Guide to Marketing Complicated Products with Trey Ferro, CEO of Wag!, Ex-Spot Pet insurance | Ep. 418

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0:21Welcome to the Marketing Millennials, the no BS marketing podcast. I'm Daniel Murray and join me for unfiltered conversations with the brains behind marketing's coolest companies. The one request I tell our guests, stories or it didn't happen. Get ready to turn the f*** up. What is up Trey? Welcome to the podcast. Thanks Daniel. Happy to be here. I want to dive in quickly. First, Trey is a Gen Z, so don't hate on him millennials listening. But he has created a company that's growing rapidly, which is cool. But I'll let you talk about the story, the background, the why, why you started your company, and then we'll get into some marketing stuff.

1:13Trey Ferro:Absolutely. So back in 2019, I found a very interesting statistic. I found out that 2 % of pet parents in the U.S. had insurance, and overseas in Europe, it was closer to 40%. So I went on a solo mission to uncover why there was such a discrepancy between the two. And what I found is a lack of education. People didn't know about pet insurance, and a lot of people still don't know what pet insurance is. So Spot was kind of based on how can we get people up to date with this new product that is essentially health insurance for cats and dogs. And the millennials, the Gen Zs getting their first pets, they don't really know how expensive these vet bills can be.

1:58Trey Ferro:And we're here to help take away that financial stress from any unexpected vet bills. So you're not having to choose between, do I pay rent next month or do I pay for a$4 ,000 surgery bill? A lot of brands out there say like, you got to test, you got to test, but very few brands make that like a core of their strategy. So how did AB testing become a major driver for spot pets marketing? We've always been a really customizable insurance product. So no matter if it's your brother, you know, who's just getting out of the real world, getting his first job and not getting paid that much and just needs, you know, a super cheap accident plan or, you know, a suburban mom who's on her fifth or sixth dog and she knows the drill, she wants the best coverage possible.

2:48Trey Ferro:We offer that. So our AB testing strategy was how do we personalize not only pricing, but the message, the creative, everything that we're putting out to people. So I'm not going to message, you know, our TikTok audience the same as I'm going to message our employer group audience, people who are getting this through their employer. then I'm not going to offer the same prices either. You know, they can choose whatever they want, but I'm going to recommend, hey man, you know, I know that you're just getting out of college. You have a puppy. Let's start you off with something cheap and you can upgrade later.

3:19Trey Ferro:Or, hey, I see that you're in, you know, Beverly Hills. You have a varied designer dog breed. Let's make sure that you have really good coverage because those dogs are really, really expensive. So we've gone along, you know, along that route for the last five years. And it's really our conversion rates, what we look at every single day. You know, how many people come on site? How many people get a quote? How many people buy? That's what we're looking at every day. What are some of the most important elements to test when they be testing? Are you looking at copy, creative, CTA, audience targeting?

3:53And which one have you seen is the most effective when you do changing?

3:59Trey Ferro:It's crazy how effective a CTA can be. I mean, just a two word button versus a three word button, you could have your conversion rate change by 10, 20, 30 percent based on what you put in there. So I like to start with the small things and then get bigger, you know, low hanging fruit. But it's really customer engagement and what you say to people. So creative is nice. Like you want to make sure your creative is, you know, synergistic throughout the process. but I want to tell your brother that, hey, this is a really affordable product. I want to tell someone with a little bit more income, hey, this is the best five-star rated by Forbes, you know, highest customer satisfaction product and 24-7 support, all that stuff.

4:46Trey Ferro:Knowing that and really just, you know, making sure that your cadence is correct, you know, hitting people just enough where you're constantly on them, but not to the point where they're like, okay, you know, these guys are annoying. I'm not going to go with them because they text me every 24 hours. I'm out of here. So that's kind of the fine line that we've decided to walk. And it is a combination of everything, but my advice to other marketers out there, start small, then get bigger and bigger. You grew up in like the Gen Z cohort. What do you think that like your mindset as a Gen Z has like transformed how you approach market versus is what you see out there of millennials, Gen X, and older.

5:31Trey Ferro:I think the biggest part of my industry being insurance is the big scary words. I don't really want to hear all this insurance lingo. I want to know, hey, I'm going to give Spot$500. What do I get? I'm like, oh, I'm going to reimburse you 90 % of everything for these 35 different claims that you could have. and it's going to happen in 48 hours and you can call me 24 seven. And as a consumer, I'm like, that was very open and honest. And as long as the reviews hold correct and these guys are telling the truth, this is a good product. It's not, Oh, let me, you know, all these exclusions and I'm going to trick you and get you to pay more and upsell you.

