NAME: Ep 379 Money Ecommerce Profits Retaining Customers, Outperforming Competitors, And Building Brand Loyalty (With Joshua Chin)_audio.mp3
DATE: 2023-04-14
DURATION: 2904
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SUMMARY:
Salena Knight is a retail growth strategist and multi award-winning store owner who has managed to succeed in vastly different businesses. She started off as a gardener and moved into working with trees and eventually project management and environmental work. She now provides businesses with the strategies, tools and insight they need to scale their stores. Salena talks about how Bonjouro works, which is an app that sends personalized messages to customers with an alert popping up when they make a purchase. The messages are pre-made templates that take just 30 seconds to record and send, which increases customer lifetime value and reduces the rate of returns. Salena then tells her story of how she ended up in the vastly different businesses she is in.

The speaker started a baby business in 2007 out of a gap in the market for eco-friendly products. She had to import everything from the US and started selling in parenting forums with PayPal invoices. She then built a website on the ecommerce platform Oscommerce and was making more money than she was in her government job. Struggling with her corporate role, she decided to take the plunge and focus on her side hustle.

The speaker was discussing their experience leaving a stable job to start their own business. They had negotiated a deal to protect a piece of land, but their boss denied the $1,000 cost. This pushed the speaker to make the decision to leave their job and start their own business. In 2008, the speaker opened their first store during the Global Financial Crisis. Despite not having much business knowledge, the speaker persevered and overcame the struggles of starting a business. With sheer will, determination, and enthusiasm, the speaker was able to grow their business.

The speaker began their story by recalling a turning point in their business journey when they opened the door to their store one Saturday morning and had a breakdown. They had worked hard to grow their business, but had no money and felt like they had done something wrong. In that moment, they decided to sell their apartment and invest the money in the business. From then onwards, they were more strategic in their decisions, focusing on areas of the business that could help them sell more product. They also realized they had been making frivolous investments such as buying expensive branding from an award-winning agency, which didn’t help them sell more product.
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TIMESTAMPS:

0:00:00 Exploring the Benefits of Personalized Customer Service with Salena Knight

0:02:51 Reflection on Starting a Baby Business: A Journey from 2007 to Present

0:04:28 Heading: Reflection on Leaving a Stable Job to Pursue Entrepreneurship

0:06:51 “The Turning Point: How a Breakdown Led to a Business Breakthrough”

0:11:08 “The Five Pillars of Retail Success: A Conversation with an Ecommerce Expert”

0:12:43 The Benefits of Knowing Your Margins and Overheads: A Story of Selling Reusable Nappies

0:16:18 “Investigating the Benefits of Increasing Prices to Increase Customer Perception of Quality”

0:19:53 “The Power of Personalized Outreach: A Case Study”

0:21:39 “Exploring AI-Powered Personalization for Outreach Emails”

0:25:40 Heading: Personalizing the Shopping Experience with AI Technology

0:27:14 Heading: Standing Out in the Marketplace: How to Increase Profitability and Profit Margins

0:29:00 Exploring the Five Pillars of Retail Success: Money, Sales, Customers, Inventory Management, and Staff KPIs

0:31:01 “Exploring Conversion Optimization Strategies for Increased Profitability”

0:38:32 Analysis of Average Order Value for Buy Now, Pay Later Services

0:40:40 Discussion on Buy Now, Pay Later Services and Their Benefits

0:42:29 Negotiating Financing Options for High-Value Packages

0:43:53 Negotiating Payment Processing Rates: A Conversation with John on His Eight-Figure Business

0:45:46 Heading: “Exploring In-App Advertising Strategies with Salena Knight”

0:00:00 Joshua Chin: So how does this work? Bonjouro? Are they personalizing the emails at all?

0:00:05 Salena Knight: You can create the template. But essentially what happens is and a little alert pops up when you download the app. An alert pops up that says Joshua just made a purchase or Joshua just purchased these shoes. And then you open it up and you just press the button, and it’s all very low fi. Record a video. Hey, Joshua. Blah, blah, blah. And you’ve pre made the template split, which might say something like, hey, name tag.

0:00:28 Salena Knight: Thanks so much for shopping with us. Here’s where your order is at. And then you just press go. But again, we’re talking 30 seconds. Even if you break this down in terms of dollars, the 30 seconds that that would take to do is increases the customer lifetime value so dramatically. And it also reduces the rate of returns. Hey there, and welcome to the Bringing business to retail podcast. If You’re Looking To Get More sales, more customers, master your marketing, and Ultimately Take Control of Your Retail or Ecommerce business, then You’re In The Right place.

0:01:12 Salena Knight: I’m Salena Knight, a retail growth strategist and multi award winning store owner whose superpower is uncovering exactly what your business requires to move to the next level. I’ll provide you with the strategies, the tools and the insight you need to scale your store. All you need to do is take action. Ready to get started.

0:01:41 Joshua Chin: What made you how do you end up in these different, vastly different businesses? Well, they’re they’re relatively related, but they seem to be, you know, a lot of work independently on its own. But you’ve managed to pull it off with pretty high commitment in your personal life alone. So tell us your story.

