How This Father-Son Combo Built A $9M/Year Dietary Supplement
Hello! Who are you and what business did you start?
My name is Patrick Sullivan Jr. I’m the Chief Entertainment Officer (CEO) and co-founder of Jigsaw Health, a dietary supplement company that my dad and I started together in 2005, and then “re-booted” in 2015.
Jigsaw Health is bridging the gap between health and entertainment by providing the highest quality dietary supplements that money can buy, while providing “edu-tainment” — educating consumers on how they can improve their health, in a fun and entertaining way.
Since 2005, we’ve been developing science-based dietary supplements, including MagSRT®, America’s #1 Time Release Magnesium Supplement. (With over 1,300 reviews on Amazon, MagSRT® has 6 times more 5-star reviews on Amazon than the next brand of time-release magnesium.)
In 2018, MagSRT® was evaluated in the Scottsdale Magnesium Study, a placebo-controlled, human clinical trial of 91 participants, published in the peer-reviewed Journal of the American College of Nutrition.
(For some context on this, every dietary supplement uses “clinically tested” ingredients in their formulas. But I estimate that fewer than 1 in 10,000 formulas have a human clinical-trial comparing the finished product vs. placebo with data solid enough to be published in a peer-reviewed, PUBMED-indexed journal -- this level of rigor is incredibly rare in the dietary supplement industry. I don't say this to brag, just to point out how unique this is -- I hope more companies follow this path as I believe it would lend more credibility and elevate the perception of the dietary supplement industry.)
As such, we’ve grown 181% in the past 5 years with 80% of our revenue coming direct-to-consumer via JigsawHealth.com, Amazon, Walmart.com, etc. And 20% of our revenue from healthcare professionals who carry Jigsaw Health products in their clinics.
What's your backstory and how did you come up with the idea?
For over 30 years, my Dad struggled on and off with various health challenges -- fatigue, insomnia, gastro-intestinal problems, and depression.
This was back in the mid-1980s -- pre-internet -- so Dad would read every health book he could get his hands on. And just about every book had a section on “Magnesium Deficiency”... As Dad walked through the list of symptoms he thought, “Well, I’m definitely Magnesium deficient, I got all of these!”, so he’d go to the store and grab the first Magnesium supplement he could find.
But there was one tiny problem. Well, actually a BIG problem! Most ordinary Magnesium supplements act like a laxative. (Think “Milk of Magnesia”.) And because Dad was struggling with gastrointestinal issues -- caused by lack of Probiotics -- regular drugstore Magnesium went right through him.
You see, Magnesium is “hydrophilic”, which is a fancy word that means it draws water to it, like a magnet.
My Dad theorized, “If I could slow down the release of a highly absorbable form of Magnesium, I could probably actually take this myself.”
People are always hearing about rapid absorption with supplements. But with Magnesium, you actually want to do the opposite -- you want to slow down the release so that absorption happens over time. Otherwise, you end up sprinting to the outhouse!
As a result, Jigsaw Magnesium w/SRT® (or MagSRT®) was created, and turns out, a lot of other people had the same issues as my Dad. So we’ve been able to help a LOT of people improve their lives by increasing their daily intake of Magnesium -- better energy, better sleep, and no nighttime leg cramps.
Dad scratched his own itch, and Jigsaw Health was born.
"Figuring out causes of my own health problems always felt like solving a puzzle. Thus the company name, Jigsaw Health." - Pat Sullivan Sr.
Describe the process of launching the business.
We launched JigsawHealth.com on April 19, 2005 as an online health resource for others like my Dad who had been struggling with complex, chronic health challenges. It was an exciting day!
However, we also made a near fatal flaw: My Dad had invented several dozen new formulas, and we were carrying “white label” versions of other health products that Dad wanted to offer as well. At launch, we had 66 different types of products (aka. “SKUs”) and ZERO customers. And we had to pay for all of the product inventory up front.
We followed the, “If you build it, they will come” methodology. (Spoiler alert: They won’t.)
We were working with a guy who was a supposed “expert” in Google Adwords. And he might have been. But in April 2005, every keyword cost about a nickel, so it wasn’t terribly competitive...yet. We began sending traffic to our 66 product pages, and we were getting about 1% conversion. Not terrible, not great either.
All of the sudden, the cost per keyword was a quarter, and then 50 cents, and then by December 2005, it seemed like everything was a $1 per click. It was like everyone on the planet started doing Google Adwords that year. This KILLED our financial model.
