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The Agile Brand with Greg Kihlström®: Expert Mode Marketing Technology, AI, & CX
#781: CommerceIQ CMO Sai Koppala on retailer resilience through intelligent operations
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- [00:01]
A
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- [00:58]
B
Welcome to Season seven of the Agile Brand where we discuss the trends and topics marketing leaders need to know. Stay curious, stay agile and join the top enterprise brands and Martech platforms as we explore marketing, technology, AI, E commerce, and whatever's next for the omnichannel customer experience. Together we'll discover what it takes to create an agile brand built for today and tomorrow and built for customers, employees and continued business growth. I'm your host Greg Kilstrom, advising Fortune 1000 brands on martech, AI and marketing operations. The Agile Brand podcast is brought to you by Tech Systems, an industry leader in full stack technology services, talent services and real world application. For more information, go to teksystems.com to make sure you always get the latest episodes, please hit subscribe on the app you listen to podcasts on and leave us a rating so others can find us as well. Now onto the show. What if the biggest threat to your brand's profitability isn't the next tariff or supply chain disruption, but an outdated playbook that forces you to choose between raising prices on loyal customers or sacrificing your margins? Agility requires more than just reacting quickly to market changes. It requires the intelligence to anticipate them and automate the optimal response. Today we're going to talk about how leading retail brands are navigating complex economic pressures like tariffs and inflation. Not by resorting to the old tactics of deep discounts or across the board price hikes, but by deploying AI to create a more resilient and intelligent operation. We're going to explore how AI is helping brands maintain pricing stability, turn insights from major shopping events into real time strategy, and fundamentally shift teams from staring at dashboards to taking automated margin protecting actions. Tell me Discuss this topic I'd like to welcome Sai Coppola, CMO at Commerce iq. Sai, welcome to the show.
- [02:54]
C
Thanks Greg for having me on.
- [02:56]
B
Yeah, looking forward to talking about this with you. Before we dive in though, why don't you give a little background on yourself and your role at Commerce iq?
- [03:02]
C
Sure. I joined Commerce IQ a little over a year ago. I run all of marketing for commerce IQ. Prior to that, for 20 years I worked in a variety of technology companies running marketing functions.
- [03:15]
B
Great, great. So yeah, let's dive in here. Want to start with the strategic view of this and touch on what talked about a little bit in the in the intro is moving beyond purely reactive measures and certainly this is, this is tough. You know, when brands are faced with tariff driven cost pressures, other type of economic concerns. The the default playbook often involves layoffs, passing costs directly to consumers, things like that. How is AI fundamentally changing that C suite conversation and offering maybe a third more sustainable path forward?
- [03:52]
C
Sure. If you actually look at what's happening over the last year, we are actually seeing brands rewrite the P and L playbook using AI. And it's not just how can I find profit with precision and not necessarily just price hikes. So if you take a step back, what a lot of the brands leading brands have been able to do is combine a variety of data, working with the retailers, sales, operations, media data and then figure out okay, what are the places where we can actually increase prices and where we cannot afford to increase prices. That's one piece on the revenue side. Right. So we've seen this by the way throughout the year. If you look at when we did analysis over by price bands, we looked at pick any category like let's say toys, we did three different price bands. What we actually seen is the higher price bands, the prices have gone up like 10% plus over the last year. So significant price increase. But on the lower end you are not seeing a very flat pricing. There's no pricing because we know the consumer is having difficulty at the bottom end. So therefore the prices have not gone up as much. So that's one aspect of it. Right. On the cost side, like the example of retail media, brands are much more sophisticated now looking at okay, how am I doing organically on the retailer's page and if I'm doing really well, let's not go spend too much money on that particular search term. Right. Let me invert optics. So brands are looking using AI to both optimize on hey what shoppers can I there's price elasticity so I can increase my price so improve my revenue. At the same time, where can I reduce my investment, be more efficient with my investment? So that's what we're seeing brands do.
