Adrian Scott CEO of Go Direct Marketing talks to Al Keck, CEO and Founder of Infinity Nation. Chatting about whats holding back companies when trying to hit their targets and success in this tough climate. To find out more about Go Direct Marketing, head to their website: https://godirectmarketing.co.uk
Al: Hi, welcome to another Infinity Nation podcast. Today I have with me, Adrian Scott, CEO of Go Direct Marketing.
Adrian: Hi Al
Al: Now, how are you? You’re good? All good? All good, thank you very much. Adrian, tell us a bit about Go Direct.
Adrian: Go Direct, long history. Fortunately, you can’t see me, so you can’t see how gray and old I am, but Go Direct was set up in 1999 as a list and insert broker, if people remember back those that long. Yeah, I know. Good old times. And I suppose now we are a specialist growth agency helping e-commerce brands grow their companies, specialising in both acquisition and retention. I think historically we’ve focused on offline channels but now obviously with the way things are in the world today, helping clients across all of their channels and how to grow profitably I think is probably a good way of describing it.
Al: Fantastic. So both the kid in that journey and that aspiration, and I know you guys have historically focused a bit more offline than we’ve been focused on online, but we always have great chats. And we met recently and one of the points we were covering was saying, what is holding back businesses from growth in the current climate? And we both agreed could be a great podcast here to discuss and see, you know, challenge our views from each side of the table and see what’s there.
Adrian: So the number one challenge I think we’re all seeing at the moment is acquisition, becoming harder for companies and becoming more costly. I think from our side we’re seeing that there are certain channels that are becoming more costly and other channels that maybe are a little bit unloved and thus should be considered more to balance out that acquisition cost but love to hear from it from your side.
Al: We could start going into old-fashioned inserts and door drops and everything else if you really wanted to but I think definitely you’re right in that acquisition has become challenging. I think partly there is, I think might have been a bit fuelled by COVID is there’s more competition out there as well. But acquisition definitely from an offline perspective is proving more challenging.
Adrian: I think costs from all the offline perspectives, so print, postage, even I mean everything from data processing costs have all gone up and therefore I think we’ve probably seen on average maybe about 30%. So when you take offline channels and the costs are going up by 30% probably similar in digital channels, the ROI that you have to get, it makes it more tricky. So from what we see, therefore customer clients’ budgets have stayed the same or maybe even shrunk and therefore it’s the the bang you are getting for your buck Is it’s not quite going as far so it’s causing a bit of a squeeze on customer numbers and that affects your growth moving forward before I used to cut 100 pounds of fuel in my car services. There’s nothing wrong with the car, it’s just the cost of the fuel has gone up and so that’s for the money I get less. Are you not electric yet Al?
Al: No, well I’m getting there, I’m getting there. But you know, looking at some of the cost per mile figures on some of those, depending where you charge it, it doesn’t seem massively We digress. I think on paid search we’re seeing similar costs. And I think the challenge there is, as you say, that consumer or client businesses have put in cost or price increases, but not to the level of 30 percent. And so there is a net net delta difference where they’re short. So I think on the acquisition piece, as I’m sure you guys do is really trying to double down on who are great customers so it’s being smarter with the data rather than the Fire and mud at a wall and see what sticks. It’s like no we need to be really clear on the right type of customer Who’s a profitable customer?
Adrian: Yeah Lifetime value becomes it comes a lot into it it’s like as we’ve discussed that on that it’s the lifetime value be get from that customer becomes more key. And then it comes down to the whole customer service, personalization, customer experience that you get out of them.
Al: Yeah, absolutely. And I know we’re going to touch on attribution in a bit, but I think for us it’s also understanding the different channels at play to acquire these customers. How, you know, I would say during COVID times, three years ago now.
Adrian: That’s a bit scary, isn’t it?
Al: Is when paid search and paid social was heavily being used and successfully.
Adrian: I think that definitely, because as I think you said a minute ago, the competition has increased in those channels because people saw that money work well during those times and thus that’s an auction that’s driven the cost up to. But we’re definitely saying at the moment, are there other channels where there’s headroom for growth and is more cost effective over a medium to long term. So organic search for example, we sort of say it feels a little bit of an unloved child at the moment where it hasn’t had a lot of effort put into it. It doesn’t give the near instant gratification of, oh I’ve turned the budget up here, period of time, short period of time, we start to see the results come in. It doesn’t react that quickly but at the same time it doesn’t cost you every time someone clicks on a search engine result. So for me it’s a balancing act of the different acquisition channels available to you to see.
Al: And for me, I suppose it touches slightly on attribution, but we were talking about it when we caught up in terms of total advertising cost of sale. And is that the metric to understand what the total sum of money be it? catalog, flyers, digital, what have I spent in marketing, what has that recruited me in terms of new customers and does that meet the business’s requirement in terms of what it’s prepared to spend for a new customer?
