S17 E9: Why Routine Beats Discounts This Q4 (with Jen Gray)

0:00Welcome back to Limited Supply, the podcast where we get deep into the tactical and strategic side of e-commerce, digital marketing, and building consumer brands. I'm your host, Nick Sharma. I've spent the last nine years building, scaling, and investing in brands. And through this show and my weekly newsletter at nick.co slash email, I'm here to share everything I've learned. The wins, the losses, the experiments, the tactics, and the insights, all so you can unlock your next$100 ,000 in revenue. Today's episode is a good one, but before we dive in, let me tell you about our chosen sponsor for this week's episode.

0:34If you're using AI to plan your ad spend, Triple Whale's Mobi can make the budget changes for you in your connected ad accounts with your approval. Brands like Kitsch use Triple Whale. Book a demo at triplewhale.com slash limited supply. That's T-R-I-P-L-E-W-H-A-L-E dot com slash limited supply.

0:58Welcome back to another episode of Limited Supply. I'm your host, Nick Sharma. And today, well, you know, last week's episode with Harley got so much praise. I got a lot of messages asking if there were any other really good talks from this event, because again, everything feels so repeatable year after year with BFCM. Same type of stuff works year after year, and it only gets bigger. So there was one more talk, which was the most praised talk that we had there. It was by Jen Gray, who at the time was the SVP at ReCharge. and she came and shared just a ton of insights. In fact, if you're listening to this, you're gonna wanna probably watch this one on YouTube.

1:33Make sure you're on YouTube watching this, search limited supply. And Jen basically broke down subscription, promos and Black Friday for every single product category with all the data. So it's a really good, insightful episode. And I think you're gonna have, I think you're just gonna enjoy it. If you have any questions, feel free to reach out to Jen directly or reach out to myself on Twitter. And I'll see you at the end of the episode. Hi, everyone. I am so grateful to be here. My name is Jen Gray, and I'm the SVP of marketing for Recharge. And today we're going to talk about the psychology of routine.

2:07If you aren't leveraging routine for your Q4 plans, you're missing out. Routine is the new thing for consumer buying behavior today. So earlier this summer, I was talking to a brand who had just come off of these rounds of investor calls. And you know, the number one question they were asked was, who is your ideal customer profile? Now, I love this question. I come from big tech, I come from like Qualtrics and Adobe. And this is the question that you're asked in these investor calls because they want to know how high your ceiling is and how low your floor is. Like they want to understand your TAM.

2:43Investors get so much out of this question. They get a sense of how efficient your go-to-market motion is, right? How well do you know your customer will dictate how efficient you can sell to them, how you can advertise to them, how quickly you can get them into your funnel and how quickly you can convert them. They get a sense of your TAM, right? How many people can you sell to and how long can you sell to them, right? Is it going to be sort of like a one and done purchase and you'll never see them again? They get a sense of how well product diversification is going to go for you, if that's going to be something you're going to be able to leverage.

3:15And they get a sense of how healthy your business is from a subscription standpoint. They get a sense of how healthy that queue of business is, that recurring revenue. So when we talk about routines, we talk about personas, right? How many of your marketing teams have led you through an ideal customer profile exercise? Some of you, some of you, yes. These persona cards typically look something like this, right? Sometimes they have funny names like Busy Bonnie or Tech Savvy Ted, right? We're going to call this one juggling Jen, because your girl Jen is juggling a lot. But these persona cards are typically focused on demographics.

3:51They tell us what our consumers or who our consumers are. They don't tell us what our consumers want and who and what their behaviors are, right? So we'll go through this one. Jen is an elder millennial. Hate to break it to you millennials, but we are now solidly considered middle aged. I know none of us like bad. Oof. Oof is right. So I'm already feeling the effects of what time and gravity is starting to do to my body. I live in Salt Lake City. I know random. Shout out mom talk. So my skin is constantly ravaged by the dry desert sun. And I care about my I care about my sunscreen. I am an SVP of marketing for a very busy tech company.

4:32So your girl's a little haggard. And I have a very moody teenage daughter who is just as busy as I am, minus the ability to drive herself anywhere. So I'm always in a car. The older I get, the less time I have. Time is by far my most precious resource, which means that I am fanatical about my routine. I am fanatical about my routine because I want all of the moments of joy. I want all the ease in my day, all without having to think too hard about it. I want to think about these things as little as possible and still get the best outcome. In short, I am busy, I am bougie, and I hold the majority purchasing power for my household.

