w/ Devyn Merklin, X-Scale
Also available on YouTube: youtu.be/0HHJ5tONfVo
Most Shopify store owners are doing growth completely wrong. They're trying to lower ad costs, make prettier websites, and rush customers to buy. Devyn Merklin from X-Scale flips all of this on its head with counter-intuitive strategies that actually work.
In this episode, you'll discover why the biggest mistake seven-figure brands make is racing to the bottom on customer acquisition costs instead of learning to outbid competition. Devyn shares how one brand tripled subscription revenue from $6K to $22K MRR in just 45 days using gamification instead of discounts.
You'll learn the psychology behind giveaway strategies that actually build qualified prospect lists, why ugly websites convert better than pretty ones, and the empathy-driven approach to customer journey optimization that most brands completely miss.
Sponsors:
Key takeaways include the LTV vs CAC mindset shift that separates big brands from struggling stores, the month 4 subscription churn fix that prevents customer dropout, and why your landing pages are probably bleeding money without you knowing it.
If you're tired of following conventional wisdom that doesn't work, this episode reveals the contrarian strategies that actually drive results.
Guest: Devyn Merklin, X-Scale (thexscale.com)
Links:
Kurt Elster
This episode is sponsored in part by Swim. Okay, here's a depressing stat. 70% of shoppers who want your products never actually buy them. They browse, they consider, then they forget. That's revenue walking out the door. Swim Wishless Plus turns browsers into buyers. Customers save products they want, get notified when prices drop, or items restock. You can also engage them in personalized fashion through your marketing or sales outreach. It's like having a personal shopper reminding them to come back and buy from you. instead of your competitors. And forty-five thousand stores already use it. And it only takes five minutes to install. You could try it free today for 14 days. Go to Git Swim. dot com slash curt. That's swimwithay. com slash curt. Turn those maybe later into sales today. Get swim. com Today on the show I have a returning guest, Devin Merklin, who back in January joined us And had had great success uh scaling Living Good Daily, shared that experience with us, and then was, if I recall correctly, looking to acquire brands. And they were going to incubate them, scale them. And I wanna know. I wanna check in. It's been over six months. I want to see how that's going, you know, and get an update here. Devin Merklin, uh the X Scale, that's your site. Thank you for joining us. What's the haps? What's going on here?
Devyn Merklin
Thanks for having me, Kurt. Well, yeah, that was the that was the goal. That was the plan. So that was the reorganized business plan. We're just gonna go acquire brands and we're gonna grow 'em. We're gonna have a lot of fun with it. And we actually did acquire a small supplement brand and um invested some time in growing it, but we quickly uh humbled ourselves and turned back around And it was actually from uh, I guess you I don't know what you consider him, investor, co-founder, business partner, um, he's it if of all things, mentor. was really um speaking to me from like a vision perspective. And the trouble that we're having with Xcale before was cracking, how is this different? Because as you start to get going, you're like, we're a growth partner, we're helping these brands. But then we started to find ourselves doing things that other agencies were doing. And so we're like, let's pivot, let's just go build a portfolio. But we had a conversation one day and um he was telling me about a business that He just recently sold a big acquisition for it and how he went about building it and it sparked a whole new idea for Xscale as a true growth partner. through tech enabled managed services. I won't go too far into the crazy details of kind of what that discussion was, but it reopened us working with brands, but not in the same way we were doing it before. but with kind of a different approach, a different vision in mind by utilizing uh proprietary software in order to help those brands actually grow essentially. So We open the doors back up to work with brands.
Kurt Elster
Um, but we're still building the portfolio in the background because that was the Welcome back to Professional Services, the thing you said you'd never do again.
Devyn Merklin
Yeah, yeah. We just have a different spin on it this go around. So trying to um step away from what we're previous to doing.
Kurt Elster
So your past experience. Yeah, it's that you were you were uh in a a CMO role, right?
Devyn Merklin
Correct.
Kurt Elster
You know, that was like your your entry position, but you really grew uh both like your skills, your experience, your role, and living good daily uh before And you like you had other experiences, you did automotive brands, which we both know automotive is is a tough place to play in. And then from there The X scale, you had a business partner where you said, okay, we can acquire brands and essentially act like um you were gonna start building what to me sounded like uh a PE portfolio, private equity. Yeah. Is that right? Yeah, exactly. Yeah. And then in a really capital intensive, higher risk, higher reward. But like what's the moment where you went, you know, I don't think this is gonna work. We should go back to services.
Devyn Merklin
It wasn't it wasn't a I don't think this was gonna work moment. It was more just a conversation where that we were having Um and he had a a a small business that's been around for about 10 years and it wasn't really getting any traction over the course of the 10 years. It was on a downward kind of turn. And we're just chatting through it and we're like, what if we combine these two together where we had these services and we had the proprietary software? And that's how we went about servicing brands. It gives us a little bit of an edge because we have like it pulls all this data into one area and we're able to make these kind of data-driven decisions that you don't normally get to make as just um in that normal service model, because you don't have a proprietary piece of platform that you can, you know, tinker with and model the way you need it to function in order to get the result that you want to get. So it was more of a a more of a a vision that spun into the to the new side of things.
Kurt Elster
This software's sounding mysterious. Like what's the what's the deal with this software?
Devyn Merklin
So this software, I I'm hesitant to say the name of it because it's been a it's been around for It's been around for a very long time. Um, and it's it's uh it's an analytics e-commerce analytics software. And over 170 different integrations. I'm pretty sure if you just go type that in on Google, you'll probably see that software pop right up.
