Advertising is Just a Math Problem

Tom Nixon (00:01.788)
Thank you so much for rejoining us here on the bull horns and bulls eyes podcast. Curtis. have a problem.

Curtis Hays (00:09.543)
I like to solve problems. I’m known as a problem solver.

Tom Nixon (00:13.426)
Well, I have a math problem and by that, I don’t mean like arithmetic that you need to solve. It’s like I’m an English major. I have a real problem with math.

Curtis Hays (00:16.007)
close.

Curtis Hays (00:23.819)
That’s a tough, so you could give me some math problems. I might be able to help you solve, but I don’t know if I’m a good teacher to help you with your math.

Tom Nixon (00:27.304)
Alright.

Tom Nixon (00:33.128)
Okay, well I’m not looking for a tutor this late in my life.

Curtis Hays (00:35.316)
This isn’t like some accounting thing you need help with, it? Do I need to now, you know, help you with your business?

Tom Nixon (00:38.152)
No, but our guest, think, will better explain my problem with math or most companies problem with math, actually. But here’s a simple math for you. Did you know that this is our 50th episode? Congratulations.

Curtis Hays (00:53.049)
I did know. And I saved this guest for the 50th episode. This is a big deal. This is a really big deal.

Tom Nixon (00:59.222)
Well, 50 is nifty. And since we’re not paying our guests, we’re thrifty. Would you like to bring them on Curtis without further ado?

Curtis Hays (01:08.665)
would, I would I’d love to introduce really excited to introduce Carl Weins. So Carl, long time friend, long time colleague, gosh, I feel like Carl so weird story. But I think when I met you, you came into the agency that I was managing for an interview, you were good friends with some other people that were working with us. But that week, there was

a gas explosion on the street you lived on and you were like exited from your home. Is that right? Am I remembering that story correctly?

Carl Winans (01:43.086)
Yeah, Yeah, was actually, you know, the business that I had, I had like a co-working space and I was in that co-working space and there was like a meth lab in the basement or something at the house next door and the whole thing just like blew up. Like it was crazy. No, I worked there. Yep.

Curtis Hays (01:59.377)
Crazy. Okay, so you didn’t live on the street, but you worked on the street. Wow. Yeah, crazy. So I’ll never forget you sitting in the interview and I was like, what are you, like, you were just involved in a house explosion and it was all over the news and everything. I lived just a couple of miles away, so I knew all about it. I was like, you could have canceled this interview. Totally would have been cool. But after that, so you actually ended up starting an agency. I want you to tell your story, but I kind of want to get into a background about.

Carl Winans (02:18.392)
Thank you.

Curtis Hays (02:28.091)
how we know each other. And you know Tom through totally different set of circumstances, but I met you at an interview, we didn’t hire you, which was probably a good thing. You went on to start your own agency eventually. A couple of people that were working with me that used to work with you previously ended up working with you. And then I just so happened to go out on my own at that time, or roughly that time. And the guy said, hey, we should have Curtis come in on some of these projects. And then I was like,

Yeah, these are these are the designers and developers that used to work with me like, man, they can help me with some of my clients. And it’s that just that whole ecosystem of just really good people who love solving problems that we can bring together. So anyway, a joy to have you have you on and of course, you know, longtime friendship and huge source of referrals, huge source of, of, of, well, just just gratitude, honestly, from my heart of the referrals that you’ve sent this way and

Trust that you’ve put into us with people you know say, hey, speaking of problems, Carl say, hey, you have a problem with Google Adswords? You have a problem with SEO? Like, I got a guy. And that happens very, very frequently from Carl. So appreciate it.

Tom Nixon (03:36.326)
Mm-hmm.

Carl Winans (03:43.342)
My pleasure. Yeah. And thanks for having me. The 50th episode, I just turned 50 actually. So I think it was kind of meant to be. Yes. Yes. And I would like to say, you know, welcome to the first annual Hair Club for Men episode. Yeah, this episode is I sponsored by Hair Club for Men. live in Turkey some of the year. I’m actually back in Michigan now visiting friends and family. I’m actually in my

Curtis Hays (03:50.346)
We’re due for drinks.

Tom Nixon (03:53.437)
Yeah.

Carl Winans (04:12.386)
dad’s basement at the moment. So, but I’m visiting here, but I’m from, you know, I’m living in Turkey. And if you do want quality hair transplants, Turkey is the place to go. So.

Tom Nixon (04:26.66)
heard. My brother’s wife is from Turkey. She just went over there and got herself quite the fix up herself. So, but she said that it’s funny because on the plane back from Turkey, there’s always like all these people with have these like plants. Yeah. Yep. So

Curtis Hays (04:28.09)
Interesting.

Carl Winans (04:33.848)
There you go.

Yeah, the bloody heads. Yeah, First time I went there, I thought there was like this massive like accident. There’s all these men with wrapped bloody heads. I was like, what is going on here? I had to investigate. So

Tom Nixon (04:51.548)
Yeah. Well, Curtis, if you ever hear me telling you that I need some time off to go to Turkey, you’ll know why.

Curtis Hays (04:56.859)
You’re not going to do that though. I think you’ve fully embraced the iconic. Yeah. Yeah. And I’m not hiding it with the hat here. I mean, I like both.

Tom Nixon (05:00.814)
I am. yeah. Yep.

