Where is DTC Marketing Headed? Ft. Jason Greenwood and Adam Kitchen

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Podcast Host (Jason): Welcome to Mentoring Moments, a subsidiary series of the E-Commerce Edge podcast. It's composed of clips taken from my one-on-one and group mentorship sessions. Hello everybody, and welcome to another episode of the podcast. It's my great honor to welcome Adam Kitchen from Magnet Monster to the podcast. Welcome, Adam, appreciate it mate. Good friends of yours, please don't need any introduction, can I say.

I'm so glad to have you here. We've been talking about this, it's ridiculous actually. I think we've been talking about doing a podcast episode together for at least two years. How bad is that? It is now the early part of 2024 and we're finally able to make this happen. We have a lot of mutual connections, we're in a couple of mutual, I guess, groups, industry groups.

We've supported each other and helped each other for a very long time. You're somebody in the industry that I truly respect, that has built something from scratch in terms of the Magnet Monster agency. I know how hard that is. I've helped build agencies, I have built my own consultancy, so I have such respect for what you do and how hard you have worked to develop your skill set and your team.

It's hard, right? You have to be the leader of a team, you now, instead of doing everything yourself, have to teach other people how to do those things at a high level on behalf of your agency, delivering true outcomes for your customers. So man, I'm stoked to have you here for the ride today.

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Adam: It is absolutely the biggest challenge, such a salient thing to bring up because obviously I'm representative of that methodology being passed down. I think this is one of the big challenges any agency owner faces, and they have to mature into it, actually, now when the clients and the leads come through, they're not working with me, they're working with the team.

And how do I transfer that knowledge and make sure that it's a good representation of the content that I've built on a daily basis? So I know you go really deep on tech on a lot of things, but I would love to speak about some of the psychology and just managing the agency on a day-to-day basis. Lots of good stuff, let's dive into it.

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Jason: Yeah, and look, that's why I wanted to have you on as a guest mentor for our Monday mentorship episodes. Because I feel like, sure, everybody and their dog, to a degree. I get probably approached by three to four email marketing companies per week for one of a few things.

One is they'll email me and say, "Hey, can I take over your email marketing for you?" Basically, and I'm going, "Have you seen my content lately? Like, I can look after my own stuff. I've got my own personal brand, I have my own pipeline, I do everything so social, I'm my own pod." If they haven't even looked at my profile, then they'll either spam me via email or they'll spam me via DM.

The other one is, "Oh hey, I see that you're an e-commerce consultant. I'm sure you offer email marketing services. You could white-label our services." And I'm going, "Did you look at my website first of all? I don't offer email marketing services. Second of all, I focus only on the tech aspect of the e-commerce stack."

So yes, while I understand the tech, the email marketing tech, while I understand marketing automation, and while I understand CDPs, (Customer Data Platform) how they have to be engineered as part of a holistic stack, how the data has to flow between them, how the triggers have to flow between them, the difference between a transactional versus a campaign or marketing email.

Understanding all of that, how that works together from a workflow perspective and a data flow perspective, totally get that. But I don't offer the services that you offer. And so I feel like this industry, just getting into the psychology a little bit before we even get into you doing in terms of direct client services. I feel like the people that offer email marketing services are often breaking every single rule of what I would consider the cardinal rules of email marketing.

If you're going to do email marketing, first of all, know who the hell your customer is. Know if they're likely to be interested in your services. Make sure and tailor the message to you so that it gives you the best chance to be able to say yes to that email. And it feels like, God, you are not a very good ambassador of your services when you're breaking every cardinal rule trying to reach out to me and get me to work with you.

Adam: Yeah, look, we could write a book about trash cold outbound email services. And we've been back and forth over this quite a bit. We've also spoken to people who have more of a, let's say, holistic approach to account-based marketing.

And we can go up in B2B direction, DTC (Direct-to-Consumer), but the reality is, Jason, from my perspective, and I don't say this in an egocentric way, because I've got a huge amount of that myself, is that email is actually an incredibly complex and very nuanced subject when you really get into things like deliverability and like the architecture around email.

And there's not really a huge amount of true experts. And it's definitely not every Tom, Dick, and Harry who pops up a Klaviyo agency, and not to say these people aren't decent performance marketers or have some basic elements of understanding of psychology. But email is a very intricate channel that requires a lot of deep knowledge.

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And you can't accumulate that over six months or a year. I've been doing this since I was 17, and as I said, I still feel like I'm learning a massive amount all the time. So yeah, there's a lot of cowboys out there. There's a lot of people just trying to make a living as well, which I respect.

Email is an easy place to break into. We've seen how Klaviyo has really made the space commoditized in a sense of breaking into the industry and being able to sell because you have these one-click integrations, which is fantastic for merchants because there's a low barrier to entry in terms of deploying what used to be quite cumbersome tech.

But there's obviously been an influx off the back of that of people who really don't know what it's all about from a DTC perspective and how it holistically ties in email, selling these services and overall just not understanding the full scope of how email plays a part within the ecosystem. Anyway, there's a lot of spiel and jargon in there which I'm sure we can get more into, but that's my overall overarching feeling of the current state of the industry.

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Jason: I think you've nailed it. And I think there's still, apart from agencies like yours, and look, there are some really good email marketing agencies out there, so I'm not trying to tar and feather the entire industry with the same brush because I think that would be unfair.

And I think that now, as email marketing appears to be, at least from my perspective, evolving from marketing automation, it being the foundation of most marketing automation workflows within a brand, particularly e-commerce brands, and particularly DTC/B2C e-commerce brands. I feel that with the loss of cookie capabilities, with the challenge of collecting zero and first-party data today, I feel like email marketing as but a channel, is but a communication channel of one of multiple communication channels that should probably be used in unison off the back of proper CDP capability.

And so I'd love to get your take on this because Klaviyo is making noise about introducing their CDP very late to the market. We've had Segment, we've had Lexer, we've had Mapp, we've had so many really good high-quality CDPs come to the market over the last say five to six years, and they do things that Klaviyo has never been able to do.

