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Drive and Convert

Author: Jon MacDonald and Ryan Garrow

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Hosts Jon MacDonald and Ryan Garrow want to help businesses be more effective at driving high quality traffic to your site, and making sure that traffic converts from a visitor to a buyer, by sharing the secrets that have helped some of the brands big and small to drive the right traffic to their sites, and convert that traffic into customers at a rate well above their peers.
31 Episodes
In the Ecommerce world, it's almost always about the data. But what works well for large organizations may not work well for small ones and vice versa. A lot of that has to do with how much data you have, and large organizations tend to have more. So where should different size organizations starts as far as collecting data and making use of it? And why do we even need data in the Ecommerce world?
Larger companies get most of the press and excitement with their 6 and 7 figure marketing budgets, but the majority of clients we work with are smaller. And smaller companies have to do things a little differently than the big guys. What impact does a small budget have on driving traffic? How should small budget brands compete online? TRANSCRIPT: Jon: Hey Ryan. So we get companies contacting us all the time, that don't have large, six or seven figure marketing budgets, and many times, those large clients get most of the press and excitement, but the majority of companies that end up investing in marketing are going to be smaller, and smaller companies have to do things a little bit differently. I want to ask you today, what impact does a small budget have on driving traffic and how do those small budget brands compete online? They obviously want to compete, they have to compete in order to grow, and I want to know what's the magic, how do they make that happen? I'm excited to talk to you about this today, and I guess I'll start pretty broad, in e-commerce, is there such a thing as too small of a budget? Ryan: Across the board as a broad general rule, no, but if you're really going to do something with your budget, then yes. I mean, you have to have enough budget to start moving things around and collecting data. And I think that initial starting budget, if you're a smaller business, is going to be important to determine how quick you can grow, how aggressive you can be, where are you going to find that opportunity to take the next step in the digital marketing evolution of your business? And I challenged a lot of business owners in this space, as I'm talking to smaller ones all the time. Like for example, yes, you can start with $100 a month budget, it's your money, and you can market it however you want, invest it however you want. But if you're e-commerce, you're e-commerce so that you can sell everywhere and have your online store open all the time, even when you're sleeping. And so if that's the case, $100 is not going to get you very far in marketing across the internet. And so if you're going to do something that small, you really need to be hyper, hyper, hyper-focused, which does limit your potential and opportunities to find little pockets where you can really dominate or win. And so I would generally say less than $1,000, there may be better places for your money than trying to drive traffic with it online. Jon: Interesting. I was going to ask, and maybe you've just answered, but I'd love your take on this too, if I only have $1,000 a month to spend, is it worth doing it or am I just throwing my money away, when we're talking about driving traffic through traditional paid media sense? Ryan: That's a difficult one because most business owners that are coming up with this $1,000 and you're smaller, that's a meaningful number to them probably, but they probably don't have the expertise to really make that $1,000 do as much as it can. And so you probably have to bring an expert in, and that costs money as well, because most people in the digital marketing world are not working for free. And so you have to figure in an expert generally, and I'll probably come back to that point, but for most businesses, I would say that you have to look at it through a lens of time and money. Jon: Okay. Ryan: Anybody can learn how to do digital marketing. You have to be able to study, you have to be able to go in and make some mistakes and learn it, but anybody can figure it out. It's definitely not the most complex thing you could be learning. But if you have more time, then you should be doing some of that work yourself and learning it and getting it to it like, "Can I get some basic things done?" If you have more money, than you need to hire people and your budget should probably be a little bit higher to be able to invest and push traffic. Jon: So we should be saying, when we say budget for today's conversation, should I be thinking about it as budget including the expert or budget just in what you would spend to drive traffic in these channels? Ryan: I think businesses should be looking at it together, but I think most business owners are thinking about, "Okay, I can spend $1,000 to drive traffic. Let's go put that on Google and make it work." I do believe though, the Googles in particular and I'll focus on Google for right now, but Google in particular has done some pretty cool things helping small e-commerce businesses get going. If you've got a feed and you're on a smaller platform, like if you're on Shopify, it's very, very simple to get up and running on Shopify and get your products going to Google. And then there's what Google is calling smart shopping campaigns that allow a business really to say, "Google, here's how much I'm willing to spend per day, and here's the goal I need to get out of it." It does not take an expert to get that up and running. And in fact, I tell companies, do not pay an agency to manage smart shopping campaigns because there's nothing to do. It can be a small piece of an overall structure, in fact, we at Logical Position do use smart campaigns in a small piece of a campaign occasionally, but we have to do a lot more work in the reporting and strategy on that type of client, to be able to justify charging management fees on smart campaigns. Jon: Okay. That makes sense. Ryan: Small budgets use more automation, I think, is the name of the game. Use things that are set up to make sure you don't just waste a bunch of money, and I think that's where a lot of small businesses, what keeps them from starting often is that fear of, "Oh my gosh, I'm going to go waste money trying to drive traffic because I don't know how to do it right." Doing some research, I think, can help keep that option to a minimum, that is just going to go out there and be a big waste. Jon: Let's say a company hasn't driven traffic on Google. How do they decide what that starting budget should be? Ryan: This generally comes down to, what's the business doing as a whole? If you're doing $100,000 a month on your website and you haven't been spending money, you probably have a larger amount you could start with then if I'm only doing $1,000 a month in sales. It's a threshold there of starting to look at it, but I generally say, in e-commerce, at least $1,000 to start with on Google. And then start thinking about it through a lens of, "I know I'm not going to be starting out at the gate if I'm doing it myself in a perfect world scenario." So there's going to be some learnings. I look at it through the lens of what's my light money on fire threshold, to let me get things going, and I've done this with new platforms on some of my brands. Nobody knew what they were doing yet, across the entire platform. Pinterest is being one of them. A couple years ago, it was just wide open. Nobody knew what it was going to do. I think they're getting some more structure in place and it's driving better traffic, but I went onto it saying, "Look, I don't know what it's going to do." My light money threshold at that point was, I think about 2,500 bucks, so I talked to Pinterest like, "Look, we can go a thousand a day for two and a half days if you want, or we can go $100 a day for about a month. I'm okay with either, whichever one you think is going to work better for me." And that was my light money on fire threshold, that I wasn't going to be mad, I was just like, "Yeah, that did suck, but I got some learnings." Pinterest didn't work for us at that point in time on that business, we'll continue to be revisiting it. But all that to come back around to it can't be a budget that if it doesn't work, it's going to tank your business, because there's a lot of unknowns if you haven't been on Google before, to how is your website going to convert, what traffic is going to work best for you. Because you'll take the same product with the same price for the same search query, going to two different sites and it's going to convert and there's going to be a different return on ad spend. And so with all of that unknown, anybody that tells you they know exactly what you're going to get by putting $1,000 out there, they're lying to you because there's no data to tell you one way or another. There's no way to know. Jon: Okay. So don't bet the farm. Ryan: Don't bet the farm, but it should probably make you a little uncomfortable. Jon: Okay. Ryan: When I'm looking at business decisions and I want to grow, and you know me, I tend to be on the aggressive side of things, I want what I'm risking to make me a little uncomfortable. I don't want it to be an easy decision or an easy thing to be like, "Okay." Could I have wasted $100 to test Pinterest? Yeah, but that was not an uncomfortable thing. 2,500 from me was a little bit uncomfortable. Partners and I talked through it and we're like, "Okay, if it returns nothing, that's not going to be great. But again, we're not going to lose the business because of a mistake if it doesn't work." So a little bit of uncomfort, I think, is good. Jon: Okay. So then let's say I have a thousand bucks, where do I start, Facebook, Google, something else? Ryan: I think generally it's going to come down to those two for most businesses to start off with. I think other platforms generally are younger and they are less proven and therefore generally higher up in the funnel. Like if you're going to jump right on TikTok or Snapchat for marketing and you haven't done Google or Facebook, I think it's going to be difficult to know if that platform is actually working for you, if you haven't gone to more advanced ones yet. And so when I talk to a business owner or a marketing team that's looking at deciding between both of those two to start, the easy way of looking at it as if there is existing market for your product, I generally say go to Google because you're going to capture people towards the bottom of the funnel as they're looking for your product. If you're creating a brand new category, there's not a lot of people searching for it on Google and so you're going to have to figure out how to create that and find the right audiences on Facebook and convince people to start trying you to build that search volume. So for example, last week I talked to a guy, his company makes edible bubbles and I'm like, "I have never heard of this before.'. Jon: Isn't that bubblegum? Ryan: Yeah. This is for kids going out and playing and blowing bubbles, he makes edible bubbles. And I had no idea my kids would want that until he sent me some samples and they're actually pretty cool. Jon: That's awesome. Ryan: But they actually make them for bars. Someday when we get to go back to a bar, they make these bubbles you can blow on top of a drink, and a lot of times they infuse them with smoke for presentations. Jon: That's cool. That's a great idea. Ryan: So really cool stuff, but there's not a target market yet that they know to search for that. So I, before last week, never would have even considered searching for the term edible bubble or edible bubble for a drink or bar drink presentation bubbles, that's just not even there. And so for that type of business, you've got to go on Facebook, you've got to target bartenders, you've got to target moms with kids, with the kid bubble one. And there's some really cool targeting on Facebook, and if you've got a good visual and some good offers, I think Facebook can work really well. For other businesses, Facebook generally will hit top of funnel like that, and so the return, again, generalizations, is going to be a little bit lower than if you had run some bottom funnel, Google stuff to figure out where people are searching for your product and what are your advantages and all of that. Jon: So we're talking the difference between perhaps intent versus awareness? Ryan: Yes. Like if there's already people searching with intent for your products or services, I would go capture them first. It's going to be a little more expensive per click, possibly, there's generally going to be more competition, but it's an existing demand that you're tapping into. You've just got to figure out how you're going to compete there. If you're creating a brand new product that nobody's ever searched before, you probably can't even spend your money on Google on search terms, you're going to be on broad match keywords on Google wasting money. Jon: Right. No, that definitely makes sense, then Announcer: You're listening to Drive and Convert, the podcast focused on e-commerce growth. Your hosts are Jon MacDonald, founder of The Good, a conversion rate optimization agency that works with e-commerce brands to help convert more of their visitors into buyers. Ryan Garrow, of Logical Position, the digital marketing agency offering pay-per-click management, search engine optimization and website design services, to brands of all sizes. If you find this podcast helpful, please help us out by leaving a review on Apple podcasts and sharing it with a friend or colleague. Thank you. Jon: What other things tactics do the smaller budgets need to be aware of? What else would you consider? Ryan: Some of the tactics I talked about when looking at smaller budgets on advertising and driving traffic, don't even have to do with the tactics to drive the traffic. A lot of small businesses, even over the last year with COVID and a lot of brick and mortar moving into online, a lot of them haven't thought about what is my advantage online? If you are selling the exact same product at the exact same price, and you have no discernible advantage over a competitor, what are you doing? Try to figure out, before you go spend money, why somebody is going to buy from you. And you can't really tell me that your advantage online is going to be because you have really smart salespeople inside, or you have a lot of knowledge in your industry, because that's not going to come across in Google shopping. Nobody cares how much you know, they don't know how much people know when they're just going to a website and transacting. And so you've got to figure out what that advantage looks like first. Why should somebody buy from you versus a competitor, if they've never met either one of you and all they're doing is seeing your website because the internet is the great equalizer and small companies can't compete with big companies, if they're better at certain things. Better at converting, if all of your competitors are stuck on really ancient Yahoo stores that are 20 years old, and you're going to come in there with a Shopify or a big commerce site, that's really easy to convert on. That can be a significant advantage, even if everything else is the same. Jon: It's funny, you say that, a friend and I were just talking about that and we were laughing, saying a great business model would be to just go to find a index of all the remaining Yahoo stores making over a million dollars a year and just replicate that on a better platform, with better usability and you would print money. Ryan: Why are we doing a podcast? Let's go get a list and start making business. But it's true. I think we still have 50 clients on Yahoo and some of them are, I think, are on the RTML, that really old coding platform, that if you're not 50, you've never even heard of that. And I only heard about it because we have clients on it. Jon: Yeah. Look, I mean, I think a lot of these stores take the approach of, if it's not broke, don't fix it. And they're still printing money, so why change it? I think they're going to ride that till the end. So somebody will come along and end them by doing something better, but you got to find it first. Talking about that is one of the things that the platform could be, one thing that these smaller companies are doing wrong. But thinking about smaller budgets, if they're sending traffic to their site, what do most of these smaller budgets do wrong? What mistakes are they making with their small budgets? Ryan: I think a lot of them, if they do have some advantages and they do have a reason to market, a lot of them make the mistake of not being aggressive enough. I think I've mentioned this probably multiple times, but a lot of small business owners really watch their P and L and all line items going in and out of the business, which is good. But when they come to Google ads, it can quickly become a very large line item and they want to focus on, hey, I need to increase profits, so we need to start cutting this budget and controlling Google, because if I control something in the middle of my P and L, the bottom gets bigger. And unfortunately, something like a Google ads or Facebook ad, is generally driving top line number that does translate into bottom line number, but if you eliminate what's driving that top line, it can really have an opposite effect of what you're intending. And so it's really a paradigm shift. If you're looking at your budget like a line item, you start looking at it as you're investing in getting new customers and then what are you going to do with it? Don't see Google ads or Facebook ads as a cost necessarily, unless you're purposely losing money and you have to control that piece, but that's a whole different story and most small businesses are not doing that, so I won't dive into that necessarily now. But then trying to figure out, okay, once you've got a customer, what are you going to do with them? Because Google and Facebook, they're a marketing channel and you're going to have to give some or all of that initial order margin to the platform to get the customer. And that allows you to compete and capture more market share, but if that margin is going to the platform, it's not going to you, the business owner or marketing teams future budgets. So you've got to do lifetime value, figure out what you're going to be doing to bring them back. So many times small businesses are thinking about, I've got to get customers, I've got to get customers, so I've got a market. Okay, good, you do have to do that, but you can't keep trying to do that without focusing on the customers you do have. What happened to the customers from last month, what are you doing with them? If you're not emailing them, if you don't have a loyalty program, you're essentially wasting all of this effort that you're doing to successfully bring new customers into the brand. And so that's where I see most struggles, because then they'll just be like, "Oh, Google was terrible. It took all my profit and then I had nothing." Jon: Well, we've talked about this several times on the show, of understanding that it's okay on that first sale to break even, and your customer acquisition costs might be high on that first sale, but you have to have a longer term game plan in place. Is it a subscription type product that you're going to use, if you have a consumable, is it something where you're able to continue to market to them afterwards, but you're doing it in a way that is going to continue to drive down the customer acquisition, but up the lifetime value over time? That definitely makes a lot of sense. So, okay, we've heard a lot of disadvantages to being small here today, but there's still a fact that most brands are going to be in that small budget. What are the advantages, what's the positive side, the glass half full here, what's the advantages to being smaller advertisers? Ryan: Yep. There's no secret that having more money can have more advantages in advertising, I mean, that's just basic marketing 101. But what I've seen through a lot of small businesses and having my own that compete against much larger brands, is you inherently have more flexibility. In fact, we were just laughing before we got on and started recording, about politics in larger companies, having all these things that you have to wade through to get things approved, or to do things, where you can't move quickly into new markets, because there's all these layers of approval. Small businesses, hopefully don't have that problem. And it's like, if you see an opportunity, you can just go do it and there's not a lot of people that have to sign off on. It's like, no, I'm going to go capitalize on that change in the market or that area that hasn't been attacked by larger brands. And so that can be a huge advantage, but I still think a lot of small businesses don't think of it that way and look at it, hey, I can afford to make mistakes and learn from them very, very quickly and pivot and adjust. And I can test new products on my site, I can test things on my site as a small business that I don't have to go to a web dev team. I can make quick little changes on my Shopify site to say, "Hey, let's see if this works or not. Let's run it for a week and if it doesn't work, flip it back." So much opportunity to test and so few small businesses actually taking advantage of that. I mean, I can't say the number of times that we've tested small things, even on Joyful Dirt, as we're moving very quickly and say, "Hey, let's test this or test this." That many of them work. I mean, we've got a really smart team that can come up with really cool ideas to test. For example, this month we did a black history month label, so we just, "Hey, let's just do a small run of a few hundred labels and see what happens." And larger brands can't in mid January, decide to do a label run for a specific event and try to get it to work. We're like, "Yeah, let's just see if it works. And so based on the success, we're going to do this multiple times throughout the year for different events and just have custom labels. Jon: That's a great idea. Ryan: Because we can. Jon: I believe this is called the innovator's dilemma. So when you're at a large corporation, you as an individual can come to the table and say, "I want to do custom labels for this month, starting in two weeks." But you have so much red tape to get through that you can actually affect the change that you want to affect. So that's a definite competitive advantage for a small brand, I can completely understand how that would work in their advantage. So that's great. Is there any other advantages that we should be thinking about? Ryan: I think being smaller also forces you to pay attention to details, that larger brands don't have to. We have a lot of large clients that focus on such macro level numbers, 35,000 foot layer of saying, "Hey, what's our data? How much should we spend? What is this?" And there's not the deep dive on, "Okay, how can I squeeze this little bit more out of this product?" It exists on a few large brands, but generally it doesn't matter to them on the small little minutia. And I think smaller brands, really have an opportunity because there is less data to sift through, they can quickly see where markets may be changing or evolving, that larger brands aren't going to catch till later. So you have to be willing to be aggressive and move quick when you see them, but you might see, even on Amazon, this is a massive thing with one of our clients where there's a couple really big players in vital wheat gluten, for example, on Amazon and the volume of sales on baking products on Amazon, is astronomical, I had zero clue until we started working with this company. Jon: Yeah, would not have suggested or thought that. Ryan: No, I'm like, "Vital wheat gluten," that's a very specific product for a very specific niche of people. Jon: Baking in general on Amazon, you would think there's no way. Ryan: It blew me away. But because the volume is so high, everybody selling FBA can only send in, because vital wheat gluten comes in, it's heavy and it comes in five pound bags or two pound bags, so it takes up enough shelf volume that you can't get 50,000 units in there at a time. And because you're usually co-packing, you're getting pallets delivered, and once it's down, you can't all of a sudden like, I'm just going to send 10 units today to take care of the sales. It's massive in and out of stocks all over the place. And so smaller advertisers could leverage that by saying, "All right, if I have my own fulfillment house, I can always keep a seller central product in stock on Amazon. Even if my FBA stock goes out," and you can play a lot of games and figure out what part of the country is or is not working. But that type of flexibility as a small brand, can pay huge dividends just by being aware of some of the struggles of your larger competitors. If your larger competitor has a disgusting amount of aging inventory, they've got problems probably floating the next purchase. Whereas you may not have that problem as a small advertiser, and you can even use drop shipping through one of the partners that could help you. So I think small companies have some significant advantages and I enjoy that part because it is more exciting to grow a smaller brand to take on a larger one. I do it myself, I add to this one. Jon: You'd love to take down the big guy. Ryan: IT do. Jon: Who doesn't? I mean, if you're in business, you're a competitor, just the way it is. Ryan: Oh yeah. And I love competing. And so it's fun as smaller business, but it does take a mentality that you are going to scrap and do everything you can to make it work. And when you come in with that mentality, I think it's very difficult to fail on Google ads or Facebook ads, because you're not accepting that it's not going to work. You see the data, you know people are spending money in your industry and they may not all be making money, but there's consistent effort there. And you just have to get to the point where you can wade through it and make it work because it will. Jon: Well on that note, any parting thoughts on this? I feel like I'm sufficiently equipped if I were a small brand advertising. You're giving me some renewed hope, that's for sure, that my $1,000 per day or per month, excuse me, would actually go someplace. Ryan: Yeah. The only thing I will say is that I do believe quality help will go a long way. You can be a small advertiser as a business owner and spend $1,000 if you learn and you're quick enough at adjusting and pivoting and looking at data, you're going to learn how to do it, but it might take you six, seven, eight months to get the point where you could have started at that point with an expert. And so it's at least worth interviewing a couple of agencies to see what it is they could do to help you if you bring experts on to manage that $1,000 spend. Yes, you're going to have to pay an agency extra cost, but can they get you moving towards your target at a quicker rate? I think often they can, but even if you're going to do it yourself, at least talk to somebody else that really knows what they're doing to see what the advantages could be. Jon: Well, and it could be huge too, if you get a higher return on that ad spend, that margin difference, they pay for themselves. It's like working with a great CPA, they're going to get you a bigger refund than if you did it yourself. So that covers their fees and hopefully more. Ryan: For sure. Jon: All right Ryan, well, thank you for your expertise on this. I know you guys work with thousands. Every time I talk to you, it's another thousand. So I'll just say thousands and thousands of clients at Logical Position, and a lot of those are smaller ones and you guys have learned a lot from that. So thank you for sharing all of the expertise you've learned. Ryan: Oh yeah. Thank you, Jon. I appreciate the time. Announcer: Thanks for listening to Drive and Convert, with Jon McDonald and Ryan Garrow. To keep up to date with new episodes, you can subscribe at
Today, Jon & Ryan talk about how Digital Marketing and CRO work together to create a scenario where one plus one really equals three or four. When these combine it It becomes an explosion of revenue and profit. Today the guys why it is that these two things work so well together.
The official data from the Census Bureau has stated that through Q3, e-commerce was up 32% year-over-year in 2020. By no means should a company complain when they're up 32% during a pandemic, but there are times when a company should be concerned when they have 32% year-over-year growth. That sounds backwards, but business owners and marketing teams should have regular fear of missing out or FOMO, to help make sure that their brands aren't falling behind their competitors. Even when the numbers look good. That's the best time you can have all the cash in the world to reinvest. Today Ryan shows you how to push for more in 2021.
How does one break down optimization into some key principles? In episode #24, Jon started talking through his eight laws of conversion. The first four were: It's hard to read the label from inside the jar. People come to your website for only two reasons: to purchase, or to research. Your goals are aligned with customers, both of you want a conversion. Competitive research is not data. Today, Jon and Ryan pick up where they left out and give you Jon's final four laws of conversions.
As business owners, we’re always worried about missing out. Many businesses owners we talk with seem to regularly have FOMO (fear of missing out) when it comes to marketing: Are my goals right? Was optimization right? Was there an area of the market I didn’t pay attention to? During holiday periods, which is when we are recording this, everything is intensified and I find most business owners are stressed about this more. Especially in a year like 2020. Today we dive deeper into the details of how a business owner can uncover where they are missing out on valuable traffic, and therefore revenue… and if their FOMO is valid. Connect with Ryan:
Today, is the first in a two part series about the first four principles of the world of Conversion Rate Optimization. What are these fundamental truths, and how can I break down optimization from a high level to not focus so much on the tactics? Everybody goes directly to the tactics, but what are the overarching things that a brand needs to know and be thinking about? Today, Jon breaks it all down.
It's hard to talk about E-commerce and driving traffic without thinking about Amazon. How do you find new customers there? Should you run on ads on Amazon? Ryan has the answers! For help with your Amazon Advertising:
There are seven different types of people that you're going to find coming to your site. And if you can understand who these people are in each one of their buckets, you're going to be able to help each one of them convert because they're all going to look at your site a little bit differently. So how do we understand who they are? And what do we need want to know how do we convert these people? Jon's got the answers! TRANSCRIPT: Announcer: You're listening to Drive and Convert, a podcast about helping online brands to build a better e-commerce growth engine, with Jon MacDonald and Ryan Garrow. Ryan: Well, Jon, welcome to the Drive and Convert podcast. You've done a lot of writing, to say the least. You've got some phenomenal content out there on the internet and as somebody that reads most of your content and speaks to you often, it's always good to read. So if you're listening to this, go find Jon and all of his content on his website. I highly recommend it. You will come away as a smarter human. But one of the fascinating concepts that at least for me seems fairly unique to your brain and at least the content you're putting out is the idea of there are seven different types of people that you're going to find coming to your site. And if you can understand who these people are in each one of their buckets, you're going to be able to help each one of them convert because they're all going to look at your site a little bit differently or want to do slightly different things. But I guess step one is just, how do we understand who they are? And then we want to know how do we convert these people? We've got them to the site. We know who they are, now how do we convert them? So I'm excited to hear about this because I can never get enough insight into how to make my businesses and my clients' businesses work better. But can you kick us off just by telling us who are the seven personas that you're seeing on the internet coming to websites? Jon: Well, thank you, first of all, for the kind of compliments on the content. I'm blushing over here if you can't see that. Yes, there are seven and a lot of people think, seven that's a lot. But the reality here is there might be some overlap in these as well, right? And these are all different types of people that you really need to address on your site. And so many people don't do that, that it really led me to write this content. So the first set of folks coming to your site are what I call lookers, right? These are people who are just looking. They're browsers, if you will, right? They're not after any one thing in particular, they're having fun just looking around. They want to see what you offer that maybe will catch your attention. Honestly, they may even have been just searching around Google for different types of products and ended up at your site, not necessarily by mistake, but they ended up there and now they're just looking at what you have to offer. Really you just need to understand that not everybody who approaches your site's going to buy. Most e-comm sites know that, right? Because their conversion rate's not a hundred percent or else we wouldn't exist. But the reality here is that you still need to address this audience. A second one to be thinking about is bargain hunters. These are people who are only at your site because you're having a sale or some type of offer. Ryan: Hopefully, it's not a discount. Jon: Exactly. That would be my point of view. But that's what they're looking for there. They're trained, as we have said, several times, they're trained to look for that sale. And so there are people, and there is a segment of folks who will only buy if something's at a perceived bargain, right? And they really want to see if they can find the bargain. Sometimes it's the thrill of finding the bargain that really gets to them. The third you really want to think about it as the buyers. Now, it seems pretty obvious, but some people are really on a mission. They know exactly what they want and they're there to get it. So they searched for the model number, they found your site, and they are ready to buy. And so you really want to facilitate that. A fourth is researchers. Some folks are just researching. They have a general idea of what they're after, but they want to compare those options and the prices. So, a lot of people will go to Amazon for this, but now, a lot of people are doing that on brand sites as well. They go to Amazon and they find the product they want but then they end up on your brand site after they've done that research. They find the model number on Amazon, they Google it to find more details about the brand behind the product. Amazon isn't always the best at having product details, right? So a lot of times you'll end up on a brand site trying to do that and that's what these folks are. Ryan: Now, what would be the big differentiator on the researchers and the lookers? Because a lot of similarities between the two, but what would be the key differentiators in your mind? Jon: The key differentiator is the researcher knows what they want. They know what they're looking for. The lookers are ... It's kind of like wandering around a mall versus going right into the Apple store. You're at the mall but you beeline it for one shop because you know that you need something from that shop. Where you might just go to the mall to hang out, right? If that's even a thing, post-COVID one day, we'll see. Ryan: Someday we'll get back to a mall, maybe. Jon: New customers is another one. People don't really think about that often. And this is really where some visitors are just going to be new customers. They enjoyed their last visit. Maybe they were a looker on their last visit and now they're there to find out more and potentially become a new customer. Perhaps these are people who you should really be thinking about post-purchase, like they just purchased. What happens at that point, right? So these could be people who are buying from you the first time. And it's an audience you really need to be thinking about because you need to make them feel welcomed and appreciated. One that a lot of people don't think about is dissatisfied customers. Everybody has them. I don't care if your net promoter scores is perfect or you don't hear about these complaints. Everybody has a dissatisfied customer or more. And that's okay. These people are there for a number of reasons and it might not always be that bad. Maybe they're just dissatisfied because it didn't fit the way they thought it would, but they still like the product, they're there to return or exchange. For some reason, a previous purchase didn't suit them and now they want customer service. And the goal here is to make it easy for them to get that and perhaps even do self-service where possible. And the last one, seven of seven, we blew right through these, but we'll dive into each in a second, but this is loyal customers. So some of these are your best customers. They come back, they love shopping with you. They love your product and then they're going to be repeat customers. So, that's the seven. To run them real quick, it's lookers, bargain hunters, buyers, researchers, new customers, dissatisfied customers, and loyal customers. Ryan: Got it. So we know what personas people are in, generally. And then are there ways outside of the types of traffic that you help decide who this one is on the site to do that, or is it, I just want to make sure the site works for all of them? Jon: You really want to make sure the site works for all of them. And I think that there's many ways to group people into these different types. As I said earlier, they could be multiple types. But I heard you say the word persona, and I think I really want to make clear that it's easy to get dragged into things like personas, or where people are in the sales funnel, or warm, hot, and cold leads and visitors, or any of those things that can really just take you down the rabbit hole if you will, right? And I see this all the time where we ask people, who's your ideal customer, and they give us an avatar of somebody that has flowcharts, and photos of Charlie, the avid runner, and his demographics, and preferences, and what soda he drinks, or what bottled water he prefers, and all of that stuff doesn't really matter. It's never really put to good use, especially when it comes to optimizing a website, because that guy, Charlie, the runner, he was generated in the mind of the brand. He's not an actual consumer, right? So what you really want to do here is just keep it simple. Really you just want to focus on better serving each of these. And by doing that, you're likely to increase your conversions for each of these. Additionally, if you go any deeper than that, you're unlikely to get started because you'll end up in this, as I said earlier, rabbit hole of trying to figure out who Charlie is. Well, Charlie, isn't going to be all seven of these, right? So don't worry about Charlie and don't worry about going so deep. Ryan: Because you might have your ... If you've done the persona thing as a brand, you could have your same persona being all of these types. And so at the same time, keep this very top level when you're looking at your site and trying to guide traffic and just do what Jon says at the end of the day. Jon: If the world only worked that way. I'll have you call my wife after this and tell her that too. Ryan: Yeah, you do the same for me when we're talking about driving traffic. Okay. But we've got to tell people how do we take these groups of traffic and these people and get them to take the action we want them to take on the site. Because I'm guessing to a degree, not all of them are the same conversion either. Jon: Very accurate. That's true. Ryan: So we've got to think about that as well. Like a disgruntled customer is probably different than a looker at the end of the day, as far as action. So guide our listeners and viewers around what that looks like and how you're seeing converting those people. Jon: Well, let's break them down one by one, shall we? So start with lookers, really is what I would recommend here. And I think the thing to be thinking about here is with lookers is you're going to catch your attention and get them to stop that just shopping and not browsing long enough to consider some type of offer or something that gets their attention, right? So if you know your customers well enough, which most brands listening to this will, they'll know what will entice their customers. And I'm not just talking about an offer or a special or deal or anything of that sense, I'm also saying what's that one feature that makes you unique and makes you stand out? What's the benefit of the product that's really going to hit home for these people? They're at your site because they had a pain or a problem they're trying to solve. And they think your products can help them solve that problem. So you really want to make sure that you're putting that right upfront to get these people's attention early. But know also, it could take a few sales to get these people in there, right? So don't be discouraged when you see the bounce rate up there because people are just looking and leaving. That's what they do. That's why I call them lookers. Ryan: I hate when people talk to me about bounce rate. Take your bounce rate to the bank. Have them tell you what that's worth. Jon: Yeah, it doesn't help, right? Ryan: No. Jon: And it's a metric so many people chase, I think, thinking, oh, I can get my bounce rate down. Okay, this one goes in with time on-site with me as well. So many people track time on-site and I think it's a false metric because if you think about it, I'm there to get my tasks done. I'm there because I want to buy this product, or even if I'm just looking around, I generally have an idea of what I'm doing at your site. I might just still be browsing, but I have an idea of why I'm there. The problem with this is if I'm there for 10 minutes, you've made my life really complicated. I'm there because I need something, I'm looking around, and then the problem is I can't find that or I got sucked into something and I'm there for 10 minutes. As opposed to, I would much rather have customers who are at my site for three minutes and buy, right? And then I have their information. I can continue to market to them at another opportunity. But if somebody is spending 10, 20 minutes on your site, we probably have some type of usability problem. Ryan: Well, and also I laughed when you started talking about catching their attention because I know you're going to tell people it is not a pop-up telling them to join your email list for 10% off your first order, especially if you're a looker. Jon: Yep. I agree with that. Ryan: That is not going to be a quality email. Jon: Not at all. But you do want to encourage them to get on your mailing list but not through a discount, not through a pop-up, really encourage them in other ways so that you can then follow up with them later. Maybe that's something like an upcoming new release that they might be interested in, right? You should be thinking about it in that way. Once you've kind of got their attention, then how are you going to continue to keep that attention and continue to market to them? This is where I hear you say all the time, you're happy to pay for ads and break-even knowing you're building your customer roster. And I think that this is a good opportunity to be thinking about that without actually converting for a sale, right? This is what we would call a micro-conversion, where they're doing something that's not actually an exchange of money. Ryan: Now I would venture a guess and you can probably correct me if I'm wrong, but lookers probably make up the largest portion of traffic to most e-comm sites. Jon: Yes. There's a reason that I put them first on the list. It's because it's going to be the vast majority. Ryan: So it's a vast majority. You've worked with some pretty large brands with the ability to test measure lots of different things. Top of mind, obviously on the fly because we didn't talk about this beforehand, but what's a good implementation of this catch your attention that you've seen implemented that caused the brand to continue to be able to grow and push these lookers further down the funnel? Jon: Yeah. So this is where things like we were just looking at a company that sells a bunch of different pants. The price point was like $128 for a pair of pants. And I was like, man, that's, that's kind of expensive. I'm just looking at these pants. I don't really need a pair of pants right now. But the reality is what caught my attention was that they are five times stronger than jeans and I can do a lot of different activities in them. And that caught my attention because now I'm thinking, "Wow, they're going to last a lot longer than jeans and I probably spent $100 on a pair of jeans." So what's 28 more dollars to have them last five times as long as jeans, right? So just something like that, the benefit is really going to hit that. And I'm the target audience for that site I was looking at. So, these lookers, they're likely, the vast majority of them should be your target audience. If you're working with Ryan in Logical Position, then you're driving qualified traffic. And so assuming you're driving qualified traffic and these lookers end up there, they're going to be within your demographic of who is your ideal customer, so then really it's all about connecting with them on the benefit. Ryan: Got it. Okay. I think that's a great thing. It's easy to execute for most brands, I think. Jon: Yeah, for sure. So we can also talk about for each of these how I would recommend converting these. And I think for the lookers, I would want to really just make sure the e-commerce site is easy to navigate and search because really that's what they're here to do, is just walk around the store, right? So make it easy. Don't put barriers in their way, help them get where they want to go, and give them a really excellent reason to give them that email address that we talked about or other contact information, and so you can build a relationship with a nurturing campaign. That site I was just talking about, they had a bi-weekly $150 gift card that they would give to somebody who signed up. So you're entered to win a $150 gift card every other week, which is great because of $128 pair of jeans, I might get those for free. So if I'm seriously interested and I want to continue to stay in touch with this brand, I might've given them my email address there, right? And then another way really here is cart abandonment because a lot of lookers will add stuff to cart as a way of holding it to compare and look at when they're done browsing your store. It's kind of like if you go shopping and you might pick up a couple of different pairs of clothing or something off the rack when you're walking around the store because, "Oh, I like this. I might like it. Let me see what else they have too." And then you end up with three or four things, right? It's the same thing browsers are doing on your website. They're throwing it in their cart and then they want to just take a look at that and evaluate after. So having some type of cart abandonment there can be a great way to captivate their interest. Ryan: Awesome. Jon: So next would be bargain hunters. With bargain hunters, it's really not about discounting, right? That's not conversion optimization. I think you know my stance on discounting. People