Facebook ads have changed more than the weather in recent years, yet there are eCommerce brands that continue to drive incredible growth by mastering the platform.
In this week’s episode, we’re joined by Nigel Thomas who is the CEO of Alpha Inbound, an agency working with 7 and 8-figure DTC brands.
In the episode, we talked about the three key levers that impact ad performance: creatives, landing pages, and increasing average order value.
- Find Nigel on LinkedIn
- Get our weekly Brand Builder Newsletter
- 00:00 – Introduction to Guest: Nigel Thomas
- 01:53 – Nigel’s Background
- 09:28 – Dynamics of Facebook Advertising
- 16:49 – Importance of Having Good Creatives
- 20:43 – Utilizing User Generated Content as Creative
- 25:43 – How to Combat the Rise of Advertising Costs
- 27:17 – Optimizing Landing Page For Conversion
- 29:44 – Increasing Average Order Value
- 32:29 – Other Key Metrics That Make Up A Successful Advertising Funnel
- 35:02 – Return on Ad Spend vs Marketing Efficiency Ratio
- 39:08 – Improving Retention and Increasing Customer Lifetime Value
- 42:49 – How to Connect with Nigel
Hi, folks, welcome back to another episode of The Brand Builder Show. And if you want to run Facebook ads successfully in today’s climate, then this is the episode for you. We’re going to talk all things Facebook ads, or Meta ads, maybe we should call them. And to talk about that we’ve got Nigel Thomas on the show. Nigel, welcome to The Brand Builder Show.
Nigel Thomas 00:18
Pleasure to be here, Ben. And yeah, hopefully we can get some, you know, golden nuggets out there for the audience today. And but I’m really happy that you brought me along. And looking forward to having a conversation you put me on the spot. And like I said, let’s get some insights out for the market.
Ben Donovan 00:36
Definitely. And in a crazy little small world, we just found out that you grew up about a mile from where I live right now in Manchester, England. So that was pretty, pretty crazy. I recognize that English accent as soon as you jumped on the call.
Nigel Thomas 00:49
Yeah, just my mother’s been telling me then that I’m starting to sound American. But you know, a Mancunian always spots another Mancunian. So actually, before we started, if you’re into football, if you’re a red or a blue, but I’m a blue. So I don’t know if this is the end of this.
Ben Donovan 01:07
Stop the recording, stop the recording. I thought you can offer some value and then you say that. Unbelievable.
Nigel Thomas 01:14
I was able to watch the Champions League find that with my dad and brothers. So that was a moment, man. But during the conversation here, I do feel sorry for you.
Ben Donovan 01:24
I’ve watched it through through my fingers. I’ve watched the Champions League final, as the treble ownership kind of drifted away into the distance anyway. Yes. Hopefully this season a little bit better for us as Eric is splashing the cash. But anyway, let’s talk. Let’s talk Facebook ads. Nigel, give us a bit of your background. You know, you’ve been all over the world and you’ve been running, you know, marketing operations for a long time. Good. Bring the audience up to speed with what you do and why this is your niche topic.
Nigel Thomas 01:53
Yeah, so didn’t always start out in marketing agencies. Ben, I actually was a cost manager at a big construction consultancy called AECOM. That was at the time, you know, 26 years old, which is about five, six years ago now. And I thought my big idea was, I’m going to be a quantity surveyor, by the way, for anyone who doesn’t know what that is, is people who count bricks and tell their clients how much money they’ve lost on that project. So as you can imagine the fruitful bunch of people, not really everyone hates their life. But my idea was to essentially go and build up a big tax free salary in Dubai, and then come back, buy a property portfolio in the UK and sail off into the sunset.Once I found out that my life would suck, doing this job, and I’d have to just stick it out for a few years, I just realized that wasn’t for me. And at the time, obviously, Facebook ads was just taken off back in kind of, you know, that 2017 era. So I started doing a bit of freelancing on the site, and I quite quickly got a few clients through a platform called Upwork. And that’s when I realized, if I’m going to make some real money here, I need to go directly to the clients, to the brands. So that’s what I did through cold email. And that’s where I learned a bit about sales, so on and so forth. You know, this is now the third agency that I’ve been a part of, and our names are for inbounds, you know. We work with seven and eight figure direct to consumer brands, predominantly the health and wellness space. And we don’t only just do Facebook ads, because what we’ll talk about today is it’s more about the content, and also the landing pages, as well as what happens inside the actual platform itself. So we build all the content, you know, we shoot all the video scripts, all that kind of stuff. We do all the ads inside of matter. Also, we do tick tock and Google. And we also create customized landing pages. So essentially, all levers that we can pull on acquiring new customers from a pay performance perspective, we now control. So that gives us a big competitive advantage in the marketplace. I’m now you know, I joined this agency two years ago, I’m the CEO. There’s also another partner in the business who handles all the client strategy, Josh, we work with just US clients. And we’ve gotten to that point now where we can work those kind of mid market brands in that