Latest / The Growth Class with Phil Masiello / E-commerce Brand Building: Creating Sustainable Boutique Growth Models with Tina Burgos

Transcript

E-commerce Brand Building: Creating Sustainable Boutique Growth Models with Tina Burgos · The Growth Class with Phil Masiello

• 0:19
  SPEAKER_00: Hey everyone, welcome to the Growth Class.
• 0:20
  SPEAKER_00: I'm your host, Phil Mastiello.
• 0:22
  SPEAKER_00: When we talk about scaling a brand today, everyone points to the same playbook flood the market, chase every trend, post 20 times a day, but truly sustainable growth.
• 0:30
  SPEAKER_00: It's built on message, architecture, precision, curation, and an unshakable understanding of why your customers buy.
• 0:37
  SPEAKER_00: Our guest today is a masterclass in exactly that strategy.
• 0:40
  SPEAKER_00: Tina Burgos is the visionary founder behind Covet and Lou, a stunningly curated online boutique and retail store that highlight independent, sustainable, and women-owned designers from across the globe.
• 0:53
  SPEAKER_00: But she didn't just build an e-commerce store, she built a community.
• 0:56
  SPEAKER_00: She transformed retail into an edit proving that when you focus on distinct identity and quality over mass market noise, you don't just find customers, you build absolute brand loyalty.
• 1:07
  SPEAKER_00: So today we're going to talk to Tina.
• 1:09
  SPEAKER_00: We're going to find out what what she's done, how she's done it.
• 1:12
  SPEAKER_00: So, Tina, thank you and welcome to the growth class.
• 1:16
  SPEAKER_02: Thank you so much, Phil, for having me.
• 1:17
  SPEAKER_02: I really appreciate it.
• 1:18
  SPEAKER_02: I'm excited to talk with you today.
• 1:20
  SPEAKER_00: My pleasure.
• 1:21
  SPEAKER_00: So why don't you take us back?
• 1:23
  SPEAKER_00: I know you have a great story about, you know, starting and sort of not stopping, but sort of adjusting and then restarting again.
• 1:31
  SPEAKER_02: So I've always been interested in fashion.
• 1:35
  SPEAKER_02: And after college, um I got my first job working for a very high-end retail store in Boston called Louise Boston.
• 1:44
  SPEAKER_02: Um I worked in all different facets of the organization, which sort of opened me up to the business side of things, not just fashion.
• 1:52
  SPEAKER_02: Um, from there, I knew that this was an industry I really wanted to get into.
• 1:57
  SPEAKER_02: So continued to build my career.
• 2:00
  SPEAKER_02: Um, got my MBA, knowing that ultimately I wanted to open my own fashion business.
• 2:06
  SPEAKER_02: And we did that in 2002.
• 2:10
  SPEAKER_02: Um, I graduated with my master's in 99, took some time to really formulate the plan, the business plan, did a lot of research, you know, found my partners, and we opened on Newberry Street, which is uh a pretty prominent uh retail district.
• 2:25
  SPEAKER_00: Yeah, very prominent.
• 2:26
  SPEAKER_00: Yeah.
• 2:27
  SPEAKER_02: So we opened that in 2002.
• 2:30
  SPEAKER_02: And at the time, I think we were a little bit ahead of where we were in the fashion industry.
• 2:41
  SPEAKER_02: We really focused on emerging independent brands, and uh we were a slightly higher price point, um, although we thought that Newberry Street could manage that um that level of price.
• 2:53
  SPEAKER_02: But I think we're one of the mistakes that we made was sort of thinking that the audience in Boston was ready for this emerging designer, and um it wasn't.
• 3:05
  SPEAKER_02: So we hung in there for about 10 years, and unfortunately, you know, we were there during um 2008 when everything kind of fell apart uh in the economy.
• 3:15
  SPEAKER_02: Um, I think another mistake that we made in that venture was that we had a very large space, and we really focused on making that space really beautiful and curated and inviting to the eyes.
• 3:31
  SPEAKER_02: What we didn't pay attention to was dollars per square foot.
• 3:35
  SPEAKER_02: And so we did not stock enough inventory in our space.
