Unlocking E-commerce Marketing Efficiency

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1. 0:00
   Wes Mathews

   This is the unfiltered truth about entrepreneurship. Raw, no BS, no sugarcoating. Welcome to Entrepreneur Intel. I'm your host, Wes Mathews. Each episode, we'll learn from experienced founders and uncover the top 5 percent learnings that led to their success in all things personal, family, and business.

   This show is sponsored by Stealth Consulting, delivering clear marketing strategies, ROI, and no surprises.

   I'm super excited for today's guest. He is a visionary in the CFO field. Really excited to dive into that. He helps e com store owners get financial clarity and increased profit margins by 50%. He has scaled Shopify stores from a million to over 37 million. Principal at Profit Surge Group and Fractional CFO at E Commerce Profit Group, Charles Lykoff.

   Welcome.

2. Charles Leikauf

   Hey man, thank you so much for having me.

3. 1:00
   Wes Mathews

   for coming on. I'm really excited to talk to you because what really sticks out with your intro, super solid stuff, but a visionary in the CFO field. I, I run into so many entrepreneurs and visionary entrepreneurs who, Quite frankly, don't really know numbers. Uh, so it's kind of refreshing that, you know, we're going to have a conversation today and you can help us out, but I have to ask you first.

   I ask everybody that's a guest on the podcast. So you've been, you went full fractional about seven years ago. Well, actually in 21, but you've been in this space for a little over seven years. Uh, what's the most important lesson you've learned thus far?

4. Charles Leikauf

   Oh gosh. The most important lesson I've learned so far. Um, well, first of all I learned the lesson that I could be here, right? I didn't know what fractional CFO was. I didn't know it was like a real thing. Um, 2017 I had a corporate job doing really well for myself. I worked for a large company called Siemens and my, my wife found this lady in a Facebook group and she was like, Oh, this lady says she needs financial help.

   I know you've been reading all these entrepreneurship books and you want to work for yourself, you know, like. What do you do? Right? Like, you know, you should message her. Maybe you can help her. And I was like, ah, it's not worth my time. Small businesses don't make any money. Like all the like common excuses.

   And so I did, I didn't message the lady. And the next day comes to get home from work. And she's like, Charles, did you, did you message Facebook group? She said she needs help with finance stuff. And I was like, are you, look, no, like I don't company that I work at numbers starts with a B in billions, not like small business, like just super arrogant.

   Um, third day, she's like, Hey, did you message? The lady's like, fine, whatever. I'll do it. So I get the lady on the phone and she owned an ad agency. Her finances were all messed up. Didn't know how profitable was. She was per each client, giving away free work, all the stuff. And in order to tell my wife, like, Hey, this isn't worth my time.

   I told her price that I thought would be insane. And surprisingly, I was like, yeah, it'll be 7, 500 a month. Then it's going to take me like four or five hours a month, maybe for three months, and I would just pay it, pay it today. And the lady goes. Okay. My first thought was, Oh my, okay. All right. I should have said a hell of a lot more.

   My second thought was I don't even have a way to take this lady's payment. So the biggest lesson, uh, first is if your wife tells you to do something, just do it. Um, the second lesson is that there are a bunch of companies out there that need a lot of help that are not doing 500 million a year, but maybe they can't afford a full time CFO.

   So the biggest lesson that I've like learned is a B, there's so many more people out there that you can help that you have no idea about. And so that's how I got here by accident.

5. Wes Mathews

   That's awesome. I love that you have just corporate experience and like, you know, your numbers start with a B and then you kind of had this vision of entrepreneurs like, you know, what am I going to do? Meddling in this space, right? It doesn't make any sense. Um, like what, like what drew you to that? I mean, obviously you had that first experience, but that's a big shift, right?

   You're talking Siemens, big company, big money. To, you know, let's call her Sally Sue entrepreneur, right? Like how, how do you make that transition or like, how do you make that mind shift change?

6. Charles Leikauf

   Uh, so the mindset shift was, um, really interesting, right? When I, when I first made the shift, my, my biggest thought was like, you know, thumbing my nose at it, which is like, This isn't worth my time. Right. One of the things I realized is like small companies have really big problems and it's impacting the owner directly.

   It's not like faceless shareholders. It's not like, you know, some dude in the corporate office and another country, it's, you know, real people and they're willing to pay real money to get the problems fixed. And so, you know, if I take a e commerce company from, you know, 1 million to 5 million over a couple of years, 10 percent margins of 1 million, maybe take home a hundred grand a year, 10 percent margins on 5 million or 20 percent margins on 5 million.

