Why Low-Budget Videos Beat TV-Quality Ads on Facebook

In this episode of Shopify Masters, you’ll learn from an entrepreneur who ran a "bad ad" on Facebook that made him $2 million in his first year of business.

The better the production quality of a video ad, the better it performs on Facebook. Right?

But there's a reason why many low-budget Facebook videos often reach more people with less ad spend than commercial-quality videos.

In this episode of Shopify Masters, you’ll learn from an entrepreneur who ran a "bad ad" on Facebook that made him $2 million in his first year of business.

Chad Kauffman is the co-founder of Kitty Poo Club, a company that ships disposable cat litter boxes, pre-filled with premium litter, directly to your door every month.

20 years back, video was what we saw on TV, so there’s this TV-quality expectation. Then all of a sudden we get into YouTube and Facebook and Instagram and Snapchat.

Tune in to learn

• Why a low-budget ad might perform better for you than TV-quality commercials
• What you should focus on in the first 5 seconds of your video ad
• Why you might need to drive your customers to a page to learn more than to a page to buy immediately

Listen to the podcast below (or download it for later):

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Show Notes

• Store: Kitty Poo Club
• Social Profiles: Facebook, Twitter, Instagram
• Recommendations: Recharge (Shopify app), Klaviyo (Shopify app), Smile.io (Shopify app), Privy (Shopify app), FOMO (Shopify app), Yotpo (Shopify app)

Transcript

Felix: Today I’m joined by Chad [Kaufman 00:00:51] from Kitty Poo Club. Kitty Poo Club ships amazing disposable cat litter boxes prefilled with ultra premium litter directly to your door each month for a low monthly cost and was started in 2017 and based out of Wooster, Ohio. Welcome, Chad.

Chad: Thank you, Felix. Appreciate you having me on your show.

Felix: Yeah, excited to have you on. I think I described the idea behind the product but where did it come from? Where’d this idea come from?

Chad: Yeah, you did actually an excellent job. Probably about two years ago, we’ve always been a big fan of cats. I actually don’t own a cat. I’m severely allergic to them but I’ve always loved cats and actually wish I could have one but we’ve always been fans. I have lots of friends that are big cat lovers and we saw a need just watching some of my cat friends, what they go through when they’re maintenance of their litter box on a monthly basis and my dad, who actually is the co-founder with me on this, recognized the opportunity and he came to me and he said, “Chad, what if we did a disposable litter box?” I kind of shook my head and laughed and said, “Yeah, dad, right. I don’t think that’s probably very viable as litter needs to be changed on a regular basis,” and shipping costs I thought would be prohibitive.

I’m an entrepreneur. I’ve started many companies so I just kind of chalked it off and put it in the back of my head and began to think about it more and more and then I really started to dive into what types of litter are out there on the market and could you actually do a disposable litter box and put enough litter in that box and send it to cat owners at an economical price that could last for a whole month. I honestly didn’t think it would be possible.

We started out on this journey of doing research and development and looking at various litters and testing and seeing if we could develop a box that would actually work. That’s how we kind of came up with it and began our indeed journey.

Felix: You mentioned that you are an entrepreneur. You started other businesses in the past and I’m sure that you’ve had plenty of ideas in the past and plenty of ideas at the same time you started this business. To hear you talk about it, there were some factors that would give you disadvantages for starting a business like this. What made you choose to pursue this particular idea other than compared to the other things that you could’ve pursued?

Chad: Sure. For one is it’s a amazing large market. There’s actually 40 million cat owners in the United States and those are owners that have indoor cats. There’s actually about 98 million indoor cats and the cat litter business is a $3 billion a year industry. As you know, if you’ve ever had a cat or any animal, they pee and poop every single day and so if you’re going to have an indoor cat you need to have a litter box. I thought that there was probably a decent opportunity if we could develop a box that was viable and a litter that was viable, that this could be a pretty good subscription base with monthly recurring revenue. In being that the industry was so large and there wasn’t anybody in the industry doing anything like what we have, we decided to pursue it, if in fact we could develop a viable product which we’ve done a very good job of.

Felix: Yeah. Obviously a very big market and you were saying that there’s no one out there that’s doing exactly what you’re doing but there’s certainly a lot of competition that could come in and try to replicate this or there are obviously solutions that people are using today currently. What did you see in the competitive landscape that made you say, “Hey, this is a place that we can come in and take our piece of the pie?”

