S16 E9: Why DTC Brands Need AI-Driven Personalization (with Liam Millward, Co-founder and CEO at Instant)

0:26Nik:Thank you. you're already using inside Klavia. So if your team lives by a one-day click, you can see exactly what Instant is adding up on a one-day click view. And believe me, when you see how much revenue your standard email setup is still leaving untouched, you're gonna want Instant Live today. Over 1 ,500 brands are live, including Third Love, Liquid IV, and Kind Patches. And this month only, you can get 50 % off your first 60 days at instant.one slash Sharma. All right, Liam, welcome back to the episode, or welcome back to the podcast. this and now is this the third or fourth time this is our third time right excited thanks for having me on a third time going excited to have you back i feel like everything changes so much every time we catch up everyone changes raves about the the episodes um you know we've gone through product changes and we've shipped so many new features but then just the the the industry as a whole i mean things used to happen in like three year increments now it's like every three months things are changing yeah I mean I feel like when we um first recorded I think like chat GPT was the main interface right yeah and then the last time we recorded honestly I think it might have still been like chat GPT maybe a little bit of Claude in there yeah now I'm fully on the open claw Hermes agent side of things I don't use any native interfaces where have you gone in the world of AI Yeah, I think we're all in on Claude, particularly internally and just in the day to day.

1:53I mean, I think the everyday consumer is still using ChatGPT. 100%. But for business operations and actually doing meaningful things with AI, I mean, there's so many AI tools now that are just exceptional. And then for day to day work, I mean, Claude is just amazing and crazy to think six months ago, nobody was even, it's like, oh, anthropic. Like, yeah, like they're cool up and coming. Yeah. I think they've even surpassed ChatGPT now in revenue, which is crazy. Yeah.

2:23Nik:Yeah. I feel like my entire life has now become fully optimized thanks to AI in weird ways. Like my, I just got this switch that I'm going to plug in tonight into my router at home, which will basically search for my eight sleep and internet enabled light switches. and that'll then connect to my open claw slash Hermes agent which I'll then be able to you know it'll just tell me hey your bed's on or you know you slept like this you didn't sleep like that yeah um I um no I mean it's amazing even with open claw I um I was traveling between two cities the other day um and it's like connected to my whatsapp yeah um and you know a simple mistake that is normally so annoying on the day i'd uh i booked my flights the one the wrong way around i was i booked it uh from the the city i was meant to be departing um i booked it as the arrival yeah wrong way around and i got a whatsapp message being like your flight's coming up in two days time um like this this is the flight information it's on time um you know blah blah here's the link to do your your meal pre-order but i've noticed that all of your other events in the day are in sydney um and this flight is leaving from melbourne so it looks like you've booked it from the wrong city would you like you should change should you change this yeah i'm like oh whoa that's actually really cool so it's not only solving problems that i ask it to solve it's now proactively solving problems i think that's the exciting state that we're in now i agree i feel like where we went from the chat gpt you know chat gpt is basically the q question and answer interface.

4:02Nik:And then we went to a point where it was like, okay, let me send a prompt and you can go and run and do things. And now we're at the point where it will now, as long as it has context, like I'm sure your open clause connected to your email, your calendar, you know, like I have mine connected to GoDaddy. And like I said, my eight sleep now. And so it has the most context possible, but now it can then proactively say, oh, by the way, this person in Slack tagged you, you owe them this from two days ago. Here's a draft. You want me to send this over? Yeah. Yeah. And, um, yeah, it's, it's amazing how that it's also amazing how fast that's happening.

4:36Nik:Like that is, that has all happened in the last couple of months, really. Absolutely. Yeah. No, it's exciting. Do you use your open cloth setup a lot between personal professional crossing over? Yeah. I mean, I feel like separate, I mean, kind of, we would be in a similar state where our business life overlaps with our personal life totally um a lot and i feel like that's pretty common for most people right um definitely yeah i mean at the point where you're building an open claw exactly you're probably in that boat um i think that our um our engineering teams use um use claude to i mean significantly increase their output we've gone from three week cycles to like one week cycles um our demos on friday our internal demo is gone from like one hour on a friday to like three hours now just showing all the things we've shipped.

