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Market Movers Discussion About How Brands Can Make Data the Center of Their Growth Strategy

Tadpull’s CEO and Co-founder Jacob Cook shares his four Cs framework for ecommerce, as well as his insights on why organizations are struggling to maximize the ROI on their digital transformation investment, why they should move from acquisition obsession to driving growth through their most valued customers, why customer-centricity is key, and why data that syncs across the entire organization is at the center of it all.


Transcript

Erin Raese:

Well, welcome to Annex Cloud Market Movers, where we bring in experts and luminaries to help us with the current times. Today, I'm extremely excited to welcome Jason Asher from Kodella. Jason and I have known each other for a very long time. He's been in sort of the commerce ERP, sort of a customer experience space for a very long time, so I'm very excited to welcome Jason. Jason, thank you for joining us.

Jacob Cook:

Good morning. Thanks for having me.

Erin Raese:

Thanks for joining us. Why don't we start with you telling us a little bit about yourself and about Tadpull and what you guys do and what you're working to accomplish?

Jacob Cook:

Perfect. Yeah. So, we work with kind of mid-market companies in e-commerce, and we're trying to kind of help them have the same tools and AI that, say like on Amazon or Facebook has. So we work really closely with great brands like Jackson Hole Resort, Caterpillar Workwear, and a host of others, using kind of their customer data, their digital marketing campaign data, and then their inventory or the product catalog data, and kind of mixing those together.

Erin Raese:

Great. And you're really focused in, on the digital space?

Jacob Cook:

Yeah. We only focus really primarily just on e-commerce and just kind of helping clients do just really three simple things. Just drive traffic to their site, so the right kind of traffic. Once they get that traffic, they're helping that traffic convert onsite with personalization and all sorts of fun things to kind of push them through the journey. And then that last piece is kind of retention. And which is why we've been excited to kind of partner with Annex Cloud, because we see loyalty and retention is so key to building really kind of healthy, thriving businesses.

Erin Raese:

We agree.

Jacob Cook:

Yes.

Erin Raese:

So as we were prepping for this conversation, we were talking about some of the trends over the last year and what's been happening in digital and so many organizations really jumping to the web quickly for a lot of reasons. So what are you seeing you? What have you seen over the last year and how are these folks spinning their investments...

Jacob Cook:

A fascinating year in the sense of, those that were doing e-commerce or currently in the game, everybody in our portfolio grew. One of our clients has been around for almost 77 years and they grew 40%, which is pretty remarkable for a brand that's been around that long. Those that weren't sure about e-commerce, they're kind of on the fence, understandably, they kind of hedged and holding cash and not investing. We're finding a lot of those are, especially in the last few weeks, here in early in '21 are, "Okay. Looks like this is the world has changed and we've got to do something." And so we're seeing a lot of those kind of come back around, but they were kind of frozen in midair there for about a year, we saw.

Erin Raese:

Yeah. It's kind of surprising that people, that organizations just held back. I mean, I remember when it first happened, it was, okay, but then it started. So it's amazing that you're still hearing that people are still a little hesitant or unsure of where to go. What is your advice when you're talking to organizations like that?

Jacob Cook:

I like to steal the line from Jeff Bezos that, what will be true in 10 years is kind of a way to guide the strategy. And so, will there be more e-commerce or less e-commerce in 10 years? And if you look at the data from the Feds, as e-comm as a percentage of retail, I mean, we kind of had 10 years of growth in 10 months. And so we're kind of saying whether you're B2B, and some kind of say, "Well, we're B2B, it doesn't really matter." And I think when you look at shifting buyer's behavior, I don't think folks that are used to B2C experience are going to cut you any slack if you're B2B. If I'm going to be buying something online, I want it super seamless, quick, easy, expect fantastic mobile experience.

And so all those things, those bars are raised for everybody, whether you're B2B or B2C. So the good news is the technology these days is pretty much Lego sets. I mean, you can by and large snap a lot of this stuff together, and it's not the massive, massive undertaking it was five, 10 years ago, to build some of these things out. So that's kind of the good news, but I think it kind of comes back to vision and culture and kind of where we're going. So we try to gently ask those questions without being insulting, if that makes sense. We don't want to go to anger or provoke anybody, but just say, "Well, do you think your customers are changing their buying behavior changing and how do we kind of meet those expectations?"

