Maybe It’s Not the Marketing

Introduction:

This week, we introduce a new member of the 21 Hats Podcast team, Shawn Busse, who tells Jay Goltz and Laura Zander about an intriguing challenge he faces. Twenty-two years ago, Shawn co-founded a marketing firm called Kinesis, but now he’s trying to convince clients that it takes more than just marketing. Sometimes, it’s not enough just to drive more leads. Sometimes, you have to step back and take a deeper look at your business, which not every client is ready to do. In fact, it took Shawn 10 years (and the Great Recession) to do it with his own business.

— Loren Feldman

Guests:

Shawn Busse is co-founder and CEO of Kinesis.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Laura Zander is co-founder and CEO of Jimmy Beans Wool.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome, Jay, Laura, and especially our newest 21 Hats Podcast regular, Shawn Busse. It’s great to have you all here. Shawn, let’s start with you. Tell us about your business, Kinesis. What do you guys do?

Shawn Busse:
So we specialize in working with small businesses, and really helping them realize their untapped potential. Often, that’s in the areas of brand, marketing, and culture.

Loren Feldman:
And how long have you been doing this?

Shawn Busse:
Let’s see, LinkedIn just told me, “Congratulations on 22 years.”

Loren Feldman:
Whoa.

Laura Zander:
Oh my God. So you can drink. [Laughter]

Shawn Busse:
A lot. I’ve been doing a lot of drinking in the last two years.

Laura Zander:
How small are the businesses that you’re talking about? Is it like five people? Twenty people? Fifty people?

Shawn Busse:
In terms of headcount, I’d say probably about the smallest is maybe in the kind of 10 to 20 range. In terms of revenue, 2 to 3 million is kind of the very small end of the scale. And then up to, I don’t know, maybe 10 to 30 million is sort of the top end. After you hit that number, things start to get a lot more complex and just not in our sweet spot.

Jay Goltz:
Or someone has the staff internally that’s doing some of this stuff that you’re doing, I assume.

Shawn Busse:
Yeah, sometimes it’s that. I find that a lot of it’s just my personal desire to work with owners directly and have a really strong impact. And once you start to get into the larger size, it becomes just a little more bureaucratic, more political. And so I just like having a strong impact, and that usually means working directly with owners.

Jay Goltz:
All right, I totally get all that. Well said. The only thing I’m wondering is: I got the brand thing, I got the marketing thing. How does corporate culture fit into what you do?

Shawn Busse:
Yeah, that’s a great question. So we were what I would call a “brand and marketing shop” for about a decade, during our first decade of existence. And mostly our client was an in-house marketer, and we would help them be successful: building websites, logos, brand, that sort of stuff. And then in the recession, most of those people lost their jobs. And that’s really tough, if that’s your customer. So we realized that there was probably—

Loren Feldman:
It was really tough for you, you’re saying, for your business.

Shawn Busse:
It was tough for me, yeah. So we just started asking the question like, “Well, if it’s the job of these people to help the business grow, why are they the first ones who lose their jobs?” So we really started examining that. And we kind of flipped the idea of, “Hey, how do we help a business thrive, instead of just doing marketing?” And when we started looking at that, we realized that the lowest cost opportunities were often doing things like changing the hiring process, getting smarter about recruiting, looking for really great contributors. And that became the culture play: Getting clear on mission, vision, values.

Jay Goltz:
Wait, wait, wait. So you’re saying, the missing link for me is simply, you’re talking about hiring people that have something to do with marketing in the company, whether it’s being a salesperson, or whatever. You got involved with helping them staff their company to help execute some of the marketing stuff that you—

Shawn Busse:
All positions, Jay.

Jay Goltz:
Okay, that’s what I don’t understand. What does that have to do with marketing?

Loren Feldman:
Shawn, can I jump in here for a second? Before you answer that, it so happens that Shawn has written a really terrific book about marketing [Marketing from the Inside Out], taking a holistic approach to it. And in it, he describes anecdotally a dental office that had exactly the experience you’re asking about, Jay. This was a dental office that thought its problem was marketing and was trying to figure out how to market better to bring in more leads. But the real problem was…

Shawn Busse:
Right, yeah, the real problem was the front desk person. So they kept asking us for more and more leads. And we looked at the data, and it was like, “Well, you should have enough business.” It just didn’t make sense. And so we just started asking the question, “Who’s the first person who a lead talks to?” And I can’t remember the person’s name. It was like Sally. And I’m like, “Tell me more about Sally,” and Sally was a misanthrope.

