The CMO Who Faked a Data Breach for Black Friday. The Payflex Playbook.

0:00Tracey-Lee:That was probably my most stressful campaign of my entire career. Payflex faked a data breach for a Black Friday campaign. The C-suite always says, well, the first thing you're going to pull back is budget that you can't track. And then nothing happened after six months. Of course, nothing happens after six months. People don't use Payflex functionally. They are a signaling identity. They want to be seen. They want to be heard. They want their individuality to shine. Like radical honesty is risky. Radical honesty is imperative. I don't know if I'd do it again, but it was a good experience. I'm Eric Fulweiler, and this is Scratch, bringing you marketing lessons from the leading brands and brains, rewriting the rulebook from scratch for the world of today.

0:46Hey everyone, and welcome to today's episode of Scratch. I am joined by Tracy Lee Zurcha Campbell, the CMO of Payflex. Payflex, if you've heard about them, and if you haven't, they are South Africa's biggest and most prominent buy now pay later service. They are really dominating that space and have been for some time now, but not only through an exceptional product, but actually through some just like really bold, cutting edge marketing that they're doing. And that's really what we get into in today's conversation with Tracy Lee. Now, Tracy's background spans everything from tobacco defense and now buy now pay later so she has a really really interesting take on what it means to work in you know brands which are typically viewed in a very negative light with a bad reputation and how you actually tackle that and create a marketing platform and a brand platform that really allows you to cut through in the market she has an incredible like position on this idea of radical honesty being the right marketing strategy and something which I just thought was really like compelling especially in today's day and age we talk a lot about actually her approach to how she balances data and brand building itself and like making sure that she's able to sell in good ideas ideas I actually get you know convey the emotional benefit but also understand the functional benefit for customers and still get the board behind it as well without having to worry every single moment about the numbers of it all.

2:23She gives some great advice to up and coming CMOs who are in a similar position and really speaks to how the superpower for her has been leaning into understanding the language of finance and being able to attribute the things that matter most when it comes to brand and brand building to her CFO. So that's a really, really interesting part of it. And then the final part of our conversation really centers around her framework and one of the most fundamental marketing skills that she believes every marketer needs, which is the ability to write a brief properly. She talks about how it's a pet peeve in marketing of hers now that, you know, a lot of times we'll just put things out for the sake of marketing without actually thinking about the objective in mind first.

3:05So she gives her framework on exactly how to do this. I'm not going to give the whole framework away here, but she refers to it as like a tattoo on your hand, which is the acronym W-A-W-T-T-A. And I'll let you get into the episode to find out what that exactly means. But yeah, without further ado, I hope you enjoy this episode with Tracy Lee of Payflex.

3:28Tracey-Lee:Tracy, welcome to Scratch. Thank you for joining me. Thank you so much for having me. I'm very excited to be here. Yeah, you're part of one of the pioneering contingents of South African brand CMOs who we're having on the show in recent months. So I think you joined the likes of the CMO of Standard Bank, Investec, Bootlegger and a couple of really other cool brands that we've had on so far. So really trying to understand more about that South African market. And one of the brands that everyone keeps talking about whenever we ask them their favorite challenger brands in South Africa. It's usually one of two.

4:06It's either you guys like Payflex or Checkers. So yeah, very, very excited to have you on the show today and talk about what you've been building over there.

4:16Tracey-Lee:Amazing. That's music to my ears. Yeah. Cool. So I'm going to start immediately with the icebreaker that we ask every CMO who comes on Scratch. And naturally, we are rival. We always talk about challenger brands and the challenger playbook. so the first question I'm going to ask you is what is your favorite challenger brand currently that you're passionate about and you can't nominate yourself you know I did write a whole story about how fabulous payflex was but in this case I would say at the moment my favorite challenger brand is go time um they this used to be time bank and they recently rebranded to go time to be more aligned to their kind of international counterparts and they are looking super sexy.

