S16 E3: The Step by Step DTC Build Playbook

25:03David Perell:is I run a growth equity firm called Sharma Brands. And we basically help brands in three different stages. Either A, we come in and we launch brands from scratch. Or not from scratch, but brands will basically bring us in after they've established what they're doing. And they might be in the branding phase, they might be done. But we usually come in, we help out with the website build out from really making sure from a conversion standpoint that it's something that's built to last. We help from a creative standpoint, we make sure that from a, basically from a user experience and a platform standpoint, it's really solid.

25:45David Perell:Then from, then things like creative media strategy, um, you know, additional technology type of stuff, whether it be emails, SMS, et cetera, we come in and get everything ready. And then, and then we help launch and, and then we, and then the focus shifts to the demand side, which is, as you mentioned, the media, the creative, the merchandising, which is basically testing different. What are you selling and how are you selling it? How are you messaging it? What are you packaging together? And then eventually, as it starts to grow, we focus on channel expansion. So that might be, you know, you start with your focus on email and Facebook ads.

26:28David Perell:and then hopefully you progress. And as you grow, you focus on getting really good at finding customers on different channels so you're not reliant on a single channel. So for Judy, for example, Judy's everywhere from Facebook and Instagram ads to Pinterest ads to we've done direct buys on native apps, publisher type of apps, all the way to TV. Um, and so we're not reliant on one channel of user acquisition, which is really important because for everybody who works in direct to consumer, you know, they've, they've seen throughout this year, there's weeks where Facebook can be really good. And there's weeks or months like September where Facebook can be really bad and things can break on the platform that you just have no control of.

27:24David Perell:and when you're overly reliant on a single channel, then you might miss your entire revenue goal simply because you weren't diversified from the beginning.

27:35Nik Sharma:So I got a question for you. When is it good to diversify in terms of your channels and when do you want to actually double down on a single channel and not focus in other areas? Because the thing is, as you focus in more places, you need a bigger and bigger team. And so when would you advise a company to say, hey, Facebook is working really well for you, Twitter, YouTube working really well for you, stay there and don't dilute your attention? And then when do you want to be diversified from the start? So it's a good question.

28:11David Perell:I think in many cases, what we do basically, our strategy is usually let's launch using the really easy tools, right? So Facebook and Google. On Google, you want to launch with basically branded search, which is essentially people searching directly, Judy Emergency Kit. Not necessarily Emergency Kit, but Judy Emergency Kit. That's a term that you want. And you want that because anytime you have a launch, you might have PR influencers, people posting, friends talking about it. You want to be able to capture that really lower funnel traffic. Now on Facebook, you might want to use, I mean, Facebook in general is a mid to lower funnel channel.

28:57David Perell:However, it does really well with finding new customers and bringing them in. Now, what we typically recommend and often do is we will, because Facebook is so easy to use, it's fairly cheap to run media on Facebook and really test and learn. will usually use Facebook initially to refine the marketing after launch because you can have the most elaborate brand book and all the phrases that your branding agency comes up with, but none of those are necessarily tested or proven from a standpoint of data. They were ideated and they sound good and they were approved by whoever's launching the brand, but you still need to really test and understand what are the value props that people actually care about that get people to click and get to your website or purchase.

29:53David Perell:And also what are the things that people want to hear in different stages? You know, you might realize that to get somebody initially interested, you have to hook them differently than the way that you speak to them after they've already heard of the brand or been to the site. So we use Facebook to help determine what are those basically, we call them like messaging avenues. So avenues could be, you know, for in Judy's case, just to keep it simple, you can have an avenue of preparedness, you have an avenue of these are kits designed by experts. You have an avenue of this is great for any type of emergency, more like macro type of things.

30:32David Perell:And then as you start to, you know, identify the avenues that work. Then you go more into what we call the cul-de-sacs, which are, okay, now that we know that designed by experts is a topic or a macro message that gets better engagement or lower cost per clicks and higher click-through rates, now let's go in and test seven different ways to say that it's designed by experts. Handpicked kits by experts, designed by emergency experts, backed by certified leading experts, like different ways to say it and really figure out, you know, what is the messaging that is both A, scalable and also B, B, it resonates the most with the end consumer.

31:17David Perell:And once we identify from a messaging standpoint, that also includes like from a pictures and video standpoint, what gets the best click-through rates. you know we also use Facebook to help basically validate our certain UGC content creators influencers spokespeople are they worth it for us then we take those learnings and start to diversify so so I in my opinion it's important to diversify as soon as you can but you can't just say, you can't just say, we're going to, you know, we want to start running ads on Outbrain or Snapchat or TV because you don't, you, you want to test, in my opinion, you want to test it on Facebook where it's cheap and it's easiest to see the actual data very fast.

32:09David Perell:Like you can test things within hours versus making that investment and testing something on TV, like we, yeah, versus doing it and testing it on TV, where you have to commit to a creative that's going to cost you anywhere between 50 to 100 grand, the media placement buy in is 50 grand. And we did the exact same thing at Hint too, where, you know, the first kind of set of TV commercials, when we decided to launch TV, which was a huge deal, was all based off of the fact that the Sweetie article, the one that we were talking about earlier, did really well. And we said, all right, guys, look, we've had the most success with this story over the last year.

32:55David Perell:So let's just look at the data of what works really well and turn this into a TV ad and start testing it. And it did extremely well out the gate. Whereas at the same time, we had a ton of other friends in direct-to-consumer where they were like, yeah, you know, we spent a hundred grand on this creative, you know, the creative agency came up with it and it looked beautiful, but it just didn't perform for direct response. We were basically going backwards and saying, okay, forget the, forget the ideation part. Let's just see what's worked well. And let's replicate that in onto a different channel.

