So thanks for that question. And I think we have one more, Ronit.
Operator: Our next question is from Daniel Wilson, if you can please unmute yourself, introduce yourself and please state what company you are calling from
Q – Unidentified Analyst: Hi, there. Thank you for taking my questions. Daniel Wilson [ph], Private Investor. Bill, I just had a question about the reductions to the digital advertising budget. If you could talk about the framework and decision-making process on those — I don’t know, economic hurdles. So if you’re thinking of this in terms of lifetime value of maybe e-comm customers. But if you could just talk about that business a little bit, that would be helpful.
A – Bill Bennett: Yes, happy to. Thanks for joining the call. I appreciate it. And thanks for your question, Daniel. So — we talk about the cuts, this is not a cost-saving initiative. The cuts are an opportunity for us to completely rethink the go-to-market strategy and how we convert newly acquired customers into long-term loyal customers. Today, we retain very few of the new customers that we acquire to the igourmet and mouth.com businesses. And so you end up looking like — I think about it like a mattress company, right? How many times are you going to sell mattress? You’ve got to make your money on the first transaction because that customer is never going to come back. This is a food business, though. We should have the ability to acquire a customer and have them come back again and again because they have such an awesome experience with us.
So what we really have to do is work on that customer retention so that the lifetime value of the customer goes up. If you look at the e-commerce industry, historically, it’s sort of been leaned on for growth, right? And the whole industry justified its losses because of the tremendous growth that it was delivering. But over — even just I’d say the last like 12 months, you’ve seen pretty much every single major company rethink sort of their resource allocation to e-commerce. If you know my background, I spent many years at both Walmart and Kroger and e-commerce, and it’s always been a tough business to make money with. And if both those companies are as part of a drastic strategy shift, where we had to rethink the profit profile of the e-commerce business to be able to get it to actually contribute to company financials.
So if you think about that ratio I mentioned earlier, lifetime value to customer acquisition costs. And we just break down some of the things we’re doing on both of those. So on customer acquisition costs, we’re evaluating our entire marketing strategy, our marketing mix, our marketing creative, even our promotional plan to understand what customers will respond the best to. The more appealing our marketing, the less we have to spend to get a customer to click on an ad and to come to the site. We’re also working on every element of the actual site experience. So the higher percentage of new customers that come to the site who actually finish their transaction, the lower our marketing expenses relative to acquisition, right? We’ve already seen significant gains in our site conversion over the last 9 or 10 months as we’ve been working on these different work streams.
Now, similarly on the lifetime value side, we’re working to drive higher frequency and retention. So a very small percentage, like I mentioned, of our newly acquired customers ever come back to the site. This quarter, we launched two new tests to understand how we can sort of shape this behavior better. So one is a new points-based loyalty program and a second is an entry into a new category for us, which is specialty meat. The goal is to find new occasions that will bring customers back outside of specialty cheese, which is the majority of that business for us today. So now customers can actually buy high-end cuts of things like beef, chicken and pork, but also exotic meats like rabbit, kangaroo and alligator. And we’re testing out to see how that changes that repeat rate and that retention rate with the new customers that we acquire.
