Notes:
The Amazon Maturity Matrix - 6 Factors That Drive Results On Amazon
Transcript:
Peter Crosby:
Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age.
Peter Crosby:
Hey everyone, Peter Crosby from the Digital Shelf Institute. Meeting the competition on any digital channel, but especially Amazon, is not a set it and forget it exercise. From their deep expertise is the Amazon digital marketing agency of record for over 125 brands. The team at Bobsled Marketing has developed a POV on what it takes to succeed on Amazon. And the measurement of maturity makes you a caterpillar, spider, chameleon or lion. Kiri Masters and Caroline Adams from Bobsled brought to the podcast their Amazon evolutionary scale from a report entitled, The Amazon Maturity Matrix - 6 factors that drive results.
Peter Crosby:
So Kiri, thank you for being such a valued member of the DSI community and coming on the podcast again, brave, brave person. And we really love having you and Caroline. We are so happy to have you both here to talk about this important report. So welcome Kiri, welcome Caroline.
Caroline Adams:
Thank you.
Kiri Masters:
Thanks Peter.
Peter Crosby:
There you are added again, Kiri, with another fantastic report this time about Amazon Maturity, and I believe it involves lions and caterpillars, but we'll dig into that, but in all seriousness, tell us about this report and why you set out to write it.
Kiri Masters:
Yeah, so I'll start with a story and we've got a lot of stories to share in this podcast, which is always how I like to learn about new ideas. But a couple of years ago, I had a Zoom call with a prospective client of Bobsled Marketing at the company that we work at, and I'll call this person Mary. Mary was a category manager for a personal care brand and had been tasked with identifying and standing up new growth channels for the brand. The brand already had a vendor relationship with Amazon, but they were really struggling to grow that channel. And at first, Mary assumed that their growth issues were because they didn't have regular contact with a vendor manager; those are disappearing vendor managers at Amazon.
Kiri Masters:
But as I talked a little bit more with her, I realized that wasn't really the root of the problem that Mary was having with growing the Amazon sales channel. She said things like, "The executives at my company are pretty dismissive of Amazon as a growth opportunity. No one else in my company really understands eCommerce marketplaces. I'm a team of one. There's no marketing budget for channels outside of our key retail accounts." And so in my head, I'm thinking, "Man, if I was Mary, I would be getting out of that place and going to a company that had a real vision for the future." But to her credit, Mary stayed the course with that personal care company and kept chipping away at the status quo.
Kiri Masters:
And of course, within the last few years, we've had a pandemic which has accelerated Amazon and eCommerce channel growth. There were also some internal leadership changes at the company, and eventually there was a change at Mary's company. Budget opened up real goals were identified to grow the channel and she wasn't alone fighting the good fight alone anymore.
Kiri Masters:
And so this is a situation where a lot of companies, a lot of eCommerce professionals find themselves in that they know they're limited and perhaps stuck at being unable to grow over the long term. And that's what we have at Bobsled as a catchall for this kind of...
Kiri Masters:
The root of Mary's problem was that her company wasn't really engaged with the Amazon channel and it had no ability to execute on the opportunity in front of it. They weren't mature in their thinking or ability around the Amazon sales channel. And so that's what we set out to do, is answer this question about Amazon maturity and how we came to that was, in thinking about what do our most successful clients do differently? And that's what we found, is that these brands who are successful on Amazon that we work with just seem to behave differently. They approach their Amazon channel in a unique way. They look at new growth opportunities differently. And so last year we decided to focus our research time on that question. What do our most successful clients do differently?
Kiri Masters:
And so what we did, and this was a team effort with myself and Caroline and a number of other Bobsledders was to look at our client portfolio, score and analyze them across a few different metrics of what we thought maturity might look like. And where we landed was this framework of assessing maturity on Amazon and understanding what are those behaviors that brands have who are especially mature and ultimately, how can those less mature brands start to mature in their thinking around on the channel?
Peter Crosby:
And Kiri, when you think about maturity, what are the KPIs that the most mature companies are... What was the target like? Is it purely growth or how do you think about the scales that are, or maybe it's in the two and two by two matrix, sort of the, what are the elements?
Kiri Masters:
Yeah, exactly. So the conclusion we eventually came to after waiting through a lot of analysis of, "Hey, what are these clients doing differently? How are they thinking? How are they behaving inside their organizations? How are they spending their budgets?" What we discovered was this access to engagement and execution. And so engagement is things like having a clear objective for the Amazon channel, having a vision for what the outcome should be, having executive buy-in from the very top of the organization and support from the very top and curiosity. So engagement was a really important factor and there were a few different ways that we looked at that.