33:31David Perell:So it's basically, you want to leverage these easier channels to figure out how people, how you should be talking about your brand and how you should sell it. and then leverage that across different channels.

33:44Nik Sharma:Nice, that's a great answer. So there's a lot of places that I wanna dive into. So we're gonna go down the Avenue versus Cul-de-Sac route. Yeah. And I wanna talk about A-B testing first, but before I sort of ask you, and you can sort of think of your answer to this as I have this comment, but what is the role of the human and what is the role of the computer and the robots? So you could say that a human is generative, They're creative. They think of new ideas that are just different and surprising, whereas then what a computer is doing is it's validating and it's testing. And so when do you want to be focused on A-B testing and when do you want to be focused on human creativity?

34:26Nik Sharma:But, you know, you're talking about the hint television commercial as opposed to traditional television commercials where often they'll spend$100 ,000 on a commercial and the results will come in and maybe they weren't that good after. And it reminds me of the quote that everybody knows from John Wanamaker that says, half of all my advertising is wasted. I just don't know which half. And so what you're saying here is that there are actual repeatable methods that you can use to make sure that you don't waste nearly as much advertising on money or waste nearly as much money on advertising. And what you're doing is you're going out, you're putting signals out into the world, you're validating that there is real feedback on those signals, and then you're doubling down on what works.

35:13Nik Sharma:And in Red of Passage, this idea is called the content triangle. And so what we do is we tell people rather than writing a big long form essay or a book eventually, that is your first thing you've ever published, it's better to write a bunch of tweets, which then ladder up to a bunch of short articles, which then ladder up to a bunch of longer articles. And at each point, you're getting validation and feedback. And I think that this is one of the things that a lot of people get wrong about creativity or don't realize the advantage that has been given to modern creators is getting additional feedback at every single step so that you can distill and refine what it is that you're doing.

35:54Nik Sharma:And for people who say, oh, but that's not a pure way of doing creativity it's just not true because i was talking to a guy named three blue one brown on the podcast and he has more than three million youtube subscribers and probably runs the biggest math youtube channel in the world and i asked him how do you begin to validate your ideas and begin to work through them and he says what i do is i do mock presentations for people before i spend all the time making a YouTube video with them. And so to get back to what we were saying here, he isn't just doing A-B testing. He's thinking of an original idea, but then at a certain point, he's putting some filters out into the world, getting feedback and doubling down on what works.

36:41Nik Sharma:So what is the role of A-B testing in building a brand?

36:48David Perell:So I personally think that it's the most critical. I mean, we've done it. Every time you and I have gotten together and put out an article, the reason the articles blow up and will get 50 ,000 people reading it within a week is because it's stacked on top of two or three layers of validation before we put something out. And it's very similar to how I think a lot of the advertising or the marketing that we do on the growth side is also done. It's very much validated a few times and looking at different signals to then say, okay, this is something that works. Let's now get creative within this realm or within this sandbox of how we should speak about something.

37:43David Perell:For example, one thing we learned with Judy was that comparison videos really not just showing what's inside Judy, but showing what's inside Judy compared to what you would otherwise get without a Judy and just with a more generic emergency kit was a concept that people really grasped onto and helped move the needle. And so within that now, knowing that that's the goal is we want to show people comparison. Then we got really creative around who's going to make these comparison videos. How are we going to, you know, how are we going to message it different ways? Are we going to start then taking this, you know, you could think of that as an avenue.

38:27David Perell:And the cul-de-sacs are, okay, are the hooks in the video going to be different? Are we going to test different hooks that get people into these comparison videos? So I think that's where we get created. And if you look at some of the larger, even the larger agencies today, like VaynerMedia is a great example. If you look at the Planters Peanuts Twitter account, for example, that is VaynerMedia's team all the way from their social team to the TV production team that will create the Super Bowl ad. that's them looking at signals of what is actually getting engagement so that they're not shooting in the dark when it comes to creating a Super Bowl ad.

39:11David Perell:They're looking at signals of what's actually getting engagement and then they're going to publish it. Then they'll keep validating it before they've decided it's validated to a point where, all right, these are all the things that work. These are the ways that people want us to talk about the brand. Now let's create something within this that's relevant and that hits the nail on the head. And even with, I mean, with Hint too, if you go back to Hint's tweets between, you know, probably like mid 2017 to mid 2018, you'll just see so much copy testing on the Twitter account, which had an audience of probably 100 ,000 followers at the time.

39:48And it was just a free way for me to just spitball an idea,

39:53David Perell:throw it up on Twitter. If it got a good amount of engagement, we would run it in ads. and if we saw good engagement there, that might turn into another article that we write. If that did well, we might say, hey, let's take this concept and work with Sarah Dietschy and produce a video around it. If that did well, then that might have been something that ends up becoming a TV commercial then. And so you kind of just validate through these different steps. And one thing that a lot of people just don't realize is they have free access to validate these ideas or thoughts or concepts just through tweeting or putting something up on Instagram stories and adding a poll to it.

40:34David Perell:There are so many easy ways to just validate and kind of figure out what those avenues are that are easily accessible. You don't always have to be running an insane amount of ads or paid media to find these value props that really stick for your brand.

40:52Nik Sharma:Basically, what you're saying here is that customer surveys are more common than ever. They just don't look like customer surveys anymore.

41:01David Perell:Exactly.

