Under The Hood: Michael from Canopy

Wellness brand Canopy makes premiere humidifiers and diffusers. It was founded in 2020 by the team at Doris Dev, a product development agency that worked on some of the most exciting digital brands including Blueland, Great Jones, Lalo, and more!

We got the chance to chat with Michael De Santis the self-declared “marketing and ops guy” who got Canopy off the ground! Michael splits his time between Canopy and Doris Dev. 

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Welcome Michael and thanks for talking to us. Tell us what growth’s been like from Day One?   

We launched right before the iOS14 update in late 2020, so there was still a great opportunity to acquire customers through Facebook and Instagram. But we didn't have a large ad spend ($100/day on Facebook), and it wasn't clear if our advertising was working. Orders slowly started rolling in, so we built out our retargeting pool. By the end of November 2020, we were completely sold out. We were out of stock until April 2022 but continued taking orders and shipping product as soon as it arrived at our warehouse.  

In the first year, we learned our business is quite cyclical. October through March we're rapidly acquiring new customers. When spring and summer roll around, customer acquisition slows down. However, we have a very large subscriber base which means Canopy becomes a retention business during the spring and summer months.

Once we understood the cyclicality of our business, we promised ourselves in Q4 of 2021 we’d prepare for the demand and wouldn’t go out of stock.  But we ended up selling out again in November '21! We had back-to-back years of selling out, which is a great problem to have but it still hurts for sure. This year, we hope that we forecast demand correctly and don't sell out. We hired an in-house demand planner for that exact reason. 

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Tell us about your retention strategy. Are you doing anything unique? 

1. We hired Antidote, an email and SMS agency that does a fantastic job. They knock it out of the park regularly. We also hired a retention manager to build a robust retention-marketing plan across email, SMS, and a handful of other tools.   

2. When it comes to retention, the first lever we pulled was Brij. We felt like there was an interesting opportunity for us to include QR codes across our experience, especially for people who were one-time purchasers of filters and didn't become subscribers right away. We strategically place multiple Brij QR codes on the machine, packaging, and any collateral customers get from us. For example, if you open up the fan housing where the filter sits, there's a QR code inside of there so if the filter is dirty you can quickly scan and reorder it. I think a platform like Brij is really a no-brainer to implement, and it's a fantastic lever to pull to drive retention.  It’s also a great way to implement upsell opportunities. 

3. We've also added in Churnbuster so we can capture folks who are going to passively churn due to a credit card expiring or something along those lines. It's really allowed us to recapture tons of revenue. 

4. We have 24 cohorts of subscribers. If someone's going to deactivate their subscription, it's essential to identify and understand when, where, and why they are and then add friction to those points. We see the highest drop-off between Order 3 and Order 4, so we’ve been testing out the following: adding friction to the subscription cancellation process, incentivizing customers with free product, and setting up flexible payments structures so it's super easy to pause the subscription in humidifier off-months like summer. 

How do you acquire new customers? 

Facebook, Instagram, and Google. We have a couple of killer PR teams as well that help drive top-of-funnel brand awareness. We also found a ton of success in partnerships. Very early we partnered with The Skinny Confidential for podcast advertising. Eventually, that turned into a product collab the Canopy x TSC Humidifier.

Post iOS14, I was very concerned about our ability to retarget. We only had a quarter-worth of pre-iOS 14 data and not enough data in the business to understand what summertime looked like for us. For this reason, I added a tool called Faraday to our stack. 

Tell us about Faraday. 

You can do a lot on Faraday because they have a massive repository of 3P data (third-party data). The way Faraday works is you upload your 1P data to the platform, Faraday ingests it, and then combines it with their 3P data to build out revenue-generating information.

For example, Faraday can determine the zip codes of the folks who have the highest propensity to buy Canopy, suggest bid modifiers based on this info, and push it into Google  Ads.

Faraday can also build look-alike audiences, generate in-depth customer personas from numerous factors like household income, family size, child status, etc. Faraday is also very useful on the retention side of things. We use Faraday to analyze the demographics and psychographics of our subscribers and identify markers for churn. Then we score all of our subscribers on a scale of 1 (very unlikely to churn) - 10 (very likely to churn). This has been a great risk mitigation tactic to get in front of people who are likely to churn before their next order.

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Anything unique about your subscriber cohorts? 

We have 4 discrete cohorts of subscribers. One cohort of subscribers that we found really surprising was older women ages 57 - 70. These women tend to have a very high household income and live in the suburbs in very large homes. Perhaps a relevant side note here is that with Faraday we’ve been able to analyze each of the cohorts and see literal pinpoints on the map of where these people live, which is super cool.

The other 3 cohorts of subscribers are women ages 25-40. One cohort is the bargain shopper who purchases in q4 when there are opportunities to get discounts or buy bundles as opposed to purchasing at full price. The other two cohorts are either highly urban or suburban and have a higher household income. 

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What advice do you have for brands just getting started? 

Keep headcount low. Being really thoughtful and strategic about when you're adding new full time employees is super important. 

I think that hiring external third parties who are experts in specific narrow verticals of your business is probably the best way to start out the process of building your business and not over indexing on hiring full time employees early on. If you cobble together the right agency partners to help execute on things that’ a game changer. We've had the same partner executing on paid social and search for us since the beginning. Every single month, we bring all the agencies together and have a strategy call across all of the agencies and the Canopy team members. 

Also making sure that all those agencies are looped in and have a clear, cogent message coming from your internal leadership team. 

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So who are Canopy’s external partners?

Obviously for all product, supply chain & operations: we rely heavily on Doris Dev & their killer product team that does a lot of the heavy lifting behind the scenes. We use Socium for paid social & SEO. Ruff Communications is one of our PR teams. Last summer, we started speaking directly to the baby market, which we weren't doing right at launch, so we brought on The Last Layer, a team that specializes in that niche of PR. Antidote for SMS and marketing. Cardinal is our web dev team.

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What’s your tech stack? 

In addition to Faraday and Brij, we also use Automate for Recharge which has been a lifesaver in building out custom workflows + Malomo in place of Aftership (plus it’s a great marketing tool).  

Then, the list is long: 

We use Matrixify for bulk uploading store data, Grin + Dovetale for influencer, Wayflyer for non-dilutive financing, PreProduct for pre-orders, Shopify Collabs FKA, Disco for post-purchase, Rebuy for upsells, TaxJar for taxes, Referral Candy for referrals, Okendo for reviews, Neutrl to carbon offsetting, Shopify Audiences, Ramp for banking, Daasity + Tydo for analytics, ShipStation for shipping, Klaviyo for email, Attentive for SMS and accessiBe for web accessibility.