Kurt Elster
Um but 170 different integrations. There you go. E-commerce analytics go. Is it glue? Oh wow, look at that. It is okay You're a secret oh my gosh. What is like glue have a reputation that I don't know about? Like why I don't get why it's a secret I've heard of glue?
Devyn Merklin
No, it's it's more of uh because we're trying to morph the software a little bit, so you don't want to give off like Glue has been this this brand and the software for the past ten years, and so we're using that platform to structure entirely different kind of software in order to do what Xkale needs to do. So I didn't want to say come out and say Glue, this is the platform, because Glue as it stands today and has its ow how it has always stand. services an entirely different demographic that what Xscale is set out to serve. So the discussion and the the vision behind it was like, let's take the infrastructure that we have. um with glue and have built over the past ten years, use that utilize those findings, utilize those infrastructures, all the integrations that have been made and develop something that is specifically for those kind of health and wellness consumable um CPG brands on uh e-commerce essentially
Kurt Elster
And utilize that platform to grow. Okay. So you've got you're really you have like sp special level access to glue. Which yeah, a a known existing established analytics platform uh for the really would If I recall correctly, it's like Shopify first, right?
Devyn Merklin
Mm-hmm. Yeah. It's yeah.
Kurt Elster
Feels like it would would have been earlier than some of these other analytics platforms and an attempt to like, okay, let's collate everything into one spot, one dashboard. You know, today I have lots of options. I have Google Data Studio. But like when Glue did it, I think they would have been one of the first ones.
Devyn Merklin
Yeah, back in two thousand fourteen, I think is when they first uh launched.
Kurt Elster
Okay. And now the X scale so you've got uh yeah, you we've got this this secret weapon in our back pocket and the we've got your experience, you know, established experience here. You're attached to industry insiders. That has to help. Uh it doesn't hurt. And then the X scale, when we talk before, the X scale is positioned as a growth partner Which has become a l a little bit of a buzzword if you're in the agency services space like us. Tell me about tell me about that phrase, growth partner.
Devyn Merklin
Yeah, so when I when I stepped away from living it daily, um one of the things that kind of stuck around and part of it, let me explain the glue side real quick was the data piece. Like there wasn't really a specific platform. And Glue as a as its own platform doesn't even have this. But there wasn't a specific platform that could give me all the data that I essentially wanted to grow the brand, right? I had to bounce between multiple platforms. I had to use things like lifetimely, you know, meta dashboard, triple way, all the different platforms. Um and we kind of like custom developed our own using like Looker Data Studio, all this kind of stuff. So that's the initiative with Glue. So glue is glue, but we're using the infrastructure to build. um kind of what we need in order to work on brands on a day-to-day basis. So when I was um in within Living It Daily, we grew so fast that we couldn't really hire a person and train them up like um the right way. Because it involves time and involves understanding how we went about growth, how we are actually doing things as a company. And so we relied on agencies, like a lot of fast growing brands too, like advertising agencies, email marketing agencies. The problem with that model is that that agency is their own model. They have a way of doing things extremely efficiently in order to service a lot of different brands. And so if you try and get them to bend on their model a little bit in order to jump into yours for growth, it's a little bit challenging. So when I stepped away, um the thought process there was, well, agencies are a model. There's this term being thrown around as growth partners. And I'm noticing that agencies are just tacking that trending word onto their business, but really they're only servicing that one area, which might be advertising. As a growth partner, you have to have a level of care. You have to have a level of understanding not just on ads, but how do those ads affect support and logistics and how do those customers go in through email? What's the customer journey? Pass that ad. So the the term growth partner when Xcale started was really just to come along with these brands and be kind of like their Sherpa. as as they grow, as they scale um their business, not just to focus on one marketing area, like majority of advertising and email marketing and different kinds of agencies do.
Kurt Elster
You know, on the site now it refers to a fractional CMO. Are you that fractional CMO?
Devyn Merklin
So we we are a team of 17 now. So every person that we hired is um we hired in breadth, not depth. So we didn't want to hire a bunch of advertisers or media buyers that came from like agency world. We wanted to bring people on that have actually worked in brands. Um that way they have a better understanding of like if their core skill is advertising. They also probably had to deal with like the support team and maybe the email marketing team. So there's a better understanding. So the term fractional CMO. really came from just um feedback from working with brands. You're like, wow, we really look at you guys as a fractional CML. I was like, okay, that's perfect Because now like Melissa on our team, she's chatting with um like the founder or maybe the marketing director on the brand that we're servicing. And she can have different discussions, not just on advertising, for example. So you can have discussions on how this ad is going to affect or this promotion might affect support when it gets launched, right? And we can cater things around the entire business because Advertising will scare you up, for example, but support might bring you down because that promotion might blow up and create a bunch of support or logistical fires. Um, so it really allows us as a team to be a fractional CML, not just myself.
Kurt Elster
We've we've come all the way around. How's this different from just being another agency?
Devyn Merklin
So another agency would be just focusing on one individual area. So um if I hired an advertising agency today, they're only going to focus on, let's say, my meta ads, right? So they might do those functions. They might focus on the creative that needs to go into meta, the ad copy that needs to go into meta. They might have a little bit of say on what happens on the landing page, but what happens after that? So what happens when that customer sees that ad, clicks on that ad, hits that landing page, who's focusing on the conversion on the checkout? Who's focusing on the post-purchase? um sequence that happens who's focusing on that customer journey after they fall into my CRM and are going through my email flows, right? That either gets passed to the email marketing agency, maybe you have somebody internal, but the growth partner kind of thought process here is that somebody is looking at that entire picture. They're not just looking at one area. So they have a buy-in on what's happening in advertising, the same way they have a buy-in, what's happening on the site, the same way they have a buy-in, what's happening in that kind of that post-purchase journey as they go through the email flows or SMS flows, whatever it might be.
