New Consumer Insights Reveal the Hidden Path to Purchase | Shawn Schwegman at ConnectCMO 2020

Want free consumer insights specific to your industry? Click here.

Transcript:

I won’t bore everyone with my background but I'll point out a couple quick highlights just to set the stage. I've been fortunate enough to be both CMO and CTO throughout my career. I worked at Overstock.com from 2000 to 2005. In that five-year period, we went from about three million in revenue to over eight hundred million in revenue. That was a phenomenal ride. Then I worked at Cha Cha, which was a question-and-answer service that scaled up from about 6 million to about 80 million monthly visits and became a top 40 web property. At Overstock, I went there to be the CTO but was asked to take over marketing. When I was in that role, the team discovered a couple of things that just led to massive scale - and I've been reapplying those learnings throughout the past 15 years until finally forming DemandJump to really productize that knowledge for marketers. 

We'll talk a little bit now about the challenges marketers face. What are they? 

Marketers have blind spots, right? We guess and we gamble and we're forced  to treat our marketing budgets much like a poker bankroll - lots of A/B testing, lots of trial and error. We do that because we don't truly understand consumer purchase behavior. There is no map. When people talk about the customer journey, or they want to create a consumer journey map, I talk to a lot of brands that say, “Well gee Shawn. I know what happens when someone gets to my website. I know how they navigate around and how they ultimately buy.” But what I would assert is that that's really the end of the journey. The beginning of the journey started way out on the internet and again there is no Waze for consumer behavior. There is no map and that means that we're really forced to make educated guesses about what content to create, what keywords to bid on, which websites to advertise on, what audience segments we should target, and so much more. So, at the end of the day we're really guessing how she buys, and what she wants. And what we would all love is to take that guesswork out of the equation. But the truth is that we've been guessing for over a century now.

I know everyone's sick and tired of seeing this quote from John Wanamaker, but we're still guessing today. And that guesswork is costing companies their livelihood. 90% of startup companies fail. They fail for many different reasons, but I would say the primary reason that most of them failed, no matter what study you look at, is they lost touch with the market. They don't understand their consumers. 

There’s a lot of wasted spend that goes into chasing that customer. Is this just a small company problem? No. The bigger they are, the harder they fall, right? More money, more problems. Unfortunately, in 2019, a lot of wonderful brands we all know filed for bankruptcy. Over ninety three hundred stores closed their door in 2019. So it is affecting business. 

A lot of this has to do with marketing not being able to keep up. A lot of it is also because the rate of change has never been greater. There’s also a lot of bad data. A lot of waste is caused by bad data and in turn bad advertising. Deloitte ran a study and found that really only 29% of audience data is more than 50% accurate. I went to one of the popular DMPs (and I won't name who it is, you’ll probably figured it out) but you can kind of see all of the data that they have on you, and I'm apparently a millennial and over the age of 65 at the same time. I don't even know how that's possible, but that bad audience data is causing a massive waste in marketing. 

It's not a marketers fault or a CMS fault. But unfortunately, we're paying the price for it. To add insult to injury, the rate of change is exploding. 90% of accessible data was created in just the last 24 months. Google releases the amount of searches that are done every year - and there's over two trillion searches made in a single year. What's even more mind-boggling is that 20% of those searches are brand new. They've never been searched before. And this actually increased from 16 percent to 20 percent in a single year. 

So what's driving that? Well, a lot of it is mobile, right? We're talking to our search engines these days. We're asking full-length questions. Gone are the days where those sort of top-of-the-bell-curve terms work. Marketers have to go into the longtail. Consumer behavior, I think, is shifting faster than people actually believe it is. 

To make matters even worse, there's two billion websites on the planet. A lot of times, when we target ads, we're chasing that audience around two billion websites. Some of those websites work for our businesses and some of them don't. So, how do you know which is which? 

And how do you rise above the noise when there's almost four and a half million blog articles produced every single day. It's just a data and content explosion. 

And the final thing I'll say on this is - there are over 7,000 marketing tools out there and none of them really solve the holistic problem. There's a lot of point solutions out there. There areΩ a lot of great tools, but as a marketer, we're still gambling unfortunately.

So is this a life-or-death situation? We believe it is. It's bankrupting companies. Every single year, you see the numbers rise. It’s costing investors an absolute fortune, and unfortunately it's costing CMOS their jobs. The CMO has the shortest lifespan in the c-suite. And those numbers are getting worse, not better. 

This problem has never been solved. So, what do we do? Where do we go from here? I'm gonna give credit to Amit Shah here, who is the CMO of 1-800 flowers. He said one of the things he is shown a lot is competitive intelligence data. He said, it's all great and everything but how do I know I'm not copying from the dumb kid in class? It was a phenomenal statement. And it really changed the way I thought about some things. Competitive Intelligence and Market Intelligence has worked for me at many different companies over my career, but that idea that Amit mentioned was a seed that grew roots. 

