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In a recent episode of Watching Amazon I got into a debate with my co-host John Lawson on whether a 1% conversion rate is considered to be a successful outcome.  I’m not a marketer, so I’m thinking failing 99% of the time doesn’t sound all that great to me.  I mean getting a hit in baseball 3 out of ten times can get you in the Hall of Fame, but 30% is a far cry from one percent.   But, since this was a livestream convo, John was getting a lot of support from marketing technology expert and thought leader (and also my buddy) Anand Thaker, in saying that one percent can indeed be a successful outcome.

So I invited Anand to a LinkedIn Live convo to explain how this can be.  And below is an edited transcript from a portion of our conversation.  To hear the full convo click on the embedded SoundCloud player.

Small Business Trends: Why is it seen as a success if you’re able to do a 1% conversion?

Anand Thaker: In marketing, and you’re not doing just one thing unless you’re just the spammer who wants to spam and make some money about that, which I’ll actually come back to in a little bit, right? But there’s a slew of tactics that you’re using and not only that, you’re actually working on trying to improve on all different fronts. So I kind of categorize it in three different arenas, right? And this inspiration comes from Agile and Kaizen and biology, if you remember all of those or if you’ve heard of those, these mechanisms that help you constantly or continuously improve. The 1% starts to sound like it’s ridiculous outside of that context but a 1% improvement can be a big deal.

But let me take a little bit of time to share these three categories why 1% might matter to somebody or what’s the motivation, whether it’s good or not, if that’s cool. So the first category is, if you’re doing the brand building and you’re doing it for growth, right? I’ve heard it even called, and this is probably more in the sports arena, micro excellence, but it’s really about go to market prioritization. If you’ve heard this parable, it’s about a university professor, the rock pebbles and sand in a jar.

The Professor and the Pebble

So the professor holds out a glass jar and he says, “All right, fill it with rocks.” And then he asked the class, “All right, is the glass full?” And the class of course said, “Oh yeah, of course it’s full,” right? It’s got these big rocks in it and it’s filled to the top. Then he whips out some pebbles and he put some pebbles into this jar with the rocks in it and the pebbles make their way and they kind of navigate and filling in the gaps, right? So that’s another category. And then of course he asks the class again, “Hey, is the glass jar full?” And everybody said, “Oh man, okay, yes, now it’s really full.” Then he breaks out a box of sand and then he puts sand into this big jar and it fills in all the rest of the gaps, right?

And so there’s two parts to sort of the fable or this narrative here, but the one part is, once you’ve done a significant number of the big rocks, right? The prioritizations of let’s take care of our customer, let’s make sure we work on the 20% improvements or the 10% improvements, if there’s enough budget left, guess what? You’re not going to end up now needing to do something. And sometimes the 1% can work, right? It’s an incremental piece to a larger puzzle, it’s not just, I’m going to just do this 1% performance and be okay with it and yeah, there’s a 100 million dollar spend and we got 10 million out of it, right? Excuse me, a million out of it, right? I mean, that might be successful but if you’ve run out of other tactics that you’re capable of doing, that’s one thing that’s possible out of that, right?

And then the other part is a competitive advantage. Let’s say you’re in a marketplace where, let’s say in big tech, everyone is in CRM but if you can improve yourself 1%, that’s at least a little bit of a leader versus some other ones, it actually can be a significant competitive advantage even though it sounds like a very small amount. And we’re not talking about just marketing, we’re talking about overall business growth. So that’s one quick category, right?

The second category is in athletics. A lot of that in athletics is about developing that peak performance but there’s also a sustainability component to it. I’ll throw another story out there, right? So a quick narrative is if you’re familiar with Alice in Wonderland there is an actual business model called the green, excuse me, the Red Queen effect.

The Red Queen Effect

The Red Queen effect is a Harvard business article that was written about if you’re standing still but you keep turning through things, then you’re really not progressing, right? And you’re not moving forward. So 1% may sound not like a lot but if you’ve done everything you’re possibly doing and you’re able to move forward at least, at least you’re not moving backward. I mean, I’m getting to the age where doing crossword puzzles is a good thing, it’s a small bit of my time, but you know what? You got to keep the mental capacity up, right? That’s one way of being able to take care of it. But let’s go back to the athletic part, I mean, how much energy and effort are a lot of the Olympians or professional athletes, or even amateur athletes who are trying to become professional, they read all the books, they get the right coaching, but then they’ve got to start on these tactics that give them again, that 1% advantage.