• 3:39
  SPEAKER_02: So not only was it not it wasn't the right inventory, but we did not have the quantity to support the sales goals that we needed to just break even on all of our our costs.
• 3:51
  SPEAKER_02: And as you can imagine, uh even then, back then, rent on Newbury Street, and we were on the less favorable side of the street um was very expensive at the time.
• 4:01
  SPEAKER_02: So all of these different factors um sort of led to the end of the business after 10 years.
• 4:08
  SPEAKER_02: You know, we we hung in and and we did the best that we could, but after 10 years, it was it was no longer a a venture that we could sustain.
• 4:16
  SPEAKER_02: Um one thing that I learned out of that was that building community was really important.
• 4:22
  SPEAKER_02: And so that was certainly one important lesson that that stuck with me.
• 4:26
  SPEAKER_02: And um I think that's kind of carried me on through the venture that the current venture that I have now.
• 4:33
  SPEAKER_00: I think you brought up a really important point about going into retail and opening up a retail store.
• 4:40
  SPEAKER_00: Uh, and that is, you know, the amount of inventory you need to carry per square foot to achieve your sales goals and your profit goals.
• 4:51
  SPEAKER_00: And I don't think a lot of people, uh, when they go into open up a retail store, think about it in those terms.
• 4:58
  SPEAKER_00: They sort of think about either we're gonna fill the store with too much inventory, at which point at some point that's gonna come back to to sort of become a discount, or they don't build enough inventory like you, and they can't achieve their sales goals because they don't have enough inventory to hit it.
• 5:16
  SPEAKER_00: Uh, and that's a really good point.
• 5:18
  SPEAKER_00: So uh it's the same thing when a brand goes into retail, even if they don't own the store, if they go into like a Target or a Walmart, you know, they have to think about how much inventory they're gonna put into that store relative to what they think their sales and profit are gonna be in that store.
• 5:37
  SPEAKER_02: And I I think that particularly for a small independent retailer, and I have these conversations all the time.
• 5:43
  SPEAKER_02: I just actually had a conversation with a woman last week.
• 5:46
  SPEAKER_02: She's opening a home goods store down in um uh Belmont, North Carolina.
• 5:52
  SPEAKER_02: And I think part of the disconnect for a lot of small independent retailers is that they love the product.
• 6:03
  SPEAKER_02: They love fashion, they love to shop, um, they love the idea of having a small curated space.
• 6:10
  SPEAKER_02: But that sort of conceptual artistic side of things does not necessarily jive with their understanding of what the business is.
• 6:19
  SPEAKER_02: I don't consider myself to be a fashion person, I consider myself to be a business person.
• 6:24
  SPEAKER_02: And so if you don't make that connection early on, you really could uh end up hurting your business down the road because you're not thinking about the dollars and cents.
• 6:36
  SPEAKER_02: And that's really what you need to do if you want to survive this.
• 6:40
  SPEAKER_00: Yeah, I agree.
• 6:42
  SPEAKER_00: You know, it it's it's always about you know business.
• 6:46
  SPEAKER_00: I was I was speaking to somebody the other day.
• 6:48
  SPEAKER_00: Uh she she's a really successful uh entrepreneur and she built this tremendous floral business online.
• 6:56
  SPEAKER_00: And um and she did it, she approached it in a very unique way, but we we won't get into that.
• 7:02
  SPEAKER_00: But uh she's really scaled.
• 7:05
  SPEAKER_00: I think she's probably you know in the$30 to$40 million a year range.
• 7:09
  SPEAKER_00: And you know, I said to her, was were flowers your passion?
• 7:14
  SPEAKER_00: And she said, no.
• 7:16
  SPEAKER_00: She said, if flowers were my passion, I would wind up hating flowers because I have to, this is a business, and I have to think like a business person.
• 7:26
  SPEAKER_00: She said, ceramics are my passion.
• 7:28
  SPEAKER_00: She said, I just saw this opportunity with flowers as a you know, as a business opportunity, and that's how I pursue it.
• 7:34
  SPEAKER_00: So this is a business, and I think about it as a business, and I think about how to scale it as a business, and I think about how to grow it as a business.