Basically, every lead who would come in the door would talk to Sally, and Sally wasn’t very friendly, wasn’t very helpful. And so they were just losing business out the door as the result of really a bad culture problem. And so that’s when we started realizing, “Gosh, how about if we put our energy into making sure that the entire team is aligned, that everybody in the company is focused on the same thing, that the owner knows what they stand for, so they know who to hire in that organization?”

Jay Goltz:
What you’re saying is—I’ll just speak for myself—you’re arguing, I think, that even a CFO has something to do with marketing simply because they’re coming up with budgets of what you’re going to spend. So you’re saying: Everyone in the organization has something to do with marketing. Therefore, corporate culture, including the hiring and management of those people, is all going to contribute to the marketing effort, because everybody’s in the marketing business. Is that what you’re saying?

Shawn Busse:
Actually, it’s bigger than that, Jay. It’s that even the CFO should align with the values of the organization. So if you say, “Hey, I want a culture where everybody leans in and helps,” if the CFO is the type of person who stands back and kind of throws bombs at everybody, they’re actively harming the culture. So let’s just set aside the marketing piece entirely, for the time being. What I’m saying is that we need everybody rowing in the same direction, whether that’s toward marketing or toward finance or toward operations.

And where marketing comes in, Jay, is that you can actually do a lot of work in the recruiting and the hiring and the interview process that is kind of like marketing. It’s communication. It’s talking to candidates about what makes a great player on the team. It’s articulating that in the job description. It’s having a website that talks about what it’s like to work with that culture. It’s using social media to talk about why this is a great place to work, so that when people apply, you’re already getting kind of the right shape of employee. So all of those pieces are shaping the culture of the company, independent of whether that culture is being applied toward marketing.

Jay Goltz:
Okay, I 100 percent understand what you’re saying, because that’s exactly my company. My only disconnect is, I wonder whether you’ve outgrown—when you say, “I’m in the marketing bit”—I think you’re in the business development business.

Shawn Busse:
Yes.

Jay Goltz:
I think it goes beyond marketing, and that’s why I was thrown off. I totally understand what you’re saying. One of our core things is our corporate culture. I actually have a definition for it, and one of them is: How far will you go for a customer? And how do you treat each other? And what do you expect from your employees? And that defines my company. I can’t put that under the banner of marketing, though. I would put it under the banner of healthy business, business development. So, yeah, I think you’ve gotta buy another word. You’re not just marketing.

Shawn Busse:
You put your finger on probably my biggest challenge right now. It’s that we’re in 22 years of business, 10 of which was marketing and brand, and the last 12 or so we basically used marketing as a way to get in the door with clients. They would say, “Hey, help us with whatever. Build a new website. Create a new brand, new logo, whatever.” And we come in the door and be like, “Hey, what’s your mission and purpose in life?”

For your example, Jay, it sounds like you care a lot about customers. How do we articulate that through everything we say? And some would be kind of confused by that. And the ones who trusted us, we’d go through our inside-out process. And we’d start to touch on lots of areas of the business that weren’t in marketing, and we would have a really great impact, and so we would keep clients forever. But the challenge we have today is that we have such a legacy of talking about marketing that people like yourself are confused in the beginning, because I’m talking about culture and business strategy and business development and all these things.

Loren Feldman:
Do you get pushback from potential clients, along those lines? Like, “Hey, I want to talk about marketing. I don’t need your help with X, Y, and Z.”

Shawn Busse:
Yeah, gosh, that’s such a great question. So today, what I’ve found is that when we start talking holistically in the sales conversation, if they start nodding their head, like I think Jay kind of does—like Jay’s saying, “Oh, yeah, I get that the interconnectivity of those things are important.” Then they are great clients. On the other hand, if they’re like, “Well, we just want to hire marketing.” They’re usually not a great client. Or they’re not going to become a client, because there’s a whole industry that will do marketing for them—websites and so forth.

Jay Goltz:
If we were white-boarding this, here are the words I’d stick on the whiteboard: I think you’re doing marketing and execution, or integration, or consistent integration. Meaning you can have the greatest marketing in the world, but if you’ve got miserable salespeople, because there’s a manager that’s disrespectful to them, or whatever, what good is all your marketing going to be? So, I do think it’s marketing plus something, another word… Execution?

Laura Zander:
Mission.