5:01Tracey-Lee:I'm loving all the hype they're making, the new colors, the new vibe. I know quite a few people in Gotam. I think they've done a fantastic job and they've certainly set the bar. So we're coming for you. Yeah, they're awesome. I think it's Raymond over there is the CMO, right? Yeah, he did an amazing keynote for us at one of our first events in Cape Town, actually, that we did for Rival. Going back to November of last year, I think even earlier than that, but an incredible keynote about how GoTime is building and like what they're building exactly within the South African market. And it's a really interesting story.

5:42So yeah, definitely a big fan of them. We need to have them on the show at some point soon as well. Great choice. Okay, cool. And then you said you had prepared a great overview of Payflex. So why don't you tell everyone what Payflex actually does? for those that might not know.

6:00Tracey-Lee:No problem. So Payflex, we're the first to market in South Africa, the first buy now, pay later. We launched officially in 2018, and we saw huge tailwinds in COVID as it was primarily launched online. We are also in over 4 ,000 retailers online and in-store in South Africa. Essentially, what we offer is installment-based payment plans that are 100 % interest-free. So this makes buying purchases that feel slightly out of your budget a lot more manageable and you don't have to pay any interest. I think the number one question that we get is how is that possible? How do you make any money if you don't charge your customers any interest?

6:42Tracey-Lee:And I suppose the myth dispeller here is that the merchants pay us slightly more than a standard transaction fee for us to be able to fund that. So it's a volume game at the end of the day. Okay, that makes a lot of sense. And you've answered one of my personal questions about the space, actually, because I just used for the first time ever a buy now, pay later service. Because I saw it was 0 % spread out over installments, and I don't pay anymore. So I thought, well, yeah, of course, I'm going to keep the money in my pocket and pay off on 0%. But I just couldn't figure out how they were making money.

7:17But that makes a lot of sense now. So I appreciate the explanation. I mean buy now pay later the minute you say that I feel like consumers today you know they kind of retract a little bit um there is this active I guess the best way to put this is like an active distrust almost of the category now don't know where that's come from that's come from a lot of I guess looking at it from a consumer lens like a lot of bad headlines about some of the biggest players in the market globally. But you've actually kind of built a whole career, you know, building brands in these very controversial categories.

7:57You know, most marketers tend to get one controversial category in a lifetime. You've done tobacco, defense, and now fintech, and specifically in the buy now, pay later angle of fintech. So you had quite a few goes at this. what does operating in those spaces really teach you about marketing and like what can't you learn operating in a you know safe cpg brand let's say yeah exactly and i think i mean your your

8:25Tracey-Lee:immediate response was you know what's the catch um is this a scam oh they're trying to make me default and that's how they make their money from a buy now pay later point of view it's super important that we as marketers understand the real pain point and the real feelings that people have towards a brand in their kind of consideration phase of the customer experience journey. So, you know, if you're selling baby clothes, you know, it's kind of you can follow these kind of broad narrative arcs around the human experience and you'll largely be correct. Whereas within a category that is a little bit controversial, you know, there's a lot of discussion and debate around over indebtedness in South Africa.

9:05Tracey-Lee:It's super important to understand really what people feel, really what they think, and to be able to express and dispel any kind of myths so that trust, the trust factor increases significantly. So I think, you know, I have had, as you say, quite a lot of experiences working within categories that have a lot of debate around them. And it's understanding it's the depth of category and the real human motivators that are, it's important to be able to to get a good grasp of that so that you can holistically reframe it for the public especially as a you know it's a brand new category in South Africa in 2018 I've only been in payflex for three years I haven't been there from since inception but you can definitely see that the trust factor towards buy now pay later over the last three years that I've been involved in this industry not necessarily because of me but just from industry and category rebuilding, the understanding and trust has certainly increased over time.

10:03Tracey-Lee:So it is becoming a more normalized industry in South Africa, very much like kind of Klarna and Afterpay, you know, it's totally normal in Europe. So that's where we're hoping to get to. And how do you build that trust? Like what are kind of the key levers that you're pulling on right out of the gate? You know, when you first entered the category and you first entered this business, what did you kind of see as like, okay, 90 days, this is what needs to get done? Maybe a bit longer than 90 days because it takes longer than that to build trust. Yeah. So I think for me, I'm a big believer in design thinking.

