PPC Masterclass on ACOS, TACOS, CPC, and Top of Search with Expert Pat Lum

Episode 176

On today’s episode we bring Pat Lum on for I believe the third time.  We have both known Pat for over 5 years and he is a true Expert on Amazon ads.  Pat and his team spend over $13 million dollars a year on Amazon Ads. That’s all they do. They eat, sleep, and nerd out on this stuff. And now, he’s sharing the new Amazon PPC playbook they have developed with the world.

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00;00;24;06 – 00;00;49;12
Speaker 1
Welcome, everyone to the Firing Demand podcast. On today’s episode, we bring in Pat Lum for the third time. We’ve known Pat for over five years and he is a true expert on Amazon ads. Pat and his team spend over $13 million a year on Amazon ads. That’s all they do eat, sleep and nerd out on this stuff. And now he’s sharing a new Amazon PPC playbook that they have developed with the world’s.

00;00;49;13 – 00;00;52;14
Speaker 2
We are really excited for this interview. Welcome to the show, Pat.

00;00;52;16 – 00;00;55;16
Speaker 3
Thank you. Thank you. It’s good to be back. Fantastic. See you guys.

00;00;55;24 – 00;01;05;25
Speaker 2
Absolutely. So for our listeners that have not had the pleasure of listening to your previous episodes, can you share a little bit about your background and your path to becoming a PPC expert?

00;01;05;26 – 00;01;32;22
Speaker 3
Sure. Yeah. No, I was I was just trying to pay for my college sold stuff online. Originally, it was actually a retail operation. I sold the physical products door to door wholesale in China, just trying to make it work and then found Amazon as an online distribution channel. And I listen to my products on there, did well, and I just became fascinated with what was then, you know, in 2016 ish, like the emerging sort of Amazon marketing space.

00;01;32;22 – 00;01;45;19
Speaker 3
And I just fell in love with just the marketing component. And so I started helping other sellers with that. And we founded, you know, Asteroid X, My, my company was founded in 2018, so it’s been about five years now and it’s been a fantastic, fantastic ride. Yeah, I just love the marketing stuff.

00;01;45;20 – 00;02;03;00
Speaker 4
Awesome. Well, cool. So like David mentioned, we’ve had Pat on the show a couple of times before and Pat’s covered. I think on the first one it was kind of like Intro to Ads and how to Run those. That’s what we’re going to dive into a couple little deeper topics, you know, expand on those. And so let’s get right into it, Pat.

00;02;03;00 – 00;02;13;06
Speaker 4
A lot of times, you know, I hear this a lot Amazon, PPC, top of search ads. Can you share with the listeners, you know, are they important? What are they used for and why are how are they different?

00;02;13;06 – 00;02;34;01
Speaker 3
Top of search is a really interesting tool that I think most people are still under utilizing. I think of it like as an ethical bribe to Amazon because most of the time when you’re running ads, you could say, Hey, Amazon and this is through like the bidding mechanisms and that ads platform, you could say, hey, Amazon, I want to pay $0.50 per click and no more than that, please, like, please don’t because it doesn’t work with my margins.

00;02;34;01 – 00;02;50;15
Speaker 3
It’s no good. I can’t afford more than $0.50 per click on each of my ads in less. What you could do is ethically bribe. Using the top of search feature, you could say, Hey Amazon, I only want to pay $0.50 a click in less. You can guarantee me, you know, show up on the first page and then I’ll pay a lot more.

00;02;50;15 – 00;03;16;20
Speaker 3
I’ll pay up to $2 a click. And you might wonder, like, why would any seller want to do that? It seems like if you spend $2 per click, you’re just going to go broke real fast. But no, that’s not what we’ve seen actually happens because of a weird dynamic. If you appear on the first page through, you know, top of search bidding and you get aggressive with that, the click through rates of the conversion rates are actually higher on the first page than if your ad had appeared on pages, you know, three, four or ten or on another listing, whatever.

00;03;16;20 – 00;03;31;17
Speaker 3
So your click through and your conversions are going to be higher. So even though your cost per click is more, you might actually end up paying just a bit more or maybe even on par to acquire that that customer, your cost to acquire the customer will actually really similar because the clicks and conversion rate is higher. It’s not going to work for everybody.

00;03;31;17 – 00;03;41;22
Speaker 3
You don’t have a strong listing obviously, but yeah, I’ve been talking to quite a few, you know, high six and seven figure sellers and they love exploding top of search for, for, for this reason.

00;03;41;23 – 00;03;55;13
Speaker 4
That’s actually I think what we found in this is an option that you recommend sellers like test on each different product like how how would you recommend like where do they find this and kind of how do they recommend how do you recommend like testing it to see if it works.

00;03;55;13 – 00;04;17;15
Speaker 3
Tested on some of your you’re your big boys or heavy hitters because you know it’s not probably advisable that we don’t like testing anything really with ads across the board if it doesn’t work with your best sellers, it’s not going to work with anything under that. So maybe try that first. Just also for the sake of economics, for people watching this in the future, we’re recording in April 2023 and the economic conditions are, well, less than desirable.

00;04;17;15 – 00;04;22;18
Speaker 3
So yeah, don’t go crazy with officers. You know, not not legal advice is very nice.

00;04;22;19 – 00;04;37;18
Speaker 2
Now pay your team manages some pretty unique accounts and and can you share with us some details on the account you’ve mentioned that does 350 K a month and ad revenue and just kind of the general strategy behind that and yeah your thoughts there. Yeah.

00;04;37;18 – 00;04;56;18
Speaker 3
I want to bring this to you guys because there was an account I saw recently. Yeah. So as you said, 350 K a month address and that’s not organic. It’s not including organic sales. There are well over a million a month from Amazon store. But what struck me about the way that they were thinking about stuff and the way they’re thinking about making money on Amazon is it was stupidly simple.