41:02Nik Sharma:That's huge. So you talked about working with Sarah at Hint. Tell me about what you think of the role of influencers in these direct-to-consumer companies. What are people missing? Why do you like working with influencers? And what have you found? I mean, I think one of the really surprising things that you and I have spoken about is that shaky videos perform really well. Things that look like people are making them sort of on a whim, things that look like people are making them at home, that have that raw and authentic feel generally when they're on platforms that are very social in nature. Those tend to perform much better than really produce videos.

41:44Nik Sharma:But I think that that then leads into another one of your principles, though, that you want your creative to match the platform. And you need to know the culture of a platform like you need to know the culture of a city. And just as if you're in New York and you're walking Fifth Avenue and it's 630 in the afternoon, you better be walking fast. And if you're at a funeral and you're walking at that speed, that's just weird. Like, what are you doing? Right. You're not being respectful. And so there's a culture in different places and that then leads to our walking speed, just as there's a culture on different social media platforms.

42:20Nik Sharma:And that leads into the kind of creative that you use. Yeah.

42:26David Perell:So there's a couple of things there. There's influencers and there's culture and nativity to a platform. So on the influencer side. So it's important that we also reiterate that this is focused for direct consumer brands, because this always makes people really angry.

42:45Nik Sharma:But from a content perspective, you're absolutely right.

42:49David Perell:The shakier, the better is a phrase that is commonly said throughout the world of direct consumer. And we'll get into that in a second. But on the influencer side, there's a couple of different roles influencers play. There's the role of, you know, I'm ninja and I'm, I'm aligning myself with a streaming platform. And that's a huge deal because that's a top 1 % influencer who has massive influence and they, they can move crowds, um, like no other. Right. And so, so there's those types of influencers, but the ones that I was heavily focused on were the ones that had anywhere between 50 ,000 followers to maybe 10 million followers.

43:45David Perell:So not the top 1%, but still had a good amount of, of a following. Right. And so one thing that I used to always see was, you know, coming to New York and, and being at Hint, I would try to, I had a few friends who at the time were, you know, influencers. And I would say like, Hey, why don't we, um, how about we get together and all basically book out the rooftop at 60 LES hotel. And I got the corporate card and let's get some influencers together. I'll get some Hint bottles on the table. We'll get everybody drinking hint and posting on their stories. And let's just like start to create this little like culture of of hint fluencers in New York.

44:33David Perell:And it was never intentional, but like, you know, it just started happening. And, and at the same time, what I saw brands doing was simply, you know, you sign up to an influencer marketing platform, you pay them the month or the annual fee. And then you get on the platform and you find 12 influencers who have a certain number of followers in a certain region and you check next to their pictures and you hit send brief of a brief of like, you know, hey, we want you to post on your Instagram a photo of you drinking the water. And this is the caption and let us know when it's posted. And it was just, it's just not, you know, every time people see it, like if you look at the comments of actual influencers who do that, all the comments from the fans are just, yeah, you get that bag, go get that check from the brands.

45:26David Perell:Like, yeah, we see you killing it with these brand deals, right? Like fans are hyped that they're, they're creating that their influencers they follow are getting a check from a brand. They're not going to go to the store and be like, oh, you know, um, I saw David Perel on his Instagram with a bottle of hint in his hand. So I'm going to go and get, you know, a bottle of and it's because it's just not natural. And so what we started doing was the complete opposite. We just said like, forget the whole like pay for influencers. Let's just like bring them together and have a good time. And we'll host a couple of dinners.

46:04David Perell:We'll get drinks together. We'll get to know each other on a personal basis. And let's look at them not as influencers, but actually content creators. So how can we leverage some of the things that the reason they're influencers or they have a following in the first place is because they're really good at one thing that they do or really good at leveraging a platform, right? So for Sarah, Sarah had built a following of probably half a million followers or subscribers on YouTube because she was really good at talking to a camera when she was doing her daily vlogging. She built an audience because she was good at speaking to a camera and people felt that she was speaking to them.

46:48David Perell:And that's why they subscribe and keep watching. And so I said, OK, well, we don't necessarily need Sarah to plug in her YouTube video or give us a shout out on Instagram. but what if we take, you know, Sarah's skills around creating these really engaging vlogs and almost create a vlog style video for Hint that just talks about why she likes to drink Hint and like why, you know, she was a self-proclaimed like Dr. Pepper addict and LaCroix addict. And all of a sudden when Hint came along, you know, Hint was like all she drank. And so I was just like, why don't we just take her skillset of that, of, of vlogging and storytelling and combine it with the why of like why she likes hint and we'll pay her for that video.

47:45David Perell:And let's see if we can run that as an ad and maybe, you know, other people will identify with her story. Um, and, and from a, like a, uh, you could say communication or like, uh, messaging transportation standpoint, she's good at communicating it through the screen. So we'll use her as a content creator to tell that story. And, um, and anyways, all that to say, you know, I think influencers are really good at creating content, which is why they can make a living off of it. So we just started looking at influencers as content creators and leveraging them in that way where they could, you know, there was no like brief that they would get.

48:26David Perell:Um, you know, Brett Conte, who's like another New York influencer, he would go to LA and say, hey, I'm in LA and I have some hint with me. I can easily create some videos here, like doing workouts on the beach and like talking about why I drink hint when I work out. And I was like, yeah, let's go two grand. That's, that's easy because we can make way more than two grand off of that. Brett's, you know, that, that's what he wanted at the time. And it was just a match. It was like, we, we almost had an, a never ending library of content because we had all these creators who we had developed a close relationship with that would just want to create content for us.

49:06David Perell:And it was really dope content. We didn't have to go and organize photo shoots and video shoots in studios and pay for hand models and stylists and, you know, all that kind of stuff. It would just come to us as content that was genuinely like people wanted to create it. Time for the retention tip of the week brought to you by Instant. Here's a founder level truth most operators don't want to hear. If retention is someone else's job at your company, you're already behind. Retention isn't a department. It's a lens that every decision should be made through. Now, your product team should be designing for repurchase.

