Episode 68: Thinking Outside the Black Friday Box with Luke McAlpine of Taylor Stitch

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Transcript

Announcer:

Welcome to Nerd Marketing, an original podcast for e-commerce operators and marketers. Looking to level up Drew Sanocki and Michael Epstein will bring you actionable strategies from their decades of running eight and nine figure brands, along with interviews and insights from the leaders of some of the most successful brands in the world.

Drew Sanocki:

Today on the Nerd Marketing podcast, we've got Luke Mic Alpine, who is the VP of Brand and Marketing at Taylor Stitch. Great menswear brand, really pushed the envelope in DTC for a long time and he shares with us some of his Black Friday thinking and not really what they're going to do for Black Friday, but how to approach it, how a brand like his thinks about Black Friday. Hope you enjoy today. Luke McAlpine from Taylor Stitch. How are you doing, Luke?

Luke McAlpine:

Good, good. How are you?

Drew Sanocki:

Good. Taylor Stitch—pants, apparel. What are you guys doing for Black Friday?

Luke McAlpine:

I can't give out all our secrets on the show.

Drew Sanocki:

How do you think about it?

Luke McAlpine:

Yeah, yeah, exactly. I think that's probably the bigger question because ultimately it's this thing everybody has to think about in the e-commerce space and as we approach Black Friday, Cyber Monday, the whole peak timeframe this year, there's a big question that's kind of been burning. It's like, why are we running a Black Friday promotional event in the first place? What's the point? And so I kind of speak more broadly to some of the themes. They certainly apply to Taylor Stitch and Taylor Stitches. You kind of have to take Taylor Stitch in context as really a retention brand to begin with. And so the intent behind our brand is to build durability, long lasting relationships with core customers, build that value over time. And so when we think about a specific time period, black Friday, Cyber Monday, it's like why run the promo in the first place?

What are we trying to do here? Are we trying to drive top line? Are we trying to drive margin? Are we trying to drive unit volume to clear liable? Is this a customer acquisition play? If so, we probably should be careful about the value of those customers coming in on a promo offer is kind of this question of are we trying to add value for some of our best customers and really kind of think about this almost as an appreciation type event, deliver some value, some opportunity to drive some retention during this timeframe, or are we rewarding our worst customers, which is certainly what we don't want to do by just throwing off or at folks if we could have found that volume somewhere else outside of a promo event. So I think coming out of the pandemic off of a couple of years of heavier promo than we typically would, these are some of the big questions that we had in our mind.

So really trying to take a look at the time frame overall. What's the season look like? What's the year look like? How are we trending to forecast or budget over this broader period of time to learn? Are we participating in something that we feel like we have to as an e-commerce brand because everybody else does it or are we actually driving quality volume throughout the year outside of this one or two week timeframe? And are we able to hit those forecasts or budgets without necessarily having to do something that feels unnatural from a promotional perspective? So I don't know. This is kind of a non-answer, but I don't know if that kind of resonates or not. You're

Drew Sanocki:

Still having these discussions or you guys figured it out?

Luke McAlpine:

Well, we'll go pretty late into the game and that's one of the talking points I have today, right, is that's like, build those contingency options into your plan. We're having essentially weekly check-ins at this point and we have a couple of different scenarios that we can deploy depending on where we are at to forecast in that week leading up to if we want. Sometimes you're doing a little bit of double work it might seem like, or the phrase that we use around here is like you're wearing a belt and suspenders, but you're going to be glad you have all those materials and levers to pull during the timeframe if you need to or if you decide to so that you've got the flexibility and the option.

Michael Epstein:

That's a great point, drew. I remember we did that at auto anything, you built out a whole bunch of assets and you kept them on standby. You could watch the data almost in real time and pivot almost in real time if you need to react to how the day is trending if you had to or change your Cyber Monday offer depending on how the Black Friday weekend is going. So yeah, that's a great piece of advice if you're not doing that, have those assets and strategies on standby in your back pocket that you could pivot if you need to.

