Here’s what I learned this week

Last week I talked about how ecommerce is really tough right now.

I ended up talking to more than a few agencies that have been telling me the following:

1. It’s getting harder to get clients

2. More clients are ghosting after audits but not making changes (sidenote on this one later)

3. Services are being commoditized and there’s downward pressure on pricing

4. Some brands won’t even sign contracts

5. AI services are starting to show up that will reduce their perceived value (https://getripple.ai/)

So the question they were asking? What do we do? How do we position our services better?

The reality is that what a lot of these agencies do is going to be commoditized.

Software is going to eat the services business.

We’ve been working on collecting data to replace a fractional CMO ourselves at Formtoro.

The problem for a lot of these agencies is that the skillset that they have is very narrow and that’s the limited part.

Most people that work in agencies come from a few different places:

1. Freelancing

2. Previous Agency

3. Brand - on occasion

The problem with most of these is you don’t get the experience of understanding enough about how every portion of the business fits together.

The vast majority of agencies I talk to have never actually run a brand or run one successfully. Most haven’t worked inhouse at a brand either.

If they have, they haven’t been exposed to the numbers behind the brand so they don’t understand how things fit together.

In fact, even most agencies that run their own brands, don’t really succeed all that often these days either…

There are exceptions, you know how I like vertical integration, brands that also white label for others and run the manufacturing, these will always be in a pretty good place.

Sarah summed up my thoughts on ecommerce today beautifully.

She’s right. It’s high-quality data, understand that nothing is 100%, and learn how to leverage it.

How I approach this stuff logically.

Start here: Customer Journey Checklist

Yes this is literally a checklist that I created and yes I use my own resources.

So let’s look at how we redid out product pages for Krakatoa Underwear via data.

First we go to Formtoro where we’ve been collecting tons of data, then we look at a 90 day window, then we segment out answers based on the product category of the pages we’re redoing.

So we isolate to just people that answered boxer briefs.

Formtoro Data:

So let’s dissect this a bit with a bit of context.

What matters most to you in your underwear?

So we look at the overall answers provided, there’s a good grouping, but easy to use fly isn’t likely to play a factor in something we need to focus on.

There looks to be an overall grouping here, so we next have to evaluate not just what people are saying but how it relates to Revenue, Orders, and Conversion rates.

We’re starting to see a bit more variations here, Large pouch and Legs that stay put are driving the same amount of revenue, waistband that doesn’t flip also is up there, then support, and fabric.

Legs that stay put are the top answer for orders, then pouch, then support, then waistband that doesn’t flip, then finally fabric.

So if we’re focusing on number of orders and product in hand this would be the configuration.

Now this is usually the one that I like looking at, what’s got the largest conversion rate, now we see some diversion, pouch is number one, support, then legs, then waistband.

For me even though there is a grouping, I’m looking at the combination of number of orders, conversion rate and revenue.

I focus more on orders over revenue though, more chance for more LTV if the product is good and multiple can be purchased like is the case here.

Ok so imagine of you had none of this data, how would you structure your product pages?

But if you do have this data, do you look to move some of these elements even higher into the images of the product?

Large pouch makes the same amount of revenue with 1% less orders.

So large pouch is the winner to focus on.

So if you’re advertising boxer briefs - focus on large pouch and variations of large pouch.

But I have a secret for you all, we also run customer research generally for men’s underwear on another website.

So people just interested in men’s underwear generally look like this breakdown.

So when we do marketing, we need to also understand not what our customers are saying but generally in a market what people are looking for.

But these come in at different price ranges, so let’s narrow to our prices ;)

Those are some familiar answers to the data we have above.

That’s right we look at data from multiple sources so we can build marketing strategies that not only position us as a brand but positions us within a category.

I don’t know too many smaller brands that do this, but honestly it costs about two days of ad spend per month to do this and will allow us to expand our angles and have a better idea how we are positioned within the broader market.

It also allows us to properly asses what our TAM (total addressable market) is at our price points.

This is modern ecommerce marketing strategy that isn’t really being talked about.

For a lot of brands, the pricing required to stay profitable is quickly exiting the range that most consumers are willing to spend.

Through our research we’re finding that at our price points, generally speaking we’re targeting 10% of the population, which means for the normal person looking at our ads we need to understand that it’s going to be a tough sell.

