Living The Red Life - From $800K to $2.2M: The Secret Sauce of This Chocolate Brand’s Success

Episode Date: January 14, 2025

Barbara & Andreas Dolleschal, founders of Zotter Chocolate and the e-commerce agency Smargesy, share their journey of scaling their chocolate business from $800K to $2.2M in annual revenue. They discuss how they crafted an "irresistible offer" that revolutionized their sales strategy, grew their email list from 4,000 to 25,000 subscribers, and leveraged influencer collaborations to create high-quality content at minimal cost. The conversation also highlights the importance of a smooth user experience and advanced payment options like Apple Pay to meet modern e-commerce standards.Facing setbacks like Hurricane Ian, which destroyed their warehouse and melted $17,000 worth of chocolate, the guests recount how they rebuilt their business in record time. Despite these challenges, they not only retained growth but also strengthened their resilience. The discussion concludes with insights into TikTok as a future marketing avenue, the vital role of technology in e-commerce success, and the creativity behind their 175 unique chocolate flavors.CHAPTER TITLES02:35 - The Key to Crafting an Irresistible Offer04:54 - Scaling from $800K to $2.2M: The Journey07:21 - Email Marketing Strategies: Growing to 25K Subscribers09:35 - The Power of Influencer Collaborations12:10 - Repurposing Content for Maximum ROI14:23 - The Challenges and Benefits of Building Brand Loyalty16:47 - TikTok and the Future of Social Media Marketing19:34 - E-commerce Tech: The Amazon-Inspired UX Formula22:26 - Overcoming Setbacks: Lessons from Hurricane Ian24:45 - A Flavorful Legacy: Chocolate Innovation and Business ResilienceConnect with Barbara & Andreas:Zotterusa.comSmargasy.comConnect with Rudy Mawer:LinkedInInstagramFacebookTwitter

800k to 2.2 million, that's amazing growth. What are the five big picture things we're gonna talk about today? One of the major things is the irresistible offer that they put in place. And the second one was investing into ads. Then the third part that is important, or was important, not to wanting make money

on the first order. Yeah, the lifetime value. Yes, that was a big change for us. And then investing into social media newsletter content and that helped us grow. My name is Rudy Moore, host of Living the Red Life podcast and I'm here to change the way you see your life in your earpiece every single week. If you're ready to start living the red life, ditch the blue pill, take the red pill, join

me in Wonderland and change your life. What's up guys, welcome back to another episode of Living the Red Life. Today, if you like chocolate, well you are in for a sweet treat. Let me tell you why, Andy and Barbara are joining me and we're gonna dive into five specific ways that they took their business from 800K to 2.2 million

in just one year, five tactics that I had the pleasure to wash and help them with that they implemented massive growth and hopefully some big lessons for you. Guys welcome to the show. So obviously we're going to dive into some juicy markets and stuff, right? But if someone doesn't know the chocolate side and you know you have the agency side, you mind just giving a quick overview to everyone on what you guys do? Of course, happy to start.

So the chocolate business started as a fun on the side business. The chocolate maker, producer is an Austrian, very famous Austrian chocolate maker, and we knew them for 20 years already. And they are working with our agency for 22 years now. already and they are working with our agency for 22 years now and when Andy and I immigrated to the United States, we missed the chocolate. Yeah. Really. And then...

American chocolate is not the same price. And then we started talks with the owner and said, how about us starting importing sort of chocolates to the United States and selling it? And that was like 10, actually exactly 10 years ago. And then we just started, I thought, oh, let's start with 20 flavors. And the owner, Joseph Toto said, no way, we make like 500 flavors. So we started with 90. We knew we can't do it out of our home.

We needed a warehouse. And this is how it started. Right. And then Andy, you obviously help, right right and you help with the business and maybe even some of the chocolate. Right I help beating obviously we have to test the chocolate at some point before we bring them to the market of course that's very important. On the fundamental side of the market right, business but also your agency.

Yeah so our agency we are our part the agency is responsible for all of the technical stuff okay so everything the e-commerce side the technical side that's what the agency is responsible for all of the technical stuff. Okay, so everything, the Ecom side, the technical side, that's what the agency does. Everything ad related the agency does. And like Barbara said, our introduction to the chocolate manufacturer was actually through the agency side. Because we met him 20 years ago and he said, you know, I want to have an online store. And I said, I cannot imagine selling chocolate online. Oh boy, was I wrong. Because now he's one of the strongest e-commerce stores in Europe. And all of that has been built by us.

