Ep 173: How To Earn Recurring Revenue In Your Ecommerce Business with Evan Padgett

There is a surge of Ecommerce businesses turning into Subscription model. You might even wonder why. That’s because earning recurring revenue is simply promising. And who wouldn’t want that for their business?

I had this exceptional opportunity to speak with Evan Padgett who is an e-commerce and subscription commerce executive with 20 years of experience. After a very successful 10 years at Techstyle, Evan joined Thrive Market as their first CMO during their hypergrowth in 2016 helping the brand secure $111M in funding and their biggest year of new customer acquisition as of that time. Now he’s the COO of Stealth Venture Labs, an e-commerce marketing firm, he works with brands like Crocs, HelloFresh, Factor 75, and MUD\WTR. 

We have discussed why Ecommerce business owners should go down the subscription route and start earning recurring revenue? How do we take a regular Ecom business, and turn it into a subscription business?

We have also discussed how do you make someone’s brand work smarter not harder, what goes into this? What platform do you suggest ecom businesses start marketing on for the first time and why?

Lastly, Evan shared what ADlightenment means, which is the word he is trademarked for.

If switching to the Subscription model hasn’t crossed your mind, tune in now to know why recurring revenue in your ecommerce business might be a good option for you.

Don’t miss this insightful episode, hit the ‘Play’ button now!

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Episode Highlights

04:18 Recurring revenue in your ecommerce business

07:50 How would subscription help in business?

11:14 Subscription on different products

15:06 How to implement subscription model

21:04 You can scale it!

25:41 Where to start marketing?

32:46 ADlightenment

36:04 Piece of advice

39:30 Where can you find Evan?

Courses & Training

Courses & Training

Key Takeaways

Evan refers to the “recurring revenue model” as subscriptions, from which any business can benefit. This is important for e-commerce businesses because they can implement some form of recurring revenue model, such as offering extra services or special releases. For example, if a business has limited products, they can offer early access to those who are part of a membership program.

Recurring revenue models are great for companies because they provide a stable baseline income and help build authentic relationships with consumers. This means that companies must fulfill their promises in order to keep consumers paying and promoting their products to others. 

There are different ways to approach implementing a recurring revenue model, but it depends on whether you want it to be the main or secondary focus of your business. Some businesses offer a “subscribe and save” option, but this can sometimes feel odd to customers who prefer to buy when they want. It may work better if you provide extra value or discounts as part of the subscription. You have to decide if you want your business to be fully based on subscriptions or just have it as an option.

About The Guest

Evan Padgett is an e-commerce and subscription commerce executive with 20 years of experience. After a very successful 10 years at Techstyle, Evan joined Thrive Market as their first CMO during their hypergrowth in 2016 helping the brand secure $111M in funding and their biggest year of new customer acquisition as of that time. Now he’s the COO of Stealth Venture Labs, an e-commerce marketing firm, he works with brands like Crocs, HelloFresh, Factor 75, and MUD\WTR.

Connect with Evan Padgett


Jaryd Krause: (00:00)

How would you like an eCommerce business that's less stressful, more scalable, and more profitable? It sounds like a dream. Hi, I'm Jaryd Krause host of the Buying Online Businesses podcast. And in this episode, I'm speaking with Evan Padgett, who is an eCommerce and subscription executive with 20 years of experience.

And after a very successful 10 years at tech lifestyle, Evan joined thrive market as their first CMO during their hyper-growth in the 2016 phase, helping the brand secure 111 million in funding and their biggest year of new custom acquisition at that time. Now here's the COO of Stealth Venture Labs which is an eCommerce marketing firm where he works with brands like Crocs, HelloFresh, Factor 75, and MUD\WTR to expand their businesses using the subscription model.

Now, in this podcast episode, Evan and I dive into why eCommerce business owners should go down the route of turning their eCommerce business into a subscription business to be able to start earning recurring revenue.

Jaryd Krause: (01:05)

Some of what I already alluded to but there's so much more to unpack that we do in the, in the episode, we also talk about in the podcast, how eCommerce brands can do this, for example, what are some of the questions you need to be asking as an eCommerce business owner or what are some of the thoughts or the ideologies that you need to have to be able to turn your business into a recurring revenue business.