Tom Nixon (05:09.414)
Well, let’s, I wanted to pose the question to Carl because Carl, this is one of my favorite quotes that, on the heels of last week’s episode, which was stop hiding behind your logo, or that was two weeks ago. This is another quote that I packed so much punch and Curtis tells me that you say sometimes advertising is just a math problem. And as an English major that sends shivers up my spine, of course, but it all serious.

How is it a math problem? Explain the concepts behind that simple statement. I love it.

Carl Winans (05:42.55)
Yeah, and it is relatively simple. And it’s not just that your business is a math problem. There’s a lot of things, almost everything is when you really think about it as a math problem. And let me just start by saying math is not my thing. I’m not a mathematician. I didn’t enjoy math. I come from more of the creative side. I used to think that math was boring because there was just one answer. But then when I thought about it from a business perspective,

Tom Nixon (05:56.187)
You

Tom Nixon (06:06.696)
Hmm

Carl Winans (06:10.028)
you start to realize, yeah, there’s probably maybe there’s one optimal answer. But the way you get there, you can infuse a lot of creativity. But in conversations that I would have with Curtis about either clients I was working with, any clients he was working with, it really would come down. I would look at some of these businesses and I would just think to myself, this is a math problem. Like they’ve got a great product. They got a really compelling brand, a good

customer experience, they’re getting great reviews, but you look under the hood and there’s a math problem. And they’re wondering why their business is not sustainable or why their advertising just is too expensive for them to continue to sustain. Or there’s just lots of things related to their business where they’re asking questions about why is this so hard and why do I have to keep

why do I keep going out of stock and then having to quickly reinvest everything I have or invest more money to get more inventory? Like it’s just not adding up and they get stuck in this cycle. And then you specifically see it around advertising because they like you, what’s your budget? Well, I don’t know. And what should I spend? I don’t know. And so there’s just a, it’s really simple. There’s just a few key metrics that you want to pay attention to and really understand.

And you can use those metrics to kind of better understand your business plan. If you’re at the beginning where you’re just thinking about starting a business, especially an e-commerce business, kind of doing this simple math upfront and this planning helps you understand, like, do I actually have a sustainable business here? What is it realistically going to take for me to get this off the ground?

Curtis Hays (08:00.401)
Carl, take a moment to explain for our audience. didn’t do the background, but you’ve got a lot of experience with your own startups. So you’ve got product level startups, you’ve got service level businesses that you’ve owned and been a part of, you’ve sold businesses, and then you’re helping other businesses. I know you have a primary focus in the e-comm space, but you certainly have it across multiple different…

Carl Winans (08:10.082)
yeah.

Curtis Hays (08:27.695)
industry and business type. So give us a quick rundown where that knowledge and expertise and wisdom now comes from.

Carl Winans (08:35.67)
Yeah, I mean, it all comes from multiple failures over a long period of time. excuse me, I’m losing my voice a little bit. Excuse me. So, you know, I’ve been a serial entrepreneur since I was in, I mean, just out of high school when I was in university at Michigan State and started my first business, you know, selling t-shirts out of my dorm room. I literally had presses, I had boxes sent to my dorm room. I’m pressing shirts because I knew

college students love t-shirts, right? And so if I could sell something to, you know, that was in demand and I had direct access to those customers, so that was my first business. And then really quickly, you know, was kind of late 90s at the time and I was like, okay, these websites are gonna, this is gonna be something. So I went and convinced a company to pay me $10,000 to build a website, which I’d never done before.

And I took that money and I went and bought a computer and some software and taught myself how to build a website. And so that’s really how I got started. And from there, ended up coming down to Detroit, met some like-minded people, started my first agency in my early 20s. Again, we had no idea what we were doing. We were just figuring it out. We made it about five years. The financial crisis came and wiped out our clients and it was like a domino effect and it just wiped us out and started over.

Ended up starting another agency a few years later, just kind of building back up one person at a time. And then while that was going on, I was, I invented a phone case and launched it on Kickstarter. It was an entirely different kind of new kind of phone case. Yeah.

Curtis Hays (10:19.167)
Kickstarter was new at the time, right, Carl? mean, it wasn’t widely known yet. You were one of the early adopters of Kickstarter.

Carl Winans (10:26.166)
Yeah, and it was super fun. was, you we raised like $160,000 in 30 days, which was enough to get the tooling done that we needed for this phone case. And so then I was like, okay, we’ve got this product and it’s in demand and we got the figured out how to make the product and ship it out and built a early Shopify website when Shopify was very early, early days and launched on Amazon as well. But we didn’t know again,

I have a series of like starting things that I have no idea what I’m doing and then eventually figuring it out as we go and learning some great lessons. Yeah, yeah. Okay, perfect. That’s Big feature. So.

Tom Nixon (10:59.624)
Yeah, that’s, there’s a word for that. It’s called entrepreneur.

Mm-hmm.

Curtis Hays (11:11.327)
You’re a purposeful entrepreneur. There’s some people like me who are accidental entrepreneurs, but you pursued it. It sort of like pursued me, but you literally like went after it, juggling multiple businesses at the same time.

Carl Winans (11:15.95)
Yeah,

Carl Winans (11:25.196)
Yeah, yeah, that’s probably one of my downfalls. I just can’t help it. I have an idea and I got to try it. So anyway, launch that product, but really learned a lot in that process, learned a lot about what I didn’t know, right? And didn’t do the math upfront to really understand like, what was our cost to acquire a customer? What was that customer worth to us, you know, over the long run? How much should we be reinvesting?

back into our advertising. And then looking at all that information and having that help make a decision maybe on what products we should make next. So if you know your current product, you’re selling it for $20, but it’s costing you $30 to acquire that customer, if you’re not thinking about your actual acquisition costs and you’re not thinking about what is the true margin of your product,

you can think like, okay, I just sold 100 units and I’ve got $2,000 in revenue, but you’re still underwater, right? So, and those are just really basic, simple metrics. And then as we get into it, now, looking back on it, like understanding what that cost is to acquire a customer, really understanding the margins.

