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With the online channel surpassing 30% of the mattress sector in 2020 (up from roughly 5% just 7 years earlier), there is no doubt that online mattress retailers have had a lot of success to date.
Mike and Jeff break down the biggest areas of opportunity for brick & mortar mattress retailers to adopt the tactics that have proven most critical in driving the market share gains of their online counterparts.
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Full Transcription:
[Mike Magnuson]
Remember? I mean like back in January when we didn’t even have a podcast.
[Jeff Cassidy]
Vaguely, yeah I do.
[Mike Magnuson]
It was so weird.
[Jeff Cassidy]
Now we know exactly ten percent more than we did at that point, about podcasting not about anything else.
[Mike Magnuson]
Do you think season two should have more banter or less banter? Probably less banter. That’s one thing that we didn’t get a lot of feedback on from our audience in season one. By the way, we should start season two with a big huge shout-out and thank you to all the people who did listen in season one.
[Jeff Cassidy]
And it was a surprising number.
[Mike Magnuson]
It’s 100% the reason we’re back. Like, if no one had listened the level of enthusiasm for doing this again would not have been there.
[Jeff Cassidy]
Yeah, and people listened despite the fact that we said we’re going to do bite-size or snack size episodes and they wound up being very long and people still listened.
[Mike Magnuson]
That’s true.
[Jeff Cassidy]
Thank you for sticking it out.
[Mike Magnuson]
100% and thank you also for the feedback, the suggestions, the ideas we loved those, just the comments, your reactions to some of the things we were saying, supportive messages that we got. Thank you especially for the reviews, people who left ratings and reviews on the apple podcast app, that’s awesome. And if you haven’t already we’d love it if you did, that helps other people discover this podcast. And so, we’re super gratified by the experience of doing this in season one.
And by the way, we should clarify that this season we’re going to do it a little differently. Last time we came out with a batch of all eight at once, we’re going to now just go to a more traditional release schedule. Where we just release one episode at a time contrary to how my son characterized it, that I was trying to expect people to binge it all up at once. The intent was really more to give people a more complete sense of the types of things this podcast was about right off the bat. Rather than letting people discover the scope and types of content we were going to cover one episode at a time, let’s give people just an immediate sense of it. Which could only be accomplished by being able to see a breadth of episodes out of the gates.
That was kind of our intention but maybe there was some benefit in terms of, if people did discover it at some point or at whatever point people did discover it, they could kind of stick with it a little bit longer perhaps. Nonetheless, we’re going to do a more traditional schedule; at least one episode at a time so to encourage you to subscribe and that way you’ll get notified every time new episodes come out. And PS; you’re going to want to do that because we’ve got some great episodes in store.
[Jeff Cassidy]
Including guests.
[Mike Magnuson]
Including guests, yeah. So we got some more similar types of things like we’re going to do today that we did in season one. Where we talk, we share insights from kind of our unique vantage point here at Goodbed but then we’re also going to be bringing in others to get their insights and we got some great guests.
[Jeff Cassidy]
Yeah, I’m very much looking forward to those conversations.
[Mike Magnuson]
Yeah, we won’t tip our hand on those just yet. Those haven’t been recorded yet but we’ve got some fantastic guests that I’m sure are going to have awesome insights for you guys so definitely subscribe to the show, make sure you get notified of those.
So with that, I think we can just dive into today’s topic which is; we thought we’ve shared a lot over the years about how online brands have grown and taken share and really some of the competitive dynamics that have facilitated that and what have you. But we haven’t ever sat down and just kind of boiled down ideas of what are some things that traditional retailers can really learn from online retailers because obviously in the success that online retailers have had, there have been a lot of things that have just worked really well and that I think would also work well for traditional retailers if those lessons were applied.
And so, we thought ‘Hey, this would be a great format for an episode here. Let’s talk about what can be learned.’ And PS; it’s also worth it to start out with… I think we can even list off a few things that we would argue traditional retailers already have learned.
[Jeff Cassidy]
Yeah and are already changing practices and making improvements.
[Mike Magnuson]
Yeah, I mean we’ve seen since this online revolution started seven years ago. I’d say the average store experience has changed a lot, I mean, I always thought that the average store experience was worse in the public perception than in reality. Well, it’s hard to get much worse than what public perception was.
[Jeff Cassidy]
Yeah, it was extremely bad.
[Mike Magnuson]
That’s like ‘you can’t fall off the floor.’ The public perception was, yeah it was about as bad a purchase as you could make. It was always compared to used car salesmen and stuff like that so you can’t get much worse than that. And the reality was certainly not as bad as that but nonetheless, I would say that the reality today is a lot better than the reality was seven years ago.
I think probably the combination of stores who are here today have made an effort, a concerted effort, to focus on that but also there might even be to a degree some attrition, right? Like, the ones who didn’t make those adaptations aren’t here anymore.
[Jeff Cassidy]
Right, there’s a correlation between the ones who went out of business and the ones to whom that stereotype most appropriately applied.
