Episode 98 | 5 Deadly Marketing Mistakes Most CPG Brands Make…And How To Avoid Them,
with Hawke Media CEO Erik Huberman
There are things you’re doing right now that are hurting your business.
It’s ok. You’re not the only one. It can be hard to keep up in the constantly shifting landscape of social media platforms, direct to consumer retail channels, marketing best practices, and latest and greatest growth hacks.
Luckily, we’ve got a marketing expert to help you identify and avoid these mistakes. Joining us is Erik Huberman, the founder and CEO of Hawke Media.
Erik knows his stuff. Hawke is a full service marketing consultancy who has done work for literally thousands of brands, including household names like Red Bull, inCase, Proactiv, Verizon, and tons more. Plus Erik has been named to Forbes’ 30 Under 30 list, Inc. Magazine’s top 25 Marketing Influencers, and he’s a frequent keynote speaker and contributing writer.
Erik starts with the fundamentals, then gets really granular and nuanced when it comes to tactics.
Pay special attention to the “three pillars of marketing” that Erik describes. If you come away with anything from this episode, that should be it. But of course there’s a lot more to it than that:
- What to do when your customer isn’t who you think it is. When brands discover this… most make this one big mistake. Erik tells us what that is.
- Do things that aren’t measurable. Yes, of course do the things with clear ROI, but not all value is immediately measurable.
- Why direct response marketing is less important than it used to be, and what to focus on instead.
Sean Kelly: What’s happening folks? Welcome to brand builder. We have Erik Huberman, the CEO and co-founder of Hawke Media, a marketing wizard on the show today.
Erik Huberman: I forgot my hat.
Sean Kelly: What are we talking about today?
Erik Huberman: Marketing.
Sean Kelly: We’re talking about marketing. We’re not just talking about any marketing, we’re talking about how to avoid key marketing mistakes. If you are a CPG or consumer company and then what the best companies are doing to maximize growth and build an awesome business. Yeah?
Erik Huberman: Absolutely.
Sean Kelly: Okay, so when people ask you, well forget people, when I ask you what is the blueprint, how should today’s consumer brands be thinking about marketing? Because marketing, as we know, is a very, very, very big area.
Erik Huberman: The individual tactics change constantly. Things are shifting. Things get more expensive, things get less expensive. Different tools come out, the details change. But overall, in terms of like when you’re looking at your marketing strategy, you want to look at three pillars that always have to be covered and it’s just a great test to make sure that you have your bases covered. Number one is building awareness. How are you letting people know that your brand exists? Number two is nurturing and what are you doing once someone knows you exist to make sure that they actually become a customer and continue to be a customer.
Erik Huberman: And then the last piece is trust. When you’re a new brand or a new company, you can tell me all you want, how healthier snacks are, how great you are. I don’t believe you because I’ve had my trust broken as an individual many, many times. So 75% of people won’t purchase a product from a company they don’t trust.
Sean Kelly: When do people buy a product from a company they distrust. Is that like when you’re stuck at the airport-
Erik Huberman: It’s not that you distrust, it’s that you don’t have an inherent test. So it’s like the impulse buy, the like, “I don’t know what this is, but …”
Sean Kelly: I just want to make sure, because there’s some people hearing I can still capture 25% of the market.
Erik Huberman: Yeah, totally. And when it’s, a lot of you’re have things that you ingest, it’s much higher I assume. Because if you’re going to put this in your body, you want to know that you can trust it. Later on if you’re in this, I’m not going to use a healthy example I’ll use an unhealthy example but a Coca Cola, you know what you’re getting there. You know that you’re getting a soda that you’ve tasted before, you know other people have tasted. You’re not worried about dying the day you drink a Coke.
Erik Huberman: But if it’s some other energy drink that has all these promises of whether it’s healthy and you’re already putting health into the people’s minds, so now they’re thinking about their health and you’re bringing it up but they don’t know who you are, so they’re like, “Why should I trust that this isn’t just crap?”
Sean Kelly: Trust becomes even more important when you’re talking about better for you, natural or organic, this is going to improve your lifestyle.
Erik Huberman: Yup, and early on in a brand that trust comes from third party validation most of the time. So that’s why influencer marketing became so big and celebrity endorsements are so interesting. Being in retail simply can do it. Being literally in a SnackNation box, people assume you’ve been vetted by SnackNation. It’s like, “Okay, I’ll eat this, they’ve already vetted you.” And then once they try it and they like it and now they feel a trust for you, now you have that relationship to nurture.
Erik Huberman: The same thing goes for press and all these other ways, testimonials, reviews. There’s lots of ways to get that validation that aren’t coming from you, Because you don’t get to have that trust inherently as you, until way down the line where now you take like a Whole Foods where it’s like people, even though actually it’s not the case all the time, people assume if they go into Whole Foods, they’re looking at a lot of healthy food and so there’s that trust because they’ve built a brand.
Sean Kelly: We like to say healthy versus clean. Just because a Brownie is clean. It doesn’t necessarily mean it’s healthy.
Erik Huberman: Exactly.
Sean Kelly: But Whole Foods, you walk in and you understand that they have their list of about 70 undesirable ingredients and you’re not going to run into any of that shit in the store.
Erik Huberman: Exactly.
Sean Kelly: The thing about trust is you can’t have … can you build trust overnight or is it simply one of those things that needs to be earned?
Erik Huberman: You can borrow it overnight. If you’re on the shelf in Whole Foods, you don’t need to build trust overnight because people assume that you’re on the shelf in Whole Foods, I can go buy this and it’s at least some level of, “I’m not going to die if I eat this. If I like it and it’s on the shelf now I can read the ingredients, but I know that I can at least trust that what they say is in there is in there, et cetera.” You’re selling me from your direct website online, a product that I’ve never heard of and you’re telling me how healthy it is. That’s when it’s a little harder.