Erin Raese:

Yeah, it's interesting. And when you're talking to them, how do you kind of coach them along on those things? Because a lot of the things I've been hearing lately is, and maybe a hesitation for some of them, is there's a lot of stats out there right now that talk about all the investment in digital yet nobody is really, or very few are actually getting out of it, what they had expected. Is that because they didn't set up the right plans to begin with? Or is it they chose the wrong technology?

Jacob Cook:

Oh.

Erin Raese:

What's happening there and is that having an impact on these folks that are still kind of waiting and seeing?

Jacob Cook:

I think that's a fantastic question that gets into kind of a general theme. I've had the pleasure of kind of teaching undergrad and graduate courses on e-commerce and data science, digital marketing since 2007. And I can kind of tell you from the higher ed experience as an adjunct professor, there's nobody really doing this yet at the higher ed. And I think our e-commerce class at the graduate level, at the University of Montana, the best of our knowledge is one of the only ones that's just pure e-commerce. And so I think it's very different, like accounting, where if you're going to come out of school, there's very specific gap principles in how you do accounting. Right. But if you think about digital marketing and then e-commerce, so digital marketing is pretty nebulous and pretty dynamic and changing, and then you had this finance component, which is really critical for e-commerce.

I think it's just, it's so interdisciplinary, nobody really knows how it works. And then I think a lot of these, especially with mid-market, they hire folks that... They'll put together the campaigns and all that stuff, but they're not necessarily super analytics driven, we've seen a little bit. And I can also say, I think from teaching a lot of my students I have in my marketing courses, they purposely avoided economics and statistics and... No shame, there's no problem, we've all got our strengths and our talents, but I think they thought marketing is going to be a lot more on the creative, fun stuff. And I think that the idea of, "Oh, you can still do that." But you're going to have a lot of analytics behind it to be kind of, get budget and approvals and show results. So I think it's a generational shift, honestly, here. I think the generation coming up, that grew up with digital that's pretty savvy in it, I think that's when you'll start to see some huge shifts on results.

Erin Raese:

Interesting. And I know when we were chatting earlier too, you were talking about a framework that you had around, I think it was the four Cs or something.

Jacob Cook:

Yes.

Erin Raese:

Is that something you can share with us and give people a few tips?

Jacob Cook:

Yeah. So teaching this and working on a couple of textbooks, a lot of stuff I can't... There's no frameworks to teach students and students need ways to kind of hang things in their minds as frameworks. And we all learned the four Ps of marketing, product, price, place, promotion. It's been around since the early 60s, as a model to kind of think about how you do marketing. And so we got to think, "Well, what's kind of a framework for e-commerce?" And we kind of came up with this four Cs. And the first one is kind of culture. And if you think about it, we always use this analogy of its kind of a solar system, right. You can have the sun and then you have some planets that are going to orbit it. And so the sun is really culture.

And in that is agile, focused, data-driven. I think also culture that's open to experimentation or failing, so not everything's going to work and that's okay and we're going to run and learn and then go through these learning loops. And then that ability of really just betting on e-commerce or believing in it as an asset in the business. And the very last piece I'd add is customer centricity. So people have lots of options to buy online, if the culture doesn't wake up to that and really embrace that and build something to build that loyalty piece, that's really hard. And then kind of around that sun is kind of a flywheel, if you will. And it's customer data, so really good customer data where we know lifetime value, we know which campaign they came from, we have net promoter score, all these really rich insights around the customer.

We feed that into our digital marketing campaigns, so customers and then campaigns. And better customer data, lets just go, acquisitions, we can run better ads into Facebook, much, much more sophisticated targeting and personalization with email or SMS. And then that last piece is catalog, so the fourth C is kind of catalog or inventory. So how do we move our product catalog based on the margins and how do we pair back in stock to the right customer that's ready to buy. And so when you get all these things kind of turning together, it kind of, it really spins really elegantly. But if you don't have good customer data, you can't run good campaigns and then you sit on inventory that you don't know how to move. So it's kind of, they all kind of feed each other. So we've had pretty good luck kind of using that as a framework for clients that can kind of get their hands around it and say, it's a journey to get these things to all come together, but you got to start someday on it. So...

