How to Guarantee Innovation & Sales Growth Through Experimentation

[00:00:00] Rose Jia: Hi. I’m going to talk about guaranteeing you sales growth and innovation through experimentation. Now why can I tell you something about that? For those of you who don’t know me, my name is Rose Jia, and I lead growth marketing for one of Amazon’s top priorities in grocery, which includes brands like Amazon Fresh.

[00:00:30] This means my team and I are responsible for driving top line growth at scale across the customer decision journey, whether that’s in store or online. And not surprisingly, we do a lot of experimentation. Now for those of you who do know me and have heard me speak, then you know that I like to start my talks reminding folks of my experience, and how I’ve been able to pull that experience into everything I’ve done.

[00:00:58] So I started my career as an investment banker and I was able to drive growth through things like mergers and acquisitions, debt and equity deals. And then I moved into corporate finance where I was driving growth through things like long range plans and connecting macro trends with the products and services that we were delivering.

[00:01:17] And of course, when I found my calling and marketing, I brought all that with me and made sure that to this day, myself and my team are always thinking about driving profitable growth at scale for our businesses. What I have learned through my experience, I’ve drilled down to three top tried and true hacks that you guys can take away with you, today.

[00:01:46] The first hack is adopting the Renaissance Marketer mindset. You’re probably wondering, what is it? Why is it important? What am I talking about? How is this going to help me with driving growth and innovation, and through experimentation? So let me dig in. The Renaissance Marketer Mindset is a new framework for marketers to think differently.

[00:02:12] Now, if we think about how people innovate. It is because of how they think. How they’ve done it differently. And so there are three pillars to the Renaissance Marketer mindset and leveraging each of these pillars will help you ensure that you are thinking innovatively, and that through that innovation you’ll be able to drive sales growth, which is what we all want to do.

[00:02:37] And part of that will be experimentation, and because your mindset has changed, how you approach experimentation, will also be different. Now onto the first pillar. The first pillar is to be multi-disciplined. This means pulling ideas from academic disciplines like psychology, history, finance, and bringing that into marketing to help you innovate.

[00:03:01] Think outside that box. But it also means being able to understand how your various functions in a business need to work together to make things happen. This means working very closely and influencing stakeholders like finance, data, engineering, product, CX, brand, legal, you name it. But it’s important that these other functions are part of your influence because you can’t actually drive sales growth without the support of every other function.

[00:03:38] The second pillar, is to be able to think long term with investment in mind. This means that you need to treat marketing as an investment and not a cost center. It means removing words like spending and budgeting from your vocabulary, and instead use words like investment and investing. This is because words like spend, cost, budget, means that what you are doing is an outflow. It is an expense and it’s short term expense. So when finance leaders and business leaders are thinking about where to cut costs, you are a cost. Your activity is a cost. But if you talk about investing in investment, which is what marketing is, it’s about driving that long-term future growth, which means that there’s going to be some upfront outflow.

[00:04:31] But it also means that there’s going to be an inflow, later on. Because what you’re doing is you are building the relationship with your customers, but you’re also able to drive sales growth over time. Now with something like investment comes, measurement. So measurement is important. How you are able to define your measurement and how you’re able to figure out your return on that investment is going to be very, very important.

[00:05:00] And of course, with any investment, you’re going to have to weigh some trade-offs. What are some short-term wins? What are some long-term gains, and where do you need to balance between those things? The third pillar, is what we all have known as a marketer for while, which is you have to balance the art & science of marketing.

[00:05:21] Marketers are already very much skewed towards the art part. We need to be able to think about how to balance leveraging things like design and creatives, and the emotional aspect that we bring to the table with the science part, which is leveraging data, using measurement, calculating ROIs, return on investment. Bringing the two together is going to be very, very important for you because that helps you make the argument with your leadership on the value of your marketing, and how it’s able to innovate, and therefore drive sales growth. With this mindset shift, you are going to be able to innovate and it’ll become second nature to you, and with that will come sales growth because you are employing the different pillars. Innovation nowadays is no longer what we perceived it to be back in the days.

[00:06:19] It used to be net new, like that wheel. But innovation is no longer net new. And innovation now is really about bringing disparate pieces of information together, and reshaping it in a new and different way. Very much like the companies that you see in the slide. This might sound eerily familiar to what we would call creativity.

[00:06:46] And guess who has creativity in spades? That’s right. Marketers. And so therefore, marketers are already set up to be innovators in the space. Now it’s about leveraging that and being able to tie that to sales growth. And why do I spend so much time harking about sales growth? This is because at the end of the day and every business that you’re in, your leadership, your business leaders, your CEO, what they care about the most, is sales growth and profitability.