Sean Kelly: Especially when all of the broadcast and all the promotion is coming from you.
Erik Huberman: Correct. Covering these three pillars is super important because the most common thing I see is someone’s really focused on two of them. Like they’re doing a great job of getting that validation and they’re doing a great job of staying in touch with their existing customers, they’ve got email addresses and phone numbers and are checking in and being just … that’s a really important part of the business, but they’re not doing anything to get new customers. They’re not advertising, they’re not finding new partners and they’re not getting their brand out there and they’re wondering why they’re not growing.
Sean Kelly: They’re worried so much about profitability, for instance. It’s like, “Oh my gosh, I don’t want to acquire the customer.” It’s like, “Okay, that’s all right.” But you’re shooting yourself in the foot in terms of profitability down the line.
Erik Huberman: Yeah, and now that he advertising and exposure side of the business is the truly scaling expense and marketing all the other stuff’s kind of consistent. So that piece is the hardest one to swallow. But at the same time, if you want to grow, that’s the only way you’re reaching new people. And it’s not always about advertising. In fact, we’re doing a lot of things now to mitigate the cost of advertising because things like Facebook and Google have doubled in price in the past year. Yeah, they’re skyrocketing.
Erik Huberman: I’ve heard the phrase, “Content is king.” And I haven’t seen anyone actually put their resources behind it. And recently I’ve seen, just from our client’s perspective and we work with about 400 brands and it has become much easier to convinced them to allocate some of their budget to building their own content.
Erik Huberman: Because now that Facebook and Google are not so much of a machine where you put a dollar in and get $20 out, you have to find other avenues. And what we’re seeing with content is again, back to healthy chocolate. You can look on Google and see how many people are searching for healthy chocolate. And if you can be the destination of people that are looking for that, you’ve just got that whole piece of traffic.
Erik Huberman: Same thing with on Amazon, same thing with a lot of these sites. If you know people are looking for what your product is and you can be in front of them, now you can start to generate that revenue. So that’s the awareness piece. And you have the nurturing piece which I mentioned, there’s two pieces of this. There’s increasing your conversion from awareness to a customer and then increasing the amount of money a customer spends with you.
Sean Kelly: So that can be through repeat purchase primarily or size of cart.
Erik Huberman: Yep. And so the first piece, the increasing conversion, there’s what’s called a purchase cycle. So many, many, many people forget this in marketing, which is why everyone looks at the day they spend $1,000 in marketing. They want to look at their returns that day. The truth is people think about their purchases, they take time and it’s not like thinking about it like I’m sitting here and dwelling on the fact, “Should I buy Willies and get some more chocolate?” It’s more like my intent right now is not to go buy a box of that chocolate, but I tried it it was good.
Erik Huberman: If I see an Ad again in a week, I’m going to be like, “Oh yeah, that was really good.” And then I get an email from them because I’m like, “Yeah, sure. I’ll give you my email address, like the products you’re making.” And they send me an email saying, “Hey, we have this new flavor. It’s raspberry. You’ll love it. Buy it now.”
Erik Huberman: That’s when you start to get the purchase. They gave you a chocolate bar to put on your counter. I ate it. If they now sit there and go, “Well, what was our ROI on that bar?” They’re going to think it was negative though the truth is if I got an email and I got a re-targeted, like I’m being sincere, I probably will end up buying it if I have a very easy way to see that again. Rule of thumb with purchases is at $50 average order, it takes about three weeks for someone to make a purchase decision. If it’s $100 it’s about five weeks, $200 goes to about six weeks and it tapers off after that, and that’s global averages in terms of online sales.
Sean Kelly: Because at the end of the day there’s going to be another snack that you’re going to stumble upon, with all the amazing brands out there that you’re then going to be like, “Oh my gosh.” And it’s whoever’s going to be able to enter that Omni channel approach and hit you from multiple angles is going to kind of when your love.
Erik Huberman: And grab me at exactly the right time.
Sean Kelly: And grab you when you are ready.
Erik Huberman: And you stay top of mind.
Sean Kelly: Are brands today too focused on direct response then?
Erik Huberman: Yes.
Sean Kelly: Yeah. Because it was all the rage. I mean we remember obviously with the advent of online advertising, the platforms like Facebook or obviously initially Google and Overture. It was all about, “Oh my gosh, for the first time ever I know if I spend a dollar, I know that’s yielding.” Has that pushed us into a place where it’s actually hurting us?
Erik Huberman: Yes. That’s not sustainable. It’s a hamster wheel of marketing, so if you’re not building a relationship with your customers, that was the second part of that nurturing piece, which is driving higher lifetime value or driving repeat purchases and building that relationship and when people are so focused on basically their CAC, their cost to acquire customer, it’s this constant churn machine where they’re just trying to drive people in and like, yeah, they’re doing email marketing to up the lifetime value, but there are a lot of things you’re not going to measure on a spreadsheet that are very important to do as a brand, that brands are not doing right now because they can’t measure it.
Erik Huberman: If they can’t attribute it to an ROI metric, they just don’t do it as opposed to just doing it and knowing that they can’t … like my own business we spend a ton of money on marketing and there’s a ton of things we do that I just know because I know how it works, I am not going to be able to directly attribute ROI to that.
Erik Huberman: But knowing how my customers work, knowing how much this cost, having an idea in my head of what kind of a conversion rate I need without being able measure, allows me to make those decisions anyways.