Now, Evan and I talk about how he's done it with some brands and how he turned those into subscription-based businesses with recurring revenue. But we also talk about an example that I gave him of a drink bottle business and how he quickly on the podcast just turned that into a subscription business, which I think is fascinating and valuable. If you are looking to grow your eCommerce business with obviously less stress and, and more confidence, then we move into marketing.

Jaryd Krause: (01:57)

Since Evan's been doing digital marketing for over two decades now, we talk about how to market your business and on which channels, and why we talk about Omnipresence. We talk about advertising on multiple platforms and having a blended approach in terms of tracking. And we also talk about a trademark word that Evan trademarks, which is alighting and what that means. Now there's so much value in this podcast episode.

You're absolutely going to love it. Now, before we dive into the episode, I want to tell you that this podcast is not the only way that I can help you for free. If you're looking to buy a business, don't go away and do it on your own. I have my framework, which everybody's been raving about, which will help you take the guesswork out of buying a profitable business. So you can get that by going to buying online businesses.com/free resources.

Jaryd Krause: (02:46)

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That's a niche website www.builders/bob/. I'll put a link in the description too. Evan, welcome to the buying online business podcast.

Evan Padgett: (03:41)

Thanks, Jaryd. Thanks for having me happy to be here.

Jaryd Krause: (03:42)

Here. Yeah, I'm excited about this chat. And the reason being is because the component of what you do is, adding a subscription model to an eCommerce business. I was just talking to two different e-commerce business owners about this yesterday. Uh, one who's already in the mastermind and another one that's wanting to join, uh, our mastermind and, uh, yeah, just talking about the subscription model and how it can really complement an e-commerce business.

And in the e-commerce business, it's you've always got to make sales usually with a, with a product to be making money. But that's why I like the subscription model. So tell me why, what are some of the reasons you, you decide or you want to work with brands to help them build out a subscription arm to their eCommerce business?

Evan Padgett: (04:31)

So to my subscription and you'll hear me use the phrase recurring revenue model pretty interchangeably but a subscription is also a subscription in a form of a physical product is a form of recurring revenue model. But every business out there could generally benefit from a recurring revenue model applied to it.

So the reason why, that's important for an e-commerce business is I can almost guarantee you, if you're a consumer package, good e-commerce business, leveraging that e-commerce as a channel, you probably have some component over recurring revenue, revenue model you can implement, and that could come in the form of extra service that could come in the form of special releases.

If you're a scarcity eCommerce model where you have limited of certain products, right? You could say, Hey, if you're a platinum member of some kind, you can get early access, you get to order an hour before every the general public does.

Evan Padgett: (05:28)

But recruit revenue models are amazing for the stability of a company making sure you have a constant income of revenue as sort of a baseline amount you're kind of always operating of. And it allows you to create authentic relationships with consumers, which is sort of the, one of the biggest benefits I think under, under leverage benefits is once you have a recurring revenue model, which is basically a bill to the consumer, you now sort of engage in a relationship with them, which means that you have to live up to your end of the bargain but they will continue paying you.

And they will also continue promoting you to other people if you deliver on, on whatever your promise is and recurring revenue model. So there are so many pros to it. It doesn't come without challenges but acquisition marketing is generally easier. LTVs generally have higher predictability of revenue generally better. So those are all three things that I'm sure you're looking for as well, and you're evaluating businesses are those factors, right?

Jaryd Krause: (06:32)

What you alluded to there and mentioned really is having that sort of relationship with a consumer and ongoing relationship. It holds the business owner and the business accountable for doing well and doing good and precisely fulfilling its promise because it's easy to just create a product and let's just sell it and let all the marketing do the work and not have any good relationship.

And that's the most important, or the most valuable part of a business I believe in having a good relationship with the consumer now that we know that it's so good for the customer's lifetime value, it's so good for our cost acquisition. We can usually have a higher cost acquisition. And it's less stress on the business.

Jaryd Krause: (07:21)

How are a lot of eCommerce business owners going to be like let's do it? Like how do we take my regular eCommerce business to that recurring revenue model because some people, and I was speaking to somebody yesterday about it, it's like we've got this type of product? How can I make that a subscription model or recur? Like, how can we people pay per month or year for something like this?

So do you have an example or a case study of a brand that you've used where most business owners who own that business may assume, how would I even get a product or a service that could be something that could be a, turn it to a subscription model that you think you're proud of, or you think you've done quite well with?

