Small Biz Expo with Dexter Dethmers
Speaker 1: Hey everyone, in today's episode of the Honey inaudible, eCommerce Industry Trends and Insights, Honeys, Dexter Dethmers reviews, fresh post pandemic consumer insights, and shares immediate steps that businesses can take to adapt to and thrive in what industry experts have coined the new normal in online shopping and digital commerce.
Dexter Dethmers: Hello everyone, hope you're all well and having a great day. My name is Dexter Dethmers. I'm Senior Manager of Partnerships at Honey. And today, I'm going to be talking to you all about digital customer engagement solutions for small and medium- sized businesses. So just a little bit about me. I have been in the affiliate and digital marketing space for over 10 years. I actually started my career overseas in Australia, where I worked for a startup and got my footing into the digital marketing space. Ever since then, I've moved back to the States and I've worked with several large Fortune 500 companies to help develop strategies for them to build and grow their business. And most recently, I've been working with Honey, which is an amazing company that helps businesses of all types, engage customers in a wide variety of ways. And specifically, I focus very heavily on small and medium sized businesses. And so today I want to talk a little bit more with you all about how to engage your customers in an evolving environment. Obviously, over the last year, I guess almost year and a half now, we've definitely seen a lot of consumer behavior change. And you've probably heard this phrase before, but a lot of people on the news and on social media and all sorts of places are saying the new normal. And that new normal means that basically, there are new behaviors that customers are exhibiting, that people are exhibiting as people live their lives in different ways as a result of the pandemic. So let's talk a little bit more about what the new normal is and how to engage this new normal in a way that boosts your bottom line. And so to do that, I'm going to take you through some stats based on a survey that Honey conducted in September of 2020. And I'm highlighting some stats that I think show customer behavior that has staying power beyond what we're living through. So there are certain behaviors that obviously, changed during the pandemic that will go back to the way they were. But then there are others where, at least from what we've observed, we believe actually have staying power beyond the pandemic and have just accelerated these digital tendencies that we've been seeing accelerate over the past five to 10 years, really take off and accelerate even faster with the pandemic. So let's talk about it. So firstly, exponentially more consumers are shopping online. And again, this is something that I sincerely believe will continue on through, beyond the pandemic. People have created new behaviors that for sure are some of them will go back to normal in some ways, but a lot of them will stick around. So that's the first big trend that we're seeing is just more people are shopping online, more people are developing comfort, shopping online because of the pandemic. Some people, particularly in older age demographics, may not have really shopped as much as they do now online and they've become more comfortable with it. They've actually learned how to use new tools to shop online. The next thing that we've seen is 80% of consumers value price and convenience more than ever. So those are the two big themes. You have more people shopping online and then you have more people that value price and convenience. So let's dig a little bit deeper into the numbers and I'll show you what specifically we found in terms of price and convenience. So just looking at the pandemic shopper again, this is from a survey that Honey conducted in a September of 2020 with Atomic Research. And the first thing that we noticed as a big insight is that 75% of shoppers currently seek more deals online than they did before the pandemic. So people are actually becoming more price conscious, and this is probably largely due to economic factors that people were facing during the pandemic. And also, just a general feeling of uncertainty from a financial perspective, but also could have something to do with the fact that people have more time to consider purchases than they did before. Particularly if they're working at home or they're spending more time at home in general, they may just have more time to consider a purchase. 79% of shoppers say discovering a deal is more important than it was before the pandemic. Again, going back to the economic factors at play, economic uncertainty means that people are going to be a little bit more careful with the purchases that they make and so discovering a deal has become a lot more important to the consumer than it was back in 2019. 