The Results Are In: Which Strategy Helps eCommerce Brands Grow the Most?
Quick Summary After posting a poll about eCommerce strategy on his Linkedin, Avex CEO and Founder John Surdakowski came to the podcast to discuss the results with Avex Senior Strategist David Anzalone.
Poll Question and Results
John 3:57 - 4:50 So let me kind of go through it: what's most important to eCommerce brands over the next 12 months? The options were PPC/social (reducing customer acquisition costs), next was conversion rate optimization, followed by loyalty and retention, and after that, customer experience.
Now PPC and social got 9% of the votes. And if I would have asked that question, a few years ago, I feel like it would have been astronomically higher, especially even a year ago, it would have been higher. The next ones up were customer experience, followed by conversion rate optimization, and then the biggest one being loyalty retention, which we'll get to in a bit.
Why PPC/Paid Social Was Last (9% of Votes)
The Importance of Paid Social for New Brands
David 7:03 - 7:48 I'd also be interested to see in the future if you ran this poll, if you labeled the type of brands because for eCommerce brands, there's so many different kinds. If you ask a brand that started maybe a month ago, specifically, PPC/social is probably going to be the most important thing over the next 12 months.
When you're just starting and assuming you're not a brand like Metal Umbrella, which we recently launched, all of their traffic was driven through organic and owned channels on social because the founders of the brand have such a huge presence. But most brands don't have that luxury.
The Technical Side of Paid Social
David 8:01 - 9:16 You think about a founder of a DTC brand, unless the founder specifically had a background in this, I'm sure they're the most uninterested in being super involved with PPC and social because if you look at the list that you mentioned, it's the item on the list that has the least to do with the brand's individuality. It's probably a reason why most brands choose to outsource this activity, because it's not only very technical, but it doesn't really speak too much to the brand's identity and a sense of growth.
It's almost a necessary, I don't want to say necessary evil, because it's not like they're inherently evil. But I think if you had to ask all brands, if you could make the same amount of money, and not engage in it at all, I'm sure everyone would say, Yes, because no one really wants to have to run ads. The more you own your own channels and your customers, not only does that directly reflect on the power of your brand, which is a good benchmark of that, but you also don't have to spend as much.
John 11:38 - 12:43 I do think that in general, Facebook is extremely expensive. Instagram is very expensive. And it's difficult, it's really hard. You do need to have an agency for it, people do learn how to do it on their own. But not only is it there the cost of the actual ad spend, and possibly even paying someone to do it, but you have to create great content too.
If you're able to create amazing content and amazing copy, and you have an organic reach, and you're able to build that organic reach, that's going to be a much better investment. Because let's just say you get someone to buy your product from an ad and they come to your site. You had to pay for them, first of all, and then you don't necessarily retain them if you're not focusing on a really good customer experience, not focusing on customer retention and loyalty, and not optimizing your site for conversions. So I do think those other things are a lot more important.
Why Brands Have to Run Ads
David 15:43 - 17:24 If someone is searching for vacuum cleaners, and all of your vacuum cleaner competitors are running ads, when people search a vacuum cleaner, of course, they're going to come up and you're not. It's a losing battle in that sense of getting new customers because they are doing it, so you have to do it.
To use a really loose analogy, or metaphor, and a way to really compare this to, let's take Europe, like 1000s of years ago, where there was a lot of different kingdoms and society states. I'm sure where you had to defend your kingdom, right? Because if you didn't want to fight or you didn't care about war, and you didn't have any defenses, then people could just come and overrun your society or Kingdom but by having a defense – it could be guards, it could be a moat, you're at least giving yourself that and you're not dealing with it right? Like if you run a kingdom and you're not very like bloodlust or bloodthirsty, you want to have people who defend the kingdom take care of that, because you want to focus on growing the society. So I almost see ads as like that defense of just the thing you have to do to kind of keep yourself competitive and existing within the space.
Paid Social Media Marketing vs Organic Social Media Marketing
John 18:52 - 20:26 There’s a brand called Mid-Day Squares. They make healthier all-natural chocolate protein bars, plant-based, 100% organic, and they're killing it when it comes to content, like their Instagram is the three founders just filming and doing fun stuff. And you can't use that content for an ad, you 100% have to be organic with it. They're not just showing images of how cool their product looks or what it's made of. Their entire Instagram is them filming like a behind-the-scenes video, and then just like doing like photoshoots with them, just like doing like funky stuff. It's really cool.
I definitely urge everyone to check out midday squares if you're like a CPG brand or any brand in general that's looking to really step up your organic social content. They're very active on LinkedIn too. One of the founders is always posting on there about the business side and they treat Instagram more like just that fun side.
You could have fun with running ads on like Facebook and Instagram because there's some that could go viral, etc. But, most of the time, you're going to have more interesting content on your organic social channels. So that, like you said, it's kind of that necessary thing that you have to do to obtain new customers. And no one's pulling their entire budgets, but I do see there being a bit of a shift.