49:40David Perell:Your acquisition team should be targeting customers with the highest predicted LTV, not just the cheapest CPAs. Your creative team should be building content that reinforces the brand after purchase, not just before. The best D2C brands I've worked with, the ones that are doing 50, 100, 200 million plus, They don't have a retention team siloed off in the corner. Retention thinking is just embedded into every sprint, every campaign brief, every product roadmap discussion. If you only think about retention when you're setting up Klaviyo flows, you're thinking about it too late. That said, the flows still matter.

50:11David Perell:And Instant makes the email and SMS side of retention way easier with AI that builds and optimizes personalized flows automatically. Check them out at instant.one slash Sharma.

50:23Nik Sharma:so earlier you were talking about how to identify influencers that you think are going to resonate so what are you actually looking for in terms of what influencers are going to move product because just because somebody has 10 million followers doesn't mean that they're going to convert really well so you're looking at comments you're looking at how many likes to retweet retweet ratio they have are you looking at quantitative metrics like that or are you having more of a qualitative feel of like, you know what? I like this person. I'd buy from them.

50:55David Perell:Yeah, it's kind of a mix. So if we scour for influencers, we look at a couple things. One is, is this person somebody who has good, consistent engagement, which is just a byproduct of being a good creator? And secondly, is this somebody who's like good at speaking to a camera. There's a lot of people who have a ton of followers because they might be bloggers or, you know, fashion bloggers. They might be, they might make really cool like slow motion videos, whatever it is, but they're not necessarily good at looking into a camera and you feel like they're speaking to you. So that's the biggest thing.

51:42David Perell:That's why a lot of times we, we worked with vloggers because they were really good at speaking into the camera and articulating things really well. The second main thing, which was the biggest thing, was do they genuinely love the product? Because if they don't, then they can't actually have a genuine answer to why they use that product or why they like that product. It's just going to be manufactured based on a brief that they get in a Google Doc, and those just never work. So even with Sarah, the way I got in touch with Sarah was a mutual friend of ours basically gave me her address and I just shipped her nine cases of Hint or 100 bottles of Hint and all of a sudden it ends up, she tries it, she loves it.

52:35David Perell:It ends up on her Twitter, her Instagram and it has a whole minute long segment in her YouTube video of how Hint just out of nowhere shipped her this water that she loves. And after we saw that, we were like, okay, this is a girl we got to work with because she clearly loves the brand. And she wasn't expecting that like, oh, if I talk about it, they're going to want to pay me or, or, or pay to work with me. It was just that she genuinely loved the product. And, um, and, and that's why we worked with her. And so that's, that's the biggest thing is do the, do the creators that you work with genuinely have an affinity for the product that they're about to create content for, because that also sparks the best creative ideas.

53:18Nik Sharma:One of the things I'm surprised that you haven't done more of is team up with specific influencers to launch a brand with them. Most of what you've done has been launching brands and then teaming up with influencers who, just like what you said, are already fans of the brand and can actually propel that brand. why haven't you done that it seems like teaming up with an influencer to launch these influencer driven brands works really well um i think that if there is a wrinkle in it it is that launching with an influencer probably helps you get up on your skis faster but you probably can't go as far and all of the influencer driven brands that have done well have done a really good job of building a brand that goes beyond their name.

54:10Nik Sharma:So Emily Weiss launches Glossier with a blog called Into the Gloss. And that blog starts doing 200 ,000 visitors per month. And now the company Glossier, it is not Emily Weiss and Company, is worth more than a billion dollars, right? They're gonna go public at some point and it'll either that or get acquired. It'll be a really good outcome. And then you have Jessica Alba with the Honest Company. You have George Clooney selling Casamigos for over$700 million. You have Aviation Gin, which was founded by Ryan Reynolds. That seems like a really lucrative opportunity that you haven't done. So what's your thinking behind that?

54:51David Perell:Yeah, I mean, so we've done a few. We've done a few. We've done an audio company that launched with Miguel last year. We did Cher. we did her personal perfume um judy is somewhat you could say partnered with a celebrity i mean simon huck i think is kind of a celebrity um you know he's got a pretty big following he's got a lot of connections um but you're totally right the the initial the initial launch is is ramped up or done a lot faster, but it also, it's still required, you know, by month six, maybe it still requires the same type of, uh, business acumen or skillsets that a brand without an influencer would require.

55:43David Perell:You might just have a few months upfront where you're saving money on paid advertising because you have an audience already. Um, we're about to launch a brand at the end of this year with one of the most well-known basketball players in the NBA. And it's going to be a beverage brand. And that's going to be one where, again, I think the first six to eight months are going to be on fire because this is one of the most well-known NBA players and his massive network of athletes and celebrities. But then after that, it still comes back to how do you fine-tune your operations costs? How do you fine tune your marketing?

56:28David Perell:How do you reach beyond just simply the audience that that one person has? And, and I mean, Glossier is another great example of that, right? Like they launched with the Into the Gloss traffic and audience, but then very quickly had to begin fine tuning the paid marketing and the messaging and the retail stores and kind of all the pieces around it to sustain that growth trajectory from the beginning. and um and yeah so we have done a few of them and we have a few that are upcoming i'm i'm definitely a fan of them mostly because again kind of like what we did with hint it allows you to really put a face to the brand um and also build that face as a separate brand as well and then these two brands that you build simultaneously play off each other and serve each other, serve each other's purpose, right?