Kiri Masters:
And then the other factor is execution. This is things like having the resources, whether that's people, budget, skills, the attention on the channel. And these are the brands that have the resources to actually execute on the Amazon strategy. So those are the two dimensions that we looked at and plotted out a four by four matrix, essentially, of high engagement, low engagement and high execution and low execution. And so within that two by two, we thought about what type of... How can we represent the brands based on where they sit on the two by two as archetypes? And we came up with a model of wildlife based on the experience of one of the co-authors of the report, Gary, who grew up in South Africa. And so we took some inspiration from his childhood and came up with a wildlife theme to show the big lion and the high engagement and high execution quadrant of the two by two and some other animals that have their own challenges and strengths in the other quadrants.
Peter Crosby:
Yeah, it's a fun characterization to just give a sense, but a bit anti-nature, because I think it starts out with caterpillars and somehow the caterpillar becomes a lion, which is maybe just how much of a miracle happens along the path of Amazon maturity.
Speaker 6:
Exactly.
Peter Crosby:
But so I'm sure the mature brands fall into the lion dimension. And Caroline, I'd love you to just walk us through, what are those mature brands, what are those lions doing that are different from, say, their caterpillars at the bottom of the scale?
Caroline Adams:
Sure. So lions fall within the mature brands and that's really the archetype or the quadrant that most brands should aspire to be, it's in the top right hand of the quadrant, and it is high engagement and it is high execution. So what makes a brand mature? What we've learned is that brands are mature because they are actively engaged. They have a clear vision of what their future looks like. Their companies have goals, they have expectations. And not only that, they are executing on those goals and those ex expectations.
Caroline Adams:
But the vision is clear. It's a vision that's articulated to all team members in the company. And it happens from the top down. It's not just felt by the soldiers on the bottom line who are executing, but it's a behavior as well that's happened from the CEOs or from the top level of the company. So it's really ingrained from the top down.
Caroline Adams:
But in addition to that, every team member really knows what their role is. They know how to execute. They know what they need to do as far as executing on what that vision is in the company. So let me provide you with a quick example of that. So I had a client that was... Q4 was strived with many problems logistically within the organization, within Amazon. And there were logistical problems, there were operational issues. And Q4 is such a busy time of the year that having inventory at Amazon is super important. Because if you don't have inventory, you can't sell products. And with all these logistical and receiving delays, a lot of clients were struggling with getting product into the Amazon warehouse and having it available for sale.
Caroline Adams:
But this one particular client ran out of inventory very quickly, early on in the season. But we put some thoughts together, we put a strategy together. And once that strategy was talked about, they immediately reacted to it. They made a decision immediately. "Okay, this is how we're going to execute it. This is what we're going to put in place." It required a lot of team effort, change in packaging, change in how they were shipping a product, but they pivoted really quickly. They made those necessary changes and as a result, their out of stock position was limited and it forced them to have inventory back into Amazon at a relatively quicker place. So it's really about acting as a cohesive unit, just like a lion pride. They all act together. They act cohesively and they know from that perspective what their role is in the execution. And they all did it in fabulous ways.
Peter Crosby:
Gosh, so much of what you're talking about Caroline has nothing to do with technology, has something to do with process, but really it has everything to do with people.
Caroline Adams:
Exactly. It's a mindset.
Peter Crosby:
Yeah. And I love that you talk about people that are in this mature category as being active learners, that learners in everyday engagement. And I think a lot about... We all know how hot the job market is for people with digital skills. And have you seen organizations that are caterpillars get to lions without a change in leadership? Can somebody in the middle of this, a person who owns the Amazon channel, for example, when you talk about how important it is for that to be coming from the top and things like that. Like if you're at a company where you're not finding that, can you get your company to a lion if there isn't that happening?
Peter Crosby:
You talked about Mary, I think, Kiri, and it sounded like she wagged the dog from her position. But I wonder, I would love you guys to talk about how do you know whether you're at a place that can get there because so much of it is about people and leadership.
Kiri Masters:
So I think, actually, there's some great thought leadership that intersects with ours, which is from Chris Perry and Oskar Kaszubski at first mover. They've recently put out a thought piece called SHEARED, Shedding Your Coat of Conformity in eCommerce. When I spoke with Chris about it, there's a lot of themes between our research and SHEARED that resonate. When I spoke with Chris about it, and I shared that Mary example, I was like I probably wouldn't stick around. That just seems so shortsighted.
