Return on Relationships with Ted Rubin

Ted-Rubin-PinterestAre you getting a return on your relationships? Do you know how to give your small business authenticity on social platforms? Do you know how to connect, interact, and engage with your audience on a personal level?

If not, then you’re not alone. A lot of small businesses don’t know how to develop and nurture relationships with customers and clients that are mutually satisfying. By focusing more on ROR than ROI and talking about what matters to your audience, you can build an authentic social presence.

This week, we bring in marketing superstar Ted Rubin, co-author of Return on Relationships, to talk about being human in the digital age, and how to use social media to scale authenticity and engagement.

Big Ideas:

You were CMO of e.l.f. Cosmetics. You basically tripled their revenue in 2 years. What was like that and how did it all come about?

  • It was really an interesting opportunity. They had started the company originally intending it to be a retail brand but they really didn’t have a lot of experience with the cosmetic industry. They were in the garment industry for many years. What they did have amazing experience with was manufacturing products in China.
  • They decided to bring out a line of products at a very inexpensive price point, but to compete (more in their minds and then hopefully in the consumers’ minds) with the prestige brands and basically with a perspective of you can get something very similar for a much less expensive price.
  • They quickly found out how incredibly hard it was to become in an inline brand at most retailers and it became, overnight, basically an e-commerce company.
  • They did have product in stores but it was mostly in retailers you wouldn’t expect to find them in like supermarkets, off-price goods chains, your dollar stores.
  • When I joined them they had built their company strictly on word of mouth – they never had a marketing budget – because they didn’t intend to be that kind of brand. They just didn’t have the money to dedicate to it but they had grown to have a very nice following of people that loved them.
  • They were looking to bring in somebody that wasn’t necessarily a cosmetics marketer, but someone that was more of a business development person, a digital marketer, who could make a lot of creative ideas on how to spread the word about them.
  • They had kind of hit a wall with traditional word of mouth and when I joined them in 2008 the social platforms like Facebook, Twitter, were really just starting to scale. YouTube was already a very big site but it wasn’t really being used as a place to promote a lot of consumer goods.
  • Things were starting to change and I saw a real opportunity to jump into that space in addition to doing a lot of the business development, creative ideas we did by leveraging about half a million people in their email marketing database (back then) – all women – I decided to approach a lot of major brands who wanted to speak to women and convince them that we have a database of women in a very aspirational state of mind.
  • When women are buying cosmetics they’re happy. Women love cosmetics. Whether they’re 17 or 70, you send a woman a box of cosmetics – even dollar cosmetics – they become little girls again.
  • I’m telling you. You can say this to a room full of corporate executives who might not ever admit this in a board room, but in an audience they’ll be shaking their heads.
  • Invariably, when I started sending out boxes of cosmetics to better understand the product the reply I would get the next day after they received the product was, “oh my god, thank you so much. I was up all night playing with my new stuff.”
  • Women play with cosmetics, so I saw a real opportunity in social here because I believe there is no social media without women and I had an aspirational product, a product women liked to play with, liked to share, liked to take photos, and I leveraged that.
  • I built them the largest social media presence for a cosmetics company back in the early days of social, back in late 2008 and 2009, before the likes of Sephora and L’oréal and Estée Lauder, were really allowed to do it, while they’re legal departments were still holding them up.
  • I had the good fortune to be involved in a couple of groups like the CMO club, and a few others where I spent time with guys like Jeffrey Hayzlett, who at the time was at Kodak, and Barry Judge, who was at Best Buy, who both were very early big believers of the power of social marketing and social media.
  • We’d brainstorm ideas and they’d kind of look at me and say, “you try it,” because I didn’t have a legal team to deal with and I could really do anything I wanted.
  • For me it was a tremendous opportunity to grow a brand and learn, experiment, and figure out this new medium. It’s really where I got my “social legs.” It was a fun, exciting time, and it really took hold.
  • One of the advantages were that we were one of the early companies that were really willing to engage in real time about real things, about things other than cosmetics, and the blogging world really appreciated it and jumped in with both feet.
  • We were able to leverage that and now, truth be told, e.l.f. is probably doing in excess of $100 million a year. I say “probably” because they’re still a family owned business and actually privately held. They recently sold the majority of the business to a large acquirer.
  • The company grew dramatically. People were sharing our products. I grew 100,000 Twitter followers back in 2009 when your average company was lucky to have a few thousand. AND we were actually communicating with these people, sharing with these people, saying things that most companies would never say.
  • I think we had 50,000 fans on Facebook back in 2009 or 2010 when I left.
  • We were sharing YouTube videos. I built the first aggregated content site for a major brand that automatically sucked in any content created about the brand in a site called Ask e.l.f. to the point where people were making videos of the cosmetics being used, how to do applications. Every single day there were videos being uploaded to YouTube and all they had to do was upload it, not even tell us about it, and we’d suck it in.
  • We had one of the early blogs in the consumer goods business. We had 250,000 followers of that blog and what we did was we just leveraged our social presence to grow our email database and in return we leveraged our email database to grow our social presence.
  • By the time I left, we had 2.5 million women in our email database and one of the largest social presences and when the company finally got a trial with Target, at the end of 2009, we sold through every single product brought in for that holiday promotion four weeks before Christmas. Bloggers from all of the country were taking pictures of the empty shelves and sending them to us.