   You've effectively changed your life. Now they can send their kids to school. They can buy the fancy car. They can go on vacations. Um, they can make a real impact on their life. Whereas if you save shareholders 20 million a year, like, okay. And who are, who are the shareholders? You're never going to meet them.

   Right. So even, even you might be one of the, you know, 50 million shareholders there. So like the real life impact has been like the coolest thing for me.

7. Wes Mathews

   So what's interesting, like why, I mean, was it just because she happened to be in e commerce? You kind of just latched on to be, cause e commerce to me, like there's, you know, professional services or, you know, B2B and then there's like e commerce in its own special class. Like, how did you, how did you wind up in e commerce?

8. Charles Leikauf

   Oh gosh. So I had like an e commerce store before when I was younger. Like I tried the whole like drop shipping thing, you know, when I was, when I was a lot younger and in school didn't turn out well, by the way. Um, so I really liked the space and it was exciting. And I talked to her, she owned an ad agency and she had like 30 e commerce stores underneath her.

   And they all needed financial help and they all had the ability to pay. And so it just, it just kind of made, made sense, right? Because after I did the optimizing for the agency, she was like, all my clients need help. Can I hire you to, to just work on clients one by one so they can afford to spend more money on ads?

   And so kind of got here by accident. I don't know why I didn't go into manufacturing because that was my background or financial services, but e commerce is just, it's just fun. Like if you change two or three small levers, you can triple the size of your business, like overnight. And that's, that's something that's really cool.

9. Wes Mathews

   Well, what's interesting is like that one, so that one interaction you had with that one woman in that ad agency, you're effectively able to help her, but then all of her client roster, you're able to get into and help. So like that one conversation, I think it goes back to like, as an entrepreneur, somebody asked me for advice and I said, just take a half hour call with anybody.

   You never know where that opportunity is going to go. And for you, you found like, like a gold mine, so to speak with that one, one agency.

10. 7:00
    Charles Leikauf

    I mean, I think about it like this, having, you're, you're so right about like having that one conversation. I have a bunch of intro calls with people networking, like I'll take anything, but that one call in 2017 has changed my life completely. So for the next, what is that for seven, eight years, my life is completely different now because of one 30 minute phone call for one strange lady in a Facebook group who I thought was going to be a waste of my time.

    So grateful for her.

11. Wes Mathews

    Does your wife remind you of that very often?

12. Charles Leikauf

    No, no, no. I've, I've kind of internalized that one where she's like, Charles, I think this is a really good idea. You should do that. I usually go, I think it's, I don't, yeah, sure. And, uh, she's right more often than she's wrong. So,

13. Wes Mathews

    No, that's awesome. So the e commerce side, like you kind of bring up something that I think a lot of people experience or have thought of I want an e commerce store or I can sell stuff online How do you look at the world of e commerce like from a financial perspective? I mean, what's a good opportunity?

    You have some big gorillas in the room, which is Amazon Technology shifting so quickly. Like what, what does that opportunity look like getting in the e commerce space right now, from your perspective?

14. Charles Leikauf

    um, so e commerce like 2017, 18, 19, and before. Like it was, it was the world of free money, right? You could spin up like a really crappy ad, like as you know, CPMs were basically free, uh, compared to how they are now, you know, pre iOS 14 and you could put something out there and if it hit you, you know, you had instant overnight success.

    Now things are a little bit harder. You have to be a little bit better of an operator. You know, your ad cost is a lot higher. You got to have like a much sexier offer. It has to be a better product fit. It's a lot more competitive. And so when I look at the space and the opportunity now, um, if you want to be lazy and just put up a couple ads, like unless you, you get lucky and hit a banger of a product, you know, good luck.

    You're probably not going to be there, but if you're willing to sit down and put in the effort and get behind the data and be a really good operator, you're going to be able to grow a lot better than a lot, a lot of people. And so now it's not just how good you are at ads, but how good you are at being an operator, how good you are at managing your cashflow.

    A lot of e commerce businesses run negative day one. Right. Like they lose money on the first purchase. And so that's the game you got to play. Just the, the level is a lot higher, but there's still plenty of opportunity for people there who operate at that level. If that makes sense.

