[Step by Step] What Is the Role of Data in Improving eCommerce Experiences?

Phillip: [00:00:11] Step by Step is brought to you by fabric. fabric is a leading modular and headless enterprise commerce platform, helping brands and retailers to innovate and scale. Learn more about fabric today at fabric.inc/FutureCommerce.

Brian: [00:00:36] Hello and welcome to Step by Step, a podcast by Future Commerce presented by fabric. I'm Brian.

Phillip: [00:00:41] And I'm Phillip.

Brian: [00:00:42] And this is Season 8 of Step by Step, and you are listening to Episode 3 of 5.

Phillip: [00:00:48] Woo halfway through. Brian, my goodness gracious.

Brian: [00:00:51] Well, almost halfway through. First, you've got to listen to half of this episode. But before you do that, if you are just jumping into the series midway through, we suggest you go back to the beginning and listen to the very first episode, and then Episode 2, and then Episode 3, where you can get halfway through by the time you've done listening to us intro this, you might be halfway through. But I'll tell you, this is a five-part series, and we're breaking down exactly what you need to do to make a sound investment in differentiated online experiences. And we're bringing it to you Step by Step.

Phillip: [00:01:33] {laughter} This is a five-part series, you get halfway through this third episode, yes, you're halfway through the five-part series. One of the things that I'm learning or realizing, and this is after some 18 years of being in the eCommerce space and I'm really dating myself now, I'm realizing now that it used to be that we had big monolithic pieces of software that kind of attempted to run everything in your business. It was the marketing stack, it was the customer, it was the customer record. It was your CRM, right? It was your maybe like, God forbid, it was your order management system, too. Nowadays, we actually have a suite of software that supports all of that. And sometimes buying that software can be really complicated because making an investment in one piece of software has a bit of a domino effect. That means you've got to make a bunch of decisions and a bunch of others. So if you've heard about things like headless or composable or mock and you're confused or you're sort of overwhelmed with all the choices and maybe you need some demystification, this is the series for you to help you get over that feeling. We're going to get you set on making an investment in your digital commerce experience.

Brian: [00:02:52] Not only have things gotten more and more confusing, but there are also so many more options there are ways to differentiate. For some reason, it seems like everyone just decides to copy each other because everyone's lost in all of this, and they're like, "Well, we're just going to go with best practices, so I guess we'll just look like our competitors." And so you end up with eCommerce sites that all look the same. And so if you're looking to break out from that, if you're looking to be the penguin that says, "I've just got to be me," and yes, I'm dating myself as well.

Phillip: [00:03:24] Wow. Is that a Happy Feet reference?

Brian: [00:03:27] No, that was a Far Side reference.

Phillip: [00:03:31] While no, my word, son. Wow, that's you're reaching way back now.

Brian: [00:03:36] Old. So if you want to break out like that penguin, then you're actually listening to the right podcast for that.

Phillip: [00:03:46] Yeah, I feel like we've given a lot of people a lot of reasons to think that maybe they're listening to the wrong podcast. {laughter} That's so true. If you're thinking to yourself, "Hey, I'm an operator and I have a bunch of questions about how I can convince the powers that be into investing in experience and not just technology," this is the podcast for you. Or maybe you're a CDO or a CMO and you're trying to chart that path for digital technology investment that will last you for the next 3 to 5 years, maybe longer, this is the podcast for you. Maybe you are a technologist and you're concerned that making the right technology decisions might fundamentally change the way that you implement technology in your business and you want to understand how to do that better. Guess what? This is the podcast for you.

Brian: [00:04:38] And on this podcast, this next episode of this podcast, we have an incredible guest. Brian Walker, Chief Strategy Officer from Bloomreach, a company I'm very excited about. And he's going to help us answer the question what is the role of data in improving eCommerce experiences? Let's go listen. Today we have Brian Walker, Chief Strategy Officer at Bloomreach. Welcome, Brian.

Brian Walker: [00:05:12] My pleasure to be here. Thank you for having me.

Brian: [00:05:14] We're super excited to chat with you because we are in the middle of Step by Step Season 8, sponsored by fabric. And thank you so much to fabric for partnering with us on this. And we are going to chat about the role of data in building unique experiences for the Web. And so this is a really interesting topic because we're in the middle of a pretty difficult economy at the time of this recording. And so, Brian, as we dive in and chat about this a little further, I think the first question is how are merchants making decisions about software in the midst of what we're going through right now? Especially coming off a really long period of growth where actually we ended up in a position with a lot of experiences that sort of felt similar to each other.