Erin Raese:

Yeah. I really like it because, when I talked to different brands out there in the market, so there's the culture, or how do we put this out there and we've got a brand that we're putting out there? Or we have some customer data that we might be collecting in one spot, but they're not able to bring the other pieces together, so they're limited there. And I love the catalog piece because I mean, obviously there's inventory that goes into a website, but are the marketing people really connecting with the merchandising teams and are they really, were proactively understanding what the opportunities are? Is there a product to the better margin or products we need to move? Things like that. So...

Jacob Cook:

And when we started building our software, it kind of hit us between the eyes because we would spend two weeks designing a campaign for a product or a category of products and we'd go out there and they'd be, "Oh, well, we're out of stock on that for the next four months." And so you basically take a week or two of work, throw it in the trash. Okay, well, what do we have in stock? And I think that modern ERP systems in the cloud, all that data is there.

And there's kind of always been this, I would say timeless rift between operations to marketing. Ops people don't want to talk to marketers, marketers don't talk to the ops people and the finance people. And so there's some of these silos that exist. And I think you can kind of surface some of those insights. Marketing can really start to get, to become a hero a little bit in the business, because we saw some research from Google that only 26% of CMOs are even invited to a board meeting, which is just astounding, right. And the average tenure of a CMO in the Fortune 500 can be 18 to 22 months.

Erin Raese:

Very true.

Jacob Cook:

So you kind of got to ask compared to, what's the CFO tenure and some of that. So you kind of ask, "Well, why aren't marketers getting a seat at the table here and what are we missing?" And I think a lot of that comes down to the language of business and analytics and data and finance. And you can go to your CEO and show, "You gave us some capital, we moved that and we converted that into cash and we can prove how we did that and how we're going to do more of it." I think you can always get invited to that boardroom meeting if you can prove that.

Erin Raese:

Exactly. And that's really what we should be doing, isn't it?

Jacob Cook:

Yeah.

Erin Raese:

Yeah. Which kind of brings me to the next question around, as we're seeing this transformation, I'll be at some faster and some, a little bit slower. And with the economy that we're we're in these days, there's really a need to keep customers and keep them growing. And what are you advising your clients on? And/or what are you seeing their responses today in the industry?

Jacob Cook:

We have been trying to work closely with the C-suite on customer lifetime value. And you can look into some of these tools, we actually build our own kind of custom value model in our software, and then we do cohort analysis. And a lot of this is inspired from work coming out of the customer analytics group at the Wharton School and Dr. Peter Fader, another guy I talked to, Dan McCarthy, they're doing some fantastic work, it's actually the cover story in Harvard Business Review last January. And really looking at valuating businesses on a bottom up approach, so almost at the molecular level, if you will, on the value of the customer. So when we can kind of help them think through, and then look at those cohort models, how bad are these customers this year versus last year versus the year before?

And then we can apply some finance tools like this count of cashflow or ways we can kind of value that business overall over time. And then if we're not seeing those cohorts grow in value, then okay, now we've got to do something different in our experience and retention and all sorts of stuff like that. But we've been starting to analyze, we're doing annual reviews right now and kind of looking back to some of our clients we work with for six, seven years now, and we're seeing those curves last three, four years, they start to compound and we're seeing that kind of exponential growth in the value of the customer, and it provides a bit of a proxy for the overall value of the business.

And so that's been helpful to kind of say, okay, marketing and digital, and e-commerce and all that stuff, but let's get back to, is your business growing in value and how do we prove that with some math? And it's been really, really fun because you can start to see, wow, these types of campaigns drive our most valuable customers that buy consistently, they don't buy on discount, they don't return, they're highly engaged on email or on-site. Okay, when we know those, we can start to run more acquisition campaigns off those profiles and ultimately prove that we're growing the business value. So I can go on for hours about this stuff, Erin, I think it's super interesting.

