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- Hey 2022 Aren't You Gorgias?
Happy New Year baby! It's Tuesday, day two of being back to the office (or my bedroom, while my dog snores at my feet) and damn I am excited. I'm writing this from a brand new email address, so please take five seconds to respond, say what's up, or ask a question. It will help ensure that my email gets delivered to you next week :)
I hope you had the best holiday and actually got some time to reset and recharge. I spent some much-needed time off the grid in Telluride, Colorado (shoutout Will from Western Rise) for the dopest house and then worked my way on a nice road trip to Moab, Utah, and Salt Lake City. Back home now in Miami and excited to kick off the year. Only 329 days to Black Friday 2022, who's ready?! Just kidding
Lets be honest 2021 was brutal. A lot of brands that started the year with us are no longer here (RIP). DTC is not for the faint of heart and it’s only getting tougher.
As I reflect on what worked and didn't this year, some things are fundamentally obvious. We spent way too much on web traffic and not enough on optimizing our traffic to convert. We’re putting a huge emphasis on making the most of every single visitor. Every single touchpoint needs to be so damn solid because you won't survive as an online business if you can't convert your traffic.
Believe it or not, it starts with the customer experience. We used to think selling the dopest product was all you had to do and the rest will take care of itself...not the case when you're seeing CPM's (Cost Per Mile) skyrocket 3x. About a year ago we upgraded from our free Shopify app called Tawk to Gorgias which is honestly best in class in providing an A+ customer experience. We have chat agents hired from Freeup.net that are available around the clock.
Each customer service agent is armed with the following information:
Expert knowledge in our products & how the game works
Retail locations where CROSSNET is available if they do not want to wait to buy
An updated record of our active discounts & promotions (this year our internal goal is to stop discounting by over 50%)
Special pricing available to retailers & physical education teachers and the contact information for the best person at our company
Look at this dashboard from inside Gorgias. Just over the past few day's we've cut our lead response time down to almost 4 minutes and we're resolving problems in under 2 minutes! You can download a trial of Gorgias here.
Our Head of eCommerce is measuring a few key metrics in platform weekly:
Lead response time. If you know anything about sales, this is the most important KPI. If your prospect has a question, you need to answer it! How quickly and how thorough can you be?
Revenue generated. Our chat agents should be helping drive conversion and pushing customers to convert. If we’re paying our agents in the Philippines just a couple dollars an hour (a great wage out there) and they are driving in even just an additional sale a day, then that’s the best ROI I could ever ask for
Key accounts. It’s one thing to convert a normal mom or dad into a customer. It’s another to help bring in a school district that’s buying 15 nets for their classes or a small retailer who may order 100 units over the course of the year. Based on the type of conversation that comes inbound our head of customer service, Rizza, can easily tag in myself or another team member to help close big deals just by using a simple @
While you’re putting more emphasis on the customer experience, making sure your website is 100% always working properly is a great place to start. Over the holidays I may have taken a few days off and an image was loading properly for like 48 hours. Once a day you should have a teammate check out the site for 30 seconds to make sure everything is copacetic. We are also having a teammate create mock orders weekly to see how the experience is, are there any weird glitches (pop-ups jumping out, weird delays, etc.) and if anything else is going wrong.
Our Biggest Lessons in 2021:
Not knowing our numbers inside and out killed us. I can't tell you how many times we had conversations where we were like "Are we going for a 2.5 or a 3 ROAS? Did we account for xyz spend? Eh.. a 2.2 is acceptable. Hell with it we're shooting for a 2 and fingers crossed." Honestly, you can think the world of CROSSNET, but we're still a startup at the end of the day.
How we're solving it. We've been using Triple Whale for the past few months and its been a game changer. It's helped us cut down unprofitable days and scale up massive days by accurately tracking spending across all of our channels. No more forgetting "Oh we spend $1200 on Google today and we're actually not as profitable as we thought."
Triple Whale allows us to quickly sort through our advertising spend versus money brought in and provides us with a clean blended ROAS, AOV, and Blended CPA.
The coolest thing about the software is that it’s super affordable and it even syncs up to Slack so you can get a daily recap of your previous day. Every morning around 9AM when I’m on the treadmill I know I can open my #TripleWhaleChannel and know the day before’s numbers. Download it now here.
More Employees = More Headaches
We did not set up our employees for success. It’s January 4th, ask yourself these questions:
Does every employee have KPIS that they are tracked weekly, monthly, and quarterly?
Does every employee understand their next promotion in the org and what a promotion looks like?
Do you have time to meet with your direct reports weekly?
Are the goals of every employee public across the org?
