Do Drop Ship Businesses Still Make Money In 2017?

Episode Quotes

"If you don’t fix the fundamentals and the rest of it is isn’t any good."

"You not only need to focus on marketing, you need to focus on the core fundamentals of business as well which it will all come down to cash flow."

"My whole kind of philosophy is you need to start at the core of the issue. The core of the issue is demand forecasting."

"We don’t do Amazon marketing or ecommerce marketing. All we focus on is inventory replenishment and everything that goes into that."

"If you aren’t organized when you’re small then you’re going to be a lot lot lot less organized when you’re larger."

"A lot of times I think I’ve learned a ton from podcasts."

Listen to Learn

00:40 Jeremy's Forecastly story. How did it started?

05:28 Ecommerce pain points and the importance of cash flow more than marketing

07:07 Solving demand forecasting

08:27 Why Fulfillment By Amazon (FBA) is a good move for business?

10:14 Inventory in FBA

11:34 How does Forecastly interact with FBA?

13:40 Forecast and demand planning on normal ecommerce sales

15:42 Importance of being organized, inventory management

17:12 What are some software for demand forecasting

21:40 Jeremy's MBA experience

23:00 Jeremy's main insights for the audience

24:10 Employment, operations and business process

26:10 Calls to action

26:35 Contact Us (Michael and Jeremy)

Transcription

Michael: Hello folks! Welcome to ecommerceQA. This is the show where we talk about ecommerce sellers, directors, managers. Basically if you’re dealing with ecommerce and you want to listen to this show. We’re joined today by Jeremy Biron who is the founder of Forecastly which is a really cool solution to problems that I think most of you listening are having. Hello Jeremy!

Jeremy: Thanks for having me on.

Michael: Absolutely. Jeremy, tell us a little bit of your story. How did you get into thinking about Forecastly which implies it has something to do with forecasting inventory which we’re going to talk about today.

Jeremy: Exactly. Forecasting inventory for Amazon FBA specifically but he has smelled my background and I think he kind have to go a way back. I started as an ecommerce seller. I think it’s about 10 years ago now. I did it part time, I had a full time sales job. I was a business to business sales rep and I started in an office supply company selling office supplies online. Came across this thing called ebay and started selling office supplies on ebay and grew a Magento store. Eventually heard about Amazon which at that point is more of like a bookstore online and started selling office supplies on Amazon, then I came across Amazon FBA. I actually got a phone call from somebody from the FBA. It was the FBA department there.

Michael: I was like you got a phone call from the FBI, but no.

Jeremy: Yeah, no, no. It was a data program for Fulfillment By Amazon. Of course I was skeptical of it. Why would I want anybody else sell my products out. I could just do it myself. Well, anything is worth a test. In my mind, show me the data and I’m good to go and I took off, so I was one of the data testers of the FBA program in Amazon in the office products category. There was of course, they’ve already done it in several other categories

Michael: Nice, and this company we’re talking about. This is the Honest Office which I think is a great name.

Jeremy: Thank you very much! Took a long time to think about that.

Michael: It’s not the one you started to.

Jeremy: See, I think we started with something longer than that. I can’t remember exactly what it was, “Discount Office Supply” It wasn’t Discount Office Supply. Yeah, I can’t remember, it was at the top of my head. But it was a much longer and the domain name was really really long. So I picked honest office, domain was available and I like it.

Michael: There you go, a bunch of awards here in internet retail and magazines, like what is that? Six of their awards. Fastest growing from multiple years, Top 1000 leading [term unclear – 2:43] retailers. This is a legitimate business here. Why did you shut it down?

Jeremy: My god, office supply is a funny category plus it was drop shipping. It was a combination of I really didn’t have a segment that it was my niche. I wasn’t growing my own brand. It got big, you’re right. We were a multimillion dollar seller. It got fairly large and we did develop some of our own brands that are sold around today, all of which that I don’t own. But what happened was is I was having frustrations. What was happening was there are cash flow issues. It was definitely my lifestyle, my lifestyle was taking a hit the time I was working and also the stress as I was feeling. The cash flow was probably really the biggest issue that I had and that was causing the most stress. Dug into it, I got a bunch of my mentors around the table. We sat down, dug through the numbers. What it came down was a funny thing, I was just having tons of excess inventory and way too many stock outs on our best products, and that’s how I get into software. Ended up building some in house software to solve the problem, and it did not solve it completely because building in house software is easy as it sounds. I learned pretty quickly and then at least I was doing a better job than the inventory management software we’re using at that time.

Michael: Which we will leave as unnamed.

Jeremy: Yeah, it’s still around today and I don’t want to. They’ve improved quite a bit but it’s all about fundamentals. If you don’t fix the fundamentals and the rest of it is isn’t any good.

Michael: So what happened after that? Building software?

Jeremy: I had some in house software that we built on this office. We used it for about three years on our own. And then I kept going to this Amazon conferences and hearing other sellers or ecommerce conferences as well and these other sellers are selling, “Alright, you’re running a multimillion dollar business.” How are you not having like tons of excess inventory and stock ups? They are having exact same issues I was having three years prior to that. The thing is I had the answer. Well, I have software unfortunately you just can’t use it. It’s not set up to use in multiple businesses and I feel a little bit [term unclear – 4:58] Day in and day out

00:05:00

was the same thing. At that point I decided, alright I’m going to make a leap. I’m going to start a software company. We kind of use our previous, our in house software as a baseline but we didn’t use a single line of code when we started Forecastly. Forecastly solves the same problem but we went about it a different way. It’s much more advance than any software that could anyone build in house unless they are Amazon or Fortune 1000 company.

Michael: Let’s talk about this. I mean, what are the big concepts, pain points that you’re looking to address specifically?

Jeremy: Sure. Mile thing is there are with ecommerce or it’s not just selling on Amazon. It’s kind of ecommerce in general, right? Everyone likes to focus on fancy marketing tactics which are awesome. Don’t get me wrong marketing is really important. I depend on it every day. But it makes it easy for folks to forget about, you not only need to focus on marketing, you need to focus on the core fundamentals of business as well which it will all comes down to cash flow. In ecommerce if you own inventory you need to watch that inventory. The inventory need to turn over and if it’s not you’re going to end up with cash that’s sitting on a shelf or you’re going to end up with your best products running out of stock and you’re going to miss out on the profit. Relatively simple.

Michael: I was just saying, problems are huge, you have to walk this tight rope. The funny thing is there is a lot of sellers don’t realize that though. They don’t realize how important that cash flow statement is or upon looking at your assets at the end of the month or end of the quarter and saying, “Where is my cash being tied up?” They forget about that stuff, because it’s truly easy too and I’m guilty of it as well. I did it on Honest Office for a long long time and I almost ran a multimillion dollar business into the ground because of it. And if you don’t have the right reporting, or the right tools to help you see what you need to see even if it’s just Excel. If you don’t setup your right Excel reports to give the info that you need to make decisions then you could run into a serious issue.

Michael: So we are aware of the problems. How does you software specifically solve those problems?

Jeremy: We look at things a little bit different. My whole kind of philosophy is you need to start at the core of the issue. The core of the issue is demand forecasting. I have a pen sitting next to me right now, and let’s say you sell pens, Michael. If I can’t tell you exactly how many pens you’re going to sell in Q4 then how I’m going to tell you when to replenish. Why does it matter if I can print off fancy shipping labels. Why does it matter if I can have the most beautiful PO that you’ve ever seen in your life and I can send that to you supplier. None of that matters if you cannot focus on the core number of how many units you’re going to sell because if I can’t tell you exactly how many units you’re going to sell then I can’t tell you how much safety stock you need. I can’t tell you when you’re going to run out of stock. Can’t tell you exactly how much money you’re going to need in Q4 to buy inventory. All of these numbers come down to the accuracy of that prediction. So that’s what we focus here on Forecastly. We focus on the core problem at hand and we don’t do bells and whistles. We don’t do Amazon marketing or ecommerce marketing. All we focus on is inventory replenishment and everything that goes into that.

Michael: I want to take a brief segway, alternate route and talk about FBA for a second because I think that inventory planning is incredibly important no matter how you’re selling stuff but it’s particularly important at FBA. Not everybody who is listening is highly familiar with FBA, they know it means Fulfillment By Amazon but can you talk to us a little bit about why it’s such a great claim why you find it to be a good move for your business.

Jeremy: Sure. I’m actually a pretty good person to talk about this because I was highly skeptical of it. I was really really skeptical and it took me a couple of months when they had first made the phone call, actually get on board. But Fulfillment By Amazon is relatively simple. They are a fulfillment company for your products, so the pen that we spoke about before you ship them a case of 20 of this, they break them down for you, labels on them and as orders come through either from your side and you feed them the orders or from Amazon.com. What happens is they’ll just pick pack and ship those products right out to the customer. You don’t have to touch it. You don’t have to deal any of that. The beauty of it is if you do sell on Amazon it’s an immediate boost in your demand because you win the buybacks which means that you’re the main seller on that Amazon page for anyone that’s not familiar with that. And it’s scalable, that’s the

00:10:00

beauty of it. If you are doing a million dollars a month come Q4 and you’re doing zero dollars a month the rest of the year or let’s just say a tenth of that $100,000 a month in revenue. You don’t have to let any warehouse employees go. You don’t have to deal with all that overhead that comes along the way, the boost in demand that you will see in Q4. Amazon will handle all of that for you.

Michael: As long as you have enough inventory sitting there in the warehouse for Q4, right? How does that work? Do you have a ton of inventory in FBA all year?

Jeremy: That’s the hard part. You’re exactly right. If you don’t know how many you’re going to sell it becomes more important to make an accurate demand forecast because what happens is you need to either ship inventory from your supplier or you manufacture directly to Amazon or you need to ship it to your own warehouse and then back out the door to Amazon. So you’re building up a lee time, takes longer for your product to get back in stock and available for sale for the customer. So if you’re not really really careful it’s easy to run out of stock and it’s also to build up excess inventory if you’re looking at the wrong reports because it’s not like you’re going out to the warehouse and seeing, ok I have a dozen pens left on the shelf. You need to depend upon Amazon’s reporting and everything that goes along with it to make your replenishment decisions.

Michael: Yeah, I just want to emphasize one thing you said at the beginning which is winning the buybacks. I mean, I think everybody knows that but that’s paramount. You don’t win the buybacks if you’re not going to sell. Whoever wins the buybacks wins and that’s super important. But if you’re winning these buybacks you’re selling really quickly to your stuff then you have to have reporting. Take it back to Forecastly, how exactly does Forcastly interact with FBA and how this insight.

Jeremy: Sure. So what we do is we tie in to Amazon’s API so we look at a few for someone that signs up, a user or business that uses Forecastly. What we do is we tie in to Amazon’s API. We download all your product data, order data and we can see exactly how these product are selling. The important thing is not only I can see how that black pen is performing. Most likely we analyze about 25 million products a month that are sitting in our catalog right now. But I can also see not only how your pen is performing but I can see how the entire category of pens is performing. Even if you build the same exact in house system that we have here at Forecastly. You stole our code and you just want to use it at your own company. It would never perform as well or as accurate as our systems as a whole because we can have machine learning algorithms to say, ok how is that product performing? How is the product category performing? How is the parent category performing? And also the really important one is how is the site as a whole performing? And a perfect example of that which Amazon has done a really good job of is Amazon Prime Day. This isn’t just on Amazon. There are other sites out there, other marketplaces or even your own site where you’re going to have a big marketing push. Well, you need to take that into account when you’re doing demand forecasting for your own website and it’s important to think about all those. Alright, how does this site as a whole is going to perform. If I usually have 10,000 visitors and I have a 100,000 this month where you can expect all of your products to sell a lot more than you typically would.

Michael: Absolutely. Let’s bring this. Obviously, anybody that’s selling in FBA is to take a look at Forecastly. That we are going to include the link of the show notes and yeah, it’s a no brainer people. However we want to also think about sellers who aren’t on FBA. Hey, I think this is enough some good reasons to get on FBA. But B, what about just normally ecommerce sales, do you have any thoughts regarding forecast, demand planning or normally ecommerce. How do you end up solving that problem in your own company?

Jeremy: Sure, so that’s a great question. And I didn’t come out here just to talk about Forecastly so it’s important that we head upon that and we get some. What we will talk about can also apply outside if just Amazon in my particular software happens to only work with Amazon but the same concepts apply. Like with seasonality. Look at If you have previous sales data, look to see, alright how did September, October, November and December, month to month compare to each other. Well if sales went up double from October to November and from November to December you should account for that. You are able to use your October sales data to figure out here’s how many black pens we sold in October. Now I can figure out how many we think we’re going to sell in November and December. The other cool thing that you can use is Google Trend. You can type black pen, I have never actually done this with black pen.

Michael: I’m going now, google.com/trends.

Jeremy: There you go. You could type in black pen and you can see, alright how do black

00:15:00

pens perform in the United States if that’s where we’re selling. How do black pens perform in United States? That’s really hard to do at scale but if you only have a limited number of few products. That can be super helpful and you can say, alright, well I can see that this summer for whatever reason, August you sell a lot of black pens coming back to school. And that’s something that you might not have thought of. In this case it’s pretty easy to think about but you will never really know what is the best month versus what is the worst month then you can take that into account when you’re doing demand planning.

Michael: I’m doing a quick test here, looks like black pens are twice as popular as blue and red pens, so in case anybody is selling those, good to know.

Jeremy: Perfect. The other thing I want to talk about as far as ecommerce sellers as a whole that I see a lot of folks, for a lack of a better term, they just mess it up. It’s all about organization because if you aren’t organized when you’re small then you’re going to be a lot lot lot less organized when you’re larger. You have to get organized. This is especially true and I’m going to tie it back to inventory management. Let’s just use your supply chain as an example. How many black pens do we have on order coming in from China? How many do we have going from our warehouse to let’s just say we use Amazon, right? So how many do we have in transit from our warehouse to Amazon? How many black pens do we have in our warehouse? How many are in a third party if we use a third party fulfillment center. These are all numbers that they need to be accurate and the only way that they’re going to be accurate is if you’re organized. So it’s really important that you have a process in place to figure out how many units are in each step of your supply chain? Tracking those purchase orders, tracking the orders that are in transit coming in to you and then also you have sitting on the shelf. What’s outbound to customer that’s already been sold? If you don’t have a good process and you don’t get those core numbers down, it doesn’t matter if writing them on a piece of paper or using a fancy software. If those numbers aren’t right you can’t come up with a good inventory replenishment number.

Michael: Do you think you could actually do that on pen and paper nowadays if you have a good enough number of products? What’s a good software?

Jeremy: I would do it in Excel.

Michael: Oh really, ok. So were you using Excel and spreadsheets to manage this part of your business when you had Honest going?

Jeremy: Yeah, unfortunately yes. But the thing is you can’t do it with let’s just say greater than, you can’t do it in any level of accuracy with more than ten skews. It’s just isn’t scalable and the problem is that you’re constantly updating numbers. The other piece is that Excel doesn’t have functionality to do seasonality demand forecasting properly. You could do it kind of in an old school way. Break it down product to product but it’s not just going to be as accurate as you can get with the machine learning software.

Michael: Is there a software that will work for general purpose ecommerce that you’ve used or heard of it might be a good fit.

Jeremy: No, not that I know of. Yeah, unfortunately.

Michael: They are going to have this built in. There is also dedicated forecasting planning software that you can attach your inventory software. You don’t need to talk about specific software as much as the principles which I think you’re getting really well right now.

Jeremy: Thank you! Thanks! Michael, you and I had spoken about this previously. I think it’s important to talk at least in a little bit about segmenting products into tiers because that is, no matter what size ecommerce company are running and no matter if you’re selling on Walmart or Amazon or only you own Shopify store. It’s really important that you break your products down into tiers and what I mean by this is for anyone that’s not familiar, it’s called the Pareto’s principle or 80/20 rule, where I like to do an A list, a B list and a C list meaning when I look at my profit and loss. I say to do it for about 2-3 months because you don’t want to do it for too short for a period of time, or too long for a period of time. 2-3 months, take a profit and loss statement broken down by products so you’re going to have all your rows with your products on it. And you’re going to see how much you made per product for that period of time and then sort it in descending order. You’re going to have your most profitable products at the top and you’re least profitable product at the bottom. What happens a lot of times is folks don’t want to get rid of that bottom tier. They think, oh we’ll still make money on it. It’s worth it. But when you start to look at the operational expenses that are involved

00:20:00

then that building purchase order us running forecast. Someone has to actually receive that inventory, everything that’s involved in that, right? There is accounting that comes down to it. A lot of times that C list is just extra money that you’re spending. Whereas, your A list and your B list, those are the products that make the most money at the end of the day. That’s your bread and butter. In every aspect of your business you need to think like that as it relates to inventory management. Ok, my A list needs to, we need to be running a forecast more often than my B list or my C list. The A list need to be more accurate so maybe I have different forecasting strategy for my A list than I do with my remainder of the products. And then the same goes down to safety stock. Safety stock is just like buffer stock. You’re trying to predict the future and you really don’t know exactly if you’re going to be right. You might sold a hundred pens. You think you’re going to sell a hundred pens but you might sell 120, might sell 80 so you need an extra 20 as a safety stock. It’s insurance. I’m willing to commit more cash in terms of percentage of inventory for my best selling products than I am for those lower tier products because I don’t want to run out of stock in Q4. It’s going to be hurting on my business. I only bring this up on every single interview that I have or call that I have because I feel so passionate about segmenting your products. I learned from experience. It was one of the biggest mistakes that I made as an ecommerce seller, was not segmenting my products early enough. I learned it from, I remember sitting in an MBA class in the Cost Accounting, the biggest take away that I got from the entire program was that one report. I almost passed out when I looked at it because I knew right away the number of mistakes we’re making.

Michael: So just a sideline question, did you end up getting an MBA while you’re running this company?

Jeremy: Yup. I quit about 6 months, I had about 6 months left on my MBA and I quit my day job and went to run Honest Office full time. I ended up finishing the MBA at the same time but it was extremely stressful and as getting married same exact time, all in the same month. 6 months out, I was in April 2012 that I quit my job 6 months earlier than that and finish my MBA and I got married. I don’t know how my wife stuck with me, but she did.

Michael: Do you feel that the MBA helped you run the company better. Like, will you do it again?

Jeremy: I definitely got a lot out of it. I think any education, it is what you make of it, right? Do I think I could have run my company just as well without an MBA? Definitely, I do I think you can get a lot out of having a good network, having a lot of friends or mentors that are in business that can give you good advice. Definitely. A lot of times I think I’ve learned a ton from podcasts. There are a lot of folks that don’t listen to podcasts, and it’s free education.

Michael: Yeah, I saw a study recently that says that 25% of the populace in the U.S. is now listening to podcast. So, that’s cool. Yeah!

Jeremy: Wow, that’s impressive.

Michael: Yeah. Well, we’re reaching the end of our time, I am wondering if there are two or three main thoughts you would like to leave the audience with.

Jeremy: I think the first one is definitely segment your products into tiers. If you don’t do anything else from this conversation or look from this conversation just do that one thing. The next thing is to use data to make seasonality decisions. I say, make it just in any aspect of business to make informed decisions but specifically when it comes to inventory management. You really need to start looking at the data, and your sales data, and then product level and category level to make demand forecast decisions or replenishment decisions. And then the last piece is stay organized. Get a process down for everything that you do and then start delegating those pieces as you start to scale up. The more organized you can be, stay organized, write it down into a process. You really need to write it down. It has to be written down because if you don’t know what you’re doing right now you can improve upon it and then it makes it a lot easier once you start delegating these tasks out either to an assistant that you have there, employees, or even virtual assistant.

Michael: At your peak from staffing employment view how many people were working at Honest?

Jeremy: At Honest Office we have three full time and a couple of part time. It was pretty small operation in terms of the amount of revenue that we’re doing.

Michael: Yeah, that’s very very tight and super good ratio.

Jeremy: Beauty of outsourcing fulfillment, right?

Michael: Did you have standard operating procedures written up for like every part of the business?

Jeremy: That’s one of the things that I didn’t have when things start going and then my mentors sat down when we’re, “Wait a second, you don’t have written processes. Every business needs written processes.” Any of my mentors that

00:25:00

were sitting there that ran large scale companies and I’m not talking Fortune 500. I’m talking like several million dollars in revenue but not $500 million. And they said right away, “It doesn’t matter how small you are, you have to have written processes.” The beauty of it is I was able to carry that over to Forecastly. We know exactly what we’re doing and we can look at it and said, alright if a mistake happens you look at the process and say, “Yep, something is not right here where did things go wrong? We need to fix that.” You don’t have to go crazy. It doesn’t have to be a printed 500 page manual but Google Docs is an amazing thing. And as you bring on a new, let’s just say you bring on your first virtual assistant part time, he or she can use that process that you’ve written down or typed up. And then you can take that and have them add comments, ok, I don’t understand what this means. And this was very well explained because when they have questions you’ll know, ok this piece of the process needs further explanation. We went wrong here.

Michael: I’m going to ask you, do you use Dan Martell’s playbook model?

Jeremy: No, I don’t. He is a great guy. He has a lot of experience and I’ll have to look that up.

Michael: That’s the one we are using for our playbook is his model. Yeah, great great to look up. Cool. Well, there are a few calls to action here. I think the first one is I’ve love everybody here who is considering doing FBA or already doing it particularly to consider Forecastly as well. You mentioned that there is a special URL that people could go to.

Jeremy: Sure. You can go actually to forecast.ly/sellry.

Michael: The other thing is if you’re interested in operationalizing your business which you should be based on this call, feel free to reach out to me, michael@sellry.com or I’m going out and here Jeremy. Cool people will contact you and ask questions about that.

Jeremy: Of course, yeah absolutely, I love talking to anyone that’s in ecommerce even if you don’t sell in Amazon don’t hesitate to reach out. My direct email is jeremy@forecastly.com.

Michael: There you have it. Well, thanks so much Jeremy for joining today and I think that the things you shared are really going to be great really to basically to ensure their business doesn’t go belly up just right when you start getting successful just from having too much inventory or not having things on the shelves. Both problems are huge.

Jeremy: Yeah, definitely learn from my mistakes. Thanks so much for having me on.

Michael: Yeah. Shownotes today can be access at ecommerceQA.com and be sure to go to iTunes which you are already take your podcast and give us a review. Doesn’t have to be 5 stars. If you think it’s 1 star, just kidding. Give us 5 stars, thanks everybody. See you later.

Episode Quotes

"Moving fast in the wrong direction can only get you into trouble exponentially faster."

"Innovation is really about risk taking, and a lot of companies don’t like to take risk."

"Opposites work better."

"If it can be done, it will be done. If you don’t do it, someone else will."

"If you continue to play the old game and think you know what it is you’re going to undershoot."

"Whatever problem you’ve got, that’s not it."

Listen to Learn

00:24 Introduction about the guest speaker (Daniel Burrus)

00:46 Daniels new book and what it is about?

02:06 Daniel talks about his article, as well as insights about innovation

04:12 What does being proactive means? The idea of being preactive - hard trends and soft trends.

07:38 The science of "cycles"

09:00 Three categories of hard trends (Demographics, Regulations, Technology)

15:40 The idea of "Opposites work better"

18:17 What are some hard trends in ecommerce?

Transcription

Michael: Hello everyone and welcome to another episode of Ecommerce QA. This is the show where directors of ecommerce, ecommerce founders, strategists, anybody that’s very close to the growth of any ecommerce company come here and we talk about what we are learning. We are very privilege today to have Daniel Burrus. Daniel is a world leading futurist and expert in innovation. He has written many books. Daniel, it’s wonderful to have you.

Daniel: Thank for having me on. I appreciate it.

Michael: Absolutely, so you just finished a new book and it’s called The Anticipatory Organization with a sub line “Turn Disruption and Change into Opportunity and Advantage” Tell me about it.

