Why Most Ecommerce Business's Are Not Ready To Scale with Steve Webster | Marketing Podcast

a bar, in terms of e-commerce growth, the highs and lows of the brand there. Their brand is doing really, really well. It's a fantastic brand, steeped in heritage, great team of people. And overall, the business is really successful across its full channel mix. So strong growth in emerging markets, particular rate pack, but still building its strength here in its home market. It's a commerce like our, our barbers retail experience, its wholesale and its franchise model has all been growing, driven really by the appetite for heritage and premium of power. Yep. We were saying earlier that heritage and premium is really busy at the moment. So why do you think that's cutting through at the moment in terms of growth? I think there's, it's an interesting market, the wind. There's a lot of uncertainty about the market. Yep. There's a lack of consumer confidence. The bottom end of the market certainly been squeezed from overseas. And I think there's a lot of consumers who are looking to make an investment in their apparel to buy one item that's durable, that statement rather than lots of me to product. And a brand like Barber, which is synonymous with quality and durability as well as heritage really fits that bill. It doesn't hurt the wax jackets have been on trend. That's true. Yeah, that's true. It's been pretty good. Is it hard to maintain, does it have interest? Is that quite hard to maintain that the wax jacket so over time? I've always thought that. I've maintained the interest or to keep, just to keep them. Yeah, I do need one. I was thinking about it. Yeah. No, absolutely not. I mean, give it a quick wax. Every 18 months, 24 months. No. You can send it into Barber. They'll wax it for you. Nice. Barber's repair service has got jackets going in it. There are 50, 60 years old, even older. It's not unusual to see someone send one in with a note to say, this was my grandparents, Jeff. Yeah. I've inherited it and I still wear it. So the customers are coming back kind of too? Yeah. And then what do the fastest grown brands usually have to why do they have the biggest cracks underneath? Okay. So there's a pattern that I've seen in the comments in the 20 years that I've been working in the industry and it's repeated a lot. And that's that the fastest grown brands quite often have big cracks in their operations. The reason why they have it, there's a multitude of reasons. But the first one really is around visibility. Now, we've got a room full of e-commerce professionals here with us today. I'm sure we went around and asked everyone what was on their dashboards. They would tell us that there's a lot of exciting things around there, but primarily the revenue, row-ass kind of mix. I'm looking out and there's two people nodding. The lights know what everyone else has got on their dashboards. So visibility comes into it. What does the business measure for? Revenue, row-ass. Those are the things that people optimize towards because that's what's visible. No one ever gets a standing evasion for fixing the OMS, ever, which is why it doesn't get fixed. So you have that visibility drive and behavior as well. Alongside that, you have incentives so people are typically measured and incentivised against those things that are on their dashboards. So you have a marketing team that is measured and incentivised on row-ass. You have a trading team who are measured and incentivised on revenue. No one is looking at cost margin too. CM2, so a contribution margin too. And that's the true cost after you fulfil the audit. Cost of acquisition, everything else, trip from it. And that's where the profit is and that's where the growth is. That's what makes the business sustainable. No one's looking at it in great detail. Everyone's focused on the top of the funnel and actually it's the bottom of the funnel where the cracks are and where they appear. That's it. The things that really sustain a business are not the things that people look at on a daily basis or get excited about. Yeah. If I did the boring stuff good. Absolutely. Yeah. And then what's the real cost of pushing growth before the business is ready? So it's a great question. The real cost is incredibly hard to calculate and people don't calculate it and that's part of the issue. The, an example would be, let's talk in terms of numbers so it feels a little bit easier. If you're in a business and you spend four million on acquisition a year, which is, yeah, it's hefty. Hefty, but not unrealistic. When your returns rate is 30%, do you effectively spend 1.2 million pounds out of your acquisition budget to return items to yourself? There's a lot of cost in there. It's not just your acquisition cost. It's your pick, your pack, your shipping cost, all of the processes and all the damage that it does to your brand through that process as well. So that's part of the issue. These costs compelled. You start off with an order. It's delayed. Then you have contact to the customer service team. Then you're probably going to get a refund request. Then you're going to get a negative review. So you've got a compounding cost through all of that. And then the next time you try and acquire a customer, what exists from that previous order is the negative review. So it's going to cost you more to acquire the next customer. So each of those gaps compiles the costs for the business overall. And you're talking obviously about revenue and roles, which I think everyone here is from every single stakeholder which drives me insane. It's obviously very important, but what would you say for businesses trying to grow? What's the lack of readiness? What do they really need to be focusing on then? Sure. There are normally, there's lots of things, but there's three things that normally occur together and stand out. So the first one would be a strategic conflict, effectively, where you have different functions in misalignment. So the