In this episode, Keith chats with Jake Cohen Head of Product Marketing at Klaviyo. Klaviyo has been collecting data on consumer shopping behaviour since the outbreak of the global pandemic Covid-19. Jake discusses these insights into the massive shift of consumer and purchasing behaviour. He talks about what to expect in the future after Covid-19 and how you can better prepare your store in the coming months ahead. A hugely insightful and topical interview for anyone working in ecommerce or an online store owner in this uncertain time.
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Episode 29: Milk Bottle Shopify Podcast with Jake Cohen from Klaviyo
Intro: [00:00:00] Welcome to the Milk Bottle Shopify Ecommerce Podcast brought to you by Milk Bottle Labs, Ireland's top rated Shopify experts, Milk Bottle Labs, build, upgrade, migrate and market Shopify and Shopify Plus stores all over the world. Milk Bottle will migrate you onto Shopify with zero interruption guaranteed, or optimise your Shopify store and maximise store sales. This podcast is kindly supported by our favourite Shopify app and the only app we install in every store. Rewind.io is the leading backup solution for your Shopify store. We'll talk more about Rewind later now over to your host, founder of Milk Bottle Labs Keith Matthews.
[00:00:51] Keith: Hey folks, welcome back. My guest today is Jake Cohen. He is the head of product marketing at Klaviyo. Klaviyo is our go to email marketing platform and Jake is based in Boston. One of the reasons I'm talking to Jake is not to actually discuss Klaviyo or email marketing. To discuss the content on the insights that the data that Klaviyo have been sharing since the Covid-19 crisis.
[00:01:14] There has been a massive shift in purchasing behaviour and consumer behaviour since the crisis. And Klaviyo is one of the platform providers that are best placed to share that data and Jake's passion and his interest on his insights into potentially the future patterns after Covid are just so, so interesting.
[00:01:34] So here it goes. Jake Cohen, how are you?
[00:01:39] Jake: I am doing all right, and I'm excited to be here with you.
[00:01:43] Keith: Great to have you. What part of the United States are you in?
[00:01:46] Jake: So I'm in Boston, which has had an interesting weather pattern for the last two months. They say April showers bring may flowers. And certainly the first half of that has been true.
[00:01:57] Keith: I used to live in the Caribbean and I was in Boston. That's awesome. Yeah, I used to in Bermuda, I, I've said that on a couple of podcasts interviews, so I won't go over the detail again, but I would remember it being in Boston. It was cold, like you guys have a long winter, don't you?
[00:02:13] Jake: When where are you here?
[00:02:14] Keith: I think it was March.
[00:02:16] Jake: Yeah, March. So we do have a pretty long winter. And the key, the secret to surviving the winter in new England is to find a love of winter sports. It's about the only way to do it, but it can get cold. And so it's worth investing in a good jacket. But we also get beautiful summers and Springs and you know best in the world falls.
[00:02:38] Keith: Yeah, absolutely. Yeah. I kind of say that in jest because I actually really liked the place. I was also there in August one year on the way to Australia, which I believe from Ireland, and it was a beautiful weather, absolutely gorgeous. And I was really disappointed because our plan was to bring some of the team to Klaviyo Boston in August, your annual events.
[00:02:56] So I was really looking forward to, to visit the city again. So I won't dig into the whole Covid-19 in terms of the local effect. I mean, I think pretty much all over the world, we're still in lockdown as of today. So, you know, the bit I suppose I'm really interested in is the analysis and some of the numbers that you guys have been pulling over the last few weeks.
[00:03:16] But before we get into that, you sent me an interesting note, told me that you have been in marketing since you were one. Could you explain that to everybody?
[00:03:25] Jake: It is literally true. So my little secret that I guess more people are learning, but no one really knows about me, is that my mother started an advertising agency when I was one.
[00:03:36] She previously sold radio ads. And one of her clients said, you should stop selling ads and you should come work for me and buy all of my ads across all these channels. She said, no, no, I have a good thing. I don't want to do it. And he said, try it. The worst thing that happens is you go back to your job.
[00:03:52] The best thing is you have a, you build a business, and so she said, fine. Literally I was one, she built an ad buying agency from nothing. My dad eventually came on and worked for her. And so growing up for me, my dinner table conversations were literally about funnel metrics and how to build more compelling messaging and how to keep clients and how to make sure that they hire and retain the best employees.