Drew Sanocki:

Some of it was due to what your competitors were doing and how sort of the week in the day was playing out, but a lot of it for us at auto anything was due to private equity ownership. And I'm curious for you too, I mean you said you've been there for before and after, it was sort of owned by private equity, right? Because then there's this level of discipline that comes in and just achieving your forecast numbers became a lot more important than when I was probably swashbuckling as a solo entrepreneur. It didn't matter. It's like, am I making money or not? But as soon as you tell the board this is what we're going to do over Black Friday, then it becomes very important to hit that number

Luke McAlpine:

And you kind of nailed it there. I mean, I've been with Taylor Stitch for a bit over five years now and the brand has grown pretty substantially in that time and I've had a number of different roles and it's had different kind of ownership structures during that time. And to your point, as a capital equity backed private equity backed brand, now the forecast is really everything to us, whereas prior we were looking to drive top line and just maximize every little bit of opportunity we could during these timeframes. And so it's just a little bit of a different mindset. You kind of touched on something that I think we've been thinking about a lot this year in general, and this is this idea of restraint and promo restraint and taking a look at that forecast view outside of a year over year context, because if you're only looking at what you did last year and aiming to comp on top of that, it could drive some management decisions that maybe aren't necessarily conducive to actually hitting the forecast. And so if you've planned for that, that's one thing, but in the months leading up to holiday and peak, we've outpaced, well, maybe we won't want to exercise some restraint here actually and not just give away margin for the sake of giving away margin on products that we might be sold out of by the end of the year anyway, right? Really there's that balance of drive volume, but make sure you don't give everything away in the process.

Drew Sanocki:

Maybe brands are wisening up to this. The idea that what we used to see a lot of was our customers holding off their purchases in late Q3 and Q4 waiting for Cyber week when they knew they could get it on a discount. And initially you're giving high fives because you've got record revenue levels for those every year beats the last year, but then you run the numbers and you realize that it's like you're essentially cannibalizing full margin purchases for discounted ones training your customers to come in and buy on discount during that one week. Have you seen that over the years at Taylor Stitch, like the shopping behavior changes in Q4?

Luke McAlpine:

Yeah, for sure. I mean, especially as Taylor Stitch is a very high retention brand and we have a very engaged returning customer. They get passionate about the brand, they follow us and they know our playbook. Our VIP customers are whales. They're the most attuned to the playbook. They're the ones that know how to do it the best. And so while they're certainly a very important part of our business as we think about customer acquisition and the types of products that are most effective with new customers, the last thing we'd want to do is discount those for the sake of discounting them, bring in new customers on a discount, and then immediately kind of set that expectation that Taylor Stitch is a brand you can always find at 20% off if you shop every 90 days or so. So it's this idea of restraint and then we still want to take an opportunity to deliver value to our customers from time to time and give them an opportunity to come back and take advantage of a good value during a key timeframe. But we don't want to necessarily just reinforce that, Hey, you don't ever have to really shop full price with Taylor Stitch instead, just wait a little bit, stock up during the promo timeframe and then you're good until the next one.

Michael Epstein:

What are some of those ways that you deliver value that are alternatives to just a straight out discount?

Luke McAlpine:

Yeah. Well, sometimes it can be a discount if that's the direction we want to go. Another way that we do it is through our loyalty program, which we call a common club, but we'll deliver additional credit back on orders over $200 or something so that on your next purchase, if you are a member of the common club, you've got an opportunity to apply some additional credit towards a future purchase. Our VIP customers also receive a bit more common club credit on every order than a standard customer. So a little bit of a perk there for hanging with us for a while, coming back, repeating with us. So I would say the loyalty program is a big one. Another thing that I think is important during this timeframe is be thoughtful about your product assortment. Have those products that really resonate with your best customers, even if they're excluded from the promo. So for us, during the Black Friday/Cyber Monday timeframe, we have some key product drops of limited edition product, limited quantities. It's Pinnacle product for us and it's actually excluded from any promo, but we'll sell out of it during the timeframe. So it's not necessarily price driven, it's a scarcity kind of concept or a pinnacle product kind of idea that really resonates with those customers, and that's a huge piece of our kind of mix during the timeframe.

Michael Epstein:

And how do you think about post-Black Friday? What's the pivot for those folks that you newly acquired over the Black Friday period and potentially acquired at a discount? You talk about Taylor sit being a retention business. What's the play to get those newly acquired customers sort of into the fold?