who listened to this show will know I'm fervent about not discounting, right? But instead, really look to offers like free shipping, or gift with purchase, BOGO. We did a whole episode on this. People really want to know the alternatives, they exist. And really here, you just want to be thinking about things like current offers on your website. Don't make your customer's desert at the checkout and then go elsewhere to find that bargain or that special code. If they have to go to any of those sites, they're not coming back. And so we really don't want to drive them there. And you might also highlight, last chance or clearance items instead of making shoppers really go find those on your site. It could be really good on every category to have a little tout or badge or flag on each product that says something about how it's last chance, or low inventory, or something that's on clearance. Ryan: Now, do you advocate for having a clearance or an outlet navigation button on brand sites for this type of thing? Jon: Generally not. Where I want to see that as within the category because, yes, having a clearance item ... A lot of brands will put that in the main navigation. The problem is you're wasting a really critical main navigation slot. You only want five to six navigation items to begin with. And if you're taking clearance as one of those or something of that sort, a sale, I see a lot of people have sale in main navigation, what's going to happen is people are going to go there first and they're not going to get a total view of your products. Usually, the products that are in that clearance are in clearance for a reason. They weren't really popular. So why do you want the first impression of what your product should be, for a person coming into your site to see, is only the products that other people normally wouldn't buy and they're on clearance, right? So instead, mix clearance in with your other products. That way you're not promoting only your worst sellers if you will. Ryan: A couple interesting points that deviate a little bit from what we're talking about, but it's applicable in that I can afford most things on the sites I go to, but I am cheap by default so I always go to the clearance button first. Because I'm like if I can find what I'm looking for on clearance first, I'm going to get it. Even though if I didn't see clearance, I would have gone to the product and probably bought a higher price one by default because that's just how I operate on a site. But also, when you are throwing discounted products on your site, and there's a clearance section that they are in, if your Google shopping is not set up properly, all of those products would have been going into the clearance section and you can be stuck in the clearance section of the site and you're going to be staying in there most of the time. And because products are discounted price, generally get to show more often in Google shopping because they're lower price point or there's a discounted price, you will, unfortunately, be sending a lot of discounted traffic to your site when that maybe is not the focus of your brand. So some brands I advocate for having an outlet site that's completely separate. Jon: That's a great point. Ryan: Kind of like Gap Outlet, their stores, they sell all their old stuff and they'll have a separate site, and then having the people going to on that. Jon: That's a great point. And that probably makes Kanye very happy as well. Next up is buyers. Buyers should be buying from you in a way that's hassle-free, right? These people want to buy. They're there to buy. They have a job. That's one job that they're there to do and that's to buy, so let them buy. Clear these obstacles, make it easy and simple to buy, really be thinking here about the bottlenecks in the path to purchase that people must take, right? What are the hurdles you're asking them to jump over? Let's get rid of those. A really great way to look at this is to do user testing, get people who fit your ideal customer profiles, and have them run through your site while you record it and talk about the challenges they're having. Again, the whole goal here is to get outside the jar, read the label from outside the jar. And it's really hard to do that when you're too close to it. So really be focusing on just eliminating every single possible barrier, too many fields on checkout, making people create an account before they buy, all of those things that would be extra steps or what we're looking to eliminate with these. Ryan: And be clear on your shipping rates. That's the one that makes me so mad lately, is people not telling me what I'm going to pay for shipping, so it'll increase your cart abandonment too. Jon: Yeah, Exactly. I mean, these people are ready to buy until they saw you were going to charge them 20 bucks to ship, right? And so, there you go. Perfect case study. Announcer: You're listening to Drive and Convert, a podcast focused on e-commerce growth. Your hosts are Jon MacDonald, founder of The Good, a conversion rate optimization agency that works with e-commerce brands to help convert more of their visitors into buyers, and Ryan Garrow of Logical Position, a digital marketing agency offering pay-per-click management, search engine optimization, and website design services to brands of all sizes. If you find this podcast helpful, please help us out by leaving a review on Apple Podcasts and sharing it with a friend or colleague. Thank you. Jon: All right. Should we move on to researchers? Ryan: Yes. Jon: Really, researchers, my point of view on these is these folks need to just make sure that they feel like they've considered their options and they're making the right decision. And your job, your only job is to help them do that. So what does this look like? Well, provide all the info you can think of, dimensions, instructions, details, data, data, data. That's what these people want, right? They're comparing. They came to your site because as I mentioned earlier, they were on Amazon, the Amazon didn't have the details, so they're relying on your site to have them. And you want to help them just make an informed decision. This could be everything from product reviews from other consumers to video. Researchers love video because they can see the products in motion and in use. Somebody even just holding the product and walking them through it. Specialized Bicycles does an amazing job of this. They actually have employees of Specialized, not models or anything else. It's employees hold the bike and then walk a consumer through it on video. And it's really, really well done. It does not have to be ... They shoot it in a studio, but it doesn't feel like it's a super well-polished and professional video on purpose, right? It's not some high production quality. You're aiming for your local news versus the national morning show, right, in level of quality here. Ryan: Got it. Jon: So the other thing is, really help these people understand things like sizing and photography. Video, I mentioned. So those are the things you just really want to help people dive into are all these different decision points. All right, new customers. These folks, they really want to feel like they've made a wise decision or that you want them to feel like they can make a wise decision, understand your warranties, helping people stand behind their products. You want to make sure that you're glad that they are your customer and make them know that. So this is where you think about retail source. Like your wife's retail store, right? She's there to answer questions. She can help out with returns. She'll generally just express gratitude when these people are shopping, right? It's hard to do that online, but this is where it becomes really, really important that you're doing things like building relationships with nurturing campaigns. And that can start with, as I mentioned earlier, a post-purchase campaign. What happens after this new customer becomes a new customer, right? They're no longer a visitor, they're now a customer. What do you need to do there? Loyalty campaigns, a huge way to engage these folks, right? You get them in and say, "Thank you so much for your first purchase. Here is points for your next purchase," or, "Two more purchases and your fourth one is free." Something of that sort, right? Where you're helping these loyal people become loyal customers. That's really what this is all about. Ryan: And these people just purchased, so maybe they haven't even gotten the product yet or maybe they just got it. Jon: Exactly. Ryan: Even just user videos on how to use the product you're getting can be valuable. I do that with Joyful Dirt. Jon: That's a great point, right? So what can you send as that follow-up email flow while the people are waiting for their package to make sure they know that you have their back, right? So if I bought Joyful Dirt, what do I need to prep for? Is there a season I should be doing this in? How much water do I need to apply? All these other types of things that I probably don't really think about, but are really key to somebody getting the most out of the product and buying again, right? If I follow your instructions for Joyful Dirt, I am more likely to have a good experience and then buy again, then if I just use the product without reading the instructions, which is more likely for me than not so. Ryan: What I appreciate on it too, on that first email after I purchase, usually the next day, it builds the anticipation because often I forget what I bought yesterday and I get surprised by Amazon in two days, who are the site I purchased it on. And so you're like, "Oh, yeah, I do have that coming in a day." I'm excited to get it now because I was excited yesterday when I bought it, and I forgot today, and then tomorrow when it arrives, I get excited. So it's a good way to continue that kind of that high from my purchase that I just paid. Jon: How is there not a phrase like the Amazon phenomenon or something, where everybody forgets what they ordered at Amazon at midnight the night before and then it shows up two days later and you're like, "Oh, yeah, I was looking for that. That was great. I'm a genius." Ryan: I know. I was like, well, I knew I wanted one of these and like, oh, I did want one and then I bought it. It was great. In college, it would have been, "Man, what did I do at 2:00 AM?" and talk about, "Oh, I had a bean burrito." Now, it's just transaction fatigue or something. And I'm just [crosstalk 00:25:48]. Jon: That was much lower key than I thought you were going there, Ryan. 2:00 AM in college. But this happened to me recently where I was working out with a trainer and we do an outdoor workout in my garage now. And it was really funny because he didn't bring his TRX bands. If you know about these TRX straps, they're a way to do workouts. And the reality is that I went on and I just ordered a pair from Amazon. I was like, "Well if you ever forget them again, I'll have some here." And totally forgot about it. And then the next workout came by and the Amazon guy literally showed up two days later while we were working out. So it had been like two days to the hour and the guy shows up and I'm like, "Oh, I wonder what that is." And you could read the outside of the box. It said TRX. And my trainer is like, "Did you get something from TRX?" I was like, "Oh, yeah. Last time you were here. Yeah, remember?" Yeah, so that's was pretty funny. I was like, Amazon wins again. Ryan: Yep. Jon: All right. Dissatisfied customers. We have two left. So let's talk about the dissatisfied customers. Everybody has them, right? And they exist. And that's okay. These folks often can just be made satisfied by helping them understand that you're trying to fix their challenge and improve the experience for everyone else. Often, it's like if I come across a problem on our website, okay, let's just say, I just bought a bed. I'm not going to name names, but I bought a bed online and it has a whole bunch of technology in it. Love it. But, I'm a tall gentleman, right? And I bought a king, and it comes, and I was like, "This is a lot smaller than a king." It turns out, I measured it, it's two inches less than a king. And I was like, that's really weird. It's not a queen. So what's going on here? And so I contacted the brand and said, "Hey, this bed is two inches smaller than a king." And they said, "Oh, yeah. Because of some of the technology, blah, blah, blah, we have to make it a little bit smaller." And I was like, "That would have been nice to have known up on your site. You need to tell people that it says king, but it's actually two inches smaller. Because you're advertising all these NBA players use this bed and things like that, and I'm thinking great, right? But then it's two inches smaller." And the founder actually emailed me and said, "Hey, I got this feedback. I heard this. Well, we're going to add this to the website and make sure people know." And I was like, okay, well, I still have the bed, now I'm satisfied. And I was like, at least other people won't have that problem, right>. So I felt vindicated in some way. And so I think I made this point to say that complaining customers are an excellent source of feedback. And that's how you need to look at these, right? It's not about just having dissatisfied customers, it's about understanding what their problems are and fixing them. They tell you what the problems with your website and your consumer experience are, and so you could fix those problems. So really just want to be quick to listen to things like bad reviews, understand the complaint before responding, and understand that you can turn dissatisfied customers into loyal ones. It is possible. Ryan: I think too often brands hear or get bad feedback or just dissatisfied customers, and it's just for them, it's almost scary confronting it, or they're really excited and passionate about their brand, and somebody doesn't like it, they're like, "They just don't know what they're doing." I've done this myself with brands, and I'm like, "They just don't know what they're doing." And then I'm like, okay, it happened again. I'm like, okay, fine, we need to adjust the product. And my baby may be ugly, so let's fix it and not make it so ugly to some of these people. You can't be scared of dissatisfied customers, or you're going to lose your brand. At the end of the day, it's going to be just terrible. Jon: That's a good point. Yeah. All right. Last one, loyal customers. So, look, the 80/20 rule says that 20% of your customers will be responsible for 80% of your business. So the way I like to look at this and it's hilarious, I was just saying this to somebody else, but loyal customers are your bread and the rest are your butter, right? So really want to be thinking about what are you doing for these loyal people? So look at loyalty programs. I like to use airlines as examples because they are so good at gamifying, right? I'm platinum on Delta. I mean, I haven't flown them in nine months and I just got another letter from them yesterday with baggage tags for platinum level. And they said, "Hey, we're going to keep you a platinum level for another year. Don't worry about it. All the miles you've accumulated will count towards next year. So you don't have to start over. We understand." And they're gamifying it and in a way that's, okay, now, next year, when I start flying again or whenever that is, I'm going to go right back to Delta because I'm still platinum there. If they had removed, I'd just figure out, I'd be like, hey, well maybe Alaska or whoever else flies more on the West Coast where I'm all the time going, I would probably switch. But now I'll stick with Delta, right? They've done a great job with that through what's no doubt a challenging time for them. So really want to be thinking about a way to keep customers coming back and how you can take care of your most loyal customers. As I say, gamifying works very, very well. Every customer is special, but you really want to treat these folks with even more kid gloves, if you will. And then find ways to reward and recognize these people, you can give them special amenities. Baggage tags aren't really going to be much for me. I don't really care about that, but I'll take the free upgrades and the free alcohol and everything else that comes with being platinum with Delta. And then really just treat them like a VIP and they'll continue to be loyal. That's really my key point here. Ryan: And this is really probably the one area that I advocate for companies looking at competitors and taking note because a lot of times when you look at competitors and they have this widget on their side, or they do this thing in their ads, they probably have no idea what they're doing. At the end of the day, they're testing something. But when it comes to loyalty and what they're doing with their customers to try to keep them loyal, often, this is where a lot of research goes and especially in the airlines. If I was running an airline, I would go to all of the other airlines' loyalty program, find a list somehow and say, "Look, if you are platinum with Delta, I will automatically make you platinum or whatever my highest thing is with Alaska, give me a shot." And just automatically, because you're losing nothing. I'm not getting Jon's business right now. Jon: Right. It's funny you say that because Alaska does just that. They'll do a status match, where if you're platinum on Delta, they will status match you and give you that for a year on Alaska. Sadly, you can only do it once in your lifetime. And I did it right before the pandemic, so that's not a good situation for me. But yeah, at any rate [crosstalk] travel. Ryan: Join your competitor's loyalty program. I highly recommend everybody do that because it's going to give you some ideas of what they're seeing in the data or how they're gamifying it. Just jog your brainstorming ideas. Jon: Yeah. Status matches is a great idea, right? That's wonderful. Yeah. Where do you think you want to go from here? Ryan: Well, we're about out of time. So, I guess, I've got a lot to chew on too because I'm sure we're going to come out with some other ideas on this after digesting most of your data. But there's a lot of things you can do on a site to target a lot of people. And so what would your suggestion be to somebody that's just taken this fire hose to the face for their site and they're like, oh, my gosh, seven different groups of people? Where do you start and how do you start taking some actions so you're not a paralysis-analysis scenario? Jon: Yeah, great point. I would say here, start by asking questions about each of these groups and taking a good look at your site from their perspectives, right? So do each of these customer types get their needs met or are you just leaving some out in the cold? And how do you identify and engage the most loyal customers, or how do you flag and recognize new customers? And are you providing enough information to researchers? So really there's a key question in each of these if you go down and just ask yourself, am I meeting the needs of these people? And you'll come up with tons and tons of optimizations that you can do to your site on your own pretty easily. Ryan: Got it. And I would probably just broad stroke saying if you move up through the list in reverse order, you're taking care of some of the easiest or most important things. Like keeping your loyal customers loyal to you, you can't lose lifetime value customers, otherwise, your top-funnel marketing is just wasted. So keep those and move up. If you have to make a choice on where you're taking actions, I'm guessing that's where I would start. Jon: There you go. Awesome. Well, thank you, Ryan. I really enjoyed the conversation today. Ryan: Yeah. Thank you. Thanks for bringing your brain and letting me pick it and add some value to our listeners. I appreciate that. Jon: All right. Well, have a great afternoon. Ryan: You too. Thanks, Jon. Announcer: Thanks for listening to Drive and Convert with Jon MacDonald and Ryan Garrow. To keep up to date with new episodes, you can subscribe at
With Cyber Week just in the rear view mirror, we’ve got a lot of questions for Ryan...Outside of revenue, how does a brand know if they were successful for Cyber Week? How do they know if money was left on the table? Or their goals were misaligned? What were the common missed opportunities in search engine marketing? What does a brand’s data say about their Cyber Week performance? When a brand looks back at their ecommerce data for Cyber Week, what should they be looking for? We've got even more questions, and we’re very fortunate to have access to Ryan who has answers! TRANSCRIPTION: Jon: With Cyber Week just in the rear view mirror, I've got a lot of questions that I've been wanting to ask Ryan. Outside of revenue, how does a brand even know if they were successful for Cyber Week? Or how do they know if they left money on the table or if their goals were even just misaligned? And what are the common missed opportunities in search engine marketing that have been happening over Cyber Week? And what does a brand's data say about their Cyber Week performance? And I keep going here, but when does a brand look back at their e-commerce data for Cyber Week and what should they even be looking for? So, I've got even more questions, and we're very fortunate to have access to Ryan who has answers on things like this. Ryan, let's start with the big overarching question that is likely on the minds of e-commerce brands right now. Outside of revenue, how does a brand know if they were even successful for Cyber Week? Ryan: Yes. A lot of great questions, Jon. I would say revenue, most likely, is most important to brands. And so, we do have to look at that, but it gives you a very one-dimensional picture of what happened. The year 2020, almost anything goes and expectations have to be adjusted very quickly, almost in real time, of what we think is going to happen, we test it, we go, "Oh, that didn't happen. Great. Do this, this, or this." I think looking back on Cyber Week is going to be important for a lot of brands to really decide what you're going to do for the rest of the holiday season. Because for most brands, you rate in the middle of your holiday season, you still got a good solid couple of weeks left of really high conversion rates, high traffic rates, and a lot of time to make up for missings on Cyber Week or continue what was successful in Cyber Week, and really make it a holiday to remember for an e-commerce brand. Step one, when I'm looking at data for a holiday season, I have two buckets of companies in the e-commerce world in my head. Either you have good goals or you have bad goals. Those are the only two buckets I look at. And thankfully, it doesn't really matter which bucket you're in, you can look at a certain metric that's going to help guide the rest of your analysis. Let's say you have great goals, and you are shooting generally in my world, you have great goals if you are shooting for a non-brand goal specifically. And so, let's say you had a breakeven goal during Cyber Week. And if you had a 50% margin after discounts and everything, you're going to shoot for a 2X. If you were above 2X during Cyber Week, either the whole week, or sporadically, or consistently, that tells me you left money on the table. Jon: Let's talk about that for a minute. When you're talking about a 2X, a 2X of what? Ryan: Your spend on Google, it's your acquisition market. That's generally where you can leave money on the table. Your organic traffic is set. You're not going to do any organic work and SEO work in the middle of Cyber Week and have it move the needle for you. Your acquisition market is going to be Facebook, Google, Microsoft, Amazon if you're on Amazon, and that's the leverage you can push and pull and move stuff real quickly. And so, generally, brands are going to go into Cyber Week with a goal. Generally, they'll set a goal for budget, set a goal for revenue. What are we going to spend on each channel? And what do we expect from each one? If you were above goal, I'm going to tell you left money on the table. Now, a lot of marketing teams, a lot of agencies are going to go back to the exec team and be like, "Look how amazing we are. We spent your money and we were above goal. Aren't you happy with us?" I would be furious with my marketing team, and I'm the marketing team for my brand. So, I'd be mad at myself that, "What are you doing not spending more money to capture more customers?" I didn't want to shoot for, let's say, 4X on my non-brand. That's great that you did that. You got us more profit, but I would rather have customers than I would profit on my non-brand terms. Jon: So, using Cyber Week as a way to build your rolodex, if you will, right? To build up that customer list that then you can go and get more sales from later. Ryan: Yeah, that's what I do with every week, it's not just Cyber Week. My goal on every week of every year on marketing is more customers. And so, that's where I set my goals, that's how I use my acquisition marketing with Google, Facebook, Microsoft, Pinterest being a new one, that's pretty lucrative now. If you're not looking at Pinterest, you should be looking there. You're probably too late to holiday season with the setup times in there. But again, all acquisition market where I have a non-brand, new customer acquisition channel, I want more customers. And that's where I set my goal. And I don't want to overshoot that. If you're under the goal, and this is an asterisk, but you probably capture the market you could have. Now, there's a lot of things that go into that, was your conversion rate garbage because you weren't working with Jon? If so, then yeah, you might not hit row as you left money on the table, because you weren't converting as well as you could have. This year's obviously unique. And there's no scenario in which you can say that 2020 is not a unique year, period. Based on what we've seen the previous 10 years of my e-commerce time. But another wrinkle coming into this year has been Smart Shopping. Google has been a big advocate for pushing for this. And so, Smart Shopping and Google has a big push this year. It was around last year, but it was a very small percentage of advertisers we were seeing with Smart Shopping. This year, a lot of advertisers in Smart Shopping, my gut tells me they're going to go back and look at all their Smart Shopping campaigns and that was a lot of missings. There was a lot of money left on the table with those. Generally, it's because all of your search queries go into one bucket. You can't effectively, in Smart Shopping campaigns, separate out brand and non-brand at scale. Small little tests you can do, but it doesn't work at scale. And so, if you have a goal, it's going to include brand searches, non-brand searches, remarketing display, there's a lot of things bucketed into that campaign. If you did not adjust your goal for a promotion week like Cyber Week, you, for sure, left money on the... If you're shooting for... I'm going to make this up again, say a 5X. Your blended goal, 5X, in your Smart Shopping campaigns and you're like, "All right. We're going to ride that into Cyber Week." And the only change is going to be a promo. Your competitors probably had a promo, they probably adjusted their goals down to capture more market share, knowing the competition was going to go up. And so, the smart campaign that's trying to hit the target row as a five in this campaign is not going to be able to adjust well against all this increased competition, increased click costs, increased conversion rates to really understand how and where to play well. It just doesn't react necessarily quick, and it's got to have a lot of data to make decisions. And so, I'm guessing, if you were in a Smart Shopping campaign, chances are you left some money on the table. Jon: And do you feel like that should be changed until the end of the year? Until we're through this high volume shopping area? Ryan: If you're in Smart Shopping now, chances are, you probably don't have a team that can move you off of that in time, chances. If you're with an internal team that has only managed Smart Shopping, they're probably, internally not going to have the skillsets necessary to build out all these granular ad groups needed to do a brand, non-brand shopping and push that way. If you're working with an agency that was running Smart Shopping, but also knows how to break out your search queries and set that up. Generally, I would advocate for that, because shopping can be changed very, very quickly in Google with very little penalty. The quality scores reset very quick and Google has even said that they are going to be on hand to make approvals in merchant centers and in shopping campaigns very, very quickly this holiday season. And we've seen that continue through. So, I wouldn't be worried as much as long as there's proof that you have the ability to create that. Well, I would also say, I've talked a little bit about good goals, and if you've got bad goals and you're shooting for too high of a return on ad spend, and you weren't going from market share or customer acquisition, which generally, you need to be in a holiday period where the competition ratchets up so aggressively. If you didn't lower goals that's bad goals, you, for sure, left some money on the table. And the easiest way to measure that would be to put, probably, let's say, a 10-week period on Google Ads, and just map out your return on ad spend or your conversion rate divided by cost, and see how that changed by week. And if it stayed flat the whole time and didn't move even through Cyber Week, there's probably money being left on the table. You probably could have been pushing harder through that time period. If it spiked and you got a higher return on ad spend, you, for sure, left money on the table. If it dropped and you kept pushing at the same investment level, you probably left a little bit less on the table at that point. Jon: Okay. Interesting. What are the common missed opportunities? And you mentioned the Smart Shopping, right? Ryan: Mm-hmm (affirmative). Jon: Are there other things that you have commonly seen be missed over these high volume time periods? Ryan: Yes. You have to be in the account constantly. And so, if you are running your own account or you have an internal marketing team, you are making changes or you need to be making changes daily, many times throughout the day during holiday periods. And because we're in a condensed environment where it means that less people are at retail stores, more people are shopping online even more so than the rest of the year, you have to be adjusting and pivoting to competition constantly. Jon: What should they be adjusting, I guess, is the question? What terms? The dollar figures? Ryan: A lot of times it's bids. And so, you're moving your bid. a lot of people will put in an automated bid system or they'll use Enhanced CPC on Google and assume that they are fine at that point. Jon: Yeah. Don't do that, because that's where I spend a ton of money, without making [crosstalk 00:00:10:06]- Ryan: Oh yeah, your $200 click, that was a fun one. One click, 200 bucks, gone. That's a nice bottle of wine, just to that click. Jon: Yeah. Well, lesson learned. Ryan: Lesson learned. Yeah. We got you back to some better spending habits. It's not going to be... Even those settings need to be adjusted all the time. And the larger you are, the more often you need to be in the account. And larger by an ad spend perspective, not a company perspective, but the more often you need to be in the account. Some of our largest spends, and we're talking seven-figure holiday spends by week, in the account, on the hour, looking at data, we have some clients that will be adjusting promos at 9:00 AM every morning. And re-looking at them at 1:00 PM based on the results. It's basically moving up. There's not many scenarios in a holiday season where you're moving bids down. The competitions only increasing, your competitors get more desperate because they're not getting sales and you are. Brand terms are going to be especially good to stay on top of that. Make sure your competitors not coming in and trying to steal some easy clicks, keeping your budgets up. And so, if you went through holiday week, for example, and you were limited by budget all week, because you set a fixed budget saying, "All right, we're going to spend X dollars. I'm going to spend $5,000 on Cyber Week, not a penny more." And you left money on the table. If you had a return on ad spend that was acceptable and you had limited by budget, why would you not spend more? Unless you're on purpose losing money to acquire customers, then you limit it based on what your CFO tells you. But for most companies, you don't want to be limited by a budget if you're hitting goals Jon: Okay. That's really insightful. And I have a follow on to that, which is assuming that a brand has had to spend a lot more because pre-Cyber Week, we saw how Facebook ads and Google Ads were way more expensive. The invested dollar did not go as far as it was going pre-pandemic or earlier in the year for instance, right? With all those costs going up, what are you... And I'm hearing from you, you should be spending even more right now, right? Because you're only going to adjust those bids up. What should a brand be thinking about spending the rest of the year? Not in terms of dollars, but is it... And this might be something that's just a based on a per account basis, but overall, should brands be expecting to spend twice what they were normally budgeting during this time period? Or is it a certain percentage that you're seeing brands? Are budgets have gone up and just need to be budgeting for the rest of the year? Ryan: Tough question, because every e-com business is going to be a little different. Some e-com businesses, 80% of the revenue comes between Thanksgiving and Christmas, and you can't possibly be spending enough. Others are pretty flat throughout the year. Some, like in the auto parts world, generally, this is slower than it's going to be in tax return time come January, February. So, it's going to depend. But one of my favorite quotes in a good movie called Wall Street was, it's more, at the end of the day. You generally need to be comfortable spending more, and it can make you uncomfortable committing to that. But, I, as a person, hate constraints, just as a general rule. I hate being told what to do. I hate having guard rails put in place. I know they're necessary, but it doesn't mean I don't push against- Jon: This is why you have a farm with a lot of land. Ryan: It is, yes, it helps. But I hate budgets in the digital marketing world. You shouldn't put a constraint on your marketing budget and say, "This is how much I have to spend. It doesn't really matter what happens." That is a huge fail that a lot of business owners and exec teams get caught in, because it's how we've budgeted marketing since we've had business. Thousands of years, you'd be like, "Okay. I have this much to go market my produce at the market." Now, because you actually pay for Google clicks after you collect the revenue, you can be free to spend more as long as you can fulfill the orders. And that is a constraint coming up here. UPS, FedEx, USPS, there are some physical constraints to how much can fit through the shipping pipeline. There's also constraints on inventory. If you're out of inventory, obviously you're not spending, but you sold all your inventory, that's fantastic. Go enjoy the last weeks of the holiday season and not worrying about selling anymore. But then, be mad at yourself that you didn't buy more inventory. So, spend more, but understand generally, marketing channels for acquisition are getting closer and closer to a vacuum in which all of that first order profit goes to the platform driving the sale to you whether that's Google, Facebook, Microsoft, Pinterest, Etsy, Amazon. The ad platforms are phenomenal at getting that margin, because competitive people like myself, getting into the saying, "I don't care if Google gets all of the margin on the first order, because I'm going to make money on repeat business. I'm building my email database. I have phenomenal email marketing. I have a phenomenal product." The more people look into marketing the way I do, the more of that margin is going to Google. Five, six years ago, it was not tremendously difficult to have a decent margin on that first order from Google Shopping. Now, I think that is going to be more and more of a rarity just because of the... Just the nature of so many competitors and very limited real estate on the screen. Jon: Let's talk about this. Say I'm a brand, not one of yours, but brands that is out there, and I missed out on Cyber Week. I listened to everything you just said, and I am kicking myself because I've missed out. And I'm at the point where I have some ground to make up between now and the end of the year to hit my numbers. What would you suggest here? Ryan: Step one would be adjust goals down so you can spend more. Take the constraints off of your budget, and if you're shooting for a profit, even if you are on a smart campaign, you have to take some guesses and figure out how much of your orders are brand versus non-brand sales, that's going to be in Smart Shopping and educated guess at the end of the day. Based on the size of your brand and new file customers you're getting, but adjust down so that you're fine breaking even. If you have a 50% margin, and I was stuck on a Smart Shopping for the rest of holiday, I would set it at a 2X goal, jack the budget way up, and let Google go find it, and find some opportunities for you to be in there. Lower goals, increase your spend level. And in lieu of discounting, which discounting is one point I'll talk about, I know one that you don't like, but at this point, becomes almost necessary evil to get some market share that if you were out-discounted by your competitors in Cyber Week, Cyber Week is an anomaly where, to a degree, I would go against Jon MacDonald a little bit and just say, you've got to discount, everybody's expecting it. And Google Shopping being the biggest Avenue for acquisition for e-commerce brands, if everybody else is discounting and you're not, you probably can't bid enough on a cost per click to compete even. It's just, Google's algorithm is so sensitive to price that if you're giving a 10% discount and your competitors giving a 25% discount on the same product, they're going to win almost every single time. Really doesn't even matter what you bid. Jon: So, doing things like offers, BOGOs or gift with purchase, Google's not going to pick up on that. You're just going to lose out because you didn't do the price discount. Ryan: Exactly. And it's unfortunate, really, at the end of the day, because I really, like you, advocate for creative bundles. I love giving free shipping to your loyalty program if you do have a minimum shipping threshold, but those just don't translate to Google Shopping and actually getting a traffic. And so, you might need to start discounting to try to make up for the fact that you weren't discounting enough earlier. And so, you have to react a little bit to your competitors. If they're giving 10% off for this week, maybe you jump to 15, maybe 20%. And then, you will also, generally, be rewarded with a lower cost per click in Google Shopping. Jon: Okay. So, you get some of that back in theory. Ryan: You get some of it back. And what most brands and marketing teams as well, and even some agencies, aren't paying enough attention to in Google Shopping is the halo effect. And I think I've talked about that a few times on this podcast, but the more you spend in Google Shopping to acquire traffic in non-brand terms, so people that don't know who you are yet, they're looking for your product, the more traffic you're going to get in organic traffic, from Google organic, Bing organic, Yahoo organic, the more direct traffic you're going to get, and the more email you're going to collect. And you're going to get revenue through email, because Google Shopping is so good at introducing people to your brand, it doesn't actually... If it's run right, often, you will actually see more assisted conversions than last click conversions analytics from Google Shopping. And so, that's why breaking even on Google Shopping is not a bad thing at all. And in fact, you're not losing money, you're building up credit card miles for your wife, for your husband to go off and travel with you after the holiday season. But you're also getting a lot of extra profit through increased direct organic and email. Jon: Right. Makes sense. Thinking about that, what about Microsoft Ads? Should we be looking at additional channels assuming that you missed out on Cyber Week? Now, you're pushing other channels as well. Ryan: Jon, you know me so well. Microsoft Ads is a layout for almost... And if your stall is [Jon Macdonald 00:20:08]. But it's the easiest marketing that most companies are not taking advantage of. It constantly surprises me how many companies I'll talk to that just aren't spending on Microsoft Ads that's like, "We did in the past, it just wasn't doing much. So, we just turned it off." I'm like, "There is so much easy money there." The conversion rates are almost always higher. The competition is lower. Yeah. There's not a ton of search volume or near this... I mean, there's a lot, there's billions of searches there, but it's just, in comparison to Google, not nearly as many. But take it, get out there, get more aggressive on Microsoft. Get there if you're not there. Jon: Do you have any other final thoughts on this? What else should brands be doing? I know you well, but I'm out of ideas of what I would think people would do. Ryan: Well, where we're at in the holiday season, there's still a lot of sales to be had. And so, I haven't even bought a Christmas present yet. I'm a free agent at this point. And I always am... I don't buy my... I'm so busy in the e-commerce world, helping other brands- Jon: Ryan last minute Garrow over here. Ryan: It's terrible. Yeah. And when we can go to stores, I'm always the first on Christmas Eve freaking out buying what I can. Free Shipping Day and Green Monday are on the same day this year, December 14th. Green Monday is not necessarily a holiday that we talk about outside of the e-commerce world. But that Monday every year in December is the highest online shopping day of all of them. Unless Cyber Monday happens to get into December, which I think it might've been last year. And so, it's a big day still coming. You want to be prepared for it. You don't have to call it out as Green Monday, because most people not in the e-commerce world don't even know what it is. They just know that our app work and they're shopping rather than working on Green Monday with everybody else. So, be prepared for that. You're going to give free shipping out that day. Just give it to people. You need to be a little more creative at this point if you're trying to make up revenue with free shipping. My brands, I try to give free shopping on everything. I don't even want it to be a barrier to conversion personally. So, if you can lower your free shipping threshold, give it on everything, that's better often than giving a discount. And so, using easy math, let's say your free shipping threshold is 50, but you've got a lot of products that are 25 bucks. Okay, well, rather than discount those $25 products 20%, giving them, basically, five bucks off, why don't you just include shipping? It doesn't have to be fast shipping. They can pay for two-day if they want, but just say, "Hey, it's free shipping on everything." And that will often go much further or just as far, but you won't be seen as a discount brand. So, your lifetime value on those customers can be higher. Jon: That's great. Let me ask you a question about shipping. Pre-Cyber Week, we saw a lot of shipping delays, and that's been happening a lot. I know that even companies like ShipHub are setting up trackers to help brands really understand what shipping times were looking like and they were obviously extended. Do you think post-Cyber Week that... I mean, December 14th, you got 11 days to get them a package in theory. Probably 10, right? Because you really want to get there before Christmas. So, you have 10 at most. Is it possible? I guess, that's my question. Is it something where brands need to start thinking before December 14? Is it something where like, "Hey, this shipping cutoff date has got to be earlier. So, all the chips on the table, just push them all over for that first week of December and just be done with it." Right? Is that something brands should be thinking about this year, because the shipping delays? Ryan: I mean, again, it has to be in the back of your mind for sure. And I would think that most delivery systems given 10 days, even in holiday, are probably going to do okay. I assume there's still going to be late packages and people will be celebrating Christmas gifts the following week into New Years. Leading up to Christmas this year, it's an entire week of shipping days. I think the last couple of years Christmas was on Saturday, Sunday or something, or it was set up in a way that we didn't have as many... I think it was on Tuesday recently, where there was a whole weekend where maybe shipping wasn't done as well leading up to it. We've got a lot of shipping days. And I think that because of COVID, there's been a lot of investment in the shipping space. And so, I think, we're going to be in better shape than we would have been normally. But still, we are cramming a lot of e-com through these shipping companies. And so, as a merchant, I would probably do my guaranteed shipping cutoff on USPS, probably right around free shipping. And then, work with my FedEx or UPS reps to figure out realistically when I should be cutting it off. And they should have a good idea, I think, internally, on what that should look like. But understand too, you're going to have some customer service issues. If you're not using Route yet on your site, I highly recommend putting it on. If you're on WooCommerce, BigCommerce or Shopify, you can just push a button, and then get it on there really quick and easy, and let that shipping insurance cover you for some of that struggle. Jon: That's a good point. Yeah. Then at that way, if things don't show up on time and they've paid extra, they can then get that. At least, that expenditure back to some degree or if their packages get stolen in transit or from their porch, then they get that [crosstalk 00:25:30]- Ryan: Yeah. I think there's going to be some porch piracy coming up unfortunately. Jon: I'll tell you what, I have seen it, I should say, already. Great. Well, any other comments on this? Today has been super insightful for me. I've learned a ton like I always do. So. Thank you for educating me. Anything I missed? Ryan: I would just say if you're at this point, and you're having to make up ground, it's time to start throwing some Hail Mary's at this point. I mean, you can't possibly test or try something that... Even if it has a low chance of succeeding, you got to make an effort if you're trying to make up ground. I would even, potentially, look at doing some social promos with complimentary brands even. And if you're going to do that, you're going to have to go big during this time period to get through the clutter, and you're going to have to promote it. So, if you're going to do a giveaway, it's going to be a, "Hey, we've got a two or three-day window. We're going to push hard with ads, get a crazy thing given away to people to draw some attention and try to get some eyeballs on something." Build up some audience lists, you can market to them or remarket to people. But really, nothing at this point would be off the table in my mind in trying to get eyeballs to the site and try to get some conversions. Jon: Awesome. Well, thank you very much, Ryan, and go Beavers. For those who can't see Ryan right now, he's wearing the Oregon Ducks gear through and through. And the Beavers, the Oregon State are their biggest rivals. I have no stake in that claim being an Ohio boy. I'm Ohio State all the way. Ryan: Well, maybe we'll meet in a bowl game somewhere. Jon: Yeah. Well, hopefully. Ryan: That neither of us were able to go watch in person. Jon: All right, Ryan, thank you for your time today and educating us as always. Ryan: Thanks, Jon.
