Phil: 

[00:00:00] We use a study like we, we spoke about social proof earlier, which is this idea that people are more likely to pick the most popular option. So there was a wonderful study cited in Nancy Hart's book using Behavioral Science in Marketing, which tweaked the design of a menu at a restaurant in the States.

One of the menu listed the specials as specials. It just called them specials and then talked about the baked ricotta. Whatever else it would be. And then in another menu. So this was on a different day with a different population of people. They would change the title of the specials and call it our most popular specials, which was true, but they, they were the most popular specials at that time because they were specials.

'cause they were specialists and people picked them and there weren't any others, so they were the most popular. And so in a randomized control trial, what you do is you show those two variants. So the control which says specials, and the variant, which says most popular to different groups of people a number of times in order to figure out how the behavior changes and what they found in that example.

Was that [00:01:00] people were far more likely to pick the specials if they were listed as most popular specials rather than if they were listed as specials. They also found, interestingly, that individuals ended up spending more when it was listed as most popular, so individuals would buy a main meal and then a special to share because they were fr by deciding idea of getting a most popular dish.

But you can only do that if you compare the variant, which was the most popular version with the control, which was the standard version. And you're comparing the difference in behavior between the populations. And what you're looking for is these overarching heuristics, these overarching biases that affect the entire population to some degree, rather than something that might affect your husband, for example.

'cause he has a different level of language than you. So all the things I'm talking about here have been proven, or at least attempted to be proven. In these sort of wide. Nationally representative sample sizes in these randomized controlled trials, which means for your listeners, retailers, this stuff should be effective if you apply to your business [00:02:00] because it should work on the majority of people.

At least that's what's been proven in in some of these studies. I love that. And I've just written some notes down and we'll come back to those 'cause I have so many questions. I love. Psychology. I've not studied it. I've studied it as a human and I am deeply interested in it, and I always am looking at why do we do the things we do.

So thank you so much for sharing this. But I have a question around, you talked about reciprocity and you know, the herd mentality and, and feeling like we're obligated. Does what we value or does the value that we put on something during the holiday season change? So, for example, I might look at a sweater and any other time of the year, I'm like, yeah, whatevs.

But then when Christmas comes, all of a sudden it changes. And it might be because it is a gift. It might be because I'm going to, I'm gonna go to several parties and I know I'm gonna need a [00:03:00] sweater for all of those, and I can see that it would work for all of those things. Or is it because I want somebody to.

I think that I'm a big spender, or I think that I'm a great gift giver. Like how does, how does what we value and what we're prepared to spend change during the holiday season? Hmm. There's some really interesting studies about this. Danny Zane, who's a professor who, who, who came on the Nudge podcast a few times, he's, he conducted some really interesting study last year, which looked at how.

Customers react differently during these sort of national event days. So he didn't specifically look at Christmas because it's almost, it's too commonplace. He looked at events that are a bit small, sort of national soup day or international spelling B day or something like that. And what he did is in his randomized control trials, he would show participants offers that the company was sharing, say 50% off our latest artwork.[00:04:00] 

And then people and he would send that email to a group of people and see how many people bought. And for another group of people he would link it to a national day. So I think in the example it was something like 30% off all of our artwork today 'cause it is international art day. And he found that when the deal was linked to a national Day of awareness, sales actually increased.

What was really interesting about this, and I think a very interesting application for, for the listeners. That these national Days of awareness don't even have to be official. Well, there was one, there was one company. He, he, he ran a lot of these studies. They have five different sort of experiments going at one.

They write them all up in a paper to sort of get some validity behind the results. And one of the companies, I think was a pet, pet grooming service. Um, and, and he was, he wanted to come up with a, a national day for pet. There's no international pet grooming day, unsurprisingly. But so what he did is he created.

The anniversary of the [00:05:00] birth of their mascot. Now that's a totally relevant day because they just created their mascot one day and it just happened to fall on that day. But then on the anniversary of that day, they sent their their customers an email and said, it's the anniversary of our mascot, Dewey the dog, whatever its name was, 'cause of this anniversary, we're giving you 30% off.

They sent that email to one group of customers, another email to another group of customers saying, we're giving you 30% off. Turns out when you link it again, even to a made up day, sorry. Anniversary of our mascot, people bought more because it was linked to the special day. So what Zane, what Danny Zane was finding from all of these studies is that we have this sort of ingrained bias for a willingness to purchase increasing during a day of national significance, even if that National Day of Significance is totally created out of thin air by the company.

So you can imagine how this scales up for something like Christmas. It's, it's even more impactful when it's a day of significance that. Absolutely. All of your friends follow that. Absolutely. Everyone in your family is gonna be engaged with you. Feel this deep [00:06:00] sense that you need to be part of it, essentially.