[Mike Magnuson]
Yeah, I think so too. And so, some of the things might be… Like the ones that come to mind for me; high-pressure sales. That’s the classic one that people complain about. And you’ve talked about; along with high-pressure sales goes just sort of a certain type of salesperson who either isn’t the type of person who’s able to earn someone’s trust or maybe they’re not adequately trained in such a way that allows them to earn someone’s trust
[Jeff Cassidy]
Yeah, I think we’ve always heard a ton about the turnover in RSAs and how quickly that turns over. And I think that’s gotten better because it feels like retailers are putting more emphasis on recruiting, training, and fundamentally trying to get great people but have them stick around. So, I see that a lot talking to retailers today. I mean a couple of ones just to give a shout out Denver Mattress and Sit ‘n Sleep where-
[Mike Magnuson]
Those are just some of the ones that we were talking to.
[Jeff Cassidy]
Yeah, ones I just talked to recently but you also see they get a lot of reviews on Goodbed and their reviews are very consistent about professionalism and knowledge/expertise of the salespeople. And both those companies put a huge priority on hiring good human beings so their recruiting process is rigorous to try and find a good person. And you and I; when we did a segment, not for the podcast but a couple of years ago with Larry Miller from Sit ‘n Sleep and he said in that interview… Well, I forget his exact words but it was like-
[Mike Magnuson]
You could teach someone about mattresses but you can’t teach them to be a good human being.
[Jeff Cassidy]
Can’t teach them to be a good human being. Yep, and I think that sums it up. In Denver, the same thing, they hire great human beings, and then they have excellent training so that they’re knowledgeable and they really focus on reducing turnover increasing tenure and you get long-term employees and that comes across to the customers.
[Mike Magnuson]
But the bigger picture, I think the point we were making is that this has been something that across the industry there’s been a lot of traction, a lot of progress made since the incursion of online retail seven years ago. I think that it’s in large part in response to that too. I mean this was something clearly that the retail online guys preyed upon, this perception of this bad shopping experience, they preyed upon that very consciously and very explicitly in their marketing. And so, this is in response, I think to the industry’s credit, they’ve really improved a lot there but a couple of other things too just to take off.
We don’t want to spend too much time on the things that have already been addressed but I think it’s worth giving props where props are due. I think a lot of the return policy games, there used to be… This is before you were in the industry but there were a lot of games with regards to return policies. We’ve talked in the past, like in season one, we did a whole episode on return policies and we talked about how there was not a lot of skin in the game for the retailer. Their return policies were so onerous that no one was going to actually ever return a mattress when it cost so much, essentially to return one.
But on top of it being onerous, there were a lot of things that were very not clear to the consumer and that were unfavorable. Like for example, if you buy a mattress ‘on sale’ which of course in a lot of cases you never buy a mattress that’s not on sale like they’re always on sale. Mark it up to mark it down, kind of thing but you buy a mattress at that ‘sale price’ and then you come back to return it and you think ‘I just want to get the other comfort level.’ Well no, this is not going to be a cashless transaction. You don’t get credit for the sale price. Oh sorry, you-
[Jeff Cassidy]
The sale is over so now you have to pay.
[Mike Magnuson]
And the sale is over, yeah. Even if the sale is still listed there, your credit is only applied to the list price of the other product so you’re going to end up having to fork out another thousand dollars just to get the one that was the same price when you bought it or something like that. That type of thing happened and those games I think are largely behind us, we don’t see that happening anymore. And so, that’s to the credit of retailers and in fact, I’d say on the return policies, more and more retailers have kind of moved towards more parity with the online guys.
Which is kind of the price of doing business at this point, we talked about it last season in episodes seven and eight about what we think the long-term consequences of the industry… of this being the state of things as it relates to return policies and maybe that’s not the ideal utopian return policy in the long term for this industry. However, from a competitive standpoint, I think it’s the anti at this point. You’ve got to have a competitive return policy and at least a lot of retailers have really moved heavily in that direction.
[Jeff Cassidy]
Yeah and on that on that point, so Goodbed obviously sits at the intersection of people who want to buy online and people who want to buy in a store. So we talk to people who are looking at both and we hear it all the time from Goodbed readers, where they’re thinking about two different mattresses, and what pushes them to one online brand is that they have the return policy.
And when you work in a store that person wouldn’t come into your store so you wouldn’t hear that message right? You would hear the message from the people who selected and decided to come into your store. So, if you form your opinion of the importance of that based on the people who are in your store, it’s already skewed. And so that return problem, it’s a very real decision point and decision influencer for consumers that we see when we talk to Goodbed readers.
[Mike Magnuson]
Absolutely. And to take off I think things that have gotten a lot better already. Pricing games, that’s another thing I wanted to just mention because I just referenced it. Like ‘mark it up to mark it down is a great example of the pricing games. I’m sure it goes on to a decent degree still but I think extreme cases like ‘This mattress, we normally list this for 27 000 dollars but now for labour day it’s 199’ or something. It’s the extreme mark it up to mark it down stuff which by the way consumers were never fooled by.