0:02:06 Salena Knight: Well, first of all, thank you so much for having me. It’s a funny story, actually. I was in my corporate life. And I say corporate in air quotes for those who aren’t watching. I was actually an arborist and a horticulturist, so I worked with trees, and I started off as a gardener, moved into working with trees, cutting down trees, and then from there ended up in project management and ended up working for the power line company, overseeing a lot of environmental things, but also the people who trimmed the trees around the power lines. And so the cons I didn’t really like kids, but somehow I ended up with a baby business.

0:02:51 Salena Knight: And it was just I think it’s like most retail and ecommerce store owners is they start a business because they found a gap in the market. And for me, this was back in 2007. There was no eco craze like there is back now. Like finding anything. Eco required a lot of hard work and usually importing it, generally from the USA. And so when I became pregnant I was trying to find these obviously very sustainable person trying to find these eco products and was having to import everything from the US.

0:03:22 Salena Knight: And realized it would be better off if I was buying in bulk. Started kind of a little side business while I was working for the government, actually, and got to the point where I was selling in parenting forums, because this was 2007. Like, ecommerce was still pretty new back then, selling so much in parenting forums that I ended up having to and I was just sending out PayPal invoices. It was just like, so basic.

0:03:49 Salena Knight: Ended up building a website on Oscommerce, which I think you have to have been around a while to know about. Oscommerce?

0:03:56 Joshua Chin: I’ve never heard of it.

0:03:58 Salena Knight: Yeah, well, go back 15 years and you’ll find Oscommerce as one of the first ecommerce platforms. Very, very quantum. And we were actually using that as our POS as well. So it was ridiculously difficult. And then it got to the point where I was making more money in my side hustle than I was working for the government. But I also really struggled with where I was in my corporate position and again corporate in air quotes because at that point I was in project management and in a leadership role.

0:04:28 Salena Knight: But I was very ancillary because trees are this very emotive thing. It’s like people love them or hate them. And I remember saying to my boss at one point, I’d negotiated this ridiculously, huge deal between all these stakeholders to keep a piece of land that was environmentally sensitive, and the cost to the government where I worked was $1,000. Like, I’d gotten everybody to put all this money in, and we’ve worked months to try and get this done.

0:04:59 Salena Knight: $1,000. We’re talking they have multimillion dollar budgets for everything. And I remember my boss saying, no. And I was like, no, hold on. I’ve got the media. I’ve got everyone involved. And he’s like, no, it’s not in our best interest. And I remember saying I still remember sitting down in front of him. He was a very large man who didn’t come to work very often and had no respect from the team. And I remember saying to him, I was so frustrated because clearly I’m a very passionate person.

0:05:30 Salena Knight: Like, why am I here then? And he said to me, well, you’re only here because the law says we have to have one of you.

0:05:39 Joshua Chin: No.

0:05:39 Salena Knight: Yeah, your face was my face, right? That was the WTF you just told me, I’m only here because I have to be here. And I think that was the beginning of the end, where because I was doing this stuff on the side, it got to the point where it was like, screw it. I can either go and work with babies, or I can work with grown men who are behaving like babies. And I know which one I prefer. That led me to leaving that very lovely, stable job that came with lots of benefits in a car and starting my own retail business, because I did have the ecommerce side running by now.

0:06:21 Salena Knight: Opened my first store in 2008, which of course, was Global Financial Crisis. Yeah, my business degree hadn’t taught me anything about global financial pandemics, so I didn’t know anything about that. My business degree didn’t really help me with a lot. I think it was just that sheer will, determination and enthusiasm. That store grew. I mean, it was crap at the beginning. I didn’t know anything about what I was doing and there was lots of struggles, but it did grow.

0:06:51 Salena Knight: And I think when I got to the point where one day you can look back in hindsight and always see these turning points and I remember it was a Saturday and I put the key in the lock and I turned it and I opened the door and there was this little corridor as you first walked into the store. It’s only about 2 meters long, maybe not even that. And you kind of walked in and turned around. And I remember opening up the door and taking two steps in and just looking at the walls and looking into the store and just going, what am I doing?

0:07:30 Salena Knight: This is not working. And literally collapsed on the floor in tears. Thankfully, it was only 08:00 a.m. Because I would go to work early and I don’t know what I used to do. I think I used to go there and just make myself a cup of tea and flick through input. Who knows? One of the stupid things I used to do was spend way too much time in my store that I should have been spending with my very young family.

0:07:54 Salena Knight: But I remember walking into the storeroom, tears streaming down my face, just sitting in the corner going, this was not what it was supposed to be like doing these things. Like everyone says, do what you love, but if you’re not making money and having it stable and can see your growth plan, then what the heck? And I made a decision in that moment, I remember I got up and I made myself a cup of tea and I got a chocolate biscuit out of the fridge. I was like, you can do this, girl. You can do this. And I rang my husband and said, I’m selling my house.

0:08:33 Salena Knight: I was very lucky. At the time, we were living in our own home. But before I’d met him, I had an apartment that I’d kept as an investment, right? And he went, what? And I went, I’m selling the apartment. I’m selling the place. He said why? And it was because at that point, I had realized I’d done what so many people do, which is I had grown broke. Like, the business was growing. I had no money. And it was that the thing that forced me onto the floor was, what the heck am I doing wrong? Like, the sales are coming in, we’ve got a great profit margin. We’ve got an amazing brand. I’m literally out there speaking on stages.