67% of shoppers report feeling less guilty purchasing when they find a deal than they did before the pandemic. Now, this is something that I think is really interesting and I think just putting yourself in the shoes of the consumer for a moment, I think we've all had those purchases that we've made online. We don't feel great about them and we don't necessarily know why. Sometimes it's because maybe it wasn't the right product or we felt like we didn't consider the purchase the way that maybe we should have, but also sometimes it's because you, maybe we're browsing online and all of a sudden you see that same product for$ 10 cheaper three days after you bought it. Or maybe you just didn't get a deal or a coupon, you just paid face value for the item. And there's just not a great feeling that goes along with that. And I think that that feeling is something that is really important as a small business to try and address. You want to make sure that your consumers are feeling really good about the purchases that they make, because if they feel good about the purchases that they make, they are more likely to connect a positive experience with your brand. And if they connect a positive experience with your brand, they're more likely to come back and buy again. So while I think this is somewhat of an intangible statistic about the way someone feels, like the idea of feeling guilty about a purchase, I do think that if you address this in a smart way, you can get people feeling good about the purchases that they make, and it will actually result in people coming back and buying again. Next 62% of shoppers say it's more important to share deals online. This is interesting because I think sometimes we live in a society where you get a good deal, but you don't really want to tell people about it because you almost want people to think that you paid a lot of money for it. That's sometimes a psychological phenomenon that I've seen play out. But then on the flip side, when you're in an economic environment where people know not everybody is doing well, and some people are struggling, there's almost a braggadocious culture that I've seen grow online, where people are bragging about the deals that they've gotten. I think if you go on Instagram or Facebook, you can see coupon cutter clubs or deal saver clubs. And these clubs are basically, people that are almost bragging about the halls that they get when they go to Target and use a bunch of different coupons. So that culture is actually growing in prominence. And we've seen that culture accelerate during the pandemic where people are being really proud about getting a good deal and they're feeling really good about it. So I think talking about feeling less guilty about the purchase that you make is one thing, but feeling proud about the purchase that you made, because you got a deal is a whole another thing. Because that actually adds to virality and that can actually serve as a marketing mechanism for you, if you use it in the right way and tapping into that deal culture. And the last thing is 81% of parents search deals more frequently than they did before the pandemic. So what we're actually seeing is more and more people are starting their searches based on getting a deal than they did before the pandemic, which is really interesting. When you think about top of funnel, I think people tend to think about influencers or content marketing. And a lot of that stuff is true, there's definitely a lot of top of funnel activity within those areas, but we're also starting to see a lot of top of funnel activity based on price conscious purchasing. So people are actually searching for deals versus searching for specific products. So I think this is all important to understand again, this is the way the pandemic shopper behave, but we do believe that these specific attributes are going to last beyond the pandemic. So let's talk about meeting this unique moment as a small business. And we talked about how the consumer preferences are involving, consumers are more online than they've ever been before, so they're making more purchases online. They're focusing more on convenience, they're focusing more on price. So how do you meet that customer where they are in this evolving time? Well, one thing that I thought I would share with everybody is affiliate marketing. I think affiliate marketing is a fantastic way of meeting customers where they are. And for those of you that don't know what affiliate marketing is, I'll give you a definition here and I'm going to talk a little bit more at a really basic level about what affiliate marketing is and how it works. And then I'm going to talk a little bit more about how you can potentially use affiliate marketing to grow your business. So affiliate marketing is a way for merchants to partner directly with publishers and influencers on a performance basis and track directly attributable performance. So that's an interesting definition and I'll break it down a little bit more so it's a little easier for you to understand. It's important to know it before I do that, when I say publishers, I mean websites. So some examples of publishers might be Honey, we're a publisher, BuzzFeed is a publisher, CNN is a publisher, Rakuten is a publisher, RetailMeNot is a publisher, Conde Nast is a publisher. So when I say publishers, I basically mean websites that you visit that present you content. It could be deal focused content. It could be cashback, it could be news or listicles. It's a huge space when I say publisher. So it's a, it's a broad term. And then influencers, I think are a little bit more of a popular term nowadays, but basically referring to Instagram influencers, Twitter influencers, TikTok influencers. So you can actually reach all of these different publisher sets within the affiliate marketing channel on a performance basis. So what do I mean by performance basis? Let's say you have a toothpaste subscription company that you're starting up and your idea is you want to sell toothpaste subscription. So you have this really cool toothpaste that helps with enamel and all this other great stuff, and you want to sell it on a subscription basis. And so you're willing to pay$ 5 for every new subscription signup that you get to publishers. So in this case to keep it simple, maybe let's say Buzzfeed, you're willing to pay Buzzfeed$5 for every sale that you get. Well, in affiliate marketing, what you could do is you could sign up for an affiliate network. Then you could list online that you are willing to