They always knew, I mean they were fooled by to the extent that they really didn’t have a clear sense of what the real value was but they weren’t fooled to the extent that they actually thought that this was a great deal and they definitely had a clear sense that there was some funny business and that they were on the receiving end of some trickery. And the information asymmetry was not in their favour and that they were getting basically ripped off.
So, that stuff I think has gotten a lot less, the model name game is another form of pricing game I would say and that of course still does exist to a degree but it’s also become a lot less common. It’s limited now, most of the bigger brands have turned most of their higher-end lines into national lines as everyone knows so there’s less of that and there’s less of the consumer frustration and sense of being ripped off that fed into it. And so, I think as industry retailers have learned from that and they’ve also started to see the benefit of having those national names in their stores.
The biggest one being that the consumers can actually find information and reviews about those products when they go online as opposed to, they type in the name of that product and it’s just a big black hole of information and they go ‘Gosh, I guess I don’t want this thing because no one, it seems in human history, has ever purchased a mattress by this.’
[Jeff Cassidy]
Right, or they look at that model X of a name game model in a retail store, or on a retail website rather, and there might be one review and it’s not that great. So, it looks bad with the one review. The actual review itself and the fact that there’s only one gives the impression that like you said nobody buys it.
[Mike Magnuson]
Yeah, so that’s kind of a good overview of some of the things that retailers have already adopted to their credit but today we really wanted to focus on things that we think that retailers could still learn from online retailers. I mean we’ve still seen this growth in the online channel and the share that’s being taken by online retailers it’s ongoing. So I think that if I’m a traditional retailer, I still want to know what can I be doing to learn from this because clearly, they’re still doing something that’s working better arguably. And so, that’s part of the reason why we thought… we have this unique position where we sit right in between online retailers and Brick and Mortar retailers.
I’m sure by the way, we could do an episode that goes the other way. What can online retailers learn from Brick and Mortar retailers so maybe we’ll put that in the backlog but for now we just thought, especially given the way the market share trends have been going, let’s do an episode on what can be learned from the online retailers who are having categorically the most success or who have been over the past seven years at least.
So, the first thing I would say that comes to mind is about customer acquisition because that really is the name of the game in the mattress category. You always have to acquire customers when you’re selling mattresses, a product that’s so sporadically purchased. And that’s one of the things that the online guys have had to find out and investors in those companies have had to find out ‘Wow, this is a big part of the value chain.’ I think when Casper went public that was a pretty big surprise to a lot of investors and prospective investors.
What a big portion of their value chain customer acquisition was, it was in the 30s when they went public. That’s over 30%, meaning their revenue was spent on customer acquisition, which is obviously quite high. I think in the traditional retail sense, one of the things though just to make these apples for apples, you do have to look at the fact that any cost of having a physical store should be considered customer acquisition costs as well, I think. That’s my point of view, so if you want to look apples to apples at what a traditional Brick and Mortar retailer’s customer acquisition costs, I think you have to include real estate and labour. Like, salespeople in that. I mean salespeople-
[Jeff Cassidy]
I don’t know about… I see your point about real estate.
[Mike Magnuson]
Certainly the real estate.
[Jeff Cassidy]
Yeah. Simply the real estate one is; you’re deciding between, and this is a little bit old school, but deciding between a high traffic intersection and a less traffic intersection. The high traffic one has a higher price tag but you’re doing it for a reason. Which is, I’m going to get more customer acquisition.
[Mike Magnuson]
Yeah, that signage, that convenience, those are all like you’re basically putting yourself in the flow of where people’s physical movements are happening whereas putting an ad on Google or Facebook is putting yourself in the flow of where their online movements are happening. And so, it’s the same thing really, that real estate for sure is the same. The people maybe is-
[Jeff Cassidy]
I think the people, now that I think about it, the people absolutely would be. It’s just a second level, right? So we just talked about hiring and training good people. Well, that does become very helpful in customer acquisition to the extent you have reviews. So, if you have good people you kind of lean into store reviews. Now that becomes marketing and that becomes customer acquisition as it helps with customer acquisition.
[Mike Magnuson]
So, you could debate, I think reasonable people could debate on whether apples to apples-
[Jeff Cassidy]
Or unreasonable people like you and I. We’re debating it right now.
[Mike Magnuson]
Yeah, I was saying that if another conversation involved reasonable people.
[Jeff Cassidy]
Okay.
[Mike Magnuson]
Nonetheless, I just wanted to make the point that to try and put it a little bit more in context but what we’re talking about here… What I’m talking about is, when I say how customer acquisition is done, what can be learned from that, it’s really about the media side of it. I think the real estate side of customer acquisition, traditional Brick and Mortar retailers they’ve figured out over decades how to choose great locations. So, it’s really more about how you spend the money and in terms of the advertising and those types of things.
