CLV Revolution Recap

Right.

Most people in E. Com have less than 18 months of experience. I see this, I go to the conferences. They're people that are brand new. So agencies scale their revenue by having repeatable processes that are done by VAS and junior sorts of people. But if the agencies are responsible for strategy and there's only two people or three people in the company that are actually good, then they can't scale. And those three people are going to be used for selling new clients, not on operating on existing clients. Because where, you know, you're the agency owner, where are you going to put those people to close the big deals?

Yeah. And that's everything.

If you, if you are, if you have an agency, if you are, if you've hired an agency, bring everything in house. So I agree with what Tim's saying. Have the agency do the strategy, but have it only done by the principals. And no offense, just pretty much ignore all the other things, all the other packages, the other stuff. They try to, you know, get more recurring revenue by having a retainer. But really the value is every agency has a couple of these really good people and you want to get those people to work on your account and name them in your contract. You'll meet them the first time because they're the ones you talk to that close the deal. You want to know that that's the person you continue to talk to.

Welcome to the Ecommerce Growth Stories podcast. If you worry about your growth, if the business model isn't working anymore, if you're running out of ways to optimize your E commerce or if you're looking to get the E commerce fundamentals right, then that's show for you. Hello and welcome to a new episode. I'm here with Dennis. Hi Dennis, how's it going?

Valentin, always a pleasure.

Excellent. So I'm, I'm glad to, to. To start this again, to make this happen again. Tell us, tell us about how you've been and what, what you've done in the, the, the last week since we haven't each other.

Well, since the CLV Revolution summit which you guys should tune into if you want to know how to increase your clv. I was at Traffic and Conversion summit the last couple days and learning how to do video. A lot of you guys are wondering how to do video on TikTok Instagram short form video. I was with the guy who does Alex Hermosi's video and also Grant Cardone's videos. So lots of cool tips, lots of cool things for you guys to be able to Grow your E Commerce. If you tune in now.

That sounds amazing because they have all this traction, man. They do this fantastic work. They are like a media company. So these guys, I mean, they are a media company. I mean it's not like anymore. All right, so in our today's episode, we're gonna have a chat together about the best ideas that we've got from the speakers at the CLV Revolution. And basically that's what we're going to talk about. Dennis, I guess you can see my screen, right?

Yep. All right, looks great.

So in day one I've touched the subject that only a third of the marketers use the data they have about their customers. So in their CRMs and only 6% of the businesses are making data driven decisions. And what are your thoughts, Dennis, what do you think?

93.7% of statistics are made up perfection.

So would that be falling under the 6.3?

Yes, as long as you make the lie very specific, it's convincing.

Yeah, exactly. That's one thing. So in your experience, do you think that people are actually trying to use their data more in the last years? What, what's your perception?

I think nobody's really wanted to use data and it's been kind of a convenient excuse because the iOS 14 and Google Chrome and all this data being missing just to say, well, let's look at it overall. So we're willing to pay a lot more for the CAC because what really matters is the ltv. So we see a lot of people are willing to have a CAC that is much lower. Much. Sorry, much higher than the aov, but I think less. It seems odd like you think with more data and more tools that'd be more data driven decisions. But very few e comm business owners are looking at it because they don't have data at the channel level or the owner knows this, but the different people on the team aren't really data savvy because they're employees and it's not their money.

Yeah, excellent. So we can move on to the, to the next one. So. So Carl Gillis said something which I am resonant completely with it. So he stated that the sale isn't done until the customer is seeing a result. And that's the moment when you can celebrate as a company, when the customers are having a success with your product, no matter what product it is. I think that's hard to measure as companies are simply shipping the products and they have the hypothesis that everyone is happy with what they've shipped.