Chad: Sure. Yeah, good question. There’s a lot of different litters out on the market. You have everything from wheat to grass to corn to clay to walnut to silica. The list kind of goes on and on and there’s a lot of different supplies slash manufacturers of that and a lot of different retailers that are retailing those manufacturers’ products. There’s a number of subscription litters on the market. If you just go Amazon as an example, you could pretty much subscribe to any litter that’s available on Amazon. We decided not to necessarily try to compete against the subscription litter services because anybody could essentially take their litter and turn it into a subscription but our hook is actually our box. There is not a disposable litter box on the market anywhere that can last for an entire month.

Where so much of our R and D went was actually into our box and that was probably the single hardest thing that we had to overcome on the R and D side was our box because it’s a cardboard box. Some people see it and say, “Oh my gosh, I would never buy a litter box that was made of cardboard.” Yeah, you would think that and we have a number of people on our Facebook page and stuff that would say, “Oh, my cat would destroy that box in two days. They love to destroy cardboard.” That’s just not true and the reason for that is because cats are very territorial and they’re very dominant. Their litter box is a part of that domain so they’re not going to destroy or tear up their domain. It just doesn’t happen. We actually have lots and lots and lots of customers, tens of thousands and we haven’t had a single report of a cat actually destroying a box because they won’t do that.

Secondly, our box is entirely coated with an FDA approved water-proof coating and then in that we have a, at the base of the box, we have a sealed recycled plastic tray which is sealed into the box. Our box is designed for urine. It’s designed for cats that spray and it will hold up for an entire 30 days without any issues whatsoever.

That’s the hook that I think becomes attractive to people that, wow, you’re giving me a simple, convenient solution from having to go out there and do the monthly maintenance on my litter box. If you’ve ever owned a cat, cat owners are scooping the poop daily. At the end of the week, they’re pretty much dumping all of it out. They’re in many cases chiseling it out because the urine clumps and it turns into concrete at the bottom of the box and there’s just all of this stinky maintenance that goes along with litter box maintenance. We’ve solved that.

Now the second component is the actual litter and our litter is made of silica gel and silica is pretty well known on the market. It’s actually just a mineral from the earth and it’s 100% nontoxic to animals as well as to humans. Many people will say, “Oh, silica gel, isn’t that poisonous?” Because they’re familiar with the little silica gel packets that maybe you see in women’s purses or anywhere where you’re trying to take moisture out of the air and they’ll asy, “Do not eat.” The issue isn’t actually the silica gel. It’s that you don’t want to get that packet itself into your digestive system. The silica gel itself is actually just fine for your system.

We developed a silica gel, however we are quite different from the other silica gel litters on the market. We tried to do a few things. Cats want a natural product and this is a mineral and so we tried to keep it as natural as possible. Many of the silicas that are available on the market have cobalt chloride which is a carcinogen and that’s actually what turns the litter colors so that people know when their cat’s urinated or the litter’s used up. We decided to not even mess with that. Carcinogens are not good for you. They’re not good for animals and so we want to have no part of that in our litter.

We also, it’s dye-free. It’s scent-free and it’s dust-free and all of that is components that are attractive humans for the quality of your air in your home and also to cats. Because of that, our litter performs extremely well. You actually can go an entire month with one cat with absolutely zero odor in your home. You say that and if you are a cat owner you think that’s impossible but that’s why we have people signing up daily in the droves because they just cannot believe that our product is actually no odor for an entire month and that really has to do with the design of our litter.

Felix: Got it. I think what you’re getting at here is I think one of the approach that you’ve taken that I really like is that you recognized that there was already a lot of subscription litter businesses out there that were selling just the litter itself and most people would see that, then discount their ability to compete and say, “There’s already too much competition out here. Let me just move on to something else.” You kind of peeled back the layers and uncovered a couple angles where you could come in and compete and I think the biggest one that you mentioned was the box. Can you talk us through the process, your thought process that goes into that when you see, because you have the experience of starting businesses, when you see a marketplace, when you see there’s already products out there, how do you uncover the angles of where you could compete? How do you pull out these hooks where you would come in and offer an alternative?