Frankly the online retailers, you can just look at the success they’ve had and how much share they’ve been able to gain, and how much awareness they’ve been able to generate in such a short amount of time. I mean to put themselves on par with, if not frankly in excess of, these mattress brands that have been around in some cases over a hundred years.
[Jeff Cassidy]
Yeah, we’ll think about the-
[Mike Magnuson]
To do that in such a short amount of time, you have to acknowledge that ‘Wow, they’ve clearly spent their ad dollars more effectively. They’ve gotten more bang from those bucks.
[Jeff Cassidy]
Yeah and think about the Google search trends data that we look at and that you’ve presented a couple of times at bedding conferences the past couple of years. I think the most searched for brands are online disruptor brands, they’re searched for more than big traditional brands.
[Mike Magnuson]
Yeah and with the exception of a few of them, like Casper is a notable exception in the sense that they’ve raised a lot of outside funding and therefore they’ve been able to operate kind of at a deficit for many years in terms of being unprofitable. But people sometimes I think mistakenly tend to apply that same characterization to all online brands and actually, that’s the exception, not the norm. The vast majority of online brands have raised little capital in relation to their overall operating budget; the amount of outside capital they’ve raised is relatively small.
I mean Tuft & Needle for example famously bootstrapped itself, never took any capital. Saatva; they didn’t take any outside capital until a couple of years ago. They operated for eight years without outside capital. Purple; I don’t think took a ton of outside money.
[Jeff Cassidy]
Brooklyn Bedding; I don’t think they took money.
[Mike Magnuson]
Nectar didn’t take a whole lot of outside money. I mean, they took some recently but they achieved massive success with something maybe 10 million dollars or something like that. I mean it was relatively diminutive compared to the size of their budgets and their overall revenue growth. So most of these guys had fewer dollars, to begin with, so in a sense, they were forced to be more cost-effective with their advertising, and then they found ways to be more cost-effective.
So what were those ways? I mean and we’re not going to spend too much time on this particular point because I think we want to do a whole episode on advertising. I think there’s just so much to get into there but at a very high level, it’s an overreliance on untargeted media. That’s what I think traditional retailers are kind of coming to terms with now, what the online retailers saw as an opportunity for them.
They saw it as an opportunity ‘Hey, we could target people who are actively in-market. This is a product where we know statistically only one percent of people are actually actively shopping at any given point in time. We know that traditional media like TV, or newspapers, or magazines have no way to reach or to single out that one percent and therefore we can get more from our ad dollars by targeting those people wherever possible. Who actually are actively shopping.’ and there are not many ways to reach them.
They’re all online but there’s not that many ways to reach those people and they just did that way more effectively and they put the vast preponderance of their budgets, and not just the preponderance but the priority, like that was their first priority. We’ve got to exploit as much as possible, we’ve got to exploit the opportunity to reach active shoppers. Sure, if we’ve got some leftover money we’ll do other things and try to build our brand and maybe we’ll do some general advertising whether that’s TV or something else but by and large, the preponderance and focus was on exploiting the opportunity to reach people who are in-market shopping.
And that has been kind of the opposite of how traditional retailers I think have… They’ve sort of been like ‘Okay well let’s start with our TV campaign and then we’ll kind of work backward to see if there is anything we could do online.’ and maybe even within online the opportunity to specifically focus on in-market shoppers isn’t even necessarily the first and foremost focus. Because by the way, just being digital is not-
[Jeff Cassidy]
Doesn’t mean hitting in-market shoppers.
[Mike Magnuson]
Does not solve the problem. Yeah, just because it’s an online ad doesn’t mean it’s focused on an in-market shopper. And so, these guys have been very effective at that and that’s the key learning. We will do a whole episode on this but in short, I think that the key learning for traditional retailers is you should first and foremost be thinking about what you can do to reach active in-market shoppers and psychologically think of anything you’re doing that’s general, like a TV ad campaign, as a bonus as a secondary priority because that’s for recruiting your customers who aren’t in-market now but maybe will be in five years.
So, you obviously have to focus first and foremost on who’s going to come in your store this weekend and if you’re-
[Jeff Cassidy]
Who you want to bring into your store this weekend.
[Mike Magnuson]
Yeah and an ad on television, sure you’re going to reach some people who might be interested in shopping this weekend but you’re going to waste a whole bunch of money doing it. Reaching a bunch of people who have zero percent chance of coming in this week.
[Jeff Cassidy]
Right, you’re paying to hit the eyeballs of the 100 people when only one is the one that you really need to hit now.
[Mike Magnuson]
Yeah, and your ad dollars need to work. The principal ad dollars that really act as the core of your advertising campaign, need to work harder for you than that. I mean like your TV ads are just not working hard enough for you. They never will, they’re going to be the bonus ads. Your core has to work much harder for you and the only way to do that is by focusing on in-market shoppers. Okay, that’s number one.
