Ad Expert Reveals The Worst Mistakes In Marketing: Rory Sutherland

Summary

In this podcast transcript, the host discusses launching an apparel brand called 'DoAC Diary of a CEO,' sharing advice on delivering value to customers. Key points include the importance of excellent customer service, avoiding the hiding of phone numbers, offering delivery choices, and focusing on packaging as a brand statement. The host emphasizes the balance between brand marketing and performance marketing, advocating for investment in both areas despite the challenges in quantifying their impact. The discussion also touches on the broader implications of focusing too much on quantifiable metrics at the expense of building customer loyalty and brand engagement.

Takeaways

• 📞 **Customer Service Accessibility**: Always make your phone number easily accessible to customers for better service.
• 🛍️ **Post-Purchase Experience**: Focus on the post-purchase experience as much as the pre-purchase to avoid a 'world of pain' for customers.
• 🚚 **Delivery Options**: Offering a choice of delivery couriers can improve customer satisfaction and perception of your brand.
• 💰 **Loyalty Programs**: Consider implementing a loyalty program like Amazon Prime for repeat customers to encourage brand loyalty.
• 🎁 **Packaging Matters**: Pay attention to packaging and unboxing experience as it can significantly enhance perceived product value.
• 📈 **Scarcity Marketing**: Utilize scarcity to create demand and exclusivity, as seen with limited product runs.
• 🎨 **Storytelling in Products**: Each product should tell a story, enhancing its art-like quality and connection with the customer.
• 📊 **Balanced Marketing Approach**: Strike a balance between brand advertising and performance marketing for long-term success.
• 💡 **Invest in Non-Quantifiables**: Don't undervalue the importance of engagement and loyalty, which are harder to quantify but crucial for brand success.
• 🔍 **Long-Term Customer Conversion**: Focus on converting customers for life rather than just a one-time sale to build a sustainable customer base.

Q & A

What is the name of the apparel brand being discussed in the script?

The name of the apparel brand is 'Doac Diary of a CEO'.

What is the relationship between the apparel brand and the podcast?

The apparel brand 'Doac Diary of a CEO' is an extension of the podcast with the same name.

What is the main advice given regarding customer service in e-commerce?

The main advice is to answer the phone and not hide the phone number, treating customers who have issues with the same respect as those who are purchasing.

Why is it important to offer a choice of delivery couriers according to the speaker?

Offering a choice of delivery couriers is important because it allows customers to choose a service they trust, and if something goes wrong, they are more likely to blame the courier service rather than the company.

What is the significance of packaging and presentation in e-commerce according to the transcript?

Packaging and presentation are significant because they are where a product first takes on a brand's personality and identity, and can influence the perceived value of the product.

What is the concept of 'cost reduction' criticized in the script, and why?

The concept of 'cost reduction' is criticized because it often leads to poor customer service, such as making it difficult for customers to contact the company or minimizing the cost of delivery at the expense of customer satisfaction.

What is the speaker's view on the balance between brand advertising and performance marketing?

The speaker believes in a balance between brand advertising and performance marketing, suggesting that optimizing the bottom of the funnel (performance marketing) should come first, but brand marketing is also crucial for long-term success.

Why does the speaker argue against focusing solely on quantifiable marketing efforts?

The speaker argues against focusing solely on quantifiable marketing efforts because they believe it leads to underinvestment in valuable but hard-to-measure areas such as brand loyalty and engagement.

What is the meaning behind the limited runs of the apparel brand's products?

The limited runs of the apparel brand's products are intended to create scarcity and exclusivity, which can increase demand and perceived value.

How does the speaker suggest measuring the effectiveness of brand marketing?

The speaker suggests that the effectiveness of brand marketing can be measured indirectly through its impact on metrics like repeat purchase rates, customer forgiveness, and the ability to command a premium price.

What is the 'halo effect' mentioned in the script in relation to packaging?

The 'halo effect' refers to the positive influence that high-quality packaging can have on the perceived value of the product inside.

