Stay In The Loop

Sign-up for texts from Nik on all things DTC, trending business news, and the best place for Pad Thai.

Text With Nik

Sunday Email: My strategy to lower CAC by 40% with influencers

This email was sent out to my email list on November 22, 2020.

Sunday EmailsNik Sharma

Happy Sunday!! I hope you're spending some time with your family as we approach Thanksgiving, but also the most ludicrous week in commerce, preparing for Black Friday.

If you wanted to get some thoughts on how I'm thinking of Black Friday, you can read my email on what I'm doing with my brands here, you can also see some thoughts I shared with Modern Retail here.

Really quick... can you reply with your favorite song? Spotify/Apple Music links are preferred. You can only play the new Big Bootie Mix so many times.

For today's email, I was confused as to if I should go a gift guide for the holidays, or what to even write about. Then as I was walking around in Soho on Friday night, I saw a poster outside American Eagle with Addison Rae, and I thought, why not write about influencers, and how 99% of brands have no clue how to work with them!

But first, an exciting announcement, I am launching my personal website! The domain is nsharma.co and it has a Journal with my thoughts, a UTM Builder you can use to better track your campaigns, a growing Careers/Job Board (lmk if you have a job to post), and over-time I plan to add more resources. I didn't want to build a silly site about me, I wanted to create a place to be a resource to other people. I would love your feedback, and especially if there's something you'd like to see there that isn't there yet. Big thank you to Patrick Johnson (developer) and Lisa Hedge (designer) for helping me bring this quarantine project to life.

Ok, so influencers... we all know who they are, how they make money, and why we follow them, but why do so many brands not understand how to work with influencers? It blows my mind.

Most of my audience works in DTC or at brands doing <$500M per year, so I want to make this take more tactical instead of talking about how brands like American Eagle work with people like Addison Rae. The short of that is that they invest heavily into top of funnel (TOF) marketing and their stores and promotions act as the bottom of funnel (BOF) to bring people into the store.

Today, I want to talk about how I have worked with influencers in the past, both from a paid, and un-paid/organic perspective... because it prints money.

When I was at a beverage brand a couple of years ago, I had the autonomy to do anything I felt would be good for the interest of the brand and lead to revenue. So when it came to influencers, I figured there's got to be two main ways to go about this:

1. Find ways to be the go-to drink for influencers, especially YouTubers. This allows them to develop a habit around using the product, and eventually, you won't be paying for placement, it ends up on their desk, in a vlog, in the hands of other influencers when they come over, on Instagram stories, etc.

2. Find the right influencers to post about the product, and when they post about it, give them a specific link so I can track revenue back based on the UTM parameters (you can build UTM links for free here). I would then mask the really long URL with something short & sweet like JUDY.co/MrSharma ... notice how the URL is clean for the post, but when you enter it, it changes to something easily trackable.

As I began seeding product, I also realized that influencers get packages all day, and I didn't have the budget to go make a really custom influencer care package, nor was that something that's quickly scalable, so I thought, "Let me just send them an ABSURD amount of product and try to figure out flavors that they might like."

It worked. Within 24 hours of sending 108 bottles to Sara Dietschy, a YouTuber and dear friend, she posted this (click the pic to start the video at 3:55):

Her whole brand was "Sara Dietschy, Rhymes with Peachy", so I sent her a ton of peach flavored water. She was also a La Croix drinker, so I personally enjoyed her calling out La Croix for never being supportive of creators, whereas we were.

This strategy worked. Soon enough, I had every YouTuber, photographer, influencer, and creator in New York and LA drinking Hint, and those that didn't have it wanted it.

To the second point of tracking influencers’ sales through organic posts, that rarely worked effectively. Why? Because the strategy itself is an awareness generation strategy, not one for driving sales. It works for American Eagle, Nike, etc., but it's not the most effective for smaller brands, because we're looking for a return on investment (ROI) of our marketing efforts.

We tested sponsoring 2 YouTuber friends to see if we can put a link in the description and drive some revenue. We did it with Danny Duncan and Gabbie Hanna (aka The Gabbie Show). Both drove a lot of traffic, but the numbers didn't blow me out of the water. When we repurposed Gabbie's video as an editorial piece and drove traffic, we found that actually drove more revenue back to us.

