Zero Party Data in D2C eCommerce with Jon Ivanco

In this episode, Nathan and John Ivanco (founder of Formtoro) discuss the concept of  D2C as a channel, the cost of retail and ad costs, the commoditisation of products, the role of media figures in pushing brands, the value of zero-party data, and the overhyped KPIs in marketing. They also delve into the challenges of attribution and the limitations of attribution software. Overall, the conversation highlights the need for a customer-centric approach and a focus on branding, messaging, and understanding the customer journey.

Takeaways

• D2C should be seen as a channel rather than the entire brand.
• The cost of retail is often equivalent to ad costs, and the advantages of being D2C have diminished.
• The commoditization of products is leading to a shift in the market, with brands focusing on branding and nostalgia.
• Media figures can play a significant role in brand acquisition.
• Zero party data collection can provide valuable insights for marketing strategies.
• Overhyped KPIs, such as ROAS and conversion rate, should be considered in the context of other metrics. Focus on profitability and avoid chasing KPIs that don't align with profitability.
• Keep pop-up offers simple and use coupons and discounts strategically.
• Rethink attribution and focus on branding, attitude, and messaging.
• Build a brand with limited releases and a focus on customer data.
• Collect and leverage zero-party data to better understand and serve your customers.

Chapters

00:00 Introduction and Background
05:21 D2C as a Channel
10:05 The Cost of Retail and Ad Costs
13:26 The Commoditization of Products
16:18 Unique Value Proposition in Fashion Brands
23:29 Data Collection and Insights
25:33 The Value of Zero Party Data
29:30 Overhyped KPIs
33:06 The Problem with Chasing KPIs
33:39 Structuring a Pop-Up Offer
35:07 The Importance of Coupons and Discounts
36:05 Attribution as a Company Journey
37:52 Branding, Attitude, and Messaging
38:21 Understanding Sales Attribution
39:27 Rethinking Acquisition and Branding
40:30 The Importance of Messaging in Ads
41:47 The Limitations of Attribution Software
42:38 Building a Brand in E-commerce
44:04 The High Failure Rate in E-commerce
45:13 The Importance of Product Packaging and Shipping
46:12 The Strategy of Limited Releases
48:28 Avoiding Failure in E-commerce
51:19 The Value of Collecting Customer Data
55:27 The Limitations of Predictive Analysis
58:15 The Power of Zero-Party Data

Transcript

0:01

Welcome back to the Blues Brothers podcast, the podcast in where we share the challenges, insights and triumphs of scaling ecommerce brands to seven and eight figures and building the remarkable teams behind them. In this episode, I'm joined with John Ivanko, the founder of FormToro, which is a data collection, pre purchase pop up company, which predominantly the value comes from the analytics on the back end of the data collection. John pushes back on a lot of stuff that I say on LinkedIn, which I really appreciate. I'm, I'm learning a lot from him on a day to day basis. And he's been in marketing, probably longer than I've been alive at this point. So thanks for that. Thanks for joining me, John. Thanks for having me. Awesome. I thought I'd start by a bit of an intro on what FormTour is, why you started the company, and a bit of background about yourself. Yeah, so Forum Toro became a labor of love coming after my last consulting gig. Prior, I'd run marketing for Lifex, actually based in your neck of the woods in Richmond. Melbourne and the concept behind it was at the time I was running customer support and marketing and we were working on you know growing the brand and making it making it happen and one of the problems that we ran into is they move from marketing predominantly into customer support so it could be closer to customers. I want to talk to customers and understand what they were dealing with the product how they're using it etc so we could reuse that messaging and turns out customer support is the most underutilized place of most e-commerce sites. They offshore it immediately. and don't talk to customers. So I used to do office hours every Thursday and Friday and I talked to all the really angry customers that were having a miserable time with our products so I could better understand where they were struggling and how to improve the product generally. But doing that we had a lot of support tickets coming in so we started looking at how do we minimize the amount of support tickets that we get. I think we're up to 1200 support tickets a week with four people which is entirely too much. So this is the first re-dive into can we automate? And that automation took place using Typeform into Zapier into Zendesk with a bunch of automations and categorizations. And just taking our existing support docs and kind of chopping them up piece by piece one step at a time. Choose your own adventure style. And we did that for a year and we got the self-solve rate up to about 85%, which was nuts. And in doing that... Every time we had a question from the product team about what was going on, we'd have data to back it up. And we could say, hey, this is where the issues were over the last month. This is the patterns that we're seeing. Did you make any changes to the specific app functionality, et cetera? Can we look into what's on the roadmap to improve this experience? Because we're getting a lot of questions about it. Or if they push an app update or a firmware update, we'd get, because it was a cloud-based product, we'd get constant feedback on how people are using it and what issues they're running into. So that was kind of like the jump into how do we use structured data in order to better understand how to improve resource management and resource optimization. So after that, I went and worked for another company and we're doing go to market strategy and they were doing market research. Market research was running Facebook ads to a landing page to a sign up to a survey, whole nine yards. And then we started looking at what's happening. People were signing up, but they weren't opening the first email. And if they were, they weren't clicking through at a rate that was high enough. And if they were, they weren't finishing the form 100%. So we were losing data, like trickle, all the way down. So our cost of a single email ballooned from about $10 in email to about $240 with data. And whenever you're looking to solve a problem in technology, you're looking for a 10x gain benefit. Well, if we could do it automatically and collect data from people without them having to leave and incorporate and use live data collection every step of the way and make it seem like they give an email and then the next question happens automatically and it's related to their customer journey. Our hypothesis was that 70% of people would give us answers. And we sat out to see if it could be done. And we did this back in like 2019 and found out that there was a way to make this happen and that this experience wasn't being done by anyone at the time. And we looked at it and said, hey, we've already used the same framework to do this for customer support on the back end. What happens if we go to acquisition on the front end? It touches way more parts of the customer journey than after someone purchased. So that was the big aha moment. So then I set out and I met my partner on a forum on IndieHackers and we kind of got to work of figuring out what this would look like in preparation of understanding that. GDPR was changing, CPRA and all these other privacy regulations were changing, and that eventually I think we're going to be consent-based marketing only. So how do you provide value? That value is creating an asset out of an existing behavior that people are used to, where you're already trading a benefit for and saying, how do we maximize this on both sides? How do you get more than email out of it? How do you be able to qualify what someone's looking for and just ask the basic questions? Yeah. Yeah, that's fantastic. And then the