Psychology plays an important part in business no matter what business you’re in or how you’re getting sales. The best tactics to convince us to spend money are the ones we’re not aware of. Retail stores have been using music, scents, and merchandising to get us to spend more money for decades if not centuries. Those tactics online now have a name and its Dark Patterns. Jon explain just what Dark Patterns are and why your brand should avoid using them. Read more about Dark Patterns: Transcription: Ryan: Jon, psychology plays an important part in business, no matter what business you're in and how you're getting the sales. Now, the best tactics to convince us to spend money are the ones we're not really aware of. And retail has been doing this probably for hundreds of years, even though I haven't been involved in it, using music's sense merchandising of how they put products on the shelves to get us to spend more money. And all of that research and data is out there for the taking, but I would venture a guess that most of the public is unaware of actually what's happening in those retail environments to commit us to spend money. When it comes to e-Commerce though, and the way our economy is moving to transacting online, I'm finding a lot of these "psychology tactics" are much more in your face, or at least I'm more aware of them. And maybe it's because I'm spending too much time in front of my computer talking to e-Commerce business owners and looking at e-Commerce sites. But I see it all the time, and a lot of times it just bugs me and you have a term for it called dark patterns. And that's a new term to me, but probably not to you because you work in the CRO world, but you recently mentioned it on LinkedIn. And I wanted to learn more about it because it fascinates me, the intricacies of psychology because studying sales my whole life and now having a retail store with my wife, it's just always there. And I think most of them I see online are garbage, some plugins on Shopify sites that maybe should never have been put on in the first place, but I want to learn about dark patterns. And I learned from one of the best in the world, who should be you. Jon: Awesome. Ryan: It sounds evil, but I just want to know more. How do we use our powers for good? Jon: I'm looking forward to it. Ryan: Jon, why don't you just take a moment and give me a high level of what do you mean when you say dark patterns when it comes to e-Commerce and e-Commerce sites? Jon: So when I talk about dark patterns, what I'm talking about is similar to, if you think about hacking and in a way that there's white hat and black hat, right. And black hat hacking is when you're doing something intentionally for a negative outcome, it might be a benefit to somebody like it's going to be benefits to the hacker, but you're hurting somebody in that process or you're creating a problem in that process. Where a white hat hacker is really just trying to help. They're trying to do things for positive. Maybe they're looking for bugs, but they're going to report them to the software maker before they do anything to exploit it. So you think about that. Exploitation is really what comes in here to my head when I think about this more than anything else. So, what we're talking about here today is really when an e-Commerce store makes something difficult because they want to influence the outcome that they're trying to do. So whether that's something through psychology, you talked about in a retail environment, the type of music they play in the background that calms people down, or how they price, where they make things $2 and 99 cents instead of $3, right? You start thinking about all these psychology tricks that come at play well in e-Commerce there's all those psychology tricks. Plus there are ways to actually increase barriers intentionally on a website so that the consumer can't take the action that they're trying to take, instead, you've made it more difficult. Some examples of this really easy one, an email pop-up pops up when you come to the site to sign up for email lists and there's no way to close it. So the only way you can get back to what you were trying to do is to give them your email address, or I like to call this negative intent shaming. So where the button in that pop-up says something like, no, I don't like discounts or I don't like saving money, right? There's all these types of dark patterns. And it can go even more, really sinister and you make it just impossible to unsubscribe without calling, right? So for years, and it may still be this way, but Skype was an amazing case study of this, where they would claim massive retention rates, but their user rate was super low and usage. And the only reason they had retention rates that were so impressive is because the only way to actually cancel and delete your Skype account was to call a phone number in the U.S. So, if you're an international user where Skype was way more prevalent than in the States, you had to call international, talk to somebody in English only, and say, I need to cancel my Skype account. Please delete it from your servers. Why won't you just do that when a click of a button? So this is a good example of a dark pattern where the brand really valued retention, so they made it near impossible, right up, maybe to that legal limit. And one of the things you saw on LinkedIn was I had posted to an article it had run in what's called The Hustle, which is a great entrepreneur email. If you're no signed up for a free email, it comes out every morning, just around entrepreneurship and the tech industry and whatnot. And they were saying that there's new legislation coming in that is all about making these dark patterns illegal. And that most things need to be self-service, and it shouldn't be a challenge. So that's really where I was going with this was not only is this just bad to do and lead to a horrible brand image in the longterm, but it's also going to become illegal fairly soon. And I hope it's sooner than later, I have my doubts that would happen anytime in the near future, but I hope it's sooner than later. Ryan: So could you also bundle in to that broad, I guess I would probably try to broaden dark patterns a little bit and say it also includes what people think is helping from a psychological perspective, but it's actually just stupid. Well, one of my, I guess, favorite, least favorite was the one that I noticed the most is there's a plug-in on a lot of sites that says, Oh, little Jimmy just bought the pink t-shirt and Oh, look over here, Susie just bought this vase. And Oh, people are buying all over on the site and I can go to some sites and I've seen maybe the analytics behind the scenes and maybe some of my audit. And I know for a fact, there's no way that five people just bought something in the 30 seconds I was on their site. Jon: That's exactly it. Fake social proof is a great example of this, right? So it's having a random number of view, people are viewing this product right now, having X number of people who just bought this product from wherever in the world. And consumers always distrust that now, because it's been abused. Right. But it's a dark pattern because what are they trying to do? They're trying to influence your psychology around social proof and having fear of missing out. And you want what everyone else wants and, Oh, well, if so-and-so just bought that product, then it's probably legit and I should buy it too. And we see this more and more, a really good example is well, and we're getting through a lot of good examples. I could go on for days for examples, but another great example is a fake countdown timer, right? They're introducing scarcity, but it's false scarcity. What I mean by that is sign up within the next five minutes and we'll give you something or okay, we've talked about this in other shows, we did a discounting episode, not too long ago. And you were talking about how your wife just leaves products in the cart, abandons the cart, waits 24 hours and knows there's the discount email coming. You know that that clock is no good. Okay. Reminds me of the old TV commercials call within the next five minutes and you get this free bonus. They have no idea when that commercial is going to run, down to the minute, they don't know. And if you think about it, especially when you see these on news stations, right? News stations have somewhat of a cadence for ad timing, but it's never down to the second, to down to the minute. So there's no way you could start a clock and say in five minutes, right? I guarantee you, if you called them in a week, they'd give you that same price. And it's the exact same thing happening here where there's a whole bunch of these dark patterns that are playing on people's psychology or making it really complicated for them to actually take an action they want to do in order to benefit the brand. Ryan: So what we're not talking about though, is actually having your inventory show on the siting. I actually only have three of these left because Amazon, I see doing that. And based on some of my experience in Amazon, on my brands, I feel the trust that at this point they might change, but that's not what I'm talking about as far as scarcity. Jon: No. Ryan: Okay. It's the manipulation of faking scarcity or faking a countdown timer. Jon: Yes, exactly. Now, if you're just always going to say that there's only three of these left, in order to have scarcity when none exists, then that's a dark pattern. But if you're actually trying to help the consumer, get the product they want and know that, Hey, if you don't buy it, now you're going to have to wait for the next batch to come in. And that could be six weeks or whatever. Right. Then I would put that under the white hat, right. You're really trying to help people and you're giving them more information to make a decision. And that's why this is such an interesting topic. How do you prove what's dark and what's not? Right. If you look at a brand, you mentioned, well, I've had experiences with Amazon. I trust that based on my experiences there. But if you just saw that on some random new e-Comm site that you've never been to before, how do you trust that for sure. How do you know for sure that, that's the reality? Ryan: I personally would have trouble with that. Just knowing as much as I do about e-Comm. Jon: Yeah. You've been burned before, right. There was a great Twitter thread, a few weeks back. It was what is one thing about industry that you work in that the general public doesn't know? And this falls under for e-Commerce that I saw somebody posted, well, I run an e-Commerce brand. And we tell people our products are selling out, when they're not. I was like, okay, well, there you go. That's a dark pattern, right? Ryan: Yeah. Happens often. Ryan: Obviously we don't like them. And I would believe they're hurting brands to a degree, but I bet you probably have some data about how does some of these products that you've seen actually do opposite of what this business owner probably intended for it to do, this countdown timer or, Hey, everybody's buying this all over the world. You need to buy now. Jon: Right. Ryan: Do you see it actually hurting the conversion rate? Jon: Well, I will tell you this, first of all, does it work for the initial conversion? Sometimes, perhaps, right? It might, probably not as well as people think, because if you have to get to that level to get people to buy, you probably have other systemic issues that you need to solve. A product issue, a pricing issue, a brand trust issue, right? There's a lot of other things that you should work on solving instead of trying to take the shortcut. So let's say you get that original purchase, right. Then the person comes back to buy again and they notice that, okay, well now I've got another countdown timer, or maybe it happens where like your wife, you wait that timer out every time. And you know, it's not happy now you trust that brand a little less, right? So I would say that on the first purchase, it might work, but for the longer term customer lifetime value growth, and maybe a brand perception angle, no, it's not going to work. I argue that it's going to hurt you more in the longterm. Ryan: Yeah, I guess an argument could be made based on that. But if you only get one sale ever you're selling mattresses, you don't care if they ever come back. Jon: Boom. That's a great example, right? A mattress store, you go to any mattress store. They're always having the best sale ever, always. And you walk into a mattress store, I guarantee you, you're not going to pay the price that's listed there. You can talk them down because they're going to give you a price that is just a random price. And you're going to be able to go in and just say, okay, well, last week it was this other price or, Hey, well, what if I give you a $100 less? And they're probably be like, okay. Yeah, that's true. If the goal is to get that first sale and that's it at all costs, and you're never going to sell to them again. And you just don't care about your brand over the longer term of, with that customer or even your reputation perhaps. Then I would argue sure. Have at it. Still, not ethical or moral in my point of view. But if you don't want to grow a sustainable brand and revenue, then have at it. Ryan: Yeah. And I would argue though, that even if that is unethical, not great, your business won't be around anyway, because people are going to see through it more and more, I think. And then the marketing costs of getting traffic to your site, necessitates at this point, a lifetime value on a customer. Jon: Right. Ryan: If you're not playing the lifetime value game in e-Commerce, I don't think you're going to be hearing from me and Jon in a couple of years. Because you won't be in commerce at the end of the day. You've got to have that. No matter if you're a retailer or if you're a brand that's selling through retailers and on your own site, you have to have a plan for selling to that customer multiple times in the future. Jon: Right, right. Ryan: Building trust, obviously we focus on that on both of our ends of marketing constantly and dark patterns can interrupt that even if it's short-term creates commercial rate increase, but are there some areas in this that you say are valuable on both of those counts? Like increases conversion rates and while some people might think this is maybe in that space, it actually does good as far as building the lifetime value as well. Jon: Well, I would say that if your intent is to put up a barrier for the consumer, that there's no positive, they can come of that in my point of view, right? People are at your site because they're there to complete a task, right. They think that your product or service can help them complete that task. And now if you are trying to actively prevent them from completing the task, they want to complete only because you want them to complete the tasks you want them to do. There's no positive that's going to come out of that. Right. For instance, you're in a checkout and the default check is yes, subscribe email list, right. How many times do people just leave that checked, right. Or you use confusing language check here to not receive our emails lists each week. Ryan: I love that example of yours. Like, wait, what do I... Is it checked? Jon: Exactly. Yeah. All of that stuff is where I end up getting really, really frustrated. And when I see that stuff often, quite honestly, I choose not to work with that brand. I just say we're not a good fit because our mission to remove all of these bad online experiences is not going to be further long by working with them because they don't really want to help the consumer. Right. Maybe it's a mistake if there's one of them or maybe they got some bad advice at some point, if it's just one thing that's happening, or they using an app that makes it too easy to do that. Like one of those purchase apps you were talking about that come up out of the corner and telling you that somebody purchased recently, but they didn't. But I would say, at that point there's really not anything I can do to change the ethics of that company. And that's, I think what this really comes down to. And there's too many brands out there that want to help consumers and do the right thing that they don't... We don't need to work with the brands who are only just trying to use psychology to trick people into purchasing. Ryan: Yeah. I think both of us have been as long enough. We know there's a lot of people in our industry that loves selling some snake oil and there are a lot of them giving bad advice and I come across constantly. So that's why my mission's probably not as holistic or maybe pretty as yours. I'll say mine is like, I just want to put all my competitors out of business that are selling snake oil and then sell [crosstalk 00:17:04] behind me. Jon: Exactly. Ryan: Save e-Comm brands from stupid advice. Jon: Hey, that's a good moral lesson in that though. Right? Just making it happen. Right. And I think the reality is, is you guys have won it Logical Position, and you've gotten as big as you have because of the way you treat people and handle these accounts. Right. You would never be serving 6,000 clients if you tried all these tricks because there would be a handful of people out there who would be okay with it. But the vast majority of brands are good. And I wholeheartedly believe that, but unfortunately, what do they say? That one bad Apple spoils the whole bunch. Is that the phrase? Ryan: Yeah. At least it does on my phone. Jon: Yeah. I've been apple picking once when I was a kid maybe, but I can't claim to have much farm experience. Ryan: So, just as in most things in business, as long as you filter through some type of lens that says, is this something I would be comfortable with my mom getting or being presented with like, Hey, if I'm lying that somebody is checking out and there's an app for that. Why on earth would it make sense for me to put it on there? If I know that, Hey, this might convince my mom to buy something she doesn't need and be a good human at the end of the day. If you do that as a business owner with an e-Comm site, you're not going to be putting these things on there to do this. And hopefully we're going to help you put your competitors out of business who are trying to do those things. Jon: Well, I think that's a great lens to put this through the mom test, right. Be thinking about this. If you are doing something that you wouldn't want done to your mom. Then don't do it. Right. And I think that, that's a really good way to look at this. If it would trick your mom into doing something that she really didn't want to do, then just get rid of it. Would you want your mom automatically opting into this privacy statement or would you want your mom to automatically get these emails? And you know she'd be frustrated if she just wants to purchase a product. And all of a sudden was getting marketing emails every day. Or if she got tricked into doing an upsell on a product, because it was default added to the cart, the highest, most expensive shipping option was chosen when there were way cheaper options. There's a lot of things like that that happen all the time. And the problem is, it's really something that would frustrate most people. But I think I see it more than probably the casual online shopper, but I also have [inaudible 00:19:40] and obligation to resolve those problems when I see them as much as possible. Ryan: Yeah. And if you do convert optimization, right, you don't need them. Jon: Right. Ryan: And that's the crazy thing. You don't need gimmicks, if you've got a solid business, good products, and you've worked with Jon, or if you're not quite to Jon's level, you're doing just good things at the end of the day. And I think the example of shipping is a phenomenal one that I didn't even think about until you said it that as a business owner, you're like, Hey, shipping, we make margin on this shipping or not this shipping. And we have free shipping here or not, but you can just check this one because it just makes sense maybe from a business perspective where is, we need more margin here because we're giving it up here. But at the end of the day, if you just do what is right, that you would want done to you, you've got that potential for customer lifetime value. Jon: Right. Ryan: And that's where your profit can come from. Jon: Yeah. I really like your approach of, if you've wouldn't do it to your mom, don't do it on your set. I think that's great. I wholeheartedly believe in that. And I think all of these things would fall under that. Right. Would you really want to do face fake scarcity and make your mom believe there's only one item left when there's not? Ryan: I'll tell you your mom, she's an idiot that she doesn't want to save money. I know my mom wants to save money, believe me. I'm not going to call her an idiot for not- Jon: Exactly. She doesn't want your emails. That's why she's clicking no. But... Ryan: Yep. Jon: Yeah. Well, I think this has been great conversation though. Ryan: Yeah. Me too. So is there anything anybody needs to know that we haven't touched on when it comes to dark patterns or things you can or might do to your site even by accident that you just want to be aware of? Jon: Yeah. I would think the first thing you should do when you add any app from the Shopify app store or any of those is give it a good look. Don't just use it because you see a competitor using it. Don't just assume they have positive intent here, go install it and then really dig in. Do some user testing on it, get understanding from consumers. Is it really being helpful for them or is it causing a another barrier in their road to conversion? And if it is ask yourself, am I putting up that barrier because it's better for me, or am I putting up that barrier unnecessarily? And it's actually making it hard for them to complete the purchase, which is what you ultimately want. And I have yet to hear an example that fits into both of those. Again, it's either black or white, it's either white hat or black hat, and there's really nothing in between that I can find. And if somebody listening to this has a great example of that. Please let me know. I would love to have some good examples of that. Ryan: Put it on LinkedIn, share it with Jon, so we can all see. Jon: Yeah. Tag Ryan and I. Ryan: Well, thanks Jon. I appreciate you giving me an education and anybody else's listening for that because it's very helpful. Jon: Awesome. Thanks Ryan. Appreciate the conversation. Ryan: Thank you.
Most online businesses are hooked on traffic. It's like a drug –– they think if they just get more traffic, all their problems go away. Because traffic equals sales, right? On the surface that seems right, but Ryan is here to dig deeper, and explain why that isn’t the whole story. TRANSCRIPT Jon Macdonald: There's a common saying that there are only three ways to increase the revenue of an online business. You get more people to visit your site while keeping your conversion rate the same, or you can sell to more people who are visiting, thus increasing the average order value. Or you can convert more of those visitors coming to your site into customers. There is a reason that more traffic is first on that list. It's where most e-commerce brands focus because usually they can throw more money at ads and see traffic increase. So it's the easy button for them. But most online businesses are also hooked on traffic. It's like a drug. They think that if they just get more traffic, that all of their problems are going to go away because traffic equals sales, right? But on the surface, that seems right, but my guess is that if we dig deeper, that just isn't the whole story. It's safe to say that everyone wants more traffic, but is all traffic good traffic? Today that's what we're going to find out. Ryan, I'm interested to get your point of view on this as always. Ryan Garrow: I'm excited to touch on this one because it comes up in 2020 more often than I thought it would be. And I think it's unfortunate, but it's also nice because I get to help redirect thoughts and how people are coming to that conclusion. But it's always surprising when companies come to me and they're like, we just need more traffic, go find traffic. Interesting. Okay. Let's dig into that. Jon Macdonald: It should be fun. Okay. Look having optimized websites for conversions for a decade plus now, I think I know the answer to this, but let's just start high level. Is all traffic, good traffic? Ryan Garrow: Hopefully most people in organizations listening to our podcast and they've gotten this far down the road already know that not all traffic is good traffic, and it's not all the same. There's different purposes, for different types of traffic, different purposes for driving traffic to different parts of the page. So, no, it's not all the same. I find a commonality, and this is probably something that's been consistent for a very long period of time. That's why it stays consistent. But companies that have investors or they're chasing investors are constantly talking about site traffic. They fall into that first point you made I think all the time like. The site is going to convert traffic. We already know that. All traffic on the internet converts at 2%. that's a metric that's been thrown out for, I don't even know how long. I even use it sometimes just to give people a ballpark. Here's what you're going to pay for costs. 50 clicks gets you a sale. At least that's a barometer to start with and most people will be like yeah, 2%, I've heard that number before. When in reality, you know this 2% could be great and 2% could be terrible. Jon Macdonald: Right. It's all relative. Ryan Garrow: It is. But they say sites are going to convert at this rate. All we need is traffic. Please go get us traffic. I'm always confused. Well, my kids probably get on my phone and click on ads so that's tactically traffic, but I'm pretty sure you don't want my three year old on your site when you're trying to sell something to me. So not all traffic is good traffic, or the same quality. Jon Macdonald: That's an interesting approach. It's almost like, I don't want to blame everything on Facebook, but it's similar to their business model where it was just, let's just get as much traffic as possible and then we'll monetize that traffic. But when you're an e-commerce business, you're not selling ads on your site, right? You're trying to sell product. You want qualified traffic, not just eyeballs that can increase your advertising rates. Ryan Garrow: Yeah. I was trying to rack my brain going into this. Is there a space in the e-comm world where just high traffic numbers helps and I couldn't come up with an example. On Amazon, you can combine organic and paid and that helps cause you're driving all kinds of ranking increases. On Google, they're separate. Bing, they're separate. But in no scenario in the e-comm world, could I figure out where just a bunch of traffic would be beneficial to me. Maybe there's some out there, but maybe there's different goals that I'm not aware of in the e-commerce world where generally you want to sell more stuff. Jon Macdonald: Yeah. And it's interesting. I was just having this conversation with our director of marketing at The Good today about our site traffic. We've grown that real steadily and it's a point of pride for us over the years, but we're very consistent with the content and trying to drive traffic. But we were talking about a competitor had posted on LinkedIn today about how much traffic they're getting and how proud they are. And I was like, man, that's like, two or three X what our traffic is. And I know that competitor is a lot smaller than us. So I was like, okay, all traffic is not qualified traffic. If we're not getting qualified traffic, they could be sending your three-year-old to their site and it's not going to matter. They're not going to have more business from that. That's proof right there that it's not the same. Ryan Garrow: Yeah. It takes no skills to find people to come to your site. Anybody can do that. You want to pay me some money, I will get traffic to your site at a cheap cost, but it's not going to be anything relevant. Anybody can put a simple display ad on. A great one would be mobile apps. That's a display setting on Google. They have a massive network of mobile things. If you're running some display, a remarketing and you haven't eliminated the flashlight app on Google Display, that person that developed that app has made probably seven figures and Google knows numbers and nobody at Google has been willing to tell me, but it is a significant number of flashlight app clicks. You have an app to click on a flashlight. Well, I don't know why you would even have that app anymore, but the number of people that have it and are using it and accidentally clicking ads is astronomical and kudos to that guy. It was just probably one of the greatest inventions of the last 10 years specifically for money making. It's the simplest app, I'd go into the phone, open the flashlight app, and click ads accidentally, and I get paid. So traffic is easy, but if you're getting a bunch of traffic that spends less than one second on your site, what's the point? They didn't intend to come to your site, but you technically go into analytics, have a lot of sessions and a lot of users. If you have an unsophisticated investor, I guess, that only they want to see is you had 1 million visitors to your site last week. Yeah. Guess what? I paid $10,000 for it and I got zero out of it. But yeah, I got a million visitors. not going to any good. Jon Macdonald: Right. So ROAS is really important here. That return on the ad spend is really the metric you should be looking for? Ryan Garrow: I think it is. I've talked a lot of companies recently that are launching and it's an important for them to get eyeballs when you're launching, even though, you know you're probably not going to get some conversion out of it. But you want some metric that you can track that says that you're getting the right eyeball. And so there's a beauty brand that's launching that's going to be a very high end, very, very high end, very exclusive. We're talking like the Oprahs, the Michelle Obamas, that level. The founder was talking to me about how they were going to get traffic. And I said, you know what, I can get it for you, but it's not going to be traffic that's going to be valuable based on your price point and what you're trying to accomplish and exclusivity. You're basically going to come to us and we could spend money for you, but you're going to get almost zero. If you're expecting to be able to spend at a return, not good. But you need to be able to say, all right, we're trying to figure out who this product relates to. And who's at least showing some interest and what are their demographics look like? Because we go in and we have an idea and so even if they don't buy, we know that women in San Francisco, in New York are spending, and I'm making this up, a minute and a half on the site. Maybe men in West, Texas are coming to the site and spending three seconds on the site. Okay. Well, great. We've at least seen something we can decide what is more or less valuable in that traffic and eliminate traffic that is most likely less valuable and try to enhance what is valuable. The wonderful thing about e-commerce is that we can track everything. It's phenomenal. That's what I love about e-commerce. There is so much we can track. You probably realize this too, that the more we track, the more we realize we can't track. The more I know, the more I realize, I just don't know. It's crazy, but we are light years beyond what we were even 10, 15 years ago, as far as what we can track and the value of that. If you can track it, you can improve it and you probably should be. So not looking at all your traffic as being equal. Jon Macdonald: How does a brand see sources of traffic that are not converting then? Ryan Garrow: They're probably just mad at their agency that's sending the traffic or they're mad at their CRO company where they didn't think that's actually not the problem. It's different depending on the person or group leading that company. We'll have some companies that come and see traffic that's not converting. And they're like, okay, well we have a product problem, not a traffic problem. Because we're getting the eyeballs, now we just have to figure out why the product isn't selling to them or find the product their selling. Okay, well we know our product. The product is good. We're getting the wrong traffic. So let's look at the audience, let's look at a different way of getting traffic, but the right audience of traffic. Whether that's from a search perspective or whether that's from a demographic, geographic perspective. I would generally say that it's better to focus on the type of traffic or it's easier, at least for businesses, I think to focus on the type of traffic than it is changing their product mix. It really depends on where you're at in the business cycle. What you're willing to do or what you're trying to do. My brand, for example, on joyful dirt. We'll send traffic and I know all of the metrics around our conversion rates, traffic coming from social versus coming from being, versus coming from Google. Our Amazon traffic is in another bucket and the search engines are pretty easy. I know that if they're looking for houseplant food, I know what product they're generally going to see, where they're going to land and what I can expect from a conversion rate and return on ad spend. But if we're releasing a new product, like we're going to come out with a vegan blend because we found out from social and interacting with people there that, Hey, we really need a vegan blend because it turns out plants really like bone meal, because it's an organic matter that plants thrive on. We've had to test and measure, come up with some new product around vegan. If I happen to target a bunch of health and wellness people on social, that does encapsulate a large portion of vegans, generally speaking. And that traffic doesn't convert as well. It's not necessarily a traffic problem because we still do really well with that group of people. But it's partially because we didn't have a product that solved that problem. So I had to go listen to that group of people and honestly have our social manager go out and like, okay, we're getting people in this industry coming to us. Why isn't it working? There were just random comments we could see in the feed and on our posts that were like, Hey, we want a vegan. We want vegan. We want vegan. So we changed the product mix or added to it, I guess. I can eliminate on Google people looking for vegan because I know I don't have that product yet. And so that becomes, I can eliminate the traffic there, but if I'm going to get it because they're in the same bucket, I don't know how, and maybe it's because I'm not as good on a socials as others. I don't necessarily know how I'd completely eliminate all people that would be interested in a vegan plant food. Jon Macdonald: There's a difference between search traffic and shopping traffic. There's people out there who, if you're not eliminating these audiences, you're just going to be wasting your money. But there's also people who are landing on a category page versus perhaps a product detail page. Those who are ready to buy and it's that intent to have somebody who's ready to buy versus those who are just browsing. Ryan Garrow: Yeah. Sure. All of these traffic sources when they're showing intent. I kind of break it down into, If I'm looking at a funnel almost all the time when I'm talking to people in my head. And you've got at the bottom of the funnel is people that are searching for your brand. They know you, they're going to come buy. Then you have remarketing on top of that. Then you have your search and your shopping of non-brand stuff. And then generally above that gets bucketed, social and display. Because people on social generally are not going onto social and searching for your product on a social network. They're not for that. They're for connecting with people, posting political opinions in fact has been very popular on social sites for some reason. When you're putting an ad in front of them, you're kind of interrupting and trying to convince them to break away from whatever they were doing on social. Whereas, on the search engines, they're trying to find you, or they're trying to find your product or service. You're capturing them at the point where they're actually showing some intent. Facebook, I don't know if you guys have all seen the social dilemma, but Facebook has a lot of data. If you didn't know that already Facebook has creepy data. It makes your experience on social better, which is good and I appreciate that point. And they've got a lot of signals that say is this person in the position to probably buy your product? And they actually have some settings within social ads that you can say, Hey, there's a high intent to buy. Let's show them an ad. Facebook wants to make money from me as an advertiser so they know I'm going to need to see sales to continue advertising on Facebook and Instagram. All that to say, there's some good traffic there from social, but it's just going to be very different from Google. If we go on the Google path it breaks into two streams where you have text ads and shopping ads. And shopping ads, pretty simple, most people understand that if you click a shopping ad, you land on that specific product. On a text ad, you can land them wherever you want. I can land that person on a homepage, on a category page or on a product page. If I have a choice as an e-commerce brand, almost 100% of the time, I want to land a text ad on a category page because the conversion rates are better. If somebody is looking for again, I'll think about if somebody does a search for plant food, and at Joyful Dirt, we have four varieties right now on our website of plant food. I don't necessarily know which one they're looking for when they say just plant food. On a shopping ad, they're going to land on all purpose or succulent or tomato and herb or houseplant. If they were looking for an herb plant food and they land on my house plant, either they're going to keep searching my site or they're going to bounce back to Google. The conversion rate generally is lower on shopping than it is if you went from a text ad to a category page that had all of my plant food on there. It's very easy to see, Oh, he's got four plant foods, okay, this is great. He's always got a one pound or he's also got a mix and match three pack. There's just more options on a category page. Generally, there is more value there and if I could land some shopping ads from those general terms on a category page, I'd be a pretty happy camper. Hopefully Google is listening and they're going to start testing that. Being able to land different terms at different points in the funnel on my site. But then even beyond that, once you've got that traffic, a certain percentage is going to convert, whatever that happens to be on your site, your return is what it is with those, and then on your ad spend. But then you have remarketing and then you can go chase the people that didn't convert and bring them back. So you have a different source of traffic of people that have already been to your site. Even that traffic is going to convert at different rates. What a lot of people unfortunately don't do on remarketing, is segment their remarketing by category page visitors, product page, visitors, shopping cart abandoners. A lot of them have a shopping cart abandonment like RLSA list, but even having those buckets in your remarketing lists, you're going to be bidding different on them. Because as you move from shopping cart abandoners up to product page visitors, up to category visitors up to homepage visitors. Your conversion rate on remarketing goes down as you move up that. There's less intent to purchase from you. The less depth they had on the site closer to purchase. It's fascinating data that allows you to really start increasing return or focusing on the best types of traffic to your site. I think you want as many levers as possible on Google ads, Microsoft ads now, generally speaking. That's one reason I don't often recommend the smart shopping campaigns because you lose a lot of that data that allows you to push and pull a lot of those levers within your site or within even the shopping campaigns. Because it includes your remarketing, it includes some display and Gmail things in there as well. And you can't separate out that brand versus non-brand. So I would even say smart shopping traffic is a much different type of traffic than a regular shopping campaign traffic. Jon Macdonald: Interesting. I kept thinking as you were going through that, which is all really helpful that, consumers, again going back to this, consumers are really only at your site for two reasons. They're there to research and understand if your product or service can solve their pain or need. That's really the first step. And if you can't do that, they are going to bounce. That's where the different types of really come in, where are they in that research process? Are they pretty deep into that? And then once they've determined that you can help them, and that's where that category page might happen. Where it's versus just one product. Once they see that, okay, I landed on the house plant, but I really want the tomato fertilizer. Then it goes a little bit deeper of, okay, now they're ready to convert. You just have to make that easy to do. That different types of traffic there definitely, definitely makes sense to me about why people would convert more coming into a category page versus a individual product. Ryan Garrow: The crazy thing about what we do is that you're never going to get to a spot where you're done. You'll never have a conversion rate that was good enough. You'll never have traffic on your site that's qualified enough. One thing is you're never going to get a 100% of your traffic to convert. Unless you get one click and one purchase accidentally for the entire month, you're not going to be there. Because even if people are looking for your brand plus product, you don't get a 100% conversion rate. I've never seen it at least. I'm not saying it's impossible, but I'm just saying the chances are unlikely since I've seen a lot. Jon Macdonald: The only way to have a 100% conversion rate I've seen is to send one visitor to your site and give them the credit card number. Ryan Garrow: Yep. Exactly. Hey, my wife needs to go test my site. Go test my site and buy something. Oh great. I bought something for myself, 100% conversion rate. In that little window of time. All traffic, not the same. If you're an e-commerce business, why would you not want to find qualified traffic and I guess see your traffic differently? I haven't met an e-commerce business yet that doesn't conceptually understand the sales funnel. Your job is to push people through the sales funnel on a site or through remarketing or just through general logic, that there are different places that people enter into the sales funnel. You should be looking at that sales funnel differently. And then the traffic sources beyond that, that's coming into your site. And so general display traffic, or I don't eve know how you would do it. But if you paid for somebody to find a bunch of people in India to go click on your site, you can do that. That's one reason we have click fraud companies that protect against that because there are companies that will do that. Those are bots coming to your site. That's technically traffic. That bot is not going to buy from you. That bot is coming for information to go feed it back to the search engine, to feed it back to somebody that wants to see what's going on on your site type thing. Jon Macdonald: What I'm hearing from all of this today, Ryan to summarize a little bit is, it's not about traffic. It's about the quality. It's not about the number of visitors, even if you're trying to raise money, et cetera. It's really about the return on that ad spend. Then you're looking at, okay, my ROAS is pretty high. There's a good chance that I could invest a little bit of more money here and get more good traffic. But there's a point at which, do you have diminishing returns of just throwing cash at traffic of any type? You really need the scalpel that type of traffic into what's good for your brand. And then on top of that, you really need to bring the traffic into the right place so that they convert higher, like a category page versus a product detail page in most cases. Did I miss anything else here, Ryan. Ryan Garrow: I would say there's exceptions to every rule as well. And I also default generally in my businesses to start putting things in motion and directing it to fix it as we go. In many ways I'll just build the car as I'm driving it. I'd like to be able to direct something in motion, because I know that I'm not going to come up with the best car sitting in the garage. I might find out that I need these wheels as I'm driving. Like yeah, those are bad wheels, let's put new ones on. I understand to a degree some of the thought process of let's just start getting traffic to the site to see what they do and not a terrible idea. But like I was, again, I was talking to a client this morning that she's got a great product. She's got a market she wants to target, but it was clear that there needed to be some improvements to the site because I would not spend my money to send traffic to that site. I don't think it's going to convert well enough. She needed to get a product builder on the site to be able to show swatches on our products because her competitors had it and she had that type of customization available on our site. It just wasn't done right. A lot of people that are investing in companies tend to want a return and they're going to be impatient. So they're like, all right, you can delay all you want in trying to get a perfect site. But at some point you're just going to have to turn on the traffic. And that is true, but also just running that through a lens of logic, to a degree being like, okay, you know, we could send the traffic that would be appropriate, but it's not going to work yet. Let's at least get what some experts would say is a good starting point and then go and then understand that you might be paying a little bit more for quality traffic, but in the e-commerce space, quality is much better than quantity, as far as the traffic perspective. Jon Macdonald: Well, yes. I don't know about you, but I don't like throwing money away. If it's not quality traffic, then I'm basically throwing my money away. Ryan Garrow: Yep. I would agree with that. I don't know where that thinking always came from. All traffic just go to the site. It must've happened before I jumped into the industry a decade ago, but I would challenge that most of the time. Jon Macdonald: Yeah, well, I think an e-com entrepreneur, if you're following the general entrepreneur communities that are out there, they're all about just get eyeballs, get eyeballs, get eyeballs. But that works if you're trying to build some type of platform where you eventually want to monetize that platform, but that's not the goal immediately. The goal immediately is to get awareness, et cetera. That's where I think in my opinion, that might be where that comes from, but it's shortsighted for e-commerce. Right. It doesn't really work in that way. Well, Ryan this has informative as always. I appreciate the conversation. Each week we're continuing to remove some of the errant ways of thinking that are out there and the things that we hear every day that we're like, no, no, no, no, that's wrong. Don't think about it that way. Let's try to convince them otherwise. And so I'm glad we're able to do that. And hopefully we were able to convince some folks today that they need to take a step back and think about traffic a little bit differently. Ryan Garrow: Yeah, I hope so. Love helping people not waste money. Jon Macdonald: On that note, thank you, Ryan. Ryan Garrow: Thanks John.