They go so much further than Klaviyo does. And in fact, some of those CDPs don't even have their own email sending capability and still need to integrate with something like Klaviyo to actually send the emails based on the segmentation they've created, and all the data that they've gathered. And some CDPs, of course, do have their own email analytics capability.

The reality is I feel like, to a degree, the market has moved past pure standalone email-based marketing automation platforms, and we're now in an era where we're trying to collect as much zero and first-party data as we can, to leverage across all communication channels, not just email. Because we see now that there are a lot of direct mail companies out there now that can integrate with something like Klaviyo and become a physical mail node in a workflow.

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And just like text messages now can be a node in a communications workflow. It's not just email, we've got all these channels that we can communicate with customers through, and yet so many brands think it's only email, and they just burn out that channel until they just see massive unsubscribe rates. So, are you seeing that evolution in the email world too, where sure, email is important, I don't think anybody would say it's not, but brands focus on it to the exclusion of all else it seems.

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Adam: Yeah, look, there's a huge amount to unpack here, and I could probably speak about this subject for days. To call this out, I am not the biggest email reader in the world, and I think a lot of the younger generation, maybe 50 to 70% of them, will never open your emails. So, this ties into the CDP conversation where, typically, you have this customer journey where a customer purchases and then the whole retention marketing thing is, now you can email them.

But the reality is, over half the recipients just don't engage with email from the very first interaction that you send to them. So, you have to look at things harmoniously. What additional channels can you retarget people with when you've acquired that data? Obviously, email is the most logical one because it's highly profitable, it's one of the first touchpoints that you can communicate with people, and it is a great revenue driver. We've seen SMS come into the scene, there's push notifications, there's direct mail.

And I think that is why you're seeing these tools evolve from, 'Okay, let's not just be an email service provider, let's become this unified tech stack'. They're trying to amalgamate all these channels into one, and I think it makes sense to manage everything through one consolidated platform. Today, I made a post about this on LinkedIn. At the same time, I think you're also seeing these tools realize that to capture that enterprise segment, like Klaviyo, they have to go into the CDP-type capability.

It ties into things like cookies, etc., but the reality is they want to grab bigger brands, higher average order value from the people they serve. That's why they're moving into this space now. So, logically, they all intrinsically tie together. But that's why you're seeing a lot of these tools that were realistically designed for SMB. Klaviyo is not enterprise software, it was never engineered for this type of capability. That's one of the problems they're going to have as they try to move upmarket.

They were designed for small to medium-sized businesses, sub $10 million, maybe you can even say sub $5 million, and now all of a sudden you want brands doing nine figures. There's a lot that needs to be unpacked there and probably re-engineered. Whether there's people that can come in and disrupt them, I'm sure there is. It's going to be fascinating to see what happens in the next few years.

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Jason: To your point, I think the one thing that Klaviyo has done better than just about anyone else in the industry, there's two things. 

1. One is when they first started out, they were incredibly humble. I've been working with Klaviyo before anybody even knew how to say their name. In the beginning, nobody knew how to say their name, nobody knew who the hell they were.

When I was selling Klaviyo into the ANZ market, to my clients in the ANZ market, Emarsys and Dotdigital were the big players in marketing automation, right? Klaviyo was a minnow. I remember considering an email marketing automation platform for Health Post years ago. We looked at every single email marketing platform at the day.

We had already been using MailChimp and knew it wasn't cutting it. We initially implemented Bronto, then within six months of us implementing Bronto, they got acquired by NetSuite, and NetSuite promptly put a bullet in their head. So, we had to migrate off them, which was a pain because we spent three months getting onto Bronto, setting up all the workflows, migrating all the data into the platform. It was a nightmare to then move off of them, and we ultimately moved to Klaviyo.

At that time, we considered Emarsys, Dotdigital, and Klaviyo. Klaviyo didn't even have a visual workflow builder at that point. They said it's coming in the next 60 days, so if you come with us, we will have a very similar visual workflow builder to Dotdigital and Emarsys, which were way ahead of the game at that time but also five times the price. 

2. What Klaviyo brought to the table at that time was a super cheap price with a very powerful product. Their sales engineers and teams were really humble; they worked hard for every single merchant they onboarded into the platform. 

They provided a white-glove service, almost nothing to get moved onto their platform. They did all the heavy lifting, and it was a no-brainer at that time. Now, I feel, and this is going to be a very politically incorrect thing to say, Klaviyo is so big now and they are ready to do their IPO.

They went from this small, hungry, humble company to the 800-pound gorilla that we all love to hate. I'm not saying we hate them because of their success. We hate them because they have become so big, so powerful, and so ubiquitous that they have total pricing power. They've jacked up their prices in anticipation of an IPO and have become arrogant, in the same way that Shopify has, in many respects. Maybe this is just what happens when companies become ubiquitous and feel like they've got zero competition in the marketplace.

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Adam: So, I think there's a lot to admire about what they've done and I don't disagree with anything that you said. It's very easy to root for the onstock in the beginning but it's very difficult to maintain those behaviors as you climb to the top of the tree. Because again they probably hit some type of limit where they realize that it's like any business order: What got you from A to B won't take you from B to Z.

Yeah, it's a logical business move, but it's a shame that it happens. You start catering to a different type of clientele and start to deprioritize the original people that built your business and created that advocacy for you. There's a lot of people in that lower market segment that will generate advocacy for you. That's one of the benefits of SaaS at a very low price point: you can swallow up a lot of people. They might not necessarily drive a huge amount of incremental profit, but they will give you good market penetration and a lot of word-of-mouth advocacy. That's a very powerful train for many businesses, especially in SaaS. It's just a shame that eventually, that ride stops, and the people who built that advocacy start to cater to a different type of clientele. I think, in many ways, it's a classic story for any type of company, especially when they go towards an IPO.

