In this episode of Market Movers, Al Lalani, Co-Founder of Annex Cloud, and Tim Ahlenius, Americaneagle.com's VP of Strategic Initiatives, discuss the change in ecommerce and how consumers changed their buying behavior due to the economic disruption with Covid-19. They also discuss how companies can focus on retaining the new customers that they’ve acquired.
Welcome to another edition of Annex Cloud Market Movers where we bring in experts and luminaries to help us through the times and help us grow. Today I'm very, very excited to welcome Tim Ahlenius. Tim is the VP of Strategic Initiatives at Americaneagle.com. Tim welcome to the discussion.
Thanks Al. Looking forward to our conversation today.
Very happy to have you. Tim, if you may just kind of... Just want a quick introduction about yourself and what you do at Americaneagle.com and maybe a little bit about Americaneagle.com would be great as well for our audience.
Absolutely. We're a full service digital agency. We have been in business actually since the Apple II Software development company was our first foray, then into networking and then into websites so when one of our customers, the Big Ten Network asked us what's this internet and website thing and our owner said, "Hey, I don't know, but I'm going to figure it out and let's go have fun with it." Since then, 25 years later, we're about just over 500 people strong and based out of Chicago headquarter and offices around the world now. So it's very exciting times.
Myself, I've been here for 11 years, right now my current role as VP of Strategic Initiatives. I really work on a lot of our enterprise client engagements to ensure that we have the right teams in place, but also as we are expanding with our partners like Annex Cloud and looking at opportunities to bring in personalized experiences and new ways of just where digital transformation is taking the organizations of today. I also work on a lot of our internal initiatives of just expanding the knowledge of what digital transformation means across every industry and across pretty much any size of industry. That's one of the favorite things I love about working at americaneagle.com. We work with a single page WordPress sites all the way up to massive thousands of pages enterprise level websites, full of content, but also covering e-commerce and everything in between.
Wonderful. That's great. Thank you so much. We've... At Americaneagle.com being there for 11 years, you've seen a massive change in the world of e-commerce, in the world of retail, in the world of digital transformation over many, many years, but probably nothing like we've seen in the last sort of eight or nine months. We start topical in terms of what we've seen, I mean, if I focus on e-commerce and retail as a vertical to start things off with.
We've seen a massive amount of shift both in terms of transformation because of the current times from retailers with stores having massive disruption in the supply chain to a significant movement towards online e-commerce, one of the numbers that, I mean, sort of we are all tracking is it took e-commerce to go from 5% of sales to 15% took a decade. It took about nine months in the last nine months to go from 15 to 25. People are projecting 30% of sales now in the holidays probably happening on e-commerce. That's a pretty massive shift, some positive, some challenging. Now, what have you seen and how have you advised customers at Americaneagle.com over the last nine months in terms of navigating through the current challenges?
That's a great question. Definitely in the past nine months or so we have seen a significant shift in especially the e-commerce space and a lot of that stemmed also from just the shutdowns that were forced upon these businesses where they were no longer able to be open for their consumers to come in and shop or for new consumers to come in and discover what they offer. You saw a big just impact on the changes for buy online pickup in store changed to buy online pickup curbside. You saw a lot of delivery systems and testing of delivery systems and combining that with other existing platforms that were out there for organizations to try and reach their customers with a sale and delivering that overall. One of the biggest disruptions with everything as an impact of the situation with the pandemic was just the availability of product.
I think one of the biggest things that happened that was a digital transformation that wasn't as expected was the impact on brand loyalty where people would commonly shop with the same store. They now were going out just trying to find the product when the starting point they went to didn't have it available anymore. Brand loyalty took a hit. I would also say that the messaging became that much more critical of what was being put out from a brand during those times. If you were low on inventory, when would you get it back? The delivery timeline that would actually take to get if things were coming from overseas. Logistics all came into a play that especially the U.S. consumer was not used to. They are used to that two day turnaround Amazon prime type of delivery expectation. That kind of got flipped over and flipped upside down on them of much longer delivery times or completely out of stock items. You look at the toilet paper scare and it's one of the things that once something really starts to trend everyone jumps on that bandwagon, other products had that same impact.