Kurt Elster
Okay, so now we're getting into Now I'm starting to see it. Like there's there is some funnel hacking in there, but there's also the the larger strategy and guidance. And like that's where you you're adding a little bit of a leadership role there. Because you're right, like a e-com business will probably hire More than one specialist agency in their marketing. You know, someone will run email, someone will run performance ads. Someone's gonna run. But then on top of it, it's like internal, external. There's someone in charge of customer support. There's someone in charge of fulfillment. Okay, now we have to have someone considering all of these things and making them talk to each other. I'm kind of curious. At the start you talked about um you know everybody's got a process and you gotta plug into that. What does communication and tooling look like? Like, you know, do we do Zoom? Do we do Slack? How often do we meet? Is it all async? I'm always interested because I find you know agencies all choose to approach this differently.
Devyn Merklin
Mm-hmm. I I look at it as we have to build a relationship um with the brand, right? Because we can't just act as an agency. We have to understand how the brand owner or the person that we're working with thinks and understand the brand because They've had however long the brand's been around. Four years to understand what the heck they're doing. We have a very short window. So I lean heavily on meeting with these brands every week. It sounds kind of wild. Um, but it's just 45 minutes. Let's sync. Let's go over everything that we're working on. I want to hear stuff from you guys. Um, that way we can mold and model and understand. what this brand is. Um, because the more that you're kind of in tune and and back to the Living Good Daily Days, I found the more that I could just understand the way Dr. Living Good thought Because he was an influencer, the better the marketing was that we were able to turn out because I would read the same books as him. I would go spend two hours, we'd talk about you know, XYZ happening in the health space and just understand that it makes the marketing so much better. So like from a frequency um perspective, we're meeting with them once a week, 45 minutes at a minimum. Um communication on an ongoing basis, we use Slack. We set up an internal and an external Slack channel. So if there's things that we need to tool internally. We can tool them internally and then we have an external Slack channel that specifically has them, the the brand owners or the um directors in that channel. That way we can ask questions, go back and forth, anything immediate that we need to do.
Kurt Elster
And how do you find Slack for this? You know, I I use Slack for this with our retainer clients and Man, just try to keep like that slack sidebar organized could be a pain. Or, you know, not every brand it necessarily wants to engage in Slack. Some people, it's like that's clearly how they operate already. And so you see it works very well. And then others, you know, you just have kind of a silent Slack channel.
Devyn Merklin
Yeah. Yeah. So there is there's an area, and I'm very I'm very aware of this is where slack can be a little bit too much. All the pings and dings, it won't really allow you to focus. The brand might be They might be hyper users and they might be asking you a lot of questions. Um, and it's important to kind of set those boundaries at the at the forefront of like what you can and can't do and just be very transparent. It's like we're a business as well. Um trying to answer every question every minute is not scalable. It's it's not fair to you, and it's also not fair to the other brands that we work with But the way we kind of section them out is on that Slack toolbar. You can, I don't know if a lot of people know this, but it's a great way for us to get organized, but you can create groups. And I might be saying something and everybody's like, oh yeah, duh, you can create groups.
Kurt Elster
But they really help me. I noticed this for the first time this year.
Devyn Merklin
Okay. Good, good. Well, you can create groups and then we can stack like all of the specific um channels for that brand in that group. So the way I explained it before is like we have an internal and we have an external, right? Well, for some brands, if like um we will work with some agencies will end up replacing just because they're bad and we'll say XYZ needs to be on this account. But we honestly look at things from we don't want to replace the things that are working well. So we're both familiar with smart marketer. We work really close with them, XSkill does. And so we work with them on one brand where they do the advertising and the email. And so we um put their Slack channel. the external Slack channel and our internal Slack channel all into that one group. That way we know for this brand, this is all the channels related to this brand. And then we have them all kind of sectioned out. So it might be advertising agency. slash this brand. It might be email agency slash this brand. So we can really talk to them individually, but then talk to them all together if there's like a big promotion that revol or involves all hands or something along those lines.
Kurt Elster
And so essentially like the in addition to what essentially is like a a f for lack of a better term, like a funnel hacking role, then this fractional CMO role, this is what really ca interests me. Man, could you is it possible to have you set our expectations around you know what one of these monthly retainer engagement looks like?
