Unlocking E-commerce Marketing Efficiency - Charles Leikauf - Entrepreneur Intel - Episode #41

This is the unfiltered truth about entrepreneurship.

Raw.

No bs, no sugarcoating. Welcome to Entrepreneur Intel. I'm your host, Wes Matthews. Each episode, we'll learn from experienced founders and uncover the top 5% learnings that led to their success in all things personal, family, and business. This show is sponsored by Stealth Consulting, delivering clear marketing strategies, ROI and no surprises. I'm super excited for today's guest. He is a visionary in the CFO field. Really excited to dive into that. He helps E Comm store owners get financial clarity and increase profit margins by 50%. He has scaled Shopify stores from a million to over 37 million. Principal at Profit Surge Group and Fractional CFO at E Commerce Profit Group. Charles Lykoff, welcome.

Hey, man, thank you so much for having me.

Dude, thank you so much for coming on. I'm really excited to talk to you because what really sticks out with your intro, super solid stuff, but a visionary in the CFO field? I. I run into so many entrepreneurs and visionary entrepreneurs who, quite frankly, don't really know numbers. So it's kind of refreshing that, you know, we're going to have a conversation today and you can help us out. But I have to ask you first. I asked everybody that's a guest on the podcast. So you've been. You went full fractional about seven years ago. Well, actually in 21, but you've been in this space for a little over seven years. What's the most important lesson you've learned thus far?

Oh, gosh, the most important lesson I've learned so far. Well, first of all, I learned the lesson that I could be here, right? I didn't know what fractional CFO was. I didn't know it was, like a real thing. 2017, I had a corporate job, was doing really well for myself. I worked for a large company called Siemens. And my. My wife found this lady in a Facebook group, and she was like, oh, this lady says she needs financial help. I know you've been reading all these entrepreneurship books and you want to work for yourself. You know, like, what do you do? Right? Like, you know, you should message her. Maybe you can help her. And I was like, ah, it's not worth my time. Small businesses don't make any money. Like, all the, like, common excuses. And so I did. I didn't message the lady. And the next day comes to get home from work, and she's like, charles, did you. Did you message the lady in the Facebook group? She said she needs help with finance stuff. And I was like, are you look, no, like, I don't like company that I work at. Numbers starts with a B in billions. Not like small business, like just super arrogant. Third day, she's like, hey, did you message lady? I was like, fine, whatever, I'll do it. So I get the lady on the phone, and she owned an ad agency. Her finances were all messed up. Didn't know how profitable she was. Per each client, giving away free work, all the stuff. And in order to tell my wife, like, hey, this isn't worth my time, I told her a price that I thought would be insane. And surprisingly, I was like, yeah, it'll be 7,500amonth. Then it's gonna take me like four or five hours a month, maybe for three months. And I would just pay it, pay it today. And the lady goes, okay. My first thought was, oh my. Okay, all right. I should have said a hell of a lot more. My second thought was, I don't even have a way to take this lady's payment. So the biggest lesson first is, if your wife tells you to do something, just do it. The second lesson is, is that there are a bunch of companies out there that need a lot of help that are not doing 500 million a year, but maybe they can't afford a full time cfo. So the biggest lesson that I've like learned is a, listen to your wife, B, there's so many more people out there that you can help that you have no idea about. And so that's how I got here by accident.

That's awesome. I love that you have just corporate experience and like, you know, your numbers start with a B. And then you kind of had this vision of entrepreneurs, like, you know, what am I going to do meddling in this space, right? It doesn't make any sense. Like what, like what drew you to that? I mean, obviously you had that first experience, but that's a big shift, right? You're talking Siemens, big company, big money to, you know, let's call her Sally sue entrepreneur, right? Like, how do you make that transition? Or like, how do you make that mind shift, change?

