Ingrid: [00:00:10] Hello and welcome to Infinite Shelf, the human-centric retail podcast. I'm your host, Ingrid Milman Cordy, and I am here yet again with our lovely co-host for the rest of Season 2, Kiri Masters. Hey, Kiri.

Kiri: [00:01:23] Hi, Ingrid.

Ingrid: [00:01:24] How's it going?

Kiri: [00:01:25] I'm doing well, yeah.

Ingrid: [00:01:27] All right. Let's keep going on our journey through the ten key human experiences that make us who we are and how that relates to content and commerce and brands that we are a part of and that we love to consume. So today's episode is all about the human characteristic of curiosity. And we are inquisitive organisms and part of our survival and our neurological configuration is the curiosity component of how we adapt to our world and how we look at them and how we question things and how we look at ultimately trends and make decisions off of things. And so Kiri and I have just been so excited to talk about curiosity in general because I think there are so many natural hooks about the human trait of curiosity in the business world. So, Kiri, what do you think?

Kiri: [00:02:23] Well, I've had a lot of... We have this Google doc, which we just jam any old idea into, and there's a lot under curiosity. I'm really excited to get into it. But I see, a huge intersection of this human trait in particular with commerce because when we're purchasing I think it is a pretty significant driver of trying new things that we are curious about, making slightly different decisions than we have in the past, seeking out content, using discovery mechanisms like TikTok or Pinterest to actually be inspired and seeking out those opportunities. So this is a human trait where there are so many intersections with the world of commerce. I'm pitching the comeback of the free gift. And this is a tale as old as time.

Ingrid: [00:03:26] Ooh, the GWP.

Kiri: [00:03:28] The GWP?

Ingrid: [00:03:29] Yeah. The gift with purchase.

Kiri: [00:03:32] Teaching me something. I had a little bit more of a lowbrow example which was the free toy with a Happy Meal. And that was a real clincher because you don't know exactly what you're going to get. It is value-enhancing. And it's sort of the ultimate sales mechanism. This is something for free, something for nothing. And I don't see enough of it these days. I was shopping Ulta and waiting for the day, and they do this periodically where you get like 60 free samples instead of like one extra thing. And I waited until they had all of the samples coming in until I purchase that item. And it is fun. There were all these different types of things that I tried. And ordinarily, I just don't really see as much happening with that free gift and driving curiosity, "What's it going to be?" "Is that a new scent that I am trying?" "Is that a new flavor?" I don't think it's used as much as it should be.

Ingrid: [00:04:49] I think you're so right. And I think that so I have a lot of thoughts on the free gift. So I would be remiss to not share my six years of growing up, as I always call it, at the Estée Lauder Companies. So the biggest, most prestigious beauty and fragrance house in the world. I think L'Oreal technically is the biggest, but Estée Lauder has the most prestige brands.

Kiri: [00:05:21] Such a flex, Ingrid.

Ingrid: [00:05:23] Well, I got to flex it. And I'm going to flex one more time here, and that is that [00:05:29] Ms. Estée Lauder, in her infinite wisdom and understanding of the human psyche, is credited with, and I think rightfully so, the introduction of this concept of a gift with purchase or what we would always call it internally at the Estée Lauder Companies, the GWP. And she is this brilliant mind that understood the power of this surprise and delight moment of a customer and the brand. And sure, you get something, and hopefully, you feel like you're getting value from that thing that you're buying. But what if we introduce this whole other thing as part of the value proposition that now we transcend from being just a transaction to a relationship? And I think you hit it so spot on with this understanding that it's connected with surprise and curiosity and this human connection need for getting exposed to things and feeling connected to a brand in a very different way. [00:06:42] And I love that you brought up the toy in a McDonald's Happy Meal as an example because as McDonald's, what do they sell? They sell food, at the end of the day. It's just a very basic thing. It's a basic human need for food. But now they've introduced this idea of play and whimsy and excitement and fun that now as a result of everything that McDonald's has done, they're Happy Meals. Those are named Happy Meals. They have playhouses. They have toys.

Kiri: [00:07:23] They have a big, scary clown. {laughter}

Ingrid: [00:07:25] And a big, terrifying clown. And all the characters. They made something that can be so Plain Jane, just basic, it's food, it's affordable, it's fast. They're already checking a whole lot of boxes for a busy parent. But now they're actually adding in this really powerful fifth dimension of fun and excitement, where now the kids are so excited because it's fun to go get a hamburger at McDonald's. And I think that the world, [00:08:03] because we've become a little bit maybe concerned about margins and concerned about profitability, we've forgotten all of these other levers that we have that inspire connectivity and loyalty and human connection to our brands that the [00:08:20] very elegant gift with purchase that an Estee Lauder product might give you, and also the fun associated with a McDonald's Happy Meal.

