Podcast Episode 2: How to use customer data effectively to drive performance in eCommerce.

Al Keck: Hi, welcome to the Infinity Nation and Beyond podcast. On today’s podcast we welcome Oli Spark, from Sweet Analytics. We’re going to dive into the world of customer data, and how we harness it to get the best results for your business. It’s going to be an exciting discussion ad lots of deep-delving into ways to make your business smarter, more effective and more efficient. Welcome Oli how are you today?

Oli Spark: I’m well Al, nice to see you and thank you for inviting me to join you on your first podcast, that’s very exciting.

Al Keck: A pleasure, before we begin, can you tell us a little bit more about Sweet?

Oli Spark: Thanks Al, I started Sweet three years ago. Having been a retail CEO myself, for as many as 18-20 years. For brands such as the White Company and Multi York. And I suppose my frustration during that process, was that so often that I tried to get to the numbers that I wanted to run the businesses that I was involved in, and really I found that I couldn’t ever do so and hence I began that rather entrepreneurial journey of saying if I can’t get it myself then I will build what I want. And that is what we have been doing at Sweet for the last three years. So now we mainly work for D2C clients – direct to consumer – and we have about 60 brands now that we work with.

Al Keck: Brilliant, thanks Oli. I think the last 18 to 20 months of covid world have really brought a pressure onto D2C retail especially those that are multi-channel. Why is it that you see data as such an important topic and where do you think lots of the companies are going wrong?

Oli Spark: I think it’s certainly a very hot topic Al. I would definitely say that. And the real thing of why it’s so vital at the moment, is because in the past it was quite difficult to get to the answers to make better decisions. And I think now with the number of platforms there are that provide those solutions, it is really imperative that any business leader actually makes sure that they get to their data so they make better decisions. I think that it where it is such an important topics because I don’t think it is acceptable now for people to be running businesses without having really up to date and insightful information.

Al Keck: I completely agree with you. I think I reflect on my own experience when I was on the client side and the time that you would spend in going across a multitude of platforms to collate data to be able to do your weekly or monthly reporting was just an inefficient and ineffective use of time. It’s important to get the numbers but I’m not sure it was good use of a Monday morning. I think the other thing now is, as the competition grows online, we just need to be smarter, more efficient and more effective with who we are marketing to. Knowing that it is going to give us a good yield or a good return. Still too often, I think we are seeing people doing a more generic one time – what’s my return on my first order – not really understanding true customer lifetime value. But I am sure we will come onto that in a bit so I am not going to jump ahead!

Oli Spark: Almost it seems you would like to do the talk as well! We have both come from that retail background and I think that trading mentality is what we both understand and probably both of us in our businesses see where we think companies are going wrong on that. And I think really at the most basic level, if we just take the view that I don’t think enough businesses really understand the difference between acquisition and retention. So as a first, really basic point, I think that a lot of businesses still really don’t run that core metric as a first understanding point. And I think that is so important because, with any direct-to-consumer business, every year you exist for a bit longer, you have more people in your database and your customer file, and so you have an inherent growth associated with having existing customers, but really to achieve growth in most businesses you need to be acquiring customers.

And I think, personally, I found way back in my old White Company days, it was only when I understood that play off between acquisition and retention that I really managed to deliver the growth that we really needed.

Al Keck: And I think that that is a really interesting point, because I still believe that’s the crux of the problem. I still think that everyone is very – and this may be a sweeping statement – very acquisition focused. I think I would say that a lot of business I look at or talk to are probably 75/80% focused on acquisition channels, driving revenue that way, driving growth that way rather than truly understanding who a good customer is, who a loyal customer is, and how to find more of those people. So, whilst they are growing, it feels like a hamster wheel of effect in terms of having to just pump hard to achieve that growth number rather than building customer lifetime value which I suppose ultimately for those business owners is building them enterprise value as well.

Oli Spark: Yes I think there are a couple of interesting things there Al. I don’t feel that a lot of people have forecasting models that really allow them to understand quite how that acquisition and retention numbers and which ones you can move in terms of growth. So you may want to grab 50% but unless you can translate that shift into a customer metrics number – people you have got to acquire – or can I get improved retention by 10% – and understand what the impact of those is, I feel that one of the things a lot of companies still struggle with is having that forecasting model that really translates that into insightful things that you can measure against. And I think that’s really important. And I think that’s – even before you move onto costs of acquiring – so we are trying to highlight things we think perhaps people aren’t doing that well, I think even if they have got that whole understanding of new acquisition and retention, it then comes down to how much does each one of those customer groups cost. Because I think we both know that it’s very rare isn’t where most of the money gets spent – as you mentioned – and unless people really understand whether their growth comes from acquisition or not, it’s not a straight line between marketing budgets and growth targets. So, there is no point in saying you are going to spend the usual 10-15-20% of your sales on marketing, if actually you want to grow faster than that. Because it is not a linear relationship. So, I think that relationship around what cost is and what cost of acquisition is again another part of the data set where companies have problems.