15. Wes Mathews

    Yeah. So like, if you think about, like, I look at a phone, right. I have a 15 year old. I have many kids, but the one that's 15 is I call it his Snapchat and Tik TOK device. Like he doesn't talk to anybody. He doesn't search anything. He doesn't go to websites. Pretty much every buying decision, the inputs coming from Tik TOK, like what do you see today in 2024 and into the future of if you're an e commerce store, cause.

    What do you do? Like how, how, you know, what platform do you go? I mean, the magic question is where do I, where do I invest? What do I do? But from your experience on the CFO side, where do you see everybody's sort of shifting to?

16. 10:00
    Charles Leikauf

    I mean, Tik Tok's like the newer big thing Tik Tok shop is, you know, pretty powerful Facebook still trying to get like their store. Like it's rolling, but it's not nearly as powerful as like the Tik Tok shop. Um, kind of method. I, you know, influencers aren't as like juiced as they used to be. Right. right?

    Like you have to be a little more careful. Um, it's really interesting. Something that I'm seeing a lot of people do is they're adding a lot of digital products, uh, to their, their e commerce offers. So like good example here is there's a, there's a company that makes like a, um, kind of like a coffee replacement, like pre workout, like things.

    So it's got some vitamins in it, but it's not as much caffeine as pre workout. It's like a good morning, uh, you know, orange powder. That's like, you know, imagine like if Sunny D Pre workout and coffee had a baby and like, that's, that's it. It doesn't sound very good, but they sell a couple of million dollars a month of them and they have, when you buy it, you get a shaker, you get a meditation, um, you know, guide PDF, you get a, you know, superfood guide.

    You have the ultimate, you know, morning routine guide. And so they have like seven digital products plus a shaker, plus a travel bag, plus a little scoop, plus some stickers. And so you're no longer buying just like the, the, you know, pre workout good morning nutrition powder. And so. When I see those, whether it's on Tik TOK or, or Instagram or Facebook or Google, or even display or whatever it is, um, having like a really powerful juiced offer that like makes it different than anybody else.

    That's like the biggest thing. It depends upon who you're going after is what platform. If you want like an impulse purchase to like a 22 year old, yeah, Tik TOK is going to be the spot. You know, if you're selling to 65 year old women, 65 year old men, I mean, you, you're probably going to be biggest on Facebook.

    You know?

17. 12:00
    Wes Mathews

    I had some, I had a conversation the other day with a guy. He had a concept, like a new concept for like a consumer good product. And as he's talking, like, I'm like, I have no, I can't really advise or consult in this space, but I'm like. Thinking about what he's talking about. And I'm like, man, you're talking about getting a shampoo or conditioner on a shelf in a unique bottle, but now you've got to sell direct to like Walmart, all the big box stores, like I thought about that and like startup, and it just kind of made my head explode in terms of how difficult.

    It would actually be to spin up like an e commerce product. I mean, how you, you mentioned about like being negative on the first sale. What does it really look like for an entrepreneur to have like one of those drink products, like how much capital, how much are they looking at investing? Cause I think people have these ideas, but some are delusional in the sense of how much and how much, how much money and how much time this is actually going to cost.

18. Charles Leikauf

    Oh gosh, so like, there's a million different factors that play into that, right? It's, are we trying to sell it on retail? Okay, well then we need to make sure there's demonstrated volume, we can get into retail, there's, you know, agents or companies or placement people that you can pay to get in there. What does that look like?

    You know, what are the payment terms? Usually they're going to pay you either after it sells or 90 days later, 60 days later, whatever. And so like, when we think of just like startup costs, like you got to be able to make the thing, it's got to be something that people want. So you have to test it and it has to work.

    You got to pay for packaging. Like if you're, you know, looking to go really hard and go into full on retail plus e commerce, like, Yeah, it could be hundreds of thousands of dollars or more. Right. But if you're just looking to get started and, and do something cheap, like, you know, you can just sell online and you can just do something organic.

    So you have to run money on paid ads. Cause what if people don't want what you made, right? Like, like even as an agency owner, right? Like if people don't want it, you can't sell it. Um, and so. Depends upon how big you want to start. Like I've started a skincare company and you go, you spend 20, 30, 000 on a couple runs of products in the beginning.

    Cool. You got to pay that. You got to get the website built. Like it's hard to get into anything unless you want to go the straight drop shipping model or do it really slow. But when you do that, everything's all always proven because you're not going to go down punk 30, 000 on inventory down for something that people don't want.

    You've already proved it out organic. So it's always interesting to start a little bit slower and with organic and with a product that, you know, people want instead of just going full balls of all, Hey, I'm going to try and be in target. I'm going to make a unique bottle that costs more with a unique product.