five to 50 million range. We’ve just read on all of our operations. And we’re looking to get to that, you know, next level and scale really as an agency. So yeah, I’ve learned a lot over these last few years, I’ve made a ton of mistakes. You’ve must have spent between me and Josh and our team over $100 million on ads, like through matter. And so I feel like I’ve got a few things to talk about. And hopefully I can provide some insight today. But yeah, running an agency’s, man. You know it, it puts you a certain way but one thing I will say before we move any further Ben is for terms of my an apprenticeship and business. I can’t think of much better things and running an agency, building it from scratch because not only do you experience the whole lifecycle of everything in business, whether that be sales, finances, operations, you know, resourcing, hiring, whatever else, you also experienced that in everyone else’s business that you work with. So it’s like, you know, you just get so much exposure so fast. And it is a lot of eating. I don’t know if I can swear on this podcast, but it is a lot of eating shit all the time. But the end of the day, it hardens you up, and it gets you ready for business. And that’s what I love about agency life. Although having said that, I don’t want to be here forever. So hopefully, when we’re having this conversation in five years time, then I’m not in an agency, but we’ll see where that goes. Anyway, I’m starting to ramble. So please cut me up. And
Ben Donovan 05:41
No, no, it’s good. Because this is interesting, you know, because there are different dynamics involved in I had a guest on a few weeks ago. And we talked about how actually, there are opportunities for you know, both sides of that spectrum, if you really master something in eCommerce, there’s so much opportunity to then take that and make money on the agency side by offering those skills to people that need it. But there’s also the same, you know, aspect that you talked about, for some people coming into eCommerce, sounds great, but they’re scared about getting started, maybe don’t have the startup capital needed. And actually learning the ropes inside an agency is a great way to learn the skill set to be able to then go and do some great stuff. Guy I follow, Danny Buck, he’s got the brand crafted, it’s like a big jewelry brand. He’s pretty big on social media. And he so he talks about, he worked in an agency for a number of years before he ever built his own brand. And it’s actually what he learned in that agency that kind of accelerated that path. People I think, so often want to get started as soon as possible, but actually, by learning is that old, Abraham Lincoln quote, isn’t it, you know, “If I had six hours to chop down a tree, I’d spend the first hour sharpening the axe”, and I think that’s what an agency environment could do. It could be like sharpening the axe before you get into it.
Nigel Thomas 06:57
Yeah, and I’ll tell you what, we can definitely use that quote, and relate that back to Facebook ads, because that’s where most people go wrong, especially eCommerce brands. They try to start running ads without sharpening the axe. And the axe in this case, is the strategy and the foundation and what they actually need to get in place, and who should run ads and who shouldn’t run ads. Because at the end of the day, there’s a lot of sharks in this space, especially on the agency side. Because the barrier to entry, unfortunately, that’s the only you know, caveat to this is you only need a WiFi and a laptop pretty much to get into the agency game. It’s not like there’s any certification. And I think obviously, over the rise of all these eCommerce brands in the last few years, they don’t know any better, right? So they just get pitched by these marketing agencies who have all these incredible case studies, which usually it’s just a one off walkthrough ticket, and it has no relevance to that company. And obviously, they go for it, and then they get a bad taste in their mouth. And that obviously leaves the rest of us, you know, people who actually care want to help these brands who actually know about business, having a hard time to try and sell, obviously, the brands, I’m working with an agency, it can work out. But in terms of the actual strategy itself, you have to know what you’re doing. Because you can lose money. It’s like gambling, you can lose money real fast. Because honestly, do you think Facebook, Google and Tik Tok care about if you, you know, go out of business and spend all your money? No, they’re only in it for themselves. So you need to understand the rules of the game, and how you sharpen the axe before you start playing?
Ben Donovan 08:37
Yeah, definitely. And that’s what I’d love for you to help us understand is those dynamics in play right now, because I’ll be honest, I haven’t run run a Facebook ad in probably two years, you know, when the whole pixel stuff went mad, I just, you know, kind of got sick of it. And, you know, I’d run out for a spin, not loads, but 50 100 grand, maybe on Facebook ads over the years. And so enough to know that around the platform, but having not touched it in a couple of years. I feel like I’m so out of the loop. And I think a lot of our audience will be, you know, a lot of them would sell on Amazon, and they’re so used to Amazon bringing the traffic for them. This whole idea of having to pay for customer acquisition is just alien. Right? And so I think you helping us understand what is the dynamic? What is the climate right now for Facebook ads for E commerce? general question.
