DTC marketers, we’re really concerned about, potential rising Keck because of how much campaign money is going into platforms and there’s, hundreds of millions of dollars being pumped in.

So we know the value of this gentleman named Kunle, who lives in the zip code, who bought on this offer through this channel, we’ll have a very good, a very high predictive. Degree of what his worth is going to be to [00:01:00] us. And that’ll allow us to figure out how much money we want to spend to get more Kunle’s tomorrow.

That will drive our CAC and the better we are at predicting it, the more comfortable we feel with adjusting CAC guardrails on a daily basis.

Scaling a DTC Brand: Insights from Kelly Thornton

Kelley Thornton: Want to know the secret behind scaling a DTC brand to $20 million while staying profitable. Kelly Thornton from Tiege reveals the strategy in this episode, don’t miss it.

This is the 2x e commerce podcast hosted by Kunle Campbell.

Kunle Campbell: So warm, welcome to another exciting episode of the two ax e-commerce podcast. Today, we dive into the story of Kelly Fontan, founder of tidge. Honey and how his innovative approach to men skincare. Turned this company into a thriving e-commerce brand. Kelly shares insights on product innovation. Subscription models and strategies for navigating challenges like rising acquisition costs and supply [00:02:00] chain disruptions.

If you’re looking for actionable tips on scaling a DTC brand or business in the face of adversity. This is an episode you don’t want to miss. Also, don’t forget to follow the podcast on your preferred platform. Your support helps us bring more incredible guests like Kelly and valuable content. Let’s get started.

Welcome Back, Kelly Thornton

So welcome back, Kelly. It’s great to have you back on the show. Last time we spoke it was back in, I can’t believe it’s October, 2020. We had a fascinating conversation about how you and your team skilled to channel into an eight figure business in just two years, which is phenomenal. We discussed the power of influencer marketing, especially strategic partnership with Aaron Marino, also known as Alpha M.

Who helped, teach Annie the voice, just get a voice up on YouTube. You shared insights on your innovative subscription model, which achieved an impressive 95 percent subscription rates, which is unheard of. We delved into like your content strategy, focusing on importance of like [00:03:00] long term influencer relationships and decisions to focus on YouTube as your primary channel.

There’s a lot we caught on this inspirational Very, I think it’s one of the most downloaded episodes for that year, and it’s amazing to have you on. I’ve seen you a lot on LinkedIn. I was like, we have to catch up again. So a very warm welcome, Kelly. Thank you, Kunle. I am excited to talk to you.

And you really, you hit on some really interesting points when we think back the last four years. Um, it’s like almost like dog years. That was like 30 years ago in DTC world. So excited to talk to you. Brilliant.

Operations and Logistics in Chicago

Are you still based in Illinois? We’re in Chicago, yeah, downtown Chicago.

And for those who We’re outside of the country that are paying attention to politics. We have the Democratic National Convention next week on two blocks over from us, which is at the United [00:04:00] Center, which is where the bulls And the Blackhawks play their sports season and the convention for the Democrats are going to be there.

We’re all a little bit nervous about it because in 1968, I don’t know if that was the last convention that was in Chicago, but it was a crazy convention, a lot of protesters. So we’re hoping for a calm few weeks here at T. Shanley headquarters. So it’s in a hockey arena. Yeah, there’s it’s a big sports arena that’s sponsored by United Airlines, and the Chicago Bulls play there, and the Chicago Blackhawks play there.

So it’s probably a, a 30, 000 seat, I’m just guessing, 25 to 35, 000 seat arena. And that’s where the convent, that’s the primary place for the democratic convention. The building has already told us that they don’t expect, they don’t suggest that our office stays open. Yeah.

How do you [00:05:00] run, because I’m very familiar with Chicago. I was there actually two years ago. How do you manage an e com? Are your. Are you is your fulfillment center in Chicago or outside of Chicago? How do you manage an e comm branding in Chicago downtown? Yeah, all of our, first off our offices and our warehouse are in the same building and we have contiguous space.

So we have, our finance and operations office and our customer experience office and then all of our marketing. And e commerce and CRM data. So we have this whole, that whole configuration and then we have our, we have two primary warehouses and a warehouse where we do our own in house packing and shipping.

So we have quite a few square feet here, maybe. 18, 000 total, something in that nature. And we are in downtown Chicago and we are [00:06:00] very much work from office type of company. So we have we have a flexible three, two hybrid. We were in a lot during those COVID years. We were in office a lot.

We’d be in office and then. Then we’d be out of office for three weeks and we’d be back in for a week. And so we’re really good at having people work from office, but having the flexibility of working from at home or remotely for a couple of days a week and we’re also summer hours a week.

Everybody’s out of the office on Fridays. Chicago is a beautiful city to live in. We had our first son in Chicago about 13 years ago. And I just relished every moment of that experience.

P&L Management and Profitability

Okay let’s talk about Your P& L, I like to start out with P& L management, profitability and growth from, you were already profitable at the time in 2020, when we discussed this four years on, have you managed [00:07:00] to, or have you managed to profitably continue scaling TH for the past few years?

And what key metrics do you focus on in your P& L? Yeah we’ve continued. So we’ve pretty much doubled our top line in that timeframe and we’re, we’ve been profitable every year except 2022, which is a very difficult year for us. A lot of capital went into managing supply. So we had a very tough time making sure that we had product delivered and on time and And product to sell to our customers, and it cost us a lot of money to, to manage it.

And looking back, we probably could have done a better job. Sometimes the only solution is to throw money at a problem. And I think a lot of people were doing that. A lot of businesses were doing that when couldn’t get any product, you were paying exorbitant fees for transportation, stuff was getting stuck in, on the sea and, For months and months.

So we’ve been profitable ever since the goal is to [00:08:00] run the business at least a 10 percent EBITDA. And. We’ve been, it’s very hard concept to both grow top line and grow bottom line for startup companies. Especially when you’re trying to build a brand from scratch, it’s very difficult.

