Steve Groenier from Artbeads – Podcast Transcript

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Shaun Ryan:  [00:03] Hi. I’m Shaun Ryan from SLI Systems and this is the Ecommerce Podcast. Today, I’m talking to VP of Sales and Marketing from Artbeads, Steve Groenier. Welcome Steve.

Steve Groenier:  [00:13] Hi Shaun. Thanks.

Shaun:  [00:15] Traditional question to get us going, what was the first thing you ever bought online?

Steve:  [00:21] That kind of takes me back a bit. I think probably the first thing I bought was a Canon digital camera back when my daughter was born in 2001, from Abe’s of Maine.

Shaun:  [00:36] Abe’s of Maine, I know the site well. And how was the shopping experience? I suppose you can’t remember; that was 10 years ago. What am I saying?

Steve:  [00:44] Yeah, eons ago, but yeah.

Shaun:  [00:45] Digital camera, but it’s pretty cool back then that you could shop online and it’s changed quite a lot since then.

Steve:  [00:52] Absolutely. I think the big thing for me was I had no idea what type of digital camera to buy and I used a site called Steves Digicams, which was this really in depth reviews on all sorts of digital cameras and basically made my purchase decision from that. Then it came down to, “Well, who’s got that camera?” and using search to go find it made it easy.

Shaun:  [01:18] Yeah. I suppose one difference now is most of the sites have reviews on the site themselves.

Steve:  [01:25] Exactly.

Shaun:  [01:26] So what about the most recent purchase? What was the most recent thing you bought?

Steve:  [01:31] I recently got in on an REI end of season sale and picked up some new ski boots. It was a good example of really wanting to make sure I tried on boots before I bought them. And REI, having a lot of a local stores, I went in there a couple different occasions and finally found the boots I thought were what I wanted and just waited for them to send out an email on when their end of season sale was. Fortunately, those boots were part of the sale.

Shaun:  [02:06] Right. That shows a lot more patience than I do with my shopping.

[02:09] [laughter]

Shaun:  [02:13] Can you give me a little bit of background on yourself? How did you come to be here at Artbeads?

Steve:  [02:18] It was kind of interesting the way I wound up in the Internet business. I actually got my degree in marketing at Indiana University quite a few years ago and found myself working for an NFL team called the Arizona Cardinals. They weren’t really doing marketing, per se, there, but knew that that was what I wanted to do with my career.

[02:43] That was back in the early days of the Internet when I saw what was happening there. And in about ’95, ’96, I started working with the Cardinals and a company that they had ‑ well, I guess the league office had contracted with the company to do NFL.com.

[03:02] That ultimately led me to a job in Seattle with this new company that was going to do the NFL.com website, which incidentally was called starwave.com or Starwave and they were acquired pretty quickly after that by Disney. So I spent six years with Disney doing mostly online marketing promotions, custom content for big advertisers like Coke and Ford and on websites like ESPN.com and NBA.com and some Disney sites.

Shaun:  [03:38] Wow.

Steve:  [03:39] But that’s kind of how I got on the Internet and from there I really wanted to see what these advertisers were doing, how was the advertising working for them. I wanted to be a part of that, the thrill of attracting customers and driving business and building brands online. So I set my sights on working for a company that was on the other side of the fence from advertising, but from a merchant standpoint.

[04:11] Since then I worked at a company called X10 Wireless Technology that sold home security and surveillance equipment and gadgets for home automation. I spent a few years there and then spent a little time with some Seattle start‑ups. But ultimately really love retail and felt like I had the most things that I could do with my marketing skills and passion online were working in a retail environment and that led me to Artbeads.

Shaun:  [04:47] Cool. So how long have you been there now?

Steve:  [04:50] I just was told that my three‑year anniversary is coming up, I think, on the 18th of this month.

Shaun:  [04:57] Congratulations.

Steve:  [04:58] Thanks.

Shaun:  [05:00] You and Artbeads.com are based in Seattle?

Steve:  [05:04] Yeah. We’re actually a little bit south of Seattle, about an hour’s drive, in a town called Gig Harbor. It’s a great little waterfront‑type community.

Shaun:  [05:12] Ah, sounds nice. Tell me a little bit about Artbeads. It’s a fairly self‑descriptive name, but what do you guys do?

