Consumer behavior can give you powerful insights on your business…
When you analyze the purchase behavior of your best customers…
Your next growth and acquisition strategies become clear…
And you can tailor your marketing to maximize advertising efficiency…
Jim Davis of clothing brand Buck Mason is here to show you how to read consumer purchase behavior so you can drive sales and convert leads into long-term customers.
- How seasonality affects consumers
- When consumers decide vs. when consumers purchase
- Why purchase behavior shows you where to invest
- And more
Mentioned in this episode:
Voiceover: This is Performance Delivered, Insider Secrets for Digital Marketing Success with Steffen Horst and Dave Antil.
Steffen Horst: Welcome to the Performance Delivered Insider Secrets for Digital Marketing Success podcast, where we talk with marketing and agency executives and learn how they build successful businesses and their personal brand. I’m your host, Steffen Horst. The topic for today’s episode is how the purchase behavior of good customers can influence growth in acquisition strategies.
Here to speak with me is Jim Davis who is the Chief Customer Officer at Buck Mason, a modern American fashion brand, that at the heart of everything is the laid back California ethos of easy living, quality and simplicity. Jim refers to himself as a failed mathematician that became a customer obsessed omni channel leader. He has 20 plus years of marketing and digital commerce experience, and resides in Omaha, Nebraska. Jim, welcome to the show.
Jim: Thank you very much. I’m happy to be here.
Steffen: Jim, before we explore today’s topic, I’d like to find out more about you. Tell our listeners about how you got started, and how you ended up where you are currently.
Jim: So I dropped out of grad school before I finished my PhD. Early in life, I wanted to be a math professor and bounced around with a few different careers. One teaching, one working in the investment world, none of which really sort of stuck to me. I think, after a few years and had an opportunity to go work at a cruise line in South Florida in their marketing department. Really applying my math and data skills, though, to help optimize very expensive direct mail marketing and things like that. And that’s when I think I got bit by the marketing bug.
I really saw this opportunity, at least in my mind, to take all of these analytic skills that I had, and really help businesses unlock how to both market to existing customers, but also unlock how to take what you know about your existing customers and use that to go acquire who your next best customers are going to be in the future. And have been doing that ever since. So that was back in 1999. Over the years, I was able to really, you know, through not necessarily in a planful way, but probably somewhat happenstance way, land in some really interesting places in the evolution of E-commerce and digital in North America, at least.
I was able to work at Office Depot in the early 2000s. Back when we were actually the largest online seller, maybe in the world, but definitely in North America at the time and doing over a billion and a half dollars in sales back then. And it was the early days of E-commerce 2000 to 2005. And I think a lot of people, you know, were starting to understand, you know, what it was gonna mean to do things like paid search and paid search optimization and bidding. But there were multiple search engines back then, because Google hadn’t reached the dominance that it has today.
We were trying to do lots of really interesting things with personalization and targeting in our email marketing, we were experimenting with comparison shopping engines. But we were also leaning very heavily into traditional media, you know, large catalog mailing programs and other mass programs like newspaper advertising and TV. And trying to develop an understanding of how all of those things were really impacting the call center environment, which was the traditional method of non store purchase that was happening at that time, but also how that was starting to migrate over to our website.
So I think that those are really formative experience for me, because you’re right at the heart of that huge channel shift that’s happening from call center, inbound calling, outbound calling, and other types of sort of what we would now call offline behaviors, to shopping online, and things like that. So that experience really helped me sort of grow into being able to work in some really great brands like Dell computers, and more recently with some consumer facing brands like Urban Outfitters, Hoka, the running shoe brand.
And really start to home a little bit more of a brand marketing muscle and an appreciation for how messaging and creative can combine with really strong understanding of consumer and consumer behavior to help brands just win in the marketplace and both drive awareness and consideration and advocacy, but obviously sell through as well.
Steffen: Now from from when you started to now, the availability of data has ended, the type of data available has changed a lot. What are you able to do these days with the vast majority of data that you have that you might have not been able to do you know, 20, 35 years ago?