Jay Goltz:
Yeah, mission and consistency.

Laura Zander:
Yeah, there’s some mission-execution, mission-driven, mission-alignment, because it’s alignment of mission.

Jay Goltz:
Alignment. There you go, good word.

Laura Zander:
With all your customers, with all your stakeholders, customers, employees.

Jay Goltz:
Boy, I’ve gotta tell you. If you did nothing more but, “We do marketing, branding, and alignment.” “Oh, what does alignment mean?” And then you pay it off. I get it. What good is putting a big engine in this new car if you find out that the tires are not aligned? You’re not gonna go anywhere.

Shawn Busse:
Right, yeah. The real challenge is there’s a thing out there—I call it the “marketing industrial complex”—that essentially is trying to sell you stuff. They’re trying to sell you websites, they’re trying to sell you logos, they’re trying to sell you brochures, whatever. And they really actually don’t want to look at those deeper issues, because that gets messy. It gets messy when you start asking—

Laura Zander:
One hundred percent.

Jay Goltz:
But they also don’t have the skill set to deal with it.

Shawn Busse:
And they don’t. You’re totally right.

Loren Feldman:
Shawn, I know that you have talked to clients about directing their marketing, not just toward bringing in business, but also toward bringing in employees. Is that something that you’ve found people asking you about more during the last year or so of The Great Resignation?

Shawn Busse:
Yeah, gosh, it’s such an untapped potential, right? So the clients who we’re working with who are really embracing, “Get clear on your mission, talk about who you are, articulate your vision, really be a remarkable company,” the companies that do that, they’re not having a problem recruiting or retaining employees. They’re just not.

And even us, we really haven’t lost anybody over the last couple years. When we go to market for an open position, we’ll get hundreds of applications. So really applying the engine of marketing to recruiting is super powerful, and I’d say underutilized. And most companies, what they do is they treat it like an afterthought. They’ll hire a recruiting agency, or they’ll place a bunch of ads, but they’re actually not telling a very good story about what it’s like to work at the company, and they’re not really painting a picture of remarkability. And so I think if a business is really remarkable, that’s the untapped opportunity.

Jay Goltz:
You just gave the word. So what you do is, “We do marketing, and we help you become remarkable.” Boom. That’s what you do. That’s interesting. I get it.

Loren Feldman:
Can any company be remarkable?

Shawn Busse:
You know, I think it doesn’t matter what industry you’re in. We’ve helped plumbers, we’ve helped folks who do things that you wouldn’t think are like, “Wow, that’s so exciting.” And sometimes I actually think there’s an inverse relationship. I think that businesses that do a quote-unquote more mundane thing often can do a better job of focusing on culture and being a great place to work.

Laura Zander:
And being remarkable. One hundred percent.

Jay Goltz:
Right.

Shawn Busse:
It’s interesting. We have very few—I mean, Laura, you probably have some insight into this—clients over the years that have been in the software industry, as an example. So cutting-edge, high-tech, advanced, advanced, advanced. And the whole thing in that space is like, “Move fast, move fast, move fast.” And I found that, often, they’re not really thinking so much about the people. They’re thinking so much about the thing that they’re making. Whereas like a plumbing business, everything is about the people. The technology has been around forever, so it becomes more about the people and less about the technology.

Loren Feldman:
Shawn, you described the transformation of your business as a result of The Great Recession and switching to offering a more holistic approach to what you do. Did that pay off for you, for the business?

Shawn Busse:
Yeah, we were kind of muddling along for the first 10 years. And a lot of that, honestly, was just that, I think like a lot of entrepreneurs, I never worked for a great employer. I worked for a really bad employer, and so I built the business as a reaction against that. And the problem with that is that you don’t know what to build towards in the beginning, and so you’re just kind of stumbling around.

Our business was nothing to talk about for its first 10 years of existence. And that’s because I didn’t have any formal training. I didn’t have good mentorship. I hadn’t worked for somebody who was really great. I think that’s the case with a lot of entrepreneurs, right?

Jay Goltz:
I’m with you two out of three. I don’t believe there is formal training. I mean, it’s laughable. People say, “Oh, I didn’t go to business school.” Yeah, I did go to business school, and it was pretty worthless other than accounting, one or two classes. I look back on it, and that was a long time ago, but I don’t think you get this in college. Mentorship? Absolutely. Working in a great company? Absolutely. But most people—you’re right—are not exposed to, “Here’s the way a company’s supposed to be run.”