Chad: I think a lot of it starts with just looking at what problems do people have that aren’t being solved out in the marketplace. For us, it seemed very obvious that the maintenance on litter boxes are just a royal pain and most people just don’t want to deal with cleaning those out. We looked at it from that angle in terms of, okay, there’s litter. Litter is becoming much more readily available on e-commerce. Litter typically is a heavy product and so people don’t want to go out to the store and have to put that into their grocery cart and lug it home and so on and so forth so why not move the route that many categories are going today which is e-commerce and have it delivered to your home? We knew that if we didn’t have anything that differentiated us other than our just litter, then we would be competing against every other litter company out there, including on e-commerce as well as traditional retail. We knew that we had to have a complete, all in one solution for cat owners if we were really going to make a splash in this space.

We really felt like the box was a major component that was being overlooked by litter companies. Right now, what’s available on retail is pretty much just an injection molded plastic box and there’s nothing fun about it. You can have short side walls which allows litter to get tracked out of the box easily. It can spill. Cat can throw it out of the box, the list goes on and on, or you put a dome on it. Actually cats really do not like domes. They don’t like enclosed spaces and just like you don’t like going into a port-a-potty, per se because it has feces and urine in there in an enclosed space, it doesn’t get flushed, it stinks. The same way is true with a litter box. I don’t mean to be too graphic here but imagine the same thing is true for a cat to enter into a hooded litter box. Having an open space like we have that allows the cat to get into it really makes for an effective product and really differentiates us between others in the marketplace.

Felix: Lots of R and D involved before you’re able to release this product. Can you talk to us about the research process and how you developed your solution?

Chad: Yeah, sure. Interestingly my background, one of the companies that I started was a plastic company and so I know resins very well. I know injection molding very well and that’s a company that I still have and we do a lot of business in that space. I didn’t want to go that route. I also didn’t want to ship a plastic box to people that would be, A, very expensive and, B, very wasteful and clog up landfills. I thought that I really wanted to come up with an environmentally friendly solution and cardboard is actually very environmentally friendly. It can, A, be recycled. B, if it does go to the landfill it does break down in the landfill and it’s a tree that goes back into its natural environment. I started with that premise of could we do a disposable 100% recycled cardboard box?

You’re talking about for one cat, an average cat urinates about two and a half to four ounces per time it goes. You start to add that up over a couple times per day over the course of 30 days, that ends up being a lot of liquid that’s going into that box and you think, “Okay, paper and liquid typically do not mix very well.” We spent a lot of time on the R and D phase trying to work with different commercially available coatings that we could coat the cardboard with that would hold up to the urine. As it turns out, if you know anything about cat urine, there’s a lot of ammonia in it and it’s actually almost like acid in many ways. It just seems to eat through everything. We couldn’t find a good coating that would allow or that would withstand 30 days worth of cat urine. Even though it was getting absorbed by out litter, this still would end up making its way to the bottom before it would get absorbed.

We probably tried for about six months to solve that equation and failed miserably. At that point I really thought that maybe what we were going after just wasn’t a viable solution. Then I went back to my plastic knowledge and decided to do a very, very thin, 100% recycled plastic tray that could be sealed into that box. When we actually came up with that, that obviously solved all of the issues and then we worked pretty hard to develop a system that allowed that tray to be sealed into the cardboard. That was probably about three to five months worth of R and D and we started out on a very manual process. Then once we proved out the concept and proved out the business, we invested in manufacturing equipment that would allow us to scale and end up doing hundreds of thousands of boxes per month. We have those manufacturing systems in place now.

Felix: What about the testing that was involved? Once you were able to produce a version of it that was ready to be tested by I guess the end consumer, the customer, were you able to get it out and iterate on? How did that process go?

Chad: Yeah, absolutely. It’s a great question. We actually probably went through probably nine or 10 different iterations and so every time we tested each iteration, I actually ran just a simple Facebook ad in my area here in Ohio and put it out to cat owners and said, “Hey, I’m looking to do some ongoing testing and I would provide you free litter and free boxes to test if you would provide me with feedback.” I signed up 30 cat owners and so they received all this free of charge. Their only catch was they needed to give me consistent feedback. I just did everything through online survey tools and so we would make one iteration. I would drive around and deliver these boxes to people’s houses and then I would send survey tools out over the next week or two or three weeks and I would get feedback.

Then I would make another iteration and I just continued to repeat that and I would make improvements based upon that feedback after each iteration until we got to a point where we felt like we had a really, really viable product that was overcoming all of the objections and input that we were receiving from those testing the product. That included not just the box itself but also the litter. We spent a lot of time developing the litter as well which has been custom developed by us. We are using, as I had mentioned, silica gel but there’s a bunch of components to that that have been custom developed by us.