6:15Trey Ferro:We're customizable. I don't care what plan you choose. I don't care how much you use it. We're never going to make you pay more because you use it, you know, up to your limits. I just want people to get this product because not enough people in America or Canada, we sell them both, have pet insurance. And pets who have insurance, they live 30 % longer. If you go to the vet, you're a healthier pet. We're trying to create communities of healthier pet families. And that's really our goal as a company. One thing that I think the Gen Zs have taught a lot of people is just like rapid transparency on pricing, rapid transparency on wording.

6:53I mean, I think millennials are into that now because we've been screwed by the healthcare system. We've been screwed by like old software pricing. We've been, there's a lot of things that have hidden all the details, which you could have done back in the day because there wasn't much options. But now there's so much options. People just want to know, hey, I'm going to spend X amount of money. I'm going to get X, like you said. And I mean, Lemonade kind of does that for just like renter's insurance is pretty plug and play. But you're like you are doing the same exact thing for like pets and not.

7:29And a lot of your part is just education, because you said in the beginning, it's 2 % of people know about pet insurance. And the only time I ever heard pet insurance was a thing was when one of my employers offered it as a benefit to people. And that's the only time I ever heard that people had that insurance.

7:50Trey Ferro:It's a new era, man. We can't just hear about, you know, cool products from our employers or our vets. You know, I'm trying to put it in front of people's faces on social, on television. I want to make this a fun thing. It's not scary like life insurance. You're going to die. This is, hey, we cover routine checkups. Like this is part of your family. This is your baby. You got to treat it like your baby. Babies are expensive. Make sure you're there to be financially responsible. You are a very digitally first company. So what are some things you've learned from using social to scale the business?

8:26What are some things that people can do that they aren't doing? And what are things that you're doing that are working on social that people should think about doing?

8:34Trey Ferro:Everyone wants to be viral. You know, that's the word that gets tossed around all the time. How do we make this viral? I'm going to go viral. And it's really just listening, social listening is so important. So listening to our reviews, asking our customers for user-generated content, recycling that into our paid media campaigns. And then I think the new digital age has created a new review network where places like Facebook groups and Reddit and Quora are so important because if I'm not doing my job as an insurer, my customers, my consumer base is going to talk about that in these forums. And there's a lot of great word of mouth, but there could be a lot of bad word of mouth if you don't do a good job.

9:21Trey Ferro:So I think that's what a lot of companies have to be held to a higher standard now is, hey, it's not just, you know, critics or acclaimed reviewers that are going to test, you know, how good you are. It's real people. And that's what we look at. You know, I look at Yelp reviews before I go to a restaurant. I'm not just going to say, oh, I saw this spot guy, you know, on television. I'm going to buy it. It's a big decision. You want to go through the steps, make sure that we're top rated, that everyone else trusts us, and we're fun and easy to understand. How do you get over, I know insurance is a very, I would say, not liked industry.

10:02So how do you get over the humps of, okay, someone posts something terrible on Reddit or they post the bad Google review? What is your action plan when you see something like that? Yeah, because Reddit has now become like the new Google search. People will search best pet insurance Reddit or best something Reddit. So how do you deal with that if you get negative conversations happening in the back channels?

10:30Trey Ferro:I try and funnel every single review about Spot that I can directly to my email, my Slack account. If someone has a bad experience on Google, BBB, it comes to me, my team, we address it. We reach out to the person personally and say, hey, I heard you had a bad experience. Tell us about it. And we fix it. And a lot of the iterations and the A-B testing that we've done is, hey, I tried calling you guys and your service rep wasn't good. Or, hey, I tried to email this photo and it bounced back to whatever reason. And sometimes it's an us problem. Sometimes they overreact to them problem. But the big thing is being open and honest to people and responding when appropriate and, you know, kind of letting people rant when they want to rant.

11:22Trey Ferro:You know, if I make a mistake, that's on me. And, you know, it doesn't happen that often, which is great why we've been so successful. But I love boosting the good reviews as well. You know, we have 6 ,000 Trustpilot reviews. We have a 4.8 rating. We are constantly looking that over and seeing, okay, what's good? How do we make it even better? People like, you know, that we offer perks for farmer's dog and dog collars. Great. Let's go get more perks partners. People like, you know, multi-pet discounts. Great. Keep that up. Let's see how much, you know, more we can offer people. But it's really looking and not ignoring it.

