The Unexpected Solution to the Acquisition Problem

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[00:00:21] Richard: Hey everyone. Welcome to the E-Commerce Playbook Podcast. My name is Richard Gaffin, the self-styled, I guess professor here at Common Thread Collective. And I'm joined today, as ever by the CEO of Common Thread Collective Mr. Taylor Holiday.

We're gonna get into kind of an interesting topic today. One thing that we talk about, in our content here at CTC all the time is the acquisition issue, right? CPMs keep getting higher, advertising keeps getting more and more expensive on Facebook and in other paid social platforms.

And the solution is clearly not to just make better Facebook ads. It's clearly not some kind of trick in platform in order to make your ROAS look better or whatever. We've spilled, a lot of ink on why single account ROAS is a bad thing in general. But, Taylor you have an interesting idea about what the solution might be and it doesn't necessarily have to do with the quality of your Facebook ads.

[00:01:07] Taylor: Oh, I'm excited about this one. Is just like the output of things that are happening around me, right? And so my reality right now is that I spend every waking second, in my dreams in the shower while I'm working out, trying to think about how to solve for Facebook ad efficiencies and new customer acquisition and growth for our customers, right?

And it plagues me in this moment to do this. And this is why the retina test is so exciting and the CLV to CAC optimization is one thing, but it's not the only way and it's not the only way we are gonna try and solve this problem in the future for our customers. There's another way.

And I've stumbled on this sort of accidentally in our own journey as an agency, which is that as an entrepreneur there's this like evolutionary skill that you develop that's about survival. And that skill is really about sales. It's about going and getting the next person to say yes, to keep you alive. Because when you have no customers, the only way you eat, so to speak is if you get more customers. And that becomes the skill that you develop that, you hone over time. That often is what grows your business.

And in that though, there's a danger that what you can lose is care for the customer once you've acquired them . Is that you can sort of think that you've gotta move on to the next sale and you move on. And I see this a lot in growth marketing too which is that, once they're across the ROAS threshold, they're sort of somebody else's problem now, my job is to go get more of those ROASERS, go get more customers. And it's like this exploitive extraction from a human.

So I've been going through this reflection of we have customers at CTC that are worth like millions of dollars to us that are fundamentally, we aren't where we are without Bear and Edward and a bunch of these folks that like committed to us to go on a really long journey and have been partners for a long time. They're just so critical to who we are.

I think I've lost sight of them in some way. We talk about that as a marketing department, like we create content, does it go to the public before it goes to our customers? And how customer centric are we really? Right? And so I've been doing a lot of like personal reflecting on this.

And inside of admission, our learning community. I teach these masterminds ,where I have groups of people, different leaders and we go on these like six month journeys together. And I'm doing this for a couple of cohorts right now. And the first thing I do is I make them reflect on this idea, this idea that , how like customer centric is you, how amazing is your customer experience?

So we do this reflection where they say, what was the best customer experience you've had in the last year? Oh, I went to this chef and he did this amazing thing. Or, I walked into this retailer and they knew my sizes and started lowing the dressing room for me. It's like, okay, if that's a 10, if that experience is so good that you're here telling stories about it, what's your customer experience like? Is it a four? Is it a six? Are people telling other people about it? 

Then we ask okay, go into Shopify sort by amount spent. Of those 50 people, how many of their names do you know? Is it one? Is it zero? Is it all of them? And what's the communication been like with them?

How much have you treated them? Cause bear matters to me. These customers matter to you. I was looking the other day, are women that have bought $8,000 worth of face cream. That have ordered 81 times over the history of the brand. We aren't where we are without that commitment to partnership in the business.

Right? Okay, great Taylor, customer experience, matters. Well, why is this a solution to your acquisition problems? If we accept that in some fashion, the cost to acquire the next customer and the next customer and the next customer , has a certain gravitational element to it, meaning it will always rise on some slope over a wide enough window. There's days where it goes backwards. There's weeks where it goes backwards, but over the long enough window, the cost to acquire a customer will rise. Then how do we win this game?

