NYC Personalization Pioneers Summit – Bryan Eisenberg

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So just imagine I changed slides that you can’t see right now. But I’m gonna start with a quote from the CEO of Walmart. ‘Cause we’ve been spending a lot of time talking about Amazon and the book is called Amazon, but I’m gonna start with the quote from the CEO of Amazon, and I don’t wanna share it, uh from Walmart, but I’m not gonna share it yet. Why are we spending so much time, think about it, talking about Amazon and not talking about Walmart. Why isn’t Walmart the leader in personalization? Come on, while we’re waiting for this to happen. okay, so she’s saying ’cause they were only an online site. I can give you that. What else? They had an optimization culture, okay. They’re a disruptor. They’re the most vocal, what do you mean by that? Possibly. That’s a good point, I like that one. Amazon is a software company. They don’t think of themselves just as a retailer. What do you mean different product? I heard that from the ether, oh there we go. So I’m gonna argue something slightly different. Pull that out, that’ll help. There we go. Sam Walton, when Walmart was growing, what was the thing that he used to do every single day? Does anyone know? He’d go ahead and he’d greet people. He’d greet the customer. ‘Cause he knew that the customer was boss and that if he wasn’t in touch with people, like we were actually just hearing as well, right, if you weren’t actually talking to the customer, they could fire you by spending their money elsewhere. And here’s the thing, I’ve been spending over two decades helping companies optimize their online experiences, their retail experiences and what I often find is that when I go into a room full of marketers, guess how much time they’ve spent actually with customers. Yeah, almost none. And so there is, there is this barrier, this cultural challenge that faces us more than anything. Are we bringing this back to life or am I doing this all without it? I’m gutsy, but. How many people here have read Sam Walton’s book Made in America? Just curious. Turn around, you gotta look at this. Seriously, how many people have read it? Oooh. In a room full of retailers for some who’ve not read of the probably most pivotal books on retail in the last 40 years. First bit of homework, like go home, read Made in America. But in there, Sam talks about his 10 commandments of retail. And there’s a number of them that he comes on. One of them he talks about blazing their own path. How many people would think that Walmart, until recently, has not been blazing their own path especially when it comes to digital commerce, right? They haven’t been doing it. One of his other commandments. This was working earlier, by the way. It’s not like we’re just testing it out now. One of his other commandments was about sharing profits with his associates and partners. They may have gone off a little bit on that one, too, and as we go through all 10 commandments, you’ll realize that they lost touch with their culture. They lost touch with their beliefs of their founder and this is sometimes one of the biggest challenges I see in a lot of organizations that when. Are we live? We hope. We hope, hold on. If not, I’ll just turn the screen around and we can all just huddle around and just have a little fun with it, but there we go, okay. Yeah, cause it was plugged in before we, yeah. I can do that. Or I can do it the old-fashioned way. There we go, okay. Sam Walton’s quote, “There is only one boss.” “The customer.” We’re gonna just move through these quickly. 10 commandments. Commit to your business, share your profits with your associates and treat them like your partners, blaze your own path, control your expenses. They’ve done that one really well, right, but celebrate your successes, appreciate all your associates. Here’s the thing. When Amazon first started out, my brother and I started in this industry before Amazon launched. We were doing client-side stuff and building out our first websites back in ’93-’94 until we started the first conversion rate optimization agency in 1998. For those of you that don’t remember, this is what Amazon looked like when they launched. So they’ve certainly come a long way. Now here’s the thing I want you all to have a perspective on. When Amazon launched, they were this little startup and you know, if you go back to 1995, here they had the audacity to believe that with that website they could beat a Borders and a Barnes and Noble and eventually a Tower Records. Now think about that. We’re sitting here and how many of you like are sitting here or maybe not in here today ’cause we all feel wonderful, but you’re sittin’ in your offices and you’re like, “How are we ever gonna compete with Amazon?” How many of you have ever thought that? Okay, Jeff Bezos had the audacity to believe that he can compete with Walmart and he’s been doing it. It’s just taken him two decades to get there. And the fact of the matter is he didn’t necessarily have the technology that we have available to us out of the box that they did. Big