Kevin Hillstrom is the President of MineThatData, a service that offers data-driven insights into how customers interact with brands, advertising, products, and channels. Kevin has helped over 250 clients ranging from start-ups to billion-dollar brands. His MineThatData blog is widely read in the marketing industry and has 10,000 monthly visitors.
Kevin has over 30 years of experience in analytics and marketing, giving him a keen understanding of the relationship between the two. Previously, he worked for leading brands such as Nordstrom and Eddie Bauer.
Here’s a glimpse of what you’ll learn:
- Kevin Hillstrom discusses how the COVID-19 pandemic has changed ecommerce and customer behavior
- Kevin’s advice to companies trying to keep their business advantage
- Breaking down how data analytics can secure repeat customers
- The marketing tactics to utilize for high-value customers versus low-value customers
- How to build a bigger and more profitable loyal customer base
- The tricky relationship between discounts and customer conversions
- What are the three different audiences among customers?
- Kevin’s thoughts on the future of ecommerce
In this episode of the Ecommerce Wizards Podcast
All ecommerce businesses use data, but how deep do they go? Sure, a few analytics might help businesses make better marketing decisions, but that’s only the beginning. Having detailed data and knowing how to read it might be the most important component of any brand’s success. Now, all you need is the right expert.
Enter Kevin Hillstrom, a data specialist and customer development expert. His services and blog are centered around using sophisticated analytics tools to help ecommerce companies make the right choices. His long career in the marketing and analytics industries have given him the expertise to not only interpret the information but also apply it. Now, he’s here to share a glimpse into his process and how he translates numbers into results.
Guillaume Le Tual sits down with Kevin Hillstrom, the President of MineThatData, to discuss how he uses data to help brands understand and convert customers. They talk about how to both acquire new customers and foster loyalty among pre-existing clients. They also dive into the future of ecommerce, how to effectively use discounts, and the three different types of consumer audiences to target. Find out the rest on this episode of the Ecommerce Wizards Podcast!
Resources Mentioned in this episode
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Guillaume: Hello everyone. Guillaume Le Tual here, host of the Ecommerce Wizards Podcast where I feature top leaders in business and e-commerce. Today’s guest is Kevin Hillstrom, CEO of MineThatData. So Kevin uses first party data, your own data, to understand how customer habits change. His mission is to help CEOs understand how customers interact with advertising, product brands and channels. He runs a very prolific blog at Blog.MineThatData.com, with over 4400 blog posts, which is quite impressive and an amazing productivity Kevin. Today we’re going to be talking about the impact of COVID. How consumer behavior is changing after COVID, how to capitalize on the e-commerce gains made during COVID and how to not lose that edge.
So before we get started, we have our sponsorship message This episode is brought to you by MageMontreal, if your business wants a powerful e-commerce online store will increase their sales or to move pile up dormant inventory to free up cash reserves, or to automate business processes to gain efficiency and reduce human processing errors. Our company MageMontreal can do that. We’ve been helping e-commerce stores for over a decade. Here’s the catch. We’re specialized and only work on the Adobe Magento platform. We do everything Magento, if you know someone who needs design, development, maintenance, training support, we got their back, email our team, [email protected] or go to magemontreal.com. All right. Well, Kevin, thanks for being here today.
Kevin: Happy to be here. Thank you.
Guillaume: Can you tell us a little bit about yourself before we dive into the main topic?
Kevin: My name is Kevin Hillstrom. I spent my formative years working in retail at Land’s End, Eddie Bauer and Nordstrom. And for the past 15 years, I have had my own consultancy, I’ve worked with about 250 different clients, they range from e-commerce startups to retail stores, to old school catalog brands. And most of my work over the last couple of years has really focused on how companies develop new customers, bring them in and actually get them to become loyal customers over time. So a lot of the work that I’ve been doing is really focused on that process that a customer takes over a several year period of time. I work with CEOs and executive teams and I really help them to understand that process and then spend their advertising dollars wisely so that they have a loyal customer base in the future.
Guillaume: Awesome. Thank you Kevin. So let’s get straight into it. What are your observations with COVID and how are things changing?