And I believe that there's two answers, okay? One is you increase the value of each individual customer. Their LTV goes up, they spend more money with you to offset the cost to acquire. them. This happens through product expansion. This happens through subscription. There's all sorts of tactics, right? 

But the second way is that you increase your viral coefficient greater than one. Okay, well...

[00:04:54] Richard: So talk to us about that. Taylor yeah. What does that mean? 

[00:04:57] Taylor: So we all just came outta Covid era. We heard a lot about, the viral coefficient. The R0, right Richard. You were very conscious of the R0 during covid days. So do you know what it means? Do you know what it means? What happens if your are nots greater than one? 

it's the measure of for every one person that's infected with the virus, how many people will they infect, okay? And if the R0 is greater than one, you'll have an exponential growth of the virus. Because for every one person, they will bring more than one with them. And if you use that on a curve, it creates not linear growth, that's exponential. And draw it as a tree, one person does two, then each of those two bring two and see how quickly you realize you have a really big tree of people. 

This is a premise in software that people think about all the time. They think about growth hacking to a viral coefficient. And so the reason when you log on to link LinkedIn, they ask you to connect your contacts so that they can invite people, is all about this viral coefficient.

But we don't think about this much in consumer product, because it's not as obvious to track and to measure. Seth Godin has this, principle that he calls Sneezers. Okay, so again, we're talking about viruses, we're talking about viral coefficients. We're talking about sneezing, spreading ideas or products.

And so the idea is a sneezer is somebody who takes your business, your idea and spreads it into the world. And identifying who those people are and empowering and equipping those people is really, really, Important.

So if we go back and we think, okay, I asked a bunch of people to tell me about a customer experience that was so good that they had to share the story in that moment. They all just sneezed on me. They sneezed me, the retailer, the brand, the business, based on the quality of customer experience.

And so I fundamentally believe that making your customer experience worth talking about, worth spreading is a story worth telling is actually one of the critical keys to offsetting rising acquisition costs and allowing your business to continue to scale? it is that essential.

[00:06:45] Richard: Yeah, that makes a ton of sense. We talked about this a little bit in our conversation prior to hit and record, but doing that effectively requires understanding your customer as a human being primarily because the reason I think about that is that this sort of talk of virality or getting people to engage with or become ambassadors for your brand or whatever, it's often also frames this sort of like, let's make the numbers just work out. Play, right? 

Like, can we create a piece of content that people are going to love to share and that's the way we're gonna create viral engagement for our brand or whatever. Now obviously that's not what you're talking about specifically, although perhaps it would play a role, but what are the components of viral customer experience?

[00:07:27] Taylor: Richard that's a brilliant question. We didn't even plan that.

[00:07:29] Richard: Thank We sure didn't.

[00:07:31] Taylor: When you ask people this, go ask your friends, tell them to tell you about their best customer experience and there's a set of common traits that are in there. And here's what some of them are that I've identified.

 It's personalized. It feels unique to me. So the example I gave, a woman walks into a retailer and the clerk knows her and starts filling the dressing room with her size, her style, cuz she knows what it is. Wow. You know me, I, amidst all the customers, I am special. I want to feel special. It's personalized that's a very common one.

A second common attribute is, it's unexpected. It's beyond the scope of what you thought you signed up for. I said this, they knew it was my anniversary and they brought me a free dessert. The chef came out and asked us how we were doing, there's something that happened that was beyond whatever the expectation was.

Okay. Those are two very common traits, so it's personal and it's unexpected. A lot of times what people will say is like, oh, I'm gonna make a better post-purchase email experience or I'm gonna include something in the packaging. And it's like, everybody expects to get an email after they buy a product and everybody expects there to be something in the box. That's not enough in and of itself. And so Taylor they're like, okay, this is pretty ambiguous. What do you mean? Well, let me tell you what somebody in my mastermind did this is freaking.