Erin Raese:

My mind is kind of going with you. I'm, okay, which question do I want to ask next? And we certainly see you through some of the things that we do at Annex Cloud, where we have the loyalty platform, but we also have this huge engagement suite where we can engage people on social and ratings and reviews and influencers and things like that. And we see that the folks that are engaging as well as transacting are spending 200% more. I mean, it's synergistic to the growth, which it sounds like a lot of what you were just saying about those campaigns as well.

Jacob Cook:

Yeah. And I think that's, what's great in that HBR article, that Harvard Business Review article last year was, loyalty leaders grow revenue 2.5 times faster. And so loyalty isn't one of these, 'Oh, well, we just kind of got it." No, this actually really does, and it's not just a little bit, it's a lot. So we've also worked on businesses where they don't have loyalty and you'll run the statistical and predictive analytics on this using some machine learning. And the kiss of death is when your average order value equals your lifetime value, because you're always in acquisition mode and-

Erin Raese:

Always churning. Yeah.

Jacob Cook:

Always churning. And I think those are really hard businesses to run without a lot of capital. They're kind of brutal to try... Eventually, as we say, it was always kind of a law of bad click-throughs, you'll eventually saturate any acquisition channel in digital marketing and then you're kind of capped. So that's stuff you can't change, it's just baked into the business model. But those are really hard problems to solve we found.

Erin Raese:

Yeah. When we've looked at churn over the years, it's in two major places. It's churn within the first couple of transactions or it's later in the lifetime, so some of your best customers churning. Those are the most... Churn happens everywhere, but most expensive are in those two areas.

Jacob Cook:

And have you guys found companies you are able to rectify that and fix it? Or is it kind of just baked into the business model and they just have to kind of live with that reality?

Erin Raese:

The ones that actually look at it and accept it are able to move, is what I've seen. I've had conversations with CMOs where they say, "Well, I don't have a loyalty problem, I need more acquisition and I need 80% more new customers or something." It's, well, but you're not growing at an 80% rate, so why do you need so many new customers? It's because these are falling off after that first or second transaction, when actually they could begin to be looked at more as retention vs acquisition.

Jacob Cook:

And Erin in your experience, is it the second touch? Is it that second transaction or third transaction that most companies kind of fumble on or?

Erin Raese:

Yeah. It's between one and four, is where the big hole is.

Jacob Cook:

Yeah. And have you seen any examples of companies that kind of, before and after, have gone from really bad to really good? Because that's quite a shift, to kind of rectify that if you have that math happening.

Erin Raese:

Yeah. We've had a lot of organizations through the loyalty, through my experiences with loyalty, to really focus in on that and make some significant changes. There's nobody that I can actually name by name-

Jacob Cook:

Sure.

Erin Raese:

... But yeah, there have been some of those folks that we have had those conversations with CMO and it's, "Wait, no, think about it this way." And then that shift. It was kind of an aha moment of, "Oh yeah. Maybe if I engaged a little bit more here or brought the loyalty strategy in a little bit earlier, we can make some significant difference."

Jacob Cook:

Yeah. I think that Pareto distribution, 80-20 rule, it's just kind of everywhere. Actually the night in class, we were teaching and we were looking at the demo store. So the Google merchandise store has a Google analytics demo account and you can go in. And we, okay, let's have a bet. How much of the revenue comes from current customers and returning? And sure enough, it's 80% of revenue comes from 20% of which of the customer base, which is returning in a random, just a random website like that, so it's everywhere. And to your point, everybody obsesses on acquisition, "Oh, we need to run on TikTok ads, or we got to try this new Snapchat ad format." And you're kind of, "Well, we certainly can, but what about all those other customers that bought from us? And we just sent them a special email or recommend some products that fit with their journey and reward them for it?" And so...

Erin Raese:

Get more love. Yeah.

Jacob Cook:

A little love. Yeah.

Erin Raese:

They might come back. You'd be surprised.

Jacob Cook:

Yeah. I think it's kind of akin to diet fads. It's, we're always looking, myself included, Oh, well, you need to do paleo, now you need keto, now you need... That's kind of, always this diet fad it seems like, with customer acquisition or retention.

Erin Raese:

We're all marketers. We're all for that next shiny thing. Right?

