David and Goliath: Surviving and Thriving in the Amazon Era
Lev Peker, Chief Marketing Officer of Adorama discusses how his brand focuses on customers and their needs.
My name is Lev Peker. And I’m the chief marketing officer at Adorama. Not to be confused with adore me, we’re also sexy but different. Adorama is a 40-year old retailer that sells electronics and we focus on photography, videography, as well as audio equipment. Prior to Adorama, I was at Sears, I ran the home appliances and the tools businesses there.
Before that I was at a pure play auto parts retailer. And before that I was an accountant for PricewaterhouseCoopers and KPMG. So, while I’m busy at work my wife is at home with our three kids. Our oldest Nathan, he’s 10. And our youngest Dylan, he is 7 months old. And so, she’s busy making sure that they’re fed, and that they get to their soccer, football practice, and to all of their after-school activities.
And so, we don’t always have time to go to a store. So, that results in us spending quite a lot of money on Amazon. So, I pulled up my account and I looked at the last six months, and we’ve placed 191 orders in the last six months on Amazon. So, why do we do that? Well, it’s really convenient. Amazon Prime has over a hundred million items available to be delivered to your door in two days.
But you can also get millions of items shipped to your door same day or in one day. And when we run out of coffee or snacks at the office, we can get to our delivery. But Prime is even more than that. You can give Amazon access to your car and they’ll deliver packages and leave them inside the trunk of your car.
And in 38 markets in the U.S., you can give Amazon access to your house and they’ll deliver the packages inside your house. But, it’s so much more than that. They also have Prime Video, Prime Music, Prime Wardrobe, Alexa Voice Shopping, they have Whole Foods Market which is a chain of grocery markets in the U.S., and Prime members get 10% discount on their everyday shopping.
They have Prime Pantry which is a subscription service for your everyday essentials. They allow you to upload your photos to Amazon directly from all of your devices, and they’ll store them free of charge. So, as retailers, how do we compete with what is, essentially, one of the best designed loyalty programs ever created?
So, like [inaudible] said before, I think there is light at the end of the funnel. What I’m going to walk you through today is an example of what we did at Adorama over the last three years or so. And I’m going to propose that we can build an emotional connection with our customers and shift from competing with Amazon to actually just owning our customer and having that customer shop with us.
So, these are the steps that I believe every retailer can take and these are the steps we have taken at Adorama, and I’m going to walk you through them one by one. The first one is really understanding who your customer is. We all have access to Google Analytics data and we can see gender, age, affluence of our customers, but that data is not really actionable.
So, just knowing that a 35-year old male that lives in Kansas shops with you, doesn’t really tell you much. You might be able to make your font larger if your customers are older or make your links darker. But this data is just scratching the surface of what you should understand about your customer. What you can append is psychographic data. So, it’s much better for me to know that a customer in Kansas, that loves to shoot sports photography, is shopping with me because now I can start thinking about my product assortment in a different way, and how I’m going to be marketing to the customer in a different way.
So, understanding the habits, the interests, and the different emotions that the customers experience, gives you another layer that you can add to your understanding your customer. But we can do even better than that. So, we can start building journeys and really understanding in what point in the shopping journey is a customer interacting with our brand, and how are they interacting with our brand at what touch point.
So, for example, a customer that might be researching a product may be interacting with our brand on YouTube, and then coming and completing their purchase of adorama.com. A customer that’s price shopping may be calling my call center and asking if we’ll match a price for them. So, it’s important to understand at what point in the journey is a customer contacting your brand. And, what are you going to do, and how are you going to address that customer and the need at that point in time.
So, once you understand who your customer is, the different touch points that your brand has with the customer. You can start selecting a niche for yourself. When I created this slide I added be really honest with yourself. Because when I started at Adorama, we tried to be an electronics retailer, we tried to sell everything to everybody.
But people weren’t buying all of their electronics from us. They were buying their photography, their video gear, their audio gear from us. They weren’t buying their televisions, they weren’t buying low-end PCs. And so, we had to really understand why that was happening. So, what we found is that people that were shopping with us who are more professional, and they were shopping with us because they needed the tools to complete the jobs that they were going through, whether that be photography, or videography, or in the audio space.