example I'd give would be when the marketing brief and the operational capability don't match. So you'll talk about your brand, you'll present your proposition to the customer, you'll talk about next day delivery, you'll talk about policy of experience, you'll talk about easy returns, nor your messaging. And when you're talking about easy returns, no one can actually manage their way through the returns port unless they've got a degree in forensics. I don't want to be easy. Yeah, there's not really an easy return except for Amazon, maybe. So when you have those two different capability, you've got a significant issue, a significant gap in a crack in the business. Second one really is in your reviews, not going to mention a review company by name because there's plenty of them, some of them are having a tough time right now. But when your reviews, and I have a live example of this, I'm talking with a retailer currently, where their reviews, more than 90% of their reviews, relate to their proposition rather than the product. So when the reviews are talking about the quality of delivery, the speed of refund, the contact with customer service, it's a clear indication. That's one of those big gaps. And the third one, and this is less visible, but is really relevant, is if you ask the senior leadership team, what makes us different chances are you're going to get four or five different versions, three or four sentences, hedging what makes them different. Now business is not ready to scale unless that senior leadership team are clearly aligned on their point of difference and can articulate it clearly. Yeah, it's tough as marketing people though to also influence that, right? Well, were you talking about the overall business? Yeah. Okay, cool. So going back to you, because you were mentioning something that would show that maybe some business is not ready to scale. Would you say is a big indicator of a business that they are ready to scale? Okay, so a business that's ready to scale, go back to my last point where you can take three leaders from the exact team and you'll get a single answer to the question of who is our customer? What do we provide them? And you have one coherent message coming through. The second point would be that the contribution margin to is the main focus of the business, rather than revenue or row S. It's clearly communicated. It's spoken about in striving the decision making in the business. The third one would be around customer service. So businesses that treat their customer service team as a source of intelligence rather than just a cost line are in a much better position to scale. The information that comes through from customer service is some of the richest, most insightful information available to a business. Now who here, sorry if anyone at home, but who here, just quick share of hands, actually reads customer service contacts verbatim at least once a week. Great, I'm impressed because there's a huge number of businesses that do not surface that information. And when they do surface it, it's a KPI dashboard that goes out quarterly to the board. And then it's also about negatives as decisions and choices. So a company that's ready to scale understands decisions that it's made not to do something and can clearly articulate them. We haven't gone into this market because we haven't offered this as part of our proposition because we're not going to invest in this piece of technology because readiness isn't about a technological gap. It's about a mindset and a culture. How do you, sorry, go ahead. I was going to say, I think quite a few leaders say that as well. And it's really about the culture and getting that ingrained. Have you had an example of that where you've tried to kind of ingrained that in the culture or maybe it hasn't worked or? Yeah, I think anyone who works in the market in your recombose function is used to that experience of kind of screaming into the void. Okay. But equally, I've worked in environments where we have been able to do that. So I worked in Saudi for three years for the largest consumer electronics retailer in the Middle East and North Africa. Nice. And there's a lot of what I've just spoken about that we did in force. And we were pretty closely aligned as a senior leadership team. As an example, the monthly senior leadership team meeting started with a deep dive of customer service. That was the first point on the agenda. And every functional head had to present their learnings and findings from the last month from customer service. And their action plan to resolve those pain points. So we were living and breathing the customer experience. Nice. Going a little bit off script. I get in trouble for all but Barbara itself I guess what has been some really key wins you thought maybe it's your time there but even because you've obviously been in the DTC section. So a lot of grows from like a heritage brand that's luxury to now quite like it's catering to the younger generation. So what have you seen? Yeah, I guess what were some of the great wins that you had over those years. Obviously it's changed now with AI stuff is different but I think Barbara is credibly lucky because it seems to be winning on so many fronts. Yeah, definitely. The the provenance of the product attracts a really broad consumer base. So the iconic wax jacket you'll see being worn by someone 70 plus someone middle aged at these 20s teens. So it's got that really broad appeal. Was it always like that? Was it like you know how back in the day it's like we had one customer segment. Now you've got once upon a time for Barbara they had very much countryside segment. And it was very much skewed to the over 50s. So they've got a much broader appeal. The other things that have been successful that the retail roll out for Barbara has been really good. If you get the opportunity to visit any of the stores in London I really suggest you do. There's a great team in there and they really take care of you. London