Referral Marketing & Word-of-Mouth Tactics To Grow Your Ecommerce Store With Jay Gibb of Cloudsponge

Guillaume: Hello everyone. Guillaume Le Tual here, host of the Ecommerce Wizards Podcast where I feature leaders in e-commerce and business. Today’s guest is Jay Gibb, and he’s the CEO and founder of CloudSponge. Today’s topic will be growth tactics for e-commerce. Jay will specifically tell us about word-of-mouth, referral, and sharing. We have a shout out to Interview Valet who connected Jay and I. Jay, thanks for being here today.

Jay: Thank you for having me on.

Guillaume: Can you give us a brief overview of your journey as an entrepreneur before we dive into the topic?

Jay: Yeah, sure. I’m originally from Canada, as well, actually from Calgary, and I went to technical school there to learn how to be a software developer. And after probably about six or seven years of being a software developer I decided to basically become a founder and an entrepreneur and start my own company. Eventually that led to CloudSponge, as we’re here to talk about today. It’s a long meandering journey of 25 years at this point. So it’s hard to summarize in a word but we’re at a stage now where it’s a nice stable company and I’m enjoying the journey surrounded by a great team of people that I’ve assembled along the way.

Guillaume: Okay, and maybe to help people also understand that this is sort of your core expertise and core offering, you know, word-of-mouth, referrals, and sharing, can you explain in 30 seconds what CloudSponge does?

Jay: The easiest way to imagine it or to think about it is, it all starts with just one button. You can just imagine on any website, think about your own website, where we can give you a button that says,’ Add from address book’. A lot of times the button that might have a little icon on it that looks like an address book icon. And when your users click that button it gives them a way to use their own address book, like from Google Contacts, or Yahoo Contacts, or outlook.com, or Office 365, or wherever they store their contacts, it gives them a way to use their contacts, use their address book while they’re still on your website.

Most of the time the reason why they’re doing that on an e-commerce website is to populate instead of typing out a comma to separate a list of email addresses for a referral form or throwing them out to a mailto link on a product page. They can use their own address book on your site without leaving the site to be able to do things like sharing and just spreading the word-of-mouth features for your site or for your products and for your referral program, using the address book. So we focus 100% of our energy on having those integrations with all of the world’s Address books, we’ve got about 40 of them or maybe 30 of them right now depending on how you count it. So we normalize all the payloads and then we kind of boil it all up and do a little JavaScript snippet that you can put on your website to basically multiply the performance of your existing sharing features.

Guillaume: So the idea being that, let’s say I’m on a website and perhaps there’s some kind of promotion to get some loyalty points to scale something if I share it with some friends. So instead of having to remember each of my friends’ emails I click on this button and I’m going to log into my Outlook or something like that and then I can just start pulling and clicking on my contacts and typing in and it’s going to autofill all my friends’ emails there so I can share to them?

Jay: Yeah, you got it.

Guillaume: Otherwise it will reduce the sharing if you have to remember everybody’s emails and you might not want to type all that stuff.

Jay: Yeah. And still you don’t really want your users to open up a different application or a different tab window to copy and paste stuff and hope that they come back, right?

Guillaume: Yeah.

Jay: And it’s especially painful if the user is on a mobile device. If they’re on an iPhone or an Android phone, the process of going back and forth and copying and pasting things is two or three times harder than on a desktop. So we take all that pain and we make it go away by just allowing those people to just use their address book without going anywhere.

Guillaume: Very interesting to me that you’ve built a sustainable business for all those years. Being such a niche narrowed down product offering ‘share to all your friends’, ‘share to your contacts’ button that you can add on any platform and it integrates with all the address book there. So that’s what you’re living everyday and that’s your core business. So people could add your tool or your button there but if we go further from that, what kind of tactics would you have to share with e-commerce stores’ managers or owners about word-of-mouth, referrals, and sharing?

