We’ve seen some huge changes to the marketing landscape so far in 2020. Being able to adapt quickly to the ongoing shifts in consumer behavior is more important than ever to succeed. Luckily, there are key strategies you can adopt to better keep pace and win with consumers. In our 6th part of our ongoing series, Blueshift Engage, Blueshift’s Marina Ben-Zvi sat down with Houman Akhavan, CMO of US AutoParts, Gautam Gupta, Partner at M13 Ventures, and Rachel Hofstetter, CMO of Chatbooks to understand how the industry is changing and how to successfully adapt and reshape strategies to set their business up for success.
MARINA: THIS YEAR HAS BEEN A YEAR OF UNPRECEDENTED CHANGE WITH MANY OF OUR DAILY ACTIVITIES COMING TO A HALT. BUSINESS MODELS HAVE BEEN SHAKEN UP AND BUSINESSES HAVE ADAPTED ACCORDINGLY. WHAT ARE SOME OF THE KEY CHANGES THAT YOU’VE SEEN IN CONSUMER BEHAVIOR AND PREFERENCES? AND HOW HAS THAT IMPACTED YOUR MARKETING STRATEGIES AND CUSTOMER ENGAGEMENT PLANS?
Gautam: One of the things about COVID, and all the change that has happened over the last few months, is that it’s changed certain industries much more than others. For example, there’s probably never been a better time to be selling food online. Over the last four or five years, food has been an incredibly tough category for eCommerce. But in the last three or four months, we’ve seen several food businesses, whether online grocery or food delivery, double or triple in daily volume.
On the other side of that, there have been verticals that have been hit hard. Travel is a great example — not just from a consumer perspective, but also from a business perspective travel has changed dramatically. In the industries that have been propelled by COVID, we’ve seen brands pull back on a lot of their marketing spend just because they either are capacity constrained or just simply don’t need to actively push as much as they’ve needed to in the past. Those spaces are shifting from push to pull where the consumer demand has increased.
The world of eCommerce and technology has accelerated dramatically, though it has for unfortunate reasons. And for investors, and probably many of the people tuning in, eCommerce has become a lot more exciting today than it was in past years.
Rachel: Chatbooks was completely digital before all this began — we had no physical footprints. So in some respects very little has changed for us, but our timelines did change overnight. In March, we paused everything that was planned. I’m a magazine editor by training, and in magazines, you work six to nine months in advance. “Christmas in July” is what we’d always say. And honestly, in marketing, we keep a similar schedule to get all our assets ready for the holidays.
This year we had to pull all those plans almost overnight. Marketers have had to have tons more empathy and respond at the moment as things were unfolding, not months in advance. We’ve gone from campaigns that are geared up three to four weeks in advance to literally the day before. That involves gut-checking everything. We’ve asked ourselves, “what’s the customer sentiment at this moment?”. In some ways, things are moving more as they do on social media. For social media, we plan two weeks out and gut-check everything a day or two ahead. Now, we’re gut checking everything marketing produces a day or two ahead and things just keep changing. For 2020 the theme is uncertainty.
Your question as a leader is, “how do I get my team on board with that?”. First of all, we’re realizing what’s important and what’s not. And so we might do fewer things, but we’re doing them at the moment, right there where our customers need them. And that’s what we’re optimizing for right now. We’re not optimizing for the world’s best email or the world’s best creative, or best photo or your biggest, boldest idea — although we do like to do that. We’re optimizing for being real, human, and showing up at that moment.
Houman: Echoing some of Gotham’s comments, in the eight weeks post-COVID-19, we’ve seen eCommerce penetration accelerate at the rate as the last decade entirely. This is an incredible shift in demand, customers are moving from offline channels to online. Brands need to be prepared as these new customers are coming online, you want to capture them and deliver the best experience you can. If you’re not prepared you risk delivering a poor experience and failing to meet customer expectations.