Adrian: I think you’ve got to look at it as a total as well. I think that’s a really good point. You have to look at it as a total and if you are trading profitably, if you are recruiting enough customers, if you are retaining enough customers and the whole business model is working then absolutely, then all the channels are working harmoniously together. Then you look at it like that and think I can still grow and I can still make money. Then that has to be a bit of a key rather than trying to focus down on the individual channels which is where it all becomes a little bit more murky, the murky dark world of attribution I think you’ll see you can get so you can get into a bit of a rabbit warren and yes Get that wood from the trees use like I’m prepared to spend this as long as I can find new customers, I only spend this to get them exactly don’t be the top line requirement of the business Yeah, and if you are finding that the channels you’re going to look at them and go, that seems really expensive or that seems really cheap. But as you say, if you look at it as an overall, then I don’t think you can really go wrong. But it starts to get a bit more tricky if you’re starting to lose money on your customer acquisition, then okay, well what channels do you start to dial down and what channels do you start to dial up? That’s when you start to need to think about them from an individual perspective.
Al: Yes, I agree. And so are you seeing specific pain points in the offline world at the moment in terms of breadth of work which is tough?
Adrian: I mean definitely from a direct mail point of view, because of the postage and print cost, paper as everybody knows has gone up massively. massively and so it really is when you look at all of our clients, they have cut their volumes. They are still being very selective about their volumes is probably a good way of describing it. They have sort of cut their volumes down so they are really creaming off the top. So really focusing on your best buyers and building models on your best multibuyers, so the loyal buyers who have bought from you multiple times recently, modelling on those and then taking the cream of the crop as to whether you’re using the data pools, the advocacy experience of the world, and taking the cream of the crop from them and really focusing on those. that from these customers that you acquire, they are long-term better customers that you get a better lifetime value from. And I think you have to look at the lifetime value because you aren’t always going to acquire them at a profit.
Al: I completely agree with you, but how many people are sort of hell-bent on… it’s an metric but I suppose pop it on first order. Yeah. That consideration and that vision of that I’m recruiting, obviously dependent on business but where applicable that there is the option and history of multiple purchases. How many people in your experience, no right or wrong, but how many people are actually considering that I’m spending this today to know that in three years’ time this customer is going to be worth this. As long as I keep all my other activity going well, I mail them, four to six months, I send email, yeah, just a rough poll. 50%?
Adrian: I think it’s probably less than that. I think most of them are looking at it from a… and it totally depends on the metrics of your business, doesn’t it? It totally depends on your average order values, your margins and everything else you’re getting. We have some very lucky clients who have very high average order values and very high margins and that makes life really easy and they can recruit to the profit. It’s where you’re getting the lower average order values, the lower margin ones, that it is very tricky and then I think you have to be, I mean you should be from both perspectives, but then you have to be very focused on, okay, well how quickly are these going to pay back and make sure that, well, yeah, then you’ve got to be very smart about the retention as well to make sure that you are getting the money back from these customers. But I don’t think enough people look at it from a lifetime value point of view. If you ask most people, if you ask, I reckon, do a straw poll, I reckon 70% off the top of their head wouldn’t know their Lifetime value their customers at all What do you think? Yeah
Al: Yeah Yeah, but it’s an important metric to know I Completely agree because I think it gives you a different mindset and understanding. Now it is reliant on you continuing to either buy or produce great products and evolve the range, it does and all the other marketing strategies required, but it is also going well actually I know I can turn that into a greater more profitable plan. So I suppose it dovetails a little bit into attribution, but before we get there. Yes last one on Acquisition are you seeing this as being a UK challenge or are you seeing it? You know in a wider market context or wider geographical market context.
Adrian: I think it is wider geographically, I think the UK I think as we’ve spoken about before all the UK is The media over here are very much doom and gloom and I think a lot of the time we talk ourselves into it. We talk ourselves into, hmm, that’s what happens. And obviously, the next biggest market, the bigger market is the States. And I do think that it is easier over there, a lot more to go at. But again, I think it is being squeezed over there as well. But I think that there always seems to be behind us. I think we always start to struggle first I don’t know whether that’s just because of the positivity or they it’s just or whether there’s more people bigger market everything else It’s more I don’t know but always seems to happen that way I mean, they’ve got ten times the population for us.
Yeah, so I mean that just means that spreads the pain point to a wider yet Dilutes it to some degree. I think with I’m with you, I think Europe is probably feeling the pain a bit more than the UK is what I’m seeing and it seems to be still a bit challenging to get into shipping products into Europe. Yeah. It isn’t impossible but it’s… We’re not going to start talking about Brexit are we? No, no we won’t. But it does seem easier to ship stuff to America. Yeah. Without a doubt. And you know you haven’t got language barriers and all those things in terms of translating websites. So yeah, I think that it does seem a key and logical route. So yeah, I think that it does seem a key and logical route.