Sean Kelly: In many ways, you’re talking about branding and building a brand.
Erik Huberman: Correct.
Sean Kelly: And so what are some of the key ways that you see consumer products specifically, are missing significant opportunities to build brand because they’re focused too much on spending money on Facebook?
Erik Huberman: Well, what’s funny is it’s right in front of us and I’m always shocked at how few people pay attention to it, Red Bull has crushed it. You’ve got an energy drink that frankly is one of the most unhealthy things on the planet during a huge health crazed-
Sean Kelly: And by the way, it gets some of the worst taste ratings.
Erik Huberman: Oh yeah. They’re still multi-billion dollar company and their marketing isn’t, “But buy the energy drink, buy the energy drink.” It’s not any of that. It’s literally, “I like dirt biking. I like music. I like snowboarding. Red Bull.” The brand association and what they’ve done is they’ve turned into a destination for their customer, as opposed to a promotional tool for their product.
Erik Huberman: That brand has done so much that like they’re going to be fine. In fact, from last I heard their media house is making more money than the energy drink is at this point, which if you want to talk about a marketing channel, imagine if you could drive a marketing channel or the point that it’s more profitable than your product. Like that’s a pretty good goal to have.
Sean Kelly: I can imagine there’s some people listening right now and saying, “Okay, Erik, that’s sweet, but it’s Red Bull.” Like they were only able to do that because of what happened over in Europe initially and it was kind of luck. What am I supposed to do with that? Like give me something tangible.
Erik Huberman: One of your employees has a couple hours a week to put into writing a blog, that’s a start. Frankly, I actually use SnackNation as an example when I tried to talk to companies about this because you guys figured out that your customer is an office manager and so let’s write a bunch of content that office managers want to read. That’s not just healthy snacks, healthy snacks, healthy snacks. No, it’s about like how do you make an awesome work environment? Awesome. office.org all these things that you’ve created from a content perspective that I don’t know, do you know their direct ROI on what that’s created in business?
Sean Kelly: We can certainly rate, we obviously see our inbound leads and what that converts into revenue and what percentage of our business that is, but at the end of the day you’re talking about content. When you serve the customer’s aspiration, it’s a little bit longer term-
Erik Huberman: And not just that, inbound leads also are word of mouth, people seeing your Ads, that they don’t don’t respond to the Ad, but then late on comes through something else.
Sean Kelly: Well even something that we’re on right now. Writing in Brand Builder, this podcast. We have outside of Jeff, Erik and us hearing [inaudible 00:15:10], “Oh my gosh, I heard you on on Brand Builder.” Or you’ll here a sales person will come and be like, “Oh my gosh, they listen to Brand Builder, awesome office and that’s why they bought.” For the most part, we don’t know. But do we know this creates a lot of value? Yeah, I think so.
Sean Kelly: The same to you being a guest on this show. Do I think that you’ll get business from this in some way? Most likely. But is it going to be something where you’re going to understand that directly? Maybe not.
Erik Huberman: Exactly. And that’s brand building. It’s understanding my audience and your audience are listening to this and eventually, it’s not everyone that listens to it, but there’s a portion of it that probably will translate and is it worth an hour of your time, an hour of my time and having a team do some work on this to put this out there.
Sean Kelly: But how do you do that? Okay, so when you talk about content is king, but it, but the thing is content is king. If you’re somebody there who’s like, “Okay, oh my gosh, well this seems so damn hard. I can spend, you know, 10 grand in Facebook, I can put money into Google.”
Sean Kelly: It seems like this creating content and focusing on the customer first of all, requires you to really understand the customer and then requires you to have a longterm view in terms of, we all know that investing in content and doing it the right way and putting it out there, takes a different kind of money. How do you with your clients and just the general people, inspire them and give them the courage to say no, creating really good content and making the up front investment and getting a little bit away from direct response and that at least having a 100% mentality dedicated a DR. How do you get them to understand that and actually take the leap?
Erik Huberman: Honestly, that’s the shift I was talking about earlier is most people understand now that there can’t just build a business off putting a dollar into Facebook. They understand there has to be an alternative and when we explain it logically that like, you’re going to get the benefit of organic traffic because we’re going to write content and create content that people will search for that show indicators that they’re your potential customer.
Erik Huberman: And then also we’re creating content that engages your audience, whether it’s leads or current customers that now are re-engaged and inherently, if you’re going to get people to your site more often than just a purchase decision, like it’s not just, “I want to buy your product.” But it’s like, “Oh, you have content.” And I’m coming back to your site every day to read your content or every week or whatever that is and listen to your podcasts, et cetera. You’re inherently going to sell me more product.
Erik Huberman: In terms of that scale, people will buy more. What that number is questionable, but at a certain scale, your cost of producing that content doesn’t go up, but the amount of people you have to hit goes up. And so even if it’s, let’s say because of all the content you create in the world and you’re doing this every day, you get a 1% bump, let’s say that’s it. Yeah.
Erik Huberman: At a small company that’s not going to mean anything. Let’s say if you’re doing a hundred grand a year and make you an extra thousand bucks doing all this content work for you’re … that’s crap. But if you’re on the track to get to $100 million company, and now I’m talking about the content work you’re doing is adding $1 million and that’s a very conservative assumption.
Erik Huberman: Now you’re talking about like, okay, we can invest a little bit to make an extra million bucks, and so as advertising costs, again increase, that becomes the best lever on that to make sure that your LTV and your CAC are going up.
Sean Kelly: You actually have a sustainable cost of acquisition.
