79-Dollar-Gadget brachte 14 Mio. Dollar Umsatz

0:00Unternehmer/Gast You are on Hermosi Hotline. The weather is cold, but the deals are hot. You got 5 minutes. What's top line? What's bottom line? And what can we help you with? Thank you for donating books. >> I'm not doing Thank you. Thank you. Congrats. >> Okay. Oh, thank you. Top line, bottom line, big problem. >> All right. So, we're making an annual $14 million USD. >> Nice, dude. Congrats.

0:24>> Thank you. And our margins are 34.9%. >> Killer, dude. Congrats, man. >> 5 million. >> Congrats, dude. Okay, great. So, what's Skin Dean? >> All right. So, we're a B2C e-commerce brand based in Mexico. >> Okay. >> We do skin care, and we sell one main product. >> Okay. >> It's a microcurrent device. >> Micro what? Microcurrent current like needles with electricity? >> Microcurrent device, yeah. >> Okay.

0:50>> So, what it does is >> You're good. You're good. It's a device. >> And it's single use. Yeah. >> I got it. >> So, it's an open open patent product from China. >> Okay. Open patent from China. Got it. >> Yeah. Yeah. And it comes with a a gel, right? So, we have that main product. That's what we sell, and we have refills for the gels. So, that's how we get our LTV higher. >> Your renewals. >> Yeah. And going to refill.

1:16>> Yeah. Yeah. Is it on subscription, or is it packs of gels? >> We are just going to do subscription. We haven't done that. We're just going to We're changing our offer right now. >> Yeah. >> Cuz we used to do like regular you buy the device and with the gel that it comes for 50 grand, and then you will sell again with emails. >> Oh, so 50 grand? Oh, so this is a commercial item. This isn't This isn't home This is This isn't consumer.

1:41>> No. Yeah. Yeah. Yeah. The The price of the device is 79 USD. >> Oh, 79. I thought I thought I said 50 grand. Okay, my bad. Okay, so this isn't end consumer, you know, product. Are you Yeah, so are you doing influencers? Are you doing TikTok shop? Are you doing paid ads, Uh or or Amazon? What are you doing here? >> We're doing paid ads and also affiliates, a lot of affiliates.

2:06>> TikTok shop or just Okay. Is it TikTok shop? >> just rolled this year in in Mexico. >> Okay. >> And we're just starting to do TikTok shop, but before that we were doing affiliate codes on the Facebook links. >> Yeah, heard. Okay, got it. >> And this year our CAC has been >> Yeah. >> Like around 65% increment, so it's been going up a lot and our affiliate conversion has been going down.

2:33Alex >> Yeah. >> And so we're trying to see possible solutions. We think we should do like more and better creative or maybe a better offer >> I'm going to >> or maybe angles. >> Yeah, I'm going to I'm going to I'm going to I'm going to actually reframe this whole thing for you, okay? So I'm going to give you I'm going to give you the answer that you don't want but that's right rather than the one that you want, okay? That's not true. >> Okay. >> So what you're going to want me to say is that, "Hey man, you just need to market harder, you need to market better, you know, put better attribution in place, add some more upsells to increase LTV." That's what you're that's what you're going to want me to say, okay?

3:05But >> Okay. >> that is that is going to be a a band-aid that will maybe put you know, kick the can out for 6 months, maybe 12 months, but then you're going to run into this issue again. Okay? It's not going to go away. So the problem right now is that you essentially run a media arbitrage business. You just you just sell clicks you sell clicks for less than you buy them for. That's the business you're in right now. It's a very easy business to do at small numbers and gets increasingly difficult as you scale.

3:37>> Okay. >> So what you need is you need another vehicle that's going to drive down CAC as you scale. And so you basically have two options. One is you create some level of virality, actually have three options. One is that create some level of virality around the product that customers bring more customers. I don't think that's likely. But I'd say that that would be a path. The second option is that you go super hardcore on the affiliates.

4:02And you basically rely on them to be consistent uh distributors of the product. And because you have superior LTV, they like now you're you're doing one-time acquisitions for affiliates who then send you recurring customers for life. And by recurring customers, I mean they send you new customers every month even though uh the customers are different. So, it's more like, "Okay, you know, uh influencer A, I can reliably say he will always send me five deals a month. And so, when I sign him up once, I get five deals quote for life from that affiliate." And so, we need to chunk up the way you think about the business.