Number two, we did a whole episode on the three C’s in season one, if you haven’t heard it definitely go check it out, but as it relates to whatever money you do dedicate towards general advertising; TV, magazines, whatever. Our recommendation is simple, which is don’t in any way mention your labour day sale or whatever kind of your price and promotion type stuff in those ads. Because we already talked about how 99 out of 100 of those people watching that ad aren’t going to be interested in buying a mattress right now. You’re already wasting a lot of money to try to get that one, why not give at least a message that maybe the 99 could retain.
Could file away and maybe remember for when they are in the market for a mattress. Your labour day sale is not going to be that kind of message, that’s going to leave zero residual value with that person. Whereas, if you leave them with a message that is more about how you are differentiated, your experience is differentiated, how shopping with you is going to help them make a better choice than if they shop some other way or some other place. Where it’s going to be a better long-term experience of owning that product if they buy it from you because you’ve got their back, things like that.
So, we talked about the three C’S and there’s actually a fourth ‘C’. So the three C’s are Curation, Customer-service, Convenience, and the fourth ‘C’ is Community. And these are all things that I think there are specific ways that retailers can really differentiate themselves and build a brand around in the long term and if your general TV ads focus on one or more of those messages, that are consistently the thing that you’re building your brand around, then that can be effective. It’s still your third priority or your lower-tier priority because it’s a long-term play here. But that at least allows that longer-term play to have a chance of success, focusing that ad on your labour day sale kind of sets it up for failure.
Yeah, I mean failure may be too strong but again if I’m a retailer I just want my dollars to work as hard as possible for me. And if I’m focusing my TV out on my labour day sale, they’re not. They’re not working hard for me because that 99% of people aren’t going to get anything from that. So those dollars I spent reaching those people aren’t working for me.
[Jeff Cassidy]
Yeah, I would argue that it could be even worse. If you focus that general advertising on your sale then the long-term message is that you’re forming your brand around sale and price. So, the people who aren’t in-market right now, the thing they’re going to take away is that store equals sale, equals price. And that’s not a long-term strategy, to just have the lowest priced products. I think that advertising has a danger of conditioning your potential customers to think only about price versus thinking about the C’s value that you just described.
[Mike Magnuson]
Yep, that’s true. I agree with that.
Reviews in general are something I think that traditional retailers can learn from online retailers. Like how to get more out of reviews and this by the way in our prioritization of your marketing expenditures, we put this number one in general. We said basically spend as much money as you have to make sure you have a great online reputation anywhere and everywhere your prospects are going before you spend a single dollar on any other kind of advertising. Now hopefully, you will have money left over, Hopefully, that won’t take up all your budget but if it does you’re still better off than spending a single dollar of advertising somewhere else because even if you put an ad out there and it is effective in getting someone’s attention by and large-
[Jeff Cassidy]
They’re going to go online and they’ll check you out.
[Mike Magnuson]
The first thing they’re going to do is go online, yeah. And if you have a crappy online reputation, it’s still a point of failure in that whole sequence and you still lost that customer. So, you might as well just put all your money towards getting a great online reputation. Make that your top priority then money left over, the next priority is those in-market shoppers, and then below that is the general audience of people that includes the 99%. If and only if you’ve got money left over having exploited and saturated what you can do effectively in those first two buckets.
So, reviews, in general, are an area where I think the online brands have really done very well from the get-go. They’re digital first, they’re digital natives, so they got it right out of the gates that reviews were going to be important. They also had no choice in the sense that there wasn’t going to be any kind of physical experience to it. People couldn’t walk in the store and get a sense of what the experience was going to be, they had to rely a lot more on reviews. But I think nonetheless what we’ve seen is that the way shopping behaviours have changed over the last… It even goes before the last seven years frankly.
It goes back 10 or 20 years, people rely more and more on reviews in making these decisions. In some cases, we’ve seen data that suggests people rely as much or more on reviews as they do from recommendations from friends and family at least in this category.
[Jeff Cassidy]
Yeah.
[Mike Magnuson]
So, it’s extremely powerful and extremely important to have great reviews and if you’re a traditional retailer that means; we’re talking about, in particular here, your stores but we’ll get to the product reviews in a moment.
[Jeff Cassidy]
Yeah, I totally agree. The online guys; they understood the importance of, and value of, reviews from the very beginning. So, they built processes around automating, asking for them, displaying them, all of those things. They have a structural advantage in that they have the email address of every single customer who buys because it’s part of the purchase process and that’s a disadvantage for retailers.
[Mike Magnuson]
Well, it’s a disadvantage only in so far as retailers don’t make it part of their purchase process. I mean it makes more sense to the user… I think the advantage is that it makes more intuitive sense to someone buying online that they might have to provide their email address than it does to someone buying it at a physical system. Someone buying at a physical store might be like ‘Wait, why do you need my email?’