Erik Huberman: Correct. That education does resonate with most smart business owners and so then what we do is we talk about, similar to how you found it was office managers, who is your target customer? Not target, and actually we always are careful with that because when people would try to choose their own customer and that’s not a good thing to do.
Sean Kelly: So many people do that without recognizing that they’re doing it.
Erik Huberman: Correct.
Sean Kelly: Like, no, I’m a crossfit athlete. I built this because I know other people in my gym like this, or I heard of another brand that launched for crossfit athletes that was massively successful.
Erik Huberman: But once you figure out what defines your customer, just like Red Bull has, just like frankly SnackNation has, it’s not meant to be a [inaudible 00:18:39] you guys have done a great job there. Then double down on what attracts that person, what interests that person. It’s not about promoting your product all the time, it’s about just building a relationship with that customer. The best way to do that digitally is content.
Sean Kelly: Once you find out the customer that has chosen you which I love how you put, that they pick you and not the other way around. How can you help them be a hero in their own journey? How can you serve their own positive transformation? Because everybody in the world wants to change from where they are now and if you can help that customer get better however they want to get better. Not how you want them to get better, but how they want to get better, you’re probably going to have a really good narrative that plays into your brand that plays into that trust and all those other things.
Erik Huberman: Exactly. I mean especially when you’re B to B, they’re trying to promote themselves within the organization and if they can look like a hero for bringing you in, you’ve won. Yes. B to B or B to C it’s all emotional purchases and so if you can appeal to the emotional side of a person, again, the health thing is great, it’s important, but then it’s like why do people care about the healthy eating? Is that they want to be champion parent, is it are they buying this for their kids, are they buying it for themselves because they want to feel better about what they’re putting in their body? Like what is it that’s driving this? And then again, what else can you do to attract them.
Sean Kelly: And it’s key to really find that out. So it’s not only understanding who your customer is, but why they specifically want your product. Like what job are they hiring your product or service to do for them? Which when you said, “Oh, I want to be healthy.” Even that there’s 10 different reasons that people want to be healthy. Is it to run a marathon? Is it to lose weight? Is it because of a wedding?
Erik Huberman: If it is a wedding, let’s just say you make snacks that happened to be the go-to energy bar for people dieting for a wedding, example. Create a bridal blog. Wait, don’t create a blog about a snacks. Create a bridal blog if that’s going to be the go-to soon to be brides bar.
Sean Kelly: And I love this because this is why we’ve doubled down in our consumer insights in business, is because we realize as an offshoot, “Oh my gosh, we can collect all these amazing insights and data.” But we’ve recognize that especially for smaller brands, they really struggled to find out who their customer is.
Sean Kelly: And sometimes people are way off, sometimes they think it’s an athlete and it’s a mom that just wants to get a little bit healthier. Now that moms can’t be athletes, there’s tons of mom athletes, but you know what I mean? There’s a really big difference in marketing to those two groups.
Erik Huberman: 100% and what you also have to be careful, back to the marketing note, is once you find that out, that doesn’t mean change your messaging. Because remember that that person was attracted to whatever your message already is. Perfect example of this, so Shoe Dazzle big shoe subscription company. Kim Kardashian was a partner then Rachel Zoe, did a ton of revenue and they were marketed.
Erik Huberman: I mean it was Kim Kardashian in her early popularity. You would assume the audience would be like a young 20s maybe just post college girl that wanted to get new shoes and it was you 40 bucks a month so it’s definitely [inaudible 00:21:17] market. So as younger kids it wasn’t like premium their core demographic, we’re of average 47 year old African American woman in the south.
Erik Huberman: And so you look at their brand and it screams sorority girl, your brand and what it stands for is what your customer aspires to be. And it’s an aspirational thing in most lifestyle brands. When you’re creating your brand, the people that are attracted to it are usually trying to be that. So if you’re marketing as an athlete brand and you find out that it’s all moms buying, it’s because moms want to feel like they’re athletes, just is that example.
Erik Huberman: And so understanding that once you know that, you’re targeting changes on your marketing, not your positioning, not your branding. And so like just getting it in front of those people more is where you’re going to make your money. But keeping the brand is important.
Sean Kelly: I love what you just said, it’s doesn’t mean that your brand or positioning changes it’s your targeting. Which influences a big part of unit economics and like how good the business does, but it doesn’t mean you have to change the brand. I want to go back to content for a second. Where are you seeing brands, consumer brands today doing content, right and doing content wrong. If you have any specific awesome and any specific really bad examples, let me know.
Erik Huberman: Well locally FabFitFun has just crushed it. Again, I sincerely use you guys as a content example too, but FabFitFun from a B to C level, they started as an email newsletter about fun things going on in fitness and health and beauty and then they spun up e-commerce. The company just got valued at $1 billion-
Sean Kelly: Isn’t the reason, I know there’s what Daniel Michael have created and the other guys who I know you know really well, many reasons that they’ve experienced that success but is the largest reason that they started as a content platform first?
Erik Huberman: Yeah, I would say and continued it to add the caveat. I’d say if they just started a content … because they had, I think their email newsletter was like 160,000 when they launched e-commerce that wouldn’t have gotten them to where they are. They needed to keep going. Now there’s a lot of other very cool things that they’ve done. They’ve been very responsible on their marketing, they’ve been very responsible in their unit economics for their product and their box. But the content is what has driven them. I mean the guys before … they got to a billion dollar evaluation on $6 million in funding. If you look at most of these, like dollar shave club raise to 150 million to get to the same point.