Kevin: There’s been like three phases that I have seen over the course of the last year and a half. When we go back a year and a half ago to March when the pandemic started, most of my e-commerce clients as we got into April and May saw gigantic increases in sales potential. So for instance, I had one client that had a $20 million business and on an annualized basis, they went for $35 million within a couple of months. They started generating huge sales increases. When I would go back and look at what caused those sales increases, I would typically see that these companies were generating a ton of new customers that they wouldn’t have generated otherwise. So COVID really changed the customer base of the clients that I work with.
Guillaume: A big time. I can really back you up on this. I have some client who moved from 20 orders a day to 400 orders a day, a massive change during the lockdown. These were the kind of commodities or products that you could just not get the traditional way, and so online orders were just exploding.
Kevin: Yes, that happened pretty much across the board for my client base with the exception of apparel. And so last year in 2020, when you went through April, May, June, July, August, that timeframe, my clients thrived. When you got in towards September through December of last year, that brought on this huge glut of customers, and those customers started to spend money. So in addition to having all these new customers, you now have all these customers who have placed their first order or a second order war by. So it’s like getting this compound interest that was happening. So a lot of my clients started to see a slowdown in new customers but at the same time all the new customers they acquired were spending money and so the multiplication of that was their businesses thriving.
So during the second phase that went until about February or March of 2021, my clients were experiencing all these sales increases and were very happy. Third phase then started really in spring of 2021. So all the customers who were going to repurchase, repurchased pretty fast and became loyal customers. This huge glut of COVID customers then, did not buy a second time as they got their needs met during COVID, they started to slump and fall through what I call the customer file. So think about it this way, a customer buys for the first time, they are very responsive and then each month that passes that they don’t buy, they become less and less responsive.
And so today, most of my clients have customers who haven’t bought in 17 or 18 months, and they’re really inactive. So they’ve lost all the potential for most customers now. So that is a trend that is really a struggle for a lot of my clients because the number of new customers have slowed back down to 2019 levels and most of the customers acquired through COVID have aged now and aren’t buying anymore. So it’s kind of back to business as usual for a lot of my clients. When I analyze my client base, I see that sales are decreasing, they’re still better than they were two years ago, but they are decreasing now. Combine that with a lot of price availability issues, because a lot of the product that my clients want to sell is sitting on ships off of Long Beach, California, and they can’t bring it in. We’re in a phase now where the customers who are buying are being disappointed because products aren’t available. So it’s kind of a weird dynamic that happened where there’s this huge positive, and now my clients are starting to struggle.
Guillaume: Very interesting. So you’re saying people pretty much got their needs met. So the early COVID customers, some became loyal customers, some just faded off. Or some countries also eased restrictions and therefore, you can again go back to your usual supplier, to the hair salon, for example, that for a while was closed because of COVID restriction and of course, ladies wanting their hair products or whatever would buy it online instead of from the hair salon directly. So yeah, it changes where to buy their stuff.
Guillaume: Okay. And now product availability is an interesting discussion to have. There are some, perhaps justified perhaps scare mongering going on right now about if you want Christmas presents, you better buy early. Because there’s likely to be some shortages of everything coming up for Christmas.
Kevin: My clients are telling me that it may not be as dire as the media reports it to be but there are going to be product availability issues, and they are having a lot of challenges getting products over here. I’m being told of issues where they’re told that their products are on a ship but as soon as that ship leaves from China, that they’re being told, basically by the port staff, to pay more to have the ship come over. So they’ve kind of been extorted a little bit. And when the ship arrives in California, or in Tacoma, Washington, it basically sits off the shore because there’s not enough resources to bring in all the containers and then deliver all the containers. So this is now manifesting itself in the customer data I analyze.
When I’m analyzing customer data, I can look to see if a customer ordered an item but that item was not available. So the item got cancelled. I can see what impact that has on customer behavior going forward. So far, the results are not dire from a customer standpoint. So what I’m seeing in my data is that customers when they are disappointed because the product is not available, they’re finding a substitute product and are buying that from my clients. So in the short term, I think that’s a big positive right now that customers are being pretty resourceful. If this were to continue for six months or a year, that dynamic may change.
Guillaume: And if we go back to say some company trying to keep that edge gained during COVID, or that boom during COVID, what would be your advice?
