On Acquiring And Growing A Vacation Rental Amenity Kits Business

Start A Vacation Rental Amenity Kits Business
About The Company
Coming Up With The Idea
Building The Product
Launching The Business
Growing The Business
Revenue + Financials
Lessons Learned
Recommended Tools
Books & Resources
Advice For Founders
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$2,000
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Modern Innkeeper LLC
from Los Angeles, CA, USA
started April 2015
$2,000
revenue/mo
1
Founders
0
Employees
Discover what tools Vivian reccommends to grow your business!
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Discover what books Vivian reccommends to grow your business!
Listen to the audio version of this story!

Hello! Who are you and what business did you start?

Hello, my name is Vivian Chen and I am the owner of Modern Innkeeper. We design guest amenity kits for short-term rental properties. Our mission is to empower rental hosts with unique supplies & resources and to transform the vacation rental guest experience – one guest, one kit, one vacation at a time.

Our main products are the guest amenity kits. Each kit includes all the essential travel size toiletries one or two people need for a getaway. Modern Innkeeper is an online resource for design-conscious hosts to offer their guests the same details as a larger hotel.

We primarily serve the needs of small hospitality owners, such as owners of vacation rentals, Airbnb, farm stays, campgrounds, cabins, small inns, and bed & breakfast.

Owners of these smaller properties often do not have the space to store supplies or the budget to order large quantities for the long-term. We deliver the kits in cases. The current kits come in 8 kits per case or 4 kits per case. Depending on each host’s booking demand, one case can last one week or one month.

The host can simply re-stock each month by easily ordering on our online store. They save the time to go shopping each time before guests check-in and they avoid ending up with mismatched amenities.

Design can influence guest experience and the details are often overlooked. Our kits are designed with the hosts and guests in mind. We focus on the health & wellness of travelers. The kits look good in any guest room or bathroom. They are also travel friendly.

Guests can take them home as a gift (the importance of guest experience in hospitality). Everything is travel-sized and designed for travel, so guests can even throw the kits into their carry on luggage before going through airports. As a side business, we make around $1,000-$2,000 per month on average. During the busy season, we make up to $1,000 a week.

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What's your backstory and how did you come up with the idea?

I took over Modern Innkeeper from the original owner. She created the first line of kits in 2015 after operating a small inn and vacation rental in Central California. She found that there was a lack of toiletries available to small property owners, especially vacation rental owners. She created the kits to fill that niche. She also ran a high-end food business with her husband. They did not have enough time for this business, so she put it up for sale in 2018. I took over in late 2018.

I am a hotel developer currently based in Los Angeles. I have been working in hotel real estate since 2009. I am involved in many areas of the hotel business – design, procurement, financial analysis, real estate, investment, and development. My work involves hotel renovations and new development projects.

I am responsible for all aspects of a new hotel project, from site selection through entitlement and development and then handing off the finished new hotel over to the management team. I also own New Stone Development, a real estate brokerage & development firm that I started in 2013. I have been a licensed real estate broker in the state of California since 2011.

Throughout my real estate career, I have negotiated many hotel management agreements, hotel license agreements, lease agreements, purchase & sale agreements, and loan agreements on behalf of the owner/investor. I have also conducted a comprehensive investment analysis as an advisor for investors interested in hotels.

My academic background is in business, real estate, and law. I have an undergraduate degree in business, executive program certifications in hotel real estate, and a Master’s degree in business law from a Top-20 law school.

My purchase of Modern Innkeeper was the first exercise buying and selling companies after law school. It is the first of many to come. Given my background in the hotel industry, Modern Innkeeper was the perfect fit for me. It was my “aha” moment when I learned about it. I understand the hotel business. I have many ideas I could apply to the vacation rental sector through Modern Innkeeper.

Starting and running businesses require one to take on many perspectives, so it’s important to keep an open mind and be curious about whatever interests you.

Since college, it’s always been one of my dreams to have my own businesses. I had been looking but never found anything that suited me until Modern Innkeeper. The flexibility of running the business remotely was also very attractive to me.