12:02Trey Ferro:I think a lot of other companies are just ignoring what they see online.

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12:46I wanted to ask you how you walk that fine line because I think I mean, I do a podcast, I get bad reviews, good reviews, and there's usually 10x more people are saying good things than bad things, but you always over index on that one person who's just going crazy on you so how do you balance like not letting your team or you being discouraged versus on that bad review versus actually dealing with it because that could also take you down that whole path where you just are not focusing on all the

13:22Trey Ferro:good you're doing as well i think the first question i ask myself is is there anything i can do about it. You know, was this something that might've been my fault or do I immediately know it's not my fault? If someone was like, I hate your logo color. I'm like, I'm sorry that one guy hates my logo color. I'm not going to change it. You know, hundreds of thousands of other people like it. And I think that it's important to just compartmentalize that. But if someone says, Hey, I hated, you know, that it took more than a couple of days to get my money back, we're going to investigate that. And if it was, you know, a legit reason, like they were talking to a veterinarian, we were getting all the facts, that's fine.

14:03Trey Ferro:We're just going to have to let that one go. But if it's, Hey, we messed up for whatever reason, you know, I'm going to fix it. I'm going to contact that person and, you know, see how I can do better. Um, so just compartmentalizing it and making sure that you're not, you know, overreacting from time to time. yeah i want to go back and a b testing because i mean i've checked out your website there's a lot of different things that are like good about the website that people could lean on but a lot of things you could a b test on your home page for example uh so what are what are some things that you i mean obviously there's like your tagline your yellow i mean your orange button then you You also have another like recognized by pet experts, trusted by pet parents, which is a good tagline.

14:53And then you also have a bunch of social proof. Then you also have the pets. Like, do you A-B test the animals? Do you A-B test the social proof there? Do you A-B test? Like, what are you thinking of A-B testing when you're A-B testing?

15:08Trey Ferro:Yeah, for us being an industry where you don't really understand the value prop, I think it's important that we show people, hey, this is what we cover and this is how it works. So content for us is really important just because you don't know what it is. If I was a, you know, lipstick brand, a soda brand, like I know what lipstick is. I know what soda is. I want to see pictures. I want to see, you know, reviews on that more than anything. So it really does depend on what your product is. I think that colors are great. You know, I actually worked at Grubhub about eight years ago, and they found that when they switched the checkout button from Grubhub red to just like a go street sign green, it increased conversion by 10%.

16:00Trey Ferro:So there are tests like that that'll prove to be really good for the company. But it does depend on what you are. And I think that people just have to have a good A-B testing software, whether they build that in-house or get a third party. It's a big part of your scale. And I think that a lot of people get too hyper-focused on one thing. And you just have to have a big backlog of, hey, what can work and why, and make data-driven decisions. Yeah. When you started the company, what do you recognize was the growth levers to scale this? You obviously saw there was a gap in the market by Europeans and U.S.

16:41people not having better experience. But what are the channels you first tag on? Could you walk me through the beginning stages of how you started to scale this business?

16:49Trey Ferro:Yeah. I mean, the best story I have is day one. You know, we set up the website. We're all excited. We press set live and we're all looking at the same computer screen. We're like, all right, waiting for the sales to come in. but nothing came in. We got maybe a few clicks, one sale, and we were all wondering, well, what the heck? We set this live. We put whatever digital flyers out into the world. It's not enough. You need to build an ecosystem. So the first thing we did is, okay, let's find some places to review us. And we got Forbes and MarketWatch. And we said, hey, we're the new pet insurance players in town can write stories about us.

17:34Trey Ferro:When people search new pet insurance, best pet insurance, we show up. The next thing we did is, okay, let's start doing top of funnel. Let's do social media. No one else is doing social media. Everyone's going to the veterinarians and the adoption shelters. So let's put this out and just get top of funnel. They'll see a spot. They'll say, what is pet insurance? They Google it and they say, oh, Forbes ranked these guys. That's pretty good. Now, Forbes ranked us. They've seen us on social. The last thing they need is that social proof. So then we bring in real reviews, user generated content, trust pilot reviews and say, hey, you've seen us.

