From Diaper Money to Debt-Free: How This Designer Created His Own Passive Income

From Diaper Money to Debt-Free: How This Designer Created His Own Passive Income

Passive income is a recurring source of money that requires little maintenance on your part, just up-front work to create a system to generate it.

In this episode of Shopify Masters, you’ll learn from a designer who pivoted from a freelance business to generate his own passive income through digital products. What started as a side business to offset the unexpected expenses of being a new parent, eventually grew into a means of paying off his debt while working less.

Dustin Lee is the founder of RetroSupply: a store that sells digital assets for graphic designers and illustrators inspired by history.

No one says, ‘Oh, someday, I want to lay out brochures for a living.’ Most designers are artists that realize that they can make money—better money—as a graphic designer.

Tune in to learn

  • Why designers are in a good position to create passive income
  • The simple framework for creating high converting product descriptions
  • How to create and sell digital products that can give you your time back

Listen to Shopify Masters below…

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Show Notes

Transcript

Felix: Shopify Masters is powered by Shopify, the easiest way to sell online, in-person, and anywhere in between. To get an extended 30 day trial, visit Shopify.com/Masters.

Dustin: Maybe that means you experiment with some new line or product and you say, ‘I’m going to make the product more expensive, so that will offset the cost of that third free product.’

Felix: Hey, my name is Felix. I’m the host of Shopify Masters. Each and every week, we learn the keys to success from eCommerce experts and entrepreneurs just like you. In this episode, you’ll learn how to package your products to increase your average order value, the simple framework for creating high converting product descriptions, and the highest converting type of email content.

Today I’m joined by Dustin Lee from RetroSupply. RetroSupply sells digital assets for graphic designers and illustrators inspired by history, and was started in 2013, and based out of Portland, Oregon. Welcome, Dustin.

Dustin: Hey Felix, thanks for having me.

Felix: Yeah, excited to have you on. Yeah, tell us a little more about these assets. What exactly are you selling to designers and illustrators?

Dustin: Yeah, so graphic designers typically need additional tools than the ones that come with the products they work with. If you work in Photoshop, or Illustrator, for instance, there’s a variety of add-ons you can get. For instance, custom brushes that get you a very specific effect, or little things called ‘actions,’ which are basically little programs that will run and achieve a certain effect. I sell a variety of those, as well as fonts.

Felix: Got it, so this is a pretty established industry in a sense that there are people out there that are looking for products like this, and people that are out there that are providing it. When you first came onto the scene in 2013, about … I guess five years ago, what was the competition like at the time?

Dustin: The competition was … I would say there was competition, but it was different. When I first started thinking about making a business like this, I was looking at sites called … There’s one called [Envato, Envato Network 00:02:05]. They have something called [Graphicware 00:02:07], and they were selling a lot of these. People were sort of just packaging them very sparsely, I guess? There wasn’t a lot to them. You might get a few brushes and maybe some brief text file instructions.

Then, a company called Creative Market opened up, and they were … I don’t want to use the word ‘higher quality,’ but it just had a more community feel to it. I was buying stuff on that platform when it occurred to me that I thought, ‘Hey, maybe I have a unique take on this that I think might do well.’

Felix: Got it, and what was that unique take at the time? Is that they were inspired … These were assets that were inspired by history? Was that your angle?

Dustin: No. I’m from Portlandia, so … vintage, retro stuff is very popular and common here. I was inspired by that. I was working for a business that specialized in internet marketing. I was kind of a copyrighting need, as well as graphic designer, and marketing nerd in general. What I noticed was designers didn’t really package up what they were doing in the same way that internet marketers would package things with clean sales pages, and … calls to actions, and opt-ins. I thought, ‘I think that, that could be really effective in selling more products.’

I started using all of those techniques, essentially, to sell products. I think it was one of the first times that someone had aggressively done that, in that space. That paid off early for me.

Felix: Got it, makes sense. You were not doing this full time; of course, at the beginning. Talk to us a little bit about your … what you were doing, essentially, prior to or at the same time as launching RetroSupply?

Dustin: Right, so I was working for a company called ‘Paid to Exist,’ which was helping first time solo-preneuers build businesses. I was a graphic designer, contracted graphic designer for that business. I have learned so much about sales funnels, and just the entire process of how people become customers. Then, I quit that because me and the founder became friends.

We made this start-up called ‘The Playbook’ that just never really got traction. We were in over our heads. As a result, I had no money coming in. I was $35,000 in credit card debt. I then found out I had a baby on the way … that we weren’t expecting. I didn’t know what to do, because I had committed 40 hours a week to this start-up that was not really making any money. I needed something, at the very least, to save face and say I was trying to do something else that was making money.

I started getting up early and working on this little side business. It was really just a … every day an hour, hour and a half, working on what became my business now, which is RetroSupply.

Felix: Yeah, that’s a … I think that’s a great story, because I think this is a place that a lot of entrepreneurs are at, or went through as well where they had something that was more stable going on, but they knew that they could and wanted to get more out of life, to earn more money, to be able to support themselves a little bit better. They find ways to carve in these times, these opportunities to work on this other business; and in your case, eventually became the thing that actually consumed your life.