Felix: Yeah, I like how you try to basically just figure out what objections people have, what kind of problems do they have with the product and then just kind of tackle each one of them one at a time. How are you able to prioritize which objections or which issues you should try to tackle first?

Chad: Yeah, that’s a good question. It really first starts with the litter because you could have the best box in the entire world but if the litter doesn’t perform and last for a full 30 days, then the box is essentially useless. The box turns out to be the icing on the cake but it’s also the hook as to why they want to buy our product and then they find out how good the litter actually is. We decided to first start with the litter and we could always come back and make changes to the box. We went through quite a few different iterations on the litter as well until we made sure that we were getting a full 30 days out of our litter for one cat and that meant really no odor whatsoever and minimal maintenance.

I haven’t talked a lot about the litter but the litter itself is very important because, as I just mentioned, if the litter fails then essentially the box is meaningless. Silica gel is a very porous material and so it actually has tens of thousands of micro pores. Cat urine is actually 95% water and 5% urea. Urea is the odor causing part, it’s the part that stinks. It’s that ammonia smell that just kind of makes your nose turn. When a cat urinates, it hits these tens of thousands of micro pores which instantaneously absorb the urine. What does water do naturally? It evaporates and we know that urine is made up of 95% water. That water actually evaporates and then the urea stays trapped in the micro pores and actually can’t escape. That’s why you get a full 30 days out of our litter with zero odor is because that odor is literally staying trapped in the micro pores.

Felix: Makes sense. This manual process that you have for producing the box initially, you mentioned that you now automate away for production. How did you know that it was time to invest in scaling up the business?

Chad: Yeah. We launched October 1st, 2017 and we didn’t really know what to expect. Our marketing approach was we were going to buy some Facebook ads and we were going to put it up and see what happens. I started with my own Facebook network and said, “Hey, I’ve got this new business, manufacturing slash e-commerce business that we’re launching and for my cat friends out there, why don’t you try our box?” I surprisingly got probably 10 or 15 of my friends to sign up and they loved it. Soon following, within a week or so, we launched some Facebook ads and didn’t really know what to expect.

In the first 20 days, we ended up signing up 1,400 customers and we were like, “Wow.” The response was outstanding and we were prepared in the sense that we had enough inventory but we had about enough inventory for that and that being it because all of our litter is actually made in China so there’s a long lead time for it to be made because it is custom made and then for it to be on the water, it’s 30 days on the water and get through customs and actually to our warehouse facility.

Because it’s a subscription base, you have to be prepared for that. You can’t just say, “I can’t ship you this month because I ran out of inventory.” We kind of then shut all the Facebook ads down and we’re like, “Okay, we’re not going to take anymore customers because we know we have a good product here and people love it and we need to make sure that we can service them for the next three months until our container comes in.” From there, we just continued to … I hired a bunch of manual labor to assemble our boxes and then knew that if we were going to scale this, manual labor was not going to be possible. I couldn’t hire enough workers to do this to scale.

I began in December, began working on what type of manufacturing equipment we would need to do these boxes and the approach that we’ve taken to seal the tray into the boxes is very proprietary and in fact we’ve patented that idea and we’ve applied for utility patents and we had custom built and engineered from the ground up machines to actually do that. It was supposed to be an 18-week build and it turned out to be a 24-week build on that equipment and so we’d just gotten it installed over the last month and began to really begin scaling up our advertising to start to fill up that product time on our manufacturing equipment.

Felix: That’s amazing. My math is right and the pricing was the same back then, you basically built a 20 to $30,000 a month in the first 20 days. Can you give us an idea of how much it’s grown to since then?

Chad: Yeah. We continue to just add every single month. We’ve really blown up the last 60 days because of our manufacturing equipment. I expect by October 1st of this year, we’ll do $2 million in revenue in our first 12 months.

Felix: That’s amazing. This goes back to the very beginning of the finding out if this is viable or not by running those Facebook ad. What were you doing? How did this happen in the first 20 days where you had such explosive growth right out the gate?

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Chad: I think it was just because we had a unique product and we were really solving a problem that cat owners had or certainly a convenience factor that cat owners wanted. I think we solved a problem and we provided a convenience. When we ran the ads, our conversion rate was pretty high. We had sometimes where we were converting 10% of the traffic to sales and we did a pretty good job of monitoring it and looking at it and understanding our messaging and what we needed to change and improving our checkout funnel and so on and so forth. Yeah. It really was surprising to us. We didn’t honestly think that we would get as much traction as quickly as we did and when we saw that, we really knew we had something and we needed to further invest in it.