assumption is that you, you gather all that data and then it informs the acquisition strategy and informs the future product launch strategy. It informs potentially it even goes back to the start, how you were talking about customer support. It informs how you're going to automate customer support to a degree. Did you ever think about data collection at the customer support level? Yeah, except customer support is a cost center. People don't spend money on it. So when you're looking at the different parts around business, there's a bunch of stuff that's viewed as a cost center versus a cost driver, and it happens to with asset creation. People spend willy-nilly on Facebook ads and advertising because they view it as being an easy way to make revenue. There's probably more efficient ways to make revenue, but. Like people have been tricked into, oh, I spend a dollar and maybe I get a dollar back and yay, I got a new customer. And then I consulted them multiple times knowing that 80% of people are never going to come back anyway. It's a fairy tale. We're just looking for a better excuse. I'd love to see more brands doing stuff like co-marketing, to be completely honest. If I had a brand and I'm wearing this shirt and someone else makes pants in the golf industry and they want to partner with them and email each other's lists and give an offer. I'll probably take them up on it. At least take a look. Like, there's a lot of room in things that are unsexy that take a lot of time to put together. Yeah, yeah, fair enough. One idea I think that I got from you, and so I want to validate it is that you see D2C as just a channel. It shouldn't be your whole brand. I mean, it can be, but if you're going to do it as your whole brand, you better have it on lock, like seriously on lock, meaning limited SKUs, limited releases, build hype, secondary market for your products. If you do not have any of those things, it's just a channel. I mean, your whole goal, and we saw it with DTC companies. If you look back, like 2012 is when DTC really started taking off. There were the Everlanes, Dollar Shave Club, everything else. And the whole goal was... out the middleman scale, scale. And you could do it because back then a click was costing you a couple pennies, an email was 25 cents. Like you could scale a brand just via paid because there wasn't a ton of competition on the market. It's not true anymore. So that saving the middleman and cutting out the middleman portion of that has just gone into the pockets like Facebook and Google, really, TikTok, et cetera. All the ad agencies are basically what took at Amazon now, has a thriving ad business on their marketplace. So all the advantages of being D to C have pretty much vanished. And you just don't have foot traffic and people can't touch your product and distribution sucks and it's a lot harder. Uh, so now if you are like going to make a push and you're not going to go limited edition, et cetera, yada, it is a channel. Like your biggest accounts are going to be, if you can get into retail, but it's a whole bunch of different headaches. Cause then you have MOQs that have to be in retail. There's holdbacks. There's funding. Uh, discounts and sales, there's retailer dropping you for shelf space if something else comes along. There's fees to be featured on shelves. Sometimes you're renting space. And then if you don't sell through, they just get rid of you. It's pretty crazy. The whole market is very skewed. And one of the things you would see a lot of in normal retailers these days, including marketplaces, like Amazon got in trouble for this and got rid of a lot of their products that were Amazon brands because they were directly competing with other brands. Mm. Nordstrom though has its own line, CVS has its own line, Walgreens has its own line, all these stores have their own line and own brand of stuff. Even your grocery store has its own line of stuff just rebranded and white labeled. So it's the distribution partners are the ones that are able to quickly just go to their suppliers and like white label stuff and then undercut you and they already have built in distribution. So it's It's getting really interesting and TikTok, oh sorry, Shein, Tmoo, et cetera, going direct from manufacturer. That's just the start. Like it's seriously just the start. You're gonna start seeing more and more of that because the margin on any good is 10 to 15% is what they're making to produce that good. It's 25% basically is what it's costing you in terms of ads in order to get in front of someone assuming your ROAS are good. 10 to 15% minus 20 equals five. So if you're a manufacturer direct and you see an avenue to doing that, you're about to cut out the middleman which has now become D2C. Yeah, yeah, that's fascinating. Um, you did have a post a while ago, which I found real eye opening, which is that you said retail costs equals essentially ad costs. So everyone's under the assumption that, um, they're getting essentially a better deal when they're advertising on Facebook and Google, cause they have a five row as or a four or a three now when you're at scale, but a three row as is the equivalent to a retailer taking 33%. And so. Yeah, it's all like sleight of hand. How much should a good actually cost? If a good's being marked up 5x its price in order to make a profit, which is normal in D to C, what's the alternative for far less? Something not talked about, really not talked about. in retail. TJ Maxx is on a tear right now. I don't know if you know who TJ Maxx is, but they're a discount broker much similar to Ross or I don't know what the equivalent would be in Australia. But they sell a lot of big brands at super discounts. It's kind of like a clearance channel. Nordstrom just announced that Nordstrom is doing Nordstrom Rack, which is their same version of that because the spending on the lower end far dwarfs everything else. Someone gave me some insider information years, years ago, so I think it's okay to share. but they did a deep digest on all that business and a lot of very big brands made more of their revenue off of those discount channels than they did directly through their retail store establishment Vertically Integrated. Like, this is what people don't really understand. It doesn't cost a lot to make stuff. And consumers are starting to get wary. And this is where like Teemu comes in and shit like that. We're like, they're showing you super cheap goods. Maybe it's subsidized, maybe it's not, but the real raw cost of a product, you're paying for everything that happens between the manufacturer and the delivery at the end. If you remove all that. crap in between the ad costs, the storage costs, the shipping costs and everything else. Turns out products are worth about like a fifth of what you pay for them, no matter what the product is. And that's pretty crazy because you're wearing a shirt right now, right? And maybe like this is what always gets me there's t-shirts now they're selling for like something like $54 a t-shirt. And like the Material cost on that is still, even at the high end, maybe $6 for that. The cut and sew at the high end is less than $10. That's a $16 shirt that they're trying to flip for that price of nearly 5x, right? Like, that's just the way this stuff goes. Is it really worth it? Nah, probably not. Is there a market to pay for it? Maybe there's a market for everything. I don't know, but I see the commoditization of goods happening at such a rate that I don't know if that market's always going to be there. Yeah, that's interesting. I would argue that branding is probably more compelling to some of the market than the commoditization of the product will end up being. But I could be wrong. Yeah. owns half your brands? You're the VF Corporation? Okay, after this call, you go look at VF Corporation and see how many brands that they own because North Face, Supreme, Timberland, Nautica, it's all VF. All these big brands that we've known for ages are all commoditized and then conglomerates really essentially. It's big brands that