Erik Huberman: So like that, that’s a good litmus test. Everyone thinks that’s the biggest success in our history and like they lost $100 million in the year they sold to Unilever and FabFitFun was just barely profitable because they’re not trying to be, so they were sustainable and decided to raise this big traunch to grow and do a lot more. And so, you know, I think what they’ve done is incredible, what they continue to do is incredible because they understand that content is a big piece of why people have working with the brand and most brands.
Sean Kelly: Was FabFitFun initially, was it a newsletter and then was it a membership site? Like what was it exactly?
Erik Huberman: It was just a newsletter.
Sean Kelly: It was just a newsletter? So it was basically just fantastic content for a specific demographic group that had really high open rate and that people love.
Erik Huberman: So at my last company used to buy Ads on their newsletter and they called me in, they’re like, “Hey, we’re wanting you e-commerce and you’re investing.” And I was like, “Guys, I don’t invest in startups.” So it was like, “No, it wasn’t a question. Whatever the size cheque do you want is great.”
Sean Kelly: It was a good call.
Erik Huberman: Yeah, thank God they did it. But they realized that that was the opportunity. And I think that’s still, like most content companies that are struggling, huge opportunity in finding a commerce aspect.
Sean Kelly: Should people be thinking about developing a content platform for two or three years before even launching a product? Should we be seeing more of that?
Erik Huberman: I don’t know that you can’t do both in conjunction. That’s the one thing. I don’t know that you need to do the content piece first. I think you can do them both. Obviously, in hindsight after they did it, it was like nice to have this asset but if they had thought about the box as well first it would have taken them those … that three years they probably would have gotten up faster because now they were trying to convert all these people that have been on their list forever, versus like as they’re going converting them. So I would say start right away with both.
Sean Kelly: You know, the thing about creating content today, is that content that’s twice as good as the rest of the content out there. So it takes, let’s just say twice as much resources and twice as much spend produces 10 x the results. If content that is the same as everyone else and requires one expand actually gives you 0.1 x whatever the return. And so it’s like how do you find a way to invest in your customers aspirations, to invest in that content and go a little bit beyond where other people in your category, in your space, are.
Erik Huberman: 100%, I think that goes down to pretty much almost every aspect of your business. If you ever doing something just to do it, you’re going to fail. Like if you’re just making a bar just to make a bar to check a box, no one’s going to like the taste of it. You’re just saying like, “Oh, we create content.” We deal with that with every aspect of marketing with different clients. It’s like, “Oh, I already do Facebook Ads.” It’s like, “Yeah, but you’re losing 10 grand a month and not making any money.” So you quote on quote are doing Facebook Ads, but you’re not doing them right. You’ve got to do it right.
Sean Kelly: If you’re not willing to be awesome in that channel, don’t do it correctly. Just focus on being damn good in Instagram before you move to this other channel.
Erik Huberman: Well that’s Revolve in a nutshell, they were just damn good at influencer marketing, they haven’t done much else but now they’re going to IPO soon, like they doing great and they focused on influencer in events. I don’t know enough about their marketing mix, but I can tell you they haven’t done that much of a lot of other things cause they went really deep in that and that’s not a bad thing.
Sean Kelly: How is influencer marketing changing?
Erik Huberman: Drastically.
Speaker 5: All these models like in The Bahamas.
Speaker 6: The most insane festival the world has ever seen.
Erik Huberman: What’s funny is Fyre festival push the FTC to put in regulations that made it so that influencers now have to disclose. What happened was that actually got the government to wake up and so they swung the pendulum that completely the other way, where like if you’re getting paid to promote as an influencer, you have to disclose it. Well the whole benefit originally and why it was such a gold mine in terms of influencer marketing was authenticity. People thought that these people truly love these products, which is the sleaziness of it, which is why it got regulated. But that is why it was so effective so long was everyone just assumed that like, oh, you know, this amazing model then I’m a huge fan of, whereas Revolve Clothing, I’d probably feel like a model if I weren’t to. So that’s where that came from and it worked very well for a long time.
Erik Huberman: And now it’s more transparent in the sense of like people know they’re getting paid for this. It still has a similar effect, it’s the same as endorsement deals. Like let’s look at Air Jordan, like everyone knew Michael Jordan got paid by Nike, still they bought Jordan’s, it’s still okay. So it’s not like it’s completely devastated, but it’s very different. It’s not as lucrative and it’s definitely not as direct response because people aren’t like, “Oh my God, they love them, I need them.” But it’s basically now another marketing channel that still has that, we talked about trust in the beginning, still people assume that like if that person’s name on it, you at least get a checkbox of like, “Okay, this is not just some random shoe company. It’s a shoe company that someone I admire also has had a relationship with of some kind.”
Sean Kelly: Well, and it’s also different. I mean, we simply need to get better rather than just having random celebrities post a picture of your product. It’s now about what is the relationship of that product with the celebrity. So for instance, why were we okay with Michael Jordan, Nike? Well, at the end of the day we would have been okay if he was paid a lot by Nike, but wore Reebok’s on the corner. It’s like he’s wearing Nike’s. I mean that was his life.
Erik Huberman: It was a PDD when he started Saraca I think it was. And he was in the club drinking Grey Goose or whatever. It was like, perfect example of like, oops. And what we talk about when clients come to us about like either the larger influencers, celebrities in that piece of it and when you’re creating your brand identity, we coach people on like you’re creating a person. It’s like who are you not what are you or how do you define you, it’s who are you? Like what is that person?
