A Playbook for DTC Survival with Allen Burt from Blue Stout

Kristen: 

Okay, we are officially recording in three, two, one. Hey Allen, you are officially our first second time guest on Playing for Keeps, which is super exciting. I'm really happy that you offered to come in for this kind of special episode. How are you doing today? How are you doing with all this craziness going on in life right now?

Allen: 

Yeah, I keep referring it to the Twilight Zone. It's just like this upside down world, you kind of wake up and you're like, "Are we still doing this? Is this just a dream?"

Kristen: 

Yeah.

Allen: 

So, I think I'm in the same boat as everybody right now, which is we're all sick of it, and all just trying to figure out how do we get through it, and then my mentality is how can we try to find the silver lining, and sort of put ourselves in a better position once we do all start to come out of this to really thrive?

Kristen: 

Yeah, and that is going to be a big theme in this episode. I think it's really safe to say that the COVID-19 crisis we're in is going to be one of the biggest defining moments kind of in our history, but more particularly related to this podcast for ecommerce. Some industries we're seeing absolutely booming, while other brands are kind of having to cut their workforce, and you see this kind of dichotomy happening in ecommerce, and I think what you're saying, it feels like this total whirlwind of like you wake up, and it's just, "What is today going to hold? What do I need to do today?"

Kristen: 

And Allen, something you and I talked about before we hit record was how scary it is for a lot of ecommerce operators, and I know you've gotten to spend a lot of time working with your clients to kind of adjust them to this new normal, to figure out some things that are working, and you have a lot of thoughts and ideas to share, which I'm really excited. So, let's just dive right in. I'll just get right to it, right now what are ecommerce brand supposed to be doing in all of this uncertainty?

Allen: 

Yeah, and it's a great question, it's question that we're getting asked pretty much by every single client that we have either on the agency side, or clients that we advise, or invest in, and the answer that I keep coming back to, and this is as much as the way we think about our businesses as much as we think about our clients businesses is that when times are really good it's really easy to overlook the things in the business that aren't working very well, right?

Kristen: 

Mm-hmm (affirmative).

Allen: 

And when times are bad, those things start to shine, those things start to sort of bubble up to the surface. So, what we've been doing with all of our clients in our business is saying, "Okay, this is a ... we recognize that this isn't perfect, that times are hard, so let's figure out what in the business is not working, or where we can go and create more what I call leverage in the business, so that we can start to shave away at these rough patches or pieces that may have not been working so well, and really try to shore up the fundamentals, so that, A, we can get more cashflow in these companies now, but then even more so put ourselves in a really good position to scale with that leverage once times start to get a lot better."

Allen: 

In ecommerce specifically, the areas that we see that brands should be focusing on are, A, your current traffic sources, your current existing audience, and your current existing customer base. Again, kind of going back to the same concept here, when times are really good it's a lot easier to go out, find cold audiences, present your product, present your offering in front of those cold audiences and drive sales. In times like this when, A, people are just scared in general, wallets are tightening up, it's a lot harder to convert those audiences today.

Allen: 

So, if you're in a position with your brand where you need to get cash in the door, or you're seeing a significant drop in revenue, and you need to start to bolster that back up, where we're seeing success with our businesses and clients is specifically in saying, "Okay, how do we double down on our current audience, how do we double down on the people who have already spent money with us, or they put their credit card down multiple times, and how do we go back to that core customer, and traffic, and audience base, and get them to buy more in an authentic way?" So, that's the big, big sort of general theme that we're focusing on right now.

Kristen: 

Yeah, and I mean, obviously I love this, because it's going back to retention fundamentals, which is what I am here for, it's what this whole podcast is here for, and so there is almost, like you were saying at the very beginning, trying to find some silver linings. For me, this is a little bit of a silver lining for ecommerce is that we are kind of being forced to take a breath, and try and calm down, and then look at, okay, what can we leverage really quickly, and what is the biggest source of opportunity? What we're seeing is it's in the existing customer base, because like you said, there's a big psychological play that we can talk about too, which is by the time someone has put their credit card down, received your products, maybe done that multiple times, the entry to barrier is so much lower than when you're trying to get repeat purchases.

Kristen: 

But like you said, a completely cold audience in good times is still really difficult to get, that's why retention is becoming a thing, but now even more difficult, because people are going to, I think, really start hunkering down into the brands they trust and they already know, because there is so much uncertainty in life, and business, and everything going on that if you already know like, "Hey, the deodorant from Native is what I've been using for the last couple months and I really like it.", and you get an email from that company with a deal or whatever, you're going to stay with those things, because consistency right now and sticking with things you trust, I think, is something a lot of people are going to be doing, which is really exciting for someone who loves retention like me. And like you said, just trying to think through what can we do right now that is going to benefit our existing customers, not so much what are we going to do right now that's going to get me an entirely new cohort of customers?

Allen:

100%, and I think there's a few things we can talk about with silver linings and opportunities too in a second, but you're 100% right with the concept of at the end of the day as wallets are tightening customers then they retreat to what they know, and what they feel comfortable with, and if your brand is something that they have purchased from before, or purchased multiple times before, they're going to be much, much, much more likely to go back and buy from you than to buy from somebody else. So, that's where you should be placing your emphasis and your attention right now. It's like the analogy I give is ... my wife even today was saying, "What are we doing for dinner tonight? Should we cook something? Should we try to support a local restaurant?", and we're talking about, "Okay, well, let's try to support a local restaurant.", and she immediately goes to the two that are her absolute favorites where she knows the owner-

Kristen: 

Yep.