Now, for people out there that are still in this phase where they are bouncing between the two, any recommendations here? How do you recommend people if they are … have a nine to five, or some regular day job … How can they get better at finding and carving out that time to work on that side business that they’re on?

Dustin: Yeah, I can give you actually a really pretty relevant, recent example. Despite the fact that I’m a graphic designer, I’m not a great illustrator. I used to be good at drawing, and I just … I lost it at some point. I wanted to get better recently, and so I started something that was 100 day project, essentially, where every day I did a drawing and posted on Instagram. When I started, my drawings were embarrassingly bad. I did it every night for about an hour. I’m on day 98 now.

Felix: Nice.

Dustin: You can see a dramatic different. I spent probably anywhere from 20 minutes to, on a really insane night, like I’d go crazy and spend an hour and a half, two hours on this drawing. It was just little chunks every day, and when I started the business, that’s really what it was. I didn’t say to myself, ‘I’m going to make this much money this month.’

I said, "I’m going to follow a system. I’m going to say every morning, I’m going to get up and I’m going to work on this business, day in and day out, and see where that gets me.’ I found that every time I have gotten traction in something, it’s been because I followed a system, as opposed to choosing a goal, and then being disappointed if I didn’t hit that goal when I thought I would.

Felix: Yeah, I think that’s a good point. I’ve heard this as well, where there’s people that … tell you to stay away from having this goal in your head, because the goal is very vague; like how do you get there? The system is what … the system, the process that you put in place is what you can show up every day and just do it, without having to think about it as a looming goal, and just put in the work, and eventually over time, you look back and say, ‘Wow, I made all this progress that I didn’t recognize at first.’

When you created the system, in your example, whether … Let’s talk about the example of you starting this business. When you created the system, how did you know what it should look like, and how did you reinforce it, so that you actually showed up every day and did the work?

Dustin: I think it was … Honestly, it was really made out of desperation. I had this child coming, and that really created a countdown timer in my head. I don’t think you have to have something like … some sort of crazy crisis to make you do that, but I think having a clear reason why, or just really those first couple days, I’ve noticed, are the hardest to start. Just starting and again, accepting that it’s a system, or a process, and doing it every day. Certainly having some sort of reason, whether that’s your family, …

I coach some people on building businesses like this. When I talk to them, a lot of times, for instance, they’ll say, ‘Well, I just want to provide something different for my family,’ or, ‘Maybe I want to carve out more time or more freedom in my schedule for my family.’ Sometimes it’s family, sometimes it’s a girlfriend, or boyfriend, or loved one. Sometimes it’s that they want to be able to travel more, or something. I think having that thing in mind, and wanting it very badly can be really high leverage. I think that’s what motivated me to do it.

Then, I think the other thing is most people are very … know a lot about the product that they want to sell, but they don’t know a lot about acquiring customers, and verifying that people want what they’re selling. I think everyone would have a much easier time if they invested the time to learn how to do that.

Felix: Now, how do you identify … or at that time, how did you identify how you should be using your time? Like you were saying that you were focusing on, in particular, … You noticed that the … that people weren’t packaging digital assets the same way that other online marketers were doing it; but then how did you actually take that knowledge and say, ‘Okay, today I’m going to do X, Y, and Z?’

Dustin: Oh right, great question. Yeah. What I did is I went on to Creative Market. Before I had my Shopify shop, I was on a platform called Creative Market that lets you sell your items there, and get set up very quickly. I basically went on there, and what I did is I looked at what products were doing well already, and I looked for overlaps between what was doing well, what I could do as good or better, or differently; and then I started experimenting with making my own versions of those products.

I would say, ‘How can I add value in a way that this person can’t, that makes me stand out?’ Or, ‘How can I do this differently?’ A lot of times, I would look through the comments on the products, and the reviews, and I would look for what’s wrong with this product that people are mentioning? Or, I would buy the product and say what is missing when I use it that I find frustrating. Then, I would just choose one. Typically, it would take me on average, about five days to make a product. I would make that product, release it, and then just see what happened; and then I would continue the cycle. Then, I would just look for feedback and see what is selling, what isn’t selling? Obviously I would do more of what was making money, and less of what wasn’t. That slowly got me more and more money.

I think my first month, I made seven … maybe five to $700. I kept trying different things. When things really became successful was when I finally completely abandoned the template that the people before me were using, in terms of how they laid out the products. I just said, ‘I know people need this particular product, and I’m going to make it the way I wish it was made.’ I really started to say to myself, ‘I’m going to make all the things that I wish people had made in the space that no one will make.’ When I did that, it was like a floodgate released. Literally within a couple weeks, … I had made more money than I had made at any job in a couple weeks. It was insane.

Felix: Got it, got it. You were taking this approach, which I think can work in other industries as well, where you were doing this research by identifying products that are selling well, but can be improved upon by either you using it yourself, and you determining what kind of features, or what changes you would make, or just looking at the reviews and seeing what people are complaining, or where people were saying, ‘I wish this product did X.’