And then starting to think about things like average order value. Like what are the add-on products that are gonna make sense for this customer? How do I keep selling to this customer? And what are the add-on products to get that average order value of? Because there’s a lot of economics behind the scenes in terms of shipping, right? And it’s cheaper to ship two items in a box than it is just the one item in a box. And so there’s all these things that you wanna think about. And so your average order value.

And then you think about the types of products that you’re launching, right? So I was exploring recently about doing another phone case, a whole different kind of category of phone cases. And then, so, but this time I did the math upfront. I built a whole spreadsheet, you know, and put in some different variables. And I was just like, okay, this is clearly not a business that I can afford to get into right now between the minimum order quantity, what it’s going to take to actually market and educate the customer.

Carl Winans (13:42.338)
You know, was like doing the math up front stopped me from wasting a bunch of time building a business that just wasn’t a good fit for me at the moment, right? I had a similar conversation just recently with a company in Ohio and they have a retail store and they have a bunch of products and they really wanted to go online, have an online store on Shopify.

and sell these same products online because they would have customers come into their store and they loved the store and they would ask like, you have a website? And so they thought, okay, this only makes sense. We need to do this. But as we started to get into their goals, right? What are your goals? Why are you doing this? And they’re like, well, we really want to supplement the rising costs of our rent on our retail location. So they’re like, we need to bring in like another $100,000 a year.

So then knowing their goal, they want to bring in $100,000. And that’s just, you know, if we’re just talking revenue, that’s one thing. If they’re talking about actual profit that they can put towards something, that’s even something else, right? But we looked at just revenue and then we look at, what’s your margin? Let’s say your margin’s 50 % and your average order value is $25. And you just, get these few little metrics and you can see pretty quickly like, oh, for me to…

have a business that, an online business that’s gonna do $100,000 of revenue. And I know that the conversion, I’m gonna get a decent conversion rate of 3%, let’s just say best case. The math was showing like after year one, they might’ve profited about $5,000. And they would have had to invest like anywhere from 20 to $40,000 just in terms of figuring out the advertising piece. And so again, they ended up making the decision like, oh, this just doesn’t,

fit our business at this moment. This isn’t the right decision. Many times, if they come to someone like me, if we don’t do the math for them up front, or if they haven’t done the math, then they jump into a project like this, and then they get to the end of the project. they’ve got this beautiful website, but it’s not going to perform the way they need it to. And everyone’s going to be unhappy at the end.

Tom Nixon (16:06.92)
It seems, you know, when you hear somebody explain this, like it’s so obvious why you would want to do this, but entrepreneurs, they get caught up in the like the dream, right? And they’re like, they almost, I feel like they don’t do the math, not because they can’t. It’s because they’re afraid of what the math might tell them and they don’t want math to kill their dreams.

Carl Winans (16:18.584)
Thank you.

Carl Winans (16:25.102)
Yes. Yes. Oh, that’s 100%. And that’s been mean many times, right? Like you have an idea and at first you’re afraid to Google it because you don’t want to know if it already exists. Right. Yeah, right. Exactly. And so there’s all these things that you don’t want to do because the dream in your head is like, you know, feels so good. It’s like a nice little warm blanket. And, you know, but then, you know, you, you

Tom Nixon (16:35.272)
Great.

Curtis Hays (16:37.243)
or look up the trademark.

Carl Winans (16:52.344)
do the trademark search or you do the Google search or then you do the math, right? And even with the phone case, I started going down the, cause I love brands, I love design, I love logos, I love customer experience. I was thinking about, okay, what is this product gonna look like on the shelf? How do I differentiate? And I was starting to go down that path and I was like, wait a minute, I really need to do the math first because I might not even do this business, right? It might not make sense for me right now.

Tom Nixon (17:20.284)
You know, the way you put it is that a business can be, it has math and it has magic, right? And it’s tempting to get caught up in the magic, the fun, the creative side.

Carl Winans (17:30.61)
Yeah, And the magic is so important. And sometimes the magic can can overcome in the short term any any like shortcomings you have with the math side of your business. Right. But in the long term, the math, like the numbers, they always win. So, you know, you can have a really, really great product and it can sell like crazy. And in the short term, it’s going to look great. You’re going to have all this revenue.

But then you’re going to find what you don’t have is a business or a sustainable business. You know, I run into this with single product companies a lot. So if you have a single product and especially if it’s not a consumable, if it’s just a product that someone might buy once or once a year, then the math is like super important because you’ve got to constantly be driving more traffic, new customers to keep selling that product.

And it’s not cheap. so if you have a $20 product and it could be the best product in the world, but if you have a $20 product and you’re trying to drive traffic to that site to sell that one product, you’ve got to then let’s say your margin is 50%. So it costs you $10 to make the product. And then you don’t even think about all the other costs. Then you’ve got to drive traffic there and get a customer for less than $10 just to be profitable.

And it’s just simple math at the very beginning that you have to think about. And so then you’re like, okay, well then are there other products that I should be thinking about that are complimentary that I could sell to the same customer to get them to come back? And how do I turn this into not just a product, but to a business?

