Randal Konik: Got you. May last question…
Mark Vos: Randy. It is a model that we still believe is going to scale, and there’s things that we’ve built into the structure that will help the flow-through as we continue to scale, top line and grow our customers and stay close to this approach. So we go to market.
Randal Konik: Yes. Mark, I just want to ask you about marketing. You gave some perspective on the call. We all know about different changes that have gone on from the Apple privacy standpoint and so on and so forth. When you think about the next few years of allocating marketing dollars, maybe give us some perspective on how you think about — how you go about changing the allocation of those marketing dollars in the next 3 years or so versus how you deployed them in the last 3 years. How do you kind of think about that in doing the same or different things to kind of get that cost of acquisition to be moving lower going forward?
Mark Vos: Great question. Yes. So we have taken the position you’re right. If you look at the past 3 years and certainly historically, from a marketing perspective, we have leaned heavily let’s say, from a direct response performance marketing perspective, and we’ve done really well with that and still do, obviously. Not so much because of privacy or other technology reasons, but more from the perspective that we feel that for the long run, the longer term, switching dollars from that performance marketing towards brand awareness will help us grow faster as well as have benefits as it relates to the efficiency also of the performance marketing. And so what — the path that we have put ourselves on is to in a very measured, controlled way to start switching away dollars from the performance marketing side into the brand awareness side.
And we have seen thus far that we have been able to do so that without raising our overall marketing expense, if you will, to make those shifts deeper into the awareness side. So we feel that we’re on a good trajectory, and that is what also the trajectory that we would like to continue to pursue to achieve that 1 of the key growth levers that we feel in our business that our business has, and that is increasing our brand awareness because that is relatively low, and it presents us with a huge growth opportunity in the future.
Operator: Our next question comes from the line of Edward Yruma with Piper Sandler.
Edward Yruma: I guess, first, what is the assumed growth or lack of of new customers in the ’23 guide? And I know you indicated that you saw some extra growth in kind of the lower and middle-income cohort. I guess, do you believe that that’s kind of pressuring results today? Are you seeing some of the same repeat behavior in some of your historical cohorts? And then as a follow-up, just so I’m clear, how much incentive comp build back is baked into the SG&A number for ’23?
Mark Vos: I’ll take the first part. What we’ve seen play out over the last couple of quarters and have also projected that forward is that — basically the slower order frequency or a reduction in order frequency with our customers. And it’s more either discerning or wants to spend less frequently or is waiting for some deal because like I said, there’s lots of promotions out there. So there’s also other choices, of course, that can be made. Whatever the mixture there is, is certainly the fact what we see mostly impacting the order frequency. And then on the other hand, due to promotions. We’ve also then seen obviously the lower AOVs come out as a result of that. And so when you think about it — so it’s not necessarily a reduction in active customers, but it’s more the frequency of purchases that we’ve seen primarily the impact.