Erik Huberman: And so we talk about like what kind of things would they say? What do they like? What’s their voice? Et cetera and sometimes the right celebrity is a shortcut to that. Like this is our brand, this person and what they stand for and everybody knows that person, so their brand is immediate aligned. That was Jessica Alba with Honest or is Jessica Alba with Honest Company. We know she, southern California, young pretty girl with kids that loves her kids and super focused, et cetera. Like that was actually what they wanted the brand to stand for. And if you look at on his company, it feels like Jessica Alba.
Sean Kelly: I love that as a brand is a person. And there’s quite a few people in the food and beverage world that are selling a product that doesn’t have a really strong personal identity and that where the founders don’t actually consume the product. And I think it’s a continual challenge. Is it better to create a product for you, for yourself or is it better to create a product for others? And is there, I don’t know, do you think there’s any difference in success between those two types of brands, types of products?
Erik Huberman: I think you can go either way. I think it is okay to solve other people’s problems, not just your own, but you do need to inherently understand the problem and be very … you have to have a ton of empathy if it’s not for yourself.
Sean Kelly: A lot of empathy if yo don’t have that. B to C versus B to B. Everyone always talks, “Oh, so this is a B to B companies and B to C company.” Have they been different in the past in their conversion becoming the same, or have we just been looking at them differently?
Erik Huberman: I think they have been different in the past because targeting wasn’t there. You couldn’t target the individual in the same way. Now it’s very, very similar. People make emotional decisions for their business and their personal life. They justify it with logic. So helping them out there is super important when it comes to marketing. But you know, someone doesn’t hire Hawke Media because we have the best ROI of marketing and they want to grow their brand, they hire us because there’s a lot of risk in marketing and they’re going to feel more confident having a partner that has a track record. Subtle difference, but emotional difference. Our whole brand is fun, easy, transparent off, everything’s about … that’s why we’re month to month and Alec Card, it’s like we want to make it really easy and instill confidence.
Erik Huberman: Like we have all the case studies and everything to show we know what we’re doing. Every other competitor of ours that’s grown like we have throws in one year contracts because they can, because frankly it is hard for a company like ours to work on a monthly basis, but we stick to that because we’re really passionate about what we’re trying to deliver and we want to stick to being easy to work with because that’s what our clients need.
Erik Huberman: That was why I started it was that there wasn’t a client centric company like ours. Our customers are some of the most emotional people out there, entrepreneurs and heads of marketing, like there is a volatile experience and they’re working with us out of emotion a lot of the time, not out of like logic, off case studies. Those again, check those boxes that justify the decision, but they really do it out of a feeling.
Erik Huberman: And so that is as much B to B as B to C and just people are emotional beings. And so I think understanding that when you’re marketing is super important, understanding like what is the emotional appeal of what I’m positioning and then understanding that a business doesn’t buy anything. Individuals at the business do.
Sean Kelly: Absolutely. And it seems like the barriers are becoming higher in terms of what the point of contact, what person at the office spending the money you’re making the decisions is expecting or demanding out of B to B brands. Yup. Definitely seemed like their expectation is rising.
Erik Huberman: It is. And I mean God bless predictable revenue everyone now learned how to prospect and drive leads, I don’t know how many emails you get a day, but mine are too many and people were just drilling people. So like getting through that noise is a very difficult thing, that’s a whole other challenge is breaking through that so that you’re not just another malware, another email, another phone call that catching them at a time, they don’t want to be bugged. Like figuring out how to actually reach someone in a way that they want to be reached.
Sean Kelly: Absolutely. Which all a lot of that comes down to the brand again, Omni channel approach, not just rolling purely on direct response. You started off by talking about awareness, nurturing and trust. This is fantastic because I assumed that when you and I are recording another podcast next year, three years from now, 10 years from now, those are probably going to be the three same buckets.
Erik Huberman: 100%.
Sean Kelly: The tactics in terms of what’s working in each bucket to some degree, but human emotion’s not to change too much, probably for another 25,000 years, so these things … what’s something within the awareness bucket that most consumer brands are not doing or not doing well that could be or should be?
Erik Huberman: So word of mouth at the end of the day is the biggest driver of success for a company because you check every box, meaning awareness, nurturing and trust just through word of mouth. It’s just slow. And so most companies are not finding ways to push word of mouth. What I don’t mean is like a referral program. Those are great, like we’ll give you a $10 if you give us a customer. The problem with those is a lot of times they just want to tell my friends about something. I want to share a great song he was talking about or I want to share a great snack and just be like, “Hey, check this out.” The moment you tell me that you’ll give me a buck to share that, I don’t care about a buck so now I’m just not going to do it. Because now you, you almost dis incentivize me by offering me some-
Sean Kelly: You’ve cheapened it and you’ve cheapened the person to some degree.
Erik Huberman: And it’s not like an an insult, it’s more of now I’m not valuing that from the sake of like I just want to help my friend get a new snack. I am now valuing it based on that dollar and I don’t care about your dollar. So doing those kinds of things, you have to be really careful how you set those up because sometimes it can cheapen the introduction. So finding ways to make it very easy for your friends to share. Using Casamigos, Casamigos as house of friends, they talked about sharing it with your friends all the time. All they did was promote the idea of sharing with your friends and create that ethos and it got people to think of it as the party Tequila. Like these are the one that I share with my friends. You can go that way.
Erik Huberman: You can go like create content around why friends should be involved or why you should share it. There’s just a lot of ways to push that word of mouth and already that is going to be the barometer of success. And one thing that we do a lot of is find some easy phrase, sentence, et Cetera, that the person can explain what the product or service is when they’re talking to someone else. So for us, we call ourselves, your outsourced CMO. It’s their tagline, trademark, et cetera and so when people are talking about us or they talk to us, “We’re like yeah, we’d love to help anyone that needs marketing help. We’d love to help, just where your outsourced CMO.” And so it’s a sentence.