It seems most brands are using email popups on their website. Today Jon dismantles this practice with passion, explaining why they're bad for everyone, and offering better alternatives. TRANSCRIPT: Ryan: Jon, we've spoke together quite a few times around the country, and then recently just around the internet, since we can't leave our houses. And almost every time we talk, you ruffle quite a few feathers when you're answering questions about email pop-ups. It seems that most retailers and brands out there on their websites, they are absolutely in love with their email pop-up campaign, they think it can do no wrong. And I personally don't like them because they're just annoying and I close them immediately because I'm trying to look at something else. And, but you're distaste, some may say hate, goes a little bit deeper within this space, but so many, again, so many brands are using these. It's just making me crazy. So, I want to talk about these and get your opinion, the backend and the numbers that are guiding your distaste for these. But even to start with, what do you think is pushing this trend and what data are these merchants seeing that's causing these email pop-ups for discounts or anything just to become the norm? If you don't have it, you're weird almost at this point. Jon: Brands, what they're doing is they see another successful brand they look up to have email popups and they say, "It must be working for them. We need to do this as well." It goes in line with all the little Shopify apps that are out there that just spread like wildfire overnight, and then they'd disappear just as quickly once everybody realizes they don't actually move the needle, but they saw their competitor trying it out, so they thought they showed as well. Tons of examples of that. I think that's generally what happens here, first of all. Second of all, the brands see that email is their highest revenue channel, most likely. And so, they say every time I send an email, it's like printing money. So I should collect more emails. And that sometimes even comes down from the executive level, down to that marketing manager who is needing to implement that, whether they think it's right or not. And third, I think what happens is that brands look at a success metric of how many people do we have on our email list. And they see these pop-ups collect email addresses. And so, they assume they are working. And I guess the goal that they usually have is just to collect email addresses at all costs, right? And they're thinking, "If I get someone on my email list, I can then continue to market to them and the rest will fall into line." And that just is a huge problem. It's, to me, it's the wrong way to be thinking about it. And after optimizing sites for 11 years, statistically, it's not accurate. Ryan: Being an e-commerce brand myself, I know that if my email list goes from 10,000 to 20,000, I'm probably making more money from email. So, where are brands missing the logic behind these pop-ups and not equating to larger email database equals more revenue from emails every time I send one? Jon: Yeah. I think, I don't have an issue with collecting email addresses. As I said, it should be, and looking at 10 decades of content and data around emails, it definitely can be your highest revenue channel. The problem I have with is the method of collecting, right? So, let's just start with that. I mean, we could, there's lots of directions, we'll, I'm sure we'll go today about the method of doing it around discounts and everything else, but let's just talk about the pop-up form in itself. And what I mean by that is just there are multiple ways to collect email addresses. You can start with those who have ordered and how you have the actual customer contact information that you own, right? If you doing an owned to sale, as opposed to something like an Amazon, then you have that information, people you can remarket to and continue to sell to. However, if you just put a pop-up on your site versus maybe even baking a form into the page, right? Where customers who are actually interested, will scroll down to your footer and they'll enter their information because they're super interested. Right? I would almost encourage anyone listening to this to set a separate form up in your footer and tag people who fill that form out as higher intent, because they actually are interested in what you had to say. Now, the problem with a pop-up, let's just talk about straight up pop up, not an exit intent, right? Ryan: So, you're categorizing your email pops up into different buckets? Jon: Yes. Yes. There's different types. And I think that's important here because the one that I want to eliminate from the internet is just the pop-up. As soon as I come to a site, or maybe as soon as I start scrolling or even the timed ones that come up within a couple of seconds of loading the page, those are the ones I want to eliminate. Now, exit intent. Let's put that in a different category. I'm not as opposed to those. But what I'm talking about here is the disruption to the consumer experience, the interruption factor as well. Think of your site like a retail store. Now I know your wife has a retail store, right? If I walk into her store and she jumped out at me and said, "Here's a clipboard, give me your email address." I'm going to probably have a negative reaction to that. Right? Ryan: At least she's cute. That does help. Jon: Well, Hey. Ryan: Popups, aren't as cute. Jon: Hey, you know what I mean? You could make, you could put a nice looking picture on a pop-up, but that still doesn't change the fact that I'm there because I have a problem that I'm looking to solve. And I'm at the website because I think that their product or service can solve my pain or need. And all of a sudden now, before I know anything about the brand, something led me there, was it I clicked on an ad or a Google search or someone told me about it, so I have idea that they can help me solve my pain or need. But then all of a sudden I just get there, I still don't know about the value proposition of the brand, I don't know much about their products yet, but then I'm getting hit up right away being asked to give them information. And I think that that's just disruptive and I can promise you every test we've run where we've eliminated that pop-up conversion rates have gone up on the site and sales and revenue. Now yes, you will collect less email addresses. But I argue that's not a bad thing in this case, with this type of pop-up. And the reason is a couple of faults. So, first of all, the email addresses you're going to collect out of those pop-ups are going to be very, I would argue they're not going to be very effective, right? Because you're getting a consumer who is entering their email address into that pop-up specifically to get rid of the pop-up in a lot of cases, because they... This goes into more things like negative intent shaming, because maybe in that popup, it's a pretty common trend now for a company to say something like, "No, I don't like discounts and offers." Ryan: Gosh, I hate that. I had that happen a couple of days ago. And I was like, "Of course I like discounts. I'm not an idiot, but I just don't like you telling me that I don't like discounts." Jon: Right. You're you're hurting the brand, right? And you're hurting your customer experience and that's damaged that you now have to repair. So, within the first five seconds of getting into the website, you're already have dug yourself a hole you have to get out. Ryan: Yeah. And I think brands are getting kind of like, "Ooh, we're kind of that little unique, give it to the man brand. And we're going to use that humor." [crosstalk 00:07:34] That doesn't necessarily come through because I actually don't know you yet. And maybe that's my first... I don't know that that's the type of brand you are. I was looking for a pair of board shorts. And now all of a sudden you're telling me I'm an idiot before I even know that you're, that's the voice of your brand. Jon: Exactly. Okay. This is another great example of real world for this, right? Popups are just like those people who canvas on the street corner, who come up and you're just trying to walk by and get to your next location, right? You're trying to get some job done in your life, going to the coffee shop or whatever it might be, you have a meeting you're walking to. And Greenpeace, not just to pick on Greenpeace, but they're out all over in Portland. They run up to you with a clipboard and they say, "Hi, can we chat for a minute?" And it's like, "No, I'm trying to get something done. This is not a good time for me." And then they follow you, "Well, did you know that this is happening with the environment? And this is happening." And it's like, "Yeah. You know what? That might still be important to me, but now's not a good time." And they're like, "That's fine. Just give me your contact information. We'll follow up with you." And it's like, "No, no, no. I don't know who you are." Right? I don't want to just give some random person my contact information. And then what are you doing with that contact information? So, I think the problem is, is that marketers stop having empathy for what the consumer is going through on the other side of the screen, and they just feel like it's okay because they can't see that person to do these really poor consumer experience activities on their site. And that's what I try to fight against with this. And unfortunately pop-ups is the worst example of this on the internet. And so, that's why I ended up fighting against it. Ryan: Oh yeah. And it's people like me that are probably helping give them bad numbers since my computer saves the email address for all of my form fills that I don't want them to email me on and I'm like, "Yeah. Yeah, here you go. Have that." Jon: Well, that's exactly it. So, now let's talk about the data that a marketer's going to get back out of this pop-up, right. So, a new site pop-up, you just came to this, a new visitor pop-up I should say. I get a form. Sometimes it just says, "Give me your info and you can stay up to date on the latest product releases, et cetera." So maybe they're not really dangling a carrot there. Right? I can't figure out how to close it. Maybe there's no close button and it takes over the entire screen and it's really annoying. So what happens? You put in an email address that like, right? So now the brand has pretty muddy CRM, right? Their customer data, their marketing data is pretty horrible. Now what's going to happen there is, they're going to start using all that data. Some will clean it, but I guarantee you most don't based on our experience and what happens is they're going to use those email addresses that are uncleaned. They're going to start sending them through their email platform. And then they're going to get a ton of bounces, a ton of spam complaints for those who might be okay, it might be good, or they're going to get a bunch of generic Gmails that never get opened. And I promise you one thing that's happening with your emails and large providers like Gmail, MSN, et cetera, is they're tracking when you send an email out to a thousand people, Gmail knows that at that same email is going out to a thousand people on their platform, and they're looking to see how many people are opening and clicking on that. And they're tracking that data to make sure that spam doesn't get through. And if nobody's opening it, nobody's clicking it, it's more likely to end up in that dreaded promotions folder or just directly into spam. [crosstalk 00:11:07]. And that's not even without people who are actually seeing that email and marking it as spam, which is only going to hurt your deliverability. So, over time what's happening is the quality of your email list is going way down only because of how you collected that as emails and the methodology you went through. And so, what happens then is you've turned what should be your highest revenue generating channel into something that is no longer producing at the level it used to, even though you have more email addresses on it. Ryan: Got it. Okay. That makes a lot of sense there. And you can kind of send yourself in a downward spiral. But I can also see the logic behind getting to that point. If logic states that me as a brand or a website, I'm willing to break even on my first order from Google ads when I'm buying traffic to my site, and then if I don't have an email up and I put it on, I'm like, "Oh, 10% discount. That's only going to increase people's conversion rates because I'm giving 10% off. But then these are people that maybe weren't going to buy, but now are because people that were going to buy, maybe they would anyway without the discount." So, I understand that logic to a degree, but how do you see that logic break down when somebody actually starts going through with that execution? Jon: Well, so now we're combining two negatives. We're taking an email pop-up that's disruptive and we're making it a discount. Now what's happening is same thing. As you said earlier, I just got to the brand, I don't know anything about the brand or their value proposition, et cetera, but now you want my contact information, and also you're already giving me a discount. Now, why are you offering a discount to somebody who just got to your site? They haven't exhibited any signs of intent to buy just yet, other than showing up at your door and you're giving up precious margin and you're creating a discount brand right away. Where it's the first thing I know about this brand is, they're going to give me a 10% off for giving me an email address. It's like, "Well, okay." And what's going to happen here is a couple of things. One is, you're creating a discount customer who sees your brand as a discount brand forever, just because that's the first impression they have. And the problem with this is you've done it just to collect an email address. Well guess what? What's going to happen now is that person's going to put in their junk email address again, the one they use just for discounts and pop-ups, right? Ryan: Everybody's got one of those. Jon: Exactly. We all use Gmail for that, probably. Right. So, then what happens from there? Well, perhaps they might open the email, maybe not, more likely not. They just wanted that discount code. And the worst offenders in these popups are the ones that, where they collect the email address without any verification, they don't email you the discount code. They just show it in the box in the pop-up. So, they just give it to you right away. Well, then that's even worse because you're putting in whatever email address you want and you're still going to get the discount. The other thing here is that, now every time I come back to buy, I'm going to want that discount. And I know I don't need to pay retail. I know that you're going to offer 10%. So, what am I going to do? I'm going to open your website in incognito, and I'm going to give you another fake email address just to get another discount code or another junk email address, or I'm going to do that Gmail trick, where you can put a plus sign and then anything you want after the plus sign. So, it's like Jon+, whatever I want and it ignores anything with the plus sign and after that. Ryan: That I did not know. Jon: So, you can create [crosstalk 00:14:31] a million email addresses just out of your one Gmail address. And most email platforms allow you to use a plus sign because it's a valid email character. And so, it's really interesting when we start working with brands, one of the first things we do when they put up a fight about removing their pop-ups, or at least running a test around it, is we go into their email database and check for the plus sign and see how many emails have a plus sign in it. And most of it it's like, plus spam is what people put, right? Or they'll even get more tricky. People who are really, want to know if you're selling their email address, or if you're giving it away or if you're abusing them and they do plus in the brand name. And then it's like if you sell that email address or share with a partner, do anything else, they now know where that came from, and they're even more upset with you when that happens. So, I think it's really important here that people, brands really need to think about not discounting because you're basically taking what is a bad consumer experience and you're making that a bad experience for your brand too. And you're just doing that to collect an email address. And now you've created a discount customer right up front, who's forever going to look at your brand as a discount brand. And that's a really hard hole to dig out of in the future. Ryan: Well, and I think a lot of brands don't give consumers enough credit, and I think people pick it up pretty quick, where they know the strategies to try to get discounts. Especially people like me that just because I can, I'm not going to give up 10% of my money to a brand just because I like them. If I can keep 10% in my pocket, I will, even if I can afford the full price, which generally is the case, if I'm shopping for it. And so, my wife knows that I'm the cheap one in the relationship. And if she's going to go buy something, she knows that if she can tell me she bought something, but got a discount, and I'm like, I'm much less likely to put up a fight about that. And so she knows the strategy. It's like, "Okay, all I need to do on my computer is start to move my cursor towards the navigation bar and boom, exit intent pop up." Or she even tells me now, she'll just, if she's interested in something, but it's not a need, it's a more of a want, she'll go put things in shopping carts, and then just wait a few days. She's like, "I don't need it right now. They're not going to run out of inventory. I'm going to go set up a shopping cart, I don't care. See if they sent me a discount." [crosstalk 00:17:29]. Almost all of them do. I mean, just people figure it out. It's not complicated. Marketers, I think sometimes think too much of themselves like, "Oh, we're going to do this. And we're going to trick all these people into spending so much money with us." And I'm like, "Nah." Jon: Well, I think that's exactly where having empathy for the consumer really comes in, right? And just saying, "If you, if this is happening to you, what's the experience you want to have?" And I think this goes back to a whole nother episode we can record on discounting and why that's a challenge. I mean, we just did, you and I just did a webinar yesterday and a big portion of that was about discounting with one of our partners. And I thought it was really interesting because so many brands are discounting. And when you think about this, you could be doing so many things that are and offer and not a straight percentage or dollar off discount. And I'm okay with doing an offer in an email. And there's a lot of other ways to collect email addresses that tie in with offers, right? I mean, you could do "Coming soon, get on the list to be first notified," and that's providing value for an email address that they wouldn't get unless they gave you the email address. But it's also valuable to them. You could do, something where it's like, "Hey, if you sign up for our email list in checkout, you get free shipping." Right? So, you're giving some value. It's not a straight dollar or percentage off discount. You're doing an offer and there's scarcity. You could say, "Hey, these products sell out. It's sold out right now. If you sign up for this list, you'll be notified." And we have a brand we work with, a really high end camping brand, that a lot of their products, they sell out before they've even landed in the United States for manufacturing, where they just have a running list on their product detail pages that say, "Hey, this product is sold out. We have a new product coming in soon, get on the list, we'll notify you. And it will be presale before it goes up on the site." Now there's a lot of value to a consumer who wants a product and is interested in that and giving their email address for that purpose. And it's a much better way to collect an email address over offering a discount. So, now they're selling these products before they've even hit the site. They're selling them at 100% margin or, well, not 100% margin, but without draining their margin by discount, right? Ryan: Or marketing. Jon: Or marketing costs. [crosstalk 00:19:54]. Yeah. What? Fractions of a penny to send that email. So, I think it's really interesting that brands immediately go to this discount right upfront and present that discount through such a disruptive manner that they have to use an email pop-up. Ryan: I think it's just, I mean, it's the easy button that they're thinking about. They're not taking that next step and actually having conversations with people, strategizing what could my options be? Because even me, having you as a friend and a business partner and various things, I come to you and I'm like, "Okay, Jon, I know you don't like discounts, but I know that there's value in somehow doing something like that, that maybe is not a discount, that keeps me from being a discount brand." And you've got phenomenal ideas for ... Now, we should probably do one, a thing on that. But you don't have to give a discount to give a discount type thing, which is a difficult thing. You have to really think through it. Jon: Right. Yeah. And you got to be creative with the offer, right? And sometimes people, like you said, it's the easy button. There's so many Shopify apps, for instance, that do these pop-ups and do discounts. Then there's apps that are really cheap to free that will do customized discount posts for email address exchange, stuff like that. It blows my mind because they see other brands using them and they think it must work for them, so we're going to do it too. Or they just, they think discounting is the only way. And I really argued that as soon as you get into discounting, it is impossible. It's like a drug, a really bad drug. It's really hard to get off of that. You got to wean yourself off of it because now everybody is expecting and they're not going to pay retail price. I mean, we talk about how your wife sends you to Michael's to pick up stuff on the way home. And you know that she's going to have a 50% off coupon, no matter what. And if she didn't, for whatever reason, she couldn't find one right then, or whatever, you just ask the person at the register when you're checking out, like, "Hey, what's that? What's the coupon that went out in the mail last week? Do you have it?" And they're like, "Oh yeah, it's right here. Here you go." And they just scan it [crosstalk 00:21:55]. Ryan: Yeah. That actually happened a couple weeks ago. [crosstalk 00:00:21:58]. I was, I got in line, she was like, "I couldn't find my code. Can you just pull one up on your phone and do a search?" I'm like, "Okay, yeah. I'll figure it out." Jon: Exactly. So, they're a discount brand and you go to them because they're a discount brand. There's nothing wrong with that if that's how they want to do it. But I would argue that, they're never getting out of that, right? They're just going to have to slash all their prices if they want to stop doing discounts. Then what promo or offer can you run because you've got razor thin margins at that point? Ryan: Yep. No. And I think one of the points you hit on too, is part of that other bucket of email popups, which you don't hate, those exit intent things. And this one works phenomenally well, for me at least, with one of the clients you've worked with in the past is Nike. One of the shoe companies you're based in Oregon. And I have an affinity for Jordan 4's. I'm not a sneaker head, but that's the one shoe that I grew up always wanting and I couldn't get them because didn't have enough money for them when I was a kid. But now I can. And so, I do keep up on the releases. And so, in this case, I gave Nike all my information to avoid the FOMO, the fear of missing out scenario. And I went to Nike site today just to see what they were doing, saying, "Okay, Jon worked with them. Did they get the message when he was working with them?" And they use only exit intent, no discount. Do you ever advocate for discount at... Well, I already know the answer. But exit intent, how should brands be looking at that? Is there anything besides FOMO or anything to do besides offering a discount that you've seen be successful? Jon: Well, I think that there's a lot of options that you can do in these pop-ups. But specifically in exit intent, this is where it's one of those things that you should really be looking at segmenting your audience and tailoring the message with those pop-ups. So, for you, let's think about the journey you just mentioned you went through. You were, you love Jordan 4's and you were looking at those on the site and they popped up with an exit intent and you were like, "Yeah, sure. I'll do that because I want to be the first to know when new ones are released." There's value there for you in that, right? And they knew, this is a collector shoe, if you will. And most of the people, you claim you're not a sneaker-head, but let's be honest, you probably are if you're into Jordan 4's, right? Ryan: Probably. Jon: And so, the reality here is they know that. That people who are looking at this shoe aren't discount motivated because for them it's all about having the Jordan 4, that they don't need the discount. They could sell those out, no problem without ever discounting them. And in fact, you and I living in Portland, Oregon, we're blessed that we get to go to the Nike employee store occasionally. And whether we're working with them or, somebody who does work with them is able to share a pass with us occasionally. And I can tell you that they have some Jordan's there, but it's not their top sellers. I say that because at the employee store, there's a large discount when you shop there because you get employee pricing, but they don't have their top sellers, usually, in the collectible ones, like Jordan's et cetera there, because they don't need to discount them. If you want them, you're going to just go up on the site and buy it at retail. So, I think that too many brands skip right away to the discount when there's other value adds you could provide. And that's where, again, you got to do a little bit of thinking on that. It can't just be the easy button. Ryan: Okay. So, pop-ups, avoid coming to the site pop-ups. Exit intent could be worth it, but you make sure you're adding some value to that, that customer that causes them to want to give you a real email address and not necessarily just throw a discount out. So, all companies want more emails. Do you have any strategies that you've seen be successful in your experience over the past decade in the e-comm world for brands to get more emails? Jon: Sure. I think there are some great ways to do, I mentioned earlier, some segmenting. So, let's say you run somebody in to your site from a Google ad that has a specific message, your value prop in it, aligning that with the message that you share for an email signup, right? So, maybe they're searching for a specific item and they get to your site and it's out of stock, well, there you go, now you should do not a stock email collection. I think that the biggest mistakes I see around email forms are that they're missing some key information. The first is you really need to set expectations on this email form. What does that mean? Well, you need to tell people what they're signing up for and how often they're going to hear from you. Pretty simple. But most brands say stuff like, "Sign up for updates." It's like, "Why do I care about updates from your brand?" Right? "I don't need more updates." Nobody needs updates. But if you me, I'll be the first to know when Jordan 4's are released, I'm in, right? That's what I'm here for. That's what I want to know. So, it's all about saying, "Okay. Well, how often are you going to hear from me?" Well, maybe it's, "I'll email you once a month." Okay. I'm okay with that. If you say, "I'm going to email you every week," I have to think twice about it, but if I really am into your brand, maybe I'm okay with that. Or maybe it's where we have special product bundles that are only for email subscribers, "Sign up and you can learn about our bundles, exclusives." Right? Things of that sort, that aren't straight up discounts. Ryan: Almost like a merging some of this email acquisition with your loyalty program. Jon: 100%. That is a great way to build email is through loyalty. It's through having, whether you want to do something as complicated as a point system, or just as simple as saying, if you're on an email address, you will get access to things that people who aren't on the email address. Ryan: And people are willing to give you more information, generally, when you're providing value outside of discount. For example, Nike, I give them my birthday. No other company gets my birthday. [crosstalk 00:27:51]. But they're telling me I'm going to get a special reward on my birthday. And I'm like, "Cool." I like Nike. They do have some trust. They built a brand that says, "I can trust them with my data already," just because I have an affinity for them and I've been wearing Nike's for, geez, 30 years. So, there is some of that that maybe not every brand is going to be able to get to, but you can probably do some pretty solid segmentation in your customer database if you had everybody's birthday. Like, Hey, this person's 20, this person's 40, they probably need different messaging. They probably have different interests, different disposable income level. Jon: Yeah. Yeah. The 20 year old is aspiring to get the Jordan's. The Ryan Garrow age folks are really out there to [crosstalk 00:28:35]. Ryan: 22. 22. Jon: Okay. Okay. If you say so. And so I think it's, now you can afford the $300 pair of Jordan's and you're excited to buy them because you've earned that right over all these years of hard work, right? And so, or those two years of hard work, if you will. But I think it's one of those things where most brands aren't even segmenting. They're just doing that really clear scatter shot, hoping to collect email addresses, just to build their list. And I just, again, that's the wrong philosophy, whole-heartedly, full stop. Popups are not the way to do that. And I just, it pains me when I see brands do that. Part of me is because our mission at The Good is, I say all the time is just to remove all the bad online experiences until only the good ones remain. And email popups are such a bad online experience. I'm on a crusade to eliminate those. And part of that is to help brands understand what damage they're doing with these initial email pop-ups. And it's true, I don't hate them just because they get in my way as a consumer, I hate them because of what they do to the brand over time. And the experience that you're putting consumers through is really negatively affecting the brand and the brand perception. And then most brands are applying a discount on top of that, so they're kind of adding fuel to that fire of just negativity and it's really just going to hurt them. Ryan: And the one thing I'll leave with would be the best emails you can get are from people that have purchased from you. So, if you just got more aggressive on getting more customers through marketing or driving people to the site, those people in your email database are going to be infinitely more valuable than anybody that just wants a coupon code or signs up just to have you go away or an email pop-up. So, I would challenge a lot of brands just to say, if you're comfortable giving an additional 10% discount, so you're taking 10% off your top line for somebody, why don't you just get 10% more aggressive on your marketing and get that customer to actually buy something and get more of them and increase your market share because that's the type of emails in my database that I'm going to be in love with. Jon: Yeah. I mean, you mentioned right up off the top that you're happy to spend your initial margin on that first purchase to acquire the customer through Google ads or whatever advertising you would do to get them to the site, so that you can continue to market to them and go after that customer lifetime value. And that's the right way to approach this because that's sustainable. Where if you're just going to give a discount and someone's only going to purchase once, because they can't get that discount again, or maybe they just see you as a discount brand, then you're going to have a bigger issue. So, I'm all for paying to get people to purchase, but I'm not, I don't think you should do that through a discount upfront. Ryan: Yeah. Don't go the lazy way. If your marketing team or your agency is telling you, "Use discounts or we can't do our job." It's time to maybe look outside that. Jon: Yeah. Find a new marketing agency. People come to us all the time and they say, "Well, we've been doing optimization on our site." And I say, "Okay, great. Let's talk about what you've been doing." "Well, we put a pop-up on, we offer discounts and our conversion rates went up." I was like, "Well, yeah. You know what? Every house will sell at some price. Ask any realtor. And they'll just say, 'Well, we'll just keep reducing the price until it sells.'" And it's like, well, eventually you're going to sell it for less than you bought it for. And that's exactly what's going to happen with your brand too. Ryan: Oh, and didn't you, you have some stat around, you give a small discount, your conversion rate has to go up just some astronomical percent. What was that number? Jon: Yeah. Mackenzie did a bunch of research on this. They surveyed and did a bunch of research on the, it was like the top 1000 e-comm sites. And what they found was that for every 5% that you run a discount on, you have to acquire, it was like 19% in additional sales just to break even on that discount. Ryan: And most people are not only giving 5%. Jon: Right. It's way more than that [crosstalk 00:32:36]. Ryan: It's usually 10, 15, 20%. Jon: And so, you really have to think about this. Now for 5% discount, is that 5% discount going to get me greater than a 19% additional sales? Likely, that's not the case. And, in fact, the article that I read on that said, and I'll have to quote it, but it said "This rarely to never has ever happened." And I was like, "Okay. So, they said rarely, never, and ever in the same sentence." Ryan: Yeah. Having done this a decade, I can almost guarantee you that that has not happened. I mean, because you would just double that maybe for 10%, you have to get 38% increase in revenue for a 10% discount. There's no way. Jon: If, I mean, if that's how the math works out on that, then yeah, you're screwed if you start discounting at that rate in reality. Because yes, you've collected email addresses and markers will come back to me and say, "Jon, yeah, sure. That's if I only do it on that first sale, but now I'm going to have those customer in my database for a lifetime." And I'm like, "Yeah, but what are you going to have to do to get them continue to buy? You're going to have to give another 5% off and another 5% and another 5%. where do you get out of digging that hole? Right? How do you fill that hole so that you're getting your margin back and your customer lifetime value and your average order value keeps going up? How do you make that happen?" You're better off it doing an offer. And, yep, it may equate to 5% off, but in the mind of the consumer, you're giving them an offer, not a straight dollar or percentage off. And then you come back the next order and you're not having to fight on a discount, you can give them some other offer, perhaps if that's needed. So yeah, we should definitely do a whole show, Ryan, on discounting. I think that could be another way to share one of Jon's things he hates on the internet. Ryan: Yes. I think we for sure should do that. Man, there's so many, so many good things in this. Jon, thanks for the time. I appreciate it. And I come away learning lots of things, including just adding a plus sign to my emails now. [crosstalk 00:34:30]. I can track where I'm being sold. Jon: There you go. Well, I appreciate you bringing the topic up and helping me share one of my missions. So, thanks for doing that. Ryan: Thank you
