In Reviews We Trust

Ep. 17: How to build an email strategy that goes beyond revenue to increase profit margin, with Adam Kitchen

October 27, 2022 Season 1 Episode 17
In Reviews We Trust
Ep. 17: How to build an email strategy that goes beyond revenue to increase profit margin, with Adam Kitchen
Show Notes Transcript

In this episode, Callum McKeefery show host and CEO of talks to Adam Kitchen, Co-Founder of Magnet Monster.

They discuss how managing the client base effectively, and providing quality service rather than a focus on constant growth can lead to longer retention. They also chat about the importance of participating in Black Friday, but not at the expense of eroding your future profitability. What it takes to build an email strategy that goes beyond revenue, that supports the whole business to increase profit margins.

Episode links:

Adam Kitchen:

Callum McKeefery:

Show notes:
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Ep. 17: How to build an email strategy that goes beyond revenue to increase profit margin, with Adam Kitchen

Callum: [00:00:00] Today on the podcast we have Adam Kitchen. Adam is the CEO of Magnet Monster and has crafted over 100 D to C email marketing strategies for fast-growing brands. Adam, thank you so much for being on the show today. I know you've just been away. Just got back. How's it going?

Adam: It's going great, mate.

Thank you very much for having me. I'm excited to talk about everything.

Callum: How did you become the CEO of Magnet Monster? Let's start about your founding story. Do you have a, an interesting roots in or,

Adam: I'm originally a kindergarten teacher.

I always loved kids. I always wanted to work with kids. I was a naughty kid at school and when it came to work experience, I got shifted off to a primary school and I just fell in love with working with kids and that was what I always wanted to do. followed that out of college and university. Now in tandem to this.

Whilst I was pursuing my teaching career, I [00:01:00] fell into eCommerce through being a bit of a bodybuilder back at the time. I know I'm skinny now, but back then I used to look good and my first ever job was selling supplements in a store in Liverpool City Center. Through there I was really big into internet forums, researching everything to do with training, nutrition, Posting on was with basically like a huge social media giants back in the day.

Well, ahead of its time. And from there I had a little link in my signature sending traffic back to all small supplement store back in the UK and we had five brick-and-mortar stores and we also had a new e-commerce operation in Warrington. And one day the owner calls me and says, Are you Adam Kitchen?

And I go, Oh crap. , what have I done? And he says, What are you doing to send all this traffic back to our store? And I said, Oh, I'm just [00:02:00] posting on this website and, joining in with these discussions. And he said to me, Do you want to come to Warrington and learn how to do digital marketing?

And that was basically the start of things. From there, it starts off in customer service. got involved in email actually very early, but back in the day, as you would know, everything was custom-coded from the ground up. So it was a really ancient system and I just fell in love with it straight away. I loved, building content in particular, which is how I've built this agency, went off to Hong Kong, went to teach, and I just became a little bit disillusioned with the teaching because of how bureaucratic it is and how much red tape. I didn't feel as though it was aligned to my teaching philosophy and how I believed education should be done.

Started making more money, doing like things on the sides in e-commerce. And when I came home. Went to London, I ended up owning an eCommerce business with a previous business partner. [00:03:00] That went bust. We just couldn't make it work. No profit margin in the supplements we were retailing.


And then I was at a bit of a crossroads.

I was 29, not very well off financially due to that business. And it says, What am I going to do? I, I will go back into teaching goal. I can monetize my skills in e-commerce. That's when we niche down and realized that Klaviyo was sort of becoming the market leader and it was quite serendipitous the timing.

I went to an event that just pinned all the business towards this new software and I've always been really passionate about CRM and email retention, and everything that goes into it. Three and a half, four years later, here we are. It's been been a great rides flip with some amazing brands and just loving.

Callum: I can't believe you've only been doing Mag Magnet Monster for four years now, is it? Yeah, three and a half, four years. Yeah. , I thought you'd been doing it for, for longer. You seem like that you, you seem like you're industry veteran sort of thing.[00:04:00]

Adam: Well, I think, not to be like to my own horn too much, but I think me and my business partner, we've got slightly different perspectives we're off-channel marketers.