Shout out to Kenny. At the Wander Club, they sell like charms where if you travel, to sort of memorialize the experience that you had they do it for like baseball stadiums and so maybe people are going around to visit every baseball stadium or every country or all the capitals of the us whatever. And after we did this first session, this is the kind of thing an entrepreneur who like gets an idea and is like, yes, I'm gonna go action against it now. I love this so much, so much more than I expected him to do. So much so that I'm telling his story right now, right? Beyond my expectations. 

So we say, all right, yeah, you gotta think about this. He goes, Hmm. He hires a person that is expressly responsible for creating magical customer experiences for his existing costume. So he creates a role. Okay. The second thing he does is they have a post-purchase survey called Inquire. He sets up on the post-purchase survey, tell us something about yourself and why this charm matters to you. A very open-ended question for people to gather intimate knowledge about their customers in ways that are beyond the sort of general demographic.

He sets up a Zapier connection to pull all of those responses into Slack, creates a Slack channel called Customer Stories. Every one of those stories feeds to the whole company and his new CX person and the stories are amazing. He starts getting people saying things like, Me and my son are on our 16th visit to a stadium, we're gonna get one of these every time together or he told me like somebody was like, I was diagnosed with a terminal illness and traveling is gonna be the last thing that I do, like intimate details of their life.

Every single person that fills it out gets a personalized email from Kenny's email, by the CX person referencing their story and why it matters to them and saying Thank you for participating. Personalized, unexpected response from the CEO based on their story. I can't believe you read this. This is amazing. Thank you so much.

Then that's not it though. He's not even done there. He then creates a second Slack channel. This Slack channel is order value greater than $300 and filled out the survey. Oh, these are VIP customers. These are whales.

Now we're actually not just gonna respond to their thing. We're actually going to use money, their money to surprise and delight.

Maybe we're gonna buy them upgraded seats at the next stadium they're going to. Maybe we're gonna buy them a hat or dinner at the country that they're traveling to or a gift card to the best, whatever. We're gonna say your story really matters to me. You went out of your way to offer my business a lot of money, I'm gonna give back to in a way that shows I genuinely care about you. 

When he's telling this story, I watch 12 people in a room start as fast as they could, typing, taking notes and I stopped and I went everyone, I was like when we talk about creating sneezers, like you're competing against Kenny, he's gonna kick your ass. And your product's gonna die because no one's gonna tell anyone about it.

And that's the reality that we all live in, is like, is anyone gonna tell anyone about the experience that they had with your product? or is it just gonna die and you're gonna have to go acquire more customers and more customers and more customers and they're all just gonna die, Right?

And so I think that is like very tangible example of an incredible way that I believe is gonna make a meaningful difference on his business

[00:11:50] Richard: Yeah. Genius. Be like Kenny is the lesson here. It's the genius of finding a way to essentially automate something that's In and of itself very human and is kind of not automatic, is really, really genius. I was talking about this idea of having your Slack channel just inundated with value proposition material to work from.

It's incredible . There's a valuable lesson I think for creative here as well. The customer experience and the stories your customers tell need to inform you're advertising, acquiring those new people. It's not that they're not individuals before you acquire them and once you've acquired them, they suddenly become human to you. But you have to kind of take the human stories you're being told and turn them into, top funnel outward facing messaging as well.

This is more like a principle that I think about a lot when it comes to creating ads . We as marketers and as probably human beings as well, are just really bad at observing our own experiences of shopping. It's like, what do I like? When I buy something .When I'm creating advertising for other people or that's for some product, whatever, I don't necessarily think about that. I think about the data. I think about all of this other tools that we create for ourselves but I don't think as much as I should is like, how do I feel I make a purchase or when the company screws up and then they make it right?

 What are the things that feel good to me? 

