OAS Max | Growing Your Retail Business

 

If you want your business to be the brand that many will talk about, Max Kerwick is the guy for you. He is the co-host of the Brand Builder Podcast who specializes at transforming businesses into brands. Having learned from platforms like Amazon, Max talks about what building a brand means to him and how to become an effective Amazon entrepreneur or a multi-channel business. He also explains the process of pivoting the average Amazon business to another business. Know more about Max’s insights on how to grow your retail business, how to grow your brand outside Amazon, and the mistakes you can avoid along the way.

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Growing Your Amazon Retail Business To Your Own Platform with Max Kerwick

My guest is Max Kerwick. Max, how are you doing?

I’m doing great, Nathan. Thanks for having me on.

Thanks for being here. For those who don’t know, Max spends his entire career dedicated to helping businesses, both existing businesses with cashflow, products, and services and new businesses starting out. He helps them uncover who their best customers are, what messages those customers want and need to hear to come back for more and develop an innovative marketing strategy to bring those messages to life in the market. He does that through consulting with brands as a President of Brand Builder Strategy and cohosting The Brand Builder Podcast with Ryan Daniel Moran. You know him from Capitalism.com. Past experiences include developing brands and helping raise money for many venture capital-funded technology companies and eCommerce brands. As well as working directly with private equity and venture capital firms before and after investment in portfolio companies. That’s a lot and we’re going to dig all into that.

It is a lot, but to say that in plain English, I’m a brand strategy guy. I help people figure out what the story of their business is, what the story their customer is trying to tell about their life and how those two things play together so that they can scale their brand usually across channels. My most typical customer at this point is that seven-figure Amazon seller that’s trying to scale up Shopify, trying to get into retail.

I want to talk all about that, but first let’s take a gigantic step back. Did you always know you wanted to be an entrepreneur? Give us a peek inside growing up. Were you a straight-A student? Were you a rebel?

Growing up, honestly, yes. My dad was a consultant and he’s a different type of consultant to me. He’s a PhD statistician and helps people wrestle with huge amounts of data before big data was a trendy word. Seeing his path as the entrepreneur and the person, he had a small business that was mainly built around his expertise and worked with clients all over the world. Versus my mom who was the classic corporate warrior, worked in tech, an early contractor at Dell. Seeing the two paths, how they could run in parallel, but one was totally different than the other. I knew that basically from the age of fourteen, fifteen, I was like, “That’s more of the path that I want to take.” I’ve always had that entrepreneurial mindset and always been interested in that for sure.

The more you can niche down, the more you can understand exactly who your customer is. Click To Tweet

What was your first entrepreneurial venture?

This feels cliché, but when I was in middle school, I used to mulch all the yards in my neighborhood. We had a 30-house mini-pocket neighborhood and I’d walk around. I think it costs $100 to get a pallet of mulch delivered. With what I charge, I could end up making about $1 per bag of mulch, which for twelve-year-old you’re walking out at the end of the day and you got $85 in your pocket. That was pretty good for a day’s work. Over spring break, I would mulch all the yards. I was always a swimmer growing up, just sold out of swim lessons. Especially as I got better, I ended up swimming in college and so I had at least in my immediate community that was my way of parlaying my like, “That guy’s good in swimming.” I’d teach little kids swimming lessons. Those were my early ventures.

I feel like doing hard labor as a kid makes you never want to do hard labor.

It’s the worst. I live in Austin, Texas now and I grew up in Austin, Texas. Austin in April is awful. It is so hot. You’re in wheelbarrows full of mulch and spreading them out with shovels and stuff. I try to get friends to come to help me so I could hit more houses in one day. Usually they would only help for one, maybe two days, and then they’d be like, “I’m sorry, I’m taking this money and I’m out.”

Fast forward the story a little bit. How’d you get in with Ryan Moran? Walk us through your first real entrepreneurial journey outside of being a kid.

I start off my career in consulting. I was working for a consulting firm, essentially what I do now. I have a research background, but I also have a journalism degree. Brands were where I found the intersection of those things. I go out and I actually do research with customers and then I take those insights and use them to write messaging and come up with the story of that brand and everything. I was doing that for a small consultancy here in Austin. I met Ryan randomly through a mutual friend. At the time, I had no idea that this eCommerce world even existed. Typically, they were tech companies. They had either raised eight figures of venture capital or they were doing $50 plus million a year in revenue. I couldn’t see a way as a relatively young guy at the time like, “How I could get into that on my own?” I couldn’t walk into those rooms at 26 and be like, “You need to hire me as a consultant.”