Nigel Thomas 09:28
Yeah, for sure. And obviously, for those people who do focus on Amazon brands, let’s just be real for a second, it’s going to be more expensive to acquire customers through your own methods, whether that’s Facebook, whatever channel you use, and drive them into a Shopify your whatever your ecosystem or platform is, it’s going to be more expensive to do that. But the caveat to that is that you own the data, and we’ll get into why first party data is so important. And more importantly, I’m sure a lot of people are aware Have this investors obviously see the returns on that and your multiples from your company are going to be a lot higher if you own the data long term. So yes, it is a more expensive cost. But there are a lot of benefits to it. And there is a way of doing it. Right. So, yeah, I mean, I was talking to one of our clients, actually a few weeks back, and he used to in 2018, used to run like half a million a month, big brand in Canada. And he used to just slap up images in Canva. This was at the height of Facebook ads. And he used to just slide stock, we’re putting images in Canva really basic things and just run it to the homepage and get like 6x return on his money. You know, that’s just not possible anymore. And the reason why that was possible, just so everyone knows, and this is this is the whole thing around this Facebook ads, dads, this is what people don’t understand, there was a huge supply and demand opportunity, where there was, obviously everyone was using the platform, Facebook and Instagram, which by the way to just settle a few myths said there’s still 2.5x billion users, like people still use Facebook, contrary to what a lot of people think. But it’s not as new as it was. And more importantly, as well as all the competition flooding in the big players, the real big players, were dumping all of their money into digital, they were still focusing on the old methods like TV, radio, or whatever else. And I’ve seen some digital budgets used to be like 5%. And we’re talking like, five, six years ago with some of these big like billion dollar corporations. And now like 40 45% 50% of their entire budgets getting slammed into digital, which what does that mean? That means, obviously, because all of these platforms are auction systems, you basically bid to get into the newsfeed of your potential customer, if obviously, more people are dumping in more money that inflates the cost for everyone. So that means overall, it’s a lot more expensive. So to combat that cost, you need to have a more strategic approach of how you do the advertising. So we break it down into three main parts as though there’s only three main levers that you can pull rarely, on the Facebook ad side of things. Firstly, you’ve got the creative side, which is getting more eyeballs to your website for cheaper. So it’s, you know, your cost per click. The second thing is, is converting that traffic on your website, turning those clicks into eyeballs, you know, into purchases rather. And then the third thing is increasing the profit. And that’s where you increase how much people are spending when they reached checkout, which is your average order value. So they’re pretty much the three levers you can pull. And that’s kind of like the approach of how we see all of our advertising. And there’s, you know, very specific things that you can focus on. And I’m happy to talk about for all three of those things. And then outside of that, the last thing I’ll say is that if you can’t retain your customers, after you brought them in, then you haven’t got a business. So we don’t focus on retention ourselves whether you know, I’m talking about email and SMS. But ultimately, you know, we have some migrate reports on the retention side, if you can’t keep that customer buying your products, like obviously, Amazon do because everyone’s on prime and they keep people in that ecosystem, then it’s going to, it’s going to be a very hard way to figure out the unit economics. Because ultimately, the more you can spend on the front end to acquire a customer coming back to that whole auction system, the more competitive you can be. So it basically comes down to a game of unit economics. So if I buy a customer for $50, and I know over the next 12 months, they’re going to spend $500 At my company, I’m now willing to spend $150, to acquire that customer. But if I know that that customer is only going to give me $50 And never spend with me again, that becomes very hard. And the thing is that people people don’t think about is the cost of advertising is only going in one direction, it’s only going that way. But if people are listening to the audio version, so you need to get you know your lifetime value numbers. And ideally, and that’s why we tend to work with skincare supplements, CBD brands, is you want to have products that people can keep buying, and that’s why you need to release more skews more variations. And a lot of these products on Amazon are fantastic for that. And but you need to try and get people on subscription. But go in with that mindset. You’re acquiring people, not just for now, but for the next few years because that’s how you build a real business. But I can talk about out the specific strategies for the Facebook site, there’s just so much there’s so it’s so complicated. And yet, I don’t know where you want to drive the course.