57:22David Perell:So like Glossier almost has three. They have Emily Weiss into the gloss and Glossier. You know, Hint, you could say has Kara Golden and Hint. Judy has like Simon Huck and Judy. Twice Toothpaste, which is one of my portfolio companies, has Lenny Kravitz and Twice. And so there's a lot of like cross promotion that allows. And then the other cool thing too is when you have a person tied to something, there's just a lot of opportunities that you might not get as a brand, but you get as a person where you can then plug your brand. So the first one that comes to mind is when Lenny Kravitz was on the Ellen show.

58:05David Perell:It became an ad for Twice because Twice was mentioned there about doing a donation and Lenny Kravitz is a co-founder. twice would have to pay so much money to get on the Ellen show otherwise. But because they leveraged Lenny Kravitz and because Lenny was going to go on the show, that was an easy plug for twice. So, yeah, all that to say, I think celebrity, celebrity brands or brands with influencers or really brands with people who have really good networks and access are something that I think is going to have to be almost ingrained in future brands because you can't, it's just, it'll be too hard to not have that network or that access or that audience upon launching a brand or too expensive.

58:56Nik Sharma:So I want to switch in to talking about operations. What are some of the things that new creators don't know about operations, the things that even people who have been in the industry for a while, they know what they're talking about? What surprises them that you have learned?

59:16David Perell:The first one that's always funny is that their content has to sell product versus just bring awareness to a product or a brand. And so I think that's the biggest one. And then after that, you know, there are so many things that, you know, even just like talking with friends who are influencers and we might work with a brand that they want to be, you know, they want to be a retained brand ambassador for. They just they might not know that like the reason they haven't gotten an email back is not because the brand doesn't want to work with them. it's because there's like seven people on the brand marketing team where there just has to be all these checks and balances done.

1:00:00David Perell:Um, whereas they might think like, Oh, this brand just doesn't want to work with me. That's why they have it replied. Um, there's other things around like, you know, when, when an influencer goes to a brand and says, we want to work with you, there's, there's questions of like, okay, well, does this influencer, does this person bring an audience that we don't have or can't get access to easily? Do they bring a network of people if they're close, you know, friend-based? Like for example, when we worked with Sarah, I feel like we got the entire squad of New York influencers on hand just through working with Sarah.

1:00:37David Perell:Is this somebody that from a cost perspective, are they costing less than the revenue they're bringing in for us? Not just gross revenue, but net, you know, like EBITDA type of revenue. What do you mean by that? Meaning like, you know, you might have like from with your margins factored in, will the revenue that's generated from this person be greater than the cost we're paying this person in the first place? there's just a lot of more operational type of like holdups that I think a lot of these influencers have never seen or are not really exposed to because they typically deal with one person on the marketing team.

1:01:22David Perell:But it all has to do with basically, is this person going to generate revenue or awareness or brand equity for us that we otherwise could not get in a cheaper way?

1:01:35Nik Sharma:So talk about when it comes to brands, what you learned redesigning Hintz water bottle and the experience of what happens when you actually go to a store and look at different products on the shelf. And maybe we can talk a little bit about end caps and the ways that brands pay for end caps and you want those to be memorable. But you spent a lot of time on that. And I'm curious to hear what you learned from that from that experience.

1:02:02David Perell:Yeah, I think it was about a year-long process. The rebrand, the website rebuild, you know, it really started, I think, with the idea that we needed a new website. We were on an older platform called Symphony Commerce, which I don't think is even around anymore. And it just, it was always breaking. And there were always things that were down. We could never get things like, you know, new pixels up quickly. We couldn't make changes to the site without having to go through Symphony Commerce's own customer service. And so it was just this bottleneck of, guys, we can't scale unless we have a new website built on Shopify Plus.

1:02:50David Perell:And that was pretty much it. And so when we started to explore that process, we also thought, all right, well, why not maybe entertain pitches or the thought of, you know, potentially a rebrand for the company because it hadn't been rebranded in, or yeah, it was originally branded in 2005. And then it just hadn't changed since then. And we were sitting at 2017 at that point. And so we started talking to different agencies and also just generally looking at kind of the brands that were coming out at the time and like what are they speaking about? How do they position themselves? You know, walking down the beverage aisle in Whole Foods, which is always the best place to look at up-and-coming brands because they take them in first.

1:03:42Nik Sharma:Why?

1:03:43David Perell:I don't know why they take them in first, but Whole Foods is usually the first stop on the retail map. um it helps you kind of validate um your product and your packaging and the way it's displayed um and so just walking down the aisles of whole foods we just started looking at all right you know this we like the way this sticks out or you know maybe hint doesn't stick out in the fridge because it's you know they were mostly um you know they were most yeah they were just mostly like whitish bottles. And so then we ultimately came to the decision that, all right, as a part of, if we're going to invest six figures into building out an incredible new website, we might as well also at the same time do the rebrand and take everything from the rebrand and push that into this new site.

1:04:39David Perell:And so the entire process probably took about a year. And we learned, we learned by actually experiencing kind of the same way that like I still learn. And so we ordered every possible direct to consumer brand to the office. We took notes of how the site works. We took notes of the things that we liked on the websites, things we didn't like. We took notes of, you know, even using a website, what makes it easy or complicated or what frustrated us? What, what, what, what was it on the site that we thought was not so frustrating? And then combining that with, um, we were at the same time, we were running tons of tests on the actual website itself.

