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Riding the Headwinds and Tailwinds of the Pandemic with John Sheldon - Honest Ecommerce Ep. 182

John Sheldon, Chief Marketing Officer, SmileDirectClub John Sheldon is the Chief Marketing Officer at SmileDirectClub. 

In this role, he focuses on delivering the best possible experience to customers in order to continue growing SmileDirectClub and reach more people searching for affordable access to a straighter and more confident smile. 

As the Chief Marketing Officer, John oversees all digital media, paid media, creative development, social media, communication tactics, and experiential initiatives for the brand. 

As a results-driven marketing leader, John continually builds a track-record of success and is a champion for creating strategic plans based on key insights. 

John has a strong background in digital transformation and innovation across a range of industries. 

He previously served as Chief Revenue Officer of Fresh Direct, a food tech company and the Northeast's leading online fresh food grocer. 

He was also the Senior Vice President of Innovation Portfolios for Mastercard driving innovation globally for the company, and the Head of Strategy at eBay Enterprises Marketing Solutions. 

He has launched and worked with dozens of digital-first brands and led the strategy to bring many great brands into the digital ecosystem. 

John earned a B.S. in Economics with a concentration in Finance from the Wharton School of the University of Pennsylvania. 

In This Conversation We Discuss: 

  • [00:00] Intro
  • [01:10] A C-suite position at a well-known D2C brand
  • [04:02] Is grass greener at an agency or at a client?
  • [05:57] Learning through agencies and starting a business
  • [06:50] The podcast is based in the entrepreneurial spirit
  • [07:17] It’s the best time to start a business
  • [07:45] How far along was SmileDirectClub when John joined
  • [08:57] How the pandemic “helped” SmileDirectClub
  • [11:34] Sponsor: Electric Eye electriceye.io
  • [11:54] Sponsor: Mesa apps.shopify.com/mesa
  • [12:38] Sponsor: Rewind rewind.com/honestecommerce
  • [13:08] Sponsor: Klaviyo klaviyo.com/honest
  • [13:56] Chase also invested in his teeth
  • [14:30] How SmileDirectClub moved on from COVID 
  • [15:50] The shift in customer demands
  • [17:43] Importance of customer lifetime value
  • [18:28] Effects of iOS 14 to SmileDirect Club
  • [20:23] Things to note when diversifying your channels
  • [21:28] How SDC does attribution
  • [22:36] Embracing being a brand challenger
  • [24:06] It’s very fulfilling to start a brand and succeed

Resources:

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  Transcript:

Chase Clymer  

Before we get started, if you're enjoying this content, you can do us a favor by subscribing to our YouTube channel and ringing the bell.

That will let the algorithm know that you like this content and it will help us produce more.

John Sheldon  

Everybody likes to bet on themselves. Confident people who have good ideas like to bet on themselves. And there's no bigger bet you can place than to go and start a company.

Chase Clymer  

Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. 

On this podcast, we interview founders and experts who are putting in the work and creating real results. 

I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.

Let's get on with the show.

Welcome back to another episode of Honest Ecommerce, everybody. I'm your host, Chase Clymer. 

And today we're welcoming to the show, potentially one of the bigger names that we've had, but I'm not going to tell you who just yet.

I will introduce them though. John Sheldon, welcome to the show. How are you doing today?

John Sheldon  

I'm doing really well. Thanks for having me on the show, Chase.

Chase Clymer  

Alrighty. So you are... I'm not gonna do the position just yet either, though. Well, you've got a pretty cool job these days. But take me back in time. 

How did you end up in this position, in the C-suite at a very well-known direct-to-consumer brand? That's what I'll give.

John Sheldon  

Thanks. Yeah, I had been working in and around the Ecommerce space since the internet was made of wood. It's about 27 years now.

I've been working in digital businesses and specifically Ecommerce. I started my career really on the consulting side, really helping businesses. 

I recognized the dawn of this new era and helping/consulting while we all learned together what this was going to mean for them and their business. And then I shifted my career after that consulting, including a business that I helped found in Boston. 