Kevin: Most of my clients had a very similar pattern that I saw revealed in the data. So what happened is when a customer bought for the first time, that customer was incredibly responsive for anywhere between four weeks and 12 weeks after their first purchase. So I call this the welcome period. It’s a time when my clients should probably have a different email marketing cadence. For the first time buyers they should probably present different merchandise online to customers based on what they bought in the first order. You basically have to really treat that customer well in those first four to 12 weeks after the customer purchases. Many of my clients still have new customer gains today that are higher than they were two years ago before COVID started. And that being the case, you really have to treat these customers well those first 30 to 90 days.
When a customer then does not buy it for 30 to 90 days, the data seems to show that customers fade away for a while. So in other words, they become unresponsive. So that is where you leverage everything that you have from a marketing standpoint that it’s free and not expensive to try and keep those customers interested in your brand. They don’t have to buy something, but they should stay interested. The data that I’m analyzing shows that when the customer gets to about 11 months after our first purchase, the customer starts to become very responsive again for about two months. So what happens is those customers have a seasonality associated with their purchase. I had lots of clients last year in April that were buying stuff for their garden, because they were stuck at home so they were planting gardens. The following April, April 2021, a lot of those public customers came back and bought again, because it was the following April, and they were doing things for their gardens again.
So that seasonality that I tend to see across the majority of my clients is that when a customer who hasn’t bought for 10 or 11 months, gets to that one year anniversary, they become responsive here. So a lot of my clients work hard to try and capture their customers in that anniversary period. If that customer doesn’t buy after that, that customer generally fades away and you don’t see the customer anymore.
Guillaume: Have you noticed anything about those products being more consumable, rather than when you say gardening thing. You don’t need to buy new gardening tools or a new set of tools every year, but you’ll need the new season and so on. So is there some link there?
Kevin: There’s definitely some link there but based on the type of product. What a lot of my clients do is they have seasonal products which they complement with other products that you can buy during the rest of the year. So what they’re trying to do there is to capture purchases in the nonseasonal periods, and then they use the seasonal products to basically get the customer on the anniversary of their order to get purchases that way.
Guillaume: And when we’re not in season, is there any winning move or best practice that you’ve observed?
Kevin: I have a client, for instance, that sells gifts. They do 40% of their business in November and December every year around Christmas. What they have found is they try to keep customers interested during the rest of the year. So they tell stories, and they prepare the customer to get them excited for next year’s November and December. And what they have found is that they can get a customer to click through an email campaign and shop just to basically look at the website twice a year during those off-season periods, and those customers are about 50% more responsive the following Christmas period. So it’s just a matter of keeping the customer interested during those off periods and having something to say to them to keep them coming back to you.
Guillaume: That’s a fun thing to know, to be able to predict your sales or to keep it as a marketing objective in trying to re-engage your customer in the offseason, at least twice. If you see them clicking an email, clicking expecting something then they’re 50% more likely to actually buy it from you again during the next holiday a year later.
Kevin: Yes. And so I use regression models where I try to control for other factors. After controlling for the other factors, the email click throughs cause you to be 50% more responsive in the future. So it’s by controlling for other factors. I know that the email tactic in this one example is useful.
Guillaume: Any other golden nuggets that you’ve discovered working with your data?
Kevin: So there are things that I look at when a customer buys for the first time. There are attributes that the customer possesses, that tells you who’s going to come back and who does not come back. So I’m now working on a project where when a customer buys for the first time, what they buy, in other words, if they buy from a certain merchandise category that lends to repeat behavior, if they buy from a certain marketing channel, so for instance, if they buy from Amazon, that’s bad, if they’re buying from paid search, that’s good. If they buy multiple items in their order versus one item, if they buy Expensive items versus inexpensive items, if they buy items at full price versus items that are discounted. If you have multiples of those good things, the customer has a 58% chance to come back in this project they’re working on. If they do the bad things by one item, buying an inexpensive item, buying an item that’s 50% off, buying from merchandise categories that do not lend to repeat behavior, those customers had a 28% chance of coming back.
