My guest today is Aimee Johnson, CMO of Zillow. Today’s episode covers Aimee’s career, including a deep dive into her time overseeing Starbuck’s loyalty program.
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Transcript
Edward: My guest today is Aimee Johnson. Today we cover Aimee’s career path to CMO for Virginia Tech, SallieMae, Campbell Soup, Starbucks. Aimee is now the CMO of Zillow, and I'm honored to have her here today.
Aimee, you spent 14 years at Starbucks including four years as SVP of Digital. Why leave then to join Zillow?
Aimee: When I was at Starbucks, I was really enjoying driving digital innovation. Working across the business unit from the field to the technology teams, the marketing teams, et cetera. And when I found out about the opportunity at Zillow, I thought, while it’s been fantastic working at Starbucks and getting that really well-rounded customer-centric view of a business, going into literally living in tech space and bringing all of the customer journeys, customer-centric, and understanding customer experiences into a tech platform. That was so ready to drive and then customer experiences to me, this was very exciting.
Edward: You had the technical chops. Were there any marketing skills you were missing jumping into that Zillow CMO role?
Aimee: The few I have that’s [...] is just communicating what marketing was, how it could be used in a journey and not just hop a funnel, and how to look at a customer holistically and not just at the moment that you’re intersecting with their life that they happen to be clicking onto your site.
But I think it was just going back, just some of that basic. How can marketing help [...]? How can we partner with the business, how can we partner with the tech, how can we partner with the different groups within Zillow to really move their vision forward?
Edward: There were no marketing functions like public relations, paid search, or anything that you were missing that you previously had that you had covered in your career.
Aimee: I would say SEO. Even while I own paid at Starbucks, it was different. This is such a big SEO team. I don’t run SEO. It’s currently handled in the tech organization. But understanding and connecting with that team since I don’t have SEM and some of the other intersecting worlds where we can all learn from each other. It’s how we literally learn from each other. What is it that each channel needs, what is it that drives the ROI and meets the channel? How can you optimize a platform in such a way that more than one platform can take advantage of the content, for example?
Really getting in and understanding the nuances across the different platforms regardless of the space in the company, whoever was driving it, we all need to work together with the same outcomes. Learning a new culture is so hard. After 14 years, it’s like one culture and you step into a completely different other culture. Not a marketing skill, definitely like actively listening, terminology. I said personalization, you said personalization? What did you mean when you said it because here is what I meant when I said it.
Just learning the words, learning the cadence of things, understanding the speed that which a tech company works a little differently than retail. You have to source the product, rate the product, launch the products. There’s physical science. In a tech space, here’s the idea, let’s go try it. The speed—really understanding the speed.
The marketing chops, I think I brought with me. There were some of these other pieces that I had to relearn.
Edward: I was always told in my career that you should be careful about switching in general. Anytime you switch, there’s a chance that something goes wrong. And that you should try to focus on switching one thing at a time. Either switch a function area, an industry, or a company. But don’t try to switch all three of them at once.
But I go back in your time, you’ve done that a couple of times where it feels like you switched three or four of those things all at the same time. Talk about switching from SallieMae to Campbell Soup. There’s a place where you switched the industry, you switched your function from doing programming into marketing, and you switched companies all at the same time.
Aimee: You know when you’re a little kid and you learn how to ski, you don’t have your poles, and you’re really close to the ground. It’s just like, woohoo, I’m going downhill. You have no idea to the left is a forest and to the right is a certain depth. You just go as fast as you can down the hill. And go this is fun.
Some of the changes I did were just because that sounds fun. I haven’t done that before, so let’s try it. The switch from SallieMae to Campbell was super purposeful. When I came out of school in the ‘90s, there was a recession going on. I was in school. I did marketing. I came out of my marketing degree. But I did not have any work experience in marketing before. When I popped out, they were like, so what actual life experience do you have in marketing? I watched a lot of ads, that was kind of cool.
Clearly, there were no jobs that I could take in. I ended up taking a job at programming—SaaS SQL programming because my dad was an engineer. We were always programming around the house and stuff like that. I was like, hey, this is easy. I’ll do it. I then went to graduate school at George Washington University to learn the skill of marketing, I guess you would say. So then I can come out and say, wait, wait, wait, now I am a marketer, I have an MBA, I could do this thing, I know I’ve been programming. Now is the time to leave tech. What tech is this little thing? What is engineering, programming going to be like in the future?