1:05:25David Perell:Things like, do we try different layouts of pages? Do we try, you know, on the collections page, do we add the option to subscribe and add to cart right there? So you don't have to go into the product page and somebody could easily add seven different things to their cart within a minute. We were running all these tests. And so we took a lot of the quantitative data from these tests and combined it with the qualitative side of what we liked and didn't like. And then on the brand side, the same thing, you know, what were the things that we liked about brands like whether it was a third love or HelloFresh or Harry's or, or quick.

1:06:00David Perell:And what were the things that we didn't like? And what were the things that we wanted to make sure that we communicated as a brand to consumers, right? So like Hint went from a brand that just sold flavored water to being positioned as a brand that takes the crap out of everyday products, replaces it with the fruit essences, and also ingredients that are much better for you. And so that was the biggest thing around the positioning was making sure that we solve for that positioning message. And then once we understood from a fundamental, from a messaging, from a kind of communications perspective, how we wanted that brand to live, then came in the pieces of, okay, now we start looking at actual like messaging copy.

1:06:50David Perell:That's where those lines, like fruit and water hooked up came in. And then layering on design on top of that. So actually, you know taking i mean to arrive at the bottle that exists today there was probably you know close to a hundred different variations of the bottle and it would be like we would put them all in the fridges we had a we had a retail store on union street so we would put them in the fridges and see what people liked and just literally asked people all the way to you know taking these different um taking the different like samples of of what the bottles look like and putting them in the fridge at a Whole Foods and just looking at the whole fridge and saying, all right, does this pop?

1:07:32David Perell:Does it stand out? No, why not? If it does, then why? And then, okay, taking these learnings and put it in iteration, you know, in the next iteration. So it's actually, it's a lot of like actual just qualitative stuff versus simply looking at a checklist or a playbook of how to do it. Um, and, and then also like, you know, it was a lot of like what Kara wanted in the brand going forward, because this brand is ultimately her baby. So it was a lot of like, you know, why, why something should be a certain way, uh, or why not? And, you know, incorporating that in, but it basically starts with the fundamentals of like looking at data, then looking at the qualitative side of things, and then actually testing and just iterating a bunch.

1:08:19David Perell:And then you kind of sprinkle in the elements at the very end of, you know, the things that like, that, you know, for example, like, how should our videos look? How should our copy look? What's the tone of voice that we communicate in? And that kind of layers in to finish it off.

1:08:38Nik Sharma:Yeah. So I pulled up a quote from Pablo Picasso that I really like. And he says, when art critics get together, they talk about form and structure and meaning. When artists get together, they talk about where you can buy cheap turpentine. And the point of that quote is that what people on the outside talk about is very different from what the actual boots on the ground painters are actually focused on. And I think that what we're doing here is we're really beginning to get past, oh, all the sexy headlines. Like, what does it actually mean? to run a DTC business, to do hundreds of different analyses of what a bottle could look like, to have a retail store and to make that retail store a scientific experience where what you're doing is you are having different theses of this bottle is going to work.

1:09:33Nik Sharma:No, I think that bottle is going to work. No, I think that one's going to work. And then actually putting them on the shelves and beginning to ask customers, which one do you like? Which one don't you like? And every industry has these things. The things that move the needle when it comes to revenue, the things that create success, but the things that when you're actually doing them kind of suck and they're very tedious. And I think that another example that I've seen from you is the times where you have watched the heat maps of how users actually click on websites. That is such a cheap turpentine experience that I want you to talk about.

1:10:13Yeah.

1:10:13David Perell:So that was, I mean, that's something that we've, we, we were doing at Hint and we still do it today with any of the brand pages we work on. It's, um, it's literally using a free app called Hotjar and you, you add this pixel to your site and it can literally, so it does three things. It looks at the scroll depth of how far somebody scrolls down on your pages. That gives you really good insights as to what information needs to actually be at the top or are you not selling enough before somebody stops scrolling. It looks at heat maps, which is where are people's clicks coming from? What are they highlighting?

1:11:01David Perell:And, you know, where are their mouses going, basically. And then the last one is actual screen recordings of user sessions. So, you know, we used to, every morning, like 20 to 30 minutes, just look through the past days, screen recordings, and see, okay, this person was, you know, there was maybe majority of people who came to this page were really interested in this paragraph that's halfway down the page. Let's bump this up because this is something that's really interesting. And we want to make sure that more people have visibility to this paragraph. But basically, again, like looking at what people are actually doing and then using that as just obvious data to rejigger how a page might look or re-communicate how something is read.

1:12:01David Perell:to help conversion.

1:12:04Nik Sharma:So what are some of the things that you have learned through that experience? One of the things that I repeatedly take from you that I think is something that you seem to believe very strongly in is the importance of social proof. And on your landing pages, you just overtly have this thing called a brag bar, where what you do is this is a place where you share customer reviews. This is where you have quotes from the press. This is where when you use quotes, you use quotes that don't just say, oh, this is a great product. It is like if you're selling a water, you say this is the most refreshing drink I've ever had.

1:12:48Nik Sharma:Things that actually explain the experience that the buyer is going to have and not just some high level comment from some potential customer. And all of this falls under an area where you are bragging about the product and you're not being humble. You are saying this is a damn good product and this is what other people just like you have said.

1:13:17David Perell:I'm so glad you brought this up. I geek out on this. So what David's referring to is typically on a website or on a landing page, there's a lot of times where there's a section where press quotes might live, customer reviews. Hopefully in the future it gets to a point where David, if you go to a website, you'll see a quote from Nick Sharma specifically because I'm in your network. So basically this is the brag bar, right? And like David said, this is where you wanna brag as much as you can in a way that is still focused on the product and the outcomes. Because when somebody is trying to buy something, they're not buying into the what of the product, right?