And you need to be, as a company, you need to be extremely capital efficient and and when you have no. Outside capital, you’re not sitting with five or six or 10 large in the bank. You have to be very careful how you can, how you spend money. You can get into some very bad habits.

So we’ve been profitable every year, except 22. We’ve been profitable every month and every quarter. In 2024 although I, I found that 24 has been much harder than we expected. We had a very big number for us. It would be, in the low 20 million range and revenue in that 20 to 25 million in revenue range.

We’ve pulled back on it a little bit as, as the year went on. So we budget going [00:09:00] into the year. At the end of Q1 we make any budget adjustments to, a 2024. 1 budget and then at the end of Q2, 2024. 2 and so forth and so on. And we’ve actually been we’ve been actually reducing.

Our expectations on our top line through Q2 and into Q3, we’ll see what happens in September when we readjust. Fortunately we’ve done this before and we’ve we’ve actually adjusted our budget higher after reducing it and we’ve picked up a little steam heading into the fall. I do think, I know we will have our best year top line ever, but I’m afraid it’ll come at a few points being shaved off at EBITDA, which is fair, given the headwinds at the moment.

So really everything boils down to Q4 right now, because we’re recording this in August and in mid August, right? Yeah.

Impact of Elections on Business

And I tell ya I’ve got some, an interesting hot take on this. I was [00:10:00] just at a conference. At Google’s YouTube facility, Santa Clara, right in LA last week. And they, Google was sharing data about their expectations of Q4.

They’re actually expecting a very good Q4. They really expect the consumer to be out and spending money and shopping really hard in Q4. When you think about it, it’s interesting, we’re concerned as DTC marketers, we’re really concerned about. Uh, potential rising Keck because of how much campaign money is going into platforms and there’s, hundreds of millions of dollars being pumped in into all the digital platforms that we.

Are so active on and, what is that going to do to what is that going to do to CAC and our ability to advertise and what, and can we even compete, can we break through the election news, to get the ear of the consumer is a consumer going to be [00:11:00] tuning out that news and all the, those ads and, what, so we don’t know that.

And we’re concerned about that. And we’re very apprehensive, but I think as we go in this is the elections early November. I think once we get beyond that I, there may be a, there may be a bit of relief in the market with the consumer. And the consumer might be like, okay, that shits behind us.

Let’s really think about the people we love and care about. And what do we, and let’s have a little let’s rejoice a little bit. And, and I know, um, the bank of England lowered rates. The last meeting we haven’t seen any rates being lowered here.

There’s, the next Fed meeting is next month mid to, September 23rd, something like this. I expect the Fed follows the Bank of England and reduces rates. If we got as much as a half point rate again, I don’t think that’s going to matriculate its way into the [00:12:00] market. Like next, the following week, consumer, most consumers don’t all pay attention, but it does mean that we’ll see lower rates on people’s credit card bills.

And maybe they’re paying 20 percent interest on their outstanding balance. Maybe it’ll come down to 18 or 17 or, something like this. And, Car loans will get less expensive. Mortgage rates will get less expensive. And ultimately, we want consumers to feel good about themselves and their ability to afford the general things in life.

Hopefully, they’ll see the price of food come down just a bit. And so I feel very optimistic about the consumer’s mindset going into Q4. I really do. I think we’ll get there. Consumer bounce here in early to mid November post election, regardless of the outcome of the election. Because this is just, obviously everybody in the world’s paying attention, but it’s a messy election here, for a lot of reasons.

So consumers are the best of my ability, but best of my, what I know and [00:13:00] think from my team and from my friends is, the politics these days have really worn people down. They’re just really, they’re really turned off by it. So we’ll see. I’m very bullish about Q4. Yes, I putting it in that context of the fact that the elections would be at the start of November and obviously BFCM is at the end of November, most certainly release inventory quite dramatically.

It would just make it a flush or at least it would normalize things. It would normalize things. I’m very, it’s going to be very interesting to see. Let’s see what’s going on with inventory ad buying and our ability, to make noise out there, from probably early October, probably like mid, September through, through like early November, elections on the 4th.

These campaigns spend like a hundred million dollars each, it’s just going to be bananas. So we can’t [00:14:00] compete with that. And it would just really be interesting to see what happens to CPAs where, we saw earlier in the summer, we saw higher CPAs than we’re seeing right now.

We’re seeing more efficient. The efficient ad spend in August than we have in the last couple of months, don’t know why maybe it’s the calm before the storm. Honestly, that’s what I think. I think it’s a calm before the storm. I think there was probably a lot of spending going into the primary. And into the conventions, maybe it’s a little calm before the storm right now, but I think before Black Friday, Cyber Monday, the customer, the consumer is going to be excited about holiday.

I know I’m going to be, cause all this crap is going to be behind us. Yeah. Yeah. It’s, it’d be refreshing for sure. What was your experience back in 2020 because the last election cycle was 2020, wasn’t it? November, 2020 what impact do you recall the impact you had on media buying? I wasn’t paying as close attention to it and here [00:15:00] are the reasons why most of what was going on in our business was fairly like steady.

Hiring was like not a, it was a reasonable expectation to be able to hire inflation, wasn’t crazy. People were still making, a decent amount of money, so we didn’t have. A lot of the pressures that came from the COVID years, the post COVID years, and then high inflation again, I think the high inflation was driven from, U.

S. macroeconomic policies during COVID and how much money was pumped into, The economy, how much cash was pumped into the economy, consumers went crazy, consumers drive everything, consumer spending is what drives the entire economy. So consumers went crazy in 2022. They weren’t doing anything in 2020.

They were hunkered down. They were [00:16:00] pretty hunkered down in their houses in 2021 and 2022. Everybody came back out on the streets. We’re going to restaurants. We’re traveling, we’re going to concerts, we’re going to sports events. They were just rejoicing to be out and about. And then in 2023, people are out, but prices have gotten so expensive.

