Joshua Chin 7:40
You talked a little bit about data and insights gathered over years, Clean it like on the surface? It sounds like a good thing. I mean, if they’re going to use honey or capital on shopping, and if that means converting better, and making a purchase that otherwise wouldn’t be a purchase. Just sure you use a coupon codes? Sure. But that doesn’t seem to be the case, from what I’ve heard, were you?
Kathleen Booth 8:09
Yeah, if this is so interesting to me, because we you know, this product came out of private beta in March. So it’s relatively new. But we have a couple of years of experience dealing with third party code through our ad tech product. And when we first released this, and when I had learned really how coupon extensions work, I was kind of shocked that that more retailers weren’t worried about it. There seems to be this assumption in the e commerce world that coupon extensions are good for business. And I think that that’s partly because there’s a lack of education around how they work, and then also really what impact they have on the most important metrics for ecommerce businesses. And so that’s what, that’s what I’m excited to talk about. I mean, how they work, you know, as buyers, most of us who’ve used them know, and I used to use them, you know, you know that you get the extension. And when you visit an eCommerce site, you put a bunch of things in a cart. And when you get to check out, the widget pops up and says, you know, we found 10 codes, do you want me to try those codes and see if I can save you money? I’m paraphrasing. You hit yes. And then it starts to pop those codes in and test to see what will happen. And that seems great, right? As a buyer, like why would I not want to save money? Yeah, but where the trouble starts. And there are there are many issues with this. The first of which is that the way that these extensions get the codes in the first place, is a little bit problematic. And, you know, what happens is if I’m if I have honey, for example, and you I’m one of your best customers at your ecommerce store, and you decide you’re going to do a promotion for your VIP customers. Maybe it’s a flash sale, and you send me a special code. I go to your website, I legitimately have that code from you. I type it into the promo code field at checkout. Because I have honey in my browser, it is able to scrape that code then and give it to everybody who uses it. And so, yeah, yeah. So it’s a big deal. And as a result, what winds up happening is, and we’ve seen this with our customers who have come to us, the kinds of codes that then wind up getting distributed are things like, like I said, VIP codes, or that 10% off that you’re offering to people who subscribe to your newsletter. Now, anybody whether they subscribe to your newsletter or not, can use it, that code that you’re using to track whether your podcast advertising is working. Now anybody can use it. So your attribution is all screwed up. That code that you’ve given to your affiliate marketers who are going out and promoting your product gets shared with everyone. And then all of a sudden, not only you don’t do not know, if your affiliate is really driving sales, you might be overpaying them if they’re getting compensated on a percentage of the sales they drive. Or then there’s also whatever I call these sort of ethical code usage. I we’ve seen, because we track the codes that are attempted, we’ve seen codes like military hero 30, clearly intended for a veteran, you know, and I always like to tell the story, I would never physically walk into a restaurant and say, lie and say, Hey, I served in the Army Can I have 30% off my meal. But we do it digitally all the time when we use these codes that weren’t intended for us. And in the worst cases, we’ve seen, like in one case, we saw an 80% employee discount code leak. And then another case, was even worse. In another case, my CEO, found a men’s apparel brand, where they had a $75 off coupon code, but they didn’t set a minimum order value. And so people were able to get unlimited merchandise for free as long as they have to order value at $75 or under. So it’s very frightening when you think about the implications of these codes getting out there. And, and really, the real problem is that when merchants discover their codes have leaked, and then they want to clamp down on that they go to these coupon extensions, and plea and request to have their codes removed. and nine times out of 10. The response is join our affiliate program, and you’ll have more granular control over that. And so it’s it’s I think merchants tend to feel a little bit as though they’re being blackmailed, or extorted, you know, because you join the affiliate program, and then you have to pay that coupon extension company every time somebody uses a code in, and you’re doing that in order to have them not share your code. So that’s sort of the tip of the iceberg. There are other things going on with attribution. I, you know, we’ve been doing a lot of AV testing about what happens when you block these extensions. And I can certainly go into all of that. But I’ll stop and see if you have any questions.
Joshua Chin 12:59
That’s really interesting that the first thing that pops up in my mind is I’m not sure there’s going to be a difficult question to answer but dynamic codes and dynamic coupon codes. That is, well, I’m wearing a shirt Klaviyo is the tool that we use a lot at Chronos. And we rely pretty heavily on dynamic codes. And that means that every single recipient and subscriber would have a unique code that is made just for them. It’s a one time use only, and it would expire at the moment it’s used. That seems like it solves the issue, or at least part of it. What do you think about that in terms of like the is it part of the solution?