You knew what you should be improving. You went and created a better products. Then, you … put it onto the marketplace. How did you make sure that customers were understanding that this was the particular change or improvement that you made, so that they should try your product out, rather than the competing product?

Dustin: There’s a few things that I did. One was because I was selling to graphic designers, graphic designers by their nature are very visual people. I made preview images, and I remember thinking to myself when I did it, ‘I’m going to make preview images, product shots that are good enough that they could be printed onto a box in a store.’ Everyone before that was, … I think despite the fact that they were graphic designers, they weren’t spending that time on making the product shots as strong as they could be.

I said, “I’m going to make this look so good that you want to pick it up.” I think that made a really big impact. Another thing I did was I did before and afters in the images a lot, so I could say, ‘Here’s what happens before, when you purchase this, here’s what will happen after you use it.’ It just made a very clear contrast about what was going to happen.

The other thing I did was I’m a big believer in trying to eliminate any uncertainty about people … for people about what they’re buying. I would make the name, so when they read the name, they can have a pretty good guess what the product does. When they see the cover of the product, that first picture they see, they have a … they can take a very good educated guess on what that product does. When they read the copy, there’s very clear bullets, short paragraphs, and I immediately get to the point in the very first sentence in what the product does. It’s really just about like in as many different ways as I can explaining, like you said, that result before they lose interest.

Felix: Right, that makes sense. While you were on Creative Market, this is basically like a platform similar to someone selling on Amazon, just selling a physical product, or something like that. You weren’t … You didn’t actually own the website that you were selling on initially. You mentioned in the pre-interview about how you were able to start instituting things, like sales funnels, and list building into your … essentially your marketing engine. Was that possible on a website like Creative Market, or was it only possible once you moved off of it?

Dustin: It was only possible once I moved off of it. One of the things that I have really learned the power of when I was working for the consulting business that I worked for was that your email list is so important because it’s the one thing that you have control over in reaching a customer. For instance on Creative Market, Creative Market is fantastic. I love Creative Market. I know all the people that worked there, and then they do a fantastic job. Just at the end of the day on someone else’s platform you don’t control if they send an email about you. You don’t get to get all the information you want, and that’s fine and fair because that’s their platform.

I’m happy to be on it, but I also realized if I really want to have more control over my own financial well-being, I need to move people over to my platform as much as I can. That’s where Shopify came in, along with Mail Chimp. … The real trick to it was most people on Creative Market would have a little bio area. They would say, ‘My name is Pete, and I like to drink coffee and design stuff.’

I use mine, and just use a very simple call to action, I said, “Do you like these products, or do they look cool? Visit www.RetroSupply.co, and get nine free products.” That drove a lot of traffic in the beginning to my own site, where people would opt-in for my email list. Then, I could start to market to them regularly about new products.

Felix: All right, so this wasn’t like a hard cut over. You were able to drive the traffic from the platform, the marketplace to your own website, because you were able to make this kind of announcement on your bio that, ‘Hey, there’s … there is a good reason why you should leave,’ not leave, ‘but you should check out this other website,’ which is your own website.

Dustin: Exactly. Yeah, I wasn’t trying to … I was trying to respect the platform I was on, because I mean they literally gave me my financial freedom. I was also trying to say, ‘Hey, if you want to be more immersed in the brand that I’m making, you can go to my own site and sign up, and you’ll get even more cool stuff.’

Felix: Yeah, I mean I think that certainly … do within a balance of the platform that you’re on, but I think that it’s great that you weren’t just saying, ‘Hey, go here,’ and this exact same experience you would get on the marketplace, you were actually giving them a value add by saying, ‘If you go to this website, there’s more that you can get.’ I think that’s important. Otherwise, people would just … There’s no reason for them to leave the platform, essentially.

Dustin: Yeah, yeah. Absolutely.

Felix: Now, during this transition period where you’re driving traffic to your … to RetroSupply, what was the incentive for getting people to sign up for the mailing list?

Dustin: The incentive was I was giving them nine free products, essentially. I made nine unique products that you couldn’t purchase. You only could get them if you signed up for the email list. It was really important that I did that because … I think sometimes people get email opt-ins wrong in the sense that they offer something that a lot of people want. For instance, contests are one way that people will grow email lists. They’ll say, ‘Sign up for my email list and get the chance to win an iPad,’ or something like that. As I’m sure you know, that will get you a lot of subscribers. The problem is that everyone wants an iPad.

Felix: Yeah.

Dustin: I was very specific and intentional in saying, ‘I’m going to only offer things that are similar to what I’m going to sell.’ Once I had … not even very many people on our list, I was just sending out product updates there, and over the course of about two years, it became … maybe a 50/50 split between how much I made on Creative Market and on my own platform. Today, it’s like it a 90/10 split.

Felix: Very cool. You built this email list. You mentioned also in the pre-interview about how you not only use email lists to sell stuff, but also to educate and get feedback from your customers. Now, when you sit down and decide to create a campaign, or some kind of a email offer responder funnel, how do you balance between what you should … What kind of content you should be putting into your emails?