Jim: I think that the the evolution of sort of information availability really came in the form of a combination of people’s interaction with digital marketing and kind of digital environments. If you have a mobile app out there, you learn a lot about people that are engaging with your mobile app. For instance, your website, things like that. You also are getting all of this signal from all of the engagement that you have with your marketing channels, some of which is starting to actually evaporate now with some of the iOS changes and things like that.
And then I think the the other piece of it that, you know, really started to become available about 10 years ago, maybe 12 years ago was a lot of intent data that you could actually acquire from various entities outside of your own properties, or anything that you were doing from an advertising perspective. I never thought that any of that data negated the value of just doing, you know, some some very, you know, traditional customer lifetime value. And if this person bought this kind of a product, were they more or less likely to buy again, in the future than if they bought some other kind of product from you.
All of that type of analysis that we’re doing back in the 90s and early 00s, I think it’s still just as valuable as it was back then. But now, you can actually overlay a lot of information about what might have led to that decision pre purchase. How did, you know what were all the different touch points that that customer might have engaged with, that led to that purchase that you’re now analyzing. And did you sort of forced them down paths that maybe made them make a different choice than they would have without that, or do you have opportunities to do that in a way that may be both more beneficial for the customer and more beneficial for the business itself.
And so I think all of that intent data, all that engagement data overlaying and being used sort of in that what’s happening leading up to that purchase is really where the, you know, the deluge of additional and new information came in. And being able to use that intelligently to try to replace probably, you know, a lot of things that people used to do with survey work and stuff like that, to understand why and how questions. I think that that data really helps you answer some of those more quantitative and qualitative aspects outside of the purchase itself.
Steffen: Now, with that data, what are some strategies you’ve used in multi category businesses to refine the products and offers use in acquisition campaigns?
Jim: Yes, some of this really in the way that I work in the way that I, you know, sort of teach my teams to work and encourage them to work is still a little traditional, and sort of looks backwards at the way we were doing things back in traditional catalog businesses and things like that. So if you look at the customers that eventually became your best customers, and figure out what they purchased in sort of what that sequence of purchases was, over time, you start to understand how like the categories of merchandise or in some cases, even the specific items that good customers first purchase.
And then how that led them to a very high lifetime value because buying, for instance, in some cases a lower value product, and a lot of businesses will lead to a very low lifetime value, because that customer didn’t have a very high consideration rate when they first purchased from you. But if it was a more expensive item in your assortment, they probably thought about it a little bit more. And therefore they’re more bought in by the time they’re more bought into the brand, I should say by the time they make that first purchase. And so getting to the second purchase, seems to be a little bit easier in those cases.
So doing a lot of probative analysis around what are all the things people bought, what are the categories those were in and then backing up and trying to attach some of that other intent and digital marketing information that you have and even in some cases, offline marketing, like catalog and direct mail and things like that, to how those different consumers or if it’s a b2b business, how those businesses might have discovered that product and kind of been led to that purchase starts to form, then strategy around, these are the things that are working the best.
These are the channels that seem to be encouraging the purchase of those products. I’m going to invest more in those channels against the audience’s that that advertising or that type of product seems to be working the best against. And then I also have to make sure from a planning perspective, that merchandising and the buying team, so the design teams, in the case of a brand like Buck Mason, where we’re creating all of our own products are bought into both continuing to carry those items in the future carrying some variant of it that I feel like I can, you know, turn this advertising and acquisition activity loose on, but then it’s also really critical to make sure that the downstream purchases that that’s likely to create for that customer are also continued in assortment going forward.
Steffen: Interesting. Now, you talked about, you know, planning. So how do those strategies impact a preseason planning and in season execution of, of acquisition campaigns?
Jim: Yeah, it’s, especially when you’re in a vertically oriented DTC brand, you have an opportunity to sit there and look at the line that the design teams and the merchandising teams have brought to bear for an upcoming season. And if you know, I’ve got a good, me and my team have a good partnership with planning, and frankly, the merchandising and design teams. We’re sitting there with information at our fingertips that has like, all of this data about what we really want to be able to have, from an acquisition perspective, in terms of product and category representation by month throughout a season. The by month part is important because, you know, clothing businesses in particular, are highly seasonal.