You have to evolve and become something that you weren't originally. This is probably classic for any type of company, especially when they go towards an IPO. As a Klaviyo elite partner, it's incredible when you go to these events and see how much positive advocacy and market sentiment Klaviyo has. Apart from the fancy tag that we've got, you don't generally get anything for offering Klaviyo services or agency services to them.

They've never given me an influx of leads, despite promoting their business for five years. The fact that they've been able to get people like me to advocate for them tells me they've got an amazing product. They do have a really strong product, fair play to them.

Whether that will continue, every dog has its day. It's no longer the underdog; it's that 800-pound gorilla. I personally think you're going to see significant disruption coming. It's inevitable. And I don't think they care so much, to be honest, because their focus is elsewhere now. They are the Dotdigital, that's their focus. They don't give a **** or maybe that's wrong to say, but they don't care as much because that's not what's driving their business forward anymore.

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Jason: Yep, they're moving up the enterprise stack, much like Shopify is trying to do. I think they'll probably find some success there, but there are many more competitors in the enterprise space than they found in the SMB space. When Bronto and a few other marketing automation platforms disappeared around that time, you could argue that the amount of competition actually decreased in the first couple of years after they entered the market.

There were a lot of competitors that just disappeared, whether they were swallowed up, amalgamated, or simply couldn't run their business in a sustainable way. Klaviyo had the playing field to themselves, doing something quite unique at the time.

To your point, I think the other thing we can take away from the learnings from Klaviyo, and then we'll move on, is that every other SaaS player out there, especially in the commerce space, needs to understand that integrations will make or break you.

Especially if you're entering the SMB space up to $100 million a year businesses. If you are not default integrated into most of the components they already work with or want to work with, so that you become the default choice because there's no heavy lift to get you integrated into their business, you are going to struggle.

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The reality is every major e-commerce platform, every major marketing platform, whether it be quiz commerce platforms, post-purchase follow-up platforms, almost every single one of them has an out-of-the-box integration with Klaviyo. 

So, Klaviyo can take over all transactional email opportunities. Loyalty platforms, membership platforms, inventory platforms, everybody integrates with Klaviyo. Every merchant ultimately wants a single system that can send as close to 100% of their emails as possible, so they can get holistic send analytics and performance analytics across email, regardless of whether it's transactional or marketing. That was just a genius move by Klaviyo.

And they haven't built all these integrations themselves. As they've grown, everybody else says, 'We actually have to build an integration with Klaviyo, otherwise we are irrelevant.'

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Adam: You've nailed it; it's table stakes for success. As you pointed out, you have to integrate with Klaviyo now to get traction on your product, as opposed to the other way around. 

And I completely agree with you. If you're building any new type of SaaS product, especially within the e-commerce space, your focus needs to be heavily on integrations from day one. I made a post about this today, saying the main threat I perceive is Yotpo. Not because I think Yotpo necessarily has a superior or comparable email product, but because they've got the resources and the team to rapidly build the integrations necessary to compete. Yotpo has the team to rapidly build up reviews, loyalty, and transactional comms with whoever else to compete with Klaviyo.

That is the main USP and monopoly that Klaviyo has – they own the ecosystem. It's not about having better segmentation options or a better AI subject line; it's that they own the ecosystem. The only way to compete is to say, 'Okay, we can save you time, not just costs from migrating. We can amalgamate all your tech stack – your quizzes, your reviews, your loyalty – if you move to us.' Until that happens, and I think it will happen because we're seeing it now in this generation of no-code, Shopify one-click, etc., Klaviyo will continue to dominate, but it is changing.

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Jason: Definitely. What is your thought on B2C versus DTC email? It's been done to death and talked about a lot, but one thing I wanted to cover off with you, which I don't see getting a lot of play or airtime, is marketing automation for B2B brands.

A lot of B2B brands have individual account managers who just send individual one-off emails out of Outlook or Gmail to their customers, with attachments, new drops, and swatches. Then they have the field sales team that physically goes and maybe even prints a catalog, takes it to a client on their field sales calls. There's this lack of understanding of the value and importance of email and CDP capability in the B2B world.

In the B2B world, by default, the business model means we generally know our customers super well. They're in our ERP; for them to transact with us, they have to be in our ERP. They have their own catalog, their own pricing, and an assigned account manager. We know these customers, and generally, those relationships are for the very long term.

The AOVs (Average Order Value) and the CLVs (Customer Lifetime Value) tend to be ultra-high compared to the B2C world. As a result, I think marketing automation and holistic marketing doesn't get as much attention in the B2B world as in the B2C world. But now, because a lot of B2B brands are realizing, 'Hey, we don't offer e-commerce today, we have to.' We saw what happened during COVID; our field sales team couldn't go and see customers on-site. We didn't have any digital channels, or if we did, maybe we had EDI (Electronic Data Interchange) for our largest customers, but we had no self-service e-commerce capability in the business.

A lot of the brands I'm working with today are getting them up and running on e-commerce for the very first time in the B2B world. But when it comes to marketing, many of these B2B brands don't even have a marketer in the business. They've got maybe a head of sales, a head of ops, but they might not have a single marketing resource. So for them, they've never thought about email marketing the same way B2C brands do. Are you seeing the same thing?

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Adam: 100% yes, and it's funny actually. We spoke to a prospect today, very close to closing, and they have two components to their business: DTC and B2B. We're taking over the B2B marketing strategy for email, which actually excites me more than the D2C (Direct-to-Consumer)) side because I've done D2C email so much at this point. The thing is, I'm not someone who has a huge amount of experience in the last five years with B2B because our agency has geared up towards D2C.

However, we have worked with B2B clients, and I come from a background of running B2B marketing automation through ActiveCampaign, definitely for smaller businesses and lower-AOV items, not huge industries. But anyway, it's irrelevant.