10:38Tracey-Lee:So I mean, there are many frameworks and methods that marketers or anybody can use. But it's really important for me to be able to deeply understand the customer psyche. So they call it Gemba walking or going into the Gemba, spending time with the customers, getting those Vox Pops, you know doing customer brand awareness research retention research understanding what what their core drivers and motivators are what makes them tick and what are those pain points and really mapping them you know in quite a detailed fashion so if I understand that and I know what channels they're coming into contact with our brand you know over a I suppose over their journey from awareness through to kind of brand advocacy, I can reinforce through consistent, consistent messaging and dispel any kind of mistrust that they might have towards not only the brand, but the category in general.

11:32Tracey-Lee:You know, there's a little bit of a competitive vibe that Bina Pelletters in South Africa have. You know, we all work together to try and build category, understanding and trust because it benefits all of us. And then we'll fight it out in the ring afterwards. Yeah, that's a good one, right? like are working together with your competitors to bring the whole whole category up that makes sense yeah in terms of like with you mentioned obviously that consistent messaging is there a red thread which runs through that consistent messaging is a particular angle that you're taking I know you had mentioned this idea I think I'd heard about it this idea of like radical honesty being the right marketing strategy can you tell us a bit about that yeah so you know I I think we have to lead, especially when a brand or a category is still kind of growing, it's really important to drive home functional benefits.

12:26Tracey-Lee:So the functional benefit for Payflex and for many others is that it is completely interest-free. There's a lot of misunderstanding around brands that charge very high interest rates and kind of have revolving credit facilities that call themselves buy now, pay later. so it's really important that that functional benefit is up front and center all the time so the way I see it is not so much as you know being that radical honesty is risky I think radical honesty is imperative and I think the problem is in a in an environment where there are so many it's so much debate and discussion I mean I'm sure you've seen it it's there's a lot of A lot of debate in the news is that you have to be equally vocal and visible.

13:11Tracey-Lee:So you have to be kind of coming to the fore, bringing your arguments forward and being visible in front of customers with your rebuttal all the time. So I don't see it as trying to justify doing something wrong. I try and explain why it is actually right. Yeah, I saw the latest data set that came out about the fact that actually the buy now, pay later services and specifically for Payflex was being used the most around the time when bonuses were dropping in South Africa in February and March. And actually, it was a really interesting data point to see that when people actually have the most money in their account, that's when they're using these services, not when they're kind of really struggling for cash maybe in January.

13:55because I think you coined the term January is really a real thing. And I quite like that, because I think everyone globally feels that, you know, post Christmas and all of that. So, okay, that makes a lot of sense. And do you feel, have you found it very difficult to sometimes find the right angle to come back with that rebuttal? Like, is there a principled stance that you take? Or is there a way, I guess a framework that you guys use internally with your team to say okay like this has come out this negative piece of news about us here's how we need to address it or is it always like you have the same same messaging and the same party line that you kind of stick towards yeah so I

14:37Tracey-Lee:think um it's a little bit of both you know we certainly have um our hymn our hymn sheet that we all try and and sing from um and not that these are you know these are not spin spin um lines that there are truthful lines about what and what payflex and the industry is all about who we service who we do not service who we are targeting and who we do not target it's really important that you know there is a consistent narrative that is fed into the public and into the media but by the same token you know there's always interesting they're always interesting points that come up and then we might you know we might sit and reflect together as a team to try and understand how we can best communicate this to people that are not necessarily fintech or finance fundis.

15:25Tracey-Lee:You know, we have to humanize it and make it accessible for those people. So we would have a discussion. So for example, regulation for buy now, pay later, it's very much on the horizon. We are quite familiar with what is required and working avidly towards being whatever the compliance and regulation is going to look like. We would like to make sure that we are compliant. But there's a lot of noise about this in the media. And often, a lot of it is misinformation, you know, so it's new. And we always have to kind of regroup and make sure that we are saying whatever we need to say that that's for new arguments that come out there.