Outlines

00:00

👕 Launching an Apparel Brand: Customer Service and Packaging

The speaker is launching an apparel brand called 'DoAC Diary of a CEO' and seeks advice on delivering value to customers. They discuss the importance of customer service, suggesting that companies should be accessible and not hide their phone numbers. The speaker criticizes the common practice of neglecting customer satisfaction after the sale, focusing instead on cost reduction. They argue for offering a choice of delivery couriers and enhancing the unboxing experience through careful packaging. The brand's apparel is presented as an extension of a podcast, with a focus on storytelling and limited availability to create scarcity and desirability.

05:01

🎨 The Art of Branding and Customer Engagement

The speaker emphasizes the storytelling aspect of their apparel brand, comparing it to art rather than mere clothing. They mention a previous successful tour where clothing was sold with a strong narrative component. The brand focuses on creating a connection with the audience, aiming for customer loyalty and engagement over immediate financial gain. The discussion touches on the broader implications of modern business practices, where there's an overemphasis on quantifiable metrics and underinvestment in building long-term customer relationships and brand loyalty.

10:03

📊 Balancing Brand and Performance Marketing

The conversation delves into the balance between brand advertising and performance or digital marketing. The speaker argues against the false dichotomy between the two and suggests that they should work in tandem. They reference the work of Lisbonette and Peter Field, suggesting a 60/40 split in favor of brand advertising. The speaker discusses the challenges of direct marketing for unknown products and the benefits of brand fame, such as customer forgiveness for product flaws and the ability to command a premium price. The discussion concludes with the idea that an obsession with quantifiable metrics can be misleading and that the true value of brand marketing is harder to measure but no less important.

Keywords

💡Apparel Brand

An apparel brand refers to a company or label that designs, manufactures, and markets clothing and fashion accessories. In the context of the video, the speaker is launching an apparel brand as an extension of their podcast, indicating that the brand will likely reflect the values and themes discussed on the podcast.

💡Customer Service

Customer service refers to the assistance and support provided to customers before, during, and after their purchase. The speaker emphasizes the importance of accessible customer service, such as answering the phone, as it can greatly impact customer satisfaction and the brand's reputation.

💡E-commerce

E-commerce involves conducting business transactions electronically, typically over the internet. The script discusses the challenges of e-commerce, such as the difficulty customers face when they need to return or cancel orders, highlighting the need for a seamless customer experience.

💡Packaging

Packaging is the process of enclosing or protecting a product for distribution, storage, sale, and use. The speaker mentions that packaging can be a significant part of a brand's identity and can influence the perceived value of a product, as seen with Selfridges' branded packaging.

💡Scarcity

Scarcity refers to the limited availability of a product, which can create a sense of urgency and exclusivity among consumers. The speaker discusses how their apparel brand uses limited runs to create scarcity and generate interest, as they did during their UK tour.

💡Branding

Branding is the process of creating a unique name and image for a product in the consumer's mind, primarily through advertising and design. The speaker talks about how their apparel brand is an extension of their podcast, suggesting that the brand's story and identity are crucial to its success.

💡Customer Loyalty

Customer loyalty refers to the customer's faithfulness to a brand or company. The speaker argues that while it's harder to measure than immediate sales conversions, customer loyalty is a valuable asset that can lead to repeat purchases and long-term success.

💡Performance Marketing

Performance marketing is a type of marketing where the focus is on measurable results, often through digital channels. The speaker discusses the balance between performance marketing and brand advertising, suggesting that both are necessary for a successful marketing strategy.

💡Brand Advertising

Brand advertising is a form of advertising that promotes a brand's identity and values rather than specific products. The speaker emphasizes the importance of brand advertising for building long-term customer relationships and brand recognition.

💡Conversion Rate

The conversion rate is the percentage of potential customers who complete a desired action, such as making a purchase. The speaker mentions the need to optimize the conversion rate at the bottom of the sales funnel before investing heavily in brand advertising.

💡Repeat Purchase

A repeat purchase is when a customer buys the same product or service more than once. The speaker suggests that optimizing for repeat purchases should be a priority, as it indicates customer satisfaction and loyalty, which are key to long-term business success.

Highlights

Launching an apparel brand called 'Doac Diary of a CEO' as an extension of a podcast.

Advice on delivering a product to ensure it is inherently valuable.

Marketers should focus on removing negatives as much as adding positives.

The importance of being accessible and not hiding phone numbers in e-commerce.

Customer service issues arise when deviating from the standard purchase funnel.