Evan Padgett: (08:08)

I have a handful I can mention from my background working on businesses, the beauty of a subscription model is, and a recurring revenue model is there's got to be some reason why CU customers come back, even if you're an e-commerce store, traditional e-commerce, meaning you don't have a subscription component in there, you're still banking on people coming back to purchase more than once. You don't have just a one-and-done purchase. So you are already in the mindset of a subscription.

You're just thinking short-term, you're just thinking, hey, maybe I could get two orders a year from this customer. How do you make that four or four and a half or five? Well, what would your product need to be to accommodate four to five purchases per year? What would that, what would that be?

Evan Padgett: (08:55)

If you're a mattress company, a big example is that people don't need to buy mattresses every year but guess what they like betting, right? They want to switch out pillows, maybe try new pillows, want to try new comforters, and doves, they want to have accessories that go in home decor. So maybe you could branch out into home decor. So there's a way for you to sometimes it takes expanding your product line, right?

But there are ways for you to build a subscription model. That makes sense. And some of the examples I've been a part of a lot of my history in the subscription is involved in fashion. Fashion is a very subjective beast. People you could put a pair of shoes or you could put a set of boots, or you could put a shirt, a blouse, a dress in front of a hundred people, half people are going to like how people are going to hate it.

Evan Padgett: (09:46)

So how do you make a subscription model in fashion? Well here's a huge part of most subscriptions, especially fashion curation. People want it to be special. You're talking to them about their fashion sense of style. You have people that want to be in leisure all day. Awesome I'm wearing athletic shorts right now. It's great, right? It's old but then you have people that want to be dressed to the nines at all times. They are buttoned up every time you see them and everywhere in between.

So you, if you're going to build a fashion brand, add a layer of curation, which takes a little bit more work, right but add a layer of curation to that. That makes me feel special every time I'm opening that box. And does it have to be monthly? No, you can do it quarterly. Quarterly is very appropriate for fashion, especially if you're in a place that has seasons, the stuff you sell to somebody in Southern California versus the stuff you sell to somebody in New York City in the dead of winter is different fives so find a way to take your e-commerce store.

Look at the things that people would buy more throughout the year and create a subscription, a recurring revenue model around it. And then all of a sudden you have a dedicated customer base that you are solving the pain they have before they either know they have it. When they have it because that's really what you got to do is scriptures got to solve a pain.

Jaryd Krause: (11:14)

So that's one sort of, I guess that's one sort of thing that you can ask yourself is how do we make their life better? How do we take away their pain and add more value to them through our products on an ongoing basis? Are there any other questions, like if somebody was to sit down like cool? I've got a business that I'm selling for example a drink bottle, and I'm selling say it's maybe hydro flask, they're quite a popular drink bottle brand that I know of.

And it's not just drinking bottles but flasks and different things like that. How would a business like that start to reverse engineer? How they can turn it into a subscription model. Is there some sort of question or some sort of thought they can bring up that can sort of stoke the fire to be able to get an answer?

Evan Padgett: (12:07)

Thinking about a product like that, they have multiple variations of their skews. I'm assuming and I know I'm in a place like Colorado, very dry. I have several different water bottles. So if they want to release styles to wait doesn't mean ha they have to base their whole business on it, but could they release seasonal styles, akin to how Starbucks has different coffee mugs and all those sorts of things.

There's an audience for that that would like to have different bottles for the season. There's also what goes in bottles? Well, water drinks are a logical partnership there to either come up with your hydration methods other than water. So you have supplements and water. You have all those types of different vitamin waters and flavored waters these days, expanding your product line into something like that.

Evan Padgett: (12:57)

You're already selling the receptacle, sell what goes in it or could go in it. But the style aspect of it, like the thing, is people with something like a hydro Flask is a good example.

Or now when it has a lot draws, little similarities to fashion as in people like to be able to style their bottle, even if you were to do this is like a dumb one. Just thinking of the hip but like removable decals that could go on the bottle that change for the season, there's a subscription for you, that could be a very high margin, $10 a quarter, $10 a month to get different decals, and people do that stuff because when you're drinking, I got stealth one of these guys right here with our brand on it and everything like when I'm drinking out to this people will take stickers to put more stickers on them, put decals on them if you have the way to remove them and update them, or regionalize them could be awesome too.