Shawn Busse:
Right, right.

Laura Zander:
Shawn, where are you based out of?

Shawn Busse:
We’re out of Portland, Oregon.

Laura Zander:
Okay.

Shawn Busse:
Yeah, and for me, I’m with you, Jay, even though I’m a recovering academic… I was an art professor for a number of years.

Jay Goltz:
Wow.

Shawn Busse:
For me, the pivotal moment was, I joined an accelerator program through EO, The Entrepreneurs Organization, and it was like a training environment for entrepreneurs. There was peer mentorship, there was coaching, and that was transformational. It exposed me to things like blue ocean strategy, more business thinking, and I just ate that up.

And from that point forward, we just grew super fast: 30-40 percent a year, year over year, fastest growing 100 for five years in a row. So really getting the business model right, learning and getting help from others, and figuring out what was important, and getting out of that messy marketing space and more into, “Hey, we want to help small businesses be awesome.” Like, that’s really what we want to do. And it’s frickin’ great work. It’s really fun.

Loren Feldman:
How big is the company now?

Shawn Busse:
So we’re at about 14 people. We do a couple million in revenue a year, give or take, and pretty much have grown every year since that transformation. 2020 was a little hard.

Loren Feldman:
Let’s focus on marketing for a second. What do you see most often is the problem with most businesses? What’s the typical situation you walk into?

Shawn Busse:
I think the number one challenge right now is that it’s really easy to commoditize a business model. It’s really, really hard to have something that somebody else can’t copy. And so as a result, most businesses aren’t focused enough, I’d say, on being remarkable in some way. And they often focus what they think is remarkable on the thing that’s actually easily copied by others.

Laura Zander:
Amen. Amen. Amen. Amen. I mean, I was thinking of my answer to that question. And it’s so formulaic and soulless, and people are just so scared for the most part. And again, this is based on the advice that we get, but they’re so scared to just be themselves.

Jay Goltz:
I have a different answer, and this goes back a long time. Big companies have professionals, quote-unquote, who know about marketing. They go out, and they find the best place to advertise and do all that. The small company doesn’t do that. They have someone call them. Back in the olden days, the Yellow Pages rep would call you, and that’s what you were advertising in, or the radio rep. But they don’t go out looking for them—it’s whoever called on them is getting the business. And as a result, most of the quote-unquote marketing the small business does does not really work. And it just was driven by a salesperson. They said, “Oh, I’ve got this newspaper in the neighborhood. Everyone reads it. You should be in here.” “Okay.” And they don’t have the expertise or knowledge or background to go out there and look for the right places to advertise. Am I wrong?

Shawn Busse:
I think that’s true. You know, I should add, Jay, our focus is almost entirely on the business-to-business landscape.

Jay Goltz:
Really.

Shawn Busse:
Yeah, so business-to-consumer, that’s its own monster, right? It’s so complex. Are you doing paid advertising? Are you doing social media? What are you doing? I can handle those things, but as a 14-person company, I would rather be really, really good at business-to-business marketing and just let go of the business-to-consumer stuff.

But to your point, I think you’re absolutely right that it used to be, pre-internet, actually buyers had a hard time getting information, and so they relied on salespeople. They relied on advertising to inform them. And what the internet did is, it basically made it much easier for buyers to evaluate. It made it easier for them to compare, made it easier for them to shop around. And so now we’re inundated with marketing stuff all over the place, all the time. It tracks us on the internet. Facebook’s constantly trying to track us down to feed us an ad.

And so if anything, what buyers are doing is they’re trying to be defensive. They’re trying to not pick up the phone and not get that email. And so that’s why the point I maintain is that the most important thing you can do is be remarkable, because being remarkable helps you stand out in a crowded landscape and actually reduces the amount of money you have to spend on advertising or other channels that are commoditized.

Jay Goltz:
In my case, that means getting more referrals, keeping your retention rate of customers very high. That’s how my company got big. There’s no question about it. When I do speeches, I always say, “Look, I’m 5 percent better than everyone else.” Do that for 42 years, though, and you end up with a gigantic business. Five percent a year. It’s the difference. That’s it. I’m just 5 percent better.