Erik Huberman: So like some small form of that it’s like’ Oh you need marketing help? You’ve got to talk to Hawke, their like this CMO outsource thing.” That’s how it usually comes out. But it works, like that nails exactly what we’re trying to articulate and we’ve given them that easy pitch versus hoping that they’re like Alec Card, month to month, I don’t know, like if you need marketing, what kind of marketing do you need? Like they’re trying to sell it.
Sean Kelly: Well I love what you just talked about because make it so simple that even if they screw up the word order, whether it’s outsourced CMO or CMO outsource or thingy CMO outsourced like it doesn’t really matter.
Erik Huberman: Marketing, CMO, Hawke cool, done.
Sean Kelly: Boom.
Erik Huberman: And that has been by far the biggest driver of our business is everyone’s like, “Oh they’re this CMO thing.” Like you got CMO in a box is what I hear all the time. Which wasn’t my phrase, but I kind of like it. People will figure out that, but finding that first articulation because what happens is if they don’t know how to articulate it, they just don’t. Meaning like if I can’t explain Willie’s, it’s really cool, actually your receptionist said it, she’s like, “It’s like a healthy crunch bar.” And I was like, “That’s great.”
Sean Kelly: Are there any consumer brands that you’ve seen that you’ve utilized unique tactics so that the word of mouth flow is even easier? What I think about it a little bit here too is how Reed Hoffman talks about how important it is to, especially early on, do things that don’t scale and most of the things that don’t scale are about human relationships.
Erik Huberman: Correct.
Sean Kelly: Because it’s really hard to scale human relationships, but it’s so important early on.
Erik Huberman: I also think you have to be careful with that because it works for software. You need the consistency of purchase with snacks that doing things that aren’t scalable, you’re going to have to ramp up production, ramped down production, understanding those phrases and understanding the nuance of your businesses is super important. I actually most of the time want to make scalable, but there’s activations and I’m using air quotes that people do that like build that word of mouth because people want to be involved in a movement. Look at Obey and how he put Andre the giant over the place and then created a fashion line.
Erik Huberman: Look at just Red Bull saying, “Red Bull gives you wings.” Like Dollar Shave Club, the video that wasn’t scalable. In fact, they couldn’t figure out how to acquire customers for crap for like two years after that video, but that first week was killer. That was a great hockey [inaudible 00:37:26] that they couldn’t predict it, but it created that word of mouth because it was now everybody who creates the dollar shave club x video at the time, that was the first time I’d seen it.
Erik Huberman: I remember seeing that video and I ended up working at science a few months later and advising there, and before that I saw that video and was like, we ran a men’s tee-shirt subscription side, I was like, “We got to do something like this. Like this is brilliant.” The day it came out, I was like, “This is … nailed it.” And like most people that saw it knew it nailed it and that created that word of mouth. That got them 50,000 subscribers in the first week.
Sean Kelly: A lot of people think that Dollar Shave Club was bought because of number of subscribers. That was a part of it, but it was more about the brand and the know how. And a big part of the know how was understanding how to market and how to acquire customers. It wasn’t necessarily the scale, it certainly wasn’t the financials.
Erik Huberman: And Unilever needed a digital arm, so to speak. They have some great products, but they definitely had not modernized and kept up with that side of it.
Sean Kelly: Their advertising and word of mouth strategy certainly did not look like it did for Dollar Shave.
Erik Huberman: Correct. You want it and you want to always have that small aspect. We always say like 10 or 15% of your marketing should always be towards this and you have to be at least a little scale for this, but you want to spend that money on tests, sandbox, trying things, throwing things at a wall, high risk, high reward kind of marketing. Because you never know if it opens up a whole new scalable channel or you do something that just boosts everything else, like a video like that.
Sean Kelly: Okay. So I love it. Word of mouth within the awareness bucket. Let’s look at the second bucket, nurturing. What is something that most consumer brands should be doing differently in this bucket?
Erik Huberman: My favorite line is that email marketing is dead or dying. I hear it all the time, and I’ve been doing this for over a decade and metrics, the general global metrics on email marketing has stayed exactly the same for 10 years. That means I haven’t improved, but they have not declined at all, still have not declined. And so average open rates are let’s say between 15 and 25%, click through rates are three to 5% have been for a long time. So what that means is a business in the growth phase we see generate around 25% of their revenue from direct email marketing to their own audience and that obviously matures to the point that companies near IPO are like 70 80% of their revenue is coming through their email list.
Erik Huberman: So to talk about email being dead is crazy, but it’s so many people, like oh, people don’t read their email. I don’t read my emails, I’ll just skim over them. It’s like you’d be surprised and again, it’s a numbers game. You’re only trying to get three or 5% of them. That’s all you need. But that is what is going to happen. Don’t get wrong, there’s probably brands out there that specifically their customers either younger or whatever and they’re not … but if you’re college and post college customer, you generally use your email and if you’re getting customers on your email or potential customers on your email address that are actually potential customers, they’re going to read their emails and click through. We’ve all bought stuff through email, so that’s a good one.
Erik Huberman: And then what’s really interesting now on that same note is SMS marketing. You’ve got the metrics that I just said with say 15 and three in terms of open rate click through rate, SMS is 98 and 30. So you have 98% of people will open their text messages and 30% will click through. So it’s not just people like trying to mark the text is read, the third of people are actually clicking through it versus 3% it’s insane the kind of metrics you can get there. Getting a phone number is a little harder, but not much.