Evan Padgett: (14:02)

So these are just some of the things that come to mind, but you could find something like your consumers that bought this product, they're using it to drink water, they're using it to drink. There's something very consumable there that you could try to find a way to sell them, that makes it fun. And again some people just reuse the plastic water bottle, they get from the store, and there's nothing wrong with that. But if you're carrying a flask, you want it to have a little bit of a personality to it. So that's like one example idea of just throwing it out.

Jaryd Krause: (14:29)

I like your thought process around asking, how is there something consumable, for example, there's something in the drink bottle that's consumable. Is there something outside the drink bottle that's consumable as well in terms of people's tastes? And I have felt that one of my last drink bottles is it was a glass one with a blue cover on it. And when I broke it, I bought the same one but I kept the blue cover. And then I bought it had a black cover, so I could change the covers around.

So there's a market for that. when you do decide to shift to the subscription model, and it can be, quarterly or annually, or monthly what are some of the logistics and things that a business would have to do? Would it be an upsell, or a down sell once they've purchased the main product into a different type of subscription? Would it be offering the subscription upfront? How does a business go and use, feel free to use an example of a brand that you've worked with?

Evan Padgett: (15:38)

So there are a few ways to go about it. I won't say that there's one universal way, but how you got to think about it is you want subscription a recurring revenue model to be your primary business or your secondary business, and what that means is secondary versions are things like subscribe and save type models. I am personally not necessarily a fan of those because it's weird customer sentiment.

If I'm a consumer, my first thought is, well, why can't I just save that now and buy when I want to. It's not necessarily a PO. Now, if it subscribes and save, meaning you get free gifts or you get free add-ons that show value and you pay less and stuff like that tends to work really well. So you have to decide on, do you want to be fully subscribed, or do you want to have a subscription be a part of what you offer?

Evan Padgett: (16:26)

And this is a, I'm not going to say there's a right or wrong, but there is a mindset here that I want to break, which is it's very difficult to do both. And it's really difficult to do both because you want to get that attractive recurring revenue you also want to have and not alienate your standard business.

So examples that come to mind here are when I didn't start it, but I was at a company called thrive market, a big online grocery company in the states, I joined up with them as their chief marketing officer internally for about a year and a half during a big part of their hyper-growth. So their business model was to sell healthy groceries and groceries, a very tight margin business. Anyway, you don't make a lot of money on grocery.

Evan Padgett: (17:10)

They planned to sell the products at the near break, even from a cost perspective. And then they sold annual membership and that annual membership was $60 a year, sort of a Costco model. That type of subscription felt really natural because what it did is it showed a value proposition for products that you would compare to Amazon or your local grocery store, and consistently saved significant money.

And being able to show that to a customer where most of our customers saved their entire annual subscription on their first, like one or two orders, because $60 a year, and you're saving a dollar on this bag of organic chips and a dollar on this, or $2 on this coconut oil and a do like it adds up quickly and groceries are consumable. So it was a really natural fit to be able to do that.

Evan Padgett: (17:58)

Another good example is a drink company that we used to work with. They would do it was a company called dream water. And what it was a company that was like the opposite of five-hour energy, where you would take it and want to go to sleep so people have to go to sleep almost every night, and some people struggle with going to sleep.

So they typically only been brick and mortar retail, and we were with them right before and up until the point that they got purchased as a company. But we were like, yeah, this is an easy recurring revenue model because you want to deliver, you're solving the pain of them having a product that helps put them to sleep at night and calms them down melatonin and all that stuff that helps you sleep.

Evan Padgett: (18:43)

They need it. Most of the time most people would say they need at least 20 out of 30 nights in a month, and the product, the economies of scale were there because when you ship if you're shipping a box of 10 versus a box of 30, about the same price, when a dimension and weights all kind of come, come ou. But you're selling three X the product. So you just look for these opportunities and see, okay, like here's a subscription product now go out and do it.

Now the rub, the subscription, the hard part with subscription, you ask about this operationally is you got a plan. It requires a lot more planning, especially when you talk about the supply chain, especially when you talk about advertising. If you're a brand that's out there doing paid acquisition when you're an e-commerce brand you're and follow me through this, cause I'll go on this numbers experience here.

