Building Profitable E-commerce Websites & Long-Term Client Relationships

Hey, hi everyone. Welcome to your E-coffee. This is your host, Ranmay. How are you?

Hey, Ranmay. Doing very well. Thanks. A pleasure to be here. Thank you for inviting me.

Lovely. Matthew, before we move very forward, let’s get the human behind the mic. Why don’t you talk us through your journey thus far how you started at Step Labs and landed in the digital marketing space, and how is it going now?

Yes, certainly happy to do so. Step Labs is a business that I started several years ago. We initially started servicing Shopify custom theme requests and Webflow development requests for marketing agencies and e-commerce brands. We have now an exclusive focus on Shopify CRO contracts. What I mean by CRO, of course, is conversion rate optimization, which is ensuring that we are operating as a conversion partner, working with some of the largest eight to nine-figure D2C brands currently in the space to make the most out of their website and ensure that their website is a vehicle for generating revenue and not losing revenue through the funnel. Great.

Can you share the tiny point that sparked the idea for Starting Step Labs during your final year at university? The transition from being a student to an entrepreneur?

It’s funny because the transition didn’t occur post-university. For me, by the time I left university, in my final month when I was doing my dissertation and my exams, we had double-digit clients and a team. It was a bit of an unusual way to finish university. There were substantial challenges in managing the workload. I wasn’t quite as operationally savvy back then, I would say. But the turning point towards starting Step Labs, initially, probably would have been a desire to have an outsized impact on different businesses’ growth that wouldn’t have been possible just working inside of the locus of one organization’s department. When you enter a graduate scheme, you can get in the UK put into some really good salaries. I had the opportunity to work at JPMorgan, and other banking institutions like this. But it never really appealed to me to not be responsible for a deal or substantial outcomes until I’m 28 or 30 and to just be on Microsoft Excel and PowerPoint. Something that has always been appealing to me is using Everything in my might and power and willpower and intellectual brainpower to see results through processes that I’ve actioned.

It was always enjoyable for me that from day one, we could build websites for six-figure brands or six-figure businesses and have an impact on their growth by having control over a central piece of their organization as a whole. I’ve always really seen entrepreneurship as a vehicle for personal growth and for actually being able to take more responsibility than you probably can in an employment capacity. That was something that was very motivating for me. I’ve deeply enjoyed the fact that last year, you can’t perfectly quantify this stuff, but last year, by our estimates, we were responsible for about 35 million in attributable revenue from split tests that we ran and other efforts. I don’t think there are many other avenues in which you can have such an impact at a young age than running your own business.

Lovely. Reflecting on the evolution of Step Labs from its inception to where it stands today, that you guys are making an impact, what has been the most unexpected or surprising aspect so far of your entrepreneurial journey?

I would say that the most surprising aspect of the journey has been that you can hit specific revenue milestones. You can hit specific revenue milestones that you would have never thought achievable, but that doesn’t dictate the quality of your business. Now, the quality of your business is dictated by the quality of the revenue and the way that you attain your revenue on a monthly and annual basis. For those reasons, let me dig into a bit more depth. Now, we hit, and where we are now, is that our business is all MRR now. This is recurring revenue from contracts that we’ve been grateful enough to have with clients that we’ve worked with for a long period. The security that you get from building a business based on recurring revenue is completely different from building a business based on one-off contracts, which are up one month, and down the next. It makes it so much more difficult to scale. I would say the most surprising thing has been that getting revenue wasn’t the hard thing. Quality of revenue was the hard thing. We had a business, Early Doors, that was generating decently, but I was working 110 hours a week.

The business making good money, but the quality of the business, the quality of the operations, how systemized the entity is, it wasn’t feasible or sustainable or enjoyable. I think this understanding that the metrics that we quantify revenue don’t tell the whole story. It is possible to build the dream and not the prison when you’re an entrepreneur, but to avoid building the prison, not the dream, you need to what revenue you’re going after, and you need to know what needs to be done to operationalize the business so that you aren’t dependent for every single cog to move.

And touching upon that from a business standpoint, SOPs are so important, right? Specific frameworks that you follow as a business, as an agency, located to your client’s requirements. So do you have any specific SOPs that you feel have worked wonderfully in terms of working with clients to ensure consistent results for them?

Yeah. I’m laughing because I’m known as Mr. SOP. This is a meme in Step Labs. You have to be able to systemize your business because otherwise, you can’t map out Absolutely. You can’t map out cause and effect. You need to know what inputs cause what outputs and how you can drive the better inputs to have better outputs. And garbage in, garbage out is always the same thing. But you also need to instill feedback loops into your company so that you get an understanding of how processes are developing and what needs to be changed inside of those systems. So you have your inputs, outputs, process in the middle, and then your feedback loop. Our SOPs that have been extremely valuable have mostly ranged probably around project management. Standardizing communication with clients. We will be communicating with our clients every day, regardless if they’re the smallest clients if they’re the biggest clients. It’s not to overcommunicate, but it’s because you need 100% transparency on how initiatives are developing and whether you need anything from them. Even if you don’t need anything from them, just the check-in is always required. When you’re operating in the service space, 80% of the business is communication because communication drives good results.