Natalie Santini:

That is very much along the same vein of as how I started out, believe it or not. So we, I used to sew reusable cloth nappies, modern cloth nappies, and when I opened the store, that's, we sold pre-made ones, but we also started selling the fabric because I wanted this really beautiful fabric. But I had to order a hundred meters of it from China.

Right? Yeah. And so you're like, but I only need two meters. What do I do with the other 80 meters? And so I started selling the rest of it on for like parenting and sewing forums. And so I would like crowd this like OG crowdsourcing. I'd just be like, you pay me and I'll do, I'll do the ordering and the importing just so I can have my two meters of fabric.

Oh, right. Yeah. Totally understand that. The digital patterns, did you go into this for it being to be your whole business, or was it just a little [00:07:00] thing on the side that you were doing for a bit of extra income? Yeah, I did it in the beginning on the side with the hopes that one day I could quit my nursing job.

I was a nurse, an rn, and I liked being a nurse. It's not that I didn't like it, but I thought, I really love being creative. And I, I like to share any knowledge that I learn and pick up with others. And I thought, oh, well this would be a good outlet. And I knew it would take a while. I just didn't know it would be years, you know, I figured, well, months it, it'll take off in months and I'll be able to quit my job.

And in hindsight, time does go so fast. So really it didn't take that long. It was four years, I think, or three years. Before I could quit my nursing job, but I'm so glad that I started before I knew everything, if you know what I mean. Oh, yes, yes. I have to [00:08:00] ask you, 'cause this is one of the questions I ask all of our clients when they come in, which is you came in with the, with the goal of quitting the nursing job.

And obviously you had some sales coming in. Did you ever reverse engineer? Okay, so I'm selling a pattern for $20. I'm making, you know, $80,000 a year, which means I'm gonna have to sell this number of patterns to be able to quit. Did you ever do that? So funny enough, I, after about a year I did that 'cause I thought, wait a second, why am I not making much money?

And then I went, oh, I have to sell a lot of patterns to make that kinda money. So yeah, it took me a little bit to catch on. Eventually got there and I thought, okay, I need more than patterns, obviously, which is interesting because patterns come with such a high margin, like once you make it. It's gravy after that, right?

Yeah, it should be. I don't know why a lot of, like, some people can get to a place where they're comfortable with [00:09:00] that amount of money coming in. 'cause most of it's profit on the PDF patterns. But for me, I never, I never kind of hid it big. I was never really in the in crowd, so to speak. I didn't know how to get there.

I'm not super great at networking because even though I'm emotionally intelligent and I can talk in a crowd and be comfortable, I'm an introvert at heart. So I always feel when I'm networking that I'm bothering people. It's such a. Problem. You know? So I didn't really know how to get to a, a platform where people could find me and know about me.

So it did take me a while to realize, oh, I just have to show up even if 10 people are on, let's say a live show, and I'm gonna answer questions. And if I don't know, I'll just say, I don't know, but I'll figure it out for you. And it, it sort of, it was in, instead of straight steps up, it was like, take some steps up and then drop.

Okay, let's start again. [00:10:00] Steps up and then another drop. And it's just, I just kept going. I didn't stop. Why? Why didn't you stop? Because so many people would get three to four years in. Yeah. And you can see things are getting better. You can see you are making more money, but you're still not at that point where you can quit the job.

Mm-hmm. I would love to know what got you to the point that allowed you to quit, but also what kept you going through all of that? I think I just have a really tenacious part of me in my character that just refuses and, and some of this, I'm gonna go back and tell you, in high school and college, I was in sports.

I was never the star athlete. Like, not even close, not, I mean. Maybe I was the last athlete crossing the finish line sometimes, and I think that taught me to not give up because only what [00:11:00] 10% of high school students are doing sports. And I thought, I wanna be out there doing it. I don't wanna be watching on the sidelines.

Sarah Williams:

400 people every single month were walking through my front door to pick up their subscription box and shocking while they were there. Like I couldn't have bought that much foot traffic if I was out on the street with a sandwich board. Like there it was. So it was like, it was like an after effect that I hadn't even planned on.

And so what I, I had to hire another person to work the register because we were so busy. On boxed pickup day. So it was like, okay, refresh all the displays and then I'm gonna send the email telling everybody it's time for their box to pick, pick up, you know, it's pickup day. And then we would get ready and the rush would kind of be so exciting.

And, and the thing is I thought, well, they're gonna have a box. They're not gonna wanna buy anything else. They won all the things. Oh, this is so cute. I hadn't seen this before. And so it really drove a lot of [00:12:00] traffic into my store as well. Plus, on top of that, let's not forget the fact that I'm guessing at this point.