Evan Padgett: (19:36)

When you're an e-commerce brand you're targeting a row as out the gate. You're never considering selling a product out the door with customer acquisition costs being in the red. You just don't, you're targeting a three, four, or better Road depending on your margins, anything less than that, we're not spending money on a subscription, the beauty of a subscription is you are buying and acquiring customers off of downstream revenue to that LTV. You look at C to LTV ratio more so than you look at Road right?

So what's your LTV and CAC. Well, C the market's going to tell you, but your LTV, you got to figure it out. You got to run a modeling exercise to look at well, we get a hundred customers and this cohort being a month of acquired customers, what's my churn going to be every billing period, maybe it's monthly, quarterly, semi semi-annually or annually.

Evan Padgett: (20:33)

It doesn't matter. You got to look at that churn. You got to know when you're going to get more revenue in and guess what you got to be. If you're shipping stuff out in a box, you got to plan for that inventory because in eCommerce you're placing inventory beds, but it's a little bit more controlled in the sense of maybe UFC analogy already built-in subscription is a foretold story.

You're going to have a thousand customers in two months 2000 customers, and six months from now, whatever you got to be buying that inventory.

Jaryd Krause: (21:04)

Your growth rate whereas yesterday I was speaking to a lady who Amazon business crushing. It was doing like 80 K net profit last year and bought a whole bunch of inventory because she's like, oh I need it because we're growing, and then Amazon because she owns an Amazon business. Well, you don't really own an Amazon business.

Evan Padgett: (21:28)

You don't say.

Jaryd Krause: (21:29)

Amazon owns.

Evan Padgett: (21:30)

What is owning an Amazon?

Jaryd Krause: (21:31)

What is owning an Amazon business? It's just gross and disgusting so that's directly targeted at you Amazon. Like it's not fair. I'm not a fan of it as you can tell, but yeah, so she bought a bunch of inventory and just was like, well, I've got all this inventory now and because Amazon changed the category without her doing a thing one day.

We'll just change the category that your product is listed in. And then yeah, half your business is gone, whereas subscription you can know your growth rate because then you can slowly wean in money into more marketing and you can predict that growth rate. It's usually more scalable with more confidence. I mean, Amazon is a severe example.

Evan Padgett: (22:19)

That's a big one though.

Evan Padgett: (22:22)

I have a ton of opinions on this. We could probably do a whole podcast on this, but this is a question I get a lot too, which is, Hey, I'm on Amazon. I also want to have my direct-to-consumer site going, because everybody's on Amazon. You know what they want.

Evan Padgett: (22:39)

I don't have that customer. So want to know how do I have to have this conversation several times a month. They'll be like, we're doing 80, a hundred thousand dollars a month, more on Amazon on these products and these verticals. And what we want to do is we want to develop. I say, well, you plan on staying on Amazon like of course we're not going to cut that off. I'm like, well, here's a thing. Doesn't matter what you do on your own.com.

Every dollar you spend on advertising, a fraction of that, no matter what is going to you selling your same product on Amazon at lower margins, without a doubt because you're prospecting and introducing customers to Amazon and or excuse me, introducing customers to your brand, they're going to search you, find you on Amazon and they are going to buy from Amazon nine out of 10 times directly.

Evan Padgett: (23:25)

If your product is on there instead of on your own website so again, I don't want to derail us too much, but man, like I have this conversation and nobody wants to believe me, but I've seen it in practice so many times with like, I hear you, I know you want to control your customer journey, right? And you want to develop that relationship, but I'm telling you now if you're stuck on Amazon and you can't find a way to peel off of that for reasons.

And look, Amazon isn't necessarily, the devil's created so much opportunity, but having both there, it just I've never really seen it work well unless you're a big box retailer, do that billion-dollar brand that just is wholesaling everywhere. You'll get some residual through your.com because you're a multibillion-dollar brand. And I tell you what, you go into those companies, you go into Proctor and gamble. You go into anybody and say, oh, what does gillette.com do in sales? They're like, we don't even care, that doesn't matter.

Like because we're selling it all in the grocery stores, we're selling it, Costco, we're selling it on Amazon. It doesn't matter. Like it's an afterthought. So it's always one of those things where like, I feel for brand owners that have reached their capacity on Amazon and want to grow but don't realize that it's a challenging step to we yourself off of Amazon long term.