Why Loyalty and Retention Was First (40% of Votes)
Benefits of Building a Brand’s Community
John 10:41 - 11:37 I do think that practitioners, marketers, agencies, consultants, have been talking about loyalty/retention for quite a while as that being something that is more important than winning new customers, because, honestly, that's what's going to lower your cost of acquiring new customers.
But brands, when they think about loyalty, it's something that they want to achieve when they’re trying to build a community and build loyal customers, but they don't necessarily know how. A lot of times, they'll say they want to do loyalty or create a loyalty program. And essentially, they're just like plugging in Loyalty Lion or Swell or something like that, and not really focusing on how it's going to benefit the customer. That also ties into customer experience.
John 13:19 - 14:06 I'd rather have a small group of loyal customers that are consistently buying for me than always trying to acquire new customers and having to keep dumping money into it. It just it helps your margins, it's easier to manage, it's more fun, you're able to put out really great content and do different things and focus on building your brand rather than just rather than focus on who we could target better.
But I think the major driver of this is going to be the changes happening on Google, Apple and with Facebook and Instagram, where it's really expensive, it's harder to track, it's harder to see who's coming from those ads. It’s going to get even harder with all of the privacy things. So I think brands are starting to feel that, and they're starting to shift a little bit more towards other things outside of PPC and social.
Increasing Loyalty Through Influencer Marketing
John 42:04 - 43:19 if I was going to start a brand right now, I would put the least amount into paid social and paid search – I’d probably put nothing into paid search, maybe some retargeting. I would put most of that into influencers. Influencers would be the highest priority right now because if you don't have any reach whatsoever, you should leverage someone else's platform. That's really where you're going to drive some kind of PR and some traffic to your site.
So I do think influencers are really important especially in the early stages or using some other someone else's platform and then building that community. You want people to spread your product by word of mouth, for people to sign up for subscriptions. It's not just about giving them loyalty points, it's about creating that type of brand and focusing on branding that is going to make people huge fans.
Look at Apple and their products, people are diehard Apple fans, or they're diehard Android fans like they created their own enemies. They created that good and evil type of mentality between like either them or Android them and Microsoft, so you have people who are hardcore fans.
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Getting Consumers to Buy Based on Emotion
Note: In the next excerpt, David is referencing the brand Bala that makes high-cost, aesthetically pleasing fitness equipment. Specifically, he is talking about their one-pound weighted bracelets ($49) and ten-pound weighted bar ($100).
David 48:43 - 49:58 The functional utility of these products for its value is awful. The price you're paying for the utility you're getting out of it is terrible. But the people that love Bala and the people that are buying it, they're not thinking practically like that, because if I went into AliExpress and I could find knockoffs of these bracelets for like $5. Because their brand is pretty big and has a huge following, then any new product they make (I think this bar is like a newer product of theirs) people probably buy it because they're like “Oh, I love Bala, it's part of my aesthetic, I love like the brand new set” and it's part of their identity.
I don't mean to like trash talk this brand because I follow them on social and I like their brand as a brand, just maybe not their products. But I could have easily said Apple because everyone knows Apple’s prices are not well reflected on the quality of their products in a utility sense. Thinking about functionality and utility, the dollar per I guess usefulness is a lot less than getting a PC in the same way of buying traditional fitness equipment versus Bala. You're getting more utility for a better price.
David 52:58 - 53:44 The more that people are buying your brand based off emotion and affinity, it just shows the overall the strength of your brand, whether you're doing this for financial benefit or not, (well everyone's launching a business for that) but whether your prices are the way they are out of the intention behind them.
I'll just keep using Apple from now on, Apple’s the perfect example. No one's buying Apple because it is the functionally superior product in personal computing. They buy it because–I mean, the same can be said for the iPhone, although I will say the iPhone is probably the best smartphone that exists because of how easy it is to use, which is a utility–people buy off emotion and if your brand is strong enough, and you're building up a loyal following, people are going to be more willing to give you money for your brand.
They're not going to think about your competitors as much because the less people care about your products compared to others, the stronger your brand is. The new iPhone that comes out, no one evaluates it like “Oh, the AI for the new iPhone is this price. I wonder how expensive the pixel is? And does it have better features?” Most iPhone users don't care about that, they're not going to make that comparison. They're just going to get the new iPhone because it's iPhone.
Why Customer Experience Was Third (25% of Votes)
David 20:46 - 22:08 I want to say at the very least a year or two ago, it was so easy to generate traffic to your website and gain revenue from there, because with a lot of these platforms, Facebook especially, had a very hands-off approach where you could just set up an ad and their algorithm would be good enough to target the people that you would need to receive. You didn't have to focus on other things, as good as they are.
