Kelsey Hunter is the CEO of Paloma, a Shopify app that turns Facebook Messenger into your highest converting sales channel.
All right, everybody. Thank you for joining us. We have Kelsey Hunter with us from Paloma. Paloma turns Facebook Messenger into your highest converting sales channel. Kelsey, thanks for joining us today.
Yeah, thanks for having me Vasa. I love a glowing intro.
You got it, Kelsey. We always start our shows with a little bit more about our guests and how things got started with their current business. So can you tell us a little bit more about your resume and what got you into Paloma?
Sure. So let's see where to start. I'll start back at the beginning, working retail in high school and college, which I think is relevant, and coming full circle here, I've spent most of my life selling things to people incidentally. But I studied design and tech in school. I started my career in digital advertising, working with big brands before getting the startup bug and moving into software. And on the software side, I worked on designing software for a couple of companies in New York, [inaudible 00:01:07], which is marketing software and buttoning, which is mobile commerce software. And so everything really ended up connecting together in a very natural way up until 2016 when Facebook Messenger opened up their API. And I was working on a project on the side where a Messenger bot seemed like actually a really great way to test it out and to validate an experiment that I was running, and to do that, I actually pretended to be a bot for about six weeks and then built some bots. So I've really taken the MVP to a new level on that one.
Wow. So did you have a bot name? Was it like Alexa or...
Exley, E-X-L-E-Y. Yeah. It was basically tracking fitness and its impacts on your mood and other cognitive things. And I thought, "You know what, I want to know how people feel every day. And so I'm just going to ask them directly." And it worked really well. And what's funny is I was working on button at the time, which is all about contextually relevant commerce. And while having these conversations with people every day, I was like, Wait a minute, the two should be very connected. If we could talk directly to people, we don't need to make assumptions about what they should be buying or why they should be purchasing something. We don't have to tell people to buy things that don't make sense for them. We could just be talking to them directly asking them questions and guiding them to the right products. And so it very, very much a no brainer for me, but-
Did anybody ever catch you like, "Hey, this isn't a bot. This is a human."
Oh my gosh, no. But the funniest thing that happened was... Let's see. This was insane. I was doing this outside of my full-time job and it was on a time schedule. And so I was working absolutely insane hours. I don't recommend doing that normally, but for short periods of time, I can extend. And I think I was messaging at night, like eight or 9:00 PM. And there were times where I fully fell asleep. So somebody would respond like 30 minutes later, an hour later, I'd wake up 20 minutes later and respond. And it was so funny because I'd get something wrong or I'd be delayed, and my customer would be like, "Oh, you're such a silly bot." Nobody just assumed that it was a person who was having trouble, always blamed it on the bot.
That's hilarious. Good old Exley. I find it a really interesting too, because based on your background in design, tech, digital software, those four things, I really feel like it came to a very cohesive, I guess, full-circle nature because when I work with you on with Paloma for one of our brands, it's nice that you guys are so hands-on in setting things up, it's relieving. So I do appreciate that.
Yeah. I think people underestimate the amount of work it is to get a new sales channel to function well. It's like launching a website. There's the user experience to it. There's the content, the creative, there's so many different factors, and we know that it's a tough undertaking, but that there's so much opportunity when you can get it right. So we like being on the ground with that because not only do we then get to figure out what the best solution is, and our partners are great at letting us figure that out for them, which I appreciate, and I feel really fortunate to be able to do, but yeah, it's a lot of different types of skillsets. And fundamentally what we're excited about is taking all of those learnings and just injecting them back into software. And then so the next time a brand comes on in your category, it won't be as much work.
Yeah. Makes sense. What are some triggers for when people should have Facebook Messenger as another sales channel? Should startups right out the gate launch with them, or is there a certain threshold that you recommend?