What kind of things were you sharing online in social with your audience that wouldn’t necessarily be about, like “we’ve got a great new product, come check it out?”

  • We basically got into the whole lifestyle thing.
  • Here’s what we really did and this is so simple and anybody can do it. We listened.
  • We didn’t just push out information. We started not only listening to the conversations our followers were having with us, we listened to the conversations they were having with each other.
  • We watched what they were talking about on their Facebook pages.
  • We saw what was interesting to them. We found out very quickly and then we tested and we started putting up photos of New York City. We had a creative director who was young, loved New York, had moved here from Sacramento, she would write on the blog about her weekend adventures, about going and finding the best deals on clothes down in SoHo or all over Manhattan.
  • We got so much play from that. It wasn’t easy, but I had to convince management that THIS is valuable. People are coming back to our blog in droves versus how they were when all we were doing was writing about our cosmetics.

At my day job at flyte new media we don’t get the most engagement on our Facebook page, but the posts that tend to do well are when I take a photo of Casco bay first thing in the morning and say, “Good morning, Maine.” Those posts are the most liked, commented on, and shared more than anything else we do like, “3 Ways to Build Your Email List.”

  • Because you’re talking to people about things that matter to them.
  • The simple thing is I get a huge amount of engagement around taking a picture of a cocktail I’m drinking that night.
  • I don’t do it when I’m out. I don’t it when I’m home, it’s been a long day, “join me for a cocktail” and I post a picture of my martini.
  • I start getting emails. I start getting things on different platforms saying, “hey, I’ll join you. Here’s what I’m doing.”
  • People start sending me a picture of theirs or what they’re drinking. What does that do? That’s a door opener.
  • That doesn’t mean I only continue talking about cocktails – it’s like a cocktail party.
  • Most people, if you’re a business and throw a cocktail party, you’re not going there so people can throw back shots and not speak in between. You’re doing it because it creates an environment where people are comfortable engaging, building relationships, and talking about themselves and their businesses.
  • You’ve found a connector there. And guess what, our blog is part of our website. So when people are coming to our blog to read about what Michelle was doing downtown on a Saturday last weekend, they’re also one click away from looking at and buying product.

So, it sounded like you were using social to build your email database, and then using your email database to drive people back to social. Did I get that correct?

  • You did, except I want to correct one thing because of the order I said it in. We actually had our email database originally at that time because with the company social was kind of a new thing.
  • We got the jump start by using our email database but then it became a back and forth kind of thing.
  • We would promote our email signups, our subscription, and our newsletter via social and then we also got a lot of email when people just came for our products and joined our newsletter or just signed up to be a part of the site and then we would use that to drive people to Facebook – people asked how we did that – well, we talked about it in our newsletter. Like, “hey, come visit us on Facebook! Great interaction, special offers, etc.”
  • I mean we mixed it up. We did all different kinds of things and what we did was we supported each medium using the other medium.