And so we have got a lot of experience, obviously, because of that. And then when we came to the United States and we figured, okay, we have to do that. We took all of that knowledge we already had and put it here into place and put everything on. That's great. Yeah, and you know, so I'm excited to dive in. You know, you came, obviously you've been working with us for a couple of years and you know, you guys,

what, you follow instructions, you go implement stuff, you know, you always push in and innovating. It's been so great to watch and you know, obviously today we're going to focus on those tactics for everyone listening. So let's dive into, you know, how, obviously what you learned from you there, but I would love the practical application of how you implemented it. Yeah, I remember it like it was yesterday when we were at your office and you were telling us why not going after the low hanging fruit, which is the e-commerce store, right?

And then building an irresistible offer and like 50% off the regular price. And I was shocked because I wasn't ready to think about selling something, not making money on it. But you really pushed that mindset and started making us thinking that we should try it. And then we tried it and it was like amazing how people took on this offer and we finally had a way getting the chocolate into people's hands who wouldn't have spent more money at the beginning. Then they got hooked.

And that's what we knew if they tried a chocolate for the first time, they get hooked, keep coming back. So this was amazing. We started this more than two and a half years ago and we haven't changed that offer. It's still the same, still works good. I think it's so important for anyone listening, if you sell any product that does better when they get it, it's so important to like get it in their hands. By any chance you do have to lose some money or cut the prices or give free shipping.

If you really believe in your product and that you believe that once they get it, they'll be lifelong fans, do whatever it takes to get it out there. Exactly. It's never going to help if they just see an image online, right? Especially any meat where you have to taste, feel, touch experience. You've got to do what it takes to get it out there. And obviously you've got a lot more customers now because of that, right? Because we know, like you said, you know, when people try our product, they love it.

Okay. But the difficult part is to get them to try. So the 50% off deal, the irresistible offer made sense, but we just didn't have the idea or the mindset for it. What's important though is you have to look at the numbers too, at the data, because we know when we get something to the store and buy the product, we know about 30% of those people stay with us and buy again.

So when we look at the lifetime value of those customers, it totally makes sense, but that's something we learned from you because we didn't do that before. And how many come back generally over time when they buy the first one? 30% come back. 30%?

Yes. Is that how it would work? And those 30% probably come back again and again. Of course. Yeah, for gifts and Christmas and Valentine's Day, et cetera. When I say 30% come back, it's more than one time they come back, okay? Because we have some that come back for once and by a second time in a year or so, but then we have a bunch of them, about 20%, 22% that buy the whole year, every month.

What do you think your top customers spend? Have you looked at like some of the top top customers? They spend hundreds, thousands, I guess. Yeah, top customers. Yeah. We have people who buy 60 bars every two months, which is a lot. I mean, it's not the regular customer, but there are some super fans. Yeah, that's great. So, you know, that's the first one, Irresistible Arthur. And, you know, everyone listening, if you haven't heard of that, I have a number of

episodes talking just about that from like years ago. Go find it. But it's really the concept of standing out, right? Giving something that it's hard for them to say, you know, no to and making it so it's like, oh, what's the risk, right? This chocolate may suck, but look, it's discounted, it's cheap or cheaper than it should normally. Obviously, still have a premium brand,

but it's maybe more affordable to be like, what the heck, let's try it. And because you have a great product, once they do try it, then you're really relying on that follow-up and that upsell and cross-sell, which is probably that let's lead into that, the second thing, which is the lifetime value and upselling. So can you talk a little about how you do that?

How do you get them to come back? Yeah, we have newsletters. Again, when we met you and we learned from you how important newsletters are, we started sending newsletters every day. And what were you doing before that? Maybe once. Every second month? Yeah.

Something. We just let so much money on the road, you know, on the table. It's wild. So now we do it every day. It's a lot of work, obviously, because we have to figure out every day the content that we send out and the new... I mean, we try to repurpose some of them after a year or two, but it's still a lot of work, but it's so worth it because we know every single time we send out a newsletter, how many people come in order that email every day. So as you send every day and as the business owner, you're like, wow, this is a lot. Most of them only see one or two of those emails.

Exactly. So it's not like, you know, maybe the top fans see them every day, but they like you. So who cares, right? Like if I see my favorite brands email every day and social posts, it's like, I like that brand, I'm okay with it, you know? Exactly. And, and, and yeah, it's again, you're working so hard to get the customer. You spend a lot of money.

