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New episodes come out every Tuesday and Thursday. Up Next in Commerce is created by Mission.org.
It doesn’t matter how great your product is if no one knows it exists. That’s why marketing matters. But not every company has the resources to go all out on a big-name CMO or to commit a large yearly budget to specific marketing efforts — especially when the digital world is changing so quickly. So what’s an ecommerce brand to do in order to get its message across to the right people?Erik Huberman founded Hawke Media to answer that question, and for more than seven years he and his team have been making marketing more accessible to businesses of all shapes, sizes and stages. On the episode of Up Next in Commerce, Erik explains how companies should be planning their marketing budgets and what the revenue threshold is that companies need to aim for before they can even think about scaling. Plus, he digs into his entrepreneurial and investor roots to give some advice to those out there who are just getting started, including the hard truth about what it means to be an entrepreneur, and some tips on new and emerging platforms where you can grow your personal and professional brands. (And yes, we are talking about Clubhouse!)Main Takeaways:Same Problems, Different Speeds: Even the biggest brands in the world face the same key struggles as the new start-up making waves: access to talent. The difference is the speed at which the companies at both ends of the spectrum can move. With more decision-makers involved and more stakeholders to answer to, bigger companies have to be more methodical and intentional about who they bring in to help, whereas smaller companies can make decisions fast, but there is more volatility with every choice. Join The Club: New platforms like Clubhouse are on the rise, and finding a way to capitalize on them is the biggest challenge currently facing businesses competing for market share. Listen in to hear Erik and Stephanie dive into the Clubhouse wormhole and the opportunities that await.I Get So Emotional: Marketing is about eliciting emotion from the person you’re selling to, whether it is B2B or B2C. By establishing an emotional connection and presenting a value proposition that a buyer can clearly see as a solution to a problem, a level of trust is created that will lead to a long-lasting relationship.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey, everyone. Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, Co-Founder at Mission.org. Today, on the show, we have Erik Huberman, the Founder and CEO at Hawke Media. Erik, welcome to the show.Erik:Thanks for having me.Stephanie:I am excited to have you on. I was just chatting up a bit before telling you how we are actually a client of Hawke Media, full disclosure to anyone listening. It's been amazing. But I would love it if you could go through what is Hawke Media for anyone who doesn't know?Erik:Yeah, sure. We're an outsourced CMO and marketing team to companies. So, what that means is we basically go into companies, identify what the holes are in their marketing, organization, or strategy. And then we can spin up different experts on an ala carte month-to-month basis, whether it's a Facebook marketer, an email marketer, a fractional CMO, et cetera. We've got about almost 200 full time people. We manage marketing for about 500 different companies from small startups to Fortune 100.Erik:Our mission, for lack of a better word, is to create accessibility to great marketing. So, the idea is we really saw that it was really hard to, for most companies, get access to great marketers. We wanted to make a place where we had amazing marketers, amazing talent, people that were top of their game, but it was super easy to work with them. That was a challenge we saw on the market that didn't exist, a solution didn't exist. That's how we got started.Stephanie:That's awesome. Yeah, it's been really fun. We did the CMO thing first. It was cool, because you do get access to people who have been CMOs at big companies before and they have all this expertise. But we had them for three months. And then they transitioned us on to the next stage of implementation of social and other things. It was just really fun to be able to have access to talent like that without actually having to hire them as an FTE or something.Erik:Yeah, that's exactly the model. I came from building and selling a couple ecommerce companies and just wish this existed. My last ecommerce company, we were heavily funded. So, I had a 10-person marketing team of talented people, but they all worked or they could have all worked half time or less and gotten what I needed to be done. So, we had toyed with the idea of, "Could we hire these guys out to other companies? Because they're a great team, but we don't need them all full time. But we need all their expertise." So, that's part of where it came from, the idea was born.Stephanie:Okay, cool. What ecommerce companies did you have before this?Erik:I had a company called Fame Wizard first, which was online music business coaching for musicians. Then a company called Swag of the Month. It was a T-shirt subscription company, long before Dollar Shave and all that. And then an activewear brand called Ellie that's still around, the E-L-L-I-E.Stephanie:That's awesome. So, what things did you learn at those companies that maybe you brought either to Hawke Media or to how you're maybe advising brands today?Erik:Yeah, really quick bullet points. Fame Wizard have a customer that has money. Having independent artists as your customer is really hard to build a business off of. Swag of the Month, the need for working capital and financing, which funny enough, we just launched our financing and working capital arm of Hawke Media a couple months ago. And then the third one, Ellie, don't overcomplicate it. If it's working, double down on it. Also, that I don't like having other people make decisions for me, because that's when I was working with a committee and I was not the main decision maker. They screwed up a lot.Stephanie:I like that you have bullet points. You're like, "I already got it covered. I already know."Erik:Yeah. I've definitely walked away with very specific, "Don't do that again."Stephanie:Yup. Yeah, that's great. So, are you able to share some brands that you work with? So, we can get the scope of who-Erik:Yeah.Stephanie:... that you guys are learning from and working with right now and teaching.Erik:Yeah, I mean, it's the full scale in terms of small startups, most people haven't heard of, and hopefully, we change that. Tamara Mellon, we started with it when they were a tiny business and skyrocketed them for a couple years. GREATS, the sneaker company, we built for three years with them and they sold to private equity. Incase, the phone case, until they sold to Incipio. It's ironic. We get a lot of companies to scale and then we get fired, but it's par for the course.Erik:And then we also work with big brands, Nike, Unilever, Estee Lauder, Red Bull, et cetera, as well. And then a lot of small brands that don't necessarily want to be the next big VC-backed company that are $3-, $4-, $5-, $10-million companies while we're working with them. That's what they want to be. They slowly grow and run a lifestyle business that pays them a couple million bucks a year and do great.Stephanie:Yup. Do you see the big brands having the same type of struggles as the smaller ones, or is it very separate where you have to put very different skill sets depending on the company size?Erik:No, the expertise are similar and the struggle is similar in the sense of access to talent is really one of the biggest... True knowledgeable, experienced talent is what everyone's struggling with. The way we have to operate is different, because when you're dealing with a small business, a lot of times you're dealing with the owner, CEO. They can do whatever they want. There's no one they're reporting to, even if they have investors who usually have control. When you're dealing with bigger companies, you're dealing with publicly traded companies, a lot more processes, a lot more checkboxes, a lot longer time to make decisions. So, it's a lot slower. So, that's why I look at our client base like a distributed portfolio.Erik:The startups are super fun, because you can do whatever you want, you can get going quickly, et cetera. But they're also super volatile on the other end, where they'll fire you overnight for one small thing. Whereas big companies, they take forever to sign, take forever to make changes, but they also stick with you forever. So, we've worked with a lot of these bigger companies for years and years and years, because they're used to signing three-, four-, five-year contracts, even if we are month to month.Stephanie:That's good. So, what are some challenges you're hearing right now around either marketing challenges or business challenges that you guys are tackling that's maybe different than what you were hearing in 2020 or 2019?Erik:Yeah, I mean, 2020 was all COVID, but the silver lining was the market share of spending online almost over doubled. So, our clients on average doubled their revenue on what we were operating for them. So, that was really good. What we saw what changed towards the later end of the year and now into this year, so, now that market share hasn't diminished that much. Instead of 13% of consumer spending, being online pre-COVID, it went up to 30. Now, I think it's at 27%. So, it's still massive increase.Erik:So, we are seeing that now, all the big CPG companies and all these bigger companies that back to the point can't make quick decisions, unless the world's falling apart, cut everything. They usually do that and then they slowly roll back. They're all really coming back strong into digital, because they're seeing so much more market share there. So, what happened was the cost to advertise on Facebook and Google during Q2 and part of Q3 dropped about 30%, because there was less competition on it. Q4, October and November were insane, October because of the election and then November, holidays hit. December, they carry over a little bit, but they do lessen.Erik:And then I think now, I am anticipating advertising continuing to get more costly, because now, again, 13% of these big companies marketing online is now 27, they're going to spend more to capture that market, which means you're going to compete with them. So, if you're a small or medium business competing, there's a good chance that cost to advertise online increases significantly. So, not necessary what companies are looking for but what they should be is ways to increase their ownership of their customers, because if it costs you more to get a customer, the way to combat that is to increase your lifetime value to a customer. It's a math equation. It's that simple.Erik:So, how do you do that? You find ways to increase your lifetime through merchandising, through retention, through customer experience. When I say merchandising, having other products and services you can sell to the same customer. There's just a lot of things you can do, and then just continuing the communication like email marketing, SMS, chatbots, ongoing content, just all the ways you can create a walled garden around your existing customer base for them to buy more from you. The companies are going to win, which is why you see Amazon just skyrocketing. They were a book company at one point. Now, they sell you anything.Stephanie:Yeah, I love The Everything Store talking about how he and his wife are going and dropping off books to try and ship them out. That was a good book for anyone who hasn't read it yet. So, I mean, I'm thinking about myself as a smaller company right now. We're talking about ad costs are going up. It's going to be harder to compete against bigger brands. If you haven't acquired those customers yet and you don't have anyone to talk to, it seems like there's definitely an opportunity to be more strategic of finding new channels, whether it's the TikToks of the world or the Clubhouse.Stephanie:Shout out to Hillary, you just got me onto Clubhouse. But it feels like there's a bunch of new channels popping up that could help democratize community building a bit more or yeah, finding your audience in different channels that bigger brands maybe won't hop on as quickly.Erik:That's funny. I just got accused of being addicted to Clubhouse. So, my wife has actually had to say, "When we're eating, put that thing away." It's just the past week, but that platform is taking off. Yeah, it's always about working for diversifying. The problem is Facebook and Google still perform so much better than these other platforms that they need to catch up. TikTok will absolutely compete as they build out their ad platform.Erik:I think it's a no brainer in the way that the platform's built, but they need to do a better job of their targeting and everything, which when I say that, no one's spamming. It's just too early. Snapchat seems to be getting their legs under on Twitter. Hopefully, we'll figure it out. Stephanie:Yup, yup. I agree. Are there any new places that maybe are lesser known, where you're like, "We're trying out this one little thing in the back alley here that no one else knows about"?Erik:I mean, your know about Clubhouse. Clubhouse doesn't plan on monetizing through advertising, but as a community builder, it's crazy. I've been on it one week. I've 11,000 followers. I'm not an influencer. Twitter, I have a bunch of followers, but that's unusual for me.Stephanie:What are you doing on Clubhouse then? Because I get on there, and I'm like, "Hi." For anyone who can't see this, my awkward waving in Zoom. I don't know what I'm doing on there.Erik:Yeah, I've been fortunate enough to spend the past decade building a pretty solid network. So, when I got on there, a bunch of my friends were the people on stage that people want to hear from. So, guys like Daymond John and Lewis Howes and [inaudible] were all pulling me up to talk with them. And then other guys, like Grant Cardone, who I never knew before this now, start pulling me around with them. So, it's been a week, but all of a sudden, I've connected with a bunch of these heavy hitters that I've never knew before, that now we're also jumping on calls offline and connecting. So, for me, basically, I was on two flights a week almost in 2019. So, I spent most of my time traveling to shows and conferences and meeting people. This is scratching that itch.Erik:So, for the people that really want to network and build that network and learn from other people, this is the perfect platform for someone like me. It's not for everyone. So, I've gotten on stage. I've talked a lot. I mean, there's millions of people on it. Thankfully, I've been very lucky to build what I've built. A lot of them are looking for advice on how to build their businesses. So, now at this point, this is my fifth business I built. W…
Full show notes at the publisherImagine this: You’ve developed a new product. One that you know works… and that you know people need. There’s just one minor problem: Selling that product requires you to not only enter a battlefield filled with regulatory land mines, but face competition with billions of dollars at its disposal. We’re seeing this situation play out in the multi-trillion-dollar industry that is supplement and pharmaceutical sales. It’s an industry that entrepreneurs everywhere are trying to make waves in, and just like any other industry, finding success means coupling the right product with the right strategy.Zak Williams was able to kick the door open with his company, PYM, which sells all-natural amino acid-infused chews that have proven mental health benefits. Zak is the son of the late actor, Robin Williams, and he is using his own experiences navigating the ups and downs of mental health to help him build PYM into a company that advocates for mental health support in whatever way works best for the individual. Practically, that means working out a business strategy that allows PYM to not compete against big pharma, but sit alongside it. And it includes developing new kinds of convergent experiences that allow consumers to operate in a physical and digital world simultaneously. Zak explains all of that and more on this episode of Up Next in Commerce. Main Takeaways:Play Where You Can Win: For companies that are selling natural products, trying to sell in the same channels as big pharma would be a mistake. Not only will you not be able to make the same claims about proven solutions, but you will not be able to afford to acquire enough customers to make it worth it. Instead, find other channels or methods of marketing where you can stand out, either organically, or in a more affordable way.Do Your Research: Making wild, unproven claims has always been a bad strategy for brands, but it is especially reckless when it comes to how something can affect a person’s physical or mental health. Invest in real research to back up the claims you are making, and be authentic with your message. Rather than trying to convince customers your product can cure something, help them open their minds to new experiences and products that might be part of a daily ritual or personal blend of what works on an individual basis.Convergent Experiences: As a new normal emerges post-pandemic, brands will need to focus on creating convergent experiences that allow people to engage in the physical world while still using a digital experience to achieve goals and objectives.