So the mindset shift was really interesting, right? When I, when I first made the shift, my, my biggest thought was like, you know, thumbing my nose at, which is like, this isn't worth my time, right? One of the things I realized is like, small companies have really big problems and it's impacting the owner directly. It's not like faceless shareholders. It's not like, you know, some dude in the corporate office in another country. It's you know, real people and they're willing to pay real money to get the problems fixed. And so, you know, if I take a E Commerce company from, you know, 1 million to 5 million over a couple years, like 10% margins of 1 million, maybe take home 100 grand a year. 10% margins on 5 million or 20% margins on 5 million, you've effectively changed your life. Now they can send their kids to school, they can buy the fancy car, they can go on vacations, they can make a real impact on their life. Whereas if you save shareholders $20 million a year, like, okay, and who are, who are the shareholders? You're never going to meet them, right to even, even you might be one of the, you know, 50 million shareholders there. So like the, the real life impact has been like the coolest thing for me.

So what's interesting, like why, I mean, was it just because she happened to be in E Commerce? You kind of just latched onto the. Because E Commerce, to me, like there's, you know, professional services, there's you know, B2B and then there's like E Commerce is in its own special class. Like how did you, how did you wind up in E Commerce?

Oh gosh. So I had like an E Commerce store before when I was younger. Like I tried the whole like drop shipping thing, you know, when I was, when I was a lot younger and in school. Didn't turn out well, by the way. So I really liked the space and it was exciting. And I talked to her. She owned an ad agency and she had like 30 e commerce stores underneath her and they all needed financial help and they all had the ability to pay. And so it just, it just kind of made, made sense, right? Cause after I did the optimizing for the agency, she was like, all my clients need help. Can I hire you to, to just work on clients one by one so they can afford to spend more money on ads and so kind of got here by accident. I don't know why I didn't go into manufacturing because that was my background or financial services. But E Commerce is just, it's just fun. Like if you change two or three small levers, you can triple the size of your business like overnight. And that's, that's something that's really cool.

Well, what's interesting is like that one. So that one interaction you had with that one woman in that ad agency, you're effectively able to help her. But then all of her client roster you're able to get into and help. So like that one Conversation. I think it goes back to like as an entrepreneur. Somebody asked me for advice and I said, just take a half hour call with anybody. You never know where that opportunity is going to go. And for you, you found like, like a gold mine, so to speak, with that one, one agency.

I mean, I think about it like this. Having you're, you're so right about like having that one conversation. I have a bunch of intro calls with people networking, like I'll take anything. But that one call in 2017 has changed my life completely. So for the next, what is that, four, seven, eight years. My life is completely different now because of one 30 minute phone call from one strange lady in a Facebook group who I thought was going to be a waste of my time. So grateful for her.

Does your wife remind you of that very often?

No, no, no. I've, I've kind of internalized that one where she's like, charles, I think this is a really good idea. You should do that. I usually go think it's. I don't. Yes, sure. And she's right more often than she's wrong.

So no, that's awesome. So on the E commerce side, like you kind of bring up something that I think a lot of people experience or have thought of, of. I want an e commerce store or I can sell stuff online. How do you look at the world of E commerce like from a financial perspective? I mean, what's a good opportunity? You have some big gorillas in the room, which is Amazon, you know, technology shifting so quickly. Like what, what does that opportunity look like getting in the E commerce space right now from your perspective?

So e commerce, like 2017, 18, 19 and before, like it was, it was the world of free money, right? You could spin up like a really crappy ad. As you know, CPMs were basically free compared to how they are now, you know, pre iOS 14. And you could put something out there and if it hit you, you know, you had instant overnight success. Now things are a little bit harder. You have to be a little bit better of an operator. You know, your ad cost is a lot higher. You got to have like a much sexier offer. It has to be a better product fit. It's a lot more competitive. And so when I look at the space and the opportunity now, if you want to be lazy and just put up a couple ads, like unless you, you get lucky and hit a banger of a product, you know, good luck, you're probably not going to be there. But if you're willing to sit down and put in the effort and get behind the data and be a really good operator, you're going to be able to grow a lot better than a lot of, a lot of people. And so now it's not just how good you are at ads, but how good you are at being an operator, how good you are at managing your cash flow. A lot of e commerce businesses run negative day one, right. Like they lose money on the first purchase and so that's the game you got to play. Just the level is a lot higher but there's still plenty of opportunity for people there who operate at that level, if that makes sense.

