How To Grow a Small Business Into a Multimillion Dollar Brand

0:00Benjamin Gottlieb here in the studio with our engineer Matt Schwartz who just reminded me we have a YouTube channel for Shopify masters so if you'd like to watch this episode instead of just listening to watch this episode of the city's most iconic eateries, Magnolia Bakery. You might have seen them on a fun skit on SNL or that episode on Sex and the City. And well, it's not just loved by New Yorkers anymore. They're actually expanding internationally to cater to more demand. They're selling online, they're in grocery stores, and we're going to chat with Adam Davis. He's a senior marketing manager and he's going to share all the strategies behind email, segmentation, social media, paid, everything.

0:58So Adam, so glad to have you here with us. Thank you for having me. This is awesome. I'm so excited to chat. Such an iconic landmark and also iconic baked goods. I know that there's so much nostalgia and love from fans. So how do you maintain that bakery charm when you're expanding and growing? Yeah, it's a good question. Magnolia Bakery has been around for now 27 years, which is a really long time. And luckily that passion and love from our fans has kind of persisted and even grown, especially in the last two or three years. The brand has really adapted to changing times. Our staples haven't changed.

1:39So 27 years ago, you could walk into a bakery and get cupcakes, banana pudding, a cake for an occasion. Today, it's more or less the same experience. So we really pride ourselves on being a classic, all-American bakery, really leaning into indulgence and special occasions and deliciousness at all times. And you mentioned the growth. Magnolia Bakery in the last few years has not only opened more bakery locations, we opened a location in Hudson Yards here in New York City, but also really expanded on the online offering. So our nationwide shipping business, our advanced order for in-store pickup business, our wholesale offerings all across the country, and most recently our grocery endeavors.

2:27Just this March, we launched our first grocery store product in the U.S., which is super exciting. I know. And that whole initiative is a big part of what you're doing at Magnolia. And I think it's so interesting about revamping that online experience because not only can people visit the online shop to order and pick up in a bakery, they can order stuff to be delivered to their house. They can find a grocery store close to them. So it's actually three different streams, but in one seamless place. How do you even start with a revamp like that? Yeah. So when I came aboard a little over two years ago, revamping magnolabakery.com was one of my first big projects.

3:13So magnoliabakery.com was not the central source, like you're talking about how you visit and then all of your options are laid out for you in one place. Priority number one was for the website to become the central source for nationwide shipping. We were working with a few third parties, a few middlemen. It was time to bring the e-commerce business in-house. And we knew that was a huge opportunity for us. So the first priority was make MagnoliaBakery.com the nationwide shipping platform for the business, which was huge. But in doing that, we knew that there's so much local demand for our products.

3:49And in launching an e-commerce platform, you don't want to discount the local ordering behavior. So you also want the website to serve as, okay, my friend's birthday is next Friday. I need to place an order for a confetti cake at Bleeker Street to be picked up at 10 in the morning. but I also don't want to call the bakery and have all these steps along the way. So it was a complex build because that same confetti cake can be shipped to you if you live in Idaho. So it turned into a big project of how do you differentiate between nationwide and local ordering? But also we're talking about the same product.

4:27So you don't want to overcomplicate things for the customer. And then you mentioned grocery, which is just an entirely different world where we needed to build a new navigation, a new collection. You mentioned store locators dynamic to where customers living anywhere in the US, redirecting to where you can buy the product online. So Amazon and third parties, Walmart marketplace, things like that. So it was a lot of simplifying once we had everything all in one place. But again, like you mentioned, just so many different options of purchase and so many different audiences to reach all within one domain.

5:05Were there any services, apps, or tools that has really helped within the revamp experience? Yes. I mean, so many. We use so many Shopify apps specifically for the e-commerce business that makes our lives so much easier. So I come from a paid media background. In my experience, I'm in running advertisements. I was pretty much hands on keyboard all the time on the agency side. Once we integrated all of our social media and platforms like Google with Shopify, it really saved us a lot of time with reaching and prospecting new customers. Me specifically, because I'm still running the advertisements for our brand.