[00:04:14] And so I thought that that was a very normal way to talk with your family. I've learned that it's not, and so know, literally, I've been thinking about funnels and marketing since before I could walk.
[00:04:27] Keith: Was that pre-internet days where it was easy to pull up your analytics account? Yeah, it was pretty interesting.
[00:04:33] Jake: Yeah. Not to date myself too much, but, uh way, way before digital was a thing, mostly broadcast. Obviously digital came into play, but the measurement was a function of direct response campaigns over TV and radio and out of home and direct mail so that you could determine the efficacy of any campaign on those channels.
[00:04:52] Keith: But the metrics on the ROI measurement, it's all very, very similar. I mean, it obviously has changed because the source of the metrics are online now instead of offline. But like your dinner table learnings definitely would have, would have been advantageous across your career, wouldn't it?
[00:05:08] Jake: Absolutely. I mean, the metrics, what you measure in the customer journey that you seek to create may vary in mechanics, but in spirit they're identical, right? You need people to discover your brand. You need them to try it. You get them to love it. And then either, well, both referring to continue to use it and you know, thanks to the advances made in the digital space, we could track every single little step. But it's still the same principle.
[00:05:33] Keith: Funny that you mentioned the dinner table conversations. I had recently listened to a podcast of a very famous Irish billionaire, Dennis O'Brien. He's a telecoms where it was an interview I've heard, I've heard him in his book a few times, but it was an interview where it was like explicitly talking about his personal life and his family. And he actually referred very, quite a few times on very strongly to the fact that he actually learned the principles of business by listening to his father. Just as you listen to your mom and dad around the dinner table. So it's amazing that you're, you're taking in all of this information at a young age.
[00:06:06] You don't really realise the benefits until probably 20 years later.
[00:06:10] Jake: I'm very lucky to have had parents that started a business B that worked together successfully and C were interested in sharing with us. So I try and thank them and also use what I can and share it to whomever is curious and wants to listen.
[00:06:24] Keith: So Jake, onto Klaviyo. We're in stores, you know, on a daily basis, and we're seeing some of them are 10 X, some of them are three X. The poor stores are probably about a hundred percent to X. I recently interviewed Kelly Vaughn. Kelly runs The Taproom Agency in Atlanta. I'm sure you've heard of Kelly, or you even know early and in the interview we're talking about Klaviyo. One of the things that we mutually agreed on live in the interview was the fact that Klaviyo is probably the only product that we can add to a Shopify store that we know is going to give 10, 15, 20% of revenue through automated emails. But when you're explaining that to a client, you can't really guarantee that revenue.
[00:07:07] For us, it's a game changer because what it does is it helps the client pay for the investment in agencies like, like Milk Bottle Labs. But your data science team have, would it be correct to say they've probably learned as much over the last six weeks as they've learned since Klaviyo was launched, because you guys are at the coalface of ecommerce success.
[00:07:28] Would that be one way of putting it?
[00:07:30] Jake: Well first, I appreciate the recommendation and the endorsement we love to serve, and we'd love to hear that you're seeing such success with your customers. On the data science side, I mean, we have learned so much in the past six weeks, and it's because we were fortunate enough to serve now over 32,000 businesses around the world.
[00:07:48] And you know, we have the unique capability to look across the performance of all those businesses. Any one of those metrics that you were referring to before and see what's happening in aggregate. So in some sense where we've sort of created this like a clearing house of like the global ecommerce market and industry.
[00:08:08] And we've invested a ton in the last six weeks to build the tooling to see that very, very quickly. And so, you know, we have this like kind of crazy control panel of like what's happening in the world and it's been pretty special to see, get built and pretty amazing. See the results.
[00:08:23] Keith: So let's roll back to the start of the crisis. At what point did your start in your days, let's start off with the trends that you saw, because I know you have a lot of information on that.
[00:08:34] Jake: Yeah. Well, to be fair, you know, it's sort of classic iterative development. Where we are today is so much, so much better than where we started.
[00:08:44] You know, they always say the first thing you ship, you're not embarrassed by it and you started too late. Well, we started right on time, so on March. 15 you know, Klaviyo had announced internally that we're going to start working from home. I think it was a Friday, and then on that Sunday, the 17th a few of us got together and we said, Hey, you know, it kinda feels like business as usual or the campaigns that we were planning and the stories you want to go tell, they just don't feel right right now. So should we do anything different? And if we do, what should it be? And so we took a step back and said, well, what? What are merchants feeling right now? What are they experiencing?