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[00:14:10] Taylor: And I'll say this to our designers all the time. Are you compelled? Are you stopping in your Instagram feed? Think about the things that have stopped you. Right.? 

 Maui Jim is one of our customers they sell sunglasses and we were talking about, the framing of purchasing sunglasses. And I was like for me, I got a big nose. And so sunglasses, like the whole thing for me is like, does this make me feel worse or better about this feature that I'm insecure about?

The entire buying process is predicated on that one idea. And everything that I think about in that process is related to how can I get an answer to that question? And it's really hard for me to buy sunglasses because I don't know how to answer the question for myself without really just going in and even trying them on in a store is an insecure thing for me, cause I assume most look bad on me. It's a hard thing for me. 

I know I'm not the only person like that. There's a version of that story for a bunch of people, for a bunch of products. And that the thing that you need to get to is somehow, get into their being and to understand them in a way that's like listening and caring and extracting out of them what matters to them.

And that's why I like to start this exercise with, tell me about something that mattered to, because what it does is it creates a feeling, right? You know what it's like to feel special and I'm guilty of this, like the data and the ROAS and the LTV to CAC and the... and I'll go all day in that world. And this is my weak point. I have to stop and I have to go, do I care? Do I actually care?

[00:15:30] Richard: Yeah. Going back to that idea of shopping being sort of an emotive or emotional behavior too often when you create advertising, you're trying to solve an emotional problem with logical solutions, right? If I can sit down and logic out what somebody would like, it's gonna work. Cause oftentimes let's say I'm selling women's apparel. I don't know what it feels like to buy that. I'm a human being, so I know what it feels like to buy something, but I still have to get in somebody else's head and the best way to do that is to listen to what your customers are saying. And so it has that sort of one, two punch of improving your acquisition and improving your CX at the same time.

[00:16:02] Taylor: Part of it is I'm gonna turn, Kenny's thing into a service at CTC like, I really am. This is gonna happen. So if you're interested in this, I want talk to you. Because I really believe that there's this whole future of business that is like ,a bunch of people running off and going, like, again this is part of my attribution thing. It's like we're gonna solve the advertising problem with these technical improvements to acquisition and I'm just like, not the future I see. It's not the future in my head There's something else. 

And, there are people that are still winning right now and what is true about them? One of the things I've talked about on Twitter is that you know, who's winning right now? Religions, products that are religions. The other day I put on a tweet that said like don't start a brand, start a religion. 

[00:16:41] Richard: What's an a example of one of those?

[00:16:43] Taylor: Okay. So things that are oriented around diets or healthcare related stuff. There's a company called, Heart and Soil that I'm close with the founders and team there. They're awesome dudes. And I went to dinner with them and when they tell me about why they work at the company, it's a conversion story. They're telling me their testimony. For those of you that grew up in the church world, right?

 It sounds something like I was sick and now I'm well. They don't say like, I applied to the job and the benefits were this and the role was da, da, da. It has nothing to do with that. This is my life. It transformed me and so of course I'm here and their customers are the same. 

You solved something for their life in a way that they're like, I'm never leaving, buy something else? And their LTV reflects that. It's one of the most incredible businesses that I've ever seen.

And so it's in that sense, the experience of the use of the product is so connected to their identity of who they are as a person. That's what religion is. It becomes the primary identity attribute of a person, right? It's that before anything else they're a Christian, they're a Muslim, they're a Jew. Like that becomes the primary identifying attribute. And so if you can develop a product, where these things become primary identifying attributes of someone's personhood you get these things that are like that where it becomes a statement about you. That's powerful.

[00:17:56] Richard: To touch on a CTC pillar, which is that no two businesses are alike. I think both brands that we've mentioned so far, Kenny's brand the Water Club and then Heart and Soil. Both lend themselves, let's say to that type of religious or deeply personal experience with the brand.