Brian Walker: [00:06:16] Well, I think if you look at the macro environment, I think your comments are fair that yeah, we're entering into what appears to be a more challenging economic environment. Obviously, inflation is impacting consumer confidence. Interest rates are making people feel like they are less well-to-do than they were some time ago. Stimulus packages for lower-income consumers have now been spent or deployed, if you will, to maybe impact everything from student loans to consumer credit and so on. But it's not really true that that's evenly distributed. There are sectors of the economy that continue to really thrive, and we're seeing some very strong annualized results. So for example, the luxury segment, which actually went through a very difficult period early in the pandemic, has been doing very, very well, partly because people have a reason to spend money on things that they can show off. They're going to weddings, they're doing some travel and tourism. They're going to cultural events again and so on. So you've seen kind of a resurgence of spending there. Other segments continue to also do quite well. Home furnishings, for example, or grocery, which has kind of hit a new plateau but has not regressed. There are other categories that are very much struggling, though. General merchandise is kind of struggling. So it's not a universally applied thing. So keep that in mind. And it also depends on which part of the market you're trying to market to, as to what you're seeing in terms of the results in your business. And the other sort of very interesting thing just from a more macroeconomic level is actually the fundamentals of the economy remain very good. We added a tremendous amount of jobs in the most recent jobs report that came out. But the reality is that everyone sort of looks at the stock market as the proxy for the economy and how well it's doing, which, of course, is not actually the case. And inflation is being driven by a lot of potentially temporary factors, but those are impacted by things that are sort of outside of everyone's control or very few people have control over, unfortunately, like the war in Ukraine that is impacting everything from food prices to energy prices and so on. And so obviously all that uncertainty about the economy, about inflation, about interest rates is impacting the decision making of every business out there. And it's actually the uncertainty that freezes the market. If you're not sure what's going to happen next, you're going to be cautious about the decisions you make. If you know what's going to happen next, or you have a very strong thesis of what's going to happen next that could either be good or bad, it's easier to make decisions, but that's actually not where most businesses are right now. They're feeling very cautious. And then you throw the supply chain issues and inventory issues which everything from not enough inventory to way too much, {laughter} and that's got businesses very much kind of disoriented essentially in their decision making. Getting back to your sort of core question, though, which is how is that impacting like technology investment? It's shifting technology investment. I wouldn't say it has completely frozen it, but large sort of re-platforming initiatives or re-platforming projects are likely to be paused. It's going to be harder for you to justify a significant effort around your core technology at this juncture. The tremendous spending on acquisition marketing that we've seen over the last number of years has absolutely slowed for a couple of reasons. One, is certainly just the cost of customer acquisition has risen dramatically on the backs of the pandemic, whether that's Google search or targeted advertising, plus the cookies and the privacy and so on. All of that is kind of changing the dynamic around where money is spent. And we see a renewed focus on engaging with your existing customers, whether that's channels like email and SMS and so on, as well as loyalty applications and solutions that kind of focus on cultivating and nurturing customer retention programs and reactivation and so on. So it's shifting absolutely where the spend is made and things like conversion rate optimization tools and tools that help drive or squeeze a little bit more juice out of the lemon you already have. Those are going to continue to see investment. So it's not fair to say all of it's stopped, but it's going to change the equation. And you better have a really solid business case for why you're going to spend money right now if you hope to get your project funded and approved.

Phillip: [00:11:46] There is a conversation that is often had or has been had over the past few years about conversion rate optimization. So we spend a tremendous amount of money to acquire customers and get them to an experience that is subpar. So you're throwing money away. And so the narrative in our industry has been you have to do both, you have to acquire, but then we have to convert. And you've got to spend on both sides of the funnel and then you have to spend to reactivate or you have to spend to retain. So the spending has been across the board. If you slow spending on acquisition does the experiential spend on conversion then matter as much if we're retaining consumers that have already come through the funnel? So what's your take on experiential design spending conversion rate optimization? Are those areas that are also subject to pause in an uncertain environment?

Brian Walker: [00:12:39] Well, I think it really it's a very difficult question to answer only because it really depends. {laughter} I'm a former industry analyst, so I'm trained to always say that. It depends.

Phillip: [00:12:48] Sure. How should we ask the question? I'd love to put a better frame around the way to ask that question.