Well, there's always a delay between when they purchase and when they get the product. And then there's all kinds of things that can happen along the way. Like I bought this, you know, I bought on a health kit, I bought this blood pressure monitor and it gave me some incorrect readings. So I'm sure that they have a whole thing saying that, you know, if you don't know how to use it properly, here's some help. But you know, I didn't give them five stars on Amazon because I wasn't fully happy. And then another one I brought, I bought another heart, you know, blood pressure monitor and then they sent me this just now. They said if you leave us review, we'll give you a free ten dollar Amazon gift card. I think they very much care, they very much know that the purchase is not the real point to measure.

Yeah, that's correct. And although we have these moments throughout the customer journey when you place the order, you are a bit reluctant if you haven't bought from that store again or that kind of product. So you need to treat that emotional and let's say buyer's remorse. Then you have another moment when you are sending, you are getting the product but you haven't tested out yet and you need to give the the path to success. So that's why I need to guide the customers, as you've said, with the blood pressure monitor. And then you have the last moment when you've said oh yeah, this is working. And I think that's the moment when you are more willing to pay off to the company that sent you that product. Although most of the companies after they ship the product they push the next products on you, which is not the right thing to do. All right, moving, moving for further. Fiona Stevens stated something interesting that due to inflation there are more people actually willing and expecting emails from companies to buy products at a discount due to the higher prices in the last period. And that means you have to leverage that. However, you need to earn their trust in in advance. So simply bombarding strangers with your fantastic offers is not going to make it.

Well, everything's costing more so I think more opportunity to have sales especially because not everything is going up. But not everyone's affected by supply chain management. Especially if you start doing things like bundling or pulling in services or with the product you also include a course or other pieces, you can have larger perceived discounts without increasing your direct cost.

That's right. Going further, Jean Lee, she stated something that you can use the data in order to understand if you have managed to Build the trust. Basically, no matter the tools that you are using, no matter the data models that you are using, what matters is that you can, you should be able to understand if you've earned the trust of your customers instead of short term wins, which basically for products that are having a high purchase frequency. So basically when customers supposedly buy more of your products, you should aim for the long term, which means you should be able to understand what kind of trade offs can you do on the short term. And that means you should be able to get the right data so that you can understand, okay, how much can I afford to sacrifice at the beginning so that I have customers which are actually using and are appreciating the products that I'm selling?

I agree with the idea of building trust, but Valentin, how would you measure that?

I don't know. June. We should ask June. And one thing to understand if you are able to earn trust is to monitor high enough response rate at your post usage NPS surveys. So when you know that basically you are selling coffee and you know that the consumption happens in two weeks after the purchase. So if you have enough customers which are A responding to your nps, B giving you a high NPS score, and C clicking on your overlays to actually share the products that they have bought, I think that's the best thing that you could measure.

Do you remember Google when they released all this stuff about the zero moment of truth?

Oh yeah.

And this is the big thing. I partially disagree, but their idea was that the, you know, the first moment of truth is like when you see it on tv, you see the box of cereal, delicious. Second moment of truth is when you're in the shopping or in the supermarket and you take the cereal and you put it into the shopping cart. Third moment of truth is a couple weeks later you pull it out of your pantry and you actually eat the cereal and you enjoy the cereal. And Google said that the zero moment of truth because everyone in advertising, there's always been the three moments of truth. Google said that the zero moment of truth was that people are searching or they're watching YouTube videos. And this is well ahead of when companies are running like advertisements ahead of it, which can affect word of mouth. Social media I think you could argue is a zero moment of truth reviews. But I think that there's something much deeper than impressions that you push at people. There's a lot of it that can't be measured. So if we have sequences along the way to communicate with these customers, especially in social media, we have a Lot more data that's beyond mps. There's all kinds of flaws with nps. I love mps, but there's flaws. A lot of people are not going to answer those surveys.

Yeah.

So I think if you find the true sentiment and you run ads, not just to buy, but ads as market research, click through rate is actually a very good indicator of trust.

