Igloo July Founders Memo

Dear Founders & Friends,

Summer is in full swing, and of course, Wimbledon rained for 3 days this year - some things never change…HOWEVER…

We’re so excited to keep adding folks to this newsletter, and after last month, we’re super grateful to have had even more founders join the Igloo club and we’ve seen some great interest in Igloo Assistant so far, particularly for folks on the design front. For those who missed last month’s newsletter, you’ll see at the bottom another link to check it out!

This month, we’d like to discuss a common misconception - founders asking about ROAS instead of focusing on LTV - some tips on customer journeys for subscription businesses, and of course some founder call outs.

STOP LOOKING AT ROAS! Instead, how can you retain customers and account for LTV in your CPA model?

Much easier said than done, but the term “let the product do the work” applies for both the longevity and the success of a private label entering or remaining relevant in their niche. After speaking to maybe 1,000+ D2C companies in our 2 years here at Igloo, the MOST sustainable businesses and least affected by e-commerce downturns come from founders who’ve built a product, a service or an offering that is 1) Higher quality, and also a better offering than competitors with 2) customer experience and journey that is unique or exceptional, and 3) Retention rate of existing customers that is strong, with a low return rate, equalling a higher LTV. And 4) Of course, unit economics (margin, etc) that make sense.

Patience is something extremely hard to come by, and, granted, building a great product, with great design, or with exceptional customer offerings, takes time. However, if you’re looking at the success of your brand 3, 5, 10 + years down the line, finding ways to shift your business towards focusing on the LTV (life-time value) and the retention of your customers will be immensely rewarding. This is where brands can shift from a ROAS (return on ad spend) model, to a CPA (cost per acquisition) model, where you’ll become less reliant on the ad engines. ROAS models only really make sense for businesses that:

• Customers are likely to only ever purchase once, and the need for a second, third item from the catalogue is low.

• Time between purchase cycles exceeds the businesses cash flow capabilities. If you have a subscription model, but it’s every 6 months, then you need to be able to fund the 6 month cycle in the meantime. Granted this can be hard.

However, this is where we ask our founders, “how are you retaining your customers, and what cost effective ways, are you strategising to get them to repurchase, or retain without having to pay for them.” Here’s a great example of a niche where this is easily forgotten:

FASHION (kind of a big industry too)

Surely, I can’t be the only one with a wardrobe of just 2 brands?

People are extremely brand loyal when it comes to fashion, like in technology and others. If you can, you need to start looking at your brand like a subscription business. If a t-shirt costs me $50 to sell, and I make $50 per sale, that’s no good. But what if it cost me $50 to sell, but I could find a way of getting my customers to buy multiple times, for the same CAC? What is it that makes customers repurchase from the same brand? Is it product quality? Is it the packaging design? Is it my email strategy? Is it my return policy? There are lots of ways you can tweak your e-commerce engine to enhance the user experience. That way, your passive organic revenue over time builds, and your margin per customer, over time, increases. Boutique and high-end fashion is a great niche to analyse when looking at profitable, high LTV businesses in a very competitive niche. Why? Because they boast low, sometimes no return policies (little extreme sure). They promote exclusivity with each purchase. They tailor packaging exceptionally, so the customer feels special. They resonate with an audience they know very well or can relate to.

Find ways to enhance the customer journey, purchase experience and post-purchase experience, to build a much stronger retention rate. You’ll be rewarded in the long-term.

One of my favourite examples is Apple. Don’t make the mistake of thinking you’re too small to compare yourself or learn from the biggest co’s in the World. I read After Steve and learned a few things I never knew about the tech giant. A great example of how attention to detail transcends from the workshop to Jony Ive’s studio, is Apple’s packaging. Have you ever noticed when you unbox an Apple product, the box opens in slow motion? The exact same way when Apple reveals a product at the Palo Alto auditorium. The slow motion packaging, evokes that feeling of suspense, like unveiling a piece of art at an auction house. So simple, yet so effective. How is your customer’s experience when they open your product?

An Email Marketing Master Piece - Scandinavian BioLabs.

Must read!!!

Founded in Denmark, here’s a brand, who I’ve had the pleasure of meeting last year, who I’ve admired the customer experience of…and here’s why.