Kiri Masters:
And Chris's point was a good one, which is, it may not be the person to change a company from the inside out, especially if you are further from the executive suite. But think of it like a relay race, and you're going to pass the baton onto the next person, and eventually that change will come. There'll be a pandemic. There will be a change in leadership. And so I think it's a personal choice in some ways, but I think if you take the view of moving the entire industry forward, it's passing the baton onto the next person and trying to get as far as you can. I think that's the most generous way to look at it. And I'm ...
Caroline Adams:
Yeah. And I would also-
Kiri Masters:
Curious to hear what Caroline thinks]-
Caroline Adams:
Yeah. I would also say as well, Kiri, that one of the most surprising things to me through this research project was when you think of a mature brand, you would immediately think of a mature brand as a brand that's been around for a really long time. They've been in the marketplace for hundreds of years, or they have a real established brand and they have layers of resources internally. So they have a lot of areas where they're able to pull from. But what we've learned through our research is that lions don't necessarily mean big brands, brands that have been around for a long time. It's more of the mindset and it's more of how they approach that particular platform, the Amazon platform, or really any platform for that matter. So that to me was a really interesting piece of it because it answered your question as far as can it be changed?
Caroline Adams:
It really has to be a whole cohesive environment, right? So for example, caterpillars are at the bottom left part of the quadrant, lower left quadrant. Low engagement, low execution. They really need help in all areas to become a mature brand. But think about a caterpillar. They are involved in the status quo. They don't like to move. They don't like to venture out. They're kind of stuck in their way of thinking. And a lot of these bigger brands or brands that are layered with hierarchy want to do it their way, as opposed to doing it the Amazon way. And a really important piece about Amazon is it's Amazon's playground. So if you really want to be successful on Amazon, you have to do it the Amazon way, and you have to morph that platform, in particular. And I think that's one of the biggest issues that happens a lot is that some of these brands that are not mature, especially that fall in a caterpillar, they want to do it their way. They don't want to do it the Amazon way. And I think that's one of the mindsets that need to be changed internally so that everybody's marching toward their clear vision and their clear goal to be successful on Amazon.
Peter Crosby:
Yeah. That's what stood out to me in your example is that it's not just the eCommerce team changing their methods, it was, in your example, the supply chain had to get involved, because if the packaging didn't change, they weren't going to be able to get into the warehouse. I'm assuming that's part of what was going on there.
Caroline Adams:
Exactly.
Peter Crosby:
And those are... You might have a lion in the Amazon channel management, but if you only have caterpillars over in the supply chain, it's really tough. So it does take that cross-functional kind of mindset to be able to do that.
Caroline Adams:
And oftentimes, a lot of organizations that we work with have competing priorities. So they are fulfilling, say inventory or product in a different channel. Maybe it's a brick and mortar, maybe it's a different platform, or a different space, and that's not having a true focus or putting a true investment behind the Amazon platform, which is really necessary.
Peter Crosby:
All right, Kiri, you and me, chameleons. I'm so interested in this evolutionary scale, but how does a chameleon become a lion? You talk a lot about the lessons from lions in the report. I think there are six of them, but if you're talking to a chameleon, what are you having them focus on?
Kiri Masters:
Yeah. So the lessons from lions are, as you mentioned, there are six. I'll just share two. As we started to share this research, the one that sort of resonated the most was to track meaningful KPIs that are coherent with the company's goals. And this is something that we see at Bobsled all the time and it's a real drag on performance because the way that we look at it is there's two ultimate goals at the end of the day, profitability or growth. And so there's different flavors of that. Profitability could be measured in lots of different ways as we have learned in earlier research and growth can be things like market share, growing category share and things like that. But if you think of it like a set of scales, you could really be focused on profitability, You could be really focused on revenue growth. If you try to be focused on both at once, you're not really going to get much out of that equation.
Kiri Masters:
So looking at those two ultimate objectives, there are lots of KPIs on an Amazon dashboard or that your agency might provide you with. And looking at those KPIs, they're each suited to measure something related back to either profitability or revenue growth. And what we see a lot of the time is brands looking at metrics that don't actually correspond to their ultimate goal. For example, they might have a goal of increasing market share, but they're really focused on advertising cost of sales or ROAS, which is a profitability metric. And it's not really trying to get your advertising cost of sales down as low as possible so that you're spending the least amount possible to acquire a sale, it's kind of working against your market share goal. And so that was a big lesson from the lions of our group, those really mature companies who are thinking about things strategically, is that they know what their main objective is and they have a dashboard of KPIs that are consistent with that objective.