That's a great question. So the thing that gets us really excited about the space and the long-term opportunity here is it really is the next storefront channel. And what we mean by that, if you look at what a new is going to do today to start selling online, they're not even opening Shopify Store Friends. They're falling through DMs. They're opening up an Instagram page, they're saying DM me, live chatting with a customer, and then they're sharing PayPal links. And we're seeing this in the U.S. market, but globally it's been going on for a long time with WhatsApp and Messenger. And so in terms of when a business should be doing this, it's tough because I see the new businesses already using these channels and they don't have any infrastructure to support it. So that's what we're really excited to be developing towards, is basically being that for storefront solution, everything from inventory through order management for these channels.
But if you're an existing brand and you've already got a presence and you've already got your Shopify Storefront, then there is a question of timing. It's like, do you have the resources to make sure you can give it enough of a commitment to really validate it? And that's where I'd say post seed, probably even closer to post series A, if you're a venture-backed D2C brand, is probably a good time to start testing to make sure that you've got the budget, you've got the bandwidth you can really give it a proper go for sure. But on the same side we work with brands in earlier stages nowadays, and frankly, launching with this can be even more effective. So I'd say start it as early as possible, but if you've already hit the ground running, you've already got a marketing team and things like that, then you might want to wait until you've now got the resources to actually give it a proper go.
Got it. Yeah. That makes sense. So post-seed, post series A, people already have some channels going. Everybody launches with email, SMS is almost becoming a necessity. How does Paloma communicate with those other channels? I know with SMS, the results are 30% better when you combine the two than just running email alone. How does Paloma fit into that for D2C brands?
Yeah. So email and SMS are pretty different in that they're outbound marketing channels. You build the list, you push out to that list, and you can do the same thing with messenger, but you need to build the list first. So where we actually start with messenger is as an acquisition channel, and for that reason, I'd say in terms of how it fits within the mix, oftentimes it ends up expanding the audience in a way that you don't have access to one of those other channels. So we always want to be mindful of the other channels and we play really well with them, but fundamentally, sometimes it's just a totally different audience and that's something to take into consideration. But if you've already got those things up and running, it will make it easier to coordinate your content and your timelines and your opportunities for broadcast. We recently did analysis with a brand that has over 500,000 customers in Paloma, and there's only a 3% overlap with their email list. So there's some really interesting stuff going on there that is really quite different.
So opposed to email, when you're building the list on Messenger, what are some creative ways brands are leveraging that list. I'm a big fan of house file building lists, and real is not buying anything like that. But what are some creative ways people are leveraging?
Yeah. There's some fun things when translating web to Messenger that you could do. We have some brands that do spin the wheels in Messenger. That lead gen tactic on site, that had a really big impression for the last year. I find stuff like that really fun. But then once you have the list, I think it's a lot about personalization. So one of the benefits of the Messenger conversations is that we get a ton of customer data and you can really use that to inform the way that you talk to customers. So whether you know their dietary preferences, or how often they work out, or if they have a cat or what color their living room is, anything you want to know, you can usually find out, and that can be tagged to the customer's profile.
So in terms of continuing the conversation, you want it to just make sense for them. They've already told you so much about themselves. You really just want to lean into that. So I think that I think the best opportunities there and the most creative uses are actually leveraging that information. I think there's some really nice things that we saw brands doing in the earlier days of COVID where they were just really nicely acknowledging the state that everyone was in and everything going on, and just offering to talk to them. Things like that, that I think can be really interesting. But in terms of just broadly outbound pushes, I think those are just the themes that I see. There's nothing in particular. It's like a single broadcast that stands out though.
Awesome. What are some of the use cases? So aside from the remarketing. I'm on your website right now, and I've got a pop up that says continue as Vasa or continue as guest. Are there ways that someone logging in to their Facebook on your website can unlock other ways to win on their customer journey?
Yeah. So basically with the way Messenger works, it is like a website. It's an alternative landing page. You could link customers to conversations the same way that you link to your website. So oftentimes our brands are driving traffic to Messenger acquisition funnels through shortlinks, through QR codes, through ads. There is an on-site chat plugin as well. So those are all really great entry points for how to build the list, but also acquire your customers. And some interesting things I've seen there, like QR codes and mailers, QR codes and in-person, in-store, I think there's a ton more opportunity there, especially with the way people are shopping now. On the URL side, you can place these URLs anywhere on the on-site chat plugin. That's something that I think is a little trickier for e-comm to adopt because of the fact that they usually have a CX on-site chat widget.