And you’re also usually working with multiple deliveries of clothes throughout the season. And the things that you may be taking on to the assortment in February, March at the beginning of spring, for instance, will probably be a little bit heavier, there may be more long sleeve, more long legs, things like that, that by the time you get to May or June, you’re talking about lighter items that are more summer appropriate, maybe more vacation appropriate. And the consumer is buying that way too. And so you have to adjust your focus throughout the season, and really be planning based off of a combination of consumer behavior and delivery flow.
So on a preseason basis, you’re you’re sitting down with this information that you gathered, and you know how many new customers if you’ve done your planning well, you’re gonna have to acquire to hit your top line revenue goals in each channel store online. And if you have wholesale channels, you’ll have sell through targets and things like that. And so you can back that into the mix that you would expect if you’re focusing on these better acquisition items, they can give you better customers. And then that allows you to turn that into a unit sales expectation for acquisition. And so as you’re going through the line or view, and then at the end of the line review, you’re noticing holes in the line.
First of all, it’s like, hey, what about you know, these items? What about chore coats in the case of Buck Mason, it’s a thing that a lot of first time buyers in the fall at Buck Mason, love to buy from us, and then they tone those for years to come. So if the design and merchandising team said, we’re not going to make chore coats anymore, I would be raising my hand and say, wait a minute, wait a minute, wait a minute, that’s 20% among the customers or something like that. And so that’s sort of how it starts. Let’s make sure that there’s no holes in the line relative to you know, what we’re carrying forward from an assortment perspective.
And then post that before you get ready to place all your buys to factories to have all this merchandise made for the season. You sit down and kind of go through in a very detailed way, what your color expectations need to be at a unit level by product so that you’re covering off on a combination of the units you think new customers are going to buy and the the units that you think existing customers are going to buy that you would have brought in in prior seasons and things like that.
Steffen: So when when do you bring in marketing because I mean, that’s what you just talked about is obviously some some great planning based on numbers and insights that you collected over time. But how do you ensure that all of that also then translates into your acquisition strategy at the end of the day?
Jim: Yeah, so and, you know, I probably should make it clear that I you know, I run marketing and e-commerce for the brand that I work at right now. And you are correct in the conversation up to this point was very much around a design, merchandising and planning conversation. But in parallel, the marketing teams and PR teams have seen that same line during that same presentation. And immediately after that, part of the conversation we’re having also is where we see big opportunity for things like earned media and some things that may not be specifically traceable back to something that I know I can spend this much money and get this much return on.
Your PR team, for instance, is going to be working with a lot of outlets to try to make sure that you’re getting, you know pick up if they’re writing about the 10 best men’s sweaters for the fall season or something like that. So we’re having conversations about the line and the assortment in a hierarchical way, meaning, what do we think are the really, really, really super interesting items that just visually, people are going to be really excited about probably editors that are doing articles are going to be excited about and consumers when they see for the first time are going to be really excited about.
So then we call those our heat items. Then after that you’ve got all this core support. The core support is really where all the revenue comes from. And that’s where a lot of the acquisition is flowing through as well. So you need the heat items to really get you a lot of the earned media pickup to drive the excitement in. You know, when somebody first walks into the store, somebody hits the homepage, that’s the thing that needs to be on the front rack or on the homepage, because it’s a really exciting item. Probably a lot of people aren’t necessarily going to buy it, but it looks great. It’s got high make to it, it just may be kind of expensive, or something like that. But it’s generating a lot of excitement for the brand.
And it’s like, hey, look at what Buck Mason did kind of thing. That feeding back into, okay, I’m gonna drive excitement with a really expensive leather jacket, for instance, back into my entire outerwear collection is really where the marketing conversation starts to pick up. Because we start to do channel cleaning relative to, again, these fundamental expectations about where am I going to get my revenue from in this category. And if outerwear is the high acquisition, high current value acquisition category. And I need to make sure that I’ve got the right assets being created with the right position and the right expectation about what the channel exposure is going to be, whether that’s paid social media, or other types of kind of, you know, mid upper funnel video advertising or other things like that, that are going to drive this acquisition.