And then shifted my career after that into the agency side. And so we're really learning more of the broader marketing implications for operating with consumers directly through this internet thing. 

And then through a bunch of relationships, I got pulled basically onto the client side. And I spent some time starting at eBay, when they bought a company that I had just started at. I was there for 11 days. And then eBay bought GSI

And so when that occurred, it gave me a real opportunity to learn Ecommerce from the inside. And the group I was in inside of eBay, we ran performance marketing for about 120 retailers. And so it was a really great experience. 

I went from there to MasterCard, where I had responsibility for the global innovation pipeline there, working underneath the chief innovation officer in MasterCard Labs, which is one of the better run innovation programs inside of a Fortune 500 company in the world. It's a great program that they have. 

I really [have] a marketer heart. And so I wanted to step back into the world of marketing. And so that's when I... The folks at SmileDirectClub found me and asked me to come in.

And I started as the Chief Digital Officer, but moved over pretty quickly into a Chief Marketing Officer role. And it's been a great ride. I've been with the company for 4 years. The whole company is only really 7 and a half years old. 

And that's 7 and a half years since somebody sent me an email and said, "Hey, do you think anybody would do this?" 

What's great about working at a company so young but with such high scale is you're just spending so much time learning about the business, and pivoting, and really just trying to take advantage of the latest set of insights that you have about consumers and how the business works.

Chase Clymer  

Absolutely. You know, what's really funny is if anyone was familiar with the tagline or like an actual customer... I'm a customer, actually. You would have figured it out by seeing your background on the video. (laughs) 

But for the listeners, maybe you should check out the YouTube channel sometime. I do have a question, though, about your history.

And I think that a lot of people that work in the Ecommerce Industry, there's always this pool to go to like one side or the other. "The grass is always greener." 

"If you're on the agency side going through a client, it's always better." 

And then "A client going back to the agency, it's always better." 

So what's your take on that for people that just exist in the ecosystem like you and I do?

John Sheldon  

My experience and obviously take it for the quantity of --Q of 1-- is more people want to try to get from the agency environment into the under-roof environment. 

And then on the client side, them going the other way back. I think particularly if you're working in D2C, there's an element of ownership and an element of impacting the business. 

And literally turning some dials and levers on in the morning and seeing the numbers run up in the afternoon. And the feeling of ownership that comes with that, that becomes a little bit addicting. 

And I think, for me, that's how I think about it. The agency side is really valuable for people to help them get scale. They have a tremendous amount of knowledge. 

On the agency side, it's a great way to learn businesses, and then learn what kinds of businesses work for you. 

Again, as a person who spent a ton of time on the agency side, I really loved working on different clients/businesses, because it's stretched your mind in so many different ways. 

One level you could think of, a year at an agency is potentially 2 or 3 on the client side, because you're getting exposure to multiple clients and their different models.

Chase Clymer  

Yeah. One of the things that I always talk about is our learning curve is so much faster at the shop. We're dealing with a dozen clients at a time. And that's a dozen more problems every day and solutions that we have to creatively solve for. 

So it's definitely a masterclass in ecommerce education on that side of things. But I think that you are right, a lot of times people do like to go not necessarily up market, but like to focus on one problem, see how well they can solve that. 

So I think that working for an agency is almost as like an Ecommerce college, as you will. Only thing that I'd say is better than that would be starting your own business.

John Sheldon  

Yeah. It wasn't being an entrepreneur is a great way to learn a lot about yourself. And obviously, everybody likes to bet on themselves. 

Confident people who have good ideas, they like to bet on themselves. And there's no bigger bet you can place and then to go start a company.

Chase Clymer  

Absolutely. Even if you... Even if it doesn't work out, what you learn doing the thing is invaluable. I would say definitely get out there and do it if you've got that itch in your heart and you want to be an entrepreneur. I just love entrepreneurship. 

That's the root of where this podcast even came from was just learning stuff from other smart people. And hopefully, someone listening finally makes that leap of faith in themselves and goes out and does something cool. And maybe we'll have them on the podcast in another year.

John Sheldon  

Absolutely. And the good news is, there's never been more tools available to you to be able to go do that as easily. 

