There’s a topic in e-commerce that if ever solved, in a definitive way, is said to be “a billion-dollar solution”, and that is the topic of “sales attribution”. In the world of e-commerce it can take up to 17 different interactions with a brand before a customer makes a purchase. Of those 17 different interactions which one gets majority credit for the sale? That’s sales attribution.
So, with RAWr! Life. operating as a “bootstrapped” business, our only source of income comes from sales transactions. We have no investors or loans which prevents us from being used as an acquisition tool for investors. It also means there's basically no money coming from elsewhere, not even to fuel new product growth, let alone being a sponsor (outside of a transaction model or free product). This is also why “cash-flow” is a commonly talked about issue with bootstrapping. Not saying bootstrapping is the right way to run a business, it’s just one way to run a business. There are pros and cons to both, bootstrapping vs investors.
In the skate industry the standard royalty for a pro skateboarder with their name on a board is a couple of dollars ($1-$5) per board sold ($55-$70) (this varies on location of the sale, online vs in-shop). When we started providing these products to the public, we only knew one model of operating a business, and that was from the skate industry. Create a brand, form a team around the brand (or vice versa), and market it. The team and media around the brand being the main driver of “end-of-the-line” customer sales. Over time we started to realize skateboards and proprietary supplements are fundamentally different products. Becoming owners and operators guided us to thinking about a “team” and people that promote us in an entirely different way, and how “sales attribution” fits in with both. Joey and I live on both sides of this conversation. We have been sponsored by companies and we own a company. How does the value between the two get credited in a “fair way” to the workings of a business?
Within this last year or so we’ve had a “Thank-You-Page” order exit survey with a 75%+ response rate. The survey question is…
“How did you first hear about us?”
Response options and their response ranking:
- Instagram Ad
- Influencer (Example: Pro Skateboarder, Pro BMXer, Model, Other Athlete, Etc.)
- Word of mouth
- Our Instagram page
- Facebook Ad
- Our Facebook page
- Google Ad
- Google Shopping
Responses 1-4 vary by only a few percentage points, but in total all 4 make up 80% of responses, so you can see the weight of these marketing options. Responses 5-10 vary quite a bit, but as a whole they only make up 20% of total responses.
People that promote us and "team" fall under “Influencer”. “Influencer” is one of the top responses, but how do we know which influencer or how to attribute their portion of the sale?
There’s a well-known sales attribution tracking type out there called “Affiliate Marketing” with hundreds of software programs to choose from. We use one that integrates well with our store. We’ve had it for at least 5 years, it does its job, and works well for people that understand how to use it. You sign up, it gives you a custom tracking URL to place on your site or page. That URL directs someone to our site, and if that person purchases a product then you get a portion of the sale because it tracks your personal code as the origin of sale.
The drawback with this method is that most people don’t have a place (website) to use the custom tracking URL. Some simply use social media, but a lot of skateboarders and BMXers only have 1 or 2 easily accessible URL locations for their audiences. That’s an Instagram profile URL, or if they meet Instagram requirements, they can use a URL in a story “swipe up”. It’s likely that they’re sponsored by many different companies, so which company gets that URL space? Likely the one they’re getting the most out of (often an investor backed company or a company that’s established and lived through an arbitrage opportunity, usually “first-mover” arbitrage).
So, let's talk discount codes, which is another way to earn. By tracking with discount codes, a team member or influencer can just tell someone the code, and if that person uses the code at purchase it will be tracked in our system. This way we can give sales attribution by simply seeing how many sales are associated with that specific code. In our software this is as easy as a “discount code use” search filtered with time frames.
Whenever we post on our own social media and there’s a place to plug in a link associated with the media we published (Linkin.bio post URL) we also put a tracking link (Google campaign created) unique for the person in the post. This also allows us to attribute the sale to that person even though we’re publishing to our own audience. They still provided a piece of content for us to use (with their permission of course), along with us providing them free product.
We came to this conclusion after coming across conversations of aggregate social media accounts growing really big on the back of curated content that they did not create. The value in the transaction for the creator often times only being exposure (which can be great). The aggregate account can also become an “influencer-account” for monetary transactions. This can be looked at from many different perspectives and intentions, but is a big part of this topic.