We would spend $10,000/month to make $25,000/month in revenue. Next thing I know, we were spending $25,000 just to make $25,000 in revenue. And then, $50,000 to make the exact same $25,000. ROI dropped through the floor.
The situation was dire. We had invested too much into having a diverse product line, and not enough into marketing/advertising.
In January 2008 -- just shy of 3 years after launch -- my Dad and I made the decision to scale back, waaaaaay back on spending and let the business make or break on its own accord. We laid off 5 employees (including ourselves), and kept in place one customer service rep, a warehouse worker, and a part-time marketing coordinator. We also discontinued all but 20 of the most popular SKUs, with 70% of revenue coming from 1 SKU, the time-release magnesium supplement, MagSRT.
The business was now doing about $100K/month in revenue, and costs were finally less than $100K, so it was operating profitably.
Over the next 7 years, Jigsaw Health grew slowly but surely, eventually reaching $250K/month in revenue in 2015.
Since launch, what has worked to attract and retain customers?
Without a doubt, marketing -- especially new customer acquisition -- has been the most difficult and expensive part of this 14 year journey. It would be easier to list the things that did work vs. the dozens, maybe hundreds of other techniques I tested over the years that did NOT create an ROI. So that’s what I’ll do…
When Google Adwords started to become painfully unprofitable for us in late 2005, we turned to radio advertising.
Radio Advertising
In 2006, we began sponsoring The Dennis Prager Show, a nationally syndicated talk show, the host of which is authentic, candid, and beloved by his audience.
At the time, I believe it cost about $9,000/month for him to read (or “voice”) one 60-second ad (or “spot”) per day. Initially, we focused on “fact-based” radio ads about why Jigsaw Health was a special company with special products...And those ads fell flat on their proverbial faces. Contractually, we were committed to 1 year, so we needed to figure it out, and FAST.
A handful of his listeners began taking Jigsaw Health products, most notably, MagSRT, and they began sending emails to Dennis thanking him for telling them about the product! When Dennis began reading these testimonials on air -- and talking about how the products made him personally feel more energized -- the ads finally started to generate positive ROI, yielding approximately $18,000/month in revenue, a 2X ROI.
We advertised with Dennis Prager for 5+ years, and it was a great relationship!
BUT... we found that we couldn’t easily scale radio ads. Running two ads per day cost twice as much, but didn’t generate twice as much revenue.
We did some experimental ads on other radio shows, but I’ve since learned that direct-response ads are very difficult on radio, and over time, they work less, not more. It seems the audience gets tired of your offer, and they begin to tune it out.
Email Marketing
In 2007, we began to utilize paid email marketing, primarily through Newsmax because one of their authors (Dr. Russell Blaylock) had been recommending Jigsaw MagSRT in the editorial section of his monthly “Blaylock Wellness Report.”
We received approval from Dr. Blaylock personally (and from Newsmax corporately) to use the subject line, “Recommended by Dr. Blaylock: Jigsaw Magnesium w/SRT”...
We’d get a 3x (or more) ROI every time we mailed the Newsmax list. It cost about $7,000 to mail, and we’d generate $21,000+ in revenue!! Oh happy day!! :)
One very important lesson learned along the way was the idea of sending a “landing-page-email” which included the “Add to Cart” buttons at the end of the email.
Compared to a short email with a “Learn More” link, these long emails with “Add to Cart” buttons generated 78% more revenue.
Why? I theorize that to a user a “click is a commitment”, whereas a scrolling to read just a little bit more isn’t a commitment, it’s just satisfying the curiosity -- so if we could just get them to keep scrolling and reading the long message in their Inbox, they would gain enough interest that when they finally saw “Add to Cart” at the bottom, they knew whether or not they wanted to make a commitment.
We used some variation or another of this “landing page email” for close to 7 years. And we mailed similar offers to other health lists with varying degrees of success, but nothing ever was as good as the ROI from “Dr. Blaylock Recommends MagSRT”.
In 2014, Newsmax decided to launch their own dietary supplement brand, and they no longer allowed us to use this subject line in our advertising. Oh sad day. :(
This was devastating for us. Overnight, ROI dropped to less than 1x of spend.
Dr. Blaylock recommended sooooooo many customers to Jigsaw Health over those years, and I’m proud to say that we’re still serving thousands of them today in 2019.