Kathleen Booth 13:46
Yeah, I think that that can be a great solution to part of the problem. And what I mean by that is really two things. One, I think I do think there are smaller merchants, for whom you know, a tool like a Klaviyo might be out of their reach. And so that because there are a lot of especially enterprise grade e commerce solutions that that do solve for this, but something like 90% of e commerce merchants are very, very small, and maybe don’t have it in their budget to use those tools. And so it’s really hard for them, you know, they’re the ones that are going to suffer the most. But the other issue is that the dynamic codes work really well, if you’re using them in email marketing. If you want to do something like a podcast ad, or you’re working with an affiliate, it doesn’t really solve that problem because you really need one code that they can share broadly. And and you know, you’re doing that for attribution purposes. And so that’s where it gets scary, like what is the right solution there? And and the real problem too, is that let’s just use affiliate marketing as an example. If you work with an affiliate, a lot of these people, especially if you’re if your affiliate happens to also be an influencer or a customer ambassador, for example. These are people that are busy, that have a lot of demands on their time. If it’s a customer ambassador, they may not even getting caught up getting compensated, they might be doing it out of the goodness of their heart. When that when the code leaks, and we had a customer go through this, they explained it to me and I really felt for them. If your code leaks to a coupon extension, what winds up happening is you then have to shut that code down, you have to issue a new one. And then you’re being put in the position of going back to your affiliates or your influencers, or your customer ambassadors and saying, Hey, here’s a new code. I’m so sorry, your code leaked, can you replace it on your website and your Instagram and all those places where you’re promoting it, it introduces a level of friction in your relationships with your ambassadors, influencers, and and advocates that I think is problematic, and can also affect the activation that you get out of them? And so it’s a complex issue and not easy?
Joshua Chin 15:48
That’s a great answer. And I think that that applies to not just the small merchants, but the bulk of our merchants at where our clients are at the typically approaching the 10 mil range. So quite fast growing businesses. And often when influencers come into play, and affiliate marketing, it’s often difficult, difficult thing to track attribution wise, and having one extension, browser extension definitely doesn’t that doesn’t help with from, I’m curious about from a user’s point of view. You know, if I were a honey user, or a Capital One shopping user, how would it change my experience shopping the brand? Would it be like, Oh, you’re not allowed to use honey on this site? Or, I mean, that would destroy my experience.
Kathleen Booth 16:44
Right? All right. So and, and user experience, I know, I don’t have to tell you, this user experience is so critical in ecommerce. And we’re very aware of that. And so the way we’ve built our tool is that it really doesn’t impact the user experience. And what I mean by that is that a lot of these extensions have a built in status, where if there isn’t a code that works, or if somebody already has a code, for example, that is lower than any code, they test, there’s a result that will pop up in the widget that says you already have the best deal. And so the way we’ve built our tool, is it blocks these extensions from auto injecting, it actually looks like they’re still trying to from the user standpoint, and then the user just gets a message that says you already have the best deal.
Joshua Chin 17:34
Okay, that’s, that’s perfect. That’s beautiful. Um, what, uh, what about the, you know, talking about adding code to the site? With How heavy is, is the code like, does it add to the issue load speed at all,
Kathleen Booth 17:51
no impact on site latency at all. It’s very light. It’s a very light code, it really doesn’t impact speed. And that that was really important to us, because we know that that site speed is crucial. it you know, it affects store performance, it affects SEO ranking. Yeah,
Joshua Chin 18:13
you don’t want to really like to like about this caffeine, it’s, it’s a, it’s margins, it’s really profit margins, when we think about just cash flow. For operating and scaling a, an econ brand. Having margins that, that are profitable is incredibly, incredibly helpful in any additional savings that come with, you know, coupon, coupon code issues, definitely helps. And that’s, that’s a big conversation that we are having, internally with our clients as well. When it comes down to like, how much discount Are you actually giving? And how much of that is affecting your margins? So I think that really does is a big benefit to, to to using Clean. Yeah,
Kathleen Booth 19:02