- [05:43]
B
Yeah. So you know, in, in talking about moving away from purely reactive discounting and other things like that. How does using AI to manage pricing not only protect margins but also build and maintain consumer trust? Because I think that's the other aspect here is obviously we need to think about profitability and internal operations, but we also can't lose the consumers through this journey. So how can AI help there? Especially when shoppers are more price sensitive than ever.
- [06:19]
C
Yeah, this is all in the context of over the last few years brands have engaged in essentially shrinkflation which actually hasn't really helped with trust. So I think shrinkflation has stopped right now. So the brands where the focus a lot is on as I was talking about, especially now we have shopper data which is all the click through signals, the sales data and promo data to figure out. I'm able to do micro targeting by segments and identify, hey, which SKUs need price support on which SKUs there's some elasticity that I can afford to not erode my margins. And that helps brands maintain a pricing strategy which still meets where the consumer is. And in many ways frankly being transparent about price increases. We are actually seeing a couple of the retailers have come out publicly and said hey, because of tariffs we are trying to absorb as much of the cost as possible and we've seen margins also go down at the same time they are passing costs onto consumers, especially where there's price elasticity.
- [07:34]
B
Yeah. And so another kind of shift in consumer behavior, major events like recent prime days for instance, reveals some other shifts in consumer behavior like splitting between premium purchases and bulk buying essentials. Can you walk us through maybe a practical example of how AI helps a brand not just spot a trend like this, but pivot its media pricing, inventory strategies, all of those things in real time, if not near real time.
- [08:08]
C
Let me walk you through a couple of examples here. We have a few leading brands who use 50 plus real time data signals that would be like CPC share of shelf and inventory data to kind of identify hey, what's the optimal demand curve and make media investments based on that. Right. So during Prime Day 10 of our customer brands actually saw like 140% increase in incremental ROAS. Incremental ROAS is essentially is how much incremental sales I'm actually driving with this media spend while also seeing their CPCs drop. And the reason they're able to do that is essentially they are able to optimize now in real time based on variety of signals. Hey, where is the opportunity for me to invest on the right keywords for the right SKUs I have based on inventory and where already I'm doing not doing as well in organic search. So we can be a lot more precise in where to make my immediate investments. And that's been very valuable for a lot of retailers where yes, you're spending a lot of retail media dollars, but you're able to stretch your dollars a lot more. You know, one of the examples of the auto care brands we work with, you know, optimize their traffic by, you know, by growing 3x in traffic and 200% increase in sales while not having to increase the retail media spend. So you can be a lot. There's a lot more efficiencies that can be gained if you take a step back. If I'm a brand with 500 plus queues and I'm selling this across 20 different retailers in the US it is manually impossible for me to optimize each and every aspect of it. That's where AI steps in, right? The manual, the execution of it, where the scale is so much, I can't just hire so many analysts and hands on keys. Is where we see AI really being impactful.
- [10:09]
B
Yeah. And another part of this is not only is that impossible to do all that manual work and just have the resources to do it in any reasonable way. Looking at dashboards and reacting to the. There's a time lag, right. I mean you can, you can look at the most beautifully designed dashboard with all the information that you could possibly have added, but you're still reacting to information and need to take that process it versus the idea of an AI teammate, for instance, that is a little more proactive and things. So maybe could you talk a little bit about what does something like that look like in practice and for a marketing or operations leader, what is transitioning to an approach like that actually look like?
- [11:01]
C
When we launched earlier this year, early beginning of this year, when we launched Ally, which is essentially our AI teammates for commerce, we spent a lot of time actually thinking, what is this? As an AI agent, as a teammate, what is it? The reality is the best and from the business impact perspective, yes, AI can give you recommendations based on a variety of data. You still need human in the loop for some decisions. So what we're seeing more and more is the teams are not spending as much time chasing data and putting the data together, cleaning the data and analyzing the data, but they're more focused on strategic activity as well as decision making. So for example, when it comes to out of stocks, we can automatically quickly tell you, hey, here are a set of SKUs that are out of stock. So let's not invest retail media dollars on those. The way we build the systems is AI makes the recommendations. The human can then approve those recommendations to automate that. So we give the flexibility for brands to make the right decisions. Because I still believe you need in many cases human in the loop, but take the grunt work out of having to do those things.