I work full-time as a real estate developer running New Stone Development. I plan to turn Modern Innkeeper into another full-blown business. It is never wise to just depend on one source of income; that’s where Modern Innkeeper comes in. It’s also a platform I could use as a creative outlet to carry out my business ideas.

I don’t believe in working with other people. For me, climbing up a crowded corporate ladder feels like surrendering my livelihood, asking someone else to take control of my life. Some people are perfectly satisfied with climbing the corporate ladder, and that's great for them and I fully support them, but I don't want that path for myself. More than just making a living, I believe in building assets and taking ownership of my work.

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Take us through the process of designing, prototyping, and manufacturing your first product.

When I had the idea for Modern Innkeeper’s new line of Healthy Guest Amenity Kits, I had a market research study done to validate the idea. After studying the data and knowing that there is a market for the product and appropriate price range, I approached a few designers, interviewed them, and chose one to bring my idea to life. My designer and I talked about the goal of the product, the brand, the customers, color palette, and packaging.

After the design, I sourced manufacturers and suppliers. I would always ask for samples and test them before committing to a manufacturer or supplier. There are long chains of emails between a manufacturer and me.

I asked lots of questions, everything from the ingredients to the bottle material to the labeling and packaging. I also asked about the manufacturing process and about the safety and certifications they have at the facilities. I had the package manufacturer send me proofs and samples before I approved for production. Shopping for the right manufacturer is a long process itself. Also, I only work with U.S. manufacturers. As much as possible, I want my products to be made in the USA for American hosts. The communication, quality control, and logistics are more simple with domestic manufacturers. This is the same general process I am currently using for another product I want to launch.

One of the challenges of creating a physical product is thinking about the appearance and use of the product. It has to be attractive and practical. I search for products similar in appearance and use that were already on the market, and I would compare them with my idea, measure the dimensions, and try to visualize how I want my products to look like. Everything from the ingredients, labeling, packaging, usefulness, colors, shapes, dimensions, weight, and utility are considered. Creating a new product is one of the most challenging parts and one of the most exciting parts of running a product business.

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Describe the process of launching the business.

I’ll go over what the previous owner shared with me, and then my “relaunch” of the business. The previous owner launched the first kit in 2015 and tried direct sales but did not have much activity until she used Amazon FBA. The startup costs were low, just the cost of initial supplies, initial design and photography costs, and the cost to create an eCommerce store.

When I took over in 2018, sales were exclusively through Amazon FBA. The business was solely dependent on Amazon and had no activity on social media and no marketing. We had a mailing list but it was not being used. I took over a turnkey eCommerce store with a proven list of customers. It was exactly what I was looking for – a built-out ecommerce business waiting for me to put my ideas into it.

I continued selling the kits through the existing Shopify store. There wasn’t any “relaunch” event or public announcement of new ownership. Nothing changed except for the fact that we stopped selling on Amazon. We lost a lot of customers when I took us off Amazon, but many of them looked for us and still ordered from us when they had to restock.

I understand that the previous owner was eager to make sales. Selling on Amazon was a good short-term solution and a good way to test the market, but I’m here to build a long-term company. Relying on Amazon for sales is not a long-term strategy. You cannot build relationships with your customers with Amazon in the middle.

The focus is on building the brand. We have control of our customer information and we are consistently active on social media and email marketing. We’re building our customer base with long-term vision instead of taking the easy way out through Amazon. Our customers are of higher quality repeat customers. We also attracted many rental new hosts looking for a connection on social media.

Considering the state of the travel industry and the timing, my sales were great during the pandemic. Before Florida opened up for business, a host of 120 units ordered from us to restock all 120 units. I also had many orders mainly from hosts who were preparing their Airbnb rentals for guests when travel started picking up again in June. I took advantage of the downtime during the pandemic to design and develop a new line of products.

The new Healthy Guest Amenity Kits launched on August 31, 2020. For the launch, I coordinated with my social media manager on content announcing the launch. We are also collaborating with vacation rental consultants on giveaways. The people who subscribe to our email newsletters and follow us on social media are the first to know about new products, special access, events, and valuable resources for vacation rental hosts.