Tom Nixon (19:13.92)
Well, Curtis, I know you’re a big math person, but so this is probably like music to your ears, but you’ve also somewhat become a convert to the magic side a little bit because you’ve advised clients to not get overly hung up in the math or in other words, don’t just spit back to me conversion data and sales and all this stuff. If you’re not going to do the magic part, which is the branding and the creativity side, and one influences the other and they almost go hand in hand. So

guess one plug for the magic before we let that go.

Curtis Hays (19:45.221)
Well, if in the magic we’re talking about the brand, which is the essence of the company, this is where I’ve gotten it wrong throughout my career from a mindset perspective is that I’ve always thought branding was a part of marketing. But marketing is really below branding. Basically meaning, this is what I’ve come to understand, branding, if it’s the essence of the company,

It’s who we are. It’s what we value, what we stand for, all these types of things. And if it’s a product, it’s the product. Marketing is just communicating that message. And so many people come to us and say, we want to communicate. We want to market. And then you say, well, what do you want to say? And who do you want to say it to? And they can’t answer that question. So whether they’ve done the math or not, and that’s a different podcast in and of itself.

they don’t know what to say, right? So I’m a convert to the magic now, Tom, you’ve taught me well, that branding is just, it’s not that one’s necessarily more important to the other, but one certainly does need to be done before the other. And you need to have a brand strategy first before you go to market. Then when you get into the marketing side, there’s two sides of this, one that Carl’s talked about, which is

Tom Nixon (20:49.384)
All right.

Curtis Hays (21:12.223)
on the e-commerce side. I think one thing that I’ve seen in my career has been most business owners, they might understand some of the concepts of the math, but they see it done somewhere else. And they think that they can do the exact same thing, but don’t think through those calculations of like, well, this guy told me he’s doing really well on Facebook. And then you’re like,

Tom Nixon (21:37.309)
Mm-hmm.

You

Curtis Hays (21:41.703)
Well, with his margins and his product and what it sells for, and it’s a consumable so people repeat purchase, their lifetime value versus your lifetime value is $500 more. So his ability to put money into advertising to acquire is much higher than your product, which sells for $25 that people buy one time and never buy again.

And here you are constantly in the churn of acquiring new customer after new customer after new customer. And that gets extremely costly when you do start to do the math and say, well, for every click it costs a dollar. And then if you’re at 3 % conversion rate, I send a hundred people at a dollar each that you spent a hundred dollars. Three of those people purchased it $25 each. So you spent a hundred dollars to make $75 in revenue. Then you take out your,

Tom Nixon (22:29.137)
Okay.

Curtis Hays (22:36.071)
margins in your shipping and all those other things. And then what are you left with?

Tom Nixon (22:41.042)
Dream killers. You’re just a dream killer. But you know what?

Curtis Hays (22:43.847)
So that was one side. I want to point real quick on the other side, which I want to say was the B2B. And I think this is something that I don’t want to get missed because we’ve got a lot of listeners that are on the B2B side. So what they don’t do is they don’t go through this calculation because they’re not ecom and they’re not thinking of a checkout and those types of things. And marketers think of a lead and they’re focused on the lead numbers and

marketing qualified and sales qualified and what they never do is actually create a lifetime value or expected lifetime value if it were to close based on the historical performance or some sort of modeling and then tie that back to the rest of what they’re doing in their marketing. Right. And so so many are like, Hey, you know, you need to get us X number of leads. And then it’s like, well, what does a lead mean to you? And what is it worth to you?

We have to start there to actually build the math models that say, okay, we’re willing and able to spend X in order to do that acquisition of a form fill or a phone call. And then we optimize from there once we start to collect the data. But this initial sort of modeling is basically what it is. 100 % needs to be done. Sorry, Tom, what were you gonna say? Yeah.

Tom Nixon (24:00.614)
No, I was just going to say for a deep dive into that, go back and listen to our watch our episodes with Amy Schuster as we really dive deep into that. I wanted to go back to something Carl said earlier because going back to the e-commerce examples that you shared even before the math, there’s a mindset shift, I think, because a lot of times like the one example you said, they kind of looked at e-commerce as opening up a new channel, right? We already have a business. Now we want a new channel.

Curtis Hays (24:05.927)
Yeah.

Tom Nixon (24:29.03)
And you shouldn’t think of e-commerce as a channel. You should think of it as a what?

Carl Winans (24:33.134)
as a business. Yeah, treated like a business. I mean, for some people it is their entire business. For some people it’s like they’re opening up a new channel, but really they’re just, it needs to be treated like a business. It kind of either, it’s a big part of your P &L, it’s the whole P &L. You come up with your own little P &L model just for your e-commerce, but you have to think about it that way and not just like, we’re gonna.

put some stuff online and then we’re gonna generate a bunch of revenue and then we’ll be able to pay our rent on our building. It’s just not how it works.

Tom Nixon (25:08.488)
Yeah, you know, you wouldn’t open a new physical location with that mindset, right? So, we’re going to try this and so hopefully, someone will come and, you know, be nice, right? So, yeah, so you got to go into it with the mindset. This is another full-time job now, right? Or at least significant part-time job. It requires its own math.