It’s very expensive to go to a restaurant here in Chicago. I, I, Sunday night I was going for a walk in my neighborhood. And my wife and I, there’s a new restaurant that opened. We haven’t been able to get in. We, the two of us went in there, we split a hamburger, we split a salad. We both had a glass of wine and it was 117 USD.

That’s a lot when you’re splitting a salad and a hamburger. We’re not talking about a steak or that’s a lot of cash. When you’re talking about splitting a meal, having two glasses of wine, it’s just insane. So people are like saying. Screw this. I’m not going to be going out as much. So [00:17:00] anyway I think Q4 will be great.

I think we need to get the election behind. I wasn’t paying attention to as much. And then of course, interest rates have been so high, right? There’s not a lot of capital out there and businesses are businesses. A lot of businesses. I know a lot of DCC businesses. I know are just barely making it.

And or close in shop because it’s just really fricking hard. It is out there. It is. It is. It is. And lots of conversations I’m having with operators is echoing your exact sentiments right now. If something’s not done, I think. Particularly in the States, there’s a need for a drop in interest rates.

So we could see the effects in Q4 at the very, worst. For, to, just to increase the share of wallets and indeed to see a discretionary income.

Cost Management Strategies

Okay, let’s Talk about cost management with inflation and, supply chain disruptions impacting, many businesses.

How have you managed to, to just curtail your task your cost particularly in [00:18:00] regards to talent and what adjustments have you made to maintain margins? You just mentioned the fact that you might have to take a hit by a few points on your bottom line, even though top line is going to grow.

Yeah, let’s, we’ll, I’ll talk quickly about it both from the operational side and then also from the marketing side where we spend all our money from the operational side. We are constantly, our operations team is constantly doing things to look at our vendors and our supply logistics to see whether or not there’s cost to be taken out.

And, our biggest costs are shipping costs, labor costs, cost of goods. So we are constantly, we’re crazy fortunate to have. Multiple vendors for to produce our products. We own our own formulas. We ask contract manufacturers to produce them. So we have a little bit of leverage because of that.

If we were white labeling products where we didn’t own the formula it wouldn’t allow us to take our formula ownership and give it to someone [00:19:00] else in code. So we’re constantly making sure that we’re getting the right costs from our products. On shipping, my, my shipper shipping team, our in house transportation team is constantly they were here for two, two hours talking to vendors about rates going into Q4 and next year.

So we’re constantly talking to DHL, FedEx, Ascendia, USPS, UPS, and once every 12 months at the very minimum, you need to go. You need to go to the areas where you’re spending the most amount of money and you need to do an RFP to make sure that your prices are in line. So I think like on the operational side that’s what we’re trying to do.

And then we’re also trying to push back to the extent that we can currently with our vendors and, not accepting price increases on certain things. I’m just saying, we’re not going to accept the price increase on packaging. And we’ll just have to go to another vendor and buy that packaging.

So that’s on the operation side, on the [00:20:00] marketing side we’re just looking really super careful at marketing mix and our, the overarching number that we talk about regularly, which is mer our marketing efficiency ratio, which is really just our total spend to our total acquisition that’s a healthy metric to look at.

Okay. We look at everything down on the channel level, but we’re looking at Mer overall to see how we’re doing with our marketing mix and and really keeping our, our total marketing expense down below, we, we love our marketing expense to be in the 25, 26. It’s almost impossible.

Sometimes it’s, It pushes 30 percent of our total revenue. 31, 32%, 32 percent is we can’t live with it, but it’s so we were seeing earlier in the year, our marketing expense ratio to be, closer to that 31, 30, 31. And we’ve just been much more efficient, renegotiated some contracts with some of our content providers and [00:21:00] pulled.

Our marketing expense down, cut anything that’s not, that’s not clearly returning capital to us. And constantly tweaking the marketing mix to make sure that all of our channels are and anything we’re looking at every single day. So anything that looks like it’s out of whack, we’ll look at it right away.

And if it, if we’re spending too much money and, we’ll cut back on it immediately. We’re not taking any big swings. So we’re not swinging for the fences on anything right now, which means, we’re not spending a hundred thousand dollars a month on, TV ad placements.

We’re not putting any money in any magazines. We’re not doing contracts with any, sports talent. We’re not doing any, we’re not taking any big swings at all. It just, we just can’t afford it. We can’t afford to drop a hundred thousand on something and it, and it not perform for us.

So we’re being super conservative about how we’re spending money on all our marketplaces, same thing, like tacos on Amazon [00:22:00] pulling back on those as well and, spending, being much more capital efficient, being really intentional about, what keywords, what we’re spending money on, how we’re spending money.

How we’re spending money versus our competitors those types of things. So on, also on the marketing side, taking a look at vendors and making sure any marketing SaaS anything that we’re not using, anything that’s not driving a business deliverables for us on, on the marketing side, we’re cutting.

Any contract with new vendors to do work, we will require the shortest possible contract that we can get into. We’re not going to get into a long term contract with the vendor any sort of service vendor that may not work out and be beneficial. We don’t want to be locked into any long term contract.

So just being really conservative across the board on how we’re spending money. Thanks. Thanks. Speaking about the [00:23:00] operations really interesting insights. I’m sure the guests would have been able to take some of the points you made there, which is. Always negotiating, you talked about shipping, negotiating your shipping, rates with all of the carriers.

You, you talked, I think that flexibility in owning your formula, particularly in beauty is so important. So you can easily switch. If you were stock to, to to, to white label, it would, you’d be stocked to a platform essentially. And yeah, that flexibility wouldn’t be there. So thanks for sharing that in the marketing side of things.