pay$5 for every new subscriber who signs up to their monthly toothpaste subscription. And then all of these different publishers that I talked about, Buzzfeed, CNN, Rakuten, Honey, they all are able to see this offer that you made. That you're willing to pay$5 for every new toothpaste subscriber. So what they'll do is they'll take links off the affiliate network and they will find ways to promote your toothpaste subscription. So essentially, through the network, what will happen is these publishers will pull down a tracking link and they will potentially put up some information about your company on their website to promote it. And every time a shopper clicks on that link and signs up for toothpaste subscription, the affiliate network will automatically track that sale, came from a specific publisher and will facilitate the payment of$ 5 for each sale coming from that specific publisher. And then at the end of the month, you'll be able to see how many sales you got through the affiliate marketing channel and which publishers drove those sales. So you may see 10 from Buzzfeed, you may see 150 from Honey, you may see 25 from RetailMeNot, and it will actually show you where all those sales came from and how much you paid out to each publisher. And likewise, those publishers can see those payments coming from you. So they can see, oh, I sold 25 subscriptions to this toothpaste subscription company. So they can actually see it all in reporting. So it's a really great way to reach customers in a really dynamic way. So let's talk a little bit about the benefits. I gave you an example at a really high level of what affiliate marketing is. I know it's a little complex and convoluted, but if you are interested in affiliate marketing, I definitely recommend doing your research and finding a network that you can potentially sign up for so that you can start testing offers. But before you do that, let me talk to you a little bit about what the benefits of affiliate marketing are. So the first is that affiliate marketing is a performance- based solution and you have the ability to set your own ROAS. ROAS, stands for Return On Ad Spend. So you have the ability to basically set your marketing costs because you're only paying when a sale occurs and you determine how much you're willing to pay per sale, you're essentially setting your own return on ad spend, or your own customer acquisition costs. So you may, let's use the toothpaste subscription service, for every subscription that you get you might make$ 10, but you're giving away five to the publisher in order for them to drive that sale. So your return on ad spend in that particular instance is two to one, for every dollar that you spend, you're getting$2 back, basically. So by working in the affiliate space, you can play around with this a little bit to figure out what is the right amount for you to pay for a customer. So that's the first benefit that I would say, it's risk- free too, so if you don't sell any toothpaste subscriptions in the example, I was just sharing, then you don't pay anything. So you're only paying for sales that are happening versus maybe if you're marketing in search display or social, you might be paying for the exposure that you're getting. So you might be paying per view or per click. And those things don't necessarily drive sales. They may drive awareness and awareness is an important part of your marketing mix, but they're not going to drive sales. And so the beauty of affiliate marketing is it allows you to set that specific spend per sale. And you're only paying for what you get. The next benefit is access to a wide variety of publishers. I talked about earlier, how, when I say publishers, it's a really broad term because within these affiliate networks, there are tens of thousands of different publishers that are signed up to promote different businesses and you'll get access to those publishers as soon as you sign up for one of these affiliate networks, you'll be able to interact with them. So again, I gave some examples earlier of content publishers, so when I say content publishers, I would say bloggers or larger editorial content sites like Buzzfeed or CNN, or maybe even the points guy you may have seen, he has a financial blog. So there's so many that are in that content bucket, but then you also have access to loyalty publishers. So Honey is a loyalty publisher because we do a lot of cash back or rewards, but then also there's Rakuten, there's Drop, there's inaudible and these are all cashback publishers that you'll have access to through the affiliate networks. And then of course, you have coupon sites as well, as well as even some companies that will do search on your behalf. So there's some companies out there that will offer you the ability to basically pay them on a CPA basis. And they'll run all of your search campaigns. There's even some publishers out there that will run your social media campaigns for you. So there's all kinds of different publishers that are out there in the affiliate ecosystem. And the beauty of affiliate marketing is you're putting, you're almost outsourcing your marketing to these publishers and paying for it on a fixed performance basis. So it's really a cool hacky way of growing your business as a small medium sized business. And again, that brings me to point number three, which is you're almost outsourcing your marketing mix, by being really aggressive in the affiliate space, you'll be able to cover a lot of different marketing channels, influencers, content, loyalty, rewards, search, display. You can do all of these things through affiliate marketing and on a fixed return on ad spend basis. So you're able to outsource your marketing