Sean Kelly: So if you’re thinking right now as a brand being like, “Oh my gosh, I have no phone numbers, or I have very few. Where do I start?” Is it simply, obviously the easiest ways to start asking for phone numbers.
Erik Huberman: There’s a local company here called Voyage Mobile, you plug it into your Shopify and most people have their phone number and their Shopify account and so you just can pull that list immediately and hit the ground running. I assume a lot of your audience is on Shopify. It’s a good platform
Sean Kelly: A lot of them 98 in 30 yes. Is SMS as a result of it being a little bit less known, do you think that’s the most under utilized?
Erik Huberman: It’s definitely the most underutilized. I think it’s … you’ve got to treat it very differently. Email, you can do these promotional kind of like banner promotional emails, text messages you don’t want just start sending coupons every day and being like, “Buy us now, buy us now.” You have to be much more targeted, much more of a proactive customer service approach where it’s like, “Any questions we can answer for you.” Like building that relationship because it’s a little more invasive so you have to be really careful how you use it.
Sean Kelly: It’s more about a conversation than driving to a sale immediately. Any of the texts that I get and I don’t know how they get my number, but any of them that tried to get me to drive to a sale, like clicking a link right away, never works. Those that have some interesting questions of me and some conversations I’m like, “I’ll play around with this.” And some of them I’m even like, “Okay, I’m into this.”
Erik Huberman: Some people are doing it illegally and taking your phone number, that’s not right. But if you’re giving a phone number, I’m already saying like, I like your brand. So what we saw, we’ve done a few tests where we’ve seen like 40% increase in conversion rates on sites because you get to a page where you’re ready to check out and like simple thing, like let’s say you’re buying a pair of shoes and you’re like, “All right, I’m going to check. Shit, am I a 10 or a 10 and a half? I don’t know well in Nike I’m a 10 but in [inaudible 00:42:28] I’m a 10 and a half. I don’t know. What do I do?”
Erik Huberman: I’m not going to go read through your sizing chart and get out my tape measure and I’m going to bounce. So now I reach out as the company and go, “Hey, saw you had these in your cart. Anything we can do to answer any questions?” “Oh, I was trying to figure out, I’m this size on this, this size on this …” “Oh actually we’re similar to Nike.” “Great.” Bomb, you just made that conversion and it took two text messages.
Sean Kelly: I love it. Okay third Bucket, trust. Where’s the biggest opportunity for most consumer brands to develop more here?
Erik Huberman: Content. Showing that you have thought above and beyond just pushing your product to me. Because over time you’re going to build trust inherently with your brand as opposed to having to borrow it from celebrities and testimonials and all this other stuff. And the way to get that sped up is to have a more active relationship with your audience. Experientials great too, if you want to talk about your super fans, throwing events, hosting events, if you’re a snack company, the tastings and things in Whole Foods and like that association, all those kinds of things are super valuable for building that trust.
Sean Kelly: How important do you think consumers feel effort is ? What I mean by that is when consumer sees like, “Oh my gosh, this was designed for me and this required a lot of effort, like this required a lot of thought. This video, they put a lot into this.” Do you think consumers care about that?
Erik Huberman: Not at all. I don’t think production quality and effort matter anymore. I actually think authenticity and message matter way more. If I film a video on my cell phone right now talking about why I do what I do versus I bring in a whole production team and do what highway produced and do it with like explosions and everything else. I think the cell phone video will actually resonate more now.
Sean Kelly: Now it would be, I think even better if you had the cell phone selfie video with explosions in the background.
Erik Huberman: There’s an App for that. It’s somewhere and I’ve had at one point where you can just add explosions to your own videos.
Sean Kelly: Oh my gosh, I need-
Erik Huberman: It’s the action film App or something, I remember this one.
Sean Kelly: I think every video’s better with explosions.
Erik Huberman: Yeah, I agree with you.
Sean Kelly: Education.
Erik Huberman: I actually think people are almost turned off prem production value because it shows you’re making too much money. I think inherently or it shows something that you’re not focused on just making a better product. Tito’s one of my favorite examples of that. The guy has not made a nicer bottle because it would cost more money. He’s like, “I would have to charge more money for my vodka, so I’m not making it.” It’s some of the best vodka compares with every top vodka out there. But the bottle kind of crap. But now it’s authentic, it’s fun, it’s a brand.
Sean Kelly: But initially it didn’t, well I guess I kind of did stand out, but not necessarily for the reasons that most people would want to.
Erik Huberman: Exactly. And he’s kept the price low because bottles one of the most expensive parts of creating a spirit brand. And he got one of the cheapest bottles he could because it’s all about what’s in it.
Sean Kelly: It’s coming to a theme that we’ve done has been interwoven throughout this and I don’t think that this was intentional, but this customer obsession. I mean-
Erik Huberman: Exactly.
Sean Kelly: It’s so much about it being focused on the customer. And instead of saying, “Oh my gosh, I’m so obsessed with my own product. I’m going to spend $50,000 in this little commercial.” You’re saying, “No, how can I be as real and as to the point as possible and speak to my core customer and actually invest the time to understand who they are and what their lives are like.” That’s going to be far more valuable.
Sean Kelly: Man, this is some good stuff. Erik, thank you for joining us on Brand Builder.
Erik Huberman: Thank you for having me.
Sean Kelly: I know the audience took down a lot. I know there’s a lot of people who right now I have a long to do list in front of them. Call Erik and the Hawke Media team. What’s the best way for them to reach out to you to learn more?
Erik Huberman: My email address is super easy, it’s just email@example.com and Hawke has an E the end too and sincerely happy to help. So questions, anything, feel free to shoot me a note. This is what I do because I love to do it.