Ezra Firestone started its first e-commerce business in 2007. It sold wigs. He has owned several brands since then. He co-founded BOOM !, which sells cosmetics, in 2010. He focuses on key management metrics such as spending about 30 percent of e-commerce revenue on advertising.
“If you have $ 1 million a year in revenue, you should be spending $ 150,000 to $ 300,000 on ads next year,” he told me. “The margins and size of a company matter, but the goal should be to grow the company.”
Firestone’s success speaks for itself. BOOM! generates annual sales of over US $ 20 million. Zipify, its ecommerce app provider, was voted the best for post-purchase upsells by Shopify Plus merchants. And a third company, Smart Marketer, offers e-commerce training and strategies.
He and I discussed all of this in our last conversation.
Eric Bandholz: You are the founder of three companies.
Ezra Flintstone: Yes. Founder of Smart Marketer. Co-founder of BOOM! and Zipify. I’ve owned a lot of ecommerce brands. My first was a wig business in 2007.
From the drop shipping days to the SEO days to the Google AdWords days, I was in love with ecommerce and was lucky enough to grow up in it – before the iPhone before it was cool. It’s my life’s work. I’ve been fortunate enough to be recognized as one of the voices in the community worth hearing. I really enjoy interacting with and connecting with other ecommerce business owners.
Band wood: You’ve made over $ 115 million in sales with BOOM! in just five years. It’s unreal.
Flint: This is true. I have BOOM! co-founded. in 2010. It sells cosmetics for women of all ages. So in the first four years I hardly made any money – a few hundred thousand sales a year. Then I made a few million dollars in 2015. I made $ 20 million in 2016 and I’ve been rocking ever since. So for me it took a while.
When we BOOM! started, search traffic was the number one source of ecommerce brand visibility. But nobody looked for “pro-age cosmetics” or “make-up for older women”. The reason business took off in 2014 and beyond is the mass availability of contextual traffic through Facebook, the ability to get messages to people based on the context you have about them. We could tell stories to these people. BOOM! was perfect for it.
Band wood: They recommended spending up to 30% of ecommerce sales on advertising.
Flint: Yes, between 15 and 30 percent. If you have $ 1 million in revenue per year, consider spending $ 150,000 to $ 300,000 on ads over the next year. The margins and size of a company matter, but the goal should be to grow the company.
You can include the cost of photos, email design, and the like in that 30 percent. I don’t. My income statement has a weekly KPI sheet. One of my KPIs is marketing spend as a percentage of net sales. Facebook, Google, and Pinterest are the top places we spend money to drive traffic. It’s always between 30 and 35 percent per week. If it’s less, we know we’re not investing enough to make the company grow.
Band wood: How do you know if the money is actually increasing revenue?
Flint: I focus on three metrics: average order value, cost-per-acquisition and lifetime customer value. The average order value is crucial. I optimize it through upsells on every page – from the product page to the shopping cart, the checkout after the purchase to the thank you page.
Cost per customer acquisition I watch most when it comes to advertising. I know what I can afford. I can’t hold up $ 70 to buy a cold customer who has never heard of the company. If the CPA goes over $ 70, I’ll change the creative and target audience.
If it’s over $ 40 in the remarketing pillar, I can’t afford it. Ditto for $ 20 in the loyalty pillar of existing customers.
I’m looking for a one to two-fold return on advertising spend at the top of the funnel. A one-time return on advertising spend at the top of the funnel does not cover costs due to the cost of the goods. You also have salaries and overheads.
All in all, however, I expect a one to two times return on ad spend at the top of the funnel, two to four times the return on remarketing, and three to eight times the return on loyalty spending. These are my ROAS goals.
One thing I tell people is never to spend more than double your profit to get a customer. If your average order value is $ 50 and your profit is $ 25, never spend more than $ 50 to get a customer. Because if you don’t spend more than double the profit to get a customer, you can win them back through remarketing, loyalty, upselling and cross-selling over the life of the customer. But if you exceed double it is very difficult to scale a profitable business.
Band wood: Change the subject, what do you think of the iOS privacy change?
Flint: It sure is a big change. However, it affects all advertisers – the entire ecosystem – not just a single company. Tracking is more difficult. Remarketing is getting harder. Facebook’s metrics will go down a bit. But I assume that new technologies will make up for the lack of data.
Band wood: You run three companies. Are you completely remote?
Flint: I started 100 percent remotely – hired my friends, family, cousins, whoever I could convince to work with me – and then outsourced the rest, e.g. B. Design and Development.
The problem with hiring friends and family, however, is that you have a homogeneous group – all white guys, for example – and not a different culture or point of view. So I started looking beyond my immediate friends and bringing in diversity.
In the beginning everything was virtual. Then I developed a concept of the “virtual bar” in which sub-teams live in close proximity to one another. You could come together and work together. Then we got too big.
So now it’s 100 percent virtual again. This has many advantages, but also many disadvantages. The reason I went completely virtual wasn’t to make more money. That’s because I’m a little withdrawn. I didn’t want to go to an office every day.
I enjoy rubbing elbows and having fun with people for a few days and then returning to my cave. I’m a bit socially awkward there. I enjoy working from home and having lunch with my wife.
The downsides to having a virtual workforce are that it’s much more difficult to keep everyone at work and organize. You need to be really good at systems, processes, oversight, and virtual calling – lots of technology.
Operations are going well virtually, but the strategy is not. So in 2013 I started bringing my leadership team together for a few days once a quarter. You come to me.
Band wood: Are all employees in the US?
Flint: I have a man in Portugal and a couple of people in Canada. I recently met a woman in London as a project manager for BOOM! But that’s the extent. I have not dealt well with international employees. However, I am beginning to understand the taxes and regulatory requirements of different jurisdictions.
Band wood: Where can people reach you and support your company?
Flint: I’m on Twitter (@EzraFirestone) and Instagram (@EzraFirestone). I’m on Facebook and YouTube too. We have over BOOM! spoken, my cosmetic brand. Smart Marketer is my training and resource portal. And Zipify makes apps that help merchants scale their business.