I didn’t have enough gray hair. I didn’t have a huge team behind me or whatever. I found this eCommerce space and I met Ryan and we jelled a lot. We had very similar views on building brands and what that meant for both the company and the consumer and all that stuff. I found that there was this huge need where when you’re building a business on Amazon. If you’re not actively building your brand, you’re just building Amazon’s brand. It’s all these people who would build extraordinary businesses on Amazon of $5 million, $10 million with very few contractors. They would try to sell that business and they were a single channel business with a lot of risks. They wouldn’t get nearly the multiple that they were looking for.

OAS Max | Growing Your Retail Business
Growing Your Retail Business: A brand is the relationship you have with your customer.

 

They would try to, “I’m going to start selling on my own website.” They had no idea who their customer was or how to market to them. I saw a huge need in this space or the type of work I was doing and a lot more freedom. Tech companies are interesting. The challenges that they’re solving are interesting and all that stuff. It’s glamorous in the sense that there’s a lot of venture capital money, but they’re mostly trolls and they mostly have a very overinflated sense of their own self-worth. Going from that to working with actual profitable cashflowing businesses, delivering physical products to people was a really cool shift for me.

Let’s talk about the brand because I feel like that’s being pushed now. You’ve got to build a brand, but people look at it and they were like, “Amazon’s my moneymaker. For me to put money into Shopify or some other channel doesn’t make a ton of sense when those Amazon sales are right there.” You’ve got to build your email list. You don’t want Amazon to control the customer. What does building a brand mean to you? What’s the first step when you’re a seven-figure seller that’s really done Amazon so far?

A lot of people when they hear the word brand, they think of what I call brand with a little B, which is like, “This is my logo, my color palette, and maybe a nice story that someone wrote me that’s going to be the foundation of my marketing.” That’s not at all what I’m talking about. Those are pieces. Those are aspects of it. Those are things that people come into contact with. When I talk about the brand, I’m really talking about the relationship that you have with your customer. That is everything. Anything that they might come into contact with, that is how you deliver customer service. That is what your website looks like, that is the products that you sell and the quality, the packaging and the way that experience is delivered.

That is any ads that you might run into. All of that wrapped up together is the brand because that’s the way that the customer experiences it. I totally hear what you say. If there is more low-hanging opportunity on Amazon and that is your only goal is to increase cashflow in the short-term. Don’t go plow a bunch of money into the brand. It doesn’t make any sense. It doesn’t align with your goals, but if your goal is to increase the multiple of sale and then the value of your business when you go to sell it, then you need a brand because you can’t sell on your website the same way that you sell on Amazon. You can’t sell in retail the same way that you sell on Amazon.

Most people, what I refer to as the Amazon entrepreneur, their understanding of how to sell a product is they just throw it up on a marketplace, give away a bunch for free, and then sales magically start coming in. They ride that and launch more products. If you tried to do that in retail, if you tried to do that on your own website or whatever, you’re going to eat dirt the whole time. If you want to build a multichannel business, you want to build a business that is a legitimate asset to acquire any, then you need a story. You need something that is going to appeal to customers at a level beyond the logical like, “I’m looking for this product. This one ranks highly and has good reviews, so I’m going to buy it.”

What process is that? Is that a three-month process? Is that a two-year process? I know it’s ongoing, but what does it really take to pivot the average Amazon business and not just be an Amazon business?

The average process does take probably between three and six months. The first thing that you have to do is go and find your customer and figure out who they are. That is always the first thing that I’m helping people do. Let’s say I’m pulling some numbers from a client that I had. A guy who does about $2 million a year sells a product that is probably around $20. It’s technically consumable, but most people only buy at once. In the previous year he had 50,000 customers. When I ran retargeting ads and stuff to try to get people to take a survey or sign up for interviews or whatever, the response rate I had on that to the list of 50,000 that we had was something less than 0.01%. With his branding, that’s with the product that they bought in the ad, everything like that. There is no relationship there.

Asking open-ended questions can generate more useful answers from clients. Click To Tweet

They either didn’t like the product and don’t want to participate or they don’t even remember that it was there in the first place. They might go, “That’s just something. I don’t remember buying that or I don’t remember buying that brand or whatever.” From the people that did respond, we’ve got several hundred people in there. That data provided some really invaluable a-ha moments where it’s the kind of thing for if you had a different type of eCommerce business, especially a brick and mortar. It would be a no-brainer. You’d be seeing people come into your store, you would know exactly who they are, what things do they ask about, all that stuff. Instead, what you have is money coming in and you’re like, “This money is great. I love this money. I don’t know anything about the people who are giving it to me, why they’re buying it, what the story they’re trying to tell about their life and how this product plays a role in that story.”