Kiri: [00:08:32] I actually think it's a better strategy now than previously as well because we're in this inflationary environment, costs are going up, and a lot of brands have opted out about passing on the costs, the increased costs, that they are seeing, and raising prices. But it is generally these free gifts are pretty marginal in cost to add on, to add in an extra sample or something like that whether it's a surprise or not. But the perceived value is a lot higher. And there is a psychological phenomenon where you losing a dollar is way harsher than the gain that you might feel from gaining a dollar. So if you ask anyone, "Would you rather lose $1,000 or make $1,000?" They would always avoid losing $1,000. Lots of studies have been done on that. So [00:09:40] if something suddenly costs $10 more than what you're used to paying for it, but you're getting something for free that would sort of offset that loss aversion phenomenon for a lot of people. [00:09:54]

Ingrid: [00:09:55] Totally. Totally. So I am curious now, what do you make of the decision-making that we make around, you just mentioned a few things there. There are the trends and the survey results of people determining how they are going to spend money or lose money and how they perceive that. And then also the curiosity around making decisions as a business owner based on all of this new data that we get, how do you start to parse out the things that are good to know, maybe a little bit noisy versus, wow, taking action on this piece of information is really going to make the make or break this business or this quarter?

Kiri: [00:10:48] Yeah, this is going from something stupid specific to something a bit more broad and esoteric, but it's good. So metrics that we have as a North Star versus check-the-box metrics. And in my world, I'm in the Amazon growth, marketplace growth world and a lot of the confusion that we see from brands in identifying and executing on their strategy comes back to their unclear what the actual objective is. Is it to grow or is it to maintain profitability? And this is really a big topic right now because you do kind of need to make a choice. Are you going to raise the prices of your products to maintain profitability and understand that some people are going to switch to a lower-priced option? Or are you launching a new product or you're a new company, you're trying to grow your market share, or whatever reason corporate overlords or the fundamentals of your business, whatever that is being really clear on what the objective that you have for that brand or that product set and then identifying what are the results in KPIs that are going to drive that objective and sticking to that. And that sounds pretty simple, but it is surprisingly uncommon to really understand where you're going and what numbers can you use to ensure that you're moving in the right direction.

Ingrid: [00:12:26] I love that you're bringing this topic up. This is something that I think about and advocate for really regularly, and I think that people sometimes, myself included, frankly, get really caught up in advocating for always 100% doing one or the other. And I think that it's much more of a pendulum, and so the problem with thinking about it in this more dimensional way of a pendulum is that it's very hard to make it clear to everyone who's contributing to your business model at that particular time where you are on the pendulum and having people change their way of thinking based on that. People get kind of stuck in their patterns of thinking and decision-making and not because they're not smart or not because they're working hard, but just because it's sort of human nature to like figure out a pattern that works, get comfortable with it, rinse and repeat. And I think that being able to identify where your company needs to be or your brand needs to be within that pendulum at that moment and for how long, between the pendulum between growth and profitability, is actually a really powerful unlock and having a dialog with everyone in your company about where you are in your journey in that moment is important because so many times, I'll see brands that are so clearly in the growth mindset and it gets them so far, so quickly, but then they don't realize the important moment to shift out from growth and into profitability. 

Kiri: [00:15:19] Yeah. Product lifecycle.

Ingrid: [00:15:21] Yeah. And again, to your point earlier, it feels so simplistic, but it's very uncommon, and I think that it's important for leaders within organizations to identify where they are in that pendulum and lead their companies very, very, very intentionally into where they want to be in that particular moment and explain the benefits and drawbacks. And frankly, imagine just one day your CEO comes and says, "All of our KPIs are different now for the next two, three quarters or whatever it takes," your KPIs are going from impressions and engagement and eyeballs and relevance to ROAS and CPA and LTV and all of those.

Kiri: [00:16:15] I wouldn't even have a problem with that if they're consistent.

Ingrid: [00:16:18] Right. 

Kiri: [00:16:18] So you're talking about growth targets switching over to profitability targets. My issue is when a brand says, "We want to grow, but we want our ROAS to be higher than it was last year."

Ingrid: [00:16:33] Oh, I know.

Kiri: [00:16:34] And those are incompatible KPIs and incompatible objectives.