The customer experience is important, but when it's not the thing that is driving growth, you're gonna naturally focus less on it, because people are going to follow where the money is. But the effectiveness, the competitiveness of paid media is so much more to a point now, where I think it is forcing people to focus on customer experience, forcing is not so much the right word, it's, it's allowing them to be open more to the idea that it's an important aspect, because it's like a given, like customer experience is like a good thing. But I think a lot of brands now having to focus on it, they're seeing the importance of what it can actually do for your brand overall.
How to Run a Customer Experience Audit
John 24:44 - 25:55 So like when you're doing like a CX audit, or you're really trying to look at your brand what we might do for one of our clients is you have to take more of a holistic and kind of unique approach in looking/understanding who the brand is, trying to understand their customers. Seeing the feedback that you're getting from the customers, and know that you kind of have to shift and move and you have to give people what they want.
It's not just customer service, that's part of it. It's shipping, it's returns, it's the communications, it's the content that you're putting out there, it's the emails that they're getting. One idea I saw recently was how some brands are doing some unique abandoned cart emails, like instead of just saying, hey, you left this in your cart, or checkout now for 10%. They reworded a bit differently, where it's almost like, hey, great news 10% off this item, and it was the item that you looked at, so it doesn't feel like an abandoned cart email. That's a better customer experience, even if it's just tweaking the copy of it.
Reviewing Your Brand’s Policies
David 28:40 - 29:27 Take a look at the policies you have related to your products or brand and think about it in terms of how much friction these policies could create for your customers. Then think about the parts of the policies that do create friction, think about why they're that way and if it really needs to be as such.
Let's take a clothing brand for example and let's say they have a policy of no returns outright like all sales are final for any product regardless if it's a brand new product, a sale product, returned in its original condition, unworn. Say they just have a flat-out no return no refund policy. Now, that obviously is a policy that has a lot of potential to create friction.
30:12 - 31:32 Think about, well, why aren't you taking returns? If we get returns, we have to give a refund. And we lose money. But is there any other reason, and if there really isn't, because let's say it's a shirt, right? The brand can resell that shirt, or they can do something with it, depending on the condition, especially if it's an unworn shirt, because the brand could add that back into their inventory. If it was worn, I kind of get why they couldn't, but usually a lot of brands will wash it or fabricate or do something to it before putting it back in its queue.
If there's no good reason you can't have a no refund or no return policy, then you might consider Hey, no returns past 30 days. That's more reasonable, that does that still have the possibility of creating friction, but you're being more lenient, and you're reducing the potential for friction. 30 days is a good amount of time for a person to evaluate if something fit, if they liked it, that gives a user plenty of time to make that decision. So that's probably something you'd want to update your policy right away with.
Why CRO was Second (26% of Votes)
CRO Takes Time
John 35:00 - 36:29 With Growth X, which is our CRO program, and we are really trying to be a lot more intentional with it and focusing on A/B testing and product recommendations, using tools like Dynamic yield, and Omniconvert, and a handful of others. Those are some of the higher-end options that are out there for brands like Dynamic Yield is not cheap. Nosto is not cheap, but it's maybe a bit more affordable. And then there are others that are far more affordable that you can run A/B tests on, you can personalize content, you can look at your analytics and be able to make decisions there.
But that's also very time-consuming, and a lot of brands don't have time. Other than running some A/B tests, a lot of brands don't have the internal staff to focus on just CRO, it either falls on some other employee at the company, or they're using an external agency. But that's where a lot of brands are going to see a straight-up ROI.
Of course, focusing on customer experience, improving that wherever you can, if you are doing paid social paid search, which I'm assuming most brands are making sure that your site is well optimized, because that's what's going to actually reduce your customer acquisition costs. If you're driving traffic to your site, you have to be optimized for conversions, and you have to be A/B testing. That's where you're going to figure out where your sales are coming through.
The Benefits of Implementing CRO
David 38:11 - 39:26 If the amount of new customers that are coming in are less and less through paid channels, you're going to want to make sure you're optimizing that experience, not only for those users, but for anyone that's coming to your site.
I think a lot of brand owners understand the word conversion rate optimization, or they've heard of it, but they don't really know everything that goes into it in regard to these platforms, the experiences that you can run, and the overall work involved.
What people do understand is the potential for these really quick wins. If you can identify who your customers are, and you create segments for them, whether it be based on gender, spending behavior, location, it's as simple as, show these products for this type of people, and it'll happen pretty much automatically as soon as it's set up (assuming the quality of your segments and the quality of the experience that you're creating is well).
You run it, and you don't have to manually think about how am I serving all of our different customers, you plan that out beforehand, you kind of set it up, and then you let it run. And the experience will tailor itself to the user after doing a lot of that upfront work.
John 54:19 - 54:55 Just to kind of recap more and more brands focusing on customer experience, CRO, conversion rate optimization, most importantly, loyalty and retention. That's going to pay dividends for much longer.
Whereas PPC/paid social, totally still part of what you should be doing, not saying you shouldn't be, but it seems to be less and less of a higher priority for certain brands depending on their level. So I'm going to send out some, maybe another poll or two to get some insights on influencer marketing.