Yeah. So if you think about like I look at a phone, right, I have a 15 year old, I have many kids. But the one that's 15 is, I call it his Snapchat and TikTok device. Like he doesn't talk to anybody, he doesn't search anything, he doesn't go to websites. Pretty much every buying decision the input's coming from TikTok. Like what do you see today in 2024 and into the future of if you're an E commerce store, cuz what do you do? Like how, how you know, what platform do you go? I mean the magic question is where do I, where do I invest, what do I do? But from your experience on the CFO side, where do you see everybody sort of shifting to?

I mean TikTok's like the newer big thing. TikTok shop is you know, pretty powerful. Facebook's still trying to get like their store like it's rolling but it's not nearly as powerful as like the TikTok shop kind of method. I, you know, influencers aren't as like juiced as they used to be. Right. Like you have to be a little more careful. It's really interesting. Something that I'm seeing a lot of people do is they're adding a lot of digital products to their, their e commerce offers. So like good example here is there's a, there's a company that makes like a kind of like a coffee replacement like pre workout like thing. So it's got some vitamins in it but it's not as much caffeine as pre workout. It's like a good morning, you know, orange powder that's like, you know imagine like if sunny D pre workout and coffee had a baby and like that's, that's. It doesn't sound very good but they sell a couple million dollars a month of them and they have, when you buy it you get a shaker, you get a Meditation, you know, guide PDF, you get a, you know, superfood guide. You have the ultimate, you know, morning routine guide. And so they have like seven digital products, plus a shaker, plus a travel bag, plus a little scoop, plus some stickers. And so you're no longer buying just like the, the you know, pre workout good morning nutrition powder. And so when I see those, whether it's on TikTok or, or Instagram or Facebook or Google or even Display or whatever it is having like a really powerful juiced offer that like makes it different than anybody else, that's like the biggest thing, it depends upon who you're going after is what platform. If you want like an impulse purchase to like a 22 year old. Yeah, TikTok is going to be the spot. You know, if you're selling to 65 year old woman, 65 year old man, I mean you're probably going to be biggest on Facebook.

You know, I had somebody, I had a conversation the other day with a guy, he had a concept, like a new concept for like a consumer good product. And as he's talking like I'm like, I have no, I can't really advise or consult in this space but I'm like thinking about what he's talking about and I'm like man, you're talking about getting a shampoo or conditioner on a shelf in a unique bottle. But now you got to sell direct to like Walmart, all the big box stores. Like I thought about that and like startup and it just kind of made my head explode in terms of how difficult it would actually be to spin up like an E commerce product. I mean how you mentioned about like being negative on the first sale. What does it really look like for an entrepreneur to have like one of those drink products, like how much capital? How much are they looking at investing? Because I think people have these ideas, but some are delusional in the sense of how much and how much, how much money and how much time this is actually going to cost.

Oh gosh. So like there's a million different factors that play into that, right? It's are we trying to sell it on retail? Okay, well then we need to make sure there's demonstrated volume. We get into retail, there's you know, agents or companies or placement people that you can pay to get in there. What does that look like? You know, what are the payment terms? Usually they're you know, going to pay you either after it sells or nine days later, 60 days later, whatever. And so like when we think of just like Startup costs. Like you got to be able to make the thing. It's got to be something that people want. So you have to test it and it has to work. You got to pay for packaging. Like if you're, you know, looking to go really hard and go into full on retail plus E commerce, like, yeah, it could be hundreds of thousands of dollars or more. Right. But if you're just looking to get started and, and do something cheap like you know, you can just sell online and you can just do something organic. So you have to run money on paid ads because what if people don't want what you made? Right? Like, like even as an agency owner, right? Like you, if people don't want it, you can't sell it. And so depends upon how big you want to start. Like I, I've started a skincare company and you go, you spend 20, $30,000 on a couple runs of products in the beginning, cool. You got to pay that. You got to get the website built. Like it's hard to get into anything unless you want to go the straight drop shipping model or do it really slow. But when you do that, everything's always proven because you're not going to go down punk $30,000 on inventory down for something that people don't want. You've already proved it out organic. So it's always interesting to start a little bit slower and with organic and with a product that you know people want instead of just going full balls of all, hey, I'm going to try and be in Target. I'm going to make a unique bottle that costs more with a unique product. Like, that's great. You know, what if nobody wants it and Target doesn't sell any of it and they go, okay, you got to buy all these back from us. That sucks.