Um, it's like, you just, you, you've got to do that second part, right? Which is following up with them. So, um, you email every day. If anything else you do to get more repeat sales. Yes. So after 10 days, 10 days after they get their first order new customer, they get an email with a discount code for their second order. That helps in a big way. We send them a text message after three weeks to write a review for us. But even that leads to orders because they get reminded,

oh, that was that awesome brand. That's what we do. And that's what you have to think about when they write us an email or a review, they think about us, they think about the product, their experience. Food, they mean the taste, how many are left in their cupboard, in their kitchen. Yeah, exactly. Also, what we also do when they get their box, they have a card in there with a referral program to invite a friend, They get like $15 off their order. Their friend get $15 off.

So this is also a great way and a cheaper way than ads to gain more customers. And those customers are generally better too if it's a friend selling for you, right? It's a warm recommendation. A lot of things there. So emailing every day. What about upsells?

Do you upsell at the car, post purchase? We upsell in the car. Yes. So, we have cross-selling in the car, obviously, and we see that because people, when they come in to our irresistible offer, it's a low price offer, basically. But we see a lot of customers that order more than just that reduced package. So at the end of the day, we have a nice order value because our average order value is about 60, 65 dollars, which is great.

By dollars on orders, great. And the thing, the psychology behind it, which is interesting is when you sometimes do an irresistible offer, the order value still gets really high because people feel they got such a deal. I'm willing to spend a bit more because I got such a good deal here. And so, yeah, it's like if you get, you know, say you get free airfare flights, right, or super cheap, you might go, well, we'll spend a bit more on the hotel. The plane was free, right?

The flights were free. So you justify it in your head and it can work really well. So upselling, cross-selling, email, text message, and package placement referrals and pushing reviews, right? How many reviews do you have? We have about 600 or 550 on Google and then another almost 500 on Google Shopping. It's a separate platform for reviews, product related. So I think we come up with all across the platforms like Yelp and TripAdvisor. Maybe in total. But the majority of that we just gained in that one year because we didn't do that before. Yeah, I mean we talked a lot like you know,

and obviously when I teach it, I go beyond reviews. I talk about social proof, but reviews are a massive part of it. That's yeah. And we take those reviews and show them on the website. So every single time someone comes in, we have small pop-ups that show up. That's the social proof part.

And again, it makes a huge difference when people come to the shop, they didn't know us before. And then they see all of those nice, you know, read. I mean, the last 10 years, we're so because of Amazon and stuff now, we're so an TripAdvisor, we're so seasoned to look at reviews. We watch movies based on Internet movie database and restaurants based on reviews, our haircut on reviews, right? Like everything's review driven, right?

And every website now shows reviews. So if you don't, it's very hard. You don't have a lot. It's very hard. And especially when you start charging premium prices, unless you're a Louis Vuitton and Gucci, they don't have reviews because they're a Louis Vuitton or Gucci. If you notice, Lamborghini, you don't see reviews, right? Because they've got such a premium.

But if you're anyone else and you're still in that premium range, it's so important because you've got to justify it, especially if you can't taste a bite first at a supermarket grocery store. Exactly. So, so next is, uh, I would love to talk about ad spend, but one thing that I mean, it's so important for everyone listening is, um, yeah, obviously we should spend more on ads, but you guys kind of, and what I try and do with people is take them through mindset shifts because that lasts forever, right? It's like a habit forming thing.

So can you talk about the mindset changes with ad spend? Well, before we knew you, we did ad spend, but it was a very low budget. Yeah. Okay. Considerable low. $30 a day. budget. Considerable low. Because we just, our mindset was every dollar we spent in ad needs to come back immediately in the first order and that was just not happening. Especially in the food industry it's very difficult to make money on the first order. So when we learned you and you told

us you have to be a little bit less scared and spend more ads because that's the only way you can grow. At the end of the day, we just trusted you, you know, and did that. So we spent a lot more into ads. At some point, we spent $1,000 a day or something. $3,000 a day. From $30 a day to $3,000 a day. So that was that was really a big step for us. And it just worked.

I mean, well, now you have a customers for life. Right. Because people are making money from that. Yes. That's two years ago. Yes. That's exactly what happened. You know, we started with, how many customers did we have when we started the whole campaign?