Marketing Efficiency and Channel Management

What, how has your mer your marketing efficiency ratio changed from 2020 when we spoke to dates? Is it yoyo or has it remained consistent between the late twenties and very early thirties? Yeah I was out of control in 2022. It was all over the place. We could not get it under control.

We had many outside vendors who we were not performing well for us. And we were we’re locked into [00:24:00] contracts. So 2022 was a pretty significant problem. 2023 was a lot better and very consistent throughout the year. And when we see opportunities to scale and spend more money and to increase, our marketing efficiency ratio we are doing that.

We are spending more money when we can be efficient. We’re surprisingly seeing a lot of efficiency. Over about 90 days, we’re seeing a ton of efficiency on YouTube. Some of our best numbers on YouTube in a long time. So we’re spending a lot, we’re shifting a lot of our budget, hundreds of thousands of dollars into platforms that are performing well for us.

I think. Historically, our channel efficiency has been inconsistent. I’d say over the last 18 months, it’s been a lot more consistent. And that just takes a lot of time, dialing it in, having the right people on the team, and really understanding truly. How you’re spending money and what your ROI is on that money.

Speaking of team [00:25:00] house what’s your approach to, do you have a marketing director on board? Do you work with a lot of agencies you prefer to keep a marketing in house or what’s the approach at teach? Yeah. Very. So we have a very strong in house team. So my approach which is admittedly, I think this is the harder approach is, to develop a strong internal team.

So that’s my approach. It’s hard. It’s harder because getting really good talent on your team is super hard. But so is hiring really great agencies to support you. So I think. They’re both really difficult. It’s a little easier to manage an agency than it is to figure out and hire good talent and then develop a team, a team structure, but we prefer to develop it internally.

So our team right now is, if I look across the board it’s just really good. Like really smart very skilled people that are very committed to the business that are very [00:26:00] clear about the objectives of the company, the mission of the company, where we’re going to be in the next 12 to 24 to 36 months.

We’ve developed, we do every few years. We just started in 2024. a new three year roadmap. So we’re, eight months into a new year, three year roadmap, five very specific points in the three year roadmap with the company, everybody in the company is engaged in that roadmap. So very clear kind of what we’re trying to do.

And then we just, when we do work with an outside Vendor, we really are very intentional about the type of vendor we want and what their skill set is and how they operate. And unfortunately, it’s come from being burned so many times and just not being very smart and intentional about who we’re working with.

So right now. When we want to make sure we’ve got a, we’re really aligned with it, with a, with an agency [00:27:00] and we really, and so we only have, and I guess there’ll be like for content creation. Yeah, we have we have an Amazon agency. We do our own Amazon ad buying in house and we do Amazon management, operational management in house.

We have an Amazon team that helps us look with our international expansion and taxation things that nature we have some agencies that help us with like global registration of our products. And then we have some, we have a lot of content creation agencies that we use, we manage.

That in house in, within the framework of Tej Creative Studios. We have a creative studio within house and in house people there. And then they manage, a lot of our, a lot of our vendors. That’s, we don’t have as we, and we have a lot of. Partners that are doing things for us Clavio and things like that.

Yeah. Cause adaptability to to, to ever changing [00:28:00] macro environment in, in, in the world of marketing is so important. We’ll talk about TikTok shop, how that has taken off and. Several, most in house teams don’t have the capability or competency to really scale TikTok shop unless if you have a genius who just sucks up, information is, and is almost an intrapreneur, in your company.

So how do you seize new channel opportunities, given that you’re very in house centric? Yeah, so the answer to that question is that this might be a bit of a, too much of a tell, but what we’d like to do is we would like to hire an agency. So let’s talk about tick tock. We’re doing well on Tik Tok, we have Tik Tok shop, we’re doing well on Tik Tok shop.

We do manage it through an external agency. So if we don’t have the core competency in house, we will we will hire an agency to help us. [00:29:00] But the intent from day one is that whoever is going to be the lead on that channel internally, even via an agency, We’ll work towards developing a skill set to manage that channel in house at a very specific future date.

So we’ll be like, we’re going to bring in an agency that’s going to help us do this. We intend to engage this agency for a year’s worth of time. And, by summer of 2025. We expect our channel lead to have enough knowledge and learn enough knowledge from that agency that will be able to manage that in house.

And we, we will be pretty clear up front, maybe not explicit, but clear up front with the agency that, we do it, we do intend to learn and to, Experience, how they’re managing process around that channel. With the intent of eventually taking over [00:30:00] the channel in house. So that, that is, that’s our approach.

Knowledge transfer which is key. So again it’s taking that ethos of owning your formula from the operational standpoint and from a marketing standpoint, actually owning the methodology. And process, in house, even if you’re getting the, the knowledge from a third party.

Yeah. It’s kind of, it’s like a combination of being a bit of a control freak and also being able to control your own destiny. It’s like a combination of those things, because, if you said it a minute ago, Kunle, if you don’t have the knowledge in house, then it’s really hard to manage a partner.

So I think like our strategy is to really, truly understand the channel as much as possible so that we can have the flexibility of scaling that channel internally.

Investment Priorities and Channel Diversification

Final question in, in, in the P& L management side of things is just your investment [00:31:00] priorities, particularly how they’ve shifted in recent years.

And I want to understand whether you’re, you’re a 70 percent DTZ company or whether you’re more diversified, channel diversified. I think you’re one of the first people who told me that told me about like channel diversification where you don’t want, and that stuck with me for a while.

Can you imagine four years on where you’re like and I don’t know whether you remember this, but you’re like you didn’t your approach is not to make a channel sort of account for more than 25 percent of. The top line you want to distribute it evenly. So is that still the case? What are your investment priorities?

Yeah. I all right this is a big question. Answer the first part of the question, the way you asked it. Our investment priorities is to invest in our people first. And so we want really fucking good people on our team, and that’s extremely hard. To the extent that we can make sure that we have the right people on the team that allow us to [00:32:00] get, five year or three year roadmap, we have the right talent.

