Jeff Herrera, CMO of Annex Cloud talks with David Lorango, Owner of Xcellio about how these unprecedented times have impacted companies and how they transition to a digital-first company to help support their customers.
David, hi. It's great to see you. Thanks for joining our Annex Cloud Market Movers. It's our virtual chat session. We're doing these since a couple of weeks ago we decided to do these to really bring some key influencers and some real thought leaders around some of the challenges that we're currently facing in today's economy. So, it's great to have you. So, thanks for joining us. I think we'll do is just chat a little bit about what we're seeing, some of the opportunities that we need to tackle, and bring some additional perspective to brands, retailers, and manufacturers so that we can provide some real value and some actions that folks can take. Okay?
That sounds great.
So, what we've seen, David is quite a bit of a challenge with respect to the economy. Gas prices are low, that's really the only bright spot, but we're seeing a lot of challenges related to unemployment, we're also seeing a lot of brands and manufacturers and retailers struggle a little bit, especially in specific verticals. So, I wanted to get your thoughts on what should brand, manufacturers, and retailers, what should they do right now to set them up for success in 2020?
Yeah. Good question. Also, the other bright spot is no traffic. You aren't really going anywhere, but in Los Angeles, there's next to no traffic. So, that's unheard of in this city, but you're right, there certainly are incredible challenges, but with any kind of challenge comes opportunity. So, as somebody who has worked in the corporate world and in the sort of the nine to five world and then transitioning over to having my own business and working as a consultant for a variety of brands across CPG and retail, some of the things that you learn while doing that and working with startups is being able to react quickly, being able to understand that markets change and fluctuate.
So, the sort of guarantees and sort of nice to have that you have with an established brand, you don't have with a startup. So, it brings to mind a lot of what I think brands and retailers can get, first of all, get into the mindset of there's a new normal, at least for the time being. And when we think of 2020, I don't even think of 2020 as an entire calendar year anymore. I think of it week by week and month by month. And I think everything's going to change week by week and month by month. So, what I've advised clients on and has worked for us, is don't try to plan ahead for ... Don't try to do September planning right now because the universe can change. Whether it's going to be November, there could be a re-lockdown or there couldn't be. People will be going back, there could be more traveling.
So, I think the way that I would set up everyone for 2020 success, obviously you have to plan and to have financial plan and budgets and all that stuff. You don't want to give your CFO a heart attack by saying, "We don't have a plan," but essentially, what you're going to look at is take what you plan to do for June, look at sort of your budget. What can you do? How can you respond to the market? Are states starting to open up, plan regionally If you're a store, you're a brick and mortar or retailer rather and you have stores, plan your promotions for reopening for grand reopenings, things like that. Retail is eventually going to open up again. So, you don't want to be caught behind when each of these states is opening up.
So, I think the plan for 2020 would be to do it a month in advance or two months in advanced max. I think, think about your budgets and your forecast in that way. Don't freak out either. You may have more opportunities now if you plan in that way. So, it's a real chance for organizations to be more nimble. So, I think the opportunity here is where a lot of legacy brands love to sort of plan this stuff a year out, or they plan it six months out and because of that, they sort of getting beat by their competitors who are more nimble and fast, it's fast-moving and they don't have the apparatus and the bureaucracy in the way.
So, way to set it up. Yeah, plan early for the next month if you can, next two months. Start to understand where you can sort of speak to your customers promotionally. If you're a brick and mortar retailer, start thinking about your roll-out strategies, your re-engagement to get customers back in stores. I think there's going to be pent up demand. And think about it locally. So, 2020 is going to be a really weird fiscal year. You may see massive increases or spikes and you may see declines, but roll with the punches. Don't be stuck to a plan that you made in 2019 for 2020.
Awesome. So, I heard a couple of really key things. One, is you got to take the right action, right? You got to be able to recalibrate, make sure you're making smart investments, make sure that you're positioning yourself for a lot of success coming out of this because we will have a recovery, right, Dave? We are going to have a recovery.
It's obviously not going to be as fast as everybody wants.
The Presidents says it's going to be better than ever.