5:22Um, I think that there's so much happening in like just business operations. I mean, even the job of like a finance manager has changed so much. Like I no longer need someone to tell me when is someone's probation period up when, you know, how much money can we save by doing this, this, and this, how much money is it going to add by doing this, this, and this, um, what was our performance this, you know, this month versus last year at the same time or three years ago. I mean, now I'm just chatting with a interface that can either one, do it proactively if I set it up to, or two, it's giving me an immediate answer.

5:56Questions that used to take, uh, let us get back to you by Thursday, close the business. I've now got immediate. I'm going into a board meeting, being able to make a decision rather than needing to put together a full deck. I'm being able to go into a meeting prepared rather than asking questions. Um, and I think that's the exciting part of a business that's gone from being asking so many questions to this is what we're doing. Um, I still think there's such a need for human creativity and humans actioning a lot of the insights that AI is finding. But there's so much less wasted time. And I think that's especially the case in the world that we play of e-com.

6:34I mean, it's never been more possible, in my opinion, for a brand to grow extremely fast. Totally. And we're seeing a world now where really small brands are overtaking massive players because they don't have the baggage of legacy business legacy tools legacy

6:51Nik:operations they're just like legacy decision making chains you know right oh we have to get this approved all right let me run it up the flagpole exactly happens instantly whereas now it's like does this meet our brand guidelines yes or no exactly um huge yeah it's amazing it's it's uh even someone in customer support you know a ticket comes in this link isn't working this button isn't working this uh tried to check out it didn't work one you can just ask claude to you know uh to break down what the problem actually was yeah so this is now a support agent that is no longer a support agent they're actually now building a new landing page right and shipping code to your website that significantly stops these problems from occurring and so rather than needing five people to be involved you're either now i mean everyone's job now is product or revenue right everything else is a waste of time.

7:36Agreed. Yeah.

7:38Nik:And I think too, to your point earlier, like the more that I spend time in basically inside Telegram, the more I do realize like the human touch. Oh, you're like a Telegram versus WhatsApp. Yeah. And for no reason, honestly, I just haven't gotten around to setting WhatsApp. I tried to set up iMessage the other day and it didn't work, but I have like, you know, 16 different agents now in Telegram. So I feel like porting it all over is going to be a process. What are you, what agency? Plus WhatsApp, if I open WhatsApp, everybody else is going to see I haven't responded to that I was just online.

8:07Nik:True. I turn that off. What agency? So every project I have going on. So like I was just telling you about Zerp. I have, you know, maybe a consulting project. Every project has its own. I call it like a GM bot, like a general manager. And what I do is I basically say to my main bot, I'm like, hey, we're going to start working with this company or we're going to do this. and you need to make sure that everything you see, if it talks about this, route that information to this bot so it can constantly stay smarter. So if I'm on a call with my assistant in the morning and we talk about Zerp, make sure that that context of that paragraph goes to the Zerp bot.

8:46Nik:When I get an email about something, make sure that that goes there if it's mentioning Zerp. And basically, well, one, it just keeps the main chat kind of clear for more urgent stuff, but it allows the individual bot to kind of build its own brain and personality and just kind of its own like cron jobs even occurring tasks within that specific chat interface. Yeah, love it. So, you know, yeah. So as I was saying, like the more I play with it, the more I do realize that like design is a huge piece that doesn't exist. And human review is obviously a huge piece that's still, I don't, although I don't know for how much longer the human review thing is going to be needed.