Al Keck: In your experience, in your exposure to your clients, how many of them are targeted with a repeat purchase target, an improvement of customer lifetime value target – how many of them are targeted to grow and push those levers, versus driving top line revenue?

Oli Spark: Al, so rare, is the truthful answer. I certainly believe that these are the really most important numbers and that’s what we’re trying to provide clarity to. But I think one of the problems around the whole data topic obviously, is actually having people who have time to really look at the numbers and to understand those numbers, and I don’t think that still businesses – though everyone – and I am sure we will talk about things like customer lifetime value and all those sort of things – I still don’t think that many businesses are truly run on those fundamental concepts. And I think the understanding is still quite low. Despite these being very generic terms that people bandy around very simply.

Al Keck: Yes, I think that understanding is low, but I think as you highlighted earlier in our conversation, getting to the nub of this data and getting a clarity on how that business is performing right now, I think is tough without a business intelligence tool to help process what is a vast volume of data. So, I think for me that is where I see most people struggle with it. And I know, one of the other things that is a real bug bear – the wrong word, but a real passion of mine is actually that people do do segmented email marketing and do use the mentality I call – or phrase – the show me that you know me – show me that you understand what I have bought and what is the next logical product for me to come and buy. And too often I think, again, people will just go oh we need to send an email out this week – I am not saying everyone – but I still see it a lot in my own inbox – it’s just like here’s this week’s email, this is what is available for you to buy. Rather than saying here is what we think is relevant to you. And again, I think it is that whole piece about taking the time and effort to understand who that customer is. Again, having been client side, I think a lot of the time it is having the time to do it. And to do it manually is very labour intensive.

Oli Spark: I completely agree with you – the tools bit is really important. And obviously I come from this background and I think the tools exist now. I am not sure the behaviours yet follow the tools. So as you say, the weekly email is such a common thing that people have and we all know that day to day running a business, it is difficult to take that step away, but the tools are there and I do still think that behaviour as much as anything else, people need to change their behaviours in order to achieve what you have talked about their Al, which is making marketing more personal.

Al Keck: And any views on what will drive that behavioural change?

Oli Spark: Consistently I think as always starting at the top of any organization but I think adoption of marketing tools is a hot topic as we know, as you asked at the beginning about data – data is a hot topic, and I don’t think any CEO can really come to a business and say that they don’t want to know the data and that should create the pressure down the organization. I think the other place where it comes to – being honest I think the gap at the moment, is people maybe like us Al, who have been around in the business rather longer than we would like to. But there is a big swathe of people who have ha this problem of getting to data and have been used to working without having to have that rigor and the digital ninjas as I like to call them, but if they are educated, they’re smart, they should be coming into our world with the desire to identify these core metrics and to drive them. So I think at both ends of the scale it could be driven in terms of changing that behaviour.

Al Keck: I suppose it comes back again to that challenge of education and there isn’t really anything that I have found yet – a true great source of educating digital marketeers at the moment. You go in and you learn from those above you. And it becomes systemic.

Oli Spark: Absolutely and we all know that there are lots of great people teaching the younger generation, but by the same token, it is – as we all know – the job of a marketeer is very wide and we haven’t talked about product data, but you know, again one of the core values I really hold is that the marketing department can often be blamed, but actually it may be the product. And unless you can get to both of those data sets in the same place, then I think as a marketeer you’re hamstrung, and I think again in terms of skills, you really need to be able to understand what customers are buying what product. Not just to be able to serve them future things but even just understanding performance. If you haven’t got the red coat which you had last year which was the best seller for new customers, maybe your customer acquisition isn’t so good this year. And it’s no fun – we both know as marketeers saying we have had a rubbish week, when actually you have been out of stock, you haven’t got the great product that you had last year, it’s that combination of both marketing data, customer data and product data which I think is absolutely vital in this whole data set.

Al Keck: I agree with you I think it’s almost why it is the lynchpin to achieving growth because as you say in the example, in a historical world, yes they would have known that the red coat sold well, but how easy is it then to identify that that was a great product that all our new customers came in and bought. That’s two separate camps really, and historically there is no easy or quick way to sort of match those two camps together.

