On this podcast, we talk about how Kerrigan and her co-founder processed their pivot towards CBD, the value of getting real-time feedback, why you should be careful of agencies that “help” cannabis brands, and so much more!
Kerrigan Behrens is the co-founder and co-CEO of consumer wellness brand Sagely Naturals.
Most recently, Kerrigan guided her team through an acquisition by HempFusion, expanded the brands ingestible offerings with gummies, and launched a non-CBD infused product collection in Target under the Sagely Naturals umbrella.
She and the brand have been featured in publications such as Forbes, Fortune, Glossy, Coveteur, Vogue, and Green Entrepreneur.
Kerrigan has been at the helm of the brand since it launched in 2015, and has successfully galvanized and accelerated marketplace acceptance of CBD as a natural and effective alternative for the products you would already find in your medicine cabinet.
Kerrigan lives in Los Angeles, which also serves as Sagely Naturals’ headquarters, with her husband and daughter.
In This Conversation We Discuss:
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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.
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Hey everybody, welcome back to another episode of Honest Ecommerce. I'm your host, Chase Clymer. And today, we're welcoming the show Kerrigan Behrens.
She is the co-founder and co-CEO of consumer wellness brand Sagely Naturals. Welcome to the show today.
Thanks for having me, Chase.
Awesome. So just take me back in time to where the idea for Sagely Naturals came from. What was going on in your life and what made you want to dive in here and take this journey?
Yeah. So I had just graduated from business school and I wanted to be an entrepreneur. I had met my co-founder in business school and we were already talking about starting something together, although it was food related. So we had each been investment bankers. We had both gone into the restaurant industry of all things.
And so when we first met, there was this immediate attraction. She was excited about operations and finance. I was more excited about marketing and sales.
And so we started putting together a business plan for a restaurant concept, basically. And it was going to require something like $3 million in startup capital.
And so we weren't sure how we were gonna do that. And meanwhile, I went to a friend's birthday party in Ohio, which is kind of a hippie community. Do you live there?
I do live in Ohio.
Are you? Do you agree with that assessment of the community?
We got a lot of weirdos here. Welcome to the club.
(laughs) Well, it's a gorgeous place. I'm jealous that you live there. So yeah, I was in Ohio on vacation. And a friend had a jar of CBD honey on her kitchen counter. And it was something that I had heard of.
This was back in 2015. And I had never tried it before. So I asked her if I could try it. And an hour later, this lower back pain that I've had had for years felt better. And not to mention, I was also in like, the best mood that I could remember being in a long time.
And it just was one of those true lightbulb moments, like, "Wow, I feel so good. How do I feel [like] this again?" And that next week, I got my cannabis prescription.
And I started doing, probably the funniest kind of market research that you could do for a new company, which is I went to as many dispensaries as I could to see what CBD products were on the market. And I was just really underwhelmed.
And also not comfortable using any of the products that I could find because most of them contain THC. But also the branding was just for stoners. And that's not what I was looking for.
And so I went to my co-founder, and I said "I think there's something here. CBD has the power to help a lot of people and I just have this feeling that it's going to be a thing."
And she was going through what we now like to call the "medicine cabinet makeover" where she had already thrown out stuff in her pantry that wasn't organic.
But she was just for the first time in her life starting to look at "What about the lotion that I put on my skin? Or what about when I pop Advil, what does that actually do to my body?”
“And if I'm trying to eat like organic whole foods, what does that mean for the artificial dyes that are present in almost every product you'll find in your medicine cabinet, or artificial fragrances?"
And so even though she wasn't dealing with chronic pain, she was very compelled by this idea of a “better for you” alternative...
And when we started to think about, "How would we put a company like this together?"
We were fortunate enough in that my marketing professor from business school got us access to some grant money and we were able to do some consumer insights work to figure out "Do people even know what CBD is?"
The answer was no. Fewer than 2% of Americans at that time knew what it was. But is that going to be a barrier? And why would someone not try this product? Why would they try it?
And what was really compelling about that work was that we learned, the majority of people actually don't have something against cannabis. They don't think that it's morally wrong. It's just the people who don't use cannabis products...
It's purely because they don't like the feeling of getting high. And that was where we saw the magic coming in, which is, if you believe that there's a medicinal benefit to cannabis but you don't want to get high, then CBD is the answer.