[00:09:23] What are they doing? And based on that, we should change everything to just provide value to them. We have an internal little mantra, provide value every day. You know, that's what we want to do. So we said, alright, well, fastest way to figure this out is let's just put a little form together and see if anyone feels that.
[00:09:41] And so we built a very quick and dirty Google form that says, you know, what is happening to sales in your business? What is happening to web traffic? What is happening, conversion rates, what happened to your supply chain? What's happening to ad spending? How do you feel? And what can we do to help.
[00:09:54] ]And we put it out in the world and to my great surprise over a hundred brands responded in a day. And so we said, okay, well we've got something here, let's go. And so we flushed out the survey a little more and started collecting it daily. And you know, two things became very clear that were surprising to us. Number one is that some stores even, you know, as early as March 15th some stores, we're seeing explosive overnight growth to the tune of three X to 10 X.
[00:10:23] I think. What you and I talked about before in a minute. And we said, that is completely counter to our expectation. So that's interesting. And the second thing was, brands generally said, I have no idea what's going on. I have no idea what's coming. Can you please tell me what consumers are thinking so I can understand what adjustments I should make in my business?
[00:10:43] Should I shut down? Should I change what I sell? Should I spend more or less on ads? Like what do I do? And so we said, okay, on the first point, let's make sure that we have a group of people that goes, you know, looks at our data to see if brands are actually growing and why. Let's start to analyze that.
[00:10:59] And the other side, let's start another survey and let's start talking to consumers and see if we can anticipate and predict where things are going. So that's kind of how this began. So
[00:11:07] Keith: just on that, is that the survey that pops up on the right hand side of the Klaviyo account when you log in, is that servant that we're talking about?
[00:11:14] Jake: Yeah, that's, so that was the survey. We actually just yesterday stopped doing that. We're going to change and I can tell you about where we're going. But yes, that was the survey that pops up in the bottom. Right. Exactly.
[00:11:24] Keith: But just on that, I'd like some more detail on, on the insights, what you got out of that.
[00:11:28] The first thing is, is that I was amazed that you began to publish the data and the learning so quickly. I mean, the amount of knowledge that people were getting off your blog is specifically, you guys jumped into it straight away and created a coronavirus Covid-19 section. With published content and you know, I'm watching it on a weekly basis and you're publishing, you know, every few days.
[00:11:48] So like, I mean, you should be commended on that. To go back to the actual learnings and the insights, can you give us some more detail on the initial, like if you roll back to the start, when you started getting your survey results, those first 100 what were the standout results that you maybe wouldn't have expected or the standout results in general?
[00:12:07] Jake: Yeah, very. Re literally in like the first couple of days, we were shocked to see that any stores were up. And we were shocked to see for those stores that were up, they were up like not 10% they literally were up 300 to a thousand percent and so the very first thing we did was we said, we gotta talk to these people and understand what's happening.
[00:12:29] I spent myself that first week speaking to three to four brands a day, all around the world. I talk to people in Ireland, I talk to people, and Ghana talks to people across the US, Canada, the UK, literally everywhere, to just understand what they were seeing. And there was this fascinating sentiments, which is these, these business owners, and there were all sorts of sizes, some that were doing previously 50K a year or some that were doing tens of millions.
[00:12:54] All of them that were doing well felt conflicted with their success. On the one hand who's not happy to have their store grow and to serve a need. On the other hand, who wants to have that success come at the face of this global plight? And so there was almost a sense of like guilt that people felt around being needed.
[00:13:16] And which I don't know, I just, the human side was just kind of interesting to me and I try to remind them that people are buying because they need something. And so this isn't you being opportunistic or sinister. This is you serving a need that is clearly, great. And so from that we said, you know what, how is this going to unfold?
[00:13:37] What you know, what are the needs actually and what will, what are they now and what will they become? And that inspired a whole investigation where we, we went to Italy to look at sales trends cause they were a month ahead of the whole rest world. And we looked at all these different States and then we started digging into our data by category.
[00:13:53] And that kind of opened up a whole new area of understanding. And yes, content that we ultimately share.
