Best of 2023: Top Advice from Business Experts

0:28Hello, and welcome to Shopify Masters. for data and measurement at Google and the best-selling author of Converted, the data-driven way to win customers' hearts. So the starting point is not the reports. Far too often I see entrepreneurs go in and say, here's my analytics report. Let's see what's in it. And then they'll stare at it and be like, well, traffic is up in Brazil. Why is that? I don't know. What do I do with that? And you can't do anything with it. I can't do anything with it. I'm having PTSD, by the way. No, it happens. It happens. Small companies and large companies. This is where you're looking for data and you hope it tells you a question or an opportunity.

1:01And it never does. Instead, what I encourage you to do is take a step back. Before you go into that data, write down your hypotheses. What do you think you could do to better connect with your customers? What information, if you had it, would change the way that you build products, that you interact, that you service with customers? And then you get to the data.

1:22So you come up with this huge list of the hypotheses you have. And then the next question you want to ask yourself is, do we have any data that helps us either prove or disprove this hypothesis? You may now find that in your analytics reports. If you don't, this may be an avenue for you to ask friends, family, colleagues, other people in marketing to say, have they seen anything that supports or disproves this hypothesis? And if you don't have any data, then you move on to the valuable third step, which is can you test or find a way to capture that data on your own? But here, really what we're doing is we're starting with the question, what you think you should do differently, where you think there's an opportunity, and then all those reports work to support that.

2:02As opposed to the other way around, let's look through all the data and see if there's something there. And then we get frustrated when we're never sure about the question or the action we should be taking. You just want to be a little bit more focused as to who you pay attention to for what you do in your business. Number two is, oftentimes when we're capturing data, when we're trying to understand customers, we don't do it with an intention of what we're going to do with that data. So most companies' table stakes is we'll capture conversion data. Here's what I need to get you that order. But we never think about what else we could do with that data.

2:34And so here's a practical example. In my inbox right now, I will have hundreds of promotional messages and email campaigns from companies I've purchased from in the past. All of them know my name. The research supports that adding somebody's first name into the subject line of an email significantly improves the likelihood that they will open that email, they will engage with that email, and decreases the likelihood they will unsubscribe. Yet in my inbox right now, no company, despite having my name, actually uses that data to build a better relationship. So companies may oftentimes collect data without thinking about how they can apply it.

3:11They just think, well, can we ask customers this? Like, can we have your credit card statement? What do you want it for. And customers are okay with sharing that data if they know the value exchange, if they know what they get back. We want to build you better products, make you better offers. I also tell people the most underutilized page for asking information. People often think they need to ask during the checkout process, which is a difficult bargain because now you're saying, you're ready to buy my product. Do I really want to ask another question or two that may distract you from finishing that purchase?

3:42Of course, right. And the answer is no, don't distract them. But here's where you want to ask them these questions. The height of trust that most of the data supports that customers have with your business is after they give you money. I gave you money. I really hope your product shows up. I hope I love it as much as I do on your website. Please give it to me. And then what do we do as companies? We give them a thank you page with an order number that nobody writes down, telling them that their email will have all their information, inviting them to close that window. It turns out that after they give you the money, that's at the height of trust where you can ask them those additional questions.

4:17What other companies did you consider? How valuable did you think our products were? How much money are you giving to us versus a competitor? That should be a playground for you to ask some of these questions to your customers to learn a little bit more about them and their behaviors. Just at the same time, always think for the questions you're asking, don't collect information just for the sake of collecting it. Think about how you might use it to personalize your emails, their experiences, or deliver better value to them.

4:50Jason Pfeiffer, the editor-in-chief of Entrepreneur Magazine, shared a story about a founder that had a few revelations about her customers when she started doing business online and began putting more energy toward the customers that convert. A story that has really stuck with me, for example, is, and it becomes an e-commerce story, but it doesn't start there, is this woman named Lena Fleminger, who operates a wig shop in Baltimore called Lena's Wigs. And Lena's Wigs, it was a storefront. And she had run it for many years as a storefront, thinking that was the only way in which she could operate this business.

5:26And so, you know, you know what a storefront is. It was people could walk in off the street and they could browse the wigs. And Lena had an employee whose job was to greet the people who come in off the street and browse the wigs. And then the pandemic comes along and she can no longer keep the doors open. She can't welcome people in. There are lockdowns. She's wondering how she can possibly operate this business. And so the only thing she can think of is something that seemed like a crazy idea before, right? It's not a radical idea, but she never thought it was good for her. And that was appointment only.