And so we each pitched in $15,000 and we came up with a single product, which is actually today, 7 years later, our best selling product, which is the Relief & Recovery Cream.
And we found a co-manufacturer and convinced them to do a pilot run, which was all we could afford and put together a pretty shitty website on Shopify and we were off with a single product and just started knocking on doors and trying to do everything we could to get customers.
Oh man. So that's a great story. So I want to talk about or just have a question about pivoting. So you guys originally wanted to make a restaurant. And then you had a...
You saw a larger opportunity within CBD. Was that the business school backing that helped you guys make that pivot faster?
Or were there a little bit more conversations? And just like "Let's do it." And what other advice would you have out there about pivoting in general?
I would say we didn't really have much conviction in the food concept. I was looking for a job. I had just graduated, my co-founder was still working. She was the director of operations for a restaurant chain. So she...
And she wasn't preparing to quit. It's not like we were taking concrete steps towards starting one of these concepts.
And when we, you know, figured out that it was going to cost us so much to start it, it just felt out of reach. Whereas when we started to think about...
Well, first of all, just the enthusiasm around CBD, there was a real passion there. And so any doubts that I had about starting a business before disappeared because I just felt so strongly that this product needed to be in the market.
Not just [the] product. But this ingredient needed to be accessed by more people. But then the fact that we were able to figure out a way to actually start a company with $30,000 and that we could fund it ourselves, it just made it so much more tangible and doable.
And that's when I decided to stop interviewing. And that's when my co-founder, decided to quit her job. And so I started, I tried CBD in July of 2015. She quit her job --I want to say-- in August, and by October we had incorporated the company.
And May of the following years when we launched our first product. So once we decided to switch to CBD, it just felt like there was fuel on the fire.
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All right, so you guys are going all in on this idea. It's your main focus and you come up with your go-to-market SKU, you've got your one product, your flagship product, and you launch a website.
Now what? How do you find these first customers? What was your guys' strategy to get this new product --in almost a new vertical-- in front of consumers?
Yeah. Because at that point, we didn't have any budget left. So there was no marketing budget. It was really just anything we could think of that was guerrilla-like.
Also there was this retail component. So without any budget, it did feel more manageable to go to an actual food store in the neighborhood and sell the product in and put up a table where we could hand out samples.
And that was a really key part of our strategy at the beginning, we made little sample packets of our cream, our one product. And we just tried to figure out ways that we could give out the samples. So the demos were a big thing. But then we were also going to...
Like in Santa Monica, there's these famous stairs that people run up and down. And we would just go to the stairs...
Initially, we would just go up the stairs and hand out samples. And then we figured out, "Oh, well we could do this a little bit more scaled."
And so we brought a massage therapist, and we put up a tent, and we were handing out samples, we were also giving people massages.
And the massage therapist was basically willing to do this without getting paid because we were just giving her the product and she was using it in her massages.
And so we found these "in kind" ways to to get exposure to the products to people. But the sample packets we also would include in every single Ecommerce order that we shipped.
And from the very beginning we have this little note card that Kaley and I initially were handwriting and signing that said "Please share this with a friend or family member in need."
And to this day if you order one of our products, you'll get at least one free sample and a similar note card. Although we don't hand sign them anymore.
So I just really wanna highlight that in the beginning, you had to be scrappy and you put in the work. You put in hours of your time to go out there and do things that...
These are the quotes of previous guests, numerous guests. They just said, "You got to do things that aren't scalable in the beginning, to really kind of get a foothold in your market."
That's a really good way to put it. Haven't thought about it like that. But that's true. Nothing you do in the beginning is scalable,
The feedback that you're getting in real-time from consumers or the way that they would ask questions about your product is invaluable. I would say that.
You'd probably have to spend tens of thousands of dollars to get that same type of feedback this day.
Yeah, absolutely. And I also had my cell phone number as the customer service number. And so I was hearing when...
Oftentimes, we have a lot of baby boomer women that use our products. And women would call and they would have trouble using the website. And I would need to walk them through how to place the order.
And in the meantime, I'd say, "Oh, so what are you using the product for?"
And oftentimes, those conversations lead to deeper insights and allowed us to figure out like, "Oh, I'm getting this question a lot. And maybe we should write a blog entry about it."