We've both owned e-commerce stores, which helps us massively. And yeah, I've sort of been fighting against people who rarely obsess over the channel and the attribution. And we can probably talk more about this and, oh, look how much email generates when, when you're a business owner, you really don't care too much about that.

You care that the overall business is profitable and growing in a healthy manner. And I think my previous experience owning the store, Allows me to not be naive about the role I play. Yeah. And also try and integrate to the other parts. So email has a role to play in acquisition and it's not just a retention channel and you can't be siloed and think of yourself that way.

And I like to think I've got a bit of a unique perspective in the email wells, and that's obviously where our positioning has been in the company and helped us [00:05:00] grow.

Callum: Yeah, I think you've done great on. Positioning piece like you talk about cuz you are, you know, when I see your post, you are always, you don't follow the herd.

You post good-quality content that's actually original, which is unusual because kind of everyone regurgitates the same sort of stuff once you've looked at it for long enough. I love that you've been there and you've worn the e-commerce shoes. Do you know what I mean? You've walked in those, in those, those footprints.

When I started reviews to io, I was, previously on the e-commerce side, and that helped me have a unique view of the market. Yeah. Massively Helps. Massively helps.

So how do you see the market at the minute? How are, how are you finding Email marketing space at the moment? Are you, is it still, Cause obviously it was massively growing during the pandemic.

Yeah. Email marketing was, it was blew up as a channel. How are you seeing it now? I

Adam: think if we're to be candid [00:06:00] the industry as a whole has gone through some relatively tough times just because, it exploded during covid as you pointed out, and now we're seeing a bit of a reversion. People going back into retail and just had huge saturation and commoditization in the space across so many verticals.

That being said, I still believe in the very fundamental basics to growing the brand. So having strong product-market fits, I know this is very obvious stuff. Yeah. Cause units, economics, margin behind. And then being disruptive and creative with your marketing, because that's a very key differentiator.

These points don't be these days, sorry. Don't be afraid to take a really strong view on things. I also think this is what we've done well as a B2B agency as well, and I was very. Strategic about how I brand it does with the monsters and the really bold red because if you look at the agency space, everything is very [00:07:00] much the same of the same.

It's all like light blue, quite corporate looking. And I want this to be very playful and clear and that's a great way to gain traction quickly. I think if you're new to a space, and the merchants that we work with, obviously they have strong fundamentals, but I would. They're not afraid to be different.

They try things, they experiment quite aggressively, and even if something doesn't work out, they're quickly like iterating and moving on to the next thing. So I think there's obvious challenges, right? Like around margin logistics, that being clear and saturation in the space. But I still believe that the best overall brands are going to win in the long term.


Callum: definitely. Do you so when you look at your customer portfolio, who's your ideal customer?

Adam: So we it, it's an interesting question actually, because I would say most of the brands we're working with now are between 10 to 50 million in annual revenue. Yeah. They might not [00:08:00] necessarily have a dedicated team on email, but they're a bit more mature in terms of how they're established as a business.

Right. And they're looking for, I would say, an element of sophistication where, again, I like to think we come in because. We can get, anyone can get email to 20 to 30% of your revenue, but to make a really holistic email strategy that supports the whole business, collecting UGC, building your community strengthening acquisition, that takes really high level of strategy.

So we're trying to aim for more mature brands. But that being said, we've worked with plenty of brands, even so, or million As long as they can afford the fees with charge, then I'm anyone.

Callum: So that, that's interesting. So when you're, when you're going after those, 10 million brands that are doing 10 million have probably already used I'd Imagine an email, whether it's in-house or externally.

They've used a email marketing [00:09:00] company agency previously. So do you find that you're picking up, accounts when the accounts have used someone else and then they're like, Oh, we're looking for a little bit more, and then they'll come to you?

Adam: Absolutely, and I think this is where our positionings worked really well for us because I was actually speaking to prospective client the other day, and he already has 28% of his email revenue from Klaviyo, and he said a couple of agencies refused to work with him, but that to me says that they're limiting their own beliefs on how they can improve the business.

If you're just looking at revenue in the accounts, then of course, You're always going to be really limited to what you can do, whereas I really believe, you know, we can help you increase your profit margin. You might be giving out needless codes somewhere in the funnel. Yeah. And going back to those over areas, we can be proactive in helping improve your customer experience.