• 7:41
  SPEAKER_00: She said, I don't think about it in terms of being a floral expert or being a passionate floral expert.
• 7:48
  SPEAKER_02: Yeah.
• 7:48
  SPEAKER_02: That makes total sense.
• 7:50
  SPEAKER_00: Yeah.
• 7:51
  SPEAKER_00: Yeah.
• 7:51
  SPEAKER_00: And I think, you know, too many people go into business uh following their passion, you know, and that's just sometimes it's it's wrong.
• 8:03
  SPEAKER_00: I I I spoke to another person who has um he has pet stores, uh several pet stores.
• 8:09
  SPEAKER_00: And what he was saying was it was really easy to get pet groomers because there's a whole bunch of pet groomers out there that just want to be pet groomers.
• 8:17
  SPEAKER_00: He said the mistake they make is that they won they think they're gonna start a pet grooming business because they love pet grooming.
• 8:23
  SPEAKER_00: And then when they do it, they realize they have to be the accountant, they have to be the marketer, they have to be, you know, the operations person, and then they grow miserable when all they really want to do is just groom pets.
• 8:35
  SPEAKER_02: That's exactly it.
• 8:36
  SPEAKER_02: I mean, I think in this industry, um, and I'm always talking to my staff about this because every once in a while they'll say, Why did you buy this?
• 8:43
  SPEAKER_02: Or why, why are we picking up this line?
• 8:45
  SPEAKER_02: If I purchased, I I tell this to people all the time, I would probably not wear 90% of the product that I put in my store.
• 8:54
  SPEAKER_02: Yeah.
• 8:54
  SPEAKER_02: Because I am not buying for myself.
• 8:56
  SPEAKER_02: If I did that, we would be out of business hot minute.
• 9:00
  SPEAKER_02: I have a very specific, and people appreciate what I how I dress and how I put things together, but I have a very specific style that is very unique to me and my personality and how I like to dress.
• 9:11
  SPEAKER_02: But owning any type of curated store, whether it's clothing, home goods, floral, any anything like that, you cannot think about yourself.
• 9:21
  SPEAKER_02: I am buying for my audience.
• 9:23
  SPEAKER_02: And that sort of runs along uh the lines of what you're talking about when people think about, you know, incorporating their passion into their businesses.
• 9:31
  SPEAKER_02: You have to separate yourself from that because it you you have to think about your audience and your target market.
• 9:38
  SPEAKER_02: We're not, it's not, you're not one and the same.
• 9:41
  SPEAKER_02: Sometimes you are, but most of the time you're not.
• 9:43
  SPEAKER_00: Oh my God.
• 9:44
  SPEAKER_00: It's so difficult.
• 9:47
  SPEAKER_00: Uh human nature always um gets involved.
• 9:53
  SPEAKER_00: And I have many clients, many clients, where you show them facts, you show them data, but they'll still make decisions based on their belief system.
• 10:05
  SPEAKER_00: And you have to, it's one of the biggest obstacles to helping someone grow their business when their belief system tells them that they want to do something because that's what they would do, or that's how they see it.
• 10:19
  SPEAKER_00: And you go, well, that's not the way the world is.
• 10:22
  SPEAKER_00: I mean, it's amazing.
• 10:24
  SPEAKER_00: And and these are smart people, these are people that started businesses that that got to maybe five million and then they got stuck, and you're trying to get them to 10 million, 20 million, 30 million, 50 million, whatever it is.
• 10:35
  SPEAKER_00: And and and just getting them to think about it's not about you, it's about your customer.
• 10:41
  SPEAKER_00: So you have to think about your customer, not yourself.
• 10:44
  SPEAKER_00: Right.
• 10:45
  SPEAKER_00: Because if you make decisions about what you believe or what you think or what you want, you're 100% correct.
• 10:51
  SPEAKER_00: It's uh it's it's a dead, dead end.
• 10:54
  SPEAKER_01: It is, it is.
• 10:57
  SPEAKER_00: Yeah.
• 10:57
  SPEAKER_00: So, but you overcame it because now you're you're you're doing well.
• 11:01
  SPEAKER_00: You haven't, you have a you moved your boutique, right?
