On this bonus episode, we talk with Nigel Thomas from Alpha Inbound. We talked about the 2 things you need before setting expectations for growth, the importance of volume and how to produce it, what marketing isn’t and so much more!
Having previously built a 7-figure agency and consulted many 7 and 8-figure DTC brands on their marketing strategy, Nigel knows what it takes to implement complex paid social campaigns at scale.
He is the CEO of Alpha Inbound, a growth marketing agency that helps Shopify brands find higher quality traffic on Meta & TikTok for less by creating, testing and scaling highly engaging UGC content.
In This Conversation We Discuss:
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I think where a lot of people go wrong is they have different agencies for different things. So then [the problem becomes] how do you monitor the performance for all cross channel [metrics]?
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.
[Hey] everybody, welcome back to another episode of Honest Ecommerce. We had to just press record on this one because me and Nigel were just jumping into it.
Today, I'm welcoming to the show, an amazing gentleman.
Nigel is the CEO of Alpha Inbound. They're a growth marketing agency that drives revenue for direct-to-consumer brands from Facebook and Tiktok.
Welcome to the show, Nigel.
Hi. Great to be here. Thanks so much for letting me be on the show, Chase.
Like we said already, before we got started, we got lots to talk about, lots of synergy, lots of fun agency stories.
I'm sure we'll get some good content out for the listeners today.
Absolutely. Well, first and foremost, let's talk about the agency. You guys have been doing some really cool stuff.
I know, some of our listeners are on this side of the fence, on the services side of things. You guys have had a really phenomenal year, grown a ton...
So just give me the crash course on what's been going on with Alpha Inbound for the last year?
Yes. So look, this time last year, I was chewed up and spat out by another startup. And I didn't really know where to go, if I'm being totally honest with you.
So what I did is I reached out to Josh, who's the founder of Alpha Inbound, and had this genius idea of bringing in some sales for the company and developing the business that way.
So I got into the company and realized there weren't really any systems there because Josh was just busy servicing his clients as a one-man business.
So we have to build everything from scratch. And then I almost blink and look back at that moment because now, we've got 10 team members, we've got about 20, multi 7 - 8-figure brands that we're working with, and yeah, we've got a really strong end to the year setup.
And just like for me personally, this time last year, I didn't actually have a job to go to here. It's just been an incredible experience. And I'm so grateful for all of our team members. Now what we're focusing on and what makes us different as an agency is 3 things.
Firstly, is the way we look at content, how much we double down on content, and the systems and the quality that we actually do it volume at scale. I can go on to that in more detail because I think a lot of agencies and also brands don't understand the level you need to go to these days.
The second thing is the macro growth approach. We do focus on paid social for Facebook, Tiktok, and Instagram. But we look at the holistic approach. We don't really like ROAS as a metric. We don't like single channel attribution.
We want to see the impact on the entire ecosystem and I can tell you the dangers of just focusing on single channel attribution. But macro growth marketing, that's what business owners look at. We want to talk to the brands who work as business owners.
Third and finally...
I know you're going to chime in here, Chase. I don't want to take up the whole podcast.
But we don't have any clients at Alpha Inbound, we only have partners. Massive difference. As CEO, when I came in, the first thing I did was a philosophy change and said "Right now guys, we're not going to call them 'clients' anymore. We're going to call everyone partners." Complete mindset shift.
And that's the one thing we'll do. We'll do anything to get our partners results. And most people say that, but at the end of the day, our partners say that for us and that's what's important.
Absolutely. And there's another thing that I think is unique to the business and probably really helped propel the growth over there --and this is something that we've been dealing with at our agency-- we've made some choices to really narrow down a bit and niche down a bit further.
You guys are very, very specific in what you do and who you do it for. It's more in that... Well, I'll let you say how you describe your clientele and your avatar, I guess.
Yes, so the ideal... For any agencies out there, this is something... So we actually brought on a consultant and they helped us through this process.
Profiling your ideal client profile, ICP, is one of the best investments of time you can honestly do. I swear it down. It was a game changer for us. So our ICP --and I can give you reasons why-- is working with 7 and 8 figure health and wellness brands.
And within the first 90 days, we reckon we can decrease their new customer acquisition costs by 20%. Listening, they're new. Not just customer acquisition. New customer acquisition.
And they're most of the brands are doing between $5 and $30 million in revenue. Now, why did we actually focus on health and wellness?
Well, actually, one of the big things is their profit margins are so much better. Not only that, they have better lifetime value.
And just overall, even though we can talk about great content, if you can pay 3 times more to acquire a customer, it doesn't matter how good your content is, how sexy or outlandish it is.