International Expansion:
If you’re a new business I can’t even begin to explain to you how important it is to secure your trademarks, IPS, website domains and social handles globally. Even if it seems like you won’t get out to that random country in Europe or China, you simply never know what’s going to happen! We had somebody pirate about 20 different domains from us, including crossnetgame.eu (a pretty damn good one) and hold it over our head for ransom. He wanted over $50,000! Safe to say we’ll be finding a new domain name out there.
Did you know you can’t even get a website in Australia without a business license? So after waiting months for that and finally locking in crossnetgame.com.au, we had to go and vet dozens of 3PLS to make sure we weren’t getting screwed. Thankfully I found a great one and their rates are about half of what I’m paying in the states. Check out CBIP and my guy [email protected] if you need help getting set up shipping Australia, China, or the UK.
Launching a New SKU:
You're never going to have the perfect amount of inventory. This summer we underestimated our customers and their excitement for CROSSNET H2O. We only brought 5000 units into the country for summer and we sold out in less than two weeks. With supply chain fun, we couldn't get more into the country for summer and missed out on what we estimate to be over $2,000,000 in product sales had we just had inventory. Shit sucks, but we'll get 'em this year!
However, this is not always going to be the case and its 100% okay to go slow, sell out and test demand for a SKU. I'd much rather sell out than be sitting on thousands of units of something nobody wants. If you’re investing in merch as a DTC company, make sure people are actually going to pay for it. In all of my experience, it has been a “nice to have” and ultimately I’d rather have that money sitting in my personal bank account. Obviously, if you can get your branded items into the hands of people who have true influence its worth it every day, but Kanye West isn’t wearing a CROSSNET tshirt ya know?
Product Seeding & Influencer Marketing Can be Expensive AF
Influencer marketing isn’t cheap. Seeding product is a quick way to destroy your profitability. We sent out thousands of units this year, praying for content and going on wild goose chases.
Start calculating these costs into your influencer strategy: Cost of influencer manager labor, cost of product, cost of shipping, cost of warehouse fulfillment. Now deduct that from your retail cost. How many units does that influencer have to sell to make that shipment profitable?
Example:
$15 Employee Cost (1 hour of negotiation & various BS)
$40 COG
$15 Shipping
$4 Warehousing Overhead
Total: $74
$150 (MSRP) - $74 (Influencer) = $76 Profit
Next factor in that the influencer is charging $250 for the post and also wants a $10 discount to motivate their audience. Knowing that we are already $265 in the hole to begin (influencer + employee time), we know that the influencer has to sell 4 units ($600) for us to get just a bit over break-even. I don't trust most $250 influencers to move 4 units. Place my money on Black 20 on the roulette table please.
Here are two questions I particularly liked from Twitter this week. Never really sat down and thought about the answers so I thought I’d share.
How do I plan & create goals?
I have an overarching company goal of making CROSSNET an accepted global sport and not that "woh, that's a cool looking four-way volleyball net"
I want to do everything in my power to increase our retail presence and sell-through. I have a vision that we should be sold in every sporting goods store possible as long as we are positioned correctly and set up for success.
Focus on inspiring and motivating our internal team. I want everyone on my team to have a better career and life after CROSSNET. Period.
Money is always nice. Make more than last year. Spend less. Profit more.
Where do I get motivation?
I want to provide for my family more than ever. I want my mom to retire so damn badly. She should never have to work another damn day in her life. I promise that days coming soon. I’m marrying a beautiful girl next October and need to do right by her and our french bulldog. My brother is my closest friend on Earth and I want us to win together.
Reading. My best ideas come from when I’m not in the trenches. This makes me think I need to free up my team’s time more so they can be actively thinking about making the org better. Every employee should be spending 80% of their time working and 20% learning and getting better.
Top 3 Learnings this Year
More revenue = more headaches
More teammates = more stress & distractions
Give me one amazing $90,000 hire over three $30,000 people. You get what you pay for. More headcount is only cool for a write up with Forbes. Having a small, core team that you can trust with every situation is better than an army of people you have to micromanage.
If somebody comes to a meeting twice and they dont say anything, they are in the wrong meeting.
Focus on 1-2 big things each month, trying to do 100 things and be a jack of all trades actually makes you shit at everything
I'll leave you with my Top 5 favorite albums of 2021. Life after CROSSNET will Involve me owning a concert venue like the House of Blues or several of them. I'm a big lover of alternative rock, psych, and chill music. Pretty much anything but mumble rap.
What else do you guys want to learn? The newsletter has grown so much in the past few months and thank you seriously to everybody who has subscribed, shared, or responded back. Lets make 2022 great and be the the year that we start paying ourselves what we deserve. Remember drop me a response back!