Steve:  [05:22] Well, Artbeads sells beads and jewelry‑making supplies primarily to crafters, from a personal standpoint, and to really small business people who are using our products to make jewelry and fashion products to sell. So it’s an interesting type of business because we have that dynamic.

[05:48] But we have over 27,000 different types of beads and jewelry‑making components and are one of the largest online retailers. We’re online only in terms of sales of those.

Shaun:  [06:01] So from what I’ve seen of that type of industry, I imagine you can have quite devoted followers who are really into their craft.

Steve:  [06:09] Absolutely. I think it’s a fantastic business in terms of the kind of customer base because they’re generally going to be inclined to be repeat purchasers. Once you buy some beads, you make some jewelry, you kind of get the bug, you want to do more and more of it.

[06:27] It gives us a really great ground to develop those long‑term relationships and bring customers back. It’s also a lot of fun because they do things with our products that are unique. So we can engage them and ask them to share photos of what they created with the products they bought. It just lends itself really nice to creating community and getting user‑generated content.

Shaun:  [06:52] So the company has been around for how long?

Steve:  [06:56] We’re just into our 11th year now. It’s a typical, probably, story in online retail in that the company was started by a husband and wife team out of their garage and they wanted to come up with a product that they could sell online that would be easy and cheap to ship. They happened to be at a bead‑type expo, an event, and were just enamored with how many people were there and how excited those customers got when they surrounded these tables full of beads. They thought, “This is the product that we should try to get into.”

[07:45] It’s been kind of a… for many of their initial years, it was a high‑growth phase year over year. Things have finally stabled out a bit, but definitely real exciting and the growth of e‑commerce.

Shaun:  [08:00] I supposed they’ve sort of followed the growth of the Internet and online commerce, the growth of companies somewhat mirrored that. Because I believe that’s now a Top 500 retailer. Right?

Steve:  [08:10] Yeah, actually Artbeads has been listed on the Top 500 retailers for six years now.

Shaun:  [08:17] Wow.

Steve:  [08:18] We’re somewhere in the 400 range right now.

Shaun:  [08:21] Yeah. But that’s amazing, from a garage selling beads, who would have thought?

Steve:  [08:26] Well, when I first looked at the opportunity to help Artbeads out, it was actually from the standpoint as a consultant. I was in between jobs and looking for somebody I could help do search marketing and affiliate marketing and customer acquisition type things, which is what I was really focused on.

[08:48] I saw this little ad for Artbeads in Gig Harbor and I figured, “Yeah, this is going to be some small mom and pop company, maybe they had a store or just an online store.” I didn’t expect at all to find an $18 million business behind it with, at the time, over 100 employees.

[09:10] So yeah, it’s kind of shocking some of the products you can find. Actually really robust businesses.

Shaun:  [09:17] Yeah. So tell me a little bit about the customer acquisition strategies you have. What are the core ways you get customers?

Steve:  [09:23] Well, it’s really driven by search in a lot of respects. The hard, trackable, new customers are coming from page search and organic search.

Shaun:  [09:35] What’s the mix there between paid and organic?

Steve:  [09:39] Well, I think it’s about 50/50. Paid search kind of accounts for around 10 percent of our business each day as far as new customers and things like that. And organic is about 50 percent of that traffic, or about the same amount of traffic.

[10:01] It’s nice to be in a position where you’ve been around for 11 years and have really high ranks in a lot of the key terms that beaders use to find out products. Of course, that’s taken, in the three years I’ve been here, it’s been a bit of a focus of mine too to make sure we hang on to those ranks or even improve them.

[10:22] But yeah, that’s probably the biggest customer acquisition tool. The other thing that I’ve been really driving in the last few years is the word‑of‑mouth marketing campaigns. And really investing in developing our communities around the social media platforms that are out there, generating promotional programs from anything from a contest that people submit designs that they’ve done for a beading challenge to just pure giveaways, giving away an iPad, for instance, to really try to do it in a targeted way to attract people to just start a relationship with us.

[11:00] I’m seeing a lot of really great results with that and really what was driving that was just that the cost of customer acquisition through paid search just kept going up and up and up and we really needed to find ways to diversify our marketing strategies. So word of mouth was one of the best.