It's a game of economics. And in economics, strong economics always wins.
Absolutely. And that is a great lead into what you guys do for your clients and how you kind of approach growth and approach...
Again, you don't like using single channel attribution. So walk me through it.
2022, iOS 14 kneecapped a lot of businesses just more from their analytics perspective.
Ads still work. That's never going to change. It's just the reporting is different and how you have to view that. So what is working for businesses now?
You said you had a big, great book of business for the rest of the year, and how are you going to approach this for your clients? So what are you guys doing for your clients? How are you approaching paid media? What's the secret sauce as it is?
Yeah, for sure. So let me challenge you for a second, Chase. If you've got an Ecommerce brand and you're running Facebook ads, you're running Tiktok ads, you're running Google ads, right? Bear that in mind.
So let's just imagine this scenario: One of your potential customers sees your Facebook ads, then a few days later, because life gets in the way, they're busy. They go and look at your website.
Again, they type it in Google come through Google. "Oh, actually mum's phone. I'm busy now. I've got to do something else."
Now they see another retargeting ad on Tiktok. They're going to come through, they're going to buy those products. And again, it's probably a different creative somewhere down the customer journey. Now they buy those products.
Attribution, says Tiktok brings them in. Now we go back though, the main discovery channel is Facebook. And my point here is not, "Oh, Facebook's better than the rest."
The point is if you look at single channel attribution, you don't take into account cross-platform customer journeys. And that's why in our opinion, you want to look at things from a macro perspective.
And actually, the easiest way to do it, and to make your life really simple is to just do all marketing and spend all revenue brought back. We call it MER, marketing efficiency ratio.
This is the way that you need to look at marketing right now because all of the channels are important, they work as one, and it's about the ecosystem.
I think where a lot of brands go wrong is they have different agencies for different things. So then how do you monitor the performance for all across [the] channels?
But I don't know how you guys see it, I'd be interested to hear your approach. But that should give you a good idea. But I'm happy to go in separate parts as it were.
No, I mean, I think marketing efficiency ratio is definitely something I've talked about before on the podcast. I think it's a better metric than return on ad spend.
Because return on ad spend is so easy to manipulate, especially with iOS kneecapping, the type of response you can get there.
The cool thing about marketing efficiency ratio is you aren't relying on the returns that the platform tells you. You're just... You're actually just not listening to it.
All you're looking at is the inputs, which is "We spent $20,000 on channel A. $10,000 on Channel B, and $5000 on Channel C" which is $45,000 that you spent.
And you made $270,000 this month. And you start to plot those data points within your reporting. And then you pull it back and you see how that affects things.
You increase it and you see how that affects things. And it's a little wider of a view, because...
Alright now I'm gonna get really into the weeds.
Yeah, go for it. Go for it.
None of the businesses that you and I work with are spending at the level that you can get super finite into those things and really move the needle just because they're not doing enough activities at those super small levels for it to make much of a difference.
The time investment in doing that isn't worth the return.
Exactly. And this is the thing. I speak to owners and most of the time, they're focusing on complaining about why Facebook ROAS isn't 5x and now it's 2x.
They're focusing on "Is Facebook better than Tik Tok?" When in reality, if they just spent their time focusing on marketing efficiency ratio, they will actually spend [and] be able to then use the rest of that time that they...
The cost opportunity that they use and all the thinking just literally to actually get better content, go into the economics, do more product development, and that's stuff that's actually really going to move the needle.
So again, I think it's just simplifying everything. And good business is simple business.
Absolutely. I mean, that's the whole thing about our Brand Scaling Framework on the growth side of things is just like "Make it simple."
People get so lost in the sauce of all the minute, tiny details. It's like, it's got to be simple. It's the 80 - 20 rule. And the market efficiency ratio is 100% that... 80% of it is going to be affected up there. And it's a great tool to look at.
And again, you went back to just talking about mindset with how you approach your partners that you work with at the agency. And it's a mindset when it comes to marketing.
Marketing isn't direct response. Marketing is an entire arm of business. And it has to do with awareness and building trust.
I've got something to say about this. Yeah.
And a lot of people are drawing a parallel between marketing... Marketing is advertising in their opinion. It's not.
And then now it's almost getting as bad as "Marketing is direct response advertising."
It's like, "No! those are not the same things." And you have to educate people that sometimes, you know what I mean?
Exactly. And what I was gonna say to that point, you've nailed it. I think I heard Alex Hormozi say something the other day. I've been listening to his content recently. And he was talking about...
