Here’s what I learned this week

This is my new headshot, yes that’s a wig, yes I wear it out in public when doing bar crawls, it comes to with a tiger print track suit available on Amazon.

Guess what though, if it’s only one person wearing a wig out, no one notices, if it’s a group of 4 people all wearing wigs, everyone notices.

I felt this is a great way to start off this week’s newsletter.

Because this a more true representation of who I am and how I like to live my life, brash, outgoing, and unapologetic.

Most of all just always searching for a good time.

Stand out in the crowd

I have a lot of contrary opinions to a lot of people in the ecommerce space, I used to spend my time trying to explain myself but it got to the point where there was just too big of a gap in understanding.

I find on a lot of my calls those that have read my work have a much better understanding of why I think the way I do and how I work towards executing towards it.

We have great conversations, others just looking to hang out get the above version of me, down for a good time, but you better have a plan :)

My LinkedIn post that made me start thinking

It's quite possible that we're all wrong.

Agencies, brand owners, software companies.

I mean pretty much every DTC ecommerce company that's gone public is running on fumes, those larger companies that are legacy are losing market share to direct from the source marketplaces.

And they all did it during "the good times".

We keep creating new software to solve for things like attribution and signal loss, but what if none of that actually matters?

If we're all required to constantly pay other people to create sales, do we really have sustainable brands?

What if first party data isn't inherently reliable and doesn't run a separate algorithm around normalized browsing behaviors?

What if browsing behaviors are determined by poor website designs and layouts rather than actual browsing behaviors of intent?

I see this with people trying to predict the best times to offer a popup a second time to people. How would you know? In truth, there is no way to know as everyone is different.

Honestly, it's likely a combination of all of the above.

There's a variety of claims made by a lot of businesses that are all saying the same things that "if only we had the data we needed we could improve the systems in a way that would lead to a positive outcome."

Tell that to Allbirds and Casper. Didn't work for them or the many other brands that have been bought up by PE recently for pennies on the dollar.

Maybe it's not about feeding the machines that drive traffic but driving traffic though the machines that live where people live.

That last question is the one I've been most focused on over the last few years, could you shift to building a business based entirely on customer feedback prior to purchase?

How would data collection around specific questions lead to a better allocation of resources necessary to grow a brand?

I've always said that more often than not we prefer to not actually talk to or ask customers questions and instead make assumptions about what would be the best course of action based on a very limited data set that lacks contextual data.

We like asking after they purchase though before they experience the product and we rely on that data right? Makes rational sense I guess.

Make no mistake, I'm betting in a certain direction, but at the end of the day I choose not to obsess over dashboards looking for micro tweaks.

Instead I prefer long tests of data collection to inform smarter business decisions that lead to profit and sustainable brands.

But that's me. It's not about hyper growth, it's about profitable happiness that actually has an impact in the world.

So this kind of kicked off my thoughts about some other things I believe in that I shared in another post, but I want to take this newsletter to go through some of the reasons I think these things in a longer format.

Let’s get contrary with some explanations

I have completely contrary opinions to a lot of people on this platform:

1. I don't think attribution is using the proper KPIs

What they tell is what happened, not the why, if you can’t paint a picture as to the why something happened, it’s really hard to rely on these things as actionable KPIs that can be fed back into the machine to take action.

My deal with KPIs and attribution is more signal strength is only good if the quality of audience is the proper audience to be feeding back into the machine.

True story.

Right now we have lots of software that is trying to identify audiences that are better than others but doing so through 1st party data only which is better than no data but still leaves a lot of questions around if it’s even accurate or what causes the behavior.

This could work really well for a single product website, but beyond that, a complex offering of products, things are going to get tough.

I love all the claims and work people are doing in this space, but if something really actually worked with any bit of precision, then everyone would have success.

But I know that even a completely free offer on Facebook doesn’t get more than 12% click through rates and still not everyone converts and that’s with the amount of data Facebook has about you, hint: it’s a lot.

2. I think the solution to identity loss is actually just to send weekly emails that are personal to your audience and interesting to your lifestyle segment

I know there are companies that are all the rage right now recovering lost revenue from being able to identify people that come back to the website outside of 7 day periods on Safari etc.

I think these are great, but Klaviyo sends that information back whenever you click on an email. The tagline is always make extra revenue but abandon carts they are referring to are from people that have already signed up, instead of sending those emails, just improve your customer journey on page and help people convert.

It feels like a trade off to cover up for poor customer experience and pushes people towards sending more emails to convert people.

Rather than do this, why not just send your audience relevant communications about the lifestyle that you fall into or represent. It’s better content for them, humanizes you as a brand, and allows you to keep those interested in the loop, do it weekly and guess what, that 7 day period doesn’t matter.

More work? Sure, but you should be doing it anyway.