Brian Walker: [00:12:55] I'm happy to answer the question. I'm just saying like it's a there's not one answer. So if you're a company that, let's say, is digitally native or relatively young in your trajectory and kind of growth curve, and you're very much focused on kind of early growth of your brand and brand awareness and so on, it's very hard to not lean in and try to spend on customer acquisition. Your whole thesis is I've got to get to a certain level of scale or whatever. Then it's going to be a very difficult operating environment right now. Cost of customer acquisition and so on being what it is. And consumers naturally tend to fall back to a different set of behaviors in a recessionary environment too. Value shopping, trusted brands, brands that can, in a sense, incentivize and through the power of their distribution and pricing capability and so on, like actually secure or grow share in this kind of environment versus where we had been before. So for those types of companies, you know, it's very difficult to, in a sense, turn off the spigot on customer acquisition and turn it up elsewhere and have all of those levers kind of equate to growth. On the other hand, if you're a more mature business already operating at scale and traffic, actually the fundamentals always should have been telling you to focus on the customer experience you're delivering, focus on helping your customers discover and buy with confidence, and all those things that you could say are kind of conversion rate optimization-y, but it's really about fundamentals at the end of the day. These shouldn't just be hacks. These should be fundamental things you're doing to drive the ongoing improvement of your experience and targeting that to your customers in a way that's relevant to them and helps them buy with confidence. And then on the flip side, building programs around communication and contextualization and personalization and so on, along with incentives like loyalty. But I wouldn't say that's just points, that's about experiences, and it's about wrapping your brand around the customer. If you're doing those things well and you're an established business, not only will you weather the storm, you're probably going to get better business fundamentals out of everything you're doing. And you can still be spending some on customer acquisition. But the reality is you're really going to see a much higher ROI. And this was always true. This is not just true now. This was always true. You're going to see a much higher ROI from getting your customers to buy one more time per year than you are spending money on customer acquisition for often customers who will not buy from you again and may be buying from you at a discount rate or maybe returning, etc. So the reality is those fundamentals just become much more important now where it feels like you're not able to just throw money around.

Phillip: [00:16:00] Let's dive in. Just let's dive into that a bit because I think there's something to tease out there. In an environment where there are few channels for arbitrage and for customer acquisition and we're spending a lot more on retention, could there be a case that's made then to de-prioritize experiential site design?

Brian Walker: [00:16:29] No.

Phillip: [00:16:30] No. Give me a reason as to why. If you have a trained set of customers who are used to shopping with you, familiar with your brand already, and like the product, why would we need to continue to invest in the experience? I'm saying this as if I don't know the answer, but I want you to give it to me.

Brian Walker: [00:16:43] Well, from my point of view, I mean, if you've got problems with your site experience where there's inefficiency or problems or customers are getting confused and you're able to effectively measure that, you'd better be fixing it. At the same time, there's a whole nother level, which I think we'll probably be getting into based on, I think some of the things you wanted to talk about. But I think the reality is the generic experience is also a huge problem. You've got to recognize that, especially if you're operating at any reasonable scale, you've got many consumers who are going to fit into different interest group segments, etc. And if you're not thinking about the customer journeys and the experiences you want to deliver, whether that's content or journeys associated with those, you're leaving a lot of money on the table. So I would put that into that same bucket you just talked about. The reality is you need to be looking at data. You need to be testing. You need to be looking at optimizing those experiences. And I don't just again, mean like little growth hacky things or recommendations and so on, but this is really about the fundamentals. Actually now is the right time to be focused on that stuff anyway, and it doesn't have to be expensive to have a big impact. And if you've got challenges, now's the time to really address them, in my opinion.

Phillip: [00:18:09] Can I ask you a targeted question then? So when you're talking about fundamentals, I think that's often conflated with best practices or truisms. Can you draw a distinction between what fundamentals could be so that we're very exacting? Because I think there's a lot of groupthink around removing friction, reducing the number of clicks, make your site faster. Maybe these things are all true. But how true?

Brian Walker: [00:18:33] I think those things are all true. Absolutely. And again, like fundamental. So I think the reality is we got, I believe, again, super generalization. Many people would not fit into this bucket. But a super big generalization I think as an industry can get kind of lazy when all you need to do is pump more traffic in or hit that big clearance email again and drive a lot of traffic and like, oh, you get more out the back end. Good. All right. We hit our target or we're hitting the growth rates that we're being kind of measured against. But that was at a cost, potentially around profitability and around the cost of lifetime value and cost of customer acquisition and so on. And that was fine because the unit economics around customer acquisition was low and you know, it was sort of a land grab mentality. And so in a sense, the fact that there were challenges around your user flows or your pipeline or your ability to reactivate those customers and get them to buy from you again within a few months. Those just were not necessarily the focus and the priority. But I think that has always been a mistake. It's not just a mistake now. So my argument would be you should have always been focused on those things, but now more than ever, you should really be thinking about rather than trying to just get as much traffic as you can out of the shrinking impact of your acquisition budget, why don't you just redeploy that budget and actually focus on getting more out of the existing database of customers you have and doing more to ensure that their journeys support what they're trying to accomplish as consumers and how they want to engage with your brand. And again, very much depends on your product and your marketing and who you're targeting and so on. It's not easy to apply these terms and these thoughts generally because every business is a little different. Understanding your customer though, and really fine-tuning those customer journeys, everything from how you're talking to them and marketing to them, to the journey you take them on is that's just common sense.