fundamental difference, so I argue that today you have a better opportunity to compete with them than ever beforehand if you understand how and why he’s been so successful. So back in those days, this is back when my brother and I still ran an agency. Yes, I’ve lost a little bit of weight since then. Agency life is horrible, but we’d work with optimizing websites like Overstock.com where we changed just one little graphic up here, that’s the after images, that basically accounted for a $25 million lift off of one graphic. How many of you would like that one $25 million graphic? Just show of, yeah, okay. And so of course, Patrick Byrne told us we were the number one conversion and all of that, but here’s the thing. Amazon has grown ridiculously fast and especially over the last 10 years and we’re gonna try to understand why. Today is about understanding why and how to get there. So think about this, their Prime members, whatever that number is. I’m gonna argue it’s over 80 million, it’s over 70 million, but they’ve been growing like crazy. What’s been the number one driver of success for Amazon that basically spurred that growth 10 years ago? ‘Cause they were growing okay, but it’s 10 years ago where everything exploded. No, it was right before Prime. Anyone have a phone? Can I borrow that for a second? The day this got released, what changed? Amazon was the only retailer that was able to do what? Link one experience to email, your cell phone number to whatever you were purchasing from day one. They’ve always thought that way. ‘Cause here’s the question for ya. When Prime members come to Amazon, they convert at 74% of the time. The average eCommerce conversion rate when I first started was 1.8%, slowly creeped up to two, maybe we’ve seen it to three-ish, but let me ask you this. Is Amazon 22 times better designed than your website? Do they have 22 times better technology stack than you? Okay, here’s the tough question. I know you guys are gonna have a hard time being honest with this one. Do you think their teams are 22 times smarter than you are? Not 22 times better looking, I know that for sure, okay, but here’s the thing, why did they grow so much? And it comes down to Jeff Bezos’s belief. He believed he wanted to be Earth’s most customer-centric company and we hear that word over and over and over and over again. Every single conference you go to, everybody talks about customer-centricity, but what does it mean? And what did it mean in Jeff Bezos’s eyes? Does it mean we’re gonna be warm fuzzy and I’m gonna take care of the customer and service you like crazy? No. What did it mean? It means he was gonna be able to use data to serve you in the appropriate way. He was gonna be able to track everything you purchased, every website affiliate that you visit, every book you highlighted, every movie you watched and all of that data, they were gonna use to serve you a better experience across channels, across devices, across all technologies. He’s done this because he really wanted to understand what’s their why, what’s the why of the company and it’s helped organize their operating systems, the way they view the world. And so Amazon, in fact, is no longer competing on price. They’re competing on the values that they deliver to customers. Because when you think about brand Amazon, I’m gonna touch on it later on, you’re gonna see like, wow, it’s gonna totally change your perspective of where they are and why. ‘Cause here’s the thing, how many of you would agree that organizations are customer-centric? Raise your hand. Aw, come on, guys, I should see more hands than that. When Bain did a study several years ago, they asked 362 executives whether they believed they were customer-centric and 80% of those executives believed they’d provide a superior customer experience, 80% of them, but when they went to those exact same customers, only 8% of those customers believed that they were customer-centric, so where is this big gap from what the executives believe and what the customers were actually experiencing? So let me give you a very practical example of how this happens. Do we have anybody here from Lush? Okay. They’ve seen this example before, but they get to still kind of let me livin’ it down. So my daughter, who is now 16, she just turned 16, it was just after her birthday. She went to a Lush store with one of her friends. And if you’ve ever noticed, they have these signs in all the stores and the key thing is right here, “We believe our products are good value, that we should” “make a profit and that the customer is always right.” Of course, so now if you’ve never bought from Lush, they make these great like bath bombs and facial masks and all of that and so this is an example from one my friends who’s a cosmetologist from her Instagram page of what one of the items looks like when she brought it home. So my daughter’s on the way home, she’s about five minutes out from the house and she’s with her friend and she’s like, “You know what, I wanna open it up” “and smell it again” ’cause the smells are what just overwhelm you, and she goes ahead and she opens it