Daniel: Well, technology driven change is accelerating at an exponential rate. But moving fast in the wrong direction can only get you into trouble exponentially faster. So it’s not just about speed, it’s also about how do we determine some kind of direction. Then secondly, reacting to problems and digital disruptions no matter how agile your organization are just isn’t good enough because of the speed of change. So instead of just focusing on agility which is the current big focus, we got agile innovation, agile this, agile that. But remember agility is reacting fast to something fast that’s already happened. What I’m talking about is the other side of the coin, and that is how to anticipate disruptions before they disrupt. How to anticipate problems before you have them, and how to anticipate game changing opportunities before others see them so that’s the idea of the book The Anticipatory Organization. It’s a proven model that’s working great and now it’s in book form.

Michael: That’s wonderful. I want to dig into your model. But I have a question an article that you wrote in Huffington Post. It’s this article titled Is it Time to Innovate? What Netflix Got Right (And WebTV Didn’t). This is a little bit funny to me because I’m a member of WebTV. Whenever we hear this new technologies or innovations spaces opening up, you wonder which one is going to win, right? And then, of course, there is the in the looses, sometimes we don’t easily know which one is going to come out on top. I find the title of this article very intriguing, is it time to innovate? I mean, I think people like me we think it’s always time to innovate. Talk to me about that.

Daniel: Well, you know, it’s very interesting because I work with small, mid-size as well as the largest of companies. No matter what their size is a lot of companies will say, “We have a culture of innovation.” But if you really dig in into it, they haven’t innovated in 10 years. They haven’t innovated in 5 years or even longer. They innovated long ago and have been milking the cashcow they created and they lost the culture of innovation. Secondly, innovation is really about risk taking, and a lot of companies don’t like to take risk. But what I have done is through this methodology which I know we’re going to talk about. What you can do is do innovation with low risk and high reward which is really a flip. It’s kind of an opposite. It is truly accelerated innovation and really transformed results for organizations. And by the way, I know this system works because I came out with leadership learning system, a video learning system about two years ago. I call it The Anticipatory Organization, and corporation of all sizes around the world have been using it. It got a product of the year award in its first year. It’s been used by the Pentagon even for leadership training and it’s been working so well I decided to put that out in book form. So the book is not something that’s been not tried. Actually it’s been working extremely well and now again it’s in a book.

Michael: I want to talk about the framework and some of the specifics of what you’re alluding to here, but I have one more high level question which is when we think about being reactive which is what we as managers know we should never do, right? We should be proactive and so on and so forth. Do you see that the trend towards enterprises especially in the tech space and particularly with software thinking in terms of agile. Do you feel like this is a new phenomenon, probably speaking like in the last 5, 10, 15, 20 years or do you feel that the need to bring things back to a proactive basis has just been around forever?

Daniel: Well, that’s a great question. Thank you. First of all what I’m doing is redefining what proactive means. Proactive means taking positive action now. And what I would say is let’s call it being preactive to future known events. So when you have the methodology of, in this case I start to get into it that methodology has to answer your question. One of the keys to it is separating what I call hard

00:05:00

trends from soft trends. Hard trends are based on future facts. They will happen guaranteed and you cannot stop them, but you can see them before they happen. And that allows you to turn disruption and change into indeed an opportunity and advantage. The other type of trend is a soft trend, and that is not based on the future fact. That’s actually based on an assumption. But unfortunately a lot of companies of any size have treated a lot of things as facts, in reality they are assumptions. Before I go any further on this let me just say I like both hard trends and soft trends because hard trends let me see the disruptions and the changes before they happen giving me a choice. Now I can be the disruptor or I can just choose to be disrupted. I have a choice. Soft trends, if I don’t like them, I can change them. Let me give you a really good example and that is I was just speaking to CEOs. It’s about 500 of them of a big healthcare conference. And they were CEOs from hospitals of different sizes as well as suppliers to the healthcare industry. One of the things that they were all assuming to be true is that healthcare cost will continue to rise. And they all saw that as unstoppable. They saw that as a future fact but in reality it is a total soft trend. We could change that. Let’s see if we don’t think you can change it you don’t even try. And by the way here’s how you could change that. Healthcare reform basically has really health payment reform. Otherwise, how are going to pay for that mess out there. Instead of using innovative new technologies, transformational technologies to, for example, transform how hospitals purchase, supply chain, logistics as well as using the technologies like Blockchain to bring transparency to consumers. I mean let’s face it, you would be paying $300 for an aspirin if you really knew how much it cost when you’re in that hospital. So we could actually lower the cost of healthcare if we use these transformational technologies and realized, you know what you could, or we can just continue to let it go.

Michael: Daniel, what’s an example of a hard fact? Something that we know in the future?

Daniel: Yes, that we know this will happen. Well, first of all, there’s already a well known science to it and that is cycles. Like right now we know after spring is summer, followed by fall, and by the way there are over 300 known cycles. Business cycles, weather cycles, biological cycles, there are even sales cycles. By the way, if there is a sale cycle, I like to have the sale completed before the cycle begins obviously to my advantage. An economist used cyclical as a way to predict the future, but as everyone listening to this knows, the economists have been increasingly wrong. And the reason is there is another kind of change and I’m addressing that very powerful in the book. And that is I would call that linear in that it’s one way/exponential meaning that it’s going almost vertically. It’s getting faster every year. Once you get a smartphone that’s not a cycle. You are not going back to dumb phone. You’re going one way. Once people in China park their bicycle and get a car, it’s not a cycle, you’re not going back to the car. And once people in India get refrigeration in their home they are not going to say we don’t need refrigeration. So these are linear changes driven by exponential technologies that give us predictable opportunities as well as predictable challenges. And to further answer your question to really add some real value here for our listeners, really it’s not that hard. There are only three categories of hard trends or future facts. And that is one, demographics. Example, simple example, there are 78 million baby boomers in the United States and hard trend, they are going to get older. They are not going to get younger. They are going to get older, guaranteed, and that gives us some opportunities. For example, if your company, you’ve got a lot of people predictably that are going to be retiring that have a lot of knowledge and wisdom. You got a database, do you have a wisdom base, you have a knowledge base? Have you actually pulled the knowledge and the wisdom from them before they leave? Or another quick example, a lot of people love to go boating and fishing. Trouble is as you get older it’s hard to launch the boat, so why don’t you and I create the easy launch trailer for seniors. Would we have a fully definable growing market every year? The answer is yes. Would we know which countries to export to and which countries not to export to. Anyway, know the ones with young populations and aging populations. You see, it’s amazing. So demographics is one opportunity, it’s a hard trend. Another one, this will surprise

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everyone, regulations – government regulations. People are saying, “Oh, I didn’t think you would say that.” But indeed it is. Let me give you an example of how to get an opportunity from it. You see, when a regulation comes into place we all look at the stuff we don’t like. But one of the principles in the book is opposites work better. Do the opposite. Look at what you do like, look at where the money is. For example, in California in January there were 1,000 new laws that went into place in January. Of those thousand laws, one of them said within three years in the State of California all Kindergarteners and 1st Graders in the state, half of their reading has to be non-fiction. You got three years to do that. By the way, right now, all of their reading is fiction. A little engine that could is fiction. So most of us would hear that and say, “Well, what are these guys? Crazy? Shouldn’t they be doing something important?” Instead, a 26-yr. old teacher in San Diego did the opposite. She made three phone calls. She called the San Diego School District, the Los Angeles School District, the San Francisco School District and said, “Hey, it’s a new law. You got three years to get half the books non-fiction. If I supply those books would be interested?” And to make the long story short, they not only said, “Yes”, but they underwrote her business and became a guaranteed customer and she didn’t have to go in shark tank. See, there’s an opportunity out there. The third one is technology. And of course, that one is especially in the bull’s eye of most of us but we don’t realize how amazingly predictable technology is. Again, this is book #7 from [term unclear – 11:47] It’s pretty easy to do that. For example, after 3G and 4G we start to read about 5G equals that’s it? No. I’m going to have 6G, followed by 7G. We can even tell how powerful they will be and when they will come out because of some predicting graphs that I can show you in the book. Are we putting more in the cloud or is the cloud getting full? Is where we’re going to continue to not only virtualize our products and virtualize our hardware as well as our software. Could we also virtualize all of our services? And the answer is, oh yeah! As a matter of fact there is a strategy I teach, if it can be done, it will be done. If you don’t do it, someone else will. So with hard trends and soft trends you can start to see what can be done before so it happens giving you an edge.

Michael: Wow, a way to seeing into the future folks. So now, let’s dig in into this a little bit more. Now we can anticipate future facts. We can infer what some soft trends will be. What are the problems? Most of the time what a lot of us do is dealing with problems. There probably a model that addresses problem solving.

Daniel: Yeah, it’s amazing. Michael, you know, I just completed a study over the last year of thousand companies all around the world and just about every different industry. I’m about to publish this but I’ll give you the results the now. This is talking to the CEO and saying, “What is your company’s biggest problem?” Then after they tell me what it is, what I do is I ask them, “Now, did that come out of the blue? No way to see it ahead of time? Or could you have seen it a year ago and done something about it?” 93% of the thousand have said, “Oh, you know what we could have seen that a year or two ago. We just didn’t have the methodology for doing it.” And that is another reason I wrote this book. You know, most of us who listen to this have said, “I knew that was going to happen.” But what did you do? You just kept going. You didn’t do anything about it. So what this does is it allows you to do everyday innovation by empowering your people to learn to predict problems. They are about to having their function and their role and presolve them so they don’t have them in the first place. We’ve invented solutions. We actually showed people how to do that in the book. And then the type of innovation is exponential innovation. How to take big leaps ahead with low risk because, again, if you don’t do it, someone else will.

Michael: I’m intrigue by this because I’m used to taking big leaps ahead with lots of risk.

Daniel: Yes, so let me give you an actual real strategy right now for all of your listeners. So even if you don’t get this book let me give you some value right now. And that is why didn’t a cab driver think of Uber? Why didn’t Marriott think of Airbnb? And I know the reason. They were all really busy executing strategy. Let’s face it, execution being lean and being agile. Hey, Blackberry was quite good at that, and so is Dell, and so is Sony and so is HP. Let’s face it we need a new competency that why I wrote this book. A matter of fact, you know what, that’s why I’m giving

00:15:00

everyone of your listeners this book. You know what, let me just do that right now. I believe in this book so much I’m going to put my money where my mouth is. I’m going to give you the hardcover copy of this book. Because right now it’s available, you can buy it on Amazon. You know what, go to theaobook.com and I’ll give it to you for free. And I’m doing that because I think you’re going to love it so much you’re going to tell whole bunch of friends. That’s how much I think you’re going to find value it because I’m losing money in everyone of these. No I’m not. You’re helping me spread the word because I know you’ll like it that much.

Michael: Wow, well that’s amazing. Ok folks, theaobook.com. We’ll include that in the show notes as well as a lot of these other points. Wow! I forgot what my next question was going to be. You kind of took me on that.
Daniel: Well, that’s another thing. Opposites work better. See, I’ve got 25 principles that will allow you to transform how you innovate to elevate your innovation and transform your results. Opposites work better. Let me give you a quick example about opposite. Back in about 2002 or 2003 a lot of people were putting out this free E-zines, right, electronic magazines. These free E-zines, and I thought why not do the opposite so I decided to make a really expensive electronic magazine monthly. By the way, how expensive? It’s really expensive. I charge $120,000 a year for it and it worked. Now here’s the point when you say to yourself I’m going to make a monthly E-zine that’s going to cost $120,000 a year to subscribe. You have to ask yourself what kind of value would it have to have to get somebody paying that much? Well, if you’ve never asked that question, you’ve never got that answer. Well, I decided to be bold enough to ask that question and by the way it totally changes how you market. Let me give you a quick example. The first client was a C-suite marketing expert at Walmart. Probably no one else at Walmart is going to subscribe that newsletter. I don’t care. All I need is one per company. The next one was American Express. Probably no one else in American Express is going to get it. I don’t care. I just need one per company. You see, it changes the whole game. And the reason I’m sharing that with you is because we’re in a time where you can change the game, or you can continue the play the game the way you’ve always done it. But the old saying was, “If you do it what you’ve always done, you’ll get what you always have”, it’s no longer valuable. If you do it what you’ve always done, you’re going to get less of what you’ve always had because you know what the world is changing around you super fast. The world’s fastest computer two years ago was disassembled four months ago because it was already obsolete. It used to be the big to small now the fast to slow. But moving fast in the wrong direction, again, can get you into trouble. That’s why hard trends separating them from the soft trends give you direction, and it gives you certainty. And I’ll tell you something, when you’ve got certainty you have the confidence to make bold moves. And as a leader when you have certainty and you talk in future facts rather just giving your opinion, what happens is your people are empowered to make bold moves because they also have the confidence to move forward to a new more powerful direction.

Michael: Now, let’s take this home Daniel. What are some hard trends that you are aware of in ecommerce space or the retail space more broadly that you feel that company is today need to think about more critically?

Daniel: Well, I’m going to give you some really good ones. For example, on my computer right now I have a prototype of a 3D web browser. By the way, all of your web browsers right now, you know what there, your computer screen, your website looks like a flat piece paper with an embedded video, and a hyperlink and some text, and a picture. But when it starts having 3D and you don’t need glasses to wear it because it’s only one viewer unlike movies, when you go to the movies you all need glasses because there are so many people viewing it. But with a handheld device or with a computer you don’t need the glasses. And you add interspatial dimensionality, you can go into buildings, you would go into stores. You’re going to have things pop out at you. Hey, I’ve already got that in my laptop. It is game changing if I’m already using that prototype. And I can’t tell you the name of the company because of the non-disclosure that I signed. But if I’m already using it can I predict you’re going to get it? Yeah. And can I predict that that’s going to change how we do our websites. Oh god, it’s going to be game changing. And that’s just one. There’s far more than that as we start looking at how do the data and analytics in Watson and AI play into this, and how do we

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use that to supplement in the ecommerce world - the human and the physical part of what we do. You know, there is a reason why Amazon is getting into and bought cold foods and is opening up over a hundred book stores around the country. They are looking at the future of brick and mortar differently than the CEO of Sears who is closing 175 stores. Both of them are seeing a different future in ecommerce and not only ecommerce but also in brick and mortar commerce. But the reason Amazon is getting into that being an ecommerce king is because they realized you are going into a new revolutionary pace of ecommerce. And it is amazing blend of the physical and the virtual in a way it goes far beyond just having your website look just like the other things that you offer. In other words, you see what I mean? We’re at a base of a mountain of this whole thing we’re calling ecommerce. And I want everyone listening to this to get really excited right now because we’re in a game changing time. If you continue to play the old game and think you know what it is you’re going to undershoot.

Michael: Fabulous. Yeah, that’s a recurring theme on the show is stop treating your website like a Sears catalog. Not to pick on Sears but there’s the picture, there’s the text, there’s the button.

Daniel: Exactly, exactly. And again the tools are there. Are you reading the same things you’ve always read? Are you doing the same things that you’ve always done? Maybe you need to start getting some new information. Maybe you need to start connecting. A matter of fact on my website burrus.com, I write a lot of articles those are free. If you’re on LinkedIn just two weeks ago I think I past the one million follower mark on LinkedIn. I’m one of the highest in the world. The reason is I’m giving a lot of really good stuff for free. I’m not even selling you stuff. Why won’t you go connect with me and see why I got a million people following me? There’s ways of getting information out there. And Michael, thank you for helping me get this message out to all of our ecommerce people out there because it’s not just an evolution anymore, it’s a revolution. And they need you sharing all of these, not just for me, but for the other people you are interviewing to try to help them to redefine and reinvent what ecommerce is.

Michael: Well, that’s great place to leave off. And Daniel, I really appreciate your time. There’s one more topic that I would love to have people dig in to which is your model that you’ve been sharing with us. In your book you talked about how to take your biggest problems not only solve them but skip them. This book again you want to go to theaobook.com, and you want to go find Daniel on LinkedIn. Let’s learn how to innovate. Daniel, final thought.

Daniel: Yes, well, taking your biggest problem and skipping in there are several dimensions I teach on that. But one of them is whatever problem you’ve got, that’s not it. See you’re trying to work something wrong. What? That’s why you’re stuck. Get unstuck and I will show you how to peel the onion back. In other words in the book I’ll show you how to get down to what the real problem is which is completely solvable. I mean, I’m an adviser to the [term unclear – 23:13] I worked with IBM and their Watson team and so on. I’ve never found a problem they couldn’t solve when they defined it correctly. Let’s get unstuck.

Michael: That sounds great. Alright everyone. Daniel Burrus, absolute pleasure to have you on today. ecommerceqa.com for the show notes and that’s it.

Shownotes:
Nextopia.com
ecommerceqa.com/nextopia

Transcript:
Michael: Hello folks and welcome to eCommerce Q & A, this is the show where, as you know, store owners and directors of eCommerce and eCommerce managers can stay up to date on the latest and greatest in eCommerce. I'm Michael Bauer, your host and self-proclaimed eCommerce junkie. Basically means I'm really into this topic, super passionate about it and frequently host on this show. Our guest today is an expert onsite search and personalization, his name is Derek Wisnewski and his company is called Nextopia. We've been working with Nextopia actually for about five or six years with clients and just been extremely happy with their company and what they offer. But we've never done a podcast together so here we are. Derek, welcome.

Derek: Hey, thanks Michael. Thanks for bringing me on to this podcast. Excited to share some more knowledge about onsite search.

Michael: Absolutely, it's wonderful to have you. Derek, can you tell me a little bit about your background? I understand you're a senior account executive at Nextopia. How do you come into the situation? Bring me your shtick.

Derek: Sure, absolutely. I started here seven years ago at Nextopia. I was kind of an experiment where we were looking to branch out our sales team, so I was brought on board to try to connect more retailers that needed improvement in their onsite search. Over the course of time our product has evolved. My role has evolved in doing podcasts, all sorts of marketing, getting involved in the technical aspect. During the course of that time, I've worked with hundreds of retailers on all sorts of various platforms and it's a never ending learning job because, even after seven years when you think you've heard it all about the challenges that people have with onsite search and navigation, there's always something new that comes up.

Michael: Yeah, well, onsite search and navigation, those are the two things people do on a website, right? They're looking for things or they're browsing for things. Now, before we move on from that point, I'm kind of curious which platforms would you say people are most happy with right now and most unhappy with from the merchants you're talking to?

Derek: That's really the big question out there because it's all over the map, so oftentimes we get retailers saying, "What platform would you recommend?" There isn't any perfect answer out there. There's no perfect platform out there. There's certainly a lot of brand names out there that you hear, everything from Magento, Shopify, Big Commerce of Illusion, but they're constantly evolving and always changing. What I've seen over the years is that some platforms stagnate, some other ones evolve, other ones simply just fall by the wayside. There's always new platforms coming up. It's really hard to say what our industry's even going to look like five years from now. I often say to a retailer that are saying, "Which platform should I choose and go to?" My answer to them is always-

Michael: Call Sellry, because Sellry can tell you which platform to use.

Derek: Yeah, exactly. Exactly.

Michael: I just couldn't resist. We actually have a platform selection service that we offer. Nobody ever pays us just for that so don't tell anyone I told you that.

Derek: Okay.

Michael: Well, Derek, today we want to talk about one particular topic which we've hit upon before. We've had a couple of guests before that have talked about this topic but it's one that we just can't get enough of because it's one that a lot of stores are still just don't fully understand, don't know how to start working and [inaudible 00:03:58] on, which is site search and the related topic of navigation. Today I want to mainly focus on site search.

Now, I understand from a blog on moz.com, that nearly 84% of companies don't actively optimize or measure their onsite search. That blows me away. Search is one of the main things people ever do, what do you do when you go to Google? You don't browse. You search, right?

Derek: Right.

Michael: When your site, do you really think they're just browsing? I don't think so.

Derek: No, no, absolutely not. That search box out there is about the closest thing you can actually get to actually talking to your customers. We've seen time and time again when people are looking at their onsite search analytics that those that are using that search box are sticking around on the site longer, they're contributing to more revenue, they're definitely more objective focus and more serious about purchasing something on your site than somebody that's just clicking around a whole bunch of different category links.

Michael: Yeah, yeah. I think the corollary maybe would just be a window shopper or even just somebody just browsing around in the mall. They're just going around, looking around, seeing what's there. Very different from somebody who comes and says to you, basically says to your salesperson, which is your website, "Hey, I want to buy this." Or, "I'm interested in this exact thing. Do you have this thing?" Wa-la, yes we do. Well, guess what? That's a much more likely sale.

Let's dig into some of the common misconceptions about onsite search and navigation that you see a lot. Several of the top things you think of.

Derek: Well, absolutely. There's several misconceptions that I've seen over the years.

One is that I've been hearing a lot of retailers that we talk to is that all onsite search and navigation solutions are built the same, which is absolutely not true. Solutions out there are all over the map. There's some that do a better job than others. There's many that just cut corners, they see their website and say, "Oh, they do search and auto complete. Nextopia does search and auto complete. It's essentially the same." But there's a lot of things that happen in the background. For example, there's some that offer very limited functionality, controlling your algorithm, bringing back results or even limited analytics. We've been doing this for over 12 years in this space. We've got a whole wealth of experience in dealing with hundreds of unique onsite search challenges because we truly believe that no two data sets are exactly the same.  If you're a retailer that spends a significant amount of time, let's say, designing and implementing your eCommerce site, why would a solution that costs a fraction of your site, and that can amount to a large portion of your revenue on your site, be overlooked so easily?

Another misconception is that onsite search should be a "just set and forget it" job.  In some cases, it is, maybe if you're a small retailer. But in our past experience, retailers that are analyzing their onsite search reports, that are engaging, let's say, with their platform, are able to move their metrics even more because they're capitalizing on all that onsite search data to merchandise their products that are congruent in the way that their customers are shopping on their site.

Michael: I have a question for you. I've heard that search-assisted conversion or conversions that involved a search are four or five times more likely to happen than those that don't use search. Is that true?

Derek: Absolutely. We see this time and time again. It's not an anomaly that anytime a retailer looks at their onsite search report and their Google analytics they spend much longer time on the site. The average order value's higher. Their search to exit rate is significantly lower. Why is this the case? Well, as I mentioned earlier, their objective focus, they know what they ... Or they're serious about buying something on the site. For example, I was talking to a retailer the other day who mentioned, "I don't think that onsite search is that important." He said only 5% of his visitors use a search box. When we dug a bit deeper, he noticed that 5% of those users account for 41% of his revenue. That means that every visitor that uses the search box is 8 times more valuable than those that browse around on his category pages. That means even if he were to move the needle a little bit, or even take, let's say, a portion of his spending that he does on paper click in AdWords, it would have a huge impact on his bottom line.

Michael: Now, I think you could say, looking at that, well, that could be a causal relationship or not. Meaning you could say, "Oh, well, those people are making those purchases because they're using the search," or you could say, "These are the type of people that are ... They are targeted searchers and they're looking for something specific." Which basically ... To me, that's the more plausible. I don't think that just because you have a search magically makes people more willing to buy. I think it's more like no, people that are coming and using this pathway, if you're giving them a good tracks to run on they're going to run on those tracks. If you don't give them what they're looking for, if you don't give them a good searching experience, they're ready to buy. They're not going to buy if you're not making it possible for them to easily find what they're looking for.

Derek: That's right, absolutely. I think we've been spoiled by the likes of Amazon and Google out there is that people are expecting that search box to be in front of them. When we look at some of the top retailers that are driving a majority of the revenue out there, such as the Amazons, an eBays, and Walmarts out there of the world, that people are expecting that type of experience on your site. If they're not, they're just going to end up going somewhere else that does offer that experience.

Michael: Let's talk about that experience. What is it about a fully [org 00:09:54] and well put together search experience that is so transformative for an online retailer or brand?

Derek: Well, I think one of the main things is to have good relevancy and to have some sort of level of personalization as well. When a visitor's coming to the website and shopping for something, they want to make sure that, for example, maybe there's some sort of enhanced auto complete that's adapting to what they're typing in. It's recognizing the terms. They want to know that if, let's say, you're misspelling something or you're using different languaging that it's able to still bring back relevant results. They want to make sure that they can easily get to the product that they're looking for with the least amount of clicks. Having robust filters or attributes, whether it's on your category pages or search result pages, that are applicable to the set of results that the visitor is looking at are important.