But so let me cut to the chase, though. Let’s assume that you’ve got the remarkable stuff done. You got the right people, and the great product or service, all that good stuff. So my question is, every day, I get 20 emails from, “Hi, my name is Josh, I can help you grow your business with SEO,” can you cut through the clutter a little bit and tell us: What do they know? What don’t they know? Can you just give us some buckets? Like, I’ll just give you my buckets, and help me with it. There’s social media, which we do a lot of. I don’t know that it’s helping any. There’s pay per click. I don’t do it anymore. I think it’s gotten too expensive, and it’s not worth the money. Then there’s SEO. We’re coming up really well now, at least in framing, we come right up, so that’s good. Is there such a thing as a list? I did a speech one time with a guy who’s an expert in this. And he made the comment that when you buy those lists, it doesn’t work. It’s like “Yeah, I did buy the list, and it didn’t work.” What’s going on with that whole thing?

Loren Feldman:
In five minutes. [Laughter]

Shawn Busse:
Oh my God.

Jay Goltz:
No, I have a short attention span. Three. Go.

Shawn Busse:
I feel for you, Jay. I get those same 20 emails, except they’re advertising something different, but same idea. And I think the real challenge to marketing is it’s a moving target. So yeah, 10 years ago, email marketing was an amazing thing. Super cheap. You could totally maximize it, get lots of great business, build relationships. And today, it’s like, everybody’s running away, because they get so many damn emails every day.

So that’s the challenge: What’s the thing? And I think about your business, Jay. And you’re not gonna win on 10 percent off. You know that. That’s a losing battle. You’re probably not going to win on SEO, because—maybe locally.

Jay Goltz:
Yeah, no, no, I’m doing well. Locally, my magic thing is, yes, I do the SEO, and I have a good presence when it comes up. Yeah, I think if you’re in retail, that’s the first thing. The problem is I don’t have the second thing.

Shawn Busse:
Yeah, I think the best thing I can think of is that—you know, Loren and I had a podcast episode a while back with a really cool automation engineer. And that’s a crowded space, tons of people do automation engineering. The kind of stuff he’s doing is just totally different. The advice I would give is: What can you do that’s not just incrementally different? I think the 5 percent play is actually really a great strategy for customer service: Get 5 percent better every year. But I mean, from a positioning and marketplace awareness, I think you need to do things that are totally unseen before, and I don’t know what that is for your business. I don’t know. If it were easy, I would just have it. But I think that businesses can’t afford to think small when it comes to positioning, brand, and messaging. I think they have to think very differently.

Laura Zander:
I think about it slightly differently, in that, what is everyone else doing? And so, how do I do the opposite? So I’m going to disagree just a little bit with email marketing. That has actually been our best growth channel for the last couple of years, and we have really refined it and refined it and refined it, and have really created—and Jay, you probably already do this—but it’s creating community, because there is so much noise and there are so many options.

Narrowing our audience down and whittling our audience down to people who really relate to us, and we’re getting more per transaction and more frequent purchases from those people. And we’re speaking more specifically to this audience that we’ve kind of narrowed down. You know, 10 years ago, based on where the market was and ecommerce and all that kind of stuff, we were everything to everybody, and that worked at the time. But now there are so many sites, like you’ve said. It’s so commoditized, the products that we carry, that we have transitioned to really identifying our audience and being a lot more specific.

Jay Goltz:
I got that part. You’re emailing your good customers, but the question is, are you actually buying lists?

Laura Zander:
Oh, no, because those aren’t our customers.

Shawn Busse:
Right.

Laura Zander:
No, it’s all referral now. And it’s long-term.

Loren Feldman:
Laura, what are you doing? What are you emailing people? Is it a newsletter?

Laura Zander:
Yeah, we email newsletters, and then obviously, two months or two weeks after you receive your order, we ask you if you want to do a review and all that kind of stuff. But primarily the newsletter stuff, and the returns are amazing.

Shawn Busse:
So Laura, it sounds like you’ve identified what we called in the book your “raving fans,” right?

Laura Zander:
Totally.

Shawn Busse:
Which isn’t a new term, but it’s something like, “Hey, let’s think about your clients, not as customers, but as raving fans.” Because it’s way better to have one raving fan who buys from you over and over again, because they are receptive to email marketing.

Laura Zander:
Yes.

Shawn Busse:
If a random person you bought on a list, you just blast them with stuff about yarn, they’re gonna be like, “What?”

Laura Zander:
Exactly

Shawn Busse:
You’re actually using it for amplification and recurring revenue, as opposed to customer acquisition. And I think just that idea alone is important for businesses to understand: Segmenting their marketing from acquisition to amplification and recurring revenue. That’s just one very important concept. I’m guessing Jay probably does a great job with existing customers. They keep coming back. He probably has a way to communicate with them.