Dustin: Yeah, good question. That was a learning process for me, because the business I worked for before was really in the business of doing a lot of educating. They sold one core product, essentially, that was like either 500 or $1,000. For me, I’m selling things that are … anywhere from 19 to $500. My average transaction is like $35.

At first, I was just sending out announcements about new products. I would try to make the copy compelling, and interesting, and surprising. I would include a lot of media. I would have a video of the product. I would have interesting copy. I would have lots of preview images. I might have a sample of the product. I realized that I needed to provide people with a wider spectrum of content. It can’t all just be sales stuff, even if you make it as entertaining as you can.

That’s when I started to work on making a mix of tutorials, so we would do tutorials on how to create a certain effect, or achieve a certain result as a graphic designer. We would have blog posts that were interviews with influencers in the industry. We would have free webinars where we would give information away with thought leaders, again in the industry.

When I started to mix all those, that did really well. What did really, really well is if when I can mix together great content that is good on its own, but even better if you buy the product. That’s really like the sweet spot, when you can hone in on that.

Felix: Can you say a little more about that? What does that … How do you … What’s an example of something like that?

Dustin: Yeah. Okay, so for example, there’s an engraving effect I saw. It’s called the ‘Grave Etcher.’ It creates this … just old school, vintage engaging look. We had a tutorial where we taught about how to make an engraving illustration of an eye. You could look at the tutorial and it looked great. You’d see this final end image, and it’s a great, stunning image; something that you’d want to know how to do. If you follow the tutorial, you can do it for sure, but if you bought this brush pack we were selling, you could do it in one fifth, one tenth the time with a few strokes of your mouse.

That did really well, because the people that don’t want to buy … would still enjoy it, but then you’re still in the back of your head like, ‘Oh man, I could do this so easy if I just buy this product.’ Does that make sense?

Felix: Yeah, that makes sense. I’ve seen this before where it’s like it’s the approach of ‘Here’s how you can do it for free, we’ll give you free content. Here’s how you can do it, but hey, if you want the result even faster, you can just buy the result by using this product.’

Dustin: Absolutely. I’ve even had people write and say those exact words. You’ll see this scripted kind of gold foiled lettering effect. We were selling … We still sell a back that would get you that effect on your lettering, and people would put it onto merchandise, and things like that, like pillows and stuff. I made a tutorial, and I decided, ‘I’m just going to give away the complete secret to doing it without any of my products.’ I made a tutorial on that. I showed them how to do it. Despite giving them every detail on how to do it, there’s always a certain amount of customers that just say, ‘You know what? I watched you do it. It took 15 minutes. I’d rather just buy this thing and have it done in like 20 seconds.’

People write me and say, “I just bought this because I just watched it and said, ‘Eh, too much trouble. I don’t care if I have to spend $20 or $30 to get the result.’”

Felix: Right, makes sense. Now, how do you decide or recognize what people want to be educated about? How do you know … How do you create that calendar, essentially, of educational content?

Dustin: Yeah, good question. I use a couple things. Early on, I did a lot of just looking at the stuff that I enjoyed, or the stuff that I found myself searching for. People go both ways on this, but I really was my own customer in a lot of ways. I knew what I wanted, and I suspected I knew what other people wanted, too.

Another thing that I would do is I would go on to sites like … that were specific to my industry for social media. For instance, Dribble is a social media platform for designers. They’ll share their latest work. ‘What are you working on?’ People will post an image of something. A lot of times, when you look in the comments of that section, people will say, ‘How did you do that? How did you get that effect, or that result right there on your work?’

People on Dribble tend to not answer those comments. I think it’s mostly because they feel like, ‘I’m sharing my work here. I’m not,’ … It’s not that they’re trying to be withholding about it. It’s just that they’re sharing their work, and they’re not there to spend a lot of time explaining things; because they’re busy.

I would just look at those responses and say, ‘Okay, no one’s answering this. Clearly a lot of people want to know,’ and I’ll use that to come up with good questions that I can answer. That was one way. Another way that I’ve used is sites like … I think it’s Buzz Sumo? You could look on there and let’s say I’m selling a … pack of brushes that are like … give you the effect of an old 1950s advertising drawing. I would go on there to Buzz Sumo and I would look up ‘retro Photoshop brushes,’ or something like that. It would show up all sorts of content, and how many shares it got, how many … on different platforms. Then I would just go look at those pieces of content and say, ‘Why did some content do better than other content?’

I did a lot of that. Then, just like a simple Google search. See, is there people looking for this on Google? If so, what are the top results? How can I make an article that’s a little different, or better, or more in-depth, or more niche?

Felix: Yeah, I think if you are not your customer. In your case, you are the customer that … You are the customer, essentially. If you don’t have that kind of understanding of what kind of questions you might have, I think that’s a great approach by going out and seeing what questions people are asking, and not getting an answer to. That’s the opportunity for you to come in and be essentially a thought in that space by providing the content for free, and then of course, they’ll discover your store that way as well.

