The people have spoken.

An avalanche of responses:

That’s what Mr. Bertulli asked you to write back last week when he shared everything you need to know about acquiring more customers from the tactical perspective.

Today, we’re back with …

🏛️ Matthew Bertulli on three pillars before you spend a dollar

✅ Cody Plofker reveals his + the Connors’ expansion checklists

🗞️ Top five headlines from this week in consumer (DTC) news

Matthew Bertulli CEO, Pela & Lomi

The Foundations of Customer Acquisition Are Not What You Think They Are (Three Pillars)

Acquiring customers is the lifeblood of most businesses.

Yet most founders and CEOs don’t have a proper framework for thinking about customer acquisition as founders and CEOs.

There’s tons of material online and in books that go into the tactics of ads and channels.

I covered that last week.

But there isn’t a lot about the why behind these tactics.

Instead, we’re going to cover the foundations:

1. TAM vs PAM
2. Fast vs Slow Movers
3. Considerations Windows

Before you buy any more ads, hire salespeople, or invest in organic content, I strongly recommend you get a good handle on all of these foundational elements.

Otherwise, you’re throwing s*** against the wall without knowing if it’s even the right wall.

1️⃣ TAM vs. PAM

You hear TAM a lot. It’s easily one of the most common terms used by investors when evaluating a business.

How big is the TAM — Total Addressable Market?

The problem with TAM is that it doesn’t apply to new categories.

Lomi falls into this bucket. Pela Case did too when it launched.

I’ll start by saying …

Honestly, I’m only taking big swings because I’ve had the good luck to check off the financial freedom box.

Failure is totally an option for me in these bigger swings.

Most businesses have a fixed TAM. They are competing in an existing market; that market is well studied.

If you want to achieve a top-10% outcome, you can probably just stay here and compete for existing demand.

If you want to achieve a top-1% outcome, you need to go beyond TAM and into PAM — Potential Addressable Market.

PAM is where massive wealth is created.

It’s hidden. Way less competitive. PAM is what only you can see because you have things that analysts and outside observers don’t. Real insight backed up by real data.

When we first came up with the idea for Lomi, my own board of directors thought it was a terrible idea.

Why? There is no clear market. No competition. No comps. Nothing to point to that says it would be successful.

After we launched Lomi and sold $1M in our first hour, the next major criticism we got was (you guessed it) — the market isn’t big enough to be worthy of major investment.

Now that we’ve crossed 220k homes using Lomi, what’s the biggest criticism of our business? “How do we know how big this can be? Most Americans don’t care about the planet.”

I love that last one. It shows bias and shows a true lack of understanding of what Lomi does.

What outsiders fail to see is all of the nuance in how we are creating a market.

We spent the first years of Lomi being told all the reasons it won’t work. Chief among them? Lack of visible TAM. Our job was to show investors, customers, and vendors that the market had tremendous potential.

I think we’ve done a pretty good job of this, so much so that we now have many fast-follower competitors.

Whether you sell services, software, or physical goods, you need to understand the difference between TAM and PAM before you start thinking about your customer acquisition strategy.

It’s almost always a good idea to build a business in a large TAM category. You can focus on taking a tiny slice of a very large pie and still do quite well.

But if your ambitions are very large, shift towards PAM and how to build a market for your category. How do you grow the whole pie … not just your slice?

2️⃣ Fast Movers vs. Slow Movers

Every product or service on the planet will have two groups of potential customers. One moves very fast, and the other is a wide spectrum of slow.

Your goal as a business builder is to identify the fast movers.

This sounds easier than it actually is.

At a minimum, 85% of your market is a slow mover. They take time to make decisions, and many may never reach that point. They seek information about their problems, versus wanting to pay for a solution.

Slow movers are where marketing dollars go to burn.

Some companies don’t have a choice but to spend time with slow movers, mostly because their category is just too immature and doesn’t yet have a large enough pool of potential customers.

You could argue that TAM is a major variable here, but I’ve seen businesses grow very quickly in small markets because they figured out a mix of product + channel that allowed them to target faster-moving customers.