At the newsletter, subscribers was about four grand. Yeah. when we started the whole campaign? At the newsletter subscribers, it was about four grand. Yeah, so we had 4,000 users in our newsletter subscribers and about... At the end, I had almost 25,000. Yeah, after the year we had 25,000 in the newsletter. Yes, it is. 20,000 more leads. Yeah, you buy customer data too with that. I mean, not everyone comes back, but a lot comes, is coming back. And let's say when I look back the last year, we reduced our ad spend drastically, but still have our client base. We can nurture through our newsletters, social media, etc. It's kind of like you do the hard work and then you can rest a little. Now you've got a good customer base and they create a ripple effect too, because they

age your reviews, they prefer people, they post on social media. And they gift it during the holidays. Holiday gifts are great multiplier for us. I love that. So that was the ad spend. And what did you, you know, mindset wise, what tips would you say someone watching that's maybe similar to you, they're like, they're worried about ads or they don't see the value in spending much on them? Well, you have to trust them and you have to look at the data at the end of the day, not just spending blindly and not look at the results and the data. But if you have the data and you see results, why not spending more? If you know that you make $2 back from $1 spent and it works for you, why not spending $3,000, $5,000 if you know you make the money back? That's the whole

thing. It's really for us, the mind shift was not to be frightened and getting away from the idea to have to make money on the first order. Because now what we are doing is we make the money on our second, third and so on order. So it's the lifetime value actually makes the whole thing working for us. I think that's a major thing when it comes to ad spend. I think the combination of trusting the process with ads, learning how to do ads right, because that was a process to how to target properly the creative etc. That was a definitely a process. It still is, it's constantly changing. But this in combination with learning about lifetime value and how to tackle into that customer data and nurture them

afterwards and sell on the backend. This was something we didn't know before we joined your program. Not in, not to that extent. We didn't know it, but we just did not. It was not. It was not really emphasized. It was sort of, yeah. Sometimes you have to understand something a little more or really see someone else doing it to be like, okay, I get it. And so I click the difference between knowing about it, but like, okay, I'm all in on this. You know, I get it. So, so I love that. And then I mean, another thing along that lines that I know doing well for you now is

social media and influences, right? So how did that change? It's a little bit more than a year now when we started investing into, because we saw from our numbers and the cash flow and everything, we wanted to reduce our direct ad spend because ads on Meta got really expensive. And so we came up with that idea of working with influencers and micro influencers, those smaller ones that are building their audience, working on their profiles. They take collaboration in exchange for product only, so we don't have to pay them.

This way we were able to expand or getting more eyeballs on the product, on the videos to their audience. And we just started sending two bars of chocolate to those. So we contacted them. Most of them say yes and they do it. And some of them do really great content, some not so much, but they are also learning. So it's really a win-win situation for us and for them. And this is the way how we got like, we have like almost 400 pieces of content in a little bit more than 12 months that we got for influencers. And it's great content, right? Part of it, it's great content that you'd pay an influencer 500 to shoot, but now they're just doing it. It's a trade, right? Yeah, it's a trade. Because they want to promote it. Right, it's a trade.

And if you look at the numbers again, like Barbara said, not every content is created, but if 80% of the content is created, it's a big win for us and it works. Do you recycle that on ads? Yes, we do. Social. So sometimes, we don't ask them to give us the ad code

for that that you need for it. Some give it to us. If it's really good content, then we repurpose it for ad, but we don't expect them to release them as an ad for us because it's really a collaboration, a win-win situation for everyone. If you want them for ad, they usually want you to pay them. Have you looked at TikTok shop yet? We did, but we are not good at that yet. If you want them for ad, they usually want you to pay them. Have you looked at TikTok shop yet? Or you? We did, but we are not good at that yet. Yeah.

Big struggle to get into that. But it's something we definitely, that's definitely something for 2025 to dig into that deeper and learn. But yeah, TikTok is pushing that. Because they basically, I saw it today, you posted videos and you don't link it to a product, you know? You haven't linked it to a product. Well, they know, you know, the more someone post, the more money someone's making, the more they're posting, right? Right.

We could create more content so they can place more ads. So it becomes this big cycle, right? Yeah. So any other tips or tricks, lessons from, you know, from the agency or the lessons you've got from us and growing to millions? You want to share? Yeah, I think we shared most of it already. From the agency side, what we see is really important when it comes to e-commerce, the tech behind it. You have to have a fast web store.