Allen: 

... she knows the story, right? And it's because she wants to support them. It's not that as brands we should be going out there and asking for a handout, that's not the approach I'm saying. What my point is, you don't necessarily have to change the message too much, although we'll talk about some ways you can, it's more so about knowing that just fundamentally the customers that already love you, they're going to be the ones who are mostly likely to continue to buy from you during these times. And if you haven't put in place the tools and the systems to leverage that better, now is the perfect time to do it, A, because it's going to help you drives today, but even more so as times start getting better, and you start driving more cold traffic into this machine, this business you've created, having that leverage that's there that's already doubling down on existing traffic, doubling down on existing customers, driving up and maintaining high retention rates, that's just going to compound once times start getting better.

Kristen: 

Yeah, and that's something really important to note, and something we both agree on is kind of this idea that if you can hunker down and you can survive this kind of Twilight Zone, and building all these internal things to actually delight, and retain, and keep your customers close, when this all kind of calms down and we enter a recovery stage the brands that have done that are going to, like you said, just thrive, because when we can get more people in all of a sudden we have this built in thing that is going to actually increase their retention, and increase repeat purchases.

Kristen:

So, it's kind of ... I mean, that's the silver lining, there's this opportunity right now to do that without having to really worry about like, "Oh, we've turned off too many ads, and we're not bringing people in, because right now it's going to be hard." So, it gives you that opportunity to think long-term and think about recovery, while also still keeping your wheels turning and connecting with your customers right now. So, let's just kind of dive into some areas that you think are the biggest areas of creating this leverage like you talked about. Before we hit record we kind of talked about three main ones, and I think we can go one by one.

Kristen: 

So, that first one being the conversion rate optimization. Like you were saying before, when times are good, little things can be okay, little leaks, little issues can kind of just be overlooked by customers, but when times are bad they're going to notice every little thing a lot more. So, the first one we talked about was the conversion rate optimization, so what are you seeing on that front of things that are working, or things that you're improving with your clients?

Allen:

Yeah, and the best analogy, and you sort of alluded to it with conversion rates, are thinking of your stores essentially like a bucket, and a leaky bucket with holes in it, and when times are really good, and you're pumping traffic in, and you've got a strong source of cold audiences that are just starting to warmup, and moving through the purchase funnel, think of it just like a fire hose of water pouring into the bucket, that you can have a lot of holes in the bucket, and the bucket's still going to fill up with the fire hose pouring into it. Once that fire hose turns off, or if you got to shut it down, or reduce it by half, whatever it may be, those holes start to leak pretty heavily and become a lot more noticeable.

Allen: 

So, I think a lot of brands are sort of seeing that today, which is they really relied on performance media, or performance spend, and once that started to dwindle, or they had to cut back, it became very clear that the site wasn't performing as well as it probably should have. So, it's a really, really good ... again, silver lining here is that it's a great opportunity to assess performance and say, "Okay, where do we fall?" When we look at conversion rates we specifically look at ... first off, the thing I always say is that I think a lot of folks hone in one conversion rates and think of it as this number that has to be at a certain level, which isn't necessarily true. Every business has a different conversion rate, and there's lots of factors that come into play.

Allen: 

So, it's very difficult to go, "Hey, we converted 2%, is that good?" We get that question all the time, and it's like, "Well, I don't know." We have to look at the entire business as a whole, lots of factors that come into play. So, that's sort of the first piece is recognizing that even just looking at benchmarks, industry best benchmarks aren't going to tell you whether or not your conversion rates are strong or not, right?

Kristen: 

Yeah.

Allen: 

They're going to give you an indication of where you fall, which is the first step, and something that I still recommend doing to see kind of where you align, but ultimately you have to look at, A, can you take somebody that's coming in from, let's say, an ad, and can you actually convert them profitability, right?

Kristen:

Yeah.

Allen: 

At the end of the day, those are the numbers that matter, it's traffic times your conversion rate, times your average order value, that's what equals revenue, and then you need to factor in your repeat purchase rate into that to ultimately determine how well the entire [inaudible] performing, but if you have a really high AOV, and you've got really cheap traffic, you can have a really terrible conversion rate and it doesn't matter, right?

Kristen:

Yeah, yeah.

Allen: 

So, you got to look at the entire equation. But that being said, if you want to hone in specifically on conversions there's really sort of two faces to do it in. I always sort of give this ... I give an analogy of an F1 race car, and I'll sort of explain that in a second, but you got to look at the fundamentals first and say, "Okay, are we addressing the fundamentals of the customer purchase funnel, and nudging them through, and communicating to them correctly on the way through." The analogy I use is like, your site is an F1 race car, and a lot of folks like to go in and immediately try to fine tune the engine, right?

Kristen: 

Mm-hmm (affirmative).

Allen:

And that would be like, "All right, let's A/B test this on the product page, or let's A/B test this element on the homepage.", or they start talking about button colors, or they start talking about very specific tweaks to the language of the copy, and I compare that to fine tuning the engine in an F1 car, but that makes absolutely zero sense if you're missing two of the tires on all of it, right?

Kristen:

Yeah.