Yeah. My first emotion was, man, I'm like, can't you just hook up with a company that's already on the shelf and just sell them your bottle? Because there's the bottle, but you have to create the material inside that everybody needs to love. I mean, to me, so talking about that, like you have some experience around really scaling E commerce businesses. One example like a million to over 37 million. Like explain a little bit about that. I mean, did they just have like a gem of a product and just really didn't know how to get it to the next level or talk a little bit about that?

I mean, so there's a couple different combinations, right? So that was a skincare business. It did really well, really high margins. It was profitable. Day one, you know, not, you know, day 90 in the, in the customer kind of relationship journey. One of the things that was really powerful is I came from the world manufacturing with like razor, razor thin margins. You gotta be really capital conscious. You gotta allocate like every little dollar. Whereas if you have massive margins with skincare and it's growing, but you apply that same financial discipline, you're going to be able to grow. So you couple that with really good customer life cycle marketing. Like our average purchase, someone bought again within seven days of their first purchase. They were literally getting the product for a day. Like you're getting a repeat purchase within seven days. And so what we were able to do is we were run $5 positive on the front end. Seven days later we're getting another purchase and then maybe 35 or 45 days later after that, sometimes 60, we were getting another purchase. So it's having a really good product life cycle and then a really high AOV or AOV was just north of the average fractional or the average skincare company's aov. So we were able to outbid everyone in the auctions and you know, spend over a million dollars a month on ads. Wow. And so that's how you can go to scale because it's know our only thing is then is how do we hire more people, how do we get enough supplies, how do we manage cash? And so operating was way more important after marketing was figured out. Right. Operating slowed us down more than marketing did.

What, what do you see come? So like that's skin care. Like you know, right now 2024, AI, there's a lot going on in the ad world and just the product world. Like what do you, what do you see as like the next three to five emerging markets when it comes to E commerce from your perspective?

I don't know about emerging markets. Like there's there's a couple different things. Like the new mother slash baby niche is, is very, very, very profitable. And companies want those lists, right, because they, they have an idea. There's a, there's a cohort of women and children who they can sell something to every year for a new, new problem or, or you know, phase. Like I don't, I don't have kids, but you do. But there's certain things. Every, every person who's has a new child versus a child of six months, two months, three months, four months, you know, five years. Like there's different products for each phase of the life cycle. And so companies are buying up, you know, baby brands for that list because they, they know that they have a game plan of something, stuff they can sell the mothers for the next five years. So people are thinking like deeper and as far as like life cycles go for products or users. So that's like, you know, one of the first things, the next thing is something that I've seen recently is when you look at the e commerce world, when people are buying something, they're usually buying to fix some sort of problem, right? So like if I buy protein powder, it's because, you know, I need to eat four, you know, two and a half, three pounds of chicken a day or just, well, you know, throw some scoops in there and we're good. And so if we think about it, I'm trying to solve a fitness or, or health problem. If I buy protein powder, if I buy like a, a, you know, a appetite suppressant pill or diuretic or something in the fitness world. Right, right now what I'm seeing is people are selling that. But then on the back end, like if you have all these high ticket coaching offers is how do you, how do you combine the two? So hey, maybe I get you to buy my protein powder or I get you to buy, you know, my creatine or whatever else, but then I go, hey, by the way, you have a free call with our, one of our health advisors to like use your product better and that turns into a sales call where you can sell them on a 3,000 or $5,000 coaching plan online. And so I'm seeing a lot of like connecting those two fields that are usually completely different. And that way you're turning a $50 supplement purchase that you may or may be profitable or slightly negative on into a $3,000 back end. And so that's another thing that I'm seeing is combining front end problem with backend solution at, you know, completely different price points. So those are the two things that I'm seeing that are fairly unique and novel. You know, from like a, a, a like solution like how to grow kind of way.