And if things are just a little bit more oriented around, you know, we’re adding a new color in an item. And really what happens with new colors is that existing customers just that love the product already add it to their closet, because they love those products, and they want every new color though. And that focus will be a little bit more CRM related a little bit more in store selling related to the existing customer. So we start to devise messaging plan that then turn into creative briefs that then lead to videography, photography, and then final asset creation to support all that channel exposure.
Steffen: Interesting. Now, how about seasonality? How does that impact the process and the analysis? Or does it impact it all?
Jim: It does, because you, especially in apparel, but I think in other businesses that I’ve been in, you see seasonality impacting it in a slightly different way. Because holiday buying patterns are often different than, you know, other times of the year. But as an example, when I worked at Dell, you know, the consumer part of the Dell business sort of had two big seasons, right? You have a season around, back to school, and all of that. Everybody’s getting ready to either go to college or go to high school. And so do I need a new computer for my high school student or if they’re going off to university or whatever, do I need to get a new laptop kind of thing.
So there’s a huge opportunity that’s on the year. And then a lot of people buy, you know, new computers, whether it’s for gaming or business use or whatever, during the holiday season as gifts and things like that. And so you think about those kinds of seasonal opportunities in the context of when am I going to spend the most money and when are decisions about what to buy really being made versus when the purchase is actually happening? It’s true in a lot of verticals that for instance, holiday gift giving decisions are really being made a few months in most cases, before the actual purchase of the gift might happen.
And so you have to make sure that you’re building that awareness in the audience that you’re trying to appeal to leading up to the time of purchase. And you have to be thinking about that and the way that you’re presenting and in what you bring, bring to market. You get outside of the holiday season, or get outside of a back to school season, and you’re in kind of a more mundane, maybe more steady state part of the year, then you’re adjusting your your investments accordingly.
I think that, you know, there are interesting dynamics, though, because obviously, part of the thing that you’re constantly thinking about from an acquisition perspective is what is that cost to acquire, because even though I may know that I got, you know, X dollars of downstream value in this customer, if I can get them to buy from me the first time on this product, or any of this set of products, it still gives me a ceiling over which I can’t spend to acquire that customer, or I’m eroding all of my downstream profitability. So that CPM start to increase during more heavy advertising periods like the holiday season. It becomes less attractive actually, to do a lot of acquisition media. I really have always spent most of my career trying to figure out how to acquire as many customers as you can near the beginning of seasons.
So that when you do get that second purchase it’s often happening within that same season. And so trying to you know, force that to be honest with you a little bit at the beginning of seasons is often when the advertising efficiency is at its highest too. So I think seasonality is impacting buying behavior and consideration on the consumer or the businesses then, depending on you know, what, what the product is and the service that you’re buying. But I think it’s also impacting the effectiveness and the efficiency of a lot of the media that you’re putting in the marketplace, too.
Steffen: When you design or define the cost per customer that you pass on to your either internal team or your agency, do you build that based on the assumed lifetime value or the one time sale?
Jim: So I’m looking at a combination of them. We’re, I think that, you know, the, I’ve worked in businesses where we invested a lot in acquiring a new consumer, because we were investing heavily and the downstream or the lifetime value of that customer or that business. In the case of some of the marketing I was doing at places like Office Depot and Dell, where I was working with small and medium businesses. And you know, when you’re investing in a loss then your, you know, a loss from the first purchase, at least, you’re kind of making an implicit assumption that the past is going to repeat itself in the future. And that, you know, sort of like what your breakeven time horizon is in the future.
And you continue in a rearview mirror sort of way to measure success against whether or not that’s still happening the way that your older data had said it would, and that you make adjustments. If you see that eroding, maybe you lower how much of a you know cost to acquire, you’re going to allow for certain campaigns or certain activities, because you see the lifetime value eroding. Or if it’s increasing, then maybe you can even go a little bit deeper and spend a little bit more money to get each new customer and kind of increment that a little bit. If you’re lucky enough to work in a business where you can actually acquire customers at breakeven or better on that first purchase.