[00:07:24] We might not be able to impact profitability as much, which is based on sales growth minus the investments that you make into the business that gives you your profits or losses, and we can’t really impact the investments portion. Because there’s a lot of other investments that are done across the business that we have no direct ownership of.

[00:07:45] However, what we can impact quite a bit is that sales, that top line. And so when our leadership and our business leadership are so focused on sales growth, and we are on the other side talking about great creatives, great marketing, doing all these great experimentations, but it doesn’t tie to sales growth.

[00:08:07] What your leadership is hearing is a lot of gibberish because it doesn’t get to what they care about the most, and this is why I want to push every marketer to think about how they drive sales growth. Another really good benefit of having this mindset is you don’t have to worry so much about new technologies. If anything, this might allow you to embrace technologies like AI.

[00:08:37] For example, pillar number one of the mindset is all about being multi-disciplined, which helps you counterbalance something like AI taking over specialized roles. And by being multi-disciplined, you’re going to be able to pull in all these different human aspects of innovation, and create something that’s human-centric.

[00:08:59] This is something that AI cannot do right now. And pillars two and three, which is to think long-term with investment in mind and to balance the art and science of marketing. Well, that part of the pillar, you can leverage AI as your ally. You can use it to be more productive. To help you analyze where else you can be more effective with your marketing, how can you perfect that return on investment?

[00:09:26] What is that balance that you should have in your investment portfolio, as well as, when you’re thinking about balancing the art and science, you can have AI help you measure, collect all that data while you are investing time and energy on connecting more humanly with your customers, creating that emotion.

[00:09:53] So how does all of this work in reality? I want to start with a quote, one of my favorites, which is that success is where preparation and opportunity meet. I’m not going to go over preparation because I know that you are already working on it, especially if you’re listening to my talk and participating in this conference.

[00:10:14] So I’m really going to focus in on that opportunity area, especially how you can create opportunity. When it comes time for opportunity, it’s really, really easy to find them when the economy is booming and it’s less so when we’re in challenging times. Now, I propose in my second tried and true hack that you should always find opportunities in challenges, and in the challenge of a booming recession, there is an opportunity to invest more. And I’ll tell you more about that. I know that we don’t know at this point whether or not a recession is coming, but when 99% of US CEOs thought a recession was about to happen last year and this year, and had made decisions based on that. They pulled back on marketing.

[00:11:11] Reduced their workforce. They’ve done a lot of the preparation work of a recession coming. It means more than ever, we as marketers need to double down on showing what our value is to driving. That’s right. Sales growth. Let me give you guys a few examples of why investing during a challenging economic timeframe is actually really powerful. And this is something you can share with your leadership as well.

[00:11:44] Our first gut instinct as a human, as a person, as well as a business, is to pull back on all expenses. We want to go for the bare minimum. We want to hold onto what we have so that way we have enough for the future. Businesses also behave like this. And we’ve seen what they’ve done in the last couple of, uh, months in terms of reducing their headcount, reducing their, uh, cost structures and, and even reducing their marketing.

[00:12:13] And so that is our first instinct. But what I’m proposing is we go past that instinct, really embrace the fact that if everyone else is pulling back and you don’t, you’re going to reap some benefits. Here’s a stat. In the 19 90 91 recession, Bain found that twice as many companies left from the bottom of their industries to the top. And this was because when there are a lot people marketing it’s really hard to stand out.

[00:12:48] But when you are the only player or one of the only players that is marketing to your customers, you are going to stand out and that return on that investment on your marketing is going to be so much higher than any other time period. And because you’re present in front of your customers in the moments in which they’re making a decision to buy or purchase your products and services in your category, you are going to end up getting those sales, whereas the businesses who had pulled back, even if they were the number one players, they’re not going to get those. You are going to be able to pull away some of their customers as well as acquire new ones. McGraw Hill Research also did a similar study looking at the ’81 recession.

[00:13:40] Now they looked at over 600 different companies covering 16 different categories, and they found something very similar. They saw that businesses who invested during the recession not only saw their sales growth higher during the recession, but the three years after the recession had ended. So by 1985, the businesses who had aggressively marketed during this time saw their sales growth 256% higher than the businesses who did not invest during this time.