own a bunch of little smaller brands that are all part of one big, giant happy family to make that happen. And half of the other brands, uh, out there that are, that maybe we're still independent at certain points in time, usually go into PE for under leveraged assets and rebranded. It's like Ray-Bans weren't really, Ray-Bans used to be sold in gas stations for $20. And then I believe Luxottica took over the brand name, uh, out of Italy. And then all of a sudden now they have luxury lines going for tons and tons of money. Like it's all branding. You're right. It is branding, but nostalgia is huge right now. If you found brands that used to be around that aren't around anymore, but we're around like 30 years ago and you just relaunched many brands with same quality stuff, you do really, really well. And we're just seeing it over and over. Champion as a brand, starters coming back as a brand. These are all brands that were huge during the nineties and just went to die. I'm waiting for someone to bust out Russell Athletic from when I was growing up. in the 90s and like just do fleece again like it'd make a killing. Nostalgia kills right now. Yeah. And you think you do think nostalgia will ever be driven down in pricing because of commoditization of products. you're watching things go up in pricing, which is pretty crazy because these brands used to be really cheap, like really cheap and affordable. And now nostalgia is claiming a higher price point on them, which is absolutely, it's unreal to me. But at the same time, there's always going to be someone new that comes onto the market that makes a good product. You know how there's been a lot of stories about DTC brands that do like the basics, whether it's t-shirts, et cetera, yada, yada. If you don't know the industry, you're like, oh, that's a great fitting t-shirt. If you know the industry though, sometimes you're like, oh, next level blanks are perfect and they're $6 a pop and they're great and they last for 10 years and they fit perfectly. Like, I think that's the thing is most people aren't in the industry to understand, you know, the variety that's out there, um, and what tweets can be made on basic stuff in order to do that. We're getting to a point though, where it's almost cheaper to custom order your stuff. in bulk than it is to, you know, buy a graphic t-shirt for $32. You get your own made for like $26. Yeah, that's fair enough. I have an interesting question off the back of that, which is that as a paid media agency, we somewhat avoid fashion brands. And the reason for that is because fashion is very driven through branding, and not through marketing efforts, right? We can't spin a USP or we can't spin a one of one offer that's going to drop cack as easily within the vertical of fashion. But with that being said, over the last year, over the last two years, I've started to see all of those brands that you sort of referred to like true classic, where they've taken the approach of let's just sell t shirts, but then let's put a USP on it of the t shirt fits really well. Do you think that goes against what you're saying with the commoditization of products? Like you can still spin a unique value prop out of a very commoditized product to the masses. I wish, I can't speak to it because I don't know their numbers internally, but I would be willing to bet that overall profit margin is probably between 5 and 10% on that business in general. And this is the problem that I think a lot of people run up into when you're in a commodity that's good area or profit margin shrinks, so you have to make up for it in volume. You literally have to make up for it in volume. They're an interesting example because... If you look at their website, there's always a sale, deal, offer, or bundle. It's very gamified in that they need the sale to happen when they're driving traffic to it. You see this with other brands. Cosmetics brands are interesting too. They do something similar where there's always a deal, offer, bundle, something going on in order to make that happen. It's the margin game. Fashion has a big margin. Cosmetics has a big margin. If you do it right, you got a really big margin and it's pretty nice to play with. But remember that margin has to be so big because it's just getting eaten away. I can't think of too many brands that are actually organically driven. Chubbies, there's a lot of talk on LinkedIn about Chubbies and the switch to branding from ROAS driven, etc. But The true story is they were rolled up into PE with Solo Stove and now that stock is down 95%. Like, I mean, let's be honest, the model's really, really hard to crack. And if you didn't crack in 2021 where it was at all-time highs and money was going into just about everything, it's gonna be a tough one to crack now. I do see it changing though. I don't think e-commerce is necessarily bad. I just think the way that we've been doing it is completely broken. I think that you do build a lifestyle brand around the lifestyle, and then you introduce products to that larger brand. You're seeing great success with those creators that are doing a media play first, and then they're finding products that fit their audience within that media play. I think you're gonna see more of that. That's a really, really interesting thing to track and follow because... they're putting out content in the hopes of building an audience that they can leverage into extra profit margins. So if you're making 30% on a, let's say, let's assume you're making 30% on a product, but now your distribution is all through the content you're making. Now content is expensive to make, don't get me wrong, but you're either spending it on content and an asset that you can re-leverage over and over and over, you're spending it on ads and it's one or done. Yep. Do you think that's going to be one of the biggest growing acquisition channels is media figures pushing brands onto them? I yeah until it gets over really commoditized like honestly I think it's all gonna be commoditized some Brand launches don't work out some do some make money some don't it just depends like Kanye's little launch with that Super Bowl Commercial like he filmed it on an iPhone cool gorilla He spent whatever I think three and a half mil for it. He wasn't in major markets. He was just in some markets building height He's great at marketing. It's a great play, but the same token like Does that work for someone that doesn't know him? No, it's not really a thing. It's why the biggest brands in the last 10 years have all been celebrity driven. If you think about the big exits, Ryan Reynolds has a bunch of big exits, Aaron Paul and Mezcal with Bryan Cranston, they exited really quick, like 18 month exit on their Mezcal brand for like 51%. Liquor's interesting though, it's all branding. So you pick places where it's all branding. I think Kevin Hart has a new tequila, The Rock has a tequila. Now think about these guys, they're getting paid a lot of money, granted. They understand production, they usually own production companies so they can get everything produced that they need to. They work out in their writers and their contracts that they get their products featured and stuff. When they do the talk show circuit, you know that's part of their terms of getting on there. They're able to leverage existing and when they're traveling on that talk show circuit to do stuff for a movie, studios picking up the tab on all their stuff because promoting the movie, it's part of the gig. Like, this is just the way it goes. Like if I happen to be a celebrity, I would for sure be launching brands that were lifestyle that revolved right around branding. Why not? Like you're just leveraging your existing following that a studio is paying millions of dollars to help you grow. in order to push more product. It's a great situation. It's not good for any small brand trying to compete. Yep. Yeah. Yeah, absolutely. I think that I think that shift of thinking about that it's an ad cost percentage that you're paying and that a retailer could be taking that