5:48But now I can kind of trust Shopify's algorithm and targeting and things like lookalike audiences where I'm not having to be in advertising platforms all the time in managing daily ad performance. So social apps, things like that, advertising platforms that integrate with Shopify have made my life so much easier. And the results have just gotten better and better over time because Shopify is smarter than me, which is great. Another one that we use all the time that I love for segmentation. So we use the bulk customer tagger. So in these multiple revenue streams, it's hard for us on paper just at a glance to understand, well, what's the difference between a local customer and a nationwide customer?

6:35So we've set up a lot of tagging kind of out into the future where we know, okay, if a customer's ordering a pie for Thanksgiving, we want to make sure that Shopify is tagging that customer as such so that next Thanksgiving, we don't have to go back and understand, oh, well, what was that customer? Shopify is already doing the work for us, so we could just import that list into our email database and just send an email about pies to people we know who have purchased pies in the past. Same thing with local. I mentioned birthdays and confetti cakes earlier, but it's like we have these very frequent special occasion local purchasers where we're saying, okay, if this order contains a gift message that contains the words happy birthday, let's have Shopify tag that order with birthday purchasers so we know that next year we can send them a birthday-specific SMS.

7:28I love it because it sounds like you're really leaning into the data analytics. And I'm sure there's so much you need to think about balancing the marketing and also the production side of direct-to-consumer. So what are some tips you have for founders who are trying to find that perfect balance of production, marketing, meeting demands, and actually delivering the product and making the right amount? Oh, man. My best advice would be don't overthink it. Shopify's analytics are the most in-depth that I've ever seen. and I can spend all day just sitting in the analytics tab of our Shopify dashboard and coming up with a list of things that we should test and learn.

8:10We actually brought on a marketing analytics assistant just to focus solely on that this year. So we are so ingrained in the data and in the trends. The most valuable data sets for us are the year-over-year learnings. So many things have changed with inflation and so many macro trends where it's hard to say one-to-one why something year over year didn't meet demand or really, really grew year over year. And I would say my best advice is Shopify for the most part. If you look at it with, look at the analytics tab in Shopify at a very high level before you drill into the details of, okay, let's look at customer types.

8:52Let's look at marketing channels. We'll give you a good picture that will probably flip a switch in your head and say, okay, there's some macro things going on here before we need to dive into the why on like a customer or a brand level. And then also because you're entering the consumer packaged goods space with retail partnerships, there's also all of the customer feedback and meeting where customers are. How are you figuring out the best ways to incorporate that feedback into marketing and developing new products and also being in this new channel? Yeah. Well, luckily our customer help center is also integrated within Shopify.

9:34That's another app integration that makes our lives so much easier that we can manage customer service directly in Shopify. But yeah, I mean, we're talking about completely different customers, right? So the consumer packaged good customer can be someone who has never heard of Magnolia Bakery before. They have no idea that we specialize in banana pudding, and they see our brand on the shelf, and it's the first exposure to the Magnolia Bakery brand, especially in markets outside of New York, where we're competing against the big cookie players of the world. And my job is to get that customer to consider us among well-known cookie brands on the aisle.

10:17So the rebrand that we launched over a year ago was really done to change that conception. So if you're familiar with the older Magnolia Bakery brand, very old style, very classic, and very retail-focused. Nothing that really jumps off the page in terms of logo, colors, design. I don't want to say antique, but definitely very old-fashioned. So when we rebranded the entire company, we did so with grocery in mind because we didn't want to come off as a retail brand when we expanded onto a grocery shelf. We wanted to come off as a modern, whimsy, fun, but still classic brand. So we maintained those classic elements, but we really did a lot of work to pop and to appeal to the modern-day customer when we expanded to the grocery store shelves.

11:12Yeah. And I think as founders grow, they also might be thinking about rebranding or at least changing different elements of their brand. What are some things they should keep in mind when they're going through that exercise? Don't lose what makes the brand great. Because we, at the end of the day, the most important thing for us was we know what works for our brand and we know what customers love about our brand. I mentioned classic and old-fashioned a couple of times. That's part of what we needed to lose, but it's also part of what customers love about us, that you can smell the Bleecker Street Bakery 20 feet down the street before you even walk in.