Talk to us a little bit more about your blogger outreach program. How did all that come about? What exactly were you doing to get these bloggers? Did you ask them to talk about you or was it kind of implied? How did that all work?

  • First of all, let’s put a little bit of perspective around this. This was early days – 2008, 2009. Bloggers were not being as bombarded as they are now by brands asking them to do things.
  • What happened with me was I was fortunate enough to be in a very early Jeff Pulver event (Jeff runs the 140 conferences based around Twitter). His original name was Social Media Jungle. I was at an early event in 2008. I was there with Gary Vanderchuck, Chris Brogan, and I got to meet a lot of these guys a little bit early on and he had a VIP party and there were these five mom bloggers.
  • The real big push in the mom blogger movement started in about 2007 when my ex-partner from Collective Buys, John Andrew, started Wal-mart Moms and started recruiting mom bloggers to be a part of that.
  • So, four or five of these moms had also known John and I hadn’t met John yet but they were a part of this and they did a panel at Jeff’s event about bloggers and mom bloggers and I was fortunate enough to sit next to them at this dinner and we began talking and they heard I was from e.l.f. Cosmetics and they said, “that’s really cool. We’ve seen your product and wow, it certainly isn’t Trish McEvoy or Chanel but then again it’s a dollar a piece. That’s amazing! We’d love to get any product,” and I said, “Sure.” They said, “hey, we’ll be happy to write a post about it,” and I said, “terrific!”
  • Very quickly I realized the power of this and I didn’t ask them for anything and they were a little bit amazed, like, “wow, Ted sent us this whole box of cosmetics and didn’t even ask us to write a post!”
  • Because to me it was like, if they like it they’re gonna do that. I started learning very quickly that if I did it for them without asking they tended to deliver even more.
  • Beyond that, I was just myself I said, “hey, you know, you should be doing something like this on your site and you might want to change this,” and I started reaching out to them with help and they were like, “thanks. What can we do in return?” I said, “you don’t have to do anything in return. I want to be your friend. That’s what I do for my friends.”
  • So little by little this relationship started to develop with these bloggers and they started introducing me to their friends and and their friends and to more bloggers and then shortly thereafter I came up with this idea for “make-up at home parties.”
  • Unlike the companies that do these parties so they can sell product at the parties, I had no desire to sell product at the parties. I didn’t even want to go through that effort. I wanted to give product to women at home to have friends over just to introduce them to the product – just to give it away for free.
  • One of the bloggers, Audrey Maclellan, who was called Mom Generations, she’s a publishing business, she’s one of the lifetime moms, she’s very well known, Audrey called me up and she said, “you know I love this idea. How are you going to introduce it?” and I said, “well, you know I was thinking Blog Her is coming up, maybe I’d do a party there.” She goes, “You know what? Let me do the party with you and I’ll invite all the bloggers that should be there. Instead of the invite coming from you – where you’re just a brand and you’re asking them to come – it’ll be coming from me, their friend. Look, you’ve been so good to me I just want to help you out.”
  • It was a major thing, we had to turn away bloggers at the door. Blog Her got upset that I did this party that was unsanctioned. I reached out to them first and tried to partner with them but they were like, “$50,000 for this or $30,000 for that,” and I was like, hell, I’ll just rent a suite in a hotel and do this myself I had offered them tons of product. I offered them what I could offer them – product in exchange for something – and they had no interest which hey, it’s their business and they run it the way they want, and I didn’t get upset at all, I just pivoted and came up with a different idea.
  • Then a lot of these bloggers who were invited to the party had other parties that were involved with Blog Her and they asked me if I’d give them product for the parties and I ended up making a bigger splash at Blog Her than the premiere sponsor, McDonalds.
  • Again, my eyes just grew wider – look at the power of this community and take this and layer it on top of social platforms – you’ve got marketing on steroids.
  • When I say you don’t have to pay for it, there’s always a cost. It can be in time, in can be in product, it can be in friendship, it can be in delivering information, but to me the cost was obviously was exponentially less than buying media to accomplish the same thing.