or that you could cut that out completely. remember the retailer has to sell your product too. They have to merchandise it, they have to sell it, they have to have the right audience for it. There's a lot that goes into that. Um, they, they won't tell you facts and figures. I don't know how specific I can get into it, but like, I can tell you that in major, in major stores, if it's a major chain, if you have like an end cap or shelf space, et cetera, or a demo unit of whatever it is you're selling, it's seven figures to be there. Like, it's not cheap. So they're already excluding certain brands that could ever get there, because a brand has to be able to fork that over. It's pretty intense. I don't think retail is for everyone. I think retail is a great alternative for people when they hit a certain scale, because you can move more volume. And there are some people that I've talked to that all they do is move volume. They just sell direct into stores. But they move. thousands and thousands and thousands of units. You're thinking container ships of units, multiple containers of units to specific locations. And they don't care. If they're making 30 cents a unit and they can pack that with a couple hundred thousand units per container, it's a good deal for them. Money's money, right? That's your different scale. Yeah. Yeah, makes a lot of sense. I do want to tie back to what we were talking about before the podcast, which was email marketing agencies and how that ties into form Toro. So form Toro collects data at the pre purchase level, which then goes through a data collection and analysis process so that you can draw insights from it, you could tag individual customers as well as they sign up. The question then is what do you do with that data? Yeah, so we do pop-ups, we do post-purchase, and we do, I guess, quizzes, because technically it's just logic map data collection. There's nothing special about that. Quizzes are pre-purchase when someone's just trying to figure something out. Most quizzes should just be better navigation, if I'm honest. 80% of traffic's on mobile. If you do a product recommendation, you've got three products. I click on them, they open up in separate tabs on my mobile device. I can't compare them. It's a pretty bad experience, but we still do them for whatever reason under the guise of, like you said, collecting data, because all data is good data. It's not. What we do is we take the data and then we push everything over into something like Clavio, Sendlane, et cetera, as a profile field. And that just gets added to that profile so that we can see kind of what's up. But what we do with that data is we want to understand the context of that data. Specifically, we need data that's also going to be in relation to number of data. answers, number of orders, revenue, conversion rate. If I answer my favorite color is blue, do I convert at a higher rate than some of that answer is red? If so, should we change more of our items to be blue that we show on the front page? These are all data points that we can use to leverage. In terms of email, I think email is actually at the bottom of the list in terms of being able to use that data because most of that data actually collected leads to conversion because 12 days or less, most of it's within like 12 hours, 12 hours to three days. So because the transaction happens so fast, instead that kind of data and that kind of insight is better used on like ads, landing pages, product pages, specifically product pages. God, there's so many terrible product pages out there that just don't have the basics. And that's really where you can make your gains happen because... Your customer journey has multiple touch points and you should use that data across all the touch points. It shouldn't just be like, oh, I collected it via pop-ups. So that means it only gets used in email. Probably like the, it's the lowest impact to use it on email. Yeah, you wouldn't believe the amount of clients that we've on boarded. And I've asked, have you ever done any surveys? Have you ever collected any zero party data on customers? And they either say no, or they say yes. And then you follow up with Okay, well, what were the insights? Oh, well, we never looked at it. And you're like, they don't have anything to compare it to, right? So you'd have to, right now, if I was gonna run a survey, here's what would happen. I'd pick out a segment of audience and I'd know that they'd purchased before for the most part or I'd be able to segment that way and then, or they'd purchase a certain product and then I'd send out a survey to them and I'd see what's up, right? So now I have a finite piece of information that relates to the propensity of someone of actually making a purchase related to answers. Cool. Where's the other half? Where's the propensity of people not to purchase? Where are their answers? How do they compare? Do I have context to that? Nah, I just know what's winning for whatever reason for them at some given time. Unless I said, you know, what was your mental status when you decided to make this happen? You don't get a lot out of it. I got more out of customer support than I did after I did it out of any survey we ever sent. And people love surveys, because then they get to qualify all the open-ended answers in a spreadsheet. and then tag them and then say, oh, this is what's coming up and, you know, try to figure it out, blah, blah. Now we have AI to summarize this stuff and sediment analysis. So we've been doing this shit for years. The problem with it is it's so far removed from when someone decides to make a purchase that people just don't care. There's no consideration for that. Oh, will you share this? Can we bribe you to share this? So you come back again. So you're only going to get answers from people that were likely to purchase a second time, which is good. At least you're narrowing it down that way. But now you got to figure out what about them is different from people that aren't going to purchase a second time. makes it really tough. Yeah. and you're not gonna follow up with, hey, I noticed you didn't fill out this survey, can you fill this out again and tell me why you're not looking to purchase a second time? No one does that. Yeah. What would you say is the most valuable insight of zero party data collection? If you're doing it right, honestly what we found is we tie it back to your ad spend in terms of quality of subscriber. So your ads aren't based on ROAS anymore. They should never be based on ROAS because ROAS is a one-to-one time period and some people take longer than others. But what you're looking for is the quality of the subscriber via the data combinations and their likelihood of actually converting. once and then multiple times. If you have enough data over enough period of time, usually about 90 days, you'll start recognizing patterns within that data that tells you who, based on their signup, is more likely to convert than others and have a good experience with the product. If I come into a store that sells jackets and I say I'm looking for a jacket that's gonna be waterproof and lightweight, right? Those are my two criteria that you collect. And you sell a bunch of jackets that are heavyweight and... wind resistant but not waterproof, right? Like, we're probably not going to be a good fit. So when we find that pattern of whatever ad is depicting whatever, and it's leading to answers that are similar to what we're trying to focus on, and we can connect those data points, and then we can say, hey, statistically speaking, people that care about stuff that's rainproof make us more money. How do we find more people like them? Oh, let's look at our ad scatter subscription intent data. Let's see who's signing up and saying rain jacket. And let's see what their conversion rate is. Do they have a higher likelihood of converting multiple times over one time based on all of our data collected? It's the really nerdy stuff, but you're looking for patterns within data that provides correlation and can lead towards