I mean, that’s golden, right. And I largely happen to be in a position like that currently. And so I am very much paying attention to the profitability of the first order. And whether or not what I’m doing from an ad spend perspective to acquire that customer is kind of getting outside of what I think the margin delivery on, you know what their buying will give me. It’s part of the reason that the product piece is so important, because obviously some products have higher margins than others, they also have higher price points.
Some groups of products tend to be bought in higher quantity in an order. So during the spring, for instance, because people are buying things like T-shirts and shorts and stuff like that, that are a little bit lower price, they tend to buy more of them at one time. But in the fall when somebody’s buying things like jackets, and maybe a pair of nice jeans or something like that they may only buy one or two items instead of three or four items. And so all of that kind of comes into play when we’re trying to figure this out.
Steffen: Yeah. Interesting. Now, what role does testing play in refining the strategies that we talked about so far?
Jim: Yeah, it’s, you know, one of the things that I’ve found is that the analysis is great. But often what happens is if you try to force it by going to market with a bunch of advertising or a bunch of retention marketing, it’s oriented around the products you want people to buy. Sometimes they’re just not responsive to it. And so I’m constantly doing creative testing, messaging testing, and testing across different channels of opportunity in the media. So whether it’s paid social, or other forms of advertising, Google Shopping, you know, mid funnel kind of programmatic opportunities, and pre roll or display advertising. All of those places are, I’ve got audiences I’m going after, and I know what I want them to buy.
But it’s always kind of a champion challenger type of mentality against these are the things that are working right now, I really want to sell more of this other stuff, because I get better customers when I do that. And I’m putting it into the assets to try to have those start to win against maybe some of the things that I would rather retire if I could, that are working pretty well. And if they win, they win. Or if they don’t, then they go away. And the other stuff continues. But I keep taking shots at it. Same kind of thing with retention. If you have goals around trying to take all of those customers that you acquired.
And, you know, at least sort of provocatively, what the likely things are, that will drive a second purchase from people based off of you know, how they first purchased with you, the channels that they might have engaged with, from a marketing perspective that drove that first purchase, and then what they purchased in their first purchase? And you find that, you know, the past data is not repeating itself. You keep testing until you find the answer, because you have to deliver that repeat purchase rate that was in your plans. Otherwise, you’re gonna end up having to make up that delta by acquiring more customers, which is obviously way more expensive.
Steffen: Yeah. How are you making that information available to your marketing support? So I mean, if you have an internal execution team, so internal acquisition team, that might be a little bit easier, but if you work with an outside vendor, like an agency, right, how are you making that information available to them so that they can be more targeted with their advertising and potentially messaging, etc, to go after the more higher quality or higher worth customers versus the ones that are more out there for you know, the big deal?
Jim: Yeah. So we’re, you know, I think in probably most of my career, I’ve been in somewhat blended environments, where you’re using some kind of combination of internal resources for certain things, and then external agencies and resources for others. And in the case of working with the outside agencies, I mean, I start the relationship with how I think about things, how I plan and then make them a part of the planning process from the get go. They’re not in the room when we’re doing things like product line reviews, and things like that.
But once we get out of that, I’m incorporating them and they’re thinking into what new opportunities might be, as well, as you know, what do we what did we learn in the current season that we should make sure that we’re rinsing and repeating for the future season as we’re developing the expense plans and the channel plans and stuff like that against that.
And then throughout the season, as we’re looking at performance internally relative to some of these KPIs around what was that cost to acquire? How much profit did I make on the first order versus what I’m expecting long term and things like that.
All that’s being shared, at least on a weekly basis, with the external agencies so that they understand our thinking about, you know, they may be seeing something within a platform, for instance, that they think is working gangbusters. But what I’m seeing on the back end is, yeah, we’re acquiring a ton of customers on that product. But for whatever reason, that product has a 40% return rate. So I’m losing most of them right out of the gate. We need to stop that, right. Like those kinds of conversations have to happen in real time.
