The Dead Pixels Society podcast
News, information and interviews about the photo/imaging business. This is a weekly audio podcast hosted by Gary Pageau, editor of the Dead Pixels Society news site and community.
This podcast is for a business-to-business audience of entrepreneurs and companies in the photo/imaging retail, online, wholesale, mobile, and camera hardware/accessory industries.
If you are interested in being a guest on the podcast, email host Gary Pageau at gary@thedeadpixelssociety.com. For more information and to sign up for the free weekly newsletter, visit www.thedeadpixelssociety.com.
The Dead Pixels Society podcast
Less Hopeful, More Engineered: A Fresh Look at Marketing ROI, with John Watson
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What if the marketing strategies draining your budget could be transformed into systems that actually generate profit? In this eye-opening conversation with John Watson, founder of Accrue Marketing, we uncover the costly mistakes most businesses make with their marketing efforts and the straightforward solutions that can revolutionize your approach.
Watson's journey from data analyst to marketing coach began when he repeatedly found himself delivering devastating news to clients about their marketing performance. After analyzing countless campaigns, he discovered a shocking pattern: businesses routinely spending $1,100 per sale on products with only $100 margins. This realization led him to develop a systematic approach to marketing that eliminates wasteful spending and focuses on proven strategies.
We dive deep into the critical importance of customer data analysis, exploring how modern CRM systems make sophisticated customer segmentation accessible even to small businesses.
Perhaps most valuable is Watson's "apple tree analogy" - while businesses strain to reach apples at the top of the tree (flashy marketing tactics), they ignore the low-hanging fruit or even the apples already on the ground (existing customer relationships and referrals). His perspective challenges the common overinvestment in acquisition while neglecting the more profitable retention activities.
For more information, visit www.accruemarketing.com
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Hosted and produced by Gary Pageau
Edited by Olivia Pageau
Announcer: Erin Manning
Welcome to the Dead Pixel Society podcast, the photo imaging industry's leading news source. Here's your host, Gary Pageau.
Gary Pageau:Hello again, to the Dead Pixels Society podcast. I'm your host, Gary Pageau, and today we're joined
Gary Pageau:by John Watson, who's the founder, coach and fractional CMO from a company called Accru Marketing, and he's coming to us from Alberta, canada, today. Hi, john how are you today?
John Watson:I'm doing great, Gary. Thanks for asking. I really appreciate kind of joining you today. you
Gary Pageau:So, John, tell us your story of your marketing journey that got us to the point where you started a crew marketing.
John Watson:I started out as a business kind of data analyst, okay, and I used to analyze the performance of sales and marketing campaigns, well before the internet, okay, and you know it was direct mail and call center campaigns and that kind of stuff.
John Watson:I did, you know, a lot of work for some of the big charities and I found that I was always the bearer of bad news, right, and I learned really quickly that a lot of the sales and marketing campaigns that were running were very poorly conceived and they had not run the numbers not targeted. Well, and I I used to joke that I had I should have one of the horsemen of the apocalypse as my logo, right, cause I was always showing up with this devastating bad news, right, right, right. And so as I started my own company, my first company, I didn't want to repeat the experience. I saw how devastatingly poorly a lot of these things did, and so I started seeking out help. I said, look, I don't want to make the same mistakes, right, all I was getting was sold over and over by, like everybody didn't want to help me, they just wanted to sell me.
Gary Pageau:Right.
John Watson:Whatever it is they wanted to do, and I found it very difficult to get legitimate help Okay, and I knew I needed it Right, so I just kept seeking it. And so how I got this kind of whole program going was is I wanted to be the help that I couldn't find Right, okay.
Gary Pageau:That's great. So you saw an opportunity and you wanted to fill it so awesome.
John Watson:Yeah Well, I just found that it's so difficult to actually move past the salespeople and actually get legitimate coaching and consulting and somebody who's willing to work with you to help you, as opposed to just trying to sell you. So that's really the genesis of my whole company was how do I show up in a way that I couldn't find for others once I had learned the ropes?
Gary Pageau:Yeah, you got to be able to learn what it is you're going to share in order to share it right.