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Welcome back to Up Next in Commerce. This your host, Stephanie Postles, co-founder at Mission. Today I'm chatting with Zak Williams, the co-founder and CEO at Pym. Zak, welcome to the show.Zak:Thank you so much, Stephanie. It's a pleasure to be here.Stephanie:Yeah. I'm very, very excited to have you on. I was going through my amazing prep dock, and I first thought that Hillary was playing a joke on me when she wrote down Zak's the son of actor Robin Williams. She likes to put in silly things to see if I'm going to go with it. Then I'm like, oh wait, this is actually real. I started reading a bit about your story and your company, and I would love for you to actually start with that. Tell me a bit about what led you to Pym, and yeah, expand on that, because I was really excited to hear about the full story.Zak:Yeah, certainly. What led me to starting Pym, the mental health support company, started very early on in life. I had anxiety throughout my teens that manifested into something more extreme after my dad, the entertainer, Robin Williams, died by suicide. I found myself experiencing bouts of depression, also extreme anxiety and stress episodes. I was feeling like my life was becoming unmanageable. I was trying to use alcohol to self medicate and was trying to find any other solution that would work. I tried cannabis products, had prescription pharmaceuticals, which work for many people. For me, I didn't find the solution that necessarily helped me in a way that would work in perpetuity. Then I found some help in things like talk therapy and alike.Zak:Through that experience, a couple things happened. One was I was diagnosed with post-traumatic stress disorder and was dealing with a lot of issues associated with that. The other thing is I started to find help and support through committing to service, specifically working with mental health organizations, not for profits; supporting them around things like governance, organizational development, fundraising initiatives, strategy, business development. Whatever it is they needed help with, I wanted to jump in and support because I found actually that commitment to mental health organizations really helped me. Through that experience, another thing started to happen, which I found that me sharing my story and what I went through really helped others while helping myself. I found that being vulnerable and taking a lens of vulnerability and opening up really ultimately ended up starting that process of healing for me. I found that mental health advocacy is one component.Zak:The second component is when I took self medication out of the equation, using alcohol, and by the end I was drinking alcoholically and it was just not good for my mental health. I was feeling very emotionally dysregulated and not having a great time. When I cut out alcohol, I was still really stressed and really anxious, and realized that I needed something to support me throughout the day. I found a solution that my wife introduced me to. My wife, Olivia June, who's also co-founder of Pym. She turned me on to amino acid formulations, which when I tried them were a game changer. They helped me feel clear and erased the anxiety that I was feeling and that was ultimately crippling me. She was introduced to this sublingual tincture by one of her doctors. When I tried it, I was just like wow, this is transformative.Zak:Armed with the insights of mental health advocacy is very healing for me, and amino acid formulations really helped support me throughout the day, I realized there was an opportunity to develop something that was very near and dear to my heart, but also helpful for people while focused on the core mission of mental health support. I started Pym with the lens of creating a brand that stands for mental health support, like Red Bull stands for energy. In starting the company, we kicked off the food science and product development element of that in 2019 and created something that was both safe and effective, while also being delicious. We worked with a food scientist named Lena Kwak, who was the director and research and development for The French Laundry, which is a restaurant in northern California; a very well-known internationally regarded restaurant in California. We wanted to create something that had a great taste and smell and a texture that felt unique but also toothsome.Zak:We came upon something that we ended up testing with our early beta testers that they liked and they found effective. We kicked off the commercialization phase when we decided that everything was in line with not only how we wanted it, but how our beta testers felt it should be. Through that process, we hired the chief operating officer of Sugarfina; a wonderful man named Scott Cuillard who came on as our chief operating officer, and he accelerated the process of commercialization by 200%. Now we're at market. We're just getting this feedback from our customers and early advocates that our product is a lifeline and it's helping people in a very significant way and we're doing these giveback campaigns where we're supporting mental health organizations, starting with Bring Change to Mind, which is an organization I'm on the board of that focuses on developing communities and high schools for mental health support, while launching campaigns to break down the stigma associated with mental health.Zak:Moving into 2021, we will be deepening our relationship with Bring Change to Mind and have a portion of our proceeds of every sale going to supporting building mental health communities and high schools. That's what we've been up to in a nutshell. The why behind it relates very much to mental health advocacy. We see ourselves as a brand that stands for advocacy and we want to really triple down on supporting the movement associated with mental health. That's what we're all about.Stephanie:That's great. It seems like this kind of product would have a lot of barriers to entry, because when I think about the market right now around mental health products and CBD and cannabis and all this stuff, there's already a market there. There's already been a lot of messaging, a lot of advertising before a product based on amino acids, which honestly, I haven't even really heard of that. Tell me a bit about how you overcame those barriers and educated new audiences or are starting to. I know you just recently launched, but tell me a little bit about that process to really get your product on the front of people's mind.Zak:Sure. Amino acid formulations for mental health support is not a new thing. We didn't miraculously come upon something that was new to the world. They were gaining momentum and popularity as a way to provide mental health support by balancing out the endocrine system in the 80s and 90s. Something happened in the 90s that set off an era of a pill to solve all your problems in life. Kind of that era of taking a curative approach to symptoms. Do you know what that event might be?Stephanie:I'm guessing you're talking about prescription pills, but I don't know what the event is.Zak:Yeah. Actually, it's a very specific prescription pill. It was the creation of Prozac. The profound thing about Prozac is it was a product that would function as an antidepressant that would not kill you if you took it in excess or stopped taking it, because at the time, the available toolkit of prescription pharmaceuticals had toxicity associated with them. In certain situations, you could take a product and if you stopped taking it, you would be at risk of severely debilitating affects in the like. Prozac created kind of a safe mechanism to provide mental health support. By the way, I'm a big believer in prescription medication being helpful for many, many millions of people. I don't want to make it seem like I'm not supportive, but the momentum that amino acid formulations were getting kind of fell by the wayside and didn't favor of this era that lasted a couple decades of a pill to solve all your problems.Zak:It's only been in the last five plus, just over five years, from my perspective, that the whole idea of seeing the individual as a system, as a collection of interacting organs and functions working together to help support and sustain the body, that idea and premise has really been embraced in a major way by the medical community. Going hand in hand with that is the idea and premise that you can take certain products, to kind of balance yourself out, because they provide support for a number of different systems and create kind of a balanced ecosystem to better help you. That's kind of where amino acid formulations kind of come into play.Zak:From our perspective, we just concentrated these existing amino acids in a way in which they actually provided a more comprehensive form of support for stress and anxiety with our first product. That's the story in brief, but the challenge is very specifically we need to popularize amino acid support as a way of providing mental health support, because there's science and research behind. Science, research and studies behind amino acids being helpful for people, but people aren't too aware of it.Zak:As part of forming the company and making the effort to formulate something that's helpful for people, we established the science advisory board from Harvard Medical School, UCSF, USC, and MIT, and with specific focus on neuroscience and neuroendocrinology, with some mental health epidemiology being an element of that as well. As part of that, we are in the process of establishing a pre-trial study, which we'll then use as a foundation to go into an actual clinical study that we'll be using to really get a deeper understanding of how we can provide decisive support for the mind and the body. We're kind of in the brave new world of natural compounds providing support both for the brain and the mind and also the body, but I'm an advocate and believer in compounds that are safe and effective.Stephanie:Yeah. It does feel like the timing's right. 2020 is a year where I've at least seen a very big shift in not only healthy living, but people actually looking into the source of what they're ingesting and thinking about healthy alternatives to not only their diet but also things they're taking, whether it's prescriptions or whatever it may be. Stephanie:It feels like the market's ready for it, but then figuring out ways, like you're doing, to pull it together and put it in an easily, I guess, consumable format where people kind of know, oh, here's the five things that are coming together, here's what they're going to do. Someone's already done the science behind me, instead of trying to piecemeal these extracts and things off of Amazon together to try and fix a need based on all the YouTubers and influencers and people who are telling you oh, this is good for this, and this is good for this. It's so much information now.Zak:Right. That's what I was doing. I was cobbling together an experience that helped me, but it was a bunch of different products. I agree. I think that there is a major opportunity on the research side too. There's some great companies that are focused on establishing more research through studies. Some registered, some focused more so on doing the research to really understand how things work prior to actually doing registered studies. There's organizations and companies that are focused on actually creating frameworks to do the testing. I will give a specific shout-out to my buddy, Jeff Chen, who was one of the founders of the Cannabis Research Initiative at UCLA, and he recently started a company focused on doing research around natural compounds. His new company, Radical Science, is hyper-focused on establishing frameworks, specifically clinical frameworks, around testing for natural products. It's so essential that people actually really start understanding what it is they're putting in their body to support themselves.Stephanie:How do you approach that regulatory field? Like you said, to me, it sounds so scary entering a market like this one where you're doing things for the first time, it's new, people aren't used to it. How did you approach this field and did you find any quick paths to get past some of the crazy rules and regulations to be able to actually start creating a product and testing it and seeing how it would work?Zak:Yeah. Great question. It wasn't a cold start for me. I have several years of experience working with complex compliance and regulatory environments due to investing, advising, working within the cannabis…
Full show notes at the publisherLet’s get this out of the way now: most companies will not have someone go from intern to CEO in a matter of months. That’s a situation unique to James Standley and Solé Bicycles. What isn’t out of the ordinary, though, are the many challenges and hurdles that James and his team had to deal with when scaling Solé into the success it is today.On this episode of Up Next in Commerce, James takes us through the trials and tribulations of the Solé journey, including various shipping and manufacturing disasters and lawsuits that nearly bankrupted the company, and he explains how he worked his way out of those troubles and what he learned along the way. Plus, he gives some secrets on what’s working well for Solé now, such as the strategy of finding different touchpoints to reach customers in a way that has absolutely nothing to do with selling to them. Main Takeaways:Starts With Heart: While the relationship with your supplier or manufacturer might seem like a cut-and-dry part of business, it has to go deeper than surface level. f you are working with overseas partners, taking the time to meet, and understand, the people you work with in person and form a relationship with them will carry you further and ease some pain if there are ever problems in the supply chain process. What You’re Known For: Through unique partnerships and marketing opportunities, there is potential to reach people in different ways, even if that means you’re not necessarily selling them a product with every touchpoint. Having a relationship with customers is more important than selling to them at every opportunity, because if they know you for one thing and then find out you sell something else, they are more likely to buy from you across the board. Shot on an iPhone: There will always be a place for highly-produced, glossy marketing materials. But, more and more these days UGC and lower-budget content is what is resonating with consumers. As opposed to showing potential buyers something they have to aspire to, like a model, highlighting people and experiences that are familiar to them as they are now will convert better. For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey everyone. This is Stephanie Postles and you're listening to Up Next in Commerce. Today on the show, we have James Standley. He's the president and founding partner at Sole bicycles. James, welcome.James:Hey, how are you guys doing?Stephanie:Doing good. Thanks for joining us.James:Yes, I'm super excited to talk about all things ecommerce with you guys.Stephanie:Yeah. I was just looking through your website and I am very excited to get a bicycle after this. I didn't even know I needed one, but now I do.James:Totally, totally, yeah. We have tons of great bikes and yeah, and tons of cool different colorways and options and a bike for just about anyone's kind of need.Stephanie:Awesome. Tell me a bit about how you started Sole. I think it was in college, right?James:Yeah. My business partners, that I ended up starting the business with and I, we met back, funny enough, my first venture, which was a music festival I helped start back in college. We were both partners in that.Stephanie:It was called the Coachella for the Mountains, right?James:Yeah. It was called Snowball, and the idea was Coachella meets on the mountains. Yeah, there was this guy, Chad Donnelley, who I knew through the lacrosse world. I played college lacrosse and he came up with the concept and I was always involved in music. Growing up, I was a concert pianist, and I had DJ'ed in college and been in bands growing up. We met through the lacrosse world, and he came up with this idea. He had reached out to me just to ask my opinion on the project and what I thought about it. At the time, I was a freshman in college and he was asking me about it and I ended up just going back to him and say, "Hey, I want to be a part of this. I think this is amazing."James:I was part of that initial team. We kicked off this event with ... Our first, we had Edward Sharpe and the Magnetic Zeros, and Bassnectar, and Pretty Lights, and Diplo and all these amazing artists come out and sold like 15,000 tickets. It was a really cool first venture and a first event. Yeah, so Jake and John, my original founders with Sole, they were partners in it as well, and they helped get some of the money for the project. We met, first year was a huge success and we stayed in contact. At the same time, they were coming up with the idea for Sole, and going back that summer, between my freshman year and my sophomore year of college, they were looking for some additional help on Sole.James:I said I'd come in and I've got a more like operational financial sort of background or mind, and they were more of the creatives and the visionary type of people. I came in, helped clean things up. We got the business off the ground. Then going through the summer, they ended up going and raising some money and starting another business, and I ended up taking over the business. I went from being technically an intern in May to the CEO in August. Yeah, so that's how I got involved. Shoot, that was 2011. So, we're going on nine years ago, and I've been CEO ever since.Stephanie:Wow. Very cool. That's a wild story. How many bikes were you guys selling when you took over, and where are you at now? So I can get the scale of the company.James:Totally, totally. Yeah. Our first year we were featured on this big Forbes article and the business sort of took off, and I think we sold maybe a thousand bikes our first year, which was a lot for a first year business. This past year we're going to sell about 15,000 bikes.Stephanie:Wow.James:Yeah. We've grown quite a bit.Stephanie:That's great. What is the selling point of Sole bikes? How's it different?James:Totally, totally. Yeah, for us, our main selling point is you go look at the bike and it's just going to look different than any other bike you've ever seen before. We're really heavy on our marketing and design and colorways and wanted to make something that's really, really simple, easy to use, easy to maintain, but also looks really beautiful, and something that has a personality, and really people can relate to. I think a bicycle, for most companies, is more of a utility product, something that's really spec-driven.James:For us, we wanted to make something that people were really, really proud of, and it's like, they can relate to, and find a colorway that really matches their personality, or they could this store music fixed tapes or find these other ways that people can relate to the product. That's really allowed us to set ourselves apart from other bike brands.Stephanie:Cool. It seems like pricing is also a big thing. The one thing I've always thought is, why the heck are bikes so expensive? Why? How'd you get your guys cost down so much?James:Totally. Totally. Yeah. Yeah. The biggest way we do it is we work directly with a manufacturer and we sell directly to our customers. Just the natural, by cutting out some of the normal distributors or middlemen, we're able to offer what would be a traditionally higher price point products for a lower price and pass those savings onto the consumer by selling direct.Stephanie:Tell me a bit more about that, because what did that look like finding a manufacturer? I think I saw you found, in the early days, your manufacturer on Alibaba. Right? Which I was like, oh, that's interesting because I feel