The general modus operandi for these companies, like you said, is they have the sales rep who's fumbling around trying to get to grips with the technology, quite resistant to it because, as you have mentioned before, they perceive it as a threat. Or, they have somebody who is using very rudimentary tactics, like just absolutely pulling the whole database, which isn't huge for a lot of these companies, with very generic blanket messaging.

So, there's definitely a very strong use case and prospect for this new position opening up, whether it's sales reps in B2B having to become more savvy with CRMs or marketing automation, or just a new position within B2B commerce as an industry, like B2C experts. It's crazy, really, when you think of the opportunities in today's market that this is not really like a sought-after or dedicated position.

Whereas in D2C, again, every Tom, Dick, and Harry has an email marketing or lifecycle automation marketer. If you look at the richness of zero-party, first-party data, like extensive notes that a lot of these sales reps and B2B people keep on their customers, I would love nothing more than to get stuck into all this juicy info and sell these people an end-to-end solution.

But yeah, it's just left on the side, given this blanket messaging treatment, which is really sad but a huge opportunity for people who are willing to disrupt it.

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Jason: You have just called it in the sense that when I go into these businesses, usually when they call me in to consult, say, on e-commerce, first of all, oftentimes I end up consulting on their entire business stack because they need a new ERP, they need a CRM, they're using 20-year-old technology across their entire business.

And then they say, 'Oh, we want to execute at a high level on e-commerce.' Well, we need to kind of build the foundation first so that you even know what it's like to sell through digital channels and get your data ready. But usually, when I ask them, 'Show me a sample of your customer data and your product data.' I can usually immediately point out to the business where they're having existing operational challenges and where they're going to have their first set of challenges in the digital world.

So usually, we need to work through a system of harmonizing the data, streamlining the data, getting it organized consistently, rationalizing the data sets, making sure it's coming from similar sources, making sure the product hierarchies are structured the same way, have the same attribute structure, making sure it's consistent in a way that makes sense in a digital buying journey.

But it's also the same with the customer data. Sometimes I get into these businesses, and I look and go, 'Oh my God, the amount of data you have on these customers...' Like you said, I think D2C brands would murder to have this level of data because they don't just have organizational data; they have data on every single approved buyer within that organization as an individual person that then rolls up into the organization level data set. It is phenomenal, absolutely phenomenal, the amount of data that B2B brands have on their buying orgs and the employees of those buying organizations. 

They could completely tailor the messaging to the individual buyer within those organizations at a level that you just never see in the D2C world. Because oftentimes in the D2C world, a customer is a customer. Once the statistics are, it depends on the region of the world, but still to this day, somewhere between 70 and 80% of D2C customers will only buy from your brand once, no matter what you do. That is a big challenge.

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Adam: It's a massive challenge, and you've absolutely hit the nail on the head. It's so fascinating because a lot of the opportunities, and I've been guilty of this in the past, of making email for D2C quite convoluted because I like to experiment with a lot of strategies.

But one of the things that we have done in our experience for B2B is remove that friction and skepticism that these salespeople have from automation replacing them, and actually making it complementary to the jobs that they're trying to do. For example, if you think of an abandoned cart sequence in a typical DTC flow, it's your general "You left something behind, here's 10% off" – we've all seen it, it's pretty much the same across the board.

With B2B, you can actually trigger more sophisticated workflows where you pull in all the data and then say, for example, to the sales rep, "Follow up with a sales call, here's the data, here's what they have in the basket." It's so much more effective and personalized, and the ROI from actually investing in those types of activities, where you marry up the offline to the online, is just a huge opportunity. You can get much more sophisticated, and those types of strategies that sometimes when you implement them for D2C, it ends up being overreaching and just not worth the juice for the squeeze.

For B2B, it absolutely is because, as you pointed out before, the lifetime value of those customers and just the overall familiarity with the brand is much higher. There's a lot that can be done with B2B marketing automation, I think.

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Jason: I'd love your take on this – I think one of the challenges with B2B marketing automation, however, is that unlike the DTC world where there are standardized systems for help desk, for example, Gorgias, which I think owns now about 80% of the help desk installations in e-commerce in the DTC world.

So, because they have an automatic integration with Klaviyo, you can pull in a lot of profile-level information from Gorgias, from returns, specific inquiry types, and everything else. All that can be brought in against a Klaviyo profile as a Klaviyo profile property. But in the B2B world, it's almost always a CRM, and very few CRMs have a native integration with Klaviyo.

So, I believe that to get the most out of any marketing automation platform in the B2B world, there's going to be some bespoke integrations. There's going to be some bespoke metrics, as Klaviyo loves to call things specific to them. But really, at the end of the day, we have triggers that will trigger off an action within the marketing automation platform, and that's what Klaviyo calls a metric.

Usually, in the B2B world, I think we would need to plumb in some very specific metrics from the operational CRM inside of a B2B brand so that we can get that same level of automation, get that same level of profile enrichment, etc. Because again, as you point out, Klaviyo is very B2C-focused and historically SMB-focused. As a result, the whole stack in the ecosystem wrapped around them is not a B2B ecosystem; it's not a B2B technology ecosystem.

So, do you find that when you're starting to work with B2B brands, one of the first things you have to look at is how can we get this data either exported via CSV and then reimported into Klaviyo manually, or how can we create an integration which can trigger some of these workflows in the right way? It's a little bit more of a heavy lift to integrate that into B2B than B2C, right? 

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Adam: Klaviyo is not built for B2B Commerce, it's as simple as that, really. I think if you want to boil it down and call a spade a spade, Klaviyo is not built for B2B Commerce. That type of profile richness and open-ended information that you need to pull in works best off closed-ended custom properties.

With B2B, you want a heavily personalized richness of information. You start pulling in paragraphs of information to Klaviyo, and you will see it's just not architected correctly to pull in that type of information. In fact, it will grind to a screeching halt.

I think trying to make workarounds when a tech just isn't set up for it is a lost leader. I personally would not do it, and I think there needs to be some consideration for a different type of platform. What that is, I'm not entirely sure. I'm not a B2B automation expert. It's the same systems, right? You can implement different platforms, but I'm not sure off the top of my head.