They want to make sure that there's elements on there on the search result page that are, I guess in a sense adaptable to, or congruent to what they're expecting on the site. For example, let's say you're a retailer that is driving a lot of shoppers that are price sensitive. They want to see that they're getting a discount or maybe that they're showing on their search result page that if you buy a certain quantity of items that you get a lower price. Or maybe, for example, that you're running a lot of promotions on your website. These are all elements that are important, that's why it's always helpful to understand who's your ideal shopper. What kind of shopper are you trying to target? What kind of experience are they expecting on your website?

For example, one of the questions we often get asked is, "How should I design my 'no results found' page, for example, when somebody gets zero results?" I often say, "Well, ask what would your shopper expect?" Would they expect some sort of coupon code? Do they want some sort of feedback form where they can special order something? Do they want a way to easily navigate through your site? These are the kind of questions you should be asking your shoppers and determining what kind of experience they want to have on your site when they're searching.

Michael: Yeah, that's really great. You know what I was thinking about when you were talking about that is the biggest thing that I love about Nextopia that I haven't seen with other search offerings in nearly the same way is that the results pages can be just really beautifully customized to exactly what you're looking for. This is a really big challenge with a lot of these companies that do fast auto completes, is just that you got to do all the templating yourself and it's just a pain. Really huge pain. I'm thinking of a couple things right now.

Or it basically doesn't even have the ability for you to change it at all. Well, you guys are great at that. You basically come along side the owners of the website, the stakeholders, and say, "Hey, what do you want for your results page? What do you need here?" And then that gets crafted out in a very meticulous way. I love that you brought that out.

Derek: Absolutely. Again, it goes to that point that I made earlier, is that when a retailer comes to us and they've spent an inordinate amount of time developing their site, getting shoppers to it, they want to make sure that their search results, their category pages, reflect that. We work directly with the retailer to not only analyze their data, we look at their requirements, we look at what kind of other vendors that they're implementing and make sure it's a cohesive implementation. Making sure that when we present the solution to them that, when they integrate it on their website, it's fully integrated with the type of vision that they want or requirements that they're asking us as part of the integration process.

Michael: Yeah, yeah. Tell you what. Open-ended question on a completely different topic, if you don't mind?

Derek: Sure.

Michael: You have a fair amount of experience with Toastmasters, which, for those who aren't familiar, is a way that you can get better at public speaking. I would venture to guess that you're into ... You really think about good communication a lot. Is that true?

Derek: Absolutely.

Michael: When you think about the search experience what is the dialogue that the website is having with the searcher? I'm looking for how can we anthropomorphize this a little bit? I don't want to a chat [bot 00:14:59] where it's like, "Hello, I'm your friendly little something, tell me what you're looking for today." Then this long back and forth conversation. No, we're looking for a two step conversation here. It's between somebody who obviously wants something and then you who hopefully can provide it. What are the things ... I'll be more specific with my question. What are some really just well executed implementations of Nextopia's search feature that have brought a really good human element to the experience?

Derek: That's a great question. I think one of the thing we're striving more towards is a better one-to-one personalization. We've introduced a module called Personas where it's providing more of that one-to-one interaction with the customer. Sort of like an Amazon level experience. It's saying ... The search is feeding back information back to you and saying, "I understand what you're intention is on this website."

For example, if you're a clothing retailer and you're typing in shoes and you're, let's say, clicking on male-related products, then the search is understanding that intention and bringing back more other male-related items on the site.

Michael: Is it like filtering it down by male stuff based on the fact that it sees, oh, you're looking for male stuff?

Derek: That's right, exactly. It's learning maybe from a more granular perspective. Maybe you have an affinity for certain brands or maybe you like, for example, Nike, and it's learning from that experience so that when you're shopping around the site it's saying, "Hey, I understand what you're trying to do." Or all of sudden if your intentions change then it's adapting from that perspective as well. So let's say you might be shopping for yourself, you're as a male, but you say all of a sudden, "I need to get something for my daughter." It's understanding okay now I'm shopping for female clothing or these type of brands. That kind of interaction one-on-one is more of where we're having that dialogue and the visitor is saying, "Hey, this is great. You understand how to adapt the merchandising towards what I want."

Michael: That's really cool. Is this just part of the search or does it go beyond that?

Derek: No, this goes beyond that. Eventually down the road what we want to do is incorporate this sort of like as a baseline as part of our platform. It's not going to be applicable to every kind of industry. For example, if you have a B2B website and people are typing in specific part numbers, Personas isn't going to be something that's going to be, in a sense, doing that because maybe people know, "I want this specific part. I'm not looking for a more general kind of search." More and more we're seeing that, even in the B2B space, that the search results are adapting and saying, "Okay, you understand that I have these certain credentials or maybe I have this special level of pricing or maybe I have visibility to these certain level of products so show me the search results that are going to adapt to that." That's what we're moving more towards.

I think, as time goes on, more and more data points are going to be collected. It's always difficult to say what's the perfect formula or recipe out there but I think the more data we collect on shoppers, the more we'll be able to say, "Okay, you want this. We understand on the basis of your history, the information or the data points that we've collected, this is the kind of search results that you want."

Michael: I was just thinking about the jobs to be done framework and applying that to search. If you think about your website search, what is a job that needs to be done with the search? Imagining that you didn't have search for a second and this will mainly apply to folks with larger product catalogs or retailers, marketplaces. The search is you telling me what you want and then me getting you my best take at what I've got that's going to meet that need. Sometimes there's a bit of guessing, right, about, let's see, you're looking for blue shoes or something like that or maybe like a ... I don't know, I can't think of anything, a belt. I'm looking for a belt. Well, you need a belt. Well, okay, a belt goes with pants. Maybe your size has changed. Maybe you might need other things like that.

Maybe there's something that will help that we can put in front of you in the way of content that would tie in with that some way. That's something that's cool about your platform is that it doesn't just do product searches, you can set it up so it can search for anything. Anything. Maybe in terms of using the search as a way to understand your customer, like you just said, but also bringing back to the customer a curated experience in a moment of time through the search results. If I could change every single eCommerce website in the world it would be to make the search so that when I search you give me a really good guess at what I'm thinking about and what I'm wanting and show me something that's maybe slightly peripheral to what I'm looking for but might tie in somehow.

Derek: Mm-hmm (affirmative).

Michael: Kind of an open-ended statement I'm making but I think everybody thinks about how do we add editorial content to our category pages. Well, what about the search page?

Derek: Yeah, absolutely. There's more of a trend moving towards that. People are putting in mixed content. We have retailers, for example, that are saying, "I don't just want product results. I want my Wordpress blog posts," or maybe, "I want my RSS feeds because I understand my visitors to my website need more information before they actually buy the product." For example, we have one client that sells lab supplies to high schools. The big problem that they had is when their visitors, teachers were shopping on their website were saying, "I know these products are here but I'm not sure that it's applicable to my grade that I'm teaching in high school." What we did was we created a mixed content result where now they have their Wordpress and their product search all mixed in together and rather than them going off the site and saying, "Okay, I'm going to go to the Wordpress site," maybe come back to the main site, everything is all merged into one.

We're definitely seeing more of that. I think as social media becomes bigger, Instagram ... For example, we have even something where you can curate the content from your Instagram and create more of that social proof on your actual eCommerce site. That's been a boon for our retailers.

Michael: What I'm hearing is kind of like a cross pollination of content and almost a search's navigation. What's the fastest way to get from the blog to the product? Well, you can click "shop" and try and find the spot or you could just search for something and if you can see, oh, I've got all these options, it opens things up for you.

Well, I tell you what, as we reach kind of the end of our segment here, tell me something specific that listeners can do if they would like to improve their onsite search and navigation.

Derek: Yeah, absolutely. I think one of the first things to understand is some retailers might be asking themselves, "How do I know that my onsite search and navigation needs improving?" Some of the steps that you can take is, number one, if you don't have onsite search turned on in your Google analytics and you have goal conversion set up, please do that because then you'll get some insightful information and you'll be able to know what people are typing in, whether you're getting the right kind of results by testing those terms or you might be getting zero results.

Also, take a look at what your competitors are doing because oftentimes retailers approach us and they go, "My competitors have a better onsite search experience than I do." Talk to your customers, as I mentioned earlier, and see what kind of their experiences on the site, whenever they're calling you up and asking you question.

Also, take a look at your conversion rate overall in your Google analytics. If you find ... Let's say you're spending a lot on SCO, and your conversion rate is low, maybe taking a portion of that budget out of there and putting it towards onsite search could pay dividends for turning those browsers more into shoppers.

Also, take a look just how your current search is structured and see is this what you're envisioning for your brand and your name. If it's not, then maybe it's time for a change.

A lot of our tools, without getting too much into it, provide a lot of that automation and make it so much easier to help you merchandise your site rather than doing a lot of manual tasks that we're hearing from a lot of retailers when we first start working with them.

Michael: I was just thinking about this. I really feel like onsite search is just as important as having a fast website in the first place. You know how when you're browsing a website and it's taking forever and you're just like, "Ugh," [inaudible 00:24:44]. Well, it's the same thing with search. If you don't have good search people feel like you really don't care and they're just going to abandon ... Whereas it's such a nice feeling when that website has a nice search. Similar feeling that I get when I'm browsing a fast website. Good search, fast website. I like this. Me likey. I'm going to stay here. I'm going to probably shop. I can tell that these people are doing stuff right.

I was inviting you to make a pitch. Go for it. How do people work with Nextopia?

Derek: Absolutely. If you're unsure or you just want an assessment on how much more valuable your search box could be, we're happy to do an onsite search assessment. We have a 50-point checklist that we can go through, give you a full report. Let's just take a look at ... We work with hundreds of different verticals so chances are we have somebody in the same vertical as you. You can take a look at what they're doing on their site versus what you have on your website and see how we can help you out. There's always opportunity and room for improvement. We got a wonderful team here that works directly with you when you are a client. We can share with you a lot of best practices, even if it's not the right time right now, at least you can take away a couple points and maybe some things to think about.

Michael: Great. Where can people go if they'd like to talk to you more about this directly or if they'd like to get a demo?

Derek: Yeah, absolutely. The best way to reach me is you can email me directly. It's derek@nextopia.com. That's D-E-R-E-K at Nextopia.com. Just drop me a note and I'd be happy to schedule a time to do an assessment with you.

Michael: I'd like to take this a step further as we discussed right before this show. We're going to give away one free website search tear down to somebody who responds saying, "Hey, I really want that." One lucky listener ... Guys, the listeners go up on this show so you better move fast here. What you want to do is go to ecommerceqa.com/nextopia. That's spelled N-E-X-T-O-P-I-A. Ecommerceqa.com/nextopia and fill out the form and we'll pull the name out of the hat and you'll get contacted by me and Derek and we will tear down your site and make you feel really bad about it and then you'll totally see how you can improve it.

That's a wrap for today. Derek, any final thoughts for people?

Derek: Just one final thought. Always remember that onsite search and navigation is a continuous process. It's something that you have to always be looking at how your visitors browse through your site, adapting to their languaging, their behavior, and if you continue to stick with it, it's going to pay huge dividends for your eCommerce site in the longterm.

Michael: And in the short term. I got to tell you, if you have a bad search I'm not even going to talk to you.

Derek, thanks so much for joining us today. This has been a pleasure for me to chat with you and we're looking forward to who that lucky person is who's going to be able to get a bunch of amazing insights into their search for free. Again, just go to ecommerceqa.com/nextopia. Thanks everyone.

Derek: Thanks, Michael, for having me. It was fun.

Michael: Absolutely. Take care.

Derek: Alright. You, too.

Michael: Bye now.

Derek: Bye.
ecommerceqa.com

Michael: Hello folks, and welcome to eCommerce Q & A. This is the show where we equip you, as a store owner, director of eCommerce, CTO, CIO, CMO, and many other titles like that at three letters long at an eCommerce company, or multi-channel companies to just kill it. I'm joined today by my colleague, and good friend, Chris [inaudible 00:00:25]. Chris, thank you for joining us.

Chris: Hey, Michael. Thank you for having me. It's great to be here.

Michael: Absolutely. Chris, can you give us a little background on the topic today, which is going to be around why you should, maybe, consider a re-platform under eCommerce. And also some reasons maybe why you shouldn't.

Chris: Yeah. Absolutely. As you know, majority of commerce stores migrate every two to three years, according to Forester. It's important to know, what are those main reasons that can kind of flag and say, maybe we need to look at a new platform. Briefly, these points include legacy systems that don't allow you to scale effectively and efficiently. Also, not utilizing a platform in full, you know, it may have a whole bunch of bells and whistles that you're not using.

Also, to initiate any new company goals, maybe product lines. Then, finally, also, if there's something happening with performance and security. Those are kind of a highlight able overview of the main ports of why someone should definitely looking into re-platforming.

Michael: Tell me this Chris, you've been in this for a while. What are you seeing in your own personal experience, you mentioned some Forester research. But just maybe give a little bit of your background on this topic.

Chris: Yeah. Definitely. I mean, it's funny that we always try to kind of come up with a general consensus of what we can expect. I think, ultimately, it really comes down to each individual use case. I've definitely see people that are very consistent with looking at new technology, through and through. Maybe a few years ago. But, with eCommerce platform specifically, it definitely ranges. You'll get a large number of companies that will be on a platform for seven, eight years plus. I've seen a lot of companies that make moves very quickly, every couple of years they change systems.

But, ultimately, I think there is a good general rule of thumb, every three to five years. In my experience, it has been very common for companies to re-platform within that time frame.

Michael: We didn't really go into your background at all though. So, where do you come into this picture?

Chris: Absolutely. I've been in the eCommerce for a little over five years now, and had the honor of working with amazing and intellectual individuals across the board. I've been over at another agency that is very heavily [inaudible 00:03:00] Magento. I was leading business development there, and consulting companies on, ultimately, how to grow their business online. Evaluating each component of their business digitally and finding areas of improvement and [inaudible 00:03:15] and such.

Over the course of my tenure at other agencies, I've been accepted onto ... As a eCommerce consultant for Oxford Digital. That kind of came about in my experience working with various companies, just kind of became invited on several occasions to take a look at other projects that maybe a particular group, from a very specific agency, may have taken on ... Maybe had run into some issues three months down the road, or even a couple weeks in. Kind of looking at what's happening there. My experience coming from SAP, high risk background. And looking at systems that relate to SAP.

A lot of demand [inaudible 00:04:02] Magento as well, but I think kind of taking the run on where I am now. It's definitely a good place to be in terms of being able to look at all these other situations from various type of industries and companies. And really understanding what is it that they're experiencing. A lot of times it's funny, things will just be very simple, that just may have gone unnoticed.

Today, I'm definitely happy to be [inaudible 00:04:33] VP of strategy over at Sellry. And taking everything that I've learned over the years, and applying it to help other eCommerce executives grow their company as well.

Michael: [inaudible 00:04:44] SAP, Magento, [inaudible 00:04:47]. You're like the man with a plan when it comes to platforms.

Chris: Yeah. Absolutely. I've done several comparisons to weight technologies against others. Forester comes out with really great reports on this. You know, B2B wave, B2C wave, I bet most post are familiar with. They have a lot of good information there on a high level as well.

Michael: Let's do this, let's dive right in. Okay. What are the reasons that you maybe should consider a re-platform?

Chris: Absolutely. The Legacy systems was one of the first ones I mentioned. It's a very common situation. Where a company will adopt a system, in a lot of cases in the 90's actually and still to this day are standing. Those systems typically don't necessarily allow you to scale effectively and efficiently. The complexity that are involved in maintaining those systems are very costly.

Michael: Can you give me an example of a system you have in mind?

Chris: I think an old system that's pretty common for companies to kind of maintain for several years, for many years, is ... Cold Fusion, I think is one.

Michael: Cold Fusion. It has such a cool name.

Chris: I know. It actually does. It's funny, they've powered some really intense sights. You'd be surprised. But ...

Michael: Is anybody really using that? I mean, I thought you were going to be like Magenta 1. Magenta 1 is eight years old, everybody still ... A lot of people are still using it.

Chris: Yeah. I would actually consider Magenta 1 to be a Legacy system, for lack of better terms. But Legacy as a whole really comes in a variety of packages. You'll have super Legacy systems from the 90's. Then you'll have Legacy systems like you said, just [inaudible 00:06:35] on eight or ten years or so.

If you're still using Magenta 1 today, there's got to be some type of validity in that. Or maybe you're just not ready to make the move for whatever reason. But, considering the fact that they'll no longer be releasing security patches as of next year. It's something to definitely consider.

Michael: What I see with these things, is there's a fatigue that comes from re-platforming once or twice. And you're like, I don't want to do that again.

Chris: Yeah.

Michael: [crosstalk 00:07:03] out a catalog every year. Thankfully, we don't have to do it every two months. The complexity, and I've definitely seen that there. If you're using a platform that's old, producing you're having to actually maintain old code because nobody else is even using that code. You're having to make it compatible for some of our screen plans, for example. They haven't made the move to [inaudible 00:07:24] yes.

As a result, they're having to literally maintain for lack of a better term, this free platform. Just for their own usage. Rather than just getting onto the new thing. So, be said for staying current. Right.

Now, can we jump ahead? I want to dive in more on this one, but I want to talk to you about your second point. About what if you're just not utilizing what's in your platform? Talk to me more about that. I mean, how many people ... There's the concept of a marketing feature. Right?

When a platform just has something, so that you'll see it and be like, that's cool that that has that, or I really want that, then you're never going to use it. That just goes with every platform. I think you're saying something different.

I think you're saying, there's a lot of platforms where you're way overpaying for a lot of things that you really don't need. And you don't have to. Is that what you're getting at?

Chris: Definitely. If someone is under utilizing a platform, it really just depends on the type of company, and the business model as a whole. Ultimately, just like you said, it's funny how often that happens. You'll see all these really cool, fancy, marketing personalization, centralized data. There's a lot of things that will really kind of make you raise your hand say, that sounds like I want to try that. A lot of times these businesses aren't necessarily well suited in terms of resources to even utilize each of these various facets. Because, ultimately, if you only have one person that's going to maintain your platform internally, that's not going to cut it.

Michael: What if you got a team of 100 merchandisers. I mean, in that case, you probably need more complexity. Right?

Chris: Absolutely. But, even then, you have solutions revolved around that. SAP has a really interesting cockpit, where it can be centralized. So, if you're having all these different people on the same team, everything is centralized and viewable. And things can be moved around easily, you know, you can push product data across multiple sites at once. There's various things.

To get back to your point though. In SAP, I've seen it a lot, in Demandware I've seen it a lot. You know, companies will look at ... Demandware specifically, with a particular type of compensation structure that they have, may be favorable in certain industries where you have high margin products. Looking longterm, Demandware does have a lot of really cool, fancy tools, that they go under utilized.

Then, ultimately, if you're looking at a rev share model, then that may not validate the functions and features that that platform has.

Michael: I think this is actually ... [inaudible 00:10:04] I just go on a brief tangent here. Because this is getting me all fired up about something. Well all heard about segmentation in the last few years. And we all said, we're going to do that. Then every single client that I've got has started doing it, and found really good ROI. Even 2X, 3X, and even more ROI, when you start segmenting. But the problem is, it's not scalable.

Now, we've got dynamic [inaudible 00:10:28]. Where you can feed all of your data into [inaudible 00:10:31] learning engine, then it's going to do that for you and free up your resources. I think it's very easy to be small minded about the fact that it feels like so much work to re-platform or to embrace the latest and greatest. But, in reality, when you consistently have a mindset of doing that, and doing it well, and doing it fast. And cutting out the things you don't need, it actually saves you a bunch of time.

Sorry for that brief tangent. But we're going to do a show in a couple weeks on this topic of dynamic segmentation. Which is think is super exciting. All right. Let's move on.

What's the third reason why you should maybe consider re-platforming?

Chris: Yes. I'd say that's going to be led by any new company initiatives. A particular goal that the company may have, maybe revolved around growth. Or maybe trying out a new product, product category. You know, a lot of tests are run this way as well. I think it's a good ... It's definitely a good way for a certain situations. For a company to kind of get their feet wet. And see what a particular platform could be like because I've been in several situations where a lot of larger enterprise companies, there's a lot more [inaudible 00:11:39] involved in their advancement need the proof of concepts, ultimately, to see and validate a new type of technology.

So, a new product is a really good way to do that. Launching it quickly on a new platform, if you're spending it up on Magento or Shopify for example. Very easy to measure that.

I think another way to ... In terms of a new company initiative, is perhaps a large B2B manufacturer. Especially in my experience, definitely worked with a lot of B2B companies that are looking into ... Either breaking into the B2C market, or looking to finally focus on the B2C market.

There's also the flip side of that, where these companies are looking to hone in on their experience, for the B2B. Just how you're mentioning this whole segmentation, and we're on this hype. That goes hand in hand with B2B as well. I mean, it's phenomenal to see how quickly these B2B companies are getting up to speed. And having all the functionality features set, the look and feel aesthetics that you would expect from a B2C experience, also reflection B2B. I think that's huge because the B2B commerce market is a lot larger than B2C, as you know.

Michael: Yeah. A little tidbit of what we're focusing on, as an agency. New goals, I think this is a big thing for just trying something out. You're seeing the big brands doing this. They're taking the ... We typically think of lower end platforms and doing really amazing things with them, and at low risk for new product lines, or new product launches, or just an isolated category they don't emphasize. Then going, that worked well. We're going to roll it out the rest of the way.

So, let's move on. What's the final, and in my opinion, one of the most important pieces why you won't consider a re-platform.

Chris: I think that's definitely going to go with performance and security. If you really think about it, that should be a no brainer. Right? If you're experiencing any type of outages, if your site is painfully slow. In some way your customer data has been compromised, I mean wow. You definitely need to look at making a change, you definitely don't want to be in a situation where you're experiencing any type of reoccurring performance issues.

Even small incidents with security or compliance that you may be experiencing could definitely be a red flag and something that you should consider. In a timely manner, it's funny you'll see a lot of companies that will be like, "Hey, I think my site is being hacked. I think something is happening here." You take a look, and you're like, "How long has this been going on?" It's hard to see what damage has been done. Certain information has been disseminated, etc.

Michael: Yeah. Sometimes it's too late.

Chris: Most of the time it is. There's been situations where companies would suffer because they had damaged loyalty with their customers by their data being leaked. Getting customer purchase information credit card numbers, things like that, being obtained by hackers. That's definitely one of the most important.

Michael: I'm glad that we're not in the days where it's like, everybody was storing credit card numbers. That was a ... Waiting to happen. Great. So, there's four reasons why you should definitely consider a re-platform. What about on the flip side? Are there any reasons why maybe you don't need to re-platform? You might think you do, but actually you don't. There's some faster way forward for you.

Chris: Definitely. In a lot of cases, you'll see that people may look to another platform, simply because of lack of resources to support the technology. There's definitely situations where you may have the wrong type of resource, maybe you're working with an agency that under qualified, or not as experienced as you'd like. That's definitely not a valid reason to make a move just yet.

Michael: Platform is a pill. If I take this pill, all my problems will go away.

Chris: Exactly. I think there's a lot more evaluation that needs to go into that. Another would be, you're looking at your competition. And they're implementing a new platform. You're just falling to the bandwagon appeal and saying, "They've got it, I want it to." And try to jump on it, and don't necessarily weigh that particular technology against your business. I think that could be a mistake that I've seen quite a few times.

Michael: That's definitely a good call.

Chris: Yeah. Another I think is ... If you're in a particular situation where your current platform you think may be giving you problems, a lot of times it depends on who is looking at the situation. Are they more marketing, are they more technology based type role? And then their experience, because they're going to look at the situation differently.

In any circumstances, it's most beneficial to have all parties, all departments, looking at the situation to identify a root of the problem. I think a lot of cases, people may think that something is going. Maybe, for example, the performance and speed of the site. They think it has something directly to do with the platform. But, it could be just the way it's configured, or it could be the architecture itself.

There's various reasons of why that could happen. That's another use case where I see quite common.

Michael: I think there's an exhaustion factor to. It's like, people don't really want to re-platform, but you really hate the one that you're on a lot of the time. The issues is, it's not always an issue with the platform.

What's your final reason, that you maybe don't need to re-platform.