Ingrid: [00:16:40] We're saying the same thing. I'm just suggesting that the people who are leading these financial decisions, whether it's the finance team or the CEO or whoever is determining what the KPIs are, need to have an honest conversation with themselves about where their company is within this growth cycle. And frankly, I think there are a lot of companies, especially corporations that are publicly traded, who are kind of slaves, or at least in their view slaves, to these quarterly and annual earnings that they have to deliver to the street when they can't. They have to determine profitability and blah, blah, blah. But I think in reality, true leaders, even of public companies, should be able to actually lead their company in the right way, and when I say the right way, not just being slaves to shareholders for the short-term gains that public companies are notoriously expected to deliver. And I think that that is probably the biggest distinction between these slower growth companies and the faster growth companies because the slower growth companies have kind of like determined, "Hey, I'm going to take fewer risks, I'm going to keep things as similar as I possibly can. And I'm going to eke out 3 to 5% growth. And that's okay for me." And I think that they're limiting themselves because of these larger constraints that, frankly, when you look at companies like Amazon and Apple, they have been free to truly just innovate and plan a down quarter or whatever because their eyes are on the prize for growth versus profitability. And I think that that's a really powerful thing to have whether you're private or publicly traded.

Kiri: [00:18:50] Yeah. Absolutely. Well, we can rap here because that was my main vendetta. {laughter}

Ingrid: [00:20:36] {laughter} Yeah. I mean, there's a lot of... I can talk about this concept for...

Kiri: [00:20:41] I'm joking.

Ingrid: [00:20:41] No, I know, I know. {laughter} I just mean, if I could talk about this concept of knowing where you are in the cycle and truly leading your business to where it needs to be at that particular moment and not letting some of those externalities like shareholder calls, make a difference, I think it's important. Any opportunity that you give me to get on my soapbox about this whole profit versus growth pendulum, I will take it.

Kiri: [00:21:13] Amen.

Ingrid: [00:21:14] So you definitely just fed me some catnip.

Kiri: [00:21:16] That wasn't too hard. {laughter}

Ingrid: [00:21:20] Yeah really. It took nothing. So going back to curiosity, though, I do have a ton of questions. Let's go back full circle to this whole idea of I'm in Ulta in the store, or I'm online, and I want to have my curiosity inspired. And I think you're right. The free samples and a gift with purchase are such a great way to do that. What are some other curiosity inspiration moments that we can draw back to the consumer experience?

Kiri: [00:21:53] Yeah, well, maybe it's less about the consumer experience, but our experience as eCommerce professionals and we're in a very fast-paced category. It's a growing category. It's very exciting. I love it. So dynamic. The people that work in this industry just have to be really sharp and curious as well because things just do not stand still for very long.

Ingrid: [00:22:23] Totally. 

Kiri: [00:22:23] And so I'm curious about trying to track all of these changes and not everything is a hit. In my world with Amazon growth and advertising and things like that and the other marketplaces as well. Just the other marketplaces and delivery providers. If you had followed all of those, half of them are out of business now. And it can be difficult to make sense of what is a real opportunity, what has legs, and what's going to be a flop. So that's a very real situation that a lot of people listening to this show are going to be familiar with. "I'm curious about this new program, this new feature, this new retailer or app," or something like that, "And when do I actually kind of put my personal brand and professional equity on the line and really advocate for something when there is a lot of testing and learning happening and not everything works out." 

Ingrid: [00:23:29] Totally. Yeah. And also the other end of that is how do I make sure that I'm testing the right amount of things?

Kiri: [00:23:37] Yes. Test and learn budgets.

Ingrid: [00:23:39] Test and learn. And so yeah I think you're getting to exactly what I'm about to say which is [00:23:46] look at your budgets and if you can cut 20 to 25% of your budgets every year into trying new things and testing and learning and having a little bit of this known/unknown of where you're investing, I have found that to be wildly helpful in making sure that we're not getting stuck in the way that we've always done things, but we're also not pouring all of our investment and resources into the new-fangled thing that might turn into TikTok, but might be one of the hundreds of things that TikTok has left in its wake. [00:24:33] And so having this like known/unknown quantity within your strategy has been very empowering for having curiosity and making sure that you're able to try new things, but not getting completely carried away with it.

Kiri: [00:24:52] Yep. Yeah. I love the concept of carving out a test and learn budget and making sure that there's something reserved there because in this space there is always something new to try. There's always a new add tie-up, there is always a new traffic opportunity, content opportunity, so just expect that to come up and you want to have something reserved in your budget for that and accept that not everything is going to be a hit.

Ingrid: [00:25:23] {song} Hip. Hop. The hippie-to-the-hip... {laughter} I totally agree. Well, this has been a really, really fun episode. Thanks for taking this fun, winding road through curiosity with me. I'll see you on the flip side.