What is the Product Customization Opportunity?
These campaigns are just for large brands or really small craft brands right?
Until we came onto the scene, product customization had historically been a loss-leading exercise. It’s always been viewed more of a branding exercise for big brands. And we’ve been involved in some of the biggest customization campaigns in the world. For example, ‘Share a Coke’, we’ve done work with Mondelez Cadbury, Nestlé with Maltesers and so on.
They’ve always liked to do packaging label customization. Things like allowing customers to put their name on their product. But customization has always been out of reach for small to medium sized brands. Even now they naturally think they can’t do it or it’s too expensive.
So years ago we asked ourselves, ‘How can we allow merchants of all size, to sell products that’s aren’t off-the-shelf?’ Because with social media, we’re all amazing content creators. So why shouldn’t we provide consumers with the ability to be able to customize everything they buy?
And we’re not talking about a person putting their head on their milk carton, although that is possible. We’re talking about a person saying, okay, I like this pillow that you’re trying to sell me, but I like the colors on this pillow, but I like the stripes on the other pillow. Geez. I wish that I could have that color with those stripes. Why shouldn’t the customer be able to configure that on their own?
And now with Spiff3D, they can. We’re seeing a progressive shift by merchants, in terms of how they are requiring goods from their suppliers. Especially in the way that their products are supplied. A lot of products now are being supplied blank and merchants are finding ways to modify and customize these standard products. This gives them the ability to sell a unique product.
A competitive advantage
Product customization provides something that is much, much harder for competitors to copy. And we know how with eCommerce, you are just one Google search away from your customers finding 50 other stores who sell what you sell cheaper. It’s a race to the bottom if you don’t have a really clear point of difference and reason why they should buy from you instead of someone else.
What exactly is Spiff3D if you had to explain it simply?
There’s essentially four components of our system.
1 – The actual customization experience, which is the real time 3D experience that the consumer is driven through.
2 – The Spiff Hub, which allows the retailer to create and manage these experiences.
3 – The fulfillment automation layer that allows you to configure the output and then the automation of the fulfillment side of the order once it’s placed.
4 – The analytics layer
Each one of them is very important, but from the perspective of being able to perfect a consumer experience, the analytics layer is very critical.
What files can the software output for fulfillment?
It’s challenging enough to build a fulfillment automation platform that does one type of thing e.g. produce a print-ready PDF file. But, to build a system that can be configurable so as to produce any output file is another thing entirely. This increases difficulty by a factor of ten.
That’s, I think been one of our greatest challenges and, I’ve really had to draw on the experience that I’ve had in the past 10-15 years in print and manufacturing to understand lots of different types of machinery as well.
Having always been in the personalization game, understanding that whole digital component, being able to print one-to-one etc. This has been critical and one of the biggest challenges. For example having to deal with things like spot colors, overlays form-cuts, dyelines, bleed… Some customers want things in CMYK others wanted RGB, some customers want SVG, some customers want JPEG or a PDF. Some customers want all of the files submitted to them in pieces and they want to be able to reconstruct them. So someone has to convert them into esoteric file types that then go to AutoCAD programs and so on.
For example we have a customer that manufactures customized funeral headstones and so their software has to etch out the writing. So in that case, it’s not a matter of printing. It’s about cutting or routing the stencil. So they have to be submitted in a particular file format.
So building a systemized fulfillment automation platform that can not only produce any output file, but then can route orders based on almost any business rules that a merchant can give us, to plug into almost anything… that has been probably the greatest challenge. And I think is probably our greatest point of difference.
Spiff is 3D, but does it also do AR?
We were part of the world’s largest augmented reality personalized campaign, which was a campaign we did with Kit-Kat and Allen’s lollies where over, I think it was over 200,000 people , got to see their own personalized animation experience that they applied off the back of the personalized tin of of Allen’s lollies or KitKat blocks.
In general, the hardware for AR really isn’t there yet to provide enough utility to consumers right now. But, it’s definitely on our radar and once that barrier lifts, you will see an explosion in AR usage, especially for customization and general retail experiences.
Don’t you need customization hardware to fulfill these products?
Make no mistake. We’re not selling hardware, but we have very well-established relationships with different hardware manufacturers that we then incorporate into our sales process. So if a person wants to sell greeting cards, and if they don’t have a suitable printer that we can send orders to automatically, then as part of our sales processes, we introduce them to a relevant manufacturer of whatever hardware that they need. We help facilitate that entire process.
And because the pathway manufacturer understands our software, they are able to install it very quickly with the Spiff process in mind and then the customer is up and running pretty quickly. So while we don’t sell it, we heavily facilitate this process for customers.
Does Spiff3D work on all eCommerce platforms or just a few?
How does Spiff work on a website? Do you have to create a separate page or domain to run it? Tell me technically how it works.
All we’re doing is creating a button that will call our API to create a transaction. And that’s a public transaction, so it’s no different to browsing a product within your website. All that happens at that point is that we open an iframe within the site. That iframe can either be displayed as a popup or embedded in the page.
The merchant has complete control over the way that we display the content and how we display it. We append the widget to the product page, to the standard product template. But we have customers that activate it on the home page. We have customers that activate it via a button click on the nav bar. There are lots and lots of different customer journeys that are customized to each merchant’s requirements. So these are set up to meet the needs that they’ve got for their desired customer experience. And so then a transaction is created. We take the customer through the design process within the iframe and then once that design is complete, we create a payload of data.