Even with Lomi, where we have a very long consideration window (more on this below), we have fast movers.

When we look at our data, especially post-purchase survey data, we find that most of our fastest-converting customers originate from TV as their first touchpoint.

This has been a theory of ours for a while.

TV is a higher-trust form of advertising than social.

It’s a combination of higher barrier to entry and the other companies you end up next to and associated with.

After all, it’s one thing to have your ad seen after a Coca-Cola commercial and a whole other thing to have your ad follow a random piece of UGC as someone mindlessly scrolls.

Slow movers are the people who are never done researching. Always searching for the next thing.

They are perpetual planners and “I’ll get to it” people.

As entrepreneurs, we want to focus our energy and resources on throwing away slow movers as fast as we possibly can, while removing friction for fast movers and letting them just purchase.

3️⃣ Consideration Window

I’ve been pretty public about one of the most difficult elements of Lomi … its consideration window. Otherwise known as the time between discovery to purchase.

This is easily one of the most difficult elements of creating a new category, especially in consumer.

Lomi is a totally new idea to most people. It takes time to educate them and eventually convert them.

If I could wave a magic wand and change one thing in my business, it would be this.

When you have a product or service that requires your customer to take time to consider a purchase, you have no choice but to shift the way you approach customer acquisition.

In one of my previous companies (B2B services), our sales cycle was ~6 months. We had your typical enterprise buying process. Thankfully, the rest of the business was tuned for this. So it really wasn’t that big of a pain in the ass.

In that business, we managed cash flow and allowed ourselves the time to build pipeline and close deals. It was a steady climb to 8-figures in revenue over a decade. We did it totally bootstrapped and very profitable from the start to the day we sold it to a private equity group.

However …​

It often means your pool of fast movers is quite small, and modern customer acquisition tactics like Facebook ads don’t really move the needle as much as someone selling a $50 impulse purchase would.

Here are some of the variables I think about for a product with an inherently long consideration window …

 Patience 

You need to understand that you’ll probably go slower than you want to. This is crucial for financial planning as much as it is for preparing yourself emotionally.

 Cash 

Pay particular close attention to cash flow + cash cycles. Long consideration window purchases often have long cash cycles (i.e., lead times). Arm yourself accordingly.

 TAM vs. PAM 

Ideally, you want large potential markets that go with your long consideration window. A small market + long window would suck. I’d question that business model entirely.

 Margin 

If it takes a long time to convert a customer, you make more margin dollars (read: dollars, not percentages). Your cash has to last longer, but when it hits … it hits hard.

 LTV 

You should also have a category where once you do get the customer, they are worth more over time.

It’s a lot easier to play the long game when you have strong LTV and margin. It’s very difficult without a balance sheet to “finance the gap” between the day you deploy sales and marketing dollars and the day they return positive to you.

If you have a product with a long consideration cycle, here’s the most important thing for you to remember …

Your goal with all marketing is to generate upward momentum.

Every dollar you invest today will return to you over a longer period. If you cannot continue to invest and build positive momentum, you will eventually find your funnel dry and few prospects left to convert.

I’ve lived this reality personally with Lomi.

And I’ve seen others live it.

You need to find the appropriate amount of gas to pour on the fire and continue to steadily increase the pour.

Long consideration cycles demand a momentum-driving marketing strategy, which is ultimately very different from pure direct-response marketing.

Before I let you go, here’s my ask.

Think about your business in the context of …

• TAM vs PAM
• Fast vs Slow Movers
• Considerations Windows

When you combine these three things, you can have a very meaningful conversation about where to acquire customers and the most effective ways to address the problem.

Last, if you missed my acquisition tactics last week, Aaron said the why-people-buy list was super popular.

So here it is again!

21 Reasons People Buy Things

1. To avoid effort
2. To save time (faster)
3. To be comfortable
4. To escape pain
5. To make money (get)
6. To save money (keep)
7. To gain praise
8. To feel more loved
9. To be healthier
10. To increase status
11. To be appreciated
12. To feel important
13. To be secure
14. To be attractive
15. To be sexy (visceral)
16. To be distinctive
17. To be happier
18. To gain knowledge
19. To gratify curiosity
20. To alleviate fear
21. To assuage guilt

Cody Plofker CEO, Jones Road

Is Q4 the Right Time to Expand? Checklists

Going into November, it’s funnel-filling time.