00;04;56;18 – 00;05;18;28
Speaker 3
Like it’s almost like the more advanced you get, the more more dumb and stupid your advice sounds because it’s just stupidly simple. So it’s it’s like I would describe their ad strategy as pointy, by which I mean, like they really only wanted to focus on a few top advertising, a few top products and really allocating like most of the budget to those, you know, say 80% of the budget to our top 3 to 5 SKUs, like it wasn’t much one much at all.

00;05;18;28 – 00;05;36;20
Speaker 3
And then to sort of put a finer point even on that amongst those, you know, select few products that they were choosing to push on, a small number of keywords, even amongst amongst those products they were pushing like. So it’s really like a, you know, a sharp point on the product selection and a sharp point, again, on the keywords used to advertise those products.

00;05;36;20 – 00;05;52;00
Speaker 3
I think a lot of times people make a mistake where they go too broad with the ads. They want to bid on this, this term, all these terms, all campaigns, manuals, you probably just need like ten or 15 real good terms that are high traffic, high relevance to the products that you can drive ranking for. And that way, you know, Yeah.

00;05;52;00 – 00;06;03;10
Speaker 3
And everything just seemed really pointed to me. I think that’s what my you know and and they also use this top of search function. Yeah it’s just it’s really it was really concentrated. I think they had enough data by then to know where to put the money.

00;06;03;11 – 00;06;18;00
Speaker 4
One quick question follow up on that. Was there anything until like were they going after are they going after keyword ranking or are they looking at keywords that just convert really well? And are the products that they’re targeting, are those their most profitable or just happened to have the highest converting keywords?

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00;06;18;00 – 00;06;41;04
Speaker 3
Again, on a really simple policy where they wanted to maintain a 10% tax and then the ad budget could be whatever, you know, they’d scale the ad budget up as high as it could go as long as the takeover was a 10%. And for those who maybe are uninitiated to this term, you got your ACOs, which is your ad spend divided by your ad revenue, and then you got your take costs, which is a similar metric, but it also accounts for the ranking of the keywords.

00;06;41;04 – 00;07;00;22
Speaker 3
So the take goes is the ad spend again as the numerator, but the denominator is all of the revenue that you get. So both from ads and organic. So what they were saying by saying they wanted to hold the 10% tax is, you know, we’re going to spend the say for every thousand dollars that we spend on ads, we’re going to want to make 10,000 total and total top line revenue in the business.

00;07;00;22 – 00;07;15;11
Speaker 3
And then we can scale up that ad spend accordingly. So 12,000 in ad spend, you know what, 120,000 top line of whatever it is. Yeah. So they wanted to scale up 10% take was super pointy and yeah and there’s just a few rules that they were using it wasn’t they think one of the thing crazy.

00;07;15;13 – 00;07;41;19
Speaker 2
Another thing you mentioned was that they so 350 K in ad revenue and then over a million in organic so yeah just rough numbers 30% PPC revenue that’s something that we’re looking at on a weekly basis is what is our proportion of PPC revenue to organic revenue. And I’m curious, is there a point where things are out of balance and if they are, how do you react to that?

00;07;41;19 – 00;08;05;17
Speaker 3
I’ve always it’s a good question. I’ve always seen a habit in like life cycles specifically. You could probably map this to the life cycle per skew. Like, you know, when a SKU starts out, it’s really normal for, you know, a 60, 40, even 730 split on in favor of ad sales like sales coming from ads. But then as it mature as you probably should, you know, you’re you’re losing too much money on ad spend if it’s a product a 7030 revenue coming from ads throughout its whole lifecycle.

00;08;05;17 – 00;08;21;08
Speaker 3
So you probably a mature product you may want, you know, anywhere from, you know, 10 to 30%. I would argue if, you know, if you have a product that’s just sitting there and 95% of the sales are organic, you might want to put your foot on the gas a little bit more and kind of see if it can, you know, how far you can push that thing.

00;08;21;08 – 00;08;30;09
Speaker 3
But yeah, anywhere from, you know, 10 to 30% for a mature product. But I’ve seen, you know, closer to 40 to 50 when it’s sort of on its way up. That’s assuming you’re using Amazon ads aggressively to rank the product.

00;08;30;10 – 00;08;50;10
Speaker 2
Okay. In terms of so on this account, they’ll spend as as long as they’re hitting that taco number, they’re just have kind of an open wallet. Are you guys looking at when you’re managing that account? Because obviously there’s this organic component that’s feels a little bit out of your control, right? Are you looking at ACOs on that in where does like break even point?

00;08;50;10 – 00;08;55;22
Speaker 2
So for instance, let’s just say they run a 30% profit margin. Does that how does that factor in?

00;08;55;22 – 00;09;16;25
Speaker 3
We’re looking at like unfortunately, Amazon doesn’t tell sellers, hey, this is how many sales you got from this specific keyword. So you sort of have to. That’s really annoying. Jeff, if you’re listening, please, please fix this. Yeah, it’s so we sort of have to extrapolate, you know, our our ad sales for keywords, is it increasing the ranking? And we do that through rank tracking.

00;09;16;25 – 00;09;33;25
Speaker 3
There’s all these software suites that you have now. You can you can use those to track your keyword ranking, you know, by by the day and you’ll see where you are and you can sort of extrapolate, okay, we have this a way to get control over this would be to run a sponsor products manual campaign with just the one keyword in it.

00;09;33;25 – 00;09;50;05
Speaker 3
We’re a big fan of this. We just have the one term inside. So that way you can moderate the bid, the budget and you know, you’re ranked tracking it in a in a software. You can kind of start to piece where all that stuff, how it all goes together. I don’t think that was quite your question, though. I think you’re wondering more about the market and like the margins in particular.

00;09;50;05 – 00;10;11;22
Speaker 2
Well, it’s some that we run into where I would say like one particular brand that we manage tends to have like a 30, 35% break even point. And so we prior to ads. Yeah. So that that would be sale price minus FBA minus referral minus unit cost minus shipping and tariffs like what we call fully loaded cost. One of the strategies that we’ve employed is, is kind of targeting costs around that break even point.