John Watson:But as an analyst, when I started, one of the things that analysts do is they dig into the root causes of things. Right, so it's not working, why? And so I just kept digging into why, why? Why, you know why, from messaging point of view, right, so it's not working. Why, right? And so I just kept digging into why, why. Why, you know why, from messaging point of view, from design point of view, from my and it turned out that in most cases it was a leadership issue and a lack of communication. Right, and so marketing, in my experience, has has largely, I've said, the way I've come to understand it is that there's a lot of assumption, it's a tremendous amount of assumption A lot of business owners, and particularly small business owners, but it's common across the board, where they feel like they don't understand all the new tech, right, they're intimidated.
John Watson:So you know, older guys like us are sometimes intimidated by the technology. They don't really understand it. It's happening so fast that they're just like, look, I don't get this stuff and they try to pawn it off on somebody else to do it, right, right, and so they hire, carefully, they'll hire a bunch of suppliers, right, that they think are are consultants right and more often than not, they're just salespeople, right, and they're pitching you on whatever it is they think is what they want to sell you and may or may not have anything to do with your needs.
Gary Pageau:Their agenda is to sell their platform, program marketing, tech or what have you.
John Watson:Exactly the leadership gap that happens is that, in the interest of passing it off, that's something that you don't understand or really don't want to understand, right, you pass it off to somebody who really isn't understanding the role you think they're going to play, right, you think they're a consultant and they're just trying to sell you whatever, and you end up with this big leadership gap, right, and then so quite often, there's no real clear goals established, there's no real conversation about how it's going to produce results, or even what kind of results they expect, and so you end up with what I call this sort of random acts of marketing, right, you know, and the strategy basically comes down to hope and a prayer, right, right, and it's like, okay, well, that's. That's kind of a pretty bad combination.
Gary Pageau:Well, one of the things I want to circle back on is when you said you had to be the bearer of bad news. That kind of stuck out to me, so I made a note here, like what was the bad news? Was that money was wasted, that resources were squandered? Was that results really weren't close to what they had expected? What were what would be a typical bad news scenario? That, as an analyst, you know quite often.
John Watson:Uh, what I found was, if you didn't do the math ahead of time, right, so almost I had. I'll just share an example. I had a client where they were a one-time sale. It was kind of an expensive sale. It was a $1,200 purchase but the margins on it were really low. They only had $100 margin on a $1,200 sale and the marketing they were doing was costing them $1,100 per sale. Oh gosh Right. Costing them $1,100 per sale, oh gosh Right. And they had been doing that, for they were spending half a million dollars a year on their promotional program and it was basically they were throwing the money away. They would have been better off to go have a big party in Vegas, and but they never measured anything, right, they didn't know that the performance of their marketing. So I was the first one to ever show them that. Here's your sales funnel and your unit cost per sale on average is vastly 10 times higher than the margin available on the product you're selling and there's no lifetime value because you're a one-time purchase.
Gary Pageau:So there's no opportunity to make a buy. You don't have that relationship with this customer because you're buying it once, yeah, and so it was a huge eye-opener right.
Gary Pageau:How was that received? Right, because you've got someone, a client or a business owner who's been doing something that they think is working right or they think is effective, or at least they're looking busy right, or they think is effective, or at least they're looking busy right. There's activity which I think a lot of marketing has become let's look busy, let's look like we're doing something right. And so how was that received? When you delivered that message, did they change or did they say you know what it works for us?
John Watson:I think, well, no, I don't think. Most people say it works for us. It's usually shock and awe. It's like some people run away and they say you can't show this to the boss, right? You have to give me a chance to fix it before you share these data.
Gary Pageau:You know the $1,200 sale. What was the response to that? What did they do? What did they think?
John Watson:They embraced it. They said, well, we are busy, they were making sales, but their sales were coming from a different channel. Most of their, the vast majority of their business was coming from professional referrals. They had a pretty large community, a network that was driving business their way and it was producing the vast majority of the work, and all of the so-called classic advertising and marketing they were doing was just taking whatever profits they were making and flushing it down the drain. Okay, so what do we do? Right? The answer is you know that's. The next question is okay, that's bad. What do we do? And in their case it was just look, let's focus on where you're generating the business and let's amplify that and do more of that, rather than wasting all that money over here. Let's focus on where you're generating the business and let's amplify that and do more of that, rather than wasting all that money over here. Let's double down on what you're great at and make that exceptional. And they're like great.