Chris: Man, the last one and I'd say it's probably the most common ... Which it shouldn't be, by any means. But, I'd say it being super close to Black Friday and saying, "We've been experiencing these issues. We need a new platform, asap. Black Friday is coming, let's do this in like a month." Yeah, let's not do that. It's very unlikely that everything will be set up within four weeks.

So, we've got to plan ahead on those types of things.

Michael: Yeah. If you're thinking of re-platforming in time for Black Friday, sorry folks. It's too late. I would say, we actually had a client last year where they switched up their entire ERP, right leading after Black Friday. It was one of the most crazy things I've ever seen happen and it all came together. It was just like, by the skin of our teeth kind of thing.

I was so nervous for like three months, my hair literally went gray.

Chris: Nailed it, though. It was successful.

Michael: [crosstalk 00:18:09] we were only a small part of that process, privileged to be a part of that but I just really don't want to do that again.

Chris: I totally understand. You get into situations too where there's all this unnecessary pressure.

Michael: Listen, let's do a quick review here. Reasons you might want to re-platform. Number one, your Legacy system is actually impairing your ability to scale. That's a little bit hard to see, it's a [inaudible 00:18:35] pan. If the pan has been heating up, and you didn't notice what you're missing. Well, you need to get some outside opinion probably there on what ... How many years out of date you are. Or you might not know that.

The second you mentioned, not utilizing your platform fully. So, if you're basically paying for a bunch of stuff that you don't need. Then that could be a consideration. If you've got a new initiative, or a new goal, or something like that, it can take a lot of time implement that in your current platform if it hasn't been designed with that in mind. It might be a good way to experience a new platform, to just align it with a new initiative in your company. Form a sense of security a major [inaudible 00:19:17].

Reasons why you should really re-platform, the first being if you are thinking that the platform implementation will solve your current problems. Well, it may need a check to see what the problems actually are. It might be a [inaudible 00:19:31] problem, it might be something else.

You also mentioned there's a second point, that if your competition does something and that means you should do it, well, not necessary. This is an industry subject to [inaudible 00:19:42] we just talked about in previous episodes. But, the platform is a big move. And may be able to get a lot more life out of your platform. I've got a buddy, who has been a guest on the show, where his whole pitch is like, don't change out your eCommerce, just fix your current website.

He's got a really good framework for how to do that. So, a quick [inaudible 00:20:04] sometimes the best approach. Third, you mentioned that if you are ... I guess that's kind of the second, or an extension of it. You need to understand the new problems that you're experiencing, before you should look to a new platform.

Then, finally, you mentioned the timeline. If you're too close to an important lunch, that's not a good time to do a re-platform. So, let's look at this here Chris. Our audience is going to have a lot of questions about this. And should I re-platform now, how close to Black Friday should I consider being before I should do a re-platform? Is there a framework or a model that I can utilize to consider a re-platform, already cracked the code on?

How can people get a hold of you if they have questions like that.

Chris: Absolutely, I'm always happy to answer any questions. I think the best way to reach me would be directly via email, that's going to be Chris@Sellry.com, C-H-R-I-S @ Sellry, S-E-L-L-R-Y .com. And feel free to reach out with any question you may have, I'll be available.

Michael: I also want to mention that we have actually put together a checklist, thank you Chris. Which you can get at eCommerceQA.com/replatforming. If you go there, it's going to give you a one pager on basically you checking off boxes, that will tell you, yeah. I should probably re-platform.

Again, that's eCommerceQA.com/replatforming. As always, you've got the show notes eCommerceQA.com, you can contact us generally by hitting podcast at Sellry.com, P-O-D-C-A-S-T. I don't know why I'm spelling Podcast.

I was going to spell Sellry because Sellry, it's not spelt ... [inaudible 00:21:46] with one or two tips here, Chris. What are some things here we can take away from the show that will help everyone sell three times as much this year, as last year.

Chris: I think one thing that you should definitely be mindful of is, what do your customers care about? What are they experiencing, what is valuable to them? Those are the best thing you can do today. You know, following up on that is, how can I better serve them, based on that information?

I think even if you just take those two simple points, you can apply that in various ways.

Michael: That's excellent. That is nice. Thanks everyone. Keep selling, let's go to Black Friday strong this year.

Chris: Thanks, guys.

Shownotes:

hotjar.com

everyonehatesmarketers.com

Transcripts:
Michael: Hello folks, and welcome to Ecommerce QA. This is a podcast where store owners, directors of e-comm and e-commerce managers can stay up to date on the latest tools and tech in e-commerce. I'm your host, Michael Bauer, and my guest today is Louis Grenier from hotjar.com. Louis has three jobs, he posts a digital marketing podcast called Everyone Hates Marketers.com, it's a show for digital marketers sick of shady, manipulative marketing, like everyone who's listening here.

Nobody on this show would ever do any of the things that you talk about on that show, right?

Louis: Yeah, for sure. And then you put them under pressure and the magic happens. It's not easy to not be sleazy sometimes when you have [crosstalk 00:00:43].

Michael: Oh, that's wonderful. I'm gonna write that down. It's not easy to not be sleazy.

Louis: Yeah. That should be amazed, actually.

Michael: That's what my wife, love that kinda quote. You're also the content strategist at HotJar, which I want to talk a lot about, but most importantly, you haven't said the third item but I think that's because it's the most important. You are the fiance to the beautiful Jennifer, and you guys are getting married in two weeks.

Louis: That's the biggest job, right?

Michael: Yeah. Cool. Well congrats on that, first of all. Why are you talking to me on the show, you should be go, wedding planning or whatever people do.

Louis: Yeah. It's already much, pretty much everything is done. Took us two years to organize it, it's not gonna be a big one, but we took it slow, one thing at a time. It's all ready.

Michael: Nice. Well, two years to plan a wedding, that's what we should have done.

Feel like we, it's hard to follow that one. Tell me this, Louis, why are you at HotJar?

Louis: Because I want to make the internet a better place. Simple as. HotJar is really the best kind of company to join to do that, the solution we are building is really a good way for anybody to improve Internet as a whole, because you can make any website much better by listening to people, by understanding how people behave on your website, by understanding what you should improve on, and stop guessing, right? This is why I join.

Michael: You're making me feel bad, because I thought my company was the best one at making the Internet a better place.

Louis: Okay.

Michael: So listen, I actually probably agree that your company is definitely way cooler than ours. We got hooked on HotJar back in, I think, '14 when a client of mine heard about your product when it was still in beta, and we were like oh my gosh, this is great. It's got all these useful things right in one place and they're really easy to use and onboarding is incredibly fast.

We haven't even talked about what it is. So tell us in a nutshell what HotJar does and is.

Louis: So, it's an all-in-one solution to understand how people behave on your website or on your app. What they do, what they don't do, what they like, what they don't like, and using that, you are able then to identify what you should improve on and where you can grow. So that's really it in a nutshell. Yes, as you've mentioned, HotJar was launched as a beta in our first strategy, so they really got a lot of early adopters, like yourself, to test the product and improve on, so the way we use HotJar is the same way we expect people to use it, which is constantly using it, making sure that we listen to people and we get back on board.

Michael: So you're using HotJar with HotJar, obviously, right? That sounds-

Louis: Yeah it's pretty, pretty metal, right? So that's exactly what we do.

Michael: Nice. So let's talk about this a little bit more. When we're talking about HotJar, we're talking about a few different things. The way we've used it is for funnel evaluation, so you tie in so you can evaluate your funnel. Check out funnel is usually what we're doing, as well as you can do user recordings, you can do user polls, you can do, oh, heat maps, obviously. What else can you do?

Louis: You also have a new feature called incoming feedback, which is a way to understand what people like and don't like about specific elements of your page or the page on its own. So it brings a bit more emotion to the user experience. It's brand new and we just literally launched it yesterday.

Michael: Okay, well I need to turn this on for a client. We went live with a client site last week, and we ran all the other stuff in HotJar but we should have waited til we got that, because this was the main thing we were trying to figure out is what are people reacting negatively to and positively to within the experience in general, and in specific areas. So I need to turn that on, I'm making a note about that right now.

But you do content at HotJar, tell me more. What's your vision for how the internet needs to change in healthy ways?

Louis: Right, so my role is really to try to help inspire as many people as we can using content. Guide, blog posts, anything. Podcasts, anything like this, right? Division we have is really trying to, as I said earlier on, to make Internet a better place by really trying to make as many people understand that you should listen to people. If you understand how they behave, if you truly ... if you truly give a damn about your users, you will have an unfair advantage, and you will be able to go faster than anybody else. You will be able, in the long run, to have a system and a business.

Michael: Talk to me about the fact that the tooling that you provide in HotJar is a kind of a mixture of qualitative and quantitative, and why have you guys decided to go with the exact mix that you use right now.

Louis: That's the question, right, why we've decided this way. Initially it was really about putting, trying to get all of those tools together. So all of the known tools together, as an all-in-one solution, right? So heat maps is not new, polls are not new, recordings are not new, all of the features we had weren't new on their own, but we put them together in a way that really enabled you to get the full picture, the full funnel, the full journey.

Now we are in the phase where we are moving on to just providing stuff to move on to things that are new, brand new, like true innovation such as the incoming feedback, which is not something that is being seen anywhere else. We are moving on to that next phase, right.

Michael: Yeah, you know, it seems like a super big pain when you're trying to make any kind of substitute change or even kinda just understand what you have on a website, because you know, there's user testing but that seems to take forever to get good quality feedback, and I just think that it's great that you're making that that much simpler, and things like that.

Now, let's say that somebody wants to be really, really quantitative, and you know, maybe they've got mixed panel or they've got Periscope or they've got Giraffe or some kind of super duper quantitative metrics tool. How do these tools play together? How would HotJar work in tandem with these other tooling?

Louis: Those tools that you mentioned, I would also include in analytics. Those are, those give you the what. So they give you the key pages that you should focus on. They give you the number of people going there and leaving. They give you the big picture and the what's, right, and HotJar gives you the why. So this is how you should connect them together. HotJar is not intended to compete against [inaudible 00:06:55] on this panel. HotJar is really intended to compliment them, to give you more context around why certain people are doing certain things.

If, for example, you have an e-commerce shop called Fat Pillows, because you said those pillows are actually better than anybody else, right? And you have this check out funnel, and you don't understand why you have such a drop off. Maybe like 90% of people landing on checkout end up leaving. Well, you can use HotJar there to understand why. You set up a heat map, understand where they click. You set up a poll, asking them why they are leaving or about to leave. You set up recordings to understand how people behave on the page, and after a day or two of traffic you will know the answer. You will know exactly why they are leaving.

Michael: So can you lay this out step by step? Let's say that somebody wants to improve let's say the check out. So we've got a check out, what are the steps that you're gonna use, and don't just talk about HotJar, maybe talk about what the other tooling is that you'd need to set up to do this properly.

Louis: So the first thing is, whatever tool you're using for that analytics, you need to understand how many people are coming to this check out. It can be done via Google Analytics, fairly simply. So you need to understand what type of product they are adding to their cart and the last step of the funnel, which is the check out. So, you can use any type of free tool to do that.

The main thing here is really understand ... I think the check out might be something that we can talk about in the next two minutes, but I think the best example to give to start with as a rating and action plan would be maybe at the top of the funnel. So when people land on your website in the first place, because the check out is kinda the last thing. But actually, if you improve, maybe if you improve the first step of the funnel, you might have a much bigger lift than if you put the check out, right?

You figure out that when people land on your home page or on a specific landing page where you're paying a lot of money for people to land on, if you find out that many, many people drop off, maybe 80%, maybe that's where you need to look first, right?

You need to look at the number of people landing on this specific page and then the amount of people leaving, the amount of money you're potentially losing, and therefore the opportunity that you have in front of you to improve.

Let's say people come from an ad and land on this landing page. The first thing you should do is understand why are those people on this page, so it might seem like they all want to buy your product, in your head. That's not necessarily the case, and that's usually not the case, especially if they have never heard of your brand before.

So, the first thing I would do is try to understand what are those people looking for, and might only be two people just saying pillows but actually, if I search for pillows or good pillows on Google, it might not mean that I want to buy one. It might just mean that I'm doing research right now, and therefore if I land on a page, kinda forcing me to buy something, I'm gonna leave because that doesn't give me the answer I'm looking for, right?

So, you could set up a poll there, on this page, straightaway after somebody lands on it or after a few seconds, asking what's the purpose of your visit today? What are you actually trying to achieve, right? The second question I would ask, which is actually really interesting especially in e-commerce because Cempathyion is really fierce, is have you heard of our brand before? And asking these questions means that if, let's say, the vast majority of people say no, never, well it's unlikely that they're actually gonna take the decision to buy from you straightaway, because they only said they trust you right now, right?

There actually have been a lot of studies about that. The more people know your brand, the more they are familiar with it, the more likely they are to go through the purchase, to click on an ad, and all these kind of things, right? That's called brand affinity, and this is incredibly important, especially at the top of your funnel. So that's what I would do first, understand what are people looking for, and then if you find out that people are looking for, like have a lot of questions, don't necessarily want to buy right now, perhaps you need to switch your ad into something more educational about the guide to find the best pillows and get a reader this way, educate those people and then lead your brand this way so that they have heard of you and they are much more likely to buy in the future.

That's what I would look at first, you know? The type of people landing on the page and what they are looking for.

Michael: Yeah, yeah. You know what my favorite thing to do with HotJar is? Is to stick up a poll after check out and say what almost caused you to abandon today?

Louis: Absolutely. That's ... sorry to cut you, yeah, yeah. It's just, I'm passionate about this and I tend to cut people off.

Michael: Right.

Louis: So exactly. So let's say now you've moved into the middle of the funnel, where you're more likely to drop off for other reasons. This is exactly what you can ask, you can say "What almost prevented you from buying today?" As you mentioned in the check out. But you can before that-

Michael: Yeah, even before that, exactly.

Louis: You can ask what's preventing you, actually, from doing what I want you to do today. So you can set up something that's a poll that asks this particular question when they are about to leave the page, and honestly, it's not a [inaudible 00:11:59] hard sell, you can, the mini tool's enabling you to do that, right?

Michael: So you would just set up an exit intent poll?

Louis: Yeah, yeah. So you can set up a poll that's on Test Doctor that says when they're about to leave the play, display the poll.

Michael: Why are you leaving?

Louis: Yeah. So you need to have a decent amount of visitors in order to get enough answers, but it's a quite careful one. But let's not forget one thing, though, we are talking about technology and HotJar and all of the other tools like analytics. Do you know, there is a tool that we all have that we don't use too much, do you know what that is?

Michael: It's not my screwdriver. I don't know.

Louis: It's our mouth, our ears, basically our senses, right? So, let's not forget that we are human beings and talking to other human beings is still our most valuable thing ever, which means that instead of investing a lot of money in ads and in user testing, which you can do, it's just bringing a few friends in the same room as you, showing them your website, letting them use it and just see what they do, how they react to it, what they say, the question they ask, and that's gonna be probably the most effective thing you can do if you have a low budget and don't have a lot of visitors right now.

Michael: I'm gonna push back just a tiny bit on that and say that works really well if those people are somewhat close to your target market or at least can ...

Louis: Of course.

Michael: You and I probably aren't that similar to the people that use our tools, in a sense. I mean, it's a good idea, I'm not saying not to do it, I'm just saying that's one thing we have to watch out for, is making sure that whoever's giving input is a member of the audience that we're trying to hit. So good input there.

Okay, so we hit top of the funnel, middle of the funnel, conclusion of the funnel. We hit asking basic questions. Can you back up a little bit and do some kind of more high level discussion around one really important method: clickthrough rate.

Louis: Mm-hmm (affirmative).

Michael: What are some really good tactics that you've seen people using HotJar for to make a big dent in things like click through?

Louis: So do you mean click through rate from an ad to a landing page?

Michael: More like once you hit the landing page and then you're gonna go beyond there and actually click all the way through the site. You could also use the term abandonment, so what are some really great ways people have been using your tools to identify problems with their abandonment and how have they been solving those problems?

Louis: Just think, first of all. In HotJar we're not a big fan of best practices, right, so it's very difficult to tell you this is the thing you should try today that definitely works. That's a word of caution, every business is different and therefore everything you can do, your customers are different so you should be careful of so-called best practices, generally speaking.

However, what we like to talk about more is kind of what we call first principles, so what are the things that will never change about people? And let's focus on that, so there's one good thing that we mention in outlining to prepare for this show is the choice of a lot, so data, like behavioral scientists have proven many times over that the more choice you're giving someone in front of them, the less likely they are to take a decision and the more likely they are to be frustrated about it.

Michael: So ...

Louis: Think about any time of you're going to the restaurant and you have this menu with literally fifty items for starter, 50 items for mains, 50 items for dessert, then you have the daily special, you have the middle of the day, you have so many options. You feel overwhelmed, you don't know what to choose, you get frustrated. Now, I show you just the early bird menu, two items for each. All of a sudden, you just feel much more relaxed and you're able to take a decision. So it's actually extremely important, so that's one of the first principles you can use. Try to simplify the experience you're offering users. Try to remove things that are not being clicked on. Try to remove things that people don't look at, because chances are it might overwhelm them to take a decision, so that will definitely be one of the first principles you should be looking at.

Michael: Mm-hmm (affirmative). Yeah, that's a super important thing to me. It's like people feel nervous when they're removing things, but in reality it's like you're reducing friction, you're making it easier for people to make decisions. So if you know anything about your product at all, prioritize the content that you want people to take action on and you will find that they will be inclined to actually do that.

Louis: Absolutely. Another thing I can say is, so we love to talk to our own users and customers in HotJar, so we like to spend time interviewing them, understanding how they talk and how they describe HotJar and how to describe the features we have. So, another thing that works really well, because once again it's based on first principles, it's based on the fact that you are using your customer for your marketing, is that you should use the language they use.

That sounds cliché or that sounds simplistic, but it's not. So, there's something happening in the marketing world or even in the e-commerce world is that when we write copy or when we try to explain something to customers on a page, we tend to put this hard, which is the hardcore salesman person, trying to sell you something and we use words we will never use face to face with anybody, right? So we tend to overpromise, overdeliver, we tend to use words that don't make any sense, that are like overly generalizing and we are not specific enough.

A good thing to do is to literally use exactly the language your customer are using to describe your products and this will have a dramatic effect. It's likely to have a dramatic effect on your commercial, on the experience because that's how people talk, right?

Michael: You have a good way of figuring out how ... that's one thing if you're just talking to someone in person, how would you do that? Maybe there's a way to use HotJar to determine how customers are talking about your product?

Louis: Yeah, so you know, if you send surveys and ask them the question "How would you describe your product to a friend?" And asking them to be as literal as possible, you recollect a lot of data around how people actually describe that to a friend, right? So surveys is a good way, if you don't have a lot of time to spend talking to people, but I would say the number one thing, even if you can't meet people face to face, is to have a 15 minute conversation with them and just make them talk. So you're not a salesman in this conversation, you are a journalist. Your aim is to understand them better so you must make them talk. And once again, the question could be as simple as, let's say you are describing what you do to a friend. What would you say exactly? And let them talk. And if you recall the conversation, you can use transcript as a way to really improve your marketing, to something that really talks to people much better.

Michael: That's great, and I think that would apply to product descriptions, that would apply to landing pages, that would apply even to your motifs and your logos and your, it's a very useful thing to do. How have you guys used that approach with HotJar to change your messaging?

Louis: So we are doing it right now. We don't see that as a one-off project, obviously it's a continuous project. So at the minute in the content team we are talking to at least one customer a week, we do that over 30 minutes and we have a customer delotment process. So if you don't know about customer delotment, it has been kind of developed by, in the start-up world as a way to understand what people value about your tool or your product or you're selling, what they don't value, how to describe it to a friend, et cetera, et cetera. So we have a few questions like this that we go through and we let people talk. We compare them every month and we try to improve things one thing at a time, one page at a time, one piece of copy at a time.

At the minute, we are actually undergoing a big project around the jobs to be done, [inaudible 00:19:36], which is a very powerful concept. It sounds also really simple when you explain it, but it's actually very powerful. So instead of trying to sell features or even benefits, what you are trying to do is consider your solution as the way somebody uses to perform a job. Such as, you know, you don't buy a pillow just to be comfortable, you buy a pillow to sleep better, but even beyond that, maybe you buy a better pillow, to get on better with your wife because you've been snoring for the last 6 months.

Michael: You keep coming back to pillows, man. You must have been shopping for pillows recently.

Louis: Yeah. I'm trying to stick to one example or else it gets tricky, doesn't it? So, this is kinda the job to be done of the pillow. If you understand exactly why those customers hiring this pillow for or your product for, you really then understand that you can explain what you do and what you said much better. Because it's never about the pillow.

Michael: Yeah. You know, it's interesting with the jobs to be done, the thing I find funny and I'm not saying not to use it, I'm a really really big endorser of this, but it's funny how it sounds when you write out "The job for this website to be done is blank," as though it's a person, but that's the whole point, right? We're trying to take the things we're creating and have them do things that cater to the needs of real people, rather than just roughly approximating.

How, for example, with HotJar, how would you describe the job to be done with point to the components of HotJar as you understand it now?

Louis: So you see, it's not about the component anymore, so that's what we've discovered. It's never about the component, it's more about the job. So for marketers in particular, let's take an example on them because we are interrogating many marketers at the minute. It seems like the best, the biggest job that they have is to understand people, understand how people behave on their website, right? That's the job, so they want to understand that. It means that they don't really care whether they have to use a poll, a heat map, a recording, or all of the above. They want the job to be performed.

So what they want to know is how to use those features together and in each other to perform the job, right?

Michael: Exactly.

Louis: The other thing we discover is there are adjacent jobs that they want to be done at the same time. The first one is they want to get stuff done. They don't want to lose time doing it, they want to spend six hours a day performing this job, they want to do it as fast as possible because they are so busy, they have so many things in their head. So therefore, not only do they want to understand how people behave on their website, but they want to understand 50 minutes a day.

That really gives us a huge insight into, we need to get better at giving them what they need faster in a better fashion, better designed way, so that they get the value straightaway and they can move on into the rest of their day.

Michael: Interesting. That almost sounds like a parameter in part of the job. Your audience wants to understand user behavior; they also want to do that quickly within under 50 minutes a day.

Louis: Exactly, right? And the second adjacent job we discovered is also, not only do they want to do it fast but they also want to be able to convince the decision makers, the managers, the C Suite, to change the experience based on that. So they want the tool to be able to convince them, right? Because they are convinced, but it's not the case of everybody that's here.

Michael: So to talk about ... I want to riff off of that for just a moment. That was a really great example of using the jobs to be done framework. What do you see HotJar going towards in the future, if you could share anything about that? Right now I see the tool is providing a lot of ways to understand your audience quickly. Anything you can share about the future of the company?

Louis: Sure. So the first thing to say is that we are very transparent and you can access the HotJar roadmap right now if you go to, let me check again the address. You should just Google HotJar roadmap, you'll find it straightaway. So we actually publish what we are working in the future. There are a few things that we are working on that are more like fixes rather than brand new features. There's a few things that we need to fix, especially regarding recordings, that we're improving but we are very excited about a few things coming next.

The first thing, as I said, is the incoming feedback feature, which is coming out of beta, which is a very good way to evaluate emotions rather than just things. We are also working on integrating Google Analytics with HotJar, which is something that people have been asking for quite a lot. Also integrating it with Xavier. We are also working always on recordings, so at the minute-

Michael: Oh, that'll be awesome.

Louis: Yeah, right? A lot of people, lot of customers have been requesting that for ages. The ability to record visitors on an ongoing basis without to set up new recordings all the time, that's definitely something that has been ask a lot. More in the future, we are gonna move to what we call an event-based architecture. So, instead of just recording page views, we really move on to give you the ability to select the event you want to record. It could be anything, right? So stemming out and [inaudible 00:24:52] you can record specific triggers that are unique to you and really use HotJar to edit them. So it's really a move from basic function ADT's around page views and site visits to really integrating with your marketing stack and understanding how people truly behave on your website.

