Sam Gastro | The Power of Upfront Value

Sam Gastro sold a gift card on eBay several years ago and made a few bucks. But that one transaction inspired an ecommerce business that today is in the seven figures.

It’s a great example of seeing a problem in the market (that, in this case, nobody else had recognized), understanding the solution, and then seizing that opportunity. Since his startup days, Sam says a lot has changed in ecommerce… but a lot has stayed the same, too.

We talk about the tactics he uses to boost retention, and why he doesn’t worry as much about acquisition. He also reveals why he radically changed his business and product offering early on… and accelerated growth as a result.

Tune in to find out…

  • The biggest mistake he made with his company’s finances (and how you can avoid it)
  • The way follow-up email campaigns can go wrong
  • How giving away things for “free” pays off in the end
  • Ways to cut through the clutter of a packed inbox
  • And more

Listen now…

Mentioned in This Episode: www.mygiftcardsupply.com

Episode Transcript:

Joris Bryon: Hey, this is Joris of the Ecommerce Excellence Podcast. Today I’m really excited to talk to Sam Gastro. Sam is the founder and CEO of MyGiftCardSupply.com. They sell U.S. gift cards like iTunes gift cards, Spotify, Netflix. All over the world. And Sam built a seven-figure company with almost no focus on ppc with a big focus on retention, though. So I’m sure this is going to be a very interesting chat. Sam, welcome to the Ecommerce Excellence Podcast. I’m really happy to have you here.

Sam Gastro: Yeah, I’m happy, too.

Joris Bryon: Hey, Sam, before we get started, I’d really love to … yeah, just tell us a little bit about your background. Where did you come from in your career, so that our listeners can understand a little bit more about you. How did you get started in Ecommerce and how did you get to this point?

Sam Gastro: Yeah, so I started off with a kind of entrepreneurial background. My mom was an entrepreneur, and a lot of my family members were entrepreneurs. So I kind of had that tendency and that itch and that desire to create my own thing and do my own thing on my own terms. And my first journey into, not quite Ecommerce yet, I was doing email marketing, back in the wild west days, before there were any laws or regulations around it. You could literally just send an email to anyone. There was no concepts or definitions around opt-in or unsubscribes or any of those things. Which was pretty crazy.

Joris Bryon: In the old days.

Sam Gastro: It got … the cool thing about that was, one it was my first dabble at making money online. And the second cool thing that came from that is, I got a quick appreciation for AB, what was, I didn’t know this term at the time, but I got an appreciation for split testing. I noticed quickly when we were sending out these emails, the different subject lines I would use, the different buttons or different text, different copy-writing. I learned quickly that the way that I was speaking was directly related to how well my emails were performing. So, it was kind of like, you might say my first training into what would then become an Ecommerce career, and kind of laid the foundation for that.

But I later on went onto a couple of other things in between that didn’t really amount to too much, but about six years ago, I started … I sold a gift card on eBay, and it went to a guy in France, I just had a gift card that I didn’t want. It went to a guy in France, I messaged him afterwards and he just asked for me to send him the code. I got to chatting with him a little bit, and he was kind of saying how there was this need for American gift cards outside of the U.S. for people who want to purchase American content, like American movies, American music, books and those kinds of things. There’s various reasons, there’s restrictions, there’s price differences.

So, there’s a couple different reasons why people were seeking out these American cards, and he said that most people at the time needed to go on eBay to purchase these gift cards. So I started selling them on eBay originally, because I could buy them cheaper here, and they were going for more on eBay then I was buying them for. So that was my first dabble. But shortly after that, three months into that, I realized that eBay’s not a great customer experience. Like it’s good to go get what you need if you need to get it, but it’s not a great experience, all in all, overall.

So, I started a … I registered a domain. I had X-Cart as my platform at the time, and then I just created a standalone, Ecommerce site where I could not only create a better experience for the customer, easier checkout, faster checkout, but also I could also retain the customers through … then I had their email and I had their phone number, and I could re-target them with emails later on and things like that that were just better for business. That was my first, okay let’s jump in. I had an official Ecommerce business going shortly after the eBay venture.

Joris Bryon: Yeah, cool. I mean, I love it when I’m surprised by some business models that never crossed my mind. Most of the people sell online, it is pretty obvious, but this, it’s kind of special, right. It never occurred to me that this could be a viable business, and actually that there would be that much of a demand as well. Did it surprise you?

Sam Gastro: It did. I also had zero idea. I was like, “What is this?” I didn’t even ask any questions. It’s the classic entrepreneurial tendency which is you see a problem, you see a way to provide a solution for it. And then the cherry on top is to make a little money alongside of it. It’s like, let’s roll.