I got to learn the basic general managers as a CPG, and I just jumped over into Campbell’s because it's a good training background at the time—the brands were great. There was an infrastructure that I could jump into and learn. At the same time, they had money to spend. The brand and the businesses themselves were interesting. And I have a family up in New York. Being right in Philly was great, going further up east.
Edward: How do you get that job though? How do you move from SallieMae, working at a tech company, doing programming, and get a marketing job at a CPG firm? How do you convince them to hire you?
Aimee: I could’ve gone in two paths at the time. Andersen Consulting had just switched to [...] to Accenture. Accenture was looking to do a change management practice in Washington DC. That was one avenue I could’ve gone. The other was I was interviewing the CPG companies of which one was Campbell’s. It was, was I going to go down this tech change management path, or was I going to do CPG?
I think I convinced the—between the case studies and everything—I just love marketing. I grew up, my grandma used to say, you never watch TV, you only watch commercials. I would talk about the characters in commercials. I would try to sell things when I was a kid. I just like knowing you and who you are, figuring out what you need, creating ideas, and figuring out how do I get those to you?
I think I’ve just always been in that space where that’s just fun for me. A part of being in an interview—even if you’ve never been in that space or done that work—if your enthusiasm, if your passion, if your understanding, if you’re actively listening to the question, and answering what they’re asking of you. Being true to yourself and how you’re feeling in the moment and really thinking about what they’re needing and looking for, then you just find a match. You find the company match that’s willing to be with you and you’re willing to be with them. It’s like a business [...] moment, I guess.
Edward: Let’s jump ahead a little bit to your time at Starbucks. Among other things at Starbucks, you oversaw the loyalty program. I built my career in loyalty programs, and in spite of that, I believe they generally destroy value. I think Starbucks is maybe an exception. I wrote a long essay last year all about Starbucks’ loyalty program. I said I want to talk to you about it today. My question, internally, what did you guys see as the key value drivers of the Starbucks loyalty program.
Aimee: Way back when there were only 2 million people in the program. I don’t know if you remember, we used to send birthday postcards—happy birthday. Way in the day, when direct mail is a thing. You’d get your little rewards in the mail. We saw a future of wow if I knew these people better, I could talk to them directly. I could talk [...] words directly because I know him, I know what he bought. I know maybe what he may want to buy.
Our original thought was like, we know him better, great. And then, by the way, these smartphone things, they’re becoming popular. By the way, we can actually get at the data that we couldn’t get at before. All these things were converging together at a moment in time where I was lucky enough not to be at the eye of the storm so I can go off and innovate to the side. It’s only two million people. She has a couple of heads. Go figure out and see what the thing is.
I didn’t have the pressure of the business. We had the conversion of technology and understanding. We have a system in place that people that loved it really, really loved it. In the beginning, it is still social. People are posting their gold card with a smile next to them. It’s like all good things. We had to convince the organization that the loyalty program did not take money away from the shareholders and the company.
By doing that, we actually looked end to end at the value of the program. That’s when we decided that we were going to keep things like the app should be centered on the rewards program. That the payment mechanism, you have to get into the reward mechanism to pay because paying at the register is a value.
We decided that the Starbucks card—which when I left I think had somewhere upwards of $7 billion on it—was part of the system. By the way, we had earnings from that as long as we kept the money. We did like an end to end P&L on the benefits of it, including the data, including the communications. When you actually do a P&L of the program, it was quite positive for our revenue. Especially because we could demonstrate that it was driving additional purchases and additional visits, especially when you brought in medium or lower users into the program.
I think it was very interesting. We could do the testing. We had a convergence of all of the data. People were intellectually curious, and we were a success story for the company. We kept growing and growing and growing because customers found value in the program.
Edward: How did you know the program was driving incremental purchases and not that people that wanted to make incremental purchases join the program?
Aimee: Isn’t it funny? That’s always an excuse people give. Why are you just giving money to people that would’ve bought it? What we would do is we’d run a lot of AB tests. We would find if a person, let’s say you’re a brew drinker and you drink a lot of brewed coffee. There are certain things that happen with you that show us that you’re a certain type of brew drinker. We knew that if you ordered a bagel the third time, now you have attached, and you’re going to have a brewed coffee and bagel now forever or at least 75% of the time.