We send these data to the order line items and then even the order process at that point has essentially left Spiff and now you’re basically still within the e-commerce process on the website of that merchant. So you can continue to shop and buy other things like you normally would. To the customer it’s just like visiting a product page and adding to cart. So when they are finished their session and checkout, via web hooks, we securely place for that transaction, a transaction ID in our system. And then the delivery channels, the fulfillment automation and delivery channels all get executed. And that point the files or metadata get routed to wherever they need to get routed to.
So how do you create the customization experiences?
We’ve built a self-serve platform for that called the Spiff Hub. This is what we call our workflow editor. So our customers can log into the Spiff Hub and create all their personalization experiences. The first thing they do is they go in and create a product in our system which syncs with the products that already live within their e-commerce store.
Once that sync is in place, it tells the widget to load the design experiences that relate to that particular product. Then you can create a workflow or the customization experience. So we’ve got a drag and drop editor that allows you to stipulate exactly what colors, what panels, what textures, etc. We’ve got about 14 different step types that you can create.
So it’s a step-based editor that allows you to do things like ask a question where nothing visually changes to the product, or a text step where they can adding text to the product and see a change in real time on, image uploads, material steps that allow us to simulate the material texture…etc.
So for example, if you might have a motorcycle helmet that you’re selling and you want to sell it with a gold foil. You want to have an option with a gold foil fleck in it, and then another one that’s got like a starry sort of finish and then another one that’s matt and another one tat’s got a glossy finish.
These are all things that you can easily simulate and create inside the Spiff Hub when creating the customization experience without coding anything! These are all variants already contained within our system which you can create and manage and manipulate in the click of a few buttons.
So one, they’ve got the ability to structure the design experience in whatever way you wish, the best thing is that you can amend it at any time. You can add and subtract things from it without having to rely on any developers. It’s as simple as using the Shopify backend to add some product variants etc.
How do you know if these experiences are working or not?
Having the Spiff Hub backend really feeds well into our data analytics system which we’ve built. This allows us to measure customer interactions related to particular steps within that workflow. So as a consumer goes through the design experience, if they abandon a particular step we know. If we wanted to know how many times they clicked on different variants we know. Are they going forward and backwards a lot? Are they clicking too much on some things and which ones are converting the most? What are the similarities that we’re seeing between the way that those customers behave? Is there are more optimal way to build this design experience so that we can increase the number of conversions? The ability to be able to drag and drop and essentially AB test everything really simply is very powerful. .
It gives the merchant the unique ability to be able to understand more about what their customers are choosing to interact with.
How much does Spiff3D cost? What’s the pricing model work?
“First of all, your pricing seems ultra reasonable for what you guys do. Cause I know what the software costs to build. Customization I’ve been involved with on the agency side, when we were building this entire backend technology with everything that was built into it. This was 100% percent custom developed. And so for me, when I’m looking at your pricing page, I’m going, geez, this feels almost ridiculously cheap. Walk us through kind of how you charge, how you make money and how it seems so ridiculously cheap for what you guys provide.”
I mean, this is no different to the model I’ve always been comfortable with. The way that we charged for services back in my broking days. We would charge people based on the trade that we did for them. And I typically wouldn’t charge them for losses, but I would charge them when we made profit. So I always liked to feel we weren’t a cost and try to sell ourselves as a revenue partner rather than a cost center. And that was evident to how we scaled the buying group that we created – SerJeant Group, which was based on the revenue that was generated off the cost savings that we generated. So if we saved them [clients] a hundred thousand, we would take 10% but we wouldn’t get anything unless we saved the money.
And now this business is not dissimilar. Like what we’re saying is that if you’re a business that’s turning over a hundred thousand dollars a year and we’re taking 1% of something… Like to clarify – our platform charges a small subscription cost, which covers the basic service, and then a transaction fee, which is based on the value of the order that’s created through our widget. And that’s 1%. So you can imagine if you turned over a hundred thousand dollars a year, we’re looking at only generating a thousand dollars out of that customer for the year on top of the actual subscription license. But where we back ourselves, is that we’re building software that is going to add so much value, that the business now will turn over 400, $500,000 a year.
And so based on that the upside for us is 4, 5, 6, 7 thousand dollars a year now making. Our goal is to try to make sure that every customer earns us a minimum $5,000 a year in transaction fees. But to do that, we have to provide a solution that increases revenue and we back ourselves to do that.
And so that’s why, that’s why it may seem cheap. We have customers that started by doing very little revenue and now doing very big revenue because they’re fully integrated with our system and they’ve seen 450-500% increases in revenue. And we generate on some of these customers, 50-$60,000 a year in fees, which becomes a lot of money.
So the idea is we back ourselves, to give our customers enough value, that ultimately they will benefit.. But aside from that, definitely we’re building the software in a way that makes it accessible to everybody.
And the other thing is that we do charge for the creation of content and integrations. So if a customer, generally speaking, customization is not one of those things that unfortunately that you can just plug and play, they usually has to be a few things that has to be changed within your business model. Like you have to now account for the fact that you’re not taking an inventory item, now that it is a finished product. We are taking an inventory item that is now a raw material and you’re now adding a process to either construct or configure a product based on the data that we give you or print directly onto it. So that process involves a bit of consulting and we do charge for that, -a nominal fee to be able to cover the costs of managing that onboarding process.
But outside of that, some customers can do all of that themselves and have the resources. We’re not phased. Whatever content you want create, we can also charge on an ad-hoc basis, like any standard creative agency would do. But outside of that, we just charge our transaction phase and work very hard to try to increase our customer’s revenue and make our money off this success.