But there's a lot of benefits having messenger as your onsite chat plugin. For one, you know who the customer is and you don't have to ask. So if you said you did continue as Vasa, if you did that, you're logged in with Facebook, we know who you are, and when you leave the website, we can keep messaging you. And that is fundamentally different than any other on-site chat plugin in a way that is just so low friction to the customer. So you could use that on-site plugin to help customers shop, to provide guided shopping on their site in a way that they're not going to get just browsing by themselves. We like to say about websites that people don't shop there, it's just where they check out. So who's helping them make purchase decisions? It's not the brand. It's all the third-party platforms out there, the TikTok videos, the influencers, talk via friends.
So if you actually have an opportunity to help a customer make a purchase decision, you absolutely should. And onsite is great way to do that, coming from ads is a great way to do that, coming from QR codes. So use case-wise, talking about entry points, I think those are probably some of the more common things. But ads are the most popular. So the whole premise there is that if you drive ad traffic to your website, that most of that traffic is going to leave, and you're not going to know who they are. And most of them aren't going to convert conversion rates on site or the average 3%. So the alternative here is that you can run ad traffic to Messenger instead. And when the customer gets into Messenger, you actually get to help them make a purchase decision. You can ask them questions, you can guide them down to the right products, tell them why they should be making a purchase. And ultimately, that's how we see the best results here. Our conversion rates are typically two to 10x that of a website.
Love that. I want to save that to when we get to some benchmarks, but we will come back to that. One thing I do love about your onsite widget is, I'm a big fan of customer experience. And there's some customer support programs that aren't quite in realtime, and I feel like we lose out on a lot of opportunity there. I love how you said people don't shop there, they just check out. That's big to me. When we're community managing on paid social, let's say, we're literally asking customers what their zip codes are when they say, "Hey, where can I buy this in store?" And we'll give them literally the cross streets, and creating that frictionless journey, even if it's digital to retail, is huge to us.
Mm-hmm (affirmative). I love that. You asked about when should people be doing this, and fundamentally businesses already have these channels. They default to being on? So it's just a matter of whether or not you're using them in supporting the customers there or not. Exactly to your point. If you can do that and meet them where they are immediately in a scalable way, why wouldn't you? That's a no brainer.
Yeah. I think it goes back to my service industry roots. You got to take orders. If you don't go to a table and greet them and go through the proper process, they're not going to order, they're going to walk out and you're going to get written up. That's how I view D2C. You just got to take the orders. So going back to benchmarks, what are some Paloma benchmarks?
Sure. So most brand partners are driving ad traffic to our conversations to Messenger, and we're taking those customers down a shopping conversation, ideally to a product match, and then typically they're checking out on site. At the ad level, you've got your normal ads metrics that CPMs click through rates, but once the customer clicks on the ad and they are greeted in Messenger, if they respond to that first message, they're opting into messages with your business. So we track opt-in rate. It's the equivalent of a bounce rate or the opposite of a bounce rate. So opt-in rate is the first one. We typically see 30 to 50% opt-in rates depending on the business and product type, but 30% is our baseline goal there.
So if you compare that to a bounce rate, there would be a 70% bounce rate, which is typically a bit better insight. After the customer opt in, then you've got completion rate. Completion rate is the customer finish the conversation with matched with product. Most of our experiences, there's some type of back and forth with the customer, and across the board, regardless of product type category, how many questions we ask, what questions we ask, we see 80% or higher completion rates. So there are situations where things will work better than others. And because we have that type of benchmark, we know how to fix it if it's not there. But 80% is pretty normal for completion. And then after the customer complete, do they click on product back to the site? For that, we usually see 50% or higher. And then from there you've got your normal things, like add to cart and purchase rate. So basically, top of funnel and very bottom of funnel, we'll just compare to click to site directly, but you also have access to all of this mid funnel data that you might not have access to for the website.
And what is all of this doing to CPAs and ROAS?
