– Ecommerce companies prioritize spending on ads over tools to understand their customers.
– Facebook, Google, Amazon, and others have successfully convinced businesses to focus on quick returns and vanity metrics.
– The lack of investment in customer research and technology hinders brands from truly understanding their customers and making data-driven decisions.Invest in tools and services that collect data about your customers to better understand their behaviors and preferences.There’s a trend in e-commerce companies to be proud of their monthly ad spend. Pretty much every founder I’ve talked to has told me with pride how much they spend on ads or how much they intend to raise their budget on ads (or how much they used to spend). Their spend on tools to understand who their customers are, though, is usually non-existent or as cheap as possible. They are looking to cut costs everywhere outside of ad spend. I don’t know how Facebook, Google, Amazon, and others pulled this off, but kudos to them. These guys are drug cartels hitting people with dopamine, chasing the highs of big returns. It’s an amazing feat to collect money, show ads to people, and report on the return on ad spend instead of profit, and hook people onto the idea of quick returns where all the numbers they show you are mostly vanity metrics. Recently, we’ve seen this go even further with pretty much all businesses moving to Blended ROAs as a means of getting past attribution issues. [insert slow clap here] Spend more money + Less accurate results = Cost of doing business [continued clapping]. This is an absolute master class in psychological positioning, and everyone in the e-commerce industry (mostly agencies and consultants) has been parroting this narrative to defend their position within accounts. Spend for other business-building activities that take time to mature? Small. Spend for tools that allow you to better understand your numbers? Necessary evil, but small. Spend for tools and services that collect data about your customers to help you better position globally? Almost non-existent. The problem with data is that a lot of previous decisions get called into question. Once you decide to go down the data-driven strategy approach, there are a lot of tough truths that come out for brands. We talk about how important branding is for a company, but we prefer to create branding and search for product-market fit on whiteboards rather than investing in customer research and technology that can help you better understand your customers. With cookies going away, now is a great time to change your strategy. If someone doesn’t subscribe, it makes it very hard to track their individual behaviors, so you’re blind before purchase. Make it your priority to answer these questions with data. What is your cost per subscriber? What percentage of people open your emails? Do you know why people are subscribing? Do you know why people that subscribe purchase? Do you know why people that subscribe don’t purchase?https://www.linkedin.com/in/jivanco