That’s going to help us get to that. Then, I believe in product actually a lot. Product’s really important to me. So physical, our physical product, our physical formulations and science in our products really important to me because if we don’t have really great products that work really well, that guys love we can sell that product all night and all day, one time we can’t sell it two times and our business doesn’t work.

Unless people love our products. So we invest in people and we invest in physical product and the way we invest in physical product is through our people. Like we have an insane chief product officer, Fadi Murad, and he’s been with us for several years, first as a consultant and full time this year.

And so we just have a really good product [00:33:00] innovation roadmap. Yeah. And really trying to understand where we want to be with our product this year, next year, and the following year on a like in channel investment. And channel diversity, if you have, so I, I learned this at my previous company, my second company that I created, which is a global advertising agency.

And when you have services business, it’s always like the 80, 20 roll 80 percent of your revenue comes from 20 percent of your clients. And That’s awesome. And that’s a good thing while it lasts, but if you lose one of your big clients in the service industry, it’s, represents 50 percent of your revenue or more things change really quickly and not for the better, but for the worst.

So, making sure that you’re diversified. And we learned the hard way here at teach. We had a big problem with Amazon several years ago. I think it was around 2021. We had problems with [00:34:00] Amazon and there were technical problems with some of our products. We were able to recover really quickly.

We were able to recover in 60 days or less. But just, you realize how dependent you are on income from a channel. And Amazon was under 20%, so it wasn’t a huge thing, but 20% of our business was a pretty big deal. So to shut off 20% of our revenue for 60 days. It’s very frightening, and you can’t bounce back quickly from that.

So being diversified in your channels is really important. What’s really good is when all the channels are killing it. When all your channels are doing really well, that’s the magic. Unfortunately, that’s not usually the case.

Diversifying Marketing Channels

Usually some channels are doing well and other channels are not doing that well.

So being diversified, being on Tik TOK, being, doing really well on, on paid, doing really well on on [00:35:00] meta properties, doing really well organically micro Mackle influencer affiliates all of these things, brand doing very well on brand. When you’re doing, when you’re doing, pretty well on three of the five, then you’re doing pretty well, when you’re sucking on all of them, you’re really in trouble.

So I think like, and what we see, Kunlei is that we’ll have a couple channels that are doing really well, like through the quarter, these channels are performing very well for us and other channels are not.

Evaluating Channel Performance

So we’ll do two things. We’ll try to figure out why a channel is not doing well for us.

Is it, is it the talent? Is it the creative? Is it the messaging? What is going on? Is it that we’ve changed something and how we’re buying on that channel? Is it the data’s not right? Is there a technical problem? Is something technically broken? We’ll try to evaluate that.

In the meantime, we’ll be shifting dollars quickly into a channel that’s performing for us. And that happens very quickly. Within a week or [00:36:00] weeks we’ll be shifting. Dollars out of, and usually we have enough scale in the, in our channels that we can effectively shift dollars. If you don’t have scale in your channels.

And you’re shifting dollars. There’s no place to put the dollars, in the channel that you’re scaling towards. So you have to have enough scale in each one of your channels that you can, you can shift yet you need to have diversity first in your channels. And then secondly, you need to be able to shift money, have room to to utilize additional capital in that channel.

So that’s what we, that’s what we’re thinking about all the time. And that’s a real key point in terms of getting to statistical significance through scale, to know if it’s working or not, and then shifting it really quickly.

Data-Driven Decision Making

So what are your, what’s your feedback loop? What are your, how often do you collect the data and how often do you react to the data and how do you even collect the data to, to make these decisions?

Yeah. I don’t, it’s hard to say, I wish I had a feeling for [00:37:00] how data driven other companies were. From my pretty ignorant perspective, because I don’t know what, where, other companies are in their data game. I think we’re incredibly knowledgeable when it comes to to data within the company.

We have our own data team. And we’re, we are looking every single, I get a scorecard every day. That’s one page. That tells me everything about our business. It’s like everything and it’s all homegrown. It’s something that we create ourselves. It, it talks about, channel spend channel efficiency from the day before, from the week before, from the month before where we acquired customers yesterday.

We actually, we’re actually. Looking at performance by channel. And then we’re understanding, cost we’re looking at, attrition of customers or return on customers on that channel. We’re looking at a future 12 month earning [00:38:00] on that channel and then figuring out basically tomorrow, how much money are we willing to spend on that channel to get to get like customers.

And then 30 days from now, we’re looking at whether or not Our predictions on that channel were correct or not and we’re looking at 30 days now, we’re looking at, today, and we’re also looking at, June 13th, which was 60 days or July 13th, and we’re looking at June 13th, 90 days, and we’re looking to see if the assumptions that we made on those channels were correct or not.

And then of course, we’re just every single day putting that back into the feedback loop to figure out how much money we can spend today to acquire customers and how efficient we are with our spend, if that makes any sense. It makes a lot of sense, Kelly.

Customer Acquisition Strategies

So from a new customer acquisition standpoint, from a CAC perspective, what’s your not start?

Is it the purchase or is it the subscription? Cause I’ll speak for one of our businesses. [00:39:00] When else we’re, when we’re working with. With the agency we, we essentially just focused on, on save and subscribe. Like how many subscriptions is this, as your works are delivered at a skew level. So we understand what the growth is.

And we chatted that over time for Tiege. When, at the time we last discussed, you were like a 95 percent subscription rate. Has anything changed there? It’s pretty similar to that. It really is in terms of our top line revenue. On, on our domain, teach. com. Our subscription revenues in the high eighties at 87, 88 percent on a daily basis.

Yeah, just back to this conversation, what we’re doing and you think about Keck we’re backing into Keck based on based on, our channel specific costs, our, our mark, our cost of product, and how much it costs us to acquire that customer will actually also include.

