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Why Burrow is Not Following the Traditional DTC Playbook

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If you look on Twitter or do a quick Google search, you’ll find a ton of chatter about the foolproof DTC playbook. Everyone has ideas about the surefire ways that young DTC brands should be setting themselves up for success. Alex Kubo is here to tell you that those playbooks aren’t as written in stone as you might think. 

Alex is the VP of ecommerce and digital marketing at Burrow, a DTC furniture brand, and on this episode of Up Next in Commerce, he explained how and why the Burrow team threw out the playbook when certain aspects of it fell flat. For example, Alex talks about the lessons they learned about the signals that pricing sends, and why it’s critical to put the right price on your product to attract the right customer even if that means pricing higher than the playbook says. Alex also dives into what it means to actually be customer centric and how Burrow stays in constant communication with customers. Plus, we discuss why marketing toward buying events or using a spray and pray strategy across a dozen channels is about as useful as setting your money on fire. Enjoy this episode!

Main Takeaways:

  • Sending The Right Signals: How you price your product or service is one of the most significant ways you signal to customers who you are as a brand and what value you bring. If you price too low, you risk being lumped in with brands that don’t necessarily fit with the type of products or value you bring to the table. 
  • More Than Words: Saying you are customer centric and actually being customer centric are two very different things. To be truly customer centric requires regularly talking to and learning from your customers and then building experiences and products based on those conversations. You can’t just assume you know what customers want, you have to do the work to find out. 
  • A Horse of a Different Color: There are best practices and guidelines that many companies follow to get themselves off the ground. Sometimes those playbooks work, but in other cases you have to toss out what everyone says is the right strategy and go in a new direction. Whether that’s in your social strategy, your pricing, or how you’re getting feedback from customers, don’t be afraid to buck tradition and do something different. 

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

Key Quotes:

“Consumers nowadays have very limited time to understand the differences and nuances between products. They’re not stupid, they’re not lazy, but they do have very limited time. And so, you have to be very clear and explicit with them, and part of that is signaling. And one of the most powerful parts of marketing that I think is most often overlooked is a focus on pricing and what that does from a positioning standpoint.”

“It’s much easier to convince somebody who has shopped at one of these higher end brands and had to wait super long or had to go to a showroom and deal with a frustrating shopping experience with this overbearing sales associate, pay for shipping, and ultimately, have to be home to get a piece of furniture delivered… It’s much easier to talk to those kinds of people who’ve experienced those pain points and tell them, ‘I’m going to take all of that pain away,’ than it is to talk to somebody who’s never experienced those pain points and doesn’t need the higher quality piece of furniture, the IKEA shopper, and talk to them about all these future pain points that they’ve never experienced but that we can help them avoid.”

“The first thing that we had to realize is that what we can’t do is architect our funnel around existing attribution technology or just rely on optimizing towards purchase events in digital channels. What we had to do is to look upstream and find correlations and causation between different upstream, midstream, and bottom stream events to really architect a healthy full funnel. And so, most of our campaigns are not architected towards purchase events, they’re architected towards or optimized towards something more upstream.”

“We were just doing way too many things at once. We had, and we still have today, a very lean team. The difference between now and then is that back then, we thought the best approach was to spray as wide as we possibly could and activate 10 to 15 channels with me managing all of them, by the way, and not doing a good job. Only until we really peeled back and just focused on a handful of things and did them really, really well, that’s when we actually started churning results, but more importantly, honestly, that’s when we started actually learning what was working. Because previously, we were just spending a lot of money, we were generating sales, but we didn’t really have a clear idea of where they were coming from because the purchase journey was so complex. It wasn’t a problem that we could solve by just putting an attribution layer in somewhere.” 

“The concept of growth in the past has generally been focused on the top line. And what that means, often, for a lot of companies, is to just go into as many different channels and try to tap into as many different demographics as you possibly can and then find out what’s working and what’s not working. I think the issue is that the broader investment community has wisened up to that, right, and they’re holding us more accountable on a unit economics and customer economics level, versus just month over month top line growth, which in reality, it’s just a vanity metric. So, it is more favorable to take a more disciplined approach, albeit potentially slower top line growth, to really uncover those median sites that you can actually build a solid foundation on and grow a real, scalable, profitable company on versus just something that’s just, scaling wildly at the top one but in reality it’s just lighting money on fire.”

“You don’t want [an influencer] to talk about your product in a positive way because you’re paying them to talk about it in a positive way, you want them to really advocate, because that means that not only are they talking on the channel that you want them to talk about it, they’re also having side conversations. And when people come over to their homes and they’re asking, ‘Wow, where did you get that beautiful sofa from?’ They are talking not just about, ‘Oh, I got it from Burrow,’ they’re also saying like, ‘And it happens to have these stain resistant fabrics, and it has all of these great other materials, and it was modular, and it was super easy to get it delivered and get it set up.’ And that’s what you really want to go off of.”

“The concept of customer centricity is used so broadly and inauthentically, I think. A lot of brands will claim customer centricity and they’ll think that they’re being customer centric because that’s who their customer is and they just need to make money off of them, and so they’ll say that they’re thinking about all their needs. The problem is they’re not actually talking to the customers, they’re assuming on behalf of the customers that they know what that customer needs.”

“Companies nowadays need to think a lot more about lifetime value than they had to necessarily, in the past. Acquisition cost is growing, and they can no longer just rely on first purchase profitability in order to sustainably scale their business, and they need to think about building a relationship with the customer. And that often comes from creating relationship and being the default brand or site to go back to when they may have that next need and finding that perfect accompanying piece.”