[00:14:00] Keith: It's funny there when you mentioned the emotional aspect, you know, eCommerce store owners strive for the numbers to grow higher and higher and higher. And yet you're saying that in actual fact the emotions kind of took over and even though there were successful, they weren't necessarily a hundred percent comfortable with it given the crisis where they survey results or what they conversations after the survey.
[00:14:23] Jake: Those are conversations. Those are conversations for sure. And like it was kind of crazy too. You know, obviously some of the brands that I spoke with have both brick and mortar presences, digital presences, and you know, that's where we got a leading indicator. Two stores were getting shut down and the digital presence is, we're going three X overnight.
[00:14:41] And so they're torn there too, cause they're saying, well geez. You know, I have in store staff know I'm glad to make up some of the revenue, not all of it. It was just a very fast transition and I think it left a lot of people's heads spinning for the first couple of weeks.
[00:14:56] Keith: You know, seeing that kind of emotional conflict with people that have, on one hand, they're increasing their warehouse staff because their online store is getting busier.
[00:15:05] But unfortunately they've had to cut staff as a result of, you know, shopping malls being closed.
[00:15:10] Jake: Well, and that was the other thing. Early on, people were so paranoid about the supply chain. Am I gonna be able to get inventory or my warehouse is going to shut down. Will fulfillment centres be closed are we going to be able to deliver any?
[00:15:22] That was a massive concern and these surveys helped us actually understand whether or not there was a problem and how that was changing every day. And what we learned was that the prevailing send them, it was like, Hey, I think there's going to be a problem, but I'm not seeing it yet. And so then we, for example, did the deep dive and talk to all these warehouses across the country and fulfilment centres and whatever, and learned that like there's not going to be a problem. They're making adjustments right now. Things may be a little slow, but there's, they're not going to close. And so it was nice to have the feedback loop of concerned, do the work, and then share it back to give people a little confidence, a little security in their decision making.
[00:15:58] Keith: Yeah. Over here what we did see was we had some clients that were, their fulfillment centres were restricting the locations that they could ship to. But most of those were kind of odd locations that probably would have been, not destinations that may not have been shipped to on a regular basis anyway.
[00:16:14] And of course, what you're talking about then resulted in the panic buying in food by, I suppose the population and it certainly at this point I think the sentiment worldwide is this, the things that probably come down to this. Was there any particular vertical that you saw. When usual spikes in, you know, like was there home wares or was there fashion or did fashion go down? Was there anything that you could share that was a surprise? You know over the first few weeks.
[00:16:42] Jake: Yes.
[00:16:45] Keith: That's why I asked the question because I know you do
[00:16:49] Jake: Good softball well, so first I'll say, if anyone wants to see what I'm about to share, if you go to klaviyo.com and click on the green header bar at the top, it will go to the site that Keith was mentioning kind of has everything laid out and it has this data around category sales day by day. But what we, what we saw, I'll share with you, you know, what we saw initially and then this sort of special research we did, and then this hypothesis that we formed that I think is proven to be true.
[00:17:18] You know, initially we saw that apparel got crushed. Sales out of the gate, middle of March and apparel were lower than 2019 and brands were totally freaking out. But oddly, sporting goes up, toys and games were up, electronics were up, firearms randomly were up, books were up. All these things were up, and we're like, what is, what is happening right now?
[00:17:45] And so this was, this was the time I mentioned earlier, we went, we went to Italy, we took all of the stores that we have. We took the Italian store and we literally group them by category. And we tried to plot through the beginning of the year, 2020 to current day, which I think at the time, March 24th or something, what happened to each category?
[00:18:06] What we found is that the categories that seem to be up in the U S the categories that seem to be down in the US were identical to the ones that were up and down in Italy, and not only that, but the slope of growth or decline was identical in Italy and in the US like shockingly identical. And we said, that's weird because Americans are just weren't unique and Italians...
[00:18:33] I lived in Italy for a year. Italians are unique. All cultures are unique. How is it the purchasing? Is it the same? And you know this informed this hypothesis that when everyone's forced home and they're scared, they become simply humans. Humans are humans. It doesn't matter what culture you know you are, you live in or where you are.
[00:18:56] This, there's been a great equalising effect where we're all operating off of the same, you know, reset. Norm.
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[00:20:06] The reaction, the psychology, again, the human element, it didn't matter what you're saying basically is it didn't matter what part of the world they were in, the reaction was identical.