9:23Nik:I'm guessing like six months or less before you and I will probably be in a spot where we don't we're feel comfortable without human review that's my guess yeah i mean i even think today uh human review is almost not needed yeah it's very actually the human holding it back totally um and i i think in many ways that's kind of fair it's so new it's happened so fast there's so many marketing managers and even like ceos and um creative directors that are like oh hang on a minute like we need to check this which is which is totally valid and i think that that was kind of the same even when you know this tools like after pay were launched it was like hang on a minute are we giving credit like wait is this unethical this is too fast yeah is this too fast and you know as the industry learns and as people learn it just changes so quickly and i think the speed of change is happening faster than ever totally um i think there's still a push and i think there will still be a push for a very long time for ai to give you the ability to have as little or as much control as a human wants though right and i think what we're seeing particularly today being you know a leader in ai tech for econ brands is brands generally start off like 25 ai and the rest human yeah and then over time like the first six weeks they might get to like 50 50 human versus like ai doing it after like three months like oh well ai is performing better and we're generating way more revenue right it looks better it is better our customers are resonating with it conversion rates skyrocketed by spending way more time on the things humans actually need to spend time on we're learning way faster and all of my doubts have been crushed um i'm not getting a huge influx of support requests being like what is this copy my shopify is just converting way better and to be honest that's what matters most right yeah it's um it's it's like like you said like we're the now the ones holding things back it used to be the other way around.

11:20Nik:Like you're waiting for something to come back. And then that is your cue to go finish that whatever that one task was. Yeah. But now it's the opposite where I like I'm like, wait, sleep is a waste of my time right now. I need to hurry. Absolutely. I mean, I think there's two things holding people back. I think that founders, CEOs, the people generally at the top are pretty receptive to AI and they're receptive most because they want to grow. They want to grow the business. They're seeing the numbers. They know they need to grow faster. They see AI as an opportunity to grow faster. I think it's the people like autumn's a rough word, but the people that are executing today are like fearing their job.

11:57Right. Um, and I think that's the wrong mindset because, um, and I use this analogy all the time in the sense that when Canva first launched, every digital agency hated Canva, like Canva stealing our job, Canva stealing our work, you know, we're a designer, this is our skillset. Now the best creative agencies in the world just use Canva. And I think that's going to be the same tide. The best marketers in the world are not going to be replaced. The best marketers in the world are going to be using the best AI tools to drive their business forward. And the quicker they adopt it, the better. I think the second thing holding a lot of brands back today is agency relationships.

12:36I think agencies are going to remain really important. Professional services are going to remain really important. I mean, that's just a no brainer. But I think there's going to be a real shift in, as an agency, you need to stop holding your client back. Sure, they might still spend$100 ,000 a year with you. But being an AI first agency, man, you've got an edge because a lot of agencies that are just like in the world of prior days. And so as a brand, it's really important that one, your executor people feel like they can experiment with AI without losing their job. And two, you're working with agencies that are actually pushing you forward as a business versus holding you back in the old days.

13:17Nik:Totally. Yeah, I feel like there is going to be some kind of new level setting of agency brand relationships for a category of brands. I think there's going to be still a large chunk of those that remain untouched because they go through procurement and they've got these massive teams on both sides. but i think a lot of the brands that are like sub sub 200 million have a huge shot of really kind of basically just eliminating baggage you know extra baggage and speeding things up um across the board it's really about speed in many ways right yeah because like also speed is the variable to beat your competitors especially if you're in a place where like you're not going to have the money to out compete a big player you're not going to have the legal resources or the distribution to outcompete but you will have the speed but if you're i mean yeah i mean and and if you're working with an agency that is rebuilding your flows from scratch every three months um you know on the email side of things i mean that that's long gone yeah but the best agencies are better than ever like i truly believe that i mean this it's it'd be wrong to be like anti-agency or anti-human um but i think that i think the world is really changing rapidly on that front.

14:36Like you need to be working with an agency that's really pushing you forward.

