Podcast Summary: Brain Driven Brands – Episode 7: "Customer Insights That Are Actually Holding Your Brand Back"

Introduction

In Episode 7 of Brain Driven Brands, host Sarah Levinger and co-host Nate Lagos delve deep into the misconceptions surrounding customer insights that inadvertently hinder brand growth. Released on December 31, 2024, this episode, titled "Customer Insights That Are Actually Holding Your Brand Back," unpacks seven critical insights that e-commerce brands often misinterpret or overvalue, leading to stalled progress and reduced profitability. Drawing from their extensive experience and recent studies, Sarah and Nate provide actionable strategies to overcome these pitfalls, ensuring brands can harness psychology-driven tactics effectively.

1. Overfixating on Click-Through Rate (CTR) and Return on Ad Spend (ROAS)

One of the primary discussions centers around the common industry obsession with metrics like CTR and ROAS at the individual ad level. Sarah emphasizes, "[...] every brand is different, every customer type is different, every journey is different" ([02:52]). Nate reinforces this by stating, "I don't care what those metrics say" ([04:10]). They argue that these metrics often fail to correlate with actual business performance. Instead, they advocate for tracking "real ROAS," which involves a blended ROAS by collection or SKU, providing a more accurate picture of profitability.

2. Misconception: Frequent Buyers Are Your Best Customers

Contrary to popular belief, Sarah and Nate challenge the notion that frequent buyers automatically represent the best customers. Sarah shares, "I do not think that frequent buyers are your best customers" ([08:26]). They suggest that high total spend and emotional connection to the brand are more indicative of valuable customers. Nate adds, "I'm way more profitable selling that $1,700 watch than I am selling three others" ([09:09]), highlighting the importance of focusing on high-value transactions over mere purchase frequency.

3. Overreliance on Surveys and Misreading Customer Feedback

The duo critiques the heavy dependence on surveys and focus groups, pointing out their limitations and potential to mislead brands. Sarah passionately states, "Please stop. [...] These are the customer insights that are actually holding your brand back" ([12:03]). They argue that surveys often fail to capture the subconscious motivations behind customer behavior. Instead, they advocate for behavioral data tracking, emphasizing actions over stated preferences. Nate concurs, highlighting the inaccuracies of traditional survey methods: "We should do a surveys episode [...] How did you hear about me? Stop."

4. Overvaluing Net Promoter Score (NPS)

NPS is another metric scrutinized in this episode. Sarah expresses frustration, saying, "These NPS scores drive me crazy because they are not indicative of behavior or emotional affinity towards your brand" ([16:19]). They argue that while NPS provides a quantitative measure of customer satisfaction, it fails to capture the underlying reasons behind customer loyalty or dissatisfaction. This superficial understanding can lead brands to misallocate resources based on incomplete data.

5. Misreading Pricing Sensitivity Metrics

Sarah and Nate discuss the pitfalls of misinterpreting pricing sensitivity. Sarah advises, "Misread what your customers feel about your prices [...] you're leaving money out there" ([17:15]). They emphasize that price sensitivity is highly contextual, influenced by factors like individual circumstances, seasonal trends, and overall market conditions. Nate shares their experience of raising prices while simultaneously increasing conversion rates, illustrating that rigid pricing strategies can be counterproductive.

6. Ignoring Post-Purchase Behavior

A groundbreaking insight from a recent study is explored, revealing that overly swift delivery times might increase customer churn due to lack of emotional attachment to the purchase. Sarah notes, "Early delivery or quick shipping of products might be doing more harm than good" ([19:06]). They suggest experimenting with longer shipping times to allow customers ample time to emotionally commit to their purchases, thereby reducing buyer's remorse and enhancing long-term loyalty.

7. Overreliance on Quantitative Metrics Without Understanding the 'Why'

The final insight addresses the industry's tendency to prioritize quantitative data without delving into the underlying reasons. Sarah criticizes the mantra "the data doesn't lie," arguing that data merely indicates what is happening, not why. She states, "Data is only telling us what's happening. [...] We need to track what's happening" ([21:56]). Nate adds, "Every little piece of your ecosystem has been set up to try and get someone to purchase, but [...] humans are irrational" ([23:17]). They stress the importance of qualitative insights and understanding human psychology to complement quantitative data.

Conclusions and Takeaways

Sarah and Nate conclude the episode by urging brands to rethink their reliance on conventional metrics and embrace a more nuanced understanding of customer behavior. Key takeaways include:

• Adopt Real ROAS Tracking: Move beyond CTR and traditional ROAS to track profitability by SKU or collection.

• Redefine Best Customers: Focus on high-value customers and those with strong emotional ties rather than just frequent buyers.

• Revamp Survey Strategies: Utilize behavioral data and subconscious indicators instead of solely relying on traditional surveys.

• Reevaluate Pricing Strategies: Understand the contextual nature of pricing sensitivity to optimize revenue without alienating customers.

• Monitor Post-Purchase Emotions: Balance shipping speed to foster emotional commitment and reduce buyer's remorse.

• Integrate Qualitative Insights: Combine quantitative data with deep psychological insights to fully grasp customer motivations and behaviors.

By addressing these seven flawed insights, brands can unlock new avenues for growth, enhance customer loyalty, and drive sustained profitability. Sarah and Nate's expert analysis provides a roadmap for e-commerce brands to navigate the complexities of consumer psychology, ultimately leading to more effective and resonant marketing strategies.

Notable Quotes with Timestamps

• On Overfixating Metrics:
  Sarah Levinger ([02:52]): "Please stop over fixating on your metrics."

  Nate Lagos ([04:10]): "If I spent ten grand advertising this watch and we only sold ten grand of this watch, then the ads are not working."

• On Best Customers:
  Sarah Levinger ([08:26]): "I do not think that frequent buyers are your best customers."

  Nate Lagos ([09:09]): "I'm way more profitable selling that $1,700 watch than I am selling three others."

• On Surveys:
  Sarah Levinger ([12:03]): "Surveys are incredibly damaging to brands in general because they're run incorrectly."

  Nate Lagos ([13:53]): "They're running the same post purchase survey they've ran for the past 10 years."

• On NPS:
  Sarah Levinger ([16:19]): "NPS scores are not indicative of behavior or emotional affinity towards your brand."

• On Pricing Sensitivity:
  Sarah Levinger ([17:15]): "Misread what your customers feel about your prices [...] you're leaving money out there."

• On Post-Purchase Behavior:
  Sarah Levinger ([19:06]): "Early delivery or quick shipping of products might be doing more harm than good."

• On Quantitative Metrics:
  Sarah Levinger ([21:56]): "Data is only telling us what's happening. Something is happening."

  Nate Lagos ([23:17]): "Humans are irrational."

Final Thoughts

Episode 7 of Brain Driven Brands serves as a critical examination of the metrics and insights that many e-commerce brands mistakenly prioritize. Sarah Levinger and Nate Lagos offer a refreshing perspective, encouraging brands to look beyond surface-level data and delve deeper into the psychological drivers of customer behavior. By challenging conventional wisdom and advocating for a more integrated approach to data and psychology, they equip listeners with the tools needed to build more resilient and profitable brands.