has been particularly successful because Barbara is an iconic brand so tourism helps feel fruitful in the business. Brands also been really fortunate in its both its franchise partnerships over things and its wholesale collaboration and partnerships with the future. And collaborations as well. The collaborations have an appeal to a slightly different demographic. The younger audience but with Paul Smith with Farm Rio that's really helped expand the brand's reach. And the collaboration with Levi's was massively successful. That's two big heritage brands coming together and it helps reach a broader audience and keep people interested and engage with the brand. But some of the more authentic pieces of activity really drive massive results. So Cat Deely is a big fan of Barbara. Sure she won't mind me mentioning it. Not that we're on first name terms but she quite often wears barba knitwear or barba dresses on her TV show. I can promise you we will sell out within an hour or two. The run rate on the products that Cat posts about on Instagram is absolutely amazing. How does Barbara see new entrance to the markets from other brands of brews? You know like Dewey from Ireland, Warren Williams, Ellie's been doing a stinner with our digital consultants. But how did Barbara view those other entries from different countries coming into UK? I think I don't think we perceive them really as direct competition. Again they've got heritage. They've got a history and a narrative. They've been around a long time. Our M Williams are not a new business. There is space for these heritage brands and it's really about for brand like Barbara. How do they grow? How do they develop into more of a head to toe lifestyle brand? There's a fantastic design team in Bergen and Nicola Brown lead menswear and women's wear respectively. Next on an amazing job on really elevating the women's wear product. Bergen and his team do a great job on providing more than just white jackets from men. So I've got on a snazzy pair of barba loafers today available both online and in store. So your barba has these iconic products that sit outside of just that core narrow wax jacket proposition. Barbara's challenge is really more about ensuring that the consumer understands more about barba than just the iconic jacket. I think the last question to kind of round it off. What would you suggest businesses to implement daily to help them go? Yeah. First thing is read 10 customer service posts every day without fail. It was for me. Definitely. I need to understand there's so much time and investment and thinking goes into crafting a message. You're marketing campaign, the product design, your website experience, the retail show, but there's a lot less focus on actually understanding how all of that's landed and what the customer perception is. I firmly believe reading 10 customer reviews every day will give you more insight than a research panel or consumer survey. So I would focus on that. Number one, second one is walk the journey. Shop your own website. Shop your competitors website. Buy something. Abandon a basket. Return something. Do it twice a week. My wife seems to be stress-testing Amazon. Try it with someone other than Amazon. Again, you're going to learn more. It's going to reshape the way you think about your brand, your proposition and your digital product by actually walking that journey. It's something that I've always encouraged the teams I've worked with to do. Think like a customer, act like a customer, and then come back to the business and say these are the things that excite me. These are the gaps and these are the fractures in our process. Have a 15 minute stand-up every day. Marketing and operations. That could be recon operations, could be operations generally. What are marketing working on? What are they looking to deliver? How can operations support that is everything in place to do it? Equally getting that fit and put from operations as well. We are creaking here. For God's sakes, don't push any more traffic to the website. We're at capacity. Or we're seeing a massive return on this product or we're seeing issues without delivery. We need to change the proposition. 15 minute stand-up daily is a discipline that really helps the business in terms of its day-to-day trade and its longer-term capability building. Then get into the habit of asking yourself or asking the business, is this still true? It's a bit of a nod question, isn't it? Is this still true? So many businesses, and I'm sure there's plenty in the room today, have processes and propositions that were built around assumptions that are at least three years old. How often are they revisited? You need your senior leadership team to be asking the question, is this still true? Challenge those assumptions. Take a couple of weeks and challenge them. Dive into them. Is this still true? Our assumption is that our customer is 55 years old and lives in the countryside. Is this still true? No, it's not because we see an huge spike in orders from students in London, as an example. And then the final thing I'd say is all of those things I've just mentioned are free. Don't cost anything. It's just a daily or weekly discipline to get into. They don't cost anything. Nothing's stopping you from doing them and the potential return is massive. So any business that's not investigating its customer service, comments, anyone who's not shopping their own journey and their competitors journey, and anyone who's not challenging the assumptions within the business, and you say, ask the question, why not? It's not a massive amount of time, zero cost, potential returns and massive. What are you doing with your time? What have you decided is more important than understanding your customer's perception of you? What your proposition actually looks and feels like to live and whether the assumptions that are running the business are still fit for today? What's more important? Let's open the floor up to questions. Does