mix in a way that you couldn't do in almost any other marketing channel. The other thing is you'll be able to learn a lot from publishers on their knowledge about your customers and how to get more. What I mean by that is when you put your offers out into the affiliate ecosystem, you'll start to see publishers pick them up and you'll start to see publishers advertise your brand. And sometimes they'll advertise your brand in a way that you would never have even thought of. Sometimes if you talk with these publishers, they'll have a lot of ideas about how to better promote your brand because these publishers are making their living off driving sales for your businesses and businesses like yours. So they've done this before. And so you'll actually be able to learn a lot about your customers through how your publishers are working with your customers. The last thing is new audiences and new users. So by promoting your offers through affiliate networks, you are able to gain access to audiences that you wouldn't have previously had access to. And by virtue of that, you'll drive lots of new users. And this is something that can't be understated enough, actually, a very understated benefit of affiliate marketing is that you are gaining access to tons and tons of built- in new audiences. So those are some of the benefits of working within affiliate marketing. So I want to give you some insider tips. If you decide to start your affiliate marketing journey, or if you're already doing affiliate marketing, I wanted to share with you some inside baseball that I've learned over the last 10 years of working in affiliate marketing. So the first thing is commission rates. You're probably going to wonder depending on what you sell, how much should I pay per sale, or how much should I pay per signup? And this can be something really challenging when you're first starting out. I think the most important thing to remember is with affiliate marketing, nothing is set in stone, so you can change your commission rates very quickly. And you also don't necessarily have to have a fixed strategy, so you might decide you want to pay more to one type of publisher. So you might want to pay a higher cost per sale or cost per acquisition for one type of publisher versus a little bit lower for a different type. But my biggest recommendation when it comes to commission rates is test. You want to test how your commission rates are working for you as a business, how many new users are bringing in. I do think that one mistake that I've seen from a lot of small businesses is that they are scared to spend money on commission at an early stage. And I think that's a fundamental mistake, I think that when you're first starting up as a business, your goal shouldn't necessarily be to make lots and lots of money early on, your goal should be to bring in as many users as possible and as many potential customers as possible so you can learn as much as possible quickly. And a lot of times what this means is that you're going to have to spend a lot of money on customer acquisition and marketing in order to really build that base of that business. So I would say don't be afraid to be a little aggressive with your commission rates, even though affiliate marketing is a very cost- effective channel, if you're very aggressive, you can really catapult your business and your growth really quickly if you're smart about how you're paying your publishers. The next thing is competitor audits. So look at your competitors. I would say, this is an important thing for any small business to understand is, you need to know what your customer's options are out there. So if you're selling teeth whitening kits, you need to know what every single teeth whitening kit out there is and what they're offering to their customers, how they're working with them customers. And if you're in affiliate, you need to know what your competitors are doing, what publishers are they working with? What are they paying out? There's ways that you can go about figuring out what your competitors are doing on a marketing basis. There's lots of websites out there like who runs where and similar web, where you can actually get a lot of free data and insight on exactly what your competitors are doing, where they're promoting their brand, how much they're paying, what search terms they're going hard on. You need to study your competitors as much as possible in affiliate marketing and how their affiliate marketing strategy is going. But I would say just in general, being really aggressive about understanding your competitors at an early stage is very important because your customers are going to be evaluating you against your competitors. The next thing is newer brands invest more to gain publisher attention. And I talked about this in rule number one, but if you're a new brand and nobody knows who you are, you're going to have to pay more. That's just the way it works. Because publishers will decide to promote you based on what their returning is. So how much money they're making by promoting you. And so if you're a brand that a lot of customers don't recognize, you're going to have to pay more because your customers are going to convert at a lower rate. You have to build that customer recognition. You have to build that customer loyalty. It doesn't just happened. And when you're a new business, your customer loyalty and your customer brand is very low. So you have to be more aggressive, than more established brands. It's the only way that you will gain publisher attention. The next is tailor strategies for each publisher. I talked a little about this in rule number one as well. But I think another big mistake that new businesses make