A lot of marketers go through this journey. And again, if you've got service providers listening at the start, what do we need? We need cash. So we've got to go direct response to get that cash.
But as we go through the evolution and we realize once we have the resources in place, it's branding. There's a reason why Gucci... There's a reason why these massive brands, Louis Vuitton, they just literally post a picture of their handbag somewhere, and people will buy it for thousands of dollars.
Oh, all they're doing is brand awareness ads. And these campaigns are...
...expensive, and beautiful, and they get free PR from it, because it's so beautiful.
But guess what, they've got 40 years of branding behind them.
And it means something. And that's the thing, they understand the power.
I don't even know if they do direct response ads. I don't think I've seen it. Yeah.
Exactly. Why? They don't need to because everyone knows that. Me and you were talking about their brand on this podcast, we both know what it stands for.
And that's what a lot of, say, beginner marketers fail to realize: The importance of brands.
But when obviously we're working with these Ecommerce brands, they want to be brands, but then I'm not sure they quite understand the philosophy it takes to get there.
Does that make sense?
Absolutely. So I got a curveball for you.
Yeah, go for it.
It's a bit of a change of pace. And I'm gonna ask for numbers. And I know this... I hate when people ask me for numbers. But, alright. I've got...
I'm a business. We're doing all right. We just hit that milestone where we're...
We're doing a million dollars a year now. We just invested in optimizing our website. We believe in the way that that's working. Our conversion rate. Our average order value.. And now we're looking to get into marketing heavily. We've earmarked some budget.
A, what kind of budget should I be earmarking for a 7-figure business?
But also B, Am I skipping anything? Is there something else I need to consider before going heavily into a growth mindset, into the scaling mindset into really getting into the paid game?
Yeah, for sure. So, honestly. You know The Wolf of Wall Street? At the end, when he says "Sell me this pen." This is the exact situation.
Because if anyone knows the actual answer to that question, which is "How do you sell me this pen?" You ask questions. So that's what I need to do here.
I need to be the doctor and ask a few questions if you don't mind, Chase:
So what are your goals for this brand?
If you're that brand, where do you want to go?
How much growth do you need?
Do you have investors on board?
What sort of pressure do you have down your neck?
What sort of resources do you have in place?
Are you focusing also on the retail side?
Do you have Amazon in place as well as D2C?
There's so many different variables. So I can give some blanket statements. But I think I just want to point out, it's going to vary so much in line with your goals.
And especially from our side, doing due diligence like that, and actually aligning it with brand owners missions is so important. Because we can have a case study and we can apply that exact same framework.
But the thing is with completely different resources and completely different growth targets, it might not work out and we need to set those expectations to what they're currently used to.
Does that make sense?
No, that's a fantastic answer. And what I want to pull away from that and really highlight here. To the brands listening: The more capable and experienced the expert you're talking to, the more likely their answer is going to be "I don't know". Because it always depends and they're always gonna have to ask you more questions.
And I think that if someone gives you a blanket statement without you being "This is super generic. I don't know enough information, but this." That's an okay answer that you can expect from an expert.
But if they say "You should spend this." and then that's it, and there's no other context, they don't ask for any other stuff, I'd be kind of weary. Maybe try some other people out.
Do you think that's part of the reason why there's so many brands who have had horror stories with marketing agencies? Because from my perspective, that's what they're doing. They're using case studies.
I think the faults on both sides, to be honest.
I think that there are a lot of... There's no real "expert" college out here. Everyone... I can just... You throw “expert” in your LinkedIn profile and try to get some clients and depending on how...
A lot of people do.
...good of a salesperson you are, literally... At the end of the day, it comes down to sales with how a lot of these agencies get off the ground.
You can churn and burn through people and get a few case studies and really just make your money in 3 months and stop those relationships. And then you're just burning all those brands.
But on the brand side of things, they want to move really, really fast, because their problems are here and now.
And most legitimate consultants want to slow it down a little bit and ask more questions, make sure it's a good fit, make sure they get the results, everyone's on the same page about what the results are of what they want to do working together.
So the simple answer is brands need to slow down a little bit, let people ask questions, be okay with the answer "I don't know. Let me get back to you."
And then agency, if you're burning clients, just get out of my industry. I don't know what to say over there. I don't want to work with those people.
I think we're starting to finally filter them out. The only one exception to the rule is when I see VC-backed companies, and they're getting real pressure put down their backs and they've got really hard targets. I don't know if you've come across this.
We've worked with a few of them. And it's hard to try and slow them down if I'm being honest. They almost want to spend the money just to show some activity there.