Devyn Merklin
Yeah. Yeah. So it's really dependent on the brand and what they need. So there no, I mentioned to you before, like it took you X amount of time to understand your own brand. And so you're relying on a Fractional see them or fractional anybody in agency, it doesn't matter. You're relying on them to understand your brand and execute effectively. Fra Before we ever engage in a brand, and it's a must, and it's it honestly comes off as really annoying to brands. Um I'll be very transparent about that, but there's a there's a reason for it. Is is it's just that you spend four years understanding your brand, knowing exactly what to do. When you hire an agency, they usually start to jump in right away or they do an audit or whatever it might be. That audit might take a week. Um and then they jump in and start pulling levers. We do not do that. We require 30 days not to do an audit. We have audit components, but to understand what's currently happening, understand what could happen, and strategize. What does the next three months, six months, one year actually look like? And then we meet and get that buy-in. This is what we're thinking based on our analysis. Do you guys agree with this? No, let's make some changes real time together and understand what that looks like. Then we start formulating that strategy and then at the end of that 30-ish day mark, then we're ready to start making some execution. But during that time period, we're assessing and we're analyzing. So Like I mentioned, like it's not just cut and dry because as we're going through that assessment, we might say, hey, agency A is crushing it. We don't think we can do a better job than them. Keep them. Agency B over here, I don't know why you're paying them this. I think, you know, we can take this on or maybe this agency over here might be better. Plug them in. And you'll have a lot better results. That way it takes the bias out of it. And we're just really focused on results because we want the brand to grow. And then we start working into like a monthly retainer. But we're really focused on growth. So we want to see the outcome. So it really we can shrink contracts down to three months and be able to spread across multiple areas of the business through advertising, through email, so on and so forth. Does that kind of answer? Like it's a different kind of approach. It's like an unbiased, holistic approach of looking at somebody's business.
Kurt Elster
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Devyn Merklin
It really depends on the brand. So that's why it gets so tricky to talk about this stuff. And that's why I mentioned it it does come off as annoying to brands because we're just trying to understand before we pull the trigger, right? Um, I I just did a live earlier today where I talked about this like baking the cupcake before you bake the full cake, or I think like uh Seth Godin it might have been a Seth Godin analogy where Um in one of his books, he's talking about shooting bullets off the bow of a ship to hit the other ship before you shoot the gigantic cannonball because you're trying to align things. But for um What some brands, their weak spot might be their top of funnel. And we might identify this because they are crushing it. They're spending a lot of advertising dollars, but they're They have a really good product, but they're sending everybody to the homepage of their Shopify store and they're like, how the heck do we scale this every time we spend a little bit more? Um, you know, ROAF doesn't keep up and we look at that as, oh, okay, we need to figure out what the offer is. We can't just send everybody to the homepage of a store. That doesn't really work. Um you might have a really good product and you're crushing it, but at scale, that's that's hard to scale. So we might have to look at their business and say You know what? You guys are doing well on advertising. You've got a good backend setup. You've got all of your ongoing communications flows. You're doing promotions. That's great. But I think the biggest area of focus that's going to give you guys the most value is that we figure out this offer. What is what are you actually driving people towards and how does that relate to your customer journey down the road? But other brands, they crush it. They might have like the perfect setup from what we see and they're able to scale up, scale down, but their problem is like retaining customers and getting them to come back and purchase and trying to maximize that LTV and that AOV. And that's when we start implementing like our promotional playbook, um, kind of like the flows that we had build in if email is necessary, if they're weak there. But that would kind of force us to look at the back or the bottom of funnel or the middle funnel, bottom of funnel area. So it's really dependent on the brand and kind of their weak spots versus their strength spots.
Kurt Elster
So where do you in that process where are you starting? Where are you looking first?
Devyn Merklin
We usually start top of funnel. So we want to look at how you're essentially going to market, how you're displaying yourself. And we want to go down the same process that a customer goes down. The only difference is from us versus the customer, we kind of know Based on experience, you can only know so much, but we kind of know like why or why you may be doing something the way you're doing it as we go through that journey. So we'll go from add to landing page to checkout to maybe you have some upsells built in to what is your abandoned cart flow, what is your post-purchase flow. We're just looking at absolutely everything a customer would see, but with a fine-toothed comb so we can analyze it uh um along the way.
Kurt Elster
Are there KPIs that we love? Are there do we have a a North Star metric?
Devyn Merklin
Yeah, so really when we look at it, it's once again, it sounds annoying, but every brand is different. There isn't like a a strong like This needs to be your new customer cost per acquisition. This needs to be your AOV. This needs to be your ROAS. This needs to be your LTV. We're just kind of looking at it in the relation to the brand. So, you know, some brands will operate top of funnel at a loss because they crush it with their LTV. They know that they can get a customer in for X amount and then that they're gonna be worth Three times that, four times that, 60 days later. Right. That's a different model versus somebody that's, you know, they're they're trying to get that customer break-even on day one because they can't afford that 60-day window. Or versus somebody that needs to be profitable on day one and have like a two X ROAS or three X ROAS um right out of the gates, right? So the the metrics that we really look at are how much are you acquiring customers for and how much they are worth 30, 60, 90 days later. If we can just look at those two for a second, we can understand. generally like an easy way to understand like the health of the entire brand and where to kind of put our focus if they're LTV compared like their 90-day LTV compared to their AOV, there's not much variation in it. Okay, that means we need to strengthen that thing because we need customers coming back. in purchasing. But if they have a really strong LTV at the end of the day compared to their AOV, we know that they kind of crush it on the back end. So we need to start looking at, all right, how do we acquire new customers? um on the front end to keep that machine going. So those kind of two areas gives us a good general understanding of like where to look, but it it gets a lot more nuanced as you start to dive into it.
Kurt Elster
Yeah. Well, so all right, we're looking we're starting with customer acquisition cost. You know, how what am I paying an ad cost to get a person to buy, typically? And then all right, if I know that, then we're looking at Not uh media efficiency ratio, not MERS. We're going more granular and we're gonna look at uh customer lifetime value and then you know breaking it 30, 60, 90 days and trying to determine Really, do we focus on acquiring new customers or do we focus on increasing return customer uh purchase frequency? Mm-hmm.