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Since launch, what has worked to attract and retain customers?

I am constantly thinking about growth and how it should be approached. Growth needs to be sustainable. Some businesses grow too fast and lose sight of their vision. One example is The Honest Company. They started as a safe and eco-friendly consumer goods business. Their growth took off and they expanded product offerings into other areas, such as lifestyle and home markets. Their core products suffered. They lost track of their mission. After they missed out on the Unilever buyout, they refocused on their core products and they are now driving good growth consistently.

It’s tempting to sell trendy items and offer a lot of products, but it’s important to focus on your strengths and the “why” you got into business in the first place. Focus on your strengths and where you can win. Get out of businesses you can’t win in. I have many ideas and I get excited thinking about how to develop them. But I always need to remind myself and ask, “Does it align with the company mission? Is it something my core customers want and need?” You can’t be everything to everyone. Stay focused and don’t offer more than you can handle.

Growth should be a realistic and steady marathon, not a short sprint, and then crash and burn. Grow at a pace you’re comfortable with. Your competitors might seem to be growing faster than you, but they might also have more funding or equity partners to feed. Internal evaluation is important. Measure the rate of growth. When you are doing better month-to-month and year-to-year, you are growing.

We measure everything and analyze data each week and each month. The data tells us what’s working and what’s not working so we can adjust. When we try something new, we watch the data. Most customers find us through direct traffic, so we focus on search engine visibility. We also focus on email marketing because emails are much more successful at converting potential customers to buyers than social media. Email subscribers are more invested in your products and services. Then we focus on ways to convert social media followers into buyers by engaging them and building relationships with them.

The data that comes back tells us a lot about what we need to do to grow and to attract and retain customers. Because we are a vendor of lodging providers, I would consider Modern Innkeeper more of a B2B rather than B2C. We have customers ranging from starter Airbnb hosts to owners of hundreds of units, so how we approach each customer depends on who they are and their needs. Our hosts are excited to share their places with us and tell us their story. We find opportunities for them to do that with us. Our repeat customers keep coming back to us because we provide a need that is simple, practical, and convenient for them. We make them look good for their guests.

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How are you doing today and what does the future look like?

Modern Innkeeper has been profitable since the beginning. The startup costs were low but the business has been profitable because it fills a niche. Both the previous owner and I have a background in the hotel/hospitality industry, so we understood the intricacies of the industry. We stuck with a business we already understood.

Our gross margins are within the beauty & cosmetics industry margins range. This is after the cost of goods sold, shipping, and fulfillment. We tend to keep low inventory levels, which means more space and less storage cost. We save on storage costs and use that for marketing and customer acquisition, which are the major operating expenses.

So far, we have not done any ads, but we will shortly. We have been just growing organically. I took over Modern Innkeeper in late 2018, but the year 2020 counts as the starting year when we actually put in some work on the business, so we are expecting things to start picking up in the next three to five years.

We are seeing more momentum on social media, especially Instagram, and our organic followers are the quality type we target (rental hosts), not random people. They’re starting to discover us and become interested in what we offer. Our email subscribers have grown each month. The open rate is up to 30% each week and the click rate sometimes goes above 3%. We are laying a strong foundation at this beginning stage for the business to take off.

100% of the sales are through the online store. I plan to keep it that way because it gives us control in every aspect of the transaction, from customer acquisition through the shopping experience, check out, and after-sale.

Relationships with customers are something we want to cultivate. On average we are seeing around 2,000-3,000 visitors per month to the website with a conversion rate of around 2% without any ads. It's a very low number. We haven’t done ads, so when we do, there will be more monthly visitors and a higher conversion rate.

I handle every aspect of the business operation except social media. My social media manager is the expert in that area, so I leave that to her and her team. We are in contact daily and meet every week to discuss plans and content. I communicate the strategy and the vision to her and she will go implement that and then we review. I have several suppliers and manufacturers that I work with regularly. I also work with designers and a market researcher for developing new products. They are all in the U.S. but all in different states. This business is 100% remote, and I want to keep it that way.