like Alibaba ... I've been there before and there's a lot going on. There's a lot of people. It's hard to know who to trust, it's hard to know if they're going to send me something good. How did you guys go about finding a manufacturer there? Did it work out well? Give me some behind the scenes.James:Totally. Totally. Yeah. Our first, when we got the business kicked off, we actually were involved in this Ali-Baba business plan competition. Back when we were in college, Jake and John had applied for this business plan competition. They won it and we got a $15,000 grant from Alibaba. That grant or that money paid for them to initially go over, meet our first supplier who Alibaba had helped set up, and we got our first order of bikes in. That's what the initial financing that got the business kicked off. But over time, went through a few different suppliers and really had to iterate our process.James:I spent a lot of time over in China meeting with different suppliers, refining the product, getting it to a place where it is today. It took a lot of trips over there and a lot of refining.Stephanie:In the early days when you're picking your suppliers and manufacturers, what would you do differently this time around? What lessons did you learn or what things did you maybe stumble on in the early days that you can avoid if you were to redo it now?James:Totally. What I would recommend is, we got placed with the supplier via Alibaba, and we just worked with the first person we were placed with. I think we ended up switching a few different suppliers over time, but what really ended up getting us with a supplier that we were super happy with is we went over there, and I went to one of the big trade shows, and we ended up visiting another 15 or 20 during this trip I went on about year two or three, and that trip we ended up finding the supplier we worked with, still to this day.James:We really got to go out and meet these people and do your diligence and find the supplier that makes the most sense for you, and not just use the first one that you end up getting placed with or you end up meeting with. You got to go over there and develop a relationship with them. I mean, it's so important. They have this saying there. It's first, you drink tea, then you drink Maotai and then talk business. What I mean by that is, they want to meet you, the different suppliers and the different people over there want to meet you. They want to build a personal relationship, and then they want to talk business because it's so important there to have a personal relationship, as well as a business relationship.James:If you're going to try to source something from China or overseas, I'd recommend going over there and meeting these people and spending time with them, and learning, meeting them as people, and really developing a relationship, because that's going to help that business relationship over time and make a really, really strong business relationship.Stephanie:Yep. If you don't go and meet them and you didn't really do your due diligence, what kind of problems could a new company encounter? Did you encounter any issues in the early days with some of your suppliers that you stopped working with?James:Totally, totally. Yeah. The supply chain for a bicycle is pretty complex. For our product alone, there's over 50 parts. Those 50 parts come from 20 different other suppliers, and then those have to come into an assembler, the assembler puts the product together and then it's shipped over. There's a ton of different things that could go wrong. A good example would be we had one of our biggest shipments ever, at the time for the business. We had put in an order for summer, and it was like 2000 units. We had also set up a big sale online with a company called fab.com. At the time, they were having ... I don't know if you remember the company, fab.com, but they were one of the fastest companies to a billion dollar valuation, I think, and people were talking about it as the next Amazon.James:It was having this really big moment. We were selling really well on there. We partnered with them and we were like, hey, we're going to bring in a bunch of units. Let's have a really, really big sale. We have this massive sale. We sell like 1,500 to 2,000 units, pre-sell them, and ends up being the biggest sale ever on fab up to that point. So, do the sale, goods come in, and then we ship all the product out. Well, our manufacturer had packaged the bikes slightly incorrect to where ... The crank arm usually woven through the front wheel, which is detached, and then tucked to the side of the bike when it's shipped. They were all packaged slightly off that almost every single bike came with one of the spokes popped off.James:You get your brand new bike that you just bought offline, brand new, beautiful bike, you open it up, and one of the spokes popped off, which it's like ... You can't ride it, but it's a small problem, but it's not an easy problem to fix. Oh my gosh, that situation almost bankrupt us. What ended up happening we-Stephanie:What did you guys do?James:Yeah, we had the product on credit. We had given we had been sold the product on credit, so we went back to the supplier and we were like, hey, this is going to bankrupt us. We got to figure something out, and they refused to take any discount on it. Then, our advisor was like, "Hey, we're going to just hold payment until we get something settled." They ended up serving us a lawsuit. They came to America, served us a lawsuit.Stephanie:Oh my gosh.James:So we were served, and had to go through this entire ... Mind you, I'm like 21 years old at the time. I'm still in school. We get served a lawsuit. I'm like, oh my gosh, what is going on? So, we had to hire a lawyer who was our body. He was only like 30 and we didn't have a ton of money. We had to put together a case and actually go out and defend ourselves.Stephanie:Yeah, did you win?James:We go through this, and we hired this lawyer, and he's like, "Look, you guys don't have the money, [inaudible] afford me, so I'm going to teach you how to build this case." I went and actually built this timeline of everything that's happened, and we came up with a case theory and counter sued them. They responded and deposed me. I had to go through this 40 exhibit eight hour deposition. But we held our ground and got through it. After that, it got to the point where it was like, financially it made the most sense to settle and were able to settle for what ended up being about half off of what the original was. Yes.Stephanie:That's wild. I'm just imagining being in college, dealing with it. How was that experience being in college? I'm just thinking, all of a sudden, you have this company and you're having to go to China and now you're getting sued. What was the college experience like for you when you were having something very different than probably a lot of your peers go on?James:To be honest, it was really exciting. You felt like it was just so cool to be building something and going through this. We were so ignorant, I think, going through a lot of this stuff, which I think ended up actually helping us. It was just very shoot from the hip and like figure it out. Yeah, so many of these different scenarios could have totally bankrupt us or ended us, but I think it builds a lot of character by going through these different situations and surviving it and learning from it and growing from it. Yeah, it was exciting. It was really fun and exciting. The goal was just like, don't go bankrupt, don't die. Keep fighting and figure it out.Stephanie:That's good. I like that. I could see it also just making it seem lik…
Full show notes at the publisherThere are some big-ticket items that most people have and need, but absolutely hate shopping for. Mattresses fall into that category. In fact, studies have shown that people would rather go to the dentist than buy a new mattress. Helix Sleep is trying to take the pain out of that experience. Adam Tishman is the co-founder and co-CEO of Helix Sleep, and on this episode of Up Next in Commerce, he explains why his DTC mattress company is different from the rest, and why those differences matter. He explains the reason it was critical to spend time researching, testing, and perfecting a product before bringing it to market and how that upfront effort created priceless brand equity. Adam also dives into personalization, but he takes it beyond the need to simply give customers a personalized experience, and explains why data-collection and a personalization strategy that includes personalized products can help you expand your business more successfully when you are ready.Main Takeaways:Slow And Steady: With a physical product that is dependent on reviews, rushing to market could spell disaster. Take the time to do the research, test, iterate, and develop a product that is review-ready before you present it to your customers.You’re Not Me: With certain products, there is a specific customer set or type of person for whom the product is made. With mattresses, every person has unique needs, so the product has to be personalized as much as possible. Finding the best way to understand your customers’ needs should be a top priority, and through multiple touchpoints and quizzes, you can gather the data necessary to provide the best experience and product.The Beginning of a Beautiful Friendship: By cultivating data and delivering personalized products and experiences for your customers, you are inherently forming a stronger relationship with them than a typical brand. Not only are you collecting insights that can be used to help you expand into new product lines, you are also creating a network of previous customers who are more likely to trust the brand and try something new.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey everyone. This is Stephanie Postles. Co-founder at mission.org, and your host. Today, we're chatting with Adam Tishman, the co-founder and co-CEO at HelixSleep. Adam, welcome to the show.Adam:Hey Stephanie, thanks so much for having me.Stephanie:Yeah, I'm excited to have you. so I have never said co-CEO before, which I kind of want to start there. Tell me a bit about being a co-CEO at a company.Adam:Yeah, definitely. So we founded the business, myself and two other co-founders, out of business school. And over the sort of evolution of the company and where we've been over the past five years, we actually run it with myself and one of the other co-founders as sort of the two headed dragon as co-CEOs. And then our third founder is our CFO and COO. And it works really well because it allows us to sort of manage different areas of the business at the CEO level and also work really collaboratively together as well.Stephanie:Awesome. So you co-founded HelixSleep and that was back in 2015, right?Adam:Yeah. So it was founded by myself and, as I said, two other co-founders back in business school, back in 2015. The three of us had moved to a new city to go to school, went through the process of buying a mattress just for ourselves. And it was sort of uniquely terrible in many ways, whether it was really confusing pricing and really expensive pricing in the store, really just bad in-store buying experience. We actually found out later doing research that buying a mattress is actually rated as a worse experience than going to the dentist. And the last thing was, it was just really confusing. If you don't buy mattresses all the time, which no one really does, and it's something that you buy somewhat infrequently, people have a really hard time understanding how to buy it. And so for us, we sort of saw the problem, saw some of the solutions that others in our category were trying to fix this problem, and felt like we could sort of come in and solve it in a much better, more efficient way.Stephanie:Got it. So five years ago it feels like so long ago, what was the market like back then? I mean, who were some of the up and coming people and what kind of unique angle did you guys see in the market at that time?Adam:Yeah, definitely. So five years ago, I would say the direct to consumer, or just generally buying mattresses online, was pretty nascent. It was predominantly, people were going into stores. There was actually a while where people were buying beds on phones, but we sort of saw the market, which is very consolidated at the traditional brand retail level. So you have sort of Simmon's, Tempur Sealy, Sleep Number, Casper, which is the most well known and largest player of the D to C mattress brands head launched recently and had really done a good job at showing that this was a category that could generate interest online, somewhat of an atypical category with low, as I mentioned, low ecommerce penetration. What we saw as the issues that I mentioned earlier, we felt that Casper and a lot of the other brands that were starting to pop up were sort of maybe filling in one friction, but replacing it with a different friction.Adam:So all of us, including Helix, offer products directly to consumers at much better price points, helping out that value chain issue with traditional retailers. Everyone tries to provide a much better buying experience through a really good user experience on the website, 100 night trial, free shipping, et cetera. The issue where we really differentiate at Helix is around the product itself. So what Casper did and what pretty much every other planner space did was said, "It's really challenging to choose a mattress. So we're going to just get rid of choice altogether, and offer one type of mattress for every single person."Adam:And what we found doing a whole ton of research and talking to people, and it sort of makes sense that if you think about it implicitly, is that there really is a wide variety of needs and preferences as it relates to your mattress and to the way that you sleep, the same way that we all don't fit in the same clothing. We all don't have the same exercise routine that works best for us, the same diet. Sleep is quite personal. Adam:So one of our missions was effectively, could we help customers understand the right products for them through a sleep quiz that asks questions about things that you knew about yourself? So your body type, your height, your weight, do you tend to sleep on your back or your stomach? Do you get hot at night? Do you get cold? Do you have back pain? Do you like a bed a little bit firmer or softer? And then we take that information and effectively translate it into the best mattress for you. So the order of the layers in the mattress, the density of those layers, the types of materials, the density of those materials, are all really important for getting the best night's sleep and effectively that's what we're doing. So we like to think of it as sort of providing a technology enriched solution as a salesperson. So instead of going into the store and sort of hanging out with sales person, we do that online through our quiz.Stephanie:Very cool. And yeah, what I love about what I read about you guys was that you did a ton of research. I think I read that you went through 100 plus page PhD dissertations, and you partnered with researchers in Europe to make sure you really understood how to create this algorithm and this quiz. Tell me a bit about your thought process there, because I think that's so different than a lot of D to C companies right now who are just trying to get that quick launch, take advantage of the market, and are just going really quickly instead of taking a step back and doing the research and figuring out how to solve the problem.Adam:100%. I think for us, none of the three of us came from a traditional mattress background, right? And so we did what three nerdy guys would do, which is we started to do research. And we actually had this idea and stumbled across a PhD dissertation on sleep ergonomics, which is the study of the sort of spinal alignment of your back while you're sleeping. You hear a lot about spinal alignment and ergonomics and sort of office chairs, but this was really the first PhD dissertation on that, with bodies lying down. And we actually noticed that at the bottom of the PhD dissertation, the head author had left his email address. And so we emailed him.Adam:A couple of days later, we got on a Skype call with him. They were located in Europe and then about a week and a half later, we actually flew to Europe and met with them and effectively worked with them to translate their initial science into the crux of our initial algorithm, which over the last five years, we've sort of wholly taken ownership of, and refined quite a lot. And so it was sort of a funny story because it really was, we got on a plane and went to Belgium and had to figure out where we were going and all those types of things. But it was really important because we felt like we had a scientific base for the hypothesis that we were making.Adam:I think to your second part of the question, it's really interesting, this tension around, do I want to get to market as quickly as possible, or do we want to take a step back, feel really confident in the research, the development, the product testing? As you mentioned, we went through many, many versions of the mattress, many, many versions of the algorithm on how we matched people. And the approach that we took was that you really only get to come out to the world and present your product once, at least in physical products, that's sort of our belief as differentiated, perhaps, from a more technical product where you can have an MVP. We couldn't really sell a mattress that was only 50% as good as we wanted it to be one day, because we would get terrible product reviews, and we couldn't sort of build brand equity that way. And so we did a lot of work upfront to make sure that the product is where we wanted it to be.Stephanie:That's great. I mean, it seems like there's a lot of room to partner with researchers around a bunch of different topics, but what was that partnership like? I mean, when you went over to Belgium and you're essentially building out a model or an algorithm based on this person's research, were they like, "I want a piece of the pie, I want a little equity," or were they ready to give you all the information for free?Adam:Yeah, definitely. So we ended up working out a deal with them where effectively, they provided consulting services in exchange for equity in the business. Of course, that could have been consulting services for money. At the time, this was literally very, very early days. It was actually before we started working with them before we had raised our seed round. So there wasn't any money to pay them really. And so we went ahead with an equity relationship, which we felt made sense at the time. We still feel like it makes sense today. We don't