11:49That's classic American bake shop feel. So we didn't want to lose that. We also didn't want to lose our priority products. We don't want to overshadow banana pudding and cupcakes in our rebrand because we knew that that's what makes us great. So we have color palettes now specific to the banana pudding product and the confetti. We have like a whole confetti world that we can play in, which is brand new for us. And it's an example of modernizing the brand into becoming more appealing, but also really zeroing in on what makes the brand great, which is buttercreams and scoops of banana pudding. And the key word for us is indulgence, because we know that we are an indulgent brand and people come to us when it's time to indulge and kind of step away from the world.

12:37So that was a big thing that we looked to zero in on, and I think we successfully did. Amazing. And I know the rebrand and the revamp is the big project, but I think that online experience is something that you try to enhance and perfect every single day. So what are some practices that people who are building in e-commerce should think about when they're trying to tweak that online experience? Test and learn all the time. There's nothing off limits for us when it comes to our website and testing and learning new things, all the way down to the smallest tiny little things. Our CMO discovered that you can put an emoji in the Shopify text in the nav.

13:17And I don't know why we never thought of it before, but it was like, wait, we can put a pumpkin next to Halloween desserts nav. Like, oh my God, like we need to do this for every holiday. So it just turned into like a joke that actually turned into like, I guess a marketing strategy of like, hey, let's make sure that the fall menu assortment was up and that we have a maple leaf next to the category title. Shopify was such a new world for us when we started that I'd say my first year learning on the platform, nothing was set in stone. All the way from paid media to the site experience. We had so many things that we wanted to test.

13:58The checkout experience, even. We wanted to test recommending certain products to certain purchasers who had certain things in their cart. We uncovered learnings where it was like, okay, a banana pudding purchaser is more likely to add a cupcake to their cart. So why don't we show that customer a cupcake on the sidebar once they have banana pudding already in their cart? I can go on and on about certain things that we've A-B tested from images to colors to category-specific landing pages is a big one too. We do our big banana pudding week sale every August. And I decided that I wanted to test a banana pudding week specific landing page, which is something that we don't normally do.

14:39We just drive to a product page. Most of our marketing just drives to a product page. But we used that kind of mini site, if you will, as a marketing hub where we fully decked it out in campaign imagery. We created interactive carousels that really emphasized the discount for the first time. And we saw huge, huge lifts. We beat our forecasts by a ton. And I'd like to think that that landing page contributed a lot to it just because we found, thanks to Shopify, that people were spending so much more time on that page exploring their options of what they can buy and mix and match versus just a product page.

15:18We interviewed Nick Sharma, and he talks a lot about landing pages and how once you're clicking through an ad, you really want to land on something that super relates to what attracted you. So I think for marketing planners, especially from the paid world, you definitely love using a calendar and also mapping out the spend. Talk to us about planning for Magnolia and also matching things up with holidays and special events. Yeah. Our calendar gets so crazy sometimes that we actually export the final PDF after a month or a quarter is over just to show everyone the pure amount of chaos that ensued in a given month.

16:00Our digital content lead, Ariana, does a really good job of organizing everything on a given day by vertical of our business. So on one day, we could be sending out, I'll just talk about email, for example. We could be sending out an email regarding grocery, regarding advanced ordering for local pickup, let's say for Halloween, which is coming up, and a nationwide shipping email for our new fall breakfast loaves, all on the same day with no customer overlap in audience. So I've mentioned segmentation before, but over time, we've become a lot better in making sure that specific messages are tailored to the right audience so that we're not just distributing a marketing message to the full file of our audience every time we have a message.

16:49Because one, there's a lot of dead weight there. We need to trim the fat. Not everyone in New York City is going to be interested in the fact that we're launching in Gelson's, which is a supermarket in LA. So there's so much segmentation that needs to be done. The strategy planning is a big part of it. So we normally plan for the big campaigns one tentpole at a time. So we're already doing, it's almost October, but we're already doing Valentine's Day planning right now. We already have our Valentine's Day emails laid out by day so that our creative team can already start thinking about how do I have to start, how should I think about the messaging and the content that we're showing on a given day.