Luke McAlpine:

I look at it a couple of different ways as we think about promo and Black Friday, Cyber Monday, I mean, historically you would see this huge top line growth during the timeframe and then immediately following a period of hangover where the business is just very light because obviously everybody did their shopping during the event itself. And then to go even further, we probably would see a pretty high period of returns product coming back to us over the next couple of weeks, which you want to consider in your hindsight process as part of the overall view of the event takeaways is what did returns look like during that hangover period because they can offset a lot of your total volume. For us, we go immediately into how do we re-engage that customer, and particularly right now, a big focus is cross-selling into other product categories. We have a few products that are really, really popular among new customers.

Things like our Apres pant, our core Oxford shirting, some of our core knit tees like in our cotton hemp, and we see that over the first one to three purchases. It's typical that customers will buy that same exact product in other colors, so they buy an Apres pant from us, they come back on their second purchase and buy another Apres pant, and then oftentimes in their third purchase, they're buying even a third pair of operate pants. So for us right now, a really big focus is how do we start to engage those customers, those folks with different product messaging to get them into other Taylor Stitch products so that they're starting to shop across the assortment. If you came into us and bought an re pan because that was the differentiated product that introduced you to the brand and you got excited about that, well, how do we start to get you into a Core Oxford as a next step so that you're shopping across the brand and we're a full wardrobe provider for you, which is broader than just a Black Friday Cyber Monday timeframe. It's a bit wider reaching than that, but that's really how we think about it in total.

Michael Epstein:

Does that play into your acquisition strategy too, like understanding which of those products or those sort of gateway products into a larger assortment?

Luke McAlpine:

Absolutely. Yeah, and I think from an audience perspective and how we think about targeting through performance channels, that's a big piece of it. As we think about page channels, Facebook, that's certainly where our creative firepower is focused when we're thinking about ad creatives and that's where our paid dollars are being allocated as well, towards prospecting audiences most of the time. The one caveat I would say there is that as we think about big promotional periods, particularly Black Friday, Cyber Monday where the cost of paid media, it's highly volatile, it's probably going to increase pretty significantly. We'll actually at times flip the entire ratio up a bit there and really just go after retention audiences in paid channels really kind of maximize the opportunity that we have with email across all of our organic and paid channels, speak to a retained audience primarily only, and then whatever prospecting and acquisition comes in during that time frame, we consider it icing on the cake. We're going to see pretty strong acquisition during promotional timeframes because we're on offer, so we don't necessarily want to pay to acquire that customer and give up the margin on the sale itself because from an LTV perspective, that can get kind of tough to justify.

Drew Sanocki:

You guys find that the customers that come in and buy on discount on their initial purchase like really refuse to buy unless they get another discount? Lower LTV customers?

Luke McAlpine:

Yes and no. So we always have generally running a first time buyer offer that works well for us throughout the year. We don't generally allow that to stack during a promotional timeframe anyway, but where we see the larger decline in LTV over time is when we have these recurring promotional events, and so it's not necessarily just a Black Friday Cyber Monday kind of issue. I'm not necessarily advocating to abandon Black Friday by any means because it can drive a lot for us, but where we start to think about it a little bit more carefully is when you think about it in the broader context of the year of a Black Friday sale, a year end sale, a Memorial Day sale, a 4th of July sale and a Labor Day sale. Now you've created kind of a paradigm where every quarter almost you're hitting a bigger promotional event that that's where we start to see the degradation in LTV over time because now those customers that they're coming back and repeating, but it's always on offer and it's really tough to get 'em into a full price purchase.

Whereas with a little bit of restraint, sticking to our guns a little bit, trusting the process, we've seen, oh, you can actually smooth out this year pretty substantially from a revenue perspective and fire up the acquisition engine so that as folks come into the brand, you might give them a little bit of a first time buyer offer, but then they come back and they repeat at full price because the product is good, the service model is incredible. They know they have free returns and exchanges. You're delivering value in other ways outside of just an offer.