In fact, at the time it was just my dad and I, my partner in this, we’ve done all of our businesses together over the years. We had put up all our own personal money to do this at that point and we realized that we had, because it’s a $3 billion industry, there’s real potential here to go very big and we’ve built manufacturing equipment to go really big. We decided to go out and actually raise some capital and so we had some business friends that we knew well and we brought them on and we ended up raising $1 million in cash at a $6.5 million valuation.

Felix: That’s awesome. Talk some more about the Facebook ad. What did it look like? Describe it to us so we can get an idea of what a successful ad for you guys looked like.

Chad: Yeah. At the time, I think the most successful ads are actually consumer testimonies but when you’re launching, you don’t have any consumer testimonies because you haven’t really sold a lot of product yet. We actually hired a friend of a friend. I have a friend whose name is Eric Carlson and he’s kind of a Facebook guru and he had a protégé that had taken on some side business. I hired him to actually develop us some Facebook ads and it was a strange thing because one of the guys that I hired and we gave a small equity position to and is a good friend of mine is now our head creative director and is also doing all of the website stuff for us. Nate is a professional designer and he’s done stuff for Apple and you know what Apple ads look like. They’re clean. They’re crisp. They’re colorful and so that’s kind of like his design and you see a lot of that reflected through our website.

This Facebook guy we brought on, he kind of took this approach where it was this mix of some cartoon stuff that we had done in the past before we really had launched to some PowerPoint stuff and threw in some music to it. It really just kind of … It actually looked really, really bad. Both Nate and I were just like, “Oh my gosh, we can’t put this up. There’s just no way we can put this up. It looks so bad. It doesn’t reflect our brand.” He said to us, he said, “Trust me. I’ve been doing this for a long time. There’s an art to this and you need to make it look like it’s kind of more consumer produced and stuff,” and something like somebody forwarded. We were like, “Okay, we’re going to trust you but we’re only trusting you for like a week because we just don’t know that this reflects our brand.” Apparently it worked and he knew what he was doing because we got tons and tons of shares and it went around.

Since then, we’ve polished things up. Our Facebook ads are now focused more on consumer testimonials. We probably get 25, 30 a day of positive testimonials from people just arbitrarily sending this stuff to us. We’re focusing our ads now primarily on that and we only do videos. Facebook videos are way more effective than static videos and Facebook will even tell you that. We only do videos and we’ve reduced our videos now from a one-minute video to a 30-second video because we were finding that our consumers were pretty much watching the first 15 seconds of our video and then they were either leaving or they were clicking and coming to our website. A minute wasn’t doing us any favors so we decided to focus only on 30 seconds and we were running two different videos.

The first video, the first 15 seconds is focusing more on that emotional appeal so it’s focusing on a human cuddling up to their cat. There’s some nice music. They’re in that cozy setting in their home and then the second 15 seconds is talking about the litter box and our litter and you’ve got some text coming up talking about it’s eco friendly, biodegradable, lasts a full 30 days, odor free, that type of stuff. The purpose is to drive people to our website. We’re not trying to tell them everything about our product but we’re trying to create some emotional appeal, catching their attention through cats which we’re targeting cat owners and they all love cats so that grabs their attention. Then about 15 seconds on the product and then using the website to really get in and describe the product and we’re seeing we think some pretty high or above average conversion metrics from those that are coming to our website to those that are purchasing.

Felix: Got it. You are using videos today and you’re also using testimonials. Are those testimonials also video based or are they text of customer reviews?

Chad: Yeah, they’re text of customer reviews. If you’re on your Facebook news feed, you’ll be scrolling through and you’ll come to our ad. At the top of the ad is the header and then we’ve got a small testimony that’s in print from a customer and then underneath that is the video.

Felix: Got it. You mentioned that the very first ads that you guys were running, they look bad to you. Can you describe a little bit more about this? What do you think it was effective even though to you aesthetically it didn’t look good?