Exactly. So, it's a huge opportunity. So, brands, manufacturers, retailers should be looking at this as an opportunity to make sure that they're connecting with their most valuable customers and they could certainly do so in the form of a really robust, very strategic loyalty program and maximize the things that they control, as well as positioning them for success coming out of this thing in 2020. So, that's exciting.
So, what, when you think about everybody moving online, to your point, the traffic, right? The traffic is coming online, we're all at home. We're staying at home, we're having a lot of a renaissance of social media as well. We're all connecting as best we can in the absence of physical connectedness. What do you think is the right experience, right, what is the right customer experience? What's the right level of engagement? How do brands, retailers, and manufacturers make highly engaging, impactful experiences with customers, existing customers, as well as those that are interested in telling their friends and family all about the things they're currently doing with their favorite brand or their favorite retailer? Can you talk a little bit about what is that optimized customer experience in this sort of difficult economy?
Yeah. And I think it's different for different brands. So, I've seen the sort of spectrum. Some brands are lightly touching on COVID-19 and others are leaning heavily into it or having on their site information about their cleaning processes and how we fulfill and how we ship and how we're responding internally. What are we donating to? So, there are extremes. Where you want to support, where you want to have that. So, I think probably at least right now, it's sort of a good thing to think about where and how you can be charitable and how you can give back to healthcare workers. How you can give back to your community. Schools are going to be incredibly hard hit. I'm seeing this in LA County, I'm seeing it across the country. So, how do you help give back to your local community? If you're an LA-based business, give back to LA or if you're Chicago, give back to Chicago.
So, I think in terms of just having that conversation about what's going on during all this craziness, have a conversation with your customer base about where you are with your employees, where you are on your manufacturing side, where you are with your distribution, mention it. I think though, at the same time, you don't stray from who you are as a brand. As much as we're leaning in and talking about this now, I'm sort of advocating for a shift right now back to not quite normal, but getting out of what I was calling peak panic three, four weeks ago. So, I think it's important to sort of still have these components and certainly I think the charitable one is one you can do, not just during this time, but anytime.
You have sites that have updates all across social media, et cetera. So, I think it's time to start engaging your core brand values a little bit more. If you're a Forever 21, whether you're Carbon 38, whether you're one of the brands that I work with, I think lean more now into brand messaging because I think there's a bit of fatigue. There's certainly lockdown fatigue. You're starting to see that now, but there's also a kind of fatigue about talking about this. So, I think now if I'm a brand spending money, I think we spend in the right areas to sort of getting back to that sort of, hey, here's who we are, here's our brand position.
And then when you speak about loyalty, those are going to be your advocates. So, I think Instagram, and I've been saying this for years and it's still true, it's still going to be a place to invest if you're a brand. You have to be smarter about it. There's less sort of ROI than there used to be when brands like Fashion Nova took over and exploded on Instagram pretty much exclusively. But how do you get out there and talk to your customers? Well, you're going to be social. Be social in a way that you as a brand are social. Showcase your products, showcase if travel starts to open up. So, I think customers are going to shift and want to hear more about the brand and being less focused on Coronavirus and the fears of catching it and all that stuff.
And on the loyalty piece of it, when I think of how you target your loyal customers, this is a good time to do email only exclusives, Instagram only exclusives, SMS where you get deals and discounts that go for one day only or something like that. Thank you. Thank you for being with us during this time. We're showing our appreciation. So, there's a lot of that, that I've seen and that's worked for my brands too. So, I think on the loyalty side, giving them something back is important. And it's a good time to think about how you can discount because no customer is going to hold it against brands that are discounting right now. Everybody's going to go through a tough time. The economy is going to be rough, certainly for at least a couple of quarters here, if not more. So, I think customers are aware of that. I don't think brands need to worry so much about losing sort of core value props if they discount.
So, definitely, if you're skittish about discounts, loyalty is the way to go. Your CRM lists, your most loyal customers, even if you don't want to give it to your entire CRM list, it could be purchasers that bought two to three times in a year or something like that. So, really important to make sure that those folks stick around because I actually think there's a lot of jumping around now for the brands that are investing in new customer acquisition. There's a lot of trials. We can't shop so they get stuff, it's exciting to get stuff and try it on, try something new. So, I think that that's really important to continue to think about now and definitely through 2020 as you mentioned earlier. So, the 2020 plan would be focusing on your loyal customers and making sure they stick around, but then also how do you get new customers? And I think to focusing on your brand props, your USPs, unique selling propositions, are important now. So, that transition is what I would sort of recommending for brands to start to think about and to get out of the COVID mindset.