Michael: That's absolutely fabulous. You know what we're doing with the client right now is we're setting up MixPanel for all of the qualitative, the what, you know, quantitative, I always get those two mixed up. And what I want to do is we already have HotJar installed, but I want to get it fully aligned with the MixPanel data so we'll be able to see the what and see the why and just dig deep into that. It's gonna be fantastic.

Louis: Yeah, we are really looking forward to it.

Michael: So Louis, tell me this. Any final thoughts as we kinda start to wind down here?

Louis: Oh, that's a wide question. I would say to summarize, really, it's all about empathy. You know, we see HotJar's almost an empathy as an obvious kind of product, it's really about understanding kind of people. So, it can be difficult sometimes for you to see the forest from the tree when you are like in front of your computer all day and have to manage this e-commerce tour and looking at these Google Analytics numbers and those spreadsheets and all, but trust me, if you do try to speak more to your customers and understand who they are and what they are trying to achieve in their life, you will get better at what you do. You will increase your sales in the long run, because you'll have more empathy for them. So I would say that's probably the most single biggest improvement anybody can take in their business, can make in their business.

Michael: That's great, empathy, yeah. So cool. How can people get in touch with you if they've got questions about how to maybe set up a really effective HotJar, testing and recordings and all that, or maybe they've got some questions about how can we collect user data better in general, or some of the methodological or framework stuff that you shared?

Louis: Right, so there are two things you can look at. You can Google HotJar big picture, which is a big picture worksheet that allows you to basically do what I explained this episode, which is understanding why people are doing certain things, it's one page that really enables you to get the big picture of what's going on on their website.

Michael: Oh, I love this. I'm looking at it right now, this is fantastic.

Louis: The second thing is the HotJar action plan, which is a little bit more actionable items that tells you what you need to do. So as I mentioned, you set up your key pages, you set up your heat maps, you set up polls, all these kinds of stuff. So it's really a solution based action plan, it's not about choosing x feature or x feature, it's about using them in coordination in order for you to perform the job you have to do, right? So those are two step I think you can do next, right, and if you have any questions you can email me at louis@hotjar.com, so it's L-O-U-I-S@hotjar.com. Any question, really, you can email me and then I'll forward to the right person if I can't answer them directly.

We have an excellent support team as well, who are more than happy to help you if you need any help. They're also on the ball if you need them.

Michael: Let's make sure to mention your podcast, that's EveryoneHatesMarketers.com, because everyone does hate marketers. Do you think people hate sales people or marketers more?

Louis: They hate them both.

Michael: How about lawyers?

Louis: There's actually a study about, you know what, I saw it, I think it was on HotSpot, marketers and salesmen are only 2% of people who trust us. Even lawyers are above us, around 4 or 5% if I remember well.

Michael: I think I'm gonna have to tell my brother that. I'm always telling him lawyer jokes, I'm gonna have to switch to marketer jokes.

Alright, well let's change the industry. Let's start using real data to solve people's needs and then they'll be happy and like us instead of hating us, right?

Louis: Exactly.

Michael: Cool, Louis. Thanks so much for joining the show and congrats on your upcoming marriage. This has been fantastic. As you know everyone, you can find the show notes at ecommerceqa.com. If you have any questions regarding the show or suggestions for a future topic, podcast@sellry.com, S-E-L-L-R-Y.com and that's it for today. Thanks everyone. Thanks Louis.

Louis: Thank you.

Dillon: Hello everybody! This is Dillon Holst and today, I am joined by the founder and CEO of Freeeup, Nathan Hirsch. Nathan is a serial entrepreneur. He is an expert in remote hiring and e-commerce in general. Nathan, thank you for being on with us today.

Nathan: Dillon, that's for having me.

Dillon: One of the things that I found interesting, just browsing through your site, how many people it seems, really have latched onto this idea of remote hiring and are really excited about the things that it can do, just in terms of either augmenting, or completely staffing their workforce. Maybe you could just give me a little bit of background about how you were introduced to the idea of remote hiring and how you decided to kind of make this your thing.

Nathan: Sure, so, going way back, when I was 20, I'm 27 right now, I started an e-commerce drop-shipping business out of my college dorm room. It quickly blew up. I was running a multi-million dollar business before I knew it. Hiring my friends for the first time. I hired my first employee before I could legally drink. I really just had no idea what I was doing. I got lucky and I made some really great hires. People who are still with me seven years later.

Like every entrepreneur, I made some bad hires as well. My business was always drop-shipping, so you never have to touch any products. So, I could hire people that could work at their place or across the hall in a different room, or whatever it was. It didn't really matter whether they were with me at any point. We would have group meetings and what not to get on the same page, but, for the most part, we could be in different states or any part of the world and still do your job.

When I graduated and I decided to become an entrepreneur full-time, and I moved to Florida, I actually did end up opening up an office, which I think was one of the biggest mistakes that I've made. I've hired a lot of full-time people, employees. I quickly realized that if I'm paying someone $50,000, $60,000, $70,000 a year, I need to get the most out of them, because I'm an efficiency person. It was really bothering me that they were spending a lot of their time doing very easy data-entry work or answering simple emails. It didn't feel like I was getting good value. I didn't feel like I was challenging them either. They enjoy their job more when they're being challenged and building rather than doing.

So, a buddy of mine that was actually on my softball team when I moved down here, introduced me to oDesk, which was Upwork at the time, and I just fell in love with it. I mean, in my mind, and I'm a pretty logical person, I'm very limited in the talent that I can get in Orlando, Florida. If I open myself out to the entire world, the possibilities are endless. Not to mention the other benefits of no payroll taxes for hiring contractors, hiring, maybe outsourcing certain tasks, although, I did remote hiring, so, it wasn't all international. But, I was determined to build this army of remote workers, which I did.

I found that hiring these remote workers allowed my full-time people, the people who I was paying to think rather than do repetitive tasks, would really excel and would be able to put a lot more of the company, enjoy their jobs more. We just grew so much faster, to the point where I got rid of the office and made the entire company remote, and I kind of had the idea that I wanted to help other businesses do the same thing, because, there are tricks to the trade. It took me a while, just like it took me a while to learn how to hire employees correctly, it took me a while to learn how to hire remote workers and even international workers correctly. I created Freeeup to help other business owners free up their time the way I have for the past seven years.

Dillon: Sure, okay. In terms of just building a workforce, I love the fact that you identified that your most valuable employees were maybe not using their time in the most efficient manner, or the way that they might have wanted to be spending their time, do you feel like that is something that exists across all industries or is that specific to the tech industry? Basically, remote teams, is that something that can work for every industry or is it just specific industries that you see as being in need of augmentation via remote teams?

Nathan: I mean, there's certainly some industries that it might not apply, if you own a bakery or something like that. But, for the most part, most businesses are online in some way, shape, or form. Even if you own that bakery, someone should run your social media, someone should build your website and run it, and all that. If you're not tapping into remote workers and talent from across the world, you're really missing out on a huge opportunity to expand your business at a fraction of the cost of what it would require to hire internal employees.

Dillon: Yeah, sure, okay, so let's say somebody comes to your site and they're looking for somebody to do some specific thing, let's say data entry. What should that person be looking for in terms of qualities. What should we be looking for in people? What makes somebody a good, remote team member?

Nathan: Sure, and that's one of the reasons why I created Freeeup, because, there are a lot of places out there, where you go to them, and you want to post a job, but it's hard to really figure out what you're looking for. Especially if you've never hired before, or you've never hired remotely before, and you're trying to pick out from 50 people that are in the Philippines, it can be challenging. A lot of times you don't know what to look for.

From my past seven years of hiring, I have a pretty good idea of what I want to look for, and I'll get into that a little bit later. So, the cool thing about us, is we identify these people, we vet them, we test them, we have a strict communication policy that they have to follow, which I'm sure we'll touch upon later as well. Then, we make these workers available to our clients. On our site, there's very little thinking involved. You tell us what you want in terms of skill, "Hey, I have this project day, I need this full-time position," whatever it is, and we pick someone from our network that's already been pre-vetted, that we already know has those qualities, and we introduce them to you.

It's really that simple.

Dillon: What kind of metrics are you testing people for when they come to you and they say, "Hey, I want to be a freelancer. I want to work for you guys."?

Nathan: Sure, so there's three things. One is skill. Obviously, if you're hiring someone to build your website on WordPress they have to have years of experience in WordPress. We're not that new, freelancer marketplace. People that are freelancing for the first time, they don't get into our network.

Dillon: What's the requirement like there?

Nathan: We want people with three plus years of experience for the most part. It can be less if it's a newer platform or something that just came out, but that's a baseline. There are really talented people that learn fast that are the exception to the rule, but, for the most part, three plus years. We have people on our team that have 10, 15 years of experience. We're really looking for that. A track record of success with past clients and years of experience.

Two is their attitude. We want people that care more about money. That are workaholics. That really like working. Where work is the number one priority, or close to the number one priority in their life, and that can really care about our client's business as if it was their own, and not just doing it for the paycheck, like I said before.

Then, quality number three is communication. Because, to me, communication is everything. I don't care how talented of a person that you hire, if you can't communicate with them, it's going to go south so fast you won't even believe it.

Those are really the three things that we look for when we're hiring a worker.

Dillon: Okay, somebody might argue that building a remote workforce could leave yourself open to people leaving early, or maybe they'll feel like you, as a company, are not investing them because you're remote. Is employee turnover more difficult to handle, I guess, when you're dealing with remote workers?

Nathan: If you treat your worker like they're not part of the team, like you're just using them, and you're just giving orders, and they don't care at all about your business, the turnover is going to be high. What I teach is to change that mentality. Make them a part of the team. Make them care about your business. Make them want to be part of the journey in growing your business, and your turnover will be pretty low.

I mean, we have a pretty large network of workers, and our turnover is extremely low. The lowest it's been in either of my two companies at this point. It's all about how you treat people, how you vet people. Whatever your company culture is, if you're adding people to the team that are like that culture, or if you're adding people that are more of that corporate mindset, but you're a start up, or vice verse. Anything that you can do to make people fit in to what you're building, is going to reduce turnover. To me, it's not the fact that their remote workers that leads to turnover, it's your whole attitude and how you treat people in general.

Dillon: You say what you teach, do you offer resources for business owners who are using a remote workforce for the first time? How does that work?

Nathan: Definitely. I mean, we offer free consulting. I do a lot of webinars and podcasts about it. We have e-books that we have continued to come out with. We have our Freeeup blog that you can check out. We always talk about building a culture, and managing people, and how to hire, and stuff like that. We have an online masterminds Facebook group that people can post questions in. We're pretty responsive. We try to answer every single one in as much detail as possible. We're really there to assist you along the way as much as we are to provide you those workers that you need.

Dillon: In terms of people that are not familiar, or maybe are just starting to build a remote workforce, what would you say the most common question you get asked by business owners is?

Nathan: Are they going to steal my information or what are the risks involved in something like that?

Like I tell them, there's nothing I can do to make that risk zero. There's always going to be a risk, that employee, or contractor, or worker, whatever it is, makes a bad decision. But, at the same time, we're pre-vetting these people. Most of the time these people are in it to provide for their family. They care a lot more about having the job than they do about stealing your information. What a lot of clients realize, is their information, unless you're a huge company, really isn't as valuable as you think it is to have someone jeopardize their job over it.

I mean, even with us, what's cool about it, is it's so hard to get into our network. Once they're in, just like our clients like it, 'cause they don't have to interview hundreds of people, our workers like it, 'cause they don't have to do hundreds of interviews. They want to stay in the network. They want us to bring clients to them, and if they jeopardize anything, they get kicked out for life.

Yes, you should be protective of your stuff, and you should give people limited access when it applies. But, you really want to have the mentality that you're trying to build trust with these workers, and everyone is in it for the same reason.

Dillon: Sure, yeah, so, keeping in the same kind of thought process with first-time business owners that are doing the remote worker thing for the first time, what would you say, just from your years of experience in watching people do hiring, what would you say the biggest mistake is, especially within the context of remote hiring?

Nathan: The biggest mistake that people make is not diversifying. They'll hire one person to do everything. They'll teach them how to do bookkeeping, how to answer customer emails, how to do this and that, and everything that it takes to run their business. They put them in that manager position, and six months later, that person quits and they have to start all over and their entire business is in shambles, and it sets them back three to six months. It's the worse thing that you can do.

If you're hiring and your business is growing at a good pace, diversify. Hire one person per team. Spread it out, if one person quits, it's not the end of the world. Come up with training guides and videos where your ... No one on your team is indispensable. If you look at your business right now, and you have 10 employees, and three of them it would just be an absolute disaster if they left, you really need to work on diversifying and changing that kind of atmosphere.

Dillon: Hm, okay, yeah, that makes sense. In terms of just working with a remote team, often, in the past when I've worked with larger companies, you'll have specific teams do team building. They'll do things to try to build group cohesion, all that kind of stuff. What would you tell business owners, and how would you guide them in terms of building team cohesion when everybody is not sitting in the same office, or they might not ever see each other face to face, how do they build team cohesion?

Nathan: Sure, so, step one is make sure everyone understands the company. When you hire someone, or you onboard someone, you should hand them a piece of paper that's like, "Hey, this is how we started. These are our goals and expectations. These are the important people in the company, and their contact information. These are my personal pet peeves, if you're going to be working under me."

Just, everything is laid out and clear. On top of that, as you hire them and you set these goals, make sure you're updating them. Is your company having a good week, having a bad week, what projects are you working on? When projects finish and you launch them, make it a big deal. Make it so that everyone's talking in a group. Have those Monday morning meetings where everyone gets on the same page and then spends a week attacking instead of everyone logging in at different times and going and doing their own thing away from everyone. Build that atmosphere where everyone is working together and is rooting for each other for a common goal.

It's really not that hard to do if you put some time into it up front. A lot of issues arise when you just have 10 contractors that never talk to each other, that don't know what the other pieces are in the company, and for the most part, don't even know what their contributions are, they just know that they do their job and hand it to you and do the next job. That's very easy to lose a person, because, the second that someone comes along like Freeeup, or anyone else, that has that positive company culture, and is paying the same rate, then that person's going to jump.

You can either pay people a lot of money and treat them poorly, or you can pay them market rate and have that great culture and lower turnover and have a great team working together.

Dillon: Can you give me an example, or maybe a specific scenario in which you've seen, either somebody do it the right way or do it the wrong way in terms of building team cohesion?

Nathan: Yeah, I mean, I've had clients that I've sat down with them, and I've been like, "Listen, you shouldn't talk to workers that way," and I'll be honest with them, I'm like, "Listen, I want you to succeed. It's not my job to tell you how to run your business. If you want my advice, I'm happy to give it."

They're good enough that they want my advice and I'm like, "Listen, if someone's pissing you off, you can't just scream at them. You have to look at it as in a problem-solving situation. Yes, you can always fire them and replace them. But, it's in your best interest, if you invested two months into training someone, to sit down and have an honest conversation and hear them out and get feedback on yourself."

Because, a lot of the time, it's not only the worker's miscommunication, but, it's also how the client manages people. It may be stuff like organization and stuff like that. In my atmosphere I'm always looking for feedback. I'm a totally different owner now than I was five years ago. A lot of that is because my business partner, Connor, looked me in the eye and he was like, "You need to change these things."

Because, we got feedback from my team of 15 to 20 assistants, that when I'm doing performance reviews or anything like that, it's right back at me. Tell me how I can be a better leader or a better manager, because, people think I'm a business owner, that the only thing I care about is money. I'm going to make more money if I'm a better manager and a better leader and people stay here.

I try to adjust people's just attitude in general, because, that's a lot of the problem. They're so used to being that boss, it's like, "Do this. Do that," without having that team mentality.

Dillon: In terms of just ... I'll give you an example from our own company, we do hire quite a few people from either overseas, or contractors here in the United States, and one of the things that we've found to be somewhat challenging is that, I guess the best way to say it would be, to build a communication process that has longevity, I guess. And what that looks like for us is, we've done our best to do kind of like a stand-up meeting every week where everybody gets together. They talk about what they've been working on. They share positive things that have happened, negative things that have happened, but one of the things that we ... Especially when we were first starting out, struggled with, was consistency and everybody making an effort to be there on time, all that kind of stuff. Because, it's really easy, when you're working remotely, it can be easy to fall into the trap of, "Well, I've got this project going on, so I'd rather get this project done, rather than show up to the meeting."

That sort of thing. Give a company like us some advice in terms of instilling, I guess, an attitude of this is really important, that we have this time to connect as a team, that we have this time to motivate each other. What would you say to somebody, especially a company that is new to the whole remote hiring scene, what would you say to them in terms of establishing some sort of consistency?

Nathan: I would divide it into two parts. Is it the workers or is it the system?

If you're just looking at the workers, are you hiring the right people? Are you hiring people that prioritize communication, that prioritize teamwork and company culture and group building or are you hiring people that just get satisfaction from completing projects and don't care about the rest of the team in any way?

If you're looking at the systems, I would say, does it flow from the top down? Connor and I, we've been working together for seven years, and we're pretty honest with each other. One of my biggest issues with Connor in the first years that we were in business is he would be like, "Yeah, let's do this project, this project, this project, this project," and he would get overwhelmed and he would be inconsistent, because meetings that he wanted to have would get pushed back.

Projects that he wanted to do would get moved around or changed, and it flowed down. Everyone else just became completely unorganized below him. On the top flowing down, I mean, with us we have Monday morning meetings, 10 am, every Monday, that for the past two years that I've been running Freeeup. It hasn't changed, everyone knows to show up. If you're an assistant of mine and you're not showing up to Monday morning meetings, you're not going to be an assistant of mine very long.

For me, it's setting that culture and putting it set in stone, and making sure that if you have other owners in the company, or other people that are up top, or even assistants that maybe have been with you for a while and have gotten a promotion or in a manager position, or whatever you want to call it. Make sure that they're following the policies and the culture, and that trickles down to the new people that are hired. Because, if you have a new person that walks in the door of McDonald's, and every person working there being like, "This place sucks. I don't want to be here right now. Get out when you can."Or, if you walk in and everyone's like, "Hey, the boss is awesome. We're all working together to make as much money as possible. They treat us well. If this happens, we get rewarded."

Then, it's going to flow down. People that walk in the door are just going to snap right into it and know, "This is how it's done here. I need to follow suit."

Dillon: In remote offices in general, give me some keys to what good productivity looks like in a remote office, and maybe if you have any particular tools that you're using in terms of project management, that kind of thing, what are the biggest keys?

Nathan: Sure, so, all my assistants, I have a team of 15 to 20 assistants. Then, I have an internal team of six people that run the teams and have their own assistants outside that. All my assistants have a combination of daily tasks that they know they have to get done. They have short-term projects. Stuff that, cool ideas we've came up with or things that we're building, that are one weeks or two weeks that they know have these due dates and they have to get them done, or tell us in advance if something comes up they need an extension, but, for the most part get it done. Then, they have long-term projects. Things that we're building over the course of the year. They know that they're responsible for these three things.

During the day I'm getting the most out of them because the day-to-day operations that I just don't have the time to do, I know are getting done. The short-term projects, I'm utilizing their brain to chop away at these projects that I can implement right away, which is huge when you're running a startup, because you don't want to wait too long to implement things. Then, I also had the long term vision in mind where my bookkeeping team is working on a long-term solution to payments, or whatever it is. My HR team is building our new testing platform for new hires in six months.

It just works out very well that every worker knows they have these responsibilities and sticks to it and reports on them. It's very structured. There's really just no excuses along the way. Everyone knows that that's the way it is. You're responsible and ... We never are like, "Hey, if you don't do this, you're going to lose your job."

But, I mean, everyone knows that that's what's expected of you. They've seen that if people come in and we assign them stuff and they don't do it, they're no longer a part of the team. We don't threaten them. We just say, "This is the way it is, if you want to be here, you have to do it."

Dillon: Are there any other things that you'd like to bring up, just in context of what we've been talking about that maybe I haven't asked you or you think is important for people to know about remote hiring in general?

Nathan: Yeah, I think you should value your time at a very high level. Valuing your time also applies to valuing your workers' time, you're business partner's time, your clients' and your customers' time. Really think about how long it takes you to do HR, and how long you spend doing interviews, and going through resumes, and training people, and even turnover. Because, turnover is the most expensive thing in business. It can set companies back for a while.

I really created Freeeup to end all of that. We have a very great interview process. We get hundreds of applicants a week. We take the top 1%. When you're a client of ours, it's free. Whenever you need a worker, you press a button, it asks you a few questions so that we know exactly what you want. We introduce you within 24 hours or even less. Because our turnover is so low, we have a no-turnover guarantee that if our worker, on the rare chance that they quit, because it is real life, people do leave jobs, we cover all retraining costs, and get you a new worker right away.

The amount of time that you can save just on the HR alone, nevermind turnover cost, is huge. It really, I mean, think about whether you're actually spending time in your business focused on sales, marketing, and expansion, or whether you're focusing them on day to day operations and HR. Because, you'd be surprised how many really smart business owners wake up one day and realize that they're spending 40, 50, 60% of their time on the latter.

Dillon: Yeah, sure, so, maybe you could give us a high-level overview of what Freeeup can do for a business owner.

Nathan: Like I said, signing up is free. We have a network of workers from $5 to $50 an hour. We're about 40% U.S., 40% Philippines, 20% scattered throughout. Everything e-commerce and online business, from WordPress, graphic design, data entry, customer service, advanced consultants on Amazon, eBay, click funnels, all that stuff, and they're ready to go.

Our workers are first come first serve. We're very much a vast hiring platform, which, I don't know any others that are like that. Where you can have someone hired within an hour. We make it super fast. All our workers have strict communication policies. We have 15 pages of communication policies that our workers have to memorize and get tested on, so that you know our workers are not going to disappear. If you ever need to get ahold of your workers, you can come to me and my assistants, and we grab them for you.

It's a very streamlined process, so you never find yourself chasing down remote workers, or interviewing, or any of that. Then, I mentioned that we're hands on. We're there to help you along the way. We're there to guide you with our blog and our Facebook group. You can always ask us questions and ask our assistants questions. And we have that no turnover guarantee. We're really trying to be that solution for the business owner, to help free up their time, hence the name, along the path to building their business.

Dillon: Awesome, so, what are you guys looking forward to in 2017? Are you guys working on any new initiatives or new projects that people should be aware of?

Nathan: Yeah, #beeverywhere. That is the goal for 2017. Connor is doing a great job on the marketing front with the blog, lots of podcasts, and webinars, and all of that. Just hired a great PR manager. I'm pretty sure she's the one that got me on this show. We have our new software that's being updated. We're always looking for software improvements. We just added five new people to the internal team to help that extra level of support, so our clients always have someone to go to whenever they need something.

We're really trying to be that hands on solution that's always there when you need us. We're really not interested in you hiring a worker, having a bad experience, and us making a few dollars. We want to make sure that you love the workers that we give you, and that they help you grow your business long term.

Dillon: Cool, well, thank you, Nathan. I appreciate you taking the time to answer some questions here today. Guys, please check out the link to Freeeup.com in the show notes. Then, we're going to also have some additional information on services that Freeeup can provide for you down there as well. Nathan, thank you for your time.

Nathan: Sure. One quick thing. Anyone that mentions this podcast gets $1 off their first worker forever. So make sure-

Dillon: Awesome, is there any kind of code that they should use?

Nathan: I'll get you an affiliate link after the show. We can track that.

Dillon: All right, that'll in the show notes as well, guys. Cool, thanks, Nathan.

Nathan: Thank you.

Show Notes:

Get Your Conversion Rate Optimization Starter Guide Courtesy of Disruptive Advertising.

Tell Us Your Ecommerce Pain Points

Check out our episode with Nick Disabato

Use Unbounce To Build Beautiful Landing Pages. (FOR FREE if you can be considered a startup)

Optimizly or Visual Website Optimizer or Adobe Target to create a better version of your current landing page

Talk to Chris On Twitter

Transcripts:

Michael: Hello folks, and welcome to eCommerce Q&A, this is a podcast where store owners, directors of eCommerce, and eCommerce managers can stay up to date on the latest tools and tech in eCommerce. I'm your host Michael Bower, self proclaimed eCommerce junky and my guest today is Chris Dayley, the VP of testing inside optimization at Disruptive Advertising. I'm reading Chris's bio here. It says, "When he's not fixing his hair, you will most likely find him pushing the boundaries of AB testing. Disrupting the website design space, Chris frequently speaks on the topics of CRO and other things like that." Chris, welcome.