Is Shopify still the king? Like if somebody's got an idea or they, they want to use a platform, Shopify is king.

I, I'll put it like this way. I have zero clients. Not on Shopify.

No, it's, it's good to know. So I mean there's a lot of entrepreneurs out there, right, that they might have a service business or some type of business that they want to put it online. Right. And from your perspective or recommendation, how do you as an entre, like how do you wrap your mind around that, like what would be some of the first steps you would take to take an old fashioned brick and mortar company and go online? Is there any like books, any resources? How would you even get started?

So if I, if I knew nothing, right, say I had a brick and mortar store and I knew nothing about selling online, the first thing I would do is I would make a Shopify account, put my stuff on there and I would get my socials done right. Make sure that you have a Facebook page, make sure you have an Instagram TikTok. I would, I would make sure you have those and I would do, I would do really like light kind of Google Ads. Now if you're looking for resources, Shopify's website has a ton, right. I remember when I first, first started, made my first e commerce store in 2013, 2014, all the resources on Shopify was helpful. Now you have a million different places, you have like e commerce coaches and whatnot. But believe it or not, there's so much gold on YouTube. There's so much gold on YouTube and if you're just getting started, you just need a weekend, two monitors. Get YouTube on this screen and get your Shopify on this screen and just, just plug it away. And you know, everyone has a slightly different path. But I would get on all the socials, I would start rolling some light Google Ads and I would, you know, just use YouTube as your thing to build.

Build Shopify now like as a professional service company. Like say you're a roofing company or like, you know, in the home services they're like, well you know, we sell roofs. But like is there anything they could do like sell swag or do something just to have a store just to get that exposure that, that would help them ultimately. Because what if you have those businesses, you're like, I really don't have anything to sell, but is that a good channel for them to market and, and show up?

I'm a big believer if you're doing something that's working, just do more of it. So like if you're gonna do all that, like yeah, maybe you can sell some swag or some hats or some jackets or whatever else. Honestly, I would just hire like hire another salesperson. Spend more money on ads. Yeah, like for your roofing company, like go sell another $40,000 roof. Like don't, don't worry about a couple hundred bucks a month from jackets unless it's like for a fun project. But if you got something that's working, I'm a big thing of just like put on the blinders and just do way more of it.

So Google on the home service side is like there's LSA local service ads now. I mean Google predominantly was like Google search, Google paid right. Now they've shifted to this LSA model which is local service ads. Now it's like a pay per lead model. If a business gets a lead that's not a good lead, you can actually dispute it, you don't pay for it. They're really evolving into what's important today. Do you see anything like that on the E comm side with spam and AI and all these things that are coming down the pipeline?

So Google's trying to cut out people to use the Google platform. They're trying to make it self serve. It's not going to be like that anytime soon. Especially because if you listen to a Google rep, you're going to lose money for E commerce. When I'm thinking about it, there's a couple different ways to go about it. To make things simpler. It's kind of hard. There's people who will do CPA offers which is hey, I'll run your ads, I'll spend all the ad spend, I'll do all this. I want $50 per new purchase that I get for you. Now if the agency gets it for $10 or $55 like that, that's on them, that's something. But usually get people to sign up for that. Like you got to have a big proven store and you know it has to be going well for anything. That makes things like a lot easier, a lot more revolutionary. I think TikTok shop is the thing, right? Like you can get out there, you can get things pushed to creators. They'll make it, they get a, you know, they get a commission percentage. So I think maybe like recruiting creators and kind of push into that. That's going to be your, your closest way to like recreate like the LSA kind of model.

Now what about, what about Snapchat? Anything there? From a, from an E comm perspective.

I have clients who run retargeting on Snapchat and like nobody they know is spending real money. What I mean by real I mean like over a hundred thousand dollars a month. I know for certain people that, that you know, know real is $1000, real is a million dollars a month. But that's, that's like my, my kind of threshold. I have people who are, are spending money on retargeting and the stats in platform show like it's getting a 19x ROAS. And then when you pull it up in triple, well, it's not doing so hot. So I don't. I haven't seen anything big on Snapchat. That doesn't mean there's not opportunity there. But most people use it as, like, a retargeting platform, from what I've seen. Yeah.