16:04Now, I want to touch on something you mentioned just there, because I think this kind of leads on nicely. You mentioned obviously having the functional angle, but actually you're balancing quite well the functional benefit but also the you know emotional benefit quite clearly in a lot of the messaging that i've seen at least like i know that you mentioned yeah no i think you mentioned as well that there's this idea of you know how do you actually as a marketer how do you identify what the functional benefit is and then the emotional benefit so how have you kind of approached that by now pay later with payflex like how have you done that yeah so so we actually

16:40Tracey-Lee:followed quite a rigorous, I suppose, a process of trying to understand what the brand essence really is. And for us, it's important that we have, you know, we'll have a Venn diagram of the three kind of main criteria that speak to how to get to our sustainable competitive advantage. So first is our kind of unique brand insights. What are the kind of key obvious functional benefits that the brand has to offer that nobody else does? More importantly for me is our customer needs. We've been in the market for a few years now. We have a sizable customer base that we can access and we can really get into their heads.

17:16Tracey-Lee:What are their needs? What are their desires, motivators, drivers? What are their pain points? What could we be solving for? And then of course, the third is the kind of competitive environment. What else is out there and how do we make sure that we have parity with competition and differentiators? So, you know, for me, we went through this process of really understanding each and every part of what are our brand values, What's the personality? What is the essence? And ultimately, what we got to is people don't necessarily use Payflex functionally. They use the brand or they use the product because they are actually, they're trying to achieve something that's higher on the Maslow's hierarchy of needs.

17:55Tracey-Lee:It's self-actualization. We're talking about people that are signaling identity. They want to be seen. They want to be heard. They want their individuality to shine. And, you know, these are not people. And this is often also a misconception because people talk about, you know, how can you do this? There's over indebtedness in South Africa. How can you perpetuate that? It's unethical. It's not the case at all, because those are not the people that we would even allow to use the product because they would be too risky. And we don't want to perpetuate a cycle of debt. We want to enable people who can already afford to pay us back to have the lifestyle of their dreams, to do things and buy things that make them feel like they can be who they really are right now and not have to wait 10 years until they have a sizable retirement pot.

18:38Tracey-Lee:They can do both, and we will enable that. So that emotional need that's right at the top of the hierarchy, it's not safety and security. It's actualization. So when you understand that customer need and you're solving for an emotional problem, it becomes really clear how your product needs to change and meet those needs of the market. Yeah, I think that's a really interesting one, especially given today's shape of the market and what demographics look like now. I think, you know, 20 years ago, we would have just taken a basic data set and said, OK, it's female age. This, you know, between these ages have this much income.

19:16And these are the types of jobs they work. And I think today that's become a lot more nuanced, hasn't it? Like there's a lot more focus on microcultures, you know, people who you can have a teenager in Ohio and a grandfather in London, for example, and they're both into Korean dramas, for example. So like that overlap has become so strange, but actually it's like a it's a microculture which you can identify in their market suit because actually they're what they're looking for is kind of kind of now the same thing. this convergence is quite a strange, strange moment for marketers. Yeah, absolutely.

19:52Well, I know we'll speak about one of the campaigns that Payflex has done, but I do want to kind of keep going on this idea of like really trying to figure out now like creative boldness and commercial rigor, because I know data is a really, really important thing for definitely you as a CMO, Payflex generally as a brand. So I do want to touch on that. So I know most CMOs today, are a bit allergic to campaigns that they can't directly attribute. And I don't think it's the CMO's fault mostly. It's usually because they have to report into a board who's looking to see what the growth has been over the last quarter and whether that campaign that they spent all that money on was worth it.

20:32Now, you and I both know as marketers that some of those most effective brand moments don't always convert into a really pretty dashboard that looks like the line is going up into the right place. They never convert into the dashboard. So how have you found that process, you know, both over your career, but also at Payflex specifically? How have you made that case to get the buy-in for work, which is, you know, inherently more difficult to measure the more creative stuff?

20:58Tracey-Lee:Yeah, I think that this is it's probably the one question that probably every marketer or CMO that spans marketing and brand will have to grapple with at some point in their career. and the earlier you can get an understanding of how to make the case and how to sell this, because you're not selling it to people that understand brand. You're selling it to people that understand money. So you have to be able to translate this kind of concept of something that's a little bit touchy-feely, it's a little bit emotional, into a language that financial people can understand. So I'll always look at the indicators of brand success.

