Episode 28: Forget KoLs: Embrace the rise of micro- and nano-influencers

In our last episode from Shoptalk Las Vegas, Amie chats with Paul Archer, founder of brand advocacy platform Duel. They discuss how word of mouth is a fundamental driver of purchasing decisions for every consumer. 

Transcript

Amie:

Welcome to Retail Untangled. My name is Amie Later and this is the podcast where we speak to retail industry experts and find our business hacks to help you succeed. You won't find these gems anywhere else and we have some superb stories from the coal face as well as helicopter insights from retail industry leaders. 

In this episode of Retail Untangled, we examine a fundamental force in consumer behavior: word of mouth. Paul Archer, founder of brand advocacy platform Duel, joins us to explain why recommendations from trusted sources are the ultimate conversion driver for considered purchases. Discover how leading brands like Abercrombie & Fitch and Victoria's Secret are strategically harnessing this power through advocacy communities and the influence of micro- and nano-influencers.

Paul, you found a duel to show that there's a better way to do business by proving that caring for people builds brands, which is not just a long-term strategy, but also profitable. So I'm keen to understand what problem were you trying to solve when you created this business?

Paul:

So I think the idea of word of mouth is fundamental for me, from first principles, that's the reason why I buy anything. And I think that's the case for pretty much everyone. Apart from that very periodic thing when you see a thing, and you're like, I have to have it. Almost every other considered purchase, you've done it because someone you know, love, respect says, I love this product, it's the one I use, I think it's great for whatever reason. And then you go and buy that. You don't have to worry about building trust or anything, you just got instant trust, you go and make a purchase.  

That's the way that I buy, that's the way everyone buys. However, if you look at pretty much any marketing budget, particularly when we started our Duel in sort of 2018 or so, pretty much 0% was spent on advocacy and word of mouth and trying to actually drive that kind of behavior. And it just felt so fundamentally upside down that there was just a massive, massive opportunity for it. And then that was underpinning this kind of concept that I've always had, I've always been a big fan of conscious capitalism. I believe that kind of like if you think about it, believe that companies have the power to change the world and unlock it because also companies are generally responsible for most of the reasons why the world's pretty fucked. So if you think about it, like everything from global warming to people being awfully treated or to just like governments being lobbied in bad ways, always at the heart of it there's a company that's acting like an absolute psychopath in the middle of it. 

And I think that if you can figure out a way that you can suddenly turn that around so that the company isn't just obsessed with sales and shareholder returns, they're actually building something for the long term, they're building brand, they're building reputation, optimising for people telling other people how great they are and what that means. They would build that company completely differently. They wouldn't engage in all those kind of behaviors.

So, in the motivation of what we do is that if we could make that something you can measure, you can manage, you can scale that word of mouth, that advocacy, just like you can with every other marketing channel, then actually the companies will be built in a way that's better for the world. So that's like was the original idea behind it. Turns out it's really bloody hard to do. Otherwise everyone would have done it and it wouldn't be 0% of the budget. 

And so we've been really kind of working this in loads of different ways and have identified that top 1 % of brands that grow incredibly fast, they all share the same tenets. And these are all the same sort of things that compound to drive word of mouth. And so what we're trying to do is how do you encapsulate that? How do you help brands understand what that looks like? And then how do you start to scale it? And that's where the software bit comes in. 

Amie:

Smart. So with organic traffic down, and we've actually been talking a lot about this since other podcasts here at Shop Talk. So, traffic's down, paid social costs are higher than ever. There is, and it seems like the time is right to use brand advocates as an acquisition channel. It's just becoming so hard and so expensive to acquire new consumers and customers. It feels, though, that what you're talking about is somewhat untapped. What's holding retail in its back? 

Paul:

I think, like, one of the things I've realised, particularly when I look around this show and you see all these stands and you realise how people do it, is the vast majority of marketing is a bit crap. Really think about it. It's not actually doing what it's supposed to do. It's generally just people doing what everyone else says they should be doing because that's the standard play book and they're not going to get fired for it. But the things that are really, really moving the needle very rarely are the things that everyone else is doing. The kind of marketing 101s would be different.

So when marketers are trying to evolve to adapt to this new way of thinking like they have just about got their head around the idea of influencer marketing and what they're trying to get for but they've completely missed the point. The reason why influencer marketing worked and does work when it does work is because it's a true fan talking about a brand in a really authentic way and some of those people have a massive audience and therefore it's driving a ton of revenue and sales and everything's great from it when it's real but most of it isn't like that most of it is someone who's been found on a marketplace who's like hey pay me to pretend to like your brand for the right price and then they go to their fans it's like I like this insert brand here.

Amie:

How authentic.