So what you can do in the case of this client is they score every new customer that comes into their business. And when a customer buys for the first time they get put into a path, they’re either going to be the high value path, average or low value path. And the high value customers get treated differently. And so the low value customers basically get treated with a lot of what I would call free marketing tactics, they don’t spend money on those customers. So understanding what a customer does in a first order, tells you how likely you are to have good customers going forward. Also by doing the scoring, this client is able to look at first time buyers and they can see when they’re going to have future sales problems. Because if they get a bunch of customers from Amazon, for instance, they have low value, the reporting tells them that they’re going to have problems in the future. So they adjust their marketing mix to concentrate and bring in customers that have higher value in the future.
Guillaume: Right. So just to be sure I heard you correctly here, so for customers that are on a high value path, you will actually send them more marketing that is, free stuff, or inexpensive, maybe report PDF, white paper studies, and that kind of stuff?
Kevin: If a customer is going to be high value, this client in particular is actually willing to spend more money on those customers. If the customer is low value, that’s where they would do all the inexpensive free stuff with that customer.
Guillaume: Okay. And I guess it depends from which business and what the price tag is on each of your items that you have. Can you give some examples of tactics they use and specific freebies that people give away? Of course, if you’re a B2B, you might send white papers, case studies, that kind of stuff. But that’s not applicable if you’re a B2C, what do you see going on as a way to keep people engaged like this?
Kevin: On a high value path you may get some pretty hard sells in your marketing messages. For instance, one of my clients would have courses that they sell. And those courses might cost $499. The high value path is going to get a marketing mix in those first 30 days to encourage the customer to cross shop into other courses and spend $499 quickly. The low value customer who browsed and bought something for $89, and intend to tell them one and done and they’re going to go down an educational path. They’re going to have a marketing mix, that basically is just teaching them about the brand, and what the brand does, and it’s all educational. The other path is going to be a hard sell, they’re going to do outbound marketing, they will assign a sales rep to that customer if it’s a high value customer and that sales rep is going to have communications with the customer. So you’re just basically spending money on the people who have the best chance of coming back, and you’re trying to cross sell them. For the customers who are not coming back, that’s where a white paper might be offered. That’s where you might refer them to the company blog and ask them to subscribe to the blog and read about what’s happening, different selling techniques for different audiences.
Guillaume: That makes a lot more sense to me. But the other technique could have made sense also, if it’s a low price item that even your high customers will spend just a few dollars each, maybe in a repeat cycle throughout the year, and you have 10s of 1000s of customers and millions of customers. So this is really interesting and actually really useful because as a business owner, you want to have some visibility and prediction for your sales, and also want to spend your marketing dollars in the right place. So if you know who’s likely high value, medium or low value, changing your marketing mix, changing where you spend your time, that you don’t cold call but phone call every single person a whole customer list when they have 10s of 1000s of customers and save a lot of time where to put your effort. I really like that. Well, anything else that you’ve observed from behaviors and changes as a result of COVID and how to capitalize on this?
Kevin: I have not observed a change in the path that customers take from a first time buyer to becoming loyal as a result of COVID. One of the things that’s been interesting is, there was this clear COVID bump that lasted three or four months, at the start of the pandemic, when customers were generally across the board were very responsive. They were kind of trapped at home so those were really good times for e-commerce. Since then, customers have largely reverted back to their 2019 behavior. And so what happens for most of my clients is they acquire a huge number of new customers, a small number of them place a second order, of those people Castle place a third order, and it takes about five purchases before the customer becomes what I call loyal. When a customer becomes loyal they have at least a 60% chance of buying again in the next year and they tend to order frequently if they do buy and so all the profit for the business is generated from those customers.
The path to get from first purchase to loyal status has not really been altered by COVID and it is an incredibly long and hard path for a customer to get to. So what I found is that my clients that have the most success, generally are really good at acquiring customers, and are really good at converting those customers to a second purchase quickly. And that timeframe is when you can affect the largest number of customers. If you have a loyalty program to cater to your best customers, it’s a small number of customers, it can have a big financial benefit, but you don’t really change the dynamics of your business. So COVID has not impacted how customers are evolving from a first purchase to loyal standards. That process has remained largely the same, it’s a long, hard process for the customer to go.