and you raised a good question in the beginning, which is around data. And so you know, one of the the big concerns that people come to us with is, you know, what’s going to happen to my conversion rates if I do this. And so we have done a lot of AV testing, and we have a lot of data from the customers we’re working with. And what we found is so fascinating. So when you think about coupon extensions, in most cases, they’re very different than traditional coupons. So traditional coupons like paper coupons that used to be mailed to you. Those were used to drive top of funnel on demand. So you know, the in the US the big the greatest example is always the Bed Bath and Beyond coupon that everyone used to get in the mail. And I was described, like, I’m sitting in my house, this coupon comes I didn’t necessarily think I needed new towels for my bathroom, but all of a sudden, I get this coupon saying 20% off on one item, and I’m like, I should just go and see if there’s something in the store that maybe I need right like I wasn’t planning on going, that’s how coupons used to be used. But as coupons have become digital, they’ve really moved to be much more of a bottom of the funnel tool. Certainly, when we’re talking about extensions, you know, you’re you’re very involved in email marketing, and you can still use coupons for top of funnel demand in that way. But when when somebody is using an extension, and they come to your site, nine times out of 10, they, they didn’t come to your site, because of the extension, they were there already. So they had a purchase intent. And what we’ve learned through our testing, is that the presence of a coupon extension, we now know how it impacts conversion at a couple different levels. So there’s two different types of conversions. There’s, there’s the number of sessions that come in that results in a purchase, that would be actual, you know, convert customer conversion. And then there’s the number of people who land and checkout and then complete their order. And that would be sort of part abandonment slash part completion, depending upon which direction you want to look at it from coupon extensions. What we found is that if somebody comes to your site, and they have an extension, they they are, let’s say, 5%, more likely to make a purchase. Okay, that’s at the very beginning sessions to completed orders, right, however, where this gets interesting, so so the psychology behind that would seem to implicate that if I land on your site, and I’m using a coupon extension, the prospect that I might be able to save money, makes me more likely to shop and add things to my cart. Now, if we look at the other metric, which is the number of people who actually get to the checkout page and have things in their cart, and then and then complete their order, there is statistically almost no difference in conversion with people who are using the coupon extension. And people who are either using it and we block the coupons or who don’t have a coupon extension. So what that tells me is that once they’re in Checkout, they’re committed, right, like they’ve mentally made the decision to purchase. And the coupon at that stage is a nice to have, it’s an extra bonus, it’s the icing on the cake, you know, and so, so blocking, the coupon extension from auto injecting actually does not affect part abandonment, at any statistical level, there’s there’s sort of like a 1%, we’ve seen, we’ve seen some cases where it’s your conversion rate is 1%. Worse than we’ve seen somewhere, it’s 1%. Better, and it seems to vary within that band based on retailer. What it does do however, if you block coupon extensions, is it increases your average order value on average by 10%. So if I break all this down, somebody comes in with a coupon extension, and they’re 5% more likely to make a purchase. But they don’t necessarily need to actually get a discount to incent them to complete the purchase. And if you block the discount at checkout, you are able to get 10% more in profit margins.
Joshua Chin 19:02
Yeah, that’s huge.
Kathleen Booth 23:10
Right?
Joshua Chin 23:11
Yeah.
Kathleen Booth 23:12
And everybody assumes that extensions are good for their business. And here’s what’s really, really drives me nuts is a lot of the retailers I’ve talked to again, they assume coupon extensions are good. And in some respects they are there’s that 5% bump in the beginning. But where it gets dicey is they partner with them, and they become affiliates with them, and they pay them for the sales they’re getting when what we’ve proven with our data is that in a lot of cases, they don’t actually affect purchase behavior at checkout. So your net, you’re taking a 10% hit based on the the savings from the coupon, but then you’re also paying the coupon extension and affiliate thing.
Joshua Chin 23:50
And that just don’t make sense. No. Have you have you seen this consistently across the board with the case, case studies? Or you’ve seen? Or does it vary? Are there certain cases where it makes sense to?
Kathleen Booth 24:06
You know, I would say we we’ve so far that AV testing we’ve done has been on a relatively small sample population, but the results have been consistent across that small sample. So um, I think I’m sure we will run into cases where coupon extensions do make sense. And and that’s something that we work with all of our customers on, that’s something that we test during the trial period. And because we’re not we as a company are not coming out and saying coupons are bad, or even coupon extensions are bad, what what we are trying to help retailers do is get more granular control over what happens on their site. And so you kind of assumptions are good for you. Great use them. But if you’re seeing some of the data that we’re seeing, and you feel like they’re not good for you, we believe you should be able to control them on your own website. Hmm.
Joshua Chin 24:56
I, I see that and you’re saying that there’s A period of trial period that, that, that that people can go through to see whether it makes sense like, from a conversion standpoint and margin standpoint,
Kathleen Booth 25:11
I have a 14 day free trial. And in that time period, we test what the impact is on conversion rates, and AOV, and all of those metrics that I just mentioned.
Joshua Chin 25:20
It’s very cool. It’s very cool. Is there a certain type of econ brand, or a certain size of econ brand that this would work incredibly well, for?