That's true. I have, I have an example, a story. There's a marketplace in Belgium and they sell vegan, healthy, whatever type of grocery things. And they haven't got enough responses and they haven't got their customers coming back with what they've presumed in their economic models. So their idea to increase the number of responses and the feedback and to increase the customer lifetime value was to hire 40 people from Madagascar where the the average income per person is 20 times less than it was in Belgium. So basically they've got, instead of hiring two people to call out their customers, they called everyone because they were also French speaking people over there which were. And very hardworking. So that was their way to increase the response rate and to increase the improve the trust. Because after you buy, I don't know, groceries, not like you expect someone to actually call you. There are many ways to achieve that. You just need to be creative about it.

You know, the iPhone 14 just came out and I like it so much. I ordered a second one today, or actually like yesterday, whatever. And I went to the Apple site and I chatted with their support and I sent them a screenshot of my purchase confirmation. I paid $1,800 because I have it with everything on. I always buy the iPhone with everything, you know. And they said, sorry, we don't accept images. Then I replied back and inside the Apple imessage I replied with the chat saying that's ridiculous that you don't accept messages. Then they replied back and said, oh, we don't accept voice either. You have to type back. And I said, oh, okay, fine, here's my order. And it says my iPhone is not going to come for a month. Can you ship it to me faster? Right? It's on standard shipping. Can you not like FedEx it or like give it to me earlier? Because before I've been able to order this and I go, okay, fine, we'll just give it and it'll show up like a couple days later. Sometimes it happens, right? And they said no, this is the fastest shipping you can possibly get. You cannot get it any sooner because it's given in the order that you know, in the order that you order it is when you receive your phone saying a whole month for an iPhone. I think you guys are putting false scarcity out there to make the iPhone look super popular. Right. Even though maybe it is. Maybe they do have shortages in chips in China or something like that. And then after that it said, hey, would you like to rate our service, you know, and do this whole survey? No, I'm not going to give you. But if you want me to do the survey, I think you know what I'm going to say. Yeah, that was today. How about Apple? Right. Apple's normally a customer that you would think understands those different touch points and they have a great product. But I disagree with this idea of scarcity where they intentionally make you wait to make the product look like it's even more popular.

Yeah. And the bad thing is that they are the benchmark. Right. One of the benchmarks of companies that are customer centric. But it wasn't from a retailer. Right. It was on their own store.

I went on their website and if there's any kind of customer loyalty or customer lifetime value, they would see I probably spent $60,000 in Apple products. You know, every time the new MacBook Pro comes out, I buy it for employee. You know, if I include all the employees, I probably spent a quarter million dollars in Apple products.

Yeah.

So that should count for something, you think?

Yeah, well, they, they. I think the bigger the company is, the more they are analyzing everything through the lens of immediate numbers instead of looking on the long run. Because if you would be having real alternatives or at some moment, I think it's how pissed off you are because there are devices over there besides those Apple products, but unfortunately not all of them are working or they've built this type of perception around how they work.

True. I guess they know I'm not going to buy a Samsung, so I'm willing to tolerate this.

Yeah. All right. Going further, Roger Dooley, he's telling something about how nowadays the companies are pushing the products by increasing motivation. However, they are neglecting something which is very important, which is the friction. So if you make things easier for your customers, you might have a good surprise about increasing your KPIs.

I've known Roger Dooley for probably almost 20 years, back when Roger Dooley was all about blogs and SEO and he was talking about how you needed to make 100 blog posts. And now he's moved into this neuromarketing and convincing people using like brain wizardry. I think the summarization of all this neurologic brain scientist stuff is the younger generations are just lazy and impatient.

Right.

They want to have it now they don't. This whole low friction make it easy is make it so that I can literally say Alexa, please order a refill of this one thing. And I don't want to have to start all the options. I don't want to have to choose the price. The reason Amazon dominates is not because they have the lowest price. It's because you can just one click order the thing. So I think that it's incredible. That's why things like free shipping work so much. Because you don't have to worry about what you don't have to. Just there's less to think about. Like that's what it is. People are less price sensitive. It's crazy.