We do our best to create discount codes and tracking links for everyone that reps us and promotes us online. Often though, they don’t have a blog or location to plug in an affiliate link, so, through these coupon codes, we can track the sales that have used the coupon code associated with their name. We will set up different codes for one person to leave room for human memory error for the customer ordering that's using the code.
- Our codes will be made easiest to remember from a verbal conversation, LASTNAME15, FIRSTNAME15, FIRSTNAMELASTNAME15, SOCIALMEDIAHANDLE15, or NICKNAME15.
- We also give tracking links (Google campaign created) for when they do have the location to use a URL that's easily accessible for their audience.
Here’s how we set up our sales attribution for discount codes and tracking links apart from our actual affiliate marketing program:
- We now pay the person promoting us 15% (money) of the total transaction (discount code or Google tracking URL), the person (customer) using their code gets a 15% discount (equivalent to being a single product subscriber with us. This also gives equal opportunity to the promoter) off of their order, while both together take 30% from our total transaction amount.
- To limit complexity with managing dozens of promoters, we wait until their accumulated share of sales attributed to them goes above $100 before we payout.
Here’s a mock example of what a single transaction breakdown with this discount code/tracking link sales attribution applied looks like…
- Website Product Total: $100.00
- Customer Discount from Influencer Attribution (15% off customers order): $15.00
- Sales Total w/ Customer Discount Applied: $85.00
- Influencer Attribution Share (15% paid to them): $12.75
- Transaction Fee: $2.50
- Customer Shipping Cost: $0.00 (we have free shipping)
- Our Shipping Cost: $12.00 (USPS priority- weight/dimensions for a $100 order item combination total)
- Our Product Cost: $30.00
- Customer Tax Fee: $0.00
- Our Tax Fee (state and fed - estimate w/ expense write-off’s applied): $7.00
- Remainder for Business Operations (insurance, rent, employee pay, product development/growth, advertising, software bills, delivery/gas, donations, etc…): $20.75
With 100 product orders that leaves us $2,075 for business operations (insurance, rent, employee pay, product development/growth, advertising, software bills, gas, donations, etc…) and the person promoting us (team/influencer/etc.) $1,275.
With that mock transaction breakdown example above, the source of the $2,075 number is the margin used to operate a business. Matching that example with reality it has to be at a scale of at least 1,000 orders a month for it to be large enough to consider the skate-world-model of a small team being paid monthly salaries, sales attribution applied or not.
That minimum 1,000 order scale in the mock example barely covers market rate salaries for the job positions required to operate this business. Getting at or above that “1,000 order scale” as quickly as possible is the main goal of an investor backed business. The money being put up from elsewhere (investment capital) funnels into the “business” making its purpose first and foremost to become a customer acquisition tool at all cost for the investor. “At all costs” often includes a small monthly salaried team to help get the “business” to reach a minimum viable customer amount. That minimum viable customer amount is what’s needed for the business itself to switch from operating at a loss (relying on the operating funds coming in from elsewhere, like investment capital) to having the business operate profitably from its own sales transactions. When the investment money doesn’t take the “business” to that minimum viable customer amount, then that is when it all folds and the salaried team and all the employees will be let go. A “flash-in-the-pan” scenario that usually leads to everyone involved scratching their heads not knowing they were working in a "fake growth environment" (I've been there). Just know the business model you’re working under.
Back to health products being fundamentally different than skateboards, with bootstrapping in mind, it first makes more sense for us to support a larger number of promoters that are getting shares of their attributed transactions vs doing the small salaried team model.
We hope this gives you some insight, clarity, and transparency on how we look at doing our part to provide for the people that help promote us, As stated, we are a bootstrapped business trying to grow and bring awareness to the importance of nutrition in one’s life. We want this to be out there for people to know we’re thinking through these things as best we can. There are no rules to this, or one right way to do these things, while operating a business. Before your next purchase, if you want to help out someone that promotes us, shop through their tracking URL, and if you want a 15% discount, then ask them for their discount code (discount won't be applied just by shopping through their tracking URL) in order to use it at checkout in the “order summary” section at the top of the page immediately after proceeding from the cart page.
We appreciate you taking the time to read this!
Note: Discount codes of any type can’t be applied on top of already discounted subscription selected products.