Dan Kurnos: Great. Thanks. Good morning. Linda, I guess this is the topic of the day. I’m going to stick with it just a little bit, maybe a little bit more nuanced, I guess, on sort of the marketing front. Can you talk a little bit about on, first of all, from your existing customer base where you’re starting to see it seems like incremental traction again. And I know that was a sort of a historical strategy and a refocused point here. I mean this kind of toggle between promo, new offerings. But can you talk a little bit about like how exactly you’re marketing to them to drive the upsell? And then on the new customer add count, I guess, we would expect that obviously to be muted. But the way that you go to market, is it kind of like, again, with that brand toggle — with the contra-toggle versus direct marketing?
Is that sort of like the market is more accepting of a lower upfront price and those people come in and subsequently convert with incremental add-ons because you’re able to sort of offer them what looks like better upfront deal and couldn’t have such strong brand awareness, or — just help me think through some of those nuances there. Thanks.
Linda Findley: Sure. So what we’ve talked about before, we do continue to see in marketing for meal kits in specific, which is people are very price sensitive at the beginning trying a meal kit. And then once they’re in, they are far less price sensitive. So a big part of what we think about going forward is how do we actually balance those promotional dollars. Not just any promotional dollars, and I’ll tell you a little bit about kind of some of the things that we’re doing there where we’re focusing a lot more on the conversion side of the funnel. But balancing those promotional dollars with media spend. Because we have the ability to sort of say, okay, let’s target fewer customers with a better promotion, bring them in and then the lifetime value gets higher as they come in because they are engaging with those additional products and those additional add-on services, again, including some things like those seasonal boxes.
So it’s just continuing to test, test, test, test and make sure that we’re driving the best balance between those two because the price sensitivity coming in does not necessarily represent what’s potential for long-term health. It’s more about demographics and cyclographics. So you’ll see our media dollars go down as we focus on some of those healthier targets. And then you’ll see us playing with some of those promotional dollars to attract those media targets, but only paying for the conversions of those in some of the channels that historically have been a little bit more about overall traffic and registrations. Like, for example, affiliates, we’re getting much more focused on the conversion and the health of the customer getting to that 13-week mark that we were just talking about.
Does that answer your question?
Dan Kurnos: Yes. No, that’s helpful. And I guess it’s obviously, it’s too early to ask about sort of initial new cohort retention from some of the new plans. I guess I’ll save that for a future call.
Linda Findley: Yes, we can save it for future calls, but what I will say is we are very good at marketing behavior throughout the entire early stage process. And so we are seeing strong behavior from their early behavior patterns of order rate, et cetera, that tell us that this mix play is going to be very interesting for us in 2023.
Dan Kurnos: Okay. Well, that’s helpful and a better answer than I expected this early on. So super helpful. And just on the Well, yes, I know it’s a double right? So the other question just on the cost savings front, obviously, to the other key components here, super helpful on the CPA metrics and the productivity. Just talk about sort of the phasing in timing of some of the cost savings efforts. And look, obviously, we saw egg prices continue to finally come down. Those are ridiculous gap. How do we think about sort of the mix of variable versus fixed and incremental opportunities as we work our way through the year? And Linda, just conversely, if you do get better traction with your marketing efforts, is there a point at which you say, hey, listen, this is working super well. Maybe we want to step on it a little bit here.
Linda Findley: Yes. So first of all, I’ll address the cost questions and then I can get into some of the efficiency questions. So, on the cost side, we are absolutely focused on making sure that we can maintain our quality while still reducing cost. And for that — for us, that’s a lot about productivity and that continued management of food waste. So again, this is sort of that secret that most people don’t understand about meal kits and continues to be really important not only for the company but for the customer. The reduction of food waste, eliminating that 40% that most — 40% of food in the US is mostly thrown out. We don’t have that because of the fact that we order exactly what we need, and we send the customer what they need.
So that is the key, along with labor productivity, which has improved greatly. As we said, we’re seeing numbers we haven’t seen since 2020, I guess, in productivity. And those two things in combination really help manage some of those food inflation costs. I think some of the challenges we had last year was we were struggling a little bit with inflation from all aspects of the supply chain. And this quarter, we’re already seeing significant improvements in being able to balance out both our food purchasing costs as well as increasing productivity in our fulfillment centers. So, no change in quality, but much, much more agile purchasing processes that will help us with that. On the marketing side, I do completely believe in marginal ROI marketing spend.
So as we continue to test some of these different nuances and as we continue to manage the capital structure of the business, we will absolutely invest more if we can do it at the right return on investment. I’ll be honest with you, for the most part. We’ll be looking at shorter return on investment right now. And then as we fix the capitalization of the business, we can look at still very efficient paybacks but allowing us a little bit more time on a marginal ROI basis. But yes, leaning in is 100% what we plan to do as we learn what works best.