And that's changed so quickly. I mean if you look behind it, everything changed with the new generations and that also changed in the workforce. So basically now you have to, you have this quiet quitting thing and you have so many people which are disconnected from having their best fantastic, outstanding life due to short term gains, which I think is going to change for sure. But it's kind of strange to see so many people which are Di Mariver I was seeing another statistic which might be false or not that only something like 14, 14% of the people are happy at work, you know, are engaged and happy about their work.

That's crazy. I saw a stat from a well known TikTok advertising guy that 30% of Gen Z folks have used crypto to purchase online in the last year.

What?

And you see the stat too that they're doing more searches on TikTok than they are on Google.

That's incredible.

It just shows you how out of touch I am with that generation.

Yeah. All right. Going further about this guy Dennis Yu, he studied that companies have a higher customer acquisition cost than the first purchase because the traffic cost and that's why you need to balance this with the customer lifetime value. So what? Tell us more about this, Dennis.

I was talking with Rudy Maurer yesterday and this guy spends quarter million dollars a day on Facebook ads. I was also talking yesterday with Kurt Malley too. He's also a big Facebook advertiser, does a ton of acquisition, a lot of other friends at this, at the traffic and Conversion summit and the trend is everyone is spending beyond their, their CAC is greater than their AOV because they know they're going to make it back when they have all the other upsells or retention. So for example, I'm a partner in a sock company, socks with like, this is a Neil Patel's face, right. And you can buy these socks for $25 with anyone's face, your face, Right. But our cost of acquisition is $30 for a $25 sock. But we know people will order three times because they're going to order again for their friend or the birthday or the anniversary or for their wife or whatever it might be. And the cost of traffic has gone up. I think the average cost on Facebook is about a $20 cpm. It was $10 two years ago. It was $8 three years ago. It was about five or six dollars four years ago. So the base cost of traffic, independent of conversion rate and bid objective is, you know, four or five times higher than it was a couple years ago. So that means the cost per click is higher because the conversion rate is still the same. So the cost of acquisition is higher. And it's true on Google as well. So it doesn't matter whether it's, you know, E Comm or lead gen is the same thing. And all the E Com guys are moving in the lead gen, like the lipstick players, are collecting email addresses to make recommendations on the kind of skin that you have and making, you know, some beauty recommendation. Right? Yeah, everything's moving towards, as you know, already loading ltv so you can afford to spend more on the CAC and anyone that's not doing that is just going to be shut out. At least if they rely on advertising, which everyone who's scaling reliably is using advertising.

I think we are living some interesting times. If we will look behind in 10 years from now, we would think, how was that even possible? You know, how is it even possible for companies not to measure what they can gain down the line from their customers and still bid? And I think that happened due to the fact that it was still doable. You know, I mean, they were still kind of profitable and they continue to do so. Until these days.

It was easy, right? I remember the days 10 years ago doing E Commerce, man, I wish I had put more money in and did more, you know, was a little bit more aggressive 10 years ago or 15 years ago where you could be profitable on the first sale and you didn't have to have all these sequences and discounts and Black Friday, Cyber Monday kind of stuff. On the first sale you're profitable, you didn't have to follow up with coupons. You know, 20% off if you buy the next thing. Now you have to.

And everything was like a bonus. You know, if they come back, you consider it a Bonus.

And we were emailing everyone the exact same thing. We were blasting everyone. Like, we did this for Rosetta Stone. We had one of the biggest Black Fridays ever of any company in E commerce. We spent, I think, $2 million a day on Facebook ads and a million dollars a day on Google Ads. And we were spending so much money that Google and Facebook flew into our office and took us out to eat and went to the sports games and things like that. And we were. We had an email list of 12 million people. Right. This is Rosetta Stone learning languages. I think we were the largest as far as I. Google told us we were the largest direct marketing company that didn't rely on the retail brand, like without. Without relying upon Barnes and Noble and Walmart and Costco and those channels that we were the largest that was still doing direct sell. Yeah, Billions of dollars. Right. Largest direct marketing company at that time, what, four or five years ago. And we were very unsophisticated. We were just. We would blast our email list four times a day during Black Friday, Cyber Monday.