• 11:03
  SPEAKER_00: You moved your store.
• 11:05
  SPEAKER_00: Um, you're also selling online.
• 11:07
  SPEAKER_02: So we started Covenant Louise's been around for about 13 years.
• 11:11
  SPEAKER_02: We started as an online retailer, and that was, you know, at the time, yes, e-commerce was definitely um an industry, but it was still relatively new.
• 11:23
  SPEAKER_02: And so um I had just come off of working for a very large um e-com company.
• 11:30
  SPEAKER_02: They were doing about um$300 million in sales a year.
• 11:35
  SPEAKER_02: I was I ran the women's division, and um they went out of business because they were constantly discounting.
• 11:42
  SPEAKER_02: And profit margins, the margins in clothing in general are very, very slim.
• 11:49
  SPEAKER_02: So when you bring something in and automatically you're giving 30% off, you're not even giving it a chance to sell at full price.
• 11:56
  SPEAKER_02: That's forget it.
• 11:57
  SPEAKER_02: You're you're gonna you're gonna lose every time.
• 11:59
  SPEAKER_02: No matter how much volume you're bringing in, it's still on discount, you're still bringing it in on discount, you're still losing money on volume, right?
• 12:07
  SPEAKER_02: Um, so it they open up my world to sort of what is e-commerce, what is how can the internet work for you?
• 12:13
  SPEAKER_02: How does this all, how does all of this um, what is this industry?
• 12:17
  SPEAKER_02: Because up until that point, I was strictly a brick and mortar person.
• 12:21
  SPEAKER_02: Um, so I just started slowly online and running it out of my house.
• 12:26
  SPEAKER_02: You know, I picked up a couple of independent brands, and at the time, now we're we're talking 10, 15 years later, um, the independent, the independent pendant brand market was definitely stronger.
• 12:38
  SPEAKER_02: Um, and a lot of these brands that I had been working with previously had a much larger name for themselves.
• 12:44
  SPEAKER_02: They were better in business, um, they had a much better offering.
• 12:48
  SPEAKER_02: So I just kind of slowly did things out of my home and and kept my expenses as low as possible.
• 12:54
  SPEAKER_02: Everything was basically all of my money was put in being put into inventory, um, paying attention to price point, paying attention to how things were curated.
• 13:03
  SPEAKER_02: Um, after about four years, the business grew to the point where we I I I grew my my dining room table and my attic where we were doing all of our fulfillment.
• 13:14
  SPEAKER_02: And uh I found a brick and mortar space in my my neighborhood, and the rent was unbelievably reasonable, particularly compared to Newbury Street.
• 13:24
  SPEAKER_02: I mean, it was less than it was about 20% of what I was paying.
• 13:29
  SPEAKER_02: So to me, that was it was nothing, you know.
• 13:32
  SPEAKER_02: Um, and it wasn't just initially I was look just looking for a fulfillment space, but it was a retail, uh a ground level retail space.
• 13:40
  SPEAKER_02: So I built it out, didn't put much money into it, and got back into the brick and mortar game.
• 13:45
  SPEAKER_02: Um, because I I thought, you know, let's let's diversify our revenue channels.
• 13:50
  SPEAKER_02: We might as well.
• 13:51
  SPEAKER_02: If I'm not paying that much for the space anyway, let's do it.
• 13:54
  SPEAKER_02: Um, so I was there for about four years and then COVID hit.
• 13:59
  SPEAKER_02: And thankfully, uh, my team, who has been with me for a very long time, and they're um, I work with three amazing women and haven't worked with them for years, we quickly pivoted to selling home goods, um, started paying attention to what was happening.
• 14:16
  SPEAKER_02: I I think things really just kind of made themselves very apparent within the first week or two of COVID.
• 14:22
  SPEAKER_02: It's it's amazing how resilient human beings were at the time.
• 14:26
  unknown: Yeah.
• 14:27
  SPEAKER_02: Trying to figure out how they were gonna survive.
• 14:29
  SPEAKER_02: And so um, thank goodness my team is very smart and we figured this out very quickly.
• 14:34
  SPEAKER_02: We were able to get some inventory on apothecary, beauty, home goods, because it was apparent that people were not no longer buying for themselves.