really work with them at all and have not for a while, but it was really helpful to sort of supercharge our learning and understanding in terms of the development of the product and the algorithm.Stephanie:Very cool. I mean, have you had to iterate the model? Do you see people requesting different sleeping habits or behaviors? Have things changed for the past five years where you've actually had to change the model a couple times?Adam:Yeah, a lot actually. It's one of the biggest, from a consumer perspective, our differentiation is about providing personalization and a more custom mattress buying experience, but from a business bottle perspective, our ability to look at our algorithm or our model and effectively improve it is a really big lever to what makes us unique. And so if you think about what we're doing, is we're taking, as I said, information about yourself, matching it to a mattress. And so over the years, we've effectively, having sold hundreds of thousands of beds, we just have a lot more data. So we've been able to improve both the way that we match you, so person A with these attributes, are you getting matched to bed XYZ, and sort of edit, that as well as making physical product improvements to the beds themselves.Adam:So a lot of people talk about AB testing and talk about opportunities with using data to improve your product as it relates to your digital product, right? Your onsite conversion or your UX or something like that. We have taken that mentality to the physical product as well. And we've actually been able to reduce our return rate, improve customer satisfaction, improve average order value, all the main metrics associated with product and product satisfaction, by effectively looking at it in that light.Stephanie:Got it. And I also it was reading that the return rate, if you overemphasize how you have free returns and the 100 day, night guarantee and all that, if you overdo that, you'll be able to sell a lot more just because people have peace of mind. Even though I think I saw at least, I mean, it was a Casper stat, but it was only 10% of the people or less actually returned their mattress. Do you guys go about that same way of thinking of overemphasize things to make people feel like it's a risk free purchase?Adam:Yeah, I think there's two things there. I think that in our category, offering a fairly long return period, it's typically 100 nights, is kind of necessary, because you need to make someone feel confident in purchasing such a large, but really expensive item, right? Average order values in our category are really high. And so people want to feel really confident in the product that they're ordering. And that's why all of these brands are offering free returns, free shipping. In many cases, or in most cases, really generous policies around warranties, et cetera. It's just offering more opportunity to make someone feel comfortable with spending those dollars. So we definitely approach it that way.Adam:I wouldn't say that we necessarily overemphasize it. The reality is, most people need around two to four weeks to get used to a new mattress. And then after that, you don't really need another 70 days, but people tend to like that process. And in terms of return rates, you're right that return rates, they're honestly, I mean, Casper's return rate is probably higher than that number you said, but they're not as bad as retail, traditional apparel or something where return rates are 40, 50% or something like that.Stephanie:Yep. What happens when a mattress is returned? Where does it go?Adam:Yeah, that's a good question. So we do a few things. So when customers want to return a product, first, we work with them to see why, because there are ways we actually can improve the product experience after the fact. So we can send you a topper that adjusts the feel or other things along those lines, but in cases where mattresses need to be returned,, at Helix, at least we actually donate the vast majority of them. So we have a network of donation partners across the country where we will donate the…
Full show notes at the publisherBusinesses are always looking for the most effective strategies and tactics to create the best customer experience possible, and in the world of ecommerce, that’s getting harder every day. We wanted to dig into some of the trendiest ways ecommerce brands are weaving their way through this maze, so we invited our good friend Jon Feldman on this episode of Up Next in Commerce to show us the way. As a senior manager of product marketing at Salesforce, and someone who talks to commerce business owners and operators on a daily basis, Jon knows a thing or two about what’s on their minds, the challenges they face, and the questions they are dying to get answers to. He’s also seen first-hand what kinds of major and minor changes ecommerce companies are making that have had the biggest impact. So how are small website tweaks having a ripple effect on call centers? What will happen to the customer journey as commerce moves to the edge? And what kinds of technology and platforms will brands need to lean on to win across a new ecommerce landscape? Find out all of that and more right here. Main Takeaways:On The Edge: Commerce has already shifted from retail stores to store-specific websites. Next, we’ll see more of a migration to shopping on the edge, with commerce happening on content websites and away from the traditional retail site. This sets up a question of customer loyalty and trust that brands have to answer and prepare for.Know Who They Are, Not Where They Shop: As ecommerce becomes more distributed and marketplaces and virtual shopping experiences crop up, brands need to accept that they will have less control over where a customer finds them or how the brand is represented. Instead of trying to funnel people to a specific site, make sure that however a customer ultimately finds you, when they buy your product, the experience with your systems, shipping, customer service and everything else meets their needs.Opportunities Abroad: The world continues to become more and more interconnected, which also means that the opportunity to spot product trends abroad and introduce them to a “new market” in another country is also shrinking.. Luckily it's easier than ever before to market and ship products around the world, so you are probably only a few backend adjustments away from being able to expand across borders.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie Postles:Welcome back to Up Next in Commerce, this is your host, Stephanie Postles, co-Founder at Mission.org. Joining us today is Jon Feldman, a senior manager at Salesforce who works on Commerce Cloud. Jon, welcomeJon:Stephanie, great to be here. Thanks for having me.Stephanie Postles:I'm excited to have you. I think before we start, because we haven't had many Salesforce people in the show, I was hoping you go through your background, what led you to Salesforce, and what you do today.Jon:Yeah, absolutely. I started doing internet commerce at ATG back before Oracle bought it in like 1997 in their professional services group. I was at ATG for eight years and I did implementations around the world, honestly. I was in New York for a while, West Coast and East Coast, and that was super awesome. I met a ton of people and learned a lot about how people use commerce systems. After that, I went and did a four-year stint at a consulting company, doing the same thing. I guess, it's not as exciting. And then I went to Restoration Hardware for four years. I was the senior director of IT/ecommerce, which was really rad, until I got laid off, which was a super bummer.Jon:And as I was trying to figure out what I was going to do with my career after being laid off. I was like, "I really don't feel like there are a lot of jobs that are senior directors of IT/ecommerce in a lot of places." And so I thought I'd try marketing and I switched over to product marketing. And I've really been enjoying it ever since. I've been at Salesforce for about two years now and talking all about the commerce product. It's a lot of fun, honestly.Stephanie Postles:That's great. What does the best day in the office look like to you?Jon:Best in the office. It's interesting because we're at a big evolution point for Salesforce marketing, I think, particularly for Commerce Cloud. The company was built around physical events. For Commerce Cloud, we had three big stations every year, we have the National Retail Federation, which is coming up in January, we have Connections in the middle of the year, and we have Dreamforce at the end of the year. And those are our big opportunities to talk to clients. And of course, with the pandemic and travel stopping, those have all gone away, which if you are a company that sells software, that's problematic because you need to be talking to customers to generate leads and keep the machine rolling.Jon:And so, because of that, we've been trying a lot of stuff with video, and my job is really around how we talk to customers through video and how we continue to generate a conversation in an audience with potential customers and existing customers when we can't see them in person. And so for me really fun days are days when we're working on new video stuff. I think that at a high level, a lot of the video that's created is repurposed webinar, and it is just like, here's just a bunch of stuff.Jon:And for me, the fun stuff is how we can modernize the format and talk to customers in a way that they're like, "Wow, this is actually interesting and engaging," and not like, 45 more minutes on payments. Anyways. So that's what a good day is.Stephanie Postles:Awesome. So on the topic of video, a lot of different companies right now are talking about that as well, about what they're leaning into in 2021, they see a lot of opportunities there, not only with YouTube, but also TikToK. What are you guys seeing in that area?Jon:Taking a step back, I think that modern video is YouTube. YouTube is the number two search engine on the internet. And so there's a format to YouTube, which is 10 to 15 minutes long, really clear call to action, and then there are like a million genres underneath that. And I think that as we think about it, it's, how do we get into a format that is more fun and interesting and engaging, and that has a clear call to action? Yeah, I think for us, it's really about, how do we modernize the format? How do we engage on video in a way that isn't just a 45-minute program on a topic.Stephanie Postles:When you're talking to customers every day, what are some of the trends and themes you're hearing from them right now and maybe how they're thinking about next year?Jon:Yeah. In my role, making all these videos, we talk to customers all the time because Salesforce doesn't want to make a video unless there's a customer interview, which I think is really smart because at the end of the day, customer's the one who have the interesting stories. Obviously, a lot of a lot of what we talk about, it's the impact of code and retail sales closing, or things being pushed to digital because if you look at the numbers on their own, they're pretty remarkable. I have access to Salesforce numbers, and its biggest Cyber Week doubled. Some of our biggest customers are seeing 500% of what they did.Jon:And that's interesting, but I think that it hides some of the really interesting storylines. I think it's easy to talk about the numbers, but one of those common things we hear from our customers is that COVID has pushed a lot of people online, it's increased the volume of their business, the velocity is much higher, and that in turn has exposed a lot of problems that they've had in their supply chain. And that little things that weren't a big problem had become really problematic as the scale goes up. And that's manifesting in everything from more attention, to deflecting calls from call centers, because we talked to Hibbett Sports and they were getting a ton of questions about the order cancellations.Jon:They implemented online order cancellations and it had this huge impact on their call center. Even though obviously you're losing revenue when someone's able to cancel the order, the impact of taking that pressure off the call center was worth it. And that also manifested on the front end where we find that-Stephanie Postles:Oh, interesting.Jon:The thing which I think is really interesting about those call center things is how there's always just little things that make enormous changes in the volume. I remember Restoration Hardware, one of the big efforts we had was to just put dimensions to the objects on every product display page, because at the time, the biggest three reason for returns at Resto was that stuff wouldn't fit through the door. And we weren't telling anybody how big it was, so you'd show up with this giant couch that was designed for like a palace in France and it wasn't going through a US standard door. Yeah, really interesting stuff along those sides.Stephanie Postles:Yep. We had someone previously on who talked about spotting bottlenecks, and it reminds me of that. Maybe people aren't looking at their customer service department or figuring out... There's so many things to look at right now. So many companies are saying their models were breaking and they had to rebuild things from scratch. And I think taking a step back and figuring out what are the biggest bottlenecks, like you guys were doing with your one customer, how they were able to look at their call center, is a great first step. That's interesting adding order cancellations online.Jon:To your point, what I think I've seeing through a lot of this is that companies are taking a broader view of what the whole customer experience is and looking for ways to work around some of these bottlenecks. Intuitively, as somebody who's done a lot of these implementations, I think that oftentimes those bottlenecks are in places where systems touch or there are like decision points and financial trees. You don't have to turn the whole thing off, but make changes that make it easier and faster for customer to go through it. It just takes stress out of the whole organization.Stephanie Postles:So what other trends are you hearing from your customers right now? And do you think these things are here to stay, or do you think the world's going to pivot back to where it was before and some of these are going to be short-term fixes that maybe aren't needed in a longterm?Jon:It's a really interesting question. I was talking to another customer, they were bringing up this really interesting point that, 2021 comps are going to be a really tricky thing to work with because the market was so crazy this year and next year, you're going to have to figure it out. You're going to have to say, "Hey, was the push online to COVID forever or short?" To your point. The other thing about what I think the future is going to hold and where commerce is is that, originally, a lot of commerce happened at a retail building, And that made a lot of sense, you own the customer that were in your store, no distractions, ready to go. And then a lot of stuff moved online and customers gravitated towards your website, where you could still have a very curated experience and it could still be on your terms, make everything happen.Jon:I think that as I look forward, we're going to see more shopping on the edge, which is where products are going to be more deeply integrated at the content sites or in marketplaces, or you're going to be finding places to shop which are not the traditional website. And I think to the question, I think that then becomes a really big customer loyalty question of like, if I'm on a content site and I see an ad for Home Depot, do I trust that it's really Home Depot? Do I believe Home Depot is going to fulfill? It brings that whole question of, what is my relationship?" And image of that vendor up And, "Am I going to transact with them outside?"Jon:But internally, we think that something like 15% of commerce next year is going to happen at the edge. So I'm really excited to see how that goes.Stephanie Postles:That's interesting. So how can a brand prepare for that? Like you said, a lot of these brands right now are thinking about community building and how to build up that loyalty. There's so many new DTC companies popping up, so there's a lot of competitions. They're all trying to figure out how to really get ahead. So how can they prepare for that if you're saying now it might start turning into shopping in other places to where you're not going to see the brand front and center anymore?Jon:Totally. And it's interesting because I think a lot of people approach that as a technology problem, like, "We're going to buy a bunch of software and it's all going to be magic." My personal belief is that technology is an enabler, but it doesn't actually solve any problems on its own. And so the specific things that I would, if I was to presume to tell someone what to do with their business, it would be that, "I think you really need to focus on what your customer is and how you can build loyalty and build a customer experience that is so great that they would prefer it." I think that if you look at Amazon, arguably the shopping experience is a disaster, but the fulfillment is so strong that you have trust that if you're able to find whatever it is in that haystack, that it's going to come to you and it's going to look largely like the picture has.Jon:I think that if I was thinking about going to DTC and I was thinking about how to do that, it's about really knowing who my customer was, what they liked, and where to meet them. Because I think the relevancy of where your product shows up and how that customer journey ties into your system relationship with that company are going to be the most important things. Because ultimately, we've lost control of the presentation, it's owning the customer and just being wherever they are, because then that's the consistent thing, is you are where they are. Not that you're always on your website.Stephanie Postles:That's interesting. When you're thinking about shopping on the edge, is that referring to Amazon or is Amazon excluded and it's more talking about newer marketplaces that are popping up, like the Fairs of the world or Italic or places like that where maybe they're sourcing products, or is it all of it?Jon:I would argue that Amazon to some degree is the edge, their marketplace is this... anyone can put stuff in there, so your brand has to compete there against the knockoffs and events, that similar stuff. So I think the edge is marketplaces and a host of other non-traditional stuff. The single sourcing stuff, I'm not as sure about, white labeling stuff I think is slightly different. When we talk about it, we really mean that, hey, your products are just going to be in places that you'd never expected. And I think honestly, we think a lot about content alongside content when we talk about it.Stephanie Postles:Yeah. You were just mentioning Amazon and knockoff…