causation. You can't control causation, but you can look for relationships within the data that says, this is more likely than not to happen versus this other answer. Yeah, I think there might be either a misunderstanding or miscommunication around zero party data being more linked to the acquisition strategy than it is to a retention strategy. I think simply because the customers, I think it might be because the customers are getting tagged and that's getting pushed into your ESM. Yeah, so the other thing is that the email agency tends to own the pop-up So when you start looking at the goal of the email agency being how many and I've looked at our own data internally everyone cares about what their subscription rate is No one cares about their subscription to conversion rate is If you got a list of 50 people and they all subscribe and that conversion subscription that signup rate was like 15% everyone's drooling if you have another signup rate, that's But no one purchases, great. So 50, no one purchases, that's a goose egg. But if you have this other one, then only like sign up rate is 2%, but 90% of them purchase, you just got a lot more sales there. You just got 45 sales coming out of that. Which one are you going to take at the end of the day? 45 sales. That's the thing is we like to hype up. KPIs that aren't relevant or they don't, they're not relevant without context. And I think that's been the biggest problem is that we have to unlearn what we've been told because prior there wasn't a good way to track all this stuff. And now there's better ways to track all this stuff and we can kind of figure out what's going on during that journey. What would you say are some other KPIs that I overhyped? Yeah, Roa's is overhyped. Blended Roa's I still like as kind of a thing. Conversion rate is one that's really, really interesting. If I send out an email that is 50% off, my conversion rate's gonna spike. If I send out an email, my conversion rate's gonna spike, depending on how big my list is and what I'm offering, right? Like every KPI in a vacuum is super gameable. You can game them all. The problem is understanding if one goes up, how does that affect? others. And that's what we miss. We get so wrapped up in individual KPIs that we forget that if something happens to one, it's gotta be impacting another one. If I have an ad that goes absolutely viral and it drives a shit ton of traffic, what's gonna happen? My conversion rate is gonna go down. Oh, is that a bad thing or a good thing? Who knows? You got more traffic and more eyeballs on your thing, that's good. But they were lucky like this is kind of the problem, right? And you must get this from like an ads thing. Everyone's like, oh, I want this to do really good and go viral and everything else. It's like everyone trying to game the pop-up and say, oh, cash back, or, you know, I want $10 off my order if you spend over $50 and all this other stuff. So all those offers, and this is the big debate, everyone's like, oh, if it's a higher priced item, you should do whatever, cash off instead of percentage. If it's a lower price item, do percentage so that it works out better for the company. Uh, customers aren't idiots. Like if you say I get $10 off for spending$50, I'm spending $51. I want to maximize by benefit. Like that's just the way this stuff works. And I think we give people too much credit in the data and the statistics. He's like, Oh, I got a higher signup rate. Yeah. What was your subscription to conversion rate? Uh, I don't know. Okay. So you got a higher signup rate, but you don't know if it was actually an effective offer. Mm. Yeah. the problem. Everyone is chasing some KPIs that make zero sense by themselves. They have to all go back to did this make us money? Yeah. What? not money. Yeah, how do you, how do you recommend structuring a pop-up offer? Do you like, everyone's going to want some way to gamify it. They're going to want what's the, what's the exact pop-up offer that we use, but is it as simple as just keep it simple and then split test over time? It's like incredibly simple. Take your Black Friday price discount, make it less than that. Take your bundle price, make it more than that. Go. That's your percentage off, and that's what it's going to be. Like literally, if someone's first purchase is there, everyone's trying to like cross-sell, up-sell, AOV. Think about your customer journey. If it's my first time trying out a brand, do I want to go absolutely nuts and buy a bunch of stuff? No. I want to test something. I want to test one item. that I like from the brand that I want to see what I like the quality about and then I'll come back and purchase more. That's the whole point of a pop-up is to de-risk that first purchase and make sure that someone gets product in their hands so they can experience it for themselves and come up with their own perceived value. We overthink this stuff so much. Oh, I don't want my margins and everything else. Build it into your margins. If you're doing 20% off pop-up, build that into your margins. Make sure it's accounted for. If you cannot have coupons accounted for in your margins, do not offer them straight up, because you know what happens. I go to a store, I don't see a pop-up. I add something to my cart. I see a space for a discount code. What do I do? Google for the brand discount code. I do. Oh, now where have I gone? I've left the page. Oh, am I gonna come back? Am I gonna get distracted? Is something else gonna catch my eye in the 50 tabs in four windows that I have open? Sorry, 10 windows I have open? We don't think about these things. And this is like my problem with people that are like so bullish on SMS. I'm like, oh yeah, good job guys, for the most part, except if you're not on mobile, then you're leaving to go to your mobile to go find something, because they don't leave it on the... website, so now you're leaving an experience to go figure it out. We are actively, we're very, very bad at the customer journey because we all do this stuff every day. We all go to a store, we look for stuff, we've added to the cart, we want to check out, we go to Google, we check on Amazon, see if it's got two-day prime so we don't have to pay shipping. We do all these things. But as brands, we assume that people don't for whatever reason. Yeah, yeah. What are your thoughts on attribution while you're there in terms of I. I'll hop in, which is I had a quote from you, which is that, attribution is a company journey, not a customer journey. It is. It 100% is. You can't tell me how I found a product. I can't tell you how I found a product. I have zero incentive to fill out a post-purchase survey after I've purchased something. That's the truth. Like there's a whole subset of people like me that will... We're not going to provide data. Like it's just there. You might see me click on four or five different products on a page before I settle on one, but you have no idea why I picked that one product. Did I see you on Facebook as an ad? Did I see you on TV as an actor wearing you in a show? Did I look for something similar to someone was wearing on a show? I'm bullish on things like Amazon that wanna let you stop and see what products are available in a screenshot. That's sent me so much time, because there's so many times like, oh, that's a kind of a cool jacket. I wonder if that style is available. How do I find that? Reddit's great for this. Reddit does a deep dive into what people are wearing, what brands are similar, et cetera. When... What's his face? The bear had the white shirt that's like$320, like white t-shirt. It went absolutely nuts and everyone was talking about it. These are kind of the things that people, these are the way that people discover products. And there's no attribution in this world that can track all that stuff. It's kind of like a wasted errand. I think instead of focusing on attribution, we should just focus on branding, attitude, and messaging. Honestly. Like... Your audience is on every channel. You just need to come up with the messaging that