We can improve acquisition. So I think those types [00:10:00] of things appeal to more mature businesses. Whereas when you are a smaller account, you generally go after the low-hanging fruit. Right. Like set. An advances court and a welcome flow in sending campaigns. Most people can do those basics or you can even get a freelancer really of work who can do a good job for, Yeah.

But to have a really advanced strategy, I think you need a specific team. And obviously, we have six people working on every single account, so that's where we like to think we swap into the ecosystem.

Callum: Yeah, that's a lot of people on each It is.

Adam: Yeah, and, and I think a lot of people underestimate how complex email can be and all the intricacies within the channel.

So on every brand, we work with, we have an email strategist who's obviously the primary market and directs the vision for the brand. We have the project manager who monitors the deliverables, and then we have a copywriter, graphic designer, an engineer who builds the emails, and then we have a [00:11:00] QA manager as well.

Involved in checking the process. So a lot of people just think you have this random person who creates everything, builds the emails, you know, writes the copies, does the strategy, and you, you can't get the great jack of all trades, but our specificity, I think. Helps us provide a really strong solution on every single area.

Callum: Yeah, And obviously it's working because obviously, your clients are staying with you, talking about the team. How's your team set up? Is it fully remote or is it work from home at the minute? How are you guys set up at the moment?

Adam: Yeah, we toyed with the idea of getting an office when we were starting to grow quite significantly.

But ultimately we spoke to people. and they just didn't really care that much and they, they enjoyed the remote lifestyle. And also we only have, there's, there's 22 of us now, but only six of us are, or four, Sorry. Now we're in the UK because we've lost a couple of people recently. Funnily enough, we lost a girl I was mentoring who [00:12:00] I was a big fan of, but she wants to be in an office environment.

Obviously we couldn't provide that, so, she left, which I was really upset about, but good luck to her. But yeah, overall everyone spreads out. We have six people in South Africa. Got a little team out there now and yeah, all over the place. Really.

Callum: Wow. That's interesting about South Africa. Well, there's two bits there, which are interesting.

One that you lost someone because they wanted to be in the office here at reviews. We just lost someone cuz they wanted to be fully remote and we were saying, look, wow, We're trying to solve difficult problems, and we need certain teams to be in the office. We don't need all of our teams to be in the office all the time.

I'm not saying I have everyone in the office all the time, but we do need when we're working on projects, brain power to be in one room so that we can all hustle on it. We can work out the difficult problems and make solutions so, And we said, you, you've kind of gotta be in the office a couple of days a week if needed.

And they were, no, I wanna be fully remote. So [00:13:00] that's

Adam: interesting. What's, so what's your policy on this? Because I've seen you've got a new, beautiful office, right? You invested a lot of time, and you generate space. So what's the company policy for you guys at the moment?

Callum: So it's mixed. So we just say that, Okay.

, If we can get you in the office a couple of days a week, that's our ideal solution. And if we are working, if we've got one of the teams is working, on a difficult project, we need you in the office in that period. We find that having brain power in one room working on a tough project.

Works better than working remote. We think we can do it in a, shorter timeframe, customer service and more routine account management and so forth. Those can be more, done remotely. And those people come into the office less frequently. But yeah, it's a blend. We try and take it day by day person.

I prefer to be in the office. I prefer the team, team [00:14:00] members to be in the office, but I, I don't think that's possible. I, I really don't think, I think if we forced everyone to come in the office, we'd lose 20% of the team instantly. I just personally don't think that, that for us, Because we were fully working from this office to start with, or, or working from our US office, working from Australia office, Germany office, and then we went remote.

We really weren't set up to be a remote company. Yeah. So it was a bit difficult for us at the start.

Adam: And yeah. Super interesting one that you say that. I, we obviously started remote and grew remote, but this year, at the beginning of the year, I said to myself, Okay, I, I'd love to travel. I really want to get back on the roads and maybe come cuz it's, it's difficult now to travel like I used to, but I want to combine work with travel.

Yeah. So I went to South Africa in February to meet Vean, who's our coo and I met him on LinkedIn and we've [00:15:00] been working together seven months. I just said to him literally at the beginning of February, You know what? I'm just gonna book a flight and come and see you in two weeks. And the amounts are like, how much closer that brought us together to the point where I, I feel like such a close friend.