[00:20:17] Jake: Yeah. And so is that, so then we were like, okay, well fast, super interesting, right? Like how could that be? So then we kind of put on our life philosopher hats for a minute, and actually what, what it reminded us of was a… So for the audience, for anyone who may not be familiar in Maslow was an American psychologist and sociologist in the mid 19 hundreds who built this very famous framework called the Hierarchy of Needs, which sought to explain what people prioritize, what these they seek to solve in what order, and why.
[00:20:50] And the very basic of it is you first need food, shelter, and water. Then you need security so that you feel safe. Then you want to feel, you seek belonging, community. Then self esteem so you feel good about yourself and only after you've done all of those, you can then pursue what he calls self actualisation, which is the pursuit of creative endeavours.
[00:21:07] And when we mapped back to what happened, we were like, I wonder if if it maps, you know, first people went and bought three weeks of food. Then they went and bought all the paper towels, toilet paper, and Purell, right to feel safe. Then they went and bought computer equipment and electronics so that they could stream and work from home and feel connected.
[00:21:29] Then they started buying beauty and cosmetics. So they can feel good about themselves, sporting goods so they could work good and feel good about themselves. Then they started buying toys and games, books and like other electronics to play with so that they could pursue their mind creatively. And we said, I wonder if that pans out in the data.
[00:21:47] And we literally went and mapped, this is why we mapped by category over time. And like exactly that sequencing plays out in the data. It's been unbelievable to see. Yeah, but that's, it turned out to be true.
[00:21:59] Keith: Jake? How old is that theory? The Hierarchy of Needs theory. Is it a hundred years old or…
[00:22:04] Jake: [00:22:04] The hierarchy of needs overalls from the 1950s I think it's from the 19 hundreds let me see.
[00:22:09] I wonder if I can find that. Oh, 1943 he wrote a paper called a theory of human motivation. Yeah. So we, but, but then we applied it to ecomm in this new world, gosh, a month and a half ago at this point, and it's turned out.
[00:22:22] Keith: [00:22:22] So at the moment, right we are at a point where all of this emotion has been floating around.
[00:22:29] Some people have, you know, impulsively made purchases that maybe that they didn't require, as you say, to make feel good about themselves, to make themselves more secure. But now I suppose, I think it's calming down, even though e-commerce is clearly still Christmas for a lot of eCommerce entrepreneurs, purely because the stores are so short.
[00:22:49] The U S is planning to reopened, the UK is planning and a little old Ireland is also - last week just issued a five phase plan to reopen. So in terms of between now and Christmas right, you know, there's still seven months, I suppose, in the eCommerce world, seven months of the calendar left to sell. Traditionally, we would have been entering what we would call a law, so may, June, July, even maybe the first week, second week in August, depending on your vertical, would calm down and slow down. We're not seeing that. For the rest of the year or let's say for the, let's say, running up to black Friday. What do you think is going to happen for eCommerce business owners that are only selling online. What do you think is going to happen?
[00:23:33] Jake: So I published what I think is going to happen. Obviously all economies in all countries want to get back to some semblance of normal so that people can go back to their lives. I believe, though, that we're going to see fits and stunts in the reopening.
[00:23:52] So in other words, despite anyone's best intention to open, there are going to be instances where the opening is going to cause a resurgence of the virus, which is going to cause some type of restriction or reclosing of either that geographic area or that sector. And so, like, for example, I'm watching Wuhan very closely, I'm watching Germany very closely to see what happens.
[00:24:17] And so using Wuhan as an example, well, Wuhan was were it all started. And they opened, I think it was March 27th they kind of reopened it. By April 9th 92% of businesses were open, but only 60% of people went back to work. Everyone's wearing a mask. Restaurants are mostly delivering curb-side for curb-side pick up or delivering in some cases, allowing people to sit outside or with fewer people in the restaurant and. They have, you know, rich testing program and an exceptional new digital health awareness platform where every single person in the state is required to enter their symptoms, have a public official checker from time to time and use this QR code app to enter and leave like public transportation and their housing facilities and all this stuff so the government can see what's going on. And even they under those circumstances, see, have seen some spikes, you know, back up because of the transmission rate, the are not of this virus. I think I heard of Anthony Fauci he is the U S sort of like Doctor leading us for this.