[Jeff Cassidy]
Or said another way, talking about things you can learn and things you can apply. A great learning and takeaway is to get the email address as part of the purchase process. So, just make it part of the process and we’ve talked about this before. Don’t frame it with the customer as ‘Can I get your email address?’ Like as a question where there’s a potential answer as no. Just say ‘I need your email address to email you the receipt and it’s just part of the form. So there’s no ‘yes’ or ‘no’.
[Mike Magnuson]
Just part of the process. We email every customer the receipt, every customer has an email address. By the way, this is a huge advantage to a customer because the receipt is going to be something, and this is something you could certainly remind them of, the receipts going to be something that they need to provide if at any point in time in the future there’s an issue. Like a warranty issue or something like that so don’t just print this out and stick it in the drawer somewhere where you could easily never find it again. We’re going to email it to you so it’s basically got a safekeeping place in your email inbox forever whenever you need it.
And so, it’s a great valuable customer service to provide to get that email, and then with that email, one of the things you can do is ask them for a review. And you can let them know too when you ask for the email address in the first place. The only thing we’re going to do is maybe ask you for a review, it just helps other customers and helps us know whether you have a good experience with the products that we’re selling which we care a lot about.
[Jeff Cassidy]
And now there are solutions that get an even higher yield on the request for review which is done by text. So, Podium is a great example and Simply Review Us is another example. So, with those applications, Podium does a lot of additional things way beyond just asking for store reviews and helping generate store reviews. Simply Review Us is focused purely on store reviews but with those you do it by text and the value of that is you can ask the consumer to write a review while you’re writing up the sale.
So they’re sitting there looking at you, you can say ‘While I write this up, do you mind if I just text you a review link and you can just write a quick review of your experience?’ and what we have seen is that the response rate is better. And personally, I think it skews the scores to a positive-
[Mike Magnuson]
They’re writing the review while they’re still in the store?
[Jeff Cassidy]
Yeah, they’re writing it while… And again, I don’t have exact data on this but it’s my personal opinion. If I’m writing it while I’m in the store looking at the person who just helped me, there are a couple of things. One; that person just helped me enough that I’m making a purchase, right? So I have a positive feeling at that moment because I just agreed to buy this expensive product and that person helped me. So it’s the best time to ask and the other thing is; I’m looking at them so, emotionally, it’s harder for me to say something bad when I’m right there. it feels more like-
[Mike Magnuson]
Yeah, I did wonder about the impartiality of writing the review while you’re still in the store. Like, if you’re really getting an objective perspective on that but nonetheless-
[Jeff Cassidy]
I think you are. I think it’s not fair to ask, obviously, for a product review at that point because it’s too early but your-
[Mike Magnuson]
Product review? they don’t even have the product, how can you ask for a product review?
[Jeff Cassidy]
But your experience in the store… I mean you spent whatever time it took you to make that decision in the store and you made a decision. So the fact that you made a decision, I think is totally fair to ask because it’s-
[Mike Magnuson]
Well, whether they write it while they’re still in the store or immediately after they leave the store, maybe that would be… Like my thinking was; as soon as possible after they leave the store would be the right time to do it. I see your point about, yeah it probably does lead to slightly even more positive feedback when they’re still in the store but either way, the point is that you can ask for a store review and should ask for a store review as soon as possible basically. Because that experience is fresh in their mind, to Jeff’s point, it was a successful experience. You made the purchase so by definition in a sense it was successful.
And so, you’re likely to get good feedback and the sooner you ask, the more likely you’ll get that feedback at all.
[Jeff Cassidy]
Yeah, and a few years ago these tools were in their infancy or not readily available but now Podium and Simply Review Us, are two great options and we, Goodbed, have partnerships with them. You can get a discount on either one by being a Goodbed partner so just ask us and we’ll connect you and get you the discount.
[Mike Magnuson]
Just to clarify, by partnerships one of the things you mean is that we do integrations with them so that… and this ties into the point I made earlier that you need to have store reviews. It’s not enough to just say ‘Oh yeah, we have store reviews. We have them here like this is where we put store reviews.’
Well no, your online reputation needs to be great wherever your prospects are going. So, it’s not enough to just say ‘Oh well, for people who go here, our online reputation is great and anywhere else? Meh, who knows what it is.’ That doesn’t work, it’s got to be great everywhere that people are going and so to that degree, Goodbed is one of the places people are going for sure. And so, we’ve created integrations with two of the more popular providers of the service, and that way you can seamlessly send people to Goodbed along with other locations like Google to have them share their feedback. And so, that way your reputation looks great on Goodbed as well.
[Jeff Cassidy]
Yeah, the easy ability to spread them wherever you want; Goodbed, Facebook, Google.
[Mike Magnuson]
And we’ve certainly seen that there are diminishing returns in any given location. When you consider where your online reputation needs to be great if you’re sending them to just one or two places all the time, then getting that review count from 200 to 210 has very little value compared to getting another place from zero to ten. For that matter, getting that review count from 40 to 50 might be relatively low compared to zero to ten.