How specifically do you need? Is it like females from the age 20 to 30 or does it get way more specific than that?

It’s way more specific than that. Think about it, females from the age of 20 to 30, how many women do you know between the age 20 and 30?

I know a good amount.

How similar are they? Across the entire board, there are probably some things that are pretty similar, but for the most part, some people are super outdoorsy. Some people travel a lot, some people are homebody. Some people go out, some people don’t. Some eat healthily, some people eat unhealthily. The common threads that bind people together are so much more often around interests and around lifestyle than they are around age, demographics, location, things like that. There are some exceptions. You sell baby products. Most of your customers are probably going to be new moms. There are some things there, but that’s so much more around lifestyle than it is around age. Some people have their first kid at twenty, some people have their first kid at 38, whatever. The story that woman is telling about her life is probably very different at that point. The more you can niche down, the more you can understand exactly who that person is. What they care about and where they’re trying to get in their life, the more specific your marketing can be and the more specifics your products can be in addressing their problems and things like that.

It sounds like you’re saying it’s all about the data. How do you get that data?

This is the part that if you’re a big enough business, you can pay to do it quickly. You could go out and you can reach target people that have been buying from you. You probably already have some email lists that you can go out. You can try to go out and use the customer-facing assets that you have to get as much data as you can and then use that to inform like, “How are we going to develop this brand? How are we going to change course? How are we going to make this compelling enough that people want to buy it outside of the Amazon ecosystem?” That’s if you’re at a larger level. That’s a process that I typically hit work on with people, but regardless of what level you’re at, it needs to be something that’s ongoing anyways.

OAS Max | Growing Your Retail Business
Growing Your Retail Business: Marketing is difficult, but if you have a story and understand who you’re going after and why they’re buying them, it will become easy.

 

The easiest first step that people can take and you can do this if you’re starting your business is set up your customer service process to allow for some ongoing data collection. Include somewhere between one to three simple questions that you ask. Once you’ve solved their customer service issue and you’ve done it in a great manner that leaves them satisfied with the experience whether or not they ended up liking the product. Instead of asking them like, “What’d you think about the product?” ask them something about themselves. Ask them why they bought the product. Ask what was going on in their life that they thought this product was going to be a good thing to buy. Try to understand a little bit more about who they are and why they bought the product. A lot of people are like, “How’d you like the product?” They just say, “It was good.” I’m like, “That’s because it was a bad question.” You need to ask those open-ended questions, let them tell a story about themselves and all that stuff. You’d be surprised at how helpful that information can be if you’ve collected over time.

Let’s turn our attention more to the marketing piece because I feel a lot of people get overwhelmed. Like you said with Amazon, you’d throw the product out, money comes in, sales come in. Marketing is that component besides Amazon PPC that you don’t really need to worry about. Outside of Amazon, you’ve got Instagram, you’ve got LinkedIn, you’ve got Facebook. You can go on and on. How do you figure out what the right channel is and where to invest your time? Is it something where you’re doing one at a time and growing? Are you going into a bunch at once? What’s your best strategy for that?

A couple of things, never go into a bunch at once if you can avoid it. I always recommend focusing on a channel until you can make it profitable, until you can at least make it breakeven. If you jump into retail at the same time as you start spending $10,000 a month on Facebook ads, you are going to be in the red for a while. If you have the funds to do that, if you have the stomach to do that, then great. I’ve seen some people do that. When all of that stuff all of a sudden clicks, their business becomes insanely profitable and they get that hockey stick part of their growth curve, which is great.

For most people it’s like, “You figured out Amazon. You have a sales acquisition channel, not a customer acquisition channel for the most part. It’s a sales acquisition channel. How can you reinvest that cash that you have coming into a customer acquisition channel?” If you’re going into your website, for example, marketing is really difficult. If you have a story, if you understand who you’re going after, if you understand who’s been buying your products and why they’re buying them, what they’re trying to tell all about their life. How are you going to go out and find new versions of that? How are you going to go out and find where those people live in the real world? Looking at it truly is not just sales acquisition. This is the biggest issue that I see from people going from Amazon to any other sales channel.

They’re used to thinking about profitability as like, “I acquired one sale.” Was it profitable on that sale? If you can figure out how much that customer is worth across their lifetime with you, whether that’s 3 months, 6 months, 12 months, 24 months, however you want to define it, then you can afford to go out. Marketing all of a sudden becomes much easier because this person is worth $100 instead of $20. Most people can’t acquire customers profitably if they’re only making $20 off them. If they’re coming in and they’re buying four to six products or they’re buying one small product and then a higher ticket item or something like that, then it’s much easier to figure out how to do marketing profitably.

