Informed humans remain the hottest trend in e-commerce
Retailers – digital and physical – are still grappling with supply chain challenges. To overcome these problems on a large scale requires a mix of technological and human know-how for large retailers.
Mike Clem, Chief Growth Officer and Executive Vice President of Sweetwater Sound, the largest digital retailer of sound equipment and musical instruments, discusses e-commerce trends arising from the pandemic and how technology can complement – not replace – sales and service agents. Her role is to transform Sweetwater’s human and digital interactions with customers into long-term relationships, not just one-time transactions.
Describe the scale of Sweetwater Sound’s e-commerce operations.
Mike Clem: Sweetwater is a 43 year old company. Chuck Surack literally founded it in the back of his VW bus as a mobile recording studio. It’s now a billion and a half dollars [annual revenue] online seller of musical instruments and pro audio. We have 9 million customers, from beginners to amateurs, from church volunteers to professional musicians. If you name a rock star, we most likely work with them, but also with recording studios, churches and schools.
Our real differentiation is a relational and consultative sales model. Most of our interactions are directed to a “sales engineer”: 550 highly qualified people who come with a pretty prestigious musical background – you have a degree, or have toured with a band, or worked in a recording studio. They go through 13 weeks of intense product training at our Sweetwater University before talking to a customer. Customers are put in touch with one of these sales engineers. Over time, you really develop a relationship, keeping careful track of your musical journey.
This business model means loyalty and retention because it’s a real relationship, and we invest in nurturing that relationship. We don’t just wait for the phone to ring; we make outgoing calls, record and help proactively. The amount of rich customer information that gives us – I learn all your goals and ambitions – we pass it through our CRM system and send it through the website as personalization, or making your marketing more valuable and relevant.
We get this truly holistic view of the customer and perform optimization that adds value for them.
How have the last two years been? E-commerce sectors such as home improvement and hobby have grown rapidly, which fits musicians who like to play in their spare time at home. But also, concerts and closed tours for your pro audience.
Clem: The pandemic has created a real challenge for some industries and a real blessing for others. We happen to be in the better half of that. For us, customers were at home, had free time and money in the form of stimulus checks. People picked up an instrument for the first time because it was a to-do list item or it reinvigorated a hobby. We had a whole group of customers who rediscovered their passion for music and invested in new equipment or upgraded their equipment.
We also sell the kind of equipment that individuals, churches and schools need for live streaming. We were selling complete video streaming systems to some of our religious customers. This has been a real acceleration of our activity.
Live music has dried up. Musicians have to make a living, and so they now have to turn to another source of income, buying the different types of equipment you would buy to perform live and stream over the internet. These live musicians are now buying a different kind of gear during the pandemic, becoming an influencer or YouTube personality.
What other technology initiatives have you launched to improve your long-term customer relationships?
Clem: Supply chain challenges affect us a lot – shortages of chips and electronics – but also the closing of guitar factories. They are a handcrafted instrument. We still feel some of the effects. That’s where this relationship business model really comes in. Because if I can bring a human into this digital shopping journey, we can talk about replacement items. Often there is a whole chain breakdown – if it’s out of stock, it’s out of stock for everyone. This is where our loyalty comes in: we can put you in touch with what is available and make sure it meets your needs.
One of the most unique things we’ve done was establish what we call a “switchability score” for each product in our 50,000 item catalog. It ranks the likelihood of you picking up a replacement if something is out of stock. If it’s a 10ft microphone cable I could probably sell you a different brand but if it’s a boutique amplifier or guitar effect you probably wanted this exact item. We offered scores to guide our marketing. When products were out of stock – and not switchable – it helped us optimize which products we could or could not push. It was incredibly successful, bringing the voice of the sales engineer into this process and saying, “Hey, this one is definitely worth the wait. Here’s why,” then sort through the search results again to really favor things that are in-stock and available. Everything you hear me say about customer relationships — we value manufacturer relationships the same way. We worked closely with manufacturers to ensure we had allocations on the most important items.
[Sweetwater also recently launched a new automated financing program with Synchrony to enable musicians to pay for gear over time.] Synchrony has been an excellent partner for many years. In tough economic times, it becomes difficult to get approved for credit. What we’ve been able to do with Synchrony is say, “Hey, here are these great Sweetwater clients that we know from this relationship, and we can basically vouch for this client.” We pass on information to customers that says, “They’ve been customers for a long time – they’ve had a long history with us.” We are able to pass on this understanding to the customer and get more customers approved for credit. It is the power to join data together.
What kind of technologies can improve customer loyalty in your digital stack?
Clem: If you play guitar, you tend to keep either adding more guitars and accessories or upgrading the amp. There is tremendous opportunity for us to find follow-up sales as we continue to improve our experience. There’s a huge amount of data science that goes into “customers who bought this might be interested in this – or these kinds of upgrades or accessories – next”, as new products become available. We do the same type of data science as many retailers, but we have the unique advantage of using our sales engineers to communicate the insights.
Mike ClemChief Growth Officer and Executive Vice President, Sweetwater Sound
Instead of running advertisements on the internet, we can pick up the phone and say, “Hey, I thought of you today” or “Here’s a really cool new product you might be interested in.” So we have this really unique ability to weave a customer through an online and offline journey, and really use those humans – especially in a privacy-sensitive future as the cookie degrades and the ability to Reaching these customers through traditional digital ads is starting to erode. a little. That’s the power of having lasting customer relationships where we can talk to you over the phone.
The human touch is built into Sweetwater’s business model. Where does AI come from?
Clem: We use AI to augment — not replace — humans. It’s useful for product recommendations, or “Here’s a customer behavior: he keeps looking at these $10,000 guitars, so he could be a guitar collector.” It’s really about getting the right sales engineers to the right customers, at the right time, so that we can add value.
What are the limits of AI?
Clem: AI is good at moving ideas forward. It’s not good for creating ideas. We kind of laugh how all these retailers talk about using analytics and AI to predict what the customer is going to do next. At Sweetwater, we have this unique ability to just pick up the phone and ask.
So we both value AI and believe it has its place, but we want to be the most human brand, the most authentic brand, and a sincere brand. Every time I hear a retailer say, “We’re going to strategically put the customer first,” I think of us and our 43 years ahead of that concept, really engaging with customers on an individual level, and then letting AI amplifies – or scales – this relationship, but not replaces it.
Editor’s note: This Q&A has been edited for clarity and brevity.
Don Fluckinger covers enterprise content management, CRM, marketing automation, e-commerce, customer service, and enabling technologies for TechTarget.