00;10;11;22 – 00;10;17;28
Speaker 2
And so I was curious on with this brand that you’re talking about, are you more focused on costs or on tacos?

00;10;17;28 – 00;10;34;20
Speaker 3
Yeah, it’s all in on tacos because Taco keeps into account the ranking there is. It’s not a bad thing at all to focus on ACOs break even, but it does localized the problem just to the ads, whereas you could be leaving some money on the table if ranking was just being driven up like crazy and all you had was an ACO.

00;10;34;20 – 00;10;55;14
Speaker 3
So it was only high enough to to break even or make a little bit of money on the ads. You could be leaving money on the table from a take loss perspective, even though it works from an ego perspective. You could it’s no, there’s nothing wrong with that. It’s just not the most aggressive thing. Like if top line was really the goal and maybe we had some ambitious like growth plan for the year or something we may want to look at, okay, could we actually have a higher than break even ACOs?

00;10;55;14 – 00;11;02;20
Speaker 3
But does the ranking justify it? And if it does, we should do that. Maybe so. That’s why tacos instead, but doesn’t have to be sorry.

00;11;02;20 – 00;11;27;21
Speaker 2
We’re we’re really go to our listeners are really going deep on this and I think anyone that’s managing their own PBC this is or working with with somebody I mean this is super, super helpful. Last question and we can move on that 10%. So when that company was formulating their their budgets, where did that 10% come from? And to our listeners, like when they’re trying to kind of figure out what should my target be, what am I, what am I aiming at, what would you recommend?

00;11;27;21 – 00;11;46;12
Speaker 3
I’d have to ask them why they set the 10%. That was like an internal sort of business mandate. If I had to guess, I would guess that it leaves enough room for like some months. We’re going to be over that and it just leaves enough kind of wiggle room so that no, no month is extremely unprofitable. You know, it’s Yeah, and it’s a nice clean number.

00;11;46;12 – 00;12;02;07
Speaker 3
But I think there’s no and it probably also works with the margin. Like you have to understand what your profit margins are on most products, it’s strictly because it’s a 10% take is like blended across all the products. So it’s not like each product has an identical profit margin that you can account for, but I think maybe 10% works universally across the product line up.

00;12;02;11 – 00;12;16;22
Speaker 3
It’s it’s nice and safe. It’s all 5%. So you get a little bit aggressive there, but it’s not 15 to 20 when you would probably truly start to cut into some some margins on some products. There’s no there’s no scientific reason why it would have to be 10% versus like 15, for example, or something like that.

00;12;16;22 – 00;12;19;04
Speaker 4
That’s awesome. Any anything else on that power?

00;12;19;04 – 00;12;37;12
Speaker 3
I think the the the take away from some of that stuff is just that it’s so it’s much simpler than I would have thought in terms of in terms of the plan. Right. 10% ACOs focus 80% spend on 5% of SKUs and focus 80% of the you know, spend on 20% of top keywords, top of search. They like, you know, product base and targeting.

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00;12;37;12 – 00;12;55;18
Speaker 3
Like the product targeting works. Oh, another. Okay, So just before we hop off of this, something really interesting is that there’s this debate over like defense terms have you guys, you know, defensive defense, PPC campaigns. Right. There’s this big debate and it’s been I don’t think it’s been resolved in years. So we’re here as of right now, these guys, we’re in a test, okay.

00;12;55;19 – 00;13;11;26
Speaker 3
And it’s a pretty well-known brand. I don’t I would love to say the brand name, but I don’t think I have clearance for us. I’ll just I’ll keep it to myself for now. It’s unfortunate, but the so they have a pretty well-known brand gets a good and decent amount of search volume on Amazon every month. Right. And so they sort of were in the mindset that I have to protect my brand.

00;13;11;26 – 00;13;28;05
Speaker 3
I have to, you know, run ads for my own keywords or else my competitors are going to do it. They’re going to steal all my sales. And I think that’s the general sort of discourse that goes on there. But however, they ran a one month test where they shut off all of the branded terms and nothing happened. They do these days.

00;13;28;05 – 00;13;46;09
Speaker 3
They sort of, you know, flip flopped slightly back into the other direction where they’ll have one sponsor, Brands banner. Those are those banner ads just at the top of search results for their brand. Just to say, hey, here’s the brand in case you’re looking for it. Here’s us definitively like the knockout punch up top, but we’re not going to bother sponsor products advertising for a bunch, you know, a bunch of our terms.

00;13;46;09 – 00;14;00;26
Speaker 3
The people were searching for a brand name, Probably want to buy our thing and not, you know what a competitor named X like. Even if they do interject a little bit in the ads, it’s not, you know, and so they improve margins, you know, that way. And that ad spend can be allocated towards non-branded terms like get new customers into the business.

00;14;00;26 – 00;14;17;20
Speaker 3
It’s alluring because if you run four ads for branded terms, your ACOs is going to be just chef’s kiss. Incredible. It’s going to be, you know, 3%, 5%. But so it produces a good ROAS, like a return on ads, then not necessarily going to grow the business. That’s another kind of counterintuitive decision that they had made. And it’s it’s paid off.

00;14;17;20 – 00;14;20;00
Speaker 3
Yeah, there’s a but there’s a there’s a huge debate about this.

00;14;20;00 – 00;14;22;05
Speaker 4
David, go ahead. Yeah. Do you have a follow up on that.

00;14;22;05 – 00;14;26;20
Speaker 2
Before we move on from in the weeds, PPC, I do have something, so can you get a follow up on this?

00;14;26;21 – 00;14;30;15
Speaker 4
No, I was going to I was going to spin into a follow up question.