So at the moment, you just can't replicate that in a remote environment. And I just got back from the states as well for. Three weeks in May. And even though I've been working with a lot of the clients now for two years, just meeting them for an hour just to have lunch with them.

Callum: Yeah. Nothing beats that closer to them.

Yeah. Yeah. Nothing beats that. And, like we don't have any team members that are fully remote that we've never seen. And maybe we miss out on talent because of that. , but, I think for the business that we've got, I'm a firm believer on brain power in the room and, meeting our team members, I think the culture's much more easier to grow.

Yep. If I, like now you've, you've been South [00:16:00], Africa, you've met the COO and you've built that relationship. Culture's a lot easier to grow he can pass your vision on to the other employees much easier than if you didn't do that. Whereabouts in South Africa did you go?

Adam: I was just in Cape Town and the actually. Recruited four, five more people from Cape Town now. So all of them are amazing as well. Awesome. Yeah. Great, Great little market if anyone's looking for talent.

Callum: So how many clients do you have currently?

Adam: So at any time we have between, we don't have a huge amount of clients, I would say, where our business model is quite boutique and we plan to stay that well.


Callum: yeah. You can tell, you can tell that from, your site, your pricing, and how you communicate. Clients.

Adam: Exactly. It's not, it's not scalable to provide the level of service we do and do it highly commoditized. And I, I've made peace with that. Yeah. I think, you know, I'll hopefully get rich from [00:17:00] SaaS, maybe like you on the day

Yeah, so, the amount of clients we have at the moment it's like 18 to 25. Some people are on sort of maintenance packages, not many. The rest of 'em are on fully managed service, and we have three pods. Each pod in the agency manages a certain amount of clients. I like to keep it maximum six at prefer.

I would even have it less than that. I know that sounds not like many for a lot of agencies. Well, again, yeah, I think the business model, as you pointed out, slightly higher pricing, better quality service um, hopefully, longer retention. And more of like full sweet CRM specialists as opposed to just email Marketers.

That's what we're going

Callum: for. You're more kinda like an in-house team then if you've, if they've only got that many, if they've only got six accounts to operate, that's more on like, they can pick up the phone, know who they're speaking to and a hundred per cent yeah, that's, that's interesting cuz I don't know anybody else in the market who's really looking at [00:18:00] it that way.

Aggressively trying to grow their customer base and not sort of manage their customer base. And I think that's true of most, most businesses in, in our, in our space, there's this, I need growth. I need growth. , like they're really trying to double down on getting more clients in rather than managing their clients that they have.

Do you only work with Klaviyo as your email? Provider?

Adam: We do at this point. I mean, we have worked with other solutions in the past. Everything from Active Campaign to MailChimp to sale through or Enterprise Red Eye, even now just Klaviyo because. The markets consolidated and also all our systems as well are built off Klaviyo.

So I know we can do, we know that software inside out Yeah. We can do a phenomenal job for anyone on it. Whereas if someone comes to us with new software, there's a learning curve. Yeah. And that's why I'm very selective as well. [00:19:00] Like we actually had partnership with, another review company, but it was actually speaking to Christian at Waterdrop

Um, hearing like how highly he spoke of you guys that we decided to switch. And obviously, we're not like a Shopify dev agency, so we're not selling a lot of software to people. Yeah. , this, this stuff does integrate into emails, so we're very prudent with who partner up with because there's a, such a strong learning curve.

And going back to what you said about. The way other agencies might manage things. I guess maybe I'm not a great business owner, but I'm trying to like I said, provide the best level of service and maybe have higher lifetime value, less share. Yeah. On the account we have, and hopefully, like I said, I'll get rich in over areas of my life because it won't be through this agency that,

Callum: that's similar to us in a way.

When I started reviews, I've never been a salesperson, that I've never. Really been interested in the, [00:20:00] the really salesy side of it. I kind of didn't like it, to be honest. Say to say I hated it was a bit too strong. I just didn't like doing sales. Yeah., I'd be the, a free platform if I could, do, you know what I mean?