Jaryd Krause: (24:45)

I've helped one person do it in my group and make more off Amazon now and owns different areas in different markets in the, in the different countries. But he's doing big volume and he's spending a lot of money on ads, like hundreds close to half a mill a month on ads. And it's not for the, oh, I'm making, and it's a big feat for somebody to be making 50 grand a month.

But if you're making 50 grand a month and you are profiting 10, 20 you've got a long way to get there. So I'm with you on that. I want to bring it back to the subscription.

Evan Padgett: (25:26)

Say that for the next episode.

Jaryd Krause: (25:28)

We could just have a full rant episode on Amazon I mean, I could do a whole series or create a whole channel or whole podcast is about that e-com and going subscription. There are so many good wins with it. First and foremost, I guess this is sort of in line with what we were talking about when somebody is looking to start marking their e-commerce business with paid ads and it can be for the subscription model.

It can be for a hybrid of both. I recommend not to have not to confuse the customers because that's critical, you confuse them. They're going to have buy fatigue and not buy from you, whether you have a subscription on non-subscription. But when somebody's coming to start marketing, where do you suggest they start marketing first? Are we talking search? We talking about paid social I have my ideologies around this but if so, why, and will it depend on.

Evan Padgett: (26:27)

Brand or there's a little bit off depending on the brand, right? But let's just say you're an eCommerce consumer package, a good company, very different than say SAS, or depending on what your customer is and how big your customer base, if it's business or, or consumer or a specific type of consumer. But let's just say you're a mass-market possibility where your addressable audience is either somewhere around half the population you targeted to males or females, or maybe just targeted to adults, right?

Something like that without a doubt, you got to be playing well on search and search is a methodology of efficient, long-tail customers that you could get that are looking to you could be a solution for the pain that you're solving. So when I say the pain that you're solving coming back to something I said earlier is a product that works well in subscription solves a pain that the consumer has a good example.

Evan Padgett: (27:14)

We work with many meals at home companies such as hello, fresh, and some others, but some of the biggest ones that exist, everyone's got to eat. They solve the pain of delivering food to your door. That's sometimes ready to eat or ready to prepare, but the pain that they also solve that you talk to the consumer about in an ad perspective is, Hey, I don't have to go to the grocery store as much.

No one loves going to the grocery store if they do, they're weird, totally love going grocery store and love waiting in lines. And you're solving that, what you're also doing, you're giving people more time with their family because they're not going to the grocery store as much. And they're getting the hours of their days, weeks, months back, right.

Evan Padgett: (27:58)

Search coming back to advertising is critical and will also give you some of the best and most efficient customers you will ever get starting with a long tail. You don't go out there and be like broad match fashion but with a savvy search strategy, it's a foundation for your initial customer base to be highly efficient, profitable customers, to start telling you about what your journey is. And of course, you say, Evan, that's demand-based marketing.

Of course, like that's going to work well. That's how you start a business by seeing your demand. Got to fall that you start talking about push. So then your demand is down. You kind of has a good, well-rounded search account. It doesn't mean you're not starting these around the same time, but your search is your anchor.

Evan Padgett: (28:50)

Your push marketing, being social, being everything, social snap, TikTok, Pinterest, Facebook, Instagram, all of that, then you start waiting into there because that's your big market. Now, of course, iOS, everything that's changing there. Everything was changing with Google next year made it difficult to advertise. It cost more efficiently for new businesses on those platforms, more than ever now, testing out. I didn't use to tell people, that you get to $150,000, maybe $200,000 a month, and spend before you even go outside of Facebook, Instagram, and Google.

Now, we just jump in with brands saying, you want to have several channels working at once. You want to have your remarketing setup. Even if it's remarketing everywhere. So if you're even bringing people in on search remarket the heck out of them on every other channel that you can TikTok snap, Pinterest, Facebook, Instagram, you better be remarketing them and you better have awesome ads to do it, which I'll talk about that.

Evan Padgett: (29:53)

The ad game, a creative game, I should say way, upscale than it was even three, four, or five years ago, you have to have good creativity which we probably talk about a little bit as well. Now you're saying, well, these customers are expensive. I'm trying to find them. They're hard to find. Interests are only going to take me so far. I don't have enough customers for lookalikes yet.