00;14;30;17 – 00;14;51;10
Speaker 2
So, Pat, we’ve been talking a lot on this show about expansion International expansion. In fact, we are huge fans of Amazon, Canada and profitability less competitive. And so that’s been a great move for us. Amazon, Canada and so my question to you is, when you enter into a new marketplace, are there any general strategies that you would employ?

00;14;51;10 – 00;15;03;28
Speaker 2
And I’m going to say like specifically, like English speaking, so like Canada, UK, if you’re if you’re primarily focused in the U.S., but then that’s how you expand any strategies to help there with hitting the ground running.

00;15;03;28 – 00;15;18;00
Speaker 3
This, I’d have to check. But you know, if you can, were you guys able to transfer your U.S. reviews onto the Canadian listings from the first day? Like, yeah, right. So definitely if you’re selling the same product, there’s no need to start from scratch on the review front. So that’s like a nice little head start, Nice a little boost there.

00;15;18;00 – 00;15;38;10
Speaker 3
If you’re us expanding to Canada, especially this especially that specific expansion, you know, I’m Canadian, we don’t talk so different, right? So we’re going to use a lot of the same keywords to buy your stuff. Then the Americans are we’re going to have a few more French searches, which is sort of a quirk of the market because we have Quebec, which is as a purely French speaking province, whereas the U.S. is going to have more Spanish searches and that.

00;15;38;10 – 00;15;54;03
Speaker 3
So that’s a little bit of a regional difference. But, you know, for the most part, I would just say set your expectations in accordance with the population numbers. We have about 10% of the U.S. population. So it’s not going to be I think we’re at 31, 32 million, something like that. And I know the U.S. over 300 million just really roughly.

00;15;54;03 – 00;16;05;02
Speaker 3
So, you know, temper expectations, which I don’t think it especially early days, it’s not going to match U.S. sales, but it’s going to be a nice a nice, nice little revenue boost and certainly less competitive. And so.

00;16;05;02 – 00;16;22;09
Speaker 2
Yeah, a little bit more profitable is what we found, is that you can price a little bit higher in due to the exchange rate. We’ve seen a little bit like 5% boost in profit over U.S. Now that that may just be our brands and it may we also are still getting pricing dialed in. So maybe we went in high and that’s working.

00;16;22;09 – 00;16;29;26
Speaker 2
We’re big fans of Canada. We have one particular brand we were just talking about this morning that 30% of overall sales is coming out of Amazon or Amazon Canada.

00;16;29;26 – 00;16;38;11
Speaker 3
Why do you think that is? We’ve seen an average of like at best like 15% lift, something like that. So that’s really that’s good. That’s a really successful expansion.

00;16;38;13 – 00;16;43;11
Speaker 2
Here’s my theory. It is particular brains in the pet space and I think Canadians they love their pets.

00;16;43;18 – 00;16;45;13
Speaker 3
How long have you been in Canada?

00;16;45;16 – 00;16;48;00
Speaker 2
So we were doing naff for three years.

00;16;48;00 – 00;16;48;18
Speaker 3
Okay. Yeah.

00;16;48;18 – 00;16;58;25
Speaker 2
Yeah. And so we knew we had some traction, but we’ve probably quadrupled it when we got out of north. And just you have put stuff there on the on six months maybe. Yes. It’s kind of.

00;16;58;27 – 00;17;13;08
Speaker 4
Probably been there six months and it’s, it’s hockey sticking like it’s not really slowing down. And so it’s it’s a yeah, we’ve seen like 10 to 20% on some of the other brands but this brand is at 30 and like Dell going oh we like Canada lately.

00;17;13;10 – 00;17;22;03
Speaker 3
It’s pretty darn good, you know. Okay. And you found that even after the exchange rate, when all said and done you can charge 5% more for for the products. Yeah.

00;17;22;04 – 00;17;34;28
Speaker 2
Wow. That’s our theory and that’s how we have things priced now whether that you know, whether we bump those down and see a bump in volume, it’s, you know, it’s like the other gymnastics of running these businesses is trying to dial on your price.

00;17;35;05 – 00;17;50;02
Speaker 3
How would you rate the competitive landscape when you were thinking about Canada and you were looking at what was already there? Like the offerings already for sale on Dossier, were you like, Oh, we could take these guys for sure. They don’t have, you know, or were you like, Oh, it’s going to be a little stiff competition.

00;17;50;02 – 00;18;11;14
Speaker 2
I would say our strategy was turn on north. That was literally the easiest way to of the revenue. And we we saw some traction there and that was with two weeks shipping time and we were like, well, things will only get better if we can get that pricing badge. And we did. Our conversion rate almost doubled when we got out of north and into Canada.

00;18;11;15 – 00;18;26;00
Speaker 2
And I would say shipping out of the U.S. is fairly reasonable. Shipping out of China. We’ve got longer lead times, closer to like that 70 to 85 days with suppliers that we’re working with, which is fine. You just plan ahead for that. Does that answer your question? Yeah.

00;18;26;00 – 00;18;36;25
Speaker 3
Yeah. Well, it’s just like because you sell in the U.S., you know how competitive it is for that brand in the U.S. Did you find that the competition like that was already selling in Canada before you got there? Like, was it how much weaker was it?

00;18;36;25 – 00;18;57;20
Speaker 2
Significantly. Okay, I’ve got a good example of this. Okay. So I was just looking at this last week. We have a product where in terms of like a moat of reviews, I think we’re probably like we’re in the top ten, but maybe like maybe eighth or ninth place. We’re second in Canada, second in the U.K. and second in Germany, behind like, yikes, the one the there’s one in.

00;18;57;20 – 00;19;21;20
Speaker 2
So we like that. We can go into these markets. We’ve got, you know, emotive reviews. And yeah, I do think that that’s something that’s considerable. And so we’ve we’ve had a guest on our podcast, Adam Feinberg, and he’s talked a lot about launching. And when he’s not super confident about performance in the U.S., he’ll launch in the U.K., even though it’s a smaller marketplace, he says there’s less players and tends to be a little bit less competitive.