When I started doing this stuff 20 years ago, 25 years ago, what you had to... The lift that you had to put in place just to get to sell your first unit of something...

Chase Clymer  

Oh yeah.

John Sheldon  

...is nothing compared to you could stand up a Shopify site in a day or two and be and be selling out of that. So it's a completely different world.

Chase Clymer  

How far along was SmileDirect when you joined the team?

John Sheldon  

So the company had really been selling products for a little over 2 years, when I joined. And I love the stage that the company was at when they asked me to come aboard because the founders and the early management team were so awesome at being scrappy and testing and learning and being super agile.

But the things that you have to do to be that agile is a lot of chewing gum and baling wire. And so eventually, as you scaled --and this business scaled really rapidly--as they got into the nine figure revenue piece, all that chewing gum and baling wire started getting loose and coming apart. 

And so what they asked me to come aboard and help them do is trying to maintain the agility that the business has always had, but really work to replace the underlying people, process, and technology, particularly around marketing --obviously my role. 

But help the business to get to the next level and build out the size team that we need to manage the budgets that we do and the size of revenue that we've that we've grown to.

Chase Clymer  

Absolutely, it's funny that you say that being held together by chewing gum and entwine, it's the story that you hear from any of those startups that really hit the nail on the head. 

And I know that one thing that helped you guys... It didn't help but the pandemic happened and you guys were in a unique situation to  almost capitalize on that. So could you speak to that a bit more?

John Sheldon  

Sure. It's a bit of a good news/bad news thing with the pandemic. Bad news first is we have 400 shops where people got started in their relationship with us. 

Everybody starts online, but then 90% of customers were going into one of our stores to get a scan. We had to shut those down overnight. And so the kit business, the Impression Kit where you can do the 3D impression of your teeth, it was really... 

The business started with that. It had shrunk that part of it and shrunk down about 10% of our business when the pandemic hit. And basically overnight had to become 100% of the business. And so a little bit of headwinds as it relates to that. 

And I would say secondarily, as a business that's really focused on affordability as a big part of our value proposition, the very people who were our core customers are our core customers because of that affordability profit proposition. 

They've been struggling in this pandemic time. Now, the flipside is a couple of things have helped us become tailwind for the business. Number one is obviously, the huge tailwind that telehealth has had. 

We've leapt forward 10 years and 2 on telehealth during the pandemic. And so being the largest dental telehealth provider, it just has benefited our business phenomenally that way. 

And then lastly, in a world where it's all this Zoom "glow up" stuff, everybody's staring at themselves on Zoom. 

Now, we've had a lot of people's desire to straighten their teeth, because they're looking at themselves on camera all day long. I saw some studies like 52% of the time, you're on a Zoom. 

You're looking at yourself or something like that. I think it's one of those statistics that's overlooked. And you're judging yourself. 

Dermatology, there are Zoom facelifts for the camera angle. There's all kinds of stuff going on. And we've been a part of that as well in the pandemic. 

So that's helped kind of balance out some of the headwinds that we've seen as a result of the uncertainty and the inflationary period that we're in right now.

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Chase Clymer  

You know it's funny, I have trained myself to pay very good attention to my guests on the show. So I don't look at myself much in the camera anymore. But you are right. 

There is a whole method to the madness behind my lighting setup and my camera choices for the show. 

Because I'm on here recording a couple times a week to make sure that I'm presenting my best self to the world. And at one point of that one of those choices I made was to make my teeth a little bit better. Mostly for me, but hopefully the watchers out there on the internet... 

I called people "watchers". It's funny. 

But (laughs) out there on YouTube, enjoy it as well. I don't know. But no, it's interesting... 

COVID in general and how it affected businesses of all shapes and sizes was super interesting. But you guys did come out ahead there so that's a great way to pivot on the fly. 

Luckily, as a old customer I know that's how you used to do it back in the day. So at least you still  had that process in the playbook to execute on when you needed to.

John Sheldon  

We did. And actually what's interesting, since the pandemic, we've reopened about 120 shops. I don't think we're ever going to get back to that 400 level. 

