Today’s guest, Jay Gibb, is a former software engineer and the Founder and CEO of a B2B SaaS company called CloudSponge. Together with his team, Jay has helped thousands of eCommerce store owners optimize their word-of-mouth sales since 2010. With a unique blend of tech expertise and soft skills, Jay is an expert at helping e-commerce stores build the right features to reduce customer acquisition costs and increase sales.
On this episode, Jay walks me through Cloud Sponge's proprietary Contact Picker program as we discuss word of mouth referrals vs email and SMS marketing, how to track the efficiency of a word of mouth campaign, the importance of privacy and security, and much more.
What is CloudSponge
Jay Gibb: We started CloudSponge in 2010 and our first product that we launched with was an API, like API for developers to connect with the world's webmail and desktop.
What I mean by that is, you know, people store their contacts in Google or Yahoo, like Yahoo Mail, back then AOL, Hotmail, MSN, nowadays Outlook. com, Office 365, iCloud, etc. We have originally, our first sort of core product was an API for developers to use so that they could have a single point of integration.
To all those address books, and they didn't so that they wouldn't have to build their own homegrown integrations with all of those different products. And typically, they would use our customers use that for building recipient lists. So, for example, they may be building, they may have a user experience or UI in mind where, you know, for an e card product where, you know, their users are creating greeting cards, like Christmas cards or holiday card.
And somewhere in that journey, when you finish creating a card, you need to basically somehow input a list of all the people you want them to email it to. Or maybe it would be for a referral program for e commerce or getting the initial word of mouth started for a crowdfunding campaign like on GoFundMe, maybe for inputting an address book to a social network, you know, like you've probably seen on like LinkedIn or Facebook, where they want you to give them your address book so that they can help you find all your friends on the network, right?
Our customers use our product to build that type of functionality because they're able to just do a single point of integration with our API and not have to worry about integrating with, you know, all of those address book providers that, that otherwise they would have to do individual integrations. Fast forward to today, what we have today is still that same core API product that lots of companies use.
But we've also built a UI layer on top of it that we call a contact picker so that, you know, startups and, you know, smaller organizations or e commerce stores that are using WooCommerce or Shopify are able to add a contact picker kind of similar to what you have seen before on your iOS or Android device, right?
When you look at your contact. Alphabet alphabetized list of all of your contacts with the little alphabet down the right margin there, like something like that, except, you know, our contact maker works in a browser, like a Safari browser or Chrome browser, and it allows the user to grant permission to read their contacts and then gives them a way to search and sort and select contacts and, and create recipient lists for whatever the use cases are on our customers websites.
Alex Bond: And it's pretty user friendly. Just maybe an hour ago I tried it out with one of my google accounts and it was really easy to find all of my contacts and just like you said they were alphabetized and everything It was really easy and we'll actually do a live demo for One of your clients today later in the show.
I'm curious, so the more I research this and the more I talk with you about it prior to the show, the closer and similarity I see to say, like an email subscription marketing platform or something like that, but there seems to be a bit of a difference here because you're using client lists and addresses. So how does your referral process differ from, say, email subscriptions?
Jay Gibb: Well, an email subscription is a situation where your user is giving you their own email address, right? They're giving you their own email address to subscribe to whatever, a newsletter or a course or something along those lines. The use cases for a contact picker is where your user is giving you somebody else's email address, like their contact email addresses.
They're creating a recipient list of their own contacts for some purpose, right? For example, to maybe to everybody's seen this, right? You've seen please input a comma separated list of email addresses. You're expecting your user to type out email addresses from memory, or you're forcing them to switch to a different tab or a different application, different window.
Alex Bond: And copy them and paste them. Oh, it's exhausting.
Jay Gibb: So it solves that user experience friction point where instead of like giving them like please enter a common separate list of email addresses you can right beside that you can put a little button that says like add from my address book and they just click it.
And then they can go and just hit checkboxes for all the people that they want, and when they submit it, then there's like a perfectly formatted list of comma separated email addresses, just input it into a form field for them. Right?
Or if you've got like a more sophisticated form where you want like first name, last name. Email address, phone number. You could do that too, right? It's a pretty sophisticated product. Like I said, we've been doing this for 13 years now. So it's, you know, pretty much every feature you can imagine wanting is available.
And so it's really absolute best way to make a recipient list where. Your users are creating some kind of list of other people's email addresses. And I think that's how it's sort of fundamentally different from subscription forms, right?