So, over the past 2 or 3 years, we’ve really set out to focus on what consumers are doing. Because as marketers we tend to work inside out. We we think about our product and we guess how we should market to consumers. Can we guess how they buy? What if you had to flip all of that on its head and start with the consumer first and work backwards? What if there was a way to understand consumer behavior? 

I'll dive into a couple of examples. I'll be real transparent here, as we were developing this product, we started using it for for ourselves. You know our challenge, DemandJump’s, was we wanted to drive leads. We had created over a hundred and seven blog posts to do so. So you can imagine how much time, labor, and effort went into a hundred and seven blog posts. But we had really limited results. So, as we started building out this product, we made a few pretty big game-changing discoveries that I'll share freely here. One of the things that we wanted to rank for was around the term “customer acquisition” - and in particular, we wanted to rank for “customer acquisition cost.” So we used our product for ourselves and it told us exactly what we should include in that article. 

We went number one in Google in two weeks. Now most SEO consultants will tell you three to six months to rank well in Google. And I would say we didn't solve this problem by trying to reverse-engineer how a search engine worked. We think that's sort of a recipe for disaster because you're always one algorithm change away from extinction. The way that we solved this was to really look at how consumers behave when they care about customer acquisition cost. What are they researching? What do they look for? 

We baked that into that article. That article only has about 350 words on it, but the words matter a lot. And you’ll see this is where, when science meets creativity, you get a phenomenal end result. Not only are we ranking really well for that one question, but that same article is ranking for searches like “customer acquisition cost benchmark” and “customer acquisition cost by industry.” All of the green that you see there is our position in Google. That one blog post changed the trajectory of the company and it's driving 30 leads every single month.

What if every single blog post you created had those same results? We'd be swimming in leads. And these aren't just, you know, looky-loos as they're called. These are highly qualified leads - people that are actually looking for a solution like ours. 

So how do you rank quickly? What content matters? We weren't ranking at all for things like consumer behavior, even though we wanted to. So again after, you know, years we're finding our product, since we use it for ourselves, we’re identifying exactly what to write about regarding consumer behavior. We're able to prioritize the right content to create for when people turn to Google or websites or videos.

You can see how fast we moved the needle. Really, in January we had almost no content around consumer behavior. By mid February, we started ranking. And just last week, I ran it again and we are showing up for over three hundred terms and questions that really matter from a Google search perspective. 

While we're in this pandemic, we've decided to really focus in on content. We're on the first page of Google now for “consumer insights”. We’re on the first page for “consumer behavior” - and the second page for “marketing attribution”. We really only started those content initiatives about two months ago. So if we can do it, I think anyone can.

But I'll share a couple other quick case studies. Express has a investment in a retailer called Homage. They they were looking to expand nationally on a limited budget. They weren't really ranking very well. They were behind their competitors in the search terms. But all of that green was the very fast impact they had in rankings for the things that mattered to their business. The results that they saw was a 22 percent lift in organic search in just six weeks. 

And again SEO consultants will typically say it takes three to six months. But when you architect and craft content with consumer behavior in mind, you can see the results a lot faster. 

Another one that we'll spend a little bit time on here is Cummins. They’ve gone through a lot of digital transformation over the last decade and they're challenged. As you know, most of our challenges as CMOS are we want to acquire more customers. We want to improve ROI. 

We've been working with Cummins for a little over a year and we've really helped them understand how to use artificial intelligence to understand consumer behavior. This allows them to align their ads, to align their content, etc with consumer tastes.

I want to take a second here, after I talk about some of the results that Cummins is having, to explain how this consumer behavior data is highlighting this hidden path to purchase and how how you can use it, not just for content creation, but for ad targeting. Cummins did exactly that. They increased their conversions. They also had a hundred and fifty percent lift in their click-through rates on display ads. They also saw a sixty-two percent drop in cost per conversion. So they decreased their cost per conversion and dramatically increased their conversions. And that happened literally overnight. 

I wanted to kind of talk about display ads and how the world has just worked. Sometimes I think we do something for so long that we just get used to doing it and we stop questioning things anymore. If you just think about audience targeting for a second, let’s look at it from the consumer lens. How does that person, that customer, that cookie, get into that audience? 

Well they visit a website, right? If I care about cars, I might go to car magazine.com. Now my cookie is placed into an audience segment for the next 30 days for people that are interested in automobiles or cars. And advertisers buy that audience segment and they spend a lot of money buying that audience and then chasing that audience around for the next 30 days serving ads on totally irrelevant websites. But the consumer typically moved on, right? And the advertiser wastes money. But what if you just shortcutted that entire piece? What if instead of buying the audience and chasing them around for 30 days when they're no longer on the site that matters, what if you just targeted those websites? You’re still reaching the exact audience, but you're hitting them at precisely the right time - where it matters the most.