Brian: [00:20:56] It's interesting, though, because I think everyone is using a lot of out-of-the-box tools to establish what this means. And Phillip's made this point already. But everyone, even per industry, let's not even say like across all industries, but even per industry, they're all sort of looking at the same data and it's all telling them kind of to do the same things. How is differentiation important when we're optimizing against the same data set, we're using the same tools that report back how we should operate?

Brian Walker: [00:21:34] I think a lot of reporting and tools are sort of based on category level and channel level activities. What we believe here at Bloomreach, for example, we're not the only ones in this market who believe this way, but I think you really need to actually focus on two different sorts of key data sets and actually focus your activities around those two sorts of poles if you will. And that's the customer and it's the product. And you really need to be thinking about data and your ability to leverage data, not just in reporting, which of course requires also that a human being interpret the report, take some action, and then measure the result, which is just far too slow, but then also start to automate around the data. And so you've got to kind of think about those two poles and obviously in the middle of that is an order. In the middle of that is a set of orders and so on. But it's also about other channels and communication channels, marketing channels, etc. And the degree to which you can understand at a customer level and then of course build cohorts, build segments, micro-segments, and do that in a scalable automated way, then you're really able to optimize around a customer. And then you're really doing something versus looking at a report that's based on channel, based on campaign, based on category, which only tells you so much. And that's really what's out of the box. That's really sort of what's out of the box and why you may sort of sense that, oh, everyone's kind of like looking at the same stuff and doing the same stuff and kind of commoditized the tactics. I mean, the reality is we've been talking about personalization for a couple of decades, since my start in eCommerce in the late nineties, we've been talking about this. Very few really are effectively doing personalization today. Very few are doing actually proper testing and campaign optimization. Very few are doing message testing. Very few are really doing testing at scale. And those who are tend to be the ones who have really grown share over the last ten, 15 years and continue to reap results. And it's hard to do if you're only using out-of-the-box tools. That's just the reality. Or you don't have that kind of mindset, which a lot of businesses don't have either. But when you can center around those two different polls and really understand and obviously the intersection of customer and product more effectively, which gets into margin contribution, not just sales, gets into attach rates, response rates, what channel, what time of day, what product, what segment, all of that. And again, it requires a level of automation to be effective because you can't generate enough reports and have enough smart people to read reports, make a decision, and then take an action and measure the result. That's just too much.

Brian: [00:24:51] Interesting.

Phillip: [00:24:51] It seems then that one of the ways of achieving...

Brian: [00:24:54] Yeah, it seems like the opportunity then is investing in software that allows you to automate. But also it sounds like there's a process change as well. There's got to be an operational shift in your organization that kind of goes alongside that. And so as we look at how like you said, you can hire all the smart people if you want, it's going to become unwieldy unless you have the right automation and processes in place. And so what types of process shifts are we going to see in marketing orgs over these next 12 to 24 months to sort of get at what you're talking about?

Brian Walker: [00:25:45] That's a really good question. So I would say, number one, actually, you can't go hire all those smart people because you can't find them.

Phillip: [00:25:53] True. You can't afford them.

Brian Walker: [00:25:54] Everyone else is... Yeah, exactly. You can't afford them. You can't find them. Everyone else is looking for the same people. And if you have those people, you better be taking care of them because... So number one, even if you had an unlimited budget, you wouldn't be able to staff the team with as many people as you probably actually would need to do that. Even if you're going offshore and so on, where again, labor for technical and sort of data-driven people has also the cost of that labor has naturally increased. And so we're really talking about a global market now and it's becoming increasingly difficult to find, to recruit, and find and retain those people. So you really do have to rely on, you know, to do this again, effectively at scale. Let's just put it that way. If you're operating a small business and you're listening to this, you're probably thinking, "I can't even touch what they're talking about right now." And I can appreciate and understand that. But you need to be starting to think even at a small to medium-sized business level about how you leverage some of these kinds of tools, techniques, and processes to become more effective and start to scale. Because, again, you have a very small team, but the answer to your question from a kind of process and operational standpoint is, yes, you have to really have a good, strong data foundation and you have to leverage tools to help you discover the patterns in that data and then ideally have the ability to kind of automate the testing and the kind of the outcome driven depending on what KPIs you're trying to achieve. What I mean by that is it could certainly just be sales, it could be a number of orders, it could be margin, it can be a lot of different things. And then it's really about this data-driven mindset and process with a focus on always testing. And as I always say, the customer is always smarter than you are. You may be a really good merchant, you may be a really good marketer, but the customer is always smarter than you are. They're always going to do things you didn't predict. And you may have a great designer and they may do beautiful stuff. If the customer doesn't like it, it doesn't matter how good it is, right? And the only way you discover that is by testing it. And the only way you test the scale is to automate because there's no other way around it. Again, if you're trying to run all of this through kind of standard tool sets and reporting, you're going to be too slow. And it's just not you can't do enough. The listeners could agree or disagree with me. All right. So I'll just say that. Reasonable people could disagree. But back in the day when we were doing segmentation with kind of an earlier generation of tools,  we'd have to run processes and we'd create segments and so on. Then we'd have to go and generate rules that we would define to drive customer journeys and personalization. Frankly, that's what a lot of people are still dealing with, which is part of the problem, because there's only we used to argue there seemed to be a sort of a limit to how many segments you could effectively operate at any given time. It seemed to be that limit was somewhere between 8 to 10.