One of the other key lessons we learned during this time was “the more we emailed the list, the more tired the list became of our offer, and the less ROI we had.” So while this was a great channel, similar to radio ads, we couldn’t scale it up because their list size was finite, and we could only mail about 6 times per year.
Amazon
When we “rebooted” the company in 2015, we were having terrible issues with MAP (Minimum Advertised Price policy), because our #1 product, MagSRT, had 40+ sellers competing for the “Buy Box” on Amazon. (And we weren’t even one of them.)
I was blind to the Amazon FBA game, until one day I googled, “How to make money on Amazon”. While our internal policy was “only sell to registered healthcare practitioners”, we realized that Amazon FBA sellers were pretending to be HCPs, stealing credentials, and then filling a demand on Amazon that we had created via Radio and Email ads.
However, this also caused many problems with our legitimate wholesale customers, actual healthcare professionals who carried Jigsaw Health products in their office, but were always complaining to us that their customers could buy Jigsaw products much cheaper on Amazon.
So we opened our own Amazon FBA store, started a “price war” with all other sellers, and began seriously cracking down on who we sold to for wholesale. It was challenging, but within 2 months, we had driven out and cut off 99% of the bad sellers. This enabled us to stay within MAP.
Since 2015, we’ve learned a ton about Amazon Advertising, Brand Registry, Reviews, Enhanced Brand Content, etc. Jigsaw has a fulltime Marketplace Manager who handles all of these details. And Amazon accounts for approximately 50% of our monthly revenue.
Customer Email Newsletter / Video Marketing
The single most valuable tool we’ve utilized for retention is emailing our customers “edu-taining” content, which is primarily video based.
In 2017, we began a weekly series called #FunnyFriday, a video a week -- some sort of short, entertaining skit, song parody, etc. that features our products and/or culture in a unique and clever way. :)
As of July 2019, we’ve published nearly 100 #FunnyFriday videos... We’re like the “Weird Al” of the dietary supplement industry. And we’re definitely the only dietary supplement company with a costume budget. ;-)
To date, we’ve not been able to make these videos work for new customer acquisition, and I’m ok with that. These are for retention, for showing our customers that real people work here. :)
80% of our monthly revenue is from returning customers, and that’s without forced continuity / auto-ship that so many other brands in the dietary supplement industry.
What platform/tools do you use for your business?
I’m a tools junkie! Here’s the highlighted list:
- BigCommerce - for hosting our website and the eCommerce store.
- HubSpot - for CRM, email marketing (integrated to BigCommerce utilizing Revenue Conduit)
- ShipStation - for warehouse operations
- Google Apps (Drive, Docs, & Sheets) - We collaborate on all of our copy using Docs; We designed a very simple but powerful Inventory Tracking & Forecasting system in Sheets.
- Ryver - for internal team communication. (Like Slack, but better because it has Threads/Posts for team discussions.)
- Aircall - phone system used by Customer Happiness Team
- MacBooks - It’s more expensive up front to put everyone on MacBooks, but they are so reliable and last so long, that it’s been a valuable investment vs. Windows and Chromebooks.
What have been the most influential books, podcasts, or other resources?
I’m always searching for new knowledge, here’s a couple of the highlights:
Books for marketing strategy:
- “Positioning” by Ries & Trout
- “Purple Cow” (and just about everything else) by Seth Godin
- “Wizard of Ads” trilogy by Roy H. Williams
- “The Average Joe’s Marketing Guide” by Joe Polish
Podcasts:
Advice for other entrepreneurs who want to get started or are just starting out?
- Think big, start small.
- Instead of asking, “How can I do this?” ask “Who do I know that could help me do this?”
- Always keep a very close eye on cash -- cash is blood, blood is life.
Are you looking to hire for certain positions right now?
Would love to find a top-notch digital marketing guru / media buyer / data analytics / funnel-master that could help us figure out how to use our creative flare for video marketing and generate more new customers on Facebook, Instagram, and YouTube platforms. We have a tremendous company culture, and very loyal customers. So the “back-end” is really strong. Getting the “front-end” cranking is my next step.
Where can we go to learn more?
- JigsawHealth.com
- Jigsaw Health Facebook
- Jigsaw Health Instagram
- Patrick Sullivan Jr. Facebook
- Patrick Sullivan Jr. Instagram
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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