Yeah. So first and foremost, conversion rate is the thing that we own because of the fact that it's like the website. We're giving you a destination for traffic, and it's going to convert at a higher rate than click to site. So ultimately, if the paid media is performing as efficiently as it normally does, and we double your conversion rates, your CPAS should be cut in half, your ROAs should be doubled. So we have partners like Joybird, for example, Facebook recently released... Actually two case studies of ROAS. One was for Lola, one was for Joybird, both of them with 3x conversion rates, and that's not abnormal. And so the returns were incrementally improved as well.
Very nice. Yeah. I'm a big fan of what we're doing with [inaudible 00:19:40] and Paloma and with paid social. One thing I want to ask for the audience, they may be wondering, what are the cons of going to Messenger versus a landing page, if any.
Yeah. That's a great question. Cons. Wow. No one's ever asked me that. I think that there's always a better benefit to going to Messenger because you get to capture the customer info and, again, help them make the decision. But maybe if it's the best landing page in the world, I'm not sure what that one looks like. That's a tough question. I don't have a great answer. I don't think that there's a world where I think that that's better.
No worries. So where I'm going with that question was, is there ways to take optimal landing pages and apply that to Messenger? There's obviously a recipe to a really quality landing page that performs. Are there any ways to mimic that in Messenger?
Absolutely. And we think of the Messenger conversation as a scaled sales person, which is also what a landing page is trying to do. They're all trying to do the same thing. But how you talk to people from a landing page is just different than how you talk to this one-to-one conversation. The landing page is inherently one-to-many. And see the brand talking to as many people as you can, hopefully in a pretty focused way, and hopefully it resonates with enough people. Within the Messenger conversation, you don't have to make any of those assumptions, but there are insights that inform your landing pages that we want to bring into Messenger too.
Let's say, if you know that a lot of your customers like your products because they're on keto and [inaudible 00:21:39] based stack is really helpful for them, then you want to take that into Messenger. If you know that certain data points resonate well, that certain value props resonate well, we can flip those around and turn those into, again, conversation. So if you know that the fact that let's say there's zero carbs in your product is something that really hits with your customer base, then in a conversation you might say, "Great, are you doing low carb keto? How long have you been doing it?" You could even ask is as detailed as like, "What are your macro goals?" You could ask literally anything you want. And then you're going to be able to share the same data point back to the customer in a way that not only is getting the point across that you wanted to, but it feels more personal to them because they know how relevant it is to their experience. Does that make sense?
Yeah. No, 100%. And on the flip side of this, what are some common pitfalls that you want to advise listeners who are just being introduced to Paloma to stray away from?
Sure. Across the board, the whole point is to talk one-to-one in a way that's personal to the customer. So as best as you can get to know them and make it about them and less about you is going to be useful. So for example, you don't typically want to ask a value prop question like, "Which of our value props do you care most about?" And maybe it's like ease of use, costs, et cetera. Customers don't like to answer that type of question. But if you turn it around and said like, "What would make your day 10 times easier?" "A keto snack that I don't have to think about." You can turn it around in a way that is about them. It's about their lifestyle. That's pretty important.
Other things, fundamentally, just on a technical side, a lot of the early chat stuff there's some things on the chat side and on the media side that we've seen really, it can be hard to navigate fundamentally. The first wave of chat bots were all functionally not necessarily great, but on the media side, there's a lot of mistakes that are easy to make because there's frankly just not a lot of education out there. So for example, when you set up an ad that clicks to Messenger from Facebook, oftentimes people think it needs to be the message objective, but you can just have a purchase objective ad, click to Messenger instead. And that's actually a lot of people who've played around in the space don't know that. So that's one. And then when you do set those ads up, Facebook has some defaults they set in place that just don't make sense either. Like they'll default to having a CTA on the ad that's like, send message. But if your ad is like, "Hey, find your fit and get 15% off," a shop now or learn more is going to work better.
So there's definitely a learning curve on how to operate things just fundamentally. But I think it's important and something we try to help with.