Paul:

It's my favorite I use it every day so hang on you said you use the other one every day yesterday like how am going to believe you they'd say we sniff out this bullshit

every single time and therefore people don't buy it and then it kind of gets a bit of awareness, some vanity like stats about how much it's reached but actually how many people have gone on and made the purchase. And the reason is we buy from people we trust.

And so we trust people who are real, who are authentic, who are talking about something with that level of passion and intensity that we're like, hell yeah, I'm going to get after that. And it drives us to make that purchase. But if you don't have that, you don't get it. So what you then find is most influencers in marketing, what they're trying to do is just a waste of time. And then there's a few brands that instinctively get it right. And they're not following a playbook. 

They're just going, well, like who loves my brand, I want them to talk about it a bit more. Some of those people have an audience, some of them don't. And it actually doesn't matter. The size of the audience is irrelevant compared to the passion that you've got there. It just so happens that if you're looking at people with a smaller audience or no audience, you need a few more of them to be able to have as big an impact as some of the larger audience. But the principle is the same, it's about authenticity. And so actually, if you're mining your customers, you're mining in the fans to find that authenticity, you're always going to be okay, because you'll have real people talking about it. And sometimes you can actually start to scale that and sometimes you'll have to turn that into a channel which is as meaningful if you're not the most meaningful channel you've got for growth across the whole business.

Amie:

That makes sense. So, Duel, it works heavily within the micro-nano influencer sphere, which has been gaining or growing power as consumers become a bit frustrated with the macro influencer content. Where does this consumer discontent stem from? And how should retailers be approaching social media content creation to keep that connection with customers?

Paul:

Yeah, so with Duel, we're kind of looking at how do you activate those customers that love the brand, who are authentic fans, and then how do you get them to talk about it publicly? And it's like a bit of a Venn diagram of someone who loves the brand who is also a social media creator. 

The way that brands then are sort of this effect of mining your customer base to actually drive reach, you know, particularly the largest opportunity as you say, is in that nano, micro space, because those people are priced better really, if you've got a large audience, generally there's quite a lot of ego involved, there's a lot of negotiations, there's management, there's agents, there's all sorts of stuff like that. 

That's pretty well saturated with all the really big brands. And actually the people who are left under there to actually make it this cost effective channel are offering the smaller side of things, which is why brands are throwing themselves into this. But I think actually where a lot of brands don't realise is quite how big an opportunity this one is and the scale that they should be operating at because there's 16 million creators in the US alone and then there's like 200 million in the world that are out there and growing.

It's about one in four, if you're popular, of your customer base. And particularly, we work with large brands, right? So we work with the biggest beauty and fashion brands in the world, all of whom have a minimum of a hundred thousand of these people. Like a hundred thousand people who are fans, authentically love the brand and are actively creating content. Some of them will have decent sized audiences, tens of thousands. Most of them will have a small audience of a thousand, two thousand, three thousand, that kind of thing. That's still meaningful. If you can get a hundred thousand people with two thousand followers to talk about your brand, you don't need to do any of the marketing. That’s you made. 

Amie:

So you’re saying start with your customer base as opposed to…the other way around

Paul:

100% start and end. Don't bother with anything else. Yes, if you're a very, very small brand and you're trying to hustle your way out there, like this isn't a good channel for you. should be hustling to, the founder should be speaking to every person, getting them to buy the product. That's where you live there. But if you are at a critical mass, you have hundreds of thousands or millions of customers, you do not need to do anything else. You have enough people that are based within that population who can get out and hustle. You probably just haven't given them the opportunity to, and you're not also engaging with them in a way which is meaningful to them. So they're getting value from you. And what do I mean by value? It's like, A, you're giving them a remarkable experience that they feel compelled to remark upon it.

And B, it is valuable enough that they want to do it again and again because maybe you've platformed them, you've tickled their ego, you said how great they are, you messaged them, you DM'd on their thing and said, thank you so much, that means everything to me. Or you paid them, or you gave them a free product, or VIP experience to go to your store. The list is endless of things you can do to celebrate a person because then that brand and you become connected to them and they do it again and they do it again and they do it again. And actually, you don't need to then pile lots of people in.

You certainly don't need to go to an external group of people because these are the ones you should be nurturing. You should be nurturing them right the way through that. And you know, if by the way you've got there and you've got 50,000 people in your program and you feel you've really saturated it and there's no one else to do, maybe you can look externally. I mean, we work with, you know, we've worked with hundreds of brands now and actively have over 60 working right now on the platform and we've never come across it. And so I've never seen anyone come even close to the opportunity that they're sitting on of this like latent passionate advocacy that sits there that actually you can say hey we've launched a brand ambassador program for you we're going to give you some free products and VIP experiences if you talk about our brand go off and do it and it's just such a massive opportunity.  

Amie:

And I mean, on the flipside of the massive opportunity, there’s probably a cost to not doing it, right?