Variable cost and fixed cost, fixed and variable marketing expense. And then [00:40:00] we’re, because we have the benefit of having years and years of data we’re estimating the future value of that customer. And we’re really good at it, like plus or minus a percent or two. It’s that tight.

It’s plus or minus like 2%. And on the channel level and based on the creative and the mix and the offer that someone bought. So for instance, if someone’s buying a, comes in and they’re a customer and they’re coming in through meta and they’re buying on full price, or they’re buying at 20 percent off, or they’re buying something and getting, a free gift, or they took a quiz and got a coupon, whatever it is.

So each one of those customers. We expect to will perform differently. So we, you know, we’ll look at the behavior of each one of those customers and say, what’s the likelihood that they’ll receive another box from us, another [00:41:00] box from us, another box from us, we can take that and predict a future 12 month earning so we know.

The value of this gentleman named Kunle, who lives in the zip code, who bought on this offer through this channel, will have a very good, a very high predictive degree of what his worth is going to be to us. And that’ll allow us to figure out how much money we want to spend to get more Kuhnleys tomorrow.

And that, that is and that will drive our Keck. And the better we are at predicting it, the more comfortable we feel adjusting Keck guardrails on a daily basis. So we’ll, we be, we may be more than happy to spend whatever the number, I’m just throwing it out there, 50 today.

And this week we may be happy to spend 50 next week. We may be happy to spend 75 and the following week we may only want to be spending [00:42:00] 42. And that’s exactly how we run our business. Yeah. Very CLTV driven, customer lifetime value driven.

Subscription Models and Customer Experience

Does that mean, so what I’m hearing from you, it means that customer preferences regarding subscriptions has essentially remained the same over the last four years, even though you see you’ve doubled the business.

Yeah, that’s an interesting question. That’s a, man, that’s a damn good question. I actually think there’s less subscription aversion today than there was before. Because I think we’re, we’re a modern day subscription company and I think a lot of E commerce companies have come to grips with if they’re going to be a subscription company, they really need to be customer focused and genuine with their customers.

And we have a reputation out there that we’ll do what’s right for the customer. And if they sneeze and they’re upset, we’ll return [00:43:00] their money, their cost of purchase. If they didn’t get something, we’ll help them. Yeah. And there’s people out there that are abusing it.

Yeah. Absolutely. Absolutely. And we do a lot to, to, to monitor, abusive customers and we block them and we banned them. But most customers are like, I believe most people in the world are good. Maybe I’m naive, but that’s what I believe. And so we treat everybody with kindness. And and so I think that the value of having a subscription outweighs the hassle, right? People don’t. In my mind, consumers do not have any concern about getting out of a subscription, right? Because the consumer is probably thinking, I’m going to get my bitch on and I’m going to get out of the subscription, and if I have to call 10 people to get it done, I’m going to get my bitch on and I’m going to do it, right?

So I don’t think consumers Believe that they can’t get out of a [00:44:00] subscription. I think what consumers think about is how much hassle is it going to be like, do I need to call five people or can I just chat in with somebody or send an email and get my problem solved? If they and so if a consumer thinks that all they need to do is chat in or email or whatever and they get an immediate response and we solve their problem right away, I think they’re cool with subscriptions because the benefit of it in my mind as a consumer outweighs, the potential hassle of having to get my money back, right?

I don’t have to do anything. I can make changes easily. I can get what I want when I want it. And it’s more convenient than having to go to a, so the benefit of the subscription outweighs it, as long as you make it super easy for the customer. It’s, yeah it’s about convenience, speed, convenience, and yeah that predictability.[00:45:00]

Could you paint me a picture of. A customer. So take me for instance if I was to go into Tidge today and subscribe to, to, to a pack to a package, what should I expect? What’s my customer experience? How have you crafted the customer experience? Do I get a welcome pack? Do I get direct mail in the post?

What kind of emails and SMSs would I expect to to get from Tidge? What’s my conversation with Tidge, like posts, post subscription? How do you treat me? Yeah, we’re really, so we’re the routine company. We’re routine experts. We’re really, we really want you to be successful with your skincare routine.

We want you to be successful in life, right? And we’re just a little, we play a little bit of a part in that. So we want you to be successful. So we’re going to try to help you. I’m going to try to make sure that you have very high visibility to receiving your box. We want your customer experience on [00:46:00] selecting what you selected and Checking out really easy.

And then we want to make sure that you had a good experience receiving your box. So that’s super important to us. We want you to, we pay a lot of attention to how long it takes for you to get your first order. And we’re paying super close attention to what you’re doing. Between placing the order and receiving that order.

So we’re paying attention to whether or not you’re making changes, you’re changing your shipping address, you’re doing all kinds of stuff. So we’re paying attention to all that. And then we’re welcoming you in to try to understand. How to have healthy, have, how to be successful and have healthy skin and get good results.

So we’re helping you with all that. And then we’re talking to you about the value of being a subscriber and what it is that you will receive from us. So those are the main things we’re doing.

Exploring New Sales Channels

Interesting. And then from a channel mix, mix perspective [00:47:00] you’re obviously DTC, you have an Amazon front, you mentioned a TikTok shop, are you also Brick and Mortar, do you have any distribution deals or is it just those three channels?

But we do not. We just started our wholesale journey. It’s part of our International wholesale or domestic? Domestic U. S. wholesale. We just started. It is, there’s another reveal. It’s a one, it’s one of our five pillars on Our three year growth plan in June, we hired our first, again not outsourcing to, a sales agency.

We decided to hire in house, we hired an in house wholesale manager, global wholesale manager, who we are thinking about global, but we want to, we want to get our feet under ourselves. And and actually we made very quickly, we made great progress. So starting in January, we know we’re already going to be in several hundred stores of of, sizable U S [00:48:00] retailer.

And there is an appetite out there for our products to be sold. At retail and this just goes right to what we were talking about earlier. I think it’s important to diversify. And so we want to be, we want to be, diverse in our channels. The DTC business isn’t doing, growing at 25 percent year over year.