You’re going to need to intersect with other agencies. You’re going to need to intersect with people who are in-house marketing teams. If you can’t effectively communicate as an agency to a brand, you’re in deep trouble. I would say our communication and project management SOPs are probably the most significant, but also standardizing development processes like how we have a very in-depth, advanced speed theme optimization guide for Shopify. Standardizing development processes like this makes it so much easier to train staff because ultimately your business is going to grow based on the loop of how quickly you can hire staff, train them, and get to a decent revenue per head that you’re comfortable with as a business that doesn’t overload your staff, but at the same time is validating the efforts that you’re putting in and the training and onboarding that you’re providing. So, yeah, those would be the ones that are the most impactful for us.

Lovely. And then talking about e-commerce brands, Matthew, what are some of the common pitfalls that you feel that brands make while analyzing website data, and how can they be avoided?

When specifically analyzing website data. Yeah. This is the biggest one, in my opinion. The industry should not be called conversion rate optimization. I despise the term CRO agency, even though That is what the industry is called. It’s because we view ourselves more as a revenue growth partner for businesses. We take control of your website as a vehicle for growing revenue and profitability. I always say this to clients when we onboard. I can promise you to 500% increase in your conversion rate within three days. They go, How would you do that? We’ve got all these conversion rate problems. How would you do that? It’s quite simple, which is if we drop the price by 95%, your conversion rate is going to go up by 500% because more people within the same funnel can purchase now. After all, the price is the biggest conversion rate. Now, what would happen if we dropped the price 95%? Yes, the conversion rate would go up, but do you know what would go down? Profitability and probably even revenue. What we are trying to educate customers on is that conversion rate can be a bit of a misnomer in terms of something that I think you need to focus on, but you probably don’t need to focus on.

The industry as a whole is certainly a misnomer, conversion rate optimization. What we want to be optimizing for is profitability and control of our funnel. Working on your website, efficiency, load speed, running specific offers and split testing those, split testing price, these are a million % valuable ways of improving your conversion rate. But you’re aiming to Improving your conversion rate is a second-order effect of, perhaps not a second-order effect, but certainly a corollary effect or a collateral effect of focusing on profitability and revenue growth. I say that’s probably the biggest thing when analyzing the Shopify dashboard that I think people get wrong.

All right, lovely. Matthew, from, an onboarding standpoint. Walk us through your typical client onboarding process at Step Labs, and how do you ensure that it is a good fit and understand the brand’s unique needs and goals?

Yeah, certainly. We first start by taking a discovery call. We have a routing form before the discovery call, which asks a few questions so that we know, based on a rough level of revenue per month and things like this, whether it’s going to be a conversation that makes sense because you do need a certain amount of traffic to even begin split testing on your website. If you aren’t at that stage, there’s not quite as much that we can do. But really beyond the root form, then we get to the discovery call. In the discovery call, you don’t want to be pitching. You need to understand the business and its problems because you’ll get different answers based on the quality of the questions that you answer. If you don’t feel like you’re getting great responses, you’re probably not asking great questions.

I agree.

Firstly, you need to build a report. But the second stage is truly understanding if this is a good fit for your business. If it isn’t a good fit and you feel like you still need to push the deal through, you have a lead gen problem. The lead gen is then the thing that you need to work on because your business is never going to retain its staff and retain its customers if you’re taking on clients that aren’t suitable for you just to get cheap revenue. It comes back to my point earlier about good revenue and bad revenue. Now, once you’ve identified the customers that you want to work with, psychological onboarding is just as important as practical onboarding. You need to congratulate clients for deciding to work with you because they’re going to make their decision within the first 48 hours, whether they find you to be an extremely beneficial and high-quality partner or a bit riskier and unreliable. If they think you’re unreliable from the start and you demonstrate any inconsistency, I’m going to get you this by this date, or I’m going to send you a checklist of things that we need from you by this hour if you miss those deadlines, early doors, these are micro-promises that have failed, and it’s really hard to build back that trust gap over time.

Some of the biggest things I would say are focusing on the psychological aspect of onboarding and ensuring that people feel like they trust in you and that you will deliver on what you’ve promised to deliver. And that you’re reducing their anxiety because it is scary. Specifically, if you have a deposit upfront, you don’t have a one-month free trial or anything like that, you’ve got to empathize with the customer and understand that they have probably tried to improve their website with other agencies before and possibly been let down. I think anything you can do to ease that burden, psychologically, of onboarding a new agency is a valuable thing.