- [12:24]
B
And so in terms of measuring success of all of this, obviously there's some metrics that are, I mean sales are revenue, you know, there's certain things that are not going to change regardless of the tactics or even the strategies used. But as brands move towards this, let's just call it more AI driven stability versus more rapid fluctuations, promotion heavy strategies, what KPIs do matter most, but also perhaps change.
- [12:56]
C
I think for the longest time the focus has been most companies focus on growth, growth, growth. You know, like look, it definitely focuses now on more profitable growth, not just volume, right? That means in the media side shifting from just roas to incremental roas, net PPM contribution margin, those are the factors end of the day, you know, I'm sure you've, you've seen the recent McKinsey report or the prior MIT report where they said like hey, a lot of companies are focused on AI pilots, but how much, how many of them are actually seeing, you know, real business impact? In many ways our approach to AI has been that let's pick a couple of use cases and go deep, right? Whether it's in content, one other by the way, another interesting thing is on the content side, if you look at it in several categories, 30 to 40%, 30% can be all digital sales or at least digitally influenced sales, right. In those cases. And once again going back to the example I told you, if I'm a brand with 500 SKUs across 10 plus retailers and yes, I have the ideal how my brand should show up, how the PDP should show up in terms of the imagery and the text and everything like that. But now to how am I going to make sure that's all consistent across all those retailers? And also being able to adjust it, you suddenly realize, hey, increasingly customers are searching for a specific keyword in pet food. It may be picking an example, maybe protein is a big keyword. People are searching by. How do you now incorporate that into it's extremely manual process? Today we are able to automate with AI. We can see, hey, what keywords are trending and Based on that, how do you improve your product page on a given retailer and have your marketing approve it and automatically updates it? Right. Things like that. We're seeing more and more where yes, the focus has to be more and that of course improves conversion. So that's where it's all about efficiencies and profitability. Either it's improved conversion, reduced cost or being very strategic of way increase prices is all the things we're seeing brands do increasingly.
- [15:19]
B
Yeah. And looking at from the customer standpoint, customer loyalty, retention, lifetime value even, what role does transparency play in? Whether that's transparency and pricing or other ways, how can brands measure the impact of greater transparency on things like customer loyalty and retention?
- [15:45]
C
Yeah, look, in a market that is defined by uncertainty, trust is essentially the new currency of loyalty. So we can correlate transparency driven messaging with changes in sales, ASP and sentiment across retailers. What we are seeing is brands are increasingly being public about like Walmart, I think a couple of months ago said that hey, we'll keep prices as low as possible but the reality is we have to increase where needed because we are already on very thin retail margins. P and G also announced recently that hey, we're going to increase prices by 25% of their portfolio across the board because of increased tariff costs. So in many ways being transparent with a customer, the end consumer, about the need to increase prices where we need to, at the same time willing to absorb some of the costs is a way you would build some trust.
- [16:46]
B
Yeah, yeah. So I want to talk a little bit about some, some of the future of AI powered commerce and certainly one of the topics that comes up a lot these days, agentic AI, it's becoming more and more integrated into retail operations. But as, as this continues automating, you know, decisions across media, sales, supply chain, what becomes the new core competency for the human teams in this equation? And what should leaders be thinking about when looking at things like talent development and other things?