1:14:06David Perell:Like nobody wants just another water. They want a beverage that's going to get them off of Diet Coke, or they want a beverage that's going to feel like they're drinking dessert without drinking a sugary soda. And so you want to always be pushing the outcomes or another word for that is just the value props. And so if there are press quotes, you want to make sure that from a actual logo standpoint, you are matching the press logos to the audience that you're going to be driving to this page. So for example, if you're running ads from Facebook, you may use and your target demographic is like, you know, 24 to 40 years old, you might focus on logos like PopSugar, or, you know, like Elle Magazine, or New York Times.

1:15:07David Perell:and then if you are running, for example, TV ads to a landing page with a much older demographic, you might focus on things like Good Morning America or Town and Country or Hearst Media. You know, like basically you want to align the demographics of the publications to the demographic of the traffic coming in. So that's one. then from the actual quote standpoint, you don't just want quotes that say, for example, this is the New York Times' favorite water or this water is extremely refreshing. You want something that says, after a week of Hint water, I was able to kick the diet soda habit. something that really explains what that customer might, why that customer might be there in the first place or why they might be wanting to try the product.

1:16:08And this brag bar, A, it helps with the validation of, okay, there's notable logos and publishers

1:16:15David Perell:talking about the product, but B, they're aligning the reason they're there with why somebody might, why that brand was in the first place in a publication. So there's that. And then the other one is the customer reviews, where, again, you want to focus on things that elicit outcomes where the customer may be looking for. So if it's like I can just pull a couple up real quick. If we look at like Hydrant, for example, you know it's a quote from pop sugar that says when i really feel the need to replenish a water mix in like hydrant offers up to triple the electrolytes as my favorite drink as well as sodium magnesium potassium and zinc like that's a great quote from a great publication and the second one there is from the skim and it says proper hydration can clear brain fog and that's exactly what hydrant does when you mix it in your water first thing in the morning so it's they're they're focused on on things that really like tell you know complete that story of the brand and then you might have customer reviews that complement it so for example on the hydra page again there's one that says ordering has been so easy and i can't imagine my mornings without hydra i struggle to drink enough water and this has definitely helped so somebody reading this might say, oh, I also struggle with drinking a ton of water.

1:17:51David Perell:If I just add this into my morning routine, maybe I'll feel much better and it'll clear my brain fog. So they kind of all tell this story cohesively. But again, it's not in the context of this is coming from the brand. It's in the context of this is what other people are saying about it. So you don't have to take the brand's word for it. You take somebody else's word for it.

1:18:15Nik Sharma:Yeah, this is key. And I think one of the things that you didn't quite get to that you had implied is that the more specific the customer review the more believable it is yeah so talk to me about landing page design and a couple of the things that you focus on are building your own bundle pages quizzes click through ways of thinking about that and then listicles so talk about click through lp listicles quizzes, and your hero style landing pages? Yeah. So basically, I think when people first

1:18:52David Perell:hear this, they're going to be like, oh, these are just gimmicky ways to trick customers into buying products. But in reality, what we're doing is we're creating experiences that just like the creative that we were speaking about earlier, how we said shaky always performs better, just like those pieces of creative are native to the platforms that people are scrolling in or looking at, these web experiences are native and intuitive to a customer who might not have the education about a brand or the product that they click the add on. And so these pages help identify and educate the perfect product for that customer.

1:19:37David Perell:So for example, if we talk about like a click-through landing page, that's basically, you know, actually, let's talk about a hero landing page first. So a hero landing page is essentially a landing page, which landing pages are basically just a fancier way of saying a web page that's more optimized for a singular purpose. In this case, let's call it a Facebook ad. It's a landing page that basically tells the story of a brand so that if somebody gets to this page and has no idea what hydrant is, they can go by the time they finish scrolling this page, they can, they know exactly what hydrant is.

1:20:16David Perell:They know if this is the product for them. They will have all the marketing messages to go tell their friends of why they should be also trying this product. There might be an offer or a higher value, yeah, basically an offer on the page to get them to convert faster. and it also tells them exactly how the product works, what it is, why it exists, how it's created, etc. So you should know everything about the product by the time you're done reading this page and ideally you know everything about the product by the time you get to you know half the page or so because most people don't really scroll past that and so with these pages the main thing you want to do is, one, it actually becomes a great way to test messaging.

1:21:04David Perell:So if you look at the Hydrant's a great example, again, we were running tons of landing page tests last year with Hydrant to the point where the main website, the copy that lives on the main website was becoming reflective of what was on the landing pages because it was performing so well. And so anyways, so you get to the site, you want to, these landing pages, similar to what we were talking about earlier, they have to be completely understandable by a 12-year-old or a drunk person. So you have to be able to communicate really effectively and really clearly why somebody's that, why somebody should buy that product so they can quickly identify if it's something for them or it's not.

1:21:49David Perell:And if it is for them, you want them to move quickly, right? So for example, with hydrant, hydrant's an electrolyte mix. But when you get to the landing page, it doesn't say hydrant, electrolyte mix with less sugar. It says meet the fastest way to rehydrate. And so all of a sudden, somebody's like, oh, I need to get rehydrated. As you scroll down, you learn, okay, why hydrant? Hydrant is a refresh, basically a paragraph of in the simplest form, not getting technical and not getting too complicated, but in the simplest form, why does Hydrant even exist in the first place? Why should somebody use the product?

1:22:35David Perell:Then we get into the brag bar and then we get into the shop section. So you're not selling at the top. You're basically, it's content focused at the top. And as you go down and learn about the brand, then you get the opportunity to buy the product. This is why landing pages work much better than actual just product pages because product pages sell at the very top and they don't explain anything. And everything that they explain, if they do, is below that. But if somebody gets to the product page and just sees a product and they don't know about it or there's no education there, then they leave.