00;19;21;20 – 00;19;28;24
Speaker 2
I’d say we’re dip in our toe into those waters, but we’re still early on enough that I can’t speak to it fully what our what our results are.

00;19;28;24 – 00;19;37;18
Speaker 3
It’s cool because I think in episode 150 that we did about five, six months ago, he said, The jury’s still out on Canada. Let’s see. So that was a successful test.

00;19;37;21 – 00;19;56;29
Speaker 4
Yeah, definitely. Definitely. Fans of Canada and excited to see this, excited to see the ceiling on that and then start playing around with pricing and conversion rates and stuff. But yeah, fans want to pivot a little bit. And now we were talking earlier, you had mentioned, you know, we kind of went deep into like this taco strategy and that’s kind of like a pure like rocket play, right?

00;19;56;29 – 00;20;18;13
Speaker 4
Like you’re really managing profit when you’re when you’re targeting tacos, you’re looking at overall profit of the company, which I think is very, very smart. And as we move into, you know, a recession or what people call a recession, as we as we go into this, you know, the rest of 23, what are some tips on how to, you know, prepare your Amazon business for a recession or how to, you know, tighten it up a little bit?

00;20;18;14 – 00;20;22;01
Speaker 4
What can you do on the on the advertising side and maybe on the company side?

00;20;22;02 – 00;20;37;13
Speaker 3
The first thing I would say to and I don’t think you know, I know you guys are really diligent with the numbers. I would just say for folks, you know, sometimes Gen Z has the saying like the math doesn’t math or the math isn’t mapping. Sometimes the numbers don’t make sense to sell a product at all in the first place.

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00;20;37;13 – 00;20;56;26
Speaker 3
You get all the revenue you want, but it’s not going to generate a profit. And typically, you know, and I think I think David actually mentioned this on the last part, but it was he was saying how, you know, generally as a minimum, you want a 44 x mark up on landed cogs, you know, if it’s costing, you know, ten bucks to make the thing, you got to sell it for at least 40 to make the economics work, preferably more.

00;20;56;27 – 00;21;23;01
Speaker 3
I mean, if you could. So just I mean, just not jumping straight into ad tactics and listing optimization, all the stuff like some products don’t have the built in margins to even justify being sold on the platform and or, you know, you’re going to have to raise the price to make it work. I’m always surprised when sellers actually do a profit analysis for the first time per SKU and they look at how much they’re actually making per per product and then they realize like, Oh, shoot, like this product does a ton of revenue, but you know, I’m making like pennies on the dollar.

00;21;23;05 – 00;21;40;16
Speaker 3
It’s not, you know, it’s so it wasn’t so it should not be in the revenue game like we got into this to to make money not have a seven figure business that doesn’t kick off any cash. Right. And the other thing I’ll sell is it’s like those are your you know your earnings is the owner to to pull out and you know can’t put food on the table with revenue.

00;21;40;16 – 00;21;57;12
Speaker 3
You can’t pay mortgage with revenue. It’s all this profit stuff. And if you ever wanted to sell the business, you know, we’ve we’ve dabbled in these online marketplaces like flip an empire flippers and looked at buying Amazon businesses and talk to aggregators. And whenever you buy an Amazon business it’s valued on what it’s not a tech company where it’s right on top line.

00;21;57;12 – 00;22;21;26
Speaker 3
Rev It’s valued on the last 12 months of profit. So even if you want to sell the business, like it’s really just about the profit number. Yeah. So, so I think some sellers could reduce complexity and make their lives easier even by cutting some products or increasing price. I think there’s a lot of, you know, and the basic blocking and tackling of of I think just, you know, just negative keywords, bid adjustments on the regular, just making sure that you don’t waste ad spend unnecessarily.

00;22;21;26 – 00;22;36;00
Speaker 3
When we meet sellers often for the first time we’re seeing I saw one the other day was you know they spend $10,000 a month on ads, 7000 just spent for no reason. It’s like money finding money under the couch cushions, because if you find seven grand in there and you’re not happy about it.

00;22;36;02 – 00;22;43;20
Speaker 4
It’s kind of a good thing, though, because now, you know, you could take that 7000 and go make more with it if you choose to. So this is the opportunity when.

00;22;43;27 – 00;22;55;06
Speaker 3
Yeah, Yeah, well, you’re a winner, Ken. That’s what you that’s what you see. But I think a lot of people get a little sad for a second and then, then, you know. Yeah. Stages of grief, seeing the wasted ads then so.

00;22;55;06 – 00;23;10;28
Speaker 4
Well this was so as we go back through they’re reducing wasted ads you keywords missed spend focusing on tacos trimming your catalog. If you have unprofitable products just getting rid of them, then you’re not spending money on inventory and wasting ad spend. And so lots of different tips and tricks there.

00;23;10;28 – 00;23;29;04
Speaker 3
Yeah, there’s maybe an argument to be said about, you know, we all saw what happened over COVID. If you’re selling during this time that, you know, the essentials got prioritized. I think if you can at all, this is probably, you know, it takes longer and it’s harder. But if you can be positioning certain products as more essential or get into the lines of product that are essential, I think you’ll be more recession proof.

00;23;29;04 – 00;23;45;21
Speaker 3
People will cut in reverse order of sort of Maslow’s hierarchy of needs. Right. They’re going to cut the you know, the vacations are going to go first and then the, you know, the luxury, you know, whatever it is. And it all gets that. And, you know, and the last thing it’s going to be cut is a bag of rice or something, you know, So I think get into the rice business.

00;23;45;21 – 00;24;09;13
Speaker 3
But like, if you if you have the money’s in the right services. Okay. Listen, Rice they need something to cook the rice certainly it’s a sort of related, but not quite. I do I am seeing a play recently that’s working nicely. Like if you notice that some of your orders are coming from B to B sort of business to business people buying up a larger quantity of items, you can just make it easier for those folks and roll out a, you know, child SKU variation that’s a ten pack or 12 pack or something.