5:17And I am an ideal consumer because I love a good product, but I'm not buying a product. I'm buying a brand promise, right? I am buying healthy skin, better hair, more ease in my day, a seamless morning routine, nice, easy coffee to make in the morning, right? In fact, it doesn't take much to acquire me as a customer. If most of you were just to kind of target me with a good Instagram ad, there's like a 70 % chance I'm going to buy. But I am also fickle. So the question is, will I purchase? Will I renew? Will I subscribe? Will I add your product to my routine? I don't know when my Instagram looks like this.

6:00And my YouTube, which I watched this morning while I got ready, looks like this, right? Build the best health and wellness routine. Build the best skincare routine. Wake up before I am. Here's why. I am constantly chasing the dragon. I am constantly chasing what's going to get me to my goals as quickly and easily as possible. You know, fear of missing out or FOMO drives millennial experiential behavior. It drives our purchasing decisions. It drives us to show up and to engage. In fact, this has led me to, in the last year, I have tried nine different sunscreens. This is a little outdated. I think this is actually more.

6:36I have tried, I've tweaked my skincare routine 14 different times. I have switched from tea to coffee to matcha and now I am off caffeine. I know, wild. I have tried truly every protein vehicle out there. I've tried the chips. I've tried the cookies. I've tried the Pop-Tarts. I've tried the bars. I just tried David protein backstage. If you want to chat, if you want to know what I think after, let me know. Supplements. Supplements is my new thing because that's like the pinnacle of ease and convenience in the morning. I tried five different meal plan services and I've tried two different cat litters because once you find a cat litter you like, you're not really trying to chase that dragon like you're pretty happy.

7:13Shout out pretty litter. And this consumer behavior has led to something interesting. It has led to this distinction between a product that is bought and a product that is kept. So I want you to think about your bathroom hierarchy at home because the bathroom hierarchy really tells all because there's an absolutely a difference between the products that are on the top of your bathroom counter next to soap that you reach for every day and the products that you use once and end up like underneath your bathroom counter next to toilet paper, right? That is the difference between a product that is bought and kept.

7:44That is a difference between a product that is a nice to have and a need to have. and your ability to be a product that is kept all relies on your ability to understand, adapt, and take action on the routine economy. So let's take a step back and talk about where we're at as a society right now. All of a sudden, the 40-year-old millennial and the 24-year-old Gen Z-er are in charge. They're in charge. The millennials now, I think, are the biggest population, the biggest generation, they represent the biggest percentage of the country's workforce and they hold the most purchasing power. And I'm finding these two groups to be really fascinating in two sides of one coin when we think about consumer behavior.

8:28I think Harley talked about that this morning was the difference between what Gen Z and what millennials really value in their purchasing decisions. So in terms of the economy, millennials are still driving most spending power. I think the collective annual income of 1.8 billion millennials is$2.5 trillion. and is expected to reach$4 trillion by 2030. Whereas Gen Z, they're really influencing consumer behavior. They're seen as the tastemakers of their generations. This is the same role that every generation at this point took on. I remember when this is millennials, but now we're out of date. We're chuggy.

9:04So in short, Gen Z are telling us what to buy and millennials are buying it. now in terms of priorities both of these generations are prioritizing dependence i think 35 percent of millennials and 28 percent of gen z report to having to financially support family members millennials are now in their sandwich era which means that we're trying to get enough protein in the day while also trying to take care of children and also starting to take care of elderly parents We have responsibilities looming large for us. Now, Gen Z, there was a survey done of how much people spend on their pets a year. Gen Z spent an average of$2 ,000 a year on their pets, which is more than any other generation surveyed.

9:48And it's growing. It continues to grow. Both our experience or valuing experiences, millennials are willing to splurge more for experiences where Gen Z is really looking for more value, more bang for their buck. millennials are starting to really embrace consistency right we're probably the last generation that is showing brand loyalty whereas gen z really looking for variety they're looking for niche products they're looking for things that are hard to find now in terms of disposition it's anxiety it's anxiety all around it's anxiety for both generations i think 78 percent of gen z and 81 percent of millennials report to having experienced workplace stress both of these generations are going out into the world with this whole new set of fears and worries about the world.