• 14:44
  SPEAKER_02: We were so isolated, but we still wanted to maintain connection with our family and loved ones, friends.
• 14:50
  SPEAKER_02: So people were sending gifts.
• 14:54
  SPEAKER_02: So I would get in my car and I would drop things off to, you know, people's homes, or we would we were shipping, we were shipping a massive amount of product to all over the country, um, just for, you know, so people could stay connected.
• 15:08
  SPEAKER_02: And that during that period, um we actually thrived through COVID.
• 15:13
  SPEAKER_02: It was it was unbelievable.
• 15:15
  SPEAKER_02: Our business was up.
• 15:16
  SPEAKER_02: And that was a point at that point I thought we're not gonna make it through this, uh, you know, at the initial, at the onset, because nobody knew what was going on.
• 15:26
  SPEAKER_02: It was sort of like the world is ending and all of this panic and fear.
• 15:31
  SPEAKER_02: Um, but um, that was definitely a point where I thought, I I don't know if we're gonna have to shut this down.
• 15:38
  SPEAKER_02: And I I felt responsible to my employees.
• 15:41
  SPEAKER_02: I was paying out health insurance, like all of these things, right?
• 15:43
  SPEAKER_02: That you are sort sort of you feel on your shoulders as a as a business owner.
• 15:48
  SPEAKER_02: Um, it's not just about keeping the business open, but who else are you beholden to?
• 15:52
  SPEAKER_02: You know, your employees, your vendors, all of these people that that you were supporting financially.
• 15:58
  SPEAKER_02: Um so we made it through that.
• 16:01
  SPEAKER_02: And after uh after the COVID period, I realized that this neighborhood was not necessarily great for a brick and mortar space.
• 16:11
  SPEAKER_02: It just the foot traffic wasn't there.
• 16:13
  SPEAKER_02: So I moved to my next location.
• 16:16
  SPEAKER_02: We shut down this locate the location here.
• 16:18
  SPEAKER_02: We moved, we physically moved during COVID, the tail end of COVID, to where I currently am.
• 16:23
  SPEAKER_02: And and we've been there for six years and it's it's been going strong.
• 16:26
  SPEAKER_02: So um I would say 85% of our business is done online, 15% in store.
• 16:33
  SPEAKER_02: Uh I'm sorry, uh 85% in store, 15% online.
• 16:38
  SPEAKER_02: And um it's been a really it's been a really strong, solid past, you know, 13 years.
• 16:44
  SPEAKER_02: It it the growth has been very slow.
• 16:46
  SPEAKER_02: I've been very deliberate with it.
• 16:48
  SPEAKER_02: Um I think I probably have PTSD from the last business.
• 16:53
  SPEAKER_02: So paying attention to the mistakes that we made, um, maybe being a little too cautious, but knowing that, you know, I I want to keep this going for as long as I can.
• 17:05
  SPEAKER_02: So um I'm not scaling as quickly as I probably could be, but you know, it's we're still around and and we're still you know, we're not we're not only surviving, but we're thriving.
• 17:16
  SPEAKER_02: So um that's sort of where we are right now.
• 17:18
  SPEAKER_00: Yeah.
• 17:19
  SPEAKER_00: No, it's great.
• 17:20
  SPEAKER_00: Look, you know, we all have had those, those uh sort of uh uh teaching moments or uh, you know, I don't really like to use the term failure because but I, you know, my first business was a a disaster.
• 17:34
  SPEAKER_00: And um, you know, and like you, I carry that with me today.
• 17:38
  SPEAKER_00: And that was, you know, I I f founded, you know, three other businesses after that, which were successful, but that first one was a killer, and it was all 100%, 100% my fault.
• 17:48
  SPEAKER_00: 100%.
• 17:49
  SPEAKER_00: And uh, but it took me, you know, what's funny was it it took me about 18 months after I sold the business to uh come to terms with the fact that it was 100% me.
• 18:00
  SPEAKER_00: And uh, you know, because I was blaming everyone, uh, you know, the rent was too high, or this and that, but it wasn't.