Chad: I guess the only thing I can say is that we live in a YouTube generation so if you think 20 years back, if you were going to watch a video most people would think of video being anything that they see on TV so there’s this TV quality expectation, right? Then all of the sudden we get into YouTube and Facebook and Instagram and Snapchat and people starting to produce their own videos and putting them up. The level of quality acceptance went way, way down. It went from consumers probably expecting TV grade quality because that’s all they had, if they watched a screen it was pretty much TV, to now being you can catch videos everywhere and most of them are all self produced. I was expecting more of that TV quality video per se but this guy said, “No, you need something that’s more low budget that is … ”

Yeah, it was just kind of low budget. You even see them in theatres now, right, these low budget movies that do real, real well and it’s stuff that resonates with people. I would just say it was kind of a low budget artfully crappy video that made it look like it was a little bit self produced and sort of like a user had produced it and was passing it around on social media.

Felix: I see. I think that polish, that TV grade polish, people immediately have this reaction that it’s a commercial so they probably ignore it or don’t want to share it. Who wants to share a commercial? If it’s something that looks like it’s produced by an individual consumer, then it’s much more friendly and more inviting for people to actually give it a chance.

Chad: Exactly. Yeah. Well said.

Felix: Yeah. This approach, it obviously worked for you. Why not stick with this model? Why not stick with this idea of creating a low budget essentially looking video?

Chad: Yeah. We probably could and I think that businesses go through phases, right? Actually, I’ll use Dollar Shave Club as a perfect example. in fact, our Kitty Poo Club, I’ve studied Dollar Shave Club till I’ve been blue in the face. I’ve literally read everything that’s publicly available on Dollar Shave Club because they’ve had such a successful model. If you take a look at their first video that went viral that looked the way it did and it was a fantastic video and since then they’ve evolved into probably a little bit more professional videos. Although we’re in our early stages here, we’re evolving into being a little bit more of a polished brand and we’re getting a lot of traction now on social media. It was a great start but it wasn’t how I wanted to represent the brand or the company longer term.

Felix: Got it. That makes sense. You mentioned that you guys first started with one-minute videos, then you cut down to 30-seconds and you spoke about first leading with an emotional side of the pitch and then talk about the features and functionality of the product. That other 30 seconds that was cut out, what did you cut out? What are some things that you see other ads that are on Facebook or anywhere that the entrepreneurs might be wasting their prospect’s time with?

Chad: Yeah. I think a lot of companies spend too much time trying to tell anything and everything about their product. Consumers have a very, very short attention span, especially on social media. You’ve got to grab their attention in the first couple seconds or they’re just going to continue scrolling down, specifically on Facebook, their news feed. Seeing a cuddly cat that looks cute, that will grab your attention for a few seconds and then if there’s something that’s meaningful there or there’s an attractive or interesting headline, it will cause them to watch a little bit more.

Interestingly enough, and I may not get this statistic exactly right but I’ll be in the ball park, I believe it’s around 78% of Facebook users scroll through their news feed with no audio capabilities on. If you have a Facebook ad that has a voiceover that somebody has to hear, you will lose out because most people don’t have their sound on. It’s very important on Facebook ads that you actually, if you have voiceover that has to be heard, that you have captions on so that people can read it. I do this often. I sit on my couch and I could have my audio on but I don’t and I’ll read captions on ads that I watch.

We decided not to go so much of the caption route but to focus on very short, specific areas that are important to the potential customer, right? No odor, less cleaning, lasts a full 30 days, biodegradable.

Felix: It’s like text on screen or are you showing that particular feature?

Chad: Yeah. This is actually text on screen and of course we have the background images of video that’s happening of the cat walking into the box and then we say, “No odor, less cleaning,” that type of stuff that’s popping up on the screen but you want to keep that emotional appeal going while you’re educating your audience and you really need to do that in no more than 30 seconds and some Facebook experts will even tell you as little as 15.

Felix: Right, makes sense. You mentioned earlier about how one of the biggest objections that you were getting from the market was that they would say they would never buy a litter box that’s made out of cardboard and obviously once they got your product, they understood the value of it but how did you convince them to try it out in the first place? How did you convince them to give this cardboard litter box a chance?

Chad: Yeah, we decided to offer a money back guarantee so no risk trial of our product. Order it and if you do not like it within the first two weeks, we would refund your money and so we put that big and bold on our website and tried to make it pretty simple and easy for users to come out and buy our product with no risk.

Felix: You mentioned earlier, too, that there’s 40 million cat owners out there, big huge market. Is the market growing?