Joris Bryon: Cool. Yeah, but from that point, you converted business to seven figure business. From that experience, what do you believe are the two or three keys to grow an Ecommerce business in today’s environment?

Sam Gastro: Yeah, man Ecommerce has changed so much. Even in the six, going on seven years that I’ve started this business. It’s crazy. I started on X-Cart, which I don’t even think is a platform anymore. And so I think a lot of the technology stuff has changed quite a bit. But I don’t think the strategy really has changed at all. So a couple of things that we focused on when I was in the early staged and kind of growing it, it was always, early on, focusing on baby steps. I never had a dream of a seven figure business out of it. I was trying to … I was getting a sale every couple days. I was dreaming of, “How can I get a sale every day? What if every day involved a sale?”

So, it was always focusing on those baby steps. Then once the calendar was filled with a sale every day, that was a very satisfying accomplishment. Then I was thinking about, “What if I can get five sales a day?” It was always just focusing on how to get five sales a day using whatever tools I could use and gleaming insights from podcasts like this and books. I went to a conference early on before I probably really had much of a business, but I wanted to start learning. But it’s like, yeah, “How do I fill that bucket of five sales per day?” Then it went to ten and then it went to 25 and 50. It still is that today. I’m still, even though we’re a large business, I’m still focusing on, “Okay, what if we have a bigger size bucket? How do we fill this up consistently?” Still I think it’s always focusing on those little baby steps.

Joris Bryon: Yeah, and that’s an interesting take on it, because there’s people that, they shoot for the moon immediately, and it’s probably overwhelming at some point in their growth. And the biggest …

Sam Gastro: Yeah, if you’re trying to shoot for …

Joris Bryon: The baby steps approach is probably lot less stressful as well, and more realistic. You gain momentum, because you reach your mini-goals and you can pat yourself on the back. That encourages you to take the next step. Was it more of less like that for you as well?

Sam Gastro: What’s that?

Joris Bryon: Was that more or less for you like that as well? So every mini-goal that you reached kept you going and motivated and you gave yourself a pat on the back.

Sam Gastro: Yeah, yeah. Don’t overwhelm yourself trying to get to six figures, seven figures. Those are … that’s too big, that’s too much. Too big of a bite to chew. I would have felt overwhelmed. I had a job on the side that was allowing me to pay my bills and things like that, so I didn’t have to … this didn’t need to become, I didn’t need to have an $85000 a year salary off this thing. If it made one sale or zero sales, it was fine. I never needed to ask too much of it. I think that just allowed me to make incremental steps and just not try to do too much at one time.

Joris Bryon: Yeah, I think that’s great advice. But in that growth, if I remember correctly, you also did a lot of things that don’t scale, like reaching out to every customer individually. Is that something you would recommend doing? How did it go for you?

Sam Gastro: Yeah, well I mean the thing, when you’re a beginning business, the luxury that you have is if it’s one sale, you can reach out to these customers, and you can send these emails, and really give that high touch experience. Like now, we have far too many customers. Well, at least I haven’t figured out yet, but trying to message each individual customer early on was a huge advantage that we had, because it created a really tailored experience for the customer, and it just let us know, we’re here, and if there’s anything you need, we’re going to be here. We still try to do that to a large degree, but man, you have such an advantage when you’re small and you’re growing, because you just have more time to spend with your customers. I think that’s absolutely a good, valuable asset to leverage if you’re in the early stages of a business.

Joris Bryon: Yeah, right. I noticed a lot of people from the get-go, they try to automate everything and sometimes you just have to do this things that don’t scale, but you learn a lot from it. Did you … when you reached out to those customers individually, did you ask for their feedback? What was your approach?

Sam Gastro: Well the cool thing is that when you reach out to them, they’re going to give you their feedback, almost unsolicited. And you’re going to get some really valuable insights like, when I first started this, I thought it was only iTunes that people were trying to access American content on. It turned out, they were quickly telling me, we need Play Station, we need Xbox. I’m like, “What? That exists? That’s a thing?” And then it went on to Netflix and Hulu and all these other ones. The feedback that you get as well, that maybe equal to just the retention side of it. It’s just keeping in touch with your customer. They’re going to let you know. If you’re on the phone with them, or you’re shooting emails back and forth with them, they’re going to let you know what they’re also in need of if it’s in your industry. That can be really, really great for you.