    Like that's great. You know, what if nobody wants it and target doesn't sell any of it and they go, okay, like you got to buy all these back from us. That sucks.

19. Wes Mathews

    Yeah, my first emotion was, man, I'm like, can't you just hook up with a company that's already on the shelf and just sell them your bottle? Because there's the bottle, but you have to create the material inside that everybody needs to love. I mean, to me, so talking about that, like you have some experience around really scaling e commerce businesses.

    One example, like a million to over 37 million, like explain a little bit about that. I mean, did they just have like a gem of a product and just really didn't know how to get it to the next level or talk a little bit about that?

20. 15:00
    Charles Leikauf

    Um, I mean, so there's a couple of different combinations, right? Um, so that was a skincare business. It did really well, really high margins. It was profitable day one, you know, not, you know, day 90 in the, in the customer kind of relationship journey. Um, one of the things that was really powerful is, um, I came from the world of manufacturing with like razor, razor thin margins.

    You got to be really capital conscious. You got to allocate like every little dollar. Whereas if you have massive margins with skincare and it's growing, but you apply that same financial discipline, you're going to be able to grow. So you couple that with really good customer lifecycle marketing, like our average, you Purchase.

    Someone bought again within seven days of their first purchase. Like they were literally getting the product for a day. You're getting a repeat purchase within seven days. And so what we were able to do is we were run 5 positive on the front end. Seven days later, we're getting another purchase. And then maybe, you know, 35 or 45 days later after that, sometimes 60, we were getting another purchase.

    So it's having a really good product life cycle. And then a really high AOV. Our AOV was just north. of the average fraction or the average skincare companies AOV. So we were able to outbid everyone in the auctions and, you know, spend over a million dollars a month on ads. And so that's how you can go to scale.

    Cause it's, you know, our only thing is then is how do we hire more people? How do we get enough supplies? How do we manage cash? And so operating was way more important after marketing was figured out, right? Operating slowed us down more than marketing did.

21. Wes Mathews

    What do you see coming? So like that's skincare, like, you know, right now, 2024 AI. There's a lot going on in the ad world and just the product world. Like, what do you, what do you see as like the next three to five emerging markets when it comes to e commerce from your perspective,

22. 17:00
    Charles Leikauf

    I don't know about emerging markets. Like there's, there's a couple of different things like, the new mother slash baby niche is, is very, very, very profitable and companies want those lists, right? Because they, they have an idea. There's a, there's a cohort of a woman and children who they can sell something to every year for a new, new problem or, or, you know, phase, like, I don't, I don't have kids, but you do, but there's certain things every, every person who's has a new child versus a child to six months, two months, three months, four months, you know, five years, like there's different products for each phase of the life cycle.

    And so companies are buying up, um, you know, baby brands, uh, for that list because they, they know that they have a game plan of something that stuff they can sell their mothers for the next five years. Um, so people are thinking like deeper and as far as like life cycles go, uh, for products or users. So that's like, you know, one of the first things.

    The next thing is, um, something that I've seen recently is when you look at the commerce world. When people are buying something, they're usually buying to fix some sort of problem. Right? So like if I buy protein powder, it's because, you know, I need to eat four, you know, two and a half, three pounds of chicken a day, or just we'll, you know, throw some scoops in there and we're, we're good.

    And so if we think about it, um, I'm trying to solve a fitness or health problem if I buy protein powder. Um, if I buy like a, a, you know, a, appetite suppressant pill or diuretic or something or in the fitness world, right now, what I'm seeing is people are selling that but then on the backend, like if you have all these high ticket coaching offers is how do you, how do you combine the two?

    So, Hey, maybe I get you to buy my protein powder or I get you to buy, you know, my creatine or whatever else. But then I go, Hey, by the way, you have a free call. Um, with our, one of our health advisors, um, to like use your product better. And that turns into a sales call where you can sell them on a 3, 000 or 5, 000 coaching plan online.

    And so I'm seeing a lot of like connecting those two fields that are usually completely different. And that way you're turning a 50 supplement, um, purchase that you may or may be profitable or slightly negative on into a 3, 000 backend. And so that's another thing that I'm seeing is combining front end problem with.

    back end solution at, you know, completely different price points. So those are the two things that I'm seeing that are fairly unique and novel. Um, you know, from like a, a, like solution, like how to grow kind of way.