00;24;09;13 – 00;24;12;25
Speaker 3
Just make it super easy to buy, get the high cart value going. It’s not a bad thing.

00;24;12;25 – 00;24;32;03
Speaker 4
I just saw actually saw an article that came out replace pulse you yesterday or the day before I oh 35 billion is annual B to B revenue that Amazon pulls in and so yeah we a strategy we do is decrease a B to B price a couple bucks, you know 5% to 10% and give them something and then add in some quantity packs if the product makes sense.

00;24;32;03 – 00;24;40;09
Speaker 4
Yeah, you know, discount three, five, ten just add in those discounts, you know, extra, extra 2%, 4% from B to B is a nice little bump. Yeah.

00;24;40;09 – 00;24;49;08
Speaker 3
And don’t increase your complexity that much when you make those quantity packs are you immediately sending something to FBA? Are you doing FBM for a while. The test, the test, the waters on that. Let me.

00;24;49;08 – 00;24;57;05
Speaker 4
Clarify. So not so quantity discounts and so you can set you know, you can give a B to B price and then you can also set a quantity, a price discount.

00;24;57;06 – 00;24;58;04
Speaker 3
Oh, gosh. Gotcha. Okay.

00;24;58;05 – 00;25;15;15
Speaker 4
So not not a different not an whole different to Asia Muscat. And they buy to it. They buy five of this one. You give them 15%. If they buy ten, you get them 25. And so the FBA fee decreases by like 30 or 40%. Once it’s over, I think five. And so margins increase even if you give them a discount.

00;25;15;15 – 00;25;18;07
Speaker 3
Yeah, no, it’s good stuff. B2B on Amazon still pretty underrated.

00;25;18;07 – 00;25;30;14
Speaker 2
Anything else on recession proofing business income? Good. Awesome. All right. So Pat, you recently shared who’s got to win Teen Motivation Exercise. How has this helped your team and do you recommend this practice to others?

00;25;30;15 – 00;25;49;01
Speaker 3
This is okay. So we’re sort of shifting into management. I recently attended a sales training session and this guy, he’s a he’s a, you know, professional sales trainer. So he helps salespeople perform, perform better. And he starts every session by saying, okay, who’s who’s got to win? Who’s going to win from this week? And remember, no win is too small.

00;25;49;01 – 00;26;12;19
Speaker 3
And I was sitting there like, oh, my gosh, Like, you know, let’s just get down to business here. Like, this is this is some wishful thinking, you know, hugs and rainbows kind of stuff. I’m not into this. Let’s just But then I saw as as he went around and people started listing their wins for the week, it was sort of perk up and they would get into this mental state that was a little bit shifted from how they came in and admittedly it brought my mood up a little bit too.

00;26;12;19 – 00;26;27;13
Speaker 3
And so reluctantly I was like, All right, this is I guess this is okay after all. And then I looked it up afterwards. And if you look at the work of like a Tony Robbins or something like that, you’ll see that they’re big on priming, which is like a change in mental states that you basically force upon yourself.

00;26;27;13 – 00;26;41;28
Speaker 3
You can change your posture, change your breathing, think about certain things that that you’re grateful for. And this will change the mental state. And it seems a little seems a little out there. But I went back to my sales team and I was like, What the heck, Why not? Yeah, who’s that? You know, a couple days later, I was that guy who’s got to win.

00;26;41;28 – 00;26;56;25
Speaker 3
And remember, no win is too small. Let’s see what you can do. And and initially people are going to be really resistant like I was though I guess it’s dumb. This is you know, I don’t have a win that big enough, worth celebrating, you know, whatever. But then with me and my team, the first person said a win and they felt good about that.

00;26;56;25 – 00;27;13;21
Speaker 3
Somebody else wanted to show them up a little bit, told them something else, and it did. And it snowballed. And we had an excellent day. So, yes, reluctantly I am here to report that priming with teams does appear to work. And this could be, you know, this could be anything. The first couple times you do it, people are not going to be used to it and they’re going to be reluctant like I was.

00;27;13;21 – 00;27;34;10
Speaker 3
But over time, they will learn to, I think, enjoy calling out these these moments. And I think it just returns your brain to the initial state where you were when you were victorious at doing something specific. And so you’ll then reenter that zone and you’ll perform like that for the rest of the day, week or month, Whatever should be done pretty frequently, though, I think, yes, I thought that was just a cool thing for for Amazon sellers working with teams.

00;27;34;10 – 00;27;46;11
Speaker 3
If you got someone working the ads or working the listings or, you know, answering buyer or seller messages like, you know, whatever it is, you know, product sourcing, whatever it is, just, you know, in that quick huddle, you could change their outlook for the whole day. I think that’s important.

00;27;46;11 – 00;28;03;24
Speaker 4
I like that. And it’s definitely something that David and I, we practice every week with our team. I think I think what I’ve seen, especially if you have a fully remote team, I think a lot of entrepreneurs get comments, especially I know Pat, you guys have, you know, maybe an office, but maybe some remote. Our team is fully remote and so bringing everybody together and then kind of sharing.

00;28;03;24 – 00;28;16;11
Speaker 4
So when you get to hear about what someone else in other departments been doing all week or their major win for the week, and it kind of like, Oh wow, that’s kind of cool. You know, they’ve been I mean, seeing them all week, or maybe I’ve seen them in a meeting or two, but they’ve had this huge win.

00;28;16;11 – 00;28;22;18
Speaker 4
And so it’s just like a series of wins that kind of builds, builds everybody up. And so I’m a huge fan of that.

00;28;22;19 – 00;28;30;05
Speaker 3
I didn’t think it would work. It’s simple, but it works is the thing I’ve been trying to implement recently. It’s a the if it looks stupid, but it works, it ain’t stupid.

