How Sharks Crunch Data: Daymond John Keeps Swimming

daymond johnAs Daymond John approached the hotel valet, a kid – who recognized John as one of the sharks on the ABC series "Shark Tank" – asked for help becoming a rap star.

John demurred. “I can’t do that,” he said. “I make T-shirts for a living.”

And then the valet pulled up with the kid’s new Aston Martin. Clearly, his music career was going just swimmingly.

Except the kid wasn’t a music artist. He was a fine artist, he told John, selling limited-issue T-shirts for $50 a pop to his roughly 100,000 Instagram followers. This year, he was doing $1.3 million in sales.

“He is converting half a percent to 1% of his followers every single week,” John told AdExchanger. “It’s the same model as Publishers Clearing House, where a good conversion is half a percent, a great conversion is 1% to 1.5%. And he’s doing it every single week.”

John, who was the closing keynote at the Direct Marketing Association’s Integrated Marketing Week event Wednesday, is keenly aware of the changing models around buying and selling – he started his retail career in 1992, before the great digital disruption, by co-founding FUBU, an apparel company catering to the hip-hop crowd.

He still serves as FUBU’s CEO and has about 10 other brands as well as a marketing consultancy, Shark Branding.

John spoke with AdExchanger.


AdExchanger: Looking at the future of the retail industry, what don’t you know that you’d like to know?

DAYMOND JOHN: How are the big box stores going to efficiently keep converting sales, making their customers feel like they’re part of a lifestyle and not lose to a bunch of Instagram kids who are slowly eating the market? How will the big box stores find those Instagram kids? Will they build a platform? “Hey, come to Kohl’s, because Kohl’s is cool.” Kohl’s maybe takes in orders for some of those individuals.

If you’re one of those Instagram kids, how do you get legitimate followers who’ll actually convert?

I know kids with style blogs who have a million followers, 2 million followers and they’re not converting anything. They’re just putting up pretty pictures. [The kid from the garage] found the key. And I think it was a culmination of him being a fine artist who was selling on the streets anyway. Then he found a way to put it on a public platform as this lifestyle was starting to grow.

When you look at the people who want to be in that position, what are the biggest mistakes they make?

You used to have to design a collection, put it out in time and give it to the store, where you had no idea who they sold it to. Did Mom pick it up? Or was it the husband? Or maybe the kid? You have no data on that person.

Now? You don’t design a collection. Design one piece, and see how many people you converted. And the biggest challenge with that? You need one manufacturer who can turn it around in a short period of time, so you don’t have to worry about inventory.

If you can get a screen printer who can turn goods in 20 or 30 days, then you tell everybody. And if the factory can only make a limited quantity? Then don’t open it up to everybody. Just say you’ve only got 100 pieces you can sell.

What have you learned about your customers that surprised you?

Eight months ago, we did something called Jewel House – a line we did for the rapper Lil Boosie. It was a very Deep South rap-orientated brand. With that customer, 87% of the sales were done on cell phones, 10% on tablets and virtually none on laptops. We also learned that crowd was heavily prepaid, and a lot of the orders we couldn’t fill because if you use a prepaid card, you have to put a hold on a certain amount of money and it ties things up.

2015-06-10-IMW 2015-475Do you do similar things with the Shark Tank products you select?

We analyze the traditional sales after a Shark Tank pitch. Approximately 9 million people see the show and we’ll get the first wave [visiting the ecommerce site]: 30,000 people will hit it at 9:00 [Eastern]. Then when 12:00 comes, another 30,000 people will hit it, because of LA. Then when it hits Hawaii, you’ll get a small wave of about 5,000 online. Then on Saturday morning, we’ll get another small wave from people who DVRed it. And everybody who doesn’t want their husband or wife knowing they’re buying it: Monday morning at 9:30, another wave.

After 9 million [viewers], we know that 90,000 people will hit the site, and if the product is under $100, 9,000 of those will place orders.

How fast can you adjust if something happens?

The first adjustment is how many abandoned carts – whether it was too much cost in shipping, too long of a wait time or they didn’t get a customer response. Then we go into our InfusionSoft system and figure out how we’re going to CRM those customers and get them back in.

Then we try to figure out why it worked or didn’t. When it’s 9 million viewers to 90,000 site visitors but only 2,000 conversions: What happened? What did we do wrong?

How do you troubleshoot?

It’s very hard. I have amazing brand managers and people I work with, like the Jay Abrahams of the world, InfusionSoft and Shopify. [Ed: Both InfusionSoft and Shopify are also Shark Branding clients.]

We fail a lot. You have to figure it out and, during the course of figuring it out, you learn so much you can apply the next time.

If you look at Shark Tank, there were few successes in season one. But every year it gets better because the sharks get smarter about the people around them and how to convert these sales.

 

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