Ben Donovan 15:08
Definitely there’s, you know, we could talk about this for hours. But I do want to try and get the bird’s eye view of each of those stages just for those for our listeners. But I think that what you do highlight is a is a very real issue for people in eCommerce that come in and think, oh, selling products online, this is like a great little side hustle. And it’s become less and less a side hustle, and just a little amateurish thing, and become something that you really do need to commit to doing well. And I think that, like I said, especially Amazon sellers, we have been guilty of neglecting the idea of customer acquisition. But even on Amazon, the cost of advertising are getting more expensive. And so most sellers need to come around to the idea that Amazon advertising itself, you know, PPC on Amazon, is customer acquisition as well. And unless you actually do the hard yards of building a real business, which is you know, a good product, good marketing, to then have more products that you can then sell a person, you know, it’s gonna become harder and harder to build a profitable business. So I think these things that you highlight are just, obviously, so essential for all sellers. So it’s really, really good to know. But yeah, these three phases that you talked about the first one, obviously, the creative and getting the lowest cost per click possible. I was interested to hear you say that, because obviously everyone talks about how with Facebook ads creative is key, especially in recent couple of years. That’s all I see, you know, now the pixel issues, and it’s all about having good creative, how does this actually affect your cost per click, or the price you’re paying in the auction? Because surely, Facebook isn’t measuring the quality of your creative against the other people bidding on this same feature?
Nigel Thomas 16:47
It is. This is how you need to think about it Facebook, make their money by having people staying on the platform for longer. And how are they going to do that? Because obviously, then they advertise them, right? The better the customer experiences, the better the longer people are going to stay on the platform, which means the more money Facebook make, because obviously there’s longer you know, to advertise to people, so the more they can monetize them. And the reason why the user experiences improve with better content, is because let’s say that I have, I’ll give you a prime example. So we were of a brand called eczema honey. Obviously, they sell products, skincare products for people who have eczema. I personally suffer from eczema. So if I go on to the Facebook platform, and I’m scrolling through, like, I don’t know what I’m doing, looking at cat photos, whatever it might be, or you know, sharing something about man set up man united. But let’s just say I’m going through my feed, and I come across an ad. And it talks specifically about eczema. It’s from someone that resembles someone like myself, maybe a guy nice 30s, for example, in this situation, who maybe is an entrepreneur, and he’s talking about how he’s working a really hard life trying to build a business, maybe a marketing agency might think about how specific I’m getting here. And how that with the struggles of this, he doesn’t find the time to take care of his skin. And to combat that. And with these flare ups, he’s found this natural solution, so he doesn’t have to use steroids anymore. Again, that’s a pain point of people, I’ve had some a really strong pain point. So now he’s got this natural solution. And here’s a product that has half a million reviews, you know, you can get a buy one get one free discount today, blah, blah, blah. Now, for me that is so specific, I go to click to that website. That’s a that’s a really good user experience for me. So the point is with the content, what you need to do is do more research. And you know, you have to understand your buying personas. So in this actual example for that brand X money we found from doing all of our research, and you know the way we do as researchers, we look at the product reviews, we look at the language that the customers are using, by the way for an Amazon customer Fantastic. All of the information that you need is all in your reviews. You can use tools to extract that and see the pain points. You know the common words that are people using an extract the pain points, the objections, the stories that are overcoming, and you can really nail down and find your bind personas for this example we found out it was mothers who have children who have eczema. So what we did is we went out into the marketplace and found mothers who have children who have eczema, and we sent them products. We wrote them a script, a transformation story about how these products have helped them like we actually gave them the products and they use them. So it was all authentic. And then they recorded a video around it. And obviously, we use a few things like psychology like social proof, or whatever else, we made it authentic. So it looked like an organic video for Facebook, we put that up into Facebook. And over, I think it’s like eight to nine weeks, that one video is done $200,000 in revenue on Facebook, for that brand. So that’s the power of creating something so specific, which again, it aligns with what Facebook are all about, which is providing a really good customer experience. Yeah. And that’s how you win at Facebook,
Ben Donovan 20:43
You touch there on user generated content, UGC. And yeah, that’s something again, excuse me, that gets talked about a lot. And I don’t want to go too, sort of timely on stuff because otherwise this podcast gets outdated in three months when the algorithm changes, and there’s a new tactic, but on the whole, the kind of creative that does do that highlights the pain points, it speaks to the person, you know, the target customer. What does that look like? Is it more? Is it less sort of polished? Or is that something that changes all the time?