We could offer similar personalities. One giving on the bagel offer, one not giving the bagel offer—see what happens over time. There was definitely a correlation (I would say), the statistical significance of yes, we did change that behavior. Even over time following the same user year over year, their increase in ticket and/or traffic will continue to grow.
As we brought different features into the program—first it was just like buy 12 get 1. And then it was we had different things we can offer you at different tiers. We had payment in there and then mobile order and pay, which continues to be extremely—I don’t know if it continues. I left two years ago. But it is a very, very incremental program. Where again, if you come, we tell you, hey, come back. Hey, we miss you. Hey, wouldn’t you like this? Yeah, sure I do. I didn’t know. I’ll be there. All right, count me in.
You can look at that in your heavy, medium, and light users. The light users are interesting and you probably know this. Is a loyalty program for everybody? No. Should it be for everybody? No. Then it’s not really helpful. But if you could charter for whom the program is most valuable, it’s that icing on your company’s cake. It’s the what’s the little extra something that you can give somebody for coming a little bit more or for being a valued loyal customer.
Your heavy heavies—are they may be more loyal, can you maybe get them to attach more? Your mediums—oh, foot traffic. Get them in a little bit more. Your lights—probably not a loyalty plan customer, but you could tease them a little along with the land until they decide to come to your establishment more often. There are different ways you can look at who you’re bringing in and how incremental they are.
Edward: The example you gave with giving the bagel attached, that’s promotion-focused. You can totally AB test that. I’d buy that. You find new customers are like that. Some of them you give them the bagel offer, some you don’t. You measure over time what the difference is. It’s almost like a coupon play. It’s like the new version of coupons that I’m sure grocery stores were doing a hundred years ago, probably with less sophistication.
What about the base program itself? They’re the most loyal customers. The ones that are buying Starbucks every day are going to be like, yeah, absolutely. I’ll sign up. Now you’re just giving me 10% off because I get every 10th coffee free or 12th coffee free. Is that a basic cost and then you have to use these incremental programs in order to make up that cost and get it over the top to make it profitable?
Aimee: We did have a methodology for figuring out if the program itself was incremental. For example, how many billions of dollars walk out the door if we just shut the program down tomorrow? And it was incremental. In it of itself it just ran as itself, it was an incremental program, and that incrementality was over the cost.
We did research around that. We kept that on continually just to make sure that we weren’t trying to sell ourselves the idea of the program. And it lies in things like the program itself with even just the value it gets, gets you a certain point. And then all of the add-on features of being part of something, the recognition, and all that. That all adds to wow, they know me. They love me. I’m a real true customer of theirs.
We have some crazy high—over 50%—response rates to satisfaction surveys that we send out because folks are just yeah, I’ll tell you about my last visit because they love us. Even the light-medium users that are part of the program. We did continually test it to make sure it was incremental to the business. This is a lot of money.
It’s funny when I first was joining the business, the operators would be like, what the heck is this hitting my P&L? We would sell that bagel anyway. A lot went into partnering with the field teams to share with them like, actually, no, you may not sell that bagel anyway. Let me show you what we did to demonstrate that. If the loyalty program wasn’t there, that mobile order and pay thing now, that’s the biggest third channel you’ve ever had.
Imagine now we don’t have drive-thrus anymore. Would somebody still go to your store if they didn’t have the convenience of a drive-thru? Would somebody still go to your store if they didn’t have the convenience to have mobile order and pay? Some of the features that we had, you really turn off and you would see a drop.
Edward: Especially the mobile order. Convenience (I imagine) is extremely valuable, especially on the margin. Did you guys look at the financial stuff too? When I wrote my essay a year ago, the amount of value in stored cash that people put on those cards, it’s just a free loan to Starbucks.
Aimee: The float is great. We looked at the float as part of the P&L for sure.
Edward: At least on my math, that almost paid for the whole program itself, and then everything else beyond that was gravy.
Aimee: Now I can’t say anymore. Just to say it was beneficial. I think people lose sight of a couple of things. It’s the ecosystem itself that makes a rewards program. It’s not offering coupons. It’s the totality of wow, we did little things. In the app, we would put your name on the cup of the content we were sending you.