1:23:13David Perell:And so landing pages work because they're focused on education first, and then so. And so.

1:23:22Nik Sharma:One of the things, one of the things that I haven't heard you talk about yet is video testimonials. So what are your thoughts on video testimonials? When do they work better, worse than text? How do you think about the tradeoffs between really short landing pages that are almost like maybe you might see this in a luxury brand like we're so good that we're not going to give you a lot of information versus really long landing pages that try to justify their value proposition with volume and how would you think about video testimonials and the length of a landing page as it relates to price point so i think the a lot of times when you see like a really high-end luxury brand doing the shorter pages or even just in general,

1:24:12David Perell:if you see a really short page, it's usually because they plan for that person to be coming from an extremely high intense source of traffic. For example, if you search, you know, again, if you search a Judy emergency kit and you get to a really short page, then it's probably because you're coming in already knowing what you're there to buy in the first place. And so it's more focused on, okay, now that you're here, let's get you to buy and you can get on with your day versus let's sit here and educate you because you might already know about the product. For video testimonials, I think what you're referring to is like user-generated content or like UGC style ads.

1:24:54David Perell:these have become, I mean, again, when you're native to the platform and, you know, Facebook and Instagram are great examples of this, UGC is just a, it's like, it's a drug because it is so cheap to produce. You can, I mean, all the UGC we do for our clients is all filmed on iPhones using, you know, the selfie camera. You make sure you have good lighting. You make sure you have a camera, you know, on your iPhone and you just talk about the product and you could even rant for 10 minutes straight. And then, you know, when you edit it, uh, in like an editing software, you just cut up all the, all the right pieces and the value props that you want in the video.

1:25:41David Perell:And because it's so easy to make and, and record, you can test so many different ways of how you communicate about the product. You can test different hooks at, you know, the first five seconds. What are you talking about? Um, you can test different, you know, different hooks. You can, um, uh, you can run it through personal like pages too. It doesn't always have to come from a brand page. So, I mean, UGC is, is so incredibly underrated as a marketing tactic.

1:26:13Nik Sharma:So why would it be underrated? Like, what is the mechanism behind that? Is it that UGC is such a new thing that a lot of the more classic thing yeah it's a new thing but it's also not looked at

1:26:24David Perell:as an elevated form of marketing because it's filmed on an iphone and because it's not overly produced the best ugc is actually usually never really that edited other than maybe spliced together and subtitles but when you start adding like logos and uh things that fly in or animations that's when it starts to just become another ad versus a testimonial right like testimonials are raw and real and that's kind of the the feel that has to also be carried through in a ugc ad

1:26:58Nik Sharma:beautifully said so you were talking earlier about as you think of designing a landing page what you do is at the top you begin to educate people begin to justify hey this is our product this is what we And then towards the bottom, you begin to sell. But often the sales cycle can be a lot longer, can maybe be over many months or something. So when do you think about running people through an email or a text message-based sales process? And then how do you think about when you begin to sell, how you begin to get people onto a website where they'll buy something?

1:27:38David Perell:Yeah, so I mean, there's definitely instances where you want to focus on, you know, you kind of have like a two funnel approach. So your first funnel is heavily focused on audience building and data collection. So that might be things like whether it's, you know, using a quiz to understand somebody's persona and collecting their email, because now you have their email and you have information where, which allows you to cater content specifically to them. And then you use the second funnel, which is basically let's focus on a series of emails or a series of text messages or, you know, quote unquote, moving them down the funnel.

1:28:21David Perell:You know, if they start with viewing a video, then you want to show them, you know, a different piece of content. Maybe it's an article. If they came to the article, now you're going to retarget them with maybe one more thing. And when they get there, you want to retarget them with the final page or the offer opportunity to purchase. We try to figure out from a messaging standpoint, how do we shorten that? And we have, in many cases, successfully shortened it. And the biggest trick to it is literally looking at customer reviews. And so anytime we build a page, a landing page, we go through and write down all the different value props or characteristics customers talk about.

1:29:07David Perell:So for example, if you're talking about Carraway, it might be like design. It might be the non-toxic, non-stick feature with no Teflon. It might be the fact that there's a canvas lid holder for the tops of the pans. And so we literally just write down a list of these value props that people talk about and we'll just go through a couple thousand reviews and just start putting tallies next to what are people, you know, addressing the most. And then when we build these pages or we design the marketing funnel or you create these UGCs, you almost just look at, all right, if everybody, if the most talked about thing in these reviews is design and non-toxic, nonstick cookware.

1:29:59David Perell:Let's focus on these two as kind of the leading messages and everything else becomes second, third, fourth to that. But again, it's like literally using actual qualitative customer information to see what they've experienced and what they liked about it. And then, you know, using that again in your marketing. That's again, why, like, why, when we talked about using Facebook to launch and really refine your messaging, like they might not have had those value props at the top of their list in their brand book, but through testing and through looking at customer reviews, that's something that they figured out.

1:30:42Nik Sharma:Yeah, what I would say is it is using customer words to sell customers. And rather than trying to force creativity on your own, what you're doing is you are taking and aggregating all of the words that customers are actually using and then basically playing a game of ping pong. You're absorbing the best ideas, then you're hitting back at them what those are and then creating this cycle of better and better ideas.

1:31:11David Perell:Exactly.

1:31:16David Perell:Thanks for listening. We'll be back next time to cut through the noise on CPG, retail, and e-commerce. If you enjoyed this episode, why not share it with a friend and be sure to subscribe wherever you listen so you don't miss the next one