Full show notes at the publisherAfter his first trip down the eCommerce road ended in failure, Jay B. Sauceda swore to never again travel down that path. But life has this funny way of coming full circle and turning your failures into successes. Today, Jay is the founder and CEO of Texas Humor, an eCommerce shop so successful that Jay decided to take the leap and also build Sauceda Industries, which helps manage not only Texas Humor logistics, but the logistics of many other D2C companies.The journey from failure to repeated success was a winding one, and Jay takes us through it all on this episode of Up Next in Commerce. Along the way, he digs into what it takes to build a company from a base of loyal supporters and his advice to marketers, including how to be a trusted friend rather than a bother in a consumer’s life. Plus, he explains why customer expectations around fast shipping don’t always have to apply to the products you offer. Main Takeaways:Small Now, Not Forever: Many eCommerce shops rightly want to outsource their logistics to a 3PL, but if your company is too small, many of those companies may not even be open to working with you. This is what Jay experienced in his early eCommerce days, and he has some ideas on how to approach this if you keep hearing “no”.A Good House Guest: Think of advertising like being a guest in someone’s home. You don’t want to walk in and overwhelm the conversation with talk of yourself. Your content shouldn’t act that way either. Bring something more to the table.I Want it Now!: Companies with fast shipping — the Amazons of the world — have led to new consumer expectations when it comes to delivery times. That may be true, but this may not be the expectation for every type of transaction. For necessary commodity goods, fast shipping is critical, but for unique items or products that customers are buying from a company they are loyal to, they actually are much more willing to accept a slower delivery timeline as long as there is transparency throughout the process.The COVID Effect: As the COVID-19 vaccines are approved and shipped, more logistical resources will be deployed to achieve that task. Stephanie thought that this could have a big impact on shipping, but Jay doesn’t necessarily agree. Tune in to hear his take!For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey everyone, and welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder at mission.org. Today, we're chatting with Jay B Sauceda, the CEO of Sauceda Industries. Jay, welcome.Jay:Hey, how's it going?Stephanie:I'm really excited to have you on. As we mentioned before the show, I'll be moving to your neck of the woods here in a month or so.Jay:It's a very popular thing to do these days.Stephanie:It is.Stephanie:Yeah. I'm excited to get there. So today I want to talk about two things that feel very dispersed. We are talking about Texas Humor and logistics, but I think the best place to start would be your background so then I can guide the listeners through the story in the way that makes the most sense.Jay:Yeah. I grew up Southeast of Houston in a blue collar town called La Porte, Texas, which is where there's a lot of the chemical plants refineries that most people can picture with the whole oil production industry of Texas. But the really great thing about La Porte that I loved was, it fostered really any kind of career development and adult development that you might want. So if you wanted to go to high school and upper education or undergrad education wasn't your thing, you could still graduate and go make 70, $80,000 working in the chemical plants close by and really support your family and do a really great thing. If you were a creative kid like I was, the high school there was really fantastic about fostering creativity of young people and developing their careers dependent upon what direction they wanted to go.Jay:So it wasn't like one of these small towns that you see in a movie where everybody works at the coal mine and you got generations of people doing the same thing like that. That may be the case for some people, but there was a lot of latitude to figure out what you're going to do and have people who could help you chase some of those dreams. So for me, I was always a creative kid and was really into photography and those types of endeavors. So I was able to exercise and work out those muscles creatively speaking when I was a kid, and then ultimately ended up coming to University of Texas, where originally I thought that I was going to study political science and which I did. But ultimately went down the path of advertising and the creative field.Jay:I spent four years at UT and ultimately just realized that doing the law school and the political science thing wasn't really my GM and ended up in advertising and working for a small ad agency here in Austin, which was the beginning of my creative career and ultimately what led to me ending up in e-commerce some years later.Stephanie:Okay. Cool. When I was doing a bit of research, I saw that the creative agency or advertising agency was only six people. So you were able to hear about the business deals, learn about the business side of things as long as the creative piece as well?Jay:Yeah. It was a great little firm called The Butler Bros. The two principals there, Adam and Marty Butler, both had some really high level well-positioned roles at the big ad agency here in Austin called GSD&M. They had that front row seat to these really large deals that bigger agencies deal with. But eventually went and started their own firm, and yeah, in those first few years there were just a handful of them. So I was able to sit in the room and as this college intern had access to a lot of conversations and things that I don't think that most ad agency interns would typically have access to. As a result, I really think that it propelled my career forward in a way that, when I ended up starting a little design studio with some friends and building out the early years of my career, I felt more prepared to operate ahead of my years because of some of those experiences and the things that you just pick up when you happen to be in the room with the principals of two companies.Stephanie:Yep. So where did you jump to next after the advertising company?Jay:I had done that for a while and then went freelance after working for them. They gave me some really great advice on the tail end of my career there. I was curious whether they were going to hire me to work for them or not. At the time they were indicating that not likely, that I hadn't really had enough of a specialty up until that point to make it worthwhile for me to be somebody who was there full time. So really great as an intern, but not so much as a full flung employee. So for that reason, their advice was to go out and try to specialize in something which ultimately ended up being photography.Jay:So I went and started to focus on photography as a whole and developed a career as a commercial photographer and ultimately did that for about 10 years. But I guess the eventual destination in this story that's worthwhile to your listeners is that, during that period, I started a small ad agency, a little designed firm called Public School with a group of friends. We had this motif that was all based off of the 1960s era of graphic design specifically around school books and textbooks. And so when we started publishing to our blog and publishing about our work, people really gravitated towards the t-shirts and the various pieces of collateral that we had designed for that brand.Jay:So we were really excited because we thought, "Well, why don't we capitalize on this and start an online store?" Which we did, and almost immediately had a ton of sales for t-shirts and various items that we were selling, which was massively exciting. But as with most people who sell things online, it's really funny to see, or it's real fun to see that money and those sales come in. It's not a ton of fun to have to deal with getting all those orders out after the fact. And ultimately that's what we ran into. It was a lot of excitement around making the money, but not a lot of excitement around having to deal with shipments. So the work associated with having to get those packages out the door was so time-consuming and unfun that I, after a while shut [inaudible] and then swore off ever getting back in the e-commerce again. So suffice it to say it's a little bit funny to find myself sitting here about 11 or 12 years later, the CEO of a e-commerce logistics brand shipping the number of packages that we are every day.Stephanie:That's great. So tell me a bit about, what year was the store live and did you shift right into the logistics business or did that come a bit later?Jay:No. I launched our online store in 2013. The social media audience for Texas Humor, I'd developed over a few years before that. Then in 2013, got it off the ground and started trying to get into scale. Initially, we were just shipping the orders out of my home garage, but over time, basically we had decided to try to outsource the work because we had just gotten so sick of dealing with the scale and having a tough time getting out of our own way as business owners. I reached out to some 3PLs and one of the ones here in Austin just had a very snarky and negative approach to telling me that it wasn't really the right time, which ultimately led to us just getting a little bit of a chip on our shoulder about it and decided to just do it ourselves.Stephanie:Mm-hmm (affirmative). What kind of pushback were you getting when you were reaching out to these 3PLs other than them saying that you were too small for what they probably wanted to work with?Jay:Yeah. Really, that sums it up. It's mostly, "You're too small for this to be worthwhile." And look, I don't have a problem with that. I run an organization that has to say that to people as well. The difference though, is that culturally our approach is to say that it's not a no, it's the not right now. And what we'd rather do is try to be a resource for some of these companies to help them understand what would make them qualify to work with the 3PL and/or make it cost effective for both parties to be in a mutually beneficial relationship. A lot of, I think, small merchants just get in this mindset that their business is worthwhile and they're ready to just offload and go. And in my case, I recognized that we were too small at the time. What I was trying to point out to the guy was that, "We're not big enough to be worthwhile today, but let me sit down and show you the marketing plan and all the things that we're going to do that will make us worthwhile in the near future."Jay:And that was just not something he was really willing to listen to. So that was very much an approach that just rubbed me the wrong way and was something that has definitely informed how we coach brands as they come to us and we have to turn them away because of a number of reasons. Sometimes it's just, we're going to be more expensive than it is even worthwhile for you to be working with us. So until you hit a certain level, you can be spending more money than you are making just to facilitate paying us to do the work and that's not a good position to be in for anybody. So let's avoid that and try to find something that's going to be beneficial for everyone. And that might mean not today, but in the near future. So let me help you fast forward by giving you some tips and some other things that can help you get there quicker.Stephanie:Yep. That's great. Before we dive too deep into the logistics piece, I was hoping you could touch a bit on Texas Humor so people know how you created Texas Humor, what it turned into and what you were trying to sell to even start talking to a 3PL.Jay:Yeah. Over my career, I've done a lot of this kind of audience building with our brand at our old studio. And for me personally, as a photographer, audience building has been a big aspect of what I've always done. And Texas Humor was just this idea that was born out of a discussion with one of the partners in the design studio I was in, in which we were just talking through what different audiences could we build and where could we go with that? And so I started from nothing, started just tweeting about Texas as a whole and that's ultimately really like where we developed the idea. There was no specific e-commerce goal in mind. But once we realized that we had a few million followers and this captive audience that we could do something with, that was the point at which we decided, "Why don't we try to make this into a little bit more of a business?" And ultimately where we got the idea to start texashumor.com.Jay:But it wasn't this big strategic thing in which we said, "Hey, we're going to go start this and we're going to build a store and we're going to do X, Y, and Z." It was far more organic than that. But I took the background that I had in marketing and advertising and leveraged that to really scale up what we were doing. Probably much faster than most organizations would, who would be doing something like what we were doing at the time.Stephanie:Yep. So how did you develop that audience and get in front of people? I think I see now that you have over 2 million followers on your social channels, and so, how long did it take to get a big enough audience that then you were like, "Oh, maybe we should try and sell something to them as well." And what did that process look like?Jay:It was a couple of years before we actually did try to actually sell anything to anybody, because at the time we were just so averse to e-commerce and wanting to develop any inventory position or anything like that. So we didn't come out of the gates thinking like, "Oh yeah, we're going to totally go do this thing and have it be focused on e-com." That was very much later on down the road. The goal that we had initially was to just try to make some form of money. But it by no means was, "Let's try to focus on e-commerce." Originally, it was more so of a content advertising play and that's really what drove it in the early years.Stephanie:Yep. Yeah. I saw that you were generating like 40,000 in revenue by the third month of operation with the content piece of it, right?Stephanie:What are some tips around building up that audience? What are some tactics and strategies that maybe you even use to this day to build up an audience?Jay:I'm a big believer that, I don't remember who told me this. Maybe I made it up, I don't know, but I just see content and advertising as like a guest in people's homes. Most people do not want someone who's going to come over to their house for dinner and just spend the entire time talking about themselves. And so as brands or content generation organizations, if the only thing we're doing is going me, me, me, then of course, people are going to be turned off by it. That's the exact definition of bad advertising. So for us, and for how I thought about building Texas Humor initially, it was really trying to think and put myself in the shoes of the people wh…
Full show notes at the publisherBrands large and small are all fighting the same battle of customer acquisition. How you reach customers, and how much that effort costs, is in constant flux, which is why Nik Sharma is a big fan of constantly running micro experiments. Nik is the CEO of Sharma Brands, a company that remains one of the best-kept secrets among the DTC community and which helps brands scale into the tens of millions. On this episode of Up Next in Commerce, Nik takes us behind the scenes of what that scaling process looks like, including his strategies around customer acquisition. Nik explains how important constant testing is, and he shares some micro-experiments he recommends running regularly. Plus, he tells us why reading every review and every comment associated with your brand is the best leaping-off point for your creative process. Main Takeaways:Please Rate And Review: Reviews really do matter, and you should look at every single one to have a better understanding of what customers are saying, what they see as the value props and what isn’t working. You can then work backward with that information and create content that matches what your customers want. Mo Money, Same Problems: Regardless of how big a company gets, the main problem any brand faces is that of customer acquisition. Bigger brands can throw more money toward getting their message to customers, but ultimately it’s about getting the right content to the right people.The Mom Test: Your website experience needs to be seamless and frictionless that even the most technically challenged, or busy, can make it through without issue. It also needs to deliver the message that you want to send right up front. No one is going to search for the thing you want them to see, so put it front and center.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey, everyone. Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, co-founder at mission.org. Today, we're hanging out with Nik Sharma, the CEO of Sharma Brands. Nik, welcome to the show.Nik:Thank you for having me. I'm excited to be here.Stephanie:Yeah. Me, too. If we had video on, I would be trying to look at your whiteboard that you had on with probably 1,000 notes on it.Nik:All the secrets. It's got all the secrets.Stephanie:Yeah. What kind of secrets are on that board? I was really trying to zoom in like what's going on back there?Nik:It's got all the goals for the week, starting with nine hours of sleep, all the way to-Stephanie:That's a good goal.Nik:... how we plan to combat Facebook and Apple's big fight that's going to start January 15th.Stephanie:Oh, tell me a little bit about the big fight. I'm obviously not up to date on that. What's going on?Nik:Yeah. So basically in the new iOS update, Apple is going to give pretty much everybody multiple opportunities to block tracking. And so it's really going to hurt attribution for a lot of these ad platforms, especially for small business ad platforms like Facebook ads, Snapchat, et cetera. And so we're basically starting to think through how we combat that going into the new year because a lot of the businesses we work with, they're either brands that are just starting. And obviously, those are small businesses, but there's also some mid-sized businesses doing anywhere from 200 to 800 million in revenue, but they're also going to be just as effective. And so we're trying to think through how we go about combating that going into the New Year, basically making sure that there's not a ton of drop-off as it relates to the client.Stephanie:Yeah, I didn't realize this was happening so soon. I was paying attention a bit to the taking away cookies and tracking and all that kind of stuff. I didn't realize the iOS update was happening January 15th. So what are you guys thinking? What's your strategy? What are you advising your brands to do? I know I just jumped right into it, but this is really interesting.Nik:Yeah. Well, as of right now, it's a little bit up in the air. We have a few ideas going of how to combat it. But to be honest, there's not a ton of information out that we have to work with. We're trying to work with multiple different ad tech partners to understand how they view the impact happening. But at the same time, we're trying to think through how do we basically start creating our first party audience ads much faster than running ads when we need them, so whether that's by creating what I would call a prospecting CRM versus just a customer-centric CRM post-purchase, or trying to think through how do we still drive lower funnel conversion and attribute those sales properly, even though they might not be last click purchases. Yeah, it's a big cluster of unknowns right now.Stephanie:Yeah, that's tricky. I also wonder to what extent will a user maybe turn that feature off and then start to realize maybe how helpful that feature was when it comes to showcasing you the information that you want to see, or maybe ads that actually are helpful because I think right now, a lot of times people are like, "Oh, I want privacy and I want this and I want that"? But if you were to turn off a lot of the features that you're talking about, then you wouldn't really get the customized experience that people will do oftentimes appreciate in Google and other places. They wonder what that would look like.Nik:Yeah. Most of the people I've talked to have basically said a similar thing that they like the personalization and whatnot that comes with it. But there is definitely a pretty big group of people who would rather prefer that they never get targeted with an ad. Unfortunately, that's the threat to a lot of the small business advertisers out there.Stephanie:Yep, interesting. Well, when you guys have a little more insight into that, I'll just bring you back in here, how you guys are approaching it and what happens in January 15th.Nik:Yeah, definitely. Definitely.Stephanie:Cool. Give me a little background on Sharma Brands. I was seeing that you guys work with a lot of brands, some of which we've actually had on the show before, which is really cool to see. We've had [inaudible] and I think I saw two others. But tell me a bit about what is Sharma Brands and what do you guys do for the brands that you work with?Nik:Sharma Brands is like the secret of the internet. We don't really talk about it much publicly. But basically, what we do is we work with brands that are either just launching or have just launched. We either guide them through the launch or we pick them up right after launch. We work with brands that are midsize, brands that are doing really well and ideally want to do better, or we work with brands that are pretty big retail businesses that want to get their ecommerce business set up and on track. And so we come in and handle everything from strategy to execution, to implementation. A lot of it is testing, a lot of it is focused on creative and messaging and offer testing merchandising. We also do everything all the way to producing national TV spots, satellite radio, like basically helping brands venture out from the more traditional just Facebook ads or building a website.Stephanie:Got it. What inspired you to create Sharma Brands? I saw you had a lot of roles. You were the head of D2C for a couple of companies. I think you worked at Hint. Is that what led you to creating Sharma Brands, or tell me a little bit about that journey?Nik:Yeah. I've always had a knack for wanting to work on multiple brands, which is probably why Sharma Brands works. But separate from that, I don't know if we are even the perfect solution. I don't think we aren't because we don't really do everything. But there's not really a proper growth partner for a lot of these brands. There are media agencies, there's media companies, there are creative agencies, there are product development agencies, but there's really not many when it comes to true growth and helping them in things like scaling, going from 1 million to 10 million or 10 million to 60 million. And so we created this little niche where we help brands do just that. We try to stay on for no longer than six months per project. Our goal is to basically get in and do just an insane amount of testing so that by the time we leave, that brand knows exactly what's going to scale and what's not going to scale.Stephanie:Interesting. What kind of testing do you mean? What do you do throughout those six months to figure that out?Nik:It can be anything from copy, creative, landing pages, long form content. When I say creative, there's a whole variety of creative. There's the things like... We might test UGC, we might test influencers, we might test studio stuff, we might test just a whole variety of different types of content. We do the same thing when it comes to page experiences, so whether they're landing pages, whether they're listicles, articles, partnerships with companies like Morning Brew.Nik:And then of course, the last piece of it is the merchandising, so everything from offers and pricing to products, to what gets people in the door, what's the best product to sell them after that. And subsequent to that, how do we optimize for brands that are high consumption? How do we focus on subscription? How do we keep customer lifetime value high? How do we bring back repeat purchase rate without having to spend money to reacquire that customer? The goal is to figure an overwhelming majority of those types of things out so that by the time we're done, there's a very clear playbook that they can operate on for the next few months or a few years.Stephanie:Yep. I'm assuming that when you were working at Hint and other places, you started seeing similar things that were working and weren't working. Can you tell me a bit about what it was like working at those companies, or maybe you started uncovering a few universal truths around D2C?Nik:Yeah, working at Hint was great. It was a lot of fun. We grew really fast, which led us to a lot of challenges that we were able to overcome. But it gave me a lot of insight into the challenges that a lot of the brands face. Obviously, I think customer acquisition is one of the biggest things that brands don't necessarily understand or distribution, which is, I think, one thing we're really good at. But then after that, after you get to a point where you're able to acquire 1,000 customers a day sustainably and at reasonable prices, then how do you take those customers and service them further? How do you come up with products that feed those customers after what they've already bought if it's not a high consumption product? How do you think through unique partnerships that attract eyeballs that then give you the opportunity to sell those customers onto your brand? There's so many things. Basically, it all stems down to distribution. Good brands are really good at product and brand building. But then the idea of then getting that in front of other people is where the tough part comes in.Stephanie:And so how do you approach customer acquisition now, where maybe it was different than prior to 2020 because it feels like there's so many new companies in the space? Maybe not all of which will be here in a couple of years. There's a lot of companies. I think more businesses launched in 2020 than in 2019 and prior years. So how do you approach trying to compete and get the eyeballs and find new customers for your brands in a pretty competitive market right now?Nik:To be honest, we don't really take competitive brands into account. What we try to do is just be really innovative with the way that we message and get in front of people. For example, something as simple as like Judy, which is emergency kit you know, being able to really hone in on understanding whether it be by surveys or by looking at what types of messaging has better click through rates and conversion rates, understanding the types of messaging that people are reacting to, and then going really deep on it, all the way to coming up with funky partnership ideas like putting Poo-Pourri and Judy together because both brands service emergency situations.Stephanie:That's a really good partnership.Nik:Yeah, no, it's great. It's really just about like how do we stay ahead of competition? Most brands today probably run a very similar playbook of like, "Let's create some... text some images, put some ads up and run them to our homepage." We put that on steroids. We're testing maybe 17 different versions of creative or testing 7 different versions of landing pages or homepages or sites that they're leading to along with 37 different audiences that we're going after to understand which type of messaging converts better with which audiences.Stephanie:That's great. So how do you think about creating all those different types of messaging? How do you stay creative? I know when I'm thinking through ad copy, even for our company, once I create one or two or three, then I'm like, "That's all I got. I'm out." How do you guys stay creative and create like, what'd you say, 17 different landing pages? I mean, like a lot.Nik:Well, I have a team that's insanely creative, so that helps.Stephanie:That's helpful.Nik:But outside of that, I think one thing we do, which is honestly something anybody can do, is we try to look at every single review. So if we work with a brand, we try to read every single review and we will literally use a whiteboard and make a tally of the different value props and how many times they're mentioned and then use that to basically work backwards and understand messaging. So things like that to things like looking at comments on ads, to customer service emails and messages, to how are other people tweeting about it, how are other people taking press about a brand and then tweeting about the press or talking about that specific article. So we try to take in a variety of things. And then if all else fails, have a little glass of whiskey and take an approach with some fresh eyes.Stephanie:That's good. When it comes to large brands and small brands, we've been going through some of these challenges, but are the challenges the same for both big and small, or do you see completely different challenges depending on the size of the brand?Nik:I think that a lot of the challenges on the macro side are the same, but on the micro... On the macro side, for example, customer acquisition, right? A company that's doing 800 million versus a company that's just launched, both are going to be focused on how do we acquire customers smarter, better, faster, cheaper with higher lifetime value? But on the micro side, it's a little different because a company that's doing even 50 million in revenue has a lot more awareness to play off of. They have a lot more scale to go leverage things like partnerships with other brands, they have budgets to go to places like The Skimm and Morning Brew and other places like that versus a company that's just starting.Nik:They still have the same problem with customer acquisition, but they need to figure out even if they rais…
Full show notes at the publisherAccess to goods is still an issue for millions of people around the world, but recently, ecommerce has been leveling the playing field. With so many direct-to-consumer operations in business today, the average consumer has more choice and therefore more access than ever before. But there’s one industry that stands out as lagging behind this trend: Coffee. That’s one of the reasons that Pernell Cezar co-founded BLK & Bold Specialty Beverages. Pernell is a long-time coffee lover and saw an opportunity to turn that passion into a business that could also make a big social impact. Historically, coffee has been hyperlocal, but he envisioned a business model that democratized access and brought specialty coffee to everyone. The only problem was that neither Pernell nor his co-founder had any experience in the coffee business other than as consumers. On this episode of Up Next in Commerce, Pernell reveals how they were able to turn BLK & Bold into a nationally-distributed product, including how they turned a mission-driven ecommerce business into a retail one by securing partnerships with places like Whole Foods and Target. Plus, he explains the importance of giving potential customers multiple ways to find your product, and the value of finding mentors to help you fill in your blindspots.Main Takeaways:The Way In: Having multiple ways and messaging for potential customers to find and want to engage with you is a great way to build a base. But when one of those ways is through a social impact mission, you have to also be sure the product quality and experience delivers. Tune in to hear how Pernell thought about striking this balance.Stick To The Plan: Entering retail can be an exciting milestone for your business, but it’s important not to rush the process. You should have a checklist of things you want/need to accomplish in order to set yourself up for success. Whether it’s with your packaging, other partnership, or logistics, be patient and get them done because a failed retail launch is hard to come back from. Share With The Class: When you’re just starting out, be open about what you are doing and on the lookout for anyone who might be able to help or mentor you. Small conversations can lead to critical connections that can propel you further than you’d be able to get on your own. You will have blindspots, and addressing them sooner means saving more time and money in the long run.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey everyone, and welcome back. This is Stephanie Postles, and you're listening to Up Next in Commerce. Today on the show we have Pernell Cezar. He's the co-founder and the CEO of BLK & Bold Specialty Beverages. Pernell, welcome.Pernell:Thank you for having me.Stephanie:I'm excited to have you on the show. I actually just saw some of your coffees in a Whole Foods around here. I was like, "Hey, he's joining us." It was perfect timing.Pernell:[crosstalk 00:00:30]. I love it.Stephanie:I'd love to hear a little bit about BLK & Bold, what is it? And let's dive right into your founding story because I know you have a good one.Pernell:Sure thing. BLK & Bold, we are a coffee roastery out of Des Moines, Iowa, founded about two and a half years ago really from the length of conversations that my childhood best friend, who's actually my co-founder, his name is Rod. I'll likely reference him a few times here. Him and I had just in teenagers, talking about whatever to being professionals and being time strapped and wanting to make sure that we were spending our dollars more consciously to support initiatives that we really felt we didn't have a lot of time to put into like we wanted to.Pernell:After so much ideation around our ritualistic beverages and coffee and tea, we really decided to focus on connecting everyday consumers back to their community by way of turning those beverages into vehicles for impact, and in which we launched BLK & Bold with the initiative to tangibly give back to disadvantage youth by way of giving 5% of our profits back to initiatives across the US that service specifically that demographic, but then also making specialty coffee and the delicacy of coffee and tea more accessible in conventional spaces where people shop already and not have it be confined to the independent shops that exist in neighborhoods across the US.Stephanie:Very cool. How did you decide to start with coffee? Because I read you didn't really have a background in that, and I was watching your video where you guys were starting it, I think, in your garage and you were trying to figure out what buttons to press and it was really fun just seeing how you really didn't know what you were doing. How did you land on that idea and decide like, this is the one.Pernell:Professionally, I didn't come from the coffee industry per se. However, as a consumer, I have user experience as a consumer. And going-Stephanie:You're a pro.Pernell:Yeah, exactly. Going across that journey, I always call it the coffee spectrum in the sense of what you like and what you don't like. And that's really where the curiosity book hit us where just traveling so much professionally in one state of my career and I just became immersed with the coffee shop culture. Visiting city A, city B, city C and falling in love with these different shops but they all have different menus. And so you learn to appreciate the different tiers of coffee, especially the specialty coffee, the more premium side of things, and really enjoyed that.Pernell:But again, the accessibility of these different experiences or product experience that we learned was hard to consistently access. And it then became a matter of like, "Okay, well, what is this? And why is this?" And from there, it was a matter of, "Okay, well, let me see if I can make this." And that hints the sample roaster journey back in our garage with me really just wanting to see how is this made, and the complexity of it went down the rabbit hole from there. So I always equate it to people that have heard someone's craft brewing story and starting that journey in their basement with a few tools here and there. It's pretty much the same approach from just a coffee junkie and wanting to learn more about it, but also have access to the different things that I was learning. So just kind of taking in our own hands.Stephanie:I love that. What were some of the biggest surprises when you were trying to find the beans and the equipment and all that? What were some of the biggest surprises you encountered when starting out?Pernell:I would say, the initial shock was just how massive, complex, the coffee manufacturing side is, whether you're talking about the sourcing of beans, which was part of your question, but also literally the manufacturing piece of it. The diversity of equipment needed, the diversity of capabilities, there's just a ton of science that goes into the process of turning a crop, which is coffee coming from the pit of a coffee cherry plant, or a fruit from a coffee cherry plant and turning that into this fine, ground product that you are brewing and drinking. And the nuances in between that to uphold integrity of that is really the really enjoyable part of the science that just, you don't know until you peek behind the curtain, fall