00;28;30;06 – 00;28;55;11
Speaker 2
I think it’s especially important, maybe even more important with virtual workforce, because oftentimes you don’t have like that chatter by when you’re getting coffee or on the elevator or whatever. And so I, I find myself liking to have that. We do it at our Friday meeting, our team meeting, and I look forward to that. And it was funny, we skipped a Friday meeting last week and I got my haircut and I was just telling my the person cut my hair all about my week.

00;28;55;11 – 00;29;08;09
Speaker 2
I was basically sharing my wins and and I realized like, Oh, you like you need this like you. And this is part. Yeah. And at the end of it, she’s like, Hey, it sounds like you’re having a pretty good day. And I’m like, Yeah, I am.

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00;29;08;11 – 00;29;09;09
Speaker 3
It’s so cool.

00;29;09;11 – 00;29;12;22
Speaker 2
I think it’s, it’s important to have that. So now good stuff.

00;29;12;22 – 00;29;24;29
Speaker 3
Yeah, I was just because I was in the mindset that, you know, we got to attack problems. Let’s talk about problems so that we can fix them. It’s still constructive in nature, but I was totally missing that. You know, you can change state by recalling some things.

00;29;24;29 – 00;29;44;11
Speaker 4
So I got one more question before the hour. One more topic to discuss before the fire round and so this is something where, Pat, you shared with us last time you’re on the podcast that you’re you’re in training, jujitsu. And so and you’ve noticed, you know, I wanted to kind of chat about like, I mean, notice like connections between e-commerce or marketing and jujitsu and kind of talk about that.

00;29;44;11 – 00;29;51;03
Speaker 4
I think David and I have shared on the podcast before that we also train jiu jitsu, and so there must be something like going on there. So what do you what do you think?

00;29;51;03 – 00;30;10;19
Speaker 3
So so I’m available. I’m just getting started. I’ve been at it for about a year, so, you know, we’ll chat again. Episode 303 50 whatever, however long it’s going to take to get some do get some color changes here. But yeah, no, I started it and I just well, first I hated it because you just beat up so badly without any awareness of the sport at all.

00;30;10;19 – 00;30;25;14
Speaker 3
You just just can just get annihilated. And I’m on my first day, you know, I’m a little bit of a bigger guy, so I didn’t get any mercy whatsoever. And I think I was also like, tensing up a lot. I was really resistant as just sort of this wouldn’t wouldn’t flow role at all, which is like I wouldn’t take it easy.

00;30;25;14 – 00;30;51;21
Speaker 3
I was just showed no mercy, got beat up a ton and only now maybe I understand a few words of this language, but barely. But yeah, the one you know, the one interesting thing that I sort of have observed from and for folks who are unfamiliar, I mean, this is a grappling sport. If you’ve ever seen the UFC and the part where they’re sort of rolling around on the ground in a mangled sort of mess and they’re trying to get either, you know, either a choke or, you know, a limb, there’s potentially an arm break, something like that.

00;30;51;21 – 00;30;54;10
Speaker 3
That’s that’s what we’re talking about here. Do you guys do gear? Nogi?

00;30;54;14 – 00;30;54;28
Speaker 2
Nogi.

00;30;54;29 – 00;31;13;29
Speaker 3
So, yeah, it’s either in the pajamas, it’s in the bathrobe, or it’s not. It’s in regular people clothes. They’re just maybe a bit tight. Yeah. So, so there’s a but there’s a saying in jujitsu, which is like, which I, somebody told me early on, which is like position before submission, which means that you have to be in an advantageous position in order to finish the fight and you have to work your way up to that point incrementally.

00;31;13;29 – 00;31;33;29
Speaker 3
You can’t just instantly, you know, unless you, you know, flying arm bars or whatever, they are common. So we do in that stuff. But you got to work your way up to a position where you can sort of win the win the encounter. And, you know, I realize that there are some similarities between that and being a marketer in the sense that you can’t, you know, people often don’t they’re not going to buy right on the spot.

00;31;34;01 – 00;31;59;23
Speaker 3
That instantaneous event doesn’t happen. You sort of need to build what people would call in marketing a funnel, right? So you walk them through step by step by step with increasing sort of advancing steps to to the final to the purchase event. And so that’s and so I’m sort of starting to visualize a jujitsu like funnel where it’s like, you know, start on, you know, start on the feet, get some ties, do a take down whatever, get the person down, pass guard, get to an advantageous position and go for the submission.

00;31;59;23 – 00;32;14;09
Speaker 3
And the same thing is like if you see an idea like an ADA awareness funnel, it’s like, you know, they know about the brand at first and then you get an email address and then you know, you communicate by email, you run a sale and you get the, you know, and you get the purchase. That’s it’s a strange pair.

00;32;14;09 – 00;32;24;23
Speaker 3
I’m not quite sure what to do with this concept yet, but I’m just sort of it’s just something I’ve sort of started to, to notice and there’s a bunch of sort of but yeah, there’s a bunch of other kind of life lessons that I’m starting to absorb. But it’s again, well, we’ll talk again later.

00;32;24;23 – 00;32;38;25
Speaker 4
Yeah, it’s an interesting concept. It’s kind of like it’s you’re given a kind of a roadmap in terms of like just you you’re given a roadmap of all of these moves and sequences. Like you said, you know, you’re starting to stand up, take them to figure out, you know, and the same thing with, you know, marketing and other stuff.

00;32;38;25 – 00;33;05;05
Speaker 4
You’re given a roadmap and then you’re kind of set free to go execute that roadmap. And then along the way should happens and something goes sideways. And then I think it’s the, you know, entrepreneur is like we’re gritty, right? Like we don’t give up and we like problem solve. And so I think like both of those, like for me it’s like, you know, your problem solving, you know, if someone has their, their arm around your neck and they’re trying to kill you, you need a problem, solve that or there’s not a good alternative to that.