Shaun:  [11:19] Right. So you’re finding that it’s cost effective.

Steve:  [11:21] Yeah. It’s been phenomenal how little you really need to invest to get good publicity, good sharing and interactions with people. The one thing that I will admit is that it’s difficult to really see sales directly tracked from inbound visits from, say, your Facebook page.

[11:48] While we’ve done some Facebook ads and things, they’re not as effective as a lot of keywords. But I really believe that the investment you make in developing a relationship on something like Facebook is fairly small compared to the value you get in the ongoing interactions, the chances you have to message them down the road. I think that that really does help foster the lifetime value and bring new customers to your front door.

Shaun:  [12:20] If you don’t have the same hard sales data that you do for paid search, and I think the reason is because it’s just difficult to track that, how do you justify those efforts and how do you know it’s work ‑ is it based on the customer engagement and other increases in sales you see that correlate with that customer engagement?

Steve:  [12:39] Yeah. You kind of hit the nail on the head with the customer engagement. Initially, everyone was talking about was how many people are your fans. Then that turned into how many people ‘like’ you on Facebook, for instance. I knew that while that’s a sexy number to talk about, it doesn’t really mean much. Because if your fans aren’t engaged, then they’re not coming to your site, they’re not participating, then what’s the point?

[13:09] So what we’ve done is really tried to look at some of the metrics, in the example of Facebook, that they give you in terms of how many impressions did your wall post get and how many clicks did it get.

[13:23] We track both using interactions, I guess they use, but we track the clicks on the links. Every one of our links is tagged for our site catalyst reporting or analytics so that we can see where the traffic’s coming from.

[13:40] When we do a post and it gets 20,000, 30,000, 40,000 impressions and a significant number of clicks ‑ and we also look at the number of comments, that’s a big indicator of how engaged people are ‑ then each of those posts has a certain amount of value to it.

[13:56] So you can say, on average, if an impression in paid search is worth a certain figure, you can kind of back into a formula and create some sort of estimate of how valuable do you think that was. So when you start adding that kind of thing up you realize, from an advertising standpoint and equivalent, you actually get a really great value for that.

Shaun:  [14:22] Yeah. That’s really interesting. And is it mainly Facebook that you’re using for the customer engagement or are they coming onto your side as well?

Steve:  [14:29] Facebook is the biggest driver of a lot of the social interactions, but certainly our strategy has been really more to diversify those ways that we can build a community. I think that I’m a little concerned about putting all of our eggs in the Facebook basket, even though that’s kind of the big driver. But I want to make sure that customers have a relationship with us directly, and so we’ve done a lot to build our own blog and grow that community there.

[15:04] We’ve got other mechanisms on the site. For instance, we use Bazaarvoice to do customer ratings and reviews as well as questions and answers. So we’re engaging people, so getting content through that. And we’ve just got a really active customer base through things like just contacting our customer service, and just all of that. We try to make sure that all of those lines of communication stay open and that we also create and foster a community.

[15:40] One of the things that we’ve done even offline is, we’ve reached out to these groups they call bead societies and developed relationships with kind of the leaders of those groups, and done things to kind of foster interactions with their members. So we might, for instance, send them a free sample of some new products we have, and ask them to use them and come back to our site and contribute a review. That’s been kind of fun to really see that we can do some offline marketing that translates to driving community and interaction online.

Shaun:  [16:21] That is very cool.

Steve:  [16:22] And the other piece of that too is that we’ve had a very active blogger outreach. In this space, you find that a lot of the people who sell jewelry, whether they’re selling it in boutiques or through art fairs or online, like at a site called Etsy, the people who do it online and even offline are really encouraged by others in the space to have a blog. And it makes it really easy to find these people and then start relationships, and basically send them some free product to encourage them to make something.

[16:57] And that’s been a huge network for us now that we have the bloggers, and it’s been fun to see how they’ve grown in their influence, where a lot of the bloggers put some content on their site that shows who follows them. And we’ve been tracking numbers, so some bloggers that we met two years ago who started out with 10 followers now have hundreds of followers. And when they do a blog with a design that features Artbeads products, it’s a really great way to get our name out there.