Carl Winans (25:23.682)
Yeah, absolutely. Yeah, and it’s its own math, its own magic, and it’s an extension of the customer experience that you might have if you have a retail store. For some people, this is their entire business. For many e-commerce, like the small to medium-sized brands, this is their entire business. And direct-to-consumer, there’s

different flavors, but one is like just your website and you are literally direct to the consumer and then Amazon has treated a little bit separately or you kind of put them together. Amazon, obviously you can sell on Amazon, but you don’t own the customer. Amazon owns the customer. On your DTC site, you own the customer and so it’s your business. if your business is, it’s all wrapped up in this online store,

You know, this 24, the store that’s open 24 seven, the math and the magic really do, as we’ve been saying, kind of go hand in hand. You’ve got to have this really wonderful customer experience and a really great product and really great service. Even customer service is a part of marketing and communications. There’s so much that can be done, you know, to, to communicate your brand and your values and how you see your customers through the customer support experience.

Tom Nixon (26:34.641)
Yeah, for sure.

Carl Winans (26:46.07)
So having that, but then also going back and having those underpinnings, right? The financial underpinnings to make sure that the machine can actually be sustainable and can grow sustainably. What you don’t wanna do is have some small problems at the beginning that you don’t address, and then you just scale your problems. So let’s just think about it.

Tom Nixon (27:05.872)
Yep. So this is where the English major on the podcast, that’s me, would like to do the Homer Simpson thing where he disappears backwards into the shrubs. And then I’ve turned it over to you two mathematicians. know, Carl, you said you’re not one, but let’s be clear if we can for the listening audience what you both value as the key most important metrics to measure when you’re doing math. You mentioned some of them earlier, Carl, but maybe let’s identify the handful that everyone should have on their math score.

Started with you, Carl.

Carl Winans (27:36.384)
Yeah, so when I think about things, like I’m on the side where someone like Curtis has driven a bunch of traffic to the website, right? And so the traffic is there. And so the metrics that I’m looking at, or let’s say that we’re starting out and the traffic’s not there, the metrics that I pay attention to are pretty simple. It’s, what is the traffic coming to the site? But then what is the conversion rate? That’s a big one. You want to know.

into Curtis’s point earlier, 3 % it seems low when people are first getting into e-commerce. They don’t realize that a good conversion rate is 3%. Yeah, that can be high. So yeah, that’s usually the first shock to someone is the conversion rate. And then you’re looking at the average order value. So when a customer comes to the website and they put stuff in their cart and they check out, you want that cart value.

Curtis Hays (28:12.945)
That’s high.

Carl Winans (28:33.304)
You want them to put as many products as possible so that you want to get the average order value up. So that’s why everybody sees it. They go to a website and it says, get free shipping when you spend $30 or more. That is meant to increase your average order value, to incentivize you. And there’s all sorts of ways to incentivize your customers to spend more with you. So that average order value is super important. And then the lifetime value of the customer.

So you get someone to come to your store and they buy once, but you know, you obviously the frequency is important. So how often can we get them to come back and buy? And then you’d look at the average order value and their frequency, and that gives you the lifetime value of that customer, right? And.

Tom Nixon (29:19.568)
Yeah, it’s a real quick on that one. That’s why Amazon is always encouraging you to subscribe and save. They’ll give you a 5 % discount if we lock you in because they want the frequency. So anyways.

Carl Winans (29:25.966)
Yeah.

Carl Winans (29:29.612)
Yeah, it’s the frequency. Yeah. And if you, instead of, if you want to double revenue, a lot of times we make the mistake of like, okay, we’ve got a double traffic. It’s like, well, actually with the traffic that you have now, if we, you know, increase the conversion rate and we increase the average order value, you know, and we are, we come up with a product that people subscribe to and we, you know, or we have other products that get people to come back. So we increase the frequency like

Those are levers that you can pull to increase revenue, increase profitability without necessarily going to have to spend more on just driving more traffic. Driving more traffic is great, but it’s hard, as Curtis knows. You’ve got to spend the time to learn, to figure out, to find the right audiences and put the right messaging in front of them and get them to the website. But the worst thing you can do is spend a bunch of money driving people to your site that’s not converting well.

Right. You’re just wasting money at that point because your site is not set up in a way that’s going to convert. So those are the key metrics that I like to pay attention to kind of on that side of the fence.

Tom Nixon (30:39.4)
And of course, just you mentioned cost of goods sold is so important to like, don’t overlook that it costs you something to build the product, ship the product, market the product. Curtis, your metrics.

Curtis Hays (30:50.961)
So all of those, but I think the one that I see missed most frequently when we look at those traffic numbers and then the conversion rates is that’s, you’re sort of doing that math assuming that that one session, which is one single visit of a user to that website is or isn’t going to convert in that one instance. And if we think to the,

711.4 rule, is like seven touch points, seven different channels, 11 different touch points, like four hours of content or whatever that that exact rule is, right? Basically, you need frequency. And that frequency piece is missed. So depending on the type of product you have, it might require four, five, 12 touch points with that consumer to convince them in the purchase.

And your ability to tell the brand story, if done right with remarketing or they signed up for the newsletter and now they’re coming back or you, whatever you’re doing to essentially incentivize them or retarget them in some way to get them to come back. There’s costs associated with those things and those additional visits, which might’ve come through paid channels. So if it takes four visits to get somebody to purchase, you need to do the math on what it.

those four visits cost not just the first visit that might have came from a Google ad campaign that was an average of, you know, $1 a click, because here you had to have an email system to get them to subscribe to you were retargeting them on Facebook. So you paid, you know, 80 cents to retarget them inside of Facebook and, you know, so on and so forth, right. So I think that’s a big part of

What I see the business owners doing is thinking in the mindset that it only takes one session from a single user to convert when it takes multiple sessions and multiple interactions before a purchase decision is made. Okay, you’ve convinced me, I need this product. Now I’ll go back, which most likely at that point is a direct visit, they’ve bookmarked it, they’ve written it down, they type it directly in, or they do a Google search for your brand. And you didn’t pay for that anyway.