00;33;05;05 – 00;33;16;03
Speaker 4
And then the same thing with your marketing. You know, if you’re you’re wasting a ton of money or, you know, or something’s not working out, you need to solve that problem to get to the next step. And so I definitely kind of see that that parallel there.

00;33;16;06 – 00;33;40;00
Speaker 2
You’re one of jujitsu and you’re one of running a business is not dissimilar. You’re one to jiu jitsu, you’re getting choked out. 20 times of practice and you’re one of businessmen. I mean, it’s just full of failures. And it’s a feedback loop, though, right? You like, Oh, that didn’t work. I’m going to do this differently. And like, if you can kind of adopt that same mindset, I think it works in jujitsu and in business because the people that go to practice want to get choked out 20 times and never come back.

00;33;40;00 – 00;33;42;22
Speaker 2
Like I would argue, they probably won’t be great at running a business.

00;33;42;23 – 00;34;04;13
Speaker 3
If you can’t start a Shopify store like, Yeah, yeah. On this topic, which is super does talk about leverage, right? Like introduced there’s a bunch of there’s an older gentleman at our, at our gym. He’s a black belt. He’s great but he’s you know he’s, he’s getting on in years, but he’s still so excellent at the sport because he understands leverage and body mechanics and his you know, he doesn’t he’s not stronger.

00;34;04;16 – 00;34;20;20
Speaker 3
You know, he’s not stronger than a, you know, a 30 year old weightlifter powerlifter. He’s not stronger than that person, but he’s still better because he understands leverage like so he knows exactly just is one of those things where it’s not just a brute force thing. Right. And so I think in, you know, in business, you know, seems to be the the same way.

00;34;20;20 – 00;34;39;04
Speaker 3
Right. Or you can get a lot of leverage from, say, media, for example, like you, you know, a low leverage activity. You could go down to town square and hand out Amazon coupons for your product, right? Or you could get online, you could build a media presence with leverage. You could, you know, leverage influencers or whatever. You could do a a more high leverage play with the same amount of effort.

00;34;39;04 – 00;34;42;17
Speaker 3
And so I think that’s that’s another similarity that I’ve, you know, I’m starting to notice.

00;34;42;17 – 00;35;03;07
Speaker 4
So I think it’s super niche, but a very interesting and I’ve got a couple of other friends in the e-commerce space that also train Jiu and I’m kind of like, there’s something there. You know, it’s like overcoming adversity, solving problems we face that, you know, on the day to day. And some of the other benefits for anybody listening is does never train jiu jitsu is like it’s a little e-commerce entrepreneur marketing.

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00;35;03;08 – 00;35;23;18
Speaker 4
It’s a lonely life where we’re grinding away all day and at a keyboard. And so it’s a great, great way to like exercise. Also, I found that a lot of people that I’ve met on the MATS training is they’re like, really good people and it’s just a great outlet to go out and, you know, take out some aggression or just have a good workout and yeah, meet some people and enjoy your time.

00;35;23;18 – 00;35;33;00
Speaker 4
So I enjoy it. So maybe on episode 350 we’ll have you back on pad and revisit anything else we want to cover before we get into the fire around.

00;35;33;01 – 00;35;35;21
Speaker 3
No, let’s get into it. Let’s talk. Yeah, we got to sell the fire up.

00;35;35;21 – 00;35;39;13
Speaker 4
This is your third fire round. Are you ready? Ready. All right. What is your favorite book?

00;35;39;13 – 00;35;44;27
Speaker 3
I am Liking the Secrets trilogy by Russell Brunson right now is the founder Clickfunnels. Awesome.

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00;35;45;02 – 00;35;45;26
Speaker 4
What are your hobbies?

00;35;45;26 – 00;35;48;24
Speaker 3
It’s just all been. It’s all been jujitsu and some weightlifting.

00;35;48;24 – 00;35;53;16
Speaker 4
What is one thing that you do not miss about working for the man set schedules?

00;35;53;16 – 00;36;00;26
Speaker 3
I figured out. I like to work very late at night and so the night owls and the the early folks get to set that timing and it’s awesome.

00;36;00;26 – 00;36;06;01
Speaker 4
Last one. What do you think sets apart successful entrepreneurs from those who give up, fail or never get started?

00;36;06;01 – 00;36;25;09
Speaker 3
I think it’s get knocked down seven times, get up eight. Like over a long enough period of time, you will be successful as long as you keep persevering and intelligently improving and refining the approach. It’s a do more of what’s working like. This is something I’m really trying to implement. Just do more of what’s working. Even if you have one sale from ads, right?

00;36;25;10 – 00;36;33;08
Speaker 3
One sale from ads can become three, sales from ads can become ten sales. And you know, so it just take an incremental approach. Yeah, you can’t fail if you don’t quit.

00;36;33;08 – 00;36;34;20
Speaker 4
David over to you to close out the show.

00;36;34;25 – 00;36;45;05
Speaker 2
So Pareto, to follow up questions to our listeners that are ready to take their PPC to the next level and work with your team of professionals, what would be the best way to get in touch?

00;36;45;05 – 00;37;02;21
Speaker 3
Well, you know, I just I wrote a free 40 page book with all of our secrets in it, and we’re just being super public with it. So even if you wanted to take all of our stuff and implement it yourself, you can do that. That’s at Astro Dexcom slash action dash plan. And if you did want to get a custom strategy for the business, we’re also ad Astra Dexcom Awesome.

00;37;02;21 – 00;37;08;13
Speaker 2
We’ll post a link to that in the show notes and you’ve been putting out some awesome content on YouTube. Where can people find you?

00;37;08;13 – 00;37;12;22
Speaker 3
I think just YouTube, my name Space lum and should come up.

00;37;12;22 – 00;37;20;11
Speaker 2
Well, we will post a link to that as well. Pat, I want to thank you for being a guest on the Firing Man podcast and looking forward to having you back on again like sir.

00;37;20;12 – 00;37;22;01
Speaker 3
So you guys sound all right about.