I mean you want to have reviews everywhere and good reviews everywhere people who are your prospects are. So those tools are fantastic and it’s really important to raise those tools because those tools like you said didn’t exist but they do now. And this is clear learning that Brick and Mortar retailers can take from online retailers that now can be very easily and readily applied. So, I think we wanted to make sure to hit that one and hit that one pretty hard.
Now product review is a trickier one because product reviews are also… That’s another learning from online retailers, how important our product reviews are. Again, they had some intrinsic advantages, starting with the fact that they had the email addresses but also the fact that they were only selling, in a lot of cases, one product. Or even today, it’s still a relatively small number of products compared to most Brick and Mortar stores and they’re selling them nationwide.
So, it was just a lot easier to get to a critical mass of product reviews for the limited number of products that they sell but nonetheless, we can clearly see as a learning that when consumers are faced with a choice of ‘Do I want to buy this product that has a lot of product reviews or do I want to buy this product that doesn’t?’ They clearly have been choosing the ones that have a lot of product reviews.
[Jeff Cassidy]
Yeah, across every category, not just mattresses. But-
[Mike Magnuson]
Yeah, it’s not just mattresses. In the case of the mattress category, until seven years ago. No products had a lot of reviews so it was easy to go well. That’s not such an important consideration in this category because-
[Jeff Cassidy]
Right, no one was doing it. It didn’t exist.
[Mike Magnuson]
Yeah, because no one was doing it so, therefore, it wasn’t ever an option for people to have a product that had a lot of reviews or to buy one that had a lot of reviews. Therefore, you could easily go ‘Well, I guess people don’t care. There’s no data that suggests that they care.’ Well, now we know. Once they had the option of buying products that had a lot of reviews they spoke with their wallets and they’ve clearly opted in that direction.
So that being said, this is an area where even today it’s really hard for Brick and Mortar retailers to compete and in fact, it’s one that we have recognized and credit to retailers who have approached us with this problem. It’s been an exciting six to nine months that we’ve had working with retailers on this problem. And so, we’re going to be announcing some things here that will really help Brick and Mortar retailers on this front and help them compete at parity with online retailers on the product review side.
And not just the Sam’s clubs of the world. There are some solutions out there that are super expensive that basically are geared towards enterprises like Macy’s, and Sam’s club and players like that but they don’t work for the vast majority of retailers in this category. They’re just not set up for serving even like a 50 store chain, frankly speaking, they’re set up for serving enterprises like Walmart, and that’s great but most of the people listening to this podcast don’t work at Walmart or a company of that size. And so, we’ve been working on something that’s going to address this issue, solve this problem, and really create a great option for product reviews for everyone in the industry.
I’m super excited because it’s designed specifically with retailers to lift all boats and the manufacturers, PS, are going to love this too.
[Jeff Cassidy]
Yeah, because there hasn’t-
[Mike Magnuson]
We’ll talk more about it in the future but-
[Jeff Cassidy]
Yeah, there hasn’t been an easy way for them to get reviews, right? The structural challenge of the traditional side, where the manufacturer sells to retail or retail has a relationship with the customer, it’s really hard for a brand to get reviews. So, there hasn’t been a way for them to do it but now there will be.
[Mike Magnuson]
It’s kind of tied into these last couple points but in general, I think one thing that Brick and Mortar retailers can learn from online retailers is the importance of your website. I mean, in the case of a D2C retailer, the website literally is everything. It’s all they have, right? At least notwithstanding the fact that some of them now are going into Brick and Mortar partnerships or opening their own stores. Putting that aside, conceptually in the early days, it was the only thing they had. And what we’ve learned from them is that ‘Wow, a website can be so effective.’ It can provide so much information that people feel comfortable making the purchase just based on what they read on the website.
And that by the way, seven years ago, was crazy. That was a crazy concept, I mean seven or eight years ago, I’m talking in the BC era ‘Before Casper’. The average shop, even the people who did sell online, the vast majority of the sales that they closed were consummated on the phone. I mean you could order a mattress on Macy’s but they weren’t selling those mattresses with a click in 2013. In fact, I don’t think Macy’s had a click-to-buy option in 2013.
I think they had a click to call option on their website for this particular-
[Jeff Cassidy]
Yeah, call for price or something like that.
[Mike Magnuson]
US mattress, I’m pretty sure that they were certainly doing the best at that point in time for sure but even those guys I’m sure a large portion of their sales were consummated on the phone. And so, the idea that you could provide a website that was going to be so comprehensive in its information that people would feel comfortable actually going all the way to making the purchase, was almost a foreign concept in this category and yet now we’ve seen ‘No, it could 100% work.’
And to that end what I’d say the key learning is for Brick and Mortar retailers is that should be the standard against which you measure your website. I think in the past the temptation amongst Brick and Mortar retailers was the standard for your website should be good enough or provide enough information to get people to want to come into the store and that’s a bar that like that’s like on the scale of one to ten that bar is at like a four or a five and the bar of can we okay is this enough information is it good enough that gets people to actually feel comfortable making the purchase right then and there that’s a nine or a ten right?
