We spoke to Daniel Passov, Owner of Greek U, about his constant innovation process, through online technology, to stay ahead of his competition. The company has revenues exceeding $1 million with 30% year over year growth. In addition, they have also made the top 100 list for San Diego Business Journals Fastest Growing Companies. Passov began his entrepreneurial journey in elementary school selling candy out of his locker and after his first job as a graphic design artist he knew he could improve the quality of fraternity and sorority t-shirts he saw at his college. Once he graduated he was making shirts for every sorority and half of the fraternities on his campus. Today, the entrepreneur owns his own company and goes to great lengths to stay ahead of his competitors in a cutthroat industry.
1) Establishing competitive advantage in a crowded market is critical
- What would you say is your true competitive advantage?
“Over the years, our competitive advantage was our designs; we really tried to come out with cool, trendy, fresh designs and, for a long time, a lot of our competitors didn't have those. When our market became saturated with companies that had good designs, we knew it was time to ‘one up it’ a little bit. We want customers to be able to look at a web page that has their name on all the design templates and so we started customizing those designs. This was our competitive advantage for a long time; now we have spent the last few years building new technology that gives us the ability, not only to create these personalized sections for each organization, but the ability to customize colors, text, the style of the shirt, and so on. When you go onto our website, you’re able to see everything with your letters on, you’re going to be able to see graduation stoles, fanny packs or sunglasses, and that’s something our competitors don't offer right now.”
- How does this play a factor in the long term growth of your business?
“We’ve had good growth over the past three years; it has been about a 30% increase year over year, and since we started building this technology about two years ago, we now have a scalable model. Because of this, we not only have the ability to build these sections that are very personalized, but we’re able to grow a lot faster. We expect our growth to be even higher than it has been because we’re able to offer items for more organizations. Before, we would only be able to build these sections for 30 different organizations; now, we have these personalized sections for over 100 different organizations.”
- How are companies like yours impacting the overall competitive space?
“This is actually a very competitive market, even though it’s such a niche. The barriers to enter into this market are very small but it’s difficult to become a big company like ours and what we’re trying to do is disrupt the industry. In the past, we’ve tried to do that with designs but the competition has caught up with us; even before that, our goal was getting quality traffic through SEO but now it’s obviously social. The biggest thing that we’re doing right now is the personalized shopping experience. There are competitors who offer the design online tool but the way you do it is you start with a blank canvas, you start designing, and it looks like a 12 year old did it with ClipArt. We’re really driving that process by creating these cool designs and allowing people to personalize them; we’ve always been a step ahead of everyone but they always seem to catch up. For this next part, however, we’re going to be ahead for awhile because the amount of technology and the capital investment over the last few years is not something that can happen over night. Although, it seems that with every big change we make, people start to catch up to us but, nevertheless, we always want to be ahead of the game.”
2) Leveraging technology to unlock profits
- How do you leverage technology in your business today?
“It’s not just on the consumer’s side that the technology is important, but also for the administration side as well. Our customers have this incredible shopping experience due to our ability to generate these galleries, images, and designs for them, which is what our technology allows us to do. The other way we leverage technology is by the system in which we process these orders. We have the ability to go through them extremely quickly, whereas before it was more of a pen and paper type process, even though we had online systems built, but nothing compared to what we have now.”
- What opportunities has this use of technology created?
“It allows for massive, scalable growth; we can handle 8-10 times the amount of sales, with this new technology, than we could before. It was a very long process to have the customer contact us, work with them on the product, customize that design, get it approved, get them to be invoiced, paid for, and so on. That whole process probably took anywhere from one to two hours, sometimes even longer, and now that process literally takes seven minutes, at the most. The amount of time this technology has freed up for us is just incredible.”
- Do you have any stories to share that show how important this is?
“It’s not just the ability to process the orders quickly; the error free aspect that the new technology offers is also equally important. Everything is put into the program by the customer, it’s sent into us, and of that 7 minutes it takes to process the order, our team checks it over for quality control. We make sure the customer didn't spell anything wrong and that the design looks good; if we feel, for example, that they didn’t pick the right colors, we would contact them and suggest an alternative color scheme. The ability to process orders so quickly now allows us to spend our time on driving more quality traffic to the website and letting our technology process those orders.”