You mentioned briefly, like, what is that Dashboard, right? Like, if you have all of these platforms providing ads, like, what. What is. Where are all these rolling into? What do you recommend to, like, sort through the data?

So that's. That's challenging because when you look at whether you have your. Your Facebook ad manager or Google Ads or whatever else, like, there's things that you can use, whether it's highroads or Triple Whale or Wicked Reports or, you know, you know, any other other kind of services. The thing is, is each platform is going to lie to you. Facebook's gonna say, I got all the credit for all the ads, Spend more with me. And then Google's gonna say, no, I got all the credit for all the ads. Spend more with me. Snapchat, same thing. And so when you look at it, it's really hard to tell. Like, attribution is, I'm sure, as you know, is a nightmare. Triple Whale is helpful, but again, it's not also, you know, as accurate as we would like to be. You can build out and, like, track all the UTMs yourself for everything. When we're looking at, like, do we increase or decrease ad spend? I like to think of it just as a marketing efficiency ratio, right? Like, if you want to be super nerdy about it, keep ad spend flat on all platforms and then just double it on one and see if your efficiency changes. Right? Those are, Those are options. But attribution in itself is a massive guessing game. And if anyone who's told you they figured it out, it's marketing bs, right? Like, I love Hyrus. I use it. It's. It's not accurate, and that's fine.

So as a fractional cfo, I mean, how do you walk into a company? Because, I mean, what you're talking about touches more than just CFO duties, right? Sounds like there's a lot of crossover with marketing or either, like, a close relationship with marketing operations. Like, what's the first thing that you do, right? I mean, companies coming to you, hey, we need help. Like, how do you even start your process?

Well, the first thing I do is we look at your numbers, right? Most of the time, their accounting's not done. Well, maybe they don't have bookkeeping at all. Maybe they don't have that done. So the first thing is, like, we look at your numbers. Usually their numbers are wrong. Terrible, right? Whether we do it in inhouse or we recommend someone to do it, we. We get your books kind of cleaned up. That's the first thing. Because if you come in and you hire us and, hey, we're really expensive, we get you a good result, and I go, all the data you're giving me is wrong. I'm a really good guesser, but that only takes us so far, right? I can get you, you know, 50% of the way there by guessing. Like, I don't need to know, you know, your exact accounting and financials to know you're spending too much on marketing or too little on marketing. Those you can kind of go, all right, you know, make a couple changes. We're in the right direction. But to get true precision on, like, what happened and what is going to happen, we need accurate financials. So that's number one. Number two is like, the very next thing is we go, okay, what are our goals? Where do we want to be? Right? If our goal is to go from 5 million to, you know, 10 million, and with a. With a 5% margin to a 12 margin, there's a lot of things that have to happen, right? We're gonna have to spend way more on ads, probably. We're gonna have to have a much better lifetime value. We're gonna have to have different cash flow management. We're gonna have to have probably a cheaper cost of goods sold. And so we have an entire playbook that we run through, right? Like, so one week we will work on cutting costs, renegotiate with vendors. The next week is getting different payment terms, getting different lines of credit that are more affordable, looking at like, hey, can you actually spend more on marketing? How do we do that? What does it look like? And so there's a massive, like, playbook of, like, solutions for each SEC section of your financials, whether it's cost, revenue, marketing, et cetera. And we just go line by line and institute like a, like a playbook for each section.

I know this isn't a one size fits all question, but, like, what can a business typically look at, you know, from a marketing spend perspective? Or like a lead acquisition cost? Like, how high is that relative to that, that widget when it comes to E commerce?