Jay Goltz:
Well, you know what? Because I’m in the frame business, I actually have their name and phone number and address, because I’ve got their artwork. So this isn’t just someone coming in handing us money. I’ve been tracking this for 20 years, and my repeat business, no matter what year—it’s unbelievable—it’s within 1 percent every single year, for the last as long as I’ve been tracking it for 20-30 years. So repeat is, no question, the most important part of the business. Next is referral, and the rest is everything else. But I’m still trying to figure out—maybe you know the answer to this—where are they getting my name from? I get these 20 emails a day. Is it LinkedIn? Is that where this is all coming from?

Shawn Busse:
Oh, there’s just a ton of service providers now, Jay—data brokers—and they aggregate things. They’ll put together credit scores and your address. Like, nothing is secret anymore. There’s nothing secret or sacred. So yeah, I hate it. That’s the part of marketing I don’t really like at all.

Jay Goltz:
Here’s the reality, in my business, at least: You lose business four different ways: Do you know that one percent of the population dies every year? That’s just a fact, right? Now, I’m selling to people who are older, meaning they’re not 12 years old, so in my case, probably 2 percent of my customers are dying every year. That’s just the harsh reality. So that’s two.

Then you’ve got, how many people framed as many pictures as they’re going to frame, the house is filled with it, they’re done? That’s probably 5 percent. There are certainly people who move every year. What percentage of people move? And then the last one is, maybe they went somewhere else. Maybe, for whatever reason, their friend sent them somewhere else. They didn’t like your selection, whatever.

You add those four things together, and you’ve got to replace that somehow. And in my case, I’ve replaced it by the referrals, and by trying to do some kind of marketing. Or if people drive by the store, if you have a store. But you do have to have something coming in, because I don’t care what business you’re in. You’re losing X percent of your customers every year through no fault of your own.

Laura Zander:
Do you track these numbers and report on them? Or is this intuition?

Jay Goltz:
Absolutely! No, I get it every month. No, no, no, it’s really simple. “Oh, Mary Smith”—

Laura Zander:
So you know how many people died?

Jay Goltz:
No, I don’t know how many died—well, we eventually might, because they stop coming in. But we say to them, “Oh, you’re not in our computer. Oh, where did you hear about us?” And it’s very simple. It’s either: I was driving by, my friend sent me in, I found you online. Maybe, we heard you on the radio, though very difficult, I don’t get a whole lot of that. It’s pretty finite. Like I said, I’m a unique retailer, in that I’ve got everyone’s name and number in my computer. So we’ve been tracking it for years.

The problem is, no matter what business you’re in, you’re clearly losing some business every year. So this is the number one mistake people make that I’ve seen. They think their problem is their rent’s too high. So what do they do? They find a cheaper location that’s off the beaten path. Yeah, that’s called suicide. I mean, your rent is your cheapest form of advertising. So they think they’re helping themselves by getting their rent down by $1,000. But they just shut off X percent of new business coming in. You have to be able to find new business every year, one way or the other, or you’re gonna eventually—

Laura Zander:
Do you track how much business you lose every year? Do you track that? Or are you intuitively guessing that 10 percent?

Jay Goltz:
No, no, no.

Shawn Busse:
He’s got the data. He knows.

Jay Goltz:
I know what percentage is repeat. So I have to assume that X percent is—

Laura Zander:
Ah, got it. Got it. Got it.

Shawn Busse:
I mean, Jay is putting his finger on exactly the dynamic I see over and over again, and this applies to B2B or B2C. So issue number one is, businesses under optimize the value of their existing customer base. So they don’t actually keep going back to them and building a stronger and stronger relationship. They focus so much energy on getting new customers that they take for granted the ones that they have. That’s super common. That’s problem number one.

Problem number two is, they don’t actually build the model or the tools or the data to actually make that possible. So Jay has been running some kind of a CRM for years. That’s amazing. Very few retailers do a good job of that, of actually understanding where that business is coming from and staying in touch with those folks. And then the number two issue is like forest for the trees, right? “Oh my God, my rent’s so expensive, so we’re going to move.” In the B2B space, I see the owners have this crappy building in some office park somewhere that has wood paneling from the 1970’s. And then they go to market to try to hire talent, and the talent walks in the door for an interview, and they’re like, “Uh, no, I’m not working here.”