5:58Go to appointment only. Because, you know, now you only have one person coming in. you can operate that during a pandemic. She had always thought this would be bad for my business because, you know, why would you add more friction to the way in which people shop? Like, why would I make it harder for a customer to come and shop with me? So she had never wanted to do appointments, but now she had to. And she discovered two amazing things as a result. Number one, sales and profits rose. Number two, customers were happier. here.

6:31Why? Here's why. Because you know who doesn't buy wigs? People who come in off the street, they don't buy wigs. They come in and they browse wigs. They're curious about wigs, but they don't buy wigs. You know who does buy wigs? People who are shopping for a very personal reason, often religious or health. And those people are very, very happy to have a private experience in which they are not shopping for wigs surrounded by a bunch of randos who come in off the street. So Lena had been paying because she thought this is the only way to operate her business. She had been paying to have a person on staff who greet the people who come in off the street and do not buy wigs at the expense of the people who actually are her customer and do buy wigs.

7:19And it wasn't until she moved to appointment only that she discovered this. And once she did, now it becomes an e-commerce story because now she discovers that actually there are all sorts of other ways to serve these people that she didn't anticipate. That in fact, having a robust virtual presence, which she had not before because she just thought of herself as a storefront, was actually an asset because it meant that she could serve people far wider than her geographic area and that actually people were very happy to have virtual fittings of wigs, which she had never thought possible. And now she does a lot of her business online.

7:54She has, in fact, rehired that person. But now that person is used far more efficiently and sort of helps manage the inflow of digital customers. And it has transformed her business. She makes more money and she works less. And I think that versions of that play out all the time where there is some way that you think your business has to operate. And what you will discover is that actually there are better ways. And I don't mean that like, you know, everyone's going to go from brick and mortar to virtual or to digital or back. But rather that as you face economic challenges, you will be forced to come up with solutions that ultimately reveal new ways to create value for your consumer.

8:39And that will ultimately shift the way in which you serve people going forward. Jason actually had a few examples of companies that didn't realize they were marketing to the wrong audience. I have a friend. Her name is Rochelle DeVoe. And she is a consumer insights researcher, which means that people hire her to go and interview their best customers and understand what they're missing about them so that they can better market, better product develop. Rochelle told me, you know, she's like, the hardest part of this job is actually convincing CEOs that they don't know their customer as well as they think they do.

9:21Every CEO, every founder thinks that they know their customer extremely well. But Rochelle says that when she's actually hired and goes out and talks to people, that there are these very large gaps in knowledge. An example is this company Vim & Vigor is a sock company. It was started by a female athlete who was looking for compression socks and couldn't find one that she really liked on the market, so decided to make them herself. And her peer group really loved them. And so Vim and Vigor became this compression sock company for athletes. And it grew and grew, and then it plateaued. And they hired Rochelle to look into this and try to understand what was going on.

10:01And so Rochelle has this process by which she identifies the best customers, the most repeat customers, the most enthusiastic customers. These are the people who you really want to understand and make sure that you're able to appeal to and then find more of. After her research, she comes back to Vim and Vigor and she says, I got some news for you guys. You are a company for athletes, but your best customers are not athletes. You know who they are? They're people who spend all day on their feet working. They're like nurses. And so these people are really buying your socks despite you not marketing to them and really pretty much actively telling them that your company is not for them.

10:46Somehow, your best customers have tolerated that you don't seem to care about them enough to buy your product. And this radically changed the way that Vim and Vigor operated. They stopped presenting themselves as an athletic company, and they started changing their marketing and, I don't know, maybe even their product development, and as a result, unlocked growth.

11:13Jason points out that founders are also missing out on exposure in media outlets if they don't consider the media company's audience. People think of the media as a service provider and that the service that we provide is coverage for your business. And that's the reason why I get lots of emails that are phrased like this. How can I get a feature in Entrepreneur Magazine? I would like a feature in Entrepreneur Magazine. How can I go about that? You have to understand that media is not a service provider, that the people who work at a media organization are not thinking of themselves as being there to support you.