Brian: [00:29:27] Yes.

Brian Walker: [00:29:28] Okay. So you're sort of like you could design lots of other scenarios. You could think about all kinds of interesting cohorts and segments and customer journeys and so on. But you couldn't operate at that level. It was too complicated and you couldn't even have the bandwidth and the people to do it. So you sort of were stuck with, well, we have eight we can actually manage. And even then it really didn't work very well. It didn't work very well. And so that's because we were as people trying to manage the system through reporting and rules. So there's a limit. And it doesn't matter how big an organization or business you have or how small you have a limit. And so the point is you've got to lean in on automation and obviously try not to use the term AI here because we're all sick of that term. But you have to use machine learning and AI techniques and automation if you're really going to get through it. And obviously, there's software out there that can support that. And we are in a different phase of the market where there is a richer set of capabilities there that has sort of democratized access to some of that which is obviously skin in the game. That's what we're up to as well.

Phillip: [00:30:58] There are a couple of things that we have noticed, both in the eCommerce industry and outside of the eCommerce industry that have really interesting unintended consequences. In a public publishing media platform model where the number of eyeballs and clicks matters the most to advertisers and time on site matters the most, eventually, the end game is clickbait, salacious titles, sensationalized stories, and really focusing on if it bleeds, it leads.

Brian Walker: [00:32:21] I haven't noticed any of that. I mean, to me, like the media industry...

Phillip: [00:32:26] I want whatever you're on. I need that because I feel like I have a very different media appetite then. Give me the Notion doc that tells me how to get the... And on the other side, in the eCommerce industry, the data and insights piece and the interpretation of that data, no matter how slow or fast, to your earlier point, tends to lead us towards a very specific set of best practices that shove people down the funnel as fast as we possibly can. We're not maximizing for time on site, we're not maximizing for discovery or maximizing for finding something quick, spearfish, get it done, get it in your basket, check out, go so that we can get you to repeat as soon as possible. I have to wonder then if the tools aren't optimized to lead to this eventual outcome where everything has the same type of interaction and homogeneity if you will. We're all optimizing for the same thing.

Brian Walker: [00:33:22] For example, if you're operating a business that's got a sort of a high consideration product, this is a product that consumers are naturally going to research, they're going to go to a variety of different sources to get input, they might hit your website many, many times, they may actually be playing with a configurator many, many times... Your customer journey, you have to be able to understand intent signals. You have to then think about how your marketing is all about supporting the customer journey versus trying to shove it down their throat. And you have to make sure that you understand and help the customer. Like they revisit it. Like, how do we help you today? It's just, again, first principles and like basic common sense, but applied to these digital interactions and then to your point, rather than trying to operate a high consideration purchase type business the same way you operate a mass velocity commodity-oriented business where it really is click and go and it is all about spearfishing. This is the problem with people thinking that they were going to try to emulate Amazon with every single website. That's completely the wrong attitude. Now, there might be principles, there might be principles around navigation and kind of concepts that we as consumers are all very familiar with, whether it's websites or apps and whatnot, try not to reinvent the wheel on how you navigate a website because we're kind of all used to a certain way that's supposed to work, right? So try not to reinvent those things. But when you think about the customer journey and what's the purpose of a product detail page or what is the customer journey that's most likely to occur that frankly, as a business, you may want to occur because you're selling a differentiated product at a premium price. And so you've got to expect that the customer is not going to necessarily buy on their first visit and then design content, design communication... I'm not using the word marketing, intentionally. Design communication that helps the customer really understand why your product is different and then support the journey behind it. And that's true if it's a house or if it's a car, it's an appliance, it's a bed, you know, just as examples or it's a watch and it's jewelry or whatever that's high value, high consideration.  

And so meanwhile, on the other side, if you're selling a commodity set of products on a website that's all about volume and you are thinking that you're competing with mass merchants or marketplaces, yeah, you'd better be very fine-tuned on deep linking product discovery and very efficient, frictionless checkout. Those are two almost very different kinds of scenarios based on the products you sell. And you need to be thinking about your customer journey and the optimizations you're trying to make accordingly.