Allen: 

So, a lot of brands kind of make this jump and go, "Okay, conversion rates, we're going to focus on it, let's immediately start running some CRO testing, and start dialing in that optimization." I'm like, "Okay, that's fine, that makes sense, but let's also make sure you got all four tires on the car first." So, the place that we always start with is the fundamentals, we want to take a look at your purchase funnel and say, "Okay, where are you driving traffic from? What's the context of that buyer, are they coming in from organic, are they coming in from Google ads where there's a very specific sort of buying intent, are they coming in from something like Instagram or Facebook where t here is no buying intent, it's really just sort of an inspiration intent where they saw your ad, or were inspired to click through?"

Allen: 

So, you have to understand the context of the buyer, where they're coming in, is the messaging potent at the point where they enter the site, how are you moving them through that messaging from home page into collections and the product page? Are you addressing the sort of emotional or logical concerns of the customer on the product page? What are the major barriers they have when they're moving towards checkout, both from a UX but also from a messaging standpoint? Those would all be the big things that we consider the blocking and tackling of conversion rate optimization, and those are things that if you see issues or misses in any of those areas you just need to fix it. It's not worth A/B testing it, just fix it, because it's like-

Kristen: 

Just get it better.

Allen: 

Just get it better, just put the tire back on the car, right?

Kristen: 

Yeah.

Allen: 

So, that's where the first step would be, sort of assessing your funnel, or assessing your site and the pathway your customer takes for each of those major stages and ensuring that, A, you're messaging them correctly, you're reducing the friction from each stage as they're taking that next step towards a purchase, are you increasing that level of product desirability by selling to them emotionally? We can go into this if we want to later, but there's a whole set of tactics and formulas for how to really drive an emotional response on a site. Are you understanding and anticipating all those barriers they're going to have before they buy? All those logical questions they're going to have either about the product itself, the process it takes to actually buy the product or return the product, or the warranties, any sort of trust barriers they're going to have. Assessing all those major elements, and ensuring that you're addressing them, and they've been built in. That's step one.

Kristen:

Mm-hmm (affirmative).

Allen:

And once you have that in place then I do highly recommend going and refining every one of those elements with A/B testing. So, testing messaging, testing different offers, testing things like free shipping thresholds, things like that.

Kristen:

Yeah, and I have to say for listeners who might be listening and being like, "Oh, I know our fundamentals are set.", it's actually surprising, I do a lot of customer experience audits, which means I go through a certain channel, I act like a certain kind of customer, and I go through the entire buying process, and the amount of lack in that foundational kind of buying process that I see is pretty shocking. Just the simple stuff of you go to an Instagram ad, you swipe up, and I'm not being sold emotionally, I'm not being told about the product, there's always some kind of disconnect there.

Kristen: 

So, if you're listening, the biggest piece of advice I can give you is to go do what I do, and go pretend you're a customer coming from Facebook, from Instagram, from an organic search, find different channels in, and then go through your buying process like that, and note down everything that happens. You're going to find areas where it's pretty clear where you can optimize and improve that experience. So, really that phase one is huge, and that's so important. I want to highlight to the listeners, that is the most important thing before A/B testing, before getting into super, super microcopy, is just the experience good enough as is, especially with a lower income of people coming into the funnel.

Allen: 

The analogy I always give for that like flows, it's ... I had sisters growing up, so I was always forced to play Candy Land, I don't know if you've ever played Candy Land?

Kristen: 

Yep.

Allen: 

But it's like, I think of the buyer journey as that weaving pathway through Candy Land with all these different obstacles, and bridges, and pathways, and messages, and signs, and that's exactly what your customer's doing throughout their journey with you. They might see an ad, or be introduced through a PR through an article, or through an Instagram post, whatever it may be, or even just word of mouth. They come to the site, they've got a first experience, they leave. Maybe they see a retargeting ad, and they come back. Maybe they sign up for your newsletter, and then they come back again after they get that email. Then maybe they add to cart, then maybe they leave again. It's a pretty winding pathway they take, and the touchpoints with your brand can be anywhere from five to 20 plus touchpoints before they ultimately buy, and the way that you message to your customer at every stage needs to be completely different, right?

Kristen:

Mm-hmm (affirmative).

Allen:

And somebody coming, you mentioned coming from an Instagram from the first time, landing on your product for the very first time, they're going to have a lot of questions, right?

Kristen:

Yeah.

Allen:

There's a lot of things that they don't know about you that you need to present at that stage, and they need to really deeply understand the value proposition of the product and the brand right then and there, and then versus somebody who has seen the product, or seen the brand multiple times, and has the product in their cart and is ready to buy, messaging at that point. They've already been emotionally sold, they've added to their cart, and it's much more about the logical concerns they have about buying, whether it be shipping, or returns, or product quality, or something getting there in time. It's a whole different set of messaging at that stage in the buyer journey than it is at the beginning. And that's a big piece of the fundamentals is not just have we dialed in our messaging, but it's have you dialed in the messaging at the specific point of the site that your customer is going to be at when they are at that point in their journey with you?

Kristen: 

Yeah, absolutely, and that's really it comes down to kind of eating your own dog food, and going through and seeing those experiences, because there's also things like I've seen a lot of brands where I'm going through a process, and we all have different tools, we've got something running our subscriptions, something running our checkout process, something running email marketing, and something I see a lot of actually all of those tools not really working to create this nice experience.