Chad: Yeah, the market is growing. There obviously is an older population that is aging and cats are very popular amongst older people because they’re low maintenance animals compared to dogs and some other animals. They’re pretty compassionate. They’re good companions. They’re a fun animal and so you’re starting to see more and more people that are moving away from dogs, actually, and into cats for those reasons, especially amongst the older generation.

Felix: What kind of advice do you have for someone that’s interested in getting into the maybe specifically cat care or pet care market?

Chad: There’s a lot of product out there. I would say you need to study and understand cat behavior. I’ve done a lot of that and I’ve talked to a lot of my friends. Like I said, I would love to own a cat. I actually did own a cat and I had to get rid of the cat because my allergies were so bad. I would say study cat behavior and find products that work well for cats. You can develop products based on understanding some of that cat behavior.

For example, our box was totally understanding cat behavior. You could go to any pet store right now and one of the things that you could get for cats is what’s called a cat scratch pad. Guess what a cat scratch pad is made of. Cardboard. You would think naturally I could never make a cat litter box out of cardboard because they sell these things for cats to actually tear apart. Yeah. That would be the first thing that would come to your mind if you knew and understand that but if you knew and understand cat behavior, you would know they’re territorial, they’re dominant and they will not destroy their domain. We made a cat litter box that’s made of cardboard that no cat destroys because we understand cat behavior. Whether it’s for cats or whether it’s for dogs or whether it’s for any other type of pet, understanding the behavior of those animals and developing products that works with that animal’s behavior I think is essential to developing a good product.

Felix: I think it’s interesting that you go towards the actual end user of the products rather than talk about the person that would be making that purchase but it makes sense that you don’t produce product that the cat or the pet is going to be interested in, then there’s going to be no repeat customers, especially important in a situation based business like yours. I want to talk a little bit about the website. KittyPooClub.com, I like the design of this website because it looks more like a kind of long form sales letter approach rather than a typical e-commerce site. What was the thinking behind the design of the store, the website?

Chad: Yeah. I actually give all of the credit to Nate [Dicken 00:42:04] who is our creative director. He was the genius behind the website and, like I said, he has a long history of professional development in this space and he understands consumers well. He understands behaviors. He understands design and I came in with the old school mythology which was have a bunch of links and have people click through to different links. That’s not the design that effective web based companies are doing anymore.

It’s the scrolling and, just as you said, sort of that news feed because we’re conditioned to Facebook or Instagram and we scroll so you get your information by continuing to scroll down and you notice at the top of our website, we have very few links. It’s join the club, so that’s buy the product and then if you need help and support or if you want to sign into your account but that’s it. Everything you’re going to get is in one ongoing scroll and that’s just the behavior that consumers are accustomed to now and a lot of your more modern sites, whether it be Apple to Amazon to Basecamp to Evernote. There’s lots of companies out there now that are using this type of design and Nate was really the one that encouraged us to go that route.

Felix: Yeah. I like how, as well, that obviously there’s the join the club link on the top but I would say the most prominent looking clickable item on the page initially above the [inaudible 00:43:42] is the see how it works button. Why drive users or drive visitors to learn more rather than say, “Hey, buy this, click on this page. Go to product page and check it out?”

Chad: Good question. I think probably because we are a new product that doesn’t exist out there right now. Because of that, you have to educate the consumer. If you’re just selling a water bottle, a standard water bottle, you’re not going to necessarily have to educate the consumer on what a water bottle is. Everybody knows what a water bottle is. I either look at it and I like the design of it and I decide to purchase it or not but you don’t have to probably tell me a whole lot of features and benefits about the water bottle, other than the Q water bottle which you did recently on your podcast and I listened to … I didn’t know about their product. It actually worked since your podcast because that is a product that was like, “Educate me.” It collapses. It’s made of a special silicone material and so on and so forth. With our product, it’s a disposable litter box that lasts for a month. That’s not something that’s available on the marketplace at this point.

Felix: What about applications? What kind of apps do you use to help run the business and run the store?

Chad: Yeah. We use quite a bit. First off, Shopify, we are hug fans of Shopify. We also love a lot of the plugin apps that work effectively with Shopify. To start, we use Recharge which is a subscription reoccurring revenue app that works with Shopify and we couldn’t do it without them. We’ve tried a number of other subscription payment platforms and recharge is by far the best. We use [Klaviyo 00:45:45] for all of our email marketing. This has been absolutely essential for us. Behind the scenes, it allows us to creative dynamic email flows that are triggered off of both Shopify as well as Recharge so we like that it functions with some of our other apps that we have integrated behind the scenes into the site.