down the rabbit hole and the learning process begins from there. So it's not as difficult to fall in love with if you're curious, because of just the many nuances in ways it becomes an art after you get going.Stephanie:That's very cool. And did you guys launch ecommerce first or were you also exploring retail as well? How did you think about that launch?Pernell:Sure thing. Obviously our go-to-market strategies much more cemented in our ideation of building the brand upfront. And so to make more sense out of that, for us, looking at building a brand in coffee in the modern day coffee climate, mind you pre-COVID, for modern day coffee climate where you have independent shops and then you have of course the conventional grocery isles and the lack of accessibility, but you also have ecom continuing to be ingrained in people's lifestyle in purchasing habits every single day. But when you look at part of the reason why coffee hadn't been accessible so much in more conventional spaces, ecoms, is because of how hyper-local the product is, and the hold coffee shop culture has on people's behaviors and what their preference is.Pernell:For us, it was a matter of, well, we are looking to shift the economics of how currency impacts domestic youth. And in order to do that in the commodity category, you have to be able to scale it. And if we go into shops, the margin is much tighter where we it's harder to make a sustainable contribution. But if we manufacture and we wholesale, it gives us more room to make the contribution more sustainable. And by way of that, we need to make more access and scalable environments such as retailer distribution and/or ecom. And so in thinking of that and understanding that, but knowing that, all right, we're going after this with little to no resources self-funded and with our own validation and learning curves to go from that. And so we for sure launched with ecom as our fastest point of entry, but also a place where has to validate the concept.Pernell:And so our ecommerce platform as well as social media, the idea of ... well, there's tons of micro roasters that pop up every day, but to pop up, but also with a very different rhetoric on being this domestic impact model, we needed to find validation that consumers were interested in that as well. And so very long-winded answer to, yes, ecom was the way we started, very much part of our DNA in the sense of being ready to own our message and also provide accessibility for people given that we don't have our own storefront.Stephanie:I love you started with the social impact model to derive results you wanted. How much did that really push you to think bigger and be like, "I'm not just going to go to one of the coffee shops and sell to them. We need big results with our model and to do that, we need the wholesale model. We need retailers, we need ecommerce we need like everything."Pernell:Yeah, for sure. We have to believe upfront, and building a hypothesis for a business that the sediments that resonated with us on there being a void of values and tangible values that were relevant for us, that other people, if that opportunity existed, we'd align to that as well. And I guess because of that, that allowed us to really focus upfront on what channels make the most sense, I guess. And so the shift in consumer behavior and the validation from consumers shifting their behavior, I want to back up and say, not behavior more so than mindset. We want consumers to still consume coffee, consume especially coffee, but we want them to know that brand B versus their brand A actually has a different value proposition that allows you to extend your impact without really changing your behavior. And that allows us to actually become considered a lot earlier than going at it in a more conventional way.Pernell:And so that was very much key for us in the sense of how do we make it easy for people to extend an impact without having to change their behavior, which allows us to then get them on board, allows us to get retailers on board, allows us to get businesses on board, all around shifting the commerce to be able to scale the impact domestically. So it's a little much of a lift for everyday people, but to have a much more relevant tangible sustained impact.Stephanie:Got it. And it seems like that story in that messaging definitely helped put you guys on the radar of a lot of new customers. Was that one of the key ways that you acquire new customers and they found out about you was getting that messaging out there and getting that PR out there for like what you guys stood for to then bring in new clients, or were there other tactics you used to bring in your first customer?Pernell:Yeah, no doubt. There's a fine balance because for us, we look at multiple entry points or propositions for where we can be in someone's consideration set. And then as they enter into understanding our brand and they learn more about what we stand for and ideally one if not all of them, resonate as well. And that strengthens the loyalty of if they have loyalty to the product, if they entered us through the product proposition, and/or from a brand values, and then they also love the product. And so the storyline no doubt allows for accessibility when we are introduced to someone in a non-tangible space. And so we can scale our story to impact this is normal that we're looking to bring in the sense of domestic social impact versus someone is shopping in the coffee aisle and so forth. So it definitely gives us a much more scalable share of voice that people can discover us a lot faster given the sensorial experience that most people usually choose coffee for.Stephanie:Got it. And at what point did you launch on Amazon? Because I saw you guys are listed there. When did you decide it was the right time to sit on Amazon?Pernell:Amazon was always part of our model as well. It was a matter of the prioritization of the learning curve. We launched June 1st of 2018. We had our core coffee items that Q4 of 2018 set up. And it was really a matter of just having them active so we can learn, and kick the wheels and make sure that we're not doing more harm being on Amazon and not for Amazon's sake but for, again, the learning curve. And then again, transitioning into, let's see, throughout 2019, the trial and error of learning that. But then with 2020 and prior ... let's call it, this 2019 was a matter of being digitally native, but ramping up and preparing to launch in brick and mortar.Pernell:And so once we got past that milestone at the beginning of 2020, of course, fast forward COVID, being on Amazon allowed us to pivot more fully into maturing, what that experience, that digital experience on Amazon looked like. And so while we were on Amazon, let's call it about 15 months prior to launching our formal storefront. When we launched our foremost storefront in early April this year, that's where we really were able to drive people to who we were, what we represented in a way that it was much more convertible given that people were ... this shift of coffee and consumerism and accessibility changed completely of course because of COVID.Stephanie:Yep. So essentially you were shifting over to retail and then COVID hit, and then you were like, okay, now back to Amazon, back to our platform and you had to quickly change once the world started changing.Pernell:For sure. I think the benefit was that we were already digitally native and our site being the hero experience, having an extension by way of Amazon and the size of traffic and consumers they have. But no doubt when it became time to diversify our revenue streams, fortunately, we were much further ahead of the Amazon experience look like then more of the, it's called the indie boutique micro roasters that relied on shops and didn't have a digital experience. They had to then began the learning process as well.Stephanie:You were already ahead of the game.Pernell:Fortun…
Full show notes at the publisherThink about the last ad you saw an ad that had an image of someone’s living room. What color was the throw pillow on the couch? Was there a dog present? How many people were pictured? You might not know the answer to those questions, but the marketers who put that creative together sure do, and you better believe that they thought long and hard about each of those aspects and dove deep into some data to decide exactly what to include in the adThose minuscule details may seem frivolous to the naked eye, but the data proves that every decision you make in your creative process has an impact on the bottom line, and the ecommerce businesses that pay attention to the data while still putting their own spin on the creative aspect are the ones that are rising to the top.R.J. Talyor is the founder and CEO of Pattern89, which uses A.I. and machine learning to analyze advertising and guide marketers toward the performance metrics that matter. On this episode of Up Next in Commerce, R.J. takes us through the most recent trends report that Pattern89 put out, which includes some important information about why businesses should be paying particular attention to copy and hashtags. Plus, R.J. gives tips on how to avoid the trap of following “best practices” and why creativity will always win.Main Takeaways:Big-Time Creative, Small Time Dimensions: Marketing creative is made up of tens of thousands of dimensions, all of which can be measured and distilled into performance metrics. And when those metrics are measured, you can utilize that data to inform the decisions you make about what elements are more beneficial to include in your ads (like an orange pillow versus a blue pillow and a cat versus a dog).#WorthIt?: Including hashtags in your marketing copy is a method to improve performance. The flip side of that argument is that hashtags have a cost, particularly if you overlay a hashtag on an image or video. The Same… But Different: When developing creative, marketers are often looking at the same data, trends and industry reports, and they are following the same “best practices.” The trick is to take the information and make it your own in order to develop creative that stands out rather than just gets lost in the sea of “what works.”For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Welcome back to Up Next in Commerce. This is your host, Stephanie Postles. Joining us today is R.J. Talyor, the CEO and Founder at Pattern89. R.J., welcome.R.J.:Hey, thanks for having me. Appreciate it.Stephanie:Yeah, I'm excited to have you on the show. I just downloaded your report, as you saw, right before the interview and I feel like there's some good juicy stuff and the things that you guys are doing and we'll have a lot to talk about today.R.J.:Yeah. Great.Stephanie:So tell me a bit, what is Pattern89 and how did you go about creating that?R.J.:Pattern89, what we do is we predict creative performance with machine learning and AI, and I've worked in digital for almost 20 years now. I worked at ExactTarget and then at Salesforce and then at another social startup, and learned quickly that marketers are spending so much time creating journeys and figuring out who their audience is, but still use a lot of their gut on what creative to put in front of those audiences, or in the places in the journey. While data is being used to figure out what and who, it really is on the creative side, still kind of a gut decision. And so set out about four years ago to help marketers use AI and machine learning, to predict creative performance, and now we're a 25 person strong scale up and serving customers all over the globe.Stephanie:That's awesome. I was reading a bit about your data co-op and how many brands you have that you get to look through all the data, so give me a little bit of like the behind the scenes of what kind of brands do you have in there, if you can share, how many do you actually have, and how do you go about looking at all of their data?R.J.:Well, when we started the business, we knew we needed a giant data set in order for the machines to find patterns and outliers that would actually help creatives, and so we started offering a free scorecard or creative assessment in exchange for joining the co-op. We're almost at 2000 brands who-Stephanie:Wow.R.J.:... have connected their accounts to Pattern89. And our machines, they don't actually look at anything that's identifiable. Instead, they're looking at 49,000 different creative dimensions of a piece of creative and tying it to a performance metric. As an example, it might look at a picture of a living room and say, "All right, there's a couch, plants, window. Is there a human or not? What color is the couch? Is there a blanket on the couch? Is there a dog in the picture?"R.J.:Then associate that with a performance metric, like, did it drive X purchases or Y video views or X views, so then we can understand in aggregate what are the patterns and outliers that we're seeing across massive amounts of data, so that we know living rooms actually perform better when there's an orange throw pillow on the couch, for example, like the one small detail. So massive amounts of brands, massive amounts of data, and really granular creative insights.Stephanie:Very cool. How do you go about, if you're looking at that kind of anonymized data and you see something doing well, how do you know it's doing well? Maybe because it's a Nordstrom where it's like, well, of course they have brand recognition, it's very easy to buy from them, versus a brand new D2C company where maybe one of their ads is doing well, or it's not doing well and it's kind of getting skewed because they don't have that brand recognition.R.J.:Yeah. That is a big question. The first thing to know is that our data science team uses a set of statistical tests to kind of ferret out what is actually driving the performance or not driving the performance, so that we're not chasing after kind of red herrings. The other thing is from an audience perspective, the history of that audience use, so is it a brand new audience or is it a legacy audience? Is it a customer loyalty audience or something else like that? Those are all the components that are also taken into account so that we can distinguish between maybe the brand legacy of a Nordstrom versus an up-and-coming D2C startup and still provide statistical significance at over 95% competence.Stephanie:Got it. What things do you think are going to work in 2021? I mean, I was just going through the report that I mentioned earlier and I mean, it was cool because it's all the way down to "Here's certain emojis and colors and imagery is up, but maybe with multiple people or one person and video's down." So tell me a little bit about what you guys are seeing and predicting to work well when it comes to advertising and copy in 2021.R.J.:Yeah. Well, the first thing that it's important to notice, the creative lifecycle has shrunk and rom a creative life cycle perspective, it's just a lot shorter than it's ever been. In addition to the creative life cycle shortening, what is performance in those creatives is changing as well, so the best advertisers have a 2:1 image to video ratio. While video performs a lot better in general, image to video 2:1 is the best performer for top performers in the dataset, and we're seeing more and more emphasis on video and video performance, but videos tend to be more expensive, so 2:1 is a good framework.R.J.:Then taking a look at what's trending and what's forecasted to be a performant in 2021, we see things like TVs and electronics really improving cost per clicks, also spas and massages, those types of things. And then maybe not surprising, we're seeing a lot of isolated people, so one face in creatives and those people are reading or studying or doing something by themselves, which kind of reflects the world that we're living in, especially as we head into 2021.R.J.:One of the surprising things, and sorry for all the cat lovers out there, is that pets typically do very well, dogs and cats, but we're actually seeing cats driving performance down. So it's more expensive to advertise with cats in 2021, so just keep that in mind as you're here.Stephanie:That's funny. Don't put a cat in your ad.R.J.:Yes, exactly. Yeah. But consistent performers, things like images or videos of those people exercising, phones, images of cities, those types of things are really staying flat. This is all going to change by audience and by brand, but in aggregate, those are the things that we're seeing rise, staying steady, and then underperforming in terms of predictions.R.J.:The other thing that we analyze is color and the importance of color driving performance in 2021. In December, we're really seeing kind of teal colors and blues perform best, but what's trending up in 2021 are, it's kind of this peachy color, and I can give you the exact hex code for the designers out there, but peach and dark green are really trending up and they've been trending up over the last three years, while kind of a pinky and a brown color are really trending down for the last three years and will continue to trend down. It's kind of funny as we think about what background colors or what shirt colors our models should be wearing, or how we should stage a photo shoot, or even what stock photo or image or video to pull, these types of decisions can impact your CPMs, your CPCs, and your click-through rates and ultimately your performance, so it's good to have the data on your side.Stephanie:Yeah, that's great. The one thing a lot of guests have mentioned is that more organic videos, iPhone videos, even iPhone photos have been performing better for them then-R.J.:Yes.Stephanie:I mean, because a lot of them couldn't stage things anymore in their studio, or didn't really want to use the stock photos. Are you seeing the same thing?R.J.:Yes, and especially selfies, really driving performance up. So when influencers take a selfie video, which might've seen sort of not have been as polished as in the past, but selfie videos in the data is actually spiking in performance as well as popularity, so yes is the answer to that.Stephanie:Cool. Any other trends in that report that stood out to you that were maybe a bit surprising and you were like, "Why is that happening" or "Why is the data showing that" where you had to dig in a bit deeper?R.J.:One of the other things that's really surprising when you deep dive into the report is copy and the impact of copy alongside your creative. Oftentimes we spend a lot of time developing what the creative would be, and then maybe we'd just go with a standard message, but the impact of performance when you have copy that's like 5 to 15 characters long, that's what's going to drive the best performance for awareness or top of top of funnel campaigns, whereas body copy needs to have