So, knowing that the article did better through paid media, leveraging a creator's journey/story with Hint, the next logical step was to pivot our influencer strategy and try to create one where we work with creators to create really interesting content, where WE provide value props, and THEY story-board, direct, shoot, edit, and deliver content. I also figured, let's try running it from their Instagram and Facebook pages, too. This was 2017, so no one was doing this at the time.

The result was incredibly successful. Below is an example of this in action, also with Sara from earlier.

The URL in the post, and behind the ad, went to a landing page optimized with an offer, and in true Sharma fashion, we created an extremely optimized funnel from the ad to checkout.

This ad lowered CAC by 40%, and had immense scale behind it. Why? Because it was concise, entertaining, hit all the value props (including a customer's pain points with diet soda), and had a convincing offer to sample the product.

Today, we still do so much of this with our clients at Sharma Brands, but of course, many people have caught onto the tactic now. Now the leverage lies in WHO the creator is, WHAT the content is, HOW the content is cut-up, and WHY someone should have the motivation to buy the product.

It's one of my favorite ways to work with creators and influencers, and it also helps them out immensely — they get more impressions, reach, and followers throughout the process.

One last thought with creators/influencers, from a brand perspective: you can't just have a transactional relationship. You need to invest time, energy, and give back to the community of creators. In New York, pre-COVID, I would host dinners all the time bringing creators together, or sponsor and co-host events with Chris Hall, whether it be renting out a pop up space for a fun night, or a sunset boat cruise. It takes work!

My Favorite Brand of the Week:

Italic.com

One of my friends, Jeremy Cai, started this business a little while back, and his goal was to take those ALO Yoga leggings you love, and get you the same exact pair without the ALO logo for $30, vs $108.

Jeremy has a team in the US, and also a team in China where they source all their products from some of the most high-quality manufacturers.

The best part? It's $100 per year ($8.33 per month) and you get access to everything at cost. Leggings, bomber jackets, backpacks, scarfs, sweats, wallets, etc.

Check it out — Italic.com

My Favorite Software of the Week:

Alloy

A few weeks ago, I had 7 people tell me I had to meet this girl Sara Du, the founder of Alloy. She built the perfect marriage between eCommerce & Zapier, allowing you to automate so many things amongst your eCommerce stack (Shopify, Klaviyo, PostScript, Pixlee, etc) and save your more time / make you more money.

JUDY was on Oprah's Favorite Things, where Amazon orders spiked. Due to that, we could make a rule that if an order came through Amazon that we were going to fulfill, we can automatically add a line item to insert a branded JUDY note thanking them for their purchase, and to let them know where they can reach us for any questions.

Try it — runalloy.com

Resources:

I did a 2-hour long podcast with my best friend, David Perell. You can listen to the episode here. It was a banger, and I'm grateful for all the positive feedback I've gotten on it, and to finally put out some more content with David. If you missed our epic article 2 years ago, read it here: The Customer Acquisition Pricing Parade.

On that podcast, I spoke about how I think about positioning/messaging testing for new brands using the ideas of avenues and Cul-De-Sacs. You can read an in-depth post by Shane Rostad on that concept, here.

Lastly, I shared my thoughts with Modern Retail around how brands in my network are thinking about this year's Black Friday, you can read it here, OR read my raw and unfiltered Black Friday thoughts, here.

From Savannah, one of my personal favorites for Facebook and ad creative, check out how she is setting up her ad account. And, if you like that, this is another good thread by Gil David on BF/CM ad account setups. Both are great follows on Twitter, too.

Previous Emails:

My 2021 Q1 Brand Strategy

My Paid Media Strategy

My Thoughts on Black Friday

My Landing Page Formula

I appreciate the time you took to read this so much, and thank you so much for continuing to read this newsletter. If you'd like to get any friends, colleagues, or family members signed up to get my emails, have them enter their email here: https://sharma.ck.page

Text me if you need me, otherwise see you next week!

Nik Sharma

917-905-2340

nsharma.co