“It is exponentially easier to start a company, a direct to consumer company than it was 20, 30, 40 years ago. So, because of that, the market has just blown up in terms of the number of companies. And so, the paralysis of choice has shifted from like going to an old school Sears or Macy’s and just having like a million different options, or as you put it, like a Wayfair, and just tens of millions of options, to now having to build a relationship with a brand and trust that that brand is making the right decisions. And so, that’s why we offer a very select assortment of fabric colors, leg finishes, arm styles. In reality, we can house tens of component skews and offer tens of thousands of combinations to the customer, but what’s ultimately the most important thing is that we do it in a way that is still a very simple and clean experience for the customer so that they get that sense of they’re creating their own product, but not to the extent of being overwhelmed.”

“I think it’s a reckoning for a lot of these companies, again, where it’s been so easy to start a company and just go on Facebook, and you’ll generate some sales, and go to a VC and you’ll show 100% month over month growth, and they’ll throw a bunch of cash at you. That’s changing, and I’m thankful for it as much as I curse the fact that we don’t have this GPS anymore, I’m very thankful that we don’t, because it’s forcing us to mature as marketers. And we’re fortunate also that we’ve had to embrace this appreciation for marketing 101 and really lean into principles and not just trust what the ad platforms are telling us, because it’s a whole shopping journey.” 

Mentions:

Power Pricing

Cultural Strategy

Shoe Dog

Bio:

Alex Kubo is the VP of ecommerce and digital marketing at Burrow. He has been with the company since 2016 and has also held roles involving growth and data analysis. Prior to his work with Burrow, Alex was a Marketing Analytics Strategist at Andela and a Project Engineer for ExxonMobil. Alex has a M.S. in Mechanical Engineering from Lehigh University and an M.B.A. from the University of Wharton School.

Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce

Transcript:

Stephanie:

Welcome to Up Next In Commerce. I’m your host Stephanie Postles, CEO at mission.org. Today on the show, we have Alex Kubo joining us, who currently serves as the VP of E-Commerce and Digital Marketing at Burrow. Alex, welcome.

Alex:

Thanks, Stephanie. Excited to be here.

Stephanie:

Yeah, I’m very excited to have you here. It was cool reading a bit about Burrow’s background and starting at Y Combinator, and I was thinking it might be fun to start there, back in 2016. What did it look like starting the company, and then we can get into today?

Alex:

Totally. So, I was fortunate that I actually met the two co-founders of Burrow while were on the same business school program in Philadelphia. And back in the fall of 2015, actually, Kabeer and Stephen, the two co-founders and my classmates were both furnishing their apartments as they moved into Philadelphia for the program, and they had two very distinct but related experiences. Kabeer purchased a sofa from West Elm in Philly, and it wasn’t going to arrive for about 12 to 16 weeks, which I think, nowadays, people are pretty used to seeing those timelines, but Originally, it was like, “Whoa, this is not Amazon.” And so, Kabeer actually used the cart, the dolly in his apartment building and rolled it to West Elm, and picked up a floor model and brought it home, because the lead time was going to be longer than his first semester, so obviously, that was not going to be a great experience.

Alex:

Stephen went the classic IKEA route, right, where you don’t come in to grad school with a ton of money and need to furnish your space quickly. And so he did that, and then ultimately, it’s a waste down the road, right? IKEA furniture, you can’t move because of the quality of the materials and that sort of thing.

Stephanie:

[crosstalk]. Yeah.

Alex:

Yeah. So, the question ultimately became, why can’t you have that higher end quality that you might find at a West Elm, or Pottery Barn, or Crate and Barrel, but the convenience, the modern day conveniences that Amazon has made the default expectation of consumers, so fast, and free shipping, and easy delivery process, and be able to modularize that design so that you can set it up and not have to deal with like the IKEA hex key or any of these really cumbersome assembly processes? And so, that concept was born. And out of that came a series of product innovation that ultimately, Stephen and Kabeer got into Y Combinator with just a pitch deck and no product and used that accelerator to develop the product, to prototype the product, and ship it.

Alex:

A funny little anecdote is that from the time they incorporated the company to the time they shipped their first product was shorter than the period of time that West Elm quoted Kabeer to ship his first couch.

Stephanie:

Oh, wow. That’s great.

Alex:

Yeah.

Stephanie:

And what were you doing when they were going through Y Combinator?

Alex:

I was actually working on my own concept in the health and fitness space and ended up calling time on it right towards the end of the summer because of a number of challenges that I was having on my end, and joined up with Stephen and Kabeer to help build out the demand side of the business. And I had a relatively intimate knowledge of the business and where they were at because we were in all the same classes working on our own businesses. And I had helped them tangentially with sourcing components during our first year of the program, because I have a background in mechanical engineering and they didn’t have any background in physical hardware. And so, there was already the groundwork for relationship. And then I was trying to move my own discipline into more of a consumer facing and ground level marketing and product marketing role, so it actually made a lot of sense.

Alex:

So, we set it up as a brief relationship to make sure that the working relationship was there, which it turned out very quickly, it was. So, I have been tasked or had been tasked with basically just building demand and ran with it since.

Stephanie:

So, since then, what does the world look like now compared to when you started and you were building up demand? I mean, I’m sure you guys were trying out Facebook and all the traditional platforms that everyone’s like, “Every brand should be on Instagram and Facebook, and if you’re not here, where are you?” What did it look like then and now?