relates to them. Yeah. What about if I am doing $100,000 a month, maybe $150,000 a month, and I have a paid media agency, I have an in house marketing manager that does the EDMs. And then I have an SEO agency as well. And I'm sitting here going, I want to grow my brand, I want to take it to 200. I want it to take it to 300 a month. But I don't know where the sales are coming from. Because my in house marketing manager says it's all from emails. my paid media agency saying they're driving 80% of it. And then the SEO agency saying they're driving another 40% of it. And when I add it all up, it's three X the actual revenue. Yeah, so we're going to add up. There's a couple of things that you can do, which is setting tighter periods of time over any attribution period for reporting. That's like number one. It's tough to kind of find out what the happy medium is on a lot of this stuff. Remember, the top of funnel can be negative as long as it makes up for it in long run, depending on your product. If you're selling a one and done product, it makes it very difficult to scale efficiently. Then you have to look at the unit economics behind it. Why can't we scale? What can we afford to acquire a customer for? Is the cost of acquiring a customer going up to become cost prohibitive? If it is, how do we look for a different way of tapping into an audience? These are all some real questions. Not a tunnel I can get into the nitty gritty on here, because there are some ways that some people are doing some good stuff around this. But it requires rethinking what acquisition looks like and rethinking what your brand looks like. How many of the emails are sales emails? How many of the ads have a sale in them? How many of the ads are promoting a discount or clearance or whatever? These are all factors that play into the success or failure of all these different touch points. Why do people click on an ad? What's the hook or the offer of that ad? Is it just to check out a collection? Is it a new collection? Is it an old collection? Is it something someone's seen before? Is it on fashion? Is it on brand? Is it a new time period of the year? Are you sending me swim trunks and we're in the middle of winter and I don't own a hot tub and I don't have any trips planned? There's so many different variables that go into this, which is why I think most of the way that we tackle attribution, it's kind of a fool's errand. Really, it's about figuring out how to voice that message to people. If it is winter and you are selling swim trunks and your ads do not have pictures of beaches and say, time for a vacation. Like, you're messing up. It's not working, right? But we see this all the time, right? People are just, oh, this is my product, this is my product, this is my product, this is the best, this is the best, this is the best. But there's no thought process into the messaging portion of it. A lot of ad agencies I've worked with and talked to, it's so much focus on Hook, hook, grab them that first 30 seconds, pain, agitation, yada, these old troops of marketing. Do they work? Yeah, to a certain extent. Are they attracting the right customers that are going to be long-term customers? I don't know. I don't think anyone has actually done a study on does this hook contribute more lifetime than another hook because everything remember on paid ads is so short-term. Yeah. There's a quote from, uh, Carson from solutions, a in the US, which is attribution is the next billion dollar company or the billion dollar solution. What are your thoughts on triple whale and all of the other different attribution softwares that are trying to stitch together? What's the messy customer journey? What's the point? I mean, they're just using an algo on top of stuff and then coming up with a number that they think is closer to being what it is. I mean, the big secret about all those guys, honestly, is from a technology standpoint, they're using fingerprint.js or they're using snowplow.io. They're using someone else's technology in order to track everyone via pixel. And then they're trying to make guesses based on the data that they're able to get from that pixel in order to... build out kind of a mindset of what's working, what's not working. If you're reliant on Facebook ads long term, you are going to go under. You're just never going to be able to get out from under that audience. There was something I wrote the other day and it's if you're building a brand that doesn't have a secondary market for it, you're not building a brand. You're running a general store. Yeah, that's a good one. know today that have a secondary market for their products that are less than like five years old? Yeah, I couldn't name one. They don't exist. And this is the hard part for a lot of people to understand. And it has to do with what your goal is as a business. If I was starting a DTC brand right now, I would have to exit to PE because IPA is dead. They're not investing in anything unless I was like absolutely massively growing and super profitable, which isn't likely to be a situation. You'd need to be vertically integrated. which is what Harry's pulled off, which was really smart of them to do, where they control that they bought the factory and all the distribution channels and everything else and vertically integrated, which is really smart if you can pull it off. But aside from that, there's no intrinsic value in what you do. You're commoditized and you're a brand. So you're trying to build equity in a brand and then you're the Adam Newman of the world that's creating new... new valuations based on who you are as a brand and who wants to be a part of you. Like where are you going to go? Where are you going to roll up into? Yeah. Where's the exit for a lot of these companies? I don't see it. And what's your valuation? If you only have 10, 15% profit margins, who wants to buy you? Yeah. If you were to, if you were to start a brand, um, they just say e-commerce, what would you start it in? Because my answer would be consumer based products. All of the clients that we have that are selling consumer based products, the repeat purchase rate and lifetime value just makes so much more sense from a acquisition perspective. You're gonna hate this. So I would do something so dead simple stupid that you can't mess it up. And I'm talking something like, I joked with someone about this, I was like, leather pillows? Easy. Like, handcrafted pillows, they're light to ship, super light to pack. You can pack like, I'm just talking like the cases, seriously. Just, you could flat pack that, put it in a thing and you could charge like $70, $80 for it, maybe you probably have to $120 for like a designer leather pillowcase that goes over someone's pillow and they have to supply the pillow themselves, like days all day, cost you like six bucks plus four bucks to ship, five bucks to ship, you're up at like an 8X right there. Yeah. I love that as a model. I've talked to a lot of CPG and the problem with CPG is if it's something that's heavy, it's just a bitch to ship. And once you get into shipping costs, for a lot of goods, the shipping cost is more than 50. If on a single item in a lot of industries, the shipping cost is more than 50% of the actual cost of good, if not more than the good itself. It's death by shipping. Yeah. But if I was going to do like a brand, pick something that doesn't have sizes or has standardized sizes that flat packs into small poly bags, limited releases and limited quantities, produce on demand if you can, build so much hype up where everyone just has to sign up on a list, run samples ahead of time, get all the photography done, lifestyle photography with all the products, and then slow burn a lunch. There's different ways to build a list around that too, though. And it doesn't have to be all about conversion when you're just building hype around something. So there's ways to leverage Facebook and all these other ad networks in a different way that brands aren't doing. Cause it's not in their, they have product and they need to move