And once the broader economy recovers, you may not be in the best position to capture those customers. You have that one shot to get it right. So, having a proper marketing strategy and plan in place, in terms of how you envision yourself emerging when that broader economy does recover, is going to be super important. Preparation is key to success at the end of the day.
MARINA: AS CONSUMERS ARE SPENDING INCREASING TIME ACROSS DIGITAL CHANNELS, WHICH CHANNELS ARE PLAYING A GREATER ROLE IN YOUR MARKETING MIX? WHERE ARE YOU DOUBLING DOWN?
Rachel: It’s been interesting over the last four months to see what happened in March and April versus what has been happening in June and July. To me, they’re almost two different areas. March and April were so fascinating for us. People would open emails, they would look at things we were sending them, they were way more online and engaged than I’d seen them before. I do feel like we are in a different era now where they’re not quite as engaged. People are not quite as online as they were.
For us, TikTok has been a fascinating platform. Millennial women have joined TikTok in crazy numbers in the last few months. And by millennial, I mean up to 45 year-olds — so our audience is on (and make up a big percentage of) TikTok now! For our team, that’s been interesting as far as content goes, but also as far as creating ads and working with influencers on TikTok. That’s where we’re exploring right now and hopefully can keep using it for a while.
Houman: It’s important to no longer be single-channel focused. Sometimes marketers have a tendency to find the channel that has the best ROI and really double down and put their efforts there. In this environment, having a full-funnel strategy is important because consumer behavior is changing, especially in this post-COVID environment. So, being present in all the channels or touchpoints where a customer has preferences in terms of how you want to communicate to them is going to be important.
For US Auto Parts, it’s really more about personalization and having the right message, regardless of the channels a consumer is using — maybe it’s social, maybe it’s email, maybe its content, maybe it’s Search. It’s important for brands to be present in all touchpoints because this new customer is coming online and it’s really difficult to predict what particular channel they’ll have a preference for. To Rachel’s point, TikTokmight be a channel that they might have an affinity for. No two customers are the same, so It’s key to have the right message across multiple touchpoints rather than doubling down on one specific marketing strategy.
Gautam: Going back to Rachel’s comment, count me as a millennial woman, because I’ve definitely been spending more time on TikTok! I read this pretty interesting stat, 25% of people age 25 to 40 are spending, on average, 81 minutes a day on TikTok. Think about that — what other channels do consumers spend that much time on? Going back to your question, we work with brands that are early stage and are very resource-constrained. A lot of our brands, frankly, can’t be in all places and have had to double down on what’s working and what where they’re finding the most efficiency. Some of the trends that we’re seeing are Facebook and Instagram still continue to be the lion’s share of spend for any of the brands that we work with.
Additionally, a lot of these folks have started looking at online marketplaces, like Amazon and Wal-Mart as secondary revenue streams, given the amount of demand that has shifted to those sites during COVID and how much those sites have been doing in terms of engaging consumers.
The third shift that’s been interesting is the shift from mobile to desktop — that’s starting to taper off now. Many of our brands saw a huge increase in desktop traffic, which was driving some nice conversion improvements and driving efficiency in some of their core digital display channels. There’s been continued activity and interest around podcasts, which seem to have kind of taken some of the off-line time and attention away from things like radio or TV. So I think that’s the basket of trends that we’ve noticed across our brands. Some of these things are maybe a bit more counterintuitive, and some are more or less expected.
MARINA: AS INTERACTIONS ARE INCREASINGLY DIGITAL, WE’RE ALL BECOMING SAVVIER SHOPPERS, PLACING GREATER DEMAND EXPECTATIONS ON BRANDS. HOW DO YOU DELIVER THE CUSTOMER EXPERIENCES THAT CONVERT AND KEEP CUSTOMERS COMING BACK?
Houman: Let’s dive deeper into US Auto Parts’ personalization strategy. For any personalization strategy to be successful, the cornerstone is your first-party data. As these new customers are coming into these online channels, you want to capture as much information about that customer as you can. Then, when you want to remarket to them, send them an email, or deliver a creative to them on the channel that they’re in you’re able to personalize the message to that customer.