Nigel Thomas 21:18
So here’s the interesting parts of this ban is that a lot of people talk about it needs to be authentic. And it needs to not look like an ad. Yeah, that right. But the thing is, is we’ve got data, we’ve run like $100 million in ads now. So we know the data behind what creative works and what doesn’t. The ones that are scripted always outperform the ones that don’t. And the reason why that is, is because until we become robots, human psychology is not going to change. So, you know, things like pain points, things like scarcity, things like social proof, if you don’t bake these into your scripts, then it’s unlikely that you’re going to be able to out compete that now obviously, you need someone who’s charismatic and has a way of communicating that in an authentic way. But really, what we do is we write out all of the scripts, and I can give you, you know, a bit of a format. But then we find the right person for that script, we give them the script, show them how to record it. And then obviously, we kind of let them do that thing. But it’s about having that framework in place. Now one of the most important things that you might have heard this, you know, trigger word thrown about is the hook the first three seconds. Now again, you’ve got to imagine someone’s scrolling down their Facebook feed or tick tock, whatever it is, you’ve probably seen it yourself, you probably do it every day, then, you know, you scrolling down it like rarely, it’s almost like a slot machine. You know, these people like almost like gamblers, they’re looking for that hook, like what is it that’s going to capture my attention, usually trying to distract themselves from whatever’s going on life. So we need something that captures your attention within that first two to three seconds. And it doesn’t even have to be completely related to the product, it’s just needs to be something kind of wild, that gets your attention a scroll stopper, then after that, you need to obviously blend it into what the product does. So you can then talk about, you know, the benefits of the product and showing the product in the customers hands. But it’s important to remember that with the attention spans that there are these days, and if you look at someone who’s at the top of the content game like Mr. Beast, what you’ll see very evidently, if you really slow it down and start looking at things bit by bit is the transitions. What these creators do is every like two seconds, they switch frames. And this is not by mistake, this is to keep catching your attention. Because humans are like extremely visual creatures, like our, you know, our like, you know, the eyes, in terms of our senses, is by far the most powerful sense out of all of our senses. So we’re detecting things subconsciously, that and that’s what keeps our attention. So we need to feed that part of our brain. So you know, the hook the first two seconds, then it’s like showing, you know the product in their hand. And then it might be transitioning to a part of the story. And every single two seconds, even though the transitions needs to be seamless. You need to keep switching and keep hooking that attention. And so the two main metrics we look at when we’re reviewing videos, is one the hook ratio, how many people watch the first three seconds of a video and we found that if between 30 and 40%, watch the first three seconds usually you’re going to have an ad which goes viral. And then the second one is a retention rate because all good and well, you know, getting people’s attention but if you can’t hold that attention, then obviously, you’re not going to get them interested to go and click through to your website, right. So what we’re looking for that in terms of retention of the whole video is usually between 15 and 20%. If we can get those two things in place, usually we’ll have a really strong video ads, which crushes it on the conversion side, as long as obviously the landing page we’re sending it to is congruent with the ad that they’ve just seen.
Ben Donovan 25:25
Yeah. Which is a great segue into that. Because obviously, like you say, creative is massive, it’s going to attract people, it’s going to get the click, but one once they get there, as you said, it’s not just the job of the ads to sell the product. There’s a stage beyond that, which sounds like you’re driving them to custom built landing pages, isn’t it?
Nigel Thomas 25:43
Yeah, yeah, that’s right. So this is another way, again, with the rise of advertising costs that you can combat, you know that that rise in advertising costs, and that is by having a better customer journey. So I think it’s important for people in terms of the mindset. So think of it like this, the job of the ads is to generate curiosity. And the objective is to get a click, that’s it. There isn’t anything else. The job of the landing page, is to sell people on why they should now buy that product. Now, do you think about it, think about that ad that I just talked about, you know, children who have eczema, and we’re selling to those mothers. So we’ve got a mother now talking on camera, about how this product has sold her kids eczema. And obviously, that mother herself who’s looking at the ads, has a kid who has eczema, they click through to a landing page. What does the headline say straight away. So you’ve got two options here, we can do what most people do. And this is what works, you know, in 2017, which is drive it to a generalized product page, which talks about you know, skincare and how it can help solve people’s eczema. Or we can drive it to a custom built landing page, which literally the first headline talks about how this product is saving, you know, children’s eczema, and how it can save a child’s eczema in X amount of timeframe. But that is so specific. So and it’s again, it’s all about that user experience. Because ultimately, sure, you get three seconds when someone’s watched the ads. But when they go to the website, you only got another three seconds again, so you have to put them back in the hook of obviously, the landing page is the headline. And that’s