anyone have any questions for Steve? Questions are blah, blah. Questions generally on the e-commerce channel. So you say very? I love the idea of daily discipline and I love the idea of stand-ups, but one thing that always happens is unless you have a sprint mentality, people start feeling like they're saying the same thing over and over. How do you keep it fresh and stop people from feeling like, "Well, I'm going to say this in the essay yesterday, you know what I mean for a time?" Sure, it's a good point. I think it comes down to the trading pattern of the business, and sometimes it's okay for people to say, "I've no update today, same as yesterday." But this should always be an element of freshness in there, so it depends on the size of the team. If you've got 20 people in that room, this should always be someone who has something new to bring. If there's five of you in the room, same five every day, yeah, it can get a bit stale, but that daily stand-up can be as simple as my updates the same as yesterday. Nothing's moved. You can also have different priorities, I think, in that conversation. Whether it's like Monday's or on web devils, what make all you have a different light, you know, I guess it's like what you're really focusing on. We have some internally agencies that are with Star of the Week is all the trends and dating talking about that have happened on the weekend, and then Friday is a wrap-up of, you know. So I think having a little bit of the direction sometimes also helps. My answer is probably a little bit weak because no two days have ever been the same for me and even if there's always been a fire to fight somewhere. Always, yeah. Fresh of it. As far as I'm concerned, it really doesn't have to inform our, yeah, our commercial onsite are you at? It also has product strategy as well, like it's really like the next-wide community. What brown examples can you think of, who are so obviously? Well, I know Barbara are in there. I can't really speak from other brands because that's the thing with a lot of this. It's the unsexy stuff. As I think someone mentioned all the boring stuff, that no standing ovation for the order management system. But these are the businesses that are run well. What we all see in the press is we'll see Retailer X has put double digit million pound investment into AI. Fantastic. But we all know that shopping from them, they are using the worst career service in the UK and it's going to take five days to get your package instead of one. Yeah. It's where you have those experiments with brands that feel seamless. Those are the businesses that are actually doing that groundwork because it doesn't happen by accident. So recently, I bought a pair of comfortable shoes from sketches. Wow, exciting. But that was seamless. That was absolutely spot on start to finish no issue with it whatsoever. Mr. Shopping really helps you. When we were working with RMMillion, some of the team would go to places like Prada and understand their experiences and I mean, very different Prada as well, luxury brand. But some of their customer experiences, everything from WhatsApp to knowing people's names to the whole actual journey. I think once you go on mystery shop yourself and you test it with competitive brands, like you said, you can really see exactly every touch point and where they spend time versus if being an AI bot that's talking to you. I mean, I had won this week where I was trying to do a return and it was only an option of an AI feature and at the end of it, you're never going to use that product again. So I think it's only based on your personal experience really with those brands. And for me, having a good customer experience, I will continue to be with that brand. So I think it's getting the experience. Yeah, absolutely. And I don't want to name and shame anyone who isn't doing it. But certainly I've had similar experiences where I've been presented with a store finder. I know the store is closed. It's not there anymore. But the AI bot is confident. Really, really confident. And when you push it, it says, don't worry, check out a store finder page. Well, I've just come to you from the store finder page. You are broken. No one is looking at the customer feedback in that business. I think those of we can see it more easily when you see those big bone headed for lack of a better description errors. You know, no one is investigating the customer in that. It's so damaging to even adding on those. We've got, you know, there's some brands, again, not naming brands, but they'll add in plugins to Shopify that are very much AI driven and not tested and there's not a team looking after it. So I think I reviewed a website, mobile website for a minute acquaintance just last week and they very proudly rolled out new face here on the site. That's great shiny and this brand has great reviews. Really, really compelling product story, brand heritage. It's a really exciting site. And I was, yeah, I'm going to buy something from this. I like it. You can't, can't, on a mobile device. You cannot get in the basket to the checkout. Because the basket overlay covers the checkout, but they didn't release that on Monday for me to tell them on Tuesday that's been like that for some time. And no one, no one has liked it to the business. So I'm sure they've got customer service complaints because I would complain if I really wanted the product. They sure as hell don't have anyone walking the journey on a daily basis. Now, I know their traffic on mobile is going to be about 80% plus. So what is that costing them? People still forget to look at the mobile version of the performance and desk opposite. It's crazy. I worked, I did some consults a year ago with a business in Manchester. The owner of the business actually came in one day and took all the screens off the devs desks and made the work on mobile devices for a week. I mean, amazing. Just to get the message through to. I make sense actually. Cool. Thank you very much.