That, that's kind of everything, everything that we develop, I'm always like, No, let's just give this to our clients for free and let's make this amazing. Yeah. Sometimes the guys have to reign me back and go, No Callum, this is just cuz he, the year's worth of development and, and we've gotta charge for this to get, get some revenue back in.

Yeah, I, that's kind of how you are. You, you're more focused on the customer rather than focused on the sale sales side of it. And I think short term it might, it's not the best strategy probably in the short term, but in the long term, I think it's the right strategy cuz you end up with happier customers.


Adam: and, and I think as you points out, B2B selling is changing a lot. Let me ask you something, actually, do you find though you've got better at sales? Because I know you a hundred per cent believe in your product, and [00:21:00] you probably find right, like, because you believe so strongly in the product, that sales just becomes a lot easier because you're really passionate and you believe it genuinely is the best solution for the customer.

Callum: Yeah, definitely believe, I live and breathe what we do. And, and, and I'm so focused on and, and the customer, I read every review, I read every single one of my competitors' reviews. Yeah. And believe so strongly on solving our customer's problems in, in this niche area, in this smaller area.

Talking about campaigns and things like that. Last Black Friday, obviously email marketing was massive. We were still in the pandemic. It was kind of after probably Christmas when I think e-commerce kind of slowed down. What do you, what worked last year that you don't think will work this year?


Adam: question. I, My Black Friday strategy is actually being quite [00:22:00] static and I would say, okay, maybe not the most exciting in the world because I, I try to approach it from a very pragmatic, and in my opinion, sensible viewpoints that you shouldn't just discount for the sake of discounting. And what I'd seen, and this was also when I had my own store as well, was.

You're very often just front-loading your revenue in order to be competitive with other merchants in the space. And I understand there is a, a little bit of a need to do that, but not at the expense of eroding your future profitability. And a lot of the brands, the feedback we've had was that we did these huge sales, we had massive revenue numbers, but actually, we were more profitable the previous month.

And, we've slowed down sales now going into, It's already a slow time of year. Massively. Yeah. It's like, well what's the point that I think a lot of brands are coming round. The realization that yes, [00:23:00] do Black Friday and participate in it, but don't just do it for the sake of it and don't just go deeper and deeper on the discount again, it comes back.

Yeah, yeah. Knowing your margins and just being sensible about it. So what we've generally advised people to do, and again, I, I've always followed the strategy of my own story store as well. Nothing too sophisticated but focus on bundling items together and then offering them if, if it's, obviously you have obscures in the store at generous discounts and I think that's generally a win-win for the consumer and the brands.

Consumer gets to try products a good price points, brands don't erode the margin too much and yeah. Gain exposure from gathering more customers to, to try

Callum: things. I suppose if you, you're growing your average order value as well, you can offset your delivery costs or, or your discount across a couple of products.

You know what I mean? That makes massive sense. I'm seeing that. I think this year will be a bit different, I think people use, use the data that they [00:24:00] have, this first-party data that they've been collecting throughout the year, and I think you'll see a lot more of their top, top customers they'll give early access to and things like that.

I think that'll, that's gonna become way more popular this year. Definitely.

Adam: And, and another thing that works very well as well, that I think people shouldn't sleep on. Most of the time I look at Black Friday strategies, It's like you start on a Monday, for example, with 20% off, and then maybe it goes to 25 on a Sunday or Cyber Monday, and that's it.

It's basically the same offer. Repeatedly over and over again. Yeah, that was a very quick win, but my advice is to create different offers for every day because then you are conditioning the customer to check their inbox every single day. It's unique. You drive much more repeat sales if you have different offers for each day, and it's generally like more beneficial and exciting for the consumer and, and often the brands as well.

If you do have [00:25:00] multiple SKUs different offers every day, bundling as well works well, and then you can stretch it out over the course of the week and let people know in advance the schedule, not necessarily the offers, but tell people when and where the offers have gone out is very important. Yeah.

Callum: Yeah. I think. People new to email marketing who were doing it themselves can make massive mistakes around Black Friday and absolutely kill their lists. And I think it, it can, people can get it wrong. It's disastrous for, for some companies, like I was getting, way too many emails from one brand last year and you just unsubscribe and, and so it is, difficult.