So for instance, Kenny's brand is about s entiment already. It's already kind of fundamentally emotional. So for people out there who have brands that do not feel fundamentally emotional. Like we sell moist towels, whatever, probably not gonna build a religion around that, but what can they do? Build me a moist towel. Religion

[00:18:31] Taylor: Okay, so Ogilvy & Mather. Me And you advertising 1 0 1. 

The Classic Ads . The ad for Guinness. What Guinness does is they don't tell you about the flavor or the features. The classic ad that I'm referencing, if you look up David Ogilvy Guinness Oyster ad. It's a grid of 15 different types of oysters and a fact about all of them. Because the kind of man that drinks a Guinness , knows about the oysters at the bar and so it becomes the kind of person, again, Guinness is an identity statement about who I am. 

Go to Dove. When Dove does the ad, where they have women look at themselves and say, are they beautiful? Or how would you describe yourself?

Or whatever. That legendary. Again, they're saying, we're the kind of company that sees you as beautiful as you are. So using dove Is an identity statement that says, I am beautiful.

This is the problem. You can't win saying that your soap smells better than everybody else's soap because that's subjective. And it's probably not actually true. And even if it's true for some people, it's not true for all people. 

You have to go further, right? What does this product say about who you are? And that could be anything. You could turn toothpaste into an identity statement, and so I think that's where classic marketers knew this. They understood this. They had to.

It's funny, like I tell people right now a lot they're like, how do I buy in my ad account? And I'm like, like you're buying on Tv. The old days wait for the data. The data iterate. Change the headline. Wait for the results, fix it a little. Improve, improve, improve. Iterate, iterate, iterate. It's gone. Can't trust the data anymore. Feedback's broken. You're not really sure what to do, so what do you do? Make a great fricking ad and publish it and distribute it. 

[00:20:10] Richard: Make hits. That's what it's all about. Okay. So if you wanna do this exercise with me, create a l et's call it religious in this definition, CX post-purchase experience for this moist towel company. And I picked that specifically because, I could see it like really being executed poorly where they don't really think deeply into why people use moist towels and they just decide to start creating like a cool brand around it.

So were you to create this type of experience for a moist brand, how would you do it?

[00:20:36] Taylor: Okay, So there's a few different things. One, let's use the Kenny principle here. So I'm gonna ask them like, what's the last spill you cleaned up? And tell me about what happened. So in the post purchase survey, my daughter spilled cranberry juice on the couch and so we immediately had to rush and pick it up.

Ooh, okay, so now I know some things about you. Cranberry juice, you have a daughter. I'm gonna send a sippy cup with a cool lid. I'm gonna extract the information and I'm gonna build this really deep connection and caring to the individual experiences of the users.

Okay. So that's like, create a magical experience based on the information. Let's take the Kenny principle and let's apply it there right. Now , in terms of the religious experience. The question is like, okay, moist towelettes, are these like wipes? What do we have here? 

[00:21:13] Richard: I guess in this it would be like, wet ones or something like that, where it's just like you have 'em in the bathroom. Maybe it's for your kids primarily or you use it as just like a hand sanitizer to have around.

[00:21:21] Taylor: So here's the premise. The kind of person that has moist towels, understands the experiences of people that need them and they're almost always slightly embarrassing and a little bit, bad and so you're the kind of person that sees people in their weakness and cares about it. Okay? So let me give you examples.

My daughter, she's five, she's learning to wipe. She's gonna hate me for saying this, right? She's a girl that creates a slew of problems potentially. And it's like, she has brothers and it kind of becomes this embarrassing thing that she has to work on together. And so there's this whole process that my wife has of like really helping her become good at this using moist towelettes and that kind of person that sits with and cares and needs for that.

And then I contrast that I have my wife doing that same thing for an elderly person. It's like, hey, you know that part of life when you can no longer actually wipe your own ass? That's embarrassing. But what is it like to humanize someone in that moment? And the people who use this product, they're those kinds of people.