Critique of e-commerce practices that focus on cost reduction at the expense of customer satisfaction.

The mistake of not offering customers a choice of delivery couriers.

The impact of delivery choice on customer blame attribution.

The role of packaging in brand perception and the 'halo effect'.

The strategy of limited runs for apparel to create scarcity and demand.

The storytelling aspect of each apparel piece and its connection to a movie explaining its meaning.

The focus on the unboxing experience to enhance customer engagement.

The balance between financial gain and the joy of the creative process in product launches.

The broader brand play and audience engagement over immediate financial returns.

The overemphasis on quantifiable metrics in modern business at the expense of valuable but harder to measure aspects.

The slower measurement of customer loyalty compared to conversion rates.

The necessity of investing in brand marketing to support digital marketing efforts.

The idea that optimizing the bottom of the funnel should come first in marketing strategy.

The importance of repeat purchase as a marketing metric.

The challenge of quantifying the impact of brand on price elasticity and customer forgiveness.

The false dichotomy between brand advertising and performance marketing.

The recommended 60/40 spend ratio in favor of brand mass media expenditure.

The benefits of brand fame that are not directly sales related.

The limitations of big data in predicting future trends, especially after major events.

Transcripts

i want to get some rules um some advice

from you then so i'm i'm launching a

uh a brand soon and it's an apparel

brand and we've been working very hard

on it over the last year or so maybe a

bit too hard on it when it comes to

delivering that apparel brand to the

world and making it um it's actually an

extension of this podcast so it's called

doac diary of a ceo um what advice would

you give me as it relates to delivering

that product to the world to make sure

that it is inherently valuable and that

people you know

one one piece of advice in any form of

uh e-tail two two forms of advice

actually

uh the two mr and by the way i think

marketers spend too much time focusing

on the addition of positives

when a lot of time needs to be spent on

the removal of negatives uh one thing is

answer the phone

okay and do not hide your phone number

i i find that so what seems to happen in

most e-commerce is you have what you

might call the sales area which is

everything that happens

up to

and including

a point of purchase

and everything there is glorious and

attractive and you know and slick

okay assuming by the way you don't have

a weird question to ask

um but i would argue one um what then

happens is if something goes wrong with

your experience either the delivery of

the experience or you need to cancel

something

as soon as you deviate from that very

narrowly preconceived sort of purchase

funnel

you enter a world of pain okay and the

two things which are i think grossly

under underinvested in uh in terms of

e-commerce are one giving what what

tends to happen is once once the

marketing job is done because the person

has clicked buy

the responsibility for that customer is

now handed over to people whose metrics

are anything but customer satisfaction

their cost reduction how can we make

sure that nobody phones us up how can we

make sure that every phone call is as

brief as is feasibly possible and how

can we minimize the cost of delivery and

distribution now one of the things i

think is a grotesque mistake that most

ecommerce providers make not all of them

but many is not offering you a choice of

delivery couriers

for example

okay

now i know why they do that they want to

put everything through one delivery

courier so they can maximize their

rebates through volume economies of

scale

actually i think you know i think many

me two problems happen there one if you

don't get to choose how your items

delivered if anything goes wrong you

blame the company you don't blame the

delivery company or yourself if i'd

chosen to have it delivered by royal

mail and it went missing i'd blame royal

mail

if they

insist that i have it delivered by you

know without singling out ups dpd

whatever and it goes wrong i blame them

um

secondly you know people have various

preferences

you know

your liking for every used to be called

um uh

hermes okay varies enormously depending

on which postcode district you're in

because if you have a very good local

driver it's incredibly good and if your

local driver is off sick it's a disaster

in some cases okay

um and by not resp not respecting the

the fact that the person is paying for

delivery should choose who delivers it

yeah strikes me as a fundamental failing

the business of hiding the phone number

so that anybody who has a problem is

effectively treated like a second-class

citizen so you have this very

characteristic thing which i think is a

problem with e-commerce

which is when it goes well it's

miraculously good

okay

but the second anything out of the

ordinary happens you enter a world of

pain

you know

and i think that is that's a fundamental

failing this is a customer service point

the importance of customer service right

a few people i mean selfridges self just

do it pretty well okay um other things i

do is i would offer a kind of amazon

prime equivalent where if you pay a few

pounds for delivery you get free

delivery for a year that seems to be a