Curtis Hays (33:12.109)
didn’t pay for that visit, you paid for a bunch of things prior to that maybe. But the actual final purchase maybe wasn’t through a paid channel. So that you just have to factor that in. And and again, do some modeling in the beginning of like, look, we’re not going to just put up some advertising on Facebook and one single channel and get a bunch of clicks and think we’re going to get a 3 % conversion rate, you’re probably on purchases going to get a 0 % conversion rate. What are you doing to nurture that

audience that you’re acquiring that’s just coming to the website across other channels to bring them back, right? And tell the brand story. Why is your product great? What makes you unique? What makes you different? Why do you need it?

Tom Nixon (33:55.463)
Yeah.

Carl Winans (33:55.534)
Yeah, and it’s just staying top of mind, right? Like they might want your product but not be ready to buy it for any reason. know, could be price, it could be they just don’t need it right now, but they will later or they’re busy. And so you have to find ways to stay top of mind with those customers. And the hard part is you don’t know that you’re, you know, that they actually want your product, but they’re just not ready. But you have to have faith that

If you do stay top of mind, eventually they’re going to come around, especially if you’ve targeted properly. Yeah, I think that’s a super important piece that gets lost. And it’s hard to, because once they understand it, still the attribution of that sale is difficult. You’re right. Because like you talked about, Curtis, they’ve got you paid for all these different touch points. And then, you know, a week later, maybe they just do a Google search and come in through the front door and make a purchase.

Tom Nixon (34:42.632)
you

Carl Winans (34:53.748)
And, you know, were you able to track that and really provide the right attribution?

Curtis Hays (35:00.357)
Mm-hmm, right.

Tom Nixon (35:01.16)
Yeah, I think, you know, we in our industry, we need to be truth tellers too. And there’s many in our industry that are promising false visions of hope, right? It’s like I can get you so many clicks and there’s some built in. I even do you to think that every click results in a shopping visit and every shopping visit or 50 % of them sounds like bad math. 50 % only 50 % will buy. No, no, only 2 % will buy. And then there’s the

But you need to be upfront and honest Curtis with these clients and to say we might run this for six months and you might not have a single attributable sale, but that doesn’t mean it’s not working in unless you’re confident that you have a the math figured out. Then I think people are afraid to admit that and then they’re very keen to claim otherwise. True. Yeah. So, all right.

Curtis Hays (35:35.621)
Mm-hmm.

Curtis Hays (35:48.965)
Yeah, completely true.

Carl Winans (35:50.465)
Yeah. This has changed a lot, you know, over the last, I mean, 10 years for sure. And the last five years and like the advertising landscape has changed and like the costs and the competition and you know, the brands that are coming into a space. So you might’ve been the category leader for quite a long time and you were making bank and you were, you know, running really profitable meta ads before iOS 14 and

You know, like all of that was humming along and doing great on Amazon. And then privacy rules starts going into place and algorithms are changing and platforms are changing and new competitors are coming into the space. Even a lot of, overseas factories starting their own brands and then coming into the, into Amazon. And so they’re able to, you know, really drive down price. And that puts you as a, as a.

as an American brand, even if you’re sourcing from overseas, but you’re an American brand, it puts you at a disadvantage. So there’s all of these different things that come into play. And you have to remember that this is a dynamic changing landscape. So what is working today? You might have the math, right? And the magic, and you’ve got everything humming along, but you’ve really got to pay attention to the macro conditions of just the e-commerce space in general. And

and kind of be fluid with that and keep an eye on competition. And because I’ve seen a few companies now kind of get taken by surprise and they just kind of at first it was a slow steady decline and they thought, you know, maybe they could manage it or maybe I just switch agencies and that will fix the problem. And then I’ve seen companies, you know, they’re about five agencies. They’ve switched agencies about five times now and the results are the same and it’s not the agency, right. But it was their unwillingness to like

Adapt the product, adapt the way that they market, adapt the way they think about their margins, adapt their business in general and the products that they sell to their customers.

Curtis Hays (37:54.895)
This happened to us just recently, actually with a company that knew the math, but they wanted to jump agencies because the math wasn’t working well. And when they came to us and they shared the math with me, spreadsheets of everything, and I said, you know what, the existing agency, there’s nothing I can do that is any better than the… I mean, I might be able to tweak a few things in your Google Ads account, and we might be able to do a little bit better with an SEO perspective, but it’s really not going to move the needle much.

And I kept pushing back and pushing back and they kept coming back and coming back. And six months later, they went out of business. Because they eventually realized the math doesn’t work. And they got out before they went bankrupt. I don’t know if they sold and liquidated or exactly how it went down. But I’m conscious of that too. Like I don’t want to take on a project that isn’t mathematically viable. There is no success there or it’s a

Tom Nixon (38:31.046)
Really?

Yeah.

Curtis Hays (38:53.637)
Or we’re doing marketing on a prayer, basically.

Tom Nixon (38:57.074)
Yeah. Only on the magic, right? Just

Curtis Hays (38:59.003)
Yeah, only on the magic. I mean, it’s great that you want the good magic to fall back on it when an algorithm changes or something like that. You’ve got a good brand, you’ve got good legs to stand on, and you can adapt. But you certainly can’t approach it from the standpoint of like, we got a really good Google guy, so we’re going to go after it from Google Ads, or we’re going to hire this Facebook agency, which has had a ton of success. think that that is the secret sauce.