And so, they were buying expensive computers that they needed for editing, but they weren’t buying the cheap ones that they were using at home. So, really understanding who your customer is and defining the niche may take you down the path of turning down certain product categories that you thought you should carry, just to have complete assortment. So, again, at Adorama, as an example, we exited the television category and we no longer sell televisions because we defined our niche and defined our customer.
So, once you’ve defined the niche and you’ve defined the customer, hopefully, you have the product assortment to support that niche. It’s time to focus your acquisition efforts. Because we’re playing in the niche market, it becomes a lot cheaper to do acquisition efforts. So, advertising, paid search, we’re not bidding on broad terms, we’re bidding on very specific terms, where the cost of acquisition is actually lower and our conversion is higher.
Now, we may give up some traffic and we may find that we’re not getting a ton of customers through the door, but I’m getting the right customers through the door. Influencers, we’re not going after macro influencers, we’re going after micro influencers. Again, it’s a lot cheaper and what we found is that micro influencers actually have more influence than macro influencers.
They tend to be more authentic, they don’t just pick up on every product, and just advertise just because they’re getting paid, and their customers actually listen to them. Same thing with sponsored content, it’s very authentic, it speaks to the right audience and we can focus on creating content in the right areas.
And then affiliates again, not going after very large sites and very large affiliates, but similar to influencers, going after affiliate that actually have an influence in the segments that we defined. So, let’s say all of this is paying off. We’re driving traffic to our sites. People are coming. Well now, we got to convert them, right? So, this is something Amazon cannot do.
Because Amazon is everything for everybody, over a hundred million items available in two days. They cannot tailor their experiences on the product listing pages like you can. Because we’ve defined the niche, we can tell our customers with predictive search, what we think they’re looking for. We can add filters that are category specific, and we can also show them information that we think is the most relevant for that customer in that category.
Again, this is something Amazon cannot do. And so, focusing and discovery at this stage is very important because you don’t really know much about your customer yet. But we focus on discovery in other ways as well. We have AdoramaTV, we have about 850,000 subscribers. We just crossed a hundred million minutes of watch time.
And we create educational content as well as inspirational content. One example of inspirational content is, we traveled the world and we have five seasons of a series called Through theLens. And Through the Lenswe went out and we interviewed photographers, that were famous in Instagram about what inspires them and why do they get out and shoot.
And then we work equipment into that in a very natural way. You know, what’s in your bag? What do you find the most essential accessories to be? And we do the same thing on the Adorama Learning Centre. Now, this achieves two things for us. One, customers are discovering us through these two mechanisms. And we’re also establishing ourselves as an authority in the niche that we have claimed.
So, that allows us to then, when we’re talking to our customers about the assortment, the products assortment that we have. We can say, “You should buy this brand because we are also using it and we are content creators just like you.” So, it creates that connection for us as well. We then take all of that content because it lives on YouTube and it lives on the blog site, and we infuse it into our product-detail pages.
So, you can see, you know, every product-detail page has a video that was created by us. We have Adorama expert advice where we pull in all the articles and we pull in all the AdoramaTV episodes related to that product. And because we’ve defined the niche for ourselves earlier, our SKU set is so much smaller that we can now scale this.
Because if you try to do this for every product in the electronics category, this becomes very costly. However, in a niche category, this becomes much, much cheaper to execute at scale. The other thing we do with content marketing, and Amazon is actually really great at this, is user reviews. But we also infuse user reviews with pictures taken by this camera.
So, we have galleries where users can upload images taken by the same camera that the customer is browsing, and then they can see that. And we’re going down the same path now with video. So, customers will be able to see that different videos of customers are taking with their video cameras. So, on the way to conversion and once the customer has converted, we have also rethought some of the programs that we’ve rolled out to our customers.
Some are to help with conversion and some are to help with retention. So, I’m going to go through three of those programs now but we have many other examples. So, the first one is in the U.S. that’s common practice if you’re shopping with a credit card for you to accumulate points. And so, what we found in looking through our data is that we have customers that were looking for the same experience when they were shopping with Adorama.