Alex:

So, now it’s a much more disciplined and much more properly positioned business than it was in the beginning. Two critical mistakes that were good healthy mistakes to make in the early days were, number one, brand positioning and product positioning. We had this idea in our head that… and sort of the classic Warby Parker pricing story of like, they wanted to price it $45, but their advisors and professors advised them not to do that because it would signal the wrong value to the customer. We had a similar experience where, for some reason in our heads, we had to price our couch under $1,000. And we made that decision because we wanted to be hyper competitive on price and make it the default, obvious solution.

Alex:

The problem that we failed to acknowledge is that consumers nowadays have very limited time to understand the differences and nuances between products. They’re not stupid, they’re not lazy, but they do have very limited time. And so, you have to be very clear and explicit with them, and part of that is signaling. And one of the most powerful parts of marketing that I think is most often overlooked is a focus on pricing and what that does from a positioning standpoint.

Alex:

When a lot of shoppers were seeing our product under $1,000 and the fact that it shipped in boxes, which we were very forward with, because we focus so much on the attributes of the product and less on the experience around it, which is another step in our evolution, that people immediately equated those two things, low price and ships in boxes, with a more expensive version of IKEA. So, then it was us talking to IKEA shoppers, and you’re not going to convince an IKEA shopper to spend another 300, $400 on a sofa, right? What you need to do is talk to the West Elm shopper, the Pottery Barn shopper, the Crate and Barrel shopper.

Alex:

So, we actually, for a number reasons, increased prices in late 2017, about half a year after we launched.

Stephanie:

How much did you increase them by?

Alex:

Originally, the sofa was priced at 950. By the way, much different cogs, profile as well, at that point. We increased the price to 1,095 to start. So, it was a pretty meaningful difference on a percentage basis, and especially when you talk about margins.

Alex:

Interestingly enough, everything you learned in microeconomics about the relationship with the supply and demand curves went out the window, because we increased the price and demand shot through the roof.

Stephanie:

Wow. Did you get it in front of new people? What else were you doing to get it-

Alex:

I mean, we were doing a lot of the same things in terms of building full funnel architecture on paid social and paid search and that sort of thing, and again, applying a lot of those early D2C playbook type approaches, which ultimately turned out to not be the best approach for us. But nothing changed substantially from a marketing perspective. We were still reaching a lot of the same people, it’s just that we were now signaling to those people that we belonged in the comparison set with a higher quality piece of furniture. That helps also, because a lot of our value props, it’s much easier to convince somebody who has shopped at one of these higher end brands and had to wait super long or had to go to a showroom and deal with a frustrating shopping experience with this overbearing sales associate, pay for shipping, and ultimately, have to be home to get a piece of furniture delivered, and either take a day off from work. Again, much different world back then than it was today.

Alex:

But it’s much easier to talk to those kinds of people who’ve experienced those pain points and tell them, “I’m going to take all of that pain away,” than it is to talk to somebody who’s never experienced those pain points and doesn’t need the higher quality piece of furniture, again, the IKEA shopper, and talk to them about all these future pain points that they’ve never experienced but that we can help them avoid. That’s maybe one of the biggest lessons learned, is that people do not think much about the future. They’re often very, very focused on the present. And so, as much as you want to talk about why you should go to the doctor every year, why should you should go to the dentist every six months, it’s like, people are not going to react until they have a problem.

Alex:

So, we’ve experimented a bunch with what is the leading value prop. So, we talked to consumers, and one of the ones that we talked about very early was this concept of modularity and how, when you move into your next apartment, you can just purchase another seat instead of buying a whole new sofa to accommodate the new space, or rearrange the existing configuration that you have to fit the new space requirements. Problem is, people are not thinking about that. They don’t really care. They can’t think that far in advance of two to three to four years down the road when moving into the next apartment. And so, we’ve deprioritized that in terms of communication and lead with other things that are more immediate, like fast and free shipping.

Stephanie:

Yeah. Got it. So, you’re mentioning earlier that the D2C playbook didn’t work for you guys, where now, even these days, you can search that and you’ll find a bunch of the playbooks and people are still saying like, “This is what you need to do to be successful.” What were some other things that you did back then that you completely reversed and you were like, “This doesn’t work for us”?

Alex:

Yeah. So, I think, first, was not acknowledging how complex and lengthy the shopping journey is for a piece of furniture online. Obviously, it’s a big investment, it’s also mutually exclusive with something else, your home, right? Let alone the high price, you’re not going to just buy another couch when you have an existing one in your home, right? You need to think about getting that out or you have to do it right at the right moment with a moving event or something like that.

Alex:

So, the first thing that we had to realize is that what we can’t do is architect our funnel around existing attribution technology or just rely on optimizing towards purchase events in digital channels. What we had to do is to look upstream and find correlations and causation between different upstream, midstream, and bottom stream events to really architect a healthy full funnel. And so, most of our campaigns are not architected towards purchase events, they’re architected towards or optimized towards something more upstream.

Stephanie:

[crosstalk] for a couple examples.

Alex:

Yeah. I guess one interesting one that we’ve learned over time is there’s a pretty clear correlation between add to cart and purchase, and the cart abandonment rate is relatively steady. We do things over time, obviously, to improve that, but it’s not something that fluctuates wildly over time. And so, one of the things we can do is just optimize towards an add to cart versus a purchase.

Alex:

The other benefit of that is it often can happen in the first session. So, when you see a lot of the privacy restrictions right now and a lot of the issues with cookies going away and that sort of thing, it helps us. We’ve actually always been architected to bear that burden a little bit better than some of our other D2C peers.

Alex:

And then the other thing, besides the purchase journey, was also that we were just doing way too many things at once. We had, and we still have today, a very lean team. The difference between now and then is that back then, we thought the best approach was to spray as wide as we possibly could and activate 10 to 15 channels with me managing all of them, by the way, and not doing a good job.