Jacob Cook:

Exactly.

Erin Raese:

Oh, goodness. I love it. Well, I'm sure we can talk about this for forever, but let's look to wrap this in a bit. So in thinking about that, as you look at 2021 and beyond, what's your advice for organizations as they're planning for their digital future?

Jacob Cook:

Own your data. Get dead serious about owning your data. And that is something that I think a lot of companies don't realize that's an asset. It's not necessarily recognized from a gap accounting principles perspective, but it absolutely will be. If you look at any modern monopoly, Amazon, Google, Facebook, they're built on data. And what we're seeing over and over again, is that data is completely becoming obfuscated over it. And it's the... I always think about that joke or quote from Ernest Hemingway, I think The Sun Also Rises, but how do you go bankrupt slowly and then all of a sudden? And I think that data's the same way. You're going to go bankrupt and you don't realize it they're kind of boiling the frog, but I think if you look at what's going on with Apple and Facebook right now, and the IOS 14 update, where all of a sudden, you got seven day attribution, that's it.

And you just see conversion. You don't see add to cart, nothing, just gone, boom. Well, if you're doing a lot of mobile business, chances are that's in really high value customers are on an iPhone, in terms of household income and what they spend, you're going to lose all that. I think when other customer's working with some Amazon, they have a direct to consumer channel and an Amazon store. And we can get... I mean, we're just... It's a roll the dice what we're going to be able to pull from the EPI for customer insights. And Amazon won't let you, understandably, have any some that data... Future as a result.

So we pushed that really hard. And nothing else, just start to build this as a hedge or just as an insurance policy. Even if you don't know what to do with the data, just get it clean, get it organized, and then be able to kind of act on it or have a strategy for a little bit down the road, if you're not sure right now, but with machine learning and AI, the gasoline is going to be the data. And if you don't have any gas you can't take the car anywhere. So, that's the biggest thing we preach.

Erin Raese:

I love it. Obviously it plays right into to customer loyalty as well. And the way I'm looking at loyalty concepts in our technology going forward, it's you can certainly have your points or discounts or some kind of reward mechanism, but at the very baseline, it's really a commitment to a value exchange with the customer.

Jacob Cook:

Exactly. And that's why I think that four Cs thing, that culture thing, we just come back to that over and over again with prospects and clients of... Every student will know, what does customer centricity really mean? It sounds nice and we really believe, we want to understand voice of the customer and all that kind of stuff, but how do you kind of bake that through the whole organization? And I think that's, I come back to, we always kind of make the joke about Amazon, they're kind of fun to pick on, but Darth Vader, we know its Jeff Bezos's Darth Vader and he's the dust-star, you can kind of point it at anything and blow it up. Right. And he's got all this amazing technology, all this infrastructure, all this AI and data.

And so, but if you go back and you read some of his annual letters and it was a really good book on Amazon story, but it all comes back to customer centricity. I mean, when they launched Prime, I mean, they lost so much money on Prime, but it was, "No, we're going to build a loyalty and we're going to build that habit." And as a result, I think almost 82% of American households have Prime now. I mean, but they lost their shot for years, but big picture, strategic thinking around the customer obviously, has created a lot of shareholder value.

Erin Raese:

Yeah. Obviously.

Jacob Cook:

Yeah.

Erin Raese:

Own your data. I love it.

Jacob Cook:

Own your data. Please, just own your data.

Erin Raese:

Well, with that, I think we can wrap.

Jacob Cook:

Perfect.

Erin Raese:

Thank you so much, Jake. This has been a pleasure and lots of education for me too, so thank you so much.

Jacob Cook:

Oh, likewise. No, thank you. And I appreciate the opportunity. Thank you.

Erin Raese:

All right.

Featured Speakers

Erin Raese

Erin Raese

SVP of Marketing and Partnerships

Jacob Cook

Jacob Cook

CEO & Co-founder, Tadpull

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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.

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Tadpull transforms people and companies through empathy and technology. Providing a combination of eCommerce software and digital marketing services, they help mid-market companies navigate the digital landscape to build profitable brands that produce results.

To learn more about Tadpull, visit Tadpull.com




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