You are absolutely right. And it's very rare that I want to work with a funded brand like that just because...
...even though they do have money, they're trying to stretch every penny into a dime and it's frustrating. And they also want to move really fast. They need things done yesterday...
And we've gone 100% off the rails with this podcast and I really love it.
Yeah, I was just gonna say, if you're going to trust an expert, in my opinion, you probably got...
Because you guys have got lots of great frameworks, you need to trust their process, because the moment you start taking control and trying to do it your way X, Y and Z, then actually what that means in reality is you don't trust them.
So you might as well end the relationship right now because it's never gonna work.
Absolutely. Let's get back to the question and we just answered a million reasons why you can't answer this question. But if we could throw out some broad statements and...
...let people know what they should be expecting when they get to that level of business so they're hearing it from us first. So they don't get...
...deer in the headlights when they hear it from a consultant. Yeah,
Sure. So what I'm gonna do Chase, I'm gonna first talk about economics. And then I'm going to talk about the resources you need because they're the two things you need to get in place first, and then you can talk about what you can actually expect.
Because without that, there's no foundation, you're not going to get anything?
The first thing is on the... Let's say economics. So what we're seeing across the board now, even on Tiktok, as well as Facebook is that the average order value needs to be above $50 if you want to really scale it.
Especially if you're a million dollars a month, you need to somehow use CRO, invest in some CRO team or consultant, get your average order value above $50. If you haven't got enough SKUs, I'm just going to be honest with you, it's probably not going to last that long.
If you can do a subscription, it's going to be better. We'll come on to lifetime value in a second. But in terms of your new...
What you also need to do, sorry, is bear in mind when you set the targets for acquiring new customers.
Lots of people, what they're doing, especially when it gets to a million dollars a year is they're just acquiring customers that are already in their database, because they're not segregating audiences properly. And there's more nuance to this.
And if you use something like Triple Whale to segregate it out for you, but you need to base your targets around the cost to acquire new customers, because that's actually what's going to facilitate growth to get you past a million.
Honestly, I can't tell you the amount of brands we've audited their back ends... They're not doing $1 million, they're doing $10 million. And they're still doing that wrong. It's absolutely insane.
And then the other important economics like I touched on, the lifetime value should ideally be 3 times the cost per acquisition.
And in terms of your margins, ideally, you want to get them above 70%. That's what we tend to work with.
Again, I understand that there's going to be complications there. But whatever you can do to increase your average order value to supplement that, that's going to be better. And like I said, if you had a subscription model, that's going to be good for lifetime value retention.
Then when it comes to the resources, essentially, the content, that's the most important thing. I'll give you an idea of how much we put together. So on a weekly basis... We're focusing mostly on video right now and UGC.
We have creative strategists, we have video editors. And what we put together is 3 new concepts every single week. And every single concept has 3 different hooks.
So a video will usually be about 30 seconds, the first 2 to 3 seconds will be the hook. We'll test three hooks with every single concept, because that's the magic. If we get a hook ratio...
We're getting quite technical here. But if we get a hook ratio of over 30% - 40%, we know we're on to a winner. So that's a big one. But just understand that's 36 new assets going into the account.
And we don't have to test all of those because, again, you want to make sure your budgets are consolidated to work in line with the algorithm, but you can create a repository in the background.
The point is, regardless again, of how good your content creators are, you need volume to test with. And you need to be able to build systems. We've just got like a complete system now to be able to hammer out 36 every single month without fail.
So if you're not anywhere near that, to be honest, you don't want to be spending that much on ads.
And once you've got those 2 things locked down, because even at a million you can grow organically past that, then you want to obviously be setting up. Now in terms of return, honestly, if we're going to talk...
I know I'm contradicting myself now. But most people are going to think like that. If we're going to talk in terms of ROAS or day one attribution, then I think you want to ideally for Facebook and Meta, reverse engineer your numbers so you can hit one to one.
Ideally, if I'm going to be completely frank with you, that's realistic. I think...
You're breaking even.
Yeah, exactly. Exactly. Because 2016 - 2017, this wasn't normal. But people got used to that. Now the big players are plowing in their budgets.
I've been talking to a lot of big founders who told me, the really big guys, they used to spend only 5% of their marketing budget on digital. Now they've put in 40% - 50% in. So that's obviously another reason why you're seeing all your CPMs rising up.
And so I think breaking even... And then for Tiktok is a bit more of the wild, wild west so you can get a little bit better. But to be honest, I'd work more on the economics and the content and the CRO, before you start spending. And in terms of like...