when they're entering the affiliates base is that they try this one size fits all approach. So they say, okay, we're going to pay$5 for every subscription sign up that we're going to get. And here's the marketing material that we're going to use and here you go, and everybody's going to have the same CPA, we're going to talk to everybody the same. When the truth of the matter is every single publisher that you're talking to is different. And so if you can create really good custom strategies for each publisher, you will have a much better chance of succeeding. And honestly, you may actually not have to pay quite as much because if you really understand what your publishers need from you, sometimes it's not always more money. Sometimes it's better creative, better messaging, better landing pages, just a better checkout flow. It's not always going to be, hey, you need to pay us more. In fact, a lot of the time publishers will come back you and say, you could pay us a thousand dollars a sale, and we're not going to sell anything until you fix your landing pages. So they will tell you specifically what you need to be successful. And so listen to them and tailor your strategies to each one differently based on what they do. And then the last tip is be flexible. And this goes along with all of these different rules is, I think when you're a small business, you come up with this plan. And I think one of my favorite quotes, it's a Mike Tyson quote, it's, everybody has a plan until they get hit. And I think that that is a very good piece of advice to anyone is, you need to be ready for any sort of change. The pandemic is a perfect example of needing to be flexible. You never know when something is going to happen that's going to drastically change consumer behavior forever. And the pandemic is one of those things that's done that. So you have to be attuned to these changes and you have to be flexible to them. You have to be ready to change. And your affiliate marketing strategy is no different, you have to adapt and be flexible. You may be humming along really nicely and you're paying your$ 5 per subscription. And then all of a sudden you realize you're having cashflow issues. So you have to very quickly adjust your CPA in order to make sure that you're not running into issues with your creditors or whatever it might be, you have to be flexible, you have to be ready adapt to change. So that's my final recommendation there on affiliate marketing, insider tips. So affiliate marketing is a great way to address customers in this changing environment where price and convenience are extremely important and more shoppers than ever are shopping online. Next, I want to talk a little bit about Shopify because I think this is another really amazing tool for small businesses that maybe are just starting or getting off the ground to really catapult your business and have a lot of success. So, Shopify, as most of you probably know is an e- commerce platform that allows businesses to really easily set up these really beautiful looking e- commerce websites and these e- commerce shops. And just a little bit about their mission that we got from their website was, their goal is to make commerce better for everyone. They want to help people achieve independence by making it easier to start, run, and grow your business. And they believe in the future of commerce that has more voices, not fewer. So they're reducing the barriers to business ownership to make commerce better for everyone. So if you are just thinking about starting up your business, or maybe you have a brick and mortar business, and you're trying to figure out how to get online, Shopify is an amazing way of doing this because they've built tons and tons of tools that are tailor made for small businesses. Not only that, they have a really robust app store that has plugins to all kinds of great tools, you might be using MailChimp for your email marketing. You might be using QuickBooks for your invoicing software or your payroll. And they actually have plugins for all of these things. So you can really easily make your business flow really nicely from a technological perspective and also create a really great experience for your customers when they're coming to your website. Shopify has grown dramatically through the pandemic. I think this is one big story that if you follow the world of investing or you follow the world of business, Shopify has been a really hot name coming into the pandemic because they've made it so easy for brick and mortar stores to adopt their business to an online world. And so they power over a million businesses and they oversee about 320 billion in global economic activity. And it's growing, it's growing all the time and it's growing for a reason because Shopify is a really great platform for small businesses. So if you're just starting out and you're trying to get on your feet, highly recommend checking out Shopify as platform as a way to power the growth of your business. And with that, I wanted to also announce that Honey has also developed an app that syncs really nicely with Shopify. So if you're a small business, that's just starting out and you want to get yourself involved in the e- commerce world and really set up a great loyalty platform right off the bat for your customers, Honey has a really great app that we've just recently launched with Shopify. So definitely check that out if you're a Shopify user or if you're going to get started with Shopify. So what is Honey? Let's talk about Honey a little bit, because I haven't talked about Honey at all and it's a really amazing tool to help small businesses grow. So what is Honey? Honey is a platform that helps you to engage