you know fairly obvious brilliant idea

because why should loyal customers pay

you know inordinately more for you know

delivery than one-off customers do

um i think you know i i think you can

make an effort around how the thing is

delivered and packaged and presented

which some people do well and some

people don't bother to do it at all what

do you think the secret is there to

doing a good job with packaging and um

possibly there's a little bit of costly

signaling involved i mean if you order

something from selfridges um

the

inside of the box is actually yellow

with the selfridges logo on a kind of

shiny backdrop and there's a little bit

of tissue paper

okay

so you're never left um that will have a

halo effect on your perceived value of

the product by the way

you know i know we don't like it but

actually packaging is to some extent

packaging is where a product first

becomes a brand

it's where it first takes on a

personality and identity uh you know um

you know a kind of

an implied target audience

and so in in this thing now the

interesting thing is how are you going

to

uh what's your shtick do you have for

example scarcity is the clothing

available yeah so limited runs we

actually we actually sold some before

when i did a tour of the uk and you had

to come to the tour to buy it and every

single night on the tour we did nine

nine nights three nights at the london

palladium took it up another country

sold out every single night every single

item to the point that we sold the ones

on our backs yeah and we'll give them

away but um every single item sold out

and every single size on the tour so

this is like the second drop of it

everyone's well aware that the first the

first run of it all sold out um we have

a very limited line uh so we have a

limited amount of items again this time

and i think the key thing with this um

release is

we've just agonized over the story of

the piece so it's like it really looks

more like art than it does clothing and

we've worked with artists and there's

this big movie that i'm releasing with

every single item to explain the meaning

of the piece and then we've put a lot of

effort into the packaging the unboxing

experience so it is limited it will

honestly probably sell out in the first

day and um

i don't even think we're gonna make

money from it but that's not really why

i do it it's more because i just love

the i love the process but um

probably will you probably will make

money i mean merch is um i'm just really

not bothered by making money from it

it's not the thing in my life same with

a tour like i spent every penny i could

on on the bloody tour because it wasn't

really why i was doing it there's

probably more of a bra a wider brand

play yes to doing it which is like it's

it's bringing our audience closer to us

so it's maybe a lost leader in terms of

the financials but in the broader

engagement

no i mean this is this is actually the

great curse of a lot of modern business

given the title of your um podcast

which is that

people generally over obsess about

things which are immediately

quantifiable and under invest in things

which are valuable but hard to actually

put a figure on yeah and so things like

engagement or loyalty of course i mean

it's worth noting that customer loyalty

is much much slower to measure than for

example conversion yeah and so the

extent that money is invested in

performance marketing or the bottom of

the funnel relative to let's say wider

brand fame yeah it's a widespread

problem in the whole business world

which is that the money isn't

necessarily being spent in in the in the

channels it is because it's more

effective there but simply because it's

more it's easier to prove

that it has an effect the truth of the

matter is the world will always be too

uncertain for us to know who our

customers are in advance

and therefore since you know 97 of the

potential customer base aren't in market

at any given time and therefore won't be

uncovered by search or you know

remarketing or whatever

spending money on the 97 of people in

advance ahead of times

is still a very effective thing to do

the reason people do too little of it is

that it's hard to quantify on that

particular point then having worked in

the advertising industry this is a

conversation we have all the time with

clients which is so you'll meet a

certain type of client who is very uh

who's they're religious about the bottom

of the funnel they're really if it cut

if i can't track it and i don't know

exactly i won't do it i won't do it then

you'll sometimes meet the opposite

which is yeah someone who just loves to

spend on brand and i don't know they're

both wrong yeah i don't think they

should yeah i mean i mean mark ritz very

good marketing professor always talks

about the importance of both ism and he

says it's vitally important that when i

actually speak about the importance of

brand marketing

that you do not interpret this as

denigrating digital marketing in fact i

go a bit further and say the bottom of

the funnel in many respects is the thing

you have to optimize first

because there's no point in actually uh

if there's a bottleneck at the bottom of

the funnel if there's some constraint or

a problem or a failing uh you know if

you have very poor conversion okay

there's no point in spending money on

advertising because you'll just

introduce more people to a disappointing

experience you're wasting money so