14:39Nik:Totally. Yeah, I'm excited to see how like AI just continues to evolve from a creative standpoint too. But from a yeah, from an execution standpoint, it's insane. And like, like you said, executors who are great executors are finding that with AI, they're, they're able to just do much more like good executors are good executors, because they understand where the limits are and what's possible even if they can't exactly do it themselves but with ai you can fill those gaps like everything you can't do yourself you can fill it with ai like you said the the flows you know like most brands don't touch their flows after they launch um now ai is your website has never been more important i mean you talk to a brand today and it's like oh we haven't updated our product pages in a couple of years um our ai's ai's not picking our brand up properly we're not showing up in search results?

15:33Well, your website is actually now the most important thing. You can kind of fuck up everything else, but if you get your website right, everything else starts to become easier. You're now showing up in search results. Your email platform is hopefully pulling whatever sale you've just launched. You've just launched your Mother's Day sale. It's now pulling all of that information, offers, the discounts, the products that are on sale, the messaging into your retention marketing automatically. There's no longer someone sitting up at 10 p.m. at night doing that right it's now just happening um you're launching a new campaign and you're answering a series of questions versus sitting there with a blank canvas going right where do i start totally um you know new product launch mother's day sale this product this product this product on sale for this boom what segment do i want to go to actually ai probably just picks it for you and it's boom boom boom series of three emails over the next week exactly schedule send done right that is now possible totally um and i think that's

16:32Nik:really exciting yeah fully agreed i'm curious like um so talking about ai you guys are obviously building uh a ton of ai stuff so when we talked the last few times it was all about instant audiences right like identifying anonymous shoppers um figuring out who those people are being able to put them into Klaviyo and then message them when otherwise you could not reach those people. And that was maybe like 97 % of shoppers on the internet. So, you know, where has that product gone and where has that now led you to? Yeah, I mean, building instant audiences was the thing that really got us going.

17:08I think it enabled us to build so much trust in the market. And what we did was we and what we still do is enable brands to remember a shopper every time they land on your website. And, you know, you could argue that this is probably the most important thing for a marketer. If you don't know who a shopper is, as a marketer, you have no ability to send them an email or an SMS, no ability to retarget them on meta. And you're basically just wasting shoppers that land on your website. And I would, you know, we built the best identification technology for an e-commerce brand and, you know, amongst every test that we could possibly do.

17:42And brands just, I mean, it's so exciting when you jump on a call with a brand and they're like, whoa we've spent no no more money but our meta ad return has gone up because we're now sending emails and sms's to people who land on our website our retention marketing has tripled um and we've basically had to do nothing and that was huge and we um we we spend a lot of time with our customers in like we i would say customer success is such a an important thing for us we take a lot of pride in in offering a very good customer success experience to our customers particularly really we work with a lot of large brands and we uh we were sitting down with a lot of our brands and they're like we want our attention to go further like this is meta ads going up you know everything's changed budgets are tighter how do we make more money from our existing customer base um particularly during sale periods and we originally built like this email optimizer tool which would scan all of your email flows and like provide you a list basically a summary of all the things you could do like an audit yeah like an audit right like an automated

18:44Nik:audit and you were basically the idea there was like hey we have so many brands understanding we can build a knowledge base and then scan your stuff against that and basically tell you where the optimizations lie yeah like where should you have a new cta maybe that maybe it's not loading properly in a certain browser right um you know this link is wrong these colors look bad yeah when it's in dark mode this isn't working and so we would we would tell a brand how to improve and And we sat there as an instant leadership team, you know, a year and a half ago. And we said, hang on a minute, the world is changing so fast that why don't we just do this for them?

19:24Why don't we just help a brand build the very best retention marketing without having to lift a finger? We know who all their shoppers are. We're the best at identification. So we know how to send an email and an SMS. We've now built the ability to audit your emails so we know what emails convert the best. why don't we just do it for you and that's been kind of the rise of instant ai you know we we launched instant ai around 10 months ago we have over a thousand brands on instant ai now um sending you know so many emails and sms's for brands every month um and seeing the wow factor when they jump on a demo i think it's really easy to get a brand excited i mean we give the brand the ability to send a unique email to every shopper.