Right. And would it be fair to say, in your point of view, obviously, you have a great background as an operator, lots of great brands like Charming Charlie and Fandango and Forever 21, the tone, right? The tone of communication. You mentioned email, right? What you're doing social, it has to be authentic, right? It has to convey a sense of real trust and also, right, you want to make sure that you're demonstrating consistent value in this time of uncertainty, right? Of unmarked certainty. People obviously are unemployed or guess what, they're struggling to get unemployment insurance and they don't know if they're going to be able to afford something, but they're committed to your brand, to your point, they're loyal. They want to continue to provide for their family with the essentials and you still want to reward them for everything that they're doing.
If they're talking about the shared purpose that you mentioned in a community or social setting and they're willing to go ahead and demonstrate that online and be able to share that with their family and friends, they should be rewarded for that. Right? They should be rewarded for that, for the efforts that they're making to bring more visibility around all the great things that your brand or your retailer is doing, they should be rewarded for that. So, can you talk about some of the ways in which brands and retailers should be authentic? How does that relate to how they communicate in email? I'm sure there's an empathetic point of view around how that should work, but we'd love to get your thoughts on that too so that key stakeholders that we talked to are going to listen to this and they understand, hey, there's a way to do this. Right? The last thing you want to come across is, hey, here's just a transactional discount because it's nice to have, but you have to be authentic to the core, right?
Yeah. I, myself, am a little more playful, so I have to make sure that, it's not always right for every brand, but a lot of brands can miss that. And so, I think of things like Forever 21 when I was there in 2018, part of what I helped institute was having more humor on our Instagram. It was very sort of fashion-focused, pretty to sexy looks. And we pivoted to be more humor humorous. Right? And I think brands miss out on that and that's not actually for all brands, but I think CPG can do that. Right? You have something like the sort of Bumblebee Tunas or those kinds of brands that maybe haven't thought about being humorous in a while.
I think there are ways that you obviously, of course, have to be sympathetic. And I think that what I would say, and I've worked on a lot of political campaigns too, so what I have cautioned all my brands from doing is don't sound like an elected official. Don't sound in that sort of official way because that's not a brand voice. The reason half of these politicians do it, it's a script and you get it. You say things to assuage concerns and make people feel safe, but ultimately, you don't showcase a personality there. So, I think brand as a brand, you have a personality. So, how do you showcase care and concern to your point? But I think also not sacrificing a perspective. So, some brands that it works for them to share memes, share quarantine memes, share something like that. Like this is my quarantine meal every day or something like that. And like it, this is CPG.
I think, again, that's not going to be every brand, but I do say that there are opportunities to grow. Even at Corral, one of ours was, one of the posts that had the most engagement, 2000 or something like that, was a funny one about a mom taping her kids to the ground saying this is a crown mom. That's a joke, they're going to get it. So, being humorous is important because doom and gloom don’t work for that long and we don't want to do that and that's not our job as brands and marketers to give people doom and gloom, we're here to inspire and be aspirational and that's important now. So, as much as we talk about this, we got to focus.
But to your point authentically, however, a Ralph Lauren is going to do it very differently than a Forever 21, very differently than a Fashion Nova. Like you couldn't say something like Corona chic, but maybe you could do something like quarantine chic or something. How do you message all of this in a way that's a little play that gets outside of it if you're going to talk about it if you're going to message it? So, I think, again, there are opportunities to gain some market share because so many brands are going to be so stifled and stodgy. And I think especially younger consumers that this is their first go-around with a recession. This is their first go-around with something crazy like this. They're going to be wanting some relief. So, how do you be authentic, I think, is actually go back to your core, your USPs, your core value props, what you are as a brand.