I love it. This is one question I should probably know the answer to because we work with you, but you see a lot of Messenger apps pop up on pages. Does Paloma offer that? Like when you clicked a brand's Facebook page, there was an automatic pop of the Messenger?
Yeah. So that'll only happen if you have a super high response rate. If you aren't automating chat for your page and then you do implement it, it takes some time for Facebook to catch up to the fact that you have 100% less than one minute response time. Otherwise, Facebook won't won't allow that pop-up to happen. But yes, we do support that for brands. But fundamentally, if you're too slow to respond to messages, unfortunately Facebook won't encourage people to message you.
So it won't pop into an automation flow the way that click the Messenger does?
No. No, it will. What I just mean by that is that the Messenger bubble won't pop up on a brand's Facebook page if Facebook thinks you're going to be slow to respond to the customer. So if you're just implementing Paloma or automation for the first time, you have to improve your response rate before Facebook will allow it to automatically pop up. But yes, for people who just message a page directly, yeah, automation there is totally feasible. A lot of our brands do that, where we start with an introduction for the customer. We'll say, "Hey. Thanks for reaching out. What can we help with?" And they can have the options to take a quiz, visit the site, talk to the support team, anything else like that?
So basically every brand needs to have an x lead before they can unlock Paloma.
Today's friends are live chatting. And that's what I mean by, you already have the channel. It's already open by default. I guess you could ignore it if you wanted to, but to have a baseline experience for your customer there is, generally speaking, a good idea.
Yeah, for sure. There's just some brands that may or may not be too quick to respond.
It might be some people sleeping. So I want to ask a question that I haven't asked yet, one that I know the answer to personally is, how easy is it to get going with Paloma? For me, with R2R, I felt like you did all the heavy lifting and I was shocked. I was like, "Oh, sweet. I don't have to do anything too difficult here."
Yeah. It's the dream. Yeah, we find that particularly with brands at that stage and size, no one knows what to do. And then we've been fortunate to do this with so many different types of brands and products, and not only do we have that expertise, but the software we've built is phenomenally easy to launch these things now that we know what to do with it. So fundamentally we had to get started. Most of our brands are, launching within one to two weeks, and that process is basically, "Hey, we want to learn about your business, your products, why people buy them, why don't they buy them? We'll take one of our template experiences that we know performs really well for your product category or customer type, and then we just basically match it up to your inventory and the customer type that you have."
And so it's a pretty straightforward process. We try to launch really quickly because once you get something live, then it's all about testing and iterating, and that part is really crucial. And one of the benefits of Messenger fundamentally is that unlike a website, rotating in new things, testing new copy, testing new questions, the order of things, order products, the links that you link to, so easy to do, and so nimble in the channel. So we like to make it easy, like to launch people fast, and then the more we can learn the better
I hear you. Well, thanks for making it so easy on us. Let's transition into the rapid fire questions. I need to get some Sonic branding for rapid fire questions. It'll be like the-
[crosstalk 00:29:27] sound effects, yeah.
Like the score from Sicario or something like that, all scary. So I guess my first question is going to be, what is one thing currently that Facebook does not have that if they did have it would make Paloma that much better?
So the top of our minds always is Instagram DM API, which is in development. So, fortunately, that won't be a thing to worry about much longer, but that's a real game changer. I think that customers who directly messaged Facebook pages, usually it's a support request. But people who directly message an Instagram page, that's typically more of a shopping intent, and to be able to manage that experience and scale that for brands is going to be huge. So we're really, really excited about that, and fortunately, as a Facebook platform partner, we'll be one of the first on it.
I can't wait. At GB, we spend about 50 or 60 hours a week doing what we only hope that Plum is going to do soon. Yeah.
That we will do soon. Can't wait.
Can't wait for that either. My next question is, what is your ideal tech stack if you were launching a D2C brand today?
If I were launching a D2C brand today, Paloma would come first.
Of course. Of course. Just operationally, there's plenty of tools that I really like to use day to day, like Notion for example, and things that just make it easy to start getting content out there and talking to people. So, I'd probably go with a lot of the basics around email comms, Klaviyo, and then in terms of the actual storefront tech, if I were starting from day one, I would start with messaging first just because you get so much more insight about your customer. And then-
So you won't start with a website?