We know that internet traffic doesn't operate in silos. No matter what method you are using to drive traffic and sales, there's always going to be a halo effect. Today Jon and Ryan chat about Google Shopping, but more specifically the effect it has on other channels. TRANSCRIPT: Jon: Hey, thanks for listening to Drive and Convert. Before we jump into this episode, just wanted to take a quick second and let you know that during this episode we had some recording issues and the audio quality is nowhere near where we would normally like to see it. But because the content was solid, we decided to keep it as is and get it out to you. Hopefully you can see through this less than perfect audio, but a big shout out to our editor, Josh, for helping make us sound pretty solid, despite all of the technical shortcomings. We do have some improvements in audio quality on the way, so thank you for listening and on to the show. Jon: Ryan, we know that internet traffic doesn't operate in silos. No matter what method you are using to drive traffic and sales, there's always going to be a halo effect. We've all heard this famous quote from 120 years ago, "Half the money I spend on advertising is wasted. The trouble is, I don't know which half." That is still true today, even with all of the attribution and digital advertising tracking we're able to do. But the good news is that with all of the data we have these days, it allows us to know that there is a halo effect and to know how much that halo effect is worth to each brand. I was recently checking out a presentation you gave [Aclavio 00:01:44] and you showed data for some real clients that blew my mind and I actually just found out one of them is a shared client of ours, which made me even more excited. Ryan: Yeah, maybe some of that's due to you. Jon: Hey, I'm not going to take credit for this, but the data was a comparison of revenue and performance before and after implementing Google Shopping. I'm talking 1800% increases in revenue in both of these cases. Tens of hundreds of thousands of dollars in newly found revenue. Now, it seems to me that Google Shopping itself didn't account for most of this revenue gain, but rather that it could be attributed to the halo effect of implementing Google Shopping correctly. Today I wanted to chat about Google Shopping, but more specifically the effect it has on other channels. Ryan: Oh, man. It is such a unique topic that doesn't get brought up enough. I'm exciting to really dive into this. I don't even necessarily know if halo effect is a technical term that anybody really uses. It's just kind of how we refer to it internally at Logical Position and what we're seeing. Jon: But I do think it makes sense though. You said halo effect originally when we started talking about the topic for today and I immediately got it. Here you are inventing another term, perhaps, that makes a lot of sense. Ryan, tell me. What is the benefit of understanding the halo effect of Google Shopping? Maybe we just start there. Ryan: As you're understanding conceptually, and most I think business owners, marketing teams understand that attribution paths generally look like bowls of spaghetti at this point in time, as people can really easily do research and understand what they want from a product as they're finding it and then coming back to business that they had maybe found it somewhere on. What I've learned, through the last decade plus in digital marketing and a lot of that in eCommerce, is that I'm weird in the eCommerce transaction space. I have a very linear conversion path. I see it. I click it. I buy it. Every company on the planet can track my conversion. It's just very simple. If I've bought from you, you know exactly how I found you. Maybe I don't do enough research or I do enough research before I actually go search for the product. I haven't done a lot of analysis on myself, but that's not normal. What's more normal is my wife buying something, where she'll do research over probably a week and a half and she's got a pretty low threshold for extensive research. If she's going to buy something for $25, she does a decent amount of research to make sure that that's the best deal. But she'll click on multiple shopping ads, multiple social ads, multiple things throughout the process as she goes back and forth between different sites to figure out where she should buy something. Through that process, what we've seen is that the Google Shopping click, for somebody that is more normal like my wife, is how people are originally going to find you, but it's not how they're, at the end of the day, going to buy from you. It's more of a discovery tool for a lot of people because Google is a research entity for most people in finding the product on eComm. They're very good at it. Google is just phenomenal at product discovery and helping people figure out what they need or want. Knowing that, most business owners still look at Google Shopping based on last click, because that's what Google Ads has set them up for. Google Ads tracking by default is last click. You can change it to be linear. You can change it to all these other things, which can make sense, but I don't necessarily think it's bad to be looking at that way, but I think you have to understand as a business owner or marketing team that it's doing other things and that attribution conversation... I've been in digital marketing for over a decade, just like you, and attribution just makes my brain hurt. Jon: Yeah, there's too many models. None of them are ever accurate. Ryan: Yeah. You conceptually know it's there, but you never really want to be like, "Let's really dive into attribution today." That has never come out of my mouth and probably never will. Jon: I'm pretty nerdy, but it's never come out of my mouth either. Ryan: Yeah. That just doesn't sound fun. No. No, not going to do it. The halo effect is something we've seen and it's an easy way to explain the fact that attribution is happening and we want to be aware of it and know it's there and that helps direct a lot of our goal setting, I think. Knowing that, from a very simple perspective, the more you spend in Google Shopping, the more the other channels on your site are going to increase even if you're not doing anything else to increase them. The easiest example, I think it happened in May of this year. We were in the middle of COVID and pretty strict lockdown at that time. This company is a B2B company and they came to me I think through a partner of ours and we were talking just general strategy and marketing, what were they trying to accomplish as a business. They sold on Amazon. They sold on Walmart. They sold on Ebay. They sold on their website, but it was very small. They didn't really care about the website much at all and they had an agency that had told them that buying on Google was the best place for them to be, which the Google Shopping actions. At that time it was I think they were the 12% mark, based on their product mix. Then, they had another agency tell them that, "Hey, your product makes us too big. You need to shrink it down because it'll never work with that many SKUs." So, they shrunk down their product mix on their website. All these things are coming together. Before they kind of have to look at their company now like a before LP and after LP because it was so dramatic, the change. Their website, in the month of April, did $16,000 in revenue and their buy on Google entity did $34,000. They combined did $50,000 in total revenue from Google and their website and they paid $4,000 for that buy on Google, $34,000. That was their total cost of doing that. By no means bad. There's not many business owners that would be like, "Ah, that's a bad idea. Don't take it." When I told them, I was like, "I think you're leaving a lot of money on the table," because we as an agency have done a lot of pretty advanced analysis on the buy on Google entity. When you run that, generally you're losing about 40% of the volume that you could be getting if you didn't use buy on Google. So, I just said, "It's probably worth a test. It's a very small piece of your business at this point. Let's just go. Give us three months. We'll go with Google Shopping instead of buy on Google and we'll see what happens. If I'm crazy and it's not more volume for you, you can very easily just flip the switch and go back to buy on Google." They thought, "Okay. That's a reasonable test for us. If the website evaporated tomorrow, our business doesn't materially change. So, let's try that." We decided to start May 1. Takes us a week or so to get campaigns up and running, but what happened in the month of May surprised even me, and I've seen lots of things in the digital marketing space. The first month, getting out of the gate, we weren't hyper aggressive. We were getting things in position. We spent a total of $2500 in Google Shopping for this business. They're a multi-million dollar business, so $2500 still wasn't a big number. The data in May, the site did $192,000 in revenue as a whole. That $2500 of spend was given attribution credit in Google Analytics of $115,000. So, they spent less, $1500 less, and they gained a 3X increase in revenue on their Google Shopping by moving from shopping actions to shopping on Google. Which is good and that return is not normal. Nobody should ever reach out to me and say, "I expect you to get that type of return." It would just be- Jon: Well, now that you say it, Ryan. Ryan: ... Yeah, it's out there in the public. Don't say that that's going to happen. It can happen, lightning can strike, but what was really surprising to them is they, on their organize traffic and analytics, they weren't doing any SEO by the way. Their organic traffic, their channel and analytics in the month of April did $10,000 of their $16,000 in revenue. In the month of May, again no SEO, that organize channel and analytics did $45,000. It was up 350%, from $10,000 to $45,000 with no SEO. That's an extreme example of that halo effect, where you spend more in Google Shopping. They find you. They didn't convert through that Google Shopping click, otherwise it would've gotten the attributed revenue and analytics. They came back and bought later, after doing research through your organic links and your organic rankings within Google. Same thing happened on direct traffic. They didn't do any other external marketing and their direct traffic went up 250%. Their email went from, I think, two or three clicks to having $4500 in revenue. Again, no changes in those things to justify that type of increase, but just starting to spend on Google Shopping. The numbers are cool. It's an extreme example that shows the value beyond just looking at the results in Google Analytics or even Google Ads, but just having that understanding that there is more going on. When I'm looking at my businesses... and I talk to business owners regularly and tell them that I am a fairly aggressive marketer, a fairly aggressive business owner, I want to win... I will spend to break even on Google Shopping all day long. It's not exciting for business owners to hear this from me because every business owner usually goes into business to make money and to have profit, but when somebody's looking for your product on Google Shopping and they haven't put another brand or competitor along with that product search, they're a free agent. That's going to go generally to the more aggressive marketer. If I have a competitor that is shooting for profit on Google Shopping and I can break even, I can be more aggressive on there. I can pay more per click than a competitor, so I can get that traffic. I can get that buyer to my site and I'm going to have a good product. Part of my model is I have to have repeat business and lifetime value, but even if I didn't, by spending more on Google Shopping and breaking even, I know about this halo effect and I know that I'm going to get profit from my organic rankings and my direct traffic will increase. So yeah, I may not see the profit from my spending $1,000 to get $2,000. That may not be profitable for many businesses, but understanding that there is profit coming is a pretty big light bulb for a lot of business owners. And a lot of agencies don't talk about this because it is a little more advanced and somebody that's only been in the space for six months to a year may not have understood that this is there. Jon: Well, and it's harder to track, right? Because you can't give a straight answer and just say you tell a client halo effect and they're like, "Well, I'm doing a lot of marketing things." So, any of those could've been the halo effect. Jon: Let me ask you this, what are some of the common challenges to understanding these halo effects? Obviously, you have to have the right data, right? And some attribution. But where do we go from there? Ryan: Step one is just knowing it's there. Okay. If we know it's happening, then I can go look for the data to help explain what the magnitude of it is. I kind of go back to GI Joe growing up, knowing is half the battle. Once you at least conceptually understand that it's going to be there, then we can start looking for examples of it. I keep my analytics investigations pretty simple. I'm by no means one of the experts at Logical Position. There are people that can make my brain hurt in attribution and analytics, so I like looking at the attribution tabs within analytics and seeing, okay, I want to know what is it looking like as far as last click and assisted conversions? I'll click into the attribution and assisted path portion of the conversions tab and I'll click on the top for Google Ads. Then, I want to see the campaign names and I want to filter for campaigns that are shopping. In Logical Position's structure, it's pretty easy. I can just put in the keyword shop and it'll find all the shopping campaigns. Then, I can easily sort for assisted conversions. I can sort for last click. So, people just have to basically understand analytics, by default... and probably 99% plus analytics accounts are going to be setup by the default stuff... it's last non-direct. If somebody clicks on a shopping ad and then comes back later that day, tomorrow, whenever, directly by typing the URL into the browser, that attribution or that credit for the sale is going to go to the channel that was right before that direct. You look in there and you can see, okay, if my shopping campaign did $10,000 in revenue that analytics is telling us it got credit for, it did this work to do this, as far as a last click attribution, you'll see right next to that what did that shopping campaign do for assisted conversions. It's basically telling me, as a business owner, if that shopping campaign wasn't there, if I didn't spend that money, I would for sure lose the $10,000 that it drove in analytics. That would just not be there probably. I can't say for sure, but the majority of that would just evaporate. But what you'll see in assisted is often in shopping, that assisted conversion number is much bigger. It assists on a lot more sales than it closes. That's just the patterns of people shopping and doing more research and making it so easy to click into a site, see what it is, go back to Google, search for another site, see what they're doing. It's very easy. People are using tabs a lot, especially me. I'm a tab-a-holic. I have multiple tabs open as I'm researching. But that assisted conversion, that's where it's just pushing the process forward and something else in analytics is getting credit. So, if you take away that shopping campaign, there's a lot of other revenue that's going to be impacted. Will 100% of that assisted conversion revenue go away? Probably not. But there's no reason you'd want to take that away and you want to keep emphasizing it. By spending more in shopping, there's a lot more of this assisted conversion revenue coming, which is where you're seeing the evidence of this halo effect in the process. Then, you can also do... I like looking at the conversion paths. There is a conversion path report in Analytics and I like going by source medium so I can see if it's Google Ads. You can even get into some of the campaigns and finding out where the campaigns are in the process. This is more advanced, so a lot of people probably aren't ever doing this, but you can download it into Excel and pivot against it and you can actually see which channels is it helping the most, what's getting the credit often, is it coming back through organic from the shopping campaign, is it coming back from an email. Maybe abandoned cart emails are a big deal for your brand. You can see a lot of that and who's getting credit in Analytics. Jon: This is my favorite view in Analytics, by the way, because it really tells you were people are dropping off in the funnel, how they came in. It really shows you a great view of what are the different challenge points along the way, based on where people came from. Ryan: Oh, yeah. When you're looking at it, where are you seeing for most businesses? What channel's often falling off that you're able to help with or that you're able to direct them to and like, "Hey, they seem to be breaking right here." Jon: Usually what we see is when an ad campaign is setting some type of expectations that aren't being met on the site, people then start clicking around a little bit. Maybe they end up on a product detail page eventually that doesn't align with that expectation the ad set. So, the messaging there is usually the case, where the alignment is off between the two. But also, it's just really helpful to understand, from a purely conversion standpoint, where people are leaving the funnel who maybe in come in via organic or non-attributable methods. The whole point there is just what's causing people to bounce at that particular page or point in the process? Ryan: Yeah, and if you can minimize that friction, then conversions go up. Jon: Exactly. Ryan: And Jon looks even smarter. Dang it. Jon: Well, it's easy when you drive good traffic and you have all these halo effects for me to solve the problems and move forward from there. This has been great, Ryan. Anything else that you wanted to touch on on this that we haven't yet today? Ryan: I just think it's important, if you're going to get more aggressive in shopping, and you also are doing SEO, you have to understand that, okay, the SEO work is probably doing good, but if there's a huge jump it's probably not necessarily 100% attributable to the SEO work being done. That's where this does get really messy. You don't want to stop doing SEO because you're doing shopping stuff, but understand that there's going to be a bump and you're going to enjoy that, but there's a lot of things probably contributing to that. Just be aware that there may be some more analysis needed, but also don't get analysis paralysis. Just understand there's a lot of good things happening. You'll find getting aggressive in Google Shopping, knowing that there are some side benefits that you're getting, that even if you can't put a number on it you know it's going up. So, breaking even on Google Shopping on non-brand searches is never a bad thing if you have some lifetime value and you just want to get market share and be more aggressive than your competitors. Because there's very few companies out there that are willing to consistently break even on some of that traffic. And a lot of companies aren't breaking out brand and non-brand shopping, which still surprises me that companies aren't wanting to do that. If you've got a campaign that is just general shopping and if you can see search queries so that you're not using a smart shopping campaign, you should go in there and see how much of your shopping revenue is actually people looking for your brand. I think too few business owners look at that. If you're getting more of your shopping revenue from brand and that's what's causing the results that you're seeing that are exciting you, you've already done the work for those companies and for those searches. You've got the brand you've built up. You need to separate that goal off on its own and you're not going to be able to set a goal specifically around what do you want to get for your brand search, as far as a return. It's going to fluctuate with things that you can't control from a Google Ads perspective. Google search results pages being tested and changed, competitors coming in and out of the market place. The brand is just going to fluctuate. It's going to be profitable, unless you have an odd brand name that is more like a Kleenex, when people just search for the product you come up because of the way your brand is named. You can be assured that your brand search is going to be profitable. Put them in their own shopping bucket and in the non-brand is really where you set your goal. That's where you decide, hey these people don't know me yet. They're going to find me. If I'm breaking even, if you're in certain competitive industries on Google, baskets, there's a lot of money to be lost on that first order because lifetime value is so high. So, sometimes you may lose money on that first order on non-brand searches, but unless you're tracking that data you won't necessarily know what you could or should be losing to get that customer, what you could be shooting for to get market share. That segmenting is important when you are pushing in shopping and you're doing that because of some of the halo effect. Jon: Yeah. If there's one big lesson I've learned from you recently, and you keep hammering this point home so hopefully everyone else is learning this as well, but it's your goal on spending with ads, it's okay to just break even because of the customer lifetime value you're unlocking there. There's other things besides just return on ad spend or just revenue that comes from that initial order from those ads. There's value in emails. There's value in all these other things that somebody knowing about your brand now and having actually validated your brand by giving you revenue. There's a lot of value here outside of just getting a high return on that ad spend. As much as that should be your goal, it's also okay to buy that first customer by breaking even there. Ryan: Well, yeah. The thing you've talked to me about, enlightened me on, about the post-conversion CROs, things I never thought about. If you're breaking even right before but you've got a great process after the fact to just increase sales immediately after a sale, wow. You've got the halo effect on the front end as well and then you've got additional revenue coming back through a better conversion process to keep that a happy customer. There's just so many wonderful things that happen when you are pushing more traffic as well. Most business owners, I need to tell you and preach to you, don't be timid. Jon: Yeah. Well, Ryan, I definitely feel more comfortable today about knowing half of the money I'm spending on advertising is wasted, but also understanding that I now know that halo effect is helping to ease some of that spend and pretty excited about that. Thanks for walking us through some examples and showing us the value here in doing some of these digital marketing things like Google Shopping, that you might not see a huge return on ad spend immediately, but are increasing your revenue overall. Thanks for your time today, Ryan. Ryan: Oh, yeah. Thanks for the questions.
So many Ecommerce stores offer discounts. Should you? Today Jon breaks down why discounts are probably doing more harm than good for your brand, and offers some better alternatives. The Essential Guide to Ecommerce Sales Promotions [78 Tactics] : TRANSCRIPT: Ryan Garrow: Jon, I come across this all the time, and I found myself accidentally suggesting these things to maybe my wife's business or some friend's businesses. When it comes to conversion rates on websites, one of the easiest ways to increase an e-commerce site's sales rate is to offer discounts on products or site-wide. I see it all the time, and I know you have your favorite email popups for 10% discounts and your Reelio spin for discounts on every Shopify site on the planet two years ago. When you see all these discounts out there, it gets stuck in the back of all these e-commerce marketer's minds that it must be a good thing to do. And I think some companies get addicted to it. In fact, one of my wife's favorite stores is Michaels, it's a craft store, and I get the wonderful job of picking up her orders on the way home from the office. And as I'm looking at these receipts, as I'm picking it up, there is not an order she puts in online for store pickup that doesn't have some crazy discount codes. It's at least 40% on every order that Michaels is giving away on these orders. And that blows me away how they must have a lot of false front on their pricing to be able to do that and that limits what they can do outside of direct consumer marketing like in Google Ads or things like that. But Jon, technically these discounts increase conversion rates and may, in fact, be increasing new-to-file customers in their database. Given those two metrics, why does a brand need to be careful if they're using discounts on their site? Jon MacDonald: Well, I think there's a couple of things to be thinking about here, first of which is that discounting is not conversion optimization. It's margin drain. These brands who are engaging in discounting, what they're really setting themselves up for is to always be a discount brand in the eyes of their consumers. And just like you're saying with Michaels, your wife is never going to pay retail price at Michaels. She always knows there's a discount code or some special that they're running. Once you dig that hole, it's so hard to climb out of it. It really just becomes impossible. Once you're a discount brand in the eyes of the consumer, you forever are going to be a discount brand. It's just not something that you can easily really recover from. And I think a good way to think about this is the real estate market. A good realtor will tell you, or almost any realtor will tell you, that every house on the block, no matter how ugly, will sell at the right price. And so my point of view on this is that if you have to discount that severely, you likely just have a pricing problem or you have a product problem. And most people try to solve those by just severely discounting, or what they try to do is to get those new-to-file customers in by offering an initial discount. And those just become really, really complicated to recover from. Ryan Garrow: Now, are you saying that 10% sales or sales throughout the year are bad across the board, or does it occasionally make sense to have a sale of some sort? Jon MacDonald: Well, let's talk about what sales are, because I think there's a ton of ways to drive e-commerce revenue without using discounts. A sale could be anything that is different than just a discount, right? So you could do different types of promotions. So you could do buy one, get one. In essence, you're basically giving somebody a free product, but you're not calling it a percent off. You could say something like buy three of these, you get the fourth free, something like that. And that also helps you get your average order value up. And yes, you end up eating some margin there. It's a psychological shift from offering a dollar or a percentage off and instead, helping you to look at other metrics. Same thing with something like free gift with purchase, right? So if you purchase something... You could always say, "Buy this and we'll give you X product for free," or you could say something like, "If you spend X dollars, you get this product for free." There are other ways to do that. I mean, you could do free shipping, which is essentially a discount. I mean, it's almost an expectation anymore in e-commerce, but it could be looked at as a discount, or you could even do if you spend over $50, you get the free shipping. You could look at free returns. I think a lot of people are interested in making sure that they can return their item without having a charge there. This list could go on and on, and you could do loyalty programs. You could do urgency by saying there's limited quantities. You could give a money back guarantee or some type of service guarantee of we'll make it right. There's a lot of other things you can do to incentivize purchase that is not a dollar or a percentage off, and I think too many people get lazy and just go straight to that as the original tactic. Ryan Garrow: So from a broad stroke over-simplification, try generally to avoid any kind of dollar discount or percent discounts as a standard practice with your site. Are you saying that necessarily like a Veteran's Day 10% off discount would not necessarily be a great thing or tied to a certain event randomly throughout the year? Jon MacDonald: Again, I wouldn't do a percentage off or a dollar. I think there's a lot of other things you could do. Ryan Garrow: Okay. Jon MacDonald: Right? So all those things I listed, you could say, "Hey, if you're a veteran, we do these special things for veterans." It doesn't have to be a percentage off. Free shipping for all veterans this weekend, or we're doing free shipping just because it's Veteran's Day. So there's a lot of other ways you could get urgency and have people to want to take action. And that's really all we're looking to do with a discount is to create urgency where somebody is interested in the product, but they need to be moved to actually converting, and you want to give them that little extra push. Most people, it's just commonplace or perhaps this laziness, I'm not sure, but we see it so much and it's where people just immediately go to that discount. Ryan Garrow: I think it's the easy button. Jon MacDonald: Right. Ryan Garrow: Even me in strategizing with my wife's retail storefront and her e-commerce site, she's getting more involved in e-com and is trying to figure it out. And so we're like, "Hey, let's do a 10% off sale for this event." She did this event for I want to say 15 online retailers, and it was a great success, but one of the requirements is everybody's got to have some kind of promo to draw in all of your followers on Instagram to this event. And 100% of them did a percentage off discount. Jon MacDonald: Yeah, exactly. Ryan Garrow: And I advocated for that. So I failed you, Jon. Jon MacDonald: Well, that's why we're educating you today, Ryan. Ryan Garrow: Okay, so percentage off, dollar discounts, bad. Getting a little more outside the box, creative thinking and how can you incentivize. With other methods, it may in effect just be a discount. It's just presented in a different way like BOGO or free gift with purchase. Free shipping is probably not necessarily an incentive anymore for most companies, but depending on what you sell. There is a unique one that just came up with my wife and I yesterday, abandonment emails with discounts. So you've abandoned the cart, almost every site... Shopify, in fact, has it built in. You can do abandonment emails. You don't have to sign up for any kind of email plan. They'll send it out because they know abandonment emails work. A lot of companies give percentages off. My wife was telling me that she leaves things in the cart on purpose for a day or two to see if she gets an email. Jon MacDonald: Right, and that's the problem right there, Ryan. Right? I think it's because we now know and we've been trained on a couple of different things. The first is that we're likely to get an abandonment email, so we might as well wait because I'm not in a huge hurry. So you're not creating that urgency by offering the discount. And two, you know how you're in checkout and you see that little coupon code field? What's the first thing we do? Ryan Garrow: Oh man. Jon MacDonald: We go to Google, right? You search for discount plus company name or website, and you see what comes up. How many thousands of sites out there now that are affiliate sites that list these discount codes that they find? And there's whole apps based around this. PayPal just bought Honey, which is a plugin for your browser that goes out and searches for all these and makes that easy for you. And PayPal loves it and Honey loves it because they get a commission on each of those. The reality is there's a whole economy based around discounting. If that doesn't tell you there's a problem, I don't know what would. Ryan Garrow: Oh, for sure. Okay. We all agreed now we're not discounting percentages off, dollars off. Okay? So you've seen almost everything under the sun for increasing conversion rates with some sort of incentive. What would you rank as probably where somebody should start? If they're going to break themselves from this percentage off drug that they've been feasting on for the last five years of their e-commerce career, what steps should they take to start weaning themselves off of that? And how can they test and measure and show results outside of that? Because many times as marketers, we're scared almost to stop doing something that's been working for the last five years because these numbers we're reporting up the chain, we don't want to risk that and the new customers or things like that. So how do we take baby steps? Jon MacDonald: First thing you should do is have one-time use discount codes, and that really helps prevent the issue of your discount codes ending up on these aggregate sites that people are just going to search for. The second thing you should do is hide the coupon code field behind a text link in your checkout. So instead of just having the field open and showing, you actually have to say, "Have a discount code," and then you click on that and then it opens a field. The reason is we've done tons of A/B tests on this and the psychology behind showing an empty discount field make somebody want to go find it, because not only they're like, "Oh, well, it's here and it's empty. I need to fill that with the discount because I'm not getting the best deal." The other thing you could do is just have discounts that work based on a link. So if you email someone a discount, then only click on that link and then it automatically does it for them and it's not a discount code field in the cart at all, even behind a link like, have a discount code. So there are some things you can be doing there. Also, immediately just look at your promotions calendar over the next three or six months and just say, "Okay, which of these can and should be changed to different types of promotions?" I think that almost every brand has done some type of discounting, right? And not to the extreme that Michaels has where... Same thing with like Bed, Bath and Beyond where I'm not going there unless I have one of their spam mailers out of my paper mailbox that I'd never checked. And unless I go there and I have that that says I'm getting $20 off or whatever. And it's interesting. I haven't been to that store in quite some time, but the last time I was there, I remember I walked up to the counter and I was like, "Oh, I had that coupon at home and I didn't bring it," even though I didn't. I just said that because I know they have them, and they're like, "Oh, no problem. We have it right here," and they pulled it out from next to the register and just scanned it for me. And I was like, "Wow, okay. How many people are saying the same thing I just said?" They all know they're going to give me a discount. And it's just not a really good situation. You want to break that cycle and really look at what you're planning upcoming six months ideally and then just start weaning yourself off of it over the next six to 12 months. Ryan Garrow: We can't all be the biggest brands in our industry. And so as we look at our competitors and see discount codes, discounts happening, especially on Google Shopping where I spend most of my time and strategy, it's you get that wonderful little button that says, "20% off discount until January 7th," or something like that. It's actually good to have that there because your click-through rate increases. So you have to just be aware that you're not going to have that anymore, but there's different things you can put into that field to get there. And overall price is generally a better principle in Google Shopping. Jon MacDonald: Well, that's exactly it. I mean, part of the algorithm with Google shopping, correct me if I'm wrong, is price, right? So why hide all that behind a discount? If you're going to offer the discount anyways and make it super easy for people to get it, just cut your price. And there's a lot of ways you can show that people are getting money off without having to have a discount code. So on your product detail page where you have the price, show three things, the strike-through price, so the original price with a strike through and then the new price next to it, and then show them how much money you're getting off, and then show them what the discount percentage is as well. So you're basically just showing them, this is what our price is off of the MSRP or whatever, and then they feel like they're getting a good deal. Ryan Garrow: Does this change it all in a MAP industry? I feel like that industry is a little interesting when you're all competing at the exact same price point, and then there's a little gray areas around discounts because you can't necessarily do BOGO discounts on Google Ads necessarily, at least on shopping ads. Jon MacDonald: Right. Yeah, I think it becomes a little more complicated to show how to communicate that, and that's why I always say, just have your best price available. Now, if it's a MAP pricing situation, which the manufacturer is requiring a certain price to be listed, you can do what Best Buy does, which is, shows the best price in cart. That's how they get around that, right? It's not a discount code. They just say, "See price in cart." Now, there's some psychological play there in the terms of once it's in your cart, you kind of feel like, "Okay, I'll just move forward." So they're pushing you that next step down the funnel. But I can't tell you the number of times I've went to, added something to my cart, and abandoned it. I can't imagine what their abandon cart rate is, but that's obviously not a metric they're that concerned about with this model. But I think they're kind of stuck in a bad spot by their manufacturers of how do you have to list the price. And if the only way you can show that price is in cart, then, okay. If that's the best thing you can do, then I would highly recommend that. Ryan Garrow: If you're going to do that, don't make people log in to see it in your cart. Jon MacDonald: Right. Ryan Garrow: That's a failure, because I've been to those sites. They're like, add to cart for price. I'm like, I try to add it and they want my email and all this information before I can get to the cart. And I'm like, I'm not doing it. Sorry. Jon MacDonald: Yeah. Well, if you're going to do that, there's other ways you can do this. You could have loyalty programs. Then if you're going to make people log in to see what their price would be, you could put it behind it a loyalty program, for instance. That's where you're going to be able to say, "Okay, we're not giving you just a percentage off here. We're saying that as a loyal member, on every purchase you get X percentage off." Right? And at that point, it's a different psychological trigger because at any point, they're a loyal customer now, right? There's an argument to be had. I saw a great article on LinkedIn today that somebody was posting about the argument that consumers fall in love with the loyalty program, not with the brand. Same thing here... Ryan Garrow: Really? Jon MacDonald: Yeah. You start thinking about airlines and sky miles. I'm on Delta. I'm loyal to Delta because I've tons of miles there, and I'll pay a little bit more. But I'm falling in love with gaming the sky miles system the best that I can there, right, in terms of how do I get as many points that I can. I have the credit card that's associated with it. I'll try to fly them. But if they're like $400 more to fly someplace... There's a threshold in there. It's a lot less than that. But if there's a threshold for me, I'll fly a different airline, and then I'll say, "Okay. Well, first of all, who's the partner that I can fly so I still get the miles? And then if that doesn't work, then who's my second choice airline that is a non-partner that I can get miles from that I can also use?" So then you start gaming the system around the loyalty program instead of having loyalty towards the brand. Ryan Garrow: Yup, I would agree. I do that myself. But there is value to obviously loyalty programs. Jon MacDonald: Of course. Ryan Garrow: Is it generally a simplification of it to keep them from trying to game it and just make it like, "Hey, I'm a loyal customer," or how do you take that next step then, I guess? I don't want to dive too much into loyalty, but you also don't want to just move your discounts and your pricing issues from one place to another, right? Jon MacDonald: Yeah. Well, let's just talk about the best loyalty program in e-commerce. What do you think that is? Ryan Garrow: I mean, the one I use the most is probably Starbucks. They keep changing it, so I'm less excited about it. Jon MacDonald: Yup. That's a good one. I'm talking about Amazon, right? If you think about the best loyalty program that there is right now, Starbucks aside, because I love that too. I get a free coffee a week essentially, so I love it. And they do a good job of not discounting. It's for the loyalty program, right? It is essentially a discount, but now I'm earning that discount. And so they're increasing their customer lifetime value. But if you look at Amazon, I think they do a really good job. Now, generally they compete on price to some degree, but not always. They also compete on speed, right? And so what I mean by that is best testament to this is Walmart. Everyone thinks Walmart's coming out with Walmart Plus here very quickly. Now, that's the rumor on the street right now, which is going to be their same type of Amazon Prime, where it gives you free shipping in a fast speed by paying a yearly fee. Well, this is just like the Costco model. Costco makes more money on the yearly membership than they do on the margins of their products. And so I think that's a really interesting model. People don't go to Costco because Costco is running massive discounts. They just have low prices. And, of course, you're buying in bulk, so you're upping your lifetime value and your average order value, and you're paying for that privilege. So it's a win-win on revenue for them. But most brands aren't going to make that commitment, and most brands don't want to start out by doing that. But I think if you start a brand by doing that upfront, then you're going to be in a much better position. And I think it's still something every brand can do and should start thinking about. Ryan Garrow: No, I would fully agree, and I have to start rethinking some of my easy button discount suggestions now for even my own brands. All right. Any final points on discount? Obviously we're not using percentages off or dollar discounts. We're getting a little more creative and actually maybe not pushing the easy button. Do you believe in regular annual events in online marketing? Like Nordstrom has their yearly sale, their half yearly sale, and that's pretty much all they get. And I have a lot of clients that do friends and family sales every month of the year or something like that. Jon MacDonald: Yeah. Look, I think that those types of promotions work really well and that's what those are. They're different types of promotions, right? I think if we could be thinking about this as a holistic kind of overarching topic for today, it's less about using discounts or the negativity of discounts. It's really about how to move from discounts into promotions, right? And so tattooing promotions to regular intervals, like the Nordstrom anniversary sale, or looking at holiday-based promotions, or any of those types of things. I think that a promotions calendar is necessary for any brand. I'm not saying don't do promotions. I'm saying don't step down to the easy button of a discount. Now, I do think the only time that a discount makes sense for a brand is if you're okay breaking even on the initial sale to get that customer in, but you know you're going to have a massive lifetime value for that customer. And only then is it probably okay to start doing discount and understand they're always going to want to pay that discounted price. So only offer a discount that you can sustain forever. And at that point, maybe this works, but I have yet to see a brand that has pulled that off effectively and done it extremely well. But that's the only instance I've really seen discounting work well. Ryan Garrow: Got it. So if I'm selling a product and I know once they buy one, I'm going to sell a hundred of them over the next three years to this one person. And I can replicate that. Jon MacDonald: Exactly. You know who's really good at this? It's Quip, Q-U-I-P, toothbrushes, right? What they do is you buy the Quip toothbrush and they include inside the first order, in the box is a little code on a piece of paper that you then go to the website, you type in that code when you're ready to refill the brush head, and they mail you another brush head and a battery for free. But it's a onetime thing, right? And what they're doing there is getting you in the habit of going back to them to get that product, and you're starting the habit. And so that's where I think something like that can work extremely well for offering a discount. They tell you upfront that it includes a free brush head replacement. We'll ship you your first battery and brush head replacement. They're very open about that. And it works extremely well for them, because they're forming the habit of, now I have a second pressure head, so I'm not going to just throw the whole thing away. I have the free brush head, even if I was like, "Yeah, the product's okay. It's not as good as the Sonicare maybe, but you know what? I have a free brush head. I'll go ahead and get that and stick with it." And by that point, you're, you're in it, right? You're going to do it again. Ryan Garrow: You're talking about maybe from a marketing perspective, you invest to get the new customer. Once you have them, your next order somehow is going to be discounted through email or something. Did you just get them in the habit? Like, "Hey, your second order is X because it's the second order," but you set that expectation upfront? Jon MacDonald: Right, because you know you're going to have a high lifetime value from them and you're just helping move that further along, meaning the habit that comes with somebody having a high lifetime value. Ryan Garrow: Got it, Because you wouldn't want your normal email cadence to be, "Hey, here's your coupon code. Come back and buy from us," because now they're going to expect that that happens all the time almost. Jon MacDonald: Exactly. And again, this is not a dollar off or a percentage off. In reality, it's costing Quip the same amount of money as if they did that, but they're being really smart with that investment. Ryan Garrow: Lots to ponder through and lots of brain synopsis to start reconnecting in different ways so I can solve problems better. Jon, I appreciate the challenge as e-commerce marketers to not do the easy button and start getting a little more creative and maybe better for the brand long-term. Jon MacDonald: Yeah. And if anybody is really interested in this topic, just go to, click the little magnifying glass in the top right, which is our site search, just type in discount and you'll come up with a ton of articles that have... There's an article 78 ways to do promotions without discounting up there. There's a lot more ideas than what we've covered today that we can't possibly get to in a 30 minute episode, but I want to make sure people know that that's a great resource for this as well. Ryan Garrow: Yes. You can spend hours learning from Jon on his website. Go there, but make sure you've built some bandwidth in after you go there to read all of the stuff you find. Thank you, Jon. I appreciate your time. Jon MacDonald: Thanks, Ryan.