Jay Goltz:
You are absolutely right.

Shawn Busse:
They lose a different type of customer, so the B2B people are suffering in a different way, by not investing in the thing that matters to the culture. So same thing.

Jay Goltz:
And the people who run the company, this is what they say. They’ll say, “Oh, no one cares what the offices look like.” That’s just not true. You might put this in your toolbox: The number one thing that repels new employees is bad picture framing in the office.

Laura Zander:
That’s funny. Okay, so you, Shawn, just totally segued into the one thing I was going to ask you guys during this, and that is: When do you decide to spend money, or spend time to save money, as opposed to spend time to make money?

So as an example, we were just given an offer by our bank to change our merchant processing to the bank’s merchant processing. And in exchange, they were going to give us two months of merchant processing for free. We pay about $1,000 a day in merchant processing. So if Doug can spend a couple of weeks to do the programming—because our computer system is completely custom. It’s not as easy as just switching Shopify, so it’ll take a couple of weeks. We’ll get two months, $1,000 a day: 50-60 grand, plus better rates for the rest of the year. So right now that’s looking at maybe $60,000-$70,000 for the year. I’m rounding numbers. Or he could spend those two or three weeks working on something so that we could make the site better, so that we get more revenue out of our existing customers or build new customers. How do you decide—

Jay Goltz:
No, there’s option three. You’re doing exactly what I’m talking about. They happen to come to you and say, “Oh, we’ll save you money.” The fact is, there are 50 other companies out there that do credit card merchant services that they’re probably going to be cheaper than your local bank.

Laura Zander:
Um no, we’ve done the research. This has been something that’s on our radar for years and years and years.

Jay Goltz:
And this is a big bank?

Laura Zander:
Yes, and we’ve gotten other bids.

Jay Goltz:
So you’re confident it’s cheaper, okay.

Laura Zander:
Yes. So this dollar amount, we wouldn’t have made the switch just for the better rates. But the fact that they’re willing to give us two months for free, and that’s going to be $40,000-$50,000 just in a chunk of change. I mean, $40,000 to $50,000 of savings, just bottom line. Like, how much do you have to do in revenue to make $40,000 or $50,000? And so the thought process was: Could Doug spend two or three weeks of his time and develop a feature on the site that would generate a half a million dollars in sales, which would then net us 40,000 or 50,000 bucks?

Shawn Busse:
Oh, boy. Yeah.

Jay Goltz:
Wait, wait, wait. Let’s be clear. You’re mixing up gross profit with net profit. You wouldn’t have to do half a million. If you did another 100 grand, you’d probably make the same amount of money with your gross profit. Your gross profit is not 10 percent.

Laura Zander:
Yeah, okay. Good point.

Jay Goltz:
Okay, so I think the answer is simple. You have to get Doug to work harder. [Laughter] I know he doesn’t listen to this, so it’s safe to say. Yeah, get him to work a little harder and do both.

Laura Zander:
Hey, sometimes you’ve got to choose between marriage and business. [Laughter]

Shawn Busse:
Oh, man. I get what you’re saying, Laura. This seems like a slightly more clear-cut thing. Because on the one hand, you’re talking a known ROI. You’re like, “Hey, I know we will get $50,000 out of this if we do this effort,” and then it will pay off ongoing, which is great. Versus the unknown ROI of doing changes to the website, and who knows what’ll happen? It could be exponentially better, or it could do nothing. That’s the challenge. But it seems like such a small investment of time. You say two to three weeks? Are there other risks that we’re not hearing about?

Laura Zander:
No, no. No other risks. Just the time.

Jay Goltz:
Wait, you didn’t tell us how much you’re going to save on an ongoing basis. It’s not just the two months free. I presume the rate’s lower?

Laura Zander:
Yes, I did. So maybe $1,000 to $2,000 a month.

Jay Goltz:
Yeah, you’re not gonna do a marketing thing. That’s like a revenue stream, to your point, and then getting two grand a month net? That’s gonna be tough to pull off with some marketing.

Laura Zander:
Right, and then forever, for years and years and years, obviously ongoing. But I mean, I feel like it’s a good question, because it’s not just this. It’s like cleaning. At what point do you stop cleaning the offices yourself and do you spend the money to have somebody clean? It’s these opportunity costs.