Michael Epstein:

I want to just go back for a second to something that you mentioned that I think is so important, and I just want to highlight it, is that you're deploying your paid dollars towards acquiring customers who are buying specific products that you have seen demonstrate higher quality, higher LTV customers, which is something that I think not enough brands are thinking about because they're thinking purely about CAC and what's the ad or what's the product that I can push in front of customers? It's going to deliver the lowest cac, but that doesn't necessarily bring you the healthiest mix of customers and the highest quality customers that lead to higher profits over time. You could be acquiring a lot of low value one and done customers at a really low CAC versus sacrificing conversion rates or CAC on some of the paid acquisition dollars to get much higher LTV and profitable customers over time. I love that you highlighted that because not a lot of brands are necessarily thinking that

Luke McAlpine:

Way. Yeah, yeah. It's funny. I mean, we would love to be a first purchase break even. We'd be in that scenario all the time or make money on the first purchase for Taylor Stitch. That's not always easy. We generally have a relatively high cac, but we also see that over time we have pretty good retention rate and good LTV, so we can justify spending a little bit more. In terms of cac, it's funny you bring it up though. Just this morning we have this kind of small assortment of brass everyday carry items that are accessories that we have. It's like a key hook, a brass pocket knife, a little lighter sleeve, a pen. They're all really well made. They're these really great tools that are nice on site. They sell well, they stand out in terms of acquisition. It's very unusual, but it's a different customer that comes to us that finds those products on Facebook. This morning we made the decision to actually turn them off and the catalog because the LTV of those customers over time is exactly what you just said. It's generally a one and done. They come in and buy a pen, and those customers not really making sense for us because they are generally here once and then they're out. They don't fit the profile of a typical Taylor Stitch customer that's going to come back and buy more products over time.

Drew Sanocki:

I had a question about Black Friday. Again, how do you guys think about standing out in all the noise? Every apparel brand will be running something sale or giveaways or discount is certainly one way to try to stand out, but it sounds like you don't want to lead with the biggest discount in the category. How do you think about standing out? 

Luke McAlpine:

It's tough. It's the biggest challenge during the timeframe, right? I mean, especially for a brand like Taylor Stitch, we have an engaged audience, but we are by no means the huge player in the industry when everybody's email inbox is getting blown up by every brand they've ever engaged with on the same day. So for me, don't bury the lead. Lead with the offer and clarity of offer is critical and that's about the best you can do, and then you just want to make sure that you're engaging folks, engaging creative, which Taylor Stitch is very strong with. Our brand has strong creative. It's one of our strengths. It's one of the reasons that folks do kind of stick with us is because we're able to connect with them at an emotional level, and that's a bigger piece of our brand strategy. But during this timeframe, it's speak plainly, speak clearly, and lead with the offer.

Drew Sanocki:

Don't get cute. 

Luke McAlpine:

Yeah, if you try to get too clever, you're just going to clever yourself right out of the mix. I do have one hot tip that is just, I think it's probably obvious, but I think it's worth restating, and that goes back to that whole why do it in the first place. The second part of that is make sure that everybody, all key stakeholders are aligned on the objectives, especially leadership. If you're somebody who's presenting the plan to leadership, but oftentimes it might be coming top down from leadership and it's just making sure that everybody is aligned on what those objectives are so that as you're making those game time decisions midweek, if you're pulling contingency levers, everybody's up to speed on why and what those If then scenarios are, if A happens, then we will do B because you could find some confusion midstream that really impacts your ability to act quickly or act with cohesion. So that's just something that from personal experience working through these things for years is get the team together ahead of time and make sure everybody's in it for the same reasons so that you can all move cohesively as a unit through a very busy timeframe.

Drew Sanocki:

That's it. I mean, that's like you don't want to have to call the board or the CEO every time you're pivoting an offer, right? It's just kind of like, Hey, we know this happened. We're not hitting this target. We've got to do this other thing, and everybody understands and it's like, okay, that's our fallback plan. Let's do it. So yeah, it's a good

Luke McAlpine:

One. That and double up on the creative if you have to have those contingency plans. It's like you might get some grumblings from the creative team ahead of time. It feels like extra work, but it's so much better than having to make that call Tuesday night at 8:00 PM

Drew Sanocki:

Oh, they're going to hate you a lot more if you're doing

Luke McAlpine:

That. Yeah, so it'll allow everybody to keep their heads on straight if you just build in that time

Drew Sanocki:

Ahead. Mike and I, when we bought this company and we were running it through our first Black Friday, and we knew we had to go promotional, everybody in the category was going promotional, we weren't hitting our target, I dunno, it was like 9:10 AM in the morning. We're like, okay, let's increase the discount from 10 to 20% or whatever the hell it was, and we just got these looks back from the team. You don't realize you got to get a coupon change on engineering's backlog. It takes them, it's a quarterly priority to be able to shift a coupon like that. There's just no way you could do it same day. So that was a little bit of a surprise to us on our first Black Friday.

Luke McAlpine:

Yeah. I will say too that try to get a little more creative with some of those contingency plans during the week. I think the whole oh, sale extended has been done so many times.

Michael Epstein:

Surprise.

Luke McAlpine:

Yeah, I hope not to ever have to do that one again. It's like, have some other things that you can do midstream so that you're not just adding an additional day onto the event on the backside or just adding days. I think we've started to learn oftentimes doesn't always result in more. You're just spreading it out over a longer period of time, which ultimately just reinforces that promo kind of perception of the brand anyway. Whereas if you can get in and out of an event very quickly, drive the results that you're looking to drive and then move on and get back to a full price position, it's so much cleaner. I do have to say one thing that I'm excited to try this year, and this isn't even to pander to you guys, is the layering in of the direct mail piece for Taylor Stitch on the retention side through post pilot. It's a pilot we're going to run or a test we're going to run as part of our mix during the timeframe, which will be new for folks that are either suppressed or we just, for one reason or another, can't get into their email inbox, but they've shopped with us in the past. So I think that would be another piece of advice I would have for anybody entering the season is just try to figure out where the new opportunities are to take something out of the event so that you can apply it towards future.

Michael Epstein:

Love it. Well, thank you. We did not ask you to say that, but appreciate, we're excited too. One last question, not Black Friday specific, but generally, I've always looked at Taylor Stitch as an innovator on a lot of fronts when it comes to sort of how you market and how you've built a brand in D two C, as you talked about, it's a retention business. People are passionate about the brand. What are some of those top tips for folks that really want to make the pivot into building a brand from the pure sort of just direct response D two C type brand, like building those rabid fans, those repeat customers, the people who are excited about the brand? What are a couple of your hot tips on doing

Luke McAlpine:

That? Yeah, I might be the wrong guy to ask because if anything, I feel like we still struggle on the true direct response marketing side of things. That's the unlock we need. I have to give credit words to, that's to the founders, Michael Mahar and Barrett and Mikey, and just creating this brand that has always felt like, I think myself included as a customer before I joined the brand as a customer, it's felt like you're along for the ride. You're in, you're in it together. The idea of the workshop as a crowdfunding vehicle in the early days, the amount of just personal engagement. Our Reddit community is very vocal and engaged, and our CX team is in there every day corresponding with them. On a personal level, I think it's just keeping the brand as personal as you can, which is always a challenge as you grow.

But with that comes like transparency and just the visibility of the effort I think is important in what you're trying to do and build as a brand. At Taylor Stitch, there's no secret. We want to grow and we think that's okay, but we also have some very specific ways that we want to grow with regard to our responsibility initiatives, reducing our impact on the environment overall and the industry as a whole. Just having that familiar tone of voice and feeling like your friends, you've got a line into Taylor Stitch as a customer anytime you need it, whether that's you're hitting up our CX team or you're hitting us up on Instagram, or you're shooting an email to me directly, it can go anywhere. This is what we're here for as our customers at the end of the day.

Drew Sanocki:

Luke, thanks for joining us. This was really fun.

Luke McAlpine:

Yeah, absolutely. Thanks for having me. Have a

Michael Epstein:

Great holiday season.

Announcer:

Thanks for listening to Nerd Marketing. Don't forget to check out all of the other great episodes, some of which include interviews with e-commerce marketing masters, working with Mr. Beast and Joe Rogan, plus Drew and Michael's experiences in private equity, advice from VC firms on what they look for in investments and so much more like share, subscribe, and tune in every week for a new episode.