Word-of-mouth referral marketing vs. Email/SMS marketing
Alex Bond: So, you know, in the e commerce world, time is money. So you're saving time. So you're saving money. I'm curious, is the word of mouth referral proven to be more successful in terms of the actual marketing compared to email and SMS marketing?
Jay Gibb: Yeah, yeah, it sure is. I mean, that's why we're still in business, right, is because it's working, obviously, you know, we have every, every one of our customers kind of has a different level of success, depending on how much energy they put into it and how much customization they make and personalization and so on.
But sort of as far as like round numbers, like just anecdotally from our customer base, what do we see, you know, less than somewhere between five and 10% of people who Interact with a form like that will actually use the address book button because you know a lot of people they just want to type in one email address or maybe they're not comfortable sharing their their contacts right or whatever the reason is.
You'll get maybe one out of 20 or two out of 20 people will use their address book to populate a field like that or to create that recipient list instead of whatever the alternative sort of lowest common denominator is five to 10 percent of people will generate a 50% of the total number of referrals are sent.
So that's why when you go to our website, you'll see words like double the performance of your referral program, or double the performance of this and that. And that's the reason why is because those people that really want to do this and they're trying to input 5 or 10 or 20 or 200 email addresses for like, you know, those use cases where they're trying to do, you're trying to get those rewards.
Or they're trying to invite people to a wedding registry and they're sending it to every single one of the guests at their wedding or something like that. Like, those are the use cases where we crush, like absolutely crush, like there's no comparison when it comes to a user experience that does not have a contact picker.
Alex Bond: No, that's great. And that's part of why I asked in comparison is because I saw, I think it was a pull quote from the CEO of Morning Brew that said, we increased our visibility by 50%. You know, I mean, two times essentially.
Jay Gibb: Yeah, they're awesome with or without cloud sponge. They just have an awesome product and an awesome team and like everything about what they're doing is really cutting edge. And so we were just like fuel on their fire, right? They're already burning hot and they so they already have like a really sophisticated, very successful newsletter referral program.
So the way their program works, if I invite people to just join the newsletter, Then if I get five of my friends to join Morning Brew new newsletter, then I'll all get like some stickers. I'll get a coffee mug. If you're 25, I'll get a hoodie like, and every now and again they'll do a contest where, you know, whoever in whoever gets the most people to join the newsletter in a certain period of time will get like a MacBook Pro or something crazy.
And that interface, if you go to Morning Brew and you look at their interface for referring their friends, on there is the the cloud sponge, you know, add from contact button. And that's the only part that we can take credit for, right? They've got the whole program and all the rewards and all the fraud scrubbing and all this stuff they do, that's all their own software or other third parties that they're working with.
But the one thing that we do and that they give us credit for is that contact picker that makes it so that their fans that want to earn these rewards. And input those email addresses into the form field in the most efficient way possible.
Alex Bond: So I'm curious in regards to, I know I keep kind of pitting you guys against say, email marketing, but that that's the closest I can kind of compare in my head in reference to saving time is saving money.
But with cloud sponge, it seems like the clients are doing more of the marketing for company, which is how you save money. How much money does a company save? Paying for cloud sponges software to implement the referral program versus the money that could be spent on email or SMS entire marketing campaigns?
Jay Gibb: Yeah, I don't really think about it as savings. I guess I think of it in my the way sort of the mentality that I have about it anyway. It's a less expensive. Customer acquisition channel than most of the other channels, right?
So it's not a replacement for something else. It's another channel. It's another distribution technique, a tactic, and it's going to be less expensive than for example, paid advertising on Facebook or Twitter or search engine marketing. It'll be less expensive than that because you know, you're dealing with referral marketing.
You're dealing with word of mouth marketing where my friend who knows me. Is sending me an email with their name in it and my name in it telling me, hey, go. You know, go buy this flannel at Dixon or whatever, some place where they know that I like these, this type of product and they want to give me a discount and they want to earn a discount.
So, the conversion rate is going to be way higher than you'll see with something like search engine marketing. And so the cost of customer acquisition is going to be lower, right? Because it's a pretty unique, I wouldn't say that we like displace something else. I think it's just, it's another piece of the puzzle. You know, if you don't have it, you should add it.
Alex Bond: Cool. Okay. That's great. Cause that actually answers my very next question, which is it sounds like what I'm hearing you say, Jay, is that cloud sponge and the referral program is best used as a complimentary marketing strategy, as opposed to one that stands on its own.
Jay Gibb: Yeah, I think so. I mean, just to be clear, we don't sell referral program software, right? So, you know anybody listening to this conversation, if they have an existing referral program on their site. For example, then they can add the cloud sponge contact picker to make that referral program perform better.