Paul:

Yeah, 100 % because other brands will be getting to it or a lot of this stuff's happening, right? They're talking about you. The idea of people are probably talking about you in a cafe or whatever to their friends, but they're probably not posting to social media. Posting to social media about brands is actually quite a big ask. It's like a thing to do. Most people would never do that. And certain people will. They typically kind of build a bit of a career as a creator. And so actually you've got a bit of an opportunity for those people who are on the up. And if you are not engaging with them and trying to say, hey, by the way, do you want to post about us? We'll give you some more free products. If you like our product, we'll give you more of it. Like, hey, all right, I'll give that a go. Then they're probably going to do that for someone else. Because this is now becoming the way that people are actually growing their brands. And it's completely revolutionised the marketing mix. Like post-COVID, everything that you know about building a brand does not exist. 

And actually you've got to rethink everything for what's going to happen for 2025 up to 2030. By 2030 I guarantee it's just going to be massively different. You'll be unrecognisable. 

Amie:

What does 2030 look like in your opinion?

So in my opinion, I mean like...the predictions people are making is they're saying about 40% of revenue will be social commerce. I think it's going to be a lot more. And so I have a broader term of social commerce. I mean anyone who's gone to make a purchase because they were inspired by something on social. So, you know, I saw someone do a thing, I went into a store and buy it, that's still social commerce. Like it may not be attributable, but it's still commerce which was driven by it. And the way the kind of, attentions have shifted since COVID, I mean, obviously it used to be publishers and newspapers and TV and everything like that. 

And the whole marketing game was to buy into that attention, ads and various things like that, advertorial, PR and things like that, old school ways of doing things. Since COVID that has turned on its head. All of that category it now makes up 35% of people's attention everything else because 65% is spent on social swiping, cruising through your obvious ones, your TikToks, your Instagrams, but also watching YouTube videos, watching Pinterest. It's incredible at social, it's entirely user-generated. It's like Wikipedia, it's just coming from real humans, not publishers, not companies, not these big celebs, it's just real people doing it. 

So if a brand has to buy into that attention, they have to access you in the way where you are spending the vast majority of your time, you have to do it in a very different way because you've got to tap into thousands and thousands of different people to get them to talk about it and so I drive it and the way that you do that the way that you engineer your brand and your marketing the way that you communicate with your customers you engage with them to celebrate them and everything like that has to be entirely different because you're trying to people to talk about you in these other platforms.

Amie:

Makes sense. So who are the retailers that you believe are doing this well and how are they generating loyalty advocacy?

Paul:

Yeah, I mean the best ones, like if you really want to look at best in class you want to look at the ones that are entirely socially native, but even like post COVID, brands that were launched in that sort of era there that have just come up entirely through social, almost definitely got some kind of like founder that's very, like got a bit of a present themselves, and maybe they're an influencer in their own right, or at least brand is incredibly tied up to the founder's persona. And they do a phenomenal job of getting people galvanised around it, because they are they're natively community builders. 

They don't think about these other channels, they just don't understand it, they just intuitively build community and it served that community. The kind of the OGs of that was like Lululemon back in the day. And then you've got this kind of like beauty early ones that have been happening with Emily Weiss and Glossier, like 2012, 2013, kind of coming up from there. And then you have Gymshark with Ben Francis, both of those brands redefine the way brand building happens. COVID happened, everything gets shifted onto online. And then you've now got these really native community led brands that are killing it. You've got the Refi's of the world. You've got Inkey List of the World and the Beauty Space. You've got a lot of these new sports brands that are coming out. And it's just a really, really exciting time to see those brands. So they're the small ones that you would look to, I would look to for your tips. There are also some brands that are pivoting the way that they think about things on a much larger scale. I mean the best example is Abercrombie & Fitch. They went from an unknown brand, well obviously a massive brand that kind of went into its kind twilight years and then just catapulted out and became the fastest growing brand, the best retail stock over the past couple of years. And I've worked with the Abercrombie team very closely and I know that this is entirely dessert. This isn't luck.

This is is, A, they execute incredibly well as a brand and they do all the things right they need to do right. But B, they have an advocacy first strategy. Everything that they do is about building advocacy within their community to get other people to talk about them. And it's been very cognisant for the past four or five years, long before they had this revival. But the revival is because of this advocacy strategy. And they're just a brilliant brand to watch the way that they do it.

Amie:

This makes sense, so looking ahead, what do you believe will be the cost to retailers and brands who are not leveraging their own communities?

Paul:

I think there'll be a very clear differentiation between them. There will be the brands that do leverage, built communities, have invested in it. And they'll be the brands that we see a lot of by 2030. And there'll be the brands that didn't. And we'll talk about them. Do you remember that brand? Oh yeah, I remember. They were so good. Yeah, they used to be so cool. What happened to them? no, they went bankrupt. Because this is the only way that people are going to talk about it. And think particularly you're seeing these brands that have this legacy  vision of the way that they are. 