Stephanie:

It sounds very chaotic and not fun.

Alex:

Yeah. Not at all, not at all. And only until we really peeled back and just focused on a handful of things and did them really, really well, that’s when we actually started churning results, but more importantly, honestly, that’s when we started actually learning what was working. Because previously, we were just spending a lot of money, we were generating sales, but we didn’t really have a clear idea of where they were coming from, again, because the purchase journey was so complex, right? It wasn’t a problem that we could solve by just putting an attribution layer in somewhere. We had to really hyper focus on one or two things and do them really, really well.

Alex:

The concept of growth in the past has generally been focused on the top line. And what that means, often, for a lot of companies, is to just go into as many different channels and try to tap into as many different demographics as you possibly can and then find out what’s working and what’s not working. I think the issue is that the broader investment community has wisened up to that, right, and they’re holding us more accountable on a unit economics and customer economics level, versus just month over month top line growth, which in reality, it’s just a vanity metric, right?

Alex:

So, it is more favorable to take a more disciplined approach, albeit potentially slower top line growth, to really uncover those median sites that you can actually build a solid foundation on and grow a real, scalable, profitable company on versus just something that’s just, scaling wildly at the top one but in reality it’s just lighting money on fire.

Stephanie:

So, for a higher priced product like Burrow and a longer buying cycle, what platforms would you advise other brands to look at and optimize for and which ones would you pull back from?

Alex:

Yeah. So, I think if you acknowledge that it is, there are a lot of things that people have to learn about the product, a lot of things that people have to get comfortable with and confident in the purchase. You think that a lot of these shorter form mediums, like paid social, paid search, right? It’s just a quick second and a half interaction with an ad, they’re not going to be as effective for a product like ours, and that’s true. What we have indexed up on are things that are more storytelling mediums. So, the earliest insight into this was we partnered with a small podcast in late 2017, and it’s sort of one of those micro ones, it’s not on a network, and just talks about fantasy football. And we just got introduced to the gentleman that runs it, and did a small test, and the results were incredible.

Alex:

Part of what we’ve learned over time from that point, rapidly scaled the podcast program for us is that it’s highly dependent on the host, and the reason that it’s highly dependent on a host is because the efficacy of that channel comes from the quality of the storytelling. And that is really what benefits our brand, is that if we go and we send a podcast host a product and they have the same amazing experience that our customers have, they can talk about it in a much more authentic way, but also, a much more individual way. We’ve actually matured to not providing very detailed scripts to a lot of our podcasts hosts and just telling them to talk about what has been most exciting for you, and that really brings out the energy in the advocacy for the brand from the host. So, I’d say it’s really about focusing on storytelling mediums. So, I lumped other video, long form video into that as well. A little bit less of authenticity, but also helps communicate a lot of these little value props that add up to the major value proposition.

Stephanie:

So, the other thing that comes to mind is branded content. I mean, I’m thinking about something like Formula One where now the results are out, everyone knows it worked really well for them. It was very, I would think, pretty organic, didn’t feel like it was just a brand push. How are you guys thinking about other kinds of content like this?

Alex:

I don’t know if we’re at the stage yet where we can start thinking about that sort of thing. I think that Formula One is a great example of taking two powerhouses and linking them together where the sum is greater than or the whole is greater than the some of the parts. So, we’re thinking a little bit less about something like that and creating more on a micro scale, I would say, brand and content.

Alex:

So, when you talk about something like the influencer arena, I am probably the biggest advocate against using influencers in the context that they are used today. And first of all, just to clarify, a true influencer is not somebody that says, “I’m an influencer” on their Instagram profile description, right? A true influencer is somebody that can speak to a community and elicit a response, and often, within a specific category, right? So, I’m not going to give a beauty “influencer” a furniture product and expect him or her to have an outsized impact on the sales.

Stephanie:

Stephanie:

So, you’d focus on the niche influencer who might only have 1,500 followers or something, which is something I think I talked about early on this show, of going through the comments of Instagrammers and seeing, are the people in there asking, “Where can I buy that? Where did you get that from?” Or are they just like, “That’s great. Cool. I love that.” What kind of engagement are you getting will show if that person has influential power over their community or not.

Alex:

Totally, totally. And obviously, it’s going to vary by a vertical too. This is sort of an extreme example, right? Again, going back to the very considered purchase, even our ability to measure the impact of that is going to be super limited. So, we’ve actually leaned into the influencer community for, more so is, partnering with actually photography influencers. One of the bottlenecks and problems with our vertical is that our products are very large and our photo shoots and video shoots require massive studios and massive crews that are very, very expensive. Meanwhile, all of these people out there that can already take great pictures and already have really interesting homes need furniture. And so, we can often partner with them in a much more economically scalable way to get a huge diversity and huge volume of content created that can showcase different styles, different aesthetics, different home types, and different personalities, and just build this library of content instead of having to book homes ourselves and go through the whole production process.

Alex:

So, we’ve actually been doing that for a while just purely based on economic reasons. But it’s interesting to see that now, I think there’s going to be a massive shift towards organic for a number of other reasons. When you talk about a lot of the privacy regulations that are going on right now, over the last 10 years, the control of the voice or the conversation has shifted towards the consumer and towards the user. You see like case examples of this with like GameStop, for example. The retail investor just had a massive impact on the market from such a small player, right? Because the control of the conversation momentum is shifting away from the brands that have the big budgets and towards the customers that have the voice, the authentic following.

Stephanie:

That’s the influencer of the year right there.

Alex:

Yeah, totally.