Phillip: [00:36:28] Can I push back on that?

Brian Walker: [00:36:30] That's probably pretty basic.

Phillip: [00:36:31] I want to push back on one dimension because I think there is an opportunity to teach something out here. In a world where headless eCommerce platforms are the norm, do we need paradigms like a catalog listing page and a product detail page and a natural funnel? Or is something more interesting or elegant potentially able to emerge that we just haven't happened upon yet? We happen to have this paradigm that's based on one, monolithic platforms, two, what we've all become accustomed to with Amazon and other players, and three, this thing that we've trained everybody at large to expect and it works, so it's good enough. But I have to wonder if somebody doesn't reinvent it at some point because they have the tools to do so now that weren't possible before.

Brian Walker: [00:37:17] Well, those tools are theoretically there's not really a fundamental shift, if I'll say just because you're on a headless platform versus you're not, that couldn't prevent you from trying to reinvent like the navigation of your website or the organization of how things work in the process to check out for example. You could already do that years ago on like legacy commerce platforms. And by the way, I tried it and it was really interesting. We spent a lot of time in the lab, large travel business, very high volume industry leader, like, okay, let's work on a better process for buying travel. And you know what happened was really interesting. We were testing lots of different interfaces on top of a legacy actually homegrown custom platform. But it was challenging. It took a lot of effort from a development perspective and so on. But what's sort of at work there is yes you may be locked into some paradigms that you think are very constraining on a legacy or monolithic platform, and that may not really play out as problematically on your website as it may play out on other digital experiences you want to create. But also just recognizing that there are these paradigms that exist now. The search box is in a certain spot. The home, the place to click to go back to the home page is a certain spot. What do we expect in the footer of a website? How do we expect those things to work now has just become so ingrained. When I was working at Amazon, I was actually working very closely with a bunch of the user experience designers, not on the Amazon site, in my case. I was working on third-party sites, but they were all involved in optimizing and redesigning the Amazon experience. They would get so frustrated because they knew there was a better way from a design standpoint, but every time they would test it, it would fail because the customer already knew how it was supposed to work in their mind. So you're kind of like pushing against something that is hard. So is there an opportunity to do it better? Of course. But again, the customer is always smarter than you are. I'm saying that just to be coy, but you know, it's going to be based on the results ultimately. Now, where I do think headless in particular actually makes a big difference is in a couple of key areas. One, is the fluidity of that experience and how you can adapt it and change it on a website. But more importantly, the other digital experiences. You need to run off of a common infrastructure, a common backend for your digital business. And that's where apps or embedded commerce and product, etc., the things that we've been talking about now for a while and are becoming more and more important, become a lot easier in a headless environment. Now, it depends on where you want to pay the tax. And what I mean by that is if you're operating in a headless environment, there is some complexity. There's also some maturity of the solutions and how they come together because often you're going to be using multiple different point solutions and so on together. And you've got to recognize that that opportunity you want to go after does come with some tax.

Phillip: [00:40:54] Define tax.

Brian Walker: [00:40:55] Just well, I just mean it's complexity and cost.

Phillip: [00:41:02] Got it. Ok.

Brian Walker: [00:41:02] And that may start to well, it will improve obviously. But today I would say people may have an expectation that headless means easy or headless means simpler. That's not necessarily true. So you really need to do your homework and understand what does that mean if I'm going to go down that route? And that's true of people who are using the Bloomreach solutions in a headless way as well, and combining it with other solutions. They need to understand all the benefits as well as some of the ways they need to think about adapting their organization. Now, if you're going to futureproof your business, you're absolutely going to be choosing headless. But it is a pragmatic decision for many right now. And we see that play out in data that we have around the interest level in these kind of architectures. And it remains interesting, but not overwhelming in part because people may not see a direct business benefit short term. And now we're in this period, as we were talking about earlier, of kind of shorter term thinking and/or have not yet quite seen how their business needs to play in some of these other digital environments and having an infrastructure that supports it. But when we talk about AR/VR, we talk about Metaverse, we talk about embedded commerce in physical products like cars or appliances or tennis shoes, for that matter. And everything starts to become an extension of a digital experience. Or you think about conversational commerce and how communication channels and voice become the more prevalent way we engage. Headless enables you to take advantage of those things in a more efficient way and not get stuck behind a two year project just to find out if it works or not. So there are advantages that are really massive, but there is a bit of a tax.

Brian: [00:43:07] I think it'd be a shame to really reinvent the wheel when adopting headless with all of the same paradigms we currently use for shopping on the Web. That's the one thing where it's like, okay, the whole point of going to headless, yes, yes, you are sort of like disconnecting all the back end and making it easier to adopt other back end technologies. But also you're giving yourself the freedom to do something really, really cool.

Phillip: [00:43:33] Or anything at all. To do anything.

