Interview: Geoff Henshaw, former CMO Stoko, Part 2

My guest today is Geoff Henshaw, former CMO of Stoko. Stoko manufactures and distributes kneebraces built into athletic wear that is comfortable enough to use everyday. Yesterday we explored Geoff’s career at Shoes.com, 1-800-GOT-JUNK and more. Today we focus on how he was growing the Stoko brand. Note this episode was recorded Geoff was still CMO of Stoko. HE is now looking for his next CMO opportunity. Feel free to reach out to me if interested and I can put you in touch.

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Transcript

Edward: This is part two of my interview with Geoff Henshaw. Today, we're going to dive into how he is growing Stoko. Geoff, can you start by describing what Stoko is and what they do?

Geoff: Yeah, for sure. Stoko is a company that creates supportive apparel. Our first product launched in October of this year. It's a compression tight with the same support as a conventional knee brace.

Edward: Is Stoko a product or is it a company?

Geoff: Stoko is a company. Our first product is called the K1 as in Knee 1.

Edward: Is the idea that you're going to introduce a series of these products that are all related to bracing the body?

Geoff: Exactly. We found that with knee braces, specifically—the knee brace actually from a technology perspective—hasn't evolved or changed meaningfully in about 50 years. People's relationship with knee braces is obviously horrible. People emotionally despise their knee braces.

Through four years of research and development at the University of British Columbia, this product was created, which is incredible. Thinking of a compression tight, almost like a tighter version of a very tight Lululemon tight. It's got over 50 meters of cabling going through the garment. That cabling is connected to two dials in the waistband. You put the tight on, you can click the dials in the back, you can turn them, and your legs are fully supported.

As you can imagine, the application is huge for a number of sports across North America. Since our launch, we're just hearing tremendous feedback from both elite athletes and weekend warriors like myself.

Edward: Who uses it? Is it people that would normally use a knee brace, or is it more than that?

Geoff: Great question. When we looked at the product, we looked obviously at the end-user. We believed that the time that they would be using the product would be in relation to when they'd had a knee injury. There's a lot of technology in the product, so the product costs are quite high, to be honest. What we believed is that we needed to sell it at a $400 MSRP. We believed in that MSRP price. We needed to compare it against a knee brace.

One of the things that we are finding is that elite athletes, particularly, we've actually got it on a number of national team freestyle skiers and snowboarders, young people that never had a knee injury in their careers. They are terrified of knee injuries, and they're starting to use the product preventably, which we're really excited about because obviously, that's a huge market.

For the general population, we felt like the value proposition was strongest for people that had—either recently or in the past—a knee injury and they're not happy with the knee brace solution.

Edward: Does it totally replace a knee brace? It is more comfortable than a knee brace but as effective as a knee brace?

Geoff: Exactly. Customer utility is highest when you're looking at brace support. It has all the support of a conventional knee brace, but the level of comfort is so much better. I don't know if you wear a knee brace. Do you wear a knee brace?

Edward: I have at times in my life, but I don't now.

Geoff: Okay. The level of comfort is like 9 out of 10 and a knee brace would be like a 2 out of 10. That bracing support plus comfort equals something called compliance, which means that you're going to be wearing it more. Therefore, you're less likely to reinjure yourself or get injured in the first place.

Edward: Is it preventative? The elite athletes that are using it as a preventative measure, do we know if it actually is preventative, or is it just a matter of it makes them feel like it might be?

Geoff: Well, I'm going to avoid the legality in that question. We believe that it protects from the potential of future injury. There's a bit of a placebo effect also where you can feel the cabling actually holding your leg in place if it's moving into a compromised position. I would say that certainly early indicators are that you could imply that it could be preventative. But certainly, there's a lot of legalities as you know as a marketer, so we need to be really careful about that claim.

Edward: Is there any downside? Does it limit mobility at all to be wearing this as an elite athlete?

Geoff: No, there's literally no downside. I just got an email from a kid on the Canadian freestyle team. I'm saying kid, I think he's like the early 20s. He just is now sitting 13th in the world in freestyle skiing. He said he's been wearing it every World Cup run that he's been doing. Certainly, there are no limitations, which is really the beauty of the product.

Edward: But he doesn't wear it when he goes out for a run around the block?

Geoff: Yeah, he wears it. Compression is huge right now. The idea of really pushing yourself is obviously important. But I think things are now really starting to shift towards recovery. There are compression benefits actually in the product also.

For someone like that, if he's actually wearing it on his flight home because it benefits him from a compression perspective and a recovery from the flight. He's kicking around wearing it day to day because, as you know, it's a common fashion to wear compression tights underneath shorts just like skateboarders do and professional basketball players do.