Chris: Thank you guys so much for having me on the show.

Michael: Absolutely. Tell me what the most disruptive thing you did this year was.

Chris: Well, it's actually, I'm not even going to give you an example in the website realm. The most disruptive thing I've done this year is, and I haven't even uploaded this to the site yet, but I started growing out my mustache. I decided this might be something that I need to try before I'm an old man, so I've got a long curly mustache going on and I just-

Michael: I've got to see this. You got to see this. Can you send a picture?

Chris: Just this week, I will say ... I will send you a picture. Just this week, I got a full curl in. It goes all the way around. It's a big accomplishment, it's pretty disruptive.

Michael: Nice, nice. You know I'm imagining a world where you can have a curly mustache and people not think you're a firefighter.

Chris: Or a painter.

Michael: Painter, okay. I don't know about the painter thing because what I've seen with painters, at least the painters that I know, they're all a little bit quirky because they've been drinking too much paint. What I mean is like ... A painter, to get those nice edges on his brush he'll stick his brush in his mouth to get it just the right moisture. At least this one painter I did a lot work with 20 years ago, he was a total weirdo, okay ... So mustaches. Well Disruptive Marketing, can you give us the big idea in a few words?

Chris: Sure.

Michael: Start with advertising and advertising marketing.

Chris: Yeah. There's a couple reasons I love the name Disruptive Advertising. Number one there are so many marketing agencies out there and there's a lot of marketing agencies that you can go out there to get an all-in-one solution. Lots of agencies that offer any kind of marketing service you want. We are just focused on one approach, and that is we are a data-driven marketing company that helps companies build advertising campaigns that convert and then convert that traffic on the website. So we take a very focused approach that is completely centered around conversions. So that's obviously a disruptive approach. That's one reason I really like it, obviously, our approach is different from everyone else in the space.

But also, we're also very disruptive in the sense that we don't use traditional tactics. We're not a rote agency that goes in and does the same thing with every client. We are absolutely an agency that looks for anyway of getting in front of your target audience. If that is using Facebook or using Google Ad words that's great. If that is re-targeting, if that's figuring out e-mail campaigns, if that is running tests on your website. We dive in and we look for ways that we can learn what is actually going to convert each of our clients' audiences. That is also a disruptive approach. I am a huge fan of adapting ... We're in such a rapidly changing industry that you've got to be able to adapt and think on the fly and be strategic and that's our core competency.

Michael: That's great, thanks for that. My understanding is that you mostly focus on lead gen, is that right?

Chris: No, actually the majority of our clients and the space that we do the best in is eCommerce. I have a lot of background in legion and that may be what you're referring to. But I would say over half of our client base is eCommerce.

Michael: You know what I'm seeing and what we're pushing right now for a lot our clients is use these strategies and tactics of info marketing in lead generation that have been proven over time, over the last multiple, honestly more than a dozen years and apply those to your eCommerce site. The main thing that I see when we're talking about info marketing or lead gen is that you have a single page that lays out a case if it's a persuasive argument that you're doing. A lot of us in eCommerce think that if we just show you our stuff that that will make you buy it, which is not necessarily true if everybody else is doing that same thing. You have to be persuasive, you have to give you a reason to buy this thing. Or if you're earlier in the customer journey, let you know why you need to be considering this type of thing in the first place.

We're going through this with a client right now, it's an ebike company, which is in interesting space, being a biker myself I'm in to that and actually have been considering buying an ebike, which is freakishly expensive right now. Which is the point, right? When you have a ... When you're not competing on the basis of price, you're in, maybe a better industry or a newer industry or something like that. There's a lot of people that are going to be competing on the basis of a lot of other attributes other than just the price. That's where all these strategies and tactics can be really valuable.

Chris: Well and what you said that I loved that's a big big part of what we do, you're talking about value proposition. And for me, someone's motivation to convert on your site is a simple, simple equation that I didn't make up. But someone's motivation to convert is equal to their perceived value minus the perceived costs. You have to build up enough value for your user that they think that that value is greater than the cost of either the dollar amount cost or the time cost it's going to take or the cost of potentially getting blasted with emails and texts from you. There's a lot of perceived costs that's in someone's mind and so almost immediately when someone comes to your site, you're working at a disadvantage. You're working with a debt that you need to repay them in the form of value. You need to show them that value. So I love what you said there.

Michael: How are we working at a disadvantage? Can you elaborate on that?

Chris: Yeah, so people in general, especially people that are web-savvy, which is everybody, is people are so familiar with the standard tactics. People are very familiar with the things that they encounter on websites everyday. So there's a lot of things that people, when they come to your website are immediately going to tune out. They're going to tune out probably 80% of your website experience. So you have to make sure that the things that you are really drawing attention to, the things that stand out to your audience, you have to make sure that those things within two to three seconds can communicate a tremendous amount of value. Because that's about all you have. You have about two to three seconds when someone comes to your website for them to psychologically draw context from your site and decide if they want to stay.

Michael: Let's dig into this some more if you don't mind.

Chris: Yeah.

Michael: The whole idea of getting value within two to three seconds, let's say we're selling a product and that product's a physical product and I can't get that product to you within two to three seconds. So what do you mean exactly in an eCommerce site let's say?

Chris: Ecommerce is probably the very best place and sometimes the hardest place to do this because we want to tell them so much about our product, right? It doesn't matter what the product is, it could be, I have optimized pages for doctors that are buying hereditary cancer testing kits. Extremely detailed, lots of components to this package and very scientific. There's lots of information that we could just barf all over these users. That's what we as marketers and we as business owners are really tempted to do, is just give them a ton of information. Whether it's doctors that you're advertising to or kids or mothers or whatever it is, you need to be able to show the value of the product in two to three seconds.

There's two things that need to happen. Number one, you need to make it seem very easy to take action. It needs to be obvious what the user is supposed to do. The very best way to make it obvious what they're supposed to do is to use color contrast to your advantage. My eye needs to be drawn to the call to action immediately. Because psychologically if I feel like I have to figure out something. If I feel like I have to figure out what I'm supposed to do, if I feel like I have to scroll down your page or read a bunch of stuff, that immediately causes anxiety for me. That's never good for conversion rate. So you want it to be very obvious, what they're supposed to do.

And then you want it to be very easy for them to figure out why they should buy your product. There shouldn't be a ton of information that you just spew all over them right away. You can have a lot of information on site. You can have a lot of information on an eCommerce product but you don't typically want to barrage them with all that information immediately. You probably want to have two to three things that are going to stand out to them, above the fold so that they can go, okay, there's a little bit of information here. If I want more I can scroll down. But it needs to seem psychologically easy for someone. If they can figure out what they're supposed to do and they can figure out why they should buy your product and they can at least just draw some quick context from the page you have a much much higher chance of converting them.

Michael: Let me make sure I've got this straight. There's two things that you mentioned are crucial for making a conversion friendly product detail page, which is first making it super obvious what you want them to do. Putting it right in front of them. And second making it really obvious why they should do it, is that right?

Chris: Yeah. What I see happen a lot with eCommerce sites, here's an example, I'm actually going to tell you about one of our eCommerce clients that sells a bunch of products. This client is Diesel Power Gear, they have a show on the discovery channel. So they get lots of traffic to their site and their monetizing on this show with a bunch of knick knacks. Like hats and beard oils and t-shirts, whatever. He's got a bunch of stuff that you could buy from them. When you go to their homepage, they were like, "Hey we've got all these cool products, there's tons of different types of people that are coming to our homepage so we just want to show them as many different kinds of products as possible". So they had this very long scrolling page, you could just scroll and scroll and scroll. They're like, "It's kind of like Instagram, people love Instagram". So they thought that this was the ultimate homepage.

When we went in, one of the very first tests that we ran that I am a huge proponent of and it's called an existence test. Existence tests are basically, we want to figure out what content should be on the site. So they have all these products that are one their homepage, for an existence test we go through and we just create a bunch of different variations of the homepage where we remove some of those products. So we had eight or ten different variations where we removed one or two or four products at a time. And we launched that test and by the end of the first week we had generated an additional 28,000 dollars in revenue. Just from removing stuff from the site.

Michael: I'm not going to ask you to share real numbers but can you give us an idea of roughly how much revenue this site's doing? Is it ...

Chris: It fluctuates from one to three hundred thousand dollars a week.

Michael: Okay. So that's a roughly, almost a 10% or even more actually, it's 10% plus ...

Chris: Yes.

Michael: Actually that's 10-30% increase.

Chris: Yeah, just from removing stuff. And you have to remember too that we were splitting traffic to some of these variations. Once we implemented one of the winning variations it represented, I believe something like 40 to 50 thousand dollars in increased monthly revenue.

Michael: Just from removing stuff off the site? Not changing any of the messaging, wow ...

Chris: Exactly. That really speaks to this point of when you give people too much stuff, it makes it really hard for people to make it a decision. When you make it simple, when you make it easy, when you help them and guide their attention where it should go, you have a much higher chance of actually converting them and them buying something.

Michael: This is great. Honestly this ties in, Chris, really closely with a series that we just recently did around timeless UX principles. This idea of taking things out, figuring out what really matters, focusing on that, pushing that, that was one of the main things we talked about. I'm glad to hear that this is further confirmation of that. Chris I want to change gears slightly and talk about you guys, was it you personally or your company won the 2014 Gold Witch Test 1? Was that you?

Chris: That was my company back ... 2014 I started my agency, Daily Conversion, this is prior to Disruptive.

Michael: Got it. So can you tell me about that? What exactly did you do, how did you win that, what did you learn from it?

Chris: This was a really fun test. The reason I submitted it was because it was a test that I think a lot of people might have rolled their eyes at when they saw what we wanted to test. And it had a tremendous impact. What we ended up testing was we had a landing page that we had optimized a lot around. We had been testing on this landing page for over a year.

Michael: What kind of company was this, what was being sold?

Chris: It was for, this was a lead generation, it was for universities. So getting people to go back to school. So we had a landing page with a giant form, a ridiculously giant form with 20-something form fields on it. Like I said, we had been testing on this for years so we had figured we had a best practice landing page here. We've been testing on this for so long, we've seen so many improvements, we've learned so much about the audience, we've got it pretty dialed in.

But I decided to shake things up a little bit so I ran a test, I just called it the color test. That's what we called it. Literally all we tested, is we tested 12 different variations of colors on this page. So we tested the background color, the value proposition colors and the button color. So different color combinations. And we used any color we could come up. So we had purple backgrounds with orange buttons. We had orange backgrounds with purple buttons. We had blue backgrounds with ... Red backgrounds ... We had green, any color you could think of we tested in this test. At the end of this test, we ran this test for ... We had, I think, close to 500,000 visitors that we ran through this test. So a significant amount of data. What we did was, after we finished the test we went in and we segmented the results by traffic source. We wanted to see, okay, do different traffic sources respond to colors differently?

What we found is that each traffic source had a different winner. So our email traffic had one color combination winner-

Michael: What was it? I got to hear this. What was the color combination that email liked?

Chris: This was so interesting. Email liked purple background with orange buttons. Like Phoenix Suns. It was the most ugly, when our designer saw that page, our designer actually told me I shouldn't even run that as a variation of the test. Because he said it looked so bad there's no way this is going to win. Not only did it win, but it had over a hundred percent increase in conversion rate.

Michael: Okay, so that's email.

Chris: Email for organic, I believe it was a blue background with an orange button. Then we had our, I guess what we called affiliate traffic, its re-marketing and then affiliate advertisers. I believe on that one it was the flip flop of the email. We had an orange background with purple call to action buttons. What came to me out of this test, was something that was very interesting. Number one, color obviously played a huge role in how people responded to that page. And different types of audiences respond differently to different colors. We had just assumed, well we'll just run the same variation for all traffic. From this point on, we learned our traffic sources respond very differently to our test variations, so we need to test them all separately. We need to have a customized landing experience for each of these traffic sources. It was very very interesting and some of the craziest results I've ever seen.

Michael: That's so weird. We just did a call the other day with Nick Disabato, whom you probably know from the industry. We had a very interesting conversation about the whole dynamic tension between activities that basically make your site look worse but convert better. There is a balance to be struck just to be clear for anyone whose new to this show, you don't want to only go off of what tests are better in the short-term, because that's like all the low-end fast food restaurants that just start randomly adding things to their menu until it's so cluttered you can't even figure out what's going on. Basically you lose your brand eventually. So you've got to watch out for that. But at the end of the day you have to balance those two things because you need to sell stuff. You need to sign up leads. This is a transactional scenario here, it's not an art gallery. Dynamic tension. Wow, that's really interesting.

One of the things that we're running into is when you start getting more targeted you get a much better conversion rate. Astronomically better, right? Every single factor by which you segment in an audience and then market to that makes it way better. What's a modern tool that you guys can maybe recommend for managing the, all the different versions of everything that you have to have? Landing pages, let's start with that.

Chris: A couple things on that note. First, I always recommend testing before you start personalizing all of your landing pages. Because I have also run very similar tests in different industries where all the traffic responded the same. Or all the traffic didn't really seem to care. I wouldn't get too complicated before you know that you nee to. But if you've tested and you find that these different audiences respond differently ... I can't even tell you, the idea of personalization gets a lot of business owners really excited. They're like, "okay yeah we can have a campaign for, we can have a landing page for women, we can have a landing page for men, we can have a landing page for Asians". This idea sounds really exciting and it also is a ton of work. And it only makes sense if the audience cares, right? If the audiences actually perform differently.

But assuming that you have tested and these different audiences actually want a customized experience, there's a variety of things. We used, for landing pages, we use Unbounce. Unbounce is a great way, very easy tool to set up landing pages. You can copy and duplicate landing pages, create variations. It's a really really easy way to manage tons of different landing pages. And it's very very simple. It has a drag and drop editor so you don't need a developer to go in and develop these landing pages. So highly recommend a tool like Unbounce.

If you're testing an actual page on your site, so not a landing page, you've got to have a testing tool in place. So something like Optimizly or Visual Website Optimizer or Adobe Target. You've got to use something and these testing tools ... What we do for a lot of our clients when we've broken out landing pages like this and we have four or five different audiences with different site experiences, we won't even make the changes on the actual site. Because it can get complicated if you've got five different versions of a page that your developer has to code up based on traffic source. A lot of time we'll just have one version of that page and then we'll use that testing tool to pull out those specific audiences and customize the experience for them. So that way you don't have this nightmare of a back end on your website that you're developer cries every time you need to make a change to. He can just manage one version and then you use the testing tool to manage all the rest.

Michael: Absolutely. We're actually seeing the emergence now, this is a bleeding edge area, but of tooling that will not only do what you said but it will do it dynamically from a data source. It will be like personalizing your page based on data that we are pulling from our [inaudible 00:21:06] or whatever it's pulling. So that's going to get really really fancy in the next, I would say, year where we'll be able to do dynamic personalization without having to do a ton of manual work.

Chris: Yep, personalization on the fly.

Michael: Cool, that's interesting. I don't want to spend too much time talking about the tech here. I want to here more about the disruptive side of your business. What are some other really disruptive things you guys have done?

Chris: Well, in the testing space pretty much anything you do is going to be disruptive. Especially because most of the time you're dealing with a business owner that has very firm opinions on what is going to work and what isn't.

Michael: Mm-hmm (affirmative). Because they started this thing and it's their baby and they know this industry. Maybe they're part of the market, that kind of thing.

Chris: Oh yeah. In fact, I'll give you one example. Just the other day, we have a fashion retailer, she's got a lot store boutiques and then now she's launched an online website to sell her clothes. So she's very very very involved in the fashion industry. She flies out to Europe every year, multiple times per year to figure out all the latest fashions to make sure that she's on top of the latest trends. She's sources out all of the materials herself, so she's very involved in this space. Because she's very involved in this space and she's very on top of the trends, she was positive she knew what her audience wanted.

One of the things that we proposed to her ... One of the things that we've seen work very well on eCommerce sites, if you're looking for a test that you should run, it's not the easiest test to build but it can have tremendous impact, is having some kind of a pop-up experience when you add something to your cart. Going back to this idea of making it very easy for your customers, you want it to be very obvious what the next step of the process is. On this particular website, if I clicked add to cart, I added a shirt to my cart, for example, I would just get a little notification that says, "successfully added to your cart". And now it's great. We recommended to her, we've seen this work on other sites, "instead of that we should have a pop-up that comes up and says, you added this to your cart, now let's go checkout and buy this", and she said "no that will never work". So we said, "okay why will it not work"? And she said, "I tried this three or four years ago, my audience just doesn't like pop-ups, plus nobody else in my space is doing pop-ups. If it worked, someone else would be doing it."

We said, "well let's go ahead and let's run it anyways". So we ran three or four different variations of pop-ups with different designs, different content, different information, different emphasis on checking out versus continuing to shop. Anyways, by the end of the test all of the variations that we ran were beating her existing website. The one that ended up winning, even though she wanted to push people to continue shopping, the one that ended up generation by far the most revenue was the one that just had, in your face a big red button that says "proceed to checkout". And then had a little tiny link that said "continue shopping". So making it very obvious, you just added something to your cart, let's get you to checkout now and actually buy it.

Again, this was very surprising to her. It went one hundred percent against what she believed her audience wanted. And went against what her industry, quote/un-quote, best practices were. But it totally worked for her audience. Again this whole idea of being disruptive is all about challenging assumptions. You can't assume, just because no one else in your industry is doing it, that it doesn't work. Chances are, no one else in your industry is even testing. They're probably just launching a new website every six months and everyone thinks that what they're doing is working. So everyone else is copying them. You've got to test what works for your audience. You've got to be willing to challenge those assumptions and be disruptive in your industry.

Michael: That's really interesting. Again I want to refer back to the fact that it tested well in the short-term, do you think that's going to have a negative impact on the brand in the long-term? Is there a way of testing that?

Chris: That's a really interesting concept that you bring up. This whole idea of branding is one that's near and dear to my heart. I'm very passionate about, obviously I was a business owner myself. I do care about brand. But to me, I think a lot of brands get way too caught up in the idea of their brand. To me, whether or not you're pushing someone to check out or giving them the option to continue shopping, your customers most likely are not going to remember that long-term. And if it's working on your site, if it's generating consistently more sales ... If you're really worried about it hurting your brand long-term, one thing I've done in the past is run what I call a perpetual control where you always have a very small percentage of your traffic that's going to a version of your website before you started testing. And then you've got your latest and greatest version of your website where you have 95% of your traffic going.

So you can track and make sure that these improvements you're seeing actually play out long-term. But for most of our clients, we see these continue to play out long-term. And that idea of brand being so concerned about what your audience thinks about your brand, if they like your site experience you've got a good brand. It doesn't matter whether you're using pink or purple or red or orange on your site to your audience. They don't really care what your site looks like and feels like. They really just care, is it easy to use? That's one thing that Amazon has found. And Amazon, I think, is the king of, is they're constantly tweaking their site. It has nothing to do with, "we want people to think that we are the most sophisticated website in the world. It's really just about, how do we sell the most damn product in the world?" And everyone loves Amazon because it's so easy to buy crap. It's almost too easy.

Michael: You know what's interesting, what this is reminding me of, to be honest with you, I don't know if I fully agree. But that is because I haven't done the testing that you have done. And I feel anxious about this idea of making changes that may feel so dangerous or whatever. I'm feeling really challenged in my assumptions about that and I appreciate that challenge. What I was thinking about just a moment ago was that the concept of, in genetics, in biology, I'm not a biologist ... But the idea that a genetic population, when it's exposed to a certain environment will change and morph. The idea of hopeful mutations basically, that genetic traits expressing themselves in a particular way within an environment will allow the population to survive better in that environment. I think maybe we can analogize from the idea that an audience is like an environment and that your website is like an organism or maybe a specific subpopulation of that genetic community that then can find it's safest and best expression. And it's going to be a little bit different depending on the environment, depending on strengths of the company and so on.

What I'm getting at is you have lizards that develop larger pads on their feet to be able to grip things better. But then in another scenario it's actually gets smaller pads so they don't have as much surface area with the sand so they don't burn their feet or whatever. I think that we can basically, maybe take that idea and just thinking out loud here, but apply that to changing ... When we think of testing and changing our websites and really any of our digital properties, or any of our marketing, any of our messaging, anything about the company that's customer-facing, maybe we can be a little bit bolder and see what's going to stick and be more straightforward. So that's a challenging thought for me.

Chris: And just going along with that, it's important that we not get so tied to what has worked in the past that we are unwilling to try new things that may work and let the audience surprise us. Because I will tell you this, I run hundreds of tests every month right now for a variety of different clients in every industry you can imagine. I am surprised every day by a test result. Something that I didn't think would work that did or something I thought would work didn't. You've got to give your audience room to surprise you.

Michael: That's great. Well that's a great place to stop and Chris we so appreciate your input and just your enthusiasm on the show today. Before we go can you let us know how folks can follow up and learn more from you and your company and maybe work with you guys?

Chris: Yeah, you bet. I'd love people to reach out if they have any questions. I'm on Twitter, @chrisdayley. My last name is D-A-Y-L-E-Y. We have, we've put together actually a free starter guide if anyone wants to start testing and they don't know exactly what to do or what tools to use. So if people want to check out our starter guide, they can go to disruptiveadvertising.com/guide. If they want to work with us there's a little check box to click. If you don't want to be contact by us just don't check that box and we won't pester you. That's a great resource if you want to get started.

Michael: Excellent. And we'll leave it there. Thank you again Chris. And everyone, start testing. Start breaking things. If you're afraid of what's going to happen, maybe work with an expert like Chris and his team. Let's improve our websites in some really amazing ways.

Show Notes:

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Josh@socialseo.com

How To Setup Gmail Ads

Set up Product Listing Ads

Learn More About One of The Most Valuable Adwords Demographics

Transcripts:

Michael: Hello folks and welcome to eCommerce's Q&A. This is the show where store owners, directors of ecommerce, and ecommerce managers can stay up to date on the latest tools and tech in ecommerce. Our guest today is Josh Martin, pay-per-click manager at SocialSEO which is a wonderful agency down in Colorado Springs. Anybody that's doing this type of work in Colorado, we consider wonderful, but these guys are really amazing. We've done a lot of great work with them. We used to do SEO back from the day. Then we realized that it was a discipline where it wasn't really possible for us to stay on top of that and all the other things that we do, so we basically have opted to partner with really excellent providers like SocialSEO.

Josh is a Google Premier partner, which means he is certified in all of Google AdWords and Analyics modules, which believe me is not an easy feat to get certified in. As mentioned he is SocialSEO's resident product, well I should say like AdWords and product advertising and things like that specialist. So today what we're going to focus on is talking about product listing ads, retargeting, and some other really interesting related topics. Josh, thank you for joining us.

Josh: Yeah, thanks for having me Michael. And thanks for that glowing welcome. I really appreciate that.

Michael: Absolutely. So let's go ahead and dig right in. Retargeting, by retargeting, in case you haven't heard the term, the way retargeting works is somebody comes to your website and then we know that they were there so that when they're off the website later on we're able to deliver relevant ads to that exact person. That allows you to optimize your ad spent. A lot of people will not do general search ads, but they'll do retargeting, because they know that if somebody has already visited their website, putting an ad in front of them again to bring them back may have a really good result. That's the basic idea of retargeting.

Then what we're wanting to talk about today is taking that and putting that on steroids with product specific ads. So Josh how does this work, how do you have to, what does it take to be able to do not basic retargeting with AdWords, I think most people in our audience know how to do that, but product listing ads, what are the steps to get that set up?

Josh: Sure. You're going to need a few prerequisites here, three. You're going to need to register for a Merchant Center account. This is going to be the handshake between your AdWords account and your actual inventory. You're going to need an inventory with live products hosted. Then lastly you're going to need that AdWords account. Those three things are what you're going to use to communicate what's currently in your products, or pardon me, in your inventory and that will be pushed out to Google. Now that can be done automatically with platforms like Magento. If you're using the Wiziwigs of the world, the what you see is what you get like Weebly or WIX you're going to have to manually upload your products, but those are basically the three prerequisites you're going to need to get started.