The short-term goal is to continue to build our network of hosts and acquire a certain percentage of new customers each month while strengthening relationships with existing customers. We have many customers that buy bulk, so we work with them on large orders. In the short-term, I want to bring more health & wellness travel-related products to the market.

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For the long term, I want to continue to develop more physical products to bring to market and get into digital products. And given my real estate background, I also want to develop alternative lodging properties in the future.

The vacation rental sector is different from the hotel sector but within the same industry with many similarities, so there are many ideas I want to improve, tweak, change, or cross-implement. I have many ideas I want to try, which is what keeps me excited about running Modern Innkeeper. My greatest interests are in real estate and design. Modern Innkeeper is a platform where I can combine both.

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Through starting the business, have you learned anything particularly helpful or advantageous?

I learned that life is much more fulfilling when your work has meaning. Being a business owner and working for yourself feels much more energizing than working a corporate job. You work with a sense of purpose, and you directly reap the benefits of the results. You are not merely just trading time for pay and enriching others. I wake up each day excited thinking about which real estate deal I might come across, and which new customers will order my kits for their rental. I control my own time and how I want to spend it.

I learned that you can’t do everything yourself. You have to evaluate your SWOT and leverage your non-strengths. You have to be thinking three steps ahead in every situation so you’re not caught off guard when things happen. In starting and running a business, sometimes it’s an advantage to be an overthinker. I learned that it’s necessary to manage your time, find the right help, and to stay curious.

I did not have the skills to build out an eCommerce store from scratch, so I bought one. I did not have the time to keep up with the latest social media trends and think about content, so I hired a social media manager to handle that. I don’t have the skills to use design software to design the products I want, so I hired professionals to bring my ideas to life.

Nobody has all the skills they need for their business, but the ability to find the right people to fill the gaps is one of the most important skills to have as the business owner. You don’t have to know everything, but you need to know a little bit about everything and know enough to find the right people to help you.

I was lucky to have found Modern Innkeeper in 2018. The timing was good luck. I had been searching for almost 10 years but did not find anything I was interested in or fit my knowledge. The only regret is not having started sooner.

It’s important to stay informed, so keep an eye on industry trends and never stop learning. Airbnb now outnumbers the aggregate number of hotel rooms across the top five hotel chains, so when I saw an opportunity to be a part of the short-term rental ecosystem through Modern Innkeeper, I took it.

And as we speak, Airbnb filed for IPO last week. That is good news for all the hosts and their suppliers. I also keep an eye on legislation affecting short-term rentals and how policies could affect the way they conduct business locally. Hotels are not going anywhere. Airbnb won’t replace hotels. There is some overlap but there is enough room for everybody.

Be in a position where you have been in your chosen field long enough to realize trends and seize those opportunities. Don’t be ignorant, because “I didn’t know better” is not an excuse. Read industry newsletters, read about people, read about outside trends, and think about how that could affect your business. Ask questions. Google everything. Stay curious.

What platform/tools do you use for your business?

What have been the most influential books, podcasts, or other resources?

I don’t listen to podcasts even though I should, and it should be one of my new habits to get into. I don’t read many books these days. I’ve read enough for a lifetime during my year of law school, so I tend to read shorter pieces such as online articles, business journals, industry publications, and whitepapers.

But if I feel like I need to learn more in-depth about a topic, I would order books. My library consists of mostly textbooks and books about business, real estate, law, design, and architecture. I don’t read fiction because there’s no time for that and I’m not interested.

In college, I would skip classes every week and go to the bookstore to read books and magazines from the business section and self-help section. I got into the habit of regularly reading The Economist, Wall Street Journal, Fortune, Inc., Entrepreneur, and Architectural Digest. I still subscribe to WSJ to keep up with the news and I subscribe to many industry-specific newsletters. When I read about someone or a topic I’m interested in, I would Google that and try to learn everything I can about it. With people, mostly leaders of industry and prominent figures, I read about their background and their road to success.