17:35And it's a good thing because two years ago, it was like, okay, it's October. We don't have the Christmas holiday campaign finalized. Now we are proactively creating everything so far in advance because our creative team works in-house. And like you said, they're designing across all of those business verticals, whether it be wholesale, retail, direct-to-consumer, or grocery. So they have a lot on their plate. And that organization and prioritization by tentpole and by importance is really what makes it all work. Because we all need to focus our energy on where we know the biggest growth is going to be.

18:16Grocery is a huge one because it's brand new for us. But we also know that these big gifting moments like holiday are going to be, for direct-to-consumer, the time periods where we want to see the huge peaks and the tangible growth, not only in revenue, but also in audience and profitability and ROAS and actual paid media metrics like CAC and LTV and things like that. So a lot goes into a marketing brief, but it's all very outcome driven so that the rest of our team knows what to prioritize and when. I love how you mentioned about segmenting and also tailoring messages, not just to the whole email list and actually understanding the customer.

18:58Because I think it gives you that bakery experience, right? You go in, they know your favorites and they know what to offer you when you walk in. Totally. So smart. And also, I want to talk about like key moments of growth as well. I think, you know, historically we mentioned those really great media cameos from Sex and the City, that iconic skit with Saturday Night Live. Right now, there's so much just customer love on TikTok and Instagram. So how is the team leveraging, you know, viral videos and those moments to grow the brand now? Yeah, another great question. And the tricky thing about viral videos is you never know when it's going to happen, right?

19:41And luckily for us, we have so much brand love that our TikTok audience, for example, just kind of grows over time because we will put a video out there of somebody scooping banana pudding. And that's just all someone needs to see to hit the follow button sometimes. And I don't blame them. You know, we really, I mentioned indulgence a few times, but that's something that we really lean into when it comes to user-generated content. And actually going into our bakeries and watching our front-of-house staff swirl a cupcake, like, that is hypnotizing. Yeah, mesmerizing. Like, you want to sit and watch somebody ice a cake sometimes.

20:27So it doesn't require much, like, marketing work for us to create that moment. But when we do, it's about capitalizing on it. And how far beyond a follow can we go to actually obtain a customer? So we lean a lot on site reabandonment tactics because we know that a lot of our new followers, they will either sign up for our email list or they will visit our website. So first-time discount codes, site abandonment discount codes, It's even dynamic like Google Shopping or meta retargeting to keep the brand top of mind in the same way that that customer saw the brand at their first exposure, whether it be on TikTok or on Instagram Reels.

21:11Really leaning into that, I keep saying indulgent, but like food porn, if you will, honestly, is what it is. It's icing and scooping and just these motions that you want to see before you are buying a dessert. Yeah, totally. I mean, I love watching food videos, so it's relaxing and also addictive to watch. And then building from that, I think I would love to also just talk about all of the amazing brand partnerships, bagels, beers, even luggage. So talk to us how all of those partnerships came to be. Yeah, it's probably the most fun part of my job to think about our brand not in the lens of our brand.

22:01Part of the rebrand that we did was we really wanted the Magnolia Bakery brand to be able to exist outside the lens of I'm looking at a dessert or I'm thinking about eating a dessert. The luggage collab that you mentioned with Manos is the perfect example of that. This is a luxury luggage brand, a high price point, and a very premium audience who definitely has overlap with our audience, with what we know about who purchases from Magnolia Bakery, but in a totally unexpected place. You would never expect our brand to show up in any travel-related sector besides selling a dessert in an airport. So what we did was we really leaned into our new textures and patterns and colors to create a piece of luggage that doesn't read Magnolia Bakery at all.

22:59It just looks like something that is beautiful and that you want to buy, and it really pops. But then when you click into it, it's like, oh, this is inspired by Magnolia Bakery's buttercream and their banana pudding. And it, oh, that makes sense why it looks the way it does. But you didn't have to be a Magnolia Bakery purchaser to purchase that piece of luggage because it's just a really awesome piece of luggage that anyone would want to buy. You mentioned the Essa Bagel collab that we did and the Six Point Beer collab that we did. And those are probably the, obviously the most delicious, but also the most turnkey ones for us to activate on because we're talking about a brand who is still in the food and beverage sector who is leveraging our banana pudding within their own product.