Google recently dropped all commission fees on their "Buy on Google" platform. On the surface-level this seems like a very intriguing offer. But Ryan here is to explain why "Buy on Google" may not be the best thing for your brand. TRANSCRIPT: Jon: Ryan, a few days ago, I sent you an article I read about Google's Buy on Google program and how they were dropping all commission fees for their sellers as part of the program. Now, to me, this seemed like a pretty good deal. Who doesn't like freeways to sell products and utilize a huge platform with lots of awareness like Google search? At least that was my take, but when I asked you about it, you said, and I'll quote, hopefully this is okay, "That product was dead in the water before this change. Some merchants will of course test it, but it will compete for ad presence with their regular Google ads." Honestly, this was not what I was expecting to hear from you at all. I was really interested in connecting with you a bit more about this and just seeing your thoughts on it and getting some more information about the program out and seeing where and when it makes sense for all of our eCommerce listeners to take advantage of it. I guess just to jump right in, Ryan, on a high level, just so we're on the same page, what exactly is Buy on Google? Ryan: Buy on Google is the little colorful shopping cart icon that shows up in Google shopping. When you start filtering and sorting, you actually transact on Google and then the merchant fulfills it. It's basically a Google trying to be this marketplace saying, "Oh, we can trust Google because I'm buying it here." It's a shopping ad set that you're able to get when you push your inventory into Google and say, "Yes, I'm willing to sell this on Google." Previously, there were commissioned tiers to sell different products. It ranged somewhere from five to, I think, 12%. It was a 12% number that Google [inaudible 00:02:07] because it was less than that Amazon 15%. That came out, man, I want to say maybe three, four years ago, maybe in an alpha-beta four years ago. I think it did cause some Amazon changes within their system on what they were going to be charging to try to have more parody with the Buy on Google scenario. Yeah. It was basically give Google the commission that you would maybe be paying Amazon and we'll push your product out there. There's no advertising costs. Google's the one putting it out there and then you just get the sale and give commission to Google. Jon: They're trying to create a marketplace without really holding any inventory or doing any fulfillment. They literally just take the money, take their cut and send everything over to the retailer? Ryan: Yeah. From a high level, it sounds like a great idea like, "Okay. I have all of this work. I'm spending all this money in Google ads and shopping and I've got agency fees or employee costs or my time in it. Now, I can just go to Google and you're just going to take a commission and it's a fixed cost, so I don't have to worry about what my return on Google shopping is." That theory sounds phenomenal. There's not many business owners are going to be like, "Yeah. Here, take my products. Sell them for me. I now know that I'm only going to be paying 12% of my revenue for my advertising cost." There's no scenario in which that doesn't sound like a good idea. Jon: That definitely makes sense. How does Buy on Google differ from Google Shopping? This is a complete novice asking that question. Ryan: It's part of Google Shopping. You only see the Buy on Google when you're in the Google Shopping tab within Google space. It used to be a little more prevalent on the first page of Google, but I believe it's only showing now in the Google Shopping tab. It's one of the filters you can put on there. Jon: Okay. Then, really Google Shopping is getting your listing of products up there. Some of them will take you to the retailer. Some of them will just take your money on Google. Ryan: Yes. It's always interesting. Google's, as we know, a for profit company. They want to make money. When they came out with this program, it obviously sounded great to business owners, but it immediately put up some flags on our team internally to say, "Okay. Google needs to reward shareholders for their investment and needs to make money to afford employees," and all the things they do around the world that are very good and positive, including paying people. If Google is going to take 12% of the revenue for a sale and not charge for any clicks to the merchant that's selling that, in theory, Google's not going to be willing to lose money by showing those products at 12% when they know from a click cost, they're getting a 20% or a five X return for the merchant. Jon: I see. Yeah. Ryan: Google's got a lot of very smart people and they do say that they are out for the good, and they will do things to just benefit people. Period. There is an opportunity maybe that they're willing to take less money, but that's not always the case. You just have to start investigating. That's why I challenge every merchant to do with any product in Google is test and measure and see if it does actually make sense for your brand. Jon: Spoken after my own heart there, test and measure. Ryan: Yes. Jon: I've had an impact, Ryan. I appreciate it. Let me ask you this then. If they're not doing any commission anymore, then how are they going to make any money and how could any brand really think that Google is going to list this above their ads? Ryan: It's a great question. That's why it's surprising that Google made this move, especially when they just released earnings when we're doing this podcast yesterday where they had the first time that their revenue dropped in a quarter. I don't know how long, if ever, that Google being willing to give up money. When that happens, it's telling us internally logical position that, "Okay. Something wasn't going the direction that Google thought it was going to be going." Either we're in the process potentially of just sunsetting this or moving it to a place where it's not going to be necessarily a focus of Google because if there's no revenue coming in, how are you going to support it internally? You can't dedicate a bunch of employees necessarily longterm to a product that makes no money. It's either a stepping stone into something different, or they're taking steps to buy some market share to a degree and try to get people using it in broad adoption so that they can monetize it later. We don't necessarily know where they're going because they won't necessarily tell us this despite our levels of... I actually asked the question. I was interviewing, I think the global partner strategy person for Shopping. He's a big guy in the Shopping space. We were talking about the free and fast program that's recently come out and I brought it up and he's like, "I answered something, but not how you want it. Then, we can't have this in the interview because I'm not authorized to speak on it." Awesome. Thanks. It's a big unknown. I know that if Google is not making money on it generally, it's not going to be something that I, as a brand, am going to get really excited about and try to push all of my eggs into that basket for my personal brand. I might test it. Again, test and measure, see what it does, but my hopes are not high. Also, my hopes are not high, but just because of the nature of the Buy on Google and the data we've seen in it. A logical position... One of the companies I talk about often, I won't mention them by name, but they started working with us in May of 2020 after they had not been doing any paid search with an agency. They had been using Buy on Google with another agency that recommended that this was the greatest thing for them. This sells B2B kind of like distributor cleaning products, just all things businesses need. They have something in the neighborhood of hundreds of thousands of skews. Most of their sales come from Walmart or Amazon, at least, they did at the time. We looked at Buy on Google and they did about $34,000 a month on average. That was over the previous six months, and they paid Google and this agency somewhere around between four and $5,000 for that batch of sales, $34,000 worth. Jon: It seems like a good [inaudible 00:08:20], if you will? Ryan: Yeah. It wasn't terrible by any means. I said, "Okay. Well, that's not bad, but based on what we see, I believe you're limiting yourself on the potential that our website only did, I believe $16,000 in revenue in the month of April." Their web sales, just if it evaporated tomorrow, not a big deal. I said, "Okay. Look, I think you're being limited here. Give us three months to test this and see what we can do." This was in the very end of April. They said, "Okay. Fine. We're going to fire the agency we've been working with, but it's going to take two weeks. You're going to actually officially be able to kick off mid-May. But in the meantime that first two weeks of May, we're going to just push all our products into the merchant center and flip a very basic shopping campaign on based on just... We don't know anything. We're just going to have the products in there. Just see what happens." I said, "Okay. Great. Can't hurt anything while we're building it out." The data, when we're on a test and measure here, Jon, the data in the month of May, half of this was just that are basic campaign. Half was us getting ramped up. Their sales went from the site in April, $16,000 to $192,000. Jon: Now, that's a return on investment. Ryan: They only spent 2,500 bucks in Shopping in the month of May to generate an additional... What is that? $176,000? The crazy thing we saw and it surprises a lot of companies, but shopping has an effect on lots of areas of your site, not just what you're going to see in analytics on Google Shopping. That $2,500 generated Google Analytics last non-direct attribution, $115,000. The organic traffic on the site went from $10,000 in April to $45,000 in May. They weren't even doing any SEO. There was a halo effect on other things that Google Shopping does because you click to a site on Google Shopping, go back and do more research. Then, you're going to come back through other channels. Direct traffic was way up. Email was way up. Social was even up and they don't even do much on social. The Buy on Google doesn't allow for that because you're buying on Google. You're not even going to the website. You don't have the ability to buy other products. We know as well, based on our research and expertise within the Google Shopping space, over 50% of the time, people click on our product to go to a site and they're going to buy something else entirely. You get to the site and you start shopping. You see the data when somebody interacts with product suggestions on a site, time on site goes up dramatically. Conversion rate goes up on dramatically by clicking that suggested product, or you might also like type products. Everything gets better. They've committed to shopping the site. Maybe you can challenge me in that in some other arena, but all you want is a traffic from Google Shopping to get to the site because everything looks better from an analytics perspective. When you don't have that because of the Buy on Google not sending people to the site, you lose all of that. When I'm seeing Google give something for free, red flags and lights and flashes of all kinds of go off in my head saying, "Okay. Either something wasn't working for Google on this. They just need to get it out there more for adoption to try to take a last gasp for effort, or are they going to try to get companies to forget about sending traffic to the site to try to convince them that Buy on Google is the only thing to be doing?" It's just interesting to say the least. Also, if you have the product in Buy on Google and also in Google Shopping, you don't get to show in both ad sets, so it's not giving you extra inventory. It's a replacement, which also tells me if it's now free, how... Yeah. Google's not bad by any means. I think Google's great company. I'm very honored to be partnered with them at the level we are. I know that they're not going to give up all their revenue from Google Shopping. Jon: Right? Well, there's something else they're getting there in terms of... It's like the old adage about Facebook. If you're not paying for it, you're the product. Ryan: Yeah. Jon: There's something here that makes me think that they're interested in the consumer data. Ryan: Yeah. They want some data, and how much are they willing to pay for that? If they have 100% of all merchants adopt that immediately because it's free, they're not willing to take a $10 billion hit in Q3 probably to see some data. Jon: Not after Q2. Ryan: Because Google already has more data than they know what do it through a degree. Again, interesting. You need to watch it, test and measure it, but often it does not make a lot of sense to utilize the Buy on Google for most eCommerce companies. Jon: Is there anything else you feel like eCommerce brands should know about Buy on Google? Ryan: If you put this on your site and you're also running Google Shopping, we've got some merchants that spend north of $10 million a year on Google. When they came to us, they're shopping... Overall, they were using Buy on Google and Google Shopping and their shopping traffic was down 40% year over year including Buy on Google. Then, they couldn't figure it out. They came to us that find out about this. They had some prior relationships with us from other companies, the eComm team that had started working with them. They brought us on and we were able to uncover that when they had flipped on Buy on Google, that's the key thing that happened to drive the volume down. They thought they were going to be adding ad sets, adding all this additional stuff, and it was going to fix their marketing costs because the numbers looked great. When they flipped it on, everything went down and the agency they had been working with just said, "Well, it's just because the market's down or your prices are too high," or they had all these excuses that just didn't necessarily hold water when we started looking at the data. It's not easy to analyze Buy on Google and what the impact on your business, because the transaction is not happening on your website. You don't see that in Google Analytics. There's a lot of matchup data. There's a lot of filtering and analysis you have to do that is very complex to actually see the impact. When I say test and measure, you're going to actually have to do a lot of work on that measuring to figure out what the impact actually is. You have to look at skew data to see, "Okay. This product, I started showing in Buy on Google. What was the impact of overall sales in taking some of my offline data?" Because the Buy on Google's not going to show up in Analytics. What does that look like? When we put it here, we started seeing what's the impressions of Google Shopping that I lost? If I lost again, easy math, a thousand impressions and 10 sales on Google Shopping when I flipped on the Buy on Google, did I get more than 10 purchases of that specific product? Probably need more than that because the halo effect of Google Shopping of my organic traffic getting more searches and clicks and purchases because of my shopping investment, that goes away. You got to take in the fact, the halo effect. Go in paranoid like I do with most things. I'll go in paranoid to start and say, "Okay. If my business is not going to go to the direction I want to, where am I going to see it? What levers am I going to need to push and pull quickly and uncover some changes?" Jon: Is that paranoid why you live on a farm and all that acreage? Ryan: No. I also have four small kids and you need room to run. We're very blessed in COVID time to have all that room. Jon: You had said at some point, as we were having this conversation a few days ago, that larger merchants will usually lose volume when they have both ads and shopping actions. Is that summarizing what you were talking about a second ago? Ryan: Generally, yeah. It's simply because you can't show both ad sets. Playing out the conspiracy theorist in me saying, "Okay. Google's... Previously, they were going to get 12% from your Buy on Google, but they knew they were getting 20% with people clicking on ads to your site, they're probably going to take the 20% margin that they were getting on click and not show the Buy on Google." Buy on Google, you don't get any search queries, so we don't actually know what you were showing for. What we were seeing often was that it was cannibalizing brand terms and taking some of the easy stuff that you were probably getting at less than 12% cost already. Not that it's bad, but even smart shopping to a degree, take some of those easy layup searches and shows a pretty strong ROI. But a lot of that was brand that maybe you could have been getting a better return on ad spend with a more complex shopping structure. That's where you can't see the data from a search query perspective, so you have to see it from a transaction perspective. You're never going to get really apples to apples, but when you're comparing it volume loss of sales or volume increase based on skew, you'll want to hopefully have a lot of that data you can be pulling. If you have smart campaigns running currently on Shopping, you're probably not a large merchant. If you are a large merchant, we should chat. Smart campaigns are quite limiting to your scale, but if you have smart shopping and then you do Buy on Google as well, you have zero data in both of those. You're just going to be able to measure total site sales and maybe they do increase, but could they have gone higher if you went just to a manual shopping campaign structure and didn't do either smart shopping or Buy on Google. It's a difficult analysis, but it's something that all brands spending over 10,000 a month on Google should probably be doing. If you're doing spending money on Google Shopping and also doing Buy on Google, you need to be doing some deep analysis of what that looks like because I would venture, I guess when you flipped Buy on Google on, you probably lost some volume because of that transit. People not being able to shop the site and add different complimentary products. Jon: Right. Ryan: Buy on Google doesn't do that. They don't know what the complimentary products would be, but if you work with Jon who's going to help you figure out some of those things that are going to help your conversion rate to help your AOV, you can only do that on your site. Jon: Right. Yeah. That's been my rub with Google Shopping and I guess Buy on Google, more specifically is that you have very little control and you lose the contact information for the buyer. This leads me to my next question, which was I had mentioned there was an article in Forbes that kick started this whole conversation. That article says something along the lines of Google just updates eCommerce game to attract more sellers, but it's still not enough to compete with Amazon. What stuck out there was not that it's not enough to compete with Amazon, but this has been viewed as a play to compete with Amazon. Do you agree that this is a play to compete with Amazon? Ryan: Well, Google and Amazon has been competing for over a decade. I don't think it's a new thing for Google to try to test waters to create more of a marketplace. It just makes sense. With over 50% of all eComm transactions happening on Amazon, there is a risk to Google on ads that people could be just moving stores to Amazon and not paying for traffic on Google. That is a potential that Google is probably well aware of, probably not giving them any insight they don't already have. Jon: But I was wondering with that approach also, they're willing to offer this for free almost as like gut punch to Amazon in that, "Hey, we'll keep the customer data and the sale. We'll give that commission up to increase the volume and steal basically the revenue away from Amazon," almost as a way as a retaliation. I'm sure Google would never say this, but for Amazon launching on platform ads, which kind of hurt... I'm sure hurt some volume on Google. Ryan: I don't necessarily think that if you are selling online, you're not aware of Google or this was what was going to all of a sudden, get you to start working with Google to a degree. I think that there is some of that there like, "Hey, we want to try to get more merchants and more data," but I don't think that that was necessarily the play for Google that they're trying to use this to be the marketplace or take down Amazon at all. Then, probably trying to get new data to see, "Oh, if it is free, what is that doing to our margin? What is that doing to the volume of people buying on Google? Does that give us the ability to push into a marketplace?" The fact that they're integrating with PayPal, the fact they're integrating with Shopify Pay is pretty big. Letting people pay with those things, so it does seem that there is a marketplace potential here and it may be if we play this out, I'm guessing that Google is taking some margin from PayPal and Shopify Pay if people are using those for the transaction. Jon: I see. Ryan: Google's Pay could be as a merchant processor at the end of the day because they already have Google Pay. If they're making enough money on the processing fees, maybe they don't need to charge for a marketplace listing. Jon: That's a great way. I hadn't thought about that, but that's a great way for them to increase the volume there, which probably makes their cost cheaper to process those overall because of the larger volumes. Yeah. That's a great idea there in terms of how this makes sense for them. That leads me to my next thought, which is that Google has really tried several ways to take a piece of the eCommerce pie in the past few years. Right? We talked about Google Pay for instance, right? But I don't see a whole lot of eCommerce brands taking advantage of it or really making it a priority to support all these things. Do you have a feeling that Google will ever become a really large player in the actual eCommerce space besides driving traffic? Ryan: I would never bet against Google. Jon: That's fair. Ryan: They have a tremendous amount of intelligent people and more data in the eCommerce space than almost any other company [inaudible 00:22:14] in Amazon just control it. I think there's so much value to owning the customer experience for brands that as a brand owner myself, I do have an Amazon storefront. I do advertise on Google. I do have my own website. I look at Amazon as a retailer because it's their customer. It's not a me customer. For me, the more people that I can get my product into their hands through Amazon, the more likely they are to become a loyal advocate brand fan for my brand and maybe they'll buy from my site. Maybe they'll follow me on social and I can get new products into them, but I know it's Amazon's customer and Google can send traffic to my site. I have a lot of affinity for that because they're willing to share all of that customer data with me and not own it. It's difficult for me to be able to give up my customer and sacrifice that data and potential relationship and experience that I know I want my customer to have on my site to ever be like, "Okay. I'll never drive traffic to my site. I'll just let the transaction happen all over the place with everybody else's system." Jon: Government antitrust interviewing aside with all these big tech companies recently. I've always wondered why Google didn't just buy Shopify before it went public or by big commerce before it goes public. I could see a massive antitrust issue there perhaps where they own the entire ecosystem, but I also think that for them to really get a piece of this pie in the longterm in terms of on the transaction side, I almost see that that's going to have to be a requirement and we'll see what happens, but it would be interesting for them to take a play there. Ryan: Yeah. I think it's going to be easier for a Shopify to move into a marketplace than it is for Google to move into a web ecosystem that you can't get out of, but there's potential that Amazon gets broken up. As big as it is, maybe they have to uncouple their fulfillment and let everybody on the planet use Amazon fulfillment or Amazon becomes just the marketplace. I foresee that as potential. I know that Shopify is moving into logistics. They're going to start fulfilling orders for their merchants. There's a lot of frenemies in the digital marketing space. You and I partner with companies that we technically can compete with on certain areas as well. It's not uncommon and it's going to be to fascinating next few years to see how a lot of this is going to shake out. Jon: Yeah. Not really on topic, but I do see that if Shopify starts fulfilling, that's a huge win for Amazon because they can go back and say, "Well, we're not on it. There's no antitrust issues here," that Shopify fulfills and they do two days. Walmart now does one day. What's the problem? You could definitely see that argument. Ryan: Yeah. I think Walmart, we need... I didn't mention. You brought up Walmart. I think they have more distribution than even Amazon. Amazon has for their FDA, I think something in the neighborhood of 77 locations around the country. Walmart's got, I don't know how many thousands of stores, but a lot of them and Shopify has all this data around all of these merchants that a lot of them sell the same thing. If you've got the same skew at Shopify system, they know where you're located. They know where you're shipping from. In theory, Shopify could start selling that particular product and saying, "Hey, merchant X, Y, Z, you have it listed for 50. We know that we can sell it for 45. Do you want to take 45 and ship it to somebody?" Yeah. Most merchants are going to be like, "Yeah. I'll take that. You're going to share this customer data with me." Kind of like the dealer network. Do you remember Shopatron? I think it's now Kibo or something like that. The dealer or the manufacturer sells it and the dealer fulfills it. That's for sure within the realm of possibility within the next couple of years. Jon: Yeah. Wow. This has been fascinating. Thank you once again for educating me on this. You're always so knowledgeable on what's happening in the Google ecosystem, not only because you guys are such great partners with them at that scale, but also that you dive really deep into this personally as a store owner and somebody who helps clients. I really appreciate your time on this today and looking forward to the next conversation, Ryan. Ryan: Yeah. Me too. Thanks, Jon. I appreciate the time and the good questions.
How can you prepare your businesses for operating in a future that has yet to be determined? Today, Jon explores the future of CRO. With such a high volume of transactions happening on Amazon and Shopify are we nearing the end of incremental improvement from CRO? For help with your CRO visit: TRANSCRIPT Ryan: All right, Jon, as a business owner and strategist, I'm constantly thinking about the future and how I can prepare my businesses, my teams, clients for operating in a future that has yet to be determined. For me, it's just kind of fun to think through. Recently, one of the things that's been on the top of my mind has been the future of CRO and how do we continue moving the needle to improve our sites, but doing that like five years in the future, what is that going to look like? With such a high volume of transactions happening on Amazon and Shopify, are we nearing the end of incremental improvements in CRO? That's kind of the thought that's going through, and I guarantee you have some serious opinions on this that I have no idea about. So I'm excited to learn from you what you're looking for in the future. But it also came top of mind because of a recent Google announcement that they're going to start including site experience into their organic algorithm. And so let's just start with that. Based on what you've heard and what you know about Google, what do you expect this to look like when it rolls out? Jon: Well, I think that the biggest concern for brands and the biggest concern they should have is that if you haven't been optimizing your site's consumer experience, it's going to severely impact your rankings, and thus your organic traffic is going to go way down. Google was kind enough to tell us now, even though it's not going to roll out until 2021. So we're recording in mid 2020. So they have given you a six months heads up, which is very nice of them. They also have provided all the tools you need to be able to improve your site experience, including one of my favorites, Google Optimize, which is their A/B and multivariate testing tool set that they've released that's great. So they're not only just giving you the tool sets, but they're also giving you the guidance on the fact that they want you to have a really great consumer experience. Say when they go to Google and search, and then they end up on your site, that they have a great experience and that they love the search results that Google is producing. So that's what Google cares about right now, is they're saying, yes, everybody knows if I need an answer, I can go to Google. But a lot of those sites that rank first have made the experience so poor in an effort to get listed higher that they don't have a good experience on those search result pages. Ryan: How much in your opinion, and maybe you can assign a percentage, is the actual act of converting on a site the experience? Can you break that out into its own piece, you think? Jon: Well, without question, I think Google has been very upfront about this. Normally they'd never release a specific percentage that anything weighs into that algorithm, but they are saying that it's going to be one of the top factors. Ryan: Is the rate of conversion on a site? Jon: They can track conversion to some degree, but I think what they're looking at is how long are people staying on your site? How many pages are they looking at? Are they converting is definitely a factor in there, but are they bouncing right back to Google? And I think they're looking at a lot of other metrics too. They're looking at page speed. They have a whole bunch of algorithms and artificial intelligence, AI, that has gotten really, really good at telling things like, do you have a popup on your site where it, as content loads on the screen, that popup kind of moves around a little bit, and just because the page loads slowly and you have this bad user experience, and now people are trying to click buttons and the button keeps moving as the page loads. Ryan: I hate that. Jon: Exactly. That's the thing that Google does not want, that experience, what you just had, that emotional reaction. If you had clicked on the first item in a search engine result page, and you went to a site, and you had that reaction on that site, Google now knows that that's what's happening, based on their AI, because they can test for those type of experiences. And so really what they're advocating for here is the consumer experience on your site, the user experience. And they're asking you to make sure that you have a consumer friendly experience. And I think that's really what's going to matter. Now, the outcome of that is naturally going to be higher conversion rates. So I've always been a proponent with CRO that says the goal of the brand is to convert higher, almost always, right? The goal of the consumer is to have a better experience. Those are actually very much aligned, because if you have a better experience, you're going to convert more. And I think Google is recognizing that now, too. Ryan: You could take the stance of maybe some of the conspiracy theorists out there, that a higher converting website in the eCommerce space could hurt Google's revenue, since people don't have to go back to Google to keep researching. They're just going to find it, buy it, kind of like how I usually convert, versus my wife, who's all over the place in her conversion path. What would you say to those conspiracy theorists? Jon: Well, I don't think it's a conspiracy. I think it's, you know, Google's pretty upfront how they make their money. It's what the ads on the search engine result pages for the vast majority of their revenue. So yeah, they want people to keep coming back to Google, but I can promise you that if I keep searching Google and I keep getting a search engine result as the first second, third, which are the only ones people are really clicking on for the vast majority of times, and the experience is crappy, I'm going to stop going to Google. So they must know, because they've factored this in as one of the top ranking items in their algorithm, they must know that this is causing a concern, and they're feeling a lot of pressure from tons of other search engines out there right now. I mean, you've probably heard of, what is it, DuckDuckGo. There's all of these other search engines that are way more privacy focused right now. Windows, any Windows laptop comes with Bing as the default search engine, Microsoft search or whatever they're calling it these days. So I think they're feeling that pressure of making sure that people have a great experience, so they continue to come back and search on Google. That's why they're making it such an important factor. Will it cost them some money? I don't know. I think they must've done that math, but I will tell you that I'm excited that this is new and that they're making a big stance for this, because it's needed. It's really needed. Ryan: Speaking of competitors to Google, Amazon controls over 50% of the online transactions in the world. And how much in the future do you think Amazon is going to impact the way we view a checkout or a conversion process? If we play it out, say, let's just say Amazon is going to continue increasing in dominance. You can't do much with their checkout. So are we going to be so conditioned as Amazon Prime members that anything that deviates from Amazon's checkout process is going to throw us for a loop, and we're not going to know what to do? Kind of like the idiocracy model, where we just get dumber, because it's so simple for us? Jon: Well, I think that's the internet. The evolution of the internet has been that way for years. And I think we did a prior episode where we talked all about how eventually what's going to happen, are we going to totally optimize ourselves out of optimization, right? You're going to have done so much optimization that every experience is going to be the same. And I don't think that's going to happen. But I do think, I mention this book all the time, it's called Don't Make Me Think. And the whole point of that is that as consumers get used to conventions, it makes it easier for them if you follow those conventions. It's so true today that people are used to Amazon checkout. They're used to the Shopify checkout. They're used to these platforms that have grown to be the monsters in this space. And if you really deviate from those best practices, then you are potentially creating a barrier. Now, that doesn't mean there aren't areas that can be optimized in those. There most certainly are. But at the same time, looking at Amazon as an example, in terms of how to convert better and not just on the checkout, I think Amazon does a lot of nice things. But you know what? It's akin to when a small footwear brand comes to work with The Good, and they say, "I really like what Nike is doing. I want to do what Nike does. Can you help me do that?" And I say, "Well, but you're not Nike. Think about this. Nike has hundreds of product lines across all these different sports. Their marketing is based on the celebrity of getting athletes to market for them. And you don't have the money to go out and get LeBron James to market your shoe. You are fighting a 10,000 pound gorilla here, trying to fight a gorilla fight when you're not a gorilla. So think about having the better consumer experience." Nike can get away with having a worse consumer experience because of how ubiquitous their brand is. It's the same thing with Amazon. I go to Amazon to buy something because I know they're going to probably have what I want. And it's a quick and easy way to just go there, type in what I'm looking for, get a handful of options, do some research, and buy something at a decent price point. And I know I can get it in a couple of days. But if I really want to find a particular item, I don't go to Amazon to buy that particular item. I'll go to the brand website to do that research, because I know in my research it's going to get way, way deeper, even though maybe the consumer experience isn't going to be as good. Maybe I won't get it in two days. However, I know that I'm going to have more content and I'm going to have a better research path on that brand site than I will on Amazon. Amazon is great for not going very deep, but going very wide. Looking at tons of different products, but not going very deep into the research on each of those individual products. And a brand site is different. It's going to help me go real deep on products, but not very wide on competitors. So I think they serve different purposes. And it depends on if I'm looking for a commodity, right? Like, I was looking at ethernet cables yesterday. I needed a 50 foot ethernet cable. I just ordered it off Amazon, because it doesn't matter. It's a commodity. I can get an ethernet cable anywhere. But I know I can get it in two days. I needed it quickly. In fact, they dropped it off the next day and it said, have it by next day. And I was like, perfect. That's what I need. So I didn't even look anywhere else at price. It was fine. It was like a $10, $15 cable. It's not going to break the bank to do that. If I saved two bucks going someplace else, it didn't matter to me. But I think that's where Amazon has its place. And I don't want people to get confused by thinking we have to meet Amazon's experience, because they're doing a lot of things that I would not recommend and do not test well. Their navigation is a mess, but it's like walking into one store, in a retail store, versus walking into your local mall that has hundreds of stores. And Amazon is trying to be that mall, when you're trying to just be the retailer. And you really need to take that approach a little differently. Ryan: Looking forward a couple of years, and maybe the physical checkout process on a site is pretty standard across a lot of things. I mean, there's Bolt right now. There's even Shopify checkout that's been very simplified. So CRO, I would assume over the last five to 10 years that you've been doing it, you've had to educate some people on just the basics of checkout. Like, why are you doing checkout this way? So if that goes away, it sounds like you're saying CRO becomes more of a brand experience on your side rather than, okay, you changed your checkout button from pink to purple, and then look at that [inaudible 00:12:29] type thing. Jon: Right. I mean, look, I think CRO has evolved over the past, we've been doing this 11 years now, but over the past five years, it's become something that most people know about. If you're on the eComm side of any reasonable size, you're looking at and doing some CRO. I think the biggest difference here is that you're right, that there are areas that are transactional that just need to be transactional. And then there's areas of a site that are going to have a better consumer experience, that are going to then reflect better on the brand. And I think that's what you mean by branded experience, where if I go to a site and I just have a poor experience, then I am at that point going to have a bad reflection of the brand. And I think that's exactly what Google is trying to prevent here, is saying that you need to have a good reflection of your brand so that people don't just equate that Google, where you started, gave you a bad experience, as well, by sending you someplace that has a bad experience. Ryan: Got it. Okay. So if you're looking five years into the future and making some crazy predictions or looking at, what are you preparing your agency, The Good, for in the CRO space? What are you maybe not doing now that you think you will be doing in CRO in five years? Jon: I think that what needs to be happening is a way to make this more accessible to brands of all sizes, first of all. I think CRO, just like most technologies and consulting and things of that sort, it's for the elite when it starts. You have to be able to afford it. It's a competitive advantage. And so you're looking at the top one percent is able to take advantage of it. Then it starts filtering down. And that's what we've seen over the past five, six years, has been really the first five years that we did CRO, it was only for massive brands. And then it started getting to the point where those mid market brands really knew it was something they needed to do, and it became more available, and the tool sets got more available. We went from having just Optimizely, which is a great platform, but it's $10,000 a month to use, just the platform, to having Visual Website Optimizer, which was a couple hundred dollars a month, to now we're at Google Optimize, which is just as good as VWO, and it's free from Google. We've kind of run that whole gamut, and each of those tools have their space, don't get me wrong, and they're good at individual items. But my point here is we've gone from $10,000 a month to free over a span of a few years, and I think we're going to see that democratization of CRO continue to happen. So what needs to happen is that it needs to have these methodologies, and the strategy behind them need to catch up with the tool sets and need to be accessible to brands of all sizes. And right now that's not the case. The only things that are out there are eLearning, where you as a small eComm owner, and you're wearing tons of hats, you don't have time to sit down and learn for 25 hours and watch videos and then figure out how the heck do I apply this to my site specifically, and pick and choose, and then still act on it, right? So you've invested all this time and you still haven't made any changes to your site. So there's some ways to fix that, and we're working on that at The Good, but really I think that democratization of CRO is where this needs to go. And I think in addition to that, I think we're really going to see tool sets continue to evolve, and I think AI is going to play an even bigger role. As you know, we've been proponents of that for years. We do AI eye tracking heat maps, which is our way of dipping our toe into that. And we've been tracking it for years, and looking and testing at those algorithms to the point where we wanted to make sure it was something that worked before we heavily invest in it. And we're ready to heavily invest in it and go all in. Being a data driven company, we're seeing a lot of artificial intelligence with big data sets really start to pay off and make this successful to brands of all sizes. Ryan: That's [inaudible 00:16:46]. I think that is going to be phenomenal, when these small companies that we know of that need the CRO services are able to get those at a point that makes sense for them financially and for the improvements that'll make. That'll be cool. Okay, here's a fun one. Besides the death of the email capture pop up that you're so advocating for and the death of Wheelio spin-to-win, do you see something that we all currently expect on an eCommerce site to not be a part of an eCommerce site in the next two or three years? Jon: Yeah. I think putting your credit card in is going to go away. I mean, I don't know about you, but I'm fully in on the Apple ecosystem. And if other ecosystems catch up with this, I know Google has done a lot with this, with Google Pay, but Apple Pay, I will now, if I'm searching online to buy something, I will use Safari just so that on my phone or even on my laptop, I can just do Apple Pay and not have to go get my wallet. I don't want to have to memorize my credit card. I don't want to have to deal with any of that. And in fact, it's just like retail. If I have the option to use Apple Pay and not touch anything and not give somebody my credit card to swipe or even have to touch the screen to do it myself, I will do that. And I use Apple Pay every single time. I was even in a drive thru getting food the other day and I used Apple Pay, and it's just like that's my first question anymore. It's like, do you take Apple Pay, because I don't want to touch anything. And it's so convenient. So same thing online. Everyone expects to have to put in their credit card. I think we're going to see that go away. Shopify has taken a big leap in that direction, by making it, you can put in your phone number and then it will auto fill out your information. It'll send you a text and confirm, and then you can auto fill all your information in. I think there's a lot of things like that that are going to start happening, just as a way to make this process way easier. Ryan: Yeah. I'm excited for that. It's during this pandemic, where we're not going into an office or commuting, I found that I don't have my wallet on me. And so when I'm off somewhere else on our property and I want to transact, I don't want to go get my wallet. So if it already has my information, I'm more than likely to go to that site, and I may pay an extra dollar. But for me, it's like, nah, it would have cost me 10 minutes of walking somewhere on my big property. So I'll pay the premium to use, so that it's already stored. Jon: That's exactly it. Ryan: I didn't even think about that, but that's very true. I may be lazy sometimes. Okay. Jon: Sometimes. We'll leave it at that. Ryan: Sometimes. Yes, sometimes. Is there something out there that you see that if just something on an eCommerce site that if a brand adopted it now, they would have a pretty significant advantage over competitors in the next couple of years, if they really took a leap of faith? Outside of using our services, because we're so amazing, what would that look like, do you think, if you had to pick one thing? It's like, yeah, most people aren't using this yet, but I think if they do, they're going to have a big advantage in a couple of years. Jon: I think that it's not just one tool, and I don't even want to go to a hundred percent to tools, because I think that's the first spot that every eComm owner looks to, is like what's the new greatest and hottest tool that I can deploy on my site and be ahead of everybody else on that? A tool is only going to do one of two things. It's either going to help you do something better, or it's going to expose a weakness. And what we see is a lot of brands jumping into tools. And what I would like to see these brands doing is using tools like Klaviyo, for instance, to do email followups post purchase. We have a whole episode, go back and look for post purchase emails and what people should do for post purchase optimization. I talk about all the different email flows that you should be thinking about post purchase, and there's so many things like that that brands right now just aren't doing. And I'm not a big proponent of just having a best practice checklist, but I will tell you, there are a bunch of items that when we jump into work with a brand, we just immediately look at and evaluate and figure out what are the top opportunity areas here. And I'm always surprised, no matter what the size of the brand is, that there's almost always things on that list. And one of them is, as I mentioned, post purchase followups. One is definitely the checkout. Are they optimized around that? You mentioned Bolt and Shopify and things like that. And I think there's a lot of great optimization happening in check out right now. I think there's also a lot of optimization that can be happening in just assets on the site. What do I mean by that? Well, like product photos. You and I have talked a lot about 360 photos, and the revolution that's coming with that, in the past. And I think that that's, you know, having better product photos as more people are going online to purchase, is really going to matter, because you can't touch a product right now. So making sure that you have a way to see every angle, to really understand what you're buying, is going to be really important. And I think reviews and social proof is a huge one that people miss out on. And I'd be shocked if more brands don't do that in the future, because there are right and wrong ways to do that. But it is something that if you don't have reviews on your site, people start getting suspect about trust. They don't trust your brand as much. They're wondering why you're not sharing reviews or collecting them. And we've seen time and again, consumers trust what other consumers have to say more than what a brand has to say. Ryan: That's awesome. So thank you for all of that information. That definitely got my mind going, and some of my brands and what I should be doing that I'm probably not, because I'm stuck in the minutiae of the business myself. So thank you for all those insights of what we're going to be looking for in the future of CRO. Any parting thoughts or words on the future of CRO? Jon: Well, I think the best way to stay ahead of the curve is to start tracking your data today. Understand how people are engaging with your site. Make sure you're tracking every click and movement. And if you do that now, no matter what tool you deploy, no matter what you start doing down the line, you will have more data to make informed decisions, because you're going to have a longer timeline to look at trends. You're going to have a longer timeline of data to look at what potential changes you made and when, and what the impact of those were, so that you can skip having to collect all that data and wait around before you can take action. Because the biggest issue I see with brands who aren't collecting data when we start working with them, is they start getting anxious, because they say, "Hey, we're just sitting and waiting right now." And I said, "Yeah, we need to get all this data that you weren't collecting forever, so we can make informed decisions. And then we can act." So it's this whole issue of eComm brands who come to the table ready to act, but then they don't have the information or data to do it, and then they get anxious because they were so ready to act. They made the decision to act, but then they can't do anything yet. And so they have to fill that gap somehow. And I think that's a big concern for eComm brands, and I think we're going to see more and more brands collecting data. And I think it's becoming a lot more popular and easy. The tool sets are so easy right now. But just get some data collecting every click and movement. Set up Hotjar and just let it run. Even if you can't do much else, just set up heat maps and let them run for a while. Do some session recordings and let them sit there. Google analytics, of course, but there's even tools like Glew, G-L-E-W, that is amazing for helping you understand your consumer audiences. All of that data is really going to be important. So that's what I would recommend. If you want to be able to take advantage of what's coming down the line in the future, start collecting data today. Ryan: You heard it here first. Jon Macdonald says collect data. Do it. Thanks, Jon. Appreciate your time. Jon: Thanks, Ryan.