And I think. I think this, these days would be completely gone. I mean, if someone waits for the CPC to go down, like. Like a miracle, those things are not going to come back anymore.

Right.

Going further, Michael Lorenzos discussed the link between the acquisition and customer lifetime value. And your customer lifetime value determines how much you can invest in your ads. It was pretty much related with what we talked about. I do remember some quote from Jeff Bezos that stated something that the one who's winning a market is the one who can afford to pay the most to acquire a customer. And I think that's true nowadays more than anytime. So we've seen that Bezos strategy was fantastic. You know, he promised a bright future. He got enough money to fill the present growth, and basically he wiped out the market with this strategy.

Well, I think Bezos also said that advertising is the price you pay for having a bad product. And he also said, your margin is my opportunity. Which is another way of also saying competition and advertising will drive the profit to nothing.

Yeah, that's true. All right, going further, Dennis Strom gave us the idea that when we work with influencers, we need to understand if those influence are actual influencers and relevant to the audience that we have. Because some influencers could be making the products more attractive, or some influencers don't even have the traction to get. Get customers for your brand.

I think influencer marketing is dead. And anyone who claims to be an influencer is not an influencer, because that's like claiming you're handsome. No. Or claiming that you're intelligent. I'm not going to claim I'm intelligent. What? That doesn't mean you're not intelligent. Influencers have moved. The new term for this is creator. And a creator is someone who is actually a customer of that product, not just because they're famous. So a friend of mine, Josh Snow, he has the Snow teeth whitening product. He's almost a nine figure business now. Right. Selling his teeth whitening. He had Floyd Mayweather, he had Kim Kardashian, he had a bunch of these A list celebrities, really famous people. And he found that those influencers, the ads with them, performed way less, not even close to as good as people who are not very well known. But like B list, they still had an audience, but they weren't a list celebrities. It costs less to get them. You didn't have to go through all this like hoopla with the agents. And more importantly, the, the videos that they made were more trustworthy.

Yeah.

Their niche audience. Instead of like getting LeBron James to say, oh, I use this vitamin. Right. People know LeBron James would be paid to say this so they don't really trust it. So I think influencer marketing is dead. I think elevating your actual customers who have an audience and those customers who know how to use YouTube and TikTok is very much the future. It's UGC.

Yeah. Because otherwise it sounds fake and it's so 2016. Maybe I do know about one of our customers, glamnetic.com so it used to be building her own audience and then she launched her Magnetic Lashes brand and now it's. She has an 8 figure E commerce based on what she built because she was obsessed about this thing about beauty and whatever and she was more authentic and attracting the customers that were her future customers. And I think that's the way to go for creators.

Good for her. She's a figurehead and everybody who's selling a product needs to have a figurehead.

Yeah. Going further, Talia Wolf, she stated something important about conversion rate that is not about changing elements on the website. It's about solving people's problems. So the idea when you do experimentation and when you change things on your website is not about changing them, it's about making those aligned with solving people's problems and making it relevant for them. And relevance is the keyword here.

Yep. It's not about tools for building landing pages or the color of the button. Yes. On solving problems. But the second part is you also have to address unspoken objections such as will this product work for me? Am I able to use it? Is it too complicated? Is it too expensive? What will my friends think if I buy the product? So the problem, the product can solve the problem but if you don't also overcome the objections directly, people won't buy.