I know ActiveCampaign was actually a lot better, even though that's built for small to medium-sized businesses. That can definitely handle some of that functionality that you talk about on a serious scale. But that's a good solution, and yeah, the reality is, when we're talking about B2B commerce marketing automation, Klaviyo is not built for it, and I would look for something else.

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Jason: Yeah, no, I appreciate the honesty and the transparency. That's where I think CDPs really come into their own, right? Because they can take these large bodies of data, and I think eventually, they will get there with AI and everything else. What they can do is they can parse large complex pieces of unstructured data, really give them like a tag cloud associated with that unstructured data, add those as structured profile properties that then can do other things.

But to your point, Klaviyo only works with structured customer data; it cannot work with unstructured data. You have to preparse the unstructured data before you push it into Klaviyo, and you have to be very specific because it has to be a one-to-one mapping between that data and the profile properties that you've pre-configured as being available in Klaviyo.

So, the reality is that it doesn't do well in an unstructured data environment, which is totally fine. You use a hammer for nails; you don't use a hammer for screws. So, I think what you're trying to say is you need to pick the right tool for the job, and when you're going into the B2B world, sometimes those DTC tools can port straight over, sometimes you need to pick a different tool.

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Adam: You've absolutely nailed it. It's not built for trying to work around stuff, and developing these cumbersome workflows will just give you a lot of headaches. I've made this mistake in the past. I've tried to integrate B2B solutions into Klaviyo, and I've ended up, to be completely frank, damaging the house, which I hold my hands up for, because I tried to make the system do something it wasn't capable of.

In the process, I ended up with a lot of profile duplication, really slow systems, workflows triggering the wrong way, and it's not purely down to bad QA. It's just trying to make something, as I said, do something it's not capable of. To close the loop on this conversation, if you want marketing automation software that ties in this type of CRM, CDP capabilities, Klaviyo is not the solution for B2B, at least right now.

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Jason: What do you see, because you audit a lot of email accounts? Let's even just look at it through the DTC lens for today because that's the bulk of your business now. Oftentimes, I'm guessing, what's the split? My question would be, what's the split when clients come to you, how many of them have been doing it perhaps in-house or working with another agency versus setting it up for the very first time? I'm guessing that you're the ambulance at the bottom of the cliff for a lot of these brands that come to work with you for the first time.

How often do you get into their accounts, and you see the same repeated mistakes over and over again, and you go, "Man, if we could have just gotten to this client before they set up Klaviyo the first time around, we would have much better data to work with today." 

And now we've effectively got to restructure half of this bloody account to get a start collecting data in the right way but also start leveraging it in the right way and stop burning our list through batch and blast. How many of these times do they come to you, and I'm sure that you don't see that many startup brands.

A lot of them are established brands that have been trying to do email marketing well for a very long time. I'm guessing you see a lot of the same mistakes over and over again.

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Adam: Yeah, so I think there's a lot to unpack in that question you've asked, but generally speaking, funnily enough, the more advanced and higher the revenue chain a brand is, generally the more problems they have. The reason being is that they just got more data inside the account, and more data tends to correlate with more messy problems that need to be sorted out.

A common issue is profile duplication, lists, and managing consents just all over the show, completely. In turn, that will affect deliverability, so inbox providers like Gmail, Yahoo, Outlook, etc., don't like it when you're a bad sender, and it's impossible to be a good sender if you're not organized with data. So, even basic things like having a naming convention or having the source property attached to where you bring your leads, not emailing people who are unsubscribed, these are all things that actually can become quite challenging when you get bigger.

A lot of the time, unless you have someone who developed that architecture from the beginning, you have people who are parachuted into the job, and they're covering up for three years of bad mistakes and bad habits. By that time, it's already an established revenue channel, so it might not be optimized to the capabilities. But a lot of the time, when you have to fix email issues, you have to stop the clot, and the only way to do that is to cause up a revenue stream.

A lot of brands are just not willing to do that, so the problems just persist and get worse. Then they're not able to generate the type of returns that they should from email. So, I would say, actually, people with the most problems are the bigger brands, and they're the ones who stand to gain the most through fixing those problems because a small 10-20% improvement in inbox placement can have a massive incremental lift.

But they're also the ones who will bleed the most in the short term as well, so they're less likely to address those problems and just persist with bad habits. It's a mixed bag. To answer your question, a lot of established brands have in-house teams, and those in-house teams sometimes do a good job, sometimes do an okay job. They will then call us on, and we're like a consultant, or maybe we'll just take over the account completely.

A lot of new brands just don't know what they don't know, so like, they don't have any type of automation set up or definitely a lot of low-hanging fruit, and it might have rudimentary campaigns, but there's not as much to fix because they haven't established so many bad practices for such a long period of time. So overall, a complete mixed bag. You don't know what you're going to get when you go inside an account, and I suppose that's one of the things that keeps it exciting after so many years.

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Jason: How often do you see issues with a lack of a dedicated sending domain, a lack of a dedicated sending IP, horrible DNS record setup? When we think about all of the things that you need to get right just to have a chance to get in somebody's inbox, and how easy it is to get it wrong and then get either your domain blacklisted or to get your IP blacklisted, there are just so many seemingly simple things about email that if you get them wrong, you can most harm your email channel forever without having to start over from scratch and rebuild from scratch. 

How often do you see situations where they've just damaged their sending reputation on an existing domain or subdomain so much that they have to go backwards before they can go forwards?

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Adam: So things like DMARC, DKIM, DNS, and all these types of acronyms were like foreign entities two to three years ago. And I think one of the interesting things is in the last two years, we've just seen these discussions become more prevalent. The reason being is because basically, the algorithms in these inbox providers are becoming much stricter on senders.