And how do you message those? On email. Social media is great. It's a great time to be social I'm sure. I doubt there's anyone out there really who hasn't made some kind of joke about this. So, something about it being funny that we're all locked inside, something a little humorous, right? It's, of course, terrible, people. It's a terrible thing, but how do you bring light and levity in even during these kinds of times? So, it's a balancing act, right? You don't want to just be, what is the word? You don't want to seem like you're taking advantage of the situation in that way. And I don't think brands are and I don't think customers think that, so you're not just opportunistic about your discounts and deals, but at the same time, if customers love your brand, they're going to be happy for this. They're going to be excited and grateful and they're going through tough times.
And so, discounts matter and especially when you're shipping product now and they're not shopping. So, I think that that little bit goes a long way. Yeah, yeah. Ultimately say, go back to who you are as a brand, don't run away from it. If you're a more light brand, lighthearted, please lean into that to some degree. I think your fans are going to be really happy that you do and don't sound too political and don't sound like you're doing a public service announcement. I think it will just fall flat. It's nice. It's nice to do, but I don't necessarily need it from my brand telling me that. I want them to do the things that I know and love them for, to continue to do that.
That's right. Yeah. So, if your brand personality is just that, right, and you did that pre-COVID, maintain the integrity of your existing brand, but just take it to the level where you recognize the circumstances of the uncertain economy and you recognize the challenges that people are facing and be creative, right? Be creative in which the way you demonstrate value. Right? So, if you have a loyalty program, you want to be able to say, hey, I'm willing to give you an additional 30 days on expired rewards, or guess what? You're a tier two, we're going to make you tier one for the next 30 days because we know things are challenging right now, but here's an opportunity for you to get more from us in these challenging times without doing the traditional promotions or discounts, you're just constantly demonstrating more value. And I think the keyword is appreciation, right? At the end of the day, you want your most valuable and most profitable customers to appreciate what you're doing and how you do it. I think that's what you're ultimately saying. Right?
Yeah, absolutely. Appreciation. And to your point, some brands have done a 60-day return policy where it used to be 30 days. So, understanding where the relief comes in. And I think maybe that's sort of where I would think about this internally for companies is it's about relief to some degree.
Relief in all ways. Relief from the craziness, relief from the difficult times they're going to go through, relief from prices really, higher prices everywhere, other than gas, like you mentioned.
And yeah, relief and appreciation, I think go hand in hand and are synonymous. Yeah.
Awesome. Well, I know we're running a little bit short of time, but I do want to ask you one more question and then we'll wrap up. I wanted to get your take on the Amazon effect. It's hard to have these types of discussions without talking a little bit about Amazon. Like Amazon needed more help. Right?
So, everybody moving online, they're certainly benefiting from this in a huge way. Like they needed the help, but they certainly are. So, when you think about your experience, you think about fashion apparel, you think about beauty, you think about skincare, those great verticals that are going to be a challenge with this, and some research that I found really interesting, Wunderman Thompson came out with a good piece of research and I think they surveyed 500 or so digital leaders and they identified loyalty as being the one area in which they felt confident that if you do loyalty and do it right, you can effectively compete or better compete with the likes of the Amazon.
So, I wanted to get your thoughts on now, with the current situation, Amazon certainly stands to benefit, what can those key mid-sized, lower enterprise merchants, as well as manufacturers and fashion apparel, skincare, health, and beauty, what can they do to think about this? What can they do to compete with Amazon? I mentioned loyalty being one with digital leaders, but is there anything else they should be mindful of so that Amazon doesn't win everything and they stand to get through this difficult time. We'd love to get your thoughts on that in those specialized verticals.
Yeah. Amazon, the one sort of screaming headline I gave literally at a talk a year ago or more than that was take Amazon seriously, really seriously. Whatever vertical you're in, don't ignore them. Brands have ignored that even when I was sounding the alarm bells. So, wherever you are, so you're talking about fashion apparel specifically, like at Forever 21, Amazon went from not a big player to be a 15% sort of top performer in fashion apparel, which was insane to see against Forever 21 as a competitor. So, they're going to keep growing and take them seriously. They're going to be your main competitor, so don't ignore it. So, to your point, what do you do? How do you beat back? Because Amazon is honestly, in a lot of ways for big brands, it's a losing proposition. You don't get the data. You get some market share, you get some sales, but you know, CPG is a little better positioned than some of the other ones, but fashion apparel, beauty, et cetera, I think to your point, loyalty and brand value are really critical.