Your book is called Return on Relationships and I know that there are people out there that don’t feel that relationships impact the bottom line. What do you say to these people?

  • I say, open your minds and use common sense.
  • Everybody prefers to do business with somebody they like versus somebody they don’t like. Everybody wants to have a good experience.
  • The way I define “return on relationships” is simply put, “the value accrued by a person or a brand due to nurturing a relationship.” Whereas ROI is simple dollars and cents, ROR is the value perceived in real, that you’ll accrue over time through loyalty, recommendations, sharing, and I use it to define and educate companies, brands, and people about the importance of creating authentic connection, interaction, and engagement.
  • I’ve never really sat across the table from somebody that’s said (unless they were looking to make a name for themselves or write something that gets them noticed), “relationships don’t add value.” What they say is, “how do you quantify it?” “What’s the ROI?” “How do I dig down right into their return on investment?”
  • First of all, what I like to correct, some people think it’s ROR vs. ROI. That is not even CLOSE to what I’m saying. What I’m saying is return on relationships will enhance ROI. We always need ROI. Even if it’s in your personal life, there needs to be some kind of value for things that you do.
  • Very few people will continually go on and on doing something unless they get something in return. When I say something indirect, I mean Rich doesn’t have to do something for me. I might do something for Rich because I know that other people will do for me because they know I did for Rich. They know that I was there. They know that you’re a good person and they want to help you.
  • What I try to make brands understand is that social media itself is very much like traditional branding. There’s not a company out there that hasn’t grown their brand, except for strictly direct marketing companies, by building their name and enhancing their reputation.
  • Tell me what the ROI is of a billboard in Times Square? Tell what me the ROI is of a TV commercial? You can’t track that directly through a click.
  • Social is now the most advanced way to build that ROR at scale. We can all do it in the store or over the phone, but to do it at scale, to let other people view how you’re doing it and participate vicariously, so many more people in addition to the ones you engage with become a part of that relationship because they see you having that relationship with others.
  • It then becomes a part of anything else that happens with your company. You share a voice, that brand perception, your net promoter score. These are all things that say how quickly and easily will someone recommend you. How many people know about you and think of you in a good light?
  • Those are very important things and the problem is a lot of people think when I say, “relationship,” that it’s the same relationship Rich Brooks and Ted Rubin will have. We’re two individuals. We met each other. We’re going to meet each other personally. We can actually hug each other face-to-face. We can shake each others’ hands.
  • Whereas, a relationship with a brand isn’t the same thing. Experts will say, “people don’t want relationships with brands,” – of course they do! What they want is a relationship with a person at the brand. They want to know that that customer service person, that vice president, that general manager, that store clerk, says, “oh, Rich is here.” Or, even if they don’t know Rich, treats him as if he’s a friend. He is somebody they care about. There’s some value to what they’re giving him.
  • Those relationships enhance business across the board especially (and I think you’re market and the listeners to your podcast) small to mid-sized businesses. That value to a small to mid-sized business is even way more than a large multi-national company.
  • Those relationships make a difference. The way someone feels about your company makes it much more likely for them to come back.
  • Let’s break it down to something really simple – trust and loyalty. If somebody trusts you, they’re going to be loyal to you. If they’re loyal to you you’re going to make more money off that relationship as a business. You’re going to have a longer lifetime value from your customer and these are things that every corporate executive understands – lifetime value of a customer, average order value, and frequency of purchase.

How can we as entrepreneurs and small business people as non profiteers make our help and our relationships more authentic in this space when so many other people seem to be jumping into the space screaming, “no, I’m all about relationships and I’m all about people!”