Devyn Merklin
Exactly.
Kurt Elster
Top or bottom of funnel.
Devyn Merklin
Yeah, exactly. Exactly. And then you start diving into it. And it's funny because you'll start diving into you might think you know something and Um, you start diving into, let's say, that cost per acquisition, for example, it might look good from you know top level, but then you start digging into their cost of goods sold and maybe they're not using Shopify and their processing fees are through the roof and um It you start pulling all those different numbers together and really get a better picture of how it's performing rather than just looking at the top level.
Kurt Elster
I want to know. Alright, I like that. We're getting into strategy. What are what are some of Devin's other favorite tactics and strategies?
Devyn Merklin
I just talked about this one on a live and you might like this because it's automotive. Um and I want I want more people to do this, not in like a gimmicky way. It just works really well. Um, everybody's familiar with giveaways. If you look at these giveaway like sweep state companies, like um specifically in automotive, if you if you just typed in 8080. on Google, you'll see 50 other ones that look exactly like them. There's Tuner Colts, there's 060. Life, there's there's so many other ones Um, and that's its own business model. And what they do is it's a sweepstakes and they say, I'm gonna give away this car. And every dollar you spend is equal to an entry into the giveaway. And they do bonus periods like 50x where it's $1 equals 50 entries into the giveaway or whatever.
Kurt Elster
It's very we used to run these on Hoonigan all the time. Yeah, they I mean you're not giving away a car unless you know it is going to be worth your while.
Devyn Merklin
Exactly. Exactly. And I I saw that and I was like, dang, how are they doing this? So I kind of like ripped it apart. And um The the problem with doing that as a business model is that you live and die based on what you're giving away. and the time frame because as soon as that giveaway ends sales will go to the floor because people are they're gambling that's what it is But what I wanted to do, it it is, yeah. You even have the if you scroll to that into the bottom of those pages, there's like the giveaway rules and all that kind of stuff. Um it gets it gets a little It's not a game I ever want to play again. I got caught in it and I'm like, how the heck do I get out of this and I got out of it really quick? But um if you take that model and you have that gambling kind of effect to it without making it gimmicky, like for your brand, like If you're a supplement company, don't give away a car. People that are going to purchase from you are only interested in their car. They're not interested in the supplements. But we did this with Living and Daily after I gave it a test in automotive. um for my brand Karma Speed, it worked really well. And then the very next month I'm like, DLG. There's a um short form for Dr. Living, but DLG, we gotta do this. This is this is gonna work really well. So the very next month we we did it, but we tr uh twisted it a little bit. So We're supposed to brand. We're not gonna go give away a car or big cash prizes. That's that's the gambling effect that we don't want. Instead, let's use that same model, but give away our product. so that we know that the person that's signing up or purchasing for that giveaway is actually interested in a product. That way we know after this giveaway is over, there's still an opportunity to sell that person that product. And a lot of brands will do the free like sign up to win XYZ. We did the free sign up because legally you have to have a free way of entry. But we also did that purchase element. So when you bought more, you got more entries into the giveaway. And we had the incentive that if you won, We'll refund your entire order and give you the prize on top of it. So it was like a nice like risk reward type thing. But we were a health brand. We weren't a gambling car giveaway brand. So usually at the end of those things we picked like Oh no, six, seven, ten winners rather than just one. So it's a really fun strategy, especially if you can get away from the the gimmicky. car, cash, all that kind of stuff.
Kurt Elster
They've run a whole bunch of these. And it's like number one, y you want to really be dialed in on the legality of it. You know, you want to make sure you have the rules right, you know, and you you do things by the book. And so in that instance, you know Neither of us are lawyers, so take my advice with a grain of salt. Yeah, as far as like the actual implementation in the store, uh we would do it as theme customizations. It could work that way. Uh or we would, you know, to show like, you know, this purchase is worth X raffle entries. And or you know, there's there's services like shared sweeps where they'll run the whole thing for you, or uh apps like Viral Sweep that you know, Viral Sweep used to sponsor the show, who you know, those you can have it um That like it it supports this style raffle in a Shopify store and like you give it the rules and the timeframes and the multiplier entries. Um They're kinda they were fun to run, yeah. I I enjoyed it, especially like, you know, all the once you get into all the details and then just the you know, the the fun of it of being like, all right, today's a multiplier day, you know, if one dollar was one ticket Today, one dollar is three tickets. And then like sales would explode, you know. Because people, you're you're giving them an excuse to make the purchase and you're giving them an excuse to spend more. You know, I might win this thing that I want. But, you know, every time we saw them it was cars, which of course it's like that's to most people that sounds crazy. Um but I've seen it done with game consoles I've seen it, and I think realistically, like if you could do it with your own product is probably ideal. Like a tactical baby gear. There's a um a Veer Cruiser giveaway right now. That uh that seems pretty good. Um, I like those giveaways. But then you're right, you're kind of trapped. Like you're like, all right, we saw like sales really, you know, peak when we run the multiplier days. But then when we don't, you know, now what? Like you're still you're stu it's a variation of the discount trap, right? Where people wait for the sale. Well, they're waiting for the giveaway, they're waiting for the multiplier day. But like, man, I could see those things they're addictive.