They humanize the elderly in that moment. And so this brand on your shelf, it says to a stranger walking into your bathroom, I care about the experience that you're having here and it matters me. I'm that kind of person. And so I build this religious experience around the kinds of service oriented humans that offer wet wipes, and it feels so frivolous, but you could see it, right?

It's there. You could feel it.

[00:22:39] Richard: Definitely. And, I definitely see there being a version of the customer experience, process for that brand where they actually demonstrate that care and then the demonstration of that care becomes the ad that becomes the kind of building of the brand or the building of the movement, so to speak.

I'm not going to get my customer to, say out loud, I'm part of a wet towelette movement or whatever. They're never gonna say that, but that's fine. Ultimately, they're gonna be loyal to you in the way that matters most to you.

[00:23:06] Taylor: I reference a lot a company called First Media that is one of the best content creators on the internet. I always say if you want to know great content creators, look at media companies more than brands, because media companies have to make money on their media. That's their money making. 

So they own Blossom and a bunch of Facebook pages that create socially native viral. content. I think at one point for three years in a row, they had the most viewed videos on Facebook, really, really viral content.

 And I heard their, lead creative director, speak once. And he said that they had a very simple thesis that, their entire media development plan was built around one metric ,i It was share rate. And if they knew if they could get the share rate from the Facebook average, which was like one and a half percent to 3%, that they'd have a viral hit and they could tell within 10,000 impressions if the video was gonna be a hit or not.

And so the question was what generates share rate? And so they said the entire thing is, you have to create for your audience's audience. A lot of times we make the mistake that we are trying to be the hero in the customer's story. And the key is to make the customer the hero to their audience. 

So they use this example where they're cooking with a crockpot. And they said most people, when they make a crockpot ad are like, check out our crockpot, it's so much better than the other crockpots. And it heats up faster than the other crockpots, and it's got a better warranty. And it's made from cooler ceramics. 

And the way that they sold crockpots was h ere are 10 DIY party tricks that you can do with your crockpot to be the star of your next hosted gathering. And it's like how to make hot dogs and fondue and all these clever ways to use a crockpot. And the whole point was they had a persona, a woman in their mind that was gonna host a party and they wanted everyone at the party to go, "Claire, you're so clever". "This is the most interesting use of a crockpot I've ever seen"

And if that happens, Claire is a hero and Claire likes your crockpot because you made her special in her world. And that's your job is to think about it. And I think that framing is something that stuck with me forever, is that I'm creating for my audience's audience, how do I make them a hero in their world?

[00:25:03] Richard: Yeah. How do you remove yourself from that conversation a little bit? I think that's really, really hard to do. Something we were talking about earlier too. The Kenny method of getting information in from actual customers ,helps you take the step towards getting yourself out of the conversation and saying, It's not about us, it's not about the brand, it's about you and the people that you know.

Anything else you wanna hit on this?

[00:25:24] Taylor: Go do this exercise. Ask yourself what's the best customer experience you've had in the last year? Write it down. Tell yourself the story. Tell someone else the story. Be ruthlessly honest if you are capable and say, where is my customer experience on a scale?

 If that experience that I had is a 10, where am I and what could I do right now to improve it a little bit? And if you take that away from this podcast, I think we've actually helped your Facebook acquisition,

[00:25:46] Richard: Yeah. Right. At the end of the day, it's gonna get better on the front end, even though we started out by saying it's not about improving your Facebook ads.

[00:25:52] Taylor: That's Right.

[00:25:53] Richard: Spolier alert it will. Thanks again for joining us on the E-Commerce Playbook podcast. Please remember to rate and review, and if you're watching on. Also remember to like and subscribe. It really helps us out. If you're interested in starting a conversation with us about retention, customer experience, and just working together in general, please don't hesitate to drop us a line at Common Thread Co. We'd love to chat and until next time, have a good one and happy scale.