[00:25:20] He said that the only virus that he's ever studied that had a faster type of transmission rate or easiest spread was the measles. It's like, it's just, it's just a crazy virus. So it's gonna come back right?
[00:25:34] Keith: But Jake, the measures they've taken in China are pretty reflective on the fact that it's a communist regime.
[00:25:40] So straightaway you've got data protection laws in the EU, which are very stringent. So do you think. Obviously look at this as not necessarily connected to eCommerce. But, I mean, you're sorting the whole area and you're following is probably better than most people. So do you think that sort of system could ever be rolled out in the U S or the UK?
[00:25:59] Jake: Absolutely not. Not a chance. And so as a result of that, the reason I'm sharing the Wuhan example with that level of oversight from the government is to suggest in the most authoritarian regime, the most centralised perspective, they're still having problems. And so now apply that to the rest of the world. Is, you know, very decentralised and very anti oversights, uh, particularly in the United States.
[00:26:23] You know, we don't have that visibility, which means that we're going to be days or weeks behind a potential flare up instead of ours. And the yield of that is because the virus spreads as quickly as it does it. It could spread more. Now, if we have good testing in place across the world, and we have good contact tracing, which is as soon as we find someone who's affected, ask them who they talk to and talk to them.
[00:26:45] We can contain this thing, but I'm yet to see any country. Do that really, really well outside of South Korea. So anyways, all this gobbledygook and medic medical study aside, you know what I think will happen is countries will start to reopen. People start to go out. There will be adjusted ways of our living our lives. People wear will wear masks. They will not go out as frequently. But I think that, you know, we're not going to see a full reopening and there are going to be times where people have to go back home for a period of time. And. I believe, you know, this summer is going to be very interesting moments. In August, I believe is when we're going to see either that as, as any set of countries, we can contain this thing or we can't, and I personally believe that's going to set the tone, the sentiment around September on what people are comfortable with come the holiday season.
[00:27:31] Will consumers feel good about getting up at five in the morning and waiting in a massive crowded line to go into a store to go buy something for black Friday. Or will they feel like that's a health risk and will they actually just go buy online? And I think that's the big question.
[00:27:47] Keith: Yeah, I think you've answered it there though. I mean, that's just not going to happen, you know?
[00:27:51] Jake: Well, it depends. I mean, if we can get our arms around this and we can contain the virus and we have good treatments and we have good testing and people feel like, even if I get exposed, I'll have a safe path to health, then I'm not so sure that they're going to be afraid to go. But if that's not proven, then I think it will be an interesting holiday season for ecommerce.
[00:28:09] Keith: Yeah. But I give people the example of, you know, you to the Irish bond. Someone would say, you know, one of the biggest findings at this point.
[00:28:18] Yeah. Well, I'll retract that. You know, many Irish people would regard them as the biggest bands. But I remember when I was a kid, you know the queues down the street when they're releasing albums and selling tickets for concerts. I mean, that's gone. You know, I've seen, I watched my own kids wait for the van driver to arrive. You know, because they know that mommy and daddy have ordered something online.
[00:28:41] Jake: That’s fascinating.
[00:28:42] Keith: It's fascinating. Yeah. It's weird. But I think one of the biggest changes I've seen is that there is people out there that were never buying online, whether that is due to their access to technology or their age or their, just their general demographic. They are now buying online for the first time and they're not going to go back 100% to retail.
[00:29:02] People will miss the touch and the feel, but I think the health concerns, you know, with actually going back shopping, coupled with the fact that people are having a really good experience online because they fulfillment networks now are providing a pretty good service. I was hesitate to make a prediction, but a lot of people will just continue to shop online.
[00:29:23] So I would be afraid for some verticals in retail.
[00:29:28] Jake: I think that's right. You know, I think they're there. So a couple of things. One, we're seeing two factors that contribute to eCommerce growth. Number one, exactly. As you mentioned, there are more people that have never spent online before, and number two, they're buying in more categories than they ever have.
[00:29:43] So one of the things that we discovered actually, we looked at sales and how they've been growing. And so roughly sales for the course of April were up, I think 86% over January for eCommerce brands. This is across 19,000 brands that we looked at. And what's fascinating is we broke those down by new first time buyers for those brands and then repeat buyers for those brands.