We probably over expanded a little bit. And so we use the pandemic as an opportunity for us to evaluate just how many shops are truly incremental in our business. So that was a good part of it. 

But interestingly, our business is now balanced about 50 - 50. So about half of people are starting with the Impression Kit and the other half are going into the shops. 

So that's a tailwind that telehealth has had. It's just giving people so much greater comfort with starting treatment at home. It's always kinda funny. 

Under all circumstances, you're gonna have a doctor behind your treatment whether you start in the shop or start from home. But people are just more confident and comfortable with it from home today than they ever have been.

Chase Clymer  

Absolutely. And that leads into the next question here now. With your SmileDirectClub Ecommerce customers, how are you seeing their demands changing? And how is that... How do you see that shifting in the future?

John Sheldon  

Probably the biggest thing that I would talk about is how we've expanded what we offer. Right. And so the relationship with us now is deeper. When I got to the company 4 years ago, I said... 

When people like Chase finish up, after they pull off that last aligner, and we've straightened their teeth, and this is amazing. Brand hurray moment. What happens next? 

And they're like, "We wave goodbye and say congratulations." 

I was like "No..." As a lifetime value marketer that broke my heart. And I'm so glad when we had plans to expand our oral care line. 

And so about 2 years ago and change, we launched our oral care line, in, in retail and online and Ecommerce for our business. 

So our Amazon store, our own Shopify store with those oral care products. But you can get it in 13,000 locations in the US and Canada. And for us, that's the whitening product. We have some teeth cleaning products and general oral health products as well, including a Water Flosser

And so now, the relationship with customers is different, because in many cases, even before they've straightened their teeth, they may have whiten their teeth with us. In fact, consumers that whiten their teeth are twice as likely to straighten their teeth. 

But also at the end, when we move from from straightening to the retainer mode, we have other elements that we can throw in the basket, if you will, for them including that great whitening product and show off your new straight teeth or you know, just the general oral care to maintain the health of your smile. 

Chase Clymer  

Yeah. 

John Sheldon  

And so we've gotten we're kind of hitting people on both ends of the teeth straightening experience with a much longer lifetime value.

Chase Clymer  

Absolutely. And I know that having those extra products increasing that lifetime value is just something that anyone that is starting a business needs to think about. 

And definitely keep it lean at the beginning with an MVP and bringing it to the market. But once that it works, you need to come up with other offers to keep it going. Because if you're... 

If it's just one and done, then you're constantly acquiring new customers, which is very expensive.

John Sheldon  

No question. Now it's one thing when you've got to a few $1,000 product offers and say you have a little bit of elbow room on your CAC

But it's more challenging if you're just... If we were just talking about $35 for the whitening, it would be a completely different world.

Chase Clymer  

Now, for most marketers out there, Facebook, Google, iOS 14, all that stuff has been a "fun" thing to navigate. 

How has that impacted how you guys see things over there at SmileDirectClub from more of a marketing perspective?

John Sheldon  

Yeah, it really did impact our business. In fact, I think we are one of the, if not the first company, public company, that started talking about the direct impacts of iOS 14.5 on our revenue and... It hurt us. 

We built our business in the beginning, on the back of paid social and specifically on the back of Facebook. And I think they took the hardest on the chin. I think that's well documented. 

And the good news for us is we had already been planning for how to mitigate the risks associated with being so focused on paid social and specifically on Facebook. 

We had actually done a wargaming exercise that said "What happens if Facebook goes away? What would you do?"

And so we had that playbook already at hand that allowed us to start to to go through that exercise in real life as the performance impacts we saw from iOS 14.5 really started to hit our business in meaningful ways. 

Now we took a dip as a result of it but I think we came out of it. And actually, I just was in a meeting this morning where Facebook is... We're at better performance now than we were pre 14.5. 

So we've found our way through it and around it and but it took us a year here to really get our sea legs again and be able to take full advantage of what the Facebook environment can provide. And we're spending money instead... 

We're doing things on TikTok, which is a big part of where our customer is right? 18 to 35 year old women, TikTok is a very popular place for them. And we're doing lots of other things as well. You probably seen us on TV and many other places.