0:09:15 Salena Knight: Why do we have no money? I had been a director of a credit union at one point, so I knew like I understood money, but I didn’t understand why we didn’t have any. And so I said, I’ve worked out that I’ve gotten to the point where I need to have that cash injection in my business. And by then I’d been in business. I think it was maybe about three years. And so I couldn’t go to the bank to get money because on paper, we didn’t have profit. We had great turnover, but there was no cap because everything I was doing what everyone does. I reinvested it back into the business.

0:09:50 Joshua Chin: Yeah.

0:09:50 Salena Knight: And I was like, I need the money to be able to grow the business. And so I did. I sold my apartment and I invested a portion of that money into the business. But I was very strategic from that point on. And I think that is where that saying the breakdown to give you the breakthrough. Instead of just putting money in, I said, I’m going to put this much money in. And these are the areas of my business that I know needed help.

0:10:18 Salena Knight: I still remember doing stupid things. Like we were just talking earlier about buying frivolous things. I bought Frivolous Branding at a cost of $13,000 from this award winning agency. But that didn’t do anything for me. That did not help me sell any more product.

0:10:35 Joshua Chin: Right.

0:10:37 Salena Knight: But from there, looking back, I can see what I did was I started to focus on these different areas of my business. I now call them the five Pillars of retail success. Worked in Ecommerce as well. And what I would do is I would just focus on the one thing for 90 days. And there was no strategy involved. It was literally like just put the blinkers on. This is kind of working. Instead of getting distracted by the next amazing thing, let’s just see this thing through. See this thing through. See this thing through.

0:11:08 Salena Knight: And that was when we started to make more money. Yes, we needed the cash injection. But actually when I started focusing on just sales or just money, like understanding profit margins and negotiating deals with my suppliers to get those margins, to increase those margins, or when I was still buying from overseas, then I actually teamed up with another store who was my competition. But I teamed up with them to do an import because then we could share the cost of shipping. We could share the cost of import duties.

0:11:42 Salena Knight: We just kind of bundled it together because even though we were in competition, there were only a handful of people in the whole country who were selling these things. Fun fact that person is now a creative director in my business.

0:11:56 Joshua Chin: That’s awesome. Yeah.

0:11:57 Salena Knight: So we had always said after we met, we were like, we should have just gone into business together. We didn’t know each other at the time, and it was a supplier that put us in contact. Right. She is the creative person and I am the strategy person. And together we make a fabric team.

0:12:14 Joshua Chin: What product was that?

0:12:16 Salena Knight: The product we got from America. They were called planet wise Wet Bags. It’s been 15 years. I still use those bags. So they’re beautiful fabric on the outside, but they’re waterproof on the inside. So we sold them for because we had a baby store, we sold Reusable nappies, so they were great when you were out and about to put your dirty nappies in. But I now put my laptop in one when I travel to make sure that it’s now waterproof.

0:12:43 Salena Knight: We use them for swimmers, shampoo and conditioner. We could sell those things to anyone. And in fact, we tried to become the two of us tried to go into business to become the distributor in Australia because we were so passionate about it, but they just weren’t interested. But if I can kind of give you a segue from that product about how we’re changing topics here, I hope you can come with me on the job.

0:13:07 Joshua Chin: Go for it.

0:13:09 Salena Knight: Those bags used to and I don’t have the numbers if I’ve said this before and I say it’s slightly wrong, I don’t have the exact numbers in my head, but it was something along the lines of in America, the bags retailed for I think they were 24 99. And we used to only get a 30% discount. So realistically, with our exchange rate, we were actually paying about 24 99 for them, plus shipping, plus import tax.

0:13:32 Salena Knight: And I think we worked out they were something like other 27 or $29 landed to get them into our store. So we would sell them for 39 99, which is still not a great margin, but it was enough to make it worthwhile. And they were traffic generators. We had the largest range, both myself and my competitor, we would pick different ranges because different prints because obviously we had different target markets. Where we were she was in in Brisbane and I was in Sydney, right.

0:14:04 Salena Knight: But we had between us the the largest range. And we would also swap like if someone wanted something, we would just go, oh, have you got one of those? And and swap them over. But we had competitors selling the exact same product for 29 99 because they were seeing it like, okay, in America it’s 24 99. Our customers won’t pay much more, we’ll make it 29 99. And so I think we worked out that they were making around about a dollar and a dollar didn’t take out their overheads, that they had nothing.

0:14:39 Salena Knight: Like there’s $1 in revenue, so they’re.

0:14:41 Joshua Chin: Probably just losing money. Net.

0:14:43 Salena Knight: We worked out they were losing money. There was no possible way.

0:14:46 Joshua Chin: Right.

0:14:47 Salena Knight: But remember, we were selling them for $10 more and selling out.

0:14:54 Joshua Chin: Right. Interesting.

0:14:56 Salena Knight: I guess one of the things there’s kind of so many things wrapped up in this story, which is one, I don’t give a flying fig what your competitors are selling things for because if people come to you for the brand that you’ve created, you can charge anything you like.