I think in your success, you mentioned was especially when you aren’t … were on a marketplace, or a platform like Creative Market, a lot of it became around your copy. I looked on your current website, the product description is very in-depth. There’s a lot going on in there. What’s your approach to creating copies, particularly around product descriptions?

Dustin: I generally follow a … formula over and over again. It’s a very common copywriting formula, which is AIDA. It’s an acronym. It stands for ‘Attention, Interest, Desire, Action.’ I’ll put the attention typically is a headline. That’s getting their attention by telling them something like … the most intense, or emotionally … stimulating way to talk about the result of the product. Then, interest is where you start to describe … the problem, and … what it’s like to have a solution to it. Then, the desire is where you talk about your specific solution in details. That’s typically bullet points, so people can easily scan there and say, ‘Does this meet the criteria of what I need?’ Then, the action part is where you literally ask people to buy.

It’s so funny. You wouldn’t think on an eCommerce site you would need to ask people to buy, but you do. If you’ve ever shopped on Amazon, which who hasn’t, right? Sometimes I’m on there, and I forget that I’m there to buy stuff. I’m just looking, I’m like, ‘Oh, this is cool. This is cool. Anyways, what was I doing?’ I leave. I think that seeing, ‘Buy now,’ things or ‘Buy this product now,’ … or ‘If you want to get this result fast or today, buy this product.’ It sounds a little sham-wow, sometimes. It can feel a little cheesy when you do it, but you have to remind people … People are so distracted. I think it really helps to be clear, and respect the fact that people’s attention is … pulled a lot of directions when they’re at home in front of a computer or at work.

Felix: Yeah, I think it’s important to know that people’s state of minds are not the same. Or, all your customers, all your visitors, their state of mind’s not the same when they come to your website. One person might be coming in and … Like go to the mall, and you’re the type of person that knows exactly what you want. You walk right into the store that you want, walk right down the aisle, pick it up, and go buy it. There’s that type of customer.

Then, there’s also the kind, the passive person that’s walking through, and then they’re spending money, but they’re not really looking for anything specific. You want to capture those people’s attentions, too, and say, ‘Hey, this is something that you want in your life, you need in your life. This is going to improve your life.’ Then, actually ask them to buy, because they’re almost like a zombie shopper. That’s the type of customer that you also want to capture at the same time.

Dustin: Yeah, I’ve never heard that term, but that’s such a good term. I’m totally that zombie shopper sometimes. I’m walking around Target, and I’m like, ‘How did I get here? Wait, why am I here?’

Felix: Yeah.

Dustin: That absolutely happens. Also, it’s true. Sometimes people take … two years to buy a product. I’ve had people on my email list, and then two years later, they become a really great customer. They’ve been getting these emails for years. You just never know.

Just the last thing about copy I feel like I should say is I’m not … a copywriting genius. I’m inconsistent. I try things that don’t work. Sometimes I have spelling errors. I mean, I am not perfect. I think the thing that has really helped me is just that I just have consistently done it, and I … try to leverage everything I have. For anyone that’s like, ‘Oh my gosh, I don’t want to learn copywriting. That’s intimidating.’ I’m not a copywriting genius. I read some books, because I find it interesting, and then I just apply that as best I can.

Felix: Yeah, I think the framework that you talked about, the AIDA, A-I-D-A, attention, interest, desire, action. I think that’s a great framework for someone to get started, because you literally just plug it in and you don’t have to think about the entire … going back to the theme that we were talking about earlier about thinking about the entire goal of having the perfect product description is come in, use the system that exists, put in the work, and then you’ll get at least better than where you were at before. I think that, that’s important that if you don’t try to become perfect, but just work the system and over time, … the first time, you’ll probably get something better than what you had. Then over time, you’re becoming better and better.

Dustin: Oh yeah. Yeah, absolutely.

Felix: Got it. Yeah, so now I want to talk about some of the applications that you’re using on your website, I noticed a couple things on there that you’re using … It was a combination of Heap and Hot Jar. Is that something you use for analytics on your website?

Dustin: Yeah. I signed up for Hot Jar, gosh it must have been a couple years ago now. I was literally like one of the beta users. I think what I was really attracted to about it, at first, was … Well, first of all, there was something I’m probably going to butcher this name, but there’s another surveying piece of software called, I think … [qualaroo 00:29:18], or [coraloo 00:29:18]? Are you familiar with that?

Felix: Yeah, I know what you’re talking about. It’s like it pops up in the lower right hand corner and asks a question or something?

Dustin: Right. Yeah, exactly. It was like, I think at the time a couple years ago. I don’t know what it is now, but it was something like $100, $150. Whatever it was, it was out of my price range. It just did that, but it did it really well. They were just … Hot Jar was just starting, and they were offering that plus heat maps, plus … You could actually record users on the screen, which was a bit invasive. It’s kind of … You got to decide like how … if you feel comfortable doing that or not, but it had so many different things.