Or "Maybe this is something that actually needs to go on the package next time."
It was really helpful.
Awesome. So you guys kind of figured out how to acquire that first group of customers. Now. For those that aren't in the know, historically, CBD was in what we just say, is like a vice category. So you can't do the traditional paid advertising.
Payment Processors sometimes are a little iffy on accepting you. And you guys going with what was more or less like a direct-to-consumer strategy? What were some of those difficulties that you encountered launching a brand that's like we'll call it "on the line"? Especially back then.
These days it's a little more "Not vice" I guess? But what were some of those difficulties that you encountered? And would you have any advice for younger entrepreneurs that want to get into a similar space?
Yeah, it's so frustrating because you're right. It is treated like a vice category even though our products don't contain THC.
Now, they're sold at 20,000 stores across the country, including Walgreens and CVS. And so yes, you would think like, "Okay, well, if these products are legal to sell. We wouldn't have these problems."
But in my opinion, big advertising giants like Facebook and Google just didn't feel like dealing with the gray area. And so they just lumped us in with the same category as marijuana or pharmaceuticals.
I actually think pharmaceutical companies have an easier time advertising than we do. But yeah, it's everything you said.
So the payment processors were an absolute nightmare for the first handful of years that we were in business. We would get constantly kicked off of our processors.
There were multiple times when we just were not able to accept payment online. And for every hour that goes by, you're thinking like, "Okay, well, that's this many lost sales."
And we ended up compensating by always having multiple processors on board. My co-founder who did our finances, [it] drove her crazy, because she was always filling out these applications.
And there were a couple times when I looked at them, and I was like, "Kaley, you realize your... This is signing a personal guarantee. We're not signing this." And she was like, "Oh shit! I didn't realize..." I [didn't] know that at the time. We weren't homeowners, but we could lose our cars if for some reason, the business defaults.
So there were some really iffy moments with the credit card processors. That has actually gotten a lot better, fortunately. But advertising is still a huge challenge.
And we are still not really allowed to advertise on Google and Facebook. And it's just always so interesting talking to other marketers or other founders that have D2C businesses, because... And I know post iOS update, it's different.
But pre iOS update, that was such a majority of people's marketing spend for those 2 specific platforms. And we've never been able to spend... I think at our most scaled [state], we were spending like $10,000 a month and that was by doing these roundabout things that...
...weren't illegal by any means, but weren't also straightforward: Click on our ad, come to our site, and buy our products.
We always had to think about ways to just make it work and not have the ad rejected. And so it's forced us to lean into other channels of marketing.
More recently, we've had some success with rich digital media platforms. And there have always been these businesses that pitch you like "We work with cannabis brands. We know your problems. We have the specific set of publishers that are okay with your advertising."
And like most things in the cannabis industry, they've often been sketchy and not delivered on their promises.
So it's so tempting to want to work with people that really understand your space. But you also have to be wary because they're not always delivering on what they say.
You mentioned it earlier. But so since you are limited to... You can't use Facebook ads. You can't use Google ads.
Those are out of the question, which are probably the number 1 and 2 channels for 99% of direct-to-consumer brands. So where are you guys spending most of your efforts when it comes to marketing?
Right now, on rich digital media, so...
What's that? For the people that are listening that don't know what that means.
As a consumer, you would experience it like you go to a website, you see an interactive ad and you are compelled to click on it.
And the ad is not just a static picture. Often it will transition from one slide into 4 slides. Or you can even run video on a lot of these platforms. So we shot a commercial... Which is another thing, by the way, that we've done recently.
We've both aired it on traditional linear TV and also OTT advertising. And we took that same asset and we've also been using it like a 30-second version, as well as like a 20-second version for this rich digital media advertising.
And then on the opposite of advertising, on the marketing side of things, retention in general, how important to you is like the email operation?
Very important, because... So being honest, like we have incredibly high retention. But part of that is because...
And we have a really, really high conversion rate. But part of that is because we're not actually directing a ton of new traffic to the site.
It's very organic.
Yeah. So our email list is... We've been almost religious about not corrupting it. When we've tried to do big giveaways with other brands, you always get a bunch of email addresses, but it can impact your open rates.
And so we'll just keep those people in a separate list and we'll send them targeted communications. But we'll never combine those names with our master email list.