I don't know if you want a percentage breakdown of how much do I think you should spend. But that's the main framework, I see it. And then it's really how fast you want to grow.
But also just making sure of your lifetime value, you don't run out of cash. That is obviously so critical.
No, I mean, you shared so much wisdom in that 4 or 5 minute explanation of how to approach getting into a growth phase of your business and the systems that you need and the expectations that you should know and what work needs to go in to get the results that you want.
I think that one of the things I was trying to dispel is basically this idea that "If I have a budget, I will win."
And it's like "No, you also need content," Content, and you need to be able to test it, and you need to let the algorithm do its thing. So that was...
Thank you for sharing that with us. Quickly here before we...
In the podcast, you mentioned if you want to get into percentages and what that should look like, I think that's a really easy exercise for a lot of founders to run through.
So if you want to break down what percentages should look like, that would probably be helpful. And then I'll let people know where they can get a hold of you.
Yeah. Yeah, sure. So I mean, in terms of the... Are you talking about what percentage of revenue to market and spend or percentages of conversion rates of the back end of the traffic?
I would say the percentages of my gross revenue. What I should be investing in paid if I actually want to scale a business?
Yeah, for sure. So again, caveating with the fact that you need everything in place. Otherwise you're...
And it depends. And it's a lot of goals but some generic answers.
Yeah, I will... I'll say this as well. Remember this about all these platforms: The house always wins. Always. So remember that and they don't care about you as well. I'm just going to be brutally honest on that.
But I probably say, potentially 30% is like a good number to be around. And it depends how much you're going to diversify into the different platforms.
Because as you rightly pointed out, if you don't spend enough on each platform, you're not going to be able to give the algorithm enough data.
So I basically also say, if you're going to spend $300k, over the course of a year, then you need to make sure that you're allocating the budgets wisely, instead of spreading yourself too thin. And also bear in mind that you want to do combinations.
So for example, Tiktok and Meta, the creatives there, they work on both platforms. So you can create content for Tiktok and maybe have an organic strategy there.
And then obviously, use all that content on Instagram and Facebook. So I think I am probably trying to look at the combos as well and just make sure you're spending enough.
And if you do hire an agency, also make sure you have those expectations in place, because it doesn't matter how good the agency is, if they haven't got the ad spend, they're not going to be able to do work. They're not going to be able to turn water into wine.
Exactly. You definitely need to pay enough to play the game. I have been kind of just throwing it out there.
It's like if you can't afford to spend 5-figures like 10k a month, like it might not be a game you can get into anymore. Is that out of pocket or is that setting a reasonable expectation?
Yeah, I mean, we only work with brands right now who're spending at least 20k a month, but you don't have to start there. I guess my pushback to you will be --and I'm sure you get this question all the time-- what do you say to the founders who then say, "I can't spend $10k, what do I do now then?"
Oh man, that's a good question. Well, I'd ask why. I'd be like, "Why can't you get there? Are your finances in ruin? Are you already bankrupt?
If they literally couldn't spend the 10k... Because I've had that on a few calls. And my approach is I'd go down the brand ambassador route? Because...
Yeah, I was just gonna say I was like, "Do influencer seeding."
Exactly. Because, again, while we go back, we talked about you need all that content. Now you're thinking forward, you're building out an assistant for your content. So now you have that when you do have the money.
So it's kind of hitting two birds with one stone. And but I'd say yeah, definitely, again, it's around the average order value.
Obviously, the higher that is, the more you're going to need to spend. But yeah, it's pay to play at the end of the day.
And let's just set realistic expectations. You want to be spending at least $10k a month, ideally more if you can.
Absolutely. Alright, Nigel, where do people go if they want to get a hold of you, they want to ask you more questions about paid media. What should I do?
Yeah, sure. So if you just go to Google, type in "Nigel Thomas Alpha Inbound", you'll get all the links to where I'm at.
The main one, that will be the first link, it will be LinkedIn, I post there every single day. And what I do is that I talk about paid social mainly. And I tell people, brand owners specifically, what they need to hear, not what they want to hear.
I'm brutally honest, and I just love getting to the point and cutting out the bullshit. So I'd also like to have a little bit of fun whilst I'm at it.
So yeah, that's where I'm at most of the time, and I'm happy to connect with any founders.
And yeah, just ask me your questions. I'll give you that brutal, honest feedback.
Absolutely. We're gonna link to all that stuff in the show notes. Nigel, thank you so much for coming on. This is a lot of fun. I enjoyed it. I'm sure I'll have you back.
Absolute pleasure. Looking forward to having you on our podcast at some point in the future to chase
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.