So what you jump into when you're doing push marketing, you got to have a war chest to a certain degree and you got to have the stomach to be able to understand that you're going to launch a lot of dollars and you're going to waste a lot of dollars. In acquisition marketing.

You really can't control the search. There are still things to conquest, a push marketing, a whole different beast. You're telling people why they need your product. Whereas Google, they're telling you the property they already sold.

Jaryd Krause: (30:46)

They're already sold in search. So like, come and give me what I need. I'm looking for this now. Search is like, oh, you're looking at babies and wedding photos.

Evan Padgett: (30:57)

Here are the baby and wedding photo sources. Jaryd Krause: (30:59)

How about you want to buy the tables that we sell or something short like that when they don't even care about the tables.

Evan Padgett: (31:07)

So that's how it is. You need to have a budget.

Jaryd Krause: (31:10)

Go ahead, that's just how it is, that's the massive difference with intent.

Evan Padgett: (31:15)

So the intent there, and driving on push marketing, guess what you need to jump in knowing your allowable customer acquisition cost on the channel and also work into a blended. This is the fight I have with entrepreneurs and business owners, the most looking at their blended C and their marketing versus individual channels. Because if you only want to run your Facebook or IG or whatever at your target blended CAC, that's good for your business.

You're not going to get there. You're not going to have a scale there. I'm going to say because attribution horrible these days, even with some of the best tricks you could put in between tagging things well with GA matching it up with your e-commerce platform, the Shopify, whatever you're using, and then triangulating that within the platform, it's still directional at best. So you got to be working towards a blended.

Jaryd Krause: (32:08)

It's so hard to know that it's I think you just can't judge based on one platform of tracking, plus you got the iOS, especially, it's so hard to know, all right. They found me through Google, and then they went on, they Google searched your name, your brand, and they went on your Instagram, your Facebook, your TikTok, and made a decision based on like a combination of those things. And that's imperative.

If you're not doing blended, you're spending wasting more money than you need to, uh, on ads. But this is coming into something I presume it's coming into something that you talk about or have trademarked. So tell me a little bit more about this word and what does ad enlightenment mean?

Evan Padgett: (32:59)

It's funny that ad enlightenment is simplified as serving the right ad to the right consumer at the right time. That's really what it's so we don't live in a world, especially now we're one size fits all ads are a thing. So when you're talking to the stay-at-home mom that is feeding a family of three or four and what they need and the praises that they have versus a single no kids employed individual at 25 years old versus the other one at maybe 32.

They have different wants and needs, and you're not just going to be able to say, boom, this thing get 25% off your first order. And have it make sense to them. Enlightenment is our way of looking at this is how we want to speak to a certain psycho demographic, a certain type of person in a stage of their life.

Evan Padgett: (33:56)

So we are addressing how this product solves their pains and their pains are different. Like they are taking me circa 2010 when I had no kids and I was just working 60 hours a week. And if I wanted a meal at home, it's because I don't want to deal with grocery stores and I just need something I pop into the microwave and I'm going to be full and it doesn't taste horrible because I'm working, I'm grinding, and I'm on the go.

You would have a different ad now to speak to me versus the one that is, Hey, I'm a stay-at-home parent. I'm trying to make sure my family's eating healthy, I and my spouse are not eating great. My kids are really picky. How do I use your product and solve my problem?

Evan Padgett: (34:46)

Well, you can get a certain amount of that information based on interest, based on the ads that people respond to who is in that ad, what creatively you're showing there how you're communicating to them, and how their landing page experience is even to address their different paints because your product a really mass-market product will solve different pains for different people at different stages of their life.

And that's really what ADLA is our approach here. Stealth is to look at, okay, we're going to go after this working parent, we're going to go after this athletic Jim goer that only wants to eat Keo or paleo. We're going to go after the person that's on a budget where every single dollar counts to them, and we're going to show them the value of what they get versus somebody that has disposable income value is not the most important thing for, they're not trying to save money.

They want convenience. So ad Litman is our approach to looking at the different kinds of customer personas. You have created advertising campaigns that speak to them most accurately and working to acquire them in such a way that we are not alienating customers as much as possible with every single ad impression that we have.

Jaryd Krause: (36:03)

So I wanted to finish up with, a question on if somebody comes to you and says, I want to take my econ business to the subscription model. What's the one piece of advice that you'd give them if you were going to work with them or not.

Evan Padgett: (36:19)

The one piece of advice I would give them I got to give a couple, I'm sorry. I would have to, I'd say in one long sentence.

Don't focus on your KPIs. To understand what your LTV is going to be, what your turn could be, and what that does to your business. Don't lose sight of what that does to your finances. because not every business has 20 million in a bank to mess around with. So be conscious of that is one in one sentence.

The next part of that is to look for what customers your consumers need or could need and think about ways to expand your business accordingly. So you mentioned hydro flasks, so tough to send people a monthly hydro flask. They will probably be like, I have a dozen of these. I'm good, but they might want decals. They might want, this might lead you into saying, look well, should we give customers something? Should we partner up with a brand and provide something to put in that bottle, think about what your customers would need regularly.

And you're already doing that because you don't have an e-commerce company where you're like my business model one and done. I hope I acquire customers, and never see them again said by nobody ever in eCommerce. So extrapolate that and say, instead of two orders a year, how do I get to four? What would be the four to five orders, a year product that I could offer and boom, start building it and then be, and then the last piece when you're doing all this be patient and flexible, you're going to have an idea of what you want. The market's going to tell you what it needs.

There's likely to be a gap therebetween those two points. So listen, and find ways to close that gap between your pricing, your promotion, your positioning, how you're solving a pain, and whatever you're doing, and don't throw that out just because I got a couple of customers that say that they don't want this like, well, like have some stomach.

Jaryd Krause: (38:14)

Lay it out, you've got to get mass feedback. Not just off a couple of people.

Evan Padgett: (38:18)

And subscriptions, people say they want to change their business model. Because they got one bad review on Facebook. Like calm down. Most of your customers are probably happy.

Jaryd Krause: (38:28)

You can throw the baby out of the bathwater it's yeah. It's pretty scary. I was just thinking throughout this chat for some people really wanting to work out, how can I add a subscription to my eCommerce business? This is what I do when I'm coaching, go away and do some competitive research and you that can really get the creative and I ideology and the juices flowing, right? Like around how have like hungry jacks or burger king in America moved to the subscription model and how some of these other people moved to these subscription models that you could twist into your way for your eCommerce business. That's what I would do. I think because I struggled to sit down with a blank canvas and just go here's the idea.

Evan Padgett: (39:16)

Taco bell here can create a subscription service. Like they're doing that's an actual thing going on. You can find a way to take your eCommerce business and create a subscription or recurring revenue model out of it. I guarantee it.

Jaryd Krause: (39:30)

Love it, Evan. Where can we send people to check out more of your stuff?

Evan Padgett: (39:34)

So you find me on LinkedIn, Evan Padgett, there aren't too many of us out there. So you probably recognize me there, check out our website, www.stealthventurelabs.com, there's a form where you can fill out, end up I'll end up seeing it, any form filled out. I end up seeing any way that sort of shows what we do, what we're doing, who we're working with.

For some of that information of course you can reach out to me directly at [email protected], or [email protected]. Give my personal out there if you all want to reach me there.

Jaryd Krause: (40:06)

Awesome. Like emails and tell you that much.

Evan Padgett: (40:09)

I love talking about this stuff. Honestly, in this industry, I've been doing this for 20 years in the subscription at this point, I've seen it evolve. I've seen it change and love talking about this anytime with anybody.

Jaryd Krause: (40:20)

Awesome. Thank you so much, Evan. Great to have you on appreciate the chat, everybody that is listing knows somebody that has an eCommerce business that could benefit from bolting on a subscription model to their business, to have less stress, more reliability, and a more scalable business. Make sure you share this podcast episode with them.

It's very valuable for us to get the podcast out there, but also valuable for them to get some really massive golden nuggets that Evan shared throughout this episode. So thanks again, guys. And I'll see you next.

Want to have more financial and time freedom?

We help people buy established profit generating online businesses so the can replace their income and spend more time doing what they love with the people they love.


Jaryd Krause is a serial entrepreneur who helps people buy online businesses so they can spend more time doing what they love with who they love. He’s helped people buy and scale sites all the way up to 8 figures – from eCommerce to content websites. He spends his time surfing and traveling, and his biggest goals are around making a real tangible impact on people’s lives. 

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