That could be the difference between dropping the ball and catching it in the end zone, it could be going from silver to gold, right? So that 1% could really mean something, and that’s another category. And the last category just to be very quick is survivability. You’ve got no choice and obviously sending out a bunch of emails and retargeting is a very quick and easy way to be able to knock things out. And so for a lot of businesses, they’ve got to just do this and I will send a bunch of emails and I will not be very deliberate about who I’m sending it to and they’ll do that because it’s a desperate attempt quite frankly. Or the more dangerous version which is the, I’m ignorant about the fact that this is going to harm my brand in the longterm and create my brand to be a disposable brand and I’m not recognizing that. And obviously that third category is the worst thing possible, right? That’s not something you would ever encourage, that’s not something that would ever matter.

But there is a place for the 1% improvement, and I know we just kind of arbitrarily picked 1% but that was part of the conversation but there is a reason for it. Either it’s the positive ones sides, I’ve done everything I could but I need to keep moving forward, and then there is, I’m at peak performance but I need to keep sustaining moving forward otherwise I’m going to end up falling behind and so you even do an experimentation and stuff like that, it’s something that matters, so. And strategically speaking I borrowed a lot of this when I was a software engineer and I started seeing a lot of this in marketing and so when I got into marketing technology, bringing a lot of that engineering and manufacturing or engineering and software engineering, excuse me, kind of tactics into this started to play a role in the operations of marketing or the operations of sales, the operations of growing revenue, this 1% matters and it’s okay that it’s 1% as long as you’re very aware that that’s not the only thing you’re going to be doing.

Small Business Trends: But what about the other, I don’t know, 50, 60, 70, 80% of the folks that are totally turned off to this. You get the 1% but are you burning the bridges of the other 90 plus percent? Does that matter? Why not try to figure out a way to find a better way of communicating or enticing, so to speak. Because it feels like to me a lot of companies, you used the word desperate, they’re desperate for a very long time.

Anand Thaker: Yeah. But we see this with companies whether they’re technology or not. When I do advisement or I’m talking to executives or board members and we’re talking about growth, I’d ask them to look at the negative space and then we talk about it in great detail and we’ll go into this. But the negative space is exactly what you’ve described, right? Okay. Everybody is focused on the 1%, oh yes, we made a bunch of money or we got some customers or we made something, but what is happening in that arena that people are not responding, people are unsubscribing and people are opting out, what’s going on there, that’s going to be a real big problem for a lot of folks.

And that is more of the qualitative and quantitative analysis that needs to be done moving forward if you’re going to use those types of tactics because, to your point, I mean, it does eventually erode you just don’t see it every day. And if you don’t enhance those relationships, repair those relationships or just even spend time working with these folks to understand your customers or potential customers and what’s going on then, you know what? You’re going to be out of business soon, or are you going to be hanging on desperately, let’s use desperation again, you’re going to be hanging on in there. But it’s almost like that Red Queen effect, again, you’re doing a lot of progress but you don’t feel like you’re really moving anywhere.

Impact of cookies going away

Small Business Trends: Did that help prepare folks for what’s going to happen when cookies go away?

Anand Thaker: I think to a point. I mean, for the ones that are paying attention and have been at least making a best effort at those transformations, those digital transformations, I think we all remember the cartoon that was drawn by Tom Fishburne with the wrecking ball coming down into an office of executives or marketers that basically accelerated that process for a lot of people. And of course there’s quotes from numerous top level, very visible, highly respected executives about how much transformation has happened within a short period of time. So I think those that are in transformation, they’re probably already starting to make that move in preparation for a cookieless world. Because there’s things like for instance, I mean, we’ve been talking about owning the customer relationship, which means you’re going to need to own that data, that was going to have to be the only way you can be agile enough to handle the COVID situation in the first place. Now in a cookieless world, guess what? Now you’ve gotten more of that information in house and now hopefully you’ve hired to handle that expertise as well.

Then there is dealing with privacy and compliance, so compliance was already starting to come into play. You’ve got to create new baselines that if you’re once offline, online, now you’re almost all digital, you have to create new baselines for how you’re able to recognize what success looks like as we talk about, right? And then various things we were talking about, right? Like building communities, loyalty programs, those who had loyalty programs they’re probably going to have to go back and say, okay, well, we got all this data and we gave you a little card or we gave you some incentives but are we really respecting the relationship we have with you as a result of that.

And then there’s, I think a lot of people talk about technology disruption but what about the business model disruption, right? Or transformation, that’s really where the transformation has happened, we saw a lot of the SaaS based subscription model. There’s all kinds of technology we can talk about that’s changed the way that we live or changed the way that we talk about but it was the business model change that really adapted or really disrupted and transformed the way that most businesses operate. So I don’t know if cookielessness will harm companies who are already in transition but they certainly will create disruption for those that are doing the duck and cover and hoping that some of this will go away and we’ll return back to normal.

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This article, “Anand Thaker – In a Cookie-Less World Marketers Won’t be Able to Outsource the Relationship They Have With Customers” was first published on Small Business Trends