Oli Spark: I completely agree with you Al, and I think we have both sat in so many meetings without that joined up approach, if we call them customer data platforms – it’s not a marketing technology term I like that much but it’s a current thing, there is absolutely no reason why you shouldn’t have clarity on who is buying what and understanding your customer groups. And clearly the other sort of marketing phrase of single customer view, comes up a lot and it is vital that any marketeer does have access to a single customer view that includes customer browser, product information, all in one place all joined together, with the marketing data. And going back to where you started this originally, I think why is it such a hot topic and I think it’s the responsibility of marketing people to make sure that they do have that breadth of information.

Al Keck: I completely agree with you. I think it also then empowers them and the boards of those businesses, to better understand the investment they make in terms of that longer term that could be possible and so that is really where I see there being  a real difference in the businesses that kick on and grow – is once they have understood that cost of acquiring a customer – and in laws of average in terms of potential buy by following some sort of better digital marketing rigor and discipline, they are the ones that then have the confidence to back themselves and invest behind the variety of marketing channels that there are to really sort of accelerate the growth and speak to a wider audience.

Oli Spark: Yes I agree Al and I think that those two metrics of customer lifetime value and cost of acquisition – you asked earlier on – do I think people drive their businesses by them – very rarely. And if I talk about my own experience years ago, it was when I understood that it was ok to lose money when I acquired a customer because I knew that I made it back within nine months. That then built my funnel for the growth of the future years. And it is understanding that whole play off between those two which I still think is – people don’t automatically understand – and you have clearly then got the next level of discussion, even if you can get to a top-level cost of acquisition, as in which channel is it that is really driving those. And that can be an offline channel or an online channel. And that brings us onto the whole topic of marketing attribution which as we all know is conceptually quite hard and actually technically quite hard. But I think that it is really important that those key metrics are beginning at the top level at least to have some views on attribution is really important.

Al Keck: I think we will have to do a separate blog post or podcast on the attribution.  I think that is its own debating topic.

Oli Spark: You can ask someone else to that one, or I will willingly come back to a session too!

Al Keck: So just to loop back – based on the insights that you are seeing in your tool what is the most efficient way to learn about the client’s business’ most – their existing customer – what traits are you able to tell, and how does that benefit them and affect the bottom line?

Oli Spark: The key things are around retention and repeat cycles. That is the key thing that we really look for in the existing customer metrics. I think gaps to purchase is a really important bit because that allows one to start looking at predictive cycles as well as just three months of normal RFM type analysis. I think it is really important to understand what the likely gap is and I think again on that retention curve, understanding the retention curve, is really important. And as we both know, so often if you don’t get people back in the first three months, of course depending on what your product life cycle is – we are talking businesses where you want to have high repeat rates – if you don’t get them in the first three months then you have probably lost them.

Now many many businesses obviously don’t have that faster repeat rate but it is understanding what is the likely purchase gap and then really trying to target the existing customer in that bit where they become more likely to purchase. Those are the really important things and then understanding the product analysis associated with all existing customers. Because again if one doesn’t understand – if there is an obvious second purchase, it’s how you then present that to the customer and how you target them with that. For me it is that retention, repeat and then really using the product to upsell and cross sell in the next cycle of how you contact people.

Al Keck: And are you then doing a lot of analysis on historical flows of what the first purchase and the second purchase was to then sort of try and interlate.

Oli Spark: Exactly that Al, we have an audience builder which allows us to do segmentation really easily and if I talk about a gym business we have been working with for a long time, where we are really looking at the patterns of history. For instance, as one knows gym memberships are a common thing where you bring people in on a low offer and then you hope you convert them to a long-term subscription. And we’re often in that where we are really looking at patterns of what we can identify before people drop off to try and bring in those early warning actions to try and increase that retention number. History is always key, and too often it can be undervalued. History we find generally a pretty good predictor of what is going to happen next.

Al Keck: I call it the hidden goldmine that we all sit on but rarely do we excavate.

Oli Spark: Exactly. I was at a client meeting yesterday and it was that typical thing where we are looking at why have sales not done so well and then actually you realise that you bumped into a huge success of a particular product, backed by a marketing effort. And it is no good spotting that at the end of the month saying actually we didn’t do quite so well because last year we had a huge bump. You’ve got to be looking forward. But so often for me life always begins with what happened last year.  Let’s start with that. And I know that’s a slightly old-fashioned view, but let’s at least always start with that. Because it does give you a firm base on which to start really working out what might happen if you want to achieve your goals going forward.

Al Keck: So we have covered a lot there in terms of people have got a wealth of history to analyse and what can we do. What tips have you got for people that maybe a younger business, maybe only got 12-24 months of data. And what tips or suggestions can you offer them. Because typically we would look at a lifetime value cycle over 3 years – again depending on what products are sold, etc. So, someone with less data, how can this insight still help them?