Loren Feldman:
But Laura, the thing we haven’t talked about—you’ve raised this in the past—is how do you get Doug out of the cage that you’ve built for him?

Laura Zander:
Well, that’s a whole different episode…

Loren Feldman:
The issue is, does it make sense to just keep building the system that he hand-built starting 20 years ago, or whatever it was? Or do you bite the bullet at some point and convert to Shopify or something else off the shelf?

Laura Zander:
No. You don’t. No, you have somebody buy it who has—

Loren Feldman:
You were considering that at one point. Have you ruled that out now?

Laura Zander:
Yes. Because I think it comes with its own host of… It’s going to be the same number of problems, just different problems.

Jay Goltz:
Just so you know, we did go to Shopify, and we’re very happy for whatever that’s worth.

Laura Zander:
We have Shopify on our other thing, with the Madelinetosh stuff, but the volume is a lot different.

Shawn Busse:
Laura, am I correct that search and ecommerce is pretty significant for you all? Or is that not accurate?

Laura Zander:
Yes, search and ecommerce is about 95 percent of the business—of one of our businesses. Now that we have multiple businesses, it’s more like 60 percent.

Shawn Busse:
So it sounds like, I almost hear two massive risks. So one is Doug being the key to everything, and then the other massive risk—and I’ve seen this before where people switch platforms, and then all of a sudden there’s some huge SEO penalty—there’s that risk too. So that’s… oof, man.

Laura Zander:
That’s very astute, and you just nailed it. So I think, the solution is at some point to partner, or be acquired, whatever, and have a team take on this system that’s built, because the system is really robust. It’s an amazing system, and it’s something that we can’t replace off the shelf. I mean, maybe, well… no, we can’t. We can’t replace it off the shelf, which is why we built it. But yes, that’s a whole other show.

Loren Feldman:
We’re just about out of time here. But before I let you guys go, I just want to go around. You know, we got this omicron thing going, and there’s even talk now, I read in The Washington Post this morning, that there may be more government stimulus money coming toward businesses, especially restaurants and gyms and retailers. Have you guys been hit yet? Are you having problems with employees? How’s this affecting you? Laura, maybe you first.

Laura Zander:
We haven’t been hit in Reno. In Texas, we had two unvaccinated employees, and they both got it. So they’re out for a little while, but they haven’t been really sick. So, I mean, in general, 2021 was a worse year for us than 2020. It was a pretty dramatic drop in sales. But other than that…

Loren Feldman:
Why?

Laura Zander:
Because 2020 was a bubble for the knitting industry. So many people were at home. But no, it hasn’t affected us.

Loren Feldman:
How about you, Jay?

Jay Goltz:
Ten percent of my staff is home, either because they got it or they were exposed. The good news is, no one’s gotten really sick. I have a couple of unvaccinated. One of them got it. She’s back today. So I don’t think getting sick today is—I’m not a doctor obviously—as bad today as it would have been two years ago. So you know, it is what it is. They’re out and they’ll be back. And the mandate they’re talking about, OSHA, it’s still unsettled. I guess by February you have to make sure everyone’s—

Loren Feldman:
You’re over 100 employees, so it would apply to you.

Jay Goltz:
Right, so we’re watching that, but we’re being careful. But there are so many people who have been careful who still got it. So we’re just doing what we can, but I’m kind of numb to it all. And I just have to tell you, I’m glad 2021 is over. I would like to believe, and I do believe, it’s going to get better soon. And I do believe that, not just because I’m an optimist, but because pandemics do go away. They don’t last forever, or we’d all be dead. So it’s gonna go away. That’s my plan.

Loren Feldman:
How are you guys doing, Shawn?

Shawn Busse:
We’re in a really fortunate position, being able to work remotely, and I’m just super thankful of that. We’ve also been taking it very seriously. Our clients have been really aligned with that, so they’ve been willing to meet over video versus in person. We’re starting to see it with the folks who have kids, whether the kids are getting sick, or more commonly, it’s the teacher gets COVID, and so then the school has to close. So we’re starting to see that. And I think this is all because of New Year’s and Christmas and all that stuff.

Jay Goltz:
Actually, I’m glad you brought that up. The real strain is my employees with little kids at home. It’s impossible. I mean, they thought they were going to school in Chicago. Boom, they closed school yesterday. It’s a problem.

Loren Feldman:
My thanks to Shawn Busse, Jay Goltz, and Laura Zander. As always, thanks for sharing. Thanks for listening, everybody.