The last time I discussed my company in an episode was in July. Things were close to their worst. We had furloughed our team for a month. But now, thankfully, the team is back to full-time. Our current strategy is focusing on Facebook as an acquisition channel. We switched our Facebook marketing approach from multi-phase testing to bid caps, something I learned from Andrew Faris.
We made the change at the beginning of October, and we’re seeing our cost per acquisition fall in line with our expectations for profitable growth. The downside is we’re getting only a few conversions daily due to the negligible budget. We’re still trying to figure out bid caps and how to create content that scales on Facebook.
I’ve learned we constantly need to try new tactics from a tiny percentage, but not at the rate of putting our business at risk. Paul with BK Beauty was on the show a couple of weeks ago. His company continues to blow up — TikTok Shop has been a significant player in their successes. We’ve been trying to get our TikTok Shop up and running, but thus far TikTok Shop has been the buggiest software I’ve used.
Beardbrand launched on Amazon in January of this year with the hope of replacing the volume we were doing on Target. Amazon ramped up within the first three months. We stayed at that mark for the next six or seven months. We’ve had some growing pains with Amazon shipping the wrong products and a few review issues. It’s been a challenging platform. Nevertheless, as of a couple of days ago, it looks like we’re approaching a seven-figure annual run rate on Amazon, which is halfway to our goal.
In July we had just hemorrhaged a ton of cash. Fortunately, we’ve seen our cash flow even out, and we’re in a better position. I’m not losing sleep anymore. We’re not throwing a lot of money back into savings, but I don’t want to significantly scale back the business from where it is now. I want to stay lean. That means ordering smaller inventory amounts than I would typically feel comfortable with and being okay with selling out to ensure that all my cash is not tied up in inventory that might not move.
One of our strategies is to be heavy on cash and light on inventory. There is the risk that we won’t make any money if we don’t have any products to sell. But if we’ve got all our capital tied into inventory that’s not moving, that’s not good either. It’s nice to have the flexibility to allocate resources to opportunities that may significantly impact us. We won’t go out of stock on our top-selling products. But we will delay ordering slow-moving items into the holiday season and focus on your best sellers. As this recession moves behind us, we hope to have a fuller inventory again.
I’ve always wanted to build Beardbrand without incentivizing through discounts and promotions. However, being inflexible with discounts did not allow us to grow as we wanted, so we’re exploring offering discounts to new customers and subscribers. As a result, we have seen nearly a doubling of our subscriber list and some success driving up our average order value, too. We did that by raising our prices and launching a bundling program. We compared the bundling offer to a percentage-off tiered bundling system where you spend more and get a bigger discount. The free items drew more action from our customers.
The downside of the bundling program and the higher price point is that our conversion rate has decreased. Overall, our net revenue is down. However, we are not hemorrhaging cash anymore. With a higher order price, we’re doing fewer orders, so we’re putting less of a burden on our team, and we have fewer customer service tickets to fulfill. If you’re planning to build a business that you want to run and operate for years, think about developing a pricing and service structure for the customers at a higher price point.
As we approach Cyber Monday and Black Friday, we historically have an ongoing promotion called Decembeard. It’s a daily giveaway. Customers enter by placing an order, and depending on the order number, one out of 10 buyers will win a $25 gift card. We’re doing it for the first 10 days. When we go to the 10th of the month, we raise that to a $250 gift card, where one out of 100 will win.
Beardbrand is now at a breakeven profit-wise. That’s not what I expected after 11 years, but I’ve come to terms with the fact that this is essentially a new business. I have to look at Beardbrand from a startup perspective. What worked for us when we launched in 2012 is entirely different than now.
I have to remind myself that being in the arena is the goal and to focus on the wins. The benefits of a win, such as a higher AOV, will compound for the business. If you’re struggling now and things seem hopeless. I’m right there with you. It is not fun or confidence-inspiring. But fight forward. Find opportunities and make your business what you want it to be.