[00:14:15] That was three years later. So the investment that they made, helped them not only during the recession, but three years after. Densu did a study that was the reverse of that, which showed that companies who pulled back on year one of marketing saw limited limited cost savings, but what they lost was two to three years of future revenues.

[00:14:44] Right. The reverse of what we saw with McGraw Hill. And they saw this to be true in all types of categories, from food to health and beauty to pharma to consumer goods. So it didn’t matter what category. What mattered was when you pull back on marketing in just one year, you lose future sales for the next two to three years.

[00:15:08] Now intuitively that makes a lot of sense, right? Because if a brand goes dark, the brand seeds all mental share, to competitors. So therefore, if you are not in market and others are in market, and your customer’s deciding what product and service to take, and they might have a little bit of loyalty to you, but they might not, because there might be some good deals happening.

[00:15:34] Well, they’re going to choose a competitor that is actively reminding customers of the value and the end benefits they deliver to your customers.

[00:15:46] So let me walk you through a case study that is very recent and also very top of mind for me, because I was on the front lines when this happened. So let me tell you the story of how Instacart found the opportunity in the challenge of COVID in 2020. In case you don’t know, Instacart, uh, was an online grocery delivery service.

[00:16:10] They’ve now expanded to beyond grocery, but back then they were just about grocery delivery. They were not the number one player in the category. They were an upstart that was starting to make a lot of name for themselves. But Walmart was the dominant player. What they ended up doing was they invested heavily in paid search during the onset of COVID 19, while the rest of the industry, actually everybody that was advertising had pulled back on marketing, uh, whether it was for grocery category or for retail, all the categories, everybody pulled back on marketing. But Instacart did it. They just kept investing in specific, channels, not everywhere, but they were really, really heavily invested in paid search. Pre COVID. We’re talking February, 2020. US customers were 50% more interested in searching for Walmart grocery, seen in the pink, also the dominant player at the time, versus Instacart seen in the white.

[00:17:18] At the start of COVID, we’re talking early March, 2020, search interest for grocery delivery seen in the gray line, increased 71% versus pre COVID, which was about mid-February. Walmart grocery in that pink line was still ahead of Instacart by 44%. By the following week, in mid-March of 2020, search interest for grocery delivery had quintupled versus just one month prior. And for the first time interest for Instacart versus Walmart grocery flipped.

[00:17:53] You can see that white dot is above the pink dot, whereby Instacart interest outpaces Walmart grocery interest by 17%. At this time, Instacart continued to invest in paid search, even though they were on a upward trajectory, even though the rest of the industry was muted, even though they didn’t have to put in more investment at this time. They weren’t essentially winning, but they still did.

[00:18:25] Then at the height of COVID, april 2020. Search interest for Instacart grew 12.5 times since pre COVID and overshadowed Walmart grocery by 108%. Walmart grocery, Amazon Grocery shipped. We were all growing organically, four to 6% versus pre COVID. Instacart grew 12.5 times versus pre COVID, way more than any of us now. If they had stopped investing or didn’t invest at all, like the rest of us, then they would’ve also grown organically. They probably would’ve grown four to six times like everybody else, but they wouldn’t have come out the other side on top. They wouldn’t have beat out Walmart as the dominant player. This was very smart for Instacart. They invested in paid search at a time when the whole world, but definitely in the US, we were trapped in our homes.

[00:19:32] Unable to really go grocery shopping. So we’re desperately looking for ways to get our groceries to us without leaving our homes. And search was the best way to figure that out. And every time we search for grocery delivery or anything related, Instacart ads would pop up when everything else, again, nobody else was really investing during this time.

[00:19:58] And therefore it made sense that Instacart was able to capitalize on that increased search interest. If you look at what happened in the months after the height of COVID. And where things had started becoming normal, you’ll see that in that gray line, it has reduced interest, over time, it has come down quite significantly.

[00:20:19] But look at that white line and where it stood, at the end of 2020, at the end of 2022.

[00:20:26] It still overshadowed Walmart grocery by at least two X. So the moral of the story is take advantage of your competitors’ gut reaction to a downturn by pulling back all this marketing investment and instead invest while your competitors are muted. 

[00:20:50] The last of the tried and true hacks is to experiment and optimize.

[00:20:55] I know this doesn’t sound surprising. But let me tell you about what I mean.

[00:21:00] Go back to the Renaissance Marketer mindset, especially pillars number two and three. So think long-term with investment in mind and balancing the art and science of marketing. This means that as you’re building experimentation, you should build experiments that are measurable, that are helpful for the long term, that tie to your ultimate goal.