Steffen: That makes, that makes total sense. Now, it’s great when you have a business that already has a lot of data available. It makes planning, makes all the things that we talked about so far, much easier. I don’t want to say it makes it easy, but it makes it much easier because you can rely on data points that give you a certain amount of insight. But what are your recommendations for newer businesses that don’t have a lot of purchase history, that don’t have a lot of data points available? How can they be more successful? How can they kind of get some hurdles out of the way that they otherwise would have?
Jim: Yeah, it’s I think it’s it’s always an interesting conundrum and I’m I, you know, I’ve had the opportunity, I did some consulting work for a while, and I’ve worked with some businesses that were sort of in that boat. They had been around for maybe a year or two years. And when they first started, they had a very narrow assortment, and they’ve added other products over time. What I always tell, you know, friends, colleagues, and, you know, other businesses, if I’m actually working with or for them in those types of situations, is really start with what you believe your brand is bringing to market that is differentiated and you can really stand for.
And you have enough confidence in this product to either be willing to chase them if it if the advertising starts to work, meaning buy more units of them so that you can kind of keep the demand engine rolling. Or you’re willing to make an upfront bet on you know, this subset of items, versus maybe other things in your assortment that you don’t have quite as much confidence in. And then once you’ve made that decision, which is really sort of a high level merchandising and design decision, then it’s around making sure that you’re giving that product every opportunity to work against every potential audience that you’re you feel like your brand and your business should appeal to.
So I’m very much in favor in cases of kind of multi category businesses. And not necessarily doing a lot of super, super refined, targeted advertising right out of the gate. But more going pretty broad with your audiences and testing lots of creatives to see if the creative can help dial in to an audience for you. And obviously paid social and the algorithms around paid social work better for the these types of activities. And if you can test lots of creatives, lots of messaging, that you’re doing it all around this subset of products that your brand really believes in, you’re going to learn a lot very quickly. Hopefully, what you’re going to learn is what combination of creatives and product visuals and messaging appeal to what audiences.
And then you can start to scale the advertising against those audiences with that type of creative and just keep reiterating the creative to kind of keep it fresh. It also then gives you the opportunity to say alright, this is how I’m bringing people in, what do I need them to buy next, for my business to be successful and do a very similar type of activity on kind of the CRM and retention side of your business. Sometimes, you know, you need to just keep paying attention to what’s happening organically too. People are you know, once you get enough brand recognition out there, you’re gonna get people showing up on your site, what are they buying? What are they finding attractive the first time? That becomes the next level of testing that you should start doing.
The other thing that’s always interesting, too, is if you have a little bit of a PR engine running, even as a newer business, what do editors seem to be interested in? What’s, what are you getting pick up on. You should be trying those things as acquisition items too. I always, you know, I can’t imagine, I’ve never worked in a business that only had like a single service, or maybe two or three products that they could sell. I would feel so pinned in by the limitations there. I’m not sure how I react. At least if I’m in a business that has, you know, a few dozen types of products that they’re selling. I have alternatives to what to do if certain things aren’t working and stuff like that.
Steffen: Yeah. Jim, lots of great information you shared with us today here. Thank you so much for joining me on the Performance Delivered podcast and giving your thoughts on today’s topic. Now if people want to find out more about you, Buck Mason, how can they get in touch?
Jim: The easiest way is to look me up on LinkedIn. I am just Jim Davis at LinkedIn. And if anyone’s interested in Buck Mason specifically or you know any deeper conversations, always happy to have you email me so we can figure out what the best way to connect is. And that’s firstname.lastname@example.org.
Steffen: Perfect. Well, thanks, everyone for listening. If you liked the Performance Delivered podcast, please subscribe to us and leave us a review on iTunes or your favorite podcast application. If you want to find out more about Symphonic Digital, you can visit us at symphonicdigital.com or follow us on Twitter at Symphonic HQ. Thanks again. See you next time.
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