where it needs to be specific. And then you start expanding down into the other areas of you know, sales. So if you think back to like the principles, I always go back to Robert Cialdini. And he’s got a great book of note, you know, your marketing, you don’t know it called Influence, probably the best marketing sales book I’ve ever read in my life. And it’s all the core principles of their, you know, like scarcity and social proof and authority. And they’re all baked into this page. So a few other things, you know, we usually do is, we have a storytelling section, where in this example, the founder of that company, his name is Minesh, he actually created the product for his own children to solve their eczema. So obviously, that’s like a really heartfelt thing that people can buy into a before and after photos are really good, you know, what was before lifelike and after talking about the product benefits, very visual, you know, images and videos that we include in the page talking about what’s actually the in the proud of the fact that they’re natural, they don’t have to put steroids on again, talking about the pain points, and putting an authority figures in there, whether it’s, you know, let’s just say it’s a dermatologist in that space that everyone would know. And then obviously trusted budgets, if they’ve been featured in a magazine that everyone knows about, you know, obviously, you can do a general one, like Forbes, or whatever it might be. You need to put that in there. And then one of the most important ones, obviously, the social proofing sites, really, what you want to do is have this specific number of product reviews. And if you’ve obviously got that number from Amazon, or whatever, put that right at the top of the page. So for this brands, they’ve had like 500,000 reviews. So we literally put that right at the top of the page, which instantly gives so much authority. And then as you go down the page, having images or ideally videos of customers, you know, a Rolodex of customers talking about how you know, their life is before and after, and the transformation they’ve been through. And then the other thing you can include is like an FAQ section. And then the last thing that’s really important when I talked about those three levers, one being creative, the other being conversion, which we’ve got those two. Now, the thing is, is you’ve paid a certain amount of money to get someone to that website. If you increase the amount of money that they now spend on your website, that’s pretty much all profit. So that’s where we do things to increase the average order value. So on this page, what we’ll often do, let’s just stay in this, we’re going back to this example, the skincare product will give some bundling options. So you know, giving them the option to buy more and get a discount. So, you know, let’s just say there’s on the left hand side, you can buy one. On the middle, you can buy, like two or three for a specific discount, and then you can buy six for another bigger discount, this massively increases the average order value by literally doing that on his own bundling products is like 10 to 15% increase straightaway. And then the other thing is, once they go through to the checkout, we use apps. Most of our brands use Shopify, there’s a really good app called Rebuy. And essentially, that will then give them an option to buy complimentary products at checkout. And you can do things like incentivize, if you spend $75, for example, you get free shipping, and you can gamify, the checkout experience, which increases the average order value, which increases your profit margins, which means if we go back to the auction system, you can now spend more in the auction, because obviously, you’ve got higher average order value. So it means you can spend more to acquire the customer. So it’s all about just pulling these different levers with your economics. So you can spend more to acquire the customer. But hopefully, that kind of makes sense as wrapping all that up, you know, having a very, very specific creative on a very specific demographic for one product, sending it to a very specific product page, which expands on what you’ve talked about in that creative, which now sells them on the products. And then making sure you give them options to buy more of the product, and gamify the checkout experience. So they’ll spend more to increase your profit margins.
Ben Donovan 32:00
So you’re saying if someone’s sending traffic just to a product page, homepage, category page, they’re not gonna make you?
Nigel Thomas 32:06
They can, but it’s not. It’s not I mean, there’s brands still doing it. But the thing is, is since obviously, you know, iOS 14, and whatever else, and it’s become a lot more competitive. So many brands have cut back on their Facebook spend. It’s like how much money you leaving on the table by not doing it? Yeah.
Ben Donovan 32:29
So you talk there about the, you know, the different metrics of engagement with the creative. Other KPIs you’re looking at in terms of what’s going to make a successful advertising funnel, you know, different average order value metrics, different conversion rate metric. Other things.
Nigel Thomas 32:49
Yeah, no, that’s a good question. So in terms of the conversion sites, what we tend to look at is Add to Cart rate, checkout rate. And then you know how many people from checkout actually buy the product, and then also bounce rate. So in terms of some benchmarks to throw some out there, bear in mind, take this with a massive pinch of pink Colette Himalayan salt, because we were, you know, with one industry, and it’s always different. So like I said, take a pinch of salt. But these are some good benchmarks, bounce rate. And again, if you have a very high bounce rate, you’re losing so much money. And the way you get around that is by having a faster, you know, loading website. We use Webflow for all of ours, which are really, you know, fast, and they’re optimized for mobile. And but if you’re, if you’re. Yeah, sorry.
Ben Donovan 33:42
Quickly, because I do so you’re hosting them off Shopify?