What are some of the biggest mistakes you see when people are growing and scaling their brand outside of Amazon?

The biggest mistake I see is that they treat the other sales channel like Amazon. Their idea of a compelling Facebook ad is to literally put the product image with five stars, a certain number of reviews and literally just try to recreate their Amazon listing essentially. That appears in someone’s Facebook feed and they’re like, “I guess Facebook ads don’t work anymore. I put $20,000 into that,” and they have a $15 product and it never works. If you did the math on that for ten minutes, you would be able to figure out, “I’m never going to be able to sell this $15 product at a level that is going to make this channel profitable for me,” and then retail too. A lot of people don’t understand. When was the last time that you walked into a retail store, saw a product or brand that you had never heard of before and then bought that product in the first go?

If you don't have the ability to communicate in words, you need to communicate in pictures. Click To Tweet

I don’t think that’s ever happened.

That traditional marketing funnel of generating awareness, giving them enough information to get into their consideration set and then being there at the point of purchase, that’s what you need to do to be successful in retail. A lot of people don’t understand what that takes, the level of work that takes and working with the retailer and the distributor and there are a lot more levels to that. All of those things require a solid understanding of why someone would want to buy your product and in order to do it successfully. That’s the main thing I see is people are like, “I’m selling really well on Amazon, I should be in retail. I should be at Target.” One of the worst things that can happen is that you get in Target and you don’t have any of the things that you need to be effective in Target. You end up losing a bunch of money with products that they end up having to markdown and sell on clearance or do something like that.

You do have to get out of that Amazon mentality and more into almost building a community. You want to figure out who the right people are, figure out how you get them in your community. How much does it cost together in your community? How much are you going to make with them on their community? I definitely think that’s where all this is going. Unless you have anything else there, I want to talk a little bit about hiring. I know you’ve hired people over the course. I know you work with Ryan, he’s obviously hired a lot of people and he interviewed me about my hiring tactics. I’d love to hear yours, what you look for in people and what you’ve seen have success over time especially as it relates to building brands and growing scalable businesses.

Most of the hiring that I do is in more creative fields. I’m a strategy guy. My work is going out and collecting the data and figuring out. I do the creative to the extent that I write the strategy, high-level messaging, all that stuff. Most of the hiring that I’m doing is for graphic designers, for people who are running ads, for people who are writing, doing more specific copywriting, had their writing listings or whatever it is. It’s funny because you talked about this when I interviewed you. The interviewing for communication and interviewing for skill, I want someone who is really good at what they do. I also want someone that can communicate where they are not comfortable. When I give them like, “Here’s the strategy that we’re doing,” all that stuff and lay that out for them.

I want them to be able to say, “I get this.” Ask intelligent questions, things that make me think about things differently. Things that make me, “I haven’t thought about that. We need to go back and clarify that or whatever.” Also, people who are like, “This is a bad idea,” or “I don’t understand this. This is outside of my skillset. I’m not going to do this.” I think some of the worst failures I’ve had in hiring are people who I hired to do one thing and they ended up having to do something slightly different and then whatever the end product is like, “I’m going to have to hire someone to fix this for another $5,000.”

I’m glad you brought up creatives. I feel like that’s where a lot of people struggle to hire because they have these ideas in their head of what they want. You’ve got someone here who’s good at designing what they want, but they can’t get that information out of their head to that person a clear way to get what they want. What tips do you have in communicating with creatives to get them on the same track and the way that you want to go?

OAS Max | Growing Your Retail Business
Growing Your Retail Business: Different words mean different things. You need to be very clear about what you mean by them.

 

I see this so much with clients and this is something that I struggled with early in my career. Managing creatives when you have no experience can feel impossible because it’s like they speak a different language. Words are coming out of my mouth, I can tell they’re the wrong words. You’re nodding and then you’re coming back with something that I hate and I can’t tell you why I don’t like it. I always call it rock fetching, where you get in that cycle of, “I can’t tell you what I want, but I want a rock. Can you go get me a rock?” They come back and they’re like, “What about this rock?” You’re like, “No, that’s not the right rock. Go get me a different rock.”