That's great. You talked a little bit about loyalty, obviously that topic is near and dear to our heart and we're seeing a lot of shift happening in multiple different ways. Now, one of the things I like to point out is there's a study from back in 2008 during the last recession which is nowhere close to how this is, but just to draw a parallel. During the last recession, there was a study done by Clarion Marketing that showed that... And this was a massive study of 685 of the top brands in the world, the Apples, the Samsungs, the of the world with 30 million consumers. The study was released in 2009, about 2008, where 52% of these brands customers defected and of those 52%, half of them defected because they could find something for less expensive, half of them defected because they just didn't want the product because they were cutting expenses.
Neither both of these were massive impact. Now you add this now where there's the disruption because of economic climate, but then there's also disruption because of the supply chain which makes it as you explain much more difficult from a loyalty perspective, this story that was floating around before is Campbell Soup could not distribute their soup on time so an up-and-coming soup company was getting a lot of traction and progress. That's great. Now, they've acquired all these customers, but they have to retain those customers. They have to keep them around when Campbell comes back in distribution and they won't have the same pieces anymore. What's your take on the loyalty and retention, the importance of it and how should brands think about it in 2021 and beyond given what we're going through now?
Absolutely. Brand retention is critical to think about and it's also one of the things that we're working with a lot of our customers on where really, as you think about customer retention, the challenge is now the number of shopping choices. Even before the pandemic hit, we had an uptick of e-commerce and you talked about the growth at the beginning from 5% to 15% even looking at it more of that 30% hit coming this holiday season.
But before that, there was options. Now there's even more options because you had so many smaller retailer businesses, small town brick and mortar stores that had to move to an online format and so they spun up e-commerce sites quickly and the advantage of today and the technology that we have available, they could spin that up very quickly. You could have an e-commerce site up in a matter of a couple of weeks for a smaller store who's now competing online, but also is driving in the local aspect.
I know in my small town, in the Western suburbs of Chicago, there's a lot of just local community just promotion of supporting your local store owners, local business owners. That drove a lot of business away from where people typically shop to now supporting locally. That lasted for a while. There were some upticks of it again as you know store's going to open for the summer and then went back down, restaurants especially were hit with that. But overall, that retention is so much more important now because with all those choices, with all the different product options and multiple similar products being available, it brings about a change in the behavior of customers now where repeat purchasing, especially repeat purchase rate and customer lifetime value to critical metrics for retention are harder to continue to maintain and let alone grow for a brand today.
You're scrambling just to maintain where you were at versus seeing those metrics grow because of the amount of competition that comes into play. Loyalty, very heavily impacted by this. It's where we want to make sure that a consumer identifies with the brand they repeatedly shop there. Now, and the opportunity of loyalty programs and almost what I would say is probably growing towards a trend in 2021 and beyond is these expectation that there's a loyalty program of some sort to try and maintain that customer retention, that incentive, the tangible incentive that you can deliver is what will help maintain that now versus the previous aspect of a customer being loyal to the brand because they have just a great experience. Now there's going to be a desire for more because there's more competition out there.
Absolutely. I think when we talk about these initiatives, kind of also building on sort of the loyalty part is to keep your loyal customers around and to earn more loyal customers. One of the other better ways to kind of push that is your most loyal customers are your advocates, so to speak. One of the ways that people, as they're sort of either starting loyalty programs or re-inventing these loyalty programs for the current times, both of which are important as part of your digital transformation initiatives. They're thinking of their best customers and saying, how can I make them into advocates? How can I get them to drive business for us in the upcoming holidays? Potentially reducing some of my margin cost, my acquisition costs, so to speak. I know you've talked a little bit about referrals as a technique for the holidays and what are your thoughts around that as well as other things or marketing tactics that people should consider for the upcoming holidays?
Absolutely. Referral marketing you talked about it too, it just the influencers that are out there now. Word of mouth marketing brand advocates are huge for any brand to obtain and continue supporting for their brand. There's an aspect too if you're a brand, you can have a celebrity or a paid influencer, that's great, but sometimes it's as simple as I'll use... I love using my wife as an example because she's one of those neighborhood moms who's always out talking about the group, talking about the latest product experience that they've had or something.