So, I think had we never listened to our customers, I don’t know if we would have been outside of selling iTunes cards. We’ve since expanded our catalog into the areas that … I’m in the bubble. I’m in the U.S. I don’t have this problem. So largely, I don’t know where my customer’s problems are unless they tell me. So yeah, reaching out to them and getting those insights can be really, really helpful.

Joris Bryon: Yeah, and you already mentioned that customer retention of course is very important. What exactly do you do about customer retention, to keep them coming back?

Sam Gastro: Well, largely I think it’s just giving them a really good experience. I think that’s the first and foremost. The second thing to just giving them a good experience is probably … retention email marketing has been really, really powerful. I mean, and now, oh my god, with services like Klaviyo, it’s like, the entry level billing on that is so cheap that anybody could set up a good retention marketing plan in two days, from trial account to fully up and running retention marketing. Just the product follow up surveys, welcome series, things like that.

I think if you do those well, and provide value to your customer in those, and it’s going to be different for each industry, but your customers, if you can provide them value through that, I think that that’s going to give you really good leverage and keep you front of mind to your customer when they’re thinking about making another purchase versus like, well, just assuming that they’re going to come back to you because they made their last purchase there. I would look at it more like a nourishing campaign to try to really win them over and provide a lot of value in this.

Joris Bryon: Yeah, and that makes sense. I mean, it’s also very … you’re respectful of their inbox, right, because everyone gets a whole lot of email, and it’s so easy, as you say, with Klaviyo for instance, to set up a retention campaign, but you can overdo it as well, or just try and push and push and push but if you provide value, they’re going to look out for your email.

Sam Gastro: Yeah, that is the absolute key is providing the value. I was looking through a friend of mine’s … a friend of mine just went through, he was kind of taking over the email marketing campaign for another business there, a seven figure business. We were looking through their flows and looking at improving it, and their welcome series and some of their follow up flows just provided no value. It was just basically talking about the product and those kind of things.

That’s a place to start, and that’s a box to check, but him and I were starting to brain storm for this company like, what kind of blog articles could you write? We talked about, it’s kind of in the relationship realm, their company. So we’re talking about doing a relationship advice column. So anything that is hitting the inbox and someone is going to be excited to open it, and they’re going to be thankful that they got the email from you versus just like, they open it and you’re just showing them your product again. It’s … I think in today’s Ecommerce marketplace, it’s just not quite enough. You get so many emails, people really value something that gives them some sort of benefit outside of just a reminder email about your product.

Joris Bryon: Yeah, absolutely. I think that’s very good advice. How did you get traffic at first to the site? I mean, you went from eBay to creating your own platform. Traffic is no problem on eBay of course, but then you create your own platform. How did you get started at first?

Sam Gastro: We went back into … So we had a lot of customers. Not a lot, but we had a little bit of traction going on eBay. So we went back through eBay and just messaged all those old customers and let them know, “Hey, just to let you know, we’re going to migrate from eBay over to our own platform. The checkout process is a lot easier. That was a very high-touch system to just go through every message and send that. But it was a personalized message that we were sending out. So I think it gave us some credibility that we were like, “Oh, they actually reached out to us and let me know that we’re migrating.”

So that was big. Also, just discussion forums and things like that. Early on, I was going into … you could go into a lot of forums, a lot of non-American forums, and people were talking about, “Hey, I want this album, I want this movie, but it’s not on the same iTunes store, how can I get it?” And it’s just dropping in with value. I could have … I just went in there and gave a quick tutorial. I had it preformatted on some of the major things that I would say. But I would just go in there and start telling them like, “Okay, this is how you do it, this is the steps you take.” Lay it all out for them, make it super easy. If you want to use us for a gift card for the payment part of it, go here, but at that point, I gave them so much information that they didn’t need to come to us.

Generally speaking, people, when you give that much up-front value, usually people are just like … that’s how I roll, anyway. I usually spend my money and am loyal to people who usually provide value to me as well. So that was my approach as well. Pushing people from eBay over to our site, and then also just reaching out through discussion forums and things like that.

Joris Bryon: Right, and from there did you, the phase after that, did you ever spend money on acquiring new traffic?

Sam Gastro: Not initially. I would say we were probably … we had a good amount of sales coming in organically before we started to pay for customers, before we started doing AdWords. But yeah, eventually it was an absolutely a critical piece of growing, which is getting our AdWords off the ground. Then later, two years in, somewhere around 2015 maybe, we started doing Facebook retargeting.

So that was really good for retention as well. So then we started to play like the big boys and started to spend a little money on advertising, started doing some retention marketing, things like that.

Joris Bryon: Yeah, but you got pretty far without spending any money on the traffic. That’s quite impressive in its own already. You also have a referral program I saw on your site. Does it work well for you?