Stephanie:

And Reddit. And that’s probably where all the other influencers are, an area that I haven’t even thought to go, but we’ve had guests come on previously where Reddit is how they figured out how to build their business, which I haven’t even thought to go there.

Alex:

Totally, totally. I mean, it makes total sense, right? It’s experts that are talking because they’re passionate about what they’re talking about, right, not because they have a vested interest or they are trying to make money off of it, then that’s where you get that authentic content from and the actual truth.

Stephanie:

So, how do you go about incentivizing that or structuring it so it can come in? Because I’m sure a lot of brands are like, “I want my customers to talk about me and take pictures and do all the things,” and then they just sit there and nothing comes in. So, what are you doing behind the scenes to make that happen?

Alex:

So, it’s less about focusing so much effort on trying to elicit that response just by trying to elicit it and more about really focusing on that product innovation and that experience that will naturally have that effect on people, right? You don’t want somebody to talk about your product in a positive way because you’re paying them to talk about it in a positive way, you want them to really advocate, because that means that not only are they talking on the channel that you want them to talk about it, they’re also having side conversations. And when people come over to their homes and they’re asking, “Wow, where did you get that beautiful sofa from?” They are talking not just about, “Oh, I got it from Burrow,” they’re also saying like, “And it happens to have these stain resistant fabrics, and it has all of these great other materials, and it was modular, and it was super easy to get it delivered and get it set up.” And that’s what you really want to go off of.

Alex:

So, I would say the biggest focus should be on nailing that product innovation and nailing that customer experience, and that’s how you can count on that customer conversation to be generated rather than trying to chase down your customers and get them to talk about it in a less authentic way.

Stephanie:

Yeah, I agree. I think that the days when people on Amazon are like, “I got paid for this review,” or something, those will be gone very soon, because I don’t know about you, but every time I go through a threat and I see that, I’m like, “Don’t trust you, don’t trust you.” I just want to see the normal person who’s reviewing it at their own goodwill, or not, maybe they’re mad, but I want that. I don’t want someone saying, “I got a free product for this review.” That just seems like those days are gone.

Alex:

Yeah, totally, totally.

Stephanie:

So, the other thing I want to talk about is product development. I saw that your co-founder and CEO said, “Every single product we’ve ever launched has exceeded expectations and projections, and that’s a testament to our customer-centric research-driven design process,” which I want to dive into that and hear. I’m sure many brands are like, “I want every single product of mine to be a success, and I want to expand my skews.” So, how do you guys go about designing and crafting new products?

Alex:

Well, I think one thing that we should clear up is the concept of customer centricity is used so broadly and inauthentically, I think. A lot of brands will claim customer centricity and they’ll think that they’re being customer centric because that’s who their customer is and they just need to make money off of them, and so they’ll say that they’re thinking about all their needs. The problem is they’re not actually talking to the customers, they’re assuming on behalf of the customers that they know what that customer needs. Or they’re just testing messaging, which is fine. That’s been the traditional approach of, “Okay, if I play up this feature or this benefit versus this feature or this benefit, and this one does better, that’s what the customer must want,” right? But it almost becomes a little bit of a self-fulfilling prophecy there.

Alex:

We take it to a much deeper level, not just with our customer community but also our lead community, all of our email subscribers that have yet to join and make an actual purchase with us, and actually going to them and asking them very specific and lengthy questions. I remember the first time we sent out a customer survey about one of the next products that we were going to launch and just wanted to get their input on like, “Is this the right product?” Number one, and B, “What are those little things that really bother you about this product?” And did a ton of just open ended response analysis based on that.

Alex:

The biggest surprise for me from that was the response rate. For a quiz or rather survey that took probably a solid 10 to 15 minutes of someone’s time to go through and really complete in depth, which they did, the response rate was astounding. And that opened our eyes to, “Wow, this needs to become a regular occurrence within our work stream.”

Stephanie:

How quickly were you sending this to them? Was it a week after they got their product and are trying to set it up, or what did that look like?

Alex:

Well, there’s a couple different ones. So, what we have is a couple different touch points that are automated or triggered based on somebody actually making their first purchase with us. So, we had, obviously, a post purchase survey right away, which I think is one of the most underappreciated and can be most impactful survey points that people do, or brands do, rather. We also have an NPS survey, which going back to how do you elicit a response from customers and activate customers, NPS is going to be your biggest indicator of how much of that is happening in the background. And that is actually backed up by an element on the post purchase survey where we ask, “Were you were referred by a friend? Does that friend own Burrow furniture, or do they not, or do not know?” And that can also give us a really solid indication of the impact.

Alex:

So, beyond the triggered survey points, we also do intermittent studies, and it’s almost on a monthly cadence now, of either focuses on new categories in general, or we’ve already identified the category, we’ve already identified the specific product and we’re trying to nail down colors, color combinations, finishes, specific features, doing conjoint analyses on like, what is most important to this set of consumer? I mean, we’ve really taken it to a super, super deep level.

Stephanie:

Have there been any products that you launch based off consumer feedback or maybe early launches where it’s like, “Oh, they led us astray with that one”? Because I’d be like, “I want a fluorescent pink couch.” And then I’d be like, “Oh, I had a little too much wine that night. Sorry about that.”

Alex:

Yeah. Fortunately, we’re pretty good at statistics and we can identify outliers and not get swayed by them too much. There actually have not been. And I think it speaks volumes for this concept of authentic customer centricity where… and you can also cross-compare between the customer set and the subscriber set, right? The subscribers are a great audience because they have not purchased anything from you, or at least the subscribers that are not customers, and there’s a reason why, right? Versus the customers, they did find something that you offered already and they’ve already bought into the brand, and they’re responding to you because they’re still engaged. And so, that’s one set of needs that you need to fulfill.