Devyn Merklin
Yeah, yeah, and there's one brand that we're doing, we're doing a giveaway right now, but it's um it's an automotive brand and it's on uh parts. And um it the funny thing is Um we we talked about it, we chatted about it, and then um the owner just went ahead and did it and it worked really well. And I'm like, oh man, that has to be part of the model. And what it was was we were signing people up. to through like digital entries, so we gave them like a digital wallpaper essentially. Um for their chance to win XYZ part And if you have a sales team, I definitely recommend doing this. But because they knew exactly what part they were signing up for, like registering to win. The uh team knew that they had interest in that part. So what they would do is as soon as they registered, like a day later, they would call all those people. that bought that uh wallpaper and just say, hey, there's um, you know, one in X chances of you winning. Um and, you know, what we can do is like we can give you a 15% off discount right now on this part. And you know, if you end up winning, we'll refund your order and give you the part for free. And so it it allows you, because you're you're getting those those people that are actually interested in your product. You know they have interest. And if you have a sales team, you can act on it immediately. If not, just put them into an email flow after somebody wins just hit those people with a discount or whatever it might be, but you're just getting everybody to raise their hand and say, oh, I want that part or I want that product, whatever it might be.
Kurt Elster
I love this strategy. I do. And it's like it's just it it's work, but it's not that tough to implement. It's not insurmountable. You know, there's tools out there, there's resources, there's services. I like it. Um, because I've seen it. I know this stuff works. Give me some of uh give me some of your favorite tools. What's like your your favorite tech stack look like at the moment?
Devyn Merklin
Yeah, favorite text? Obviously Shopify. Shopify is obviously number one. I don't think you'll ever be able to beat it. Um and then there's uh loop subscriptions. There we go. Loop subscriptions, that really good.
Kurt Elster
Yeah, we've used that.
Devyn Merklin
We we we started and I'm a little biased, but also not. I haven't been able to find something that works better just yet. And when I do, um, I will go chat the owner. uh Piush is this name of loop subscriptions and say gotta step it up but um they've been doing a lot of cool stuff with like um looking at kind of like cohort data, upsells through subscriptions, gamified subscriptions that I don't really see other kind of subscription apps doing. And we've been testing a lot of the stuff through our little e-commerce brand that we purchased back in February and drastically increased MRR. Like we were doing like six thousand dollars a month MRR. And within 30, 45-ish days, we got up to about 22,000 MRR by just adding a little bit of gamification.
Kurt Elster
Devin, tell me your secrets. How do I optimize subscriptions?
Devyn Merklin
Well, that's a that's a loaded question. Really, I think that if I had to generalize it without spending an hour talking about subscriptions, um, it's really just understanding where people are falling off and why. Okay. Um everything that we do in e-commerce is a is a relationship. And especially in supplements, like people are purchasing your your supplement because they think it's going to work for them, right? Oftentimes I think it's a silver bullet. I think we talked about this last time of like why supplements kind of work. And you have to get through to them and let them know that this is not a silver bullet. So I'm speaking specifically to supplement brands right now, but take it for any other brand. For subscriptions, you have to get through to them and help them understand that this is a journey. You can't take this product and then go eat McDonald's and then expect this product to work, right? So you have to be nurturing them along that journey. No supplement is ever going to fix that. So just having that communication in a gamified format. So like um gamified format meaning like on their third uh subscription order, maybe you're giving them a discount incentive or maybe um to go back to what I was saying. Maybe it's a PDF guide or a workout plan or whatever it might be helping them stay along that journey. But that's for optimizing subscriptions, that's a loaded question.
Kurt Elster
Yeah, that would yeah, that's specific to supplements, but I like that idea. You know, late because I I've been looking at this for a couple brands and in in most of these subscription apps, you should be able to see, hey, this is the the month, this is you know the point in the subscription where they're like most likely to churn out. And just on average, that's typically that's gonna be month four. And so month three, you know, before that next charge shows up, you better do something. You know, one I really like, like free gift with purchase. I just I love the novelty, the mystery of it, you know, the the utility of a FGWP promo. And so you go like month three, you're like, hey, you know, thanks so much for being a subscriber. Just wanted to let you know you're gonna get a free gift in your fourth month. We don't tell 'em what it is. So now we've stopped them for potentially canceling in the fourth month because there's this value add where we knew they would possibly drop out. Ah And then, you know, they get their their mug or whatever it was uh as their free gift on month four. And then, okay, now we have we've gotten past that that area of churn. But now we know like, oh, well month eight is now where they churn most often. Okay, same deal. Can we come up with some value there? So I think that process is like Can you identify where they're churning? Can you identify why? And you know what what can you do to overcome it. And in your case it was like, well, it it's just training and education, which that's clever. But like also PDF, you know, there is there is perceived value in those digital downloads. Yeah.
Devyn Merklin
And then along that journey, like upselling them as well. Yeah. Oh yeah. They're they're good in in um if you uh if you're if you're sneaky with them, adding all your little hyperlinks in those PDFs, like if you do recipes, for example. We did this a lot with Living It Daily for uh like dessert recipes. We'd always use like the collagen product in like the dessert recipe that we're giving out and then you've linked to that product as well because When they get that PEF, maybe they're low on the product or maybe they're using somebody else's college and the recipe doesn't taste the same. Oh well, let me just click here and go purchase the product. So those are really good. And then um Another thing is that I don't see this commonly in subscription apps. Like there isn't a focus on this, but upselling those customers once you have them in subscription, because that's always a challenge, right? When you're acquiring a customer. And they choose subscription. And I think a lot of people notice that the next best upsell is more of what they just purchased. But if they bought a subscription and you upsell them to more of what they just purchased, what are the chances of them going and just canceling their subscription because they just got a whole bunch? Pretty high.