I mean, truthfully, you should spend as much as you possibly can, right? Like, if I had a box, it's a little black box. And I could feed a dollar into it and it popped out $4. You better believe I'm taking out a second mortgage and I'm putting every dollar I can into that box. When you're looking at that, I like to think about it as what's the least efficient I can possibly be and still make money. And so when I come on, I usually there's like a marketing team that's already there and I go, okay, marketing team, you can spend as much money as you want up until this marketing efficiency ratio. So it goes walls to the walls. Provided we have inventory and cash flow for all of that, we're assuming those things are solved. Right? And so if I say, hey, marketing team, go out and go get me a 2.4 mer, right? Spend as much money as you can, that makes your job hell of a lot easier. Cool. Just go spend. And so that's the first, that's the first thing I like to do is figure out whatever number that is and then just let them go, provided, like we have the back end infrastructure and inventory to manage that.

And what do you feel like for like an E comm company, what do they need on that marketing side to make that happen? Right, because we just talked a little bit about all of these ad platforms are going to lie to you and you need to make decisions based on good data. And as a cfo, you need accurate data. So like, who's kind of leading that charge on the side of the E comm to make sure that that happens?

So it really depends, right? If you're a good marketing firm, you're looking at like, what is your cost to acquire a customer, right? Not cost, acquire a purchase. Those are, those are very different things. And because attribution is a mess, I just look at total spend by total new customers. So call it cac, call it ncpa, like, you know, whatever vernacular you so choose. That to me is usually the most important thing in judging that. So if I know I sell something for 100 bucks, the product cost me 20. Right. Realistically, you can probably spend, you know, up to $70, up to $60 to acquire a new customer based upon LTV and whatever else. And you know, whenever the second purchase comes, so it's, you know, how do we, how do we get there? Right? What does that look like? You know, and if you're at underneath that, spend as much as you can.

Sounds amazing, but it also sounds a little scary, right? So how do you help the entrepreneur walk that tightrope? Right? Because they're probably, I'm Assuming that they're probably cash trapped, there's a lot on the line. They're like, this has to work because if this doesn't work, we're screwed or we're tapped out or the money well is going to dry up. How do you, how do you calm them down?

I've had times where agencies have called me in and they're just like, Charles, my client is terrified to spend money on ads they're getting. Like, here's an example. This was in the baby niche. We had a client who was Getting like a 4.7x ROI on ad spend and they were break even at like 2.2. So there's, there's a massive margin there. And I, I built a financial model to show them you have the money, you have the inventory Runway, we have the credit. If need be, you can quadruple your spend. As long as it doesn't get, you know, below this, this, this total row as number, you will make more money. So do you want 40% of 100k a month or do you want 10%, you know, of a hell of a lot bigger number? Right. Which one works? Because at the end of the day I want to optimize for, for like net income or like total benefit to the owner. Revenue is whatever. And so I just think, what do I need to do to increase how much the owner is going to make at the end of the day? If I can show you in the financials of what happens, then it's, it's no longer like an emotional kind of decision. It's just like, okay, well the numbers make sense, let's do it. And like, that's the cool thing about ad spend is I don't have to commit spending $50,000 a day tomorrow. And if I do, I can turn it off in one day if it doesn't work. Granted, it's a pain in the ass to do so, but like, so how.

Do you write like you're a smart guy, client grabs you, but you're like, hey, I'm fractional. Like, you're not 100% with that one company, right? How do you overcome that when somebody's betting a lot of money, a lot, they're like, hey, okay, we're going to go down this direction. But you're like, hey, I'm fractional. You know, how do you overcome that when they're like, no, no, no, come, come full time, like be all in on our project.

I mean, you probably can't afford me full time. Number one. Like I tell them straight up like you probably can't. Two, probably couldn't afford someone as good as me full time, so just take me part time. Three, you have to have a really good sales process, right? Like in the sales process like we, any sort of on alignment of expectations in the sales process is going to show up in your relationship with the customer. So if they're, if they're ultra clear on like this is what's going to happen, this is what we're going to do, this is what we're involved in, this is what you're going to get on and on the sales call and then on their onboarding call everything's reiterated and we align with goals. You can't come to me a month later and be like hey I want this. It's like we've been on the same page since that's the them deviating it. And so when I see people who are other fractionals get in trouble with scope creep, it's because they didn't have like a very dialed in sales process. Right. I usually don't have people who want more than we're giving them. And this because our deliverables are really good and our results are good. So sales process deliverables now you bring.