Brian: [00:43:37] I think this is actually what I really want to get back to and I think it's maybe at the crux of this whole conversation is the customer journey or taking the customer-centric approach, which is exactly what you said at the beginning of the conversation, which is if you as a merchant, you go and you take your data and you look at it from an industry perspective, you're going to end up with the exact same website, exact same eCommerce experience as your competitors.

Brian Walker: [00:44:14] It's the safe thing to do as well.

Brian: [00:44:15] Right. Whereas if you take a customer perspective into a headless build, you should end up with a unique website, one that's more targeted at your specific customer needs. And so my question for you then is as, as customer data is sort of at the crux of this next experience that if you do decide to go down the route of future-proofing, as you've said, and building something flexible like headless, how does the CDP play into this? Because I feel like the CDP is sort of actually the new glass holder when it comes to how we should be building experiences. And so how does CDP data flow into how you should be building your headless experience if you're going to do something unique?

Brian Walker: [00:45:14] I'd like to, if you don't mind, kind of split your...

Brian: [00:45:16] Yeah. I asked like ten questions.

Brian Walker: [00:45:16] Split into two questions.

Brian Walker: [00:45:17] So I'm going to kind of parse those. The first, first part of it I'd like to talk about is changing the paradigm and how to leverage this sort of architecture. And by the way, you don't have to necessarily even completely re-platform to start moving in a headless direction. Obviously, headless platforms enable you to sort of do a skip change. But the reality is these things are already happening for businesses that are operating legacy technology in the back end and kind of opening their platforms up to be API enabled. And one of the kind of key things you mentioned like how could the customer journey be changed or how could we design different experiences if we have that? Well, why do we actually need to drive someone from marketing to a landing page to add to cart to check out? Why aren't they checking out and ordering straight from their marketing channel? Why am I not able to convert at the moment of inspiration, including on third-party sites? In a replenishment type scenario too, aren't I able to just click reply yes to a notification or a text message, and it's all taken care of? Why would I need to actually go somewhere and do something and then get distracted and forget to complete it? And this might even be a product that I actually want to have replenished because I take it for nutrition or I need it for my kids or whatever. My pets. And so yeah, there are subscription products and so on. But consumers have a relatively low adoption rate of subscription programs, whereas replenishment is a different kind of thing. They're in control. So anyway, those are just examples of the kinds of things you could say, yeah, the existing model is really inefficient from a consumer standpoint. We're just kind of married to it because that's how it's always been, but we can absolutely turn it on its head. Or why aren't the products themselves connected in a way? Why is it that my automated cat food feeder isn't just automatically reordering when it's low? Why do I have to realize that I'm out of cat food and deal with it?

Brian: [00:47:30] Yes.

Brian Walker: [00:47:31] Right. This is an example. Simple example. Coffee, beans, etc. Now there are some who have kind of tried to move the needle on this, but it hasn't really gotten to the point where a) maybe some of this is related to consumer expectations, but b) businesses are really kind of afraid to challenge the paradigm or don't have the technology to that enables them to experiment and kind of unleash some of these kinds of ideas and then start to capitalize them. So that was the first part of your question. The second part was around CDP. Most of your listeners might kind of groan when they hear that term because it is such a problematic acronym in our industry because it means so many different things.

Phillip: [00:48:18] Say it again. {laughter}

Brian Walker: [00:48:18] Yeah. So it's unfortunate that in the technology industry of which I am a part, we're really good at jumping on these things and making them into big trends. And then if they start to happen, everyone piles in. And that's what's happened with CDP. So there's not all CDPs are alike. There's actually a pretty wide spectrum of flavors in the market. And so we have to be careful with the term, but you have to absolutely have a strong data foundation. So there are a lot of different tools in the market that enable you to do that. But look at it like energy or like oil and gas. Oil comes out of the ground and you store it and you move it around the pipelines and you move it around on ships. That's what customer data is. It's oil. And other people have used this analogy. Data is a new oil and so on. Well, that's true. But customer data, just think of it as like you're extracting it out of the ground. You got this kind of raw material that you can do lots of different things with, but you can't really burn and use raw oil.

Phillip: [00:49:25] Sure. You have to refine it.