Oli Spark: I think I would actually go one stage back, to businesses that are at start up and don’t have data. And we have had a couple of clients recently who have fortunately had amazing successes in a very short amount of time. And I think the real lesson I would always be pushing there is – everyone talks about digital first – data first is another important concept – because going back to our point on learning from last year – if you don’t start collecting the data from the very beginning and you don’t – there’s no point being six months in and people starting to ask questions. So we have definitely added real value by putting in that data first approach. So, I think that is what I would always say for people who are low on data.

But on your thing about people with shorter time spans, there are always lessons Al to be learnt, out of any time span. From our absolute view we would love to have 4 or 5 years’ worth of history and it produces a lovely model. But even short-term models produce really good insights. If I think about a couple of other businesses we have got who are proper businesses who have transferred from being wholesale businesses attached to the pandemic, and that is really where they have started businesses from scratch – and here we are a year and a bit on and I know that that data from just one year gives us great value in terms of it. So, I really don’t think people should be put off just because they have got a relatively short trading history or even relatively short access to data.

Al Keck: Cool. I suppose now that we know more about our customers historically, what would your key tips be now in terms of factoring that into the movement and the growth of that business moving forwards. How do you factor in building loyalty and retention as we talked about – that we think that’s a key metric and milestone. And any other tips, I know that when we have used your tool I am a big fan of trying to utilize it to go and find more like minded customers because the laws of probability – is that if we find a customer that is like some of my champions or VIPs or however you want to talk about them, the laws of average are tested across multiple clients – is that they will act like our great customers which means they will be more loyal and they will spend more money with the clients. What tips have you got?

Oli Spark: Yeah I think our segmentation is the key to all for me in terms of all of that. With tools like ours you can segment really easily and then you can drive those out into Facebook. You are able to use your first-party data into so many platforms now at a segmented level. So I really believe that the one big learn in this is using your data. Because, again, data or any platform it’s only as good as you driving some action from it. And that’s the really important bit. So I don’t think any marketing leader should feel secure just because they have got a platform in, the really important bit is what do they then do with it. And for us the real things are the usual of really identifying what your audience is, and then using that audience to push the usual channels that we all know, like Facebook and Google. But you may have an audience that – an unsubscribed audience – there may be customers that have unsubscribed for email. And we all know that they often may or may not have unsubscribed because they really didn’t want to talk to you, or not. And so then you can pick up other channels like direct mail. And I think again it’s looking at the whole marketing mix Al, that really matters. And really understanding your customer. That you can then do through a segmentation tool. And I think that is the really important thing.

Al Keck: Segmentation is the key to all.

Oli Spark: Segmentation is definitely a driver of value in our – yes.

Al Keck: Ok, brilliant. Are there any other points you want to cover – I mean I think that has been really useful. I am conscious that we could sit here for hours and hours and talk about this over numerous pints and glasses of red wine.

Oli Spark: I’ve already done this and I haven’t even been offered the red wine! No, I think the thing I would always stress is – I think you and I have both comes to this with very similar beliefs – data is so important, it really shouldn’t be seen as the barrier. If I take my own platform if you want a standard ecommerce tech stack it takes 15 minutes to set up. There shouldn’t be that fear around data – fear and inertia, no one was prepared to move, no one was prepared to try, because you just disappeared into an IT nightmare. And nothing ever happened, and it was too demoralizing. There really is no reason why people shouldn’t be actively testing, moving forward with data because APIs make it just so much easier to do. That’s a really important thing for me. It’s not impossible.

Al Keck: No, I remember the integration projects of old and that – it didn’t make it impossible – it made it financially unviable. But as you say, 15 minutes you’re up and running and I don’t really see what you have got to lose. And there’s only lots to gain.

Oli Spark: That’s certainly where I come from. And if we talk about Shopify, Magento, all of those common platforms, it really is that easy. People then should have access to these key metrics we have talked about.

Al Keck: Brilliant where can we learn more about Sweet?

Oli Spark: Thanks Al, I would love a plug! Sweetanalytics.com is our website, we would love people to get in touch and then we are very pleased to have done a couple of projects with you and coming in via Infinity Nation either way we are happy for. We have worked in a couple of sites now, just client day to day, but I think the secondary thing around investors using the combination of our data skills and your digital skills is another really important thing that I would l love people to come to us for. And they can come to either of us via that.

Al Keck: Well it’s been great to chat, and we look forward to catching up and discussing some more ecomm tips soon.

Oli Spark: Thank you Al and thanks for including me.