At the end of the day, it’s not gonna work that way.

Tom Nixon (39:30.642)
So, Carlos, I made sure I made a plug for the magic, but let’s make sure we make a final plug for the math. What does life look like if somebody who’s done the math and you advise clients on helping them do the math? What does this get you other than obviously some clear answers, but there’s what does life look like on the other side of once the math problems are solved?

Carl Winans (39:49.006)
Yeah, that’s a great question. Well, it helps you focus on the right things, right? First of all. So if you’re someone like me, who’s more of a serial entrepreneur and looking at trying new things or testing new ideas or starting new businesses, it helps you figure out really where you should put your focus, right? Before you waste a bunch of time. So that’s one benefit of it. The other is it just…

it gives you, once you have the math done, right, you’ve got the financial underpinnings figured out. And especially if you’re at the beginning stages, it becomes your, not North Star necessarily, but it’s kind of, you’ve got some guiding principles in terms of how we need to go to market from that financial perspective, right, and from a numbers perspective. And so it gives you that confidence to say like, okay, I have an actual business here.

not just an idea, not just a cool brand, not just a product, but I’ve got an actual business. And then that once you have that confidence, it then frees you up to spend more time on the magic parts of your business, the real fun parts for I mean, some people, the math part is fun. And and now I found the fun in that. Because I know it gives me the the direction and the confidence and the ability to then just

really get creative with the rest of the business.

Tom Nixon (41:17.628)
Yep. Well, I’m in the market for a new phone case, but so it were so you tell us where to go to get those in another question popped up. You talked about fluidity and making sure that you’re keeping an eye on things every time a new iPhone comes out. It’s got to set your whole business a real. So what is the business? How can we get and then you can answer that question as well.

Carl Winans (41:21.262)
You

Carl Winans (41:38.254)
Well, I’m no longer selling the original phone cases from like that was, I started that in 2014. So that was with the, don’t even know what iPhone it was back then. And that was the, yeah, something like that. Yeah. And it was called the, the mega tiny corporation. And it was a, uh, it was the, the world’s first, I called it an anti-gravity phone case. So it had nanosuction material on the back of the phone.

Curtis Hays (41:48.497)
Six, seven, eight, I think we were selling. Yeah.

Carl Winans (42:06.23)
And so you could stick the phone to any smooth flat surface without the phone case being sticky. It was like these little micro-suctions that would just stick anywhere. So you would do hands-free selfies. This was back when selfie sticks were a thing. So we were like the anti-selfie stick. But again, we didn’t do the math right. And so we focused on the wrong product. We didn’t reinvest properly into marketing.

Tom Nixon (42:22.108)
Yeah.

Carl Winans (42:33.696)
We focused on the next wrong product instead of the next right product and a bunch of other things. And so that led to the business eventually just not being sustainable. there was, we didn’t take advantage of being the first mover in the space. We created an entirely new category of phone case. And with a lot of buzz, a lot of PR, like customers all over the world that were getting this first phone case and ordering from us.

But then quickly, when you have something like that, competitors move into the space, right? If you don’t have some sort of defensible moat, which unfortunately it wasn’t patentable. We tried several times to try to find a way to have some sort of defensible moat there, but we just didn’t have it. And so the only moat you have in that sense is time. And knowing that every dollar that’s coming in, like if you really want to grow and capture as much of the market as possible.

reinvest back into your marketing to get more customers in the door and then also reinvest in the next product that makes sense with, you know, to sell to that same customer. So you can really start to build on that foundation of that first product and create a business.

Tom Nixon (43:46.182)
Yeah. Yep. Love it. But that’s that’s more math, too. You have to, you know, factor all of that in. So, Curtis, you held up your phone. You have a handsome phone case that I should consider.

Curtis Hays (43:59.015)
I don’t, you know, we don’t have sponsors here and I don’t want to get us in trouble, but I’ll tell you afterwards. Yeah, leave, if you’re really interested, leave a comment below and I’ll send it over to you in a private message. But Carl, so this hasn’t, we didn’t, we weren’t clear on this. So I want to make sure our audience is clear. You, you’re still an entrepreneur. You’re still coming up with ideas.

Tom Nixon (44:04.346)
Okay. Well, we could have a sponsor.

Curtis Hays (44:24.711)
Not that you’re necessarily ready to share all of those ideas and different things. Maybe there are some that you want to share. But I know you’re still an entrepreneur, still coming up with ideas in various stages. where I see you’ve moved to is taking this knowledge and expertise and trial and error that you’ve had over the years and helping other business owners navigate e-comm and running a business. Again, and we’re…

where I kind of sit in that space of just helping more in the digital space and staying in that lane, you’re able to come in with somebody who has an idea who might have the product, you know, in production, manufacturing, whatever they’re getting ready to go sell, but you you can, you can advise not just a narrow area of like, yeah, I can build you a website and I can throw up the product and do that. That’s how we get into this whole math thing is that you’re actually consulting and helping

businesses with the business itself, fulfillment, and what are you going to do about this? And what are you going to do about customer service? And all those types of things.