Kathleen Booth 25:32
Yeah, so um, so right now, our, our app is really only available at the moment for Shopify plus users, but we are rapidly moving in the direction of expanding that to, you know, regular Shopify and also other ecommerce platforms. So there’s that factor, but then I would say, you know, I think it really only is applicable for a company that’s using coupon or discount codes as part of the marketing mix. If you don’t use codes, you’re not going to have this problem. And then there are certainly some industries based on the data we’ve seen where the problem is much more acute. And I think apparel, we’ve seen it really, really bad. Beauty, home decor. But we if we have, you know, customers and all kinds of different verticals, we have some CPG customers, um, you know, like on our site, one of the customers that I think is listed as is super coffee, for example. Yeah, yeah, yeah, they’re a client of ours. And made in cookware is another one. You know, and they all come to us for different reasons. Some of them don’t have a lot of coupon codes they use but they, they’re, they’re luxury brands, and they don’t want to be associated with discounting. And so they feel it hurts their brand equity when somebody comes to their site. And a, an extension pops up and says we have 10 codes for you. It’s sort of they feel as though it cheapens the brand. And so they’re, they’re interested in blocking that for different reasons, maybe than somebody who does have a lot of codes and is actively using discounting. And so it’s a, it’s a really interesting kind of conversation that we get into with retailers.
Joshua Chin 27:09
Makes sense, that, let’s say could take a slight shift in the conversation. So Clean.io was you guys are relatively new company, and you guys are doing something really incredible. I haven’t seen any other company doing what you guys are doing. But uh, what’s the future of Clean.io? If I, if we were to have this conversation again, like two years from now? Well, yeah, that’s
Kathleen Booth 27:34
a great question. So it all comes back to that concept of digital engagement, security. And at our heart, what we are really dedicated to is giving brands the ability to control what happens on their own websites. And so in e commerce, you know, we’re already looking at other aspects, for example, even just with coupon codes, we’re seeing that how they claim attribution is questionable. And so we’re looking at Can we give brands better control over, over, you know, how different cookies affect attribution reporting, and perhaps help them improve the accuracy of that. There are a lot of different directions we could go, but it’s all about, it’s all about controlling the user experience, and your brand on your own website.
Joshua Chin 28:25
So it sounds like you’re turning, you’re turning, you’re basically reinforcing the idea of owned marketing and own channels, which, which I can jam with. I like that. I used to think that email has always been and will always be an own channel, and then iOS 15 came out. Now we realize that Okay, we’re not so we’re not as advanced as we thought we were. Um, so Kathleen, what are some? Or what’s one question that you wish more people with us? You personally about? That you just don’t get a lot in these podcast interviews?
Kathleen Booth 29:07
Oh, that’s such a good question. Oh, my goodness. Um, I mean, I think you’ve asked a lot of them. I think I you know, the question that the challenge we face is that peep, there’s a lot of assumptions out there. And I would love for people to to ask us, but also more broadly, just themselves, like, what does the data really show about how in this case, something like a coupon extension affects my business? Let’s stop relying on assumptions. And let’s really look at the data that’s specific to our own businesses. Because as you know, it’s different for every ecommerce business. It’s different by industry, based on who, what customer you’re targeting. But I you know, I’m a marketer. I spent my whole career in marketing and I wish more marketers would really walk the walk and look more closely at their own. data and think critically and question the assumptions that they’ve made. Because it hurts us if we don’t, if we don’t do that it hurts our results. And it can cause us to make investments in marketing that, that are money losers. And and, you know, again, as somebody who’s a marketer, I don’t want to waste a single dollar of my budget. And so knowing what’s really driving results is so, so important to me. And I just wish we would all challenge ourselves to to dig a little deeper on that.
Joshua Chin 30:27
I agree. And that’s definitely good reminder for for me as well. Kathleen, for people listening who are on Shopify plus, and you’re interested, check out Clean.io, what’s the best way to get in touch with you or someone on your team?
Kathleen Booth 30:43
Well, the beautiful thing is our company named Clean.io is also our URL. So we’re really easy to find. And when you get to our website, just look for Clean cart, which is this product that we’ve talked about today. And you can book a demo directly from our site, or you can fill out a form and we’ll get back to you. You can also if you just have questions, feel free to connect with me on LinkedIn. I am very active there and I will definitely accept your connection requests and I’m happy to chat and and you know, answer any questions you have. Perfect
Joshua Chin 31:15
link will all be in the show notes, guys. Kathleen, thank you so much for being on the show.
Kathleen Booth 31:20
Thanks, Joshua this was awesome
Outro 31:25
Thanks for listening to the eCommerce Profits Podcast. We’ll see you again next time and be sure to click subscribe to get notified of future episodes.