So, I think the bar has been raised from four or five to nine or ten. And you should think of it that way so your website… And by the way, it’s not to say that people are necessarily going to be buying from your website. You’re going to still have this unique advantage over online retailers which is that ‘Hey, even though we’ve given you all the information. Certainly more than enough information to feel comfortable making the purchase right there from your couch, we also give you this added benefit of being able to come into our store, which is convenient to your house, and try this product to make sure it really is what you want. And we encourage you to do that, and we can also help you with our salespeople when you get here. To just give you some guidance from them.’
That’s an added bonus but if you can get them to the point where they feel comfortable almost being ready to make that purchase even without that. Man, you’re going to sail through that store visit. That’s going to be almost a guaranteed save so set that as the bar for your website. And so, think of improvements to your website as an investment against that. You wouldn’t question the idea of putting in good lighting in your stores or good-
[Jeff Cassidy]
Cleaning it.
[Mike Magnuson]
Replacing peeling paint or old carpeting because you see that as an investment. Like you’re creating an experience that’s going to make people feel comfortable making a purchase from your store. Think of the investments in providing additional information or things along those lines on your website making that navigation easier for people or that experience better for people as a similar type of investment.
[Jeff Cassidy]
Yeah, well your website is really your flagship store these days. So you need to make that flagship store look great.
[Mike Magnuson]
Yeah, I would say it’s even more than your flagship store because your flagship store would serve the most people and it would maybe pull from the broadest area but if you lived outside of that area-
[Jeff Cassidy]
You wouldn’t see it.
[Mike Magnuson]
You wouldn’t go through that flagship store to go visit another store whereas your website is a kind of gatekeeper for all your stores.
[Jeff Cassidy]
That’s true.
[Mike Magnuson]
And so, investing in your website is super important and-
[Jeff Cassidy]
Here’s an area where Covid helped. So, when Covid hit and every business was literally closed, the only way you could sell mattresses was through your website. So, it was helpful in accelerating Brick and Mortar retailer’s appreciation for how powerful a website can be. How important it is and how effective it can be, right? Because a lot of retailers, they hadn’t done a whole lot with Chat or with any leads coming from their website, any real investment in their website. And when Covid hit, they started to do some of those things and they got great returns.
They said ‘Wow, this can be really effective, like super-efficient.’ and the other thing, just coming back to something you said earlier a consumer goes online to research the mattress purchase. There are two websites that both are equally amazing, right? There’s a brand that sells online only and there’s a local retailer, the websites are amazing, high quality, and the local retailer also has amazing reviews. They have the additional benefits that you described, I can go try it in the store and they can have it here this afternoon.
They have humans, good humans who help me make the decision. It’s like-
[Mike Magnuson]
And help you feel more confident in your decision
[Jeff Cassidy]
Yeah, so in that basic scenario, it’s such a huge advantage to local retail. Think about it that way; on one hand, it feels like ‘Oh man, it’s a huge battle against more efficient, digital-native, competitors.’ but if you think about flipping it around, it’s like traditional retail has those huge advantages. So, if you can just make the store reputation and the reviews look amazing, the website looks amazing, get all the things that you described. Now it just feels great.
It feels like, it feels like very optimistic.
[Mike Magnuson]
And I might even say, just to lower the intimidation factor… Look amazing almost sounds to me like ‘Oh man, if I’m a local retailer I only have a few stores and I’m thinking about my website. I’m not digital myself and the idea of like look amazing, what is that standard? That sounds intimidating to me.’ and I think the way I would think about it is if you’re someone listening and you think that describes you. The standard I would just use is to just make sure your website provides the information that people would want to make them feel comfortable making this purchase If they didn’t have the ability to go visit your store.
That’s the standard and if you can get anywhere near that standard, given the point Jeff’s just made about the fact that obviously in your case they do have the ability to go visit your store. So that is a huge advantage and bonus but if you can get anywhere close to the idea that they already feel comfortable making this purchase without that then you’re going to win.
Looking amazing is great but maybe it just feels more attainable and achievable to think of it more about the information that people need to reach that point in their decision journey. More information-rich, easier to find-
[Jeff Cassidy]
Easier to navigate.
[Mike Magnuson]
Yeah, navigate in terms of just finding their way to that information, whatever that is. So maybe that makes it feel a little bit less intimidating and more attainable because I really do think it’s not an unreasonable standard and certainly not an unreasonable standard to shoot for.
Alright. Well, I think that’s going to be what we’re going to cover today. Well, we’ve barely kept this under an hour so let’s call it before it reaches that point. And so, we want to again thank you guys for all your support, and if you like what you’re hearing, we ask you to please tell a friend. Leave us a review, we’d love that, and that helps other people discover the podcast. And of course remember to subscribe, to be notified of these new episodes as we release them. So in the meantime, we thank you for listening, we’re out.