It has to be snappy. It has to be easy to manage, easy to go through and check out, navigate. Everything needs to be easy because people are so used to the Amazon shop. It's one click thing. So you have to have something that is similar to that. So the experience needs to be almost like that.

And that has a huge impact on how much people actually check out. And when we look at our bounce rates, that's proof that we did the right thing. So that's on the tech side very important. It's way lower than the average in the US rate. Right. Yeah, that's smooth user experience, fast, simple. I mean, again, Amazon just kind of spearheading that, but they're changing how people want to shop. And now Apple Pay too, like I'll leave websites if it's e-com, if I can't pay or like, hey. I remember when you said and tested it, I want to have Apple Pay. Now we have it and I see how many people use it.

It's crazy. We just implemented that because you mentioned that. So you didn't have that before, but you know, at some point, those are the small things. I kind of have a big impact. Yeah, totally. And then so he talks a lot about big wins, big successes, scaling from 800k to 2.2 million,

which is amazing, growing the email list to 25,000 from four. But there's got to be some failures in there. Oh yeah, every entrepreneur goes through struggles. So, you know, and especially when you scale, it's like pushing your car to that max, you know, the miles per hour that's listed or kilometers an hour that's listed on the car screen. Aini, do you want to share any lessons going through it? I mean, we had plenty of failures, obviously, because if you're long enough in business, you have failures. It's just part of the niche, I would say.

But the biggest thing in our chocolate business was when we got hit by Hurricane Ian. It was right after we just started our irresistible offer. Yeah. That was we started in August, actually, and it was just, you know, taking off. Taking off. And then end of September, iron hit us hard. We lost our warehouse. We lost all of our product. We had three weeks no power, so there was no way that we could stock our warehouse back

again. So we basically lost three weeks of our most important season. That was in high season. That was really hard. All of our product. It was like 17,000 bars at this time. Yes, that was... It's like a hundred grand product. That really hurt. And at the time we were really... For a moment we had no idea how to survive this. But we had a great landlord.

He fixed the warehouse within two and a half weeks. We got our warehouse restocked pretty fast. That was because we have a really great partner back in Oslo that produces or creates a product for us. So we got that back. And even though we lost three weeks of our most important season, at the end of the year, we still had some growth, which was that was because we had this irresistible offer. Yeah, that was for sure the biggest failure or thing that happened. It was scary because after Ian hit, after the general experience of that storm, which

was traumatizing to us. And then, okay, we saw the warehouse roof failed, we had no power, the chocolate was melting away. It was like, what are we going to do? It was so, I was out of ideas. How are we going to survive the seasons? Will we be out of business after that? Because this last months of the year in chocolate are the most important ones. And it was really in a growth phase. So this really hurt us. But yeah, we were still lucky that we got power back in three weeks.

It was awesome. And it made us stronger because now we know, okay, what we can survive, you know, and how we can survive, you know, and how we can survive. And we know we have ways how we can go over a situation like that, but yeah, it's. Insurance covered the lost product months later, but they don't cover like. It's a bit of a time. Yeah, but they just covered the raw product.

Yeah, you look like. Covered the margin. Revenue and profit through that time, which is very important. So last question, just to wrap, if people want to take, we talked about chocolate for 20 minutes, I want some chocolate now, so people listening do. Where do they find the chocolate or hear about the agency? So the chocolate, they find it on SauterUSA.com. SauterUSA.com. Our Instagram is SauterChocolates. And our agency, if you want to look into e-commerce stuff, we are really experts in that. It's at smargacy.com.

S-M-A-R-G-E-S-Y.com. And yeah, we're happy to help. Great. I want to just finally, what are some of the amazing flavors they can try? Because I know you've got a lot. Oh, butter caramel. I'm usually talking about my personal favorites. Butter caramel. Top five flavors.

Yeah. Brown butter toffee, marina cherry, dark chocolate mousse. Yeah. French white nougat, currant and chili. So it's just to me. It's very difficult because we have 175 different flavors, all of them. Great. Well, guys, it's been a pleasure helping you guys, supporting you guys, seeing you grow, implement all these things. And obviously, we've been fortunate enough to taste the chocolates, give them out at

mastermind events. And thanks for coming on today and sharing all those lessons and wisdoms and you know hopefully actionable steps people can use in their own businesses so great job guys, if the ways go implement and keep living the Red Lab. Thank you very much. Take care. Bye!