Today, Jon asks how to determine what your SEM budget should be...and Ryan explains why the answer may actually be to have no budget at all For all your digital marketing needs: TRANSCRIPT: Jon: It's a common question that I hear quite a bit. "How much should I be budgeting for search engine marketing and how do I even forecast what I should be spending?" Well, securing the SEM budgets is always a challenge, right? So when you do spend on search engine marketing, you want to ensure that you reach your performance goals, but there are countless traps and ways to actually overspend or even underspend on your search engine marketing budget. And even if you follow all the best practices, you could still end up with some inefficiencies, so correctly addressing the ways to misspend requires paid search experts to consistently monitor campaign performance and budget spend. And also they need to have a pulse on what the company is trying to accomplish. So luckily for us, we have access to Ryan and he has access to 6,500 search engine marketing budgets to learn from. So today we're going to talk about ad word budgets and how to forecast what your brand should be spending and how to ensure you don't overspend or underspend. So, Ryan welcome. Ryan: Thanks, Jon. It's a big one. This topic is constantly top of mind for CFOs and there's constant tension, I think, between marketing teams and finance teams over budgets. And for me personally, it's one of my favorite topics and also my least favorite topics, just because of all the tension around it. It's my favorite because almost every company needs to be educated in how to forecast and plan budgets. But it's also my least favorite because it's always an uphill battle with changing the opinions of business owners, executives, finance teams, even marketing teams that don't understand forecasting and budgeting. It's a difficult conversation to have, but I'm happy we're going to be diving into this and hopefully doing some education. Hopefully making people think about what they're doing and how they can be maybe looking at SEM forecasting a little bit differently. Jon: Awesome. Well, I'm looking forward to being educated on this. This is a topic that we were chatting before we started recording, and you have some unique perspectives on this that I've never even given thought to. So. Ryan: We both have [inaudible 00:02:32] all kinds of things, Jon. It's great to be able to do this with you, but when this topic came up in our sequence of things we're going to be talking about it. I get all hot and bothered and excited and adrenaline starts flowing and I talk fast. So bear with me, but very similar to how you get when somebody's got a discount email pop up on a site is how I get when somebody tells me what their budget is X number of dollars a month. And don't overspend. It's just, I'm on a personal mission to eliminate SCM budgeting for 99.9% of the population. It just doesn't make sense for most companies. Jon: So explain that to me, I'm interested to learn more. Why is that? Well, Ryan: we get into the conversation because finance people want to see what numbers are going to be and understanding what's going to be coming in and out of accounts. And so it's for the last a hundred years of CFO's doing work to prepare bank accounts. Marketing has been a line item on the P and L that they've paid attention to and set goals around on how much are we going to spend? What are we going to do? How much are we putting into magazines and newspapers and TV ads and billboards? So it's understandable, but SEM is in a very unique position that it's not a normal P and L line item. Let me just use an example because here's what normally happens. Finance meeting, all right, the owner is, "What the heck," gets all red in the face. "What the heck is this $350,000 charge for Google last month? You know, we need to cut that down because our retailers are selling less of our product. We need to save money. And you know, if we go into a COVID time, we've got to control all of our money and keep it from going out so we're not spending $350,000 on Google anymore. Every month, a marketing team, we need to cut a hundred thousand dollars of that." Marketing team reaches out to the logical position says, "Hey, yeah, our wholesale channel is down because nobody's shopping in stores. So we need to cut a hundred thousand dollars of our marketing budget on Google." And that I get it, logically it passes the make sense test that you're going to take that hundred thousand dollars from Google and move it to the bottom line of profit. So you can cover the missing profit from some retailers that aren't selling product. Jon: Right. They're looking at it purely as an expense line item. Ryan: Exactly. Which again, conceptually makes sense. What isn't considered in that is that $350,000 drove 1.3 million of top line revenue, 10,000 new to brand customers, and also had an impact on two million organic direct traffic revenue. And so cutting that hundred thousand dollars, most likely won't even save that company money. It'll probably cost them revenue and profit because it's not going to be driving as much top line revenue. And many times in the past, if you cut a hundred thousand dollars of billboards, you may not actually feel an impact in the business at all over the next month, depending on what you're selling, depending on what the billboard's mentioning, but it simply does move that hundred thousand dollars to the bottom line. And that again, logically makes sense. But with SEM, it doesn't operate like a historical marketing channel. It is driving so many other things that impact the business. And so because of that, it is somewhat complicated to explain that to a business owner over a phone call or, "Hey, we've got five minutes with the exec team. Let's tell them why we need to be spending on SEM." For most businesses, I'll add, will start with the crazy notion that you should not have a budget for paid search. It should be, "Nope. You are going to set your goals and going to spend. And if you can spend more, you are going to take it if you're hitting your goals." Jon: Okay. So it's not an expense line item. It's an investment. Ryan: Yeah. Jon: Okay. Ryan: If you're printing money with an investment, is there any reason you wouldn't continue printing money? And the general answer is, "Well, no, if I put a dollar in and I get $10 back, I'm going to go find a bunch more dollars. There's no limit to the number of dollars I can be spending. Because I could take that $10 that I just printed and put it back in and it prints a hundred and I take it out and it prints a thousand." The asterisk to this, which we will touch on probably a little later is it does make sense to forecast sales from SEM, potentially based on historical data for inventory or production. And that's where it does get kind of like a sliding scale on what we can spend based on the inventory we have. And I've got a couple of examples on that. Jon: So if you're not budgeting the spend, should you be looking at the back end is what you're saying. You should be budgeting the return on that adspend and what that's going to be in revenue. So you're saying, "I want to make a million dollars. What does the adspend take to hit a million dollars?" Ryan: Maybe? But the reality is, is I challenge companies to, yes, you're going to look at this, after the fact on a PNL, as a line item, but in the month itself, the spend on SEM actually doesn't have an impact on cash. Therefore it's not necessarily a normal P and L line item. So easy math example, you're going to spend a hundred dollars on paid search on Monday. Great. You set up your Google Ads account. You've got your credit card on there. You spend a hundred dollars on your credit card on Google. It drives $500 of revenue. Okay? That hundred dollars that you spent on Google Ads doesn't even hit your card until you spend 500. So it's still just in Google system. You spent in essence, at that point, fake money, it didn't hit anything. It's just a Google system, but that $500 that you processed on your website is real money. And that's going to hit your account as soon as your merchant processor will send it to you. So let's just say easy math. It's going to hit you on Wednesday 48 hours later. So every day you're going to spend a hundred dollars to get 500, your credit card's not going to get built from Google until end of day Friday, when you hit the $500 billing threshold from Google. And by that time you've already collected $500 on Wednesday, $500 on Thursday, $500 on Friday, that's hit your bank account minus the processing fee. But we will ignore that for this example, you've got $1,500 in your bank account. Your credit card has only been hit for $500. If you are like me and you're [inaudible 00:08:29] this, I pay my credit card once a month. And I pay off the entire balance on ever pay interest. And that credit card bill is probably not due until the 14th of the next month. Let's say this was the first of the month. So you've got 45 day float on that hundred dollars you spent on Monday. And by that time you've already collected money. And if you're not losing money, which ideally you're not, but you're actually making money, then it's a money printing machine that actually doesn't cost you any money. You have, in theory, an unlimited amount of money, as long as you're at least breaking even just from a cash perspective, right? And your credit card limit, obviously. Jon: So it's no longer about SEM budget forecasting. It's around the laws of SEM cash flow. Ryan: Not every business has unlimited inventory. So you might be able to spend a hundred thousand dollars tomorrow to generate a hundred thousand and $1 of profit in your business. But if you don't have the inventory to back that up, then you do have problems. And we have some clients right now that are struggling to get inventory from China for their production. I think one company has a hundred containers en route from China they're just waiting on to be able to sell and they can flip a switch, and that inventory is almost going to be gone immediately. It's crazy, the demand for their products. So from that perspective saying, "All right, we have this much inventory coming. We want to sell it." And maybe that becomes the conversation around, okay. Based on the historical data of what we've been able to sell, what we've been able to spend, what's the return on adspend goal that we need to be at to sell that much inventory? So again, this is getting somewhat complicated math, but I'll try to boil it down simple. Let's say in my brands, for example, I will spend down to break even to acquire a new customer at any point in time, because I'm competitive. I would love to put my competitors out of business because I think my product is better. My service is better, but break even is fine for me because it doesn't hit the cash. I'm getting new customers. And I have a lifetime value. If, for example, I all of a sudden had a... And this happened, I think in April we had a production hiccup. And so I knew that I was going to run out of inventory if I kept spending down to break even on like, let's make it up the 20th of April. So I said, "Okay, all right, marketing, we're actually going to raise our return on adspend goal because I need to throttle down sales because I can't run out of inventory on the 20th. I have to be able to get to the 30th before I can get my inventory back in." And so that's the strategy I use. I didn't care what we spent, as long as it wasn't losing money. I still, I said, "All right, instead of breaking even, and we're going to get a 2.5 X because based on the historical data, we think that's where my sales special is going to be." So that took some guessing and manipulation on daily sales totals. And we had to watch it pretty carefully. But once we hit inventory levels again, I was right back to pushing aggressively to sell an inventory. Jon: Yeah, that definitely makes sense. So there's other factors you need to be thinking about here and inventory sounds like is a big one for sure. Then that could be the more delimiter than what you should be spending or what the budget would be for SEM. Jon: Let me ask you this as a little divergence, but how do you get leadership on board with this type of mindset? Right? Because if you go in most financial folks would probably understand that return on investment spend, but maybe if leadership and finance is still looking at all of this as a budget line item, that's only on the expense column. How do you recommend people approach this conversation? Obviously there's simple math, just like writing it out, might help, but have you have found any tips and tricks for how to approach leadership about something like this? Ryan: It's difficult again, going into this conversation about money is always... I don't think there's any conversation around money that becomes easy, except, "Hey, I want to give you a million dollars." That's pretty easy. I'd be like, "Yeah. Okay, great. I'm in." The longer an organization has been looking at marketing on Google or Microsoft Ads as a line item that they forecast and budget annually, the more difficult it's going to be to change the minds of the team that's been doing that. We've worked in some billion dollar organizations that said, "All right, last year we did X number of dollars on our website and we expect a 10% growth. Therefore we're going to take our marketing budget for paid search, which was 10% of that total. And then we're going to add 10% to it again. So there's your budget. Go do it. Divide it up by the quarter that you think the revenue is going to come in and four quarters higher, therefore it gets 42% of the budget." And then they work down into the week and have even daily budgets. Those organizations are going to be much more difficult because they're bigger, their CFO, they were publicly traded. So they had to report numbers to shareholders and forecast what their expenses were going to be. And because SEM is an expense you report to shareholders, if that expense was a hundred percent higher than you told them it was going to be last month, they may not be happy because they're not understanding what's that top line number that it was driving. So you have to have it correlate really, really well saying, "Hey, we spent a hundred percent more, but we actually drove over a hundred [inaudible 00:13:53] more revenue." It's going to make them excited. But the group that's doing the conference call with the shareholders may not understand that and be able to break it out in that much detail, especially if it's a multibillion dollar organization and the website is a small piece of that overall business, which it was at the point we were working with them. It's challenging. So my advice is to try to chip away at certain aspects of it over time, being able to show, "Hey, when we spent more at this level, we got more, it was a direct correlation." And I like to use impression share showing potential like, "Hey, there's a potential there in impression share. We used absolute impression share at the top, which means you're in position one on Google and top impression show, which means you're just above the search results," to kind of give an indicator if there's a room to push. And then I also like to talk about what we refer to an internally as the Halo Effect. I don't think that's an official term, but if it does become an official term, you heard it here first. Paid search, specifically shopping in eCommerce has a large impact on organic traffic and direct traffic. And in fact, if you look in Analytics and you get lost in Attribution, sometimes it's hell, sometimes it's heaven, but you can get lost all over an Attribution. You will find out that the more you spend on Google Shopping, the more your organic traffic increases, the more organic sales you get. And you can look at assisted conversions to see that if you label your campaigns appropriately, you can see generally on non TM shopping campaigns, which is non trademark people, just looking for your product and service, and don't know you as a brand yet for that product or service, you will see assisted conversions generally higher than attributed last click conversions in Google Analytics. And so it's having a disproportionate influence on driving sales through other channels, and it is driving sales to its accredited channel. And so showing them that, showing them, "Hey, this says have a large impact. If you just cut it, you're not just cutting the results that you're seeing from the SEM budget. You're cutting results you're seeing in other channels as well." And so in some companies, this is unfortunate, but if you cut Google Shopping, your SEO team, all of a sudden is going to look worse without them doing anything wrong. They just happen to have the organic traffic drop because of Google Shopping not spending as much money. So it's a very complicated web picture as we continue to shop more and more online, it's only going to get more complicated and intertwined, but at least helping them understand some of that first, even before you get to the, "What are we going to spend," budget. Jon: Yeah. It's almost like we, as an industry, need a one sheet for executives on how to explain this simply for them, because I think there's a so much education that goes into this. And I think half the job of marketing ends up being internal education, which is really just reduces effectiveness. I mean, we fight that all the time with conversion optimization ecomm and marketing teams, they're all a hundred percent on board and understand the return on the spend on optimization. But then you look at a high level executive and they say something like, "Well, but you know, we just had our best month ever. Why would we need to optimize?" Ryan: No, exactly. We're constantly in education mode in what we do. And I actually had this conversation with Google last week because they're really internally pushing for more automation within Google to control a lot of the inner workings of Google, which is not bad for many companies, but they want to move agencies into more of an advisor role and helping companies grow by educating them on digital marketing, which I think is a great goal. I said that, "Well, the problem you're going to experience with that though, is you've got a bunch of, let's just say 24 to 30 year olds in digital marketing that have never owned a business that are trying to educate business owners on growth strategies for their brand. And they probably just don't have the experience to be educating at a high level why these companies should be investing in marketing." And it's scale yet, I just don't think we have the expertise as an industry to be advising people that have grown hundred million dollar brands on how they should continue growing. Jon: And the barrier to entry with marketing roles is typically pretty low, right? Ryan: Yup. Jon: It's something where there is a lot of people in the industry, but there's few experts. And you start doing something like that with all of the junior folks who are just getting into it, and you're going to end up with some big problems. So let me ask you this, Ryan. What are some ad word budget management solutions that kind of help you maybe just prevent yourself from even under spending? Because I think we've determined today, most companies under spend, right? Ryan: Mm-hmm (affirmative). Jon: Because they're not focusing on the right metrics around this, but I know you're talking about a lot of these tool sets that Google's coming out with. I know we've talked about them on this podcast before how I've even been personally kind of put through the ringer by using automation tools through Google. So what are your thoughts just on the AdWords budget management solutions that are out there? Ryan: Generally, I don't like them, but when I'm talking to business owners about controlling budgets, the first thing I tell them is, "Look, you're going to have flexibility, regardless." If you're rigid on your goals, you're either leaving money on the table or you're wasting money. You can't dictate search volume across the entire United States, for example, for your product or service, but what you can do is decide, "Okay, here's what my goals are. Let's make sure that we're at least meeting those. And if we have a little bit more we spent, that's probably okay, as long as we get the goals, if we under spend it's okay, because the search demand wasn't there." Google at its core is a demand capture. People are searching for a product. You put it in front of them because you have that product. There are pieces of Google that can be demand creation, but by and large, it is demand capture. And so build flexibility into your model. But then this is another thing I have to educate a lot of businesses on as well. A big education piece is aligning your marketing goals with your business goals. So often those are not going in the same direction. So you have a marketing team. That's been given a goal and they're rowing in direction to achieve that goal because they have incentives and bonuses in place to hit those goals. And then you have an executive or a business owner that's driving or paddling the boat in a different direction because of their goals. And if they're not aligned, you have a lot of tension and issues because there's going to be frustration from the executive team. "Why isn't marketing giving me the results I want? We set this wonderful goal and they achieved it, but it didn't have the impact I wanted it to." So you start with, what's your business goal? Do you want to grow? Even beyond that, do you have an exit strategy as an owner? Do you have shareholders? You have to hit certain metrics as a business to be successful and make them happy? And then after you've set that you say, "Okay, how can my marketing team utilize the SEM channel to help hit that goal?" And let's set incentives around that rather than what a lot of companies do is well, "We had an agency five years ago tell us that we should be getting it for X or you know, 10 years ago, we were highly profitable on Google Ads. I want to be highly profitable still." And don't pay attention to the changes or evolution of digital marketing over the last decade that has made your 10 X profit goal spending 50 grand a month, not possible at this point, based on what your site's converting at or all these other things you could be doing or should be doing. So it's goal alignment build in flexibility and then monitor it. It's not something you just set it, forget it, let the marketing team just do it. Like I'm in marketing, I have brands, I still daily track everything. It's all about the data. Like I want to know what's happening in my business regularly. I don't let it go on autopilot. Sometimes I want to, but I don't. And just in be involved as a business owner, you have to have an understanding of what it's trying to do. Jon: This is great because I think if I could summarize a little bit of my learnings from the conversation today, it's you shouldn't have a budget, you should have a goal, right? So look at the other end of the spend, not the front end, but the back end. Ryan: Mm-hmm (affirmative). Jon: And then you really need to work on educating your team internally and the executives, if it's not your money that you're spending, because that way, you're making sure that they understand the return on the investment there. And then from there it's really an inventory challenge perhaps on how much you could spend. And you could really look at this as a cashflow machine. And that's how this should be looked at, perhaps is what's that cashflow equation? How are you getting that money before it's even truly spent? And how can you reinvest that up until you have no inventory left or you have an inventory problem. And then from there, there's no real way to kind of put something on autopilot here. They just don't work that well. You don't want to look at your marketing channels as equal. You really want to play at these different points of the acquisition funnel as you've mentioned. Did I miss anything on that? Ryan: Well, there's a couple of points. I think people should just pay attention to as well. There are circumstances where some companies intentionally lose money on the initial order from a customer. They have high lifetime value, they have a competitive space where it's necessary to even compete. They're going to lose money on the first order, beauty, skincare, that is often the case. Jon: That's still the cashflow formula. You're just stretching it out, right? Ryan: You can't spend unlimited money because it does actually cost you money to get that customer. And so you have to look at, from a finance perspective, how much money do I have in the bank? I can't spend endlessly if I'm losing money on the first order, if I'm breaking even or profitability, you can usually spend endlessly, but then it's also saying, "Okay, what's my diminishing return, and is there a better place for that investment?" Yeah. Diminishing returns is I'm losing money to spend. So maybe I stopped spending here on Google because I know that I can get this money losing return on Facebook or Instagram which is actually better. And so that's where forecasting probably has a bigger impact. And we've had those conversations with businesses about lifetime value. And there's some complex math formulas around it, but it can be done. But then when you're looking at moving budgets, there are some automated tools that brands love looking at. I mean, brands really do love tools that have great graphics and sliding things you can move around and makes it look like you're just doing amazing. And there's one that I really don't like. And it says, "We're looking at your Facebook spend and your Google and Microsoft spend. And if Facebook is at a five X and Google is at a three X, Oh, we're just going to move money from Google over to Facebook and keep spending until they're kind of at equilibrium," because that totally makes sense if you're just looking at math and numbers, but what most brands miss is that those budgets are accomplishing very different things. And so you have to look at them differently and not necessarily move budget from one to the other, just because a return on adspend goal makes sense like, "Oh, I'm printing all this money on Facebook and I may be breaking even on Google." It should be looked at differently. So generally avoid tools that just automatically move budget to the best performing things. Because for most businesses that doesn't make sense. Jon: I think that's a great point to end on today. And I think we've packed so much into 30 minutes here. I really appreciate you as always Ryan educating me on and helping me change my point of view on this, as I definitely came in thinking of SEM as an expense line item and you need to budget and have a forecast around that. And you've definitely shifted my thinking completely around, which is awesome. Ryan: One less business owner to educate. I love it. Jon: Boom. All right. Well hopefully a few other got educated today by listening to this and we'll continue to spread the word. So thank you Ryan. Ryan: Thanks Jon.