I’ve read about Vladimir Putin’s formative years and what influenced him to govern Russia the way he does today. One experience that resonated with me was his formative years in East Germany. The Berlin Wall had fallen, and he was at that time an officer inside the local KGB headquarters in Dresden.

Crowds stormed the Stasi headquarters and had approached the building Putin was in. He persuaded the group to withdraw and then called the headquarters for orders and protection. But they told him, “We cannot do anything without orders from Moscow, and Moscow is silent.” There was no leadership, which greatly affected and shaped Putin’s vision and how he governs Russia today. It is a more organized style compared to the chaotic Yeltsin years. He became “Moscow.”

In my years of working for other people, oftentimes my Moscow was silent, or on vacation. My Moscow was reactive and lacked focus. I felt stuck - having to put out the fires but lacking the authority to call in the firefighters. I had to fend for myself and carry the weight of an entire team without the resources and support available.

This Putin anecdote inspired me to build my version of “Moscow” in every business I am a part of. When Andrei Kondrashev interviewed Putin in his documentary titled “Putin” and asked how he had the energy to do everything, Putin said, “It’s the confidence that you’re doing everything in the right way, and readiness to dedicate your life to what you’re doing.”

Another example is Brent Saunders, former CEO of Allergan, the maker of Botox. I think he is one of the smartest CEOs in the pharmaceutical industry. He is a master dealmaker who took unconventional (and smarter) ways to get to the top, maneuvered masterfully within the industry, and then engineered an exit with a very comfortable retirement package for himself.

I read about his journey from starting businesses with his twin brother as teenagers to being a lawyer and consultant taking the unconventional career path to head pharmaceutical companies, turning things around, and making blockbuster merger deals with every company he has headed. His latest deal was setting up Allergan to be acquired by AbbVie for $6.3 billion and walked away with a $39 million golden parachute. And he did all this before turning 50 years old.

Martha Stewart is another example for those looking to build a successful brand. Sometimes she is a keynote speaker and shares advice about her success. (1) Always be looking for ways to expand. (2) Embrace social media. (3) Stay consistent with your brand. As a successful businesswoman, author, and personality, she is a great example for those looking to build a global company.

Sara Blakely of SPANX is another example of a successful businesswoman who built a global brand. Her story is an inspiration. I follow Sara on Instagram where she shares about her life and her business. She is an interesting personality. On top of the hard work, she makes a business look fun and meaningful.

In terms of books on general business knowledge, I find the reading list of top MBA programs to be very helpful. Works by Michael Porter, Peter Drucker, and Jim Collins are good places to start for books on management. I also like Seth Godin and Malcolm Gladwell’s books for unique insights on social behavior.

As for getting into the entrepreneur mindset, a great place to start would be Robert Kiyosaki’s Rich Dad Poor Dad. The middle class climbs the corporate ladder, the rich own the ladder. He said, “The richest people in the world look for and build networks; everyone else looks for work.” This was one of the first books I read when I skipped classes in college.

Starting and running businesses require one to take on many perspectives, so it’s important to keep an open mind and be curious about whatever interests you. Besides reading, I find that listening to music has helped me generate new ideas.

Advice for other entrepreneurs who want to get started or are just starting?

1. Use your youth, education, energy, and knowledge to your advantage. You may be younger than many colleagues or employees, but you may be more educated and more knowledgeable than them. Present yourself in a way that commands the recognition and respect you deserve. Don’t just tell them. Show them. Let the quality of your work speak for itself.

2. Avoid black and white thinking; it’s doesn’t do anyone any good. Not everything is “black and white” or “win vs lose.” There are shades of gray and many times the solutions are in the gray area.

3. Find your support system and build it. Be selective in who you choose to listen to. If you listen to anyone and everyone, you won’t get far.

4. Watch how you are treated in a group. It can tell you how each person sees you. Watch whether their actions match their words. Do they treat you differently in a group setting versus when you are one-on-one? Do they act the same way in a group as they are one-on-one? Are they putting up a front to mask personal insecurities? Are their comments emboldened now that they have an audience to impress? Do they forget/abandon their partners and make disparaging comments when otherwise they wouldn’t be that way when they are alone with you? Do they forget their colleagues and team members when they are entertaining clients? Subtle things can tell you a lot about a person. Learn to look beyond the façade. Many people are just performers.