I’m glad you raised the point about the proper sales funnel to land up at those groups. The sales team or marketing team is not pushing the leads in another way. It should not be, ideally. I’m glad that you raised that point. In terms of differentiating yourself? There are a lot of agencies doing this work. How does Step Lab differentiate itself in the competitive landscape of WebDev agencies, particularly in terms of the unique value prop it offers to seven, eight-figure DTC brand owners, seeking revenue growth?

Sure. The biggest way that we differentiate ourselves is by operating exclusively as a revenue growth partner and capping the amount of people that we work with. We onboard between three to six customers per quarter, which is very small. We deliberately decide. We probably only take on 20% of the customers that we have calls with. The reason why we do that is so that we can be certain that we’re delivering results. Our approach is extremely extensive and intensive. We are working on covering all of their development, all of their design, their research, and their strategy, while simultaneously producing a monthly roadmap for them, which calls the biggest lever possible to grow revenue. Everything we do is focused on growing revenue and profitability. All of the decisions that come from that, which landing page campaigns to run, what aspects of the marketing calendar are going to produce events that we can run and tailor specific campaigns around, all of these things are focused on through the lens of a monthly roadmap that we deliver for clients. From the perspective of differentiation, I suppose it’s just, yeah, we are not focused on being just a landing page provider.

We’re not selling a service, we’re selling a partnership, and we don’t lose customers. We may have lost two customers in the last 14 months. I need to go check the dates. But yeah, certainly the approach is Italian artisan, not suit supply. That’s my friend.

You haven’t done Good stuff that you shared there in terms of having your client retention as one of your priorities. In terms of, can you share some advanced CRO techniques that you found particularly useful in boosting conversions for your clients?

The biggest is if you can run split tests focusing on price. This is a real gem, I would say, but when people first price their product, they do it on napkin math. I don’t mean to say This is ingenuous, but this is what tends to happen, which is that you look at where you’re positioned in the market, whether you’re going to be a premium or luxury supplier, or if you’re going to be somebody who is possibly a lower quality solution but substantially cheaper, and you base your pricing off of that. If you’re going to be the lower quality solution but more accessible, 10% lower than the competition, and if you’re going to be premium, 10% higher. It will be of these rough estimates. It’s not that you would be 100% wrong. It’s that you’re not going to completely understand the price elasticity of death and curve. If you did understand that curve better and you were able to price to a 1% increment or percentile of accuracy, you’d be able to capture the differential in revenue between where you’re currently pricing if you’re 10% off in terms of accuracy there. If you can get that to 1% through testing prices in different localities, revenue is going to instantly go up because it’s highly unlikely that you’re within the top 1% of accuracy in terms of understanding the exact elasticity for the market.

Even if you do, you will not understand on a month-by-month cadence, especially if you’re in your first or second year of business. The best way to run these tests is in Europe. You pick two countries like Germany or Lichtenstein or Luxembourg or France. From those specific countries, you operate with two different prices in a hypothesis, and then you evaluate the data between revenue and profitability from there. Then you scale that based on the results out to America and give it its concrete. It usually is because there’s not going to be that much geographical difference as long as mid or higher-income countries in Europe. That would be the biggest gem that I think I can provide that I don’t hear anybody else talking about.

Lovely. Finally, Matthew, can you share a piece of advice or a mantra that has personally resonated with you throughout your journey as a founder for our audience listening today?

Two things. 80% of it is stress tolerance. The second thing would be to never get too high, never get too low. Especially agency business, just riding waves. You’re going to have waves that will feel like tsunamis because they’re horrific. Then you’re going to have times where you feel like you’re on the Mediterranean Coast, and the better you can get at managing yourself and managing your stress tolerance levels through the downs, and also managing just becoming too excessive through the ups, the better you’re going to be able to lead the team. The more emotional control that you can demonstrate as a leader, the more emotionally controlled the whole organization is. I think understanding stress tolerance that it’s never as good as it seems or as bad as it seems and that your accuracy is probably off in terms of your assessment has been one of the most true statements that I think I’ve taken with me throughout business thus far.

Great. Lovely, Matthew. This has been a brilliant conversation, and I’m sure our audiences would have benefited a lot from the insights that you have shared today. Thank you so much, once again, for taking the time to do this with us.

No problem. It’s a pleasure. I love having these conversations and have been a fan of the podcast, and I think I’ve got personal insights out of it. I hope that people can even get one thing out of what I’ve said today. If so, that would be great.

I’m sure they will. Thank you so much. Cheers, man.

Thanks, Ranmay. Cheers.