23. Wes Mathews

    is Shopify still the King, like if somebody has got an idea or they want to use a platform, Shopify is King.

24. Charles Leikauf

    I, I'll put it like this way. I have zero clients, not on Shopify.

25. Wes Mathews

    No, it's good. It's good to know. So, I mean, there's a lot of entrepreneurs out there, right. That they might have a service business or some type of business that they want to put it online. Right. from your perspective or recommendation, how do you, How do you wrap your mind around that?

    Like, what would be some of the first steps you would take to take an old fashioned brick and mortar company and go online? Are there any like books, any resources? How would you even get started?

26. Charles Leikauf

    so if I, if I knew nothing, right, say I had a brick and mortar store and I knew nothing about sound online, Um, the first thing I would do is I would make a Shopify account, put my stuff on there, and I would get my socials done, right? Make sure that you have a Facebook page, make sure you have an Instagram, TikTok.

    I would, I would make sure you have those and I would do, I would do really like light kind of Google ads. Now if you're looking for resources, Shopify's website has a ton, right? I remember when I first, first started, made my first e comm store in 2013, 2014, all the resources on Shopify was helpful.

    Now you have a million different places, you have like e commerce coaches and whatnot, but believe it or not, there's so much gold on YouTube. There's so much gold on YouTube. And if you're just getting started, you just need a weekend, two monitors, get YouTube on this screen and get your Shopify on this screen and just.

    Just plug it away. And you know, everyone has a slightly different path, but I would get on all the socials. I would start rolling some light Google ads. And I would, you know, just use YouTube as your thing to build, build Shopify.

27. 21:00
    Wes Mathews

    Now, like as a professional service company, like say you're a roofing company or like, you know, in the home services, they're like, well, you know, we sell roofs, but like, is there anything they could do, like sell swag or do something just to have a store just to get that exposure? That that would help them ultimately because what if you have those businesses are like, I really don't have anything to sell But is that a good channel for them to market and show up?

28. Charles Leikauf

    I'm a big believer if you're doing something that's working, just do more of it. So like, if you're going to do all that, like, yeah, maybe you can sell some swag or some hats or some jackets or whatever else. Honestly, I would just hire another, like hire another salesperson, spend more money on ads.

    Like for your roofing company, like go sell another 40, 000 roof. Like don't, don't worry about a couple hundred bucks a month from jackets, unless it's like for a fun project. But if you got something that's working, I'm a big thing of just like put on the blinders and just do way more of it.

29. Wes Mathews

    So on the home service side is like there's LSA local service ads now. I mean Google Predominantly was like Google search Google paid right now. They've shifted to this LSA model, which is local service ads Now it's like a pay per lead model. If a business gets a lead, that's not a good lead. You can actually dispute it.

    You don't pay for it. Like they're really evolving into like, What's important today. Do you see anything like that on the e com side, like with spam and AI and all these things that are coming down the pipeline?

30. Charles Leikauf

    trying to cut out people to use the Google platform. They're trying to make it self serve. It's not going to be like that anytime soon. Um, especially cause if you listen to Google or HEP, you're going to lose money. Um, for, for e commerce, you know, when I'm, when I'm thinking about it, right. There's a couple of different like ways to go about it to like make things simple, simpler.

    Um, it's, it's kind of hard. There's, there's people who will do like CPA offers, right. Which is like, Hey, I'll run your ads. We'll spend all the ad spend. I'll do all this. Right. Um, I want 50 per new purchase that I get for you. Now, if the agency gets it for 10 or 55, like that, that's on them, that's something, but usually get people to sign up for that.

    Like you gotta have a big proven store and you know, it has to be going well for anything that makes things like a lot easier, a lot more revolutionary. I think TikTok shop is the thing, right? Like you can get out there, you can get, things pushed to creators. They'll make it, they get a, you know, they got a commission percentage.

    Um, so I think maybe like recruiting creators and kind of pushing to that, that's going to be your, your closest way to like recreate like the LSA kind of model.

31. Wes Mathews

    Now, what about, what about Snapchat? Anything there from a, from an e com perspective?

32. Charles Leikauf

    I have clients who run retargeting on Snapchat and like nobody they know is spending real money. What I mean by real, I mean like over a hundred thousand dollars a month. I know for certain people that, that, you know, real is a thousand dollars, real is a million dollars a month. That's, that's like my, my kind of threshold.