I'll use that as my reference here, but that peer influencer I feel while you'll hit certain demographics with the celebrity and paid influencers on Instagram and everything else, there's this whole other group of peer influencers that you can really use as a brand and support who are supporting you and they're talking about you and the experience with you as a brand and that comes into your brand messaging that comes out through them, but it also stems back into your brand positioning and that referral marketing can take brand messaging so far, but your brand positioning where you stand as an organization, your values and even the sustainability has been coming up for several years, but now I think it's even more about the overall experience that you deliver to that peer demographic of influencers is so much more critical with referral marketing.
Whether it's online, social media and they're talking about it there which is very common with the COVID situation or whether it's a peer group of moms who are texting or dads or parents, all... I don't want to leave anyone out, but overall, that group is so critical because they are the ones who have your product in real life and the experience they have with that product, the experience they have with the buying product are going to be communicated. While you can pay celebrities, while you can pay paid influencers to go out there and promote from an awareness perspective, really having that experience on the other end of that referral and supporting them and giving them options to share is huge.
That's great. Just kind of moving specifically to one of the things you mentioned that I really like in this part of the conversation was that aspect of the brand promise, the brand promise, the brand messaging, so to speak. I'm thinking for the upcoming holidays as you try to differentiate and you try to... Because of the availability of different types of products and competition and the impact of the economy and the pandemic and so on and so forth, that brand message and the brand positioning would be a key differentiator I would think. I mean you advice a lot of companies around that I think and what are your thoughts on good examples and brands that have done it well and how do you advise people to think about that as they plan their upcoming kind of marketing tactics for the holidays and beyond?
Absolutely, great question. A lot of that brand messaging comes through transparency and really letting them know where your inventory truly is at and then also, especially in the holidays, I think one of the biggest things we saw already was where companies like Best Buy and Amazon have already held a lot of their pre standard holiday discount periods purchasing right there, it's the pre-Black Friday sale or it's the upcoming already in Black Friday pricing mode.
If you can do price matching, that's huge, that is one of the biggest ways that you will lose previous customers is if they can find it cheaper elsewhere. I think that's a very big focus for people right now. Communicate where you are giving a brand promise out there and be very clear about where that... What those promises are. Whether it is price matching, whether it is return periods, that's a very big one for people right now.
A lot of brands shifted to that already with the pandemic, with their physical retail locations having been closed. It was great. I had a purchase experience with REI and the REI Co-op was, "Hey, our stores are closed. You can either choose to return it through mail if you want to, otherwise, you can wait until our stores open and then bring it back in at that point to return." They really went out there and communicated the options available. I think that just comes out with that transparency in your messaging, holiday period, especially with where we're at now with more just pandemic concerns and just the holidays in general are a crazy time giving that extended return period is huge for people, especially with sales happening before the typical Black Friday, Cyber Monday period, where you're selling at discount rates month before standard holiday purchasing pattern happens.
I think there's two reasons for this. One, we saw there was a lot of delivery issues early on in March and April where we were really seeing a slowdown in that, getting those purchases in sooner rather than later, make sure that people get it on time critical for the holidays. Two, it's just the availability for people to know that their price match is also there. If you can't do some of those things, there's other messaging that you can do. If you are a family owned company, talk about your family values, share that out.
We're a family owned company. We talk about our family values all the time and we want to make sure that that's understood for how we can be different than another organization. Talk about that from your products, if your products are built or hand-built or... Introduce to the people who are your craftsmen and craftswomen behind a product and bring a story about them to the front. It really lets people connect not only to you as a brand, but to the people who build and make your brand, the brand it is today.
That's great. While we think about brands sort of providing a unique message for themselves to their audiences, I know one of the topics that you help a lot of customers around is also personalizing the experiences for the end consumers or the end buyers that are coming in on their sites, so to speak. Personalization is an interesting topic for those of us who've been in the industry for a long time. We used to talk about it back in the 2000s, sort of the first decade of 2000 to 2010 and around for commerce, for example, it would be like, hey, that's personalized and provide the right product mix. You may also like recommendations and what not.