Because the master email list is very pure, it's people who are really passionate about the brand and many of them have already bought something. And we [actually have] correspondence with some of them where they're willing to answer survey questions for us.
So we get amazing insights from some of them. And so yeah, retention through email and loyalty programs has been very key for us.
And so something that's unique about your situation, compared to a lot of other guests that we've had on the podcast, is the brand was acquired and you're still there and you're still working right alongside with it's...
So can you tell me a little bit about that process? And what that allows you and the brand to now do?
Yeah, so HempFusion is --or I shouldn't say was-- one of our competitors CBD brands. They have been around as long as we have back in those early days when Kaley and I were checking out our local natural food stores.
We were seeing HempFusion products on the shelves and we always really admired the business for its emphasis on quality, which in this category is very easily the number one differentiator.
There are a lot of ways to get CBD but not a lot of ways to get it where it's organic. And you're sure that there aren't any pesticides being used when it's grown.
And so the investment that they made over the years and their quality program was always very impressive to me and my co-founder.
And during COVID, we were thinking about raising money. And then we ended up having a conversation with one of the founders of HempFusion and they had just gone public and there was an opportunity to combine forces.
And the way that the industry has been going is very much consolidation that we were the number one selling brand in retail across the country.
But we've always been a small brand. We've raised money over the years, but never a substantial amount of money. And so it just felt like if we wanted Sagely to continue to grow and to reach new people that the best bet was really to bring on a partner.
And so I want to say about 6 months ago, we were acquired by HempFusion, and it's definitely brought us the ability to have more resources and scale in a way that we probably would have had a harder time doing on our own.
Absolutely, it makes sense in a lot of cases, doing... You can go a lot further with a team than you can on your own. That's for sure.
Now, is there anything that I forgot to ask you about that you think would resonate with our audience?
One thing that you had me thinking about the last time we chatted was just whether there was advice for other Ecom founders.
And I can't take credit for this one, but another founder told me a handful of years ago, that the way they think about their budget is 80% to 90%, tried and true tactics.
And then 20% to 10% of experimental funds. And you're smiling, so clearly, you've heard this advice as well. But I had never really bucketed it like that before.
I had always encouraged my marketers to think about what's next. And what are we trying that we haven't tried before.
But that felt like a much safer way to frame the concepts to be able to say at least 10% of our budget at all times needs to be going towards experimental channels.
Yeah. Channels or just experimental marketing in general.
So you've got your tried and true things, things that you know that would work. Oftentimes, I will sometimes say, "It's a switch that you can flip and you know that on the other side, money will pour out." If you've got a funnel pretty well dialed in, in that regard. But then there's always like...
You want to keep testing new things. And there's always new technologies coming out or new ways to interact with people and just like cool stuff you can do.
And you have to go into it with an open mind like "This might not work or it might work crazy good. Who knows?" Because you've never tried it before.
Yeah, the difficulty is that it seems programs these days... It's hard to find programs that you know, want to start with less than a $50,000 test, which depending on how big your budget is, that feels like quite a commitment to test something.
But I do believe that it's worth it ultimately, to find those things that can allow you to reach new consumers.
Absolutely. Now, you've talked so much about this amazing product. If someone is curious about it, and they want to try it out, where do they go? What do they do?
Well, given this is a D2C focus podcast, I would recommend going to our website, which is sagelynaturals.com.
But we are also now, like I mentioned, in 20,000 stores across the country. So basically every drugstore that you have near you.
And we also just launched our first collection of non-CBD products at Target. So those are also over the counter pain relief products. Think of it like an Icy Hot or Bengay but just only with natural ingredients.
And if you are watching, you can see our packaging, we basically wanted to come up with something that just felt a lot more modern and feminine than what you can currently find in the pain aisle at your local drugstore.
So why shouldn't you be able to "take some pleasure in pain." You're already dealing with something annoying, like for me, lower back pain.
So hopefully the experience of using something at least can be pleasant in that the cream smells great. It absorbs really easily.
And so that's what I always hope people can experience and why we focused on sampling so much at the beginning of our business is that once people try the product, they love it. So yeah, I hope people will try it.
Absolutely, Kerrigan, thank you so much for coming on today and sharing all that.
Thank you for having me.
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.