up. By the way, I did this example last week at a veterinary conference and when they saw this, I had a very different impression of what it looked like. But anyway, she opened this up and it looks like someone’s fingers were in it, so it certainly didn’t look like the mask she’d want to put on her face. Now ladies, gentlemen, how many of you would wanna put that on your face? You wouldn’t wanna do it. So she calls me and she says, “What should I do?” I said, “Call the store and find out what you should do.” So she calls the store, and they said, “Oh, no problem, just bring it right on back.” So she drives back another 15 minutes back, finds parking, goes into the store, finds somebody finally who can take care of her and she said, “Look, you know, I just bought this.” “I walked out, here’s the receipt” “and I opened it up and here’s what happened.” Said, “Oh no, no, no, that’s normal.” “That’s the way it’s supposed to settle.” And she walked out of the store. Now I got onto Twitter and I got her a $10 coupon for it because they kind of agreed it shouldn’t. Everyone I’ve spoken to afterwards said, “No, that’s not what it should look like.” Blah, blah, blah. Whatever happened. She’s been back once since. The brand is essentially dead in her eyes. Now do I believe that the management and the founders of Lush believe that the customer is always right? Absolutely, but what happened? She met an average employee on maybe a below average day. Maybe his girlfriend just broke up with him. I don’t know what it was. And he decided not to make the return. And it’s those actions that happen within all the different channels of our organization that break things in the customer experience. It’s why Amazon is so close-lipped about how they manage all the different channels. It’s why customer service is not as transparent as it sometimes should be, right? Now there’s a story about what gets told and how this gets told that failed in this organization ’cause while they have a policy, it got broken. Now I wanna take it to the extreme. How many of you know the old retail story of the gentleman who goes into a store in Alaska to return snow tires and the retailer only sells clothing but they refund him the money right away? How many of you know that story? It’s a legendary story, isn’t it? Anyone know the story? It’s Nordstrom’s. Now do you have any doubt that when you walk into a Nordstrom, every single employee knows that policy? They know that story cold because that internal story has permutated the culture so that everybody’s aligned with the exact same mission. So today I wanna talk to you about Amazon’s four pillars. Now we understand Jeff’s beliefs, how did operationalize this? And the four pillars are a key to this. Now it’s not just four random pillars I came up with. I have been having conversations with people, but when I actually wrote the first time about these four pillars, one of the recruiters from Amazon took the link from the article and sent it to one of my friends who was applying for a job there. So obviously, they believe this kind of is inline with the way they view the world. Now here’s the thing, and I’m gonna go over each pillar, so I’m not gonna go into detail it now. To make these pillars work, comes back to exactly what I’d said a few moments ago. It’s taken Jeff Bezos 20 years to get Amazon where he wants it to be. It didn’t happen overnight. What he understood was and one of his other core beliefs is that when you do the right thing for the customer over the long term, or as my good friend Avinash Kaushik from Google likes, a faith-based initiative, that it’ll pay off for you long-term. One of the biggest obstacles that many retailers have been crashing and burning over the last two decades have been is that they’ve been so focused on stock market and short-term that they’ve neglected that we live in an environment today that’s like quicksand. It’s changing so rapidly, so we can’t make decisions moment-to-moment, but we’ve gotta live in a world where it’s day one ’cause you know what day two is according to Jeff Bezos? Death and stasis. So he works in a building called Day One to remind him this and so when he had Jim Collins come in to talk about their flywheel and how things are growing, I wanna present you the four pillars that apply to every single business and I’ve done this with everything from pest control companies to Amazon, so it’ll work with anything in between and so let’s look at each pillar individually and how it works, so customer centricity. So yes, it is about the customer experience, it is about the data. Now it doesn’t matter whether you’re selling doughnuts and by the way, anybody here live in Tampa? Just curious. Nobody, but if you ever get to Tampa, go visit the mini-doughnut factory in Tampa. A good friend of mine, super successful, he’s now about to open four new stores. He’s already opened up his second and third store. He started by personalizing mini doughnuts. That was it. You’d walk in, he’d bring you the doughnuts hot and every single time you ordered them, he’d make ’em on the spot, but here is the key