I’ll use the example within our business. At US Auto Parts, we see the vehicle as the customer. So somebody who might drive a Ford versus a Chevy will have different passions, interests, or concerns about their vehicle. They’re not going to be impressed if you’re going to market to them about a vehicle that or a part that has nothing to do with the vehicle that they drive.
That’s been the way we’ve looked at our personalization strategies. There is a surging demand and customers are coming online — let’s get as much information about them as we can and have the right platform in place to collect and capture that information. Having a martech platform that’s able to send the right message at the right time has been a differentiator for us.
Rachel: We can’t split our customers as cleanly as Houman can with different car types, so what we focus on is 1:1 communication and doing that where we can. But, it’s actually true 1:1 communication. We do the whole email marketing segmentation thing, but what we find drives what we do is being there and talking to them like a friend would.
We have a social media team, of around 12 to 14 people, which is sparking conversation and replying to customers in the comments of our social media posts. They also run our private Facebook groups where they call the “Mom Force Group”. We have thousands and thousands of parents who are in there just talking about parenthood things. And these team members of ours, our community managers, are facilitating conversations and then getting out of the way and letting people talk among themselves and trying to support that around the edges.
That’s one way that we’re truly being personal. And in theory, it doesn’t scale — and yet it kind of does. The more we inject into it, the more community helps scale it themselves and makes it work. And so that’s one way that we can show up and be human.
Gautam: I have two thoughts on this. One goes back to what Rachel was saying, which is brands are behaving like human beings. Brands are talking about their values as a company, in light of recent events and answering the question from the consumers’ perspective, “what are brands doing to support local communities and to support causes?” The first part of keeping customers engaged and attracting these new online customers involves being personal with the customer and talking about the things that the customer cares about.
And secondly, as demand has increased, I think a lot of retailers that we work with have struggled with the basics of “in stock and on time”. And the biggest thing that we’ve seen work is setting expectations. I think customers today understand that there’s a lot of volume going through the FedEx, U.P.S., and the Postal Service networks. And so they don’t expect to have the same two-day service and they’re extremely understanding as long as you set expectations.
We’ve seen a lot of our brands communicating more proactively about when products come back in stock, how long things could take to ship, and all the other aspects of the customer experience.
Houman: I’ll echo Gautam’s comments in terms of transparency — it’s been key for us. Things are bound to happen. There are times where demand spikes and parcel providers get backed up. At the end of the day, the last thing you want to do is break that promise to the customer.
Let the customer know ahead of time that there will be delays and follow up with updates. But to Gautam’s point, if you know that there is going to be a delay, and put the systems in place so that you can reach out proactively rather than waiting for that customer to reach out and complain and social media is one of the first channels that consumers tend to go.
A lot of folks might be worried about their conversion rates if they send those messages. But, I think about it in terms of the worst-case scenario. What if you do break that promise and you’re affecting your LTV because that customer might not come back to you. You have this one chance to wow and impress these customers. That’s where brands need to think long term versus short term gains.
Rachel: LTV is the biggest thing we’re all thinking about, especially when you’re comparing that to customer acquisition cost. We want to get people in a product that makes it easy for them to keep coming back and buying. We have an ongoing photo book series where customers can add photos at any time. But to do that, we have to offer customers delight along the entire process of their journey. That doesn’t stop when they make their first purchase and check out. It is everything from the follow-up emails to when they get that product.
We did a study of a customer’s lifecycle last year. We thought the happiest moment in their lifecycle was going to be when they got that first book in the mail. They’ve done this hard thing. They are waiting. They get the book. They’re super excited. That’s when they’re going to want to tell their friends.
We found that it is not the peak moment of their experience. The peak moment of their experience is as soon as they finish that book and they cross something off of their to-do list. And then what was so fascinating is customers go through a lull. And what they were waiting for was for us to send them a promotion. We were sending them a coupon for 15% off right after they got their book in the mail — turns out that was too late.