20:08No two shoppers receive the same email twice. Subject lines, copy images, everything is different to every shopper. We learn about every shopper. So we know what it takes to convert you as an individual. And we do it with as a brand, you give us your brand guidelines. We know your tone of voice. We're constantly looking at your website. You can have creative control if you want, but then you just leave instant AI to grow revenue on complete autopilot. And I think that wow factor has been really exciting for brands.

20:38Nik:Yeah. And honestly, the setup is pretty much just as easy as that. Like I did the setup a couple times and the hardest or not the hardest, but the part that takes the longest is just getting your internal creative team to basically give the sign off that, hey, this is on brand and good to go. And then once that happens, you're like you said, you're pretty much done. Like it does it on its own. Well, yeah, I mean, it just does it on its own. Like I obviously speak on stage a lot and I share the story of instant, but I'd say a unique part of our journey has been really the surprise of like not needing to push the hard sell.

21:14I think so many tools are, you know, it's just like a ram down your throat consistently for us, like almost like 95 % of our new brands come inbound. They hear about us from like on a podcast or at an event, or honestly, a lot of our customers just come from word of mouth. And so, you know, I strongly believe a company is built on two things, like people and product. If you have the very best team and the very best product in the market, your customers come to you and they love you. And I'd say that's been the most exciting part of the journey so far is just when a customer discovers InstaEye, they walk away in almost every case like, oh, well, this is pretty cool.

21:56Nik:Yeah. And that too, especially with how fast you guys are shipping product or shipping updates and new features. Yeah, we ship new features almost every week. I think we're really focused on bringing an edge to personalization. You know, we see the fastest growing brands across all the brands we work with today. Generally, the fastest growing brands, about 30 to 40 % of their revenue comes from retention marketing. and you have to note that like 40 % of most brands revenue come from meta um and so retention marketing in many ways is just as important as meta and everyone focuses on the new shopper the new shopper the new shopper absolutely it's important you need to keep the top of the funnel full um but there's such a huge base of revenue that is like almost free right like totally well also not to mention that a lot of the so much of acquisition is assisted by good flows like if you don't have good pop-up on the site and if you don't have good flows you know you're missing a lot of those users uh who are coming to the site and maybe they're putting it in or not but then they're leaving um you know conversion rates what like three to five percent so that means 95 percent are leaving without buying yeah and if you can collect you know 10 to 15 percent of emails on site and then get the rest through instant for example then you're basically it's like it's just It's free money right there.

23:21Absolutely. I would say there's three really big things that are top of mind for us at the moment. Number one is you need to send a unique email to every shopper when they abandon your website. That's never been possible before. It's not possible for a marketing manager to sit down and send 30 ,000 emails a day.

23:39Nik:Yeah. But now you can. And when you say unique, you're basically name, subject line, email, like, you know, clothes or whatever they looked at. Yeah. I mean it used to personal it's funny because personalization like 12 months ago was um the first name everyone was like oh first name that's personalization I mean that's just like the basic now got something yeah hey like insert Liam comma oh shit I forgot the comma there yeah yeah yeah um now it's like every email is different and every email is written differently um the subject lines are different some subject lines have an emoji some subject lines include the first name subject lines don't even include that yeah um we reference the the the products that they view but not just the product we describe the product they used and why they might like to buy it um we take into account things like the time of day they're looking at your website their location is it summer is it winter what country are they in um is shipping time fast because we don't want to put fast shipping in the email when they're in some other country um and so now all of a sudden you have the dream email to every shopper, which just had never been possible.

24:47So unique emails has been really exciting. The second thing that's been really exciting is the ability to, the timing of marketing has always been a big factor. And if you read any kind of playbook today, it'll say, send an email or an SMS two hours after someone abandons their cart. And I actually believe that's false. That's not the right strategy. You need to be learning about your shopper. When do they purchase? Because I might browse as, you know, I don't know, maybe let's use the example of like a really busy mom, for example, their kid's gone to sleep, they're browsing the internet at midday or something at noon and they're browsing around.