Guillaume: And let’s say if a company puts that forward as an objective, and say, let’s try to get more loyal customers. What would be the recommendation here that you try to get them to like five purchases or something like that? I guess perhaps it would be just that number five, based on the industry, the type of product sold. What else would you do other than the low medium high value path for the marketing mix?
Kevin: What most of my clients do when they want to talk about having a loyal customer base is they go and find all the customers who are loyal already and they try to make them more loyal. So that process doesn’t result in you having more loyal customers. So when I found my clients are the ones who are good, have a loyal customer base, focus all their marketing efforts on customer acquisition and the process of going from a first purchase to a second purchase. And so what happens is, if you increase the number of customers to go from a first purchase to a second purchase by 30%, you will likely increase the number of loyal buyers in two years by about 15 or 20%. So there’s this lag. And if you do your marketing activities well with all of your new customers and first and second time buyers today, you will have a loyal customer base in two years that is much bigger and more profitable.
Guillaume: Makes a lot of sense. So you just work at the root or at the foundation on how many new customers buy a second time. It’s just like a target that’s really hard to measure but when you increase that, of course, the rest will follow and many of them will actually buy a third time as well and so on.
Guillaume: Very interesting. Because this gives focus again as very often a merchant or a business owner can do almost anything there and needs to know what to focus on. So this is giving a clear direction. We’re going to focus on increasing the number of second time
Kevin: Yeah, and it’s an easily measurable goal. So for me, my clients about 30% of first time buyers will purchase for a second time. And so what we do is we say we’re going to change that number from 30% to 35% this year. That is a very hard goal to achieve. It is incredibly hard to go from 30% of first time buyers buying again to 35%. However, that 5% increase results in enough customers that two years from now, your number of loyal customers increases at a fast rate. And then those customers generate a lot of profit downstream. So I try to get my clients to focus on that window and try to get them to change their marketing tactics so that two years from now, they will have more loyal customers.
Guillaume: Very interesting, I call those golden nuggets. I like this stuff. Anything else that comes to mind that would help merchants and how they target their
Kevin: From a merchandising standpoint, what you sell goes a long way towards determining if you’re going to have a loyal customer base. So I have clients that are in retail malls, for instance, and if they sell boring products that customers generally don’t need, and they sell them at a significant discount like 40% off, you are going to attract the customer who in the future is only going to buy boring products at 40% off. And so you get yourself stuck in a cycle that is really painful. I have one client that sells a dress shirt, it’s a $24.95 cent dress shirt. It’s sold very inexpensively. They basically break even on the sale of this item. And they build their whole marketing campaign around that item. They’ve done the research and that item causes customers to buy from other product categories in the future. So if you buy the dress shirt, you may need a tie in the future, you may need a dress, shoes, you may need slacks, you may need a suit, you may need to complement this item. And so they have found that that item causes them to acquire customers who in the future are going to do lots of things.
So from a merchandising standpoint, you can research for every item that you sell. You can look to see in the future, if those customers who buy those items exhibit cross shopping across lots of categories. And there are specific items that you sell that encourage that behavior, every company has those. And I would say when a customer visits your website, if you recognize that that customer has never purchased from you before, you should try and feature the merchandise that causes customers to be likely to buy and then do lots of things positively in the future. So the assortment that you are showing the customer should be a little bit different than what you show other customers.
Guillaume: Okay, so it’s better a concept of the loss leader, but it’s not a loss, it’s a breakeven. They sort of proved that when you buy a shirt from us, if you’re a returning customer, maybe next time you get a suit or more expensive stuff, or just other stuff in general. It can be scary also for a merchant, when they do that breakeven technique that they’ll be acquiring the equivalent of that 40% off kind of customer, then they’ll never be able to sell them the full retail price of other stuff, or will they actually come back for other things. Do you see that as a bit of a risk when you put forward one product that is sort of the breakeven and low price point product?
Kevin: I think as long as you limit the damage to one item, or a small number of items, you are okay. So what I found is that my clients discount the whole assortment, and it’s 40% off everything this week only, or it’s Cyber Monday 50% off. Those are dangerous tactics. If you focus on something small, so that the customer buys something else, they’re paying full price for something else, then you don’t tarnish whatever it is that you’re doing with that one item. So my clients that have success tend to focus on something small, and then they hype that one thing trying to get the customer to buy them multiple other products on their first purchase.