Shaun:  [17:30] Yes, that’s really interesting. So they’re blogging about their jewelry using your products, and that’s generating awareness of your brand and driving traffic to your site. And presumably, they’ve got their own Facebook pages and it’s all sort of meshing together.

Steve:  [17:47] Yes, it’s fun, too. It really is, I don’t know, you might say like a symbiotic relationship in some ways, in that when a blogger does something on their site, we’ll often times put a link up on our Facebook wall. And they’ll come back and tell us, that’s the most traffic I’ve ever got to my blog. They see these huge spikes. And so they really appreciate that, that we’re helping them grow with their awareness. They will post on our wall themselves, but when we do it, obviously, it means a lot more to our network of people who like us, which is over about 65,000. So that’s a lot of fun.

Shaun:  [18:30] Cool. I presume you’re keeping tabs on Google+? What’s your take on that?

Steve:  [18:37] I’ve been watching it not real intently since it launched, but certainly tempted to jump right into it. My take is, eventually Google is going to have a social network that’s going to rival what Facebook is doing. And I definitely think it’s going to be… I believe this is one that will be a winner for them, and eventually just like I have a Facebook “Like” button on all my product pages, we’ll be integrating Google+ buttons and things like that.

[19:15] But I’ve also heard some things, too, that they’ve had some PR issues, and some glitches, such as accounts getting deleted and all of that. But I am not going to dive into it immediately. I’m less of an early adopter in some of those cases than I like to take a little bit of a wait‑and‑see approach. But I think they’ve got a winner with this one.

Shaun:  [19:41] Yes, I mean it’s probably a fairly pragmatic approach, because if you’re an early adopter, you’re going to be jumping on to everything, and you can waste a lot of time on those things.

Steve:  [19:51] Yes, and these days the time is certainly a premium.

Shaun:  [19:57] Now, Steve, is there a website that you particularly admire that you look to for inspiration for your own site?

Steve:  [20:01] Well, one of the things I like to do being a part of the IR 500, I like to try to keep an eye on what other people are doing in the list who are bigger than us. Some of the sites, I also tend to want to look at things that are local for fun. But I really like what REI is doing in the space, from the standpoint of having a community of their customers that they build around having a very strong focus on learning and education, because it really has a lot of parallels with our business. We really have kind of products, we have a big learning center, and we’re trying to build a community.

[20:44] Another site that I’ve seen and keep an eye on, especially with how they’re doing the marketing is Motorcycle Superstore. I think they’re a fantastic example of somebody who’s kind of built a real expertise in the space, and showing that they’re enthusiasts. And they have this co‑motorcycle site called Motorcycle USA, which is really the content site. And I think it’s smart somewhat, how they’ve broken them apart yet how they tend to kind of integrate them as well. And again, similar to what we’re trying to do is, we’re providing a product with an enthusiast community of people around beading, just like Motorcycle Superstore’s around motorcycles.

[21:32] And our product, I don’t look at it as simply just the physical product we sell. I look at it as the learning and the content, the ideas, the inspiration, and the community. I really think that in order to survive and thrive in any retail space, you’ve got to do things much beyond just simply having a great product at a great price.

[21:57] And I think Amazon is winning the war of just having products at great prices, but I don’t see them ever being able to compete with a retailer from the standpoint of actually supporting an enthusiast community with content and really quality interactions, and somebody who could actually sell the product and talk to customers about the product.

Shaun:  [22:22] Yes, you’ve just got to have another level of expertise about the product, rather than just stocking it and letting the community reviews do it. And I suppose that’s how retailers like yourself are going to survive against the giants like Amazon that seem to have everything at great prices.

Steve:  [22:38] Well, I certainly hope so, that that’s how we will survive. I would hate to see it come down to nothing more than who’s got the lowest price. I think eventually what you do is you lose out on a lot of the value‑add that merchants provide in the space. And I think there’s a lot that we do to drive demand, and were it not for the people driving demand, Amazon wouldn’t even have a business in many of these product niches. So I think, yes, retailers with expertise are always going to play an important role.

Shaun:  [23:21] Yes, and it’s a really interesting insight. So tell me a little bit, you’ve already touched on a couple of the technologies you’re using on your site, Bazaarvoice and Omniture. What else are you using on your site that’s working for you?