Michael: So basically you're going to, if I can summarize that just for my own sake, you have to start with accurate inventory that is then going to be published to Google Merchant Center, is that right?

Josh: Right.

Michael: Right. Then what do you do after that?

Josh: Yeah. So once it's published your products are now live in Google Shopping, which is great, you're now going to be put with every other site that sells similar products to you, and you're going to be in Google search with a picture of your product, price, and even a promotion. That's the only way to participate in Google Shopping. But from there if you're looking to retarget or remarket users, you're going to need to set up a remarketing campaign. This will be done by inserting a little script onto your website that's going to begin to kind of track the users behaviors on your website, whether they did or did not engage with your website, what they did or didn't do. And then from there-

Michael: This is kind of tied in with your existing AdWords pixel, you have to change it a little bit I believe?

Josh: Yes, exactly right. Your traditional pixel tracks conversions, so phone calls, form fills, or products sold, whereas this pixel is strictly there to track behaviors of the user.

Michael: Right, so we'll include some links in the show notes about exactly where you need to go to learn about the precise changes that you need to make to your website. The point is once you've correctly added the scripts to your website, Google is going to know about shoppers behavior and which products they're looking at, which is the key last ingredient in being able to create these campaigns if I'm not mistaken. Let's say that you have gone ahead and correctly applied the retargeting code onto your website. Let's say that you have your product information being published to Google Shopping and successfully actually visible on Google shopping, and then you've gone into AdWords and you've created this campaign. What's the next step?

Josh: Sure. So next we've got the what, it's your products, and now we've got to decide on the where, so where are you going to show these advertisements. There really is a plethora of options. You can have manual placements on relevant sites, let's say you're selling cooking ware. It would be great to have a placement on a cooking ware specific forum. Then you have Gmail itself, which can be an advertising platform and we have seen, not being bashful here, I've seen conversion rates on the Gmail side of things because what this does is it actually drops a relevant product into the users inbox and that user can purchase directly from Gmail.

You really want to look at the types of products you're selling and the types of consumers that purchase them, because you can also begin to target based off of income, your traditional demographics, anything you can target within Facebook or social media you can target. You can also add a layer of what that user's behavior is in Google. So what's their search habits within the last seven to 90 days? Are they currently in market for your product or not? It's a very, very powerful medium.

Michael: Josh, this is something I want to dig into much more towards the end of the call around how we can do Facebook style demographic targeting within AdWords. Just to continue this thread along the lines of the product listing ads, where in your campaign settings do you find the ability to let's say choose Gmail as the target or to use a particular forum, or is it going to be more of a general thing where you have to extend a little bit of trust towards Google that they will find the best locations to distribute the ads?

Josh: Yeah, no, it's relatively manual actually. You're going to need to develop a individual campaign for each target type. So you'll need a Gmail campaign to target Gmail. You'll need a search product listing campaign to target the search portion. And then you're going to need a remarketing campaign to target users who have visited your site, but did not convert.

Michael: Got it, and that sounds like something that a company like yours would be optimally suited to assist with at least on getting things rolling?

Josh: Oh most definitely.

Michael: Let's talk about this now. We've got our products being published to Google Merchant. We've got that being sucked into Google AdWords. Google makes all this really easy to connect all these accounts. And then you've got several campaigns going on. So we have a Gmail campaign, retargeting campaign, and maybe one or two other ones. The biggest thing that we've run into with AdWords, and I have a lot of clients that are always talking to me about this is our AdWords spend is not getting us sufficient ROI and sometimes it's not even getting any ROI. Can you share any tips for how to optimize the ROI of your ad spent?

Josh: Sure. Yeah, and it's a very common sentiment, and a lot of people have been burnt by AdWords and paid advertising in general, and a lot of times it's a good intent but the effort is a little misguided.

Michael: What do you mean by misguided?

Josh: Typically, people are directed to and encouraged to sign up for search campaigns via a lightweight AdWords version called AdWords Express. Most businesses find themselves by virtue of AdWords Express starting with the search campaign. Now search can be very, very powerful in the right place. However, search can also be relatively expensive. So the advertis-

Michael: By search just to be clear I think just so I'm clear you mean like search advertising what we normally think of as Google paid shopping ads, the ones that appear at the top of the search results when you put it any old keyword, right?

Josh: Almost. Search would just be those text ads that we're familiar with at the top and the bottom of Google that have the ad icon, whereas remarketing also known as display would be those product listing ads at the top. Think if it's got an image or a video, that would be display. If it's text on the top of a search engine, that would be a search campaign.

Michael: Got it.

Josh: And so from there the cost per click in search on average is about $5, depending on the keyword it can go as high as $100 cost per click.

Michael: Oh my gosh. I remember when it was like 15 cents a click.

Josh: Well it still is in the remarketing world. That's what a lot of people don't realize, is when you come in to display video, or images, or product listing your cost per click is in the neighborhood of 40 cents and oftentimes, yeah, we see that 15, 13 cents mark when we go into these more complicated campaigns. The reason being AdWords is a big auction. And if an auction is more crowded, the cost goes up. Search or text advertising is the most crowded option you're going to find in AdWords. Whereas product listing advertisement is a little more nuanced and very specific to ecommerce so you're going to get a reward of a little bit better cost per click.

Michael: Would you say that the reason it's less crowded is because it's a little bit harder to set this up than just setting up a text ad that only takes like two minutes to set up?

Josh: Most definitely. And it's also the reason they, it's not the first thing Google's going to point out to you.

Michael: I think if you're listening to this show you definitely care about your ecommerce store, and what I want to share with you is that this is a valuable opportunity for you to differentiate from your competition by doing something that most of them aren't going to do, which is go through the effort and it can be a little bit tricky to wire all this up, I can speak from personal experience, at least if you're me. Now if you're Josh working with SocialSEO, then that's probably the easiest thing in the world for you.

I would just encourage you to don't ... It's very easy in ecommerce to, because we're all so busy, to only do the things that are easy to do, simply because you don't have time to do the other things. Well this is an opportunity where it's very, like very obvious that if you can't easily do it yourself, don't just not do it. That would be like ... I can't think of a good analogy, but this is an obvious win for you to get for your business. Just like if you weren't doing Facebook advertising for example like of course you've got to pixel your website, you've got to get all of your custom audiences working and so on, but everybody's doing it, right? Now this is a case where you should especially do it because not everybody is doing it.

Let's continue the thought here. I really want to make this interesting for folks. So maybe could you share a couple of campaign stories, maybe some really effective ad campaigns that you have been able to put together and what the results that you got out of those were?

Josh: Sure, yeah. Without getting into specifics I'm just going to kind of speak about a client out of turn a little bit here. But one of the most effective ways to use almost any campaign type but certainly product listing advertising is to layer it with all of the demographics that I mentioned earlier, but also make sure you're using all applicable areas of AdWords, so as I mentioned Gmail, remarketing, but also segmentation.

What's huge here is a lot of people simply put their inventory into one feed, which would be one campaign, and really just let it kind of live in Google Shopping. But you don't have the control you do in other types of campaigns. For example, keywords, they don't exist in product listing advertising. You're going to need to get crafty in order to show your advertisements to the correct individuals.

My example here is a client who sells high end natural skin care products but at a very, very affordable cost. That makes clearly this job a little bit easier on the end that it's more affordable. The thing is most people don't realize that most natural products are also hypoallergenic. What we were able to do is take the information that Google knows about its users and kind of their search habits and behavior and use that to target people who we had a very educated guess were in market or likely to need hypoallergenic products. So by being able to leverage the big data that Google provides we were able to open up a whole new market segmentation for this client, whereas before they were mostly akin to compete with Burt's Bees, things on that level, where those consumers are more health conscious than a need based where we were able to use the-

Michael: Allergies as a need based, yeah, right. Interesting. Now did you determine that the hypoallergenic market was an available opportunity through seeing something in Google, or was this something that you found out through another type of research?

Josh: No, Google actually provided it. They have a great tool called Keyword Planner. Now we can't use keywords in product listings, but we can use that tool to understand how much market interest there are. So by running a few hypoallergenic related keywords through the Planner we were able to see that there's a pretty decent market for them and we were also able to see that the competition and cost were relatively low, which showed us that not a lot of people were targeting it.

Michael: So let me see if I'm getting this. You used the keyword tool to determine the potential market receptivity for a new market, and then did, what did you do, product listing ads towards that market or did you do traditional text ads?

Josh: Yeah, product listings. And those were delivered via Gmail. So they came right into those users in boxes. It was a product that was relevant to them, something they needed, and it was likely a better cost than where they were getting their previous product.

Michael: Interesting, and you were targeting the hypoallergenic. So what was the ROI? What were some of the figures if you can share them since we don't know who it is?

Josh: Sure, yeah. On the first month they invested about $1,000 into this campaign and we were able to return to them two fold, so we returned $3,000. The campaign was really, really gangbusters. It converted 18%, and that's about average for what we've seen in Gmail. Because let's consider this, if you are a Gmail user you might be familiar with the three tabs at the top of your Gmail: Inbox, Social, and Promotions. Well Promotions is where all of your newsletters are going to live, and where all of your promotion based emails should be funneled into. So when somebody actually clicks on the Promotion tab they're a very applicable user because they're practically raising their hand at that moment saying, "I'd like to see some promotions and be advertised to at this moment."

Michael: You know it's interesting to me is like we started to touch on at the beginning, that's really an impressive story. I appreciate that. Is that we've all, a lot of us have turned in some ways to Facebook to address the need to have highly targeted advertising because there's so many little demographic themes and interest groups you can segment towards. And what we're showing with you here is definitely keep doing that, but don't abandon AdWords just because of your bad ROI, like dig into some of these extra mechanisms that you can use to get product listing ads in front of people at a better price point, to use the keyword planning tool in conjunction with the product listing ads, to utilize Gmail based advertising and you can use ... I mean I've even seen this in Google Analytics recently. The demographic capabilities that Google is rolling into its tools are better and better. Don't think of Google based advertising as like what it used to be. It's much more powerful now in terms of targeting and so on.

Josh, as we kind of move towards the conclusion here, I'm wondering if you can share maybe some ways for our guests to connect with you if they have some follow up questions. There's been several really interesting ideas that people will probably want to interact with you on.

Josh: Yeah, sure thing. I'm pretty active on our Twitter feed. So anybody's welcome to reach out to @socialseo and I'm more than available for any questions. Feel free. It's josh@socialseo.com. Go ahead and shoot me any questions you have and a member of my team will be back to you within 24 hours.

Michael: Oh boy. Awesome. Maybe what we can do is let's have in the show notes we're going to have some direct links to three different things, number one, how to get your Gmail based ads going, number two, how to set up your product listing ads in general, and then three, maybe some information around demographic targeting that I wasn't aware before this call that we had such a powerful tool set, so I'm really excited to dig into this more personally and a lot of our listeners will be as well.

Josh, one of the things we're doing more broadly is we're trying to help everybody who's listening to this show and generally everyone we're interacting with in the ecommerce world, just understanding what the needs are, and we mentioned in other episodes needs around ROI, needs around clarity, needs around time. There's so many needs and there's so many things that are vying for our attention in this industry. We really want to understand, speaking to you as our listeners we want to understand what your needs are.

What we'd love to have you do is go to sellry.com/survey. That's S-E-L-L-R-Y.com, it's our website, /survey. We've put together a little survey that you can fill out to just give us some insight into what your biggest paint points are right now. Don't worry. We're not going to try and sell you on something, at least not until we come up with a really good solution for your problems. But we want to kind of get a feel for what the biggest issues are that everybody is dealing with these days.

Once again that URL is sellry.com/survey and, yeah, go and interact. Let's kind of share, share some goods here between ourselves, and then that will help us also inform the further content of the show. Josh, we really appreciate your time today and I'm excited to learn more so thanks for making yourself available. As everyone knows, show notes at ecommerceqa.com. Make sure to subscribe on iTunes or Stitcher or however you listen to us. Thanks everybody. Keep selling.

Show Notes:

Tell Us Your Biggest Ecommerce Pain

Check out Freeeup

Schedule a Call with Nathan

Nathan's Recommended Repricing Software

Check Out Freeeup on Facebook

Free Up Your Business: 50 Secrets to Bootstrap Million Dollar Companies

Upgrade Your Ecommerce Store With Sellry

podcast@sellry.com

Transcripts:

Michael: Hello folks and welcome to E-commerce Q&A, this is the podcast where store owners, directors of E-commerce, and E-commerce managers can stay up to date on the latest tools and technologies in E-commerce. Our guest today is Nathan Hirsch and Nathan is the CEO and founder at FreeeUp, which is an amazing company. We've actually interviewed Nathan before and today we're gonna talk about very a interesting topic that jumps further back into his history. Nathan, thank you for joining us.

Nathan: Thanks so much for having me guys.

Michael: Absolutely. First of all is it Nate or Nathan?

Nathan: Nathan's fine.

Michael: Cool. I was looking at your LinkedIn and you're in Winter Park, is that right?

Nathan: Yup, right outside Orlando, Florida.

Michael: Cool. Yeah Winter Park you being from Colorado I was thinking more a different type of winter park, but that's great. So-

Nathan: Whatever Florida winter park can be.

Michael: It should be almost a joke right? It'd be summer park in the winter? Is that ... I've never been to Florida believe it or not, so yeah.

Nathan: Yeah, I just moved here five years ago so maybe that's what they were going for.

Michael: Where were you before?

Nathan: Massachusetts. And I went to school in Connecticut. So, I've seen snow.

Michael: Yeah, for sure. So today's topic I'm very excited about. Not because it's a new topic but it's because it's one that is so important for E-commerce of all flavors and the topic is Drop Shipping. We want to talk about Drop Shipping and we want to talk about optimization when Drop Shipping. That's the whole reason people do Drop Shipping typically, is to free themselves up and give themselves more time to work with the margins. Now you sir, are a very successful Drop Shipper. Can you tell us a little bit about why we'd want to talk to you about Drop Shipping?

Nathan: Sure. So I started off as a broke college kid in my dorm room. And I got mad that the bookstore was ripping me off. I was buying textbooks for hundreds of dollars and selling them back for pennies on the dollar. So I was like, "Alright, I can learn how to do this myself and cut them off," and before I knew it I had lines out my door of people trying to sell me their textbooks 'cause I was paying more than the bookstore. And I was holding onto the books, selling them at the end of next semester and then at the beginning of next semester. And pretty much finding all of these different ways to sell them from different bookstores to Ebay, to Amazon.

And then when I found Amazon I fell in love with it. I thought it was way better than Ebay. I became addicted and obsessed to it. And really wanted to figure out how to maximize it and how to make money. But I was also a relatively broke college student, so besides the money that I made on textbooks, I didn't really have anything to buy inventory and I didn't know anything about buying inventory. So to me, I kept trying to brainstorm how I could start an Amazon business without any kind of initial cast investment. And I came up with the idea of Drop Shipping years before I even knew what Drop Shipping was called. It was honestly like four or five years later that I was into the company that someone told me, "Hey, you're running a Drop Ship model."

So my concept was I would sell stuff I don't have, buy it from someplace that had it, get it shipped to my customer, and then handle all customer service outside of it. And it was a real trial and error experiment. I remember I sold this small toy laptop on Amazon, I actually had it Drop Shipped from Walmart to the customer and I was like, "You know what, I'm gonna try it. Worst case scenario I'm out like 25 bucks and I learned a lesson if the customer complains, and I won't do this again. Or best case I'm on to something here." And the customer never complained. I sent her a few emails to follow up and make sure she was happy. She never responded and I was like, "Alright, I just made $10. Let's start listing lots of different products from different websites." So months later I was running a multi million dollar Amazon Drop Ship business out of my college dorm room and it really only expanded from there.

Michael: Wait, you said months later? How many months later?

Nathan: Within six months to a year.

Michael: Nice.

Nathan: Yeah, I mean I was really ... I started hiring people to just list products all day. I remember being in the back of my college class just listing baby products on Amazon and having people look at me like, "What is this guy doing?" And it was just a lot of trial and error. I started off trying to sell DVDs and different video game systems and realized that the margin wasn't good for that, and I found this niche in baby products, home goods, and toys. And from there it was about building a team, which is why I'm so passionate about hiring, because good teams make you look really good and make you get on top of the world business-wise. And really expanding to get away from retailers and onto more suppliers and building those good supplier relationships, which is a whole nother part of Drop Shipping.

Michael: Yeah. And I definitely ... We'll be linking back to the previous episode where we talked a lot more about that topic. And feel free to bring it in as much as you need to 'cause like you said, it's the people that make it possible to scale a company. It's not just the tech. And that's gonna be true even as we move into a world that's dominated by task work is being done by smart robots.

Nathan: Exactly. There's so many manual processes of a Drop Ship business, and I built a lot of software to do it. But the thing about when we built the software, it was never like, "Okay, we built the software, now let's terminate all the people that were doing that task." It's like, "There's so much to do, let's take those people and move them to the next role to make this next process more efficient. And then once they create a good process for that, we create software for it and then move on to the next one." And really what the technology does is it lets you take the lower level stuff off your plate and focus more on building new processes to build more technology down the line.

Michael: Exactly. So it's basically like operationalizing everything and then helping your people essentially become smarter and smarter, which is a boon to them I would say.

Nathan: Exactly. Connor, my business partner, and I have a strategy that we never do something for more than three or four months before passing it off of our plate. So when we were first coming up with our order placement system, there's a lot of stuff that goes into it. When you're doing orders you want to check for pricing, you want to find the manufacturer, you want to check the address and make sure you're not gonna have issues down the line. 'Cause anything you can do to be proactive will only help you. So, you create this order system with these checklists, and you teach order people to do it, and then you master it and then you add technology to it to make it even easier for the order guys and faster for them to process orders.

Michael: Nathan, I find that there's an incredible disparity between the QA that goes into order fulfillment from company to company, particularly those that are using 3PLs and other forms of distribution. How did you find the perfect level of customer service care, I don't know what you want to call that, but that whole mix of making sure that the order goes out right, making sure that the customer's happy. That entire sequence of events there. What did you do to find that sweet spot where you weren't spending too much time and money and you were able to preserve margin, but you were still ensuring a very high degree of success?

Nathan: Yeah, so I've only used my own systems and processes. And really any software that I built besides one repricing software, Appeagle, that I really like, 'cause I didn't really want to use a ... Actually, I experimented with building repricing software and I kind of gave up and figured that theirs was gonna be better than my end result anyway. But outside of that all the other stuff we've built has been stuff that, processes that we build and turned into software. Because my understanding is that anything that I buy out there, whether it's the channel advisors of the world or whatever it is, they're never as good as what your custom system can be. Because it might be 80% of what I want, but it's impossible to get it to 100 because they're not willing to make adjustments to their software to compliment your business, for the most part.

So most of the stuff that I did was processes I created based on trial and error and doing it over and over again and being proactive and thinking of every possible thing that could go wrong, and then giving that to developers to create a software that fits for my business but might not necessarily fit for someone else's.

Michael: Interesting. I've got a lot of questions there about the software side. But I want to start with the ... Maybe go back to the beginning. Thinking about your story, if you had to do it over again, what are the first steps that you would say, go into starting and managing a Drop Shipping company that could potentially scale? And let me ask you also, would you even do it again? Do you believe in the Drop Shipping model still, or would you go a different direction now?

Nathan: Yeah, so I know a lot of people that have been able to start Drop Shipping models. A lot of them are my clients at FreeeUp, and they do it very successfully. But it's a totally different environment than it was back in the day. When I was selling these products on Amazon, it was like me and four other people on all these listings. Now, it's you've got hundreds of sellers. You've got all these manufacturers that are better educated on Amazon, some of them won't even let you sell there. And you really have to ... If you're gonna drop ship, you almost have to build your own website and drive traffic there.

When I take a step back, the biggest thing that I learned that cost me a lot of time and energy upfront that I would do differently, is being stricter on who you work with. So what I eventually did was I created these guidelines that if a manufacturer is gonna work with us, they have to follow these guidelines. They have to have tracking numbers. They need to ship stuff when they say they're gonna ship stuff. They need to respond to emails within 24 hours every single time. They need to have a return policy that actually works with our business model and works with Amazon, which is what we were selling on, but it would work with whatever platform you're selling on, or whatever return policy you want to offer your customers. Because there's nothing worse that welling your customer that they can't return something in this day and age.

So, coming up with that criteria and really vetting out all those other manufacturers that don't follow it is really the only way to drop ship now a day because either you're selling on Amazon, and if you're not, if you don't have quality control, you're not gonna be selling there very long, 'cause they're gonna suspend you. Or, you're selling on your own website and if your manufacturers are sloppy and they don't care about your end customer, you're gonna get a terrible reputation and your business is gonna tank. So you really have to ... You're really only as good as your suppliers are.

Michael: Talk to my more about that, because that seems like the nub of the issue. How do you find good suppliers for a Drop Shipping scenario?

Nathan: You network, you build relationships, and you sell. What I did was I hired a Lead Gen Team of people in the Philippines that were making a low dollar an hour. And we would just have them do research and come up with these large spreadsheets of manufacturers. And then we would have someone go through them and be like, "Oh, this person doesn't allow sales on Amazon, this person has a bad reputation online," whatever it is to vet those people out.

And then the last group of manufacturers, those are the people that we would cold email, cold call, follow up with, until we got a definite no or got a meeting. And once we got a meeting and realized it could be beneficial, then we had these standards that we needed them to follow in order to work with us. So you're taking these thousands of manufacturers and you just keep narrowing them down and down and down and it takes up a lot of time and effort, and that's where building a team comes in, to help you do that. Because if you're doing it all yourself it really is an impossible task. It wouldn't have been able to get done.

Michael: When you mention manufacturers ... So were you exclusively buying from manufacturers directly?

Nathan: So when I started off I was buying from retailers. And I did that for years. And as Amazon got stricter we migrated to manufacturers, so now we only buy from manufacturers.

Michael: And now, so talk to me about business now. The business is still running Port Light I can see, is that what it's still called? Port Light?

Nathan: Yup, still running. It kind of runs without me. VA's do everything from the order fulfillment to the listings to the customer service. It's at a good level. What I found with Amazon is when you get too big that's when trouble starts to happen. Especially with Drop Shipping and quality control. So we're at a good place, it's profitable, it runs well. I get to focus my time on FreeeUp, which is something I'm very passionate about because with my Amazon Drop Ship business, yes I can make money and sell products and help my internal team. But with FreeeUp, I get to help 500 plus workers provide for their family and I get to build relationships with them. I get to help thousands of clients and meet different influencers and help people achieve their dreams and their passion and build their own Drop Shipping business. So for me that's more rewarding and I also see more potential. And I always preach diversity in my book and every podcast I go on. But just having those multiple revenue streams and not being 100% relying on Amazon is a good business decision.

Michael: One thing I've been seeing is that for companies that are trying to get out there, a lot of times there's ... Let's take the model of a start up. So a start up will come up with typically one really good idea, right? They're either gonna come up with an innovative product that they kickstart or they have a unique way that they're curating things, or it could just be a different take on an existing model. One thing I'm seeing a lot is E-commerce companies wanting to supplement their core product offering that maybe is more innovative or they're manufacturing somewhere themself, with product that they source and Drop Ship. So, I think as we're thinking about this model, the idea of using Drop Shipping as a supplemental way for a company that doesn't typically do that, might be a really good angle. Do you have any input on that?

Nathan: Yeah, I agree with that. Anything you can do to diversify your business is good. Whether you stay in Amazon and you just find different ways to diversify your product line, or maybe you open and Ebay store and a Shopify store, or you open a second business once you get your Amazon business to a certain level. You can reinvest in something else. Or if you just own small percentages of different companies. It's just always good to figure out how to continue diversifying. 'Cause you never know when that main product line of yours might go down when a new competitor comes up, when Amazon might kick you off or when something happens in the economy. There's just so many things that can go on with the business. The tasks that you have as a business owner is to constantly reduce risk by diversifying.

Michael: Absolutely. So speaking of that, I'm only seeing ... I'm not probably doing this right, I'm just googling here instead of asking you what URLs I should go to. So I can see the Port Light store on Amazon. Is there an Ebay store still? Is there a direct URL to an E-commerce store?