Peter Crosby:
So Kiri, do you find that this will get as granular as what's the goal for this product on this channel? Where do you often find that they need to, because they may have different objectives and does it differ by channel or is it usually here's a product and this is what to have, or we're a growth company? Where does it get?
Kiri Masters:
Yeah, that's a terrific question and that's often the case. So we'll often have a company that has a new brand that they're launching and those have got market share goals, those have got growth goals. The rest of the portfolio, the cash cow products, might have profitability goals because they're the cash cows and then you've got a segment of your assortment or entire brands that have a different type of goal.
Kiri Masters:
And also as you mentioned, different channels might have different objectives as well. So, Amazon, at this stage in the maturity cycle, it might be more of a profitability play for some brands, whereas looking at more emerging channels like Instacart or GoPuff, or something like that, brands might be a little bit more aggressive and have more of a revenue growth goal on different channels. So you're totally right. There can be a mix across assortment and channels.
Peter Crosby:
So now that you have this approach, I wish we had time to talk about all six lessons from lions, but it's in the report and we'll have a link to that in the show notes. But as an agency partner, has the way of thinking about this changed the way in which you talk to your clients and engage with them? Are you able to use this to help drive important conversations in a way that maybe were more generic or unspecific prior to you guys really clarifying this even for yourselves?
Caroline Adams:
Yeah. I can answer that one. I work specifically with clients directly in my role at Bobsled and oftentimes, my perception of where they would fall on the assessment is different from their perception of where they would fall on the assessment. So they would take the assessment and they would be plotted as an example, as a chameleon or as a caterpillar, but in their mind, they should be a lion because they think that they're executing everything correctly.
Caroline Adams:
And oftentimes when you talk with clients, giving them different advice or helping them strategically grow toward their goals, it's more of just a dialogue. Yes, I'm the expert, I'm helping them, but when you actually haven't taken assessment and you see where you're falling based upon your own answers and based upon where you're falling on this key metric, it almost brings it to light a little bit, "Oh, we need to improve in this area. We need to improve in that area." It's not just what Caroline's saying. She's just not saying these things. Now there's almost like a quantifiable result behind it. So it does help with the dialogue and it does help with them just being able to morph for change or grow in meeting those KPIs on the Amazon platform.
Peter Crosby:
Great. So Kiri, I think I skipped your second lesson from lions, so I want to make sure we get to that. What's the second one that you would want to focus on with these chameleons?
Kiri Masters:
Yeah. Sure. And this echoes a little bit of what Caroline was talking about early with her client example, but prioritizing Amazon in the supply chain, we often find with, especially larger, more traditional retail focused brands that Amazon is really an, an afterthought in their supply chain planning efforts and staying in stock on Amazon is a pretty low priority. But what we found across our most mature clients is that 85% of them prioritize Amazon in their supply chain efforts. The reason why that's important is as Caroline mentioned, going out of stock is one of the worst things that you can do on Amazon. You don't just lose your sales during that out of stock period, you actually lose a lot of the sales momentum in a residual fashion afterwards as well.
Peter Crosby:
Yeah. It can take month to-
Kiri Masters:
So climbing out the hole-
Peter Crosby:
Yeah. It can take months to climb the hole unless you spend a lot of money to-
Kiri Masters:
Exactly.
Peter Crosby:
Yeah.
Kiri Masters:
And to Caroline's point, I think with brands taking this assessment that we have and seeing where they end up can be quite instructive because those are things that they might not immediately think about when they consider, "Why are we not performing as well as being put on this channel?" It just might not be one of the things on their radar. And so, like Caroline said, it's really a self assessment. It's things like what kind of KPIs are you setting in your company? Do you have KPIs? Do they align with the strategic goal? Is there a strategic goal? And so it's obviously highly subjective and it might differ a little bit between the... Different people in the company might score things a little bit differently, but it probably highlights some areas for brands where they might not have thought that it would have an impact on their Amazon channel outcomes.
Caroline Adams:
Yeah. And Amazon is such a... There's so much opportunity on Amazon that a lot of brands or sellers feel that all they need to do is get a product on Amazon and it will sell itself. So there's a false hope or false expectation that I'm putting my product on the biggest platform out there and I'm going to make millions overnight because here I am on the Amazon platform and that's just not the case, obviously. But what I think is something that's really important for clients to understand, or for any brand to understand is what do I need to do? What does my organization need to do, whether it's big or whether it's small to really move the needle on this Amazon platform and that's where that assessment helps.