between like 40 and 60 characters and should include a hashtag.R.J.:What's a little bit surprising about hashtags specifically, is that including a hashtag overall improves your performance, but it's going to be a little bit more expensive. And then even further, if you put a hashtag as a text overlay on an image or on a video, you're going to see the costs go up even more. So it's funny how best practices intersect with performance in good and bad ways, and what we're kind of distilling down is how the algorithms at the individual platforms prioritize or deprioritize content, based on supply and demand, like what's popular and what's actually performing.R.J.:If you think about it from the platform perspective, they want creative diversity. They want you to be producing something that creates more thumb scrolling and more content engagement. So they're looking at how much of X do we have, how much of Y do we have, and then prioritizing content that favors newness and differentiation and engagement. Anyway, some of these things are like, need to put a hashtag in there because that's actually going to drive your performance up, but it might also drive your cost up so you've got to kind of weigh the pros and the cons of each creative dimension.Stephanie:Cool. I'm thinking about all this data and feedback that you're giving to customers, and how do you make sure that they don't all start doing the same thing where it's becoming like a self-fulfilling prophecy? Because I know a couple of guests prior who've been on the show previously have mentioned, like, "Don't go in the Facebook ad library and try and get inspiration from there, go to the books from the 1960s and check out what was happening back then. Don't just look at what your competitors are doing, because the second you start just doing what they're doing, you lose." So how do you make sure that your clients aren't just all doing the same thing, driving the same trends, driving the rates up or down because they are all hearing like, "Oh, the color green is like the way to go"?R.J.:Yeah. Well, I love what you're saying there because I have really railed against "best practices" as a way of doing marketing, and so much is changing that I think a lot of marketers go to "best practices" and then look at a creative forecast from Pattern89 or some sort of other data source and say, "All right, that's what we should do." The problem is exactly what you're saying, which is that if we all do the same thing, then the advantage goes away. Instead, we need to think about data and creative AI as a recipe. Every chef gets the same... I love watching food TV, like Food Network and all that stuff, and you can give Michelin star chefs the same recipe and they all make something different, even though the recipe components might be the same.R.J.:I think that that's how we have to think about creative. How does our brand interpret these recipes? How do we make it distinctly ours and so our brand message shines through while also honoring those creative elements that the algorithm cares about? A good example is we know that 40 to 60 body copy characters, so we should have a 40 to 60 characters in our body copy, and a hashtag. So don't go copy paste some body copy from a competitor and just change the brand name. Instead, what's the unique message that you want to tell in that? And then what hashtag can you use that actually spells out your brand message? Or if we know that images of people studying or reading books are important, what is the way that we can tell that brand story in a funny way, an engaging way, in a serious way? However it reflects your brand.R.J.:I've used this slide in a presentation where I actually have five different brands, Instagram posts, where they're all advertising athleisure wear, and they literally all look the same. It's all a woman who looks fit, who is exercising in her sort of ethereal-looking inside apartment. It's like literally the same creative and you can't distinguish between those ads, and I think that's where we're seeing kind of the "optimization to best pra…
Full show notes at the publisherStyle is a very personal part of what makes someone who they are. The way you dress is a reflection of who you are or who you want to be, and what speaks to you may be totally foreign to the next person. Knowing all of that, it’s understandable if you believe that something as personal and experience-driven as style could never be boiled down to data points or plugged into an algorithm. But… you’d be wrong.At Stitch Fix, a combination of human stylists, powerful A.I., and behind-the-scenes technology has created a winning model that delivers a personalized online shopping and styling experience straight to clients’ homes. A powerful data science team is one of the key reasons that Stitch Fix has been able to launch its valuation into the billions. Stephanie Yee is the VP of Data Science at Stitch Fix, and on this episode of Up Next in Commerce, she explains all the ways that data and technology are being put to use to create the best customer experience possible.Stephanie describes how technology like GPT-3 is going to finally make seemingly unimportant data consumable to a consumer audience, and she explains how an event like COVID-19 can impact your backend models and what to do to adapt in that situation. Plus, she gives tips on how any ecommerce operation can go about building a data science team, and the soft skills to focus on when hiring talent. Main Takeaways:Asking the Right Questions: The most important skill a data scientist can have has nothing to do with technical prowess. It’s about having the ability to frame a problem and then ask and answer the right questions. Encourage your team or new candidates to pump the brakes and reevaluate the “why” behind the question they are trying to answer or the problem they are trying to solve. Making The Indecipherable Easily Digestible: With the shifting demographics, and older generations now becoming more comfortable shopping online, tools need to be created to ingest and answer long-form questions in a way the consumer connects with. Technology like GPT-3, which is the most advanced language model to date, has the ability to do just this. Tune in to hear how! The Quick Change: Deploying algorithms and A.I. in conjunction with human resources/industry experts is critical for organizations to be able to adapt to big changes in a market. COVID-19 had a drastic impact on models that were trained on pre-COVID data. Should you scrap your current model and start over? Or build on what you have? Stephanie says a little bit of both.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie Postles:Welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder of mission.org. Today on the show, we have Stephanie Yee, the VP of data science at Stitch Fix. Stephanie, welcome.Stephanie Yee:Thank you. I'm excited to be here.Stephanie Postles:Me, too. I know it's going to be a good interview when there's two Stephanies, but I'm slightly worried about how the transcript will look. Like who's saying what? Who sounds smart? I'll just take all your quotes and pretend they're mine.Stephanie Yee:Perfect.Stephanie Postles:So tell me a little bit how long have you been at Stitch Fix for?Stephanie Yee:I've been at Stitch Fix for almost four years. Yeah, four years in January.Stephanie Postles:Well, tell me a little bit what does the role of the VP of data science look like day-to-day?Stephanie Yee:Yeah. If I have to think about it, being the VP of data science, it really comes down to maximizing the value that the data science itself and the team can bring to the company, like how do we really get the full promise of an algorithm's approach to things? I think as you guys probably know, Stitch Fix is really thinking about how do we help people find what they love and how do we use data science and human expertise to do that? So the types of things that I think about in service of that are things like what are new opportunities that we haven't really discovered yet? And that's been pretty exciting over the last four years.Stephanie Yee:I think another area that I think about a lot is like what's the right almost interface between data science and data scientists and the business partners. So this is if we have data scientists working with the design team, or the product team, or the marketing team, or even executives, what's the place where data scientists can contribute the most? And also, just being really intellectually honest, like what's the place where it makes sense for others to take over? And then obviously, the last part of my job is to really create an environment where the team can be motivated and fulfilled in doing things that bring out the best to each of them.Stephanie Postles:That's great. So it would be great to dive a bit more into Stitch Fix. I know what it is because I'm a customer, but I think a lot of people may not know exactly what it is or all the things that go on behind the scenes to get the pretty box on your door. So could you explain what it looks like, what is Stitch Fix from a high level, for anyone who doesn't know, and then what goes on behind the scenes to create the company that it is?Stephanie Yee:Yeah, so Stitch Fix is a personal styling company. And at the core, we use both data science and real stylists and their expertise to help people find what they love. If you think about unpacking that, it's really about understanding... or from a data science perspective, it's really about understanding a client's needs, as well as being able to set the stylist up for success. The core of Stitch Fix, the way that it shows up is in a box of one or more items and clients are able to try it on, they're able to send back what they don't like and really just keep what they really love.Stephanie Postles:Tell me how do you go about making sure that you give the customer the exact outfits they would like or refine that process to where maybe the second or third time you've nailed it? Because for me, at least when I am getting the outfits, I'm like, "The first time, maybe like one thing was off or something," but then after that, it's like, "Okay, now, this stylist knows me, or this algorithm knows me." So how do you refine that behind the scenes?Stephanie Yee:Yeah. I think that that's a great question. I think a lot of it... I mean, as a data scientist, like I always think about the data that we collect and what's available, and this comes both from what clients tell us as well as what we're able to infer, so a really interesting example of this, and this is where you had mentioned like, "Okay, there might be one item off at first and the algorithm really learns over time," we really think about things in terms of the ability to say like, "Okay, what data do we have now?" And with the stylist, the stylist is incredibly important throughout the client's life cycle. With the stylist, like what's the right thing to be sending right now? And in response to feedback like, "Oh, that item that didn't really work out for whatever reason," we're able to respond to that.Stephanie Yee:I think a really interesting example of the approach that Stitch Fix takes, or rather one of the interesting things about Stitch Fix is that we're thinking about this and we're thinking about a purchase experience in terms of soft goods. So if you think about the way that ecommerce really started off, or at least as I recollect it, it was like comparison shopping sites where you were looking at like how many megapixels do you want in your digital camera. And a camera, those are very easy to compare because it's like, "Oh, it is three or it is four." Whereas with what I think of as soft goods, there's so many different variants on like a V-neck top that it's almost a little bit overwhelming.Stephanie Yee:And then on top of that, a lot of the typical searching and filtering is not really going to get people there, just because what might be a great top, even if it's the same aesthetic, what may might be a great top for you might be not as great for me or vice versa, just because it's like, "Oh, you know what? I really need things that are machine washable, or I have very narrow shoulders or something like that." So Stitch Fix is really trying to distill a lot of these things that are ultimately very difficult to categorize into what we would call a latent space, but really to say like, "Okay, we have something like style." Style is not what lunch table did you sit at in high school, it's really a form of self-expression. And because people are so different, we need to be able to use data science to quantify where people are on a spectrum versus what category they're in. To handle this like-Stephanie Postles:How do you even encourage people to get maybe the feedback that matters? Because I'm even thinking like if I were to get a shirt and I'd be like, "Well, it doesn't fit," I know you're probably behind the scenes like, "Well, why? What part doesn't fit? What don't you like?" How do you encourage someone to tell you what you need to know to then send them something better?Stephanie Yee:Yeah. That's a great question. So what we found, I think that the motivation to give us feedback is actually just an inherent part of the service. I think a lot of people they'll like... When I've styled people and maybe I've missed the mark, people will say, "Oh, you know what? You didn't get it right the first time, but here's more what I was looking for." If you think about it as a relationship, it's not a transaction where you walk into the store and you say like, "I'm happy or I'm sad." It's relationships and relationships are predicated on that back and forth. So it's really a phenomenal percentage of clients that leave feedback on a fix. It's something like 85%.Stephanie Postles:Wow, that's great.Stephanie Yee:It's just like an intrinsic part of the relationship just because we do frame it as a relationship.Stephanie Postles:Yeah. I think having that stylist there really is what forms a human connection, where you're like, "Well, this is..." Of course, there's a bunch of machine learning and algorithms behind the scene, but there's a face here, a human who's actually approving this style and making sure it's perfect for me. And you instantly feel that connection and you don't want to let your stylists down [crosstalk] get that feedback.Stephanie Yee:Exactly, exactly. And similarly, the stylist doesn't want to let the client down. So there's that level of trust that gets established. And from there, I think, a lot of the desire to say like, "Hey, this had a fit issue for me because it was too long or something like that." There's just something that's special there inherently. And then on top of that, we obviously do encourage clients to give us feedback, like we'll give them a nudge. But we're certainly not the type of company that has to like... They'll come to us rather than us having to really force the issue, will say.Stephanie Postles:Yep. What are some of these subtle nudges that you give that aren't annoying, but then encourage the person to give you the information you need to help them. I think a lot of brands struggle with that, where they either don't follow up at all sometimes if they want feedback, or they do it too much and you're like, "Whoa, chill." How do you guys get that right blend?Stephanie Yee:I think that there's two parts to that. One is saying like, "What's the right number of times to be asking or to be reminding really because it's less on asking?" It's just more like, "Hey, if you want, you can leave feedback and there's someone on the other end who's going to be really thinking about it and responding to it." I think it's figuring out like what's the right time to tell people, and it's really like when would this be relevant to someone? I think that there's some other aspects where it's like what's the right time of day to reach out to someone? And all of these can be distilled down into data science problem or data science opportunities. I really find that to be really interesting. I think that there's another aspect, which is that the clients do come back to the app and come back to the site, even without looking to transact. Once they're there, then it's possible to be like, "Oh, by the way, did you want to..." Just making it really easy and lowering friction to giving feedback. That's another way that we're able to implicitly encourage it.Stephanie Postles:Yep. So with all this feedback coming in, it's a lot of natural language that you're probably getting, or is there any tech that you're excited about right now to help you categorize it? Are you looking into GPT-3 or anything new this year that could help solve that problem when people are just giving you probably long paragraphs of like, "Here's the things that aren't working for me," and they're just putting in terms that you're like, "Okay, I can actually build any database at this."Stephanie Yee:Yeah. I think it's interesting because I think some of the unstructured texts or data generally that might be, I would say, overwhelming to someone like you or I. Computers are actually quite good at processing it. So I think GPT-3 is really incredible, sort of advanced in the way that we're thinking about the opportunities that come from natural language processing. So I think the team is really actively thinking about like what's the right way to bring that into the client experience? We certainly want our stylists to continue to be proactive and like a central part of that relationship. And we're actually trying to figure out like, "Okay, how can we actually bring the stylist forward even more?" But I think the way that I would look at it is I actually love it when there's a large corpus of data, will say, just because there's quite a bit of things that one can infer or pull out of that that would be otherwise a rather arduous task for a person like you or I.Stephanie Postles:That's great. Earlier, you were saying that the team is looking at how to maybe utilize GPT-3. And it can be for the overall industry, not just Stitch Fix too. Is there anything where you're like, "I could see this really impacting ecommerce in this way," because that's the one area that I've been trying to look into it? I can see all the things that you can do with it, from not having to code things and writing books and stuff. How could it actually impact ecommerce or data science or behind the scenes?Stephanie Yee:Yeah, I think that's a great question. I would say that if you think about... GPT-3 is a really great way to translate information into the format that people are used to absorbing information in, which is text. I think that it's especially important going back to the like you can't…
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