Guillaume: And does that also apply to the system kind of a discount category or section when they see this a lot on e-commerce websites that they have one like a liquidation section but the rest of the store is a premium store, but these are major reality discounts?
Kevin: Liquidations are a necessity and so what you’re trying to do is two things with liquidations, you are trying to limit the number of times a customer buys liquidated merchandise, or if the customer buys that frequently, you go ahead and let the customer go down that path. You kind of try to separate out the rest of the customer base. Now you basically have two customer bases, the one that likes off price merchandise and the one that likes full price merchandise. What you don’t want is you don’t want the full price crowd to slowly leak into the off price stuff so that you eventually have no full price customers left. You want to have as many pure, full price customers as possible given the liquidation strategy you have to employ.
Guillaume: Which seems like a business challenge or risk here. How do you prevent that lick from regular customers going from the retail store to the outlet store kind of thing?
Kevin: In your marketing communications, you do not try to feature the off price stuff. You’re trying to constantly reinforce that you are worth selling a widget at $100, and that $100 is a fair price. And you are constantly reinforcing that message from a marketing standpoint. For the 15% of your customer base that wants off price, you make it available to them but you’re really trying to passively push the high price stuff. There was a day when a new marketing team came in in 2014. They said we’re going to use email marketing to push all the off price and liquidations activity, and within a couple of months those email customers were getting five marketing messages per week and had changed their behavior. And they went from buying items that cost $51 on average to buy items that cost $45 on average.
When they buy items that are $45 on average, in the future, they would buy more inexpensive items, items that are 35 or $40. And you could just see those customers because of the marketing message changing their behavior. So you want to mitigate that change of behavior. So this company was never able to go back once they let that happen. They couldn’t go back and sell at full price because they had trained their entire email database, which is 40% of their customer file, and they taught them to buy inexpensive stuff.
Guillaume: You almost want to start a new marketing segment and new marketing message and then put all your new subscription into that new segment to try to rebuild what you lost with your marketing team. Basically, they went for short term profit and then they damaged the brand and the client base.
Kevin: Yes, I agree with that.
Guillaume: Yeah. So that’s another golden nugget here. So don’t push your liquidation stuff through your marketing emails and so on, just make it available on the website if you find it, or you can have a specific kind of loss leader or breakeven leader in the full price section, and then you don’t offer a full discounted section, just one specific item that is like an amazing deal in this high end store to drive web traffic to that place.
Guillaume: Very good. So, any last golden nugget that comes to mind like this?
Kevin: The best way to describe what I encourage my clients to do is to shift their focus a little bit. Most of my clients are focusing on marketing channels, in other words, they’re going to pay Facebook X dollars, and they’re going to get Y number of customers and they kind of view it as a transaction. And there are a large number of people that I would compete with in my job, who would say no, you have to focus on the customer, and you have to focus on a personalized approach to each customer, and make sure you’re taking care of the customers. I don’t subscribe to either of those processes, though I think both can be very successful. So for me, I like to shift the thinking of, I have a prospect audience, I have first time buyers, and I’m going to welcome them. I call out the welcome process. When a customer buys for a second, third or fourth time, I call that emergence. The customers are emerging from where they started to becoming loyal customers. I then have loyal customers; it’s been my experience plus my client base that loyal customers don’t stay loyal.
Customers are always in a state of decay. Loyal customers are like a five year old car that you want. That car has been fabulous to you and you are loyal to it, that car is wonderful. But that car is always going to break down and need repairs. Eventually, that car is not going to be acceptable anymore, and you’re going to throw it out or sell it and get a new car. So loyal customers are like that, they’ve treated you well. The end goal is not to have loyal customers as loyal customers disappear eventually. Those customers become what I call retired pr lapsed, they don’t buy from you anymore. If you’re going to market to them, you basically do free, inexpensive marketing and you don’t spend money on them.