Peter Crosby:
Yeah. I was literally talking with Chris and Oscar. We recorded their podcast yesterday for SHEARED and Chris was just talking about, Chris and Oscar having sat the seat at various brands, just talking about how hard this job is, of people that are doing this every day and that they are not only trying to fine tune and move through this maturity curve, but often dragging the rest of the organization, sometimes kicking and screaming into this digital first age. And I would imagine as an agency partner, you see that a lot. And at least I find it inspiring because to fight those forces and to have the will to keep moving along that curve, I think is it... You have to be somebody who finds that fun and gets excited by the wins, I would think. And is that what you're seeing? What are the human characteristics of people that have the grit to do this? Do you have anything to share there?
Caroline Adams:
I would say they have to be open-minded and they have to be flexible. I mean, having an open mind means... Amazon changes all the time. Just when you think you've got it all figured out, they're going to make a change. And then when you have that figured out, they're going to change again. So...
Peter Crosby:
Yeah. And they probably won't tell you about it.
Caroline Adams:
They don't.
Caroline Adams:
And they don't tell you the reasons behind it or any of that. So it's kind of-
Caroline Adams:
... having that open mind to know that even though I have this figured out today, something might happen tomorrow. I mean, I had a client that all of a sudden out of nowhere, a third of their catalog got flagged for pesticide hazmat. They were suppressed, taken down completely out of nowhere. Couple of days later we found out, oh, it was an Amazon glitch. But just being aware that this... We went into immediate mode of how do we correct this? How do we fix this problem? Because now you have a third of the catalog without the ability to sell, which is a big part of the business. But having that open mind to say, "Okay, these things happen, these things change and I just have to be aware of that." And then the flexibility to realize that if there is a change that's happening on the Amazon platform, or if there is a change... Say we're doing a test and the test isn't working, not shutting that down, being open to another test and then being open to another test and just keep learning and keep growing based upon the test that we're doing, and we're putting forward.
Peter Crosby:
So to close, if these brands want to take their own self assessment and figure out caterpillars, chameleons, lions, how can they go about doing that, Caroline?
Caroline Adams:
Don't forget about the spider.
Peter Crosby:
Oh spider. I forgot the spider. Maybe because I hate spiders.
Caroline Adams:
So they can go to-
Peter Crosby:
Like Indiana Jones, “why did it have to be snakes?”
Caroline Adams:
Exactly.
Kiri Masters:
Peter, you say that you want to come to Australia to visit. If you don't like spiders, you might want to stay where you are.
Peter Crosby:
I've heard, but maybe it'll get me over it, because I heard the borders are open, and so look out, I am coming your way, so brace yourselves.
Kiri Masters:
Get the bugs spray out.
Peter Crosby:
Yep. Yep.
Caroline Adams:
So they can go to bobsledmarketing.com/resources. On that particular page, there will be a self-assessment that they can take. There's a link right there. It's a quick couple of minute self-assessment. They will be given a score and then from there, we take that. I'll get an instant score. From there, we will take that and we'll plot it out for them and let them know where they fall on which animal, which archetype they are, where they fall on the quadrant.
Peter Crosby:
So much through this conversation has been about the need for aligned KPIs and the right incentives to drive the right behaviors. And I just have to put in a quick plug. Mike White from Profitero and Molly Schonthal who leads our Digital Shelf Institute Executive Forum have been working with members of the executive forum around producing the key measurements, the key KPI for winning on the digital shelf and they're coming out with that report, with a whole set of the questions you need to know along various stages of maturity to make sure you're all agreed on what you're measuring. It goes back to that sort of profit versus growth conversation.
Peter Crosby:
So I just want to make sure, anyone who wants to get a heads up when that report comes out in March, if you go to the digitalshelfinstitute.org, there's a "Become a Member" button. If you just throw your name in there, you'll get a communication when that comes out. Of course we'll make noise here, but I feel like that piece and aligning on that is super important. And the work that Mike and Molly and others have done to kind of lay it out, I think is going to be really useful for a whole bunch of brands. So that is to come.
Peter Crosby:
But in the meantime, take the assessment. Figure out your archetype and have the conversation internally and with your stakeholders about where you're at and what you're going to do to move on to the next step in the evolutionary curve. So Kiri and Caroline, thanks to you and all the Bobsledders for creating such an engaging and really useful report. I really appreciate you sharing it.
Caroline Adams:
Thank you.
Kiri Masters:
Thanks for having us on, Peter.
Peter Crosby:
Thanks to Kiri and Caroline for walking us through the jungle that is Amazon. We put the link to the report in the show notes. Thanks as always for being part of our community.