And because it's such an important revenue channel for DTC, B2B commerce, a lot of tools like Klaviyo are putting a massive amount of resources into education and investing and making sure that their customers are aware of these things when it comes to a setup level. When I first started using Klaviyo, it was like, shared Klaviyo IP domain, what do you think, get your account started with a dead run, start testing.

It's not like that anymore, or at least they are a lot more prudent to make sure that you settle in the right way from an infrastructure level in the beginning. And they have to be vested in that process as well because if you don't get an ROI from the platform, obviously, you're not going to use it. Again, these were very complex technical projects, and they still can be. They sound rudimentary to a lot of people who have a tech background, but actually, they can be really overwhelming when you don't know anything about them.

But we're actually seeing more people now educated about them and more prudence. And I think, in fairness, most of the ESPs do a good job in highlighting their importance because they have no choice. Right? If you don't take them seriously, you're not going to get an ROI from the platform. Yeah, it's moving in a positive direction, I would say, on the deliverability front.

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Jason: That's so good to hear because I remember even a few years ago that people had no idea what the concept of warming up an IP was, warming up a domain. They had no concept, and when I would start to work with some of these businesses, even when I started at Health Post and some of the other brands that I work very closely with, and some of my clients from my agency days, a lot of them, you mention some of these things to them, and because even if you're not their email marketing agency when you go in, for example, to implement a new e-commerce platform for them, you get blamed for absolutely everything related to e-commerce.

If their email performance drops off, if their performance marketing drops off, they'll blame you for absolutely everything, even if you only just built their website. So, they almost, to a degree, want a single throat to choke, right? Which is understandable if they don't understand who's guilty, who the guilty party is. They shoot first and ask questions later if their revenue falls off a cliff. That's completely understandable. I completely get that.

But unfortunately, sometimes they're barking up the wrong tree if the technical setup, now obviously the technical setup of the e-commerce site also has to be right, so that you don't lose domain authority, so that you retain your search rankings, all that sort of stuff. And as you know, just like when you make major changes to the email configuration of a platform, there's usually a dip before there's a rise. And it's the same for a website. Even if you put really good 301s in place when you rep platform a website, the reality is you're usually in a dip in the SEO rankings until everything starts to be shunted in as a native URL that is not subject to a 301 inside Google.

And until those are fully indexed natively indexed against your domain, you're going to see a dip. That's the reality, and there's no two ways around that.

So, how often do you guys find a challenge where you're saying, you have to tell them, you have to give them that warning upfront, “Okay, you're coming to us, we're going to be making some substantial changes to your Klaviyo account. As a result, you're probably going to see a dip in ROI before we see a sustained rise because we now have to bed all of these changes in. We have to continue to optimize based on the new settings, and it's just going to take some time to start collecting the data in the way that we need to collect it to be able to further optimize the account.”

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Adam: It's a fascinating subject, and we really go into reliability, and that scenario that you just described is the nightmare for any agency or email marketer, because time to value, as you know yourselves, Jason, for a service provider is a critical way of rotation and build when you work with a client. 

First, you have to reduce revenue in such a stressed industry like e-commerce, where there seems to be a constant anxiety and stress of daily cash flow management, inventory, and financial forecasting. Then going up and down, it really is an industry, I think, where we're all addicted to stress, to a degree.

To then tell people to lower their expectations rather than have them really high is a very difficult thing to do. It's the right thing to do. I'm a big believer in playing the long game, and if that results in some huge short-term pressure and issues, then you just have to go through it. I've seen some clients, we have over Black Friday, they say to one of our strategists, actually, we want you to send to a bigger group of people in these segments, and we're okay if we harm deliverability because we just really need their money right now.

And you deal with that a lot. It is what it is. By saying no, we're not going to do that, we can walk away from principle. But the reality is we're an agency; we want to be paid. As long as we make them well aware of the implications of doing that, then you're always trying to manage politics in the process of driving results. And that's another topic we can get into at some point, but a lot of the agency game, right? It's not just delivering your subject matter expertise and performance. Actually, it's managing a lot of politics between different departments. It's just part and parcel of what comes with the job.

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Jason: Yeah, I never like to cry about an industry that I chose to get into, but Client Services is one of the hardest businesses in the world. When you're trying to balance delivering quick wins against low-hanging fruit as best you can, whilst also explaining what the long-term game plan is, what the long-term roadmap is, and the potential consequences of any decision that the client makes... You want them to make fully informed decisions, if nothing else. And you want to document the fact that they chose to go this route. Maybe we made a set of recommendations, they chose to take two out of the five recommendations, and that's fine.

But ultimately, it's a hard conversation to have, right? It's, and sometimes you get down to a place where you have to put everything in writing, you have to put everything in an email, you have to put everything in your project management system, you have to keep everything in writing so that if there is comeback, when there is the inevitable comeback, and they say "Why didn't you warn us? Why didn't you tell us? Why didn't you tell us to go a different direction?"

Well, actually, we did. And it's a hard conversation to have to basically say the blame game because they're blaming you and you're trying to say actually we did have this conversation three months ago but you decided to go a different direction, which we're never going to say that you can't make your own decision, you absolutely can, it's your business.

But now we're collectively going to have to deal with the consequences of this, you and us together as a partner, and this is what we're going to have to do. And it's a hard thing to say because it sometimes feels like you're shooting yourself in the foot not to take the blame for everything but the reality is you just have to be honest and you just have to be transparent. And I feel like those of us that have been in the game longer than a day, we know that, right?

I've been in the game over 20 years and I have seen a lot of agencies, a lot of partners, a lot of brands be quite deceitful with each other in the pursuit of a short-term relationship to get them over the line even to the point where I see some agencies running down other agencies and saying "Oh no, you should definitely come and work with us" and in many cases the reality is it's just a conflict of personality and goals.