- [17:19]
C
Look, AI is taking over some of the day to day manual execution of it. Right. And reality is the human in the loop is still critical. The human is moving to more into the deciding and the collaboration aspect of it. If you take a step back today, if you look at on one side you have retailers going increasingly algorithmic, right. Like if you look at what Walmart and Amazon are doing. So brands need to keep up with that. If you look today, typically a joint business planning between a brand and a retailer, it's extremely manual process. There's lots of time spent on the brand side. By the category management teams and the sales strategy teams, building together the whole plan for the joint business plan. Then there's a negotiation going on with the retailer. And then on the execution side, on a monthly basis, on a weekly basis, you're literally sitting face to face with the retailer, figuring out what's working well, what's not working well. Today a lot of that stuff is still done on PowerPoints and Excel sheets. All we are saying is AI can simplify that aspect of it where it can streamline getting data and analysis, but you still need the human to make decisions and collaborate with other humans on the other side to drive results. So there is a lot of gloom and doom about, hey, AI is going to replace jobs. And I firmly believe AI is an extremely powerful force that can streamline a lot of the work, helping humans transition to more of the strategic and the collaboration kind of work and decision making.
- [18:56]
B
Right? Yeah. So thinking ahead a little bit here, you know, thinking about whether it's the next major frontier for AI and retail or other things, you know, if we were having this interview a year from now, what is one thing that we would definitely be talking about?
- [19:13]
C
What we will see is the collaboration between retailers and brands would become more streamlined because of AI. As I was saying earlier today is extremely manual and slow process. What's going to happen is I foresee a world where that collaboration becomes much faster and streamlined, where you have agents on the retailer side, you have agents on the brand side and they would work together. Let me give you a concrete example. I was talking about digital shelf. We see a world where when the AI on the brand side will identify here the 10 things you need to fix to improve your conversion on the retailer website on the brand side, the person responsible for the commerce team would approve those recommendations. Based on the recommend, they'll review the recommendations. Once they're approved, it automatically hits the retailer side. On the retailer side, the retailer agents, goes and updates the website. That's where we're headed. Right? I'm very bullish on where this can go, frankly. If you look at the value chain, retailer margins are so low. Right. The only way to increase profits without having to increase prices is to be a lot more efficient. And that means personalization, better conversion. All of that comes into play. One of the things we haven't talked about is shopper behavior. Now I can combine shopper behavior, which includes sales clicks and all these things, with my SKU data and everything, as well as shelf data. We can do a lot more personalization which improves conversion and more sales. So lots of interesting stuff. I'm excited about coming over the next year.
- [21:06]
B
Yeah, we'll have to have you back on in a year and we can talk about all that. Definitely interesting stuff. Thanks so much for joining today. One last question before we wrap up though. What do you do to stay agile in your role and how do you find a way to do it consistently?
- [21:23]
C
What I found more for my teams is because there's so much change, you need to have a culture of psychological safety within your teams that allows people to experiment, do a B testing, try things out without worry about that role because we are in a time of uncertainty and that's where also gives you the most opportunities. But you need to let your teams feel free to try, test, experiment on things so that way they can find something that really works for their business. That's one. The second one is when I'm recruiting. Now I'm looking for people with a growth mindset. People are willing to say that hey, I haven't done this way before but I'm open to look at from first principles and see if this is something that makes sense. Let me try it out.
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B
Right.
- [22:18]
C
Those are the things I'm looking at when I'm building my teams and even personally yesterday for example, I was trying to build an automated workflow within marketing on how I can go and look at what are leading thought leaders on LinkedIn saying about this specific topic. How can automated using an aten Right. So even I'm getting my, you know, as even a marketing leaders have to get their hands dirty to understand how AI can help their teams.
- [22:43]
B
Yeah. Love it. Well again I'd like to thank Sy Coppola, CMO at Commerce IQ for joining the show. You can learn more about CY and Commerce IQ by following the links in the show notes. Thanks again for listening to the Agile Brand brought to you by Tech Systems. If you enjoyed the show, please take a minute to subscribe and leave us a rating so that others can find the show as well. You can access more episodes of the show@theagile brand.com that's theagile brand.com and contact me if you're interested in consulting or advisory services or are looking for a speaker for your next event. Go to www.google greg kilstrom.com that's G R E G K I H L S t r o m.com the Agile brand is produced by Missing Link, a Latina owned, strategy driven, creatively fueled production co. Op. From ideation to creation, they craft human connections through intelligent engaging and informative content. Until next time, stay curious and stay agile.
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