Sam Gastro: The automatic referral subscription?

Joris Bryon: The referral program, I think I saw it on your site.

Sam Gastro: Oh, the referral program. The referral program has done okay. It’s not something that we have fully developed out yet. It was a product or our rewards program. Which our rewards program has worked out really, really well. People have really taken to that much better than I ever expected to. And so … I think we will eventually make a strong push towards … what I’ve learned is that a lot of these things will take a little bit of emphasis and a little bit of structure.

So I think if I set up some emails and really make some nice pages and graphics that explain the referral program, and give my customers ideas on how to share it with their friends and show them the benefits of doing that, and really kind of paint the whole picture, I think then something like that can really gain traction. I don’t think just putting it on the site … if you just put it on the site and it’s there for someone to discover, I think it can just do okay. Which is really what it’s done, but I do plan on building some marketing around it and kind of painting that picture for them.

Joris Bryon: Right, and then …

Sam Gastro: And then we’ll be … I have good faith in it.

Joris Bryon: Yeah and that makes sense. And can you explain a little bit for the listeners the rewards program, what it is exactly and why you think it’s working so well?

Sam Gastro: The rewards program?

Joris Bryon: Yeah.

Sam Gastro: I think my belief in it is that, one of the reasons why you buy American gift cards if you’re outside the U.S., one of it is content restriction, like the movie maybe didn’t come out on your local iTunes store. But the other big reason is you can save a few bucks. It’s kind of a trick. Prices for movies are different in every country. So if you’re a real thrifty shopper, which some people are. What I’ve learned is it doesn’t how much money you make or whatever, some people are just thrifty shoppers. That’s a good percentage of our customers, they’re just thrifty.

So, I think what it equates to is it’s just one more leverage point to save a little bit of money, you’re earning a little bit of rewards, you get to redeem that later on. I can’t speak to how it might work in a high ticket, high end product, like if you’re selling designer handbags. I would imagine that it wouldn’t work the same as it would in something where it’s like, maybe Dollar Shave Club or something where people are really valuing each dollar and things like that. I would assume that it works better in that market or that niche, but that’s been my experience with it, just thinking that customers really just want to squeeze every penny out of their purchase.

Joris Bryon: Yeah, that makes sense. I think it’s a good match, probably, with the product and the type of customers you have. If you would start it all over again, what would you do differently?

Sam Gastro: Well, I would say, I migrated two different platforms. I went from X-Cart to BigCommerce to WooCommerce. Migrating a platform is terribly painful for everybody.

Joris Bryon: Yeah, absolutely.

Sam Gastro: Nobody enjoys that. Not me, not my team, not the customers, Google’s SEO hates it. It’s not good for anybody. So I guess if I were to go back, I would spend a little bit of time really thinking about the platform I’m currently on, and I would try my absolute best to predict which platform is going to still be around and the most relevant in the five or ten year window. For anybody starting businesses now in the Ecommerce space, my 100% faith is in Shopify, just watching … it’s not who I run with, because I need a little bit more customization, but choosing the right platform I think is really, really powerful. So yeah, Shopify is probably what I would recommend for most people right now. Migration is painful. That was probably the … that was one of the harder two phases for the business. And then …

Joris Bryon: Yeah, I can imagine. Sorry, go ahead.

Sam Gastro: No. Well I have another one, but I’ll let you go.

Joris Bryon: Oh, no, I was just saying it’s true. Shopify is probably the best bet when you’re starting out right now, but it’s difficult. You have to make a choice when you start out, and you don’t maybe think too much about it, but later, well down the road when you hit the limitations of the platform you’re on, then it becomes a nightmare to make the switch. By the way, why did you make the switch from BigCommerce to WooCommerce?

Sam Gastro: When it comes to WooComm, I was dealing with a largely international customer base, and I needed to have a little bit more tools around basically customizability on the checkout page for payment options. They were really great for migrating with the big guys, like PayPal and things like that, but with international payments, I’m trying to work with everyone around the world, we needed to incorporate, and we were trying to innovate a little bit faster than BigCommerce was trying to. They just weren’t keeping up with where I thought the current marketplace was, or at least for us as international business. So we had to go to something that we could have complete control of.

Joris Bryon: Okay, yeah. That makes sense. Before I interrupted you, what probably going to say a second thing that you would do differently if you were to start over again?