0:15:13 Joshua Chin: This is really interesting. Okay, let’s unpack that a little bit.

0:15:17 Salena Knight: Because can we just say then also, though, you have to know what your margins are. You have to know what your overheads are. Because I remember reaching out to one of these competitors because it was a really tiny industry and saying, how do you manage to sell them for 29 99? Like, we’ve worked out, landed, it cost us 27 $28. And she was like, oh, it just sounded like a good number.

0:15:43 Joshua Chin: So it wasn’t a strategy because I.

0:15:46 Salena Knight: Figured it wasn’t a lost leader. No.

0:15:48 Joshua Chin: Yeah, I figured it’s probably a lost leader to get people in the door. But you’re saying it’s not.

0:15:54 Salena Knight: And I can tell you this story over and over again about how we were charging more than our competitors, sometimes competitors that were only 2 minutes down the road, something that someone else was selling for 1999. We were selling for 29 99 because at 1999 our customers thought it was too cheap and that the quality wasn’t as good. So we just did a test. We’re like, oh, we’ll put it up to 29 99.

0:16:18 Joshua Chin: Hold on, for the exact same product or is it slapped on of a different brand?

0:16:23 Salena Knight: No, the exact same product.

0:16:26 Joshua Chin: That is strange. That is so strange. Wow. Okay, because if I thought about okay, if we’re comparing a jacket that’s brand A versus brand B and they’re priced differently, I’m going to use price as an indicator of quality. But it’s the same product. It’s the same brand. That’s so interesting.

0:16:50 Salena Knight: Identical product we bought, same person, same thing. So here we have two products that two that I come to mind where because we had built this brand of having great quality products, and I would never say we were in the luxury brand range, we were definitely that kind of upper middle class. Like, people had to have a disposable income to buy the kinds of products that we sold. But because we built this persona and we had this knowledge and remember, we traded online and in store. Our in store wasn’t very big. We had tiny little shop.

0:17:25 Salena Knight: So we were still selling these exact same products at a higher amount. But there are a few reasons. One is because we had an amazing level of service even back then. I look back now sometimes, can I just say, if you are in business now and you’re beating yourself up, trust me, you will look back in the future and go, oh my God, I was freaking awesome back then. Because I look at stuff that we did that just seemed normal. To me, like sending out remember, this was 2007, 2008. MailChimp was like one of the few email marketing, and it was a pain in the ass. You had to put people in different categories and you’re paying more than double.

0:18:06 Salena Knight: But we got to the point where we developed these information series, like how to use products, and we would literally have an exercise book where we’d say, send Samantha Smith video two. And we would send an email that was like, hey, there was nothing automated because that didn’t exist or it didn’t exist at a level that was affordable. That was a very enterprise level product, which is why I love ecommerce and retail now, because what we get for $75 or $50 or $20 was literally limited to people who were on magento enterprise back then, right?

0:18:43 Salena Knight: And so we would do all these old school videos. We would show people how to use things. We developed cheat sheets and we would physically, we would call people up like every day. There was a diary where you had to write when someone did a specific type of purchase. You would have to write to contact.

0:18:58 Joshua Chin: That is amazing for a retail store. And were you doing this for select customers that were like high spenders, or are you doing it for every high spenders?

0:19:09 Salena Knight: What we did for high spenders is I think we had something like a $250 level for that is, again, we just literally had this book, like a diary, and it would be call Jane, order number x to check in and see how they’re going. So my team had a KPI of call three people a day, okay? And if it wasn’t a high spender, it was just calling two people to ask how the service was, just getting some kind of feedback, because those calls don’t take very long, but what they do is they build that brand loyalty. Because how often does an actual business have a person who reaches out to you and says, how are you going with the products?

0:19:53 Joshua Chin: That is awesome. That’s such a strong differentiator and it’s even expensive. Well, it is time, right? I mean, if you’re calling up every single one of your customers, it’s bound to be expensive.

0:20:08 Salena Knight: But it’s not when you have a KPI of two. And so sometimes what would have three was like one high spender and then two various. So each person you get three connections. And these days, I could have sent an SMS. Back then, there was no SMS. Like, if you needed to SMS, someone picked up one of their own personal phones and sent some pictures or some messages. And sometimes we didn’t even get to talk to people. It was just leaving a voicemail to say, hey, it’s us. We’re just checking in. We just want to see how you go. If you’ve got any feedback or you’ve got any questions, give us a call.

0:20:44 Joshua Chin: Right?

0:20:44 Salena Knight: But again, I think that idea. And let’s be honest, you can hack this stuff these days. You can do whisper messages. I saw one the other day where they did. You pre record the video and then it fills in the person’s name, like the AI. Makes the guy’s mouth move.

0:21:00 Joshua Chin: Okay, here’s a really cool story. So I got a cold email once. I’m not going to name names, but it’s a good story and they’ve done it really well. I get cold emails a ton and you probably do too, Salena. But this one caught my attention for a really interesting reason. Basically what the email said was something along lines of I don’t even recall what the subject line was, but it was good enough to make me click right. That’s the whole point of the subject line. And I clicked on it. It was something along lines of AI. Personalized.

0:21:39 Joshua Chin: Personalization on your outreach emails.