Maybe maybe the wholesale business is growing at 20 percent year over year. I don’t know, because we’re not there, but we do want to be diversified, but we want to be very. Thoughtful about how we do it. Like the goal isn’t to be in every door that we can be. It’s to be in the right stores and to be profitable.

That’s right. That’s right. That’s right. That’s phenomenal. One thing I one point I wanted to make about TikTok shop is just the fact that it’s not mature enough to support save and subscribe or any form of subscription. How are you tackling that? This is what I think. And actually I’m very bullish on [00:49:00] TikTok shop.

I actually think that the mindset for us brands should be that it’s not a competitor of Google or Meta. So it is not a Google or Meta. It’s a, which is where my mind was for a long time on it. It’s really a direct competitor of Amazon. It is. I think they’re after, I’m firmly believe.

Tick tock by dances after Amazon, they’re not after Meta. Um, I think it’s really important to be, to have a really good tick tock shop strategy and to, really seriously consider it as a distribution channel, like Meta, like Amazon and, uh, begin your journey with them.

And it’s going to be. If it’s going to be anything like Amazon, it’s going to be a long haul and trying to figure out how to be on there, [00:50:00] how to have a great shop and how to grow that shop over time, understanding that right now, TikTok shop owns the customer. They own the customer. I guess you have the customer address.

But realizing that they’re here to stay and they’re here to compete against Amazon. And so you better get on the platform and you better figure out how to, play within the guardrails that the TikTok shop has set up and, hopefully have a successful shop. I think it’s clear how you can be on that platform and win.

It’s early in my opinion, right? It’s very early. So I think. Getting a great, having a great strategy and building TikTok shop and committing to it for the long haul is really important. Okay. Sorry. I realized I was just talking to myself because I was on mute.

Yeah, I heard an audio problem there and I was trying to figure out what was going on, but that’s okay. Let’s [00:51:00] ask the question again. So your audio is now has changed. I’m going to just mark this and bookmark this clip. So we don’t lose. So your audio has changed. So you’re the quality of your audio is has dropped.

Yep, I’m gonna fix that right now. Okay. I apologize for that. No worries. I was trying to, I was trying to shuffle off there why I lost you. I didn’t realize what the problem was. There we go. Can you hear me now? I can, but you’re still, I think you’re still using your computers. Let’s see. Okay. So it does say you’re using your, okay, let’s we’ll proceed.

We’ll proceed. I think it’s better now. Yeah. It’s better. It’s better. Yeah. So I was saying that it’s interesting where Meta is going in comparison to to, to ByteDance. I was listening to the Q2 earnings reports for 2024 where Meta and Mark Zuckerberg was talking about how they’re doubling down on Meta [00:52:00] AI.

They’ve been investing a lot on AI to improving the just time spent engagement and performance of of their platforms. When the platforms are interacting with customers. So now they’re creating a chat, GPT kind of lookalike called Meta ai, and they’re throwing a lot of resources like that.

Meanwhile, bike dance seemed to be focusing more on commerce on their TikTok shop. Since they solved the attention, challenge, TikTok will hold you as a user for hours, for minutes, if not hours. So it’s interesting how diverse or how different their strategies are at the moment.

But one thing I’d like to see TikTok shop have is a save and subscribe option, Claire, save and subscribe where you’re able to, it’s essentially subscribe to a brand, but they’re also quite good. Anecdotally speaking, when you purchase something from if you purchase a beauty product from Metta or a Metta, from, sorry, from TikTok, TikTok is quite good at retargeting you again.

And it would [00:53:00] incentivize you to get that second purchase through and it’s quite persuasive. And I think it works. Yeah. I concur with everything you said on my comment on, the subscription aspect of TikTok shop, to me, it will only be a matter of time. TikTok has been very deliberate.

If you’ve really looked at how they’ve rolled out things, and I, to me, there seems like there’s no expectation that they would, there should be an expectation that they’ll have, the ability to do subscribe and save over time. Absolutely. They have the know how for sure. Okay.

Influencer Marketing Evolution

Once you swiftly move on To influencer marketing at the time, you were, you essentially had a brand ambassador.

It was Aaron Marino. Was a significant part in Teja’s early success. Can you share why he’s no longer the face of the brand? What led to this change and how has it impacted the brand’s identity and marketing strategy? Yeah. First off, Aaron Marino is intimately involved in the brand.

I, he’s engaged with the brand on a daily basis. [00:54:00] So he is still a minority is very high minority stakeholder in the brand. He sits on our stakeholder board. So he’s a critical person in the brand and he’s very He’s a very savvy marketer and a very savvy businessman.

So he’s very engaged in the brand. I think he is, and not only that, the brand, the brand is very fortunate to have Aaron be so engaged early on in helping us develop and grow the brand. Without him, we wouldn’t be where we’re at today. So with all that being said, there’s a natural, this is, this again goes back to the channel conversation.

There’s a natural ebb and flow of every channel. There’s just, there is, and there’s a natural ebb and flow of content and content creators and no Aaron created content for us for many years. He still creates content for us regularly. [00:55:00] But the type of content that he’s creating for us is changing a little bit.

So he’s not talking on our YouTube channel, regularly, really the blog on our YouTube channel is really about the making of our brand and what we were doing with the brand every week. And, we felt that content was got to the point where it wasn’t, as relevant to our customers anymore.

Aaron and I and our business partner, Rob, decided that we weren’t going to continue making that kind of content. And Aaron has made a lot of content that he’s. That he’s presented to his YouTube channel for many years. And we just felt collectively between Aaron and Rob and I, that we weren’t going to rely so much on Aaron’s YouTube channel to help us grow our business.

Um, we’ve leaned less on Aaron and it’s been, not just. One year, it’s been year after year. We’ve relied less on Aaron to grow the business. [00:56:00] And we’ve relied more on our ability to be good marketers to grow the business. And so that’s it. You don’t see Aaron I, I don’t know.