• 18:05
  SPEAKER_00: It had nothing to do with me.
• 18:07
  SPEAKER_00: I had nothing to do with that, it had everything to do with me.
• 18:09
  SPEAKER_00: But you said something a little while ago, which I, you know, I was laughing because I feel like some of the things you're talking about are exactly some of the things that are relevant in what I speak about uh to clients and entrepreneurs.
• 18:24
  SPEAKER_00: And you talked about this business that you worked for in the fashion business, and they were just complete, can continually discounting.
• 18:32
  SPEAKER_00: And, you know, what happens when you discount?
• 18:34
  SPEAKER_00: It's okay to strategically discount, you know, around holidays or around events or around things like that.
• 18:40
  SPEAKER_00: But when you're just discounting to get sales volume, all you're doing is training your customer.
• 18:45
  SPEAKER_00: And the biggest one was Bed Bath and Beyond.
• 18:49
  SPEAKER_00: And Bed Bath and Beyond was so dependent upon coupons, they built their website.
• 18:54
  SPEAKER_00: Their website wasn't selling anything, their website was just a place where people went and got more coupons.
• 18:59
  SPEAKER_00: And so they got so dependent on coupons that people just didn't pay pay regular price for anything there.
• 19:05
  SPEAKER_00: They just waited because they knew that they were gonna get a coupon for it and they were gonna sell it at a discount.
• 19:10
  SPEAKER_00: And so the business became so dependent on discounting that it just killed it.
• 19:15
  SPEAKER_00: You know, it kills your profitability.
• 19:17
  SPEAKER_02: Right.
• 19:17
  SPEAKER_02: So the business where I worked, um they were conflating cash flow with profit.
• 19:24
  SPEAKER_00: Right.
• 19:26
  SPEAKER_02: That's they're not that's not the same thing.
• 19:28
  SPEAKER_00: No.
• 19:29
  SPEAKER_00: No, no, I mean, look, it cash, you have to pay attention to your cash, right?
• 19:34
  SPEAKER_00: You have to pay attention to cash management because cash is what pays the bills.
• 19:38
  SPEAKER_00: But are you building cash or are you draining cash is always the question.
• 19:43
  SPEAKER_00: And is discounting um so the the where most entrepreneurs get into trouble, and I see this on Amazon every every prime day, I I see it.
• 19:57
  SPEAKER_00: Nobody pays attention to how much it's really costing them.
• 20:00
  SPEAKER_00: How much did the product cost?
• 20:02
  SPEAKER_00: How much is it costing you to you know, your throughput, your shipping, et cetera?
• 20:06
  SPEAKER_00: And then you discount and you wind up losing money on a sale.
• 20:11
  SPEAKER_00: But you think that if I, okay, I lost a dollar on this sale, but if I sell a thousand of them, I'll be okay.
• 20:19
  SPEAKER_00: Well, no, because then you're just gonna lose a thousand dollars.
• 20:21
  SPEAKER_00: Exactly.
• 20:22
  SPEAKER_00: You know, when you lose money, volume does not do anything except accentuate the loss.
• 20:28
  SPEAKER_00: And so, you know, people think volume solves everything.
• 20:32
  SPEAKER_00: Volume only solves things when you're making a profit.
• 20:34
  SPEAKER_00: Even if your profit is small, right?
• 20:37
  SPEAKER_00: Supermarket industry, right?
• 20:39
  SPEAKER_00: Canned goods and and and all that stuff, you know, it's probably got a 4%, 5% net operating profit.
• 20:44
  SPEAKER_00: But you sell in volume, you sell enough of it, you make a lot of money.
• 20:47
  SPEAKER_00: But if you're losing, but they don't lose 4% on each can and then expect to sell, you know.
• 20:52
  SPEAKER_00: So that's where I think people get backwards.
• 20:55
  SPEAKER_00: And then they focus on cash flow and they think, okay, well, we just generated all this cash, but the cash is actually depleting over time.
• 21:02
  SPEAKER_00: And then what happens is there comes a point in time when you don't have any cash left because you disappeared.
• 21:09
  SPEAKER_00: It's insulated.