Admittedly I recently subscribed to a 3 month subscription with these guys, to get a feel for how my hair health can be improved, and of course, to see the results of the treatment (will keep you posted on this!). But one thing I told Anders, the founder, is that I’d not experienced an email marketing strategy quite as intimate from a brand ever. It’s something he said they worked extremely hard on, at SBL. From welcome flows, introducing the founding team, education, learning tools, science focused insights, free consultations and more, Anders and his team have conquered the email experience to provide what feels like a personal journey for everyone under their wing. Granted hair loss, or healthcare is a lot more personal, than maybe buying a t-shirt. But does it have to be? Ultimately I just care about the result. BUT, the user journey, experience, and of course science behind the product will be a big contributor to why I want to stay with a brand that’s still 1) openly more expensive (actually quite a good creative strategy for Meta ads), and 2) has so many competitors with credible clinical studies as well.

Just fyi, I had had 9 emails (NOT including order progress notifications), in the last 30-days, keeping me up to date, informed, and learning about the product.

See below just a few examples:

All exceptionally designed and tastefully written. For brands that are new, or feel like they haven’t quite executed the email strategy / experience for their customers, I strongly encourage you either sign up to their newsletter, or honestly, just buy a product to get a feel for how they execute the user experience. You’ll pick up some excellent learnings on the email front.

Founder feature: Drew Isler & Harvest Art Gallery

MUST READ!!

Drew may be the most positive and optimistic founder on the planet, and Harvest Art Gallery (founded in Nov 2023), is an expression of just that. With a base in Chicago (big up Chi-town!), Drew has brought vinyl discs in frames and prints to office interiors, people’s homes, student dorms, and more, since he started the company. With goals to furnish larger offices and expand his B2B engine, Drew’s background in HR has also allowed him to closely understand the dynamic of the corporate World. He explains:

“I was actually Director of Human Resources for a finance company. I never thought I'd find myself in Human Resources but it suited me well. I loved getting to know the people of the company personally and I enjoyed being a part of the system that made the company function cohesively. Interestingly, it gave me good insight into how a successful business operates, and how to recruit great people to make that happen.”

What’s awesome is that Drew even takes the time to sit down with customers, and learn more about what they like about the product, their home space or where they chose to display the records, and what he as a founder can to improve their customer journey. By improving the customer experience, Drew has helped people in his customer base, come back (sometimes as many as 9 times), to buy gifts or add to their collection. Talk about LTV!

Tools that rule: HotJar

Ever wondered how your customers are navigating your website? Try HotJar with a free trial!

We’ve used HotJar (and Microsoft Clarity), dozens of times, to learn more about how users are navigating a website. While it’s common knowledge that users generally buy products when reading in an “F” shape (right to left then down the left side), every websites user experience is slightly different.

Especially for founders who are looking to see where their users are dropping off, how they’re behaving, where they spend a few seconds confused or unable to navigate in the funnel, HotJar’s screen recordings allow you to watch these users literally navigate your website in real-time. A very valuable and interesting software, that will help your UI team, or website designer make tweaks, test LP’s (please measure TOF and BOF metrics using GA) and improve your funnel experience. Microsoft Clarity is also a robust product that does the same, and we can’t recommend them any more.

Scott speaks about Airbnb’s role – if any – in the crisis of housing affordability. He discusses the danger of microplastics and advice on raising American children in the UK. Listen here

• Easy Watch: Smartless podcast (interest: acting, comedy).

• E-Commerce: Limited Supply - Nick Sharma & Moiz Ali (interests: e-commerce, FB, Google, Shopify, fundraising)

The changing of the guard

Some of the latest news and headlines at the macro level. Just a few snippets.

• Global tech outage: Systems crashed around the World, thanks to MSFT and CrowdStrike. Luckily some places were giving away free coffee. Read more

• Looks increasingly likely that we’ll be entering another Trump administration, with Biden dropping out of the Presidential Race. BBC News

• Small-caps crushing Blue chips this month: The RUSSELL2000 outperformed the S&P500 Index, by 10%, as stocks rallied in light of a potential Trump re-election. Read more.

• Tariffs on China Continue: What this means for US consumers. Read More.

• UK election spotlight: Labor Party swept through the polls, GBP strengthened against the USD. Here’s what the new party intends to take action with: Labor Manifesto

• Carlos Alcaraz wins Wimbledon, his 4th grand slam at aged 21 (WTF!): Read more

• Messi can’t stop, won’t stop winning: Argentina Wins 2nd consecutive Copa America. Read more

Few highlights from the week…

Looking to pull specialists in-house at lower fees, but more experience?

Finding skilled individuals, that meet a long list of your brands criteria can be challenging. Part of the reason why we co-founded Igloo was to be able to introduce senior folks as operators onto accounts, work hands on with founders and at affordable rates. That’s why we just launched Igloo Assistant. Not everyone’s comfortable with the agency model, and some founders, understandably, just prefer having their directors and associates in-house. So if you’d like to learn a little more about Igloo Assistant, please reach out!

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