    I have people who are spending money on retargeting and the stats in platform show like it's getting a 19X ROAS. And then when you pull it up and trip a while, it's not doing so hot. Um, so I don't, I haven't seen anything big on Snapchat. That doesn't mean there's not opportunity there, but most people use it as like a retargeting platform from what I've seen.

33. Wes Mathews

    Yeah. You mentioned briefly, like, what is that dashboard, right? Like if you have all of these platforms providing ads, like what, what is, where are all these rolling into? What do you recommend to like sort through the data?

34. Charles Leikauf

    Um, so that's, that's challenging cause When you look at whether you have your, your, your, uh, Facebook ad manager or Google ads or whatever else, like there's things that you can use, whether it's high roast or triple whale or wicked reports or, you know, um, you know, any other, other kinds of services. The thing is, is each platform is going to lie to you.

    Facebook's going to say, I got all the credit for all the ads. Spend more with me. And then Google's going to say, no, I got all the credit for all the, all the ads. Spend more with me. Snapchat, same thing. And so when you look at it, it's really hard to tell. Like attribution is, I'm sure as you know, is a nightmare.

    Triple whale is helpful. Um, but again, it's not also, you know, as accurate as we would like to be. You can build out and like track all the UTMs yourself for everything. Um, when we're looking at like, do we increase or decrease ad spend? I like to think of it just as a marketing efficiency rate ratio, right?

    Like if you want to be super nerdy about it, keep ads been flat on all platforms and then just double it on one and see if your efficiency changes. Those are, those are options, but attribution in itself is a, is a massive guessing game. And if anyone who's told you they figured it out, it's marketing BS, right?

    Like I love high roast. I use it. It's, it's not accurate. And that's fine.

35. Wes Mathews

    So as a fractional CFO, I mean, how do you walk into a company? Cause I mean, what you're talking about touches more than just CFO duties. Right. So it sounds like there's a lot of crossover with marketing or either like a close relationship with marketing operations. Like what's the first thing that you do?

    Right. I mean, companies come into you, Hey, we need help. Like, how do you even start your process?

36. 26:00
    Charles Leikauf

    Well, the first thing I do is, We look at your numbers, right? Most of the time their accounting is not done well. Maybe they don't have bookkeeping at all. Maybe they don't have that done. So the first thing is like, we look at your numbers. Usually their numbers are wrong, terrible, right? Whether we do it in house or we recommend someone to do it, we, we get your books kind of cleaned up.

    That's the first thing. Cause if you come in and you hire us and Hey, we're really expensive. We get you a good result. And I go, all the data you're giving me is wrong. I'm a really good guesser, but that only takes us so far, right? I can get you, you know, 50 percent of the way there by guessing. Like I don't need to know, you know, your exact accounting and financials to know you're spending too much on marketing or too little on marketing.

    Those you can kind of go, all right, make a couple of changes. We're in the right direction, but to get true precision on like what happened and what is going to happen. We need accurate financials. So that's number one. Number two is like the very next thing is we go, okay, what are our goals? Where do we want to be?

    Right? If our goal is to go from 5 million to 10 million and with a, with a 5 percent margin to a 12 percent margin, there's a lot of things that have to happen, right? We're going to spend way more on ads. Probably. We're going to have to have a much better, um, lifetime value. We're going to have to have different cashflow management.

    We're going to have to have probably a cheaper cost of goods sold. And so we have an entire playbook that we run through, right? Like, so one week we will work on cutting costs, renegotiate with vendors. The next week is getting different. Payment terms, getting different lines of credit that are more affordable, looking at like, Hey, can you actually spend more on marketing?

    How do we do that? What does it look like? And so there's a massive like playbook of like solutions for each section of your financials, whether it's cost, revenue, marketing, et cetera. And we just go line by line and institute like a, like a playbook for each section.

37. Wes Mathews

    I know this isn't a one size fits all question, but like, what can a business typically look at, you know, from a marketing spend perspective or like a lead acquisition cost, like how high is that relative to that, that widget? When it comes to e commerce,

38. 28:00
    Charles Leikauf

    I mean, truthfully, you should spend as much as you possibly can, right? Like if I had a box, it's a little black box and I could feed a dollar into it and it popped out 4, you better believe I'm taking out a second mortgage and I'm putting every dollar I can into that box. Um, when you're looking at that, I like to think about is, is what's the, What's the least efficient I can possibly be and still make money? And so when I, when I come on, I usually, there's like a marketing team that's already there. And I go, okay, uh, marketing team, you can spend as much money as you want up until this marketing efficiency ratio. So it goes balls to the walls provided. We have inventory and cashflow for all of that. We're assuming those things are solved.