Alex:

And then there’s the other set of needs, and oftentimes, there’s a good amount of overlap, which is great for us, and oftentimes, there’s not, and that’s when we need to make choices around what does that offering look like and who are we really chasing with that?

Stephanie:

Yep. The other thing I think you mentioned in the past was around how you start thinking about zoning and mapping out what else a person needs in their room, which means like, “Oh, brilliant, okay, if someone got a couch, a little swivel chair, and obviously, they need pillows.” And I want to hear, did that method work, and how have you expanded that since you first started trying it I think maybe a year and a half ago or so?

Alex:

It did, totally. I mean, you take one concrete example of this is with the advent of coffee tables for us. We first launched the sofa and then we launched our first line of coffee tables, and those were specifically designed dimensionally to work best with the sofa styles that were selling the most volumetrically. So, we knew that there was a high rate of match, right, between them. It wasn’t like we were designing for something that we were only selling like 5% of our assortment or something like that.

Alex:

Where that took another level is in 2019, we launched the corner sectional, and then arrangements and configurations started getting a lot more varied and a lot more… opened up actually, additional demographics as well, with more suburban, satellite city homes with larger room spans. And that opened up a new category, and so what we had to do is to figure out, “Okay, well, if you have a five-seat corner sectional, none of our coffee tables really make sense for that. And so, how do we create a coffee table that works perfectly in that configuration for that customer specifically?” So, that’s when you saw in late 2020, we released our Kettle and Signal collections, which are more of a round geometry versus a rectangular geometry. And that happens to work really well with things like a Double Chaise Long King Sofa, where the chaise is wrapped nicely around the round coffee table, or the corner sectional, it creates a really nice conversation pit type feeling.

Alex:

So, it is very much about understanding how our pieces interact. And then the next level that is, what are the types of rooms that people are using it in? What are the actual dimensions of those rooms? And what logically, could somebody need the most, given that room design and size?

Stephanie:

It seems like a lot of brands are missing that right now, because oftentimes, I mean, whether it’s furniture or a lot of other things, I’m like, “Where is that matching dresser set? Or where is the pillow that goes with that?” And it feels like having to go around and look in different places and trying to find it myself, I’m like, “Why am I doing the work? I just want a kit which is like, ‘Here’s all the five things that match together.'” But why is that so hard? I don’t get why can’t brands do that?

Alex:

I think one of the biggest examples of this is that company brand list that skyrocketed, but they were launching things in such unrelated categories that there was no bond between them. And companies nowadays need to think a lot more about lifetime value than they had to necessarily, in the past. Acquisition cost is growing, and they can no longer just rely on first purchase profitability in order to sustainably scale their business, and they need to think about building a relationship with the customer. And that often comes from creating relationship and being the default brand or site to go back to when they may have that next need and finding that perfect accompanying piece, right? Versus just like you buy cleaning detergent from the company, and you come back and, oh, they’re offering soccer balls or something.

Stephanie:

Pillows.

Alex:

Yeah, it’s like, “Okay, well, that doesn’t make sense.”

Stephanie:

Yeah. Which makes me think, I mean, it seems like the world is headed towards a more curated world right now. Maybe back in the day, I would go to a Wayfair or something like that and I’d be like, “Cool, I’m fine with scrolling, scrolling,” five years later, still scrolling and looking for what I want. It doesn’t seem like consumers want that anymore. So, how do you see the consumer journey and preference adjusting now where maybe a couple years ago, that would be totally fine?

Alex:

Yeah. I think it’s almost a byproduct of the ease of standing up a company nowadays. It is exponentially easier to start a company, a direct to consumer company than it was 20, 30, 40 years ago. So, because of that, the market has just blown up in terms of the number of companies. And so, the paralysis of choice has shifted from like going to an old school Sears or Macy’s and just having like a million different options, or as you put it, like a Wayfair, and just tens of millions of options, to now having to build a relationship with a brand and trust that that brand is making the right decisions. And so, that’s why we offer a very select assortment of fabric colors, leg finishes, arm styles. In reality, we can house tens of component skews and offer tens of thousands of combinations to the customer, but what’s ultimately the most important thing is that we do it in a way that is still a very simple and clean experience for the customer so that they get that sense of they’re creating their own product, but not to the extent of being overwhelmed.

Alex:

I think of myself on old school furniture sites and staring at the screen from two inches away trying to figure out the difference between this gray and that gray, and I’m like… and then you request swatches from them and they come 10 weeks later.

Stephanie:

Yeah. I’ve recently been through that experience. It’s not great.

Alex:

Yeah. No, it’s not fun.

Stephanie:

They arrived and I’m like, “What was I trying to buy, again?” [crosstalk]. I mean, it seems like you guys could also have a very localized approach where, like you mentioned earlier, if someone is looking from a very suburban area, like my hometown in Maryland, where my expectations there would have probably been to have a huge wraparound couch, I’ve got this big living room, versus being in San Francisco or Austin, where now it’s like a little bit more limited space, and what can I fit in these small areas? [crosstalk] think about that?

Alex:

I mean, the first step there that we’re taking, it’s more from a content driven approach. So, that goes back or loops back to the way that we’re treating influencers and leaning into the photography community and the different styles and aesthetics that they have. Because what we are creating are based products. They are beautiful but they don’t belong in an architectural [inaudible] editor’s home, right? They’re not the one-off piece that you design and custom build for 15 grand or something.