Then the second decade we were talking about let's now personalize the experience, the prostakes, the site whether it be personalized messaging and product sort of displays or anything else that allows to have that one-on-one communication to that customer while maintaining that brand promise at the same time. What do you think that personalization... Where do you think personalization is going in the third decade now, let's call it the 2020s, where what's new. What's really new that can be applied to personalize experiences now?
Yeah. Personalization. I love talking about personalization. I've been working within a personalization space for many years now and you're absolutely right, I do like kind of calling it the third decade. I don't know why I like saying the third decade of it so let's call it 3.0, personalization 3.0. Where we're at today is, personalization before used to be a bit more single channel focused I would feel and you would have personalization that could happen on individual channels but personalization until the past, I would say couple of years was never viewed at the omni-channel aspect of approaching personalization.
I think that's so critical in today's world. We have people who are constantly on their mobile devices and for some people that is their computer of today. How do we ensure that whether they're in social media, they're on email, they're on a website or they're on an app, that their experience is personalized based off of all the other experiences that they've already had with your brand. Even location data, if you had a physical store and you know that in store there's ways that you can personalize that as well.
Looking at the omni-channel approach for personalization, where we can say we want to take the engagement in that they have on one channel and use that to influence and personalize the next channel is huge. We're past the recommendations, we're past the standard, my account personalized area remember me and what's amazing is there's been a lot of things about data privacy. I'm on our data privacy committee here as well and the CCPA, the GDPR, a lot of acronyms for those who aren't in privacy, you can Google them and read all about them. It's a lot of fun long nights, but with it is a concern about data privacy. However, people are willing to accept it in order to have a better experience from the majority of clients that I've worked with. Rarely have I seen from all those initiatives, this massive abandonment from customers that say don't personalize anything for me, show me everything the same way it is and don't make it easier for me to shop.
I have not experienced that yet in six, seven years of focusing on personalization with our clients. I would really stress that next year, especially in 2021, the continuation of combining your channels data for the experiences that your customers have and using that to continue the personalize messaging information and seeing how they want to engage with you is only going to benefit brand loyalty, referral marketing, all those things we've talked about so far, it will influence those tremendously.
I'll wrap it up with just talking about the aspect of where we take personalization next. To me, knowing that I've already purchased from a category from you doesn't mean that that's the only category to personalize to me in the future, try and use other data signals or ask the simple questions. I've had some really great brands who have asked simple questions on a spring cleanup of their email marketing list to gather additional insights into me. Then they've used that to then continue messaging to me effectively without it feeling big brother-ish or feeling like they're invading my privacy and doing more than they should.
It's really made me a bit more loyal to them because of that. I think that's critical for as we move forward and as we have people who are consumed by the overwhelming amount of choice online and in the digital channels today, that if you can show them why you can give them a bit more efficiency in their day, a bit more of a limiting of the amount of decisions you're asking them to make, it will make a tremendous impact on your customer's loyalty to you.
That's great. That's fantastic. As we talk about sort of the different channels, one of the things that we are seeing, especially in these times for companies that are seeking out digital transformation, primarily, I mean, in the retail world they've had e-commerce for a while, they're just scaling it but that was there. But the businesses that are sort of really seeking true digital transformation now are companies that may not have been direct to consumer in some capacity so that's manufacturers, for example, that were selling to retailers that could be B to B companies that potentially weren't directly selling through commerce. They were... They had direct connections with their customers, but weren't doing it online for example.
We're seeing a massive kind of splurge in those companies trying to go direct to their customer and as well as sort of focusing on digital transformation in 2021, including focusing on retention and loyalty initiatives with their end customers directly where they always were going through a middleman before, through a distributor or through a retailer in the middle from that perspective. What's your advice to kind of in final to kind of close this here. If I am the CEO or a C-level CMO at a company like this that is considering digital transformation into going direct to customer next year or if I haven't already done it now or I haven't even started yet, what are the key considerations that you should think about if we can just give a few pieces of advice there?