So what I try to teach is this continuum, that every marketing executive should do everything to fit somewhere in that continuum, and then the reporting to show how well you do and moving customers through that continuum. So if you’re going to do a campaign on Facebook, and you find that that campaign has 500 purchases, of those 500 purchases 400 of them are first time buyers, you know that that is part of your awareness or acquisition area of marketing. So those campaigns go into that bucket. When you’re doing those campaigns, that’s the thought process you’re going through. That’s who I’m trying to bring into the business now. When you do email marketing, for instance, you are largely talking to customers who are better. So the marketing message to those people is just fundamentally different. And I’m trying to basically get my clients to focus on this continuum and their campaigns should fit into the continuum, their personalization effort should fit somewhere in that continuum. Everything should have a reason for being within that continuum.
Guillaume: I really like what you’re saying and there is one more thing that comes to mind. So we’re talking a lot about high volume, large businesses and so on, how does that change if we’re talking about a different kind of business? Just for example’s sake, let’s pretend it’s like a Ferrari dealership or something like that which has a very small volume of purchases, but each one is a major purchase, like $250,000. How do you handle something like that when you have very few samples of data to do analytics and statistics?
Kevin: So from my standpoint, your analysis window changes. In other words, if you buy a Ferrari, you may buy another Ferrari in three or four years. Three or four years becomes a three or four month window when I have an apparel client, that customer’s second purchase happens within 30 to 90 days after their first purchase. For the Ferrari, it might mean that the next purchase happens three to five years later. So you extend the welcome period considerably. The welcome period, then, is that the car’s going to be under warranty. So your job is to get the customer to come in and get their first oil change for free, or whatever that is. Get those checkups because you don’t want that customer going somewhere else for service.
So your communications are going to be about the reasons why customers should take their car to you every four months for an oil change and what the customer gets out of that or how you’re going to treat the customer well, so that the customer continues those habits. Remember, earlier I talked about a client where they sold gifts during Christmas and their job was to get the customer to click through an email campaign twice a year during the non-Christmas period. The same thing happens for a Ferrari dealership, you want that customer to interact with you maybe a couple of times a year. And so you’re trying to do those things. And your window extends, not a short 30 to 90 day window but a long three to four year window.
Guillaume: Very interesting. So the rest stays the same, basically. But you just stretch it to four or five years instead of being just a few months.
Kevin: Yes. You stretch the window wide.
Guillaume: Cool. I’m coming pretty close to the end of the recording time, do you have any last idea that could help merchants?
Kevin: I am really optimistic right now about e-commerce merchants in particular. When I started in retail in 1990, retail in my opinion, was really boring. And it was set in stone, you had a process in place and it was very hard to change things. And when e-commerce came along, for the first 10 years or so, commerce professionals were building something from nothing. So that was a different kind of sport. So it’s fun to build a website, and it’s fun to execute marketing programs you could never execute before and to read results that you could never see. So it was a time of exploration and excitement that way. To me, the next five years are really about creating slightly different business models. Given what COVID has done to our society, it’s almost like you’re starting with a clean piece of paper, and you’re getting to redesign things that you wouldn’t have gotten the opportunity to do otherwise.
So for many of my e-commerce clients, they have a lot of profit that they generated in the past few years that they wouldn’t have had otherwise, they have money to invest. And that money can then be invested in either new products or new marketing strategies, or new brands, whatever you want to do. There is a window here now for the next two to five years, where you get to do things you wouldn’t have done otherwise, because you have the money available to do it. And if I was an e-commerce professional, I would be really excited about that. I wouldn’t be taking advantage of changes in customer behavior as more and more customers shop online, there’s just going to be more and more opportunities to take the profit you get from your business and reinvest in something neat and interesting. So I’m actually quite optimistic about where e-commerce can go. I do think that over the next two to five years sales are going to continue to leak from in store and purchasing into e-commerce and it’s going to be the job of e-commerce professionals to speed that process up and do new and interesting things with it.
Guillaume: I think you’ve shared lots of golden nuggets here. Kevin, thank you very much. If people want to get in touch with you what’s the best way to do this?
Kevin: You can contact me on Twitter at MineThatData, or my blog where almost all of my customers interact with me, Blog.MineThatData.com and I post there five times a week. So that’s a good place to see what I’m currently thinking or about what my current research topics are.
Guillaume: Awesome. Well thank you for being here today Kevin.
Kevin: Thank you. This was fabulous and I appreciate the opportunity.