11:54They are not. Their job is not to care about you. Their job is to care about their reader or their listener or their viewer. So instead, you have to understand exactly what it is that they want and that they do, And then frame yourself as an opportunity to them. At Entrepreneur Magazine in particular, we think of ourselves not as a business magazine, but as a thinking magazine, which means that what we're really interested in is how have people thought through problems? How have they made counterintuitive decisions that led to significant results such that other people can read these stories and say, aha, that is really insightful.

12:39I know exactly now a different way that I can think about my own business.

12:51Ashwin Krishnaswamy also helps brands think about their businesses differently through his branding agency called Borge. He advocates for building your business backwards in some cases, meaning distribution first and then ideas second. companies that launched in the mid 2010s that went on to become very successful from differentiating based on aesthetics taking a traditional category call it mattresses and saying hey we're going to make a mattress brand for a more modern consumer for a millennial consumer and that became a kind of model of success and the model was also d2c but it was heavily laid in on the right kind of branding supporting that.

13:31And I think that kind of thinking has continued to carry through where people are starting new brands today and saying, hey, if I just differentiate based on aesthetics and look, I can start an apparel brand and it's going to be successful. And I think one of the things that not enough founders are thinking about early on is distribution and customer acquisition and what are their channels going to be for distribution? Because that is the kind of true make or break for the business. It's not just the idea and the brand, but it is that kind of customer acquisition process. I think everyone looks at, you know, Facebook and Meta and paid search and say, okay, this is going to be a staple of our business.

14:10And if we can acquire customers for 30, 40, 50, 60 bucks, but we're selling a product that has enough margin at a high enough average order value. Okay, great. We can make that happen. But a lot of brands are getting smarter on, hey, how can we use organic to acquire customers? How can we use TikTok organic to acquire customers? How can you use influencer gifting or micro creator gifting to build awareness for our product? I'm seeing some brands that are going kind of back to old ways of marketing, old as in it's not directly going to drive sales for your product, but you create demand for kind of adjacent categories.

14:47Maybe you start a podcast. There's a lot of brands getting into the podcasting space saying, hey, we're going to be a health and wellness podcast. it just so happens that we also make supplements and nutrition products. And so I think all of these shifts, all of these changes in kind of like spaces getting saturated or customer acquisition channels getting saturated are forcing brands to think more creatively and more long-term about how to acquire customers and how to build a business. And brands need to not only be creative, but unique. He gave an example of helping a ski glove company make their brand more aspirational.

15:21I always say niche down. If you think you're too niche, I'll suggest you're not niche enough. You haven't gone deeper. And a lot of people have a fear of doing that with their brand. They say, oh, well, we're going to turn people off if we go to niche. And what I say is you have to own the niche first. And especially if you can find a kind of aspirational niche or you find one category, you can actually pull other people into that category. And so a concrete example of this, I was talking to a company that makes really good and warm insulated ski gloves. And the way that they were positioning their product was, hey, we make some of the best ski gloves out there.

16:08And I said, I'm a snowboarder. I've been a snowboarder for 15 years. This doesn't speak to me. And I look at your product and I say, is this that different than Hestra? Because both gloves are 200 bucks. And I know Hestra has been around since the late 1800s. And I think they're really quality. But you're telling me all of these like professional ski boarders and ski patrol use your product. But you're just saying, hey, we make like really good ski gloves. And I said, that's not enough. I would go so far to say gloves built for the backcountry. So let's just target backcountry skiers and snowboarders, the absolute experts, the absolute cream of the crop of skiers.

16:46and the owner of this brand was saying, oh, but we don't want to alienate the people who like going to resorts, who might consider themselves like intermediate skiers. And I said, no, that's totally fine. You're not alienating them. What you do is if you were actually building a product that's good enough for all of those backcountry skiers and ski patrol people, people who ski at the resort level will say, hey, if it's good enough for them, it's definitely going to be good enough for me. And I actually aspire to be in that category one day. So I want to have the equipment that those people have.

17:18And so that's the idea of if you choose a niche that seems really specific, you can actually pull a market towards that rather than saying, hey, we're for everyone. Because if you're for everyone, the backcountry people aren't going to be interested.

17:36Mariam Hagihi is the Bank of Canada's first director of data science. She says that understanding why people make decisions is key to becoming a more confident leader. I actually think that the key metrics would be dependent upon each business and where in their journey they are at. Are they starting? Are they middle? Are they trying to scale up? What they're trying to hit? What part of the country or even which country they're operating from? Where is their market, et cetera, et cetera. The more important point here is understanding how decision-making works. And this has become a focus of mine for the past little while.