• 21:10
  SPEAKER_00: That's why I was laughing because there's, you know, there's three points in this conversation that I talk about constantly with people and with with with founders.
• 21:19
  SPEAKER_00: And I and I think to myself, you know, you can show, again, you can show people the facts, you can show them the data, you can show them how it works, but they always go back to what they believe.
• 21:32
  SPEAKER_00: And that's always a danger.
• 21:34
  SPEAKER_00: And it it's until they get hit over the head where something dramatically happens, right?
• 21:40
  SPEAKER_00: Like again, in my first business, you couldn't tell me anything.
• 21:43
  SPEAKER_00: I knew everything.
• 21:43
  SPEAKER_00: I knew everything, I knew how to do everything, and I was 100% wrong.
• 21:47
  SPEAKER_00: And it was after that then I realized I I don't know everything and and I have to listen to people.
• 21:53
  SPEAKER_00: And until like they go out of business, like like that company did, the founders probably didn't learn.
• 22:03
  SPEAKER_01: Right.
• 22:04
  SPEAKER_01: It's uh uh it's crazy to me.
• 22:07
  SPEAKER_01: It's crazy to me.
• 22:08
  SPEAKER_00: It is, but it happens.
• 22:10
  SPEAKER_00: I mean it's a it's amazing.
• 22:11
  SPEAKER_00: I y you know, we're going through this now with uh we have a client who's sells one product, they have no recurring revenue.
• 22:20
  SPEAKER_00: You know, they're the it's a it's a it's a shaving product.
• 22:23
  SPEAKER_00: You're gonna buy it once and you're never gonna buy it again, right?
• 22:27
  SPEAKER_00: And the cost, the cost of acquisition of acquiring a customer in that channel online is about$50.
• 22:35
  SPEAKER_00: And that economics don't don't work.
• 22:37
  SPEAKER_00: And they keep going after like bringing in another marketing guru because they think there's gonna be some marketing hitch that's going to get sales.
• 22:46
  SPEAKER_00: And maybe there is, but the reality of it is it's not the marketing that's the problem, it's the economic structure of the business, how much the product costs, how much it costs to acquire a customer, what you can sell it for.
• 22:58
  SPEAKER_00: And everybody keeps saying the same thing to them.
• 23:00
  SPEAKER_00: You you have to get other products because you need recurring revenue.
• 23:03
  SPEAKER_00: That's the only way this business works.
• 23:05
  SPEAKER_00: Right.
• 23:06
  SPEAKER_00: Right.
• 23:07
  SPEAKER_00: It's just like you, you're not selling a product once to somebody.
• 23:10
  SPEAKER_00: You're trying to build a community, get them to come back and buy again and again and again.
• 23:14
  SPEAKER_02: Yes, that's exactly it.
• 23:15
  SPEAKER_02: I mean, we want it's great to have new customers, right?
• 23:20
  SPEAKER_02: Um, but in a business like ours, you're looking for the repeat.
• 23:25
  SPEAKER_02: You need that re client to come back.
• 23:28
  SPEAKER_02: And um you constantly need to feed that repeat client and draw them in because if you don't have that, again, the cost of acquiring a new customer, the amount of time and energy, it's it's a lot.
• 23:42
  SPEAKER_02: It's a lot, particularly when you're dealing with brands like ours that are independent, you know, at this at this price point, you know, they're used to purchasing things from the sex Fifth Avenues of the world, the Burke Dorf Goodmans of the world, the Neiman Marcus's of the world.
• 23:57
  SPEAKER_02: So they're used to brand names at that level.
• 24:02
  SPEAKER_02: And so when they're looking at something from, you know, a brand XYZ that we carry that is the same, that's a thousand dollars, there's a there's an education that's involved there.
• 24:14
  SPEAKER_02: And so the time it takes to sort of bring them along into you know what we're trying to sell, um, it's it it's it's time.
• 24:24
  SPEAKER_02: It's time that I have to pay my staff and it it's it's sometimes it works out and sometimes it doesn't.
• 24:29
  SPEAKER_02: Um, but you know, for for any business like ours, you want the repeat customer.
• 24:34
  SPEAKER_02: And so um we're constantly trying to figure out how do we get these people back in.