3. Contribution margin is just a fancy way of identifying sales velocity issues with product sales and poor SKU selection

This one might get me cancelled. But anyone talking contribution margin down to the sku usually isn’t actually tracking sell through rates of products close enough to know what they should be ordering more of and how to release new variants along the lines of top sellers.

The vast majority of the time margins look really bad because of poor ordering, a bad product launch, or too much product that requires the balance between sales and inventory management to reduce the costs.

Pay attention to sales velocity, when something isn’t selling quick enough, push it via sales and owned channels.

This stuff isn’t difficult. You can also advertise it a bit more and see if that increases the sell through, lots of things to try here.

But if it doesn’t, then you have SKU issue, take it as a learning and move on.

4. Abandon cart emails to people that have already purchased from you shouldn't happen if you have abandon checkout emails and a weekly lifestyle email

This is a bit of continuation from above, I honestly think that the solution isn’t to constantly send people emails every time they add something to the cart.

It’s actually a really quick way to have someone unsubscribe from being bombarded to finish a purchase that they walked away from for a reason that is likely entirely to do with your website experience or some sort of indecision.

I’ve purchased plenty of things on my mobile phone, I love Apple Pay, super easy to make things happen.

Some data here, we run a cart trigger popup for 20% off when the cart value goes above $60, the opt-in rate isn’t 100% in fact it’s about 20%, the sub to conversion rate ranges from 60-80% for those that do opt-in.

If percentages get a little tricky that’s 20 people signing up out of 100 and about 12-16 people converting from those or roughly about 12-16% conversion rate from those that add to cart over $60 that haven’t purchased yet if they haven’t signed up yet after they have added things to the cart over a certain value.

So just asking those people to subscribe for an offer when they have something added to their cart actually has a ridiculously high conversion rate, do this instead of your typical wait for abandon emails. It’s a higher intent point of the journey.

Don’t overcomplicate these things.

5. Sending emails to people that were identified but didn't opt-in should never happen

This is illegal in Europe, it should be illegal in the US, for some reason it’s not and it really bothers me. I’d absolutely never do this, it just seems scummy and spammy.

None of the things that actually drives brand long term.

6. Every brand should have a customer support matrix and customer support should be part of your marketing budget

I ran customer support, this was one of the first things that I instituted.

Bad experiences reach 10 people, good experiences reach 3.

Do the math on this one.

This is someone that already owns your product, don’t take a bath on every sale, but know your cogs and figure out things that make everyone feel good.

Here’s a real life example that we used:

RETURNS INTERNAL LOGIC POLICY

First Order?
Yes
More than one pair?
Yes, have them return them and order again process return once confirmed to be unopened
No
Did they pay full price (non-intro price)?
Yes, send out new pair, let them keep pair
No, issue store credit, let them keep the pair
Intro Pair?
Yes
issue store credit for the price of the good minus shipping
No
More than one pair?
Yes, have them return them and order again process return once confirmed to be unopened
No, have them return them and order again process return once confirmed to be unopened
This is not likely to be the case
Exceptions see #4
Judgment call around just having them give it away

Order Lost
Confirmed not received?
Has it been more than 7 work days?
Issue store credit for entire order, have them reorder

Wrong size
Single unit?
Yes
Our fault?
Yes, send out replacement pair have them donate or gift
No
Opened
Yes, store credit for full amount
No, replace and have them donate or gift
Multiple Units?
Yes
Our fault?
Yes
Known issue?
Yes, have then donate them and replace
No, pay shipping to collect them, track for factory reimbursement
Not our fault
Customer responsible for shipping it back


Exception Cases
Spent more than $300 lifetime (this is more than 15 pairs of underwear)
Work to proactively solve the issue as best as possible

7. Over complicating implementations kills productivity and usually doesn't create a good customer experience

I really want to share something that was sent to me but I’ll refrain. It was actually sent to me by someone that I used to work with/oversee.

I have no idea if they are on this list, but it doesn’t bother me.

There is a pattern of people continually adding complexity to systems just for the sake of complexity without taking the time to acknowledge how it impacts the end consumer.

I’ve seen some crazy stuff.

Good example: force someone to go to email to get a code.

All for the sake of deliverability?

Guess what emails almost always go through? Order confirmation emails.

Get the sale and get out of the way of the customer making a decision.

8. Screenshares of small private companies outperforming publicly traded companies is rarely what's actually going on behind the scenes

So I’ve been wondering about this one for a while. So we have all these agencies and software companies talking about these great relationships and topped up numbers for all these massively growing brands that are “killing it” yet their counterparts that are currently on the public markets, have retail stores, and have distribution through major retailers are failing.

Something isn’t adding up.

I’m not saying it’s always the case, but I’d be willing to bet the books don’t look quite as good as most people think, but because they aren’t public we don’t know the truth behind these brands.