Nigel Thomas 33:45
Yeah. It just, it’s a lot faster doing it like that. So in terms of bounce rate, and it’s an above 20%, you probably going to have issues. So you don’t want it to be above 20%, the bounce rate in terms of add to cart rate, you should be looking between 10 and 15%, in terms of checkout rate, around the 50% mark, then in terms of how many people from checkout, then buy the product, you want to be looking at 50 and 75%. So there’s some you know, like high level metrics in terms of what we look at for the funnel stages. And obviously, what we ultimately do, Ben, is when we audit a brand, we reverse engineer the entire funnel, we look where it’s leaking, whether it be creative, or conversion, then we just optimize there, because I think a lot of the brands the problem is they’re trying all these different strategies they hear about, but actually, if they had a marketer that looked at their specific funnel, it will probably best to just invest resources here. And maybe their creatives are actually pretty good. They just need to, I don’t know, increase their Add to Cart rate by 20%. And then all of a sudden they start making twice as much money. Does that make sense?
Ben Donovan 34:57
It does, yeah. Are you looking for any specific return on adspend?
Nigel Thomas 35:02
We don’t really tend to focus on ROAS anymore. So the problem with ROAS,is it doesn’t take into account cross customer journeys. So let’s say that someone on Facebook, you know, sees your products, which again, you got to think about the psychology, they go in there to hang out with friends and not going there to buy products. And then two weeks later, they go research your product through Google. And then they go and buy the product through a Google ads. Now, if you look at just ROAS on single channel attribution basis, what it’s going to show is that Google was responsible for that purchase. But that’s not the reality of what’s happened. So actually, the Northstar, the metric that we tend to focus on and this is what most of the Big eCommerce brands have now switched to is something we called MER, which is marketing efficiency ratio, an easy way to think about it is just blended ROAS is basically all of your marketing budget versus all the revenue you get back, because that’s where you can get more efficiency. And you can understand cross customer journeys, because ultimately, Facebook is going to be the main scaling platform where you’ll spend more money, but Google will often be a higher return. Because it’s more intent based, it’s further down the funnel, just like Amazon is going to be a higher return. And that’s something else to speak about. For the Amazon side of things just whilst you run that, we often see that when we start the Facebook ads, you get a big spill over onto Amazon, because ultimately, you got to think about that customer journey. And again, for the listeners out there. If you see a product on Facebook, probably what is the first thing you’re going to do, you’re probably going to go through Amazon and check it out, right? Just like if you were in a retail store, you probably do the same so you can get it cheap. Well, a lot of our brands do that. But they have taught listings on Amazon, so sure they’re spending on Facebook, but they know that they’re going to buy the products on Amazon. So you know, it’s all about understanding the entire ecosystem. And whilst when things are a lot cheaper, people just focus on specific attribution channels, but actually was never the right way to do it. The thing is, is it was just so easy that you didn’t need to do it from an overall macro standpoint. But now you do need to do that. So it’s about looking at everything from a blended perspective. That’s how we, that’s our Northstar.
Ben Donovan 37:27
Yeah. And you do make an interesting point. I think any brands that would be listening, that maybe aren’t yet selling on Amazon and just are DTC at the moment, I think I’ve seen so many DTC brands that have in the past said, Oh, no, we’re not going to sell on Amazon just exclusively DTC, but realize how much revenue they’re missing out on just because of the branded search, like you say that people will see an ad. And it’s not just a price, you mentioned cheaper pricing. For me, it’s a convenience, right? I’ll see something that I want to get. And I won’t be like thinking, can I save $1 or $2 here, or great British pounds. I’ll be thinking I want it delivered tomorrow, I want free Prime shipping. And I want to know I can return it if it’s broken, you know, and Amazon gives me all of those things at the click of a. So if you are a brand that’s generating a lot of searches online, and you’re not selling on Amazon, you’re probably missing out on a lot of just branded search run.
Nigel Thomas 38:19
Actually even worse than that you’re paying to basically educate customers, and then for your competitors. Because if you don’t advertise on Amazon, what’s going to happen is you pay to put an ad on Facebook. Again, what are you doing, you’re spiking curiosity, you’re educating them, you’re, you’re getting that first touch point. If they then go to Amazon, and your competitors top listed, you basically just pay to get them further down that customer journey. So you’re basically paying for your competitors to grow faster on Amazon.
Ben Donovan 38:51
Yeah. Crazy. Crazy. You talked a lot about, you know, obviously supplement brands replenishable. Are there any things that maybe we should just fit before we finish address that maybe a different if someone doesn’t have a brand that sells, you know, replenishable goods?