Nathan: Nope. So my Amazon business is my Amazon business and then all my time is focused on FreeeUp.

Michael: Got it. But back in the day, did you have several channels or just the one?

Nathan: No, not really. We started off a little bit on Ebay and we launched our own site but we ended up consolidating it. So I thought the question you were asking before was, "What was the worst business decision I made," and was opening up an office. Because I added Overhead to Drop Shipping business that just needed no Overhead, so it was completely unnecessary. So when we opened up an office we're like, "Yeah, we're gonna expand and we're gonna be the next Amazon of the world." And that didn't happen. And so once we hit that peak where we were like, "Alright, this doesn't make sense to reinvest these resources," that's when we scaled it back down, got rid of the office, made it all remote, focused on our Amazon store which was booming. And it allowed me to have another passion of mine, another idea I had, to focus on FreeeUp.

Michael: Absolutely. Nathan, I've got a very specific question for you. What strategy did you use for determining what your mark up should be? I know you mentioned that you use all internal processes. So I'm very curious to hear what you came up with to do that equation.

Nathan: Yeah, so it's all trial and error. Almost everything I do in business is trial and error. What I try to avoid is learning necessarily from the experts, 'cause what I've found is yes, you should take bits and pieces of what the experts are saying and apply them to your business. But if you just copy them, everyone copies them, and no one makes any money. So what I try to do is trial and error. I try to push the limits. Hey, how high can we sell this product? And then once we figure out that, hey the Drop Ship business works between that 10 to 20% margin, and even getting 20 is pushing it, then we're like, "Okay, now let's come up with different formulas for the price range of zero to 50, the price range of 50 to 100." And really dissect it and go down. And then you take those formulas for each one and you trial and error them and you adjust them accordingly.

So really that's the only way I do it, is by finding market data of real live customers. And yeah, you might spend a few months kind of trying to figure it out, but then once you identify what your target is and what they're willing to pay and what your optimal margins are, then you have these formulas in place and they're not just some generic formula. They're formulas that are customized to your business that you can use long term.

Michael: And these formulas are things that you build into your software or into some sort of operationalized process? Or how did you scale the business via these formulas?

Nathan: Yes, they're all ... We started off with macros and then eventually moved it to software.

Michael: So all of the software, you're still using it?

Nathan: Yes.

Michael: Cool. How does it compare to off the shelf Amazon repricing software and that kind of thing?

Nathan: The order fulfillment and the getting orders and the sorting them and the sending them, that we have our software for. I mentioned before that for the repricing we use Appeagle, we love them. So we built the pricing software, we added pricing formula to it, and it was okay. But we still found that Appeagle was better. They're really good at what they do. They focus on it. So we migrated to them, but outside of just using our software we have our own formulas that are connected to macros that are connected to Appeagle. So I don't know if that answers your question but-

Michael: Yeah, conceptually answers it. I'm very curious in seeing how that was actually played out, but that might be a little bit of a trade secret that you might want to keep, I don't know. So this is really fascinating. Can you tell me more about this whole transition that you went ... From you had the office, then you said, "No, that's not gonna work, we're gonna go everything remote." And I'm kind of guessing, tell me if I'm wrong, but is it right in me assuming that FreeeUp was something that came out of you realizing that you're really good at operationalizing things and then having people work on them remotely?

Nathan: Yeah, absolutely. So I liked hiring, when I found Upwork, a friend of mine on my softball team told me about it, I thought it was the greatest thing in the world. I was like, "I'm gonna build an Upwork army," and it was called an oDesk army. And so I spent so much time just interviewing these people and finding these all-star workers and a lot of those people still work with me six years later. And they're fantastic. And what I realized is all of a sudden I was hiring more and more. All that time that I was spending building processes and expending the business, all of a sudden switched over to HR time.

And I remember that I was sitting in my office one day after going through three different interviews, and I just hired someone after we had spent weeks interviewing them and they quit after like one day and I was just reading more resumes and I was pissed. And I just threw something against the wall and I was like, "There's gotta be a better way. I cant go to Upwork anymore and post a job and just filter through all these people." So that's when the idea really materialized that I could create a marketplace that was better, that I could use my ability to create good systems to make it more efficient and also to protect the clients. Because I know what clients want, I know what clients hate, I know every single good and bad thing that's happened when it's come to hiring.

So when I created FreeeUp, the concept was instead of being a marketplace where as a client you post a job and all these people throw applications at you and you have to decide, is we'll vet people into that marketplace. So we get hundreds of applicants every week, we have a great interview process based on eight years of hiring. We have 15 pages of communication guidelines our workers have to memorize and get tested on. So there is that standardization, that you always have that same experience. And then we back it up on the back end so if the clients have an issue, instead of having to fire someone and get a new worker, they can tell us and they get a new worker right away and we cover those hours. And if they quit we cover all retraining costs and all replacement costs.

And it's incredibly hands on to make sure as a business owner you spend as little time on HR as you possibly can and as much time expanding and focusing on the things at your business that you want to do. And that's really what I wanted when I was back hiring all these people.

Michael: Yeah, absolutely. It's so interesting to me ... We started out talking about basically creating repeatable systems and then turning those into software products. And I think a lot of people think of that idea as so beautiful because it's so sterile in a sense. You're taking something that could be relational and need a bunch of emails and contact and handshakes and all that, and it's becoming this completely code based thing. But then if you look at where your business has actually gone and what you're focused on now, you've actually gone more towards the helping people be effective. Which I think is cool, 'cause software's one thing but it's ultimately people that we care about right? And it's people that we want to work with and we're relational beings. So how do you, maybe in coming back to the Drop Shipping topic, which is obviously tied in again because we're all mainly concerned about optimizing our businesses, preserving margin, and having a good life as a result. What are maybe some final thoughts that you'd have around Drop Shipping? If you could give people three do's and three don'ts for thinking about using Drop Shipping? Probably as a supplemental thing to their company or maybe there's gonna be still some windows to do a full Drop Shipping model?

Nathan: Sure. So the biggest do is the client isn't always right, but it's in your best interest to make the client or the customer happy, especially your initial customers. 'Cause you're essentially using them as a test. You're Drop Shipping products from this manufacturer. At the beginning you're really crossing your fingers every time you sign up a new manufacturer, when those first orders go out, you're hoping that those work out. So you have to be on high alert. You need to make sure that if the customer complains, you find out why, you figure out how to fix it, and you figure out how to make that customer happy so you can make money down the line.

Two would be creating those manufacturer systems that I told you about. Making sure that they're getting tracking numbers and shipping on time and answering emails and stuff like that. And really holding them accountable and not being afraid to cut off manufacturers that aren't meeting your incredibly high standards that you have to have. And then the third os figuring out where you can actually find a niche. You can't do what I did and just go out and sell everything. It doesn't work anymore. You have to figure out what niches there isn't a lot of competition, what people are buying, what time of year it is, different outside factors that contribute to it. And really find something that you can grab a hold on and really make money on long term.

In terms of the don'ts, everything has to be process driven. You can't go in and just hire someone on day one, throw them into it, and just be like, "Hey, you're processing orders and doing customer service," and you're doing it your way. There has to be a your way to do it. There's your way to get a tracking number and give it to a customer. There's your way to get the client, the customer's information and pass it to the manufacturer. And it should be the same thing all the time. Even down to the hour of the day that's worked. Hey it's 9AM every morning, that's when orders go out to the manufacturer. Hey, it's 11, that's when we check tracking numbers. So it has to be incredibly systematic. Does that make sense?

Michael: Absolutely yeah. That's really helpful.

Nathan: Cool. And then I guess the other don't would just be focus on packaging. It's that one part of the business that everyone forgets about. They have these products, they have a customer base, or they found a marketplace. They've listed everything, they built everything, they know that if the customer opens their product that they'll like it. But they always forget, how is the product being packaged? How is it being shipped? Is the product actually going to arrive damaged? Because especially if you sell on Amazon, Amazon doesn't want to hear UPS messed up, or my manufacturer messed up. It's, "Hey, you messed up. You have to package it better."

So the last thing that we talked about with manufacturers all the time was how are you actually packaging these products? How are you making sure they're safe? Are you selling $1000 products in glass and barely investing anything in packaging? Hey, let's increase the prices and make sure that we don't have issues because I'm the one that has to deal with it at the end of the day. So that's something that I always make people focus on and people who lose sight of that end up dealing with a lot of complaints and ruining a lot of relationships.

Michael: Yeah, not something you want to do when you're starting off, or at any point along the way. Well this has been great. Nathan, I wonder if you could go ahead and leave us with a couple of things? Number one, what's the best way that our listeners can connect with you if you don't mind, if somebody has a quick question about Drop Shipping or something related? Or of course about FreeeUp, is there a way that people could talk to you directly? And then two is are there any other resources or anything else you'd like to plug?

Nathan: Yeah, sure. So right on our website, FreeeUp.com with three E's, my calendar is right at the top, you can book a time to talk with me directly. I'd love to talk to you about your business and how I can help you or even give advice on just pointing you in the right direction, even if you're not ready to hire or use FreeeUp yet, I love talking to business owners and networking and figuring out ways to work together. You can also check us out on social media, FreeeUp on Facebook. You can check out the online hiring mastermind group. We post a lot of great stuff about using remote workers and building processes and systems that actually work. You can check out my book, Free Up Your Business, we talk a lot about that business that I grew up with in college and that I grew. And all the different good things and bad things that happened along the way that really shaped me as an entrepreneur.

And then lastly, right on FreeeUp.com you can sign up as a client, it's free, there's no monthly fee, mention this podcast, you get a dollar off your first worker forever. And you can honestly just keep it in your back pocket and if you want to hire in the future or you just want to meet some workers with no commitment to hire, you're welcome to request a worker at any time.

Michael: And that's a dollar off per hour, a dollar off per-

Nathan: Yup, a dollar off your first worker's hourly rate forever.

Michael: Oh my gosh, I'm signing up right now. Awesome. Well Nathan, this is fabulous. We're gonna include all these links that were just mentioned in the show notes. And everyone, we have something else to leave you with as well. With Sellry, we really want to understand what store owners are feeling in terms of pain right now. Is it wondering how to deal with Amazon? Is it something about new technology? Is it lack of sales, lack of traffic, lack of conversion rate? Obviously it's gonna be different for a lot of people but we're assembling a massive survey that we're going to share the results with everyone with.

So what we want you to do is go to Sellry.com/survey, S-E-L-L-R-Y.com/survey, and there you'll be able to fill out a form and we'll be super respectful of your data we're not gonna spam you or sell your data obviously. And what we want to do is fill out that form and then we'll come back to you with the results once we get enough respondents. That's gonna help us guide the content of this show as we go forward. As well as we might have some ideas in the future to come up with amazing things like FreeeUp, or probably not FreeeUp 'cause they're already doing that, but you get the picture. We want to help people who are listening to this show and in general anybody doing E-commerce to be more effective at that.

So, and I know that Nathan can relate to that. Nate, thank you so much for joining us, second time, that should tell you that we really enjoyed you the first time. And we have this time.

Nathan: Awesome, I appreciate it guys.

Michael: Yep, alright, talk to you later and again everyone you can go to ecommerceqa.com for the show notes. If you want to email us directly you can go to, just send us an email to podcast@sellry.com. Again that's podcast@S-E-L-L-R-Y.com and we'll leave you there. Keep selling.

Show notes:

Tell Us Your Ecommerce Pain Points

Check out some work by Seth kodisagency.com

Email Seth. seth@kodisagency.com

Email us, we want to hear from you! podcast@sellry.com

Sellry

Transcript:

Michael: Hello, folks. Welcome to eCommerce Q&A. This is the show where store owners, directors of eCommerce, eCommerce managers stay up-to-date on the latest tools, tech, and techniques in eCommerce. I'm your host, Michael Bower, and I am joined by Seth Erickson of Kodis Agency. You might recognize Seth from our previous episode on customer experience and this is third episode of a little miniseries that we're doing on timeless UX principles. With Seth being a master of those things, we thought it would be a fitting conclusion. Seth, welcome.

Seth: Thank you for having me.

Michael: Very quickly, before we go into stuff, I want to talk about the quick review of parts one and two. In the first episode, we talked about some general truths about UX and how it relates to other disciplines like conversation rate optimization and customer experience. We also laid out the fact that what we're talking about in this little mini series are the things that hopefully are evergreen content, things that are gonna be always true about UX. Not so much discussion of trends, although sometimes trends illustrate principles. And then we talked about two specific principles, the first being the idea of white space or don't make me think, clarifying things, simplifying paths, making the decisions that people need to make obvious, and reducing visual clutter, and the second being around copy and readability. Takeaway on that one was how to make your sales copy readable, how to make your calls to action very comprehensible, and lowering that friction for people to take action based on the text, not only the visuals on your website.

Today, we're gonna talk about two great mistakes, and by great, and you can take that two ways. Obviously, like big mistakes to make, but you can also take it the other way, where if you know about these common mistakes, you can take an opposite path and really gain a huge amount of benefit. So, that's where Seth and I are gonna riff on this a little bit. Two different principles, one that's his favorite, one that's my favorite.

I want to talk about standardization and the idea being that your new awesome UI is probably, but not necessarily wrong. People come to us and they say, "Oh. I have to differentiate myself from my competition, which means I have to have a website that looks different from every other website in the word. It's gotta look custom and it's gotta look amazing." To which we say, "Sounds great, but do you understand that the differences may be ... You might want to take that a different direction than you think."

Seth, where do you come into this discussion, when somebody's saying, "I want my website to be different."

Seth: It depends on if it's right for the client, so from our perspective. So, to give you an example, we did some work for a Jewish Synagogue called to Sixth & I and they come from a very conservative background and they look at a lot of other sites that were Jewish Synagogue sites and they said, "We want to do something different". And when we looked and took, did our own research into their area, it was very obvious that there was too much sameness, right? Everything was the same and, therefore, if they wanted to stand out, they needed to do something different. It was almost a prerequisite of the project. Whereas, just trying to stand out for the sake of standing out doesn't really make sense. It needs to be driven by a purpose. It's my thoughts around it.

Michael: So, where I take that is, if you're in an industry where everybody's trying to be whizz bang, then you need to be a little bit more mainstream and emphasize

Seth: Yeah.

Michael: Other than the craziness of your navigation.

Seth: Yeah. I think if everything is the same and your industry, then it makes sense to try to do something different. But if everybody, like you said, is trying to be the next big thing ... Sometimes the tried and true methods work the best.

Michael: Right. While everybody's shooting off rockets and going all different directions and stuff you just stay with patterns that make sense in your UX, with design that is usable and familiar. And then everybody else can do the crazy stuff and confuse their users. And people will want to come to you because what you present is works and it makes sense. What the word I'm looking for? It's not foreign, flashy.

Seth: But it lacks substance when you have too much of that.

Michael: One of my clients famously says, "We're not building space shuttles here. We're selling blank" and I won't tell you what they're selling, but it's like, "We're selling a product" and so, people, in order for them to be willing to give up closely, personal information like payment details, we want to make sure that they feel comfortable with doing that. This is not an art gallery where we want to shock them or amaze them so much as we want them to buy something.

Seth: Yeah. Be comfortable. Trust. Build trust. Yeah. All od that stuff. Definitely.

Michael: I think this is a bit sad sometimes for super designy people, because it's like they really want to do something new and different and innovative and who doesn't want to do that, right? But at the end of the day, if your conversion rate is going to go down because you made a particular design decision, maybe there's a way you can get the both of best worlds, but this is a difficult balance to. So, there's three areas where we see standardization being an important consideration. First is in layout, which we would define as how the user orients himself in the site. So, if you think of your physical environment, that where the walls are, where's the TV, how small is the room? That's the metaphor to think about. So, on the website, is this a full screen layout, is it a fixed boundary layout, how big are the images and the texts on the screen relative to the size of your screen? That'd be layout.

And then navigation, how we're moving through the site? And then finally calls to action, how people are going to take action based on what they're doing on the site. Seth, do you advocate a particular level of innovation versus standardization for things like layout, navigationing, calls to action?

Seth: That's an interesting question. We, what I advocate for and it's something that I've taught a lot of the designers that have worked under me is the idea of flow. It's something I've never really heard other people talk about. Maybe they do. Maybe they call it something else. I call it flow. And, to me, what flow is, is if I look at a site, the site should be designed in such a way that guides my vision and allows my vision to move around the site smoothly. And, in most cases, I'm trying to draw the eye down and I want to have pieces that connect together in such a way that it becomes a fluid experience. You and I had talked recently about all these symmetrical websites and I kind of ranting about how I'm so tired of the symmetrical websites because they're safe, right? And nobody's really trying anything at this point. Everybody's just making the square and-

Michael: Could I just say ... could I just jump in and say that almost single Strapify website does this?

Seth: Yeah.

Michael: Very, very symmetrical. Very, very boring visually.

Seth: Yeah. And we don't always use this principle, but it's one that we've used for a long time. We want to guide them visually in a way that says, "Oo, I'm looking here." And "Oh, I want to look over here." And, "Oh, now I want to look over here." But not in a way that's like they've had too much coffee, right? It's jittery and bouncing and your eyes just going 20 different directions at once. To do that, you almost have to create more of an asymmetrical design and to do that, to get people to look around and see things and have white space and supporting that. That's one, for us, that's a huge thing that we apply a lot. But then sometimes we have clients who say, "This is our style guide. You have to do stuff this way." Right? So we do it that way and try to improve it.

Something that I wanted to mention on your point about being crazy and innovating is, I think innovation really only works when it's seamless, right? When you don't really have to think about the jump from the old way to the new way, right? You used the example of the iPhone. We had push button phones and then all the sudden we have flat glass and we could just touch the flat glass and we had the visual representation of what we already knew. That was a seamless transition. Nobody had to learn how to use the phone again, right?

But then if you do something crazy and now it's like, "I need to learn how to use a phone, what?" That doesn't push things forward for people. I think Apple's been very good about creating more seamless transitions in their innovation. It's something that I don't think people realize. They're selling those air buds or whatever the-

Michael: AirPods.

Seth: Like hotcakes and all they did was they took something that people are already familiar with and they took the cords off, right? That was a marginal innovation but people were able to transition into that quickly. They didn't have to learn something new to be able to use it. I think, from an innovation standpoint, like with shopping carts and whatnot, they are probably things that could be done that would ... where people don't have to think about the process as much or you could make it more seamless. I'm sure you guys probably work on that on a regular basis. That's where I think breaking something works. If you can make it almost like magic, right?

Michael: If you think about the hamburger button, the three lines that everybody's familiar with; that's an innovation, right? People now know what that button means. I remember when it first came out, I thought, "Man, that looks really dumb." And then very quickly, I realized, "Oh, that's great". It saves a bunch of space. It's not an amazing icon or anything but it serves a very useful, functional purpose. Now everybody knows what it means and you don't have to put menu underneath it, although you can if you want.

Maybe one takeaway is that we would definitely advocate starting with common UR patterns. Let the crazy design world innovate new website patterns and let Twitter spend millions of dollars teaching people what new button types mean. You don't, as an eCommerce store, probably not a good use of your fund when you might actually confusing people if you're coming up with a totally different navigation, let's say.

Calls to action would be another area where you want to explain, like we talked about in the last show, you want your calls to action to be incredibly easy to understand. It should be like falling off a log to know, "Oh, this is a button. This is a link. I can click this." That's the whole idea there.

Seth, I want to talk about another principle. This is one that you said is your ... the biggest one where you see mistakes being made in UX.

Seth: Yeah. Empathy. I mentioned earlier when I started. I started in UX in 2004 as I said Flash was going strong then. Every website was Flash. But people spent more time thinking about themselves and then they did about their in user. That is still a problem today. I think it's part of the human condition. It's that selfishness, that we ... You see it with startups a lot. They come up with ideas that are great and then nobody wants it, because the idea was great for them. We worked with a startup that was doing fantasy games and it was a year and a half into the project before somebody asked the question, "Are the games that we're providing to people fun?" That was a fundamental question that should have been answered before the project started and investments were made and other things happened.

It's the biggest thing to be, because at the end of the day, it always comes back to people, right? People are always using your app, your site, your whatever. If you don't understand those people or care to understand those people, then things tend to backfire in your face. That's my quick two cents on that.

Michael: What do you think the solution is there? The empathic problem?

Seth: I don't know. I think it's something that can be learned. In my mind, I can think of two people that do UX for Kodis and one of them is very logical, very ordered. The other is very ... has a high emotional quotient. Both of them have learned UX. I think the logical, order person, it took a lot of stop putting yourself into the situation. Stop using yourself as the profile, having those conversations and starting to say, "You need to turn this thing around and try to look at it from the other side." It really is having that understanding, but I don't think it's hard if you care about people, if you care about what you're doing. But if you don't or you're just trying to fill a role, then I think it becomes incredibly difficult.

Michael: Let's try and bring this all together. I almost said, "Let's get real." This is one of those shows where I feel like it's like there are big picture, super important things that are constantly being violated on most websites. Let's maybe, maybe we could say a few of our favorite things that we see. I'll talk about some of my favorites. One thing I love to see is when the user experience of a website is very targeted. This would have to do with another area called positioning, but when you pull all these things together, what you're really doing is you're communicating to a user, "Hey, we understand who you are. We understand what your problem is and we're giving you this solution to that problem." And we're making this ... It's a risky thing to do that, right? You're not being vague or ambiguous. You're not saying, "It depends." You're saying, "We offer this and we think that this is going to help you and here's why."

Seth: Yeah.

Michael: It's a persuasive statement.

Seth: It's sets you up as the expert, because you focused on this one thing. You're not the smorgasbord of problem solving. You are the guys who do this one thing in this area and it helps build trust. I think it makes people more secure, if they have that pain. Yeah, definitely.

Michael: We're actually putting together a project right now where we help companies drop most of their product catalog that's not working. Then just focus on the core catalog, 80% on this, no, put 80% of the emphasis on the 20% that's going to create the results. 80, 20. Then take the top product or products and do a few different things to experiment with dialing in the user experience all the way. We've seen that be a really interesting exercise to see what kind of conversion rate increase you get when you go with the full vertically focused funnel aligned with one particular product line. It goes beyond just doing a micro site. What's one of your favorite things that you've seen? Something that makes you relieved or excited when you see it?

Seth: This is ... It's funny that ... There's a bunch of things. I like it when people start to use animation more to improve their UX. Drawing the users eye to something that's important because it's animated as opposed to making it as big as possible or bright pink. You can be much more subtle. It doesn't ... Animation is one of those things where a little bit goes a long ways. It doesn't require things to be flying across the page and whatnot. I like it when you can engage the user on a different level as opposed to just making everything static and flat. HTML5 is starting to make that a little bit more possible and more and more I'm seeing people doing just that. It's just more engaging.

Michael: How can folks who want to learn more about UX, design centered thinking or digital transformation, which we hardly touched on, but it's all about doing innovation in a smart way, how can they get in touch with you, Seth?

Seth: Well, we can ... they can reach us through the website. It's kodisagency.com. K-O-D-I-S agency.com. You can always email me at seth@kodisagency. I like to get lots of questions whenever people have them. I think that's the best way.

Michael: Well, thanks everybody for bearing with us as we've slowly rolled out this little mini series and we look forward to answering any questions that you have about UX. This is one of our favorite things to be doing and I think you can look at our client list and see that we take a lot of pains to really help people come out with amazing UX. We're not trying to get you to pay us to do this. We just would like to take a look at your problems and your questions and maybe give you some insights, if that would help. You can pay us if you want to, but you get the idea.

Then there's one other thing we're wanting to do, speaking of empathic, we want to get your input about what we should be talking about on the show, what problems have you experiencing. There's a little survey we put together. It's at sellry.co. S-E-L-L-R-Y.com\survey. You go there and fill out the form, we'll be sure to send you back the results, so you can get a feel of what other store owners and operators are experiencing as well in terms of pain points. You can also email us at podcast@sellry.com, if you just have a quick question. And otherwise, the show notes are at ecommerceqa.com and we'll look forward to dialing in with you next week. Thanks everybody. Thanks, Seth.

Seth: Thank you.