you've got to get the back end and i

would argue the first thing in theory

you should optimize if you're being an

absolute purist is repeat purchase

because having gone through the expense

to acquire these customers and actually

that's the that's the metric that always

fascinates me because

we were talking earlier about electric

cars and i said the question about

electric cars isn't how many people are

buying them okay it's not what

percentage of the new car market in the

uk in july were plug-in vehicles

now only question worth asking really in

the long term is

does anybody who buys an electric car go

back to buying a gasoline car

because if the answer that is hardly

anybody then okay you don't know the

exact shape of the s-curve but you know

the growth is going to be pretty

spectacular and so the thing to

understand i think in a market is to

what extent does your uh product

actually convert someone to something

and then the lifetime so you'd start

with repeat purchase then you go to

conversion and then you'd work your way

up but what tends to happen is that

when people are obsessed are obsessed

with quantification of everything okay

it's worth noting by the way that all

big data comes from the same place the

past

all right so there's a limit to how much

big data particularly if you've had some

major event like a pandemic in between

how much big data can actually tell you

about the future in any case

um as david ogilvy famously said you're

not advertising to a standing army or

advertising to a moving parade

people are coming in and out of market

all the time

um and so

you're absolutely right you get some

people who are just fame junkies and by

the way i suppose there are brand

categories where that's appropriate if

it's sold through retailers you know in

other words if it's mostly sold in the

physical space you might you know you

might argue to an extent you know for

let's say a burger king or a mcdonald's

that's not a totally crazy position

although it is now because suddenly

they've got to think about delivery and

and whether people order through the app

or order through an intermediary because

it has a major bearing on their business

but but at the same time yeah i mean the

tragedy is this idea of this false

dichotomy between brand advertising and

what you might call performance or

digital marketing

as if you have to be in one camp or the

other where is the balance though and

how does one go about is it just

intuitive is it just there are figures

on this so if you look at the work of um

lisbonette for example in peter field

uh the ratio shifts a little bit but

generally they'll stipulate a figure

around about the 60 40 mark in favor of

what you might call brand mass media

uh expenditure because they have a

mutually beneficial relationship

obviously

my first 20 years of my life was spent

in direct marketing and actually you

know

because direct marketing was

unfashionable we spent a lot of time

denigrating advertising spend because

they got much bigger budgets than us not

necessarily rightly but they were also

you know much more indulged than we were

because they didn't have to prove

effectiveness down to the same sort of

level of statistical significance

but we came to realize pretty quickly

that actually

um

first of all there's nothing harder than

direct marketing a product that nobody's

ever heard of yeah and that every time

just to give an example every time

american express went on television or

advertised big in mass media

the response rates to direct mail would

not quite double maybe but they

increased pretty significantly you had

to work less hard and you had to work

it's that wonderful phrase which comes

from a book by

uh let me get his job right uh his his

name right um

i i think it's matt johnson who's just

written a book called um brands that

mean business and his wonderful line is

having a great brand means you get to

play the game of capitalism in easy mode

and that's

and what what is true is fame to some

extent

brings a load of benefits which aren't

necessarily sales related so for example

you can [ __ ] up and your customers will

be more forgiving okay uh

take the example of apple i mean on a

couple of occasions apple has produced

products which had fairly major flaws

which might have proved pretty fatal

to lesser brands you know the famous

phone where if you held it in the wrong

way it didn't make phone calls for

example

and

given the reality distortion field

around the apple brand people have

passed over those incredibly rapidly and

so

there are all you know people are less

price sensitive

that's not easy to measure by the way as

well it's very easy to measure the

extent to which something has an effect

on sales but the effect to which

something has an effect on price

elasticity and the extent to which you

can command a premium because it's a

great brand because it's a great brand

it's harder to measure because you don't

have the counter factual

you know when you sell something the

counter factual is that you assume that

you wouldn't have sold it otherwise

but if you sell something for a high

price

you can't in fact determine that without

your advertising you wouldn't have sold

it

for you know for that for that premium

price so it's to some extent this quest

for perfect measurement

to reduce marketing to a kind of

newtonian physics is a bit of a false

god

[Music]

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