18:24There is a lot of research out there that talks about the way our brain works and the way decision-making works. And why does that matter to business owners, entrepreneurs, and founders? is because it matters how people decide to spend their money, whether they decide to buy your product or buy another product, whether they decide to invest in your business or not. So understanding how people make decisions, how human beings make decisions is a direct impact on your business.

19:02there's a whole domain out there in psychology and economics and actually this domain called behavioral economics which is kind of like the love child of psychology and economics and there are a ton of accessible books and podcasts and blogs there i can think of one of mega bestsellers is this book by Daniel Kahneman, who's the world famous psychologist, winner of a Nobel Prize in economics called Thinking Fast and Slow. There are other good materials out there about how our brain works, what makes us select, what makes us decide to take a direction versus is another one. But I think those are key, they're not metrics, but they're key concepts, key principles for founders and business owners and really everyone in the society to understand.

20:00I think strategy is just as much about what you decide to not do as it is about what you decide to do. So which direction to not go, which market to not enter, which product to not do is just as much of a strategic decision as it is about what to do. And sometimes metrics and data, if you just focus on metrics and math and data, you will lose that strategic side of what you decided to not do because it only shows what you did. In a world with artificial intelligence, it might seem like technology has all the solutions. But Merriam recommends a healthy dose of skepticism too. So what is disruptive technology?

20:46An innovation that significantly alters the way that we as consumers or as businesses operate, industries as a whole behave.

21:01One of those disruptive tech that is impacting our lives on a daily basis. And the impact of that is only going to grow. I'm sure all your audience have heard of all the recent stuff in the news about ChatGPT and that type of technology. I mean, that's existed now for a few years. That's nothing new. But having it at that scale and that readily available to the public, of course, that is new. The other one is innovations with respect to hyper-personalization. And that goes hand in hand with AI. So how products get developed, how much you can personalize it, how much you can have personalized marketing to reach a certain segment of the population.

21:54All of those can be enhanced by artificial intelligence and machine learning. And the good news is that it's becoming less and less expensive to access that kind of disruptive tech. There used to be a time when people would have to have large operations and, you know, pay a ton of money to developers and data scientists to understand those things. But now a lot of those capabilities are becoming available in a very easy to use format. So founders themselves could probably easily learn and pick it up to a certain degree. Maybe they would need a little bit of handholding, a little bit of training current there.

22:37Of course, you always need to consult experts and keep an eye out what we call responsible innovation. So responsible AI, that goes into concepts of fairness, ethics, bias, because these algorithms, they use massive amounts of data to train the machine to give you an answer, give you a solution. And if your underlying data has issues, has biases or a certain segment of the population is missing, then that would just get sometimes even magnified in the answer that AI is giving you. So it's important to keep an eye out that.

23:25Neil Hoyne from earlier in this episode echoes Miriam's sentiment on AI. It might be able to complete some tasks, but it won't build the same relationship with customers, at least not yet. You should be very curious about what this technology can do. You should play with it for yourself, but you shouldn't look at it as something that you have to immediately integrate into your business or worry about being left behind. Your business is successful because of everything you've done. To this point, AI should help to accelerate or transform it, not to dramatically change it and head in a different direction.

23:55You're talking about trust here and the risk of perhaps peeling away some layers of trust that you've built up over the years with your brand, right? Anything can happen with automation. I like to use very human examples for it. Every holiday, we just passed Mother's Day here in the States, I will write a card for my wife, right? My words, not as eloquent, but I like to think that I can write. Now, if I go into chat GPT and I ask it to write a card, it will do a brilliant job. But it doesn't sound like me. And the meaning is lost. And part of what the value is, is that human connection, that imperfection, the time spent, the effort, just as we were talking about as companies build products of sitting down there to try to come up with words.

24:41And so even though technically these AI models can give us the right answer, is it really the right thing for building trust with people, for building that genuine connection, that intimacy, I would argue no. And that's simply about knowing the limits, what your consumers want and how you deliver value to them. And that's it for this year. Thank you for tuning in. If you liked this episode, leave us a review or send it to a friend. We wish you a happy holiday from our entire Shopify Masters production team. Gogo Zogar and I are our producers. Matt Schwartz and Miku Betlam are our audio engineers.