I’m sure there’s images of him on our website and there’s some videos of him somewhere on our website, but he’s just not front and center to everybody. And and that’s okay. It’s good for our brand, and it’s good for Aaron. We need to be broader and bigger. Then just one person bigger than me, bigger than Robin, bigger than Aaron.

New brands can be sustainable around the world. Yeah good stuff. Good stuff there. So do you have any, so what’s your influencer markets and strategy? We create, three to 400 pieces of content every month, and we’re creating content with people that are great at delivering content that we think.

Our customers are looking for, so if our customers are looking for specific type of content our goal is to be engaged and embedded in that content that they’re interested in and we need to be [00:57:00] talking about what is important to teach, which is, skin care. So we’re producing, an exorbitant amount of content all the time that is relative to men and talking about skin care.

Okay. Okay. Makes sense. And then how is the content, how’s it funneled the three to 400 pieces of content you create? Is it purely paid or do you also use it organically? Both. We have paid contracts where we’re doing where we’re doing just, It’s just being used on our content providers channels and sometimes we’re doing things that are being used across all channels.

It’s everything. Sometimes we’re using it solely on organic channels. We use it, we use content everywhere and it’s different in form and function. Okay. Makes sense. Makes sense. We’re going to jump into some wrap up questions so we get this going.

Future Outlook and Expansion Plans

What is the future outlook?

Just looking ahead what your next big milestones, you talked about your five year plan for [00:58:00] TE teach. How do you plan it? The outlook is super bright. It is great. Our brand is strong. Our economics are strong, our team is strong. The market is maturing and more guys are interested in taking care of themselves.

We’re very well positioned to be market leaders. I don’t see anything, but all arrows up and to the right, I think we, as a brand have a lot of work to do things that, that we’ve talked about briefly on this roadmap, such as. Product and launching great innovative products.

We have a lot of work to do and being well, better known in the market, right? Having more visibility. More people around the world become familiar with our brand. And wanna trust us to try to try our brand to be there’s go to skincare brand for dudes. I think the future is very bright.

If we want to be specific, we see a continued global expansion. We see product expansion. We see brand [00:59:00] expansion. We see US marketplace expansion. Lots of opportunities ahead. Expansion. Expansion. Expansion. So speaking of international expansion, would we, would you going to have a local UK presence or local European presence?

I would love to, we do really well in the UK. And we’d love to have presence there in the UK. We do very well in Europe. So we’d like to be there too. And so I think yeah, it’s definitely on the roadmap. Okay. Good stuff.

Final Thoughts and Advice for Entrepreneurs

Given everything you’ve learned about learned since our last conversation, what’s the one piece of advice you’d like to give to aspiring entrepreneurs, especially those looking to scale their DTC, beauty businesses in 2024.

Do it, man. Get after it right away. Be prepared for a grind. Get after it right away. I’ll probably say the same thing that I would say to you, back several years ago is creating that voice in the market. It’s really hard. We were just talking about Aaron and how important he was for teach and is to teach so having a great voice, [01:00:00] figuring out how you’re going to have a voice in the marketplace now you’re active activating on that is is really important.

So get out there and figure that out. Yeah. Yeah that sure is, has been your unfair advantage, in, in this really competitive world of, men skin care men’s grooming. So final thoughts, is there anything we haven’t covered that you think is important for our listeners just to know about Tiege or, the men’s grooming?

To know about Tiege, look, I think it’s important for all guys. So if we’re talking about Tiege, I think it’s all, I think it’s really important for guys. To be thinking about how they’re going to have healthy lives. Take care of themselves, mind, body. So having a healthy skincare is really important.

I prefer to use our products, but if you’re going to get out there and, use teal keels or somebody out there lab series, or it’s globally known that produces good products. Not as good as ours that give offer. Some block protection like SPF, it’s really important for guys to get out there and embark on a [01:01:00] skincare journey, for marketers.

I think 2024 has been a lot harder year than we all anticipated. I think consumers came off of COVID spent a lot of money and have been really fatigued by. Inflation and we need some help on, what inflation looks like Q4 looks solid. I’m very bullish on it and I think if we could get behind the U.

S. election and we could quiet down some of the noise that’s in the world it’s incredible that 2024 we still have. Wars raging everywhere and if we quiet down a little bit and consumers can feel better about the future it would go really well for us in 25. Yeah. And there’s this YouTube shop and channel now which essentially puts YouTube into the mix as a viable channel.

So I’m really looking forward to that one too.

Conclusion and Wrap-Up

Kelly it’s been an absolute pleasure having you on the 2x E Commerce podcast. For people who want to find out more about TIGE, it’s TIGE. com. T I E G E. com. I’ll link to it in the show notes. You’re active on LinkedIn. I’ll link to your LinkedIn profile.[01:02:00]

This is really good. Four years was a bit too long. Maybe next time we’ll catch up in, in another 18 or 24 months. What do you reckon? Hopefully another two years max. I’ll come back. Okay. All right. Chaz, thank you so much for being so open. Appreciate it. sir. Appreciate you having me.

Okay. All done. Really appreciate it. Great convo.

Kelley Thornton: So thank you for tuning into this episode of the 2X eCommerce podcast. I hope you found my conversation with Kelly Thornton insightful, especially on how teach are successfully skilled while maintaining strong profitability for smart cost management. From smart. From smart cost management to the importance of diversification.

There’s a lot to learn from any e-commerce operator. If you’ve enjoyed this episode, please subscribe to the 2X eCommerce podcast on your preferred platform. Your support helps us bring more incredible guests and content to help you grow your business. Don’t forget to leave a review and share this [01:03:00] episode with fellow operators who could benefit from Kelly’s insights until next time. I keep pushing the boundaries of e-commerce. Thank you for listening.