Kristen: 

Sometimes you have multiple tools acting at once, and you're getting different messages at the same time from ... like yesterday I had a recurring charge go through, and I got a receipt from ReCharge, a receipt from Stripe, and a receipt from the brand. Just simple things like that, making sure that these touchpoints are building that journey, and actually working together in a way that makes sense, and not kind of fragmenting that Candy Land experience, basically.

Allen: 

100%. So, that's my recommendation is the first place to start is exactly what you said is auditing your journey, or having somebody else audit your journey for you, and making sure that you've got those major, major conversion components in place, and then once you do, if you do have enough traffic, and any brand that's doing multiple seven figures in revenue does, is that it makes sense once you have those components in place to then start refining them, and A/B testing them to get some additional lift.

Kristen: 

Yeah. So then moving on, the second place we talked about was average order value, which is it's a pretty big piece in this, especially now that if you get somebody all the way to conversion thinking, "Okay, how can we get this order value increased?" So, are you seeing specific ways that are different from before that are working for this in this kind of new time, or is this again getting down to the foundations, and really making sure it all works?

Allen: 

Yeah, so there's a little bit of both. I think a lot of folks forget about average order value. They focus on traffic, and then I think sort of the second area people would focus on would be conversions, right?

Kristen: 

Yeah.

Allen: 

And then I think a lot of people miss the component of order value. So, I think there's part of this where there's a lot of folks out there that just haven't tested, or haven't tried to do anything to increase AOV. So, for them, I'd say fundamentals, like that you need to test the fundamentals, and there's lots of ways to increase AOV on site. The most sort of low friction way to do it would be something like a post purchase upsell.

Kristen: 

Yeah.

Allen: 

Something that comes after the fact, or really deep in the checkout experience. The sort of more top of funnel approach would be things like free shipping thresholds, and sort of incentivized tiers, loyalty program incentivized tiers, or discounted tiers, or free gift tiers, things that are going to incentivize people adding more product to cart during that initial purchase process. So, that plus bundled offers, or through upsells on product pages. We're working with a high-end nutrition brand right now that's targeted towards moms, and the product page specifically is built around these sort of bundles of nutrition. I've worked with another very high-end skincare brand where if you're using one of their products you're also probably using another one of ... or, if you're using the face cream, you're probably also using eye cream, you're also probably using the face wash, right?

Kristen: 

Yeah.

Allen: 

So, these-

Kristen: 

And if you're not you should be.

Allen: 

And you should be, right? That's the whole reason they've all been formulated to work together. When we started working with them they were just selling products one off, one of the very first things was a very, very simple addition but just making sure that we built in a complete your regimen, you know-

Kristen: 

Yeah.

Allen: 

... section on product pages, where it's like, "Look, if you're using this face wash the rest of that regimen is these two other things, and add them to your cart as part of a bundle." Not even a discount, just add them as part of what you're buying because they naturally go together. So, increasing AOV doesn't even have to have an incentivized, or discounted, or free gift to go with it. It could just be a natural congruency between products that are in your catalog. So, those would be the fundamentals to start with.

Allen: 

If you're already doing a lot of the fundamentals for sort of the time we're in right now, specifically for COVID, there's also a ton of opportunity to better message in a way that would increase AOV, and sort of the best example that would be looking at consumable products. Trying to not name specific brands here, but like so let's say ... because there are very specific ones I could name. If you're a flour company, and right now baking, and bread making, and cooking making is just off the charts, right?

Kristen: 

Yep.

Allen: 

There is a very specific way you could be messaging people that are coming in that would typically buy one bag of flour. Everybody's holed up at home, they're quarantined, they need to buy maximum ... they're trying to stock up, there's a way to present product with bundles or offers in that way that's going to naturally increase AOV just because right now we're at a time where people are naturally buying more of something, right?

Kristen: 

Yeah.

Allen: 

My wife and I had a conversation this morning, we've got a three-month-old, and she's freaking out because she calculated that we only have seven weeks of formula left. Like, seven weeks of formula, that's a lot of formula, but she's freaking out, because she doesn't know how long this is going to last, and if the stores are going to have it. So, in her case her mentality is bulk buying. So, it's not to necessarily sort of do this in an inauthentic way, but if your customers have concerns, and your customers are naturally changing their buying habits to bulk buying, there's no reason you shouldn't be making offers and presentations that are naturally congruent with the way that they want to buy right now.

Kristen: 

Yeah, absolutely, and that makes so much sense to me. There's so many ways to do it, and like you said, it's really not taking advantage of customers, but thinking about why they're shopping with you, thinking about the value that your products are giving to them, and then explaining that at this time there is a benefit to getting more, and you can do that in a way that serves the customer, not serves your business. That's what I see these really good brands are able to do. I've seen it from a lot of coffee subscriptions, like Kettle & Fire did some stuff about bundling. All these kind of things where it's just messaging to the times, but being very aware and empathetic towards your customers so you're not just taking advantage of them.

Allen: 

100%, and what I would say too is specifically if you are in a category that is a consumable category, and in a food category, a lot of food products tend to have a lower order value in general if you just were to just let people buy it as they would typically buy it. One bag of coffee is 15 bucks, right?

Kristen: 

Yeah.