Brian Walker: [00:49:27] Exactly. So. Most CDPs, really, all CDPs, honestly, are really focused on the very important task of kind of unifying customer data and organizing it, normalizing it, identity resolution, and so on. These are important things. These are really important things. And the good news is there are some good tools in the market, including from Bloomreach. But the reality is that doesn't get you very far. You have to be able to refine it. You have to be able to use it. And so the way you actually turn it into jet fuel or gasoline or some other propane, what have you, is you have to refine it. You have to actually turn it and activate it into something useful and then have a means of actually using it to power whatever it is. So let's just use the car analogy. It's the easiest one. So like, okay, I've turned it into gasoline. I understand it. And I've started in a sense you could use that analogy to think about segmentation, all the automation stuff we were talking about earlier. And then I've got to be able to put it in the tank and put it through my internal combustion engine to create energy and momentum. And so the CDP is really the oil. And so you've really got to think, just because I have a CDP, most of your listeners who are listening who are like, "Okay, I have a CDP, but I'm not seeing what you're talking about happening in my business." It's because you really need to have the tools to activate the data, and to do all this optimization. And so there are obviously lots of products, including ours, that really focus on that activation piece. Yes, we have a CDP, but the CDP is where kind of the raw energy lies. It's really around the activation. So you're right, CDP and customer data and I wouldn't even call it having a CDP, but having a strong customer data foundation is critical. It's also critical that if you're an omnichannel business, you not just be focused on your digital customer experience side of this. You really got to think beyond that, obviously. And if you think about this as not just a tool for your marketing channels, but you're thinking about this as a foundational piece for your customer experience as a whole, but then have these activation pieces on top, essentially applications and things that you're building or buying to activate on that. That's where, okay, now you've turned that into something really powerful. So I know it sounds very complicated or it's like, oh, that's just dollar signs rolling around in people's heads. "Oh, there are a lot of tools he was just talking about." Yeah, guess what? Your business is digital now, right? There's not an easy button. And by the way, the good news is with the maturity now of SaaS software, cloud infrastructure, and so on, this is an era when you should be testing in really trying different solutions and really finding the one that's going to enable you to optimize your marketing channels, optimize your communication, optimize the site visit, and optimize your lifetime value. Those are not all different tools, but I'm just saying those are the things you should be focused on.

Brian: [00:53:03] Well, I think you hit the nail on the head earlier. There's not a talent pool out there that can do this without toolset. Like, you can't hire a big enough group of people to do this without the right tooling. And it's actually if you think about how much you spend on people and the people that are required to do this without the tooling, all of a sudden the case starts to get really good, especially when you consider that digital is in many ways your flagship. It's the store that everyone that goes in-store touches at some point.

Brian Walker: [00:53:38] Well, I think the pandemic got a lot of people in the economy to think differently about these channels. But obviously, if you've been in this business as long as I have, you went from an eCommerce business that was 4 to 5% of the total business to where now almost all customer journeys start digitally, whether they're converting online or not. So my point is, you are a digital business. Oh, and by the way, your sales associates in stores or your service people in contact centers, or should it really be leveraging a common system and data store underneath so that they can serve the customer in a contextual, relevant way when you're engaging with them? So those are digitally enabled channels now as well. And so therefore you are a digital business. Everyone.

Phillip: [00:54:33] Ooh, I could think of 20 ways that we could keep talking. I guess to wrap this up, let me come back to the original opening question that sort of started this show. Did we appropriately answer what is the role of data in improving eCommerce experiences? And I feel like we absolutely addressed a bunch of the underlying conversations. I'll just ask you outright, what is the role of data in improving eCommerce experiences today?

Brian Walker: [00:55:05] Oh, it's the most important thing. I think let's just take I talked about sort of the two poles, customer and product data, but the question I would ask everyone is what's the most important asset in your business today? And I think the answer should be your customers. So if you don't understand those customers better than anything else in your business, you're not really doing your job well enough. Because your most important asset is your customers. It's not your stores, it's not your inventory, it's not your whatever, your brand. People might have different ways. They want to answer that question. For me, it's super clear. And it's true for us, too, is a software business. Our most important asset is our customers, too, by the way. But it is your customer. So the data associated with your customers is the most important thing to your digital business. And yes, the products you sell and those are all important too. But it's not. They're not the most important.

Phillip: [00:56:19] Ooh, I couldn't agree any more. I think Jeff Bezos might agree with you as well. Some phenomenally successful people might violently agree with you. Thank you so much. What a pleasure to have had you on the show. We are continuing the series. We're going to be asking these important questions about how you can grow the role of experience in your business. Stay tuned for more of Step by Step and thank you for listening to Future Commerce. Thank you so much for listening to this season of Step by Step. You can find more episodes of this podcast and all Future Commerce properties at FutureCommerce.fm. You can sign up too to get invited to any of our events that we have coming up. We have so many amazing events, everything from happy hours and get-togethers around conferences to our salons. You can get on the list and you'll get our newsletter that comes out twice a week, The Senses, that's everything that you need to know about how brands and people intersect and how commerce happens. That's called The Senses. Comes out twice a week. You can get that and more, including your invitation to all of our events at FutureCommerce.fm/Subscribe. Thank you so much for listening. Remember the future of commerce is what you make of it. Commerce will shape the future and we can shape commerce.