Here’s what’s working right now for us:

• CTV
• Demand Gen on YouTube
• Podcasts
• Axon (Applovin)

Channel diversification has been huge this year. Right alongside reaching net-new accounts.

Especially ahead of Black Friday, Cyber Monday.

Internally, we call it scale potential.

And you have to balance it against any new channel’s …

• Funnel stage
• Creative lift
• Product fit (AOV)

To help, I created a checklist.

Later this week at the Operators Masterclass (October 29th), I’m going to share and walk through that checklist.

Even better, Connor Rolain and Connor MacDonald have also made their own versions that they’ll guide you through.

Plus, David Herrmann is going to jam with us.

This is for operators, by operators. No theory, no untested strategy. A bunch of real, in-the-weeds DTC leaders sharing tips, lessons, wins, mistakes, and principles to help you scale spend profitably and develop a cohesive media mix.

Keynotes, lightning panelists, dedicated Titan episodes, and a downloadable playbook + our checklists.

It’s free. It’s this Wednesday.

If you can make it, here’s where to …

THE FEED

What Top CEOs Do When They Miss Their Numbers

Creative Strategy and How AI Is Changing the Game for Growth Teams With Reza Khadjavi, Motion CEO

Operators Titans E005: Peak 21 With Founder & President Roman Khan

The Trends

Curated by the editor of CPG Wire, this week’s biggest headlines in consumer news.

1. Grüns Delivers Record Growth: Inc. Magazine

Grüns just announced a major milestone: $300M in revenue in 24 months, making it one of the fastest-growing consumer brands of all time. The gummy vitamin startup shared a few other key metrics too — one billion gummies shipped and over 6,300 points of distribution across the U.S. Grüns also teased a major upcoming retail announcement on LinkedIn.

2. Advent Shops Luxury Fragrance Portfolio: Fashion Network

Private equity giant Advent International is looking to sell two luxury fragrance brands — Parfums de Marly and Initio Parfums Privé — which could fetch as much as $2B. Advent acquired a majority stake in the parent company of both brands in 2023 at a reported valuation of $700M.

The fragrance category has been on a sustained heater with PHLUR, D.S. & Durga, Creed, Ex Nihilo, and a number of others trading hands recently.

3. Olauto Aims to Disrupt Sleepy Category: Beauty Independent

After selling Inkbox to BIC in 2022 for $65M, co-founders Tyler & Braden Handley are back in business with Olauto, a premium car fragrance brand.

In a category long dominated by low-quality options, Olauto is focused on two things: (1) sophisticated design and (2) elevated scents. The company currently offers 5 products, which unfold over a 3-month period with layered notes.

4. Taste Tomorrow Backs Happy Coffee: LinkedIn

Taste Tomorrow Ventures (TTV), the $30M venture arm of L.A. Libations, just invested in Happy Coffee, a purpose-driven coffee brand. Happy Coffee was founded in 2024 by Robert Downey Jr. and Craig Dubitsky, a serial entrepreneur who created EOS and Hello Products (acquired by Colgate in 2022).

TTV debuted in May and has backed three brands: Happy Coffee, Just Ice Tea, and Better Sour.

5. Kering Bows Out of Beauty: Reuters

The owner of Gucci and Balenciaga is abruptly exiting the beauty category via a $4.7B deal with L’Oreal. As part of the deal, Kering will sell luxury fragrance brand Creed and license the remainder of its portfolio to L’Oreal for a 50-year period.

The divestment is the opening move from Luca de Meo, Kering’s ambitious new CEO who took over on September 15th. Prior to joining Kering, de Meo spent three decades in the automobile industry and turned Renault around.

 Questions: Live Q&A 

If you’ve already signed up for the Operators Masterclass later this week, but haven’t sent me your questions …

Can’t wait to see you there!

With thanks and anticipation,
Aaron Orendorff 🤓
Chief Content Officer

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