  • Listen, every person will one day see through a poseur.
  • If it’s not authentic and it’s not really who you are, if you’re not true about it, if you’re not willing to do for others without any expectation of something directly in return, people are going to figure that out very quickly.
  • What I like to say is in someways it’s a better opportunity than it was before because there’s all these fakers out there and if you’re authentic and if you’re real and you’re actually trying to help people.
  • I love the movie Miracle on 34th Street. One of the scenes I love best is when Santa starts sending the customers to Gimbels from Macy’s because Macy’s doesn’t have the product. The general manager freaks out and is like, “oh my god, I don’t care if they have better product they’re here to buy.” My Macy says, “oh my god, what a fabulous marketing idea. Of course we should send them there then we’re the good guy. We’re the one that’s looking out for our customers and not just trying to sell them something.” So in the long run, that will make you more money. It’s not just about the extra buck.
  • I really believe that. There’s a lot of people that say that’s crap and nobody really cares, they only care about what they can get cheapest today. But I think there’s a big change going on. I think that we went through this dramatic change from small business, local businesses to mass marketers where people wanted to be anonymous. They just wanted to buy at the cheapest price and they didn’t care.
  • I think the world is making a major shift. I think things are coming back mainly because of the ability to share because of how much information is available. Because a change in generation. Millennials care about companies that care about people. They care about more than just the cheapest price. They’re different people. It’s not just them. All of us are coming that way.
  • First of all, we’re following our children. Second, we’re following their lead. Third, we’re recognizing the same things. We want our world to be a better place. We want cleaner air. We want better food products. Look at Chipotle that makes a series of TV shows called Farmed and Dangerous making light of but giving education about the dangers of corporate food manufacturing. They put a lot of their marketing budget into these films that made fun of an industry and did it through storytelling and content and were able to tell the story of why their product is better without saying, “our product is better,” but by explaining what happens in most food processing.
  • That was remarkable and now there’s a lot of other companies saying how can we be doing the same, but the only way you can be doing the same is that you’re authentic because if you’re a company that is using those processes you can’t do the same story. Again, if you’re legitimate and you try to help people and I buy your product and I call up and I say, “hey, you’re gonna have customer service whenever you need it,” and then I can’t get it over the weekend or I call up and I told, “we’ll only give you answers as to why your product isn’t working for the first 90 days, now you have to pay us $39/year.” I’m sure you’ve experienced that.
  • I’ve bought wireless devices and I call up and I’m told, “oh yeah, it can be reprogrammed but you’re not on our new programming,” and I’m like, “goodbye. I’m gonna go buy somebody else’s wireless router. I’m not gonna buy from Linksys anymore,” because Linksys is now charging me to fix a product that’s not working and it’s as simple as an upgrade in the software they do over the phone. Meanwhile, when they’re marketing their products they’re saying, “we’re here to serve you and to help you.” Now granted, initially they’re probably going to up their profit margins, but over the course of time I go into homes and I don’t even see Linksys routers anymore.
    • Because things are so public these days and they’re shared so quickly, that when a company is not being authentic that they’re outed a lot sooner and social media has accelerated the pace that we discover what brands aren’t being authentic.
  • They’ve accelerated that process. Here’s the problem. Because so many things have accelerated, what brands and companies assume is that building a social presence and making it pay and seeing the ROI can happen overnight.
  • They want to see the ROI the same way they do when they buy a Google ad or even put up a banner. What they have to understand is that because social media, social marketing, and social relationships live so much on digital platforms, companies make the mistake of believing that they’re digital marketing and they’re not.
  • You can’t measure them like search, like banners, like email. You have to measure them more the way you’d measure your branding efforts, your experiences with people on the street, your billboards, your radio, your TV.
  • There are things that take time to show up in the numbers and you have to be looking at them quarter to quarter, year to year, and not minute to minute. That’s not where you’re going to see the results. Now, if you buy a Facebook ad or a Twitter promoted tweet, that’s an advertisement, that’s not social marketing. That’s advertising on social platforms.
  • Don’t mix that up with building shareable content, engaging, interacting, and building relationships.

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Rich Brooks
Relationship carpenter.