your customers and help you turn passive shoppers into active buyers. And Honey does this by automatically applying coupon codes at checkout for users, and also allowing you the ability to give cash back to your users when they check out using honey. So it's almost like a white label loyalty solution for your business. So let's talk about Honey by the numbers. So worldwide, we have over 29 million members and we have over 42 million monthly visitors to join honey. com. We see over$ 600 million in monthly GMV by over 10,000 Honey partners. So we're partnered with over 10, 000 merchants worldwide. And we also have about$ 15 billion worth of purchase intent through our tool called Droplist, which actually allows users to save products that they love and set the price that they would be willing to purchase that product at or get notified when a product reaches a certain discount amount. So let's talk a little bit more about Honey Solutions. We have an amazing scale, I just talked about how many users we have globally, but tools that we have specifically for you as a small business is we have our promotional code management with Savings Finder. So we allow you to add coupon codes to Honey, specifically, Honey branded codes, that are automatically applied to users at check out. And this is a really great tool if you're looking to improve conversion rate, what we find is that Honey braided codes improve conversion rate for users by up to 10%, which is really amazing. And then we of course, have Honey gold and Honey store offers and this tool actually allows you to set cashback rates for your users. So if you're participating in Honey gold, your users can receive, in some cases between five and 10% cash back when they check out. And this is another really amazing tool to turn someone who's just thinking about buying a product into actually dipping their toe in the water and buying that product. And I would say the other thing we talked a little bit about earlier, talking about how the culture of buying is changing to be more deal centric. Honey helps people feel good about the purchases that they're making. And we talked earlier about the feeling of guilt. Honey reduces that guilt and it creates this really positive connection between you, you as a brand and your customer. So when you're cutting customer checks out, they get their cash back, they get their coupon code. Guess what? They're feeling really good about the purchase that they just made with you and they're far more likely to come back and purchase again. Some other great tools that we have are deal alerts, so we allow our users to set deal alerts on specific products that you have set up, where there'll be alerted if the product drops maybe by 5% in price or 10% in price. We also email customers that follow your store. So if you do have a sale or a new coupon code, we actually email anyone that's following your store to get them to come back and purchase again from you. We also have a really robust product discovery platform that allows users to cross compare different products across a wide variety of stores, in order to help them make really great buying decisions. And then of course, we have our Droplist, which allows users to save specific products that they're interested in. And in some cases, share those out to other people, but also get alerted when those specific products reach certain prices. So those are some of the awesome products that we have to help a small business really catapult their growth, improve conversion rate, customer retention, and turn passive shoppers that are just looking at your products into active buyers that pull the trigger. So let's recap real quick. So how do you tackle the new normal? Well, the first recommendation that I have is get active in affiliate marketing, meet those customers where they are. If they're searching for deals and discounts, then you want to work with those types of publishers. If they're working in the influencer space, then you want to use affiliate marketing to tap into influencers. If they're reading lots of articles and they have high buyer consideration before buying, then you want to invest in content through affiliate marketing. Affiliate marketing allows you to do all of these things. Next is Shopify, get yourself set up on Shopify if you haven't already, it's a fantastic tool. It will allow you to turn your business from zero to a hundred faster than you could believe. And then of course, once you have Shopify set up or you're in the affiliate marketing ecosystem, highly recommend working with Honey to help catapult and boost your shopper's ability to convert and actually purchase and getting those shoppers to feel good about the purchases that they make and really starting to ramp up your business. And then of course, if you're on Shopify, download the Honey app, use it, tell us what you think about it. We just launched it recently and we'd love to hear more feedback on how the Shopify app is working for our Honey users. So check it out and start using it.
Speaker 1: Thanks for listening to this episode of the Honey inaudible, e- commerce Industry Trends and Insights. To learn more about how Honey can help drive your business, reach out to honey- partner- support @ paypal. com. And be sure to follow us on Apple music, Spotify, or wherever you listen to podcasts.
Dexter Dethmers joins the show to share insights into consumer behaviors post-pandemic and what businesses should be doing in this new normal. Dexter, Senior Manager of Partnerships here at Honey, brings in data about these behaviors. He shares insider information and tools to maximize engagement with customers that significantly can benefit small businesses.