5. Use your past disappointments to fuel your ambition. If you have been wronged in the past, turn the anger and frustration into motivation for success. Sometimes you just need that fire. Anger and fear can be great motivators.

6. Know what you deserve and fight for your position. Sometimes at my hotel projects, I have team members intentionally leave me out of emails on many occasions or skip me on project updates because of their personal bias against me. They would rather jeopardize the project and create chaos instead of leaving their fragile egos at the sideline. Don’t let them define your position. Only you can define your position. Egos are like disabilities; they need be handled artfully. Keep fighting until you get the outcome you want. Know you deserve to be treated properly and do your work with dignity. Find your strengths and use that to get to the driver’s seat. Get in the habit of seeing things long-term. Stay focused.

7. Communication is everything. Good and constant communication can save a lot of time and mistakes. Poor communication can delay or kill a project. Even worse than poor communication among a group of colleagues is a boss with poor communication skills. It can be beyond frustrating to work for someone who cannot communicate consistently and proficiently to drive the team through the finish line.

8. Being organized can save a lot of time and money. No one wants to work with a hot mess. Create a system where you can stay on top of everything. Be organized in every aspect of the business – the facts, the resources, the people, the plans, your position against competitors, your short-term and long-term goals. Don’t be the fool who asks questions about something that was resolved two months ago and have team members wondering, “Where have you been?”

9. Be proactive, not reactive. Don’t scramble to put out the fire after it has been set off. Don’t be the person always playing catch up. Be the one on the offense who has already thought about how the defense would react. Have a Plan A, Plan B, and Plan C. You want to lead the chess game, not just survive it. This includes being proactive in learning as well.

10. Hire the right people. Scrutinize the decision as if you are nominating Supreme Court justices. Do background checks if you must. Don’t just hire someone because he is a friend of a friend. One incompetent apple can spoil the entire project. One bad team member not carrying his/her weight can sow resentment among the other team members who must share the responsibility. Don’t be the boss with questionable judgment and a record of carelessly hiring the wrong people. The loud ones may get all the attention, but the quiet ones tend to be more intelligent. Look for substance, not pomp. Watch what they do, not what they say. Some people are great at selling and talking, but lack the attention to detail and the ability to execute.

11. Find a way to cope. Starting and running a business can be very frustrating. We all run into difficult employees and difficult vendors. Find a way to cope with these difficult people and bad days. Go to the shooting range. Go to the batting cages. Go out for a drive. Take a walk. Have a plan to handle these obstacles and don’t let them affect your bottom line. Just stay away from drugs and alcohol. When I was working on my law degree while working full-time, I would study late at night because those were the quiet hours when I could focus. I studied every night and every weekend and coped with burnout by taking many TV breaks throughout the day.

12. Sacrifices are real. One of the greatest sacrifices in my journey to entrepreneurship was having to live at home after college while I bought time to find and reach my business goals. Living at home as an adult felt repressive and at times demeaning. I could have taken the easy way and just get a job and an apartment, but I knew that I would become too comfortable and too fearful to leave that comfort zone. I did not want to be a lifelong employee. Saving on living costs and sacrificing the freedom to be the queen of my castle were short-term sacrifices I had to make to achieve my long-term goals of business ownership and financial freedom.

Are you looking to hire for certain positions right now?

I am looking for a product designer, package designer, data scientist, and app developer. I am also looking for marketing and advertising professionals. Independent contractors. The pay is based on the market rate for similar work, either by project or by the hour.

Where can we go to learn more?

This is an interview we did with a ryokan (traditional Japanese style inn) in the Ishikawa Prefecture in Japan. Getting to know the host of the ryokan put even more meaning to our trip.

If you have any questions or comments, drop a comment below!

-  
Vivian Chen,   Founder of Modern Innkeeper LLC

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