[00:21:25] Now, if you don’t know what your ultimate goal is, then look to your business leader and your CEO. What are they sharing with their stakeholders, with their shareholders? And make sure you tie to that. So for example, if they’re looking at sales. If they’re looking at number of customers acquired or retention rates, then you should be building marketing and experiments that help you validate whether or not what you are doing is able to help drive any of those pieces.

[00:21:56] So, even if you are building experiments in which you are going to be measuring the success of that experiment, that experiment itself should tie back to that ultimate goal. All activities should be measured in some capacity. Some of it will be very, very easy to measure, like direct click attribution, like you know how that is going to tell you if someone clicked on it and bought something immediately.

[00:22:24] But other activities are a little bit harder. So you ran a brand campaign. And you don’t know if that’s going to drive sales in the next 30, 60, 90 days, but everything should be measured. And you should think about measuring even if it means building out different components and stitching it all together in a correlational way.

[00:22:47] Oftentimes, you might not have the resources to be able to build a robust marketing mix model. But it doesn’t mean you can’t measure. And if you find yourself in the habit of saying, “well, you know, I have that out-of-home billboard that I’m putting out my message and I can’t measure it. Therefore, I’m just going to tell finance and business leadership that we’re still going to do it ’cause we know it’s important, but I can’t measure it.” If you find yourself in that situation, pull yourself back and think about how you can actually measure it.

[00:23:22] There’s always a way to measure. For example, with that out-of-home experience, you have a good sense from your out-of-home vendors, approximately how many impressions, how many people are going to walk by that billboard or drive by that billboard, and see that piece of advertising? And from there you should be able to connect the dots and say, okay, well I know that most of the time when I’m running a digital billboard a.k.a. display banner, the click-through rate that I see from something like that is approximately 0.12%, and therefore I’m going to apply the same digital click-through rate to a physical billboard and assume approximately X % of the impressions would lead to an eventual consideration of my product and service.

[00:24:20] And then after that, leverage your conversion rates to say, typically when someone is interested in my product, their likelihood from consideration to conversion is X percent, and therefore, I’m going to apply that rate and by the end, you would’ve had some directional information on how a billboard was able to help potentially drive sales in X amount of time.

[00:24:45] Of course, all of this is directional, and that’s what you should share with your finance and business leadership, but at least it provides a reason, a quantifiable reason behind why you’re doing what you’re doing.

[00:24:58] Okay, so let’s go back to goals. 

[00:25:01] When you’re running your experiments, you want to make sure you can measure that experiment.

[00:25:06] And so the way that I like to think about experimentation is I like to use the SMART framework. It stands for specific, your goal and what you’re experimenting is very specific. 

[00:25:19] It’s measurable, so you have figured out a way to measure it. 

[00:25:23] It’s achievable so you know you can actually do it and get some measured insights from it.

[00:25:29] It’s relevant to the ultimate goal that you’re trying to achieve. 

[00:25:33] And of course, it’s time-based. Time-based is very important because you want to measure in a set amount of time. If something that you are about to experiment has no end date in which you can figure out a result, then that experiment’s too broad and you should narrow it down and turn it into chunks.

[00:25:51] So that way you can experiment and have that time base. It’s also very important as part of experimentation and optimization to iterate a lot. So after the experimentation phase is learning, you are going to identify what’s been working, what’s not working, what you’re going to invest more time and energy into, and what you’re going to put aside.

[00:26:11] Once you’ve learned, you’ll want to gain efficiencies in the things that are working. For example, if you know a message is working really well at converting customers, then your next step in your iteration is to expand and where this message is going to show up so you can have more people see this message that you know converts very well, and get more conversions out of it.

[00:26:32] Or you might want to double down on how to increase that conversion so that way you get more bang for your buck. 

[00:26:40] Well, this was just a small taste of what we have to offer at Renaissance Marketer com. There you’ll find lots of resources including cheat sheets on how you can influence stakeholders and functions like finance, data, legal, compliance, you name it. 

[00:27:01] As well as, case studies on how other successful companies have been able to take advantage of recessionary periods, investment in marketing and have driven sales from it. And of course, different ways for how you can become an evangelist of new technology versus being fearful. 

[00:27:22] I hope these three tried and true hacks have been helpful, and I look forward to hearing from you whether or not they have worked to drive innovation and sales growth.

[00:27:33] If you have any other thoughts or questions, please feel free to reach out to me through LinkedIn or look on Renaissance Marketer.com. I look forward to hearing from you. 

[00:27:45] Thanks.