There aren’t too many that share their numbers publicly and even then they are presenting information in a way that can’t make them look bad, people would lose confidence in the brand.

Reminder dollar shave club was never profitable and they had a commodity at the time with super cheap distribution and acquisition with a recurring subscription based product. $200 million in revenue no profit (Article)

In a certain sense we’re seeing in markets that going public doesn’t even allow for a path to profitability.

There are some exceptions here with people that have done a good job of actually minding the numbers but my faith doesn’t really extend that curtesy to every DTC “influencer” that runs a brand. (Sean Frank is probably the exception to the rule here, there are a few others but they don’t share as much)

9. Egos in business are like balloons flying towards power lines, eventually everyone will figure out not everyone knows what they are talking about, especially the ones that contradict themselves often

I have an ego, it’s self confessed, battle tested and accumulated over 20 years in marketing with a brief stint being forced into explaining things via the Socratic method.

Thanks law school, I’m sorry those around me.

We’re all learning, we all aren’t right all the time.

I fail lots of times, because I try a lot of different things.

The more things you try, the more you fail, that’s just the way things go.

But there’s a lot of people that don’t dogfood their own products in any environment and claim they work or that they are killing it because of something they do without looking at the root cause of what makes them successful.

This is dangerous. Hence balloons and powerlines.

10. People fight people usually for one reason, they feel threatened, on social media it's usually intellectually, I don't fight people, but people get pretty defensive and have called me names for asking tough questions

The amount of people that have personally attacked my character for sharing an opinion on a public post in the past amazes me. They lack the ability to process constructive criticism and questioning.

See Socratic method above. People hate Trial Lawyers because of this reason, they ask questions knowing the answers and looking to trick people up to push an opinion in a direction that leverages their case or perception of a case.

To me it’s poetry in motion, but to those on the receiving side that aren’t used to it, man do they ever flip out often.

It’s an awkward place to be, because I welcome a discussion around any of these topics, but it seems like a lot of people are too shy to have that discussion because they feel that I’m abrasive, it’s a character trait of asking tough questions over the course of my life and being responsible for driving results based on the answers to those questions.

Most of the calls I take with people that are looking for mentorship are full of nothing but questions, because the ability to properly articulate the answer to a question really separates people from one category to the other.

I ask tough questions on purpose.

11. Everyone in ecommerce actually wants their marketing completely automated, they just want to set some goals and press a button, the only problem with that is it takes multiple variables to drive growth and getting them all to play nice together is tough without a central nervous system and we're just not there yet

I don’t think anyone really wants to admit this but we’re all lazy, we want things to just work on auto-pilot, this is why AI seems so promising, but instead we have to prompt and reprompt things a million times to make them work.

The reason is we’re all using the same approaches as before that don’t exactly work all that well and have too much variability to try to use a computer to magically fix that variability.

Hint: If the baseline equation is wrong, the best scientists in the world can’t solve it.

This is what everyone is missing with AI and the future of automation, we’re operating on what’s currently present and available instead of what’s possible.

Someone is going to crack this, a lot of people are working on it right now, but the equation and the variables will matter more than the results.

12. 100% conversion doesn't exist but you can definitely get more than 100% claiming it if you have multiple apps installed

I’ve been thinking about what it would take to get 100% conversion rate and whether it’s even possible. More on that too come, it’s a test I think nearly everyone should run at least in part, no idea if it would work but could be interesting.

13. Payment plans for products less than $1000 shouldn't exist, they are predatory and push a consumer narrative that doesn't make sense for society generally

I’m morally opposed to this practice, I think it puts people more in debt and that’s not cool, you shouldn’t be selling products to people that can’t afford them it creates an overall negative impact on society, I’m not into that.

14. If software companies were super good at what they did and promised, they would be working with enterprise level companies only, the larger the company the bigger the impact you can have on the bottom line in very quick order or they would just use their software to have a full on competitive advantage over the others and ink relationships with a handful of people that would massively benefit, again, we're not there yet

So this one is absolutely spicy, but something we’ve been thinking about internally, it doesn’t have to be enterprise either, but if our software provided an unfair advantage for stores, we’d evaluate the numbers, then take a cut.

In it’s current form, it’s too much manual work, in it’s future form… TBD.

I don’t think this is a bad model though.

10 companies doing $5 million per is $50m coming in largely automated, less than 10 employees, around 20% net profit, $10m a year net profit all software leveraged and scalable. $2m in salaries or outsource it.

It will be interesting to see what happens with automation there’s going to be a lot of winners and losers specifically with Operating Expenses.

Well hell, this was a long one, sorry about that, but when the moment strikes and the typing starts flowing we like to keep it going.

The Takeaway

Have a great Sunday!

-Jon

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

You can learn from me: jonivanco.com