Sam Gastro: The other thing that really caught me is, and early on I got what is known as shiny object syndrome. That is, I went to a marketing conference, and I was like a kid in a candy store. I had a fresh business, I was six months out, maybe eight months out, and you have some of the best marketers in the world making some really amazing products. I just didn’t … and man I couldn’t swipe my credit card fast enough to try this tool and that tool. “These guys are going to double, these guys are going to 4X your business in 30 days, and duh, duh, duh.” I racked up a credit card bill like you wouldn’t believe. It took me a while to get unburied.

A couple of things. One, I would probably try to have a little bit more diligence on which tools, and be a little bit more realistic on some of the expectations. But there’s also benefit to keeping an open mind, I think, and being willing to try things. So there’s a balance there. And then, just having a little bit of control on the finances is something I probably got a handle on like three years into the business, which was like managing the businesses finances well.

If you don’t have a good foundation in finances, which I didn’t, I highly recommend a book called Profit First by Michael Michalowicz. He has this system, basically buckets, financial buckets that he sets up. It’s a beautiful book and I immediately jumped my business into his model. It changed my whole business. It changed my whole … it reduced my stress a ton, and it made us a much more healthy business. I don’t think we would be able to scale to the level that we are today, had it not been for implementing this system. So if finances aren’t your forte and you’re kind of just winging it, and everything’s going into one account, coming out of one account, even if you’re early on, there is no … even if you’re doing 200 bucks a month, this is a very light read and the system is fairly simple to implement, and I believe it will absolutely set you up for a strong, good financial structure going forward in your business.

Joris Bryon: Right, yeah, I think that’s a great tip. So Profit First by who?

Sam Gastro: Michael Michalowicz.

Joris Bryon: Michael.

Sam Gastro: It’s a gnarly last name, but if you go on Amazon and you search Profit First, he has even a Profit First for Ecommerce now. He kind of did a spin off. I got that one in the mail. I haven’t read that one. Anyway, just the Profit First book, that book in general, he makes it … he paints the picture for all types of businesses, and it’s just a brilliant book that I think saved my life.

Joris Bryon: Okay, so that one’s going on my reading list, absolutely. Yeah, so maybe just one last question. What’s your number one piece of advice for people looking to accelerate their Ecommerce growth?

Sam Gastro: I would say the number one thing that you want to do, let’s see. It would have to be … it’s a mix between consistency. I’ve been really fascinated by this idea that if you go to the gym today, it’s going to do nothing. You can go to the gym for four hours today, and it’s going to basically do nothing for your life. You can eat a big salad today, and it’s going to basically do nothing for your life. It’s only when you go to the gym consistently, every day for three months do you start to see a change in your life. Or when you eat that salad consistently, every day for … you say no to the fried food. It’s like, it’s all about that consistency. I’ve been really fascinated with this idea. I think that was something that I’ve been really consistent with the business in terms of just that consistent, low amounts of pressure over time. I think that’s really helped.

And then the second part to that would just be going after the low hanging fruit in the business, and being solely, laser focused on that. When I was working with my friend the other day, and we were going through these flows on this Ecommerce business that he recently has taken over from a marketing stand-point, he is kind of new to the world, and it was really easy to get distracted by some segmentation he wanted to start talking about. They were a little bit more advanced. I was like, “Wait, wait, wait.” I was like, “But look, the abandoned cart email,” which is historically the most profitable email that you’ll send out, or one of them. It was in absolute disarray. I was like, “We need to just stop here and only focus on this right now and fix this.” I was like, “This is the lowest hanging fruit.” I was like, “We can fix this in a few hours, and probably double the amount of revenue that’s coming in from this email series.”

And so, I think that that’s a huge thing, is isolate and focus on what is the easiest to do, and what can leverage the most results? Stay focused on that and try not to get distracted on other things that maybe could be more complex and you’re not sure about. Just keeping your focus on what’s going to be … what’s going to make a big impact on the business, and try not to get distracted by other things.

Joris Bryon: Wow, that’s absolutely great advice, I love that. We could probably go on for hours and hours, but kind of running out of time. Want to make sure before we go that people know how they can find you, a little more about you. What’s the best place for people to connect with you?

Sam Gastro: I keep a very low profile online. So kudos to you for reaching out. I mean, I’m Sam Gastro on Facebook. You can just search me up on there and friend me, because I am trying to put out a little bit more content. I’ve been doing some videos talking about work-life balance and emotional health and things like that, in terms of entrepreneurialism. Because those things can get skewed. If you’re into those things, or anything Ecommerce, I love chatting about this stuff. So happy to connect with anybody, and talk more about this. This is fun stuff.

Joris Bryon: Right, all right. Yeah, thank you so much for being here Sam. It’s been really great.

Sam Gastro: Yeah, thanks for having me. It was great. I had a lot of fun.

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