We also use [Smile.IO 00:46:11] and we actually just launched this in the last 30 days and that’s the Kitty Coins rewards. This rewards users or our current members for recommending us to other cat owners and signing up. The new people that sign up, they get rewarded. They get discounts and then the customer or member that recommended them also gets rewarded. Smile hase a very effective product for allowing that to seamlessly happen behind the scenes. That has paid for itself many times over in the first month for us.

We use Privy. That’s the coupon that pops up when you first come onto our site that gives people a percentage off of their first order. That’s been very effective for us in capturing emails. There’s a number of people that will come in, they’ll give us their email address and they won’t sign up and then we have a whole email campaign that then gets launched that goes out and targets those people that didn’t sign up because now we have their email address and we captured that through the Privy platform so that’s been effective for us.

We also FOMO and you’ll see many Shopify sites out there using that today that pops up saying such and such, Felix just bought two boxes an hour ago and he’s in Toronto, Canada. That just kind of brings credibility, that, “Oh, lots of other people are doing this, too,” and so the more people you get buying on a regular basis, the more these things start flowing. We found that to be very effective.

Then we use [Yapo 00:48:04] for showing reviews on our product pages and that’s bene extremely effective. I would say those are probably the top apps that we use and have completely integrated into our site.

Felix: Very cool. Talk to us a little bit about your day to day because you mentioned earlier that you had an existing business. You still have it and now you also run this. How do you structure your day to get the most done possible?

Chad: Yeah. Its’ hard. It’s like any entrepreneur, right? You’re doing long days, early mornings, late nights. It’s especially challenging for me because I’m running multiple businesses and I think the key is to get really, really good people involved and it’s not … Especially in this day and age right now when the economy is really, really booming, businesses are really competing hard for talent and so how do you get the right talent? That’s the million dollar question that everybody’s trying to solve to go out there and get the best people. For us, I think it really has a lot to do with leadership and vision and do you create an enjoyable place to work and do you have good coworkers that people want to work with. We think we have all of those components and pieces in place that we’re being able to attract really good people. I really give it over to our team that’s making this thing grow and go and although I’m intimately involved, it seems like at this point at every level, I couldn’t be doing it all if I didn’t have a good staff.

We have probably, oh, on the Kitty Poo Club side right now we have about 10 employees. We had more than that when we were doing a lot more of building the boxes by hand but now that we have manufacturing equipment in place, we have less people. That was actually really cool because we just had some natural attrition of people falling off as our equipment was coming in. We actually didn’t have to let anybody go. That just happened on its own. People had some other opportunities and so that’s been a really good fit for us. We’ve got kind of the right labor force in place right now for the number of customers we have and we’ll increase that as we continue to grow.

Felix: Got it. KittyPooClub.com is the website. You got the funding. You invested in manufacturing. What’s the next milestone that you want to reach as a business?

Chad: Yeah. We want to continue to grow that monthly subscriber base and then I think that we’re going to be moving into some other types of litters. We’re doing a lot of R and D right now on other types of litters that we believe are going to work very effectively with our box. We expect to grow a base of that because silica doesn’t work for every single cat out there and so we believe that we can ultimately offer a product that will work for every cat and every situation. That’s the next phase and then I think we’ll continue to be growing into other items that cats like that we include in with our box. We’re doing some of those right now.

We have the opportunity for people to purchase anti-tracking litter mats. You’ll see that on our website right there in front of the box. When a cat comes out of the box, if they have any litter attached to their paws, it’ll be caught in that mat. We offer custom scoops that have been developed specifically for our litter. I see us getting into other ancillary products that are a good fit for us that we can continue to sell to our customer base and grow from there.

Felix: Awesome. Exciting times ahead. Again, KittyPooClub.com is the website. Thank you so much for your time, Chad.

Chad: Thank you, Felix, for having me on your show. Greatly appreciate it.

Felix: Here’s a sneak peek for what’s in store in the next Shopify Masters episode.

Speaker 3: For a lot of folks, you can create a plastic prototype I’d say for under a couple hundred dollars.

Felix: Thanks for listening to Shopify Masters, the e-commerce marketing podcast for ambitious entrepreneurs. To start your store today, visit Shopify.com/Masters to claim your extended 30-day free trial. Also for this episode’s show notes, head over to Shopify.com/Blog.

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