Where does the data go
Alex Bond: So my question to you in terms of where this information specifically goes. Is it private? Is it stored on a cloud sponge server? What happens when I upload these addresses?
Jay Gibb: Good question. It does not get stored anywhere, not on our servers. It just basically gets loaded into the front end of this particular customer's browser. The only thing that's kept on the cloud sponge servers is a log file entry for like billing purposes or for like troubleshooting purposes.
If somebody, you know, has a problem so that we're able to see. You know, the IP address that did the import or whatever for GDPR investigations, there's no sensitive data store. In fact, we wouldn't be able to have customers like GoFundMe and Airbnb and Nextdoor and Yelp. Like they, there's no way they would use a product like ours if we were actually storing all this data. They put us through audits on an annual basis, right?
And so we're just a data processor under GDPR and CCCP. It's stored in the user's browser in local storage. You can make it so that it expires really quickly. There's customizations for, you know, if our customer is concerned about their website being used on public computers, like at libraries or coffee shops or whatever, there's ways to modify the experience so that, you know, as soon as the tab is closed, all the data gets obliterated.
Every feature you can imagine when it comes to privacy is available. And we have, you know, basically some really sane defaults private for privacy that can be tightened or loosened depending on the use case and what, what our customer prefers.
Important analytics to determine success
Alex Bond: So moving on to just a couple more follow up questions that I have. In terms of the analytics that a company can see or have access to when someone is referring, using the referral software from CloudSponge, what are some of the analytics that a company can track to emphasize how impactful a client's word of mouth referral was?
So in other words, the user views the recipient list creation page all the way to How many people did they select from their address book and submit and everything in between right? So, our customer dashboard for all of our customers has a funnel on it by default. It's like, how many people loaded the page?
How many people clicked on the ad from address book? Like, it started engaging with the. The software engaged with the contact picker, right? How many people successfully connected with their address book, like got through that permission window that says, like, allow, allow me allow this company to read my address book.
And then once they get there, how many people did they select from their address book and submit and and then we can break that down into, like, okay, How many of them were Google versus Yahoo versus outlook. com and sort of the abandonment rates and the sort of the the entire funnel conversion rate of the contact picker. So that anybody who adds this product to their existing recipientless creation form is able to modify it and tweak it and make it better and you know most of our customers.
Once they, once they start using it, they'll just reach out to me or they'll do, you know, a consultation with our team and we'll look at their site with them and actually hold their hand and say, Hey, listen, like, we've seen a couple thousand of these websites before, and it's well known fact that if you change this or this, you modify this text, or you add this warning label or whatever, you're going to improve the performance of the sort of this area of your website.
Right? So we take the optimization of that area personally, and we consider it our responsibility to make sure that our customers are getting the most out of that for the outside of that for everything that comes before the contact picker or after the contact picker were opinionated because we've seen a lot of this stuff.
And so we can offer advice once we see those things. And a lot, and we have a category on our blog that's called teardowns, where we've actually gone to some of the best experiences that we've seen and like rip them apart and shown the details and shown the emails and kind of explain the, everything that's sort of around the contact picker to try to help our customers have a little bit more content for inspiring them on, you know, things that they might like to do in their user experiences too.
Alex Bond: Other variables that were beyond cloud sponges control as to why it affect, it was such a high success. Is that accurate?
Jay Gibb: Yeah, that's right. Like for example, the one we did most recently is a company called wise used to be called transfer wise for doing wire international white transfer company. They're awesome. They use cloud sponge.
And if you next time you log into your wise account, like just look for the Referral area, and we have a tear down on our website that goes through the entire process. And we kind of highlighted, like, which is the part of that process. That's like the cloud sponge contactor contact picker part. But there's a bunch of stuff that they did around it that we just absolutely love.
And we want to make sure all of our customers. Like are aware of how awesome it is so they can go do that too. Or they can ask their vendors that are responsible for the referral programs to do that stuff. And we have teardowns for Airbnb and Nextdoor and DonorsChoose and a whole bunch of other like well known companies out there that use CloudSponge for it. All the experiences that we were most impressed by.
Alex Bond: Well, that's great. I really appreciate that. And I can imagine other people do too, because of, lot of, you know, marketing agencies are gonna require a fee to say, this is what you should do, this is what you shouldn't do versus someone like yourself who's just saying, This is what worked, and that's as simple as it really needs to be now.
Not every solution is a one size fits all one, but it's nice to have a few of them that worked and be able to kind of pick and choose why they worