How Caraway is Navigating Economic Uncertainty

How Caraway is Navigating Economic Uncertainty Speaker 1: 39% of consumers are more cautious with spending than pre-tariffs. 20% of them prioritize value over brand names. Only 14% are planning on sticking with preferred brands basically as prices. Go up. Consumers are price sensitive, but they can support some price increases. Because people are somewhat price sensitive, they are willing to move beyond the brands that they have shopped with in the past. The product matters more than the brand. Social proof matters. Key benefits matter. Showing some type of way to justify the price matters. Speaker 2: Welcome back to another episode of Chew on This. Today, we have a special episode presented by Klaviyo. We have Jay Cohen, who is the VP of Industry and Insights at Klaviyo, as well as Jordan Nathan, who is the CEO and founder of Caraway. We're going to be breaking down what it really takes to protect your margins, especially in an economic climate that we're living in, and how we can actually drive sustainable growth under pressure. Really cool topic. Incredible brands here. And then we also have Klaviyo, which is a tool almost every e-commerce brand is using. So really, really excited to break this down. But before we jump in, guys, for the few people who may not know who you guys are, if you guys don't mind giving a couple of minutes of intro from each side. And Jake, we can start with you. Just a little bit of your background. Speaker 1: I was going to say brand operators first. Jordan, why don't you go first? Speaker 3: Sure. Well, thanks for having me, guys. Fun to be on again. I'm Jordan Nathan, founder and CEO of Carraway Home. We are a non-toxic kitchen and home goods brand launched in 2019, so a little over five and a half years old. Started with the brand in the cookware category, was looking to tackle PFAS and providing an alternative to customers that was safe to cook with. You know, over the last few years, we've really expanded across the kitchen into food storage, bakeware, knives and utensils, and As a brand, our kind of North Star is to make all homes clean homes. And, you know, as we've kind of grown, that word non-toxic has really expanded in meaning. And today we're really looking to tackle not just PFAS, also known as Teflon, but also microplastics, lead, cadmium, etc. And, you know, we're a digitally driven brand, but also, you know, very omni-channel. So, well, DTC is our biggest medium. We do have a big business on Amazon and we're in close to a thousand stores nationwide with Target, Crate & Barrel, Container Store, and a few others. So yeah, I'll pass it to you, Jake. Speaker 1: I will say that our household is a very good Caraway customer and has evolved our purchasing, I think, in line with your product expansion strategy, so it's working. Speaker 2: Right there with you. My wife's a super fan. Speaker 1: Yeah, I think I used one of the tough words this morning. Very good. My name is Jake Cohen. I've been at Klaviyo for almost 10 years now. I joined and led product initially, built out a product marketing function, worked on some key partnerships, and now lead our insights and market research function, keeping close with different categories, helping people understand what's working, what's not working, and what tools they can leverage to help improve the quality of their business and pursue their dream of building something that people want. Speaker 2: Before we dive in, a quick word about today's sponsor, Klaviyo. In 2025, retention isn't optional. It's a growth engine for any brand that's serious about scale. That's why at Obvi, we use Klaviyo for all of our email and SMS marketing needs and to know what our customers are talking about. We're not just using Klaviyo to blast everyone the same promo code, but to make sure our message actually reaches the right people at the right time based on real customer behavior. Klaviyo combines real-time customer insights with AI to help us design smarter flows, create dynamic segments, and personalize every touchpoint based on what our customers are actually doing. It saves us time and helps us drive way more repeat business. Want to know more about your customer than ever before? Go to klaviyo.com slash chew on this to learn how. Now, let's get back to the episode. Thank you guys for the intro. And I know there's a lot to cover today. So I want to jump right in. And Drew, I'm actually going to start with you with, you know, we're in this climate where I think the uncertainty piece almost feels like it's just like the that's like the known factor. Like it's almost always uncertain now, right? There's something that is that you're going to walk into to your office and you'll be like, all right, well, I'm going to have to figure this one out. Going through that, whether you look at iOS or you look at post-COVID or you look at what's going on with meta right now, whatever it may be, Tell us a little bit about how your viewpoints are in just building Caraway, right? I think you guys have always taken a really cool product first approach, but also you've gone through so many different ups and downs of what the market uncertainty has, but your brand has been able to grow through it. So what does it really take to kind of even build that infrastructure to be able to kind of fight through a lot of the different headwinds that we do face as brands? Speaker 3: Yeah, I mean, I think overall, it's been a tough past, you know, three, four, five years, as mentioned, iOS updates, COVID, you know, rising debt, high mortgage rates, you know, list goes on with tariffs. And, you know, I think, As a business and brand, uh, we've always tried to control what we can and, you know, really, uh. Zig well, I guess the environment zags and, um. You know, I think looking at the past few years, um, we've kind of taken a to relate it to like sports. Playing like a trap in some ways where, you know, I think we're on the defense most of the time, but looking for opportunity when it opens up. And so, you know, where we've really leaned in past few years and especially this year is really doubling down on what we know works and talking to the customer, hearing what they're looking for and making sure that we're meeting them, you know, where they are and, you know, with each product need that they have. And then I think really the key to our growth has been long-term planning. So we take a 100-year approach to the business. We do expect Caraway to be here in many, many decades. And I think with that approach, It forces us to prioritize. Not everything needs to get done right now. And, you know, our roadmap really runs out three to five years. And so when you're kind of working backwards and you have a long-term plan, you always have things at the ready, whether it's products or channels that have been looked at and vetted that you might be planning farther out that you can be nimble and kind of adjust. And so I think for us, you know, that long-term planning has been really enabling When it comes to pulling levers when things in the macro environment are happening. And also, you know, really focused on a flexible marketing calendar and ensuring we have constant newness. Um, you know, if a channel is gonna, you know, tank one month or, you know, met us having challenges, whatever it may be, we've always got something new that we're testing. And so for us, it's really focusing on the 80% and then always leaving a little, you know, 20% left to test and try something new. Speaker 4: Love that. Jake, from your end, you're dealing with a bunch of brands that have also gone through the ups and downs over the last few years. Just to build on what Jordan was mentioning, how Carraway is handling these struggles, what are some of the best-in-class brands that you've been working with? What have they been doing over the last few years to make sure that they are growing and they are playing defense when they can and offense when they can and continue to get and grow through these tough times? Speaker 1: Yeah, it's been hard to state the obvious. I think though there's generally speaking three buckets that I see pretty consistent attributes in across successful businesses. The first is in product, the second is in, I guess you'd call it retention, the third in advertising. In product, The best companies have the best product, full stop. And they invest, I guess, from a Jordan seat, a disproportionate amount of energy in ensuring that the product is great, not only from a design perspective, but from a quality control perspective, from a timeliness and availability perspective. And from a delivery and like sort of opening usability perspective, it really has to be all of those things. A lot of the companies that I've seen come up and down or flail out just sort of skip a step or they get so ahead on demand that they aren't able to fulfill it very well and then their reputation degrades and then it becomes harder. So just a maniacal focus on an exceptional product and balancing the right amount of demand supply as best you can to ensure that you deliver on the promise that you put in market is sort of a precondition to everything else. Easier said than done, a little generic but consistently true. On the retention side, so it's kind of a combo with advertising and retention. The reason I put those together is for the businesses that start to have some customers, ensuring that you keep those customers very happy, but also making them a promoter such that they bring other people in. It takes your blended CAC numbers down and it gives you more of a reliable drip of revenue that allows you to be a little bit more experimental and opportunistic on the advertising later. And it's why it's in the second bucket. So practically what that means is the best brands build out a really nice sort of buyer journey and set of touch points that happen from the first time they're curious about the brand to the first purchase and opening to the multiple purchases later. And they build a series of automations that basically hit all of those touch points. So it's just a factory work on your behalf. Not enough people do that. And you literally can draw on a piece of paper and then each line between each step is an automation you can put together. And I also see the really best brands. I'm nervous with this guidance because it has to be done right. We'll get into it later, probably. But they actually send more communication that is poignant and tight and specific to their customers who are best, as opposed to fewer communication to everybody. A little counterintuitive. So that helps on the retention side to keep up your repeat customers. And then on the acquisition side, it sounds passe now, but like, I don't know, starting a couple of years ago, having contribution margin as the primary heuristic that you look at from your ROAS or your return or whatever on your advertising, as opposed to just revenue back, is really the magic behind it all. It's hard, obviously, because not all products have the margin to support it. But if you can do it that way, you become profitable from the get-go, and then it becomes much easier to maintain spending and experiments and general growth. So, I see people taking a portfolio approach to their advertising. 60% to 80% goes to the tried and true, trusted stuff. You keep running that. An extra 20% to 40%, depending on the nature of your business. It goes towards experiments, either on the same channel, trying new content, trying new targeting, trying new formats or new channels to see what might work. And, you know, when those three things come together, I've seen incredible, incredible performance, excluding the spending side. There's also like a how to keep costs down, but just generally these three things keep the growth up. Speaker 4: I love that because I think there's one thing that Jordan mentioned and then one of the buckets Jake, you also mentioned is really focusing on like the needs of the consumer, right? I mean, it sounds very obvious, right? Like listen to your customers, what do they want? And then kind of build upon that. But I think the best in class ways of actually doing that is doing the things that aren't scalable, right? So for us at Aave, we have, you know, this massive Facebook group. A hundred thousand plus people that are in there so that we have direct connection to, you know, a subset of our customers or our best customers to maintain that loyalty, right? On top of that, even like, you know, picking up the phone, calling customers, understanding, you know, the pain points there, you know, getting on Zoom calls, recording those conversations, leveraging that for insights for how do we, you know, figure out our product roadmap? How do we even maybe even leverage this content for ads or even just content or organic? Those are the things that, one, again, you have hundreds of thousands of customers. You're not going to pick up the phone and call every single one of them, but just the subset that you can actually leverage these small insights can yield big results. And it kind of leads me to the next point, which is some of the stats that you actually pulled. Among brand loyalty and how consumers are thinking about their shopping habits, now is the time to really reel in your customers and make sure that you're providing a real experience for them versus just hammering them with promos and promos and promos and expecting them to pull out their wallet every single time. Speaker 2: Yeah, I think what Ash touched on a little bit of the data you pulled, right? Maybe we can break down some of those even in more detail, right? I think some of it being 39% of consumers are more cautious with spending. You have 20% of people prioritizing value over brand names. I'd love to break down a couple of these just from your end, right? You get to see this, you get to bucket it in a composite and then Are there recommendations on what this type of data means? What should I look at when I see 20% of people are prioritizing value over brand names? How should I go to market differently or what should I do and adjust that? And I know you have some incredible stats. I would love to break some of these down with also some action items from your viewpoint of what maybe brands are doing or what you think brands should do. Speaker 1: Just take a step back for everyone. So what we're actually talking about, at Klaviyo, we did this during COVID and then we redid it during the tariff Drama, where we would go out and pull a bunch of American consumers, 25 plus, and ask them how they're feeling, what they're doing, what their plans are, how things might be changing. And then we bring that back to brands to give them some, I don't know, transparency, understanding of where things might go so that there's just one less thing to worry about. And it's been very interesting. I'm frankly a little bit counterintuitive. So yeah, there's three. I'm going to read here because I can't remember all numbers so well. It was Einstein who said, never remember anything you can write down. So I try to practice that as best I can. Yeah. So one of them, the three statistics we wrote down, 39% of consumers currently are more cautious with spending than pre-tariffs. 20% of them prioritize value over brand names, which I think creates an opportunity. Only 14% are planning on sticking with preferred brands basically as prices go up and there's others. So basically what we've been seeing overall Is that consumers are price sensitive, but they can support some price increases. So I wonder if you're comfortable talking about Jordan, I'm curious how you guys are thinking about this. That's one. Number two, because people are somewhat price sensitive, so above price increases above a certain point, they are willing to move beyond the brands that they have shopped with in the past. The way I interpret that is the product matters more than the brand. But I actually think it's a little bit of a false positive signal because I think if you have a trusted brand, you almost get points towards the purchase consideration. So if I'll make something up, I don't think, let's see Caraway, I don't think that y'all, you don't make cutlery, right? Speaker 3: We do sell knives, not like forks and spoons. Speaker 1: Let's go with flatware. So Caraway does not sell flatware, right? But if someone had to go replace, I need forks or whatever else, I don't think they would choose Caraway flatware because it's Caraway. But I do think if they were looking for forks, that new product would enter the consideration set and would be one of the ones that they would consider more readily. At that point, though, it's brands' responsibilities to point out the benefits of their products more than they may have in the past and the theoretical reason why this is a different product and it's a better value for the certain use case of the consumer so that they should buy it. Phrase differently, the days of, oh, I like this brand, swipe up, let's try it. I think that's starting to go away. And I think consumers now are more thinking about, given my use case, given my need, does this specific product serve it well? So social proof matters. It's like classic product marketing. Key benefits matter. Showing some type of way to justify the price matters, right? Less than this thing that you love or, you know, You can do the math of like if you use a fork 200 times a year, it's only 10 cents a bite. I don't know, whatever, you know, you'll have to try different things. That matters a lot more. And then the other thing that we've seen brands be successful doing in all of this is if you have proactive, specific and transparent touch points with people, consumers respond positively to that because they can sort of feel Tell them if you're going to change prices. Tell them if you're having a shortage of inventory. Tell them if you're having something new. Tell them if a sale is coming before you go tell everyone else. They feel like they're treated better. They'll pay more attention. They'll pay more mind. And ultimately, they'll buy your products. Speaker 4: Jordan, given some of these stats that Klaviyo has researched and surveyed most consumers, how are you guys handling some of the changes at Caraway? So, for example, if 39% of consumers are just more cautious with their spending, and given Caraway is definitely high-ticket items, how are you guys thinking about strategy during this time? Speaker 3: So we are a premium brand, not the highest priced in most of our categories, but on the higher end. And this kind of value-based shopping we saw come to fruition last year. What we noticed, I think in Q2 last year, we might have talked about this on the podcast episode then. We noticed when we were, we don't run sales really throughout the year, but we do some like different events, whether it's gift with purchase, or you get a gift card with something. We noticed that the highest highs of those events were higher than prior years. And so heading into holiday, we had an assumption that people were really capitalizing on events where they get extra added value. And I think in that same timeframe, A lot of factors, you're adding new products. We had more customers that we acquired over the years coming back to buy, but our repeat rates were really increasing at a faster clip than prior. And I think what we kind of felt and noticed from the consumer was they were still spending, but they wanted to spend money on brands that they trust, at least in our category. I think separately, I have talked with like beauty and fashion brands, and I think on the flip side, I've heard kind of those categories. You're seeing like less consumer trust and consumers willing to buy dupes or trade down. And so at least within home and cookware and kitchenware, I think the consumer is spending but really being thoughtful about where they spend. And I think to Jake's point, the reason that consumers are continuing to invest in Caraway is it's not just the beautiful products and value. We're in this wellness economy where people are investing in their health and Caraway is really at the forefront of the movement away from PFAS and microplastics. And so when customers are going into our category, they're looking at, well, I can buy lots of cookware, but I trust Caraway with the limited dollars that I have to spend. And so having that additional value add of what your brand stands for, I think is extremely critical in this moment. With tariffs kind of underway, We've been tackling it from lots of angles, happy to go deep on kind of any area, but we took a very different approach than most. So we actually raised all our pricing on 5.15 just a few weeks ago, and I know a lot of brands We are still kind of holding out to see what happens. It's a ping-pong match. The air is changing every day. But we really wanted to say like, hey, let's find out what the new norm is with new pricing. That's the one thing we really can control. While we're raising pricing, though, we do want to talk about the value of the items that you're getting. And so sets are a core piece of our business. That's what people mostly come to us to buy. If you go to the PDPs now versus like three weeks ago, you'll notice that we're displaying set savings, both the dollar and percentage. We never showed that before and we want to be, you know, with raising prices and getting actually more dollars off now your purchase than buying singles. We want consumers to really be aware of the savings that they're getting with sets. We're also adding more toggles on the PDPs and adding more badging. So you'll see like best value badging. We very clearly display like the more you buy on a page, the more you're going to save. And then actually similar to Jake's example, we are running a bunch of ad messaging where I think the average consumer spends $2,000 to $3,000 eating out at restaurants every night. And, you know, when you're in, you know, a tough environment and you're eating at home, you know, you could buy Caraway for $450, you know, save money, you know, eat healthy, be safe. And it's really an investment in your family as well with the safety of the materials. Yeah, we're putting a lot of emphasis on that value, but that emphasis also doesn't need to come in the way of discounts, right? It's what else does your product provide outside of price and are there ways to get consumers value by buying more, you know, getting sets, maybe a gift with purchases, in-cart offers. We're seeing that really work, you know, this year and also leaned into that last year as well. Speaker 1: Jordan, how much did you all raise prices-ish? Speaker 3: I think about 10 to 15% across the board. Speaker 1: First of all, everything you said is incredible, and I'm not surprised that it's working well. Another fact that we saw, to pull it in, consumers were telling us that in anticipation of price increases, They were frontloading some of their spending through the rest of the year. And so what's actually genius about Jordan, what y'all are doing is you might have had a sort of land and expand strategy where you start with one piece and then people will add it as they go. You're now making it obvious or more obvious for the buyer that if they just Go get it all right now. It's actually beneficial for them in the long run on an amortized basis. So it saves them money, actually, to buy more. So your AOV ends up, tell me if I'm right or wrong, your AOV probably ends up going up. Your repeat customer rate probably is a little bit higher. The revenue from that customer base, I'm guessing, is better because they're buying bigger stuff. And they're probably feeling even happier about it because you're helping them in other areas of their life, which is awesome. Speaker 3: Definitely. Yeah. And interesting too, I think over the past 12 months, I don't know if this is macro environment or just our business, but there has been more of a shift while we're pushing sets and those are still greatly growing. And the big piece of our business, there's more of a transition to singles, but interestingly, like the current values are the same. So, you know, it could be a function of a broader assortment. I also think with the price changes, we're only a few weeks in, but I think we've had some products have absolutely zero impact. We've had a few that have fallen off and we've had a few products that are actually selling more. And so I think in our category, things like cookware are probably more, quote unquote, like essential, whereas a knife set or, you know, something that you buy every 10 years or maybe isn't, you know, a must have item in the kitchen. Some of those items I think we're seeing slower growth on this year just because they're not as essential to everyone's, you know, cooking journey. Speaker 1: It shows the power of testing your pricing because you never know where the yield is going to end up being. Speaker 2: When we moved Aabvi to Klaviyo earlier this year, we weren't just switching platforms. We needed a better overall system to manage email, SMS, and real-time customer insights to create long-lasting customer relationships. All under one roof. Since making the change, we've rebuilt our abandoned cart flows, created dynamic segments that tell us who's ready to buy again, and used predictive data to time our offers more effectively. The impact has been higher repeat purchase rates, Better retention metrics and even more control over how we grow our customer value. Retention isn't set it and forget it tactics anymore that used to work. It's a system that needs the right tools and infrastructure. For us and for a lot of top brands out there, we know that's Klaviyo. If you want to turn retention into a growth engine, go to klaviyo.com slash Chew on This to learn more. Now, let's get back to the episode. I want to take some of the broader learnings that we've been going into right now and go a little bit more deeper into a little bit more of the tactical elements of some of the things that you kind of touched on, Jake, earlier, which is like, you know, some people using brands even tighten up messaging, but sending more messaging, right? And I think a lot of that starts to signal at segmentation and what it means to actually really understand who you're talking to, why you're talking to them, how you're going to provide them value, and then how often you can talk to them, right? And I think segmentation for so long has kind of been bucketed as one of those things where it's like, oh yeah, you should definitely do it and someone in your department or your team should worry about it. But it wasn't like a more global practice in a brand where like everyone's talking about it, right? And in ways, you kind of need to, right? Because you're segmenting top of funnel, you're segmenting middle of funnel, you're segmenting bottom, you should be doing it on retention, you should be doing it even in your product, right? Like how you're segmenting certain products to certain people. So technically, this is a practice that's all parts of your business. But I think given the challenges we've all had lately, it's becoming more and more important and crucial that we lead with this. So maybe you can kick us off with a little bit of what you're seeing, whether it's best practices or What you're seeing certain brands do that is a standout in kind of this world of smart segmenting so that we can get some takeaways of really cool tactical insights. And then Jordan, I'd love to get your insights on what you guys have been doing, especially from an A-B testing point of view or going deeper into it. But yeah, let's start there. Speaker 1: This is funny because I can share what I'm seeing globally, but man, it better be right because Gordon literally does it. We'll find out. To me, the most interesting thing that I see brands sort of evolving to and doing As it relates to segmentation is, yes, what we said before and what you just reminded us of, which is they'll actually segment out their best customers, their most engaged customers. So it's usually a smaller number of people that represent a disproportionately high amount of the spending, and they send messages to those people a lot. Like a lot, a lot. That's one. And then on the other side, they will maybe, Less frequently and differently, but at a consistent basis, reach out to people who have lapsed while having a sunset flow that removes people that are very clearly disengaged so you don't run the risk of messaging people who don't want it and then getting high spam complaints and then degrading your deliverability overall. Those kind of things are what we're seeing. So for a little bit of context, so hopefully people are familiar with Klaviyo. We're a marketing analytics and service platform. A B2C CRM, it's made up of a bunch of integrations with an intelligence layer that has marketing tools, now service tools, and then an analytics package. And within the analytics package, That's usable in the rest of the product. We have this RFM tool, which basically just pre-buckets your customer base into five categories. They are champions, loyal, recent, needs attention, at risk, and inactive. Sorry, six categories. So you could create these with your own definitions. This just takes sort of the best practices. But what we'll see is for brands will take champion and loyal. Customers and basically send the messages again. It depends on your purchase cadence and it depends on your category, but pretty frequently, you know weekly potentially more than once a week sharing information. Sometimes it's a product recommendation that's specific to that individual which is an adjacent product. They haven't purchased yet related to ones that they have. Other times it's just, here's what's up, we're raising prices or new bundle that's offered or if you want to buy something ahead of some holiday, this is the last day for shipping. Stuff you'd expect, but they just keep it on all the time. So you're top of mind. And then on the other side for the at-risk and then the inactive, you can set up these sunset flows, which I think we're familiar with. It's a little basic, but not humazed how many brands don't do it, where if someone is inactive, you basically just set it up to Unsubscribe them from future communications so you don't run the risk of getting the spam complaints, which of course will degrade your deliverability and then the messages to the great potential customers don't get delivered in the inbox. Once you have that, then you can take the needs attention, the at-risk buckets, and maybe once a month, say, you can offer something unique and special that is new that they haven't seen in the last couple quarters. So we'll use Caraway's examples, like the fact that there are now bundles at better prices. That's a thing. The fact that tariffs are more expensive, so the cost of going out to dinner is more expensive. So giving that, it's a great content that you can make of like, imagine a person does an experiment for a week to see how much they have to spend to go to great restaurants versus cook the same thing at home with Caraway products, brand new ones, I bet it's less. And as a result, check out how to save money in the modern tariff world, like that kind of stuff going out, giving people an explanation of What the product can do for you and the benefits? Absolutely. Send those once a month. And if people lapse down into the inactive bucket, the Sunset Flow takes them away. But that will revive the people that are at risk and eventually move them up so that when you send a lot of messaging, consumers that like your content, they're going to read it. So you want to send it a lot more than you think and you won't get into trouble. A little counterintuitive. Speaker 4: Especially if you're sending a ton of messaging out, right? In terms of like what the actual messaging is for all those six different segments that you've had and then also breaking out a layer of getting them on SMS as well, right? How should brands be thinking about the cross-channel messaging and maybe keeping that different and keeping it separate or should they be tying it together more cohesively? Speaker 1: I'd be super curious to hear how you're thinking about it, but I'll take the wrist joint and say what I think. I'm not the brand operator, so I'm looking a little bit more broadly across categories. First and foremost, you have to test this stuff because what works perfectly for one brand is not the same as the other because it's a different consumer and it's a different context. But I would say I'm a product marketing person in my heart. And so I think about a true funnel of how someone goes from having no idea they have a problem they want to solve, to realizing they have a problem they want to solve, to realizing they want to solve it with your category, to realizing that your product is the best for them in that category, to trying it and loving it. And different people who are at different moments of their life are at different points of that funnel for your business. And so I see a lot of value in writing those categories that I just mentioned, what someone has to believe to move to the next category and what someone has to do to move to the next category and setting up either campaigns or automations that move people down. And as you do that, they bring themselves to your product because you educate them. Philosophically, to understand why they want your product as opposed to throwing an ad in their face and saying, buy my thing, right? Speaker 2: It's so great. Speaker 1: They have to understand why it matters to them and so on and so forth. Anyways, so if you can get all that going, I think you'll end up making a lot more. It just requires a few more touch points to get in front of people and slightly different content. As it relates to SMS. I personally do not think that the right strategy is to immerse someone in the same message on email and SMS and push and whatever all at the same time. I think that there are different reasons to reach out on different channels. SMS for me tends to be either something that there are certain consumers who prefer SMS and we have in Klaviyo a way to sort of show you that that's their preferred channel for their relationship with your brand. So that you can prioritize that channel in your communication. The other is if there's a certain amount of scarcity or urgency that you want to drive, using SMS to get in front of people quickly so they see it. A good example, this is a VIP sale before it's available to someone else or limited inventory, you know, limited edition that comes out. That stuff can drive a lot of revenue. So it's a little use case dependent, but I would say if it's a channel preference for an individual or it's a scarcity or limited edition driven thing, I would use SMS more. All else, I'd probably use email or whatever the preferred channel for that specific customer is. But Jordan, is that how y'all do it? Did I say anything that's super incendiary, given your strategy? Speaker 3: No. I mean, I think every brand's different. I'd say from my POV, I don't think there's ever an amount of emails or SMS that's That you want to hold back. I'm always fighting with my team to send more. Obviously, you got to keep in touch with deliverability and having campaigns to move out unengaged consumers is really important. So we look at our program kind of into two or three buckets. One would be campaigns, one would be like evergreen flows and maybe third, content. You know, like you said, you got to test everything. We send a lot more emails than we do SMS. Typically, we're running the same content on those two around a campaign. So a product launch, Father's Day, Mother's Day, etc. And we'll send maybe an email and SMS to someone on the same day, but we'll space out the timing very strategically so that maybe they're waking up to an email, but then they're getting a text at night to remind them. Our evergreen flows. You know, after your first purchase, abandoned car, abandoned visitor, you know, we're constantly iterating on those. And, you know, I think we're at the point as a brand, I wouldn't say we fully nailed it yet, but we are personalizing based on who you are and how you came through. And so we've got some flows that are based on what is your first purchase you came through. We've tested a little bit this year. Having a light box on the site where you select like why you're coming to the site and purchasing. Maybe you have a new home purchase. Maybe you're looking to improve your health. Maybe you just need a cookware set. And kind of tailoring the flows based on like the reason that you came to the site. And then another thing that we're really experimenting with is building out long-term flows. So let's say you come through a cookware set. You know, we can build the kitchen journey with you and using kind of like our core cohort data. If we know someone who buys a cookware set is next going to buy a bakeware set. Hey, at the 30 day mark, we're going to drop you a credit to go try this other item. Hey, you reached day 100. Why don't you add on a stir fry pan? You're ready to master this. And so I think the like longer term flows have been really successful for us. And then on the content side, We have a big goal this year to humanize the brand. And, you know, one thing we're trying to do is just create content for content's sake. And some of those emails are our best emails. They're not salesy that we might feature someone on the team or an influencer or do like a roundup of the month. And it really keeps people in touch with the brand. I think for those like core consumers, as you mentioned, the top spenders, They definitely get the most communication. One thing we've done this year that is not super scalable, but I think we're taking a bet on the long-term payoff of it is every month we look at different cohorts of what we define as like our top 100 to 200 customers. It could be folks that are spending the most with us. It could be customers who are commenting most on social, just people that are really engaging with the brand and we're building a community around. We're actually sending those customer cohorts gift boxes every month, thanking them for being a customer. TBD on what that payoff will be over time, we'll measure those, the LTV, but, you know, trying to make an early investment and showing our appreciation for them being a part of the community, hoping that longer term they do spend more with us. The last piece I just want to add, one thing we started to do last year, and I think going back to like the macro environment, Every little win counts and you know, if you can increase conversion rate 0.1% or 0.01 in 50 different places, it can add up to a lot. So one approach we've been taking are kind of micro sends where we'll identify like a small cohort of a A couple thousand users. I'm making this up. Maybe it's people who bought a Sage tea kettle and we want to hit that group for some reason. We do a really small send to that group to generate additional revenue. And the thought is, hey, if we can do a couple micro sends a day, generate a couple thousand bucks from each of those sends, it adds up to a lot and really take targeted approaches to smaller groups and audiences. Speaker 1: I have a question and a few things to add, if it's okay. Speaker 2: Yeah, absolutely. Speaker 1: Jordan, the I love how you're collecting intent when people come on site, because that's something you can either track and see, do people actually buy what they came for? Or if they didn't buy, is that something that we can like recreate the purchase occasion for? Roughly how many people who see that lightbox give you information? Speaker 3: I don't know the percentage. It's not our best performing. It's not our worst performing. We've had light boxes where we give away like a $5,000 kitchen suite of products. And so that's going to be the highest performing. But pretty good. You have free shipping, you know, all your kind of typical value options that we give at The Lightbox and so, you know, it's decent and we also have tried to capture it post-purchase as well before. Speaker 1: And do you, when you do that, do you ask for contact information first and then show, hey, why are you here or the other order or something different? Speaker 3: I think it's select like why you're here, then put in your email, then put in your SMS. Speaker 1: Yeah, yeah, cool, cool, cool. I've done experience like that in the past and about four Four to eight percent, depending, of people who saw it ended up giving information and that the accuracy rate was very, very high. So it's great. I would encourage people to do that and then use that in your personalization, your segmentation, whatever. It's exceptional. And you can even follow up. Did you find what you're looking for? What did you buy? Great learning also as the CEO. Why did you not choose us? What would have changed it? That's great to bring back to the team. Three things you said I'd like to comment on that I think I'm going to try to make this very actionable for people. So the first one you talked about, you are always in a little bit of a conversation with your team about sending more versus sending less. So I hear this. This is one of the biggest things I hear between if you are a brand that is big enough to have a team that manages your marketing for you. This conflict I hear all the time. The CEO is like, just send more emails. It's fine. And the team's like, no, we're going to burn our list. We can't do it, right? It's somewhere in the middle. But the answer is the CEO is conditionally correct. As long as you have a sunset flow on and you are systematically and consistently removing people who have expressed a disinterest in your brand because they're just not engaging, it is a good idea to send more. I am not talking Bucket on Klaviyo. I actually think that net-net you'll send fewer messages overall if you reduce the size of your list, but send more messages to them, which is like our philosophy. But it turns out to drive revenue, that is the right thing to do. So words of the wise, that's something people should know. The idea of giving your top 100 customers a box, really good idea. For other brands out there, two books to recommend that would have theoretically suggested a move like this. One is Delivering Happiness from Tony Hsieh. Have people here read that? Speaker 2: I'm not. Speaker 1: No? Oh man, it's a really good one. Founder of Zappos, talking about amazing customer service and the opportunity to delight customers so much that they just, they're like, they can't believe what an experience and as a result, they come back and they buy more. So I think that's what we're hoping to see with this Top 100 Customer Strategy. And then the other book on this topic is called Raving Fans. Have you all read this one? Speaker 4: I got to get both of these. Speaker 1: So this one is old. It's like a 90s book or something. But it's basically, there was a study that these business people did that basically said if a person has a negative experience, They're very likely to tell, I think it's like 10 people about it, but if they have a really positive experience, they're very likely to tell like a hundred people about it, just more, right? And so what that means is that you have an opportunity for a handful of people to make the experience so overwhelmingly positive, it will come back to you as opposed to just not bad. Something to think about. And then the last one on the targeted sends. So there we have a little bit clear stuff. I'm biased because I understand the product better. But in our analytics tool set, we offer best next or most commonly next purchased product, as an example, where you can take a specific product that was purchased. You can build a segment of people who bought it, but not the next most likely thing to buy. You can identify that segment and then recommend it to them. And these little opportunities, these little optimizations, to Jordan's point, they stack so high. If you can spend a little bit of energy on them and have enough buffer time for your team to just try them. Speaker 2: Packed full of insights. And I think, Jake, the way you break them down to be able to source in data from being able to see them on multiple fronts and to break down it, it's super actionable, super helpful. I'd love to, before we wrap up here, I do want to touch on one point and Jake maybe you can probably touch on this and Jordan if you have comments on this too. I feel like one thing that we hear and probably a lot of listeners here can resonate to this because they've probably fell in this bucket at one point or still do, is when it comes to the segmenting concept, right? What you hear more often than not is, oh, I just don't have enough things to segment on to put the effort to segment, right? And I'd love to know, is that just a myth, right? Is there some truth to it? Is there some validation to it? Because there is part to it where it's like, you know, I love what you touched on with micro-sensors and I think that's excellent. But then there's some parts there where it's like, You know, it does take effort, right? It is setting up a campaign. You have to think through the content. Not every company has, you know, the robust pipeline to be able to build that out. But what is the effort measurement here that you can use to understand if, you know, segmenting, whether you're doing a good job at it or you should be doing more, what's the best way to evaluate that or what's a good starting point? Speaker 3: I would say we, I mean, we're five years in, we have 15 plus product categories now. I don't know that we went super deep until the past 12 to 18 months. You know, I think like anything is the juice worth the squeeze and you could spend the time segmenting or you could spin up another quick email probably in the same amount of time. And, you know, maybe you generate the same amount of revenue. And so, I think there's levels of segmenting across any stage of business. I think the bigger product catalog gets, the easier it is to focus on. But also on the flip side, you need more hands and content and all that. But I do think there's a place in any business, even if you have one product, if you can capture information on who that customer is, what they came to the site for, you know, marketing different flows to them based on the reason that they were purchasing. You know, or USP. And then for measurement, I think like anything, you run two flows next to each other and you see which one performs better. Let's say you have a huge product catalog. You don't need to start with everything, right? Take your top-selling product, try out a couple different flows or offers, run them simultaneously. I think in today's environment, just conversion rate and everything you do needs to be that much better. Advertising is really hard. It's hard to acquire customers. Like every little tweak, every little 0.01% conversion you can get, you should take. And those little tests and wins, you know, are huge. And what you also might find is you might run a flow on one or two or three products or, you know, segments and then say, hey, I've got enough conviction to just roll this out to everything, and we'll test future stuff later. But if this worked on these one or two types of products or types of customers, I think you can get to a point where you're like, hey, juice is not worth the squeeze to run this across all. Let's just scale this out and roll with it. Speaker 1: Can I add a little thing on that? Speaker 2: Yeah, please, Jake. Speaker 1: It's definitely true that for some businesses, segmentation and creating these micro campaigns is totally not worth it. Like if you have a thousand people that are your customers, you're kind of just getting going. It's like, you know, probably maybe you don't need to do all that, right? But to Jordan's point, you don't have to give specific numbers, but if you're at three and a half years in, you started to do this with 15 different categories, like that's a lot of juice to squeeze out, lots of play with. So for sure, it matters how much cardinality or how much sort of surface area you have to play with. What I will say though, is No matter how big or small your business is, there are definitely opportunities to extend what you're doing and create more revenue. And or create more margin. And so the recommendation, we haven't at all talked about how to keep costs down and how to make our employees and teams more efficient using AI and all this stuff. There's a whole, it's a whole other hour right there. But you know, we're building a lot of this into the Klaviyo platform to help make it faster to find opportunities, faster to implement those and faster to get results. But even beyond that, I would tell, I advise people all the time, choose your favorite LLM, whether it's ChatGPT or And Claude or Perplexi, whatever it is, and go explain what your strategies are, what you've been doing, how it's been going and ask for ideas. I guarantee you, you will get one or two or three that you either haven't considered or on the back burner. And you can model that out pretty quickly in Klaviyo and get a feel for whether or not that's worth trying. I highly encourage people to go do that or to set a promotional calendar. I mean, it's wild how much you can get that will give you more touch points with your customers that are net positive that will make them happy and also generate the revenue that you need. Speaker 4: Love it. I mean, this whole episode was jam-packed. No, I loved it. But before we wrap up, with love from both of you, just one takeaway, one quick insight for the audience to go back and implement in their business starting today. What would that one chew be? And Jordan, we can start with you. Speaker 3: Yeah, I think with macro pressures, it's a great time to, you know, question everything about the business. And I look for like easy and quick wins, free shipping threshold, do you charge a return fee, pushing value and sets to higher AOV bundles. You know, I think a lot of these site tactics can drive a big impact. And when there's, you know, cost pressures, we have talked about raising prices for like Three or four years ago I was too nervous to and we raised and everything's fine and you know we'll tweak from here and I think out of adversity comes opportunity and I think this is a great environment to give you reason to test some things that you have conviction around and I think every dollar you can make now is absolutely critical. So I think don't be afraid to take those swings. I think A lot of products across the board are going up in price. And, you know, with that, I think gives you grounds to raise with it. And then, yeah, I think focus on website conversion rate, focus on every, you know, thing in your email flow. We're a customer of Klaviyo as well. You know, providing value to customers and really speaking to why they should be spending with you versus other brands at the moment. Speaker 4: Love it. Jake? Speaker 1: I agree. The thing that I would call out from Jordan when he says, don't be afraid to take the swing, especially now. And I will couple that with my piece of advice, which is more in a sort of content positioning thing. Before anything goes out, Force yourself and your team to answer the question, so what, from the perspective of the customer. There's a tendency I see where it's like, we have to grow five more percent this month or this quarter to hit whatever. So like, let's go throw stuff out. And it ends up being like, buy this thing. And it usually doesn't do as well. But if you're going to take a swing, like raising prices, but you can then reposition that as the so what for the consumer, it's much less expensive than going out to dinner every night. It will resonate. So as long as you look at it and say, so what? Why will the person care? And you make that front and center, you'll be successful. Speaker 4: Love that. Chew on that. 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