21:37Tracey-Lee:so you know things like brand recall brand recognition salience those types of metrics and i'll measure them over and over and over again so we go out into the field we get a kind of sizable sample of you know respondents and then we have an understanding of how the brand is actually tracking because if you can see your salience metrics are going down and you can see the underlying performance metrics that that feed into salience then you can make the case to say well, if salience is going down in the market, that means that at the point of purchase, when a customer has to make a decision of which not only buy not pay later method to use, but which payment method to use, if it's going down, we know there's a very strong indicator that our sales are going to go down.

22:24Tracey-Lee:So for brands, if you are investing in a brand, say now we're investing a huge amount and next year something happens. And of course, you know, the C-suite always says, well, the first thing you're going to pull back is budget that you can't track. And then, well, you know, first thing we're going to go is take brand budget away. And then they go, well, nothing happened. Nothing happened after six months. Of course, nothing happens after six months. It can take up to two years for a brand's, the metrics to go down, and then it'll start heading the sales lines. And then you are really in trouble because to get that back, you've got to invest two to three times that amount.

22:59Tracey-Lee:So to make this case, I will often use examples of other brands that have seen this kind of budgetary that there was the many examples that you can find. Harvard Business Review often publishes cases like this where they've reduced budget and two years later their sales and revenue are tanking. So you know when you have that data to kind of show a financial person what can happen when you don't when you don't do when you don't invest in brand it becomes a lot more digestible for them and by the same token you know we We will also always continue to do performance campaigns that do have a brand element.

23:40Tracey-Lee:So in any effect, there will be some kind of support in that regard. And you can kind of see from a, even if it's not a direct conversion, you can see plausible causation. I spoke to a lady from, she was previously at Uber and Uber Eats, and they had done a geographical campaign, which was out of home. you know, out of home is notoriously difficult to track, but they could see the uplift in sales and the downturn in sales in that area when they didn't have, when they did and they didn't have the billboards up in the area. So, you know, those are good case studies and examples of tracking plausible causation.

24:17Tracey-Lee:And I will often use that when I have to make a case of why I spend so much money on something. Yeah, it's really an interesting time that we're living in. I do feel like, not to make not to make any sort of prediction but i feel that the tide is starting to move towards the understanding of brand and like why you should invest in brand especially from non-marketing people um the reason being like you're just starting to see it more and more and i think even if you consider for example the biggest companies in the world right now who are kind of having the biggest brand war like open ai and anthropic being the two examples you're seeing that actually as we reach this place where effectively their models can do mostly the same stuff like functionally they just have brand to rely on and you see them kind of really playing out the brand wars properly like you saw anthropic super bowl ads you see all the like good pr they're trying to put in the market as well like that's all branded marketing play like that's not like they're not doing any like ads and performance stuff like there's probably no data behind like the Super Bowl ad, definitely not.

25:25But that Super Bowl ad definitely did well for their brand sentiment, as opposed to OpenAI. So it's a really interesting one. I think that kind of, yeah, pushes people to understand it a bit more.

25:35Tracey-Lee:Yeah, I think also, you know, there is a case to be made for the value of a brand as an intangible asset. You know, if you go to market, if you were selling, and you were being evaluated based on, you know, the value of your intangible assets brand plays to that. So, you know, there's some of the most valuable brands in the world. It's all about brands and it makes their companies worth so much more. Yeah, definitely. So true. And I want to talk a little bit about a specific campaign, which I know Payflex did really, really well on. And it's the leaks campaign. You know, this one sounds like an absolute minefield to get signed off.

26:13Just to give everyone listening a bit of context, Payflex faked a data breach for a Black Friday campaign. But yeah, I would really like to understand and get under the hood of that, Tracy, and understand the insight that made you think that was going to work. And also how you sold that in. And finally, what advice would you give to another marketer who wants to take such a risk like that, but can't really get the board behind them?