23:53So for us, the biggest thing is making sure that the product tastes exactly like our banana pudding. We don't want to sell ourselves short. A lot of times in banana-flavored things, you get an artificial flavor. It tastes like a Laffy Taffy. That's something that we don't do. The Six Point Beer collab, we sent their team a ton of desserts. And their brewmaster, I think is his proper title, created a whole assortment of beers for us to choose from. And once we tasted it, we said, that's the one. You could taste the banana. You can taste the vanilla wafers. And it was perfect. So my job does come with a lot of taste testing, which is very fun.

24:39Another one is the Tula Skin Care collab that we did, which we worked on for a very long time with them, specifically on perfecting the smell. Because that's obviously not a taste-based collab. It's a smell-based collab. So we wanted it to smell not like you are putting candy all over your body. You wanted it to smell like a actual scent that you want your body wash to be. We just did a Boy Smells candle collab with the same thing where they leveraged our banana pudding flavor to create a really luxury and beautiful smelling candle. But to answer your question, these collabs are extremely beneficial for both parties.

25:22For us, it's reaching new audiences. It is finding brands that have a similar audience makeup to ours on a very high level, but bringing the Magnolia Bakery brand into new verticals and reaching people where they don't expect us. And for the other brands, it's being able to incorporate such a famous dessert like our banana pudding or cupcakes or whatever it may be into their assortment to create a really buzzworthy limited time offering. So I'd say both sides win. Yeah, because you're exposing new customers to both brands. Yeah. Enlarging your respective pies, if you will. Yeah. Yeah. And also meeting customers where they are.

26:07And I think that's another element of marketing where you're playing with email, SMS, paid. Any advice there? Balancing the different channels, reaching customers in different ways. And how do you make sure, you know, you're not sending too many texts or emails? Balance. Yes, balance is the right word. You mentioned balance, it's the right word, especially on the non-tentpole time periods. So when it does become Christmas time, it becomes constant messaging, but in a smart way. So still not messaging the full file every day, no matter what, but oftentimes if we identify customer segment, who is a gifter, We know that they've sent gifts in the past.

26:55That's the customer that we really want to drive the frequency up during the 10-pole moments like holiday. The down periods, which is the summer outside of our big Banana Pudding Week sale, it's really being smart because I have seen that opt-outs and unsubscribes really peak when there's no key message in the market. when it's not order ahead for a specific thing. And it's just, we're Magnolia Bakery, order our dessert. It's like, if there's no reason to order that dessert and you have to pay to ship that dessert across the country, you're talking to people who a very small percentage actually might be interested in what you're saying.

27:42So there's definitely a balance between those channels that you mentioned. And on the paid side, we really lean on retargeting and what we know works, which is the low funnel. So we don't really over-rev on prospecting and trying to drive new customers with paid during those down periods. We really rely on, okay, customers visited our site. How do we use paid to recapture that customer to make a purchase? email has to be extremely contextually relevant and SMS has to properly complement the emails. They can't be the exact same thing because most of our email audience is also on our SMS audience.

28:28So you don't want to send the same email and SMS on the same day because it's just a waste of our marketing messaging. You want to make sure that the SMS – SMS is a great platform because you're reaching someone who is super engaged, right? Someone's cell phone is their prized possession. And if you send an SMS every day, you are going to lose that customer no matter what. Because when I get three SMS a week from a brand, even if I've made a purchase, I'm like, okay, that's enough. Um, so email, we can send three a week and slice and dice the way we want, but SMS, we really want to lean on for those big announcements.

29:16Um, like, Hey, guess what? Our Halloween dessert assortment is finally here. It's back. We have these new desserts this year, which are really exciting. After that, probably not going to hear from us on SMS for a little bit because we're going to rely on some other tactics to drive home the purchase. We can get dynamic with the SMS and say, okay, if someone has reabandoned or abandoned our site, let's send them an SMS to kind of draw them back, maybe offer them a discount code. But for the most part, we like to keep everything balanced to make sure that we're not overreving in any department, including the dollars that we're spending.