Alex:

And what’s beautiful about that is that they stand up to any environment that you’re putting them in, whether it’s a very eclectic like Austin ranch style home, or the fourth floor walk up apartment in New York, or a more sprawling home in Houston or another geography like that. And leaning in with more of that stylistic approach than necessarily sub-segmenting, “Oh, we’re only going to show love seats to this geography, or we’re only going to show these massive sprawling corner sectionals to this other geography,” because people still have varying needs, a lot of people have multiple rooms. So, we don’t want to limit, necessarily, the assortment, but we are trying to diversify constantly the styles and aesthetics that our products are showcased in.

Stephanie:

Got it. Yeah, that makes sense. So, for the last big point, I wanted to talk about the industry as a whole, like the D2C industry, commerce, what kind of things are you seeing or preparing for behind the scenes for what’s to come?

Alex:

I mean, we could talk about the elephant in the room, which is-

Stephanie:

Let’s talk about it. Yeah, let’s do it. I haven’t really talked too much about that, because it’s been so up in the air, and when’s it going to go through? It’s more official now, so let’s do it.

Alex:

Oh, yeah, it’s official. This is a tough thing, and I think it’s a reckoning for a lot of these companies, again, where it’s been so easy to start a company and just go on Facebook, and you’ll generate some sales, and go to a VC and you’ll show 100% month over month growth, and they’ll throw a bunch of cash at you. That’s changing, and I’m thankful for it as much as I curse the fact that we don’t have this GPS anymore, I’m very thankful that we don’t, because it’s forcing us to mature as marketers. And we’re fortunate also that we’ve had to embrace this appreciation for marketing 101 and really lean into principles and not just trust what the ad platform are telling us, because it’s a whole shopping journey.

Alex:

So, we’ve built a very healthy, full funnel approach proactively, even without any of this talk about these privacy regulations. That has helped us create something that can stand up in the face of this. There are a lot of companies that have not done that, they’ve not invested in really understanding marketing 101 and how to build a healthy full funnel without having that very granular level of insight or having automatic triggers in their campaigns and stuff. So, I think that is the most important thing, is like there is a day of reckoning for marketers everywhere in the D2C space to take a step back and really appreciate the principles of marketing and evaluate your program architecture overall and make sure that it’s in a healthy state, and not just because your add to cart rates or your conversion rates are really high from this one campaign in this one ad unit, but really, overall, how is your program operating? Where are the weak points and how can you supplement those?

Stephanie:

Yeah. So, if you were starting over day one today, what kind of things would you look at? What metrics would you look at? What kind of things would you put in place to start building up that healthy funnel?

Alex:

Yeah. I think we would look at… I’m trying to think if I didn’t have all the information that I have today, but I think what you would look at is the abandonment rate through the funnel, right? Of the people who click through to your site, how many of them end up viewing a product? Of those people, how many of them end up adding it? Of those people, how many of them end up actually proceeding to step one of checkout, step two, step three, step four? And find out what that makeup looks like.

Alex:

And obviously, you’re going to spend a lot of time on conversion rate optimization and trying to improve the outputs of each step of that funnel. But that paints a picture of, okay, how broad do you have to invest at the top of that funnel if your ultimate target at the bottom of the funnel is X? And what does that reach look like? And what are the best mediums to do that to actually elicit a response and get people onto your site or into your store or signing up for whatever service you provide? So, that, I think, is what I would take as step one.

Alex:

The other one is, I would just consider, for the vertical that you’re in and the product that you’re trying to sell, how much of a story do you need to tell? And that will help inform how much you will need to invest in more storytelling mediums than more immediate click to buy type mediums. Also, how visual is your product? That will tell you how much you have to be content driven versus leaning into things like search or audio formats or anything like that. And that can really help govern your channel choices.

Alex:

And then the last thing is just, don’t fall into the trap of doing too many things at once. There’s always something to be said to acknowledging the resources that you have and trying to build a architecture that is best for that set of resources, not just the one that happens to be doing really well for the other portfolio company that your VC backer is constantly in your ear about, you have to focus on what is going to work for your company, your vertical, your customers specifically.

Stephanie:

Yep, yeah, I love all that. Is there or are there any tools right now that you’re very excited about that are either new or just time tested, you’re like, “We’re going to keep using these forever because they do wonders for our marketing efforts”?

Alex:

I think a lot of it is less about tools and more about information sources. So, we’ve partnered with a number of different companies over time to do things like customer enrichment and really understand our customers to a deeper level, again, going back to that concept of customer centricity, not just talking to them directly, but also learning much, much more about them. And I think one of the biggest traps that a lot of companies fall into is they think of their customer as an average customer, and the problem is they’re failing to acknowledge that customers are not one monotonous group, they are a system of clusters and cohorts. And what you really have to do is understand what is unique and important about each of these clusters and then create a messaging architecture, channel architecture, product offering that really speaks to each of those clusters individually.

Alex:

So, from a tools perspective, it’s more about these data enrichment, customer data enrichment type platforms, and then using those to create these clusters and cohorts and really understand those customers. Again, for us, an attribution platform, not super helpful because of the complexity and both mix of offline and online activity that it takes to get to the purchase point. Much more about really understanding the customer and then applying a marketing 101 approach to it.

Stephanie:

Cool. Yeah, that’s great. All right. Well, let’s shift over to the lightning round. The lightning round is brought to you by our friends at Salesforce Commerce Cloud. This is where I ask you a question and you have a minute or less to answer.

Alex:

Oh, boy.

Stephanie:

Ready, Alex?

Alex:

Sure.

Stephanie:

Oh, boy. What’s one thing you don’t understand today that you wish you did?