Jay: We integrate with a bunch of different referral program platform-like providers. We don’t offer the referral program functionality, we don’t send emails or issue unique codes, or do any fraud mitigation or any of that stuff. That’s what all of our partners do. So we get to see an interesting view on the industry. We get to see lots of different e-commerce stores and lots of different referral program providers. And using that, I get to kind of see what’s working.

One of the things that I would encourage, from a tactical perspective, first of all anybody who’s got an e-commerce store that doesn’t have something like this shouldn’t really think about doing it as far as referral programs. What I mean by that is a double-sided referral program where your customer, the person who’s already purchased something from you and probably loves your product, can refer your store or a specific product to others and get some kind of benefit for doing that. And the referral that gets sent to the new customer, the double-sided part is that they would also need to get something. So just to put it into an example, you might say if any of your friends purchase a product they’ll get $10 off their order and when they make a purchase you’ll get $10 off your next order. So it then becomes like customer retention or repeat purchasing. Now somebody has got a $10 credit burning a hole in their pocket and they’re excited to come back and use that. So all the best e-commerce use cases that I’ve observed, one of the things that they all have in common is that they all have some kind of double-sided referral program to make sure that those super fans, the people that love their product have an incentive and motivation to share. Some of those people are motivated by giving their friends a discount and others are going to be motivated by earning their own discount and that’s why making a double-sided is really important.

Guillaume: Yeah. It totally makes sense. I’ve seen programs like this, like win with your friend kind of deals. If your friends win or you win you both win regardless of who the winner is, if you refer someone and your friend wins then you’ll get a win too. So it’s sort of adding you one more ticket for the draw. All right, so that’s for referring, everybody should have some kind of referral program in place, basically, and some kind of sharing features. What can they do to make sure that these things work well? So the first thing is a double-sided offer as you’re saying, what else?

Jay: One of the things that I see all the time that I think is easy improvement is that most e-commerce stores will have, you know that little envelope icon on a product page that nobody clicks on?

Guillaume: Yes, the mailto.

Jay: You click on it and it opens a mailto link to your browser window. That can be easily improved by basically making it do something that uses the address book. I would suggest maybe changing it from that envelope icon because I think people become kind of blind to that icon over time. But they can click it and to be able to actually bring up an interface that lets them compose an email there, use the address book to select friends, you know, the person or the people that they want to share it with and send those emails directly from your website instead of popping them out to a different window or their email client, which they might not be expecting. You’ll get better compliance with features like that. And it’s whether you use an address book or not, you don’t need to use an address book for that. But even just to make it so that those icons will put your user into a sharing interface that’s native where they can type in an email address. Obviously, I hope that they would use an address book, but they don’t have to, and then write their message and send it. At least that way you as a store owner gets to send that message and include your brand with the message, include whatever your promotion that you might want to share. It’s just a lot more useful from a measurability perspective and from just controlling your message and knowing a certain user did a certain thing and if you don’t just sort of kick the user out to that mailto link. I see that far too often and I think it’s a missed opportunity.

Guillaume: Yeah. I think in the first place you should not send the user off to your platform or your e-commerce site to keep them there with something that’s like a pop up in there and they haven’t lost your site. It sounds like a good idea but as much as you can, don’t let them leave your own site.

Jay: That’s the theme here, just keep people on your site. When you’re trying to get them to share something, whatever you do, don’t send them somewhere else to do it.

Guillaume: Okay, good point. All right:

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Guillaume: What else do you have in mind?

Jay: I guess it’s kind of two versions of the same thing. A lot of e-commerce stores will have an add on or a plugin or module or a wishlist. Which is structurally very similar to a registry, like some larger sites might have a huge catalog, they might have a gift registry where a bride-to-be might go and select a bunch of products and put them into a registry, and either way it’s a wishlist. It’s just a different sort of more formal use case for a wishlist. In either case, the whole thing with the wishlist in a registry the whole point of it is for other people to see it. And as a part of that function you need to have some way, especially if it’s a registry and you potentially have hundreds of recipients of this registry, have a convenient way for your user who put together the list of products to share that. And again, far too often I see these wishlist features that are basically just a wishlist for yourself, even if they do have the concept of making your wishlist public. For example, for my kids in my Amazon account, I’ll make each of them a public wishlist around Christmas time so that all the people in my family that ask me like, what what can I get for your kids, I can share those lists with them and tell them to just pick something and tell me what they’ve chosen so that I can take it off the list. And even there the sharing part of the wishlist functionality is pretty clumsy. It could be a lot better. It could be better by actually having a sharing function where you can type in or use an address book to input the email addresses of the people that you want to receive it and include a message. And it’s another one of those places where sharing functionality in sort of the boilerplate e-commerce stores can be easily improved.