• 24:38
  SPEAKER_00: Yeah.
• 24:39
  SPEAKER_00: No, you're 100% uh 100% correct.
• 24:42
  SPEAKER_00: It's all about the repeat customer because the cost to acquire customer, and and I don't care.
• 24:47
  SPEAKER_00: You know, I had a conversation with the this the founder of the company I was talking about, and he said, Well, you know, the automobile industry doesn't have doesn't have recurring revenue.
• 24:55
  SPEAKER_00: I said, Yes, they do.
• 24:56
  SPEAKER_00: I said they sell service contracts, they sell financing, they sell service, they sell parts.
• 25:01
  SPEAKER_00: They in in today's environment, I mean, my car, I have an app in my car and I have to pay whatever it is.
• 25:06
  SPEAKER_00: It's 10 bucks a month.
• 25:09
  SPEAKER_01: Right.
• 25:09
  SPEAKER_00: Yeah, everybody's got started on remotely, all of that stuff.
• 25:12
  SPEAKER_00: Yeah, everybody's got recurring revenue.
• 25:14
  SPEAKER_00: I don't know a business that doesn't have recurring revenue.
• 25:16
  SPEAKER_00: You can't, there's no business where you can sell a product for under$100, sell it once and make a profit.
• 25:22
  SPEAKER_00: And and it just doesn't, it doesn't happen, you know.
• 25:25
  SPEAKER_00: So um, yeah.
• 25:28
  SPEAKER_00: Uh yeah, we're uh we're about out of time.
• 25:30
  SPEAKER_00: Uh for people that maybe in Massachusetts listening, where's your store located?
• 25:36
  SPEAKER_02: So we are located um on at 28 Lincoln Street in Newton Highlands.
• 25:41
  SPEAKER_02: Um it's a really great little walking neighborhood.
• 25:44
  SPEAKER_02: It's one of the villages of Newton.
• 25:46
  SPEAKER_02: And um, you know, there's some restaurants there, some hair salons, a couple of jewelry stores.
• 25:51
  SPEAKER_02: So there's a park down the street.
• 25:53
  SPEAKER_02: There's a lot of parking, actually.
• 25:55
  SPEAKER_02: It's a great place to spend an afternoon or a day just sort of uh supporting all the small businesses that are are on our street.
• 26:02
  SPEAKER_02: It's um we found a really good home there.
• 26:05
  SPEAKER_00: And and what's your website?
• 26:07
  SPEAKER_02: It's Covet and Lou, C O V E T A-N-D-L-O-U.com.
• 26:14
  SPEAKER_02: So everything that we have in store is on the site.
• 26:16
  SPEAKER_02: Uh we of course we'd love to meet you in person.
• 26:18
  SPEAKER_02: I mean, it's that's you know, we have a wonderful community of people, and um, it's always nice to meet people in person.
• 26:25
  SPEAKER_00: Yeah, it is it uh it is always nice to meet people in person.
• 26:28
  SPEAKER_00: But uh um yeah, and I appreciate you taking the time.
• 26:32
  SPEAKER_00: Uh unfortunately, we're running out.
• 26:33
  SPEAKER_00: So uh if anybody wants to go and check out what you've got, covenandloo.com, we'll have that uh website link in the description of the show, and uh we'll put the address of the store in there for anybody who's in Massachusetts or going through Massachusetts.
• 26:47
  SPEAKER_00: Newton is a beautiful town.
• 26:49
  SPEAKER_00: I mean all those those areas.
• 26:50
  SPEAKER_00: Yeah.
• 26:51
  SPEAKER_00: I was in uh Massachusetts for a little while, uh uh going back and forth with uh many years ago.
• 26:57
  SPEAKER_00: I love it.
• 26:57
  SPEAKER_00: And my daughter was up there for for college, so yeah, it's a great I I love uh I love Massachusetts.
• 27:03
  SPEAKER_00: I love New England, so um, but again, thank you for taking the time and uh I appreciate you coming on.
• 27:09
  SPEAKER_02: Thank you, Phil.
• 27:10
  SPEAKER_02: I appreciate you.
• 27:11
  SPEAKER_00: All right, thank you.