10:36And this has led to a very interesting trend. It's led to impulse spending behavior with 51 % of millennials and 45 % of Gen Z reporting to spending money to soothe anxiety. Now, this is my favorite. This is really leading consumers to spend their dollar on things that elevate their everyday lives, right? This is exactly what Harley said this morning. This is little treat culture, right? This is, I went to the grocery store. I deserve a little treat. I did my taxes. I'm going to go to Starbucks and buy a$9 matcha because I deserve it. People are choosing to spend their dollar on things that they can control, things that elevate their every single day lives.

11:18And their routine sits at the intersection of this. So today's buyer is choosing to splurge on luxury goods to soothe their economic despair. Traditional markers of success, like buying a house, a 401k, who is she? These seem out of reach for younger generations. And so they're choosing to spend things on spending their money on things that elevate their everyday lives. Whereas Gen Z are really embracing this mentality of, I'm going to spend that dollar because what really matters anyway? They're really starting to see this disenchantment with society and capitalism as a whole. And so they're choosing to spend their dollar again on things that they can control.

11:56so this really means that we are facing a change in economic value so when we first started out in the goods and services economy everyone was fighting against commoditization right the internet was the greatest force of commoditization because all of a sudden I could get online and I could instantly compare product to product which drove everyone to care about three things and three things only price price and price right this was the rise of DTC brands DTC brands all of a sudden prioritized a one-to-one relationship with their consumer. They could own the end-to-end product experience and they could innovate at the speed of the consumer.

12:34Now we're all competing in the attention economy because you've prioritized digital experiences. You've prioritized where your buyers are, but this has gotten expensive because attention has become commoditized. Attention has become the rarest commodity in the economy because there just isn't enough attention to go around, right? I've gotten like 19 ads just today, just this morning while I was scrolling through. And I'm sure, you know, we know how many emails we're going to get during Black Friday, Cyber Monday. It's a lot to compete with. And this is expensive. You have seen your acquisition costs.

13:04And this year will be no different. You can spend an hour working through your ad budget with AI and still have to make every change yourself. Triple Whales Mobi uses your business data to recommend exactly what changes you should make and then can go and make those changes for you with your approval. You can plan before any money moves. Book a demo at triplewhale.com slash limited supply. That's T-R-I-P-L-E-W-H-A-L-E dot com slash limited supply. So in order to truly disrupt the economy, you have to figure out a way to be embedded in the daily lives of your consumers. And you have to stay there.

13:45But I have some good news. every level of economic disruption has been difficult. But this one is going to be easier because we've never seen people care about their routines as much as they do now. The entire societal zeitgeist has risen up to meet this need. How many of you listen to the Huberman Labs podcast? Are there any Huberman dads out there? I'm a Huberman dad, right? His latest ad on his podcast, he's coming out with a book called Protocols, because we fucking care. Like, I want to know if I should cold plunge or not. I want to know if I should like mouth tape at night. People want the protocols.

14:19They want to understand how to elevate their every single day because routine really is the invisible scaffolding that sets up our success. We all have goals. We all have dreams and our routine is how we get there. So I want to talk a little bit about how you can leverage routine and Q4 to be successful and to take advantage of this change in the economy. So my very first one, product diversification. And this is fascinating because this is exactly what tech did. So tech started out as like one type of software for one type of buyer. I worked for a dental company for a dental software company, and they started out as appointment reminders.

14:56Then they started to eat up like online forms and payments, right? This is the best way to be part of somebody's routine is to own the entire fucking routine, right? Start as one thing and start to eat up more pieces of that workflow. We love our, we have some really great examples of this. Barefaced is a, as a recharge merchant. They do such a great job. Their toning pads are sort of their tip of the spear product. This is the most popular product. It's what they get everyone in with. And then they start to eat up more pieces like, Hey Jen, would you like to try a vitamin C serum? And I'm like, Hmm, I've got nine, but sure.

15:29I'll try another one. If you don't have a replenishable? Find a replenishable. Tushy is another example of this because how many times in your life do you buy a bidet? Once? I don't know. I don't know when I'm supposed to refresh that. They started to create and see the bathroom as a full category. They came out with toilet paper. They came out with candles, right? Really thinking about this. So this leads me to my next point. Figure out your category. Figure out the category that you're playing in. Casper is my favorite example here. They started out as a mattress company. But again, how many times do you buy a mattress in your lifetime?