Nigel Thomas 39:07
It’s just, it’s more about retention, like I said, you know, how can you continue? How can you get your customers to keep spending money with you. Because if you can’t do that, you’re gonna have a very hard time scaling your business, the biggest thing that investors look at from a DTC standpoint, as well as like margins, and everything else is lifetime value to customer acquisition cost. And a healthy ratio just for anyone out there who doesn’t know is three to one. So you know, the amount of people spend over the lifetime there with you being three than the you know, to the amount that you acquire that customer being one. If you can expand that ratio, so you can get like a five to one because you have you know, really good retention marketing because maybe you have a community on the back end and people want to be there. Again, using that example, the eczema brand, they’ve got a Facebook group like 15,000 people. People aren’t just part of that brands, because of the products, that they’re socializing with each other. So it becomes, you know, part of the experience, they’re creating their own ecosystem. So Amazon have their ecosystem. It’s about how can you create your own ecosystem, where people have that experience. And there’s lots of different things you can do, you know, brands, who got very innovative. If it’s, for example, I talked to a brand the other day, a crazy idea, but I think it’s really smart, that for all of their packers, when they send out the products, they include a handwritten note and a picture of the person who packed the product. And honestly, it might sound like a lot of work. But those guys, I think, have something like, like, it’s something ridiculous, like 40% of the people, or 30% of the people who buy like one product buy again within 30 days. And they that people like obviously, the word of mouth marketing is insane of that, because no one’s doing that. And then people post about it on social media. So that’s just like one little thing. But it’s about the experience. It’s about how can you create your own system. And ultimately, what that will result in is increasing your lifetime value. So you have a brand, because that’s what a brand is, at the end of the day. The reason why, you know, Starbucks, I’ll give you an example here, because this always blows my mind can spend so much on marketing is because whenever when people walk into a Starbucks for the first time, on average, that lifetime value is $10,000. Every single person that works for Starbucks actually think it’s close to 15,000
Ben Donovan 41:43
Nigel Thomas 41:45
Yeah, you can check it out, Google it yourself. But it’s a true stat. And you know, is there any reason that Starbucks can spend all this money on marketing, because they’ve got a proper brand. They know how much people spend on their products. And obviously, you’re not going to be Starbucks. But even if you have that ratio, like three, five to one, you can create that ecosystem. That’s what investors want to look at. And that’s where you can start getting really exciting with these numbers. And ultimately, that’s when frontend you’ll have more cash to then dump into scaling faster with paid acquisition.
Ben Donovan 42:20
Yeah. Man, that’s super insightful. I’ve heard that also Starbucks, they have this huge arbitrage in the amount of money that are on gift cards, you know, that they’ve collected hundreds of millions in cash, spend for X amount of time, and it’s just a crazy crazy. Anyway, it’s kind of off topic
Nigel Thomas 42:40
There’s all sorts of weird loopholes and new systems that you figure out. But yeah, you got to do what you got to do, right?
Ben Donovan 42:49
Listen, this has been super insightful, obviously, is clearly you spend your working hours really invested in this stuff. Where can people find out more about you, what you guys do if they want to learn a bit more?
Nigel Thomas 43:00
Yeah, sure. So LinkedIn is actually I didn’t really think that this is going to take off. But at the time recording, like in the last few months, I went from like seven to 30,000 followers just by posting every single day on LinkedIn every week day, and I’ll talk about you know, insights of what we do for our clients and how we’re building this agency, you know, behind the scenes. And yeah, so if you just Google Nigel Thomas LinkedIn or Nigel Thomas Alpha Inbound, I should be there. And I’d love to be able to connect with everyone even if you’re not a brand. Or if you are, send me a connection. I love talking to entrepreneurs and let’s have a back and forth conversation.
Ben Donovan 43:41
Also MAN Yeah, well we’ll leave a link in the show notes the description on YouTube as well for people to to connect with you there we really appreciate you taking the time out and as as you promised at the start dropping these golden nuggets. Thanks for coming on.
Nigel Thomas 43:55
Yeah, no worries well, all the best of the season that Monday nights it and I hope it brings you more misery but but I do really appreciate you bringing me on today. And you’re doing great things for this podcast. I’m excited to see where it goes.
Ben Donovan 44:08
Thanks, man. Let’s go. We’ll see. I’m far more confident that you guys are gonna get more value out of this than man and I are gonna finish about because that’s just not happening. But anyway, if you do feel sorry for me, please like this video on YouTube, subscribe on the podcast. And thanks for joining us on this episode. It’s been another great episode. And we’ll be back same time next week. Take care!