Yeah. And you have this on a website. There are, there are so many things. I was looking recently at the new, the new, the latest product page from Amazon. So they are squeezing all these, all these things somehow that they are hitting all the objections that you could have. Like if it's too expensive you could go to their own collection of used products. If it's. When will you get it? You can get it by tomorrow, but it's going to cost you that. So you, you have everything is in that page. So you don't have to go to the customer service, you don't have to do anything. It's everything there. So buy it.

You know, Amazon takes a good chunk of my money. I was talking to David Meerman Scott last week and he said the UPS and FedEx people or the Amazon people must think it's like Christmas because every day there's two or three deliveries from Amazon.

Yeah, all right. And we also had Robert Craven explained that the power that the agencies are having, it's nothing that they had before because they finally get into understanding how their customers work so how an e commerce works. So basically they are now being hired to consult on strategy but they need to wake up to this new reality as well because it's not about tweaking websites, it's not about bidding differently on ads. It's about using their power to have diverse business models as their clients and helping their customers to structure, strategize better.

I love Robert Craven, I've seen him for years. We've hung out in London and Europe. Great agency guy. I like how he focuses on the strategy because most of these agencies, they have a lot of VAs or lower quality workers. But trouble is most agencies aren't strategic themselves. So it's going to be hard for them to advise clients. But for them to unlock value they have to increase the ltv, not just build a new website or run ppc. And agencies that are stuck on a particular function often can't go beyond the boundaries. They're in a straightjacket for that function because the larger companies have a multi agency environment or there's multiple departments and the agencies don't have the political skill to be able to get beyond those different areas.

Totally agree all right. And last but not the least, Tim Kilroy stated pretty much the same thing, that an agency isn't outsourced labor is now outsourced strategy. I, I think it's so important to understand if you're an E Commerce and you want to hire an agency or you want to fire your existing agency, you need to validate the depth of their understanding about how an E Commerce works. Because many agencies are being built by, let's say, smart experts, which at some moment, in order to become profitable, they hire new people, they train new people, and then they look out and they are more working as a sales leader for their organization and they are not training or they are not recruiting good enough consultants for, for your business. So basically at that moment, all they are doing, they are standardizing their work and they are not bringing value because the, the environment right now is so dynamic that you can't rely on obsolete information anymore.

Well, the dirty secret agencies, as you know, is that every agency has a couple people that are really good, really awesome in strategy and they're there to close the sales in the beginning. So you talk to those people and you think, wow, everyone else in the agency that's doing the implementation that works on my account must be amazing too. And then you have some junior people. But no matter. It's not like the agency, like you're saying the agencies are trying to screen to find better quality people that are strategic. It's just not possible. There's only so many people. Right. Most people in E Comm have less than 18 months of experience. I see this. I go to the conferences. They're people that are brand new. So agencies scale their revenue by having repeatable processes that are done by VAS and junior sorts of people. But if the agencies are responsible for strategy and there's only two people or three people in the company that are actually good, then they can't scale. Then those three people are going to be used for selling new clients, not on operating on existing clients because we're, you know, you're the agency owner. Where are you going to put those people to close the big deals?

Yeah. And that's everything.

If you, if you are, if you have an agency, if you are, if you've hired an agency, bring everything in house. So I agree with what Tim's saying. Have the agency do the strategy, but have it only done by the principals. And no offense, just pretty much ignore all the other things, all the other packages, the other stuff they try to, you know, get more recurring revenue by having a retainer. But really the value is every agency has a couple of these really good people, and you want to get those people to work on your account and name them in your contract. You'll meet them the first time because they're the ones you talk to that close the deal. You want to know that that's the person you continue to talk to.

Yeah. That's a fantastic advice to follow. All right, then, Dennis, that was it for today. It's a wrap. We're running out of time. So thanks a lot for being here. Thanks a lot for listening us and see we'll see each other in the next episode.

Thank you, Valentin. Thank you, everybody. I'd love to hear what your feedback. Love to hear, especially if you disagree.

All right. See ya.

See ya.