"My wish for 2017: Pervasive Personalization": Interview with Erik Lautier

I can always rely on Erik for a killer soundbyte. Our paths first crossed in 2014 while filming a Qubit case study at multichannel fast fashion retailer bebe. Erik, CDO at the time, stated:

“A lot of brands are fixated on how to take the digital experience and bring it in store. What I wanted to do was take the in store experience and bring it online.”

And that makes a lot of sense. In store is where the richest interactions lie. Where someone can get to know you. Where someone can judge your style and make the best recommendations. Truly the aspiration of every fashion site the world over.

Over a year later, and Erik has moved on from bebe to lead the Direct to Consumer & Marketing functions at francesca’s, a US retailer with 640 locations, and growing. We caught up at Etail West and I was keen to get his views on some hot topics, frequent discussion we hear a lot about at Qubit, and of course, a hip phrase to include in my thought leadership pieces.

First up, how do you approach your marketing spend?

What I love about digital marketing is the quantity and quality of feedback we can get from it, but that feedback can go to waste if you don’t retain a very high degree of fluidity in your approach. As you measure performance, you have to be prepared to flow money in and out of performing and non-performing initiatives; I also usually retain an “innovation slush fund”, which is a fancy way of saying that I earmark some funds to allocate to things that might not even exist yet - namely, the new marketing channels that often scale so quickly that companies can't plan for them during the initial budgeting period, because those channels haven’t been invented. Right now, as I’m typing this, some 19 year old is probably building an app that will have 10 million downloads six months from now, and I'll want to have a presence there to reach my demographic. So you have to remain fluid.

How do you think about dividing your spend between channels, and planning for the unexpected?

I normally wouldn't use a mathematical analogy, but I'm talking to Qubit here, so here goes: I think the digital marketer's job is similar to approximating the area under a curve using rectangles. The area under the curve represents the theoretical maximum marketing return, and the rectangles are your initiatives. Their height is your ROI; their width is how much you’re investing. There’s a point of diminishing returns in all marketing channels, and as that return dips below the level of the next-best alternative, you flow your investment dollars into that alternative, until its performance erodes, at which point you invest in the next alternative, and so on until you reach the bottom of the curve.

Of course, it’s greatly complicated by the fact that the curve is moving and your rectangles are constantly changing shape, to say nothing of their influence on one another; you might have an initiative with a lower return that makes a higher-ROI initiative more productive, so you have to understand how these things work in concert, and developing a reliable attribution model is paramount.

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What part of omnichannel do you think will get cracked for the mainstream retailer in 2016?

Omnichannel is obviously a big buzzword, and there’s clearly a lot to it, but it doesn't mean you need to do it all, and it most certainly doesn't mean your customer even wants or needs it all, or that it’s on-brand for your particular business. That said, I think inventory visibility is table stakes at this point, and it's a fairly lightweight and low-cost integration with a potentially high return. But fuller omnichannel strategies can be complex, and aren’t just about the systems - they can heavily involve people, process, and payroll too.

What do you mean by ‘payroll’ exactly?

If you wanted to do ship-from-store and had to pay one employee per store one extra hour per day to ship out orders, you would hit a million dollars in incremental annual cost at around 300 locations, which means ship-from-store has to produce significantly more than that.

Ok, now the million dollar question. What's on your marketing wishlist for 2017?

If I'm wishing, I'm going to wish big. I'd like a vendor to take personalization from a componentized solution to a pervasive one. By which I mean, I want the level of personalization online to more faithfully mimic what we see in stores.

If I'm a customer in a store, and you know me, you're not just recommending product you think I’ll like, you're actually speaking to me in a different way than you would another customer. Maybe I'm more casual; maybe the other customer is more formal. Maybe I want help looking for something; maybe the other customer wants to be left alone.

I want personalization to find the shades of grey and not be so black and white. And I think there are behavioral cues online that can help with that, just as there are cues offline that a strong sales associate in-store can pick up on whether it's your fifth time in a store or your first.

Aha, I can see you’re waiting to drop your phrase here?

Yep, so it’s pervasive personalization!

A level of personalization carried far beyond the landing page, to site content, through checkout, and post-purchase, and of course into marketing.

Well, I think almost every vendor in this room is after ‘pervasive personalization’ in that case. I know that Qubit is close to that goal, and that you’ve seen from our demo how machine learning can help, but what do you think needs to happen on the inside of business to accommodate that ambition? The people and process side of things.

As the online and offline worlds form a deeper partnership and the customer experience becomes ever more seamless, so should the corporate experience; I expect silos to be further broken down and deeper partnerships to be forged between areas like IT and Marketing, Ecommerce and Stores, etc. As the lines between divisions become increasingly blurred, I think it’s important that executives become better versed in areas of business outside of what would traditionally be under their direct oversight, and I think it’s equally important that organizations place a strong cultural emphasis on collaboration and knowledge sharing, as well as incentive structures more heavily weighted around full company targets rather than divisional performance.  

Erik, always a pleasure. Thank you so much for some down to earth insight, especially at a trade show that presents such an attack on the marketing senses.

You got it! Any time.