    And so if I say, Hey, marketing team, go out and go get me a 2. 4 MER, right? Spend as much money as you can. That makes your job a hell of a lot easier. Cool. Just go spend. And so that's the first, that's the first thing I like to do is figure out whatever number that is. And then just let them go provided like we have the, the, you know, back end infrastructure and inventory to manage that.

39. Wes Mathews

    Um, for like an e com company? What do they need on that marketing side to make that happen? Right? Because we just talked a little bit about all of these ad platforms are going to lie to you. And you need to make decisions based on good data. And as a CFO, you need accurate data. So like, who's kind of leading that charge on the side of the e com to make sure that that happens?

40. Charles Leikauf

    so it really depends, right? Uh, if you're a good marketing firm, you're looking at like, what is your cost to acquire a customer, right? Not, not cost acquire a purchase. Those are, those are very different things. And because attribution is a mess, I just look at total spend by total new customers. Um, so call it CAC, call it NC, CPA, like, you know, whatever vernacular you so choose.

    That to me is usually the most important thing in judging that. So if I know I sell something for a hundred bucks, the product costs me 20. Realistically, you can probably spend, you know, up to 70, up to 60 to acquire a new customer based upon LTV and whatever else. And, you know, whenever the second purchase comes.

    So it's, you know, how do we, how do we get there? Right. What does that look like? You know, and if you're at underneath that, spend as much as you can.

41. Wes Mathews

    It sounds amazing, but it also sounds a little scary. So how do you help the entrepreneur walk that tightrope? Right. Because they're probably, I'm assuming that they're probably cash strapped. There's a lot on the line. They're like, this has to work because if this doesn't work, we're screwed or we're tapped out or the money well, is going to dry up.

    How, how do you, how do you calm them down?

42. 31:00
    Charles Leikauf

    I've had times where agencies have called me in and they're just like, Charles, my client is terrified to spend money on ads. They're getting like, here's an example. Um, this was in the baby niche. We had a client. Who's getting like a 4. 7X ROAS on ad spend and they were breakeven at like 2. 2. So there was a massive margin there and I built a financial model to show them you have the money, you have the inventory runway, we have the credit if need be, um, you can quadruple your spend as long as it doesn't get, you know, below this, this, uh, this total ROAS number, you will make more money.

    So you do you want 40 percent of a hundred K a month? Or do you want 10%, you know, of, of a hell of a lot bigger number, right? Which one works? Cause at the end of the day, I want to optimize for, for like net income or like total benefits, the owner revenues, whatever. And so I just think, what do I need to do to increase how much the owner is going to make at the end of the day?

    If I can show you in the financials of what happens. Then it's, it's no longer like an emotional kind of decision. It's just like, okay, well, the numbers make sense. Let's do it. And like, that's the cool thing about ad spend is I don't have to commit spending 50, 000 a day tomorrow. And if I do, I can turn it off in one day.

    If it doesn't work, granted, it's a pain in the ass to do so, but like.

43. 32:00
    Wes Mathews

    So how do you write like you're a smart guy, client grabs you, but you're like, Hey, I'm fractional. Like you're not a hundred percent with that one company, right? How do you overcome that when somebody's betting a lot of money a lot of they're like, hey, okay We're gonna go down this direction, but you're like, hey, I'm fractional, you know How do you overcome that when they're like, no, no, no come full time Like be all in on our project

44. 33:00
    Charles Leikauf

    I mean, you probably can't afford me full time. Uh, number one, I tell them straight up, like probably can't, um, two probably couldn't afford someone as good as me full time. So just take me part time. Um, three, you have to have a really good sales process, right? Like in the sales process, like we, any sort of on alignment of expectations. In the sales process is going to show up in your relationship with the customer. So if they're, if they're ultra clear on like, this is what's going to happen. This is what we're going to do. This is what we're involved in. This is what you're going to get on and on the sales call. And then on their onboarding call, everything's reiterated.

    And we aligned with goals. You can't come to me a month later and be like, Hey, I want this. It's like, we've been on the same page since that's them deviating it. And so when I see people who are other fractionals get in trouble with scope creep, it's because they didn't have like a very dialed in sales process, right?

    I usually don't have people who want more than we're giving them. And that's because our deliverables are really good and our results are good. So sales process deliverables.