So, we’ve created the Adorama Rewards program and it’s meant for the point…we call them point accumulators. They basically earn 1% cash back on all of their purchases. And it’s meant to entice that the initial conversion as well as the retention of that customer. The other group of customers we found is the loyalist customer.
These customers were shopping a lot with us. And so, we asked them, “What can we do to make your experience of shopping with Adorama better?” And we created the VIP360 program. And all of the benefits in the VIP360 program were asked by our customers of us. So, we give them free two-day shipping, we give them one-year drops and spills warranty on every product they buy while they’re in the program, they have a 60-day return policy, no questions asked.
They can even open the package. We have a dedicated customer service line and we have member only discounts and perks. The program costs $50 a year. We rolled it out last year and what found is that the customers, the really loyal customers are joining in droves. So, we didn’t think the program was going to take off but it’s doing quite well. And now we’re expanding on the offering of the program.
The other program that we rolled out last year is the private label credit card that we have. So, again, and asking our customers, how can we make their experience better of shopping with us? We found that a lot of our professionals, were booking jobs, whether that be a wedding shoot or a wedding video, and they needed the tools to complete those jobs.
However, they didn’t have the cash flow to buy whatever equipment they needed. So, we created the private label credit card where we give them 0% financing for 24 months, so they can complete the job, get the cash flow, and then they can pay off their balance. So, all of these programs try to drive conversions.
But we all know that for every one customer that comes and buys from us, probably 50 leave without ever buying anything. So, how do we build an emotional connection with those customers that are leaving? I’m going to give you one use case of category browse. So, a typical browse abandoned program today would work something like this.
Customer comes to your product-detail page, they leave and you send them an email with that product in the email. And you say, “Hey, you know, you browsed this item, you know, why don’t you buy it?” And then you might have some product recommendations at the bottom as well of similar items that customer’s browsed. So, that’s great. And we do that also on the first email. But on the second email, we don’t really know anything about this customer yet.
So, they browsed this item that’s within the mirrorless camera category. So, why not send them some content about mirrorless cameras category overall, and give them some value? Maybe they’re just shopping, maybe they’re just learning about this category. And then emails three and four may give them even more content, may give them other articles, other videos that allow them to discover the category a little bit more.
And then the last email is going to tell them about a sale within the category, not necessarily specifically on that item. So, I think it’s a very interesting way to rethink even the simple, you know, browser abandoned email that we’re all doing today.
And kind of start thinking about it from a customer point of view, and, am I building a connection with a customer by just sending him one email with just a product in it? So, I think all of these things, they kind of take us on a path of converting the customer and getting the customer in and really understanding the customer. But what we often overlook is organizational design.
So, traditional marketing, you know, even in a customer-centric organization probably looks something like this and most of us probably sit somewhere within this org. chart. And with established KPIs that reward people staying within their own channel and within their own silo.
So, we might say to our paid search media, you know, “You got to drive your cost per acquisition down, and you have to grow your sales 10%.” And we may say to our email marketing person, “Well, you have to grow your subscriber lists by X and you have to grow the lifetime value of a customer by Y.” I think the future looks more like this, where the customer data is at the core of everything.
And acquisition and retention kind of sit in two silos that overlap and they’re feeding each other information. And the KPIs reward this circle. Meaning, if I reward my acquisition channels for retention metrics, like growing my subscriber list. They’re going to be much more likely to be able to drive those metrics as well, and vice versa.
So, I think, if customer data is at the center of everything and the KPIs are properly established, you’re going to get those lists from your retention channels, fed to your acquisition channels that will allow you to capture more of customers that look more like your best customers. So, just to recap what we’ve gone through today. I think it all starts with the foundation of understanding your customer.
Then finding a niche and really being honest with yourself there and maybe saying no to some categories that you previously thought you had to carry. Focus your acquisition efforts around the niche that you have defined for yourself. Focus your site on discovery. Again, this is something that Amazon cannot replicate just because they’re trying to be everything to everybody.
Do content marketing. Take all that great content that you create and infuse it into your pages. And then build relationships with customers that not are just converting with you but also not converting with you. Rethink even the most simple programs that you’re probably running right now. Thank you.