Up a good point now and like where do you see or where does the e commerce world live with salespeople or having digital websites do the selling for you versus actual people? I mean do you see that shifting from 2017 where you started of a people now of just technology finishing the sale?

There are, there are a couple of brands we've worked with who they sell like more expensive goods like in the one to $4,000 range. And a couple of them have added on salespeople to call the abandoned carts and that has been really powerful for them, you know, to do at scale. Like it's hard to find people that are like really good but usually like hey, I saw you were looking at this. What are you specifically looking for? Like one was they sold like massage tables, right. And like tables for chiropractors. And so those can get kind of pricey. And so people who would opt in or do that on the email lists or who are looking at certain products, they would call and I think these people added an extra $150,000 a month their business just by having someone who call for those higher ticket things. And so when you're willing to do that you're, you're going to learn a heck of a lot more about your customers. Your ads are going to get better. Like you know when's the last time an E commerce store got on the phone with their customers and was like, hey, why did you buy this? Or like, why didn't you buy this? Right. Like, your ads are going to get a lot better. But b, if you're selling something really expensive, like you can get, you can get a salesperson in there, just call me. Like, hey, I saw you looking at this thing. Why didn't we, why didn't we get it? Were we looking at something else? Were you looking at, like, something that would be more helpful? You know, so I've seen that with higher ticket things. With lower ticket things, it's about interviewing your customers. If you just pulled 10 customers a month and interviewed them, your, your marketing process would be a lot better.

No, it's interesting that you talk about the abandoned cart. Like, I've yet to have somebody call me to do that. I'd probably buy it right then and there. Right? Because you, you're putting something in your car. Like, you just didn't do that by accident. Like, something happened. I, I could totally see that. That's a really, that's a really great tip. So what you're talking about, it's amazing. It's complicated. Super smart guy. If somebody has an E commerce challenge, like, how, how do people get in contact with you? Are you, are you taking on new clients? Or like, what's that first step to, to make that intro to you?

Sure. So you can always look me up at Charles Lykoff on Instagram or just go to ecomprofitgroup.com those are probably the best places. Depends upon the time of the year, whether we have availability or not. But at the end of the day, if you have a conversation with me or someone on my team, the idea is whether it's good fit for you now or in the future, we can always build you a game plan to get to your goal. Right. And so if you sit down, you're like, hey, I'm at this size. Maybe it's a good idea you work with us, maybe it's not, but at least I can point you in the right direction. And that's what's most important to us. So econprofitgroup.com or just Charles, like, off on Instagram? Those are the two best places.

Yeah, I was gonna say, like, should there be a certain amount of revenue they're doing before they talk to you? Like a proven process or like, typically.

The work people who are doing over a million dollars a year in revenue who are doing ads, maybe about 500k a year if you're like fully organic. Those are the two kind of thresholds because under 30 or $50,000 a month, you don't really have like your messaging fit down. And like, that's not where you come to me for. Can I be helpful? Sure. But like, go. Go get an agency. Go get a fractional cmo. Like go sit down with someone like that instead of us first.

Yeah. And E commerce is a completely different world where sounds like. I mean, do you have partner vendors that you work with who can deploy all these ad strategies on the marketing side?

Yeah, I mean, I've. I've got everything from 3 PLs to lines of credit to ad agencies to whatever you need to where we can like, point you in a better direction if it's, you know, if it's helpful for you. Even if we're not the best solution, like, happy to point you where you need to go.

Well, sounds like you're a great solution at any stage because you can just point them to partners and. And you know, when they're ready for you. Hopefully that's the goal. Right. They come back and hire you and, you know, you're off to the races. So, Charles, thanks so much for coming on wealth of Knowledge. Really appreciate all the shares today. Definitely provide a lot of value.

Hey, man, thank you so much. I appreciate it.

Yeah, man, thanks so much. I appreciate it. This has been another episode of Entrepreneur Intel. Thank you for joining us. For show notes for other episodes, please Visit us@entrepreneurintel.com until next time.