Particularly you have this sort of brand guardian that's just like, this is how our brand works. Maybe this works in your super high end fashion and that's how Hermes works and stuff. I don't really understand that well. Like I've never spent $5,000 on a handbag. But like for everyone else, you still have these people that like, no, we have to curate everything the way that our brand appears in all of the different places. 

But actually that was fine in 2010 when you controlled all three of the places your brand would show up. Your brand is now showing up across 10 different social platforms and on each one of those hundreds if not thousands of times a day with different individuals that are talking about the brands you do not have control and that any semblance you may have that you have control is completely wrong you've got to just like lean into the fact that other people own your brand narrative now they will be telling it in the way they are and you've got to embrace that and sculpt it and earn the right for someone to talk about you in a way that's meaningful because you can't control it and the more you try and control it the more you're gonna stifle that and the more you kind of just allow people to take that and run with it and take it and make your brand their own and co-creator in a way that's meaningful, the more you're going to thrive.

Amie:

Yeah, that makes sense. And so for brands that aren’t doing this well, but want to. Or hear this and say okay, super important, we want to exist in 2023 what would your advice be in terms of kickstarting this type of approach?

Paul:

So I think it would go back to, I think it's like five core principles or pillars to this that a brand should do and maybe think about it in order because actually brand advocacy is a philosophy as much as it's anything else. It's like it's a mindset and an approach of how a brand should be and how it should be built. And it starts with a very clear purpose and a why. And if the brand has no why that people can't understand, then who's going to get behind your brand if they don't know why you exist, right? So if you don't know why you exist, no one else does, they don't care, they won't talk about you. 

So start with that, get that sorted. And hard to figure out that that brand's doomed in the first place, right? That's fine, not much we can do about that. The next bit is looking at that customer experience and creating that remarkable nature we sort of talked about earlier that makes people feel compelled to talk about it. And that's everything from the comms, from the communication to the product itself, to the way that you engage in service, all of this and really think about how do you make that magical and really be very empathetic about the way that you show up so that people feel that you recognise them. 

The third one is your employees. And this is one of the areas that I always overlooked. your employees should be your number one advocates because they are the voice piece. Even sometimes with a retail brand, most of the retail brands are store associates and they're an obvious front. A lot of D2C brands, they're also your first point of concept. They're writing every bit of copy that they do. They sculpt it, they design it. If they don't fully buy into your why and who you are as a brand, if they don't live and breathe it and they're head to toe wearing it, for example, then you're doomed. If your employees won't do it, no one else will. so ensuring they get as much in their hands and it's free and they can give it to their friends and they feel proud that they work for your brand and that's like a huge sort of leverage there. 

The fourth one is building a customer community, giving it a place to hang out that's not just about driving sales. Most community is generally a loyalty program which is about giving you some points so you can go buy some stuff and then your entire CRM is like here's how I can bombard you with more messages, hey do you want to buy my thingy? No please buy my thingy, go on buy my thingy, all right I'll give it to you for cheaper, I'll give it to you even cheaper, I'll give it to you even cheaper.

That's basically how CRM has done in most cases. And that's just like, they've got it wrong. It's incredibly selfish from that perspective. It's just like all about the brand. Like what can you, like go on, on, buy my stuff. But if you reframe that and think, what can I give them? How can I add value? And how can I be generous in a way and show up? It doesn't have to be financial or product related. It could be support. could be advisory. It could be places to hang out. It could be using stores as a location for events. Myriad of different options you can do to add value. But if you view it from a value giving perspective, you'll generally be onto a good start.

And then the final bit is the advocacy, the influence of it, the amplification stage when you're you know you're doing all that good work that's happening there you kind of want to push it out a bit more and actually finding yeah exactly like putting your fingers on the scale like finding those that have a little bit of an outsized leverage and influence to other people it could be because they are a very trusted node like a lot of professional networks for hairstylists for example or makeup artists. When your hair stylist says you should use this product, you can use that product. You don't bother doing any research. So how do you work with those guys? 

And then obviously the biggest one now is creators, how do you work with creators? Have a very scaled approach to engaging with those creators because actually the best practice is to forget everything you thought you knew about PR, which is how most people do influencer marketing, and actually go back to it and view it as a kind of a brand meets performance channel. Like get your CRM team to start thinking about it. View all the different segments of different creators that you could have under there. It's like the small ones, the big ones, the ones based in this location, the ones based in that location, those that are on brand and greater content creating, those that aren't that drive us a lot of revenue because of the traffic, right? 

All are part of the family and all you need to show up for them in a different way. So build a strategy that engages with all of these sort of micro sub communities that sit under your brand network. And if you get that bit right, as well as doing the prior four sort of stages to that, you cannot fail. You're going to be absolutely flourishing.