Sure. That's a lot to unpack in the short little bit, but let me do my best here. Definitely first off is understanding the model of how you're approaching it. If you are connected out through distributors or through other channels of how your products are out there and you're going to add e-commerce and a lot of brands are doing that and you were correct in that, in direct to consumer. I think a lot of it stems from just understanding the policies that you're going to put in place so that you can continue in your other channels so that your brand and products are still being found and purchased and supporting those channels correctly while pushing your own out there from a marketing perspective.
I think one of the biggest things that you have an advantage of when you do direct to consumer is really telling the product story versus just being a product on a site. That's another consideration for a potential purchaser. By telling that product story and really investing your time in developing that, it's your differentiator. For me, there's also certain brand promises as we talked about earlier where if you communicate your brand promises correctly, there's a reason to buy through a brand themselves directly where certain things are recovered or returned or corrected in the experience with a product much faster or with more succinct customer service. I guess is one way to put it.
Where if I'm having to go through a third party who then goes back to you as the brand, there's an extra middle layer there that just kind of makes it a little bit muddier and having that direct to consumer relationship also stems from the brand loyalty where you had brand loyalty of anyone who was purchasing your brand before or you generate brand loyalty if you're a new brand. I think that's where we see a lot of new brands spinning up with the direct to consumer model and I would say is an example of that in the mattress world.
Casper suddenly took a whole direct to consumer approach. We're going to ship the mattress to you. They popped up some stores. They really got a good following. They focused on the omni-channel approach and then we saw Purple enter the market and we saw several other companies enter the market in direct to consumer. It really flipped the script on how typically you went to a mattress store before, you laid on the mattress and tested it out. Now you've got people buying the mattress based off of testimonials and referrals and everything else online.
I look at that model and I look at where now there's some brands that I buy myself personally who have kind of taken the same approach. Hey, we're still selling through our other channels, but here's why buying through us is a way to support us and to support the initiatives we have as a brand. Might still be a little more expensive, but knowing the relationship I have with the brand directly whole different experience.
BioLite is a big one that I've gone into before and I had some issues with some of the lights that I had. They are rechargeable solar little lights that my kids love. I had an issue with one and I wrote them and their customer support wrote back. They asked me several questions. Help me troubleshoot all through email. I didn't have to go on and wait for a ticket and all this other stuff. The system created it for me. I just simply filled out a form and the relationship started from there. They had an issue where the troubleshooting didn't work. They go, hey, what's your address? We're going to ship you a new one. If you're kind enough to ship us back the old one, we're including the return label.
It was a great experience and it now built a customer for life in that sense because their product and their differentiation and how they handled the situation was so much better than I've experienced with other brands. Just some personal examples of how that approach comes in, but at the end of the day plan accordingly, communicate your promise and have just great messaging about why buying from you, start with that why. Why buying from you direct is going to be better for them in the long run than if they went and shopped elsewhere. Even if it's cheaper elsewhere, it's an opportunity that you can build that relationship and then continue to foster that relationship over time.
Absolutely. In addition to that education, the brand promise communication, your customers that end up then directly buying from you despite of potentially and maybe a price is advantage in some cases or your most loyal customers and so they are the people that you can test new products on that that will sort of help you and give you advice and help you grow as a brand.
Tim, this was a fabulous discussion. There's so much advice that you've given everyone that we can sort of pick from. Really appreciate you coming on today and helping us out here and passing on some of the experience you've got and for everyone else, if you want to find Tim he's very available on LinkedIn or you can find him from the Americaneagle.com website americaneagle.com. If you want to watch additional such videos, please go to annexcloud.com/marketmovers. Thanks again Tim.
Thank you Al.
Co-Founder, Annex Cloud
VP of Strategic Initiatives, Americaneagle.com
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.
Americaneagle.com has been dedicated to providing web design, development, hosting, and digital marketing services for over 20 years. With a team of 500+ skilled professionals, we focus on achieving measurable results for a wide range of clients, from start-ups to Fortune 500 companies, and professional sports teams to government organizations.
To learn more about Americaneagle.com, visit Americaneagle.com