Edward: Where is the path for more products? Do I just go through the joints in the body and say you’re going to have an ankle one, an elbow one, and a shoulder one?"

Geoff: Great question. Our vision is that we have our product for every athlete in the world. We consider anyone who has the ability to walk or to move an athlete. That really helps inform our product roadmap and it also helps form our pricing.

Our pricing is really sharp. And our product roadmap would consider joints in the future that have a high incidence of injury. That would include ankles and shoulders, for example. But certainly, we're focused very much on the knee right now.

Edward: Start with one before you start jumping to the next. What does your distribution look like? Is it all direct to consumer?

Geoff: Yeah, the primary channel is direct to consumers, and that's commerce specifically. But we do see a huge opportunity around retail. We're starting with specialty retail because oftentimes, people are going to specialty retailers to find a solution to this problem that we have. We've found it to be sort of a logical intersect.

The second area that we're looking at is around medical professionals. That includes, for example, physiotherapists where they, from their clinic, can actually recommend their patients to purchase our product to help them with an injury that they have.

Edward: But you have not gone into that. So far it's 100% ecommerce?

Geoff: No, we've actually pushed into relationships. I’m in Vancouver, so we pushed into relationships with a couple of national retailers in Canada. More on the specialty side, which we're really excited about, and then we have medical professionals currently referring our product to their patients. They would refer a patient, and then we would provide them with a commission based on that transaction.

Edward: That referral though is still done through the website or some sort of platform?

Geoff: Yeah, that transaction occurs on the platform because really their core business for medical professionals in treating patients, obviously. If they're getting into fitting and returns, that's not going to help their business. At that point, they hand it over to us and we're able to interface with the customer from there.

Edward: Are there any concerns around the doctors themselves? If they get a commission from you every time they push this out to their patients, are the doctors themselves worried about the conflict of interest of them getting paid to push a product?

Geoff: Yeah, very much. Again, we launched this in October, what we’ve heard back from that group of medical professionals is they are very patient-focused and they'll do the right thing for their patient. If that includes referring our product, they'll absolutely do that. It's been interesting because I would describe their reaction to a referral fee as being indifferent.

What that's meant for us is that as an organization, we've had to invest more heavily in product knowledge and product understanding. Oftentimes, that means that those medical professionals actually have to wear the product themselves before they're comfortable referring it on to their patients.

Edward: Does it come back to your Coastal Contact days of providing free products to the physiotherapist with the hope of getting a revenue stream?

Geoff: Yeah, totally. One of the things that we found is that because people have had this tough relationship with their solution—being a conventional knee brace, for example—there's a multiple on each product that we sort of seed.

They're wearing it, then they're liking it, and then when appropriate are recommending it to patients. But then they're also telling others in their network, family, and friends about this great product really is incredible. Ultimately, that solution feels better than paying Google and Facebook for acquiring new customers.

Edward: It's always better when you have a marketing channel that isn't in an auction to the highest bidder, but obviously harder to build, though, too. I could turn on paid search tomorrow, but if I want to build a network of physiotherapists, that's a lot of work over a lot of years.

Geoff: Tell me about it. Trust and scale are critically important for that particular program, for sure.

Edward: How do you scale that? Do you have a sales team that's calling on all these? It’s not really sales because you're not selling them anything, but like a community relations team that goes and calls on all these physiotherapists across the country?

Geoff: Yeah, we have an outbound team that is looking to set up product knowledge sessions. I think, for us as a startup, looking to immediately automate or scale things, that wasn't really (in my opinion) a great solution because you need to get in there and figure it out yourself first and have these one-on-one interactions. Ideally, you want a few people to go first.

That's really important because it creates a little bit of a flywheel effect where you can then point to other people that have joined the program and then that I think adds and builds a little bit of trust for future people who aren't going to join the program.

As we build that out now, we're at a stage where we're looking at digital channels to generate leads for our sales team then to speak to.

Edward: Yeah, it's always a challenging thing because you have this upfront cost of getting a physiotherapist on board, but you don't know what that revenue stream is going to look like or what type of physiotherapist to get on until you've invested it for a considerable period of time.

Geoff: Exactly. With that said, within physiotherapists specifically, generally, they have a binary opinion towards bracing in general, so we identify that first. And then the second part is to understand what percentage of their patients that come through their practice have, for example, a knee injury currently. From there, we can rough out whether we think this is a good partnership to pursue.

Edward: What does it look like? You get a physiotherapist on board and they're excited about working with you. How many products will physiotherapists sell in the next month or 12 months? Have you even thought up through that?

Geoff: That's a great question. Generally, we believe it would be close to 30% of people that are coming through a physiotherapist would be appropriate for our product. That's kind of the way that we think about it.

Edward: That's because 30% of physiotherapists are dealing with knee injuries, 30% of their patients?