Allen: 

And it can be very hard if you're especially leveraging paid ads to drive that conversion. That's a tough number to be profitable at. So, something that I also see a lot of consumable brands doing, and we'll just stick with the coffee example, because I think it's a good example, is they don't test bundled offers well against things like paid traffic. So, you can have any sort of assortment, or sizing of product on your site that you want, you can let customers come in naturally and buy that one bag of coffee if you want them to, but if you're driving traffic specifically from paid ads, it makes sense to test and limit what you present to the customer from that traffic source, and test to see how high you can get your AOV. I was talking to a coffee brand the other day that they're ... for specific ad campaigns they run to AOV is around $60. So, people are on average-

Kristen: 

Wow.

Allen: 

... buying $60 of coffee in one purchase, and it has everything to do with, A, the messaging from the ad, the target of the ad, and then also the landing page they bring them to, which is separate from the site itself, and they're only offering bundles and product sizes that are a larger quantity. But I think a lot of consumable brands right now are going ... probably haven't, A, tested that to see how high they can push the envelope with their AOV, and what I would argue is that in today's times you're probably more ... you're more than likely than not to be able to increase the size of that bulk order just given the natural tendencies of buyers today.

Kristen:

Yeah, absolutely. And now we enter into the third and arguably my most favorite section of this, obviously my listeners know I have a deep, deep love for email marketing, and I say it a lot like, this is the biggest opportunity for most brands is to hone in on emails, automations, flows, personal outreach, all this stuff. For anybody who hasn't heard it, there is an episode that Val and I did, and we talked about a lot of campaigns that we liked, email campaigns that we liked, so for sure go listen to that if you're looking for some inspiration. But Allen, you are obviously the email expert, which is exciting. So, let's get into it, one, why is email really that third pillar that you're looking at, and then what's really working there?

Allen: 

Yeah, so great questions, and I think even the first episode you and I did I think we mainly talked about email for retention-

Kristen: 

Yeah.

Allen: 

... so I think we'll ... we don't have to talk about any of that, but the thing that, A, the reason why I love email, there's lots of reasons, but from what we see in the data that we have is that email is typically your highest ROI sales channel with anything that you do. There are exceptions to that, if you have an influencer, or you're an influencer backed company, and things like that. But typically email should be your highest ROI sales channel. Generally speaking, the amount of revenue that is attributed to email that's coming from your email efforts should range somewhere between 25 to 35% of total revenue, which is a substantial chunk of your revenue.

Kristen: 

Yeah.

Allen: 

So, sort of the first thing is if you're not seeing those types of numbers then you need to assess and figure out what's going on. We have some brands that we work with that exceed that and do 40 ... we have one brand during the holidays was doing 45, 50% of the revenue [crosstalk]-

Kristen:

Wow.

Allen: 

... and so it's ... lots of factors come into play, it depends on how much you're expending on performance marketing, and all the other channels that you have that are driving sales, because we are talking about a percentage, so it's all relative. But generally speaking, if you're only driving 10%, or 15%, or even 20% of revenue from email, you probably have a lot of opportunity to expand upon that.

Kristen: 

Yeah.

Allen: 

So, the two reasons why email is incredibly important today given the times we're in right now is first off, it's naturally a nurturing tool. So, you are bringing in ... if you are still bringing in cold traffic, if you're still driving ads, the best way to turn those cold ads into buyers is going to be nurturing. The term I always like to use is, and kind of going back to a previous comment I made earlier which was your brand is going to acquire anywhere from five, to 15, to 20 touchpoints with your customer, or potential customer, before they buy. When it comes to email we like to think of this as manufacturing touchpoints, versus just letting your customer naturally weave their way through your journey, and interact with your brand occasionally, we like to actually force that and manufacture it so that you can increase those numbers of touchpoints in a much shorter period of time.

Kristen: 

Yeah, I love that.

Allen: 

Email's the best way to do it. Well, when you think about it, somebody could see an ad, come to your site, and then they leave, and then maybe they just happen to see a retargeting ad a week later, and then maybe they see your Instagram another week later, and so you can let those happen organically over time. Maybe it takes a couple months, or a month, or you can get someone on your email list, and they get a six email sequence, and they hit retargeting ads, then they start following you on social because one of those emails also prompted them to your social account, that person's going to have the same amount of touchpoints in a two week period that they would've had organically in a two month period. So, it's going to shorten the sales cycle.

Kristen:

Yeah, and you have more control over those touchpoints-

Allen: 

100%.

Kristen: 

... in the messages that you're sending.

Allen: 

For sure, and to that point the way you should be thinking about it as every one of those emails, every one of those touchpoints should just be nudging the customer towards that next stage in the journey. Every email doesn't have to convert them, right?

Kristen: 

Yeah.

Allen: 

Right? And I think that's where a lot of people miss the boat on this is they see email campaigns, or they see specific flows, and they see low click rates, or they see kind of low conversions, or just revenue rates per email, and it doesn't mean that that email's not working. That email could be doing its job, and then they're converting on the next one, or they're converting on the next ad they see, right?

Kristen:

Yeah.

Allen: 

Because they go three emails from you, then they got a retargeting ad, and they're more likely to convert on that retargeting ad, because now they've been nurtured through your content on email. So, some of this is an attribution problem, and so you can only track so much of it through the actual metrics and email, but as a leveraging mechanism, the mechanism that creates leverage in the business, email is by far one of those fundamentals that you need to have in place to do really, really well, because if you do it makes everything else better.

Kristen: 

Yeah.

