The TL;DR:
- Let’s Chat D2C: The state of the ecommerce tech industry. How we got to this point, what’s happening now, and where I think it's going.
- What I’m Thinking about this Week: Please keep your CRM data clean.
- The D2Z Podcast: Building Tech Start-ups with a Contract CTO who takes companies from ideation to product launch.
- App Highlight: Klaviyo’s October Product Updates, including Campaign A/B Testing for Conversions.
- Book of the Week: Notes from the Underground - This might be the strangest book I have ever read. Just found it in my cabinet and figured I’d give it a whirl.
- Upcoming Events: I’ll be in LA this Wednesday and Thursday if you’re around and want to connect!
Let's Chat D2C: What's Going to Happen to all of these Ecomm Tech Companies?
It’s no secret that many of the largest ecommerce tech companies have had a rough 2022. While 2020 and 2021 were rocket ships, 2022 has been a sinking ship.
So how did we get here?
Fundraising Valuations
The vast majority of tech companies that raised significant capital in 2020 and 2021 did so at extremely high valuations that they will have trouble ever living up to the expectations.
Rapid Growth Followed by a Stark Slowdown
The pandemic caused a meteoric rise in ecommerce, but that growth trajectory has slowed to pre-pandemic levels and even drawn back a bit.
Overhiring
Most of the tech companies and agencies I’ve spoken with hired anyone with a pulse during this phase. They couldn’t keep up with the growth, but this led to overhiring that was exposed when the bottom fell out.
So what now?
Layoffs
We’ve already seen some of the more prominent names in the space, including Shopify, have to course correct and lay off 10%+ of their team.
Consolidation
I expect aggressive consolidation from some of the larger tech companies in the space and even some more agency rollups.
The Ecosystem will Continue to Eat Itself
- At a certain point, you can only innovate so much on a product before it becomes commoditized in the market. An excellent example of this is product review apps.
- Companies are searching for growth, especially those that raised capital at inflated valuations and have significant investor expectations. You have to look at other product lines, especially when you already have significant market penetration with your current product (i.e., reviews).
I’m not expecting a lot of innovation over the next 1 to 2 years, as companies will start encroaching on their partner's product lines.
New Entrants are Well Positioned
Specifically, in product categories where the incumbents raised a lot of money at inflated valuations and now have to lay off staff, new companies are in a solid position to learn from their predecessor's road bumps and scrappily grow by picking off merchants from them.
The End Result
In 5-10 years, I could see there being 2 or 3 Yotpo’s (all-in-one ecommerce marketing solutions that do everything) and a bunch of small, point-solution apps. These Yotpo-style companies will get there via strategic acquisitions and new product line development. I think Klaviyo is in a very strong position to execute something to this effect.
What I’m Thinking About This Week: Please Keep a Clean CRM
Crossbeam is one of the most powerful tools we use with our tech partners. It allows us to connect our CRM (HubSpot) data and our partner's CRM data in one place. From there, we can do account mapping and identify co-selling and referral opportunities.
The Most Common Use Cases
- Mutual Client → Collaborate on Merchant Success
- Client of Tech Partner that we are Actively Selling → Tech Partner Refers Electriq and Supports Sales Process
- Client of Electriq that Tech Partner is Actively Selling → Electriq Refers Tech Partner and Supports Sales Process
- Mutual Prospect we are Actively Selling → Co-sell with Eachother
Why You Need a Clean CRM
You need to be able to slice and dice your CRM into the following groups at a minimum:
- Clients
- Open Opportunities
- Prospects
If your CRM data isn’t clean, none of your Crossbeam populations will be accurate, making account mapping and co-selling very challenging. Beyond that, you may send emails to the wrong contacts!
Establish Rules of Engagement Early On
If the above sounds like you, I’m sorry. You will need to do a deep dive audit and get your CRM in a place where the data is reliable. Trust me; it’s painful. Electriq had to do it, but now we’re reaping the benefits of going through the process.
If you’re just starting out, establish rules for how contacts get into your CRM, what data is required, and how your entire sales process should work. By getting everyone on the same page, you’ll be able to effectively scale your CRM system with good data.
This Week's The D2Z Podcast
#34 - Building Tech Start-Ups, Founder Mistakes, and Successes
🎧 Listen Now 🎧
In this week’s episode, I sat down with Bill Boulden, a serial tech startup CTO who focuses exclusively on working with businesses from the idea phase to launch. Specifically, we explored the following:
💰 Building a minimum viable product without breaking the bank
📲 Bill’s unique approach to building start-ups
😎 Common mistakes start-up founders make
🚀 Start-up trends and successful strategies
App Highlight - Klaviyo Updates
Klaviyo released a bunch of new product updates in October so let’s dive in.
Email Subject Line Assistant in Flows
If you’re anything like me, copywriting is not your strong suit, and you prefer to focus on data and architecting flows. Now, you can leverage Klaviyo’s AI-assisted subject line generator when building out flow content. No more writer’s block!
AI-powered Suggested Responses for SMS
SMS is a timely communication channel. The difference between replying in 30 seconds versus a minute can not be understated. Earlier this year, Klaviyo added the ability for brands to set quick responses manually. They’ve improved upon this functionality and have “suggested responses” automatically generated with AI.
Single sign-on for Klaviyo One
SSO is a must-have for enterprise organizations.
A/B Testing Campaigns for Conversions
Campaign A/B tests can now run with placed order rate as the test metric. Now you can see what messaging strategies can drive the most sales!
An Upgraded Overview Dashboard
With the new functionality, you can:
- Compare performance to the same time period in the prior year
- Track email deliverability and sender reputation across different mailbox providers
- Measure signup form performance alongside other marketing channels
- Export the dashboard as a PDF
New Heap Integration
Heap’s digital insights platform gives you a complete understanding of your customers’ digital journeys, including website, app, marketing channels, and more. With the new Heap-Klaviyo integration, you can leverage Heap’s behavioral data in your Klaviyo communications.
New APIs
Klaviyo is continuing its investment in becoming an API-first platform to empower developers.
Multimedia Texts for Back in Stock Flows
Back-in-stock flows used to be limited to SMS, but now you can include dynamic images of the specific products customers were interested in via MMS. This is a good one to A/B test to see if the additional cost of the MMS is worth it for your brand.
Book of the Week - Notes from the Underground
This seriously is the strangest book I’ve ever read. In his short 1864 book, Fyodor Dostoyevsky tells the story of a man who is “too conscious.” I’m not even going to call the below key takeaways because almost everything in this book is open to analysis and interpretation.
Next week, I’m going back to reading business books haha :)
Key Thoughts
- Overthinking everything can lead to doing nothing.
- How can we all be free if we have to accept 2+2=4, even if we want it to be equal to five (this one is a real doozy)?
- Can you consciously desire something harmful and stupid
Upcoming Events
I’ll be in LA this Wednesday and Thursday if you want to connect!
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