25:26Maybe they don't purchase. Their next available opportunity to purchase is probably at 9pm at night when they're finally, their kids are finally gone to sleep for the day and they're just relaxing. And I want to send them an email then not two hours after they abandon their cart at 2 p.m in the afternoon that they just never see right and that's been a really exciting like uptick in in revenue as well yeah

25:48Nik:yeah I think that's um so cool there's been so many apps that have tried to do the personalization thing but um too manual too too limited yeah and and what's cool is like you you took all the things like, you know, the audiences piece, you took, you know, there used to be a software that would only specialize in, oh, we know based on browser behavior, when to serve the pop-up. Now, not only are you doing that, but then you're deciding, oh, we take, we can take all these things, ingest them, match it with our database and know when to send this email out again. Yeah. Instance AI agents. Just a better way of using all the tools that you have at your disposal.

26:26Exactly. And like, we have a very strong vision that as a brand you should rely on meta you should rely on shopify and you should rely on instant to grow your business and as a marketing manager i think a big skill set over the next 12 months will be managing instance agents to run your business pop-ups emails sms campaigns identification all in one platform that's really important because they all need to speak to each other at lightning speed right um that kind of goes on to my third point which is like it's also never been possible before before for a marketer or a founder of a brand to experiment as fast as they can today and it's one thing to plug all this data into Claude and for Claude to spit out something that's fine like whatever do that um but instant is running your business um from a retention point of view we are helping you grow your revenue um and uh and the volume of experiments, you know, different subject line, different copy, we're then telling you what's working, we're then incorporating those learnings into the new flows without you even needing to do anything.

27:32And, you know, we're seeing like, huge increases in click through rates, then open rates, then conversion rates, while you sleep. Right. That's really exciting.

27:43Nik:Time for the retention tip of the week brought to you by Instant. If you run an apparel brand, Here's something most people get wrong. You treat returns like a cost center, but your returns flow is actually one of your highest leverage retention touch points. Think about it. A customer just returned something. That doesn't mean that they don't like your brand. It usually means the fit was off or the color wasn't right. So what do the best apparel brands do? They build a post-return email flow that does three things. One, acknowledge the return with zero friction. Two, immediately recommend the right alternative based on what was returned.

28:15Nik:And maybe the reason, maybe it's a different colorway, a different size, a different silhouette. And number three, include a small incentive to come back within 10 days. Brands that nail their conversions flow for returns, they see 30 to 40 % of their returners convert into repeat purchasers. The ones that don't, those customers are gone. Their return was their last interaction with you, and it was a bad one. If you need help building smart post-purchase and post-return flows, Instant makes it super easy. Their AI-powered retention engine generates personalized emails for every shopper automatically.

28:47Nik:Check them out at instant.one slash Sharma. So how does instant layer in with legacy ESPs? Yeah, I mean, we really help a brand to try instant really, really quickly. So a lot of brands will get started with instance AI generated flows, they'll go live. I mean, as you've seen, like most brands go live in like a day they get started they get experimenting no pressure see how it goes um and that's the beauty of the platform and so they will um they'll start to see the results for themselves and then over time they will just use the product more and more and more um you are behind as a brand if ai isn't generating at least 30 of your revenue and one of the easiest ways on the retention side i mean let's just say business overall sure to start right um but retention is like one of the easiest um right now if you really put your mind to it retention is really important so for the most part untouched like no one makes solutions for the retention side of the business yeah it's really it's um and that's that's the wow factor a lot of brands see that when we demo them they're like okay shit like we have to give this a go um but we um yeah we're kind of the ai first solution for retention um we're helping marketers bring a new edge to their business helping them stand out and we're helping them grow their revenue and And, you know, there's so many tools on the market today that save you time and save you energy and make things easier.