Sometimes, you know, there are a lot of brands that just agency hop, the grass always looks greener and sometimes it's not the agency's fault, the agency's done absolutely the best they can to make that client happy. And there's this final saying and I'd love to get your take on this” Familiarity breeds contempt” - the reality is sometimes an agency could do just about everything right but at the end of a 5-year run or when the key employee of the brand that they were working with leaves and goes somewhere else and a new person comes in to head up operations all of a sudden they want to bring in their favorite right and so sometimes you can do absolutely everything right and you're still going to get escorted to the kerb.

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Adam: Yeah, it's classic shiny object syndrome. It's part and parcel of running an agency and why we can never, any of us, stop doing sales because you can never take anything for granted. You can think you're providing the best service in the world, but eventually, you're going to encounter change and people just like change at some point. So, a couple of key things I want to quickly point out is that:

1. One, if you're an agency, you've got to manage expectations in the beginning. That is absolutely critical. So, if you are going to do something that will potentially draw for revenue in the short term, you better be upfront and really frank that that's going to happen, and you owe it to the clients to be completely honest, to manage those expectations.
   
   
2. And the second thing is that brands, I understand, there's a lot of pressure for short-term results, especially when it comes to revenue, but they're often conditioning an agency to look for short-term tactics, and that's bad for both parties.

So, all that to say, I think mutually you need to go into a relationship with a long-term view. And if you're working with an agency, try and get some type of roadmap or forecasting from them that takes into account these scenarios. It's obviously, "What can we do this month to make a massive difference? We all want to drive huge, incredible returns. Time to value is a critical metric, but not at the expense of the long-term view." And that's always going to be a challenge for an agency.

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Jason: Couldn't agree more. And I think that's one of the reasons why I have appreciated moving more with a pretty laser focus on the B2B side, because B2B brands tend not to be subject to things like seasonality. They tend not to be subject to high levels of competition in their market because they usually are quite specialized in their market, or maybe they're the only authorized distributor in a specific region or catchment.

So, they often have natural moats around their business that the DTC world just does not have. Also, because usually projects in the B2B world aren't led by marketers, and that can make things somewhat easier in a way. Only because a lot of what we do tends to be quite technical in nature, right? Whether we like it or not, tech underpins a lot of the services that we deliver to our clients, and the way that their clients are going to be engaging with their consumers are through tech and digital channels.

And as a result, what we deliver tends to ultimately be quite technical in nature. And if you're dealing with a marketer who has really specific marketing outcomes in mind, whether it be traditional marketing or digital marketing, the reality is they don't necessarily have an interest in the tech that has to be enabled to make that happen.

They aren't necessarily interested in the data that has to be collected to be able to make that happen. And therefore, they can sometimes have unrealistic expectations: "I want this to happen tomorrow. If I give you enough money, can you make this happen tomorrow?" The reality is, it isn't always about the budget. Some of this stuff just takes time. The correct data collection just takes time.

The way in which we start to figure out the cadence that we need to connect with our customers for the best outcome for them and for us, that takes time to assess, and it takes a hell of a lot of testing. It takes a lot of A/B testing to get to a place where we can make decisions with a high level of confidence.

And so, from my perspective, I think that there's this famous saying: "Marketers ruin everything." And it's only half true. It's said tongue-in-cheek, but the reality is, I 100% agree with you. I think that business leaders are going to have to continue to take a longer-term view of things, especially as the world is moving to a much more privacy-first place.

As that continues to happen, those quick wins, the low-hanging fruit, it's just not going to be as easy to collect anymore. We have to take a much longer-term view of this. And I actually think it's forcing marketers, it's forcing operators to actually behave better. The expectation that someone is going to see an ad and convert within 30 days of seeing the ad, those days are gone forever.

That's the reality. It is now much more of a nurture situation. It's much more about how we can take someone – I don't really like the funnel analogy, but it's still out there in the world – taking someone that is not even in your sphere, is not even considering you, how can we get on their radar all the way to the point where they convert at the end of the day?

Marketers and operators are going to have to understand that consumers, whether B2B or B2C, have more choice than they have ever had before. And therefore, we have to build up an insane level of trust with those consumers before they will ever say yes to buying from us, and certainly before there will ever be a loyal, long-term customer.

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Adam: I think what we've seen is a historical trend in the last decade, at least in commerce, where mores were able to run on performance strategies and help bad businesses thrive, or at least survive, and do a reasonable amount to make the owners money.

Now, we're seeing the paradigm shift to business fundamentals. From the owners, it needs to filter down to the marketers. So, it's not enough now to have good marketing; there need to be solid business fundamentals underpinning that business model.

And what you've just pointed out, essentially, some of those changes have really expedited that change. The old days of just throwing up ads on Facebook and cashing out, they're long gone now. You need to have product stickiness built into it so it drives lifetime value. You can't just rely on marketing alone to help you scale profitably.

So, it comes back to, yes, a lot of agencies have mis-sold brands, but a lot of brands have placed this short-term gratification from driving fast revenue through shitty tactics on agencies and conditioned this type of behavior. So, I think you're going to see a new generation of more astute marketing agencies and marketers in general who have more financial acumen but also work with people who are more strategic, who own these companies, who understand that it's a longer-term play in e-commerce in general.

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Jason: Couldn't agree more. And as we come to the close of our time together, I really do appreciate the time, Adam, that you've shared with me today. If a brand, let's say they're doing email marketing today or some form of marketing automation in their business, and let's say they've got an in-house resource doing that, and they don't necessarily can't put their finger on why they think that their email marketing maybe isn't performing as well as it could or it should. What do you think are some of the very first steps, apart from coming and working with an agency like yours, of course?

That's a natural kind of getting some external support and external capability injected into the business and some transfer of skills. But if they want to start thinking about what can I do to think more holistically about my email marketing, what are one, two, or three things that I can begin with to try to identify even if I'm doing what are the metrics I should even be looking at to say whether I'm doing a good job or not today with email marketing?

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Adam: So, I would focus explicitly on two things. Number one: Are you acquiring enough customers consistently to support email scaling performance? Because email is intrinsically tied to acquisition. If you want to talk exclusively about D2C, like you pointed out, Jason, earlier on, 70 to 80% of consumers are never going to buy again. 