0:21:44 Salena Knight: This may be the same company.

0:21:46 Joshua Chin: Really? Okay. And it might very well be. And I watched the video that they sent that was attached to the email. It was attached as a GIF. And I clicked on it and I saw the video and it was like, oh, this person was speaking to me and addressed me by name as well, which was pretty cool. And then the rest of the video was relatively generic, but I could tell that it was kind of pre recorded and stuff like that.

0:22:19 Joshua Chin: It kind of explained what the company did and how it could help. And it was at a point in my journey, it wasn’t that long ago, a couple of months back where I was really curious about outreach strategies for my agency. And when I received this email, perfect timing. And at the end of the video, what shocked me was he revealed that the entire video wasn’t actually recorded live by a person. It was an AI person that was speaking, converting text into voice based off this person’s vocal profile and image, which is mind blowing to think about because imagine the possibilities of personalizing every single video based off a script that you input into the software. And the script, by the way, can be further personalized based on additional tags, like first name, company name.

0:23:24 Joshua Chin: You could even personalize the first product that someone bought. Yeah, the product that someone bought. Oh, that is so cool. So I booked a call and I had a chat with the guy. We didn’t end up doing any business together, but it was still pretty cool.

0:23:38 Salena Knight: It’s probably not the same company, but the one that I saw, you sat down, it was an ecommerce one and you sat down and you recorded the video. It would be like, hey, Joshua, thanks so much for buying from us. We’re super excited to get our package out to you. Like, here’s a little bit about the brand. Come back and join us. But the name part was the AI. And it was like, come here and give yourself a try.

0:23:59 Salena Knight: It didn’t know how to work Salena. It actually sent me an email saying, sorry, we haven’t got that name in our list yet, but we’ve now added it in. Back then, one of the things that we did back in my day, we were one of the first people to try out the service, bonjouro, which is kind of a bit like bomb, bomb, which you make the little videos for your customers. And so we tried it out, and what we would do is, as we were packing orders, we would shoot like a 22nd video that would be like, hey, Joshua, super excited to pack your order.

0:24:37 Salena Knight: This is my favorite thing. Blah, blah, blah. It’ll be out for you. It’ll be going out tomorrow. And nowadays, people are doing that just to prove that the thing went into the box because there’s so much problems with customers trying, you know, trying to claim that they didn’t get things. But yeah, that little type of system and that app actually integrates with Shopify these days.

0:25:01 Joshua Chin: It’s an Australian company that’s Bonjoro am I looking at right? Is that the company with the little bear?

0:25:08 Salena Knight: Yeah.

0:25:09 Joshua Chin: Saying hello? Yeah. Okay.

0:25:11 Salena Knight: And so you can connect us to Shopify. So as your orders are packed, you can send the video. And as a customer, that experience, that is next level experience. You aren’t getting that if you shop at a big box store. The great thing is even things like fulfillment centers, if you get a good fulfillment center, even they will be able to get on board with this kind of stuff. But you’re going even a further you’re like, the AI is going to do it for you.

0:25:40 Joshua Chin: This is cool. So how does this work, Bonjouro? Are they personalizing the emails at all?

0:25:46 Salena Knight: You can create the template, but essentially what happens is a little alert pops up. You download the app. An alert pops up that says, joshua just made a purchase, or Joshua just purchased these shoes. And then you open it up, and you just press the button, and it’s all very low fi record a video, hey, Joshua, blah blah, blah. And you’ve pre made the template, which might say something like, hey, name tag, thanks so much for shopping with us. Here’s where your order is at.

0:26:13 Salena Knight: And then you just press go.

0:26:16 Joshua Chin: Yeah, that’s cool. That’s really cool.

0:26:19 Salena Knight: But again, we’re talking 30 seconds. Even if you break this down in terms of dollars, 30 seconds that that would take to do it increases the customer lifetime value so dramatically, and it also reduces the rate of returns. We did something similar in our business with our consulting and our training, which is every person who buys gets a personalized message from someone on my team saying thank you. So we have an app. Same thing. We have an app. It sends a thing Joshua just purchased. Hey, Joshua, super happy to have you on board, please reach out and let us know if you need any help.

0:26:58 Joshua Chin: That’s cool.

0:26:59 Salena Knight: 12 seconds and someone presses Go. That reduces your returns rate exponentially. In fact, I think I’m just trying to think if we’ve even had any people trying to get refunds. I don’t even think we have.

0:27:14 Joshua Chin: That’s really cool. That’s really cool.

0:27:17 Salena Knight: We were talking earlier about profitability and profit margins and knowing your numbers, what are your competitors not doing? And like, you didn’t know about this, so how many other people don’t know about this? My people all know about this, but that differentiator for me, the cost, which might be like, $0.25 in terms of the labor to do that, you’re going to get that back, right? And potentially, people share that. If you’ve got some sort of funny brand or like, you’re really light hearted, that’s the kind of stuff that people share on social media. That’s your UGC that everyone wants to get.

0:27:57 Salena Knight: And so you even put that into the script. I’d love it. If you when you get this, make sure you tag us on social media. Put the call to action in there, and people are going to remember that when they get it. So sometimes you do have to spend money to make money. But I think it all comes back down to how do you stand out? Because standing out means you can charge more. And I know that I know personally that you can charge more for the exact same product as your competitors. And sometimes it’s as simple as you have a bigger range.