The whole idea of the digital experiences is how do you put in a digital space the feeling as if your favorite barista is there to help service you, what does that look like, and what does that feel like. And then what kind of events and experiences should we create digitally. We never really thought of it as a rewards program. It’s like a click of this, that would’ve not worked for us.
Edward: How much time and effort were you spending on that internal sales pitch? Marketing to your employees, franchisees, and the store managers that this is a good thing.
Aimee: A lot. I had a fantastic boss, Matt. He was fantastic. Also, being an evangelist to it. You’d have to pitch the field, you’d have to pitch finance, you’d have to pitch senior leaders, you’d have to pitch marketing. Continually showing the value of the program.
At some point, we did hit a tipping point. Where it was like, wow, we’ve made it. We’re in our own cups. Starbucks Rewards, we were able to advertise our own cup. You knew at some point whether you could up take some of the best real estates in the store. That folks are starting to believe that the program is literally driving business. At some point, it was driving a third of the incrementality. It was a very strong program. But continually, right?
A lot of it was, wow, who’s my finance partner? Who’s the biggest critic in finance? It’s like this is draining my coffer. Let’s partner, let’s figure it out. Tell me why you think it’s draining your coffer. Let’s go track that back down and work with them together in the field. Okay, great. You don’t want it on your P&L. Why don’t you want it on your P&L. Let’s have that conversation.
Okay, marketing. Sure, you want to be talking about that unicorn frappuccino, but what’s going on at the last five seconds of that ad, and can we really talk about downloading the app because here’s what the ecosystem looks like? A lot of it is sure, everybody will always debate you on everything. Even if you have the best data in the world. Unless you could partner with those around you, actively listen to them, and actually listen. Because some of [...] they said, wow, I didn’t think about that. You’re right. Let’s change it.
That’s where you actually get the buy-in. The tipping point doesn’t happen just because of the tips. It happens because of partnerships, conversations, and no sticking of point of view, altering [...] but continuing moving forwards.
Edward: Aimee, what were the biggest failure points in your career? Where did things not go as expected?
Aimee: There were points where I thought I had stuff over the finish line and it just didn’t go. We were trying to figure out how do you think about Starbucks coffee like brewed coffee. In marketing, there’s a business [...] statement, there’s a tone in manner, exists for existing, and you should be able to talk about it. They talk about coffee in a way that is like, it’s citrusy yet fruity. It’s coffee. What do you mean citrus and fruity?
We kicked down a project that was like, let’s talk about coffee so it has its own personality, so it’s more approachable, so you don’t come off as professors. We come off as geeks that love coffee. We just could not separate the product from the brand Starbucks. Enrolled a lot of people in it and just at the last minute, it just fizzled, didn’t work. We never got it over the finish line. A lot of package coffee innovation just was a little bit before its time.
There are some really cool coffee innovations. Some of which ended up [...] and other things in the marketplace. But we just weren’t able to get it across the line. I call my failures, they’re all like a bookshelf of future success. Because you never know when it just was not the right moment in time or something that you can go back from and learn.
You remember when we tried that whole thing where we’re gonna go to the farmer’s market and we were going to try to convince people we’re this little company from Seattle? That didn’t work. Why didn’t that work? What can we maybe learn? What were you trying to do? What’s the problem that you’re trying to solve, and how can we use that in the future? Because the problem is a good problem, we fell in love with the answer, and maybe that’s why it didn’t work.
Edward: Aimee, do you have any productivity tricks? What do you do to be productive that other people don’t do?
Aimee: I am a processor, a bit of an introvert. On the other side, I write things on lists and lose my lists. List writing for works for some. Where’s that list? And I spend 30 minutes procrastinating doing the work, trying to find the list. I love working with just a really smart other. Whomever it may be, whatever the topic is—that kind of crank through things. To work through what’s the problem I’m trying to solve. To work through what is the goal.
It’s funny. I feel like I’m not productive at the same time I’ve managed to do a lot in my career. I don’t even know how to answer that question. My crazy. I guess my crazy makes me productive, is that an answer?
Edward: That’s fantastic. Aimee, this has been so great. Thank you for your time. We’re going to pick this up tomorrow, exploring your time in Zillow.
Aimee: Thanks.
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