They’d already moved on from their peak experience. They weren’t as interested anymore and they weren’t thinking of telling their friends. So we moved that promo up to two days right after they bought when they’re still in peak experience mode. And that was one of the big unlocks for us. They would go make another book and they were much more likely to have higher LTV.
Do this with your customers. We did a diary study where every day for the first 30 days, we checked in with them after their first purchase. How are they feeling about Chatbooks? What are they wanting to see right now? We used that process to figure out where the peaks and valleys of their Chatbooks experience were. That process unlocked higher LTV for us by capturing customers’ attention when they were in their peak experience.
AUDIENCE QUESTION: WHEN YOU’RE AN EARLY-STAGE BRAND WITH BUDGET AND RESOURCE CONSTRAINTS HOW DO YOU PRIORITIZE WHERE TO FOCUS?
Rachel: We put a little bit of energy and time into something just enough to do it well. I think our first TikTok ad buy was maybe $200 and it was a quick ad that took a half-day for our creative team to put together. If it works, find what the leading indicator is. If it doesn’t work, it doesn’t mean you don’t do it ever again. You just put in another small piece and another small piece. And at some point you say, OK, all those small tests aren’t working, let’s pull out. But I think you can get started on almost any platform, at least social platforms and channels like that with fairly small budgets. And again, you’re just looking for directional feedback here.
Houman: I think for any e-commerce retailer or any business for that matter, it’s really important to focus on your metrics and your analytics. Customer behaviors are changing — it’s key to pay attention to your analytics because that data is going to tell you what’s working, what’s not working, and where to focus. I would let the data dictate. Your data is your guide to help you prioritize what matters, where you’re going to get the best return, and why. And then also sometimes, to echo Rachel, some channels may not have an immediate ROI. Sometimes you may need to look at that full-funnel and give it some time to measure the channel.
Gautam: The best thing marketers can do is double down on owned channels. We see a lot of the brands that we’ve invested in spending more time on email and their house list. Then, spending a lot more time on conversion optimization. It just depends on the size of the budget and the bandwidth of the team, but for smaller brands, those should be where you focus.
And then separately, you know, we’re seeing a lot of brands just explore their tech stack and look for just more automated ways of doing things and cheaper ways of doing things. We’ve seen a number of our brands explore new products around email automation and abandoned carts. There’s way more technology out there that doesn’t require a human to set up as much as it did in the past, and so brands are exploring how to take time out of the equation of your funnel and out of customer engagement.
MARINA: FINALLY, WHAT IS THE MAIN TAKEAWAY YOU’D LIKE TO LEAVE FOR THE AUDIENCE AND FOR FOLKS WHO ARE TRYING TO EITHER EXPAND THEIR DIGITAL PRESENCE OR CAPTURE ON THE E-COMMERCE OPPORTUNITIES RIGHT NOW?
Gautam: I’ll just leave with two thoughts. One, it’s just a really exciting time in e-commerce and it’s a time to be aggressive and invest further in growing your digital efforts. I do think that there’s going to be a long term shift from offline to online, so take advantage.
Secondly, it feels like this is the age of Creative and brands becoming more human than we were in the age of pure algorithms and trying to find channel arbitrage. As brands think about growth, figuring out messaging, figuring out value prop, and how you tie that towards Creative has probably never been more important because targeting has become commoditized.
Houman: My key takeaway for today would be, long term, the brands that will emerge are the ones that were ready to strike first when others were not. So, be the first mover on your vertical!
Rachel: I 100% agree with everything you both just said. I’ll add, especially to Houman’s point, is as you’re being human and being real and being authentic and communicating — especially while shifting to more digital channels — is feel free to do things that don’t scale either. You’ll scale them eventually in some unique way or you won’t. And that might also be fine because the ROI is still so high. So don’t worry about how you do it for ten thousand people or a million people — do it for one person, then 10 people, and then 20 people and go from there.