Geoff: Exactly.

Edward: You mentioned a little bit before about when someone tries this thing, they tell their friends and family about it. That type of viral coefficient is, first of all, fairly common in unusual products and it's fairly common in apparel. You're both an unusual product and a piece of apparel. How do you accelerate that? Do you make sure that you have a really big logo on the side of your pants?

Geoff: The logo on the K1 tight is something that we're always talking about. Currently, it might be a little bit too subtle. That said, you can actually aesthetically see that there's kind of cabling within the tights, which actually looks cool, and we believe sparks conversation.

The things that we really look at are through the customer journey or athlete journey, as we call it. What are opportunities for people that have purchased the product to actually share their experience? Obviously, if you look at the unboxing, that's an opportunity. A small card saying, hey, if you love this, tell members of your family or friends about it.

The second is obviously digital. Even within an automated welcome series, post-purchase, and if we see someone has given us 9 or a 10/10 from an EPS perspective, we will send them an offer that they can distribute to members of their family or friends to really encourage that advocacy.

Edward: Have you estimated what that viral coefficient is? For every product that you sell or every customer you acquire, how many more customers are you getting over the next 12 months from that customer telling people?

Geoff: My gut tells me it's three.

Edward: Well, that seems really high.

Geoff: It does seem really high, but if you talk to and I probably talk to a customer at least once every two days, they have had something dramatic happen in their lives, which is this knee injury. It's impacted them from, oftentimes, being able to do something that they have a spiritual relationship with, which is exercise.

The solution that they have is either wear a brace or not wear a brace, neither of which is particularly compelling. We're providing them with this incredible solution that they will then wear doing this activity that they have this great relationship with and often there's a social component. That is just ripe for them to talk about the product that they're wearing.

Edward: Even so, most people who have knee injuries don't have a lot of friends who have knee injuries, or do they?

Geoff: Great question. There are particular sports where the product is particularly relevant. The two sports segments that we're looking at right now—and we're actively focused on—are ski and snowboard.

Edward: If you could get someone on a ski team, it quickly spreads to the rest of the team.

Geoff: Exactly. If you get even within skiers and snowboarders, certainly, there's a ton of, unfortunately, a knee injury. Those opportunities for people to talk about the solution that they have are right there.

Edward: My wife gave up skiing just before we met. She had a big accident at Whistler, and she hasn't skied since because she's so afraid of hurting her knee. Do you think this is going to change her mind? Now she can put on one of your pants and start skiing again?

Geoff: I'm going to give you a promotional code, so that should help even more.

Edward: If it gets her back on the ski hill, I'm happy to pay full price.

Geoff: The other nice thing is that—depending on who your insurer is—it should be reimbursed.

Edward: Geoff, you do a bunch of retargeting. How do you account for incrementality? How do you know how many of those people would have come back to you anyway?

Geoff: Good question. I think retargeting is certainly challenging within a digital marketing mix. For us, in all transparency, we haven't proven that out with Stoko yet. One of the things that you can do pretty clearly is also looking at what you're more established competitors are doing. If it looks like they're doing heavy retargeting, you can probably make a bit of an assumption that, okay, this is a high consideration purchase. People are going to be coming back to your website multiple times and checking out what their options are.

We started with that kind of thesis and then started to invest more heavily in retargeting. Obviously, there's a number of different channels that you can look at from a retargeting perspective—everything from Google to Facebook to [...] et cetera.

Right now, we're fairly heavily invested in retargeting. I think what I have found is that certainly, you want to look at the full journey of your customer. To me, the best test for retargeting is what happens when you turn it off. I think one of the nice things is that we're at a stage as a company where we can run those tests. We're not looking at attributing 15%-20% of our revenue to retargeting. We can do it in a fairly binary way where we're, okay, let's turn off retargeting and see what happens. I think that's generally the best way to test retargeting personally.

Edward: That's one of the nice things about when you're a small enough company. If Coke turns off the retargeting, they have no idea what it exactly did to sales. When you're small enough, you can see any given channel, you can actually see the differences that happen.

Geoff, this has been fantastic. Thank you so much for your time today. Before you go, can you tell us about your quake book and how it changed the way you think about the world?

Geoff: Yeah, for sure. It's actually an author that I've been reading this year. He's a Canadian called Joseph Boyden. What he looks at is First Nations experience in Canada, really starting with their first relationships with European settlers.

For me, obviously, a lot has happened this year. But for me, it really helped me understand the condition of First Nations in Canada, which is not great, not good. It helped me understand how things that happened generation after generation after generation ago impacted where we're at today. That it's important to acknowledge those things to understand how we could even attempt to make things better.

Edward: Thank you, Geoff. I really appreciate your time today.

Geoff: Thank you. Thank you for having me.