No, I wouldn't. I wouldn't do that.
Yeah. That's the world that we're building towards. What new sellers are doing online is selling through those channels first without even having a website. If I were a D2C brand, that's what I would get so excited about. It's about direct to consumer, right? There's no more direct than literally talking to people. And as a person with a product and design background, that's why I got into this in the first place. I want as much information as I can then for the best way to sell to people. So yeah, that's probably a cop out answer, but I think that's the most exciting thing here for new businesses.
I love that answer. I'm going to be thinking about that probably for the rest of the day on how that would work. My mind is blown just thinking through that. So I like it.
Yeah, it's becoming more common. There's a big brand that we launched recently that literally just launched their first product. They did launch web before Paloma, but only by like a week or two, and immediately we've outperformed, and they're learning so much more about their customers this way. So it's really exciting. I think it'd be a really fun time to start a D2C.
That's wild. It's literally that GIF of the dude wearing the glasses and his mind's blowing and it's like the clouds are coming out of his head. I have more questions on this one now because I didn't expect that. Would you potentially consider a prelaunch to Messenger? Some brands may gate or they password-protected website.
Yeah. I love that idea. That's really fun. Messaging is just a really fun interface. I don't know if you are into games, but text-based games, I always found really enjoyable. So it's just the perfect channel for me, but I love that idea of, you could have some initial storytelling there. You can love some gatekeeping there. You have to enter a certain code. Everything's really easy to manipulate when it's all text based. Yeah, absolutely. And we'd encourage pre-launch for brands on the channel anyway, just because, again, of the lead gen opportunity too.
I love that I'm going to be noodling on this for the rest of the day. I'm not even kidding.
Yeah. I've been down the rabbit holes on customer research too. You can ask people anything you want, and if you pre-launch, why not try to get all that data before you're even live and then have a direct channel to market to and in once the product launches. There's no reason not to do that.
All right. Last question of rapid fire is if you were starting a CPG brand today, who would you start it with?
Who would I start it with? I started with Zach Podbela, my co-founder. I know that's probably a crop out too, but...
You're definitely not making any enemies today.
No, I'm not. We get along so well. We have very similar communication styles. So, he just joined the team at the end of last summer. And so I did the solo founder thing for a number of years, and it's been such a game changer. So, we've had plenty of tough things to work through, but fundamentally, we just operate really well together, and I think trust is super important. So, yeah.
You don't need to fix anything that's not broken there. Well, here's the second part of that question now, what would you guys create?
That's the fun question. I'll think about this for a minute, but when I think about if I were to start a CPG brand, what would it be? And I just started thinking about my favorite foods. They're not very CPG friendly. Like Buffalo wings, I don't think are a good idea. So I think that's a tough one to answer. There's already plenty of this out there, but Palomas are actually my favorite drink. So I'm really happy that those are packaged in cans now and I can just find them playful. But yeah, probably not the most funny answer.
Is that why Paloma is named Paloma?
No, it's just a happy coincidence. Paloma means dove or pigeon, that's the same thing. But yeah, there's a messaging bird theme. Also, just a really charismatic name.
Got it. Well, very cool. Kelsey, where can everyone find you and Paloma if they're interested in chatting?
All right. So our website, getpaloma.com, and you can message us on Facebook and me, I think I'm Kelsey A.H. on Twitter and LinkedIn, all the places. Feel free to DM me. I think those are probably all the hotspots.
I'm actually surprised you have a site now that we had this conversation. Pretty soon it's just going to be gone. Just leave Messenger.
[crosstalk 00:37:12]. It was for a while. Yeah, it's pretty simple. We don't typically spend a ton of time there. Probably should spend more time on it, but we spend more time messaging. I like spending more of my time with my customers.
Same. Our website's pretty trash. I like yours though.
Thank you. Thank you.
For sure. Well, Kelsey, it was a pleasure having you on the show. Thank you for joining us. And that's going to be a wrap for us.
Great. Thanks so much, Vasa. [inaudible 00:37:45].