You get into the cycle that’s where everybody’s losing money. What I always tell people is start out as much as possible with giving them an idea of who your customer is and what other types of brands they buy. Is this person a Whole Foods shopper? Are they a Target shopper? If it’s a woman, does she wear Glossier makeup or does she wear this? Give them some reference points so they can understand the visual language that you’re going after. When it comes to giving feedback, as much as possible, I always take screenshots and draw a line of, “I don’t like this because of this reason. I like this because of this reason. I need this to look more like this,” another reference image or whatever. Take as much of the guesswork as possible out. If you don’t have the ability to communicate that in words, then you need to communicate it in pictures because that’s the only way they’re going to get it.

That’s a great tip for those of you who are reading. I can’t tell you how many times I’ve seen that client who will respond back saying, “This is not good. This is not what I want.” The freelancers, they’re like, “I want to make sure you’re happy. I want to get you what you want, but I don’t have any information. I have nothing to go by.” That screenshot really takes the guessing out of the equation. Is there any bad hiring experience, any horror story that you can share with the readers?

Yeah, actually, I want to go back to something you said. Writing this needs to pop more is not constructive feedback. That’s one of my biggest pet peeves with clients is when they’re like, “I want this to pop more. I want this to stand out more,” or whatever. You need to be very specific with what you mean when you say, “Does pop mean it needs to be louder, it needs to stand out more?” You need to be very clear about what that means and what your expectations are. Probably link back to some images or you’re going to get back more of the same.

You’ve got to remember that the freelancers work with different clients. Pop could be different things for five different clients.

It’s like quality. Quality means different things to different people depending on what you’re talking about, what category are. It’s the same with design. Different words usually mean different things. You need to be very clear about what you mean by them. All of my nightmare hiring stories is when I’ve hired full-time employees, not when I’ve hired freelancers. My biggest mistakes in hiring and my biggest regret has always been when I’ve said, “I’m going to hire a generalist, someone fresh out of college that doesn’t really know what they’re doing and I can coach them up.” That is an absolutely awful idea in my experience. Maybe if you’re in a larger organization, you have a lot of SRPs and things like that, but for the work that I do, that basically means that I’ve added a full-time teaching job onto my existing job.

It’s like I never have the time to do it. I don’t have the processes in place and all that stuff. It never works out well for me and my business and it never works out well for them either. I try to find someone who is better than me in at least one thing so that I can point to them saying, “If your other stuff is still a work in progress but you’re badass email marketer, and you’re doing a good job on that, you’ve cleared that off my plate.” For someone who doesn’t really know what they’re doing at all, it’s smart and eager. In a bigger organization, I could probably take better advantage of that person, but as it is now I’m like, “I don’t know what to do with you.”

If your goal is to increase sale and the value of your business when you sell it, you need a brand. Click To Tweet

One of the biggest fights Connor and I got in back in the day is he kept trying to take people and turning their weaknesses into strengths and he would invest time. You’ve got to stop doing that. Almost never do you get an ROI on that investment.

I have one time that’s worked out. She was the best person that’s ever worked for me, but I have five times when it was awful and I lost a lot of money and that person had a really terrible time.

The other thing is this happened, someone’s like, “I don’t think I need a virtual assistant. I think I need an intern.” I was like, “FreeeUp doesn’t have interns and you’re welcome to go find an intern.” Let me tell you why hiring an intern is probably not what you want and very similar to me hiring college kids back in the day. First of all, it’s not their number one priority. Second of all, you’re going to invest all this time and they can just go get another job. You might as well get someone that will do what you need upfront right when you need them.

I was an intern at one point. I loved the experience that I got or whatever, but I was never very loyal to those places. From a hiring perspective, I definitely think that you’re better off hiring someone where the terms are a little bit more upfront and everybody knows what they’re getting into. There’s a little bit more value on both sides.

Where can people hear more about you?

In terms of content, I have The Brand Builder Podcast on the Capitalism Podcast Network. You can check me out there and then you can always go to my website, BrandBuilderStrategy.com.

Thank you so much for joining us and I’m sure we’ll be in contact.

You as well, cheers.

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About Max Kerwick

OAS Max | Growing Your Retail BusinessMax Kerwick transforms businesses into brands.

His whole career has been dedicated to helping businesses – both existing businesses with cash flowing products/services, and new businesses just starting out – uncover who their best customers are, what messages those customers want/need to hear to come back for more, and develop innovative marketing strategies to bring those messages to life in-market.   

I do that now through consulting with brands as the President of Brand Builder Strategy and co-hosting the Brand Builder Podcast with Ryan Daniel Moran. Past experiences include developing brands and helping raise money for many venture-funded technology companies and e-commerce brands, as well as working directly with private equity and venture capital firms before and after investment in portfolio companies.