product. There's very few that understand how to do a proper product launch. If you're launching a product, it's not, oh, week before. No, you launch a product and you put one variant out at a time and you really have five variants going and you stretch that out for five, six weeks. And you just eat the storage cost on doing that. And you hype cycle it up, hype cycle it up for like three months before that. Like you want people asking you when a new variant's coming out or a new color's coming out or something like that. I know this side because we have this with the underwear brand. Like. We have customers that email us, like, when you guys bring back colors, I want more colors. That's like the best situation in the world when people are like seeking out more variants of your product. And you know what that tells us is, sweet, let's slow roll these variants out. Every time we drip one out, there's more excitement. Like, we don't run proper marketing anymore. Like it's the weirdest thing, but for some reason we stopped. The last company that does this. Nike still does a good job of this. We have their sneakers app and other things. They'll release colorways first via the app, and then they'll release some through retailers and stuff like that, and they do a really good job. But they have a secondary market offering for most of their products, which is pretty crazy. They've already mastered that, and they've done so many limited releases over the last couple of years, and that's really cool. But most people can't pull that off. Yeah. Switching gears a little bit. There's a super low barrier to entry in e commerce. And what it ends up leading to is an incredibly high failure rate. I don't know if you've seen the stats on the average Shopify store, but they're pretty funny to look at, which is the it's something like the average revenue is$1,000 a year, and the average profit is negative $2,000 a year. How can how can people avoid failing? so rapidly in the early stages? Or do they need to fail rapidly to learn? I wrote a post and they got me banned from reddit ecommerce. And I said everyone should stop trying to start a store and start a newsletter instead. And the reason why I said that. As I said, you still have to acquire customers, gain interest, and have something of value to share. There's plenty of products out there. Actually, on a call earlier today, I go like, if you really wanted to arbitrage this industry, you would just, you know, be a software program, get installed, understand someone's data, find people that were failing and going downhill. They're going to go out of business, and then you offer 10 cents on the dollar for all their leftover inventory, which moves your margins to 90% on that, and then you just need to out-market what they had and you have enough margin to play with. This happens all the time. There's people that get involved in business that don't understand all the things that are required in order to be successful in business and they have dead stock. The first person that opens up like a dead stock website where you can just purchase dead stock to take over stores, like for pennies on the dollar, that's how you learn. Then you have more margin to play with. Then you're putting all your money into marketing though. The problem is everyone puts all their money into Facebook ads. There are certain categories of goods out there in specific areas where the max amount of good customer reviews is like 50. Let's put on you. How would you build a brand today? I would build a brand straight up through some degree of a strategy that got me more reviews than my nearest competitor by a handful. I get to a hundred reviews and there are real reviews with like detailed, like, this is what I bought. This is what I used to have before. This is how this is better. I would or would not recommend this to someone bonus points. If I can get that on video and I can reuse that video and ads and stuff like that up, up and away, like it's not difficult. It's just a lot of people get thrust into this. They pick some product off Alibaba or whatever, and then they just keep going. And they try to like resell it and they're competing with everyone. And that's not a way to go and your margins aren't there to support it. A lot of the stores I've talked to where I've known that have failed or like had a lot of problems, it's they don't have the unit economics to make it make sense. You know, the shipping cost is too high. They don't have that automated. They don't have a large enough market. Repeat purchases too low. Uh, price point just can't be, uh, it just can't be felt within the market. And that's true. It happens all the time. Like there's a lot of things that are obstacles. How would I do it? How many brands do you know that are super small that just start running ads right away and they're not collecting data to understand anything about their customers and they're not sending out surveys? majority. Yeah, why? What would give you the absolute best? Your people are dropping thousands of dollars on any given day in ads, and they know nothing about their customers that come there except maybe an email address and if they purchase what they purchased. Doesn't that seem a little batshit crazy to you? It seems batshit crazy to me. Like if I was putting up my hard-earned money, I was spending thousands of dollars on ads in a given day. and I wasn't collecting data relevant to people that were coming to my website? I'm just guessing. Yeah, I think people are misinformed because if you ask the average e-com owner, are you collecting data when people hit site, they'll say, yeah, of course. Like GA is pulling all the data. And they'd say, oh, what are you doing with that data? My best series of questions was, I was talking to a CMO about this. And this was years, years ago when we were just getting started. And they had just run a campaign for their brand. And they'd spent a lot of money on it, like over a million dollars and that on it over a course of a month. And I said, cool, how many signups you get? and then I got the number of signups. It's like, cool, so that's like about $10 a signup. Not bad, awesome. All right, how many of those people converted? Oh, this amount converted. It's like, cool, how many people didn't convert? Oh, this amount didn't convert. It was like only like 4% of people converted or something like that. Like, okay, so 96% of people. Do you know the difference between the people that converted and the people that didn't convert? And it's that blank stare of what do you mean? I was like, well. Do we have any trends or anything that separates the people that did convert and didn't convert and tells us why one may or may not have converted? And the answer is always the same. I have no idea. And then it's like, cool. So you spent a million dollars on ads. You have a list that's pretty much useless if they're not converting. It was a one and done transaction. You learned absolutely nothing from this. Where do we go from here? The problem that we have is when you start pushing people into thinking about what they're doing, you have to also really realize, or it took me a while to realize this is, the calling out is all fun and games, but that's someone that made that decision to do that and spent that money to do that. And it's a sunk cost, they can't get that back. And they greenlit that on the expectation that it would deliver results. And if it did not deliver the results anticipated, There was nothing gained from that experience. And that's scary. That's really scary. Because the way that I always viewed marketing is that if I'm doing something, I need a hedge as a value asset. If I do something, I need to be able to create an asset out of it. 50% of people are never going to open my emails. I know that. They're going to sign up for a list, never open an email. Did I at least get something for that? Did I at least get a better understanding of why they were there in the first place? Is there a way that I can maybe swing them to open an email? What