[00:30:05] And what's amazing is the total amount of revenue spent by repeat buyers has remained effectively the same since January, day by day. So all the growth, that 86% growth since January has been, all new buyers,
[00:30:19] Keith: They need to install Klaviyo and increase their repeat purchase. Right?
[00:30:23] Jake: [00:30:23] There you go. Right. What I've saying to people is, you know what's fascinating right now is major advertisers that pulled out all their spend and consumers are spending more time online than ever before.
[00:30:36] That is decreasing demand for ads and decreasing supply. So ad rates are lower than they ever been coming off of a period in February and March where they were higher than they'd ever been. And so it's an opportunity for brands right now to invest in acquisition in a less competitive environment than they've ever had before.
[00:30:54] And if they do that successfully, I personally would target a row as one because I don't lose money and I gain a connection. And when I have that connection, I can communicate them to with them through own channels, like, you know, like SMS, like my website. And what I think is going to end up happening is, you know, when store starts to open in an effort to recoup lost revenues and also reestablish the habit and the normal normalcy of going to stores. Brands are going to advertise three, four, five X, as much as they were the same time last year, try and prep up for the holiday season. And so that's going to increase demand for ads and increase the price and eCommerce brands are going to get priced out. So if they invest now in acquisition and build up that customer base.
[00:31:35] They're going to be able to communicate with those folks later in the year. Drive those repeat purchases and they're going to continue to keep this whole flywheel going. Only if they want to take advantage of this time now and to, I obviously am biased. You use something like Klaviyo hopefully us to help manage those relationships and communications to the rest of the year.
[00:31:54] Keith: You're on the money there. I've been trying to explain to people that, you know, as I mentioned earlier on, we've got, you know, customers that I've seen. I think I might've mentioned this to you before we started to record. You know, I've seen a customer, it does, it's done, you know, a million in 5 years and then a million in 5 weeks. To turn that 1 million in 5 weeks into three or four over the next 18 months or even nine months, he has to start reselling. So you know, the return on ad spend if it's a one to one, well then that's just a, that's still a very low cost of acquisition. If you can resell to that customer two or three times using automated email. I think in the midst of this, e-commerce owners have to really also kind of stand back and realize that although the opportunity is not selling what you're selling now, the opportunity is the future to resell what you're selling now. You know, a lot of people don't get that.
[00:32:43] Jake: That's right. But what I'll also add is you know, as a reminder to brands, to go back to the most fundamental marketing lesson of all, which is when you're communicating, when you're selling something, you're selling something that someone wants either because they have a need or they seek to be distracted.
[00:33:03] That's it. That's why people buy. And so needs will evolve and change. So today, people have needs, we call them new essentials because they are now stuck at home for 16 hours a day on average instead of four to six a day on average. And they have a whole new set of needs to feel comfortable and happy at home.
[00:33:22] These are the newest essentials. Well, when we go back to out, you know, people will not have quite the same means, but there will be new needs then. For example, one of the last time you got to see any extended family.
[00:33:33] Keith: Yeah. So it says seven or eight weeks ago. Yeah.
[00:33:35] Jake: Right. And so like, what's the, what's one of the first things you're going to do when you're able to safely leave to travel?
[00:33:40] You're going to go see your friends and family.
[00:33:42] Keith: Right. And visit them and possibly bring something with you.
[00:33:45] Jake: Exactly. And so what ends up happening is there's a new need. You want to show your love. And so now let's say you sell, it doesn't matter say some soccer balls. Now's a good time to buy a soccer ball because you want to be distracted at home because what?
[00:33:59] It's going to be a good time to buy a soccer ball to give to friends, show that you were thinking like that. It just, it just changes. And so if people remember that. You know, at the end of the day, business is two people connecting, fulfilling a need. And what you should be seeking to do as a brand is to build more connections and relationships so you have the opportunity to both understand those needs and to serve them whatever ends up happening in the future.
[00:34:22] So if we get, just get back to the basics of connections and human relationships and maintaining those, you'll, you will find opportunities to sell them something because you will understand what they need and you will have the opportunity to serve that need.
[00:34:36] Keith: So if you were to give advice in terms of what brands should do now, you know, to prep for that, is that, is that really diversification of their product range? They may need to sell something else because the need will change. Is that one of the pieces of advice are okay.