That's why you need someone, a company like yours managing that to make sure that your list isn't getting devalued. So do you, when you do a segment and make sure that people who open every email are getting more of 'em on Black Friday and then people who aren't, are only getting the major ones?

Adam: Yeah, I mean, definitely there's an element of common sense and intuition as you pointed out. [00:26:00] If someone. Has received an offer and they've purchased on Monday, then don't be. Yeah. Send them the same thing on Tuesday. Because it doesn't make any sense. So I think, again, like people o overestimate how heavy they need to go on the frequency.

If you're very strategic about letting people know when and where the offers will be distributed, you don't need to pummel people with like 20. Email reminders. So yeah, get out, follow a schedule, and then segment accordingly based on people's behaviour. If they did purchase an offer on one day, don't send it to them five times.

You know, follow subsequent follow-ups cause it's not necessary.

Callum: Obviously SMS is, it's a big talking point this year, it was, last year, but SMS with Klaviyo pushing more into the SMS space and you've got attentive being, very aggressive in that space now. How do you [00:27:00] slot SMS into people's strategy?

Or do you just stay away? No, we

Adam: do, we do SMS as well. We're managing it under Klaviyo. We've managed it under attentive as well. And how do I see it slot-in? So it's quite interesting actually. In the US we see it actually work much more effectively. I think it's still relatively. New in the UK and this was also something that surprised me when I was in the States, how many people still use text messages to each other.

Yeah. And obviously, for us, we're all WhatsApp and Yeah. When I speak to people and I was like, Do you wanna chat on WhatsApp? They're like, No, we don't use it, I was like, What? You don't use WhatsApp? So yeah, it's, it definitely works more effectively in the States because I think it's got more mainstream.

Callum: That's interesting.

Adam: Yeah. In the UK. So I think no matter what market in, you need to build like clear benefits of subscribing to the list. So my opinion of SMS is that because it lacks the context of email. [00:28:00] and also the price points of it. It's much better suited towards these types of sales promotions, and we actually use a much lower frequency and more direct response type messaging through SMS.

And then we save more of the contextual educational brand-building content for email. Um, But again, it's like you, you've just got to deliver value on both channels. S

Callum: yeah, I think SMS is. It's a bit tricky if you're a brand, Sending an SMS is scary because, the unsubscribes, the, you are contacting me too much.

Do you know what I mean? You, you, you can fall foul of like regulations and so forth and, people pressing stop way too often. How do you see, obviously you're with Flavio a. Klaviyo just went through the rebrand. They're, they seem to be a lot more focused on the data rather than on email marketing.

How do you see the brand changing over the next 12 months?

Adam: Yeah, this is an interesting one, I [00:29:00] think. In my opinion, Klaviyo always was really a CDP. And we've always looked at it like that. Maybe not as sophisticated as some of, the mainstream solutions on the markets. Yeah, and I think if you push the software to its limits though it does have really robust data features and it didn't surprise me.

It's all that they sort of pivoted the business to this type of positioning and yeah, I, I think ultimately, You'll see a lot more enterprise brands on there. Hopefully, they don't leave, that smaller market that really built the business behind. Sure they won't. And, it's interesting because I see Klaviyo becoming a fully immersive CRM.

Suite of tools and integrations all integrated together. So everything from direct mail to SMS, email, push notifications, possibly even things like WhatsApp in the future, managed under one roof and then leveraging the data from there. And I think it's, it's a great move [00:30:00] for them, and I think it's logical as well.

Callum: Honestly, thank you for being on the show today, Adam. It, it, it's been amazing talking to you. Can't wait to meet you in person. Go for a beer. If you are listening and you want to hear more from Adam, Adam has an amazing newsletter.

I will add it to the show notes. And I definitely think, I, I get his newsletter and it's great. It, it's definitely highly recommended. Adam, is there anything you want to cover before we before we jump off?

Adam: No, mate. I really appreciate it. I apologize if you can hear this. Background noise, but all of a sudden some insane construction work has just started in the building

And, but yeah, like the newsletter's the main thing Callum so thanks for, the plug on that.

Callum: Yeah, no, no problem.

Adam: Thank you for having me.

Callum: Thank you for listening today. In reviews we trust is a bi-weekly podcast where I hope to be bringing you advice and insights from brands that are taking the e-commerce world by storm.