I started using that to ask questions. For instance, I would use the survey, and a little poll would pop up on a page for a new product and say, … as they’re about to leave the page and abandon it, ‘If you’re not buying this right now, can you tell me why?’ A lot of times, that would help me find … weak spots in the product. ‘I don’t know if this works with my version of Photoshop, or Illustrator,’ or ‘The price is too high,’ or just whatever. That was very useful.

Also, recording people was really useful. I don’t do it a lot, but when something new is put onto the website, a new feature, or maybe a new product, it’s interesting to see how people travel across your site, and what they do. You’ll often see bottlenecks that despite the best Google analytics data, is very hard to see without actually watching someone.

Felix: Yeah, I think it’s particularly if you are more visual learner, I think heat maps are a way better than the … like Google analytics, because Google analytics, you get the data but you still have to process it, understand how it all fits together, and especially how users flow from one place to the other. I think heat maps and recordings are … almost a more instant, in terms of recognizing what’s the issues. It’s more glaring, almost.

Dustin: It’s a little more personal, too. When you see analytics, you don’t really get a sense for why someone left, but if you’re watching a heat map or a video of someone, you can see the pause in a certain area. Or, you can see them flip back and forth over and over again to the same. You can say, ‘Why do they keep flipping back to that image right before they abandon it?’ You might not ever know that with analytics.

Felix: Right, that makes sense. Have there been any recent or … recent changes that you’ve had to make based on the survey, or heat map, or recordings, that they made you recognize, ‘Oh, this is something that we have to change on our site.’

Dustin: Yeah, yeah. Absolutely. In the past, something that I noticed was first of all, my call to action on my homepage, if you go to it, there’s a hero image in it. It gets people to sign up for the email list. It’s really big. It would take up the whole screen almost. Just by looking at what people were doing, looking at heat maps, looking at some videos, you could see that people couldn’t see that there was multiple categories of products just below that. By just shrinking the height of that image, so people could get a hint that there was products below that, that immediately boosted sales.

Felix: Okay.

Dustin: It’s funny, there’s so many things you would just never even think of looking at. It’s so hopeful to see those things.

Felix: Got it. Can you give us an idea of how successful the business has grown to, today? You’ve been in business, I think like we were saying earlier, five years now; started in 2013. Has this become … Over time, how did it replace your other sources of income?

Dustin: Right, oh yeah. It was dramatic. When I first really honed in on the kind of products that worked for me, I remember I had this day, which I called the … slot machine day with my phone, because you get notifications on your phone. I remember when I was featured in an email in Creative Market for a new product. It went to a list of, I don’t know, maybe 100,000 people? My phone just … Remember, I’m broke and I have a baby on the way. I’m in debt. The phone just started giving me notifications so fast, they were starting to blip over the top of each other. Each one was a sale of 10 to $20.

I remember I literally packed my stuff up in the Starbucks where I was working, and I ran home. It was like a walking distance place. I ran home to my wife, who was pregnant, so she could hear the phone blipping.

I was like, “Do you hear that?” I was like, “Every one of those is a sale.”

Felix: That’s awesome.

Dustin: By the end of the day, it was $1700. I mean, that’s a lot of money, I mean especially … For anybody, that’s a lot of money; but especially when you’re in debt and you’re wondering, ‘How am I going to pay for diapers and baby food?’ I know that sounds dramatic, but literally, I was thinking that kind of stuff.

Anyways, that really taught me two lessons. That taught me number one, email lists are good and important. They taught me … It kind of reinforced that my business, that I was on to something.

Anyways, that first year, I think it made $80,000. That was including my freelance work, and that business. The second year, I just had RetroSupply and it made, I believe like $180,000. The second year, I made like $230,000. Then, the most recent year, it made $400,000.

Felix: Amazing. When you were growing this business, were there certain inflection points where you jumped from $80,000, $180,000, to eventually $400,000. Were there changes, or was it more like a … just time in the game type of situation?

Dustin: Well, there was definitely like getting established, and time in the game, like you said. There was also big, ah-ha moments that happened along the way that made dramatic results. The one that immediately comes to mind is … I never really thought about average order value. People, I think the acronym for that is A-O-V, average order value. Yeah. I never really thought about that.

Then I started analyzing what my average order value was. It was … I think like $21, or something, and something cents. … I started thinking, ‘Whoa, it’s very hard to get new customers; but it’s not so hard to … It’s not nearly as hard to increase the average order value, or average cart value, or whatever.’

I started thinking, ‘How can I make people spend more when they have a transaction?’ I just did something really simple. I put a … and it’s still there to this day. I put a little dropdown bar on the top of the site. It would say, ‘Buy two products, get one free.’ Immediately, I mean overnight. It went from average order value being $22 to the average order value being, I think $29. Through tweaking, I think now it’s up to … on most months, around $35, $36, $37. As you can imagine, when you have thousands of transactions happening a year, … a $10 or $15 change makes a dramatic difference in how much money you make.