Alex:

Shoot. Where do I start? I think I would like to understand more about the global supply chain. I think over the last six months to a year maybe, we’ve seen, very intimately, the impacts of a broken or strained supply chain, and I think that there’s a huge opportunity for D2C companies to innovate on the supply chain side. We focus so much on how do we innovate on the customer side that we focus so much less on the supply side of the business. So, I think that is where… and it will become increasingly important for marketers and supply ops to be speaking and working very much hand in hand to grow a company together. So, I do wish I had more of that background.

Stephanie:

Yeah, that’s great. And you guys just raised around, and I think that money, a part of it, was to focus on international supply chain effort, right? Figuring that out better.

Alex:

Yes, totally.

Stephanie:

So, you’re already right in the right spot, the right time. You’ll have to let everyone else know the insight. You have to come back and tell us what you learn next year.

Alex:

Yes, definitely.

Stephanie:

What’s up next on your reading list or podcast list?

Alex:

There’s actually a couple books I think that I want to reread. I’m one of those weird people that really likes to read technical books, and so there’s a couple of conversations we’re having right now about pricing in this book called Power Pricing that I love to read. There’s also one by a gentleman named Douglas Holt called Cultural Strategy that I think is one of the most foundational and important books, especially for the world today. And again, how the customer controls the conversation, and understanding how to position your company and your messaging around cultural movements and ride momentum versus trying to create that momentum yourself as you have in the past. The last one is Shoe Dog, actually.

Stephanie:

Yes, such a good book.

Alex:

Amazing book. This would now be, I think, my third time reading it, but it is a way to, I think… A lot of people have been talking about languishing right now and the fact that we’ve been in this environment for so long and we’re yearning for that personal interaction, and so tired of being in the sedentary and fixed on a digital screen environment. And I think Shoe Dog can help reignite a lot of that passion, right? Because it’s like, “Wow, this multi-billion dollar company started at such a microscopic level.” And it really helps you understand the power and the capability you have as an individual to create something like that and can help really reignite that passion.

Stephanie:

Yeah, that’s one of my favorite books. Actually, we have a podcast called The Story that tells the unknown backstory of people who change the world, and we highlighted him in one of the episodes because we were like, “The story is too good not to tell, and tell, and tell until everyone hears it, and gets motivated and starts their thing today.”

Alex:

Yeah, totally.

Stephanie:

That’s awesome. I feel like they need a movie out or something. Do they have one?

Alex:

I’m sure there will be. I’m sure there will be.

Stephanie:

There has to be one. Too good of a story not to. What’s one thing you’re secretly curious about? [crosstalk].

Alex:

TikTok, I think.

Stephanie:

Are you all on there?

Alex:

We are not. From a demographic perspective, in the past, I would say a year and a half, it hasn’t made sense. The program is continuing to grow, the demographic adoption is continuing to expand, and so I am interested in what it looks like going forward. I think it is also a challenging medium for a lot of brands that are really attached to high production quality content, because what scales the best on that platform is very lo-fi content, very organic and authentic content. And it creates this shift for a lot of companies in the way that they think about creative. So, I’m curious in that we are actively learning about our potential approach to that channel, but also curious about how does that platform and program evolve over time. I’ve not heard great things about the ad platform that they’ve built so far, which is partially why we’ve been hesitant to really go after the channel, but that will evolve. They will crack that code. And what that looks like, I don’t know, but I’m certainly curious.

Stephanie:

Yeah. We’ve definitely heard 50-50 on TikTok, some brands saying it works wonders, but they’re the ones creating their own content, maybe not an ad partner programs. I also think from a consumer standpoint, how it’s going to evolve, because at least me personally, I think I got signed out and I couldn’t remember my password-

Alex:

Oh, no.

Stephanie:

… and I just never signed back in. I’m like, “I’m not sure I really like it then, or maybe I know that just scrolling is not good for me.”

Alex:

Yeah. That was me with Clubhouse, actually.

Stephanie:

Oh, same.

Alex:

I loved Clubhouse for the first seven days and was on it constantly and I have not been back on it for [crosstalk].

Stephanie:

Yeah. I think it got crowded. I mean, now it’s just so busy, so many people talking about so many things, it didn’t feel curated. I started feeling like that to me too where it was 50-50 of like, “I like these videos, and next nine, I don’t like.” I think there has to be curation to keep at least us involved, it sounds like.

Alex:

Yeah, totally. I mean, honestly, that’s what happened with the podcast world too, right? It became everybody launched their own podcast, and then there’s so much content. The biggest problem with podcasts now is discovery. The only way you learn about what to listen to is through your friends.

Stephanie:

Yeah.

Alex:

And so, that concept of discovery is such a challenge for podcasts right now, and I think that’s what Clubhouse is going through at 1,000 times faster through the learning cycle.

Stephanie:

Yeah. I think the next couple of years will be interesting, because I mean, they’ve been talking about discovery issues back to even when I worked at Google, figuring out Google podcasts, and that was an issue back in 2017. So, why hasn’t this been solved yet? It should be so much easier.

Alex:

Yeah.

Stephanie:

All right. Well, Alex, it’s been awesome having you on the show, such a fun conversation. Where can people find out more about you and Burrow?

Alex:

Burrow.com would be the easiest place.

Stephanie:

What about you? Are you on LinkedIn? What if people want to talk to you?

Alex:

I am. LinkedIn. Alex Kubo. I’m not sure if you can actually search me and find me, but I’m sure you could.

Stephanie:

I’ll find you. Don’t worry. All right. Thanks so much, Alex.

Alex:

Thank you so much, Stephanie.

 

Episode 125