can I do to change that behavior? These are all the questions that people should be asking. They should realize that it's a sunk cost. They should realize that they can get more value for what they're doing. And they should be doing it, because it's a fraction of the cost of what they're spending on ads. But we're so programmed, so programmed, to just be all or nothing. We're watching an ad. Did it make us more money than we spent on it? Cool. That's the silliest thing I've ever heard in my entire life. It is a zero learning experience. It's a zero sum game doing that. You're just waiting for an algorithm that you have no idea how it works to decide whether or not you're gonna be a winner today. It is gambling. It's gambling without real learning. And everyone's like gonna come back and say, oh no, we learned that hook did or didn't work. To what audience? How much money did you spend? Did you show it to everyone? Or did you let the algo decide who to show it to on that specific day based on a variety of factors that you have zero insight into. Yeah, I'll give you a I'll give you an objection, which you probably hear a lot, which is what will happen to my signup right on site. absolutely nothing. The reason being is live data collection happens, and as soon as they give you an email, you get the email. Sign up rate stays the exact same. It's just extra information. We're just retraining people to expect to give more information relevant to their journey when they're accepting what was just free percentage off. Like, imagine this. Could you imagine if you walked into a store and said, hey, I'm going to give you my email. Give me 20% off? What would happen? Legit, what would happen? They'd be like, and no, that's not going to happen. And then you say, well, what if I gave you feedback about whatever, whatever? Well, maybe, kind of. That's a little bit more value. I feel a little bit more comfortable doing that. But we don't think about it that way. Stores right now are just like, hey, can I have your email? I'll give you 20% off your email. But don't worry, I'm just going to send you the same crap as everyone else. and I want you to be successful in buyer shit. Will that make you buy right now? Today, 20% off, just give me your email. Now think about it this way, in person if you just gave someone that 20% off they might purchase. But if you say, oh no you gotta check your email. What are they gonna do? They're gonna walk out. They're gonna like think if they didn't have cell phones. Go beyond before cell phone times. Oh I'm gonna send you an email don't worry about it. Oh you mean I gotta go to my computer and go do something separate some other place? That's what it's like when you don't put a Yeah, yeah. What other objections do you hear? Do you hear many at all? I think a lot of it is people are concerned about friction. They're concerned about people converting less. People tend to be more invested in that journey and they're ready to do that. But if we ask one question on all of our forms, which is when are you looking to purchase or upgrade? Today in a few days, in a few weeks, in a few months, right? That's just the level set one. A lot of people say today more often than not, but not everyone's ready. And people that aren't ready convert at a lower rate than everyone else. So you need to understand who's signing up for your list. Like if you can't convert that high intent list, you're not gonna be able to convert other people on your website. I view it this way though. I would gladly spend 20% on a single order or a first couple of orders in order to better understand who my customers are so that I can improve my ad spend. Guaranteed, my 20% that I give up in any given day is dwarfed by my ad spend in that day. Yeah. How many? gonna be that way. Yeah, yeah. And it's also I imagine this is zooming out a little bit, but it's also going to be very helpful in curating your next product launch, right? How do you make a product launch if you don't have really granular details about what your audience your existing audience, why they're even buying from? What pain are they trying to solve? Who are they? And then the obvious answer, as I said before, is, oh, well, GA4, like we know the average age, we know the average gender split, like that'll tell us what we should launch. Here's the thing, and this is so interesting, right? We have all this data, and we'll call that the first party data that should be predictive analysis and allow us to massively succeed, right? There's a lot of people claiming predictive analysis. You brought up some of the acquisition players that say they're really good at it, right? Let's assume they were super, super dialed in, good at what they did, and like top notch. Would this many stores be failing on a? regular basis. Like, let's just assume, like, really? Like, if you have all the tools and the tools are really good and they make a plan for every, like, every size business and you had all this information that was predictive and it could tell you what to do and it could tell you what to focus on. It could tell you what was succeeding. Then stores wouldn't fail. Everyone would be profitable. Everyone would be happy. We all be making millions of dollars, right? Right. But is that the scenario? Not really. So maybe, maybe just for a second, maybe no one's actually figured out how to predictably understand if people are gonna purchase or not or what things would make them purchase or what demographics are more likely to purchase than others, et cetera, unless you have a very specific niche product within a space. I think that's one of the best sales pushes up for collecting zero-party data. It's uninformed versus being informed. I think the hardest part for people to understand is that if everyone has the same access to data, GA4, pixels, Facebook ad creative, everything, right? Like if the field is completely level and all these tools worked as well as they all say they do, why are people still failing? Correct. Maybe it doesn't work. Maybe it's not as easy as people think it is. Maybe it's the wrong set of data. Maybe the data sets that everyone has access to aren't enough. Maybe they're the wrong sets of data. That's always been my biggest contention with all this stuff. Specifically around zero party data is I think people equated zero party data being quiz data and quiz data turned into automated emails with quiz results and product recommendation engines. That's where it ended. You collect data, we tell you how much revenue is driven by anyone that took this quiz, and then we send them their answers to their quiz via email, if they give us their email. That's not how you leverage data. That's like, it's baby steps. It's nothing special on that. You need to like integrate that data across the entire journey and on the touch points and figure out how you can build a better journey around that. Yeah, absolutely. Well, thanks, John. I appreciate it. I think this was a really productive conversation. Hopefully people learned a thing or two. I'll pass to you to plug anything that you want. Obviously, FormToro, I want to roll it out on the majority of stores that we currently have under management and work with. We use a few other data collection tools, but the analytics portion of FormToro, I think is what really sets it apart. Anything to add? that's where we found it. Nah, visit me on LinkedIn at John Iwanko. That's where I share some stuff and comment on some other stuff. Also, JohnIwanko.com is where I have free resources for people to check out the parts of the customer journey and move people through a better understanding of that. So the whole goal at the end of this is all the harsh comments and feedback and everything else is challenging people to think differently about this stuff. Because if we keep saying the same stuff and doing the same stuff, we ain't going to grow. Everyone's going to go out of business in the e-commerce space, we'll lose the marketplaces eventually. Yep. Thanks, John. I appreciate it. Thanks for having me.