In every business there are tools specific to that industry or type of business that will help them grow. Ecommerce is no different. CRO is one of the most important tools to grow an Ecommerce business. Today, Jon dives into the role CRO plays in Ecommerce businesses. For help with your CRO: TRANSCRIPT: Ryan: Oh Jon, most people start businesses because they've got skills, knowledge, and the desire to control their work and what they're actually doing on a day to day basis. I would also guess most business owners want to grow and in every business there are tools specific to that industry or type of business that help them grow. E-commerce, as we know, is no different. You and I both know CRO is one of the most important tools to grow an e-commerce business and it's never a bad time to grow. Ryan: Today I'm really excited to dive into the role CRO plays in e-commerce businesses. You, Jon McDonald, knowing more about CRO than anyone I know, can you start us off today by giving us your thoughts on CRO and the growth process of an e-comm business, at a high 30,000 foot level? Jon: Yeah, sure. Well I think the best way to think about this Ryan is that there's only a small number of ways to grow your company just at a high level before even thinking about conversion rate optimization. You can get more new customers, you can get your current customers, or even those new ones, to spend more with you, and you can get your average customer lifetime value up by getting those customers that have purchased to come back and purchase again. Those are really the only three mechanisms you have for earning more revenue out of your business. Jon: So, of course, traffic generation can hit that first one really well. We might argue, and maybe you could fill in on this a little bit Ryan, but traffic generation, when done well in digital marketing, can help you also increase average order value. Then remarketing, you can resell to the people who have already purchased perhaps and you can run campaigns around that. Jon: But I think if you're really looking to impact the first two of those in a major way, conversion rate optimization is really going to be how you're going to get a higher return on that ad spend and how you're generally just going to convert more of your visitors into buyers. So if you're thinking about growth the biggest lever with the highest return on investment, and of course, I'm biased, but I think that the highest return on investment is going to be conversion optimization because with a small investment in making it easier for people to purchase on your site you're going to get a high value back that's going to be sustainable over time. Ryan: Well yeah and I think even on a previous podcast we talked about CRO after the sale even and increasing some of that lifetime value in areas I hadn't even considered actually being CRO. Like even some of the things in the shopping cart post purchase which would increase lifetime value had never even occurred to me. Ryan: I think it does play in all three, but I think for most people as they're thinking through their entire e-comm business they're going to probably see CRO in those first two buckets of growth. As you're looking at e-comm businesses and you analyze tons of businesses, is there a place in the growth curve of an e-comm business where you really see CRO as being the most impactful? I'm thinking in my head of a bell curve and growth or maybe you're growing up to a plateau like where would you in a perfect world insert CRO? Jon: Well I think that you need to have enough traffic to effectively do certain types of CRO. Let's break this down a little bit. Let's look at this bell curve in three chunks. The first chunk would be the folks who are just getting started, maybe we'll just say less than a million dollars in revenue, which is a pretty big gap there. But that first million what you really need to be focused on is making sure people know that you exist. Jon: They need to have an easy to use website but normally you're going after those early adopters who are willing to put up with a little more complications on your site than the average customer. So it's really important for that first third of that curve that you are mainly focusing on driving traffic that is going to hit a very specific segmented marketplace that is going to be your key customers that are going to stick with you no matter. Jon: You probably aren't going to be converting much on branded terms because people don't know who you are, so when people do find your site, at that point, you want to make it as easy for them to purchase but you're not going to be able to do things like AB or multivariate testing because AB testing and multivariate testing, et cetera, require enough traffic for you to get results in a meaningful timeframe. Jon: So in that first third what I usually would want people to do is when I'm looking at these companies I want to see them collecting data. What do I mean by that? Well are they actually looking at great analytics data? Have they actually ever dived in there and customized it a little bit or is it just they just put the snippet from GA on their site and that's all they have. Jon: Couple other things to be thinking about there, like you could easily pretty cheaply get things like heat maps and movement maps. You can do that type of stuff to start understanding how people engage with your website and just make changes based on data. You don't have to test it, right? Ryan: Mm-hmm (affirmative). Jon: Just make the changes. The best way to test there is just to do week over week or month over month. Now if you're making changes every day that's going to be hard to really know what worked well, but I don't want that to stop brands. They should still be tweaking their site as much as possible and then sticking to perhaps even larger changes in that first third. Ryan: In that space, in that first third, a lot of times the business owners generally don't know best practices on website. They know their industry, they know their products well. But how much would you as that business owner trust your gut looking at small pieces of data like that on a daily, weekly basis where you can't actually get an AB test and have full confidence that this is what is better. You just say hey, go with your gut on that because it's probably better than not going with your gut? Jon: Well I think that it goes back to the phrase I say quite often which is it's really hard to read the label from inside the jar. I think that with that in mind that it's still as an owner of a site and a daily operator you're still too close to it and you really still need that consumer feedback. Collecting that data and paying attention to it, even if it's only 100 visitors a day or a week, that's still data that you should be looking at. Where are people leaving, what pages are they getting stuck on perhaps, where are they dropping off in the funnel, that's all good information to know where are the holes in your bucket because they're flowing right through that bucket instead of collecting them as revenue. You really need to know where those holes are and that's really what I'm getting at here. Jon: The other thing you can be in this first third of that curve, go talk to consumers. You should email every single person who buys personally. There's not a volume at that stage under a million where you can't email every single person individually and just ask them, "Hey, this is me, this is actually me," just start the email that way. "I'm sending you a personal email. I want to know why you purchased and what your experience was." That's it. Jon: I have never gotten an email like that and I purchase online almost exclusively now, that's my job. I have never gotten a personal email from a brand. It's always an automated give me a thumbs up or thumbs down, or what's my net promoter score and they're doing it in a really horrible way. I don't want to rate you on a scale of 1 to 10, that's not what this is about. I'm not going to waste my effort there. If you sent me a person email and said, "Jon, thank you so much for buying from me, we're just starting out, as you likely know. If you didn't know, well hey, welcome to the small club. Excited you're here. Jon: I want to know about your experience because we want to continue to improve our site. Can we chat for 10 minutes at some point or can you just spend 10 minutes right now just write down your thoughts? Nothing is going to be better than that." There's a lot you can do in that first third that people just aren't doing and that's what I'm looking at these businesses if I'm going to give them a passing grade they're doing at least some of these items and most aren't. Ryan: No, I think that's important as somebody that's launched my own brands. You get, as a business owner, so many different directions that many times it's difficult to I think step back and think about okay, if I am selling online what's the most important thing to me right now. If I'm acquiring traffic I need to make sure it's doing the best. I don't like wasting money. Ryan: So I think most business owners probably need to do a little more of what I would consider some of that grunt work on their own where maybe it's not going to be your most favorite thing to do, but it's highly important if you really want this brand to work. Jon: Right. I think to get to that next level, and I would say that middle of that curve is generally a million to 25 million, big gap. But you can get easily get over a million by just doing what I mentioned. If you put in all that grunt work you will get over a million dollars a year in revenue of your site. Then once you get over that point you will likely start having enough traffic, and by enough traffic, let's just say 40 or so 1000 visitors per month. At that point, if you have 40 or so 1000 individuals hitting your website, and I should say users instead of visitors, there's a difference there in analytics. But when you have that 40,000 users on your site you can now start running AB testing on your site and actually get things to hit statistical significance, which is the mathematical formula that's going to tell you that this is proven with math that it's going to improve the metric you went after. Jon: I think that's what's really important here is that once you hit that middle part of the curve that you are really starting to invest in data-driven decision making that is run by testing ... and usually in this part when I'm looking at these businesses, these are the ones who have some money to start growing and reinvesting on a regular basis. It's usually no longer just the owner spending their own money to grow the company because when they got over that million mark now they have some employees, they start having enough margin, ideally, that they can reinvest. Maybe the owner is still involved, but they also might have hired a digital marketing manager or an e-comm manager. Jon: So at that point, that's when you really start to see some rapid growth and that's why that band is typically a million to 25 million because you can really grow pretty rapidly in there if you're AB testing in each of these 3 points we talked about earlier, which is the first time visitors, getting people to buy more, and then also a repeat customer. You can start optimizing all three of those because you have enough traffic going far down the funnel where you can even run tests in the checkout, which typically is going to be one of the pages that has the least amount of visitors to it because you're only in checkout if you're actually going to buy something. That gives you a wide range. Jon: Now if you're over 25 million, what I really start to look for there on that growth curve at that point is these people have in-house teams, generally, focused on optimization. They've proven out the value in that middle tier and now they've moved up to the top tier and they can start having a whole team centered around this, and if they don't, they realize that they're missing out. They know that they're missing out but there's something else holding them back from doing that. Jon: Generally, that's when they also either start to outsource that or they're looking to augment their team and come up with some additional new, fresh ideas because at that size they start to realize that they're too close to their site and they need some outside ideas. It could be as simple as they're just looking for test ideas or it could be as simple as they want to accelerate their testing and do more of it, or they want to train up their team and refresh the skillset there. Ryan: Got it. So grunt work "CRO" what we termed an earlier episode CRI where you're just making improvements to the site that are removing some friction even if there's not tests to back it up, you're just seeing some of the friction. Really it's 40,000 visitors, million dollars plus in revenue, really want to take the next step and grow. If you don't want to grow you're probably not even listening to this podcast. Jon: Right. Ryan: So you're probably not appropriate for this anyway. But here's something I don't think I've ever asked you about this, and I don't know why. Obviously when you're doing CRO on a site it's impacting everything all the site, all visitors are going to convert better once CRO process is going. What traffic channels generally see the biggest uptick in conversion rates once you've started the process and you're really seeing some good improvements going on? Is there a certain part of the site or type of traffic that you're seeing as just takes off really, really well? Jon: Well I think that it can affect the entire lifecycle of the customer, as we talked about earlier, and thus all the different types of channels once they get to your site. Now in terms of traffic generation channels, I think that generally what we see return on ad spend does improve because you're getting more people to convert. Now at The Good, we focus exclusively on onsite test, so we don't do any testing offsite, so we're not testing ads or any of that type of stuff. Jon: That's where Logical Position in your team comes in. But what we do see here is the match between having a successful ad campaign direct that visitor to an optimized portion of the site, that is like adding fuel to a fire. At that point they both become way more effective. So there's definitely synergies there. Jon: Now in terms of overall channels, generally, we see organic go really, really high. This is because people are already looking for you. They already know you exist. At that point, they've made their mind up that they likely want to purchase, maybe they heard about you through a friend, or it's all those channels that are going to have the people who are going to clearly fit your ideal customer profile. Jon: Now you're going to see those organic numbers really start to increase and improve because you've made the site easier to use. You've reduced all of the barriers that person who already really wants to buy that they're not going to get as frustrated. They're not going to have a reason to desert like they had prior to optimization. Jon: So that's one of the benefits because at that point you can get your cheapest traffic to be optimized and convert higher, then that's where you're going to see a massive return on your investment. But that's not to discount that you would see higher conversions from people who come by clicking on an ad and I think that's really going to be valuable in terms of return on investment. So there's a couple ways to look at that. Ryan: For a business's initial foray into CRO do you recommend their focus be on increasing the number of conversions, increasing the average order value, something else, or all of the above at the same time? Is there an order that I should be looking at those as a business owner? Jon: Yeah. I think that unfortunately The Good is in an industry called conversion rate optimization, so a lot of people come in with the expectation that conversion rate's the only metric that matters. Now I totally understand that 100% matters and if you can move that lever then you're going to see a massive return on your investment in it. But there are a ton of metrics that you do want to be looking at that are I would argue as valuable, if not more valuable and more sustainable. So if I get your conversion rate to double or I get your average order value to double we're going to have this very, very similar outcome, mathematically. People spend twice as much or let's just break it down, I get 100 people to spend $2 or I get a 100 new people to spend $1, we're going to make the same amount of revenue, right? Ryan: Mm-hmm (affirmative). Jon: So I think you want to look at these metrics more holistically and then develop a plan to one, analyze where your weakness is. Maybe you already have a really strong steady conversion rate and it's more about getting your average order value up, or maybe you notice that your cart abandonment rate is really, really high, or maybe there's not enough people even adding something to a cart, so there's all these clues, there's all these clues around why people aren't buying. Jon: If you just focus on conversion rate you're going to be, as a consumer, an untrained eye or maybe just somebody who's in that first band of up to a million dollars. They're going to go online and read a bunch of articles about improving conversion rates, and the reality is, a lot of them are just going to start running discounts, do pop-ups. Do all these that will show you an immediate boost of numbers but it's not sustainable in any way. And you start having long-term systemic issues where you're stuck on the discount train and once that discount train leaves the station your consumers are always going to be expecting discounts at every single purchase and every single stop, and that's really hard to get off the tracks once that happens. Ryan: And that's not a fun business. Jon: Right. Nobody wants to be in the business of, how do I put this, of giving everybody free stuff. It's basically what it is if you over discount. So I think you really want to be thinking about what metrics are most important to moving the needle for your business. The only way to do that is to go back to what I said earlier, which is early on in your business you need to set up the right tracking. You need to get used to looking at the numbers and you need to start making data-backed decisions. If that guides you into understanding where your metrics could be improved then that should be where you're going to start working on your optimization moving forward. Ryan: Oh man, and I will double down on that statement. I have talked to so many businesses in the startup process or they've been in it a couple years even and they're with a platform like a Shopify or a Bitcommerce and they don't have Google Analytics. How are you looking at your business, oh I just look at the back end of Shopify or Bitcommerce. It's like wow, there is so much more available in a more robust analytics platform than just your shopping cart or the web platform that you utilize that I think both can be important for various things, matching each other up, verifying certain things are working, but for sure make sure your analytics is working and tracking reasonably close. Because even with the Shopifys and the Bitcommerces of the world that have 1000s, millions of users if you're Shopify, the implementations of analytics do not work the same on each one of those. They don't line up correctly all the time, so you got to make it at least line up as close as possible. Jon: Yeah and there's one thing that one of your team members at Logical Position, Brian Aldrich, he really hammered into my head over the years. I've seen him speak at the same events all the time, and stuff. He always says, "You need a single source of truth." Unfortunately, if you the e-commerce platform be your single source of truth you're missing out on a full picture. Jon: So just getting started early on using Google Analytics, or some analytics package, I mean I don't know why you wouldn't use Google Analytics for this, but make that your single source of truth because no two analytics packages are going to line up exactly, and I think that's the point you're making. Jon: But if you just look at one of them like Shopify's built-in analytics that's great for at a glance how did I do day over day, et cetera, but the reality is, it's not going to help you optimize your site so you really need to have that real truth, source of truth, be something that is a full picture of the consumer experience. Ryan: Funny enough, analytics is top of my mind because I had a contact from another one of our partners. He's going off to look at other businesses to get involved with and one of them was an analytics company, so he had me sit down and talk with him to see what it was about and if it had some validity. They started their pitch at me was, "Well you already know analytics is bad, right? Google Analytics?" I was like, "Well, no." Ryan: Their whole thing was like oh yeah, Google's just bad. Google Analytics is bad because it gives itself too much credit and doesn't actually let you see the full attribution of everything. I'm like, well, I mean I don't believe that. But you see it's probably more in depth analytics products across the board. Does one in particular stand out as a business owner when you're looking at things? Is Google Analytics okay but actually bad or is it Adobe is way, way better, or something most companies haven't heard of that they should be looking at in addition to analytics, or instead of? Jon: Well I think you make a good point here and that's that every analytics package is going to be a little different. The thing is it's all in how you use it and the consistency in which you use it, it doesn't matter which platform you use. Also, a startup doing less than 10 million, they have no business looking at Adobe. They can't afford it, just be upfront about that. So it's also what is your return on your investment going to be? Jon: If you are spending a ton of money to get some data but you're not utilizing that data to get a return on that spend then don't do it, what's the point? This is where Google Analytics really serves in a great need is yeah, look, you're giving data to Google, if you're not paying for it you are the product. So the reality is it's a trade off. A lot of people think there's privacy issues in giving that data to Google, and whatever. Jon: Reality is that if you're a site doing under a million dollars a year, or even way more than that probably, Google doesn't care about your data, quite honestly. They've got bigger fish they're working with. The reality here is that out of the box Google Analytics is a great tool to get started with. Then if you don't ever touch it and you don't customize it, yeah, there's going to be better tool sets out there that come customized out of the box. But what I highly recommend is that you start learning early about Google Analytics, you learn how to set up custom dashboards, you learn how to feed information into GA through events on your site. Jon: There are limits on what type of personally identifiable information you feed in, but you can still feed in stuff without tying it back to a user pretty easily. You don't have to send a user's email, or an order number, or a phone number, or any of that kind of stuff into GA to warehouse it there, but you should be able to feed in whenever someone buys a product you can event that says this product was sold and this is the dollar value. That's not tied back to anybody. Jon: So I think there's a lot you could be thinking about there that could extend the Google Analytics to do everything you need and it's going to happen pretty easy out of the box. Now if you're looking to do segmentation that's really drilled down and have a lot of other information, you're going to need tools on top of Google Analytics to do that. But quite honestly, Google Analytics is great for the vast majority of brands out there. Ryan: Good insights, I appreciate that. As we're winding up I do have one more question that maybe it's interesting for people or not, but what's been the longest CRO engagement you've been a part of? Jon: Yeah, it's a great question. If I understand why I usually get this question it's because people want to know how long can conversion optimization influence growth. Is that basically where you're going with this too? Ryan: Yeah, it's like is it 2 years, is it 10 years, is it 6 months. Jon: I have a couple of answers to this. The first is that we've been in business over 11 years and if conversion optimization was not a sustainable thing then there'd be no way we'd be in business this long. I think the longest that we've been, I would say, we had a customer for four or five years and the engagement ebbed and flowed over time, meaning that we would sometimes be launching a lot of tests and sometimes just be holding their hand as they went through changes and coming back and forth. But they were a paying customer of ours for a handful or quite a few years, however you want to look at that. Jon: Now an average, an average goes about two years. Right around that timeline is when I see an average customer that we've helped them get to that next level where we have helped proven the value of conversion and optimization to the point that senior management decides this line item, that's not going away, so we should probably hire and bring that team in-house. I applaud that. I think at that point it makes sense. Jon: If you have a brand that has grown and you've used optimization, and you know that you're going to continue doing this, and you have successfully changed how you think as a brand to where you know that you are going to use data to make decisions, that you're going to put the consumer interactions on your site first, that you're going to really, truly care about your consumer's user experience on your site and the customer experience over all, then great, we've done our job. Jon: We have fulfilled The Good's mission of removing all of the bad online experiences until only the good remain. If I can do that at a brand and help them eliminate all of that, and want to have that same mission, and carry the torch, then I applaud that. So I think after about two years is generally when I see brands start to take that in-house, but there's a lot of brands who decide not to and continue to work with us beyond that. Ryan: In the CRO process does it ever work where you can start and stop constantly like hey, I want to do a three month here, stop for six months, do another three months, six months, stop, does that ever work or is that just more butter and can't finish the process when you start and stop constantly like that? Jon: Yeah, look at it this way, if you want to run a marathon are you going to train to win a marathon by one week running and then taking a couple weeks off and then running again? No. You need to build up [crosstalk 00:27:03]. Ryan: Did you get my training schedule? Jon: Yeah. I'll leave that one. Ryan: Yeah. Jon: But I think it's interesting, a lot of brands and business owners approach it the same way, they just feel like hey, well I can go optimize my site right now and do this once, and be done with it. That's not how it works. I think anyone can go out and do this checklist but that's just step one, that's really just the beginning. So I think all in all that when I see that and I try to set that expectation upfront and when somebody says, "Yeah, I'm going to do this for three months and then reevaluate," it's like well you know what, we can always reevaluate. We can just have that conversation at any point. Jon: But if you're only truly going to do this for three months then we're not going to be a good fit. In fact, do not spend your money on optimization at all because it's not going to have a sustainable long-term impact. You're better off just taking that money that you are going to spend and just running a bunch of discounts on your site, or spending it to drive a lot more unqualified traffic, or doing a lot of other things just to get your brand out there. Jon: But if you really truly want sustainable investment and optimization it needs to be a small amount spent on your site in a regular interval over time and it needs to be a long-term line item. So spend each month and compound that growth very much like a retirement investment account. You need to put a little bit in with every paycheck and then eventually you're going to start getting a lot out of it that it's going to just grow and grow and grow over time. Ryan: That is a phenomenal analogy, I think, for what CRO and what you should be looking at it as. Thank you Jon, I appreciate all the insights today. Ryan: Is there anything I didn't ask that I should have or a point that you wanted to get across in this topic that you couldn't get in there? Jon: I think I wanted to emphasize that CRO can be done at a company of any size, it's just the methodology in which you're going to do that. So I think you have the option to look at getting some data and making data-backed decisions at any size company. How you might use that data and approach, are you going to use that data to run AB testing? No, not for every size company. Jon: But I do think that there are options for every size company. So the mistake I see small brands make is that they feel like they can't do optimization because it's just too expensive and they look at it as an expense instead of investment, and perhaps they're intimidated by the data. But I think that there's a lot of options out there. Ryan: Jon, thank you as always for enlightening me and teaching me something new. I appreciate it. Jon: All right, looking forward to the next chat Ryan.
There are so many folks selling “search engine” services these days. And a lot of that is “snake oil” –– especially when you talk about “search engine optimization” or SEO. And this no doubt bleeds over into the SEM – or “search engine marketing” field too. Today Ryan unpacks just exactly why SEM is so hard to do yourself. For help with your SEM: TRANSCRIPT: Jon: There are so many folks selling search engine services these days, and that is a lot of snake oil out there. Especially when you start talking about search engine optimization or SEO, this no doubt bleeds over to SEM, or search engine marketing field, as well. The challenge that I see here with SEM is similar to what often happens in my world with conversion rate optimization. There are a ton of free resources out there, checklists, how-to articles, online trainings and certifications, and most of them are too high level and broad to actually be helpful with the e-commerce site. In my view, this really makes SEM very hard to do yourself, especially if you're an e-comm owner. Ryan, today I'm really interested in your thoughts about search engine marketing and why and what makes it so difficult to do it yourself? I really can't wait to get schooled by you once again. Ryan, let's start maybe with what your definition of search engine marketing is. Ryan: It's not complicated, for me. Search engine marketing involves making sure that you are showing up when people are searching for your product or service. As long as there's an intent or a search around that and an active process of putting something in, whether that's voice or typing, texting, it's ... they are searching for it. For me, the biggest ones are obviously Google. Bing, which is now Microsoft Ads. And then I consider Amazon Ads search engine marketing. Yahoo's in there but they usually just get powered by Google and Microsoft Ads themselves. In all of those platforms they are searching for it, and you can design a specific ad in that system to attract that searcher. Jon: That's interesting. I just heard something that brought up an interesting point for me. I've always thought about search engine marketing just being on search engines, but there's so many things out there that are search engines right now. YouTube is the number two search engine. Would you consider showing up in results and marketing around YouTube part of this? Ryan: I guess ancillary, to a degree, yes. It's part of Google. Google owns YouTube and you advertise on YouTube through the Google Ads platform. When you're capturing searches on Google looking for your particular product, you can also have YouTube ads, as far as remarketing. The difference I see on YouTube versus general search engine platforms is that a not a lot of people go to YouTube to find the product to buy. They may be doing some higher level research on looking for reviews. If I'm looking to buy a Bluetooth speaker, my dad just bought one for his neighbor, he had to do some research and figure out which one was going to be easiest because she's 80 years old. You can go on YouTube and find some reviews about ease of use or older people using Bluetooth speakers, and see which one's easiest. It's a research process, more, on YouTube, then it'll be, "I need a Bluetooth speaker now. I'm going to go to YouTube and buy one." Generally that's not how people are trying to transact yet. They can transact with Google or go to the website and buy it, or they go to Amazon and buy from the Amazon platform. Jon: That definitely makes sense. It's ancillary there but it's not the main way you would define it. You're thinking Google, Bing, those type of search engines at this point? Ryan: Yeah. They're actually searching for the product or service. That, for me, is the big key. In the paid realm, it involves a lot of things outside of a search engine. You can pay for display ads that are prospecting, they're not searching for you yet, or you're remarketing through those ads that can happen across the internet. You have social ads where you're marketing to followers of your brand or trying to find new followers and get your products in front of them for them to try, but they're not actively searching for that product. You're trying to get them to search for that product. So search, generally, I see further down the funnel. Jon: Okay. Ryan: [Crosstalk 00:04:18] a cut when people are not searching for it. Jon: That definitely makes sense to me then. I know this is a high level question but it is the topic of the episode today. Let's just dive in. What makes SEM so difficult to do it yourself? Ryan: Jon, that is a great question because it crosses the mind of almost every business owner as they're looking through a [PNL 00:04:38] and see the charge for an agency or an individual that's managing their marketing, like, "Well, why can't I just save this money, put that in my pocket, or develop something else with that extra money monthly or annually?" The real answer is because the search engines are constantly changing. What is currently happening on Google or what you currently see on your phone or your desktop when you do a search, is not the way it's going to look in a couple months, six months down the road. That constant change means that you need somebody or something to keep on top of all of those changes constantly. Just from the Google algorithm of ranking organic results, I think there's 500 to 600 changes every single year to that algorithm alone. If you've been in e-comm long enough, you've seen a huge change around the paid side of things. You had Frugal 12 years ago, 10 years ago, where all of your clicks and shopping were free. Then it changed into PLAs, then the Google officially called it Google Shopping and then there was Smart Shopping. In between those big shifts, there was all these little changes. Constantly new ad sets, new placements. We now have ads that show in Google images. We have Google Shopping showing all over the place and being able to dissect and see which ad types are working versus not working. It's crazy how much development we have to do internally to keep on it, and we have 700 people at the company constantly researching, studying. And then we have that group think kind of thing going on. But that amount of change is astronomical, and I've been in the industry for 10 years. My general thought is, I've been studying to be an expert for over a decade now, and I'm still, by no means, the smartest person in e-comm marketing. There's people like [Frederic Filloux 00:06:19] whose brains are ... I'll probably never catch him, but if you're a business owner or a marketer and you've not been studying specifically how to be the best possible expert in paid search, for example, you're going to beat ... get beat by somebody that's been studying it to survive or as a career path, or because they're super passionate just about paid search. I think understanding that dynamic, it makes it difficult to say, "Oh, yeah, I probably should DIY this to either save some money or because I think I can really do it well." I think about it as, you're going to be in a fight with somebody, because that's kind of what paid search is. It's your money versus theirs, your ad versus theirs, for the consumer at the end of it all. You could be a decent fighter, but if you're not a professional, you're not going to jump into the octagon and try to take on somebody that does this for a living and eat, sleeps, trains, and breathes ultimate fighting. It's not going to happen. Jon: We don't need to get kicked in the face because you have not been training, right? Ryan: Exactly. Jon: Let's break that down then. There's two possible options if you are going to work with an expert. There's the contractor and there's agencies. What's the difference between hiring that really passionate individual versus hiring that agency with 600 employees? Ryan: This is a good one. There are some highly talented contractors in the world. Very, very good. Some of the best people at an agency will go off on their own and take one or two clients and just operate those clients. Nothing bad with it, it happens regularly in our industry. The problem is for the majority of contractors, their life's going to evolve. If you get a contractor, let's say when they're 25, it's just them, they're traveling around, enjoying life, managing a couple of clients. Great lifestyle for them. Let's say they decide to take steps and have a family where maybe income needs to increase. Well, if your company is not providing enough income for them, they need to have more clients. Generally in America, you want your business to increase in value or you want your work to increase or your income to increase. Most contractors are good for a little while and then they want to scale. They want to get bigger. That means they have to also look at acquiring and so they're stepping away from just managing your account and figuring about, "How can I get another account?" or, "How do I insulate myself if this client canceled so that I don't have a huge income hit and starve for a few months until I find another client?" There's always going to be this dynamic with a contractor of growth versus taking care of what they have versus how do they protect themselves or insulate themselves from clients that eventually will cancel? That's part of it. The other part, I would say, is when somebody is doing nothing but working on your account they will know your account intimately, but are they going to be able to see other things coming down the road or learn new techniques from an account that they wouldn't be managing because they're a contractor, but they can learn from the person sitting next to them in an agency? I've seen a lot of group think that's helped. We've, at least at our agency, have repurposed a lot of things that Google intended one way, completely different way, and it worked phenomenally well. For example, this beta, we did one that was intended for the travel industry. They were showing these big, beautiful images when you search this destination. We're like, "Wow, that is just awesome." We didn't have a tremendous dearth of travel clients at the time but we're like, "That's really cool beta." We're like, "I wonder if we could get one of our e-comm clients to show product images in there when somebody searches for a product." So we went to our Google team and was like, "We think this has some validity with this client here. Do you think we can get him in the beta?" They're like, "Let's get him in the beta." Worked phenomenally well. They crushed it. I think they had it for four months and then Google sunset the beta because it didn't actually work as they intended it for travel, but it worked phenomenally well for e-commerce. So we had an eCommerce client using something in a different purpose, that if we didn't have a breadth of clientele, we wouldn't have even heard about that beta and seen that. Also, Google does have some teams that help agencies that they may not be at the same level or even can have the resources to help aid just a contractor. Sometimes it can but most of the time you're going to have additional resources that Google throws at an agency because it scales Google better. Jon: They're more of a partnership there. Ryan: I also worry about the bus. If your contractor gets hit by the bus, what happens? If they're stuck at a hospital, you don't even know because they didn't have to notify their client when they got stuck in the hospital. I like having backups in place. Jon: That's a good point. Ryan, let's dive one step deeper on this then. You were at a small agency previously before you were brought into Logical Position. Now you're with a large agency with over 6,000 clients. What should people be thinking about between a small agency versus a larger agency? Ryan: Having seen both sides, I do have a little bit of a unique perspective. When I was at a small agency, I really liked being small and nimble and being able to pivot. As a CEO of that agency, it was great to have all of these options. If I saw something I wanted, I was like, "Yeah, let's go do that. That sounds like fun." At a larger agency, there may be a little bit more red tape when I want to just go do something. We have to get some people aligned and make sure it's not going to impact other parts of the business. From a client, I get some clients that have said, "No." They don't want to work with us at Logical Position because they don't want to get lost inside a large agency. They want to be more important to the agency that they're working with which, I can see that. As a business owner myself, I'm like, [inaudible 00:11:40] my vendors to care about me and pay attention to me. So some of them are like the big fish, small pond. There's some good things about that. I think most agencies in the U.S. are not as big as us and so most agencies I would consider small. They can be hyper-focused on industries so there's some ability, if you have clients that operate locally ... I know there's a really big agency, actually, that focuses just on flooring. Most flooring contractors and suppliers operate locally and so they're able to just be very, very good at saying, "We know how to market flooring. We're going to do it in Dallas for this company and this company in this area of Dallas," because there's not as much overlap. In the e-comm space, generally we're all competing with everybody in the U.S. for eyeballs, for clicks, and for sales. I personally want the absolute best for my marketing, whether it's big or small. That part becomes, if everything else is equal, I generally like more resources in my vendors. They are more insulated. They're more protected against employee turnover. They're more protected against a power outage and one office can be compensated for in another office. Generally more security measures in place at larger organizations. This is obviously generally speaking. That's just a personal preference of mine. I've seen the difference at a larger organization. That group think is just expounded upon if the agency is run well. We have people dedicated to strategy. We have omnichannel strategy team that our clients don't pay for but they rotate through all of the clients and help their clients understand omnichannel strategies and maybe things they weren't normally thinking about in their paid search conversations that has to do with, "Your social strategy, maybe you need to look at this," or, "Your wholesale or direct to consumer through brick and mortar, maybe we need to talk about this," or, "Here's some partners that we have over here that may be appropriate." I think it's the overall resources we can allocate because of scale, it's pretty impressive. I didn't dislike boutique, but, man, our clients have so many more resources now under the Logical Position banner than they had beforehand. I think our skillset and optimization strategies have evolved at a much quicker pace with all the people involved in hiring new people and new blood to give us fresh eyeballs. We may be doing things one way and somebody else comes in and like, "Well, you could really change this and do it that way." And we're like, "You know what? We never even thought about that because we've been doing it this way for three years." Now we have another set of eyes that's fresh and they're like, "That could be done better." Jon: We've talked about what search engine marketing is. What's the difference between working with a contractor versus doing it yourself versus hiring an agency of different sizes. What if somebody who decides, "I'm not at the point where I can pay somebody for this yet. I need to do search engine marketing to get started. I know it's going to be difficult to do well myself, but I want to set myself up so that I can transition to that agency and get some help down the line," what are some good ideas for how they should get started? What should they be thinking about as they're diving into this? Ryan: I think people starting off, you need to start with the idea that you're entering the marketplace and you haven't been there yet. What I look at is there's been homeostasis across the marketplace as it sits now, and you're going to put a new competitor in there. That's going to have an impact. As the new competitor that doesn't have the data that the other competitors do, whether the other competitors use it or not, it doesn't necessarily matter. They have some data if they want to use it, you're coming in almost blind saying, "I think this is going to work. I want to pay for clicks and traffic to my site." That disruption, you need to probably default to aggressive. Aggression can mean many things in the e-commerce SEM space. When I say it, I'm meaning that you are willing to take less margin-per-order to capture market share and start collecting that data fast. If you're going to compete nationwide, e-commerce in the paid search realm, you're probably not going to compete well by spending 100 or 200 bucks a month. If that's your budget, there's probably better places to put it. I generally say, if you're not going to start with at least 2,500 bucks, I think you could probably do better things with it. This is not a fast and true across all industries, all e-comm period, but as a general rule, do that. Then you also need to commit to it for at least three months. Basically you're looking at 7,500 bucks of marketing to be able to get a good gauge. In a perfect world, you're going to go at least six, but the shortest I would go would be three months to get this data. Jon: What I'm hearing then, Ryan, is if you are going to dive into this, you likely should be looking at spending a decent amount of money. If you're spending that much money though, then it does make sense to have someone manage it. It's like, if you have a lot of finances personally, you should have someone helping you manage that because you can't be looking at it every day, adjusting your investment. That's kind of what's needed here, right, is somebody to help look at that? Ryan: Oh, yeah. In fact, I actually tried to start up a domain called, Search Investors, because I wanted people to see us as investors where you're putting money in, and our job is to make it do what you want it to do. It is complicated. Just like I don't manage my own money, my investments. I don't have the time to dedicate that somebody that knows the investment world and can prepare for ups and downs and get my money doing what it's supposed to do. I'm not even passionate about it. It's like, "Just go make it happen. I'm good at maybe bringing the money in and you're going to be good at making it grow once it's in." Yes, that is part of it, is once you're going to spend 2,500 a month, it does make sense to have somebody that's really, really good at this to give you the best shot at it. If you're going to spend less than that, you can probably get a little more creative. There's some areas you can probably be spending money. One of the great ways to start would, if you wanted to truly spend 500 bucks, put a gun to my head and say, "You have to come up with an idea for 500 bucks a month." I would say, "We're going to go onto Microsoft Ads because the competition is lower there, the search volume is lower. You can maybe test the waters a little easier. The platform itself is a little more difficult to work in, maybe, than Google, but it's still generally the same thing. Track your sales and orders there through that process." Even then, I think 500 bucks a month could be spent more wisely at growing an e-comm brand. Maybe if you also sell on Amazon, Amazon Ads may be better. There could be a better place on social media to be spending 500 bucks on an influencer to drive some sales. Even doing some SEO at 500 bucks a month may be more valuable for your brand than $500 in paid search. Could be. Every situation is different. I don't even do my own ads because I know there's people better than me. I'm fairly good at the ad piece, but I know people that are so much better than me, I'm like, "All right." I'm playing this game to win. I'm not playing it for fun. My businesses aren't ... they are hobbies because I just enjoy them, I'm passionate about business. But at the end of the day, I want my businesses because I believe I'm the best at what I'm doing there, to be the biggest and the best because I'm going to be able to help more people. I use my resources and thoughts saying, "If I'm really good at the marketing piece, I'm going to capture a larger market share, I'm going to have more of the market, and there are going to be more people that know me and are happy with what's going on versus my competitors, which maybe aren't as good as I am." Jon: Within the past year we've had this global pandemic. I'm wondering, how does that change some of what you're thinking about here around these items? Ryan: I think it's even more important to have experts that have lots of data behind what they're doing. We've had global pandemics which are relatively new [inaudible 00:20:01] States, at least since we've been alive. The last big one we had, you can look back at the Spanish Flu of 1918, but there's not a lot of people that have been alive that experienced both that one and then we've had the coronavirus going on. Changes like that, I think, are going to become more common in the online space. It's just going to shake things up and cause people to look at data differently or transact online differently. I think people with more data and more access to it are going to be able to see trends quicker and pivot clients quicker or test more things at the same time. It is, to a degree, another argument for maybe a larger agency, that when you have 6,000 clients that you're talking to monthly that you're seeing what they're doing in the marketplace and you're seeing, "This business owner tried this over here, look at how good that worked. Hey, we've got a bunch of other clients that can now try that or experiment with that in their business." It's almost like CRO across 6,000 clients, to a degree. Not necessarily CRO but you're seeing all these various things happening and all these AB tests going on that we can look at our Google MCC and see, "What is causing that client to go crazy right now? Let's dive into that." It's, I think, more important to have somebody that just understands. As we get more and more experienced with these massive global hiccups, if you will, we're going to know how to react better and better as a society. I think also, generally experts react even quicker to changes. You play a lot of basketball, and when they started shooting more three-pointers in Golden State, they had people that adapted very quickly to that. Then even just a couple of years later, the best basketball players in the planet weren't able to do as much as they could have before against that offense or against the defenses they were setting in place. The experts will evolve the quickest, and now you could probably still go into high school basketball and shoot three-pointers all day and that same exact Golden State offense will work really well at the high school game. Jon: Now it's changing, you have seven-footers shooting three-pointers. Ryan: Oh my gosh. Never would have thought before. Manute Bol when I was a kid [inaudible 00:22:01] shooting three-pointers. Jon: Yeah, I wouldn't have thought that. This has been really insightful. As usual, it comes back to expertise. If you have expertise in this industry, you will do way better than if you're just trying to do it yourself. Getting that expertise on your team is really going to drive the results for you. It's just so hard to know what's out there, what is all that data? It's hard for you, within your own little world of just you and your company, versus having a partner who is seeing this across 6,000 clients and seeing the trends and data. That's really interesting to me. Any final thoughts here, Ryan, before we wrap up? Ryan: I would just say there's very few scenarios in which I'd recommend a business owner or high level marketing executive doing in ... being involved in the minutia of digital marketing. Even if you hire a small agency or large agency or contractor, that time alone can be better spent in other areas. If I come across a business owner that's doing their own marketing on Google, I know there's nothing happening on there. They may log in every day, but you see the changes they're making, it doesn't have anything to do with optimizing the account. Maybe a couple of negative keywords but that time spent working on the business would have way bigger dividends if you'd hired somebody to handle that piece and moved on to that. That's what I try to do in my business is just, "Where could I find people that are smarter than I am?" And it's most often in almost every area. Jon: Yeah. I call that, best and highest use. What is your best and highest use? It's probably not messing around in AdWords or Microsoft ads. It's making sure that you spent the time to find somebody who is an expert to help you, and making that effective. That's a great point. We didn't even talk about the return on investment today. I think that's a really great point that people should be thinking about here. Ryan: Make more money on your time and money. Jon: There we go. Ryan, thank you so much for educating me once again. I've been schooled on what makes search engine marketing difficult, to do it yourself. Ryan: Thanks Jon.
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