1. If you're not continuously acquiring a lot more customers on a monthly basis, then you're never going to see incremental lift from email. So, you have to have a steady top-of-the-funnel acquisition strategy going on at all times. And if you're not seeing that, then obviously, you need incredible lifetime value built into the product, not the emails. Don't drive lifetime value; having great products and customer experience does. So, that's the first thing: Look at your acquisition, make sure you're acquiring the right type of customers, and make sure that you are consistently acquiring consistent cohorts and that you're able to scale email that way. That's number one.
   
   
2. The second one is obviously deliverability. So, if you all are having a database that is increasing in size, and you have a net active subscriber base growing, then theoretically, yes, you should see an incremental lift from email revenue because you have more active customers to email. If you're not seeing that, then obviously, you need to do an analysis on your deliverability. Are you ending up in spam? Do you have bad inbox placement with certain providers? If so, dissect that. Because you should see, like I said, theoretically, that email revenue is growing. So, those are the two things: Make sure you're acquiring more customers and make sure you have strong deliverability.

If you just do those two basic things, which are hard to execute, you will see email performance scale. You don't need super sophisticated strategy; you just need good, clear content, consistent cadence communicating with customers, and just clear offers. Because let's be honest, email is not the most complex channel in the world. Yes, there are some complex technicalities, but customers already know you. It's quite easy to drive predictable revenue from email because you've already sold to them in the past, and that's how you acquired an email base.

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Jason: And as we come to the end of our time together, you know the drill. I love to hand the microphone over to my guests. I'd love to let them basically flip the script and ask me one question, any question they like, personal or professional. So, Adam from Magnet Monster, what is your question for me today?

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Adam: I would like to ask you, is Mexico a long-term destination for you, or is this just temporary for the next year?

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Jason: It is, at this stage, planned to be long-term. We don't have any intention of moving anywhere else at this stage. It's still early days; we've only been here for just under a year. We're moving to Puebla more long-term. We think it's a place we can make a really beautiful life in. Remains to be seen, though. You can think a place is perfect, but until you've lived there for 6, 12, 18 months, it's really hard to know for sure. I experienced this once already, moving from the United States to New Zealand, and living there for almost 30 years.

I don't know how it is for most people that shift countries to live, but it took me probably five to six years after I moved to New Zealand until I felt like I was really, I felt almost like a local. I felt like I knew the lay of the land. I had traveled around the country several times. I felt like I knew how Kiwis behaved, how they did business.

I felt like I knew how the country ran and how the culture, how I could integrate myself into the culture without being just one of those loud, arrogant Americans that comes in and expects every place we go to to be like America. It took me a little while to just observe and learn and take everything in and say, "Okay, this is very different from the place I came from, but that doesn't make it bad or good. It just means that it's different."

And these people live a different lifestyle to what I grew up with. They grew up in a very isolated country at the bottom of the world, and so they developed ways of interacting with the world, which is quite different from how I grew up in the United States. And even just from a population perspective, it being a fraction of the population of America, it took me time to have enough empathy with myself but also empathy with all those that were around me, to say, "Look, there's going to be a learning curve here."

And even though they speak English, so the language issue wasn't as much of a barrier, sometimes it was even difficult just to understand because of the accent and because of the vocabulary choice. There were certain words that were used locally that I had never heard used in that way before.

So, it took me a little bit of time to pick up the local lingo, the jokes, just the sense of humor, the sport, and how seriously the country takes cricket and rugby, and just the things that are part of the fiber of New Zealand. And things like Kiwis looking forward to beaches and barbecues in summertime.

Coming from the United States, that was Christmas; it was not a time for beaches and barbecues. So, it's all those little subtle nuances that take so much time to appreciate. It took me probably five or six years before I felt truly comfortable in that environment, like I could fit in and like I could contribute to my local community as a result.

And I know, because in Mexico, not only do I have to think about all those things and how I can assimilate into the community and how I can help my community, but sometimes it's just acceptance and saying, "This is Mexico. This is how they do things here. You better just get on with it. You better just accept it and move on with it."

Because if you don't, you're going to live a life of frustration, and especially things that you have no hope of changing, like when I think of some of the things with government bureaucracy and things like that, and the way that the government operates. I am never going to influence that. So, the reality is, I better just shut up, go through the process, appreciate the process for what it is, and get on with my life. And so, that's what I'm honestly trying to do.

The longer that we live here.

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Adam: Bruce Lee said, "Be like water; adapt to where you are." And I couldn't agree more. My experience with travel replicates that. It's nothing worse than being in Thailand, to me, or when I was in Hong Kong, and having a bunch of British people go over and moan about how everything over there was not like it is in the UK.

Then I say, "Go home, then." It's our job to contribute to places we move to because they've accepted us. And I love that hierarchy that you said Mexico has: God, family, community. Great framework to follow, and I think we do well in all businesses and put ourselves in a position of strength. Then you're in a good place to give back to the community. So, I think that's a salient message to end on. And that's my goal as well, to be in a position of strength to give back to people.

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Jason: 100%, Adam. Absolutely love this conversation. How do you like people to get a hold of you? I'll put links to your LinkedIn profile as well as the Magnet Monster website in the show notes. But how do you typically, if someone wants to reach out, learn more about email marketing and how they can do it the right way, how do they find you?

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Adam: Yep, so as you said, LinkedIn. I'm very active there. I'm a pest, and I post content every single day. Otherwise, email at magnetmonster.com. 

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Jason: Absolutely love it, brother. Really appreciate your time and can't wait to catch up with you again soon. This has been a long time in the pipeline, and it has not disappointed. I appreciate it so much.

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Adam: My pleasure, mate. Thank you for having me.

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Jason: If you'd like to get mentored by Jason for free, head over to greenwoodconsulting.net, scroll to the bottom of the page, and click "Get Mentored by Jason."

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