0:28:28 Salena Knight: And so someone says to me, I’ll be honest, I’m having this problem right now. I do a lot of lifting at the gym, and I like this particular protein, hot chocolate and a particular protein case and powder for my smoothies, but no one sells both of them. And I get so frustrated because I don’t want to pay $9.95 shipping from both of, you know, from two separate companies. And but if someone sold both of them, I would potentially pay more even if I was paying the same amount.

0:29:00 Salena Knight: Like, if each of those people charged me $5 extra more, and even just for convenience.

0:29:07 Joshua Chin: For convenience, yeah.

0:29:08 Salena Knight: Right. So it’s understanding. This is not new to anyone listening. It is really understanding. What do your customers actually want? And most of the time, they won’t tell you that. Most of the time they won’t say, oh, I want the convenience to buy two different brands, because it doesn’t come up until they’re in that situation. Now I haven’t bought either. I’m out of both. I’m really frustrated. I’m just like, right, so now we’re going to have to pay $20 for shipping for these two different things. Or should I just not get the hot chocolate, but I actually need it to get my protein macros up, right? Like, no, you need it. You’re going to have to get it. And now. I’m just like annoyed at both companies and I have not found any company that has the two things that I want.

0:29:53 Joshua Chin: Interesting, that’s really interesting. Now, quick segue here. So five pillars of retail success. The five pillars of retail success. We talked a little bit about margins and sales. Tell me, what are the five and what do you typically start first?

0:30:17 Salena Knight: Okay, money which is understanding how money comes into, moves around and goes out.

0:30:23 Joshua Chin: Of your business because that’s where margins.

0:30:25 Salena Knight: Fall, margins come in, inventory management, just your day to day overheads, even things like staff KPIs quite often in that pillar as well. Because if they don’t have any targets, then they’re not going to make any money. We’ve got sales, which is the making of the money. So money, sales, customers and customers is a really big one because you’ve got to find them, you’ve got to catch them, you’ve got to connect with them, you’ve got to convert them and then you have to keep them and then you have to keep them coming back again and again. So there’s actually like six different sections in the customer pillar.

0:31:01 Salena Knight: So money, sales, customers marketing, which is telling the world that you exist, but also getting people to want what you sell. And what I find is people work on one or the other so they work on just getting their brand out there or they try and hammer at people why they should buy it. But very rarely do I see people who are running their own businesses and doing their own marketing, putting both of those things together.

0:31:24 Salena Knight: So getting people to want what you sell as well as telling the world that you exist. So money, sales, customers, marketing and then Impact. So Impact is what a lot of brands focus on when they shouldn’t be. Impact is we say building a brand, not just the store. So it is things like leadership, it is branding, it is getting into brand strategy. But so many people want to focus on the brand side of things. And I’m not talking about branding, but the brand stuff.

0:31:51 Salena Knight: And that’s why they don’t have any money. And I say this from experience, right? That was me. I was so busy getting our brand out there and saying how amazing we were and really digging into making sure that our customers thought we were perfect. But actually the proof was in the pudding. I’ve had all the sales but I didn’t have the cash in the bank. At the end of the day when I changed to working on my money pillar, which is generally where most people have to start off because even businesses that are doing well can always do better.

0:32:22 Salena Knight: And if I can get somebody well, I have a guarantee I will make you back whatever I cost you, whether that’s $2,000, $25,000 or $100,000. Because if I don’t, then you didn’t get any value from me, you didn’t get any value from our equation. You got no return on investment. If I only make you back 98,000, then you’re out $2,000. So for me, it is always about finding a way that we can make someone more money really quickly.

0:32:51 Salena Knight: And it’s not uncommon to make someone back their investment sometimes in a week, because it is things like, oh, but if you just called up your supplier and asked if you could get trade terms, how much money do we make? If we can spend the money that you are going to give that supplier for the next 30 days to grow the business, or if we get rid of first thing I always do is get rid of old inventory.

0:33:16 Salena Knight: That’s great. I can make people thousands of dollars in a day. Sometimes we do $20,000 in 3 hours for one client. Again paid $2,000, made $20,000 in 3 hours. Do you think that person’s coming back easy.

0:33:34 Joshua Chin: Now? How do you think about the we talked a little bit about this last time we spoke on conversion optimization strategies and we touched on after pay. And some of these companies that are making it easier lowers the barrier to entry for people to make a purchase on items that typically would take a little bit longer of a consideration period of people thinking through things. Maybe it’s like a $100 purchase.

0:34:12 Joshua Chin: But now with after pay that split up into three payments with no interest. It’s easy for me to get a grip off. And I’m paying like $33, $35 a month.

0:34:23 Salena Knight: We get four payments in Australia.

0:34:25 Joshua Chin: Four payments, okay. Yeah, that’s great.

0:34:28 Salena Knight: It’s different in every country based on the financial regulations. In some countries it’s even six and some it’s only two. So yeah, it’s all different based on financial regulations. Was the question, what’s my opinion or did I just cut you off?