Allen: 

It makes your conversion rates better, it makes your conversion rates better, it makes your advertising better, it's just an all around boost to the business.

Kristen: 

Yeah. So, thinking about emails right now, I mean, there's been a lot of conversation of like, "Dear God, please don't send me another COVID-19 email." It's an update from the founder that tells me you guys are cleaning your store, we know this already. So, there is this tricky balance right now, so what do you even do as a brand when the line to walk is so thin? Is there a way you can even message this? Are you changing messaging, or is it better to kind of stick with the status quo, and try to just keep building relationships? How do you even go about deciding what kind of messages to send right now?

Allen: 

Yeah, and I agree, I think it's a 100% gray area that you have to tread lightly. The way that we've seen success with this is, A, you need to look internally and assess kind of where you fall, what is your product? Is your product an essential? Is it a nonessential? Is this something that people are going to be buying during these times? Is there a way to angle it and position it differently? So, I think you have to first off assess who you are and where you are. Go back to the flour example, in that case, people are just buying a ton of it, right?

Kristen: 

Yeah.

Allen: 

So, you might not have to adjust your positioning at all, right?

Kristen: 

Yeah.

Allen: 

So, just and in fact, instead focus on the fundamentals so that you can maintain that level of sale as you come out of this. I think in a lot of cases some of these food brands are going to see a decrease, because people are stocking up once we come out of this thing might actually get hurt. So, I think it's focusing on the fundamentals if you're doing really well, continue to focus on the fundamentals and put yourself in a position to continue to do well once you come out of this. If you're not an essential, then we saw a lot of people sending out emails kind of talking about, I think, what was this sort of initial scare of COVID, and sort of the concern about the virus, the concern about the virus being on products, I think we're over that, I think everybody's talked about that, and we're all over getting those emails.

Allen: 

At this point, our recommendation is to, if you can, adjust positioning if it makes sense. Not positioning saying, "Hey, we've been affected by COVID by our product.", but saying, "Look, we're a high-end speaker company that sells speakers, and for us we're getting hit, because it's a high-end and expensive product, and we mainly cater to audiophiles, and our positioning has always been talking about the very specifics of the product, and how we engineer it." Testing, adjusting that positioning to instead of talking more specifically about the product, adjust it to enhancing your home experience, right?

Kristen:

Yeah.

Allen: 

Everybody's at home, everybody's spending tons of time at home, that product is so very relevant to people that still have money, and there are a lot of people out there that still have money, and they're spending a lot more time at home, and they want to optimize that at home experience. So, can you adjust your positioning and messaging not to speak to COVID, but just speak to the lifestyle change that the customer is in, right?

Kristen: 

Yeah.

Allen: 

So, I think that level of adjustment can be made across multiple, multiple, multiple different product verticals. We've got a brand we work with that's sort of at home and children's good company, it's a leather goods company, they're higher end products, and for them I think it's a great time to position what they do as a way to really enhance the at home experience.

Kristen: 

Yeah.

Allen:

Everybody's at home with their kids, everybody's stressed out because their kids are out of school, and they're like, "How can you reduce the stress at home? And how can you make that sort of area, that kids' play area, or your kitchen, or your living room, a little more zen, a little more stress free, a little bit easier to clean to take the edge off?" So, I think there's ... I don't think everything has to be presented through the lens specifically of saying, "Hey, we're going through the coronavirus, this is what you should do." I think you need to think a little more subtly around what's the mindset of everybody on a day to day basis, and how can you subtly adjust that position just to be more representative of where they are today?

Kristen: 

Yeah, and that marketing to the mindset is something that we've talked a lot about in multiple episodes this season, and that's the power of marketing to a story and a mindset versus marketing to, say, a specific demographic, or a specific need, is that you then have the ability to adjust and flow with your customers mindsets adjusting and flowing. I mean, for some people like you're saying switching this positioning is going to pretty easy, and there's going to be a clear path, for other people it's going to be a little more difficult. But I was trying to challenge myself a few weeks ago to think about this, and something that I thought about, I actually purchased a $170 pair of hiking boots in the last two weeks, which if you think about it it's like, "Well, I'm not really going to be able to wear those anywhere, because I can't go to popular trails."

Kristen: 

So, at first I was like, "Okay, why did I choose to buy that?" It's because I actually saw an ad from the company that I didn't even really process until later that they had a guide for breaking in your hiking shoes inside, and why it's actually better to do that, because then you can find out if you like them before you take them outside and they're nonreturnable, and a guide on how to do that. It was something that I didn't even sit and read it, but it got ingrained into my head, and then when I thought about like, "Oh, I was going to buy these anyways."

Kristen: 

When that doubt came up of like, "Well, I can't use them.", it immediately was overturned by, "Oh, well now I get like the entire return period to actually walk around at home, feel these out. I can use this guide to kind of break and mold a little bit to my feet, and then decide.", and the purchase became really simple. So, there are a lot of ways through content, through positioning, through the messages you're sending that you can still get people to buy, and just shifting that mindset, and thinking about the stories people are going through now is so, so powerful.

Allen: 

100%, and so you kind of have to take it on a product by product basis, and I love that example. I would've never ... when you said hiking boots I was like, "I'm very curious to see what this angle was.", but that's a great angle, because it's true. I mean, that's exactly what you want to do.