thing. He knew that in order to be successful, every doughnut had to look that beautiful because if it wasn’t ready immediately for a picture on Yelp or Google or on Instagram, it wasn’t gonna work and so what’s the employee’s rule, and by the way, he’s done this on TV shows and stuff like that, he actually told one of the reporters, “You would never get a job with us.” Gotta see it. If it’s not beautiful, just throw it away and do it again ’cause the cost of the doughnut means nothing, right? It’s the experience that they have both eating it and seeing it because today, your brand is what other people say it is, not what you wanna say it is. It’s one of the big marketing shifts that we’ve had to face. And so I wanna give You an example from the book. It’s one of my favorite examples. And I’m gonna talk about how things that cost nothing, a screw, could totally change a business. So my friend owns Goettl Air Conditioning and they have several cities that they operate in and one of the things he grew up believing was that every single screw in an air conditioner needs to be completely tightened and if it’s not tightened the vibrations will actually cause the machine to break down eventually. But here’s the problem. How would you know that they replaced every single screw if they’re all the standard silver or, whatever it was? You wouldn’t, so he has to demonstrate that action to everybody. Now the beauty is this actually was one thing that actually worked through all four pillars because you as customer can now know they’ve replaced every single screw. If it’s not bright, shiny red screw, they didn’t replace it. Even those hard to find ones, you can see the red screws so it made it obvious for the customer to demonstrate that they’ve changed those things. From a systems point of view, the tech just has to look. What’s not changed? Boom. Right? And then they can just manage that process over and over again. Simple things, screws, how doughnuts looks, how your packaging looks, all these things are part of customer centricity and we can measure them. Let’s talk about a culture of innovation. Amazon last year spent more money on innovation, about two and a half times what Barnes and Noble’s did in revenue. Just to put that in perspective. They’re spending more money than most other companies and this is that quicksand effect and we’ve heard this a few times today. This is about rapid prototyping. Innovation is about how you get things fast. This is one of my favorite tweets of all time. Brett Berson, “I just learned from a former longtime” “Amazon employee, the idea for Prime came” “from an integrated circuit engineer.” “He wrote up a six-page memo” it’s gonna be very important. “He was inspired by the Costco membership model.” “it was built as a test” “It’s now the key pillar of Amazon.” “The best ideas come from anywhere.” If you’re not getting ideas from boardroom to stockroom, your organization is wrong because the communication is not happening. You need that in order to be innovative. You need to be with the people who are touching people all day long. It’s really important to do that. Now here’s the thing, and when I talk about our process later on, you’ll understand why this is so important. They started with the six-page memo, a narrative, a story, that starts from the end of the success and what it would look like in order to get there and got everybody on that exact same page. That is the lowest cost fidelity prototype that you can develop that’s completely well thought out even before going to wireframes. They were the first to use social commerce. Now, of course, everybody goes there to look at reviews. And that started as a test and it started as friction. And Jeff Bezos was getting friction from the publisher saying, “You can’t put up reviews” but he understood that he needs to innovate on behalf of the customer so what did he say? “You don’t understand, publishers,” “we’re not in the business of selling books,” “we’re in the business of helping customers buy books.” And just think about how that subtle differentiation changed the way they approached things. So I’m sure we’ve all seen the video of Amazon Go. Here’s my question for you. Two key insights on this. Number one, when was it released? When did they release that video, anyone remember? Like about a week and a half after Good Friday. Uh Black Friday, all the holiday traffic. They wanted to present a future differently, but here’s the question, why didn’t Walmart invent this? Now they’re just experimenting with scan and go. Why? Why is it taking so many other retailers to realize that physical retail is that next big disruption point. It’s why Amazon is spending so much. I’m not gonna go through the video. We all know it. This is where we need to focus on in a lot of our innovation, Agility. Having great ideas are great, but if you can’t act on them, your organization’s in trouble. Does anyone know who invented the digital camera?

Bryan Eisenberg shows attendees how to take the “Four Pillars of Amazon’s Success” and make them all their own during this entertaining and informative talk.