And I would caution any brand and not put all of their product lines on Amazon. You can have some teaser ones and a lot of brands that I've worked with have a teaser. Some of the core, but you don't have all of it. Why do you keep coming back to a brand? They have different colors. They have different fits. So, it's like an Amazon may have for Ralph Lauren, they have their classic ones, but maybe they don't have a slim fit or a custom fit, or what have you. So, it goes back really to loyalty and brand prop and what do you service? What is Amazon not going to do? It's not going to have that sort of quality piece. It's not going to have the brand piece. Amazon is there as a convenience but make sure you differentiate yourself from what Amazon is selling.
Quality is important too. I think brands should not sacrifice quality. I think investing in that is still going to be very important. And so Amazon is going to lose against other brands that have quality. So, if you have a good loyal fan base, you continue to sort of produce products that are quality, Amazon won't be able to compete. And also, Amazon has a lot, and they've gotten better, but they still have a lot of sort of fake sellers out there.
So, it goes back to quality. You go and shop on brands and their e-comm sites because you know what you're going to get. Amazon is there for convenience and until they really create their own brands in apparel and own brands in cosmetics, beauty, I think that you have to maintain that loyalty. So, like the Sephoras and the Ultas before this happened, they were doing great because their loyalty programs are fantastic. You're going to buy it there instead of Amazon because you're going to get points. So, how do you think of that consistently and give back? Why should I be on a Corral? Why should I be on a Sephora, on an Ulta or a Forever 21 versus Amazon? Because there isn't that loyalty piece, it's convenient.
So, building that brand, maintaining it, making sure you have quality is vital. That, and yeah, you bring it up, I can't say enough that they're just that player that you have to watch out for. Really plan strategically your three year plan. Yeah. And as much as we all use Amazon, I don't want brands going away. I don't want it to be Amazon is the only thing.
Yeah. Listen, hey, great perspective. I got to tell you, I feel really lucky to have you here because you're very candid. You have a lot of great insights and we're excited to share that with everybody. At the end of the day, it's us, it's you, it's everybody trying to make sure that brands and manufacturers and retailers are supported as best as we can so that we can continue to deliver the unique value proposition to get through this very challenging time. So, I really appreciate it. Tell everybody where they can find you. Xcellio's out there. I know you're on LinkedIn, but if anybody has any questions that they need to be answered or want to learn more from you, where can they go?
Yeah, definitely. So, I'm redoing my site. I've been overwhelmed right now, but blow me up on LinkedIn. I'd say, blow me up. Please blow me up on LinkedIn because I get a lot of random spammers on there. So, it'd be really nice too-
Yeah. So, find my LinkedIn page and I'll give my email at DLorango@gmail.com. Feel free to email me questions. I love talking about this stuff. I'm grateful to be here talking about this and helping brands and helping vendors and partners that I love working with. So, this is great. I'm there and I'm a resource as much as I can be and I have the time to be. So, I appreciate it.
Awesome. Thanks so much, David. I look forward to seeing you soon.
CMO, Annex Cloud
Since 2010, Annex Cloud has provided industry leading loyalty solutions to more than 250 leading brands and retailers, including Jenni Kayne, Hewlett-Packard, Bed Bath & Beyond, e.l.f. Cosmetics, Olympus, Sugarfina, Mizuno, MacKenzie-Childs, VF Corp., with the ability to engage tens of millions of their customers one-to-one at scale.
The Annex Cloud platform provides fully integrated Customer Loyalty, Referral Marketing, and User Generated Content (UGC) solutions that seamlessly work together to optimize the customer journey and deliver a unified customer experience that is designed to accelerate revenue growth, retain valuable customers, increase average order values (AOV) and drive repeat order frequency.
Xcellio is a leading marketing consulting agency specializing in 360 degree growth solutions and driving exponential growth for clients. By bringing together the best partners across the industry, Xcellio offers what most other agencies don't - best in class partnerships with best in class results.
To learn more about Xcellio, visit xcellio.com