Kristen:

Yeah, and so I guess if somebody's listening, and going back to this, they're looking at their email programs, they're looking at these numbers that we put, 25 to 35% potential revenue to drive from email, and they're looking at it and they're like, "Oh God, we're driving under 10%.", what are the first things you do if that's the situation you're in?

Allen: 

Yeah so, great question. So, the first thing to do is the fundamentals, like I would not focus on the COVID sort of positioning yet, I would say, "Okay, are we actually ... do we have all four tires on the car?", right?

Kristen: 

Mm-hmm.

Allen: 

That's sort of the question I always ask when you look at brands, it's like, "Where are you missing a tire?" When it comes to email, the fundamentals are, A, flows, so your automations, there's different terminology for the new drip campaigns, whatever you want to call them, in services like Klaviyo we call them flows and automations. A, are you firing them, B, do you have them, and are they actually set up to be those baseline flows that you need that are representative of each stage in the customer journey. The way that we think of email is this term we call lifecycle email marketing, and the idea is that we talked about sort of the KLN board and the steps that a customer takes in their buying journey with you, email and specifically flows should be layered on top of that exact journey, any Gmail should be positioned to nudge somebody and push somebody towards that next stage in the journey.

Allen: 

So, if you're looking at, and this is just a very general set up, you kind of have to do this on a brand by brand basis, but do you have your welcome series, do you have browse abandonment series, do you have your cart abandonment series, do you have your first purchase, second purchase, VIP campaigns, win-back campaigns, all those would be the fundamental flows that absolutely need to be in place at a high level, and then obviously assessing on an individual flow basis do you have the right content and positioning in each of those flows to direct the customer towards that next step you want to take. If you're a flour company that sells a $20 product, it's very different versus somebody that sells a $3,000 electric bike, right?

Kristen: 

Mm-hmm.

Allen:

There's a whole lot more nurturing that goes into that, and your welcome sequence is going to be mainly based around nurturing for a really high-end product versus maybe a consumable that's really easy to understand, and it doesn't require a lot of education. So, you have to ... there is no specific formula that you can just sort of strap onto every single brand and see success, you have to adjust it, but if you're going to assess where your holes are and your gaps, it's first off, looking at your flows, and then it's second, looking at your campaigns. End of the day, generally speaking the more campaigns you send the more revenue you're going to drive if you are able to maintain high engagement on those.

Allen: 

So, as the more campaigns you send, and you start to see lower engagement on a per campaign basis, that's when you know that you're spending too much, or the big or there is you're not segmenting, or you're not providing the right content per campaign. So, looking at your campaigns and seeing, "Okay, what are our open rates? What are our engagement rates?", generally speaking we like to see engagement on a campaign ... or, sorry, open rates on campaigns to be at least 20%. It can be lower, kind of depending on the time of year, or depending upon if you're doing a big product launch. There's times when dipping below that makes total sense.

Allen: 

But generally speaking you like to keep it 20% or above, between 20 to 30, A, so you can maintain a really good sender reputation score so that during times like the holidays you can sort of branch out a little bit further, maybe see a slightly less engagement without it hurting your sender reputation. So, it's looking at engagement, and if you're seeing numbers that are consistently below 20, consistently below 15, if you're seeing anything below 10, anything below 10 is a clear sign that you're just probably sending a lot of stuff to spam, and you need to really rethink your segmentations of who you're sending to. So, if you're seeing any of those numbers, the next step is then to look at your segments, and determine who are you sending to, how are you determining what those segments are.

Allen: 

The very basic way to start would be building out segment spaced upon engagement, so how engaged are your customers, are they ... have they opened or been on the site in the 30 days, last 60 days, last 90, last 120, 180? That's sort of a very basic, basic set up for engagement, and then sending more email to customers that are more engaged, and sending less email to customers that are less engaged. The reason for that is ... and if you think of sending more email to those more engaged makes sense, but if you're looking at folks that ... let's something somebody bought ... you just bought a pair of hiking boots, right?

Kristen:

Yeah.

Allen: 

Let's say all you sell are hiking boots, there's no real strong cross sells other than another pair of hiking boots, right?

Kristen:

Yeah.

Allen: 

It's very unlikely that you're going to be really engaged with another hiking boot email if you're going to get that email twice a week, right?

Kristen: 

Yeah.

Allen: 

You're probably either going to unsubscribe, or you're just not going to open it, which is even worse, right?

Kristen: 

Yeah.

Allen: 

You're just dead weight on the list. But if you got an email once a month that was the best new hiking trains in Colorado, you'd be super engaged, right?

Kristen: 

Mm-hmm (affirmative).

Allen: 

And you would open it, and so by sending less email, and in some cases focusing on higher quality content versus product pushes, you can keep those less engaged customers still engaged, and as you start to see their engagement level increase you can then start to increase your sends, and you can start to increase the amount of product positioning you're putting in front of them, and ultimately you're going to drive a sale. So, we see a lot of times folks will, as an example, they'll send an email blast, and then they'll send the exact same email blast again to all the people who didn't open it. It's like, you just sent the same email twice to two people who have no interest of receiving that email, right?

Kristen: 

Yes.

Allen: 

So, it's completely counterproductive to this idea of nurturing somebody back to the point of engagement when they want to buy.

Kristen: 

Yeah, and I mean, that's the most powerful advice that I've ever heard on email marketing, and listeners, I'm going to link up to the first episode Allen and I did in season one, because this is ... we went deep onto how to basically this, and how to focus on engagement, and how to create content that drives engagement. So, be sure to listen to that if you need some actual examples.