16:05So they started thinking, rethinking their category as a sleep company. So all of a sudden, me as a consumer can start thinking about Casper in terms of my sleep routine, not just my mattress buying routine, right? So all of a sudden, I'm buying the glow lights next to my bed so I can wake up nice and easy. I'm thinking about the pet beds, right? Think about the category that you own and figure out what your product diversification strategies after that. Product positioning. Now this is my favorite. I can nerd out about product positioning. Product marketing is my background. So when you go to sites that you interact with and you go to the product dropdown, that's product positioning.

16:42However, they've laid out that information for you. But many companies think about this as sort of what do we do versus what do we do for you? And they have a hard time making that connection. So there's kind of two ways that you can do product positioning. Well, there's many, but we'll just outline two. let's talk about Lululemon first. This is a brand that I interact with many times. I can go to the product dropdown and I can search by what I'm looking for, right? And I can go down the dropdown and I can look for leggings. But this assumes that I know what I'm looking for, which Lululemon assumes, right?

17:15Because I am looking for leggings. I click on leggings and all of a sudden they have to differentiate why their leggings are better than every other person's leggings, right? They have to differentiate based off of their fabric. They've done a good job with this, right? Why Align is better than Set Active's Sculpt Flex. They have to feature war because of their product positioning. Or they can product position based off of my goals as a consumer, right? All of a sudden, I can go down to the dropdown and I can say, oh, I'm getting into running. I'm getting into tennis. And I can start seeing their products in terms of my everyday, in terms of my goals.

17:54now subscriptions if you have a replenishable subscription you just have to be on subscription this is the best way to be part of somebody's routine especially like our friends vegamore here if you have a product that requires usage to see results like i think you have to use vegamore for at least like two to three months to actually see results subscription is the way to go and if you're going to go that route make subscriptions the star of your show vegamore has done a great job here with making a sort of a subscription cta in the nav they've made a subscription benefits page. They've outlined the subscription benefits in each of their products as well.

18:26Our friends at Array, we love Array. They have understood that routines are ever-changing. They have to create optionality. So when you go to check out with Array, you can choose your frequency. You can choose where I want it every three months, where I want it every one month. And they have advertised the benefits of using for two months, right? Like 74 % of participants reported less IBS symptoms right after two months of usage you can make it very clear how often you have to use this product to get the value now at recharge we see a ton of brands that do the convenience part very well right let's just do a 15 discount let's make it nice and easy to check out let's make it sure you don't have to worry about reordering it's just auto ship and they forget about the value piece they forget about the value piece and so we have a lot of brands that are starting to use rewards as strategies, right?

19:15Punch card rewards, milestone-based rewards, cash back credits. It's a way for you to solve a genuine need in my day, in my life, while also creating moments of joy and delight. I know, recharge pushing subscriptions, groundbreaking. But we promise it pays off. We promise it pays off in GMB. We were talking to a brand who does, I think, 10 % of their revenue on subscriptions, but their subscribers have a seven times more valuable LTV than their one-time purchases, which is like, if you could just move that subscription revenue by like 5%, God, that would be like hundreds of thousands of dollars in GMV, right?

19:53It nets out and they keep getting more valuable over time too. So when you think about your acquisition costs for Black Friday, Cyber Monday, the best way to make sure those pay off is by getting someone into a subscription that's going to continue to get more valuable the longer they're with you. That's a way for you to offset that CAC to LTV ratio, right? And that's our goal, is to make sure that you're not thinking about sort of this moment in time revenue, but sustainable revenue, sustainable revenue that's going to keep growing and getting more valuable for you as time goes on. And that's it.

20:24That's it for me, everyone. So thanks. If you want to chat subscriptions, come by me after. All right, now listen, September 24th in New York City, I'm hosting the third Q4 Summit, okay? It's free to attend. It's gonna be about 500-ish brands in the room. We're gonna have programming all day. We're gonna have breakout sessions. It's gonna be a very special room. You can attend for free, okay? Just go to ecomfounders.com backslash Q4. Fill out the form for a ticket. My team will review it, and we'll make sure you get a ticket and you're in the room. But September 24th, I wanna see you there. If you have any questions, shoot me a DM on Twitter.

21:04Otherwise, I'll see you there. 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.