0:34:44 Joshua Chin: No, I want to know about how you think about conversion optimization, first of all, and what other tools do you have your clients explore and how do you make that choice, how do you make that decision? And we’ll touch on the ethical side of things after that.

0:35:08 Salena Knight: Can I start with how do I make that decision? And I think it’s pretty clear. I like to make people money. That’s my thing. If I can make you money, everybody’s happier. Because once we make money, everything else becomes easier. Because you can bring in people you can outsource, but it also makes you happier in life, like you can give to charity. You can go and spend it in a local economy. You can go and stick it in the bank if that’s what makes you happy. But you can do lots of good things when you have more money.

0:35:36 Salena Knight: How do I make a decision when it comes to buy now, pay later? I would say, I mean, after pay is the market leader. Certainly. Here the US. And in kind of Asia Pacific. However, in the UK, it is probably Klana, because they were around for a lot longer. So I would say start with the one that is the most recognized in wherever it is that your customers are, because they’re going to be the market leader, which means people are going to expect that.

0:36:08 Salena Knight: However, I know that and this is the numbers. In Australia, for example, after pay 6% of the sale and then someone like Klana varies between three and five. And there are other companies that sit kind of at that 3%. That’s a lot of money that you’re giving up. That’s pure profit that has to go. So a few things. One is once you start implementing these and a cost comes into your business, you have to increase your prices.

0:36:34 Salena Knight: Most people can’t absorb 3% or 6%. For a lot of people, that’s their profit on an order. So you can’t just absorb that, like going back to the money pillar. When these things happen, how do you choose? Well, you make the money, you make a decision based on the return on investment. So the caveat there is sometimes you need to start out with the market leader. But once you have established your business and your customers, then sometimes I actually recommend you take that one away because most of the people who use Buy Now, Pay Later have more than one account with a company because they’ll mix and match.

0:37:14 Salena Knight: And so if we can get rid of we’ll just use afterpay. In this example, as much as I love afterpay at 6%, if we can get rid of them after three months, six months, and move into one of the other brands where we now get one, two, 3% more margin, then that makes sense. But you’ve already educated the customer, that you have a range of options and then one might disappear. And I can almost guarantee that the only people who are going to complain are the people who have low average order values, like good customers who have their accounts across several different companies.

0:37:49 Salena Knight: They’ll just do one of the other ones. And so that’s how I choose. But I would also say that I know from the stats that a person who buys with a buy now, pay later, spends more money now. What I would say in terms of average order value is always higher. But what I would also say there is going to your Afterpays, your Klanas, your Sizzle, I think, is one of the ones in the US. Sizzle, yeah, asking them, what is the average order value for your clients? Because I know here in Australia, on something like afterpay it’s 120, but on Klarna it’s 220.

0:38:32 Salena Knight: So which one would you rather have? The one that their customer demographic spends almost double the amount. So there’s a few things to take into account, but I see lots of people who have all of them, but they don’t sit down and go, all right, so how much of our money is coming in from each one of these? And what is the value of how much profit am I making on the average order value from an afterpay or a client or a sizzle?

0:38:58 Salena Knight: Do I need them all?

0:39:02 Joshua Chin: Interesting.

0:39:03 Salena Knight: Does that make sense?

0:39:03 Joshua Chin: Yeah, it does. So on the upside, the downside calculation is easy. You’re taking like three to 5% or 6% off your net on those transactions. And you could put a couple of assumptions around percentage of sales using binopay later. But what about the upside? The upside is a little bit tricky. Obviously, there’s that AOV expectation. So there’s that delta of how much additional money that you’re making.

0:39:38 Joshua Chin: What about the long term? Do you consider LTV and you look into those metrics at all for people using after pay, are they a little.

0:39:45 Salena Knight: Bit more loyal, less I only have the stats for that. Klana are great with stats, so their lifetime value is much higher as well. But it’s interesting. It kind of stands to reason and look, that’s in Australia it might be different in different countries. So don’t just take this is not financial advice, of course.

0:40:03 Joshua Chin: Yeah.

0:40:03 Salena Knight: So having that understanding of, well, actually, the demographic who uses this buy now, pay later is very different to the demographic. So I’ll be honest, I don’t even have a buy now, pay later. The only buy now, pay later I use is PayPal. Pay in full because it comes up at checkout. Like, it’s just easy, right? You don’t need to I have a credit card. Just put on my credit card and pay it off. But my next door neighbor, who is very well off, loves using it because she will do, I guess, something different to what I do. And I guess this is the demographic, because this is not me.

0:40:40 Salena Knight: She will go and buy four different things at four different stores knowing that she was paying in four. So instead of spending $100, she spends $400 and then pays the $100 a week over the four weeks. So for her, it’s like, well, why wouldn’t I use it? It’s not that I don’t have the money. It just means I buy more stuff. I think there’s a combination here. One is you got to know your people. Like, you don’t want the people who are the defaulters on afterpay. They’re only out there buying the sales stuff.

0:41:15 Salena Knight: $50, average order value, doing just what they have to to get to free shipping. You want those people who are doing those higher levels because it means they can buy more. And you were talking about the ethics of it. And this is a conversation that we had, which is, yeah, it’s same as credit cards. You don’t get the I guess no one died and made you the financial god of somebody else that you have no idea about their circumstances.