4:36Instead of what's my LTV CAC per customer, we need to think about what's my LTV CAC per influencer. >> Right. >> Right. And so, maybe it costs you a thousand dollars to get an influencer, and then each influencer on average sends you a thousand dollars a month of gross profit, and they stay on average for 10 months. And then when you start doing the economics from that level rather than that of the consumer level. Okay? >> Okay. >> And >> Okay, so I think yeah.

5:00>> Now, you can do that strategy, and that can work long-term if you pair it with this other thing, which is brand. Because right now, this is the answer that you don't want, but it's also true, is that every e-commerce brand that's uh you know, drop ship thing from China, or I get this like random manufacturer thing, it's usually a guy who's super quant driven, and I get it cuz I came from that world. Okay? So, I I I I I this comes from a place of love. Um I know you think you can solve this with a spreadsheet, and you can't.

5:29So, we need to start being So, the way to do it, let me let me I'll just finish, and then I'll I'll let you answer. When you do the affiliates, we need to be mindful of who these affiliates are. And we need to start slowly shifting the associations that we're making so that we can build this into a premium brand that will allow you to price higher and maintain lower CAC and retain the affiliates longer because the long-term vision of like how does what does this look like when it's right? What does this look like long-term?

5:55Is that the affiliates want to keep promoting it because when they promote it, they gain status through the association with your brand. >> Right. Mhm. >> That's how this works. Otherwise, they're going to be mercenaries and as soon as somebody else comes from the knockoff in China that gives 11% instead of 10%, they're gone. >> Yeah. Okay. I understand. >> That's It's work though, man. I'm like I don't I like I don't want to sugarcoat it. Like you're making money and the thing is is that like you'll scale up and then your margins will shrink and then you'll just consistently play this game until eventually you give up and be like oh I just think I need to find another product. I think the product's really saturated right now and you're going to just jump from skew to skew to skew to skew and there's tons of guys that they do that their whole lives and they make okay money, but they never actually accomplish their goals.

6:39So, you have to shift your brain in terms of how you think through this business and you have to shift towards what are the associations? What is the brand that I want to build? Maybe there's five influencers that are absolute savages and they're going to cost more to get. But if you get them, they'll feed the business way more than a lot of these one-z two-zy guys using discount codes. >> Okay. I understand. So, go hard on branding and on the influencers. >> Yes. >> As well?

7:05>> Yes. >> And Okay. Okay. I understand. Yeah, we're on the price side of things. When I wanted to ask when when do I know if the product is saturated the the market? >> You haven't, dude. It's skin care. >> Yeah. >> You're doing $14 million a year. It's nothing. >> Yeah. >> I'm not saying this I'm just like just like dude, it's a it's a $300 billion Yeah, it's a it's like you're not even close. >> Okay. Yeah. Yeah. Okay. >> Yeah, so I just do you like do you know you literally don't even ever need to worry about that ever again.

7:35Cool? >> Yeah. Okay. >> All right. >> I appreciate you, brother. That was that was more strategic advice than tactical, but in general, just so you guys know by the way, everyone who's watching, um one of the things that I've learned after like obviously advising a lot of businesses is that once you reach like five, maybe 10 million, um it's it the the the things that give you the highest return are more strategic insights, which is like how are we going to allocate our resources over the next 12 months, more so than like here's this three-step follow-up. Now, I can do clouds to dirt because I've been there so many times in different businesses, but um I try to, just so you guys are curious, like I try to cater my my advice or steps or whatever based on the level of the company to try and solve it in that way.

8:16So, if I'm talking to somebody who's two, you know, $20,000 a month, um I'm going to try and make the insights super tactical. Like we need to go from 10 reach outs to 20 reach outs, right? For this, you know, this business, obviously he's doing $14 million a year, but the strategy is long-term not going to work. So, anyways, thank you brother for donating, man. Um I appreciate you, and it looks like we have >> Happy birthday, and I'll see you in September in the live workshop. >> All right. Thank you, brother. All right. If you are a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift.

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