3) Building customer loyalty
- How do you build customer loyalty in such a competitive market?
“In any business, the goal is to build customer loyalty but it is especially difficult in this industry. There’s one person who’s in charge of ordering for a particular event in one month and then someone else for another in the next month. Therefore, when we look at our CRM, we don’t look at it on a person to person basis, we look at it from a chapter basis. We do have some great ways to keep our customers loyal, some of them are our trade secrets, but we do branding plays where we make sure that every single person that receives our items knows it was Greek U. We also have different brand plays online; as potential customers travel across the web, they’re seeing our name in different places. Customer loyalty is very difficult but we feel we’ve made great strides over the years; we had a 30% return rate a few years ago, which is actually really high in the industry, and last year we had a 47% return rate. I don’t know how those metrics measure up to my competitors but I know they’re high based off of when I first started the company.”
- How do you quantify the long term value of loyal customers to your business?
“We know the dollar values of the long term revenue from each new customer and also, on average, how many times those people order. We publicly quantify it as the percent of people that return and we’re going to be able to track it even better with the new technology because it’s all online based. We’re able to track it by organization versus by individual because even though we had more than a 40% return over the last year, we can't track that exactly because a new person in the same organization might order and it’s difficult to match those two orders up. Our technology allows us to match those better and we’ll most likely see that return rate go higher; but even if it doesn’t turn out to be higher, we’ll still be able to track it better.”
4) Metrics are critical to success
- What are the most important metrics in your business?
“The most important metrics in our business are the conversion rates and the average revenue per order. It doesn’t matter if we drive a million people to our website every month if people aren't converting. Therefore, we’re really working hard to increase our conversion rates and that average order value. One of the biggest ways to do that is to drive more quality traffic; once that traffic gets to the website, making sure that people are finding what they’re looking for is key. The other important metric is the CPAs, which is our cost to acquire each new customer; we have different metrics for different mediums we use that drive traffic and each one has a different CPA that we’re targeting. The most important thing, from a marketing standpoint, is to drive traffic to the site, convert it, and increase that average order value.”
- What metrics do you measure that your competition doesn’t?
“I don’t know what my competitors measure, however, we are very data driven. I’m looking at numbers everyday to stay updated with all the different marketing we’re doing. My competitors and I, most likely, have access to the same type of data, it just depends on how everyone is using it. I know that I’m utilizing that data very well and it proves it in the numbers and the decisions that we make.”
- How do you communicate important metrics to employees in your organization?
“Right now we actually don’t communicate those numbers but we happen to be in the process of building out a dashboard that will allow our employees to view important metrics, as well as compare historical data. The dashboard will be personalized for each department so each employee will be able to see exactly what their metrics and KPIs are, then be able to make decisions based off of that.”
5) Experience share
- If you could start your company over again from scratch, what would you do differently?
“The first thing I would do is find a mentor. For me, the most difficult part of being an entrepreneur is not knowing the right questions to ask; once I have a question, I can always find somebody who can answer it. For example, ‘we’re growing at 30% per year, I’m happy with that but I want to grow faster, how can I do that?’. Once I thought of that question, I was able to get the answer and that’s what the last two years have been spent on, but, I wish somebody would have asked me that four years ago. If I started again, I would try to find somebody who’s been very successful, can mentor me, ask some of those questions that I would never even think of asking, and then I could either define those myself, ask other people or have that mentor help me.”
- Based on your experiences, what is your #1 piece of advice you would offer other entrepreneurs?
“Besides finding a mentor, it’s really about looking to solve a problem and trying to find something that is a pain for people, which is a cliche answer but it’s really true. When we try to launch new items or technology, we’re really trying to solve problems that people are having. It’s also just about dreaming bigger, whatever you think you can build your company to be, multiply that by 10. When you think of something that’s much bigger than you’re already thinking, it helps you lay out the plan and the steps before that. Think of the end result of what you really want, multiply that by 10, not necessarily money wise, but just the scope of how big you want your project, product or company to be and then you’ll be able to think of lots of steps to get there.”