0:41:45 Salena Knight: That is the financial institution’s fiscal duty to check in to see whether somebody can afford it or not. It is not your job to decide whether they can afford it or not. And so I think we get hung up on this. And I know I was talking to you about how we’re going to bring financing in for some of our higher value packages. And I’m probably very different to everyone else. I don’t mind paying interest if I have a choice of spending $30,000. You know, let’s just say to work with you, I don’t know what you charge, but let’s just say it was a $30,000 package and I have the choice of spreading that out over several years. And my first payment is 1000. But now I’ve got $29,000 that I can use to continue to grow my business and make more money in the process.

0:42:29 Salena Knight: It is worth it to me for the $300 worth of interest that I would pay in that month because I’m pretty confident I will make more spending that 29,000 than $300.

0:42:41 Joshua Chin: Makes sense.

0:42:42 Salena Knight: Yeah. But lots of people don’t think about it like that. A lot of people think that debt is bad, and debt is only bad if you haven’t sat down and worked out the return on investment.

0:42:51 Joshua Chin: Yeah. And if you’re no productive means of utilizing that capital, then probably not a good idea. Yeah.

0:42:58 Salena Knight: Like buying $2,000. Microphones.

0:43:02 Joshua Chin: Man, that got me tempted. Microphones. Now, here’s an interesting one on the cost side of things. I have a friend out here in my part of the world, in Singapore, who has negotiated a deal with one of these bigger buy now pay later companies by pitching them against their competitors. And they run pretty high volume of sales consistently every month. We’re talking eight figures in revenue a month. So really high volume.

0:43:48 Joshua Chin: I really don’t think that you got to be making eight figures a month to do this.

0:43:53 Salena Knight: I don’t think you have to either. It’s the same as your bank, right? If you have a home loan, you go there and negotiate.

0:43:59 Joshua Chin: Yeah, exactly.

0:44:00 Salena Knight: The more transaction, it’s the same as your merchant facilities if you’re processing a higher it’s the same with PayPal if you’re doing a higher volume. But you have to ask. They’re not going to come out. They’re not going to come out and say, hey, we’ll give you a better rate.

0:44:13 Joshua Chin: Yeah, exactly. You got to ask. And what he got out of it was really interesting because his business is so big, they actually paid him to use their software on his website.

0:44:30 Salena Knight: It’s pretty impressive.

0:44:31 Joshua Chin: And offered as an option. So he basically got the first X number of transactions free. And on top of that, he got paid cash just to use the app as part of the contract. And as part of the contract, you got to have that thing as well.

0:44:52 Salena Knight: Right. They love promoting that.

0:44:54 Joshua Chin: Exactly.

0:44:55 Salena Knight: Especially to their own merchants.

0:44:57 Joshua Chin: Exactly.

0:44:58 Salena Knight: Here’s John. He’s doing eight figures and 70% of it is done through after pay. He’s now making a new revenue channel, which actually is getting him to push people into using that buy now, pay later because it’s actually in his benefit. So he’s a smart guy, right?

0:45:19 Joshua Chin: Yeah.

0:45:19 Salena Knight: But even if you’re not doing eight figures in revenue a month, sometimes something is simple. I actually did a podcast on this with Kleiner, actually, about how they very rarely get merchants who come up and say, can I do some kind of promotion with you? I’m like, someone has to do those.

0:45:37 Joshua Chin: Promotions, like turnover, win win, basically, right? Yeah. I’ll promote Klarna, you give me a better rate, and we all win.

0:45:46 Salena Knight: That’s kind of the there’s lots of inapp advertising in a lot of these find our pay laters now, and of course, they’re sending out emails to their merchants, but also to their end consumers. So if you’re being featured on a regular basis in an afterpay newsletter to consumers, bet your bottom dollar that someone’s going to click through, aren’t they? And if you’re getting that for free, all you have to do is ask.

0:46:09 Joshua Chin: Exactly. Salena, I hate to end this conversation. I think we’re getting a lot out of it and we might just have you back for part two, but this is amazing for people listening, what’s the best way to connect with you? And I know you got your podcast, so give that a shout as well.

0:46:30 Salena Knight: Yeah, bringing business to retail. But look, I always talk about ecommerce. It’s just a bit of an SEO feature, bringing business to retail. And we were talking earlier sorry, just to cut in again, which we’ve been around like this podcast has been around since 2015 and so it’s, I think, 450 plus episodes.

0:46:50 Joshua Chin: Yeah. You’re going to be at 500 this year.

0:46:53 Salena Knight: Yeah, I mean, don’t go back to the beginning. They’re pretty crap back then. But it’s been interesting to see how the world of retail and ecommerce has changed. And I am a tech nerd, so I am all for all the apps and all the things, but I love the fact that having that bricks and mortar retail experience as well is always great for bridging the gap because ecommerce always needs to try so hard to find a way to recreate the in store experience.

0:47:20 Salena Knight: And if you don’t know what that in store experience is, then you’ve got no chance of recreating it. 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 Salena 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.

0:47:55 Salena Knight: On your platform of choice. Because the more reviews the show gets, the more independent retail and ecommerce stores just like yours, that we can 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. You.