Chase Clymer  

Yeah, absolutely. I think that diversifying your marketing channels is definitely a step that most brands need to take. 

And I've seen it happen many times, and then maybe not at the scale as you guys ran into your spend on that particular channel. 

But a lot of people would tie their growth for their business to one key incentive. And I think your idea of like running that wargames type situation of "what happens when this goes away?" You should have those conversations sooner rather than later.

John Sheldon  

Yeah, no doubt. Obviously, the flip side of that challenge is that every new channel that you add is a new set of measurement. It's a new set of operational care and feeding that you have to do to keep that thing going. 

And obviously, then you're going to start to think about "How do I allocate my dollars between these channels?" 

And "Is this apples to apples?" 

If you're using Pixel measurement, by way of example, they might both be claiming credit for sales. And so "What are your ways of navigating through the complexities of that measurement?"

Chase Clymer  

Absolutely. Attribution is just a whole other interesting thing. We would have probably have to have a whole other episode about that. 

But some of it is going with the truth of what they have what the metrics say. And some of it is you just take it on the chin, because none of it is ever as accurate as you really want it, which is the unfortunate truth. 

John Sheldon  

Yeah. I won't get too deep on it. But we've spent most of my time at SDC really coming up with and managing a system that we feel competent in. 

Chase Clymer  

Yeah. 

John Sheldon  

And it's taken us some time to kind of just get to a place where we know, I can look at this number and trust it. And that's how... 

And that's where we're going to operate. And we've just done a lot of investment in the analytics side to get to that place.

Chase Clymer  

Absolutely. I hope that a lot of people out there listening to this understand [that] you just have to trust the number at a certain point and move on with your day and start marketing. 

It's just you gotta get the stuff out there, you got to get data back, and you got to iterate upon it.

John Sheldon  

No doubt. 

Chase Clymer  

Awesome, John. Now, is there anything that I forgot to ask you about today that you think would resonate with our audience?

John Sheldon  

Yeah. I think one thing... I know you have a lot of early stage businesses that are out there. And we started as a disruptor in space. Nobody had kind of gone into the orthodontic brand space and certainly not in the D2C side. 

And we're making a big transition from being a disruptor into being a true genuine challenger brand. 

And I think, for me, that's been a really fun exercise for our business because Invisalign is our competitor. And they're kind of the Kleenex brand in tissues. There is no other brand to talk about, really. 

Chase Clymer  

Yeah. 

John Sheldon  

And so when you think about them, what we've done is we've actually gone out and started creating equivalencies between our outcomes and theirs, and our brand and theirs, and showing the differences to the consumers about when you own a vertically integrated stack versus the way they have to sell through channel, which is why we can do it for 60% less. 

And so just showcasing that and being unafraid to be a challenger brand, and to really put yourself up against an industry leader and a brand leader is a it's both a fun challenge as a marketer but also can be, importantly, brand building. 

You have to be careful in how you do it, by the way, because if you do it the wrong way, you'll end up building their brand more than your own. 

But that's something you have to work through the steps of just just how far down the challenger path are you really gonna go.

Chase Clymer  

You've seen all these Netflix shows about the failures that have happened. I want to see one of the winners come out because that nerd in me loves a story like that. 

So hopefully one of these days we'll see something come out of it. John, you've been amazing. Thank you so much for coming on the show and sharing with us. You got any parting words for the audience?

John Sheldon  

Yeah. I would just back up what you said, which is if you've got if you've got a passion for something and you think you want to get out there and sell... 

If you think you can bring something unique in terms of the content and the way you present it, I strongly urge you to go ahead and do that. It's very fulfilling. 

Chase Clymer  

Absolutely. Thank you so much for coming on today, John. 

John Sheldon  

Alright, Chase. Thanks for the time. Cheers.

Chase Clymer  

Alright. I can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. 

We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes. 

Make sure you head over to honestecommerce.co to check out all the other amazing content that we have. 
Make sure you subscribe, leave a review. And obviously if you're thinking about growing your business, check out our agency at electriceye.io. Until next time.