Kurt Elster
Yeah.
Devyn Merklin
So it's hard to get that upsell flow right. So if you're focused on just driving new subscribers, um as many as possible, it's hard to get that funnel dialed in. and upsell them properly. So having that built into their journey as a subscriber, not immediately, but um through um like we would send out an email uh for our subscribers that has a little link that we're able to do this within loop they can just click that link and then add XYZ product to their next subscription order So that way when their next subscription order goes out, they add this product to it, it tax on to their bill or whatever it might be in the background. um and then ships with that that product right that way you don't have to ruin that immediate customer journey and like overload them with supply no but you can add it throughout that journey as they go
Kurt Elster
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Devyn Merklin
Honestly, probably their landing page slash product page. A lot of e-commerce brands they start with ads going to their product naturally, right? Like I have this product, it's amazing, it does great things. I want to go sell it. I'm gonna go run ads to it. And they just get in that motion of like that's how it works. And they don't think about the entire like customer journey of the people that weren't willing to convert on that product page. You will get people to convert there. It might do really well, but that what we get tripped up on is understanding that there's a percentage of people, a large percentage of people that did not purchase on that product page. Why? They were interested in your ad. You had their they raised their hand. You had their buy-in. Why didn't they purchase here? And for those people, what we often tend not to do, and it's a hard sell because this is working. You know, this is working well. I see dollars come from this. Taking that person and educating them, taking more time with that person. It's like um It's like a like a toddler, right? You gotta like guide them along the journey. You gotta give them information and teachings and all this kind of stuff before they're ready to convert on that product page. So it's taking a step back from that. And understanding all those people that didn't convert, what's their journey to get them to convert? And that's that is the hardest thing because you see dollars coming from this and it's dopamine. It's like, oh, let's scale. But you're missing out on so much more opportunity. And I guarantee you, if if somebody on this does this takes time to do this, those people that you spend time on teaching them, giving them information, educating them, building trust with them. their lifetime value as a customer will be so much more than that person that converted on just that product page.
Kurt Elster
You know what I really appreciate about your approach is the implied empathy, right? It's always like understanding, you know, meeting them where they are. predicting, you know, what what the issue, future issues will be and trying to circumvent them. All of it comes from some level of emotional intelligence about what the the customer's relationship with you know a website is. It's an easy thing to trivialize and dismiss. And yeah, you're getting into it in a way that really like leverages uh consumer psychology. And so I I appreciate the approach. I think it's it's thoughtful. I think it's smart. Let's do let's do some more quick ones, some more lightning round questions. How important is pretty? You know, do I do I have to have an amazing, you know, it's gonna win design awards website?
Devyn Merklin
No. Um why not? I I I bucket this into a want, right? Um and and a want can also be a need, but When it depends on where you're at as maybe an owner, a founder, business owner, whatever whatever it might be, um, and what you're expecting out of that business. If you If you're expecting the elevated branding, like you're just getting started, the elevated branding, I'm gonna go drop $20,000 on this designer. We're gonna have. you know, the designer of Valenciaga, I don't know, designed my logo, it's gonna be crazy. And we're gonna sell. That's a pipe dream. It doesn't it doesn't work that way. Um Going back to the empathy thing, I think as marketers, we talk a lot about like the numbers and all that kind of stuff. Um that that for or doing what I just described. is the opposite. That's the empathy play. Like you gotta build that in at some point, that branding piece. But right now, if you're just trying to get this business off the ground, you need to figure out what works. And so oftentimes what works is ugly. Um there's been funnels and pages and stuff that we've built in the past that They're ugly, but they just work. They just get the right customer. They just drive the AOV that we need to get us the cost per acquisition that we need. Later then comes the branding piece, right? So that branding piece is I often I say it's a want because I don't think anybody wants to put anything out in the world that's ugly, right? You know, like an ugly landing page, ugly logo. Like I think everybody looks at this stuff and says, I want this to be so much more. And that's the key word is like I want this. But from a business perspective, we have to get really logical sometimes. And that's the the weird game that we play as I think as marketers is that, you know, there's a logical element. But then there's like the like you described as like the empathetical element to it. And that's where that kinda comes in. It's like once you've got the legs to this thing Now go make it pretty. That's the want. That's when it's actually worth making it pretty because now you're not just doing something from the start to make it look good. Now you've got data. You know people like your product. You know the process. And now make that process and everything so much better. So how important is pretty, I think, is kind of subjective But I would say just focus on getting that that structure, that process first, and then make it a want to make it so much better.
Kurt Elster
Yeah. Yeah, absolutely. I mean it I I figured that would be the answer, but an excellent answer. You have to have you have to have that positioning, messaging, selling proposition. You have to have a funnel that works. Like figure that out first. And then go, all right, now that we know what works, we can apply that content and positioning and funnel to a better or we can apply better branding to what we know works. You know, and really like I We have known for a long time design should follow content. Like content should lead, and then design serves the content. You know, design is the picture frame. Okay, but what's the photo in the frame? And I think that's a an important lesson because it it's seductive. It is easier to, you know, mess around and and pick colors and logos. But that stuff like You know, logo, a brand guide, those things without the story to empower them, you know, they're they're just a a thing. They don't have They don't express a lot. They don't mean a lot, you know, to anyone outside of the brand owner who who had to work on it.
Devyn Merklin
Um what uh Are you Are you familiar with um peri culture?
