How We Focused On Email/SMS Marketing And Grew Revenue To $90K/Month
This is a follow up story for ChipMonk Baking. If you're interested in reading how they got started, published about 4 years ago, check it out here.
Hello again! Remind us who you are and what business you started.
My name is David Downing, and in early 2019 I teamed up with Jose Hernandez to start ChipMonk Baking, a Houston-based specialty bakery that produces healthy, low-glycemic cookies and other dessert products sweetened with monk fruit and allulose (two naturally occurring sweeteners that don’t impact blood sugar).
Jose created these recipes after being diagnosed with type-2 diabetes and subsequently controlling the disease through diet and exercise. Perfect for keto diets and people following gluten-free lifestyles, ChipMonk’s desserts are low-carb, delicious treats with all of the taste and none of the sugar.
As of November 2022, our business sells around $90,000 per month split roughly evenly between our direct-to-consumer (website, Amazon, Walmart.com) and business-to-business (wholesale retail, food service, contract manufacturing) sales channels.
Today, you can find our keto cookies and cookie bites in over 300 locations!
Tell us about what you’ve been up to. Has the business been growing?
The plan is working and today we have over 17,000 email subscribers.
2022 has been a tough year for us! While we faced higher costs due to inflation and the overall economic environment, our revenue growth has slowed, primarily due to our B2B wholesale channel. Here are some high level updates.
Protein Cookie Launch :
We recognized a need to create a high-protein snack to help diversify us away from a purely keto audience. In response, we launched a line of single-serve protein cookies that are delicious and available for sale on our website, Amazon and plenty of retailers.
Wholesale Slowdown :
We’ve still seen great wholesale success on online platforms like Faire, but we’ve struggled to grow into larger stores and chains. Mostly this has been due to a lack of a national distribution partner. We’ve found that distributors have huge fees and can be very slow to work with.
We’re also realizing that the grocery and convenience store space is very very expensive for brands to be successful due to an ongoing need to spend money on promotion. We’re currently assessing our wholesale focus to see if we can find channels with easier access and better margins (e.g., food service, fitness/supplement stores).
Tight Finances :
With slower sales, our cash flow has been tough this year. In response, we took out an SBA loan to help fund the business and have had to reduce our team size to be more efficient. We’ve also invested in more equipment, like a flow wrap packaging machine, to help us produce more cookies with less labor time.
Website Growth :
We’ve seen strong growth on our website mainly due to working with affiliates and influencers in the keto space and working on improving our conversion rates. Specifically, we built out a landing page specific to cold ad traffic from Facebook that offers a low-cost “starter bundle” that lets someone try our cookies risk-free (100% guarantee and shipping are free).
This has allowed us to achieve a really low customer acquisition cost while bringing in new subscribers to our email and SMS program. From there, we re-engage our subscribers with really enticing small-batch products. For example, we made a batch of a few hundred carrot cake icing cookie sandwiches that drove over $10,000 in website sales in just a few days.
We release a small batch every two weeks to keep people engaged and coming back to the website. The plan is working and today we have over 17,000 email subscribers.
Contract Manufacturing & Private Label :
In response to slower growth for our traditional wholesale business, we launched a new service offering contract manufacturing and private label production to other food brands. For example, a new company may want to create a healthy baked product. ChipMonk helps them develop the recipe and then makes it on their behalf, charging a fee.
This type of work helps us to fully utilize our commercial bakery space and generate extra cash flow. It also helps us learn more about low-carb/sugar-free baking to come up with new recipes for our brand.
What have been your biggest challenges in the last year?
Our biggest challenge this year has been growing revenue to a point where it can overcome our overhead costs. We have 10 employees and our commercial bakery which means we have a lot of costs that are nearly independent of our sales volume (e.g., rent, insurance, employee benefits, salaries, and utilities). We’ve hit a wall trying to grow into the grocery channel, and e-commerce has also been tough to grow due to rising advertising costs.
In response, we’ve forced ourselves to become much more efficient and evaluate our spending more closely. We’ve initiated a 3-month customer lifetime to customer acquisition cost review to help guide our digital ad spend (Facebook is working well for us while Amazon is not).
We’ve also had to let go of employees and contractors that weren’t driving value or living up to ChipMonk’s core values (picture below).
The good news is that a smaller team has given us good growth opportunities to us all - forcing us to learn and adapt to new roles.
We’re also being pushed to look into alternative sales channels like food service, contract manufacturing, international distribution, and even consumer trade shows.
We 100% are not out of the woods, but every day we are working towards new goals, assessing results, and changing course as needed.
What have been your biggest lessons learned in the last year?
For me, the biggest lesson has been about people management. First off, you need to spend time hiring the right people. Vet them and make sure they align with the company's core values. After that, as a leader, I have to hold people accountable for those same values and to the goals we set together.
When business is going well, I noticed I was letting a lot of underperformance slide or I was keeping around employees that weren’t interested in growing. For the long-term success of the business, I’ve realized I have to get the wrong people out and the right people into the team. It’s painful and not something I enjoy (especially because it’s my own fault if the wrong person was hired in the first place), but I think our team is in a great spot now and ready for new challenges.
What’s in the plans for the upcoming year, and the next 5 years?
Here are our high level focus areas:
Continue to grow our website business primarily via affiliate/influencers and email / SMS marketing. We want to start attending large consumer trade shows as a way to grow our email list quickly.
Build out our contract manufacturing and private labeling services and land 1-3 large accounts.
Build out alternative B2B channels including food service, international, and fitness/supplement stores. Say no to channels that don’t make financial sense for us (e.g., big grocery, and convenience store).
Once we achieve consistent profitability, get investment or form a partnership with another player in the health food space.
Launch a new product line in the low-carb, high-protein space that is truly amazing and differentiated from the competition. Use our website's small batch releases to help guide product development
Long-term we want to build a profitable business that provides fulfilling and financially rewarding work to an amazing team and healthy products to customers across the country!
What’s the best thing you read in the last year?
I’ve mostly been reading trashy Warhammer 40K books for fun, but most recently I read Four Thousand Weeks: Time Management for Mortals by Oliver Burkeman and it opened my eyes as to how I was approaching a time in my life. The bottom line is it pushed me to just live in the moment and appreciate what’s right in front of me.
Another book I highly recommend for entrepreneurs or small business owners is Traction: Get a Grip on Your Business by Gino Wickman.
Advice for other entrepreneurs who might be struggling to grow their business?
Let the numbers guide you! If you’re burning through cash, you need to review your financials and make sure the fundamentals make sense. If they don’t, then it doesn’t matter how many customers or accounts you land, you will never make any money. Do not ignore this until it's too late!
Outside of that, I also encourage networking with peers and experts. Find people doing what you’re doing or doing things you want to do and reach out via LinkedIn. Also explore local small businesses or alumni networks. Many people will give you a few minutes to share their insights. There’s so much free knowledge to be had, and you never know where a new connection might lead.
p.s. Calendly is an excellent tool for scheduling calls!
Are you looking to hire for certain positions right now?
We currently aren’t looking to hire any full-time employees but are interested in finding brokers or consultants who could help us expand into the alternative B2B channels mentioned above.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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