What does this do for looking at conversion rates?

This is probably a topic for another day, but it does bring in some serious considerations as direct from manufacturer and TEMU continues to grow.

Conversion rates might not matter.

Instead it goes back to all quality of audience.

So while we’re talking about this, here’s my LinkedIn post from today:

You're new product or brand won't be my new favorite until I try it.

How can you sell your differences if you don't know what a customer's current favorite is and explain the differences?

Example:

I'm looking for a golf polo, I'm on a new company's website.

I'm interested in potentially trying their products but they are a little more pricy than I usually spend.

I sign up for a discount via their popup.

They ask me for my email - I provide it.
They ask me for my phone number - I don't provide it.

They don't ask me what product category I'm interested in, what products I'm interested in or my current favorite brand or what matters to me.

Now let's take this in reverse.

The brand asks me what category I'm interested in, what products I'm looking for, what my current favorite brand is, and what matters to me most in the products.

The first one tells me nothing.

The second one is doing competitor research, analysis, and helps me develop specific messaging to create direct comparison resources to explain the differences between known existing brands and your brand.

This is the power of data.

I really don't think people are looking at popups correctly yet...

Companies that change their approach to use this high intent action as strategic market research for content creation have the ability to better adjust to the changing landscape of DTC ecommerce.

I’ve been thinking a lot about how we can leverage data to influence brand positioning rather than just personalization or improving ad performance.

I see both of these having to work hand in hand together rather than one or the other.

This is the kind of research that really big companies do, complete with research, consumer panels, etc.

Small companies haven’t been able to do this, until now.

As more and more brands die off by trying to figure out ads, I would hope that more would look to be even more data driven and help better understand not only their own brand presence but the industry and category they compete in.

Here’s what I would do in this changing market

Level the fuck up.

The software is cheap these days, you can do a lot for a few hundred dollars a month in software and a few grand in ad spend.

Remember the market is based on strategy but lots of strategy really is similar to everyone else’s strategy these days, there’s less and less differentiation both on the marketing approach side and the product differences side of things.

The old market had barriers, the new market has none.

Yet the pool of consumers hasn’t increased at the same rate.

Remember you entered a market where there was no barrier to entry, you’re now in an environment where those same basic strategies that got you here are going to be the first replaced with technology.

Focus on actually understanding the customer journey.

Focus on creating assets that can help you better understand markets.

Take a statistics and probabilities class.

Learn how to collect and leverage data, learn how to do customer research.

Ironically, I have talked about the same stuff for years, and now we’re just starting to see people talk about zero party data but for email?!?

This is the biggest misconception about zero party data collection and how to leverage data. The focus is always been on the immediate application rather than the broader marketing insights and overarching strategy.

Ironically, this is what all major conglomerates do.

They release different brands to different segments with usually the largest profits on the largest TAMs.

It’s why Nordstrom is opening up more Nordstrom Racks than Nordstroms.

Same product different price points. TEMU is going to take over the this market.

This is why the focus should be data first

It’s not about your brand, it’s not about your story.

None of that has any context relevant to the buyers journey.

I don’t buy products based on a brand’s story.

I buy based on my existing experience with other similar products, aesthetics, features, and price.

Do I think brands should be founder led? Yes.

But the reason isn’t about their story, it’s because they are usually more passionate about the problem than other people. It’s just an excuse to get them to explain the “why” and provide that context to an audience.

Yet, I still see lots of best selling product pages without any video on them.

Now imagine you know what other products are people are using that they love.

How cool would it be to do comparison videos of your product with those that are their favorites?

I don’t know about you, but I’m always googling, product A v. product B comparison.

In fact, there’s entire YouTube channels dedicated to this stuff.

Data, Brand Awareness and CAC

Most brands think more people know about them than really do or even remember them for that matter.

The truth is that’s not really the case.

They all play roles but I think there’s going to be a different approach that starts to present itself. I’m paying real close attention to this space.

I think there’s opportunity here, no idea if it will work, but we’re currently running a test and it’s all math.

The Takeaway

Step one is understanding data collection for your website, step two is understanding data collection for your industry.

Have a great week!

-Jon

Catch up on past posts: https://ecomwithjon.beehiiv.com/

You can learn from me: jonivanco.com