To kind of recap this, the consumer visits a website. Their browser gets cookie-ed and they get added to this audience segment. Advertisers buy that audience, but you're not serving ads to them in the moment when they're on that website that matters - when they're looking at the content that matters. UYou're serving ads to them over the next 30 days randomly on different websites - and again there's two billion websites on the planet. So we're just chasing that audience around. And we're wasting a lot of capital. That’s why I believe display and remarketing don't have the results that they could. If we just thought differently about it. 

The other thing I would say is if you're paying attention to the news, cookies are crumbling. And they're crumbling pretty fast. Google has announced chrome will delete cookies automatically. Safari already made these changes. There are all kinds of privacy concerns and challenges here, so we could be looking at a completely different world in the next year when it comes to audience segmentation.

But you can, instead of targeting the audience, just target the audience’s behavior. If you know what websites people are on right before they buy, why not just target those websites? Then you don't have to pay for an expensive audience segment. And the consumer is going to pay attention a heck of a lot more. If I want to buy a big-screen TV and am looking at TV reviews, chances are I'm gonna pay attention to an ad from Best Buy offering me some discount on a great TV. But I'm probably not gonna pay attention 25 days later when I'm on a finance blog looking at how to save money. But unfortunately, this happens all the time today.

So when it comes to consumer behavior, I would say you have to consider a couple things. Number one: after five years of trying to build this out and making a lot of mistakes along the way, consumer behavior is a graph. It is not a problem that you can solve in a sequel or in a database or in Excel. It is an interconnected graph.

The other thing I would say is: the data that you need to understand consumer behavior is outside your walls. You have visibility into your audience once they get to you, and you might even know the the site they were on right before they got to you, or the search term they used before they got to you. But the real journey started 3 or 10 steps prior to that - and that's the data that matters the most. But even if you if you get the data, what we found is that the math is far more important than the data. Probably by a factor of 10x. Again, there's so much data out there. You can learn from social. You can learn from search. You can learn from different websites. But connecting it all together in a graph database is what we found made the most sense. And we actually are up to about 45 or 50 different data sources that we found over the years that add incremental value to that picture. But again, it's how you process that data and the math is more important than the data by about a factor of 10x. 

The other thing I'd say is if you are looking for solutions around consumer insights and consumer behavior, just know that it's expensive to build. It’s pretty fast and affordable to buy it from whoever you're buying it from. 

I would make sure that you own the data at the end of it. You don't want it to be leased, if you will. You want to be able to get it back at the end of the contract. You want to own that data. 

Where I've gotten the most value over my career is really understanding when you overlay that data on top of your own data, it starts to very quickly identify gaps and opportunities. When I think back to my Overstock days, what we learned. At Overstock, again, we went from three million to 800 million in about two years. We were really struggling with growth rates. There's a company called Smart Bargains that was kicking our butt. They were a lot bigger than us. And when I took over marketing, we spent a lot of time basically forgetting everything that we did and going out externally and buying a lot of external data. And the magic happened when we took that external data and overlaid it on top of what we were doing. That immediately identified gaps and opportunities. A few years later, I think smart bargains ended up going out of business. And we really catapulted up to eight hundred million.

But the other the last thing I would leave you with is that, from what we've seen, the consumer behavior data adds value across the organization. A lot of our customers will use it from a marketing perspective to help target with absolute precision, but very quickly we see product teams crave the same information. As a matter of fact, one of our customers uses the data to determine what t-shirts they buy next, or what products they go make. So just know that consumer behavior can add value across the organization. The other area I would say that consumer behavior is really helping companies is around is for digital transformation. Digital transformation really starts starts with understanding the customer. We digitally transform as companies, probably because we almost lost touch, or aren't as connected as we want to be with customers from a digital perspective. 

So just keep in mind as you're looking at the process for customer journey maps. I was recently on a webinar with Forster where they kind of highlighted a wonderful program and seven step process. But it's very time-consuming and probably by the time you get done with that customer journey map, it's almost already obsolete because of the rate of change. So we've seen another use case there in really helping to automate or shorten the amount of time it takes to create a customer journey map for your organization. 

Given the times we really want to help companies out more so we're happy to provide some free insights if this is important to your business. So all we really need to know is what's the one thing that you really care about as a company. If I'm Nike, that would be running shoes. If I'm the CDC I care about coronavirus. So what is it that your brand cares about? During this pandemic, we're providing some free insights in the hopes that they help and we're happy to run some analysis and provide you with a pretty healthy

consumer insight report or consumer behavior report for your business. This works for b2b for b2c, for pretty much anything. So with that said, we've got about 10 or 15 minutes. I'd love to take any questions that you might have.