[00:34:52] Jake: So a couple of things. So first of all, advice is, is temporal, right? Like, like what time, when and all that kind of stuff. And it's also like, it's tough to give blanket advice, but what I can say is, for right now, I would be exceptionally focused on acquisition.
[00:35:08] I would get forms on my site if I'm not using them. I would invest in ads if I have the cashflow and I can get a reasonable ROIs, which I'm hearing insane numbers from people so that I can build up that base. And what I can tell you is organically we're seeing profile. I'd like the base of profiles at the base of people that brands can reach out to grow tremendous.
[00:35:31] Four or 5% month over month as a result of this across the whole bucket. And that can be much, much higher if you're intentional about it. We're seeing record numbers in web traffic and record numbers, informed conversions across our forms. Be average across all of Klaviyo's three and a half percent conversion rate on form and that's the average. Yeah. Like you know that there's people getting nine 10, 11, 12% so I am, I am investing in building connections and relationships so that I am not reliant on third party channels, on wholesalers or on ad networks to have those conversations. I can leverage channels that I own, which are much more cost effective and have a conversation.
[00:36:10] That's what I'm doing right now. What I'm doing in two months. Is I'm reaching out to those people that I have relationships with and I'm asked. I literally would send them a survey and I'd ask them, what's on your mind. What are you doing now? How are you spending differently? What are the most important things you need?
[00:36:26] What can we do to help you better? And once I understand that, either I keep doing what I'm doing or I react to those results, either by potentially expanding my product line by potentially offering new services like information or digital services that people will pay for. Perhaps I'm partnering with other brands that fulfill a need that I don't, but it's nice and complimentary.
[00:36:47] And so that's a wonderful campaign that I can put out. There's a million things you can do. Once you understand what people want, but you need people, and then you need to understand what they want, and then you can set yourself up to deliver on those needs and then mutually benefit.
[00:36:59] Keith: Yeah. But you know, the difficulty there, I suppose most busy owners, is that what they're busy e-commerce owners?
[00:37:04] Is that what they're trying to do the moment, I suppose is serve the current needs? So what you're saying there, it's also really important to kind of future proof and look ahead, isn't it?
[00:37:15] Jake: It is. You know, and this is, this is my comment on blanket guidance. It depends. Like I know one, one brand that we work with is Who Gives a Crap, which is creating third toilet paper company.
[00:37:25] They ran out of inventory weeks ago. And so what they did is they said, all right, well, if we can't sell anything, let's at least breed these conversations. So they have an overlay that takes over their whole website that says 'we're all out, but we'd love to tell you when we have more. We would love to stay connected with you' and they’re insanely successful at growing their list.
[00:37:43] Right now, on the flip side. There are jewellery brands that aren't selling anything. I talked to someone that sells like key chains made out of, you know, recycled musical instruments, which is a very cool thing, but you know, sales are not going the way that you hope. And so, you know, that person is seeking to connects with other brands.
[00:38:01] Recommend those brands to their customer base to continue to provide value to some type of rush here with those other brands and grow their list there too. So it's like. It depends. If you're selling, go sell, perhaps 80% focused on now 20% is future-proofing. If you're, you know, not selling super, super, super if you're got 10 extra, maybe like one or two X and normal, then you know, I might consider having a 50/50 split where I, you know, focused on fulfilling as much as I can, but I really, really, really put energy into acquisition and growing my list.
[00:38:30] Keith: That's great advice, Jake. It has been absolutely fantastic to have you on this week's podcast.
[00:38:36] Really, really appreciate the insights, and I'm actually kind of thinking as we're talking, I'll reach out to you probably in six or nine months, and I'd love to just look back at the previous six or nine months, not necessarily after Covid-19 is completed, because it probably won't just end overnight, but I'd love to see what learnings and kind of what, what changes have been experienced in that time.
[00:38:58] Jake: I'm excited to share them or any time leading up to them.
[00:39:01] Keith: Really appreciate your time. Have a good day.
[00:39:03] Jake: Thank you, you too.
[00:39:07] Outro: Thanks for listening to the Milk Bottles Shopify Ecommerce Podcast. All of our episodes are available on Spotify and iTunes. We really appreciate the support of our sponsor. Rewind.io, the leading backup solution for your Shopify store. Get your first month of Rewind for free. Just to respond to any of the welcome messages or emails after you begin your seven day free trial and mention our podcast until the next time. Take care.