Steve:  [23:35] We used to do our product recommendations or cross‑sells by hand, and it was kind of a very time‑consuming, tedious thing, as well as something that never is updated as well as you’d like. Products go out of stock, and you have to go back and try to update them. So we really helped streamline from an operational standpoint that whole bit of product recommendations by integrating a product from Baynote that provides that kind of content on our product pages. And we’re looking at other ways to get more out of that platform.

[24:21] And the thing is, it was just really surprising to me ‑ and it probably had a lot to do with our product line ‑ but the customer engagement is extremely high, and they almost use it almost from a navigational standpoint. It’s that high in terms of how many people click on the recommendations in their entire traffic experience.

Shaun:  [24:43] And it sort of makes sense, because I suppose if someone’s looking for a bead, they don’t know exactly what they want. They need to look at a few different things, and a recommendations engine is a great way of navigating for a bunch of related items.

Steve:  [24:55] Yes.

Shaun:  [24:56] So what have you got coming up in the next year? What do you see as your biggest opportunities?

Steve:  [25:00] There’s so much that I want to do here with our store and the customer experience, a number of things. For instance, we’ve just launched a new site search platform with SLI, and are real excited about the things that we can do to bring a lot of this content that our customers have submitted and that we’ve done on the blog, and the community content from our learning center, and really bring that more to the forefront of the whole shopping experience.

[25:33] Search, as far as the role that it plays in our site shopping experience, is super‑critical. On any given month or time, it accounts from anywhere from 25 to 40 percent of all of our page views, and it’s the second‑most engaged‑in box on our home page or link when people come to the site, so it’s super‑important.

[26:00] Anyway, that’s going to be a lot of fun to see where we can take that. Some of the other things we’ve got going on would be beefing up our remarketing efforts through the banner space. We’re currently launching a test with Criteo, and they’ve got a much more dynamic presentation of products, and are kind of a rich media in the banner space that actually show customers products that they may have actually seen when they visited the site, or related products. And that’s going to be, I think, a big enhancement over the very static banners that we’ve been doing through Google’s remarketing program.

[26:44] We’re also looking at a complete overhaul of our email marketing initiative, our whole strategy. We’ve really kind of been what they call a batch and blast‑type marketer. Everyone gets really the same content day in‑day out when we send the emails. And we’re looking at some new platforms, and really want to turn into a very targeted approach, and send emails more based on customer behavior, such as a site visit where they didn’t purchase, or an abandoned shopping cart, based on their purchase behavior.

[27:23] If somebody comes in and shows an affinity towards, say, a Swarovski crystal bead, we want to develop a marketing campaign around that in a series of emails that can go out in more of an automated fashion to help introduce that customer to all things Swarovski that we carry in that learning center idea that we provide and the support we have for it.

[27:48] Yes, there’s a lot going on, and I could continue. We just talked to a vendor who has some really interesting things to roll out a loyalty program that creates a point incentive basis for customers who do things on social media, or who share content, such as writing a review. And I really see a huge opportunity for us to get our customers sharing more photos of what they made. On any given product page, I’d love to have just a great photo library of a bunch of stuff that people created using that product.

Shaun:  [28:31] Yes, that would be great, wouldn’t it?

Steve:  [27:32] Yes, that would be fantastic.

Shaun:  [28:34] Cool. Well, Steve, it sounds like the business is doing very well, but you still have a huge number of opportunities ahead of you. It sounds like it’s going to be exciting times at Artbeads.com.

Steve:  [28:45] Yes, absolutely. We’re moving fast and trying to stay ahead of it. The whole e‑commerce space is so much fun, because there’s always new things to consider and do. It’s tough to stay on top of it at times, but we’re doing the best we can.

Shaun:  [29:04] Yes, it sounds like you’re doing a great job.

[29:07] We’ll wrap it up there. Steve, I just want to thank you very much for your insights today. It’s been an extremely interesting interview.

Steve:  [29:13] Hey, you’re welcome, Shaun. Appreciate it. It was great talking to you.

Shaun:  [29:15] Thanks very much. And that was Steve Groenier, the VP of Sales and Marketing from Artbeads.com. I’m Shaun Ryan from SLI Systems, and that was the Ecommerce Podcast.