Guillaume: It’s treated by default. It’s always a personal wishlist and not a public one that is meant to be shared. So it’s appropriate if you make lists that can be shared especially if you’re upgraded to a registry. There’s the obvious use case of the bride and then you have other use cases like baby showers and everything that a couple needs for the new baby. You don’t want to receive three strollers and so as soon as someone buys it, it’s taken off the list. So that is indeed something that has room for improvement or standardization, I don’t know how much that could increase business depending on the industry. But for sure wishlists have more of a sharing mindset when they’re built in and add on the personal mindset which could be interesting for some percentage of sales increase in some industries.

Jay: Yeah. And finally, the last one which is kind of similar to the first one with the referral program, the double-sided referral program, it’s more of a single-sided version of that, where, again, a lot of e-commerce stores will have a way to send coupons. That’s just one side, you’re sending something to, or you love a certain product and your friend just mentioned that they have the problem that this product solves so they’re in the market for this product. And you say, ‘Oh, wait, hang on, I can send you a coupon for that’. You want to make it really easy for somebody to come to your site, find the product and send the coupon. And if you don’t have a way for somebody to send those coupons, it’s again, a kind of a softball. It’s an easy win to be able to have a 5% off or a $10 coupon or something like that so that your customers that love you and want to tell people about your products have something to anchor that, a place to do it, a reason to do it. As long as they’re aware that they can send a coupon that’s a pretty low customer acquisition cost and is going to most likely be cheaper than other customer acquisition channels that you’re paying for.

Guillaume: Sharing coupon codes could be a good way. Sometimes coupon codes are seen by some merchants as something like, ‘Oh, I don’t want to have too much of it because it’s going to eat in my margins, I’d rather have the McDonald’s approach’. McDonald’s will not ask you to give your coupons, they will tell you to keep it and you can even come back with it, you know they want the volume aspect of it. For sure share it with your friends and make everybody come to the store with that coupon, that can be the mindset regarding this. For sure they will have at least 10% off, 5% would only work if you have a really super expensive thing which is typically 10-15% off that they will redraw people. For sure sharing coupon codes or when you send to a friend this value saying, ‘Hey, get this percentage off’, you’re adding value to the relationship with your friend. You’re sending them something that might be valuable and saving them money.

Jay: You mentioned cutting into the margin, I think that is true in some cases, but I think that either way you’ve got customer acquisition costs unless all of your customers are just coming to you organically, which is very unusual and that doesn’t happen often. You probably have got some kind of spreadsheet or some metrics where you’re tracking customer acquisition costs and you’re keeping track of your ad spending and other things like that, and I think that this goes into that spreadsheet. Rather than going into the unit economics and the profit margin on the product, I think something like a coupon or the second side of a double-sided referral program belongs more in the customer acquisition category than the unit economics category.

Guillaume: All right, thank you for sharing that. Any last thoughts before we wrap up?

Jay: All of what I’ve been talking about is in a PDF. I’ll make a landing page, www.cloudsponge.com/ecommercewizards that your audience can go to and there’ll be a downloadable PDF there. It’s basically like an audit where you can take a look at it and sort of check off the stuff that exists and audit the sort of UI of those things. Then get on my calendar to do a consultation and have a chat about it and see if there’s any ideas that I can provide on an individual basis.

Guillaume: All right. Thank you Jay for being here today.

Jay: Great. Thanks for having me, Guillaume.