Kristen: 

But, I mean, this idea that just segment based on engagement versus some higher level things is so powerful, because then you actually get a sense of how people are engaging, the stories they're living, the journeys they're going through with your brand, and then like you said, protecting your sender information, protecting your brand image, protecting relationships, because once someone unsubscribes because you've sent them 24 sales emails in a row the relationship is severed, and that's what's the big danger of once I unsubscribe from a brand because I'm annoyed by their emails, I'm not going to go back and shop with them, unless something happens, they have some amazing sale or something.

Kristen: 

But if you can keep me on your email list, and you can send me the content at the right time that's intriguing, that's keeping me opening, taking you back to the hiking boot example, if they were to do kind of what you're saying, like a monthly newsletter that's really helpful content, when I come around to needing a new hiking boot I'm not even going to go shopping, I know exactly where I'm going to go, because this relationship was formed. That's why I think that idea of engagement, and measuring engagement versus just very simple conversion on a specific email is the most powerful suggestion. And right now it goes back to also nurturing your existing customers, those email flows are going to be doing that in a way that brings them back again and again.

Allen: 

100%. So, to kind of loop it back to sort of the time we're in today it's, A, all those fundamentals, if you're not doing any of that stuff yet that's the place to start, get your fundamentals right, and then if you're already doing that, then look and see how email's performing. The last thing you want to do is have an email program that's firing 35% of your total revenue, firing all cylinders, and then all of a sudden go in and start adjusting all your positioning for COVID. Don't mess with stuff that's working. But if you're doing all those things already, and you're seeing dips in revenue from email, or you're seeing your flows not perform as well, then it's time to go through and asses what's the messaging, and see if [crosstalk]-

Kristen: 

Mm-hmm (affirmative).

Allen: 

... to tweak it to be more relevant to where customers are today.

Kristen: 

Yeah, and that's a good piece of advice too is just going through your flows even if the ones that are working really well, or the ones that are working really poorly, just going through and making sure the messaging is not kind of tone deaf right now. I got an email just this morning from a company that I will not name, that was about their launch into a store, and go buy in the store, go run to this, and it was very just like, "Ooh, you guys should've read that email before you sent it right now.", and that shouldn't have been the announcement.

Kristen: 

So, that's another thing, just checking your pipeline of emails, checking what's going to come out, and just ensure that it's not tone deaf, because that's another area. You can do a lot of things really right, but if you do one thing wrong right now it's pretty dangerous. So, that's something that I've talked to a lot of brands about where they've gone through their flows and they've just said, "Okay, we're going to nix this email, or we're going to change this messaging just a little bit so that we don't upset any customers."

Allen: 

Agreed. Totally agree.

Kristen: 

Agreed. Well, I feel like we've covered so much good stuff, Allen, this was so helpful, I feel like you really came and gave people like a recipe to start going through, so I appreciate it. One last question, if a listener is listening and is a little overwhelmed trying to really think where to start, if you had one suggestion or one tactic on where to start right now that people could walk away and start implementing today what would it be?

Allen: 

Oh, that's a great question, and I think the first thing I would do, because this is what we do with all the brands that we work with and come to us is we sit down and we just assess where they are, what's working and what's not working. So, I would do a self assessment and say, "Okay, what's revenue look like? Are we down? Are we up?" First question, "Why are we down? Is traffic down? Okay, so folks just aren't coming to the site, or is traffic still up and folks just aren't converting?", right?

Kristen: 

Yeah.

Allen: 

Understanding where, A, if revenue's good or revenue's bad, what's the cause that's driving it, and then start to work yourself backwards into where you need to start making changes. Now, we've got ... before all this started one of the big questions we always get is somebody would say, "Hey, look, we just can't scale." It's like, "Well, why can't you scale?", and it's like, "Let's dig in. Let's figure out." It's like, "Well, you can buy traffic, but the traffic just isn't ... it's just not profitable." So, your RoW ads is low. Is that an ads problem or is it a site problem? So, let's go look at the site. Well, it looks like there's all these sort of fundamental issues with the way you guys are messaging and pushing people through that purchase journey on the site. So, let's do an audit and let's figure out what's going on and what's wrong."

Allen:

So, it's very hard to say, "Hey, go do this one thing, because it's going to fix all your concerns.", when really the very first thing you should do is do an assessment and say, "Okay, where are we, what's working, what's not working?", and then once you figure out what's not working dig deeper into that, and if it's, for example, something like conversions or AOV, doing a site audit would be the best next step, or if it's on the email front, doing an email audit, determining what's working and what's not working would be the best next step.

Kristen:

Yeah, and I love that because it rounds all the way back to the beginning of the episode, we're really just saying instead of panicking and maybe, I've seen some brands toss out really, really heavy discounts, sending a bunch more emails, it's just right now if you can with your brand just take a breath, and look at what's going on, and analyzing where you actually stand before you make any rash or large decisions on your future. I think that's the biggest piece of advice we can give, and the most important one. So, thank you so much, Allen, for doing this special episode. This was so much fun. This is just chock full of helpful, tactical information for merchants right now, so I really appreciate it, and I guess we'll have to just have you on every season.

Allen:

I'd love to. I love doing these, these are a ton of fun. So, happy to come back whenever you like, Kristen.

Kristen:

Awesome.