Like all of your expenses were covered. Yes. 400 people at, we were at $40 to begin with, and the price just keeps going up. Like just the relief of knowing that like, I don't have to stress this, this is happening. 100 was my number, Salina, so I, my big goal was if I got a hundred subscribers, my rent and my utilities were paid for, for my building.

And so all, and then everybody that shopped in the store, that was just business, right? Like that, that's where I made my money. So this, to me, it was like my big goal was could I get a hundred subscribers by the end of the year? I didn't know in month three I'd have a hundred subscribers, and by the end of the year I'd have close to 400 subscribers.

And so now remember the story of me sitting at the embroidery machine in, now I'm sitting there for days on [00:13:00] end. Um, just monogramming and monogramming and monogramming and working all weekend, like I gotta go to the shop. I got like hundreds of things to monogram and so, you know, you buy more machines, so then you can run two monograms at once, and then you can run three monograms at once.

So it's just a process that you figure out along the way. So you said what you found was that people were coming into the store and just picking things up. At any point did you kind of go, huh, well, the box has. The pajamas and the ring, but maybe we could do like a nighttime cardi or, or the face scrubs, or did you, did you start?

Well, you were, I feel like you were probably savvy enough to work that out from the beginning, but as you're talking, I'm thinking, well, in my store I would have the extra extras. Yeah, we're gonna have the matching slippers and a matching robe, right? And, 'cause I'm designing the shirts, I may go to market and buy a line of cardigans.

Now I know what colors are coming. I'm gonna [00:14:00] put the ink in the shirts to match these cardigans. So now I have a $48 upsell on these 1500 people that have the same T-shirt, right? And so things started to really click for me and I was able to. Say, okay, 1500 people are gonna have this T-shirt. Let's go ahead and buy a hundred of these cardigans.

I'll make the shirt match. And then I'm just selling more, upselling more, upselling more. And so I got really good at that over the years and it worked really well. And what I found is that our subscribers are actually our number one customer in our shop, in our e-commerce shop. I no longer have a brick and mortar, but they're our best customers.

They're the ones that show up live. When I'm live selling. They're the ones buying all the extra things. They're, they're the ones buying gift boxes for people in their family at Christmas time, like they are our best customers. That is amazing. And if we can just circle back to right at the beginning I was saying that you now charge $74 a box.

You are only [00:15:00] paying $37 to get a customer, which in this world is amazing. But not only that, they're staying for 17.3 months and so I'm just gonna get out my calculator 'cause I can't air math either. There we go. That is $1,280 and 20 cents that you are getting from a customer when you pay $37 for them one time.

Yeah. I mean, a lot of businesses can't even keep a customer for that long, like. With constant refreshes. Yeah, let alone gar, almost guaranteed revenue. Guaranteed revenue and guaranteed sold inventory. Remember how we were guessing what we should buy in the beginning Now, because 80% of my revenue comes from these subscriptions, also 80% of my inventory is sold when I bought it.

So I never have to play the inventory guessing game too much. I buy [00:16:00] the 20% that I have to buy. I buy to match the subscription box so that I'm not too far off with whatever I've got. But you think about how. Long it takes to get a customer to come back 17 times. And you think about when we are talking about one time sales, like how many times you have to acquire them to come back, how many times you're paying for them to come back.

When that reoccurring revenue, you just pay for them one time. You love on them, you treat them well, you curate great boxes, and they're gonna keep paying you over and over and over like clockwork. And every month on the first. My bank account is full every single month. I don't have to worry about it. I don't have to wake up.

And, and what'd you, what'd you tell me last time we talked Sing for your supper? Is that what you call it? Probably, yes. Okay. Uh, I call it like, I used to have to wake up and pay the rent every day. Like I had to show up and sell every day. Yeah. To make sales in this way. No matter what's going [00:17:00] on in my life, I don't feel like showing up today.

I don't have to, I don't have to pay the rent every day. The rent's coming on the first and I've got the check for it and the everything else that I do is great. If I wanna go drop a new fall collection, great. I just added money to my revenue for the month, but I don't have to do anything 'cause everything is taken care of from that reoccurring revenue.

So that's a wrap. I'd love to hear what insight you've gotten from this episode and how you're going to put it into action. If you're a social kind of person, follow me at the Selena Knight and make sure to leave a comment and let me know. And if this episode made you think a little bit differently or gave you some inspiration, or perhaps gave you the kick that you needed to take action.

Then please take a couple of minutes to leave me a review on your platform of choice because the more reviews the show gets, the more independent retail and e-commerce stores just like yours, that we can [00:18:00] help to scale. And when that happens, it's a win for you, a win for your community, and a win for your customers.

I'll see you on the next episode.