45. Wes Mathews

    Now you bring up a good point now. And like, where do you see, or where does the e commerce world live with sales people or having digital websites do the selling for you versus actual people? I mean, do you see that shifting from 2017, where you started above people now of just technology, finishing the sale?

46. 34:00
    Charles Leikauf

    There are, there are a couple of brands we've worked with who they sell like a more expensive goods, like in the one to 4, 000 range. And a couple of them have added on salespeople to call the abandoned carts. And that has been really powerful for them, you know, uh, to do at scale. Like it's hard to find people that are like really good, but usually like, Hey, I saw you were looking at this.

    What are you specifically looking for? Like one was, uh, they sold them like massage tables, right. And like tables for chiropractors. And so those can get kind of pricey. And so people who would opt in or do on the email lists or who are looking at certain products, um, they would call. And I think these people added an extra 150, 000 a month, their business, Just by having someone who call for those higher ticket things.

    And so when you're willing to do that, you're, you're going to learn a heck of a lot more about your customers. Your ads are going to get better. Like, you know, when's the last time an e commerce store got on the phone with their customers and was like, Hey, why did you buy this? Or like, why didn't you buy this?

    Right? Like your ads are going to get a lot better. But B if you're selling something really expensive, like you can get, you can get a salesperson and they're just calling me like, Hey, I saw you looking at this thing. Why didn't we, why didn't we get it? Where are we looking at something else? Were you looking at like something that would be more helpful, you know?

    So I've seen that with higher ticket things, um, with lower ticket things, it's about interviewing your customers. If you just pulled 10 customers a month and interviewed them, your, your marketing process would be a lot better.

47. Wes Mathews

    No, it's interesting that you talk about the abandoned cart. Like I've yet to have somebody call me to do that. I'd probably buy it right then and there. Right. Cause you, you're putting something in your cart and like, you just didn't do that by accident. Like something happened. I could totally see that.

    That's a really, that's a really great tip. Um, so what you're talking about, it's amazing. It's complicated. Super smart guy. If somebody has an e commerce challenge, like how, how, how do people get in contact with you? Are you, are you taking on new clients or like, what's that first step to, to make that intro to you?

48. 36:00
    Charles Leikauf

    Sure. So you can always look me up at Charles Lykoff on Instagram or just go to ecomprofitgroup. com. Um, those are probably the best places. Uh, depends upon the time of the year, whether we have availability or not, but at the end of the day, if you have a conversation with me or someone, The idea is whether it's a good fit for you now or in the future, we can always build you a game plan to get to your goal, right?

    And so if you sit down, you're like, Hey, I'm at this size. Maybe it's a good idea. You work with us. Maybe it's not, but at least I can point you in the right direction. And that's what's most important to us. So ecomprofitgroup. com or just charlesligoff on Instagram. Those are the two best places.

49. Wes Mathews

    Yeah, I was going to say, like, should there be a certain amount of revenue they're doing before they talk to you? Like a proven process or like,

50. Charles Leikauf

    Uh, typically the work people who are doing over a million dollars a year in revenue, um, who are doing ads, maybe about 500k a year. If you're like fully organic, those are the two kinds of thresholds because. Under 30, 000 or 50, 000 a month, you don't really have like your messaging fit down. And like, that's not where you come to me for, can I be helpful?

    Sure. But like go, go get an agency, go get a fractional CMO, like go sit down with someone like that instead of us first.

51. 37:00
    Wes Mathews

    yeah. And in e commerce is a completely different world where it sounds like, I mean, do you have partner vendors that you work with who can deploy all these ad strategies? On the marketing side.

52. Charles Leikauf

    Yeah. I mean, I've, I've got everything from three PLS to lines of credit to add agencies to whatever you need to where we can like point you in a better direction. Um, if it's, you know, if it's helpful for you, even if we're not the best solution, like happy to point you where you need to go.

53. Wes Mathews

    Well, it sounds like you're a great solution at any stage. Cause you can just point them to partners and, and, you know, when they're ready for you, hopefully that's the goal, right? They come back and hire you and you know, you're, you're, you're off to the races. So Charles, thanks so much for coming on, uh, wealth of knowledge, really appreciate all the shares today.

    Definitely provide a lot of value.

54. Charles Leikauf

    Hey man, thank you so much. I appreciate it.

55. Wes Mathews

    Yeah, man. Thanks so much. I appreciate it.

    This has been another episode of Entrepreneur Intel. Thank you for joining us. For show notes or other episodes, please visit us at entrepreneurintel.com. Until next time.