Felix: Yeah, and I think that especially works for people that are selling digital products because you are not incurring the inventory costs. For anyone out there that cannot offer a 100% free product, I think even things like offering free shipping, or a discount code, or they reach a certain average order value, are good incentives … good enough incentives to get people to try to break past that threshold and get that … whatever reward it is that you’re offering.

Dustin: Absolutely, and I’ll send … and maybe you can probably speak to this better, Felix. Just restructure … I mean, you can kind of think of it as glasses, and each glass is a product. How much liquid is in the glass is the money. Let’s say you want to give a product away for free. Maybe that means you experiment with some new line of products, and you say, ‘I’m going to make the product more expensive, so that will offset the cost of that third free product,’ for instance.

If you were selling coffee that you were shipping, for instance, maybe the coffee is more expensive; but that makes it so you can give away a third bag, or a little bonus, because it’s covered by the cost of buying two. I think restructuring offers can dramatically change how people perceive, and how much they buy.

Felix: Yeah. Oh no, I think that’s a great point. Pricing is very psychological. There’s tiering and anchoring between prices, to where you see something that’s really expensive, to give them something that’s cheaper, you use … or identify different value in it, but certainly you could package things in different ways that make it essentially appear more valuable. I think that that’s a great point that you can find ways to make it work within your budget or within your margins.

You’re in a situation where you’re a creative, but then you’re also willing to understand marketing. I think that combination where you can not only create the product, but then also sell it. I think it’s such a great one two punch for anyone out there that wants to start a business. I think where we see a lot of people, they start on one end or the other; because you’ve been … You’re in a situation where you are creative, you understand that side more, and transition to selling products. Can you speak more about this? How can someone that’s in a situation where they have creative talents. They have art. They want to sell the stuff that they’re creating, but don’t know how to begin. What are the steps towards creating a business around … a freelancing business that you already have where you’re selling your service, but now you want to be able to branch out and become … sell more products and create more of a passive income stream that you’ve done?

Dustin: Right. Yeah, that’s a really good question. I think part of it is knowing what you really want. Do you want to make a lot more money? Or, do you want to have the fulfillment of being creative? A lot of times, I’ll see even designers … No one says, ‘Oh, someday, I want to lay out brochures for living.’ Most of designers are artists that realize that they can make money, better money as a graphic designer than a fine artist, for instance.

If you want to sell something, you really have to start thinking about customers. You can’t think about just your own artistic integrity. I think that’s hard for some people. I guess you just have to decide, ‘Is my priority to make money, or is my priority to … express myself through my art?’ There’s not a right answer. You just have to know what that answer is for you.

The second thing is, and I think people will be able to apply this to all sorts of different endeavors. The big shift for me was this: in graphic design, for instance, there’s so many people that are freelance designers, or big agencies. When there’s that many, it’s like classic 80/20 principle. 20% of these people are going to be in more demand than the other 80% combined.

I think what I started to realize is I realized let’s be realistic. If, by definition, 80% is going to be the minority, in terms of how much work they get. I shifted from the idea of I’m going to sell to … I’m going to try to sell my services to businesses, for instance, to I’m going to sell to other designers; because designers like to work on cool projects for clients. They don’t so much like to scan in textures, and make Photoshop brushes, or Illustrator brushes. I decided I’m going to be the guy that does that thing that no one wants to do, and then I’m going to package it up in a really fun and exciting way for them. Why would they ever do it themselves when I’m doing it for them?

It kind of reminds me of that whole story of during the gold rush, they say the people that made the most money were the people selling the picks and axes, or the pans and picks, or whatever; not the people that were actually mining for gold. Sometimes I feel like that’s so true. There’s so many designers trying to do that, but there’s not very many designers trying to provide assets.

I could tell you one more story real quick about this of someone who’s been hugely successful with this. There’s a fantastic designer named Aaron Draplin. He made … He does design work, and it’s amazing; but he created a company called ‘Field Notes.’ It creates just little notebooks for people. … Their tagline is, ‘I’m not writing it down to remember it later, I’m writing it down to remember it now,’ or something like that.

Anyways, these are very simple notebooks. I suspect he’s made an absolute killing. They’re in so many stores. It’s not him showing off his design talents; although they’re well designed. It’s him making a product that makes designers and other people heroes, if that makes sense.

Felix: Mm-hmm (affirmative), that makes a lot of sense. I think that that kind of freedom that you’re now able to create allows you to potentially pursue the kind of art or creative art that you want to go after; because you have this freedom that you don’t have to be at the whim of laying out brochures, like you were saying.

Dustin: Mm-hmm (affirmative), absolutely.

Felix: You actually mentioned as well that you have a course, you created courses around teaching this to designers. Can you say a little more about that?

Dustin: Yeah, so early on, Creative Market had contacted me when I was just starting on that platform and said, ‘Can you write some articles about how you made this work?’ I wrote some articles. People, there was a really good response. I made a site called PassiveIncomeForDesigners.com. Basically what it is, is it’s … it has a podcast with it. It has like a free online course, and then there’s a premium course for people that are interested in that.