Carl Winans (45:31.244)
Yeah, 100%. So yeah, that’s one of probably two main focuses for me at the moment in terms of my of my areas of interest. I’ve been working with a lot of e-commerce brands over the last several years. As a prime example, like I have a client now that’s launching a new women’s golf apparel. And it’s a brand new new line, really great women’s golf apparel.

golf apparel, like really great fabrics, high quality, super high quality. She knows her customer. But I was, I’ve been there with her just from the very beginning, building like it’s going to be a direct to consumer business. And there is a B2B side to it as well. And helping her step by step, build that out as a business, doing the math, figuring out how we’re going to handle customer service. What does that look like? And really getting into the nuance of the actual customer experience all the way through from

the moment they visit the site for the first time to the moment they consider making a purchase. they make a purchase. Then if they need to make a return or they need to have some sort of interaction with support and what does that entire life cycle look like? How do you build it? How do you build it in such a way where a small team or a solo entrepreneur can still manage it themselves? And so really helping them do the math, right? So those are the things that I’m

that I do now. And I’ll actually, you know, if I’m starting with a super early stage brand, I’ve helped with naming, brand development, messaging. Like I love the brand and design side of things. So then I’ll design their store, you know, get them up and running on Shopify and then go through all the conversion optimization process. And usually when we get to that point, that’s when I call Curtis and I’m like, okay, hey, we’ve got this brand.

Now they’re ready to start advertising. They need to drive traffic. And then, you know, that’s where we get a chance to work together. So that’s, it’s a big area for me. And I’ve been, it’s been that way for a few years now. And then obviously everybody’s talking about AI. AI is, know, conversational AI, especially has been important for me. I had an AI startup for the last few years. I started it in 2020.

Carl Winans (47:53.134)
was one of the co-founders, like 95 or 99 % of PEC startups, we didn’t make it for a variety of reasons, it got me, it was in the e-commerce space. And so I was working really closely with e-commerce brands and then I’ve had obviously my own experience. so just really kind of fell in love with the e-commerce side of things. So that’s.

That’s that. But then from an AI perspective, we all know, you know, if you’re listening to this podcast, you’re well aware of AI and the opportunities and challenges it’s bringing. so for me right now, I’m using it every day and then looking at it through the eyes of, you know, a student and trying to look at the challenges that small and medium sized businesses are going to have and

AI will be a, it will give you an advantage in the short term. In the longer term, it’s going to be table stakes. you will, you know, using AI in your business, whether internally for processes or externally in terms of how you communicate and market, et cetera. Like at some point it’s going to be commoditized and you’re going to need to do that. Just like you need to have a website mostly right now. Like it’s,

So sooner than later, businesses really need to start to understand like, how can we be more efficient? How can we be smarter? How can we be faster, cheaper, better? All those things, because if you don’t, you’re gonna end up being behind. And so that’s an area of focus for me. I’ve been spending a lot of time actually starting to build applications using AI. So like I use AI now in just about every aspect of my business just to be.

more efficient and intelligent. So yeah, so those are the of the areas that I’m really excited about.

Curtis Hays (49:52.636)
Mm-hmm.

Curtis Hays (49:59.419)
That’s awesome. So if anyone watching will put your LinkedIn, is that good to put in show notes? Is that a good way people reach out if they got questions, need help with your business? I know you’ve always been willing to jump on a call with me or one of my clients and so appreciate that. Tom, any final thoughts from you?

Carl Winans (50:05.484)
Yeah, LinkedIn. Yeah, LinkedIn. Yeah.

Tom Nixon (50:21.097)
I’m going to, I got a date with a barber, so I am not going to be part of this, venza hair club before you’re a sister.

Curtis Hays (50:28.667)
I think we should, I’ve had some ideas lately. So my go-to, like if I wanted a phone case now, do know where I go? No, I go to YouTube. Because there’s a million influencers who they get out 10 of them, they buy 10 of them and they’re testing them on their table and they’re doing all these things. And I’ll watch 10 or 12 different influencers give me their reviews and I’ll select that. So that’s how I personally buy now.

Tom Nixon (50:36.143)
Amazon.

Curtis Hays (50:59.079)
So I wanted to try a new razor. So I did first go to chat GPT to help me I do use the new deep research is like, hey, I want I want a safety razor, because the electric thing just isn’t working for me. Give me give me a list, do the research, give me a list. So it gave me a top list. And then I took that list and I went into YouTube. And bunch of bald guys reviewing

Carl Winans (51:07.086)
I was gonna ask.

Curtis Hays (51:28.721)
their shavers. So I got some, you know, feedback through YouTube and I went and made a purchase to use it for the first time today. So I need a few more uses with it to let you know if I’m satisfied. But yeah, we could we could start our own like, let’s just review shavers and bald bald gels and, you know, I don’t know.

Tom Nixon (51:51.474)
Well, since you have all this AI stuff, you know what I’m going to do? I’m just going to ask you after you’ve done all the research you’ve done on.

Curtis Hays (51:57.841)
There you go. No, I’m gonna put the camera on you and you’re gonna shave your head for the camera.

Tom Nixon (52:03.144)
All right, that’s good. But I’m going to just ask you. I’m going to make you go watch 10 videos and then you report back. It’s my version of GPT. It’s CPT. Curtis plans for Tom. All right. Well, Carl’s great catching up with you again. Keep us posted on your many adventures and misadventures with math. We really appreciate you coming on and we’ll have you back. We already talked to hit on two other topics, influencer marketing and AI. So we got more to talk about.

Curtis Hays (52:08.432)
Okay.

Curtis Hays (52:14.833)
There you go.

Carl Winans (52:15.694)
we go. I like it.

Tom Nixon (52:32.72)
Until next time everyone, we’ll see you bull horns bulls eyes.

Carl Winans (52:32.95)
Thank you.