18:13Trey Ferro:You know, these guys say we're good. Our customers say we're good. You're now on the website. The website says very clearly what you're going to get for this amount of money. and here's all of our good customer service stats, this is why you should go for us. You know, the phrase I like to use is nuts. The thing to inspire people is need, urgency, trust, and a money sign for affordability. So if you can get someone to understand they need it, you know, pets are expensive. You need this. Urgency. You need to get this before, you know, you have an accident because if you get it after, we're not going to cover it.

18:51Trey Ferro:trust great reviews and then money we're affordable we have a great target it's crazy because i mean pet lovers are the obviously have a dying love for their their pattern there is a need to to want to keep that like even saying the the statue said that 30 live longer everybody wants their pet to be healthy happy just like their kid like healthy happy so how how to do that i mean it's it's good that you're in a an urgency market but there's also marketing to people who are thinking about getting pets or have families that have pets like are you thinking about that so but i also see that your your site is very which other sites aren't always like this, but like very like educational because people don't know what pet insurance.

19:48So for example, like what is accident insurance? Like what is pet insurance? You're answering the question so the people don't have to go off your site to do the research. All the research is done on your site when you get there. Because even if you understand that you need pet insurance, you still, insurance is complicated. Not everybody understands. They might understand that I might need this, but they need to be educated. What do I actually need? Do I need this or this or this? And what stage of life am I in? What stage of life is a dog in? All that good stuff. That's exactly right. What are some underrated things that you thought wouldn't work, like tests or anything that you thought wouldn't work that ended up working?

20:33Trey Ferro:One of the tests we did was a hyper-detailed checkout, like final page. And I thought that people would just like to see, okay, here's what you're paying, you know, check out, move fast, get through the funnel as fast as possible. Because you don't want people to have to press a bunch of buttons or get distracted by stuff. But I think that the digital user today is really savvy. And we put, you know, hey, this is what this costs. This is exactly when this is going to start. Like we're going to send it to this email. Like, please make sure this is your billing address. Do you want direct deposit now?

21:13Trey Ferro:We just loaded that page up with more information. And I guess people felt a little bit more reassured. Like they didn't have to read all of it, but they knew they didn't have to cycle back for any additional information. It was all right there. So it was a lot of content and a lot of info on the page, but it did really well. And I think that, you know, it works for some demographics, some verticals and others. It doesn't, you know, if I'm scrolling on Tik TOK, I go to spot and I want to get a quote fast during my lunch break, you know, that's a totally different customer than someone who's gone through, you know, five hours of research, talking to their spouse about it.

21:55Trey Ferro:And I think that that different personalization at every step of the funnel, I always thought that it can't be that different, but it really is sometimes. You know, one picture could make all the difference of, hey, you know, that's a primarily person-focused picture. I don't really resonate with the person as much, but, oh, my gosh, that dog looks like my dog. And figuring out, you know, what are the most popular dog breeds? See if we can understand what the person has, guess, and then put that dog breed in front of them on the website. All that little stuff makes a huge difference. Yeah. Could you talk about some of your funnels, what they look like?

22:35Like you just talked about there's one from Instagram. What are the type of personalization funnels you have right now?

22:43Trey Ferro:I think the biggest part of the personalization is the customer engagement. So if you're coming from social media, you know, I know that you're not super warm. I'm not going to hit you, you know, every single day with an email or a text or whatever else. But if you're coming from like a comparison site or, you know, a direct referral from your employer, like I know that you're really focusing on this. And I'm going to hit you as much as I can because I know you want to give you the best discounts and just move you from stage to stage. so our big ones are social media review sites uh you know friends and family is a huge one um if you're friends and family i'm going to say you know go see what ex pet like i have the name from the referrals i'll see go see what bucky saved last year bucky saved 800 whatever is public information i'll say that i'm not going to give anything i can't but uh people really like to know that we're the experts and not pretending.

23:54Trey Ferro:So not saying, Hey, this is the best for Bucky. It's, Hey, this is the best for a three-year-old Chihuahua. You know, I understand what's the best. I'm going to offer you the best. You can trust me. Yeah. I think, I mean, people, expertise is belts trust. So if you can give the expertise upfront, it's also, I mean, but you have a lot On your site, there's a lot of expertise through social proof as well. So you definitely rely on that. I want to go into, are you using any AI in your workflow now that AI is becoming big? How are you using it? How is it improving your business today? We use AI to create the rough drafts for some of our customer engagement journeys.