It basically just goes into all of the details. I try to be extremely action-based in the information I get from people, and the information I share. I just talk to creatives about how to do it. I don’t expect that all creatives are going to go out and make $400,000 a year doing it. For so many of them, just making a couple of extra hundred dollars a month is a difference between taking on projects you love, and taking on projects that drain your energy.

Felix: What do you think that creatives, … based on what you’ve seen, what do you think that they can get started first? What’s a asset or skill that they should be focused on first to make that first step towards creating more passive income and more financial freedom for themselves?

Dustin: I think it’s … becoming a … an expert at paying attention to what people want; or maybe ‘expert’s’ the wrong word. Maybe just really consciously spending time regularly trying to think about what other people want and need, as opposed to what you want to make.

Felix: That makes sense. Are there places where you can look for that? I think that that’s something that’s important where you are … The successful entrepreneurs I’ve seen, they pay really close attention to the market. Their only source of motivation or inspiration comes from their customers. They make that a very important point because the last thing they want to do is start implementing their own thoughts and be so wrapped up in their own opinions. Obviously you want to be a leader and have your own opinions, but you also want to be able to validate that. For anyone out there that wants to begin down this process of trying to pay more attention to what the market might want, where should they be looking?

Dustin: Yeah, so whatever you’re drawn towards, no pun intended, or maybe I guess pun intended.

Felix: Yeah.

Dustin: Whatever you’re drawn towards, … go find where people are successfully selling things. I think there’s a myth amongst some people that if you look and people are already selling something, that’s a bad thing. I’m sure you know, Felix, if people are selling something, that’s a good sign because it’s making money. Go find things that you would be interested in selling yourself, and go pay attention.

At first, if I was going to start again, I would go to Creative Market. Or, if I was wanting to sell something else, maybe Amazon, or … somewhere where people are buying those kind of products. I would look at the products, and I would look at what the best selling products were. I would look at the comments, and what people had to say about the products. Then, I would buy the products and I would just start really thinking about what do they like about it, and why do they like that about the product?

Then, once you start to get a little traction, so like for instance, once I started to build my email list, I would send out surveys. I still do. I send out a survey maybe once a quarter. It’s just like three questions. One of the questions is a question that I picked up from a guy named Jeff Walker. It’s just what’s the number one problem you’re dealing with right now? I get hundreds and hundreds of answers. When I look at those, a large majority is the same issue. Then I know, that’s … a good starting point for what I’m going to make.

Felix: Makes a lot of sense. Now you’ve obviously grown the business each and every single year; $400,000 in sales, in revenue last year. What are some goals that you have for this year? What kind of milestones do you want to hit this year?

Dustin: I think my goal for second half of 2017, and now for this year has been to make the business run more without me. When it started, it was just me making products. Now I have a variety of contractors and freelancers that make most … 80% of the business run. I’m trying to get it to a point where I’m doing as little as possible, because I want to pursue some other stuff. For instance, I’m interested in the idea of … Yeah, you were mentioning you have a new baby. Congratulations on that again.

Felix: Thank you.

Dustin: I have three [inaudible 00:46:37] … wouldn’t it be so cool to make subscription boxes of art supplies for little kids? Because as a parent, I think most people can relate to the idea of feeling guilty when they need to do something and they have to put their child down to watch a Disney movie for the 50th time, or something like that.

I think everyone goes through that. I was like, ‘Wow, man. How cool would it be if every month you got an art box,’ and then they all … because my kids love drawing stuff. So for instance, I want to pursue that; but to do that, I have to completely pull myself away from the other business, for the most part.

My goal to, long story short, my goal is to remove myself as much as possible from RetroSupply for now. Not because I don’t love it, but because I just want to try some different stuff; and then focus a little more on this art box business.

Felix: Makes a lot of sense. Thank you so much for your time, Dustin. RetroSupply.co is the website. You also mentioned as a PassiveIncomeForDesigners.com is the course that you teach.

Dustin: Yes, and then I also do a podcast with three other designers who have very unique perspectives, and they’re all entrepreneurs as well. That’s called ‘The Honest Designer Show.’ You can just Google that. It’ll pop up on the top. If you’re a designer or creative, you can hear four different perspectives from designer creatives slash entrepreneurs.

Felix: Very cool. I think those are great steps for anyone out there that is a creative that wants to start making steps towards creating their business. Again, thank you so much for your time, Dustin.

Dustin: Thank you so much, Felix. It was fun to be on.

Felix: Here’s a sneak peek for what’s in store the next Shopify Masters episode.

Speaker 3: If I put an ad out and it’s … I’m not getting any bites on it within like the first three to four days, then I can pretty much be sure that that’s not going to work.

Felix: Thanks for listening to Shopify Masters, the eCommerce marketing podcast for ambitious entrepreneurs. To start your store today, visit Shopify.com/Masters to claim your extended 30 day free trial.

Also, for this episode’s show notes, head over to Shopify.com/Blog.

 


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About the Author

Felix Thea is the host of the Shopify Masters podcast, the ecommerce marketing podcast for ambitious entrepreneurs. Got something to share with Shopify Masters listeners? You can submit your story for consideration.

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