Kurt Elster
Yes
Devyn Merklin
And the belter orange?
Kurt Elster
No, that I don't know about.
Devyn Merklin
It's like that it's that Amazon orange like button, like add to cart button. And that that's the funniest thing is um I remember a discussion a long time ago because we were testing different colors of buttons. We're like, okay, let's do like green and let's do pink and let's do black and let's do Beltro orange, but Beltra Orange is so ugly it doesn't matter branding. And we tested them all and true to form. That Beltra Orange crushed it, but it looks so ugly on the page.
Kurt Elster
Works because it's ugly. It stood out.
Devyn Merklin
Yeah. Exactly. It just works.
Kurt Elster
So what's the what's the big common mistake you see seven figure brands making?
Devyn Merklin
Big common mistake. I think honestly, it's not paying attention to that lifetime value metric. Okay. Um, and let me explain this because a lot of the discussions I've had probably over the last, well, let's say six months since opening the doors up for services again is my cost per acquisitions are so high, how do I lower these? And that's the wrong question. Because I I I get it. There's some scenarios where people like the cost per acquisition is like out the window. It just should not be that. Like, yeah, we gotta lower that. But um For most brands, they have a really solid cost per acquisition. And I'm looking at them and I'm like, why are you trying to lower this? This is actually solid. And the the problem is is is because Costs per acquisitions on any platform are always gonna go up. The barrier of entry into our world, into e-commerce is going down. It's so easy to start an e-commerce brand. Um, let alone a supplement brand or t-shirt company.
Kurt Elster
Like the the barriers entries. I have a t-shirt brand going by the end of the day.
Devyn Merklin
Exactly. It's so easy to get in. So it drives the cost to get customers so much higher. There's more competition in the marketplace. So naturally we have to think, okay, cost per acquisitions are never going to be the way they were back in like 2015 or something like that. They're only gonna go up on every platform. If it's a new platform, they might be low now, but I guarantee you three months, a year, they're gonna go up. And so you're asking the wrong question. It's not how do I lower my cost per acquisition, but you should probably be asking that. And I think this comes from Russell Brunson or uh who's his mentor, Dan Kennedy, you should be thinking about how can I spend more to acquire a customer? Um, because if you look at it that way, All the big brands, they're able to outbid you because they know their numbers. They know that lifetime value metric.
Kurt Elster
And they understand margin contribution.
Devyn Merklin
Exactly. And they say, hey, you know, our product costs or the price of it's 40 bucks. We can spend $100 to acquire this customer because we know XYZ But seven-figure brands are so worried about it's so expensive to acquire this customer. But you need to be figuring out how much that customer is worth to you, 30, 60, 90 a year from now. That way you can go play with the big dogs and outbid all of your competition. You should be focusing on how do I optimize every piece checkout past. and maximizing every cent, every dollar that comes out of that thing so that you can go spend more. Because it's only going to go up. It's just going to get harder and harder and harder. Stop trying to race to the bottom for cost acquisitions. Instead of figure out how you can spend more so you can outbid everybody on meta or TikTok or whatever it might be.
Kurt Elster
I counterintuitive advice and I l I love it. That's clever. Okay. That is a great spot to leave this. Let let's end it there. Devin Merklin, where can I find out more about you?
Devyn Merklin
You guys can go to thexscale. com and we we're doing this really cool thing. I'm not telling anybody sign up for your services or our services. It's it's Totally up to you. We want your brand to grow and if you're growing, you're growing. But we created a free mastermind in s in the platform school. And I'm having the absolute most fun just chatting with other like business owners from six figures to seven figures. There's a couple eight-figure brands in there. We're going live in there every week. My team is in there interacting and we're just chatting about things that's working. Um uh we we we're both familiar with Ezra and this resonated with me when I first When when I first heard about him and his motto was serve the world unselfishly and profit. Jack nasty. I was like that that really stick sticks with me because that's who I am as a person. Like I love marketing, I love the tactics and the logical stuff, but I also love helping people. And it it's super cool to see people jump in there. We're sharing strategies, we're sharing tactics, they're getting results, and it's just it's on it, it does a lot, a lot of good for the soul. So I think there's a little link at the very top of our website that you can click and and jump in. Um we're having a lot of fun in there.
Kurt Elster
That's good. Yeah. I I enjoy the cu the online communities. You know, I'm like permanently online. Um, but if if you have not tried one of these like async online communities For sure, give it a shot. You know, you you could get a lot of inspiration from it, make um connections with it, you know. And it doesn't have to be this one, but you know, pick one and try it. Uh Devin, are you going uh to Smart Marketer Live in Colorado this year?
Devyn Merklin
I'll be there. I'll be hosting some roundtables.
Kurt Elster
Oh, very exciting. I I'm going as well. Uh, and I I look forward to it. I had I had fun at the last one. You know, it's easy, low-key conference. Um, you know, I I like the small ones. That's this one is is become one of my my favorites. They know how to put on a good show. So, yeah.
Devyn Merklin
Um I'm not sure not too sure, but if it's anything like last year, it was it was fun. Good amount of people there and good people there. Um Separate to other conferences I've been to. Everybody there was very wholesome. Very wholesome.
Kurt Elster
Yes. Yeah, the vibe changes. It is It's like positive, it's friendly, it's collaborative. You know, that's just kind of the tone they sent. But yeah, okay, fabulous. Man, Devin, uh, always good talking to you.
Devyn Merklin
You as well, Kurt. I appreciate the time.
Kurt Elster
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