Gary Pageau:So so one of the hardest things for a marketer or a business owner to do, one of the hardest words they have is no right, I'm going to stop doing this. Because they've been, you know, they've had this activity, you know generating interest or whatever. Like I said, it's expensive, it's, it's, it's eating up the entire cost of the product in this one channel. But you, they'd almost be better off not doing anything well, you have to do something.
John Watson:but it really comes down to the biggest conversation that I, the most frequent conversation I have with people, is now that you know your max cost of sale, right, and you're starting and choosing advertising channels based on which ones have a hope you know at all of ever producing a sale within that cost. Right, exactly Right, and it does. It eliminates most of them, right. You look at it and say, all right, well, that's, those are the constraints of the business, which channels have a hope of actually producing profitable sales, and that alone makes a huge difference because you start focusing on things that can work. It doesn't mean they will immediately, but you know that the possibility is there, right, that in many cases, a lot of the channels I see in a perfect world where you had fantastic response rates, they still wouldn't produce a result that was workable, right, right, so it's like, why are we wasting time on that? But just simply by focusing on things that that have the potential to work, with sort of a reasonable margin of error, right, you can.
Gary Pageau:you can really put the effort into those things because they have potential, right because one of the things that like in our in my audience is you know, we've got a lot of people, you know, sell cameras, right, which is a 1200 device with a very low margin, right as you know, because, you mentioned earlier, you're a photographer, right, so you know what cameras cost, so you know, but it but again it's the same sort of thing where the buyer for cameras is different now than it used to be, because obviously people have camera phones, so you don't need a snapshot camera for everyday photography, like you used to, right, so people were buying cameras differently, so you have to reach them where they are, as opposed to traditional advertising.
John Watson:Well, I think what it does is, you know, whenever you have a low margin product, really, the first thing to look at is how does lifetime value factor into the business? Right, can I cultivate a relationship with this client? And oftentimes, particularly in retail, we tend to take the order, you know, and then we don't follow up with them. Right, it doesn't go into an email database we don't have necessarily. You know, if we're advertising focused, we may not be putting enough effort into retention. And what type of promotions can we run? How do we engage with people, get them coming back for all kinds of add-ons? And I think the first thing is to just look at how does the business work and where should we be focusing? Is it on acquisition, is it on retention, and what's the balance between the two that actually makes the most sense?
Gary Pageau:And so what are some of the things that somebody should look at when they're trying to evaluate that? Because in many cases again in my audience these are well-established businesses, right, they're brick and mortar. If they're a camera store or a one hour lab or a printer or a photo lab, you know they've been around for a while. There isn't a lot of startup activity there, right, but a lot of them, a lot of them, make the assumption that everyone knows we're here because we've been here, right, so there has to be some sort of outreach to people who are unaware. But you also have to reach your current audience, right? So is there a formula or a percentage or something that you can look at for that?
John Watson:You have to create the formula for the company, and I think that's really the goal, and I always try to talk about it in investment terms. Right? So, if you had an investment portfolio, you'd have money in different asset classes, right? So if you think I have an acquisition asset class and I have a retention asset class and I have maybe something for developing partners or channel partners, and it really comes down to what are the asset classes, what allocation should I invest in each of them? And then how do I maximize the return from each one of those channels?
John Watson:And the easiest way to do that is by looking at your data right and analyzing it and most retailers are really good at logistics and managing inventory and right. You know, the operational part of the business is critical, so they tend to be really good at that, and critical, so they tend to be really good at that. And the most common thing, though is is not doing customer data analysis Right and the customer data analysis is usually not present in the in the point of sale software right. It's just not something that's generally built in, and if it is, it's pretty lame right.
Gary Pageau:Well, what would be an example of useful data in that case? Right Cause, in most cases they're capturing, you know, name, sometimes address, certainly an email, if they can. Sometimes a phone number Isn't that useful, or what more do you need?
John Watson:Absolutely. That's the beginning of it, right. So most things with customer data analysis. What you're looking for is where are they in their relationship with you, right, right, are they a first time buyer? Is it the first time they've ever bought from you? Right, so that's a welcome thing, right? The?
John Watson:The goal with that person is to get them to come back and be a repeat buyer. If they've bought from you many times, right, right. Once they're a steady repeat buyer, how do I upsell, how do I cross sell them? Or how do I introduce them to other opportunities that you offer? Right, you know, when you have an opportunity to engage them, get feedback from them, try to turn them into an advocate where they get referrals, maybe turn them into an affiliate if they're into that sort of thing. It really comes down to if you can identify where a client is in the life cycle of the relationship with you, you can communicate with them in appropriate ways to achieve very specific objectives. Right, but it tends to be some, like I said, it tends to not be part of the software, right. So it requires you to kind of dig in, pull the data out, segment it all up in a meaningful way and then to do some sort of segmented communication out to the different groups?
Gary Pageau:Now, if you're your typical business owner, that sounds like a lot of work and it's continuous work, you know, because you've got, hopefully, new customers coming in all the time that you got to figure out where they are on their on their journey. Is this something they can do themselves, or should they put it on staff or hire, you know? I mean, where do you put that sort of thing in a business?
John Watson:The beauty is this stuff is now accessible to small businesses. It's pretty affordable. Yeah, it really is. You know you're getting into automation, right. So, like I said, part of the problem with the point of sale systems is you need to get your data out of it, but that doesn't mean you have to manhandle it right. You can have connections right, directly made to another, another system, like a crm system, for example. Right, so the data comes out of your point of sale into the crm, the crm aggregates it up into meaningful ways and then you can start to do triggered emails and text messages and communication that are all programmed with workflows, right, and this is all available in fairly entry-level CRMs now, right, yeah, yeah, and so it's not rocket science anymore.
Gary Pageau:Funny. You say that because a lot of systems everything wants to be a CRM. Now right, I mean, I use MailChimp for my newsletter and it wants to be a CRM. I mean, so there's a lot of technology being built in across different platforms actually to let you do this sort of thing.
John Watson:More and more. With everything up in the cloud, you can integrate things so much easier than you could. Even if you have a couple of components that are traditional software, you still have the ability in most cases to integrate them and to automate this kind of stuff.
Gary Pageau:You've used the phrase a couple of times random acts of marketing. Where did that come from and what does that mean?
John Watson:Random acts of marketing comes from that earlier conversation about sort of being sold on tactics. We're inundated with tactical stuff all the time. It's Facebook this and TikTok that and Instagram this, right, and it just it's. All we get is this bombardment of tactical things and it's overwhelming Right, and so a lot of people feel like geez, I have to. It's like fear of missing out, right, I need to be on that platform and I need to do this and I need to do this, and they're just sort of racing to keep up with the trends and it's you're not doing it for good business reasons. You're doing it because you think you should Right, right, right. Anecdotally.
Gary Pageau:But I guess my point is why is it with marketing specifically that people do that? They don't do it with other parts of their business?
John Watson:You know what I mean. It's almost like you know why, though? It's because people don't understand it, right? Okay, marketing has always had this sort of mystery. You know, romance like airy fairy it's emotional, it's, it's creative. It's something else that I don't understand, right, and then, and now technology, right now it's super high tech, and so you have this combination of it's mystical, right? It's this, you know the thing I don't understand, and so, because I don't understand it, I'm likely to be passing it off to somebody else and sort, and so it makes you susceptible to being sold on stuff that you don't really need or understand Right, and, in many cases, aren't ready for Right, and it just, it's a very slippery slope.
Gary Pageau:I mean, the reason why I ask that is because it seems like a lot of it is. You know, like I said, you know I call it chasing the shiny right. You got a shiny object. Yeah, it is. You know, like I said, you know I call it chasing the shiny right. You got a shiny object and you just chase it down and it's. You know, I'll go to an industry conference and there'll be a marketing presentation. Somebody will get up there and they'll talk about their, their TikTok experience, right? Oh, I, you know I moved this many lenses on TikTok and you know this kind of thing and you know everyone immediately tries to copy them. But what they are not copying is the process of how that person actually sold all those lenses on TikTok. Who did they target? What was the demographic?
John Watson:They just said oh, no, you got to do TikTok videos. Well, the other thing is, just because you sold it on TikTok doesn't mean it was profitable, right? Yeah, that's true. What did it cost you to make that sale? Right, and it seems low. But quite often the social media has a lot of human costs, right? The amount of time and energy you put into it is often ignored, right? So when you start to do full cost analysis of some of these channels, they're not as effective as they appear to be, right?
John Watson:they can be right, but they're often not right.
Gary Pageau:Yeah, I mean it's funny to say because you know I've done it. I'm not an expert like yourself, but you know there is sort of. You know the classic things very often are classic because they work. You know, like direct response postcards, right, if you have a lawn care business and you need to reach people with lawns, you can do that very effectively with a postcard and very cost effective. You don't need to be doing TikTok videos and dances with your John Deere and things like that. But you know it's just funny because it's like, well, that's not cool, that's not happening, that's not. But guess what, it's darn effective.
John Watson:My recommendation for most small business owners is I use it like an apple tree analogy right, and you think about all this fancy stuff, is you're picking the? Apples on the very top of the tree first. You know like you're looking around and there's apples all over the ground. Right yeah, I can reach most of them. I don't have to get the ladder out and do that. I can focus on the low hanging fruit or what's dropped off already.
Gary Pageau:Right.
John Watson:And and quite often we, we ignore those things. Right, they're free, they're low cost, they're easy, they're, they're, in many cases have a higher demand, like the higher intentionality from the buyer. And we're spending our time kind of climbing the ladder, grabbing stuff and kind of focusing where we're spending our time kind of climbing the ladder, grabbing stuff and kind of focusing, where we're just trying to get attention and there's no, and there's no intentionality, right, but we've interrupted them, we. They're aware of us now, but that doesn't mean they're going to buy right, yeah right.
John Watson:So so much of it is. Just look, take care of the fundamentals first. Make sure you understand what the economics are and that you're making decisions that actually support your business as opposed to just distract you.
Gary Pageau:So if you're a, let's say, your typical camera store, right, and you've got a mix of products, in the sense you've got your higher end cameras that you make very little money on, you've got your accessories, which you make more money on but they're a little harder to sell, and then you've got your high margin print products right, your output, your print, your cameras, your canvases, your metals and your photo books and all those great products right. But most people envision you in their head as a camera store, right. That's sort of what gets the attention. What would you do within that situation in terms of? Would you just focus on the margin things and just keep on doing what you're doing or trying?
John Watson:No, I think you always have your lead offers that try to draw people into the store.
Gary Pageau:Right.
John Watson:But this is where going. Circling back to the customer analysis, right, if you know what they bought, if they bought a high-end camera, well, there's a good likelihood. They're going to buy some lenses and they're going to buy some accessories and all kinds of stuff.
John Watson:Right, they're into it yeah, yeah yeah, and if they're, you know you can use the their purchase patterns to guide you in terms of how to communicate. The segmented communication is really underutilized and by recognizing where people are in their life cycle, by identifying what kind of buyer they are are they professional, are they semi-pro, are they just somebody who's messing around you really can tailor, you can communicate to them in that way. I mean, it's not from an acquisition point of view, but even in an acquisition point of view, you can tailor to different audiences based on what you're trying to sell.
Gary Pageau:Right, you have a picture of, let's say, you have your aficionado, right You're. You know the old retired dentist meme, right, where you know the guy. This is the guy who's going to buy a Leica and go to Alaska and you know he's going to spend a lot of money on hardware, right, so you may have a few of those people. So how would you use that customer to get more people like him, like you know what I'm saying?
John Watson:Again, it depends on who they are. I think now everybody's a social media influencer in some way, yeah, right, and so if you're doing that kind of high-end photography, you're probably posting it. You can incentivize them to really give you feedback, to make introductions, turn them into a fan or a source of referrals. Quite often those people are doing. I mean, they can be training other people. I know I do. People come to me all the time say how do I use my camera? Right? So you can, and I've sent so many people to local photography shops because I like them right. Yeah, yeah, and I think part of it is the customer service side. If I'm really enamored with a shop because I absolutely love the product line and I like how they treat me and you know what they offer, you know they sort of help me out right, then I'm going to send people there, right.
John Watson:And I think part of it is really looking at the marketing in a holistic way, right? So everybody tends to think marketing is advertising, right, or the acquisition side, and they miss. There's a whole, I mean the vast majority. Most of the marketing should actually be retention and customer engagement and gathering customer feedback and generating reviews and testimonials and referrals and the margins on that are vastly higher and you usually lose money on your acquisition Right. Exactly, you make money on the retention Right and but we've got that mixed up in that we spend way more money and time on the acquisition side Right, and you know, and tend to drop the ball on the retention side.
Gary Pageau:Right, yeah, exactly, because I mean, if you're I mean, I've heard numbers anywhere costs up to you know, $18 or more for an online company to you know, get a print customer Right, that that's, that's what it costs them to acquire. So, which is why they do, like you know, get a print customer right, that that's, that's what it costs them to acquire. So, which is why they do, like you know, a big giveaway to at least get one thing from them and get them into the system, so at least they can sell them something later.
John Watson:Yeah, it's, it really is. You know, I think this holistic view is well. The main thing I focus on is trying to get people to to see marketing as more than just advertising.
Gary Pageau:Right.
John Watson:Right that there's a, there's a. I have a 20 step framework that I get them to back up and say let's just look at this from a beginning to end perspective. Right, If you look at the customer's journey through your business over time, not just the single transaction but over, say, 10 years.
Gary Pageau:Right.
John Watson:What experience am I creating? How do I facilitate their experience so that I can maximize my earnings from those relationships?
Gary Pageau:Right.
John Watson:So you're cultivating relationships, maximizing lifetime value and generating all kinds of secondary sales, as well as referrals and et cetera, et cetera. And because you need that to offset the high cost of acquisition.
Gary Pageau:Right.
John Watson:Right, but people? But historically I've seen people put way too much emphasis on the acquisition side and largely ignore the retention side, and it just did that. The math, you know. If you really understand the math, you'd flip it around.
Gary Pageau:Well, and that's what's funny is, I think, a lot of very wildly, wildly successful companies are the ones you don't hear much about, right, because they're just working on their existing customer base and et cetera, et cetera, et cetera. But I think you know, in terms of where our media works and how the business press works, right, the big and flashy, you get all the attention. But there's literally, you know, thousands of companies that are kind of doing what you're doing. Hey, I'm just gonna focus on my current customers and, you know, go where my bang for the buck is and I'm not going to take out the splashy ads or have the TikTok influencer.
John Watson:Well, it's a balancing thing, right. I'm not saying don't do it. What I'm saying is balance it right.
Gary Pageau:I'm just saying it's a matter of you know sort of. As you know, as we become a sort of media obsessed culture, right, we look for those kind of things when actually the hero companies are the ones that are, you know, not probably blasting things out.
John Watson:The challenge really, I think, is getting people to realize that attention does not translate to sales, right, not always it can translate to sales if you put the system in place to make sure it does in a high probability, but just by itself, without the system behind it, is very unlikely to Right.
Gary Pageau:Yeah, well, yeah, I mean, how many hot fad products have there been right Just in the last? Well, forever. But in the last few years that got a lot of attention but then just flopped in the marketplace.
John Watson:Yeah, it's, I mean, like anything, and this is why I try to get people to think about it more from a systems point of view, right, not just do the single tactic and hope for the best. It's like chain them together as an actual system. Right, we're going to do this lead offer and we're going to do, you know, when they get in the store, we're going to do this kind of promotions and this type of engagement and this kind of you know how, this, how we're going to enroll them in our you know sign up program and and that's how we're going to follow up with them. And it's like, if you think about it as this lifetime, you know this, this, this integrated approach, right, it really doesn't take a heck of a lot of extra. I mean, it's certainly not any more costly than advertising, right, it really just is a shift in, it's a different way of approaching it, right, it's less sort of hopeful and more engineered I love that.
Gary Pageau:That's a great slogan. I love that. Less hopeful, more engineered, right. accrue marketing. com I love that. That's awesome. So where can people go to learn about your 20 ways to fix your marketing? Where can people go for more information?
John Watson:well, the two way, two places. One is my website, which is accrewmarketingcom, and then Amazon. I have my books up on Amazon. It's probably the easiest place to buy it. It's called being Profitable a business development roadmap, but my website is full of I've got 20 free downloads, ebooks for download. I've got a ton of resources. So I think the thing. If people want to understand more of this, I would invite them to take advantage of all the free resources at accruemarketingcom.
Gary Pageau:Awesome. Well, listen, john, it's been great talking to you and I've learned a lot, and I appreciate your time and best wishes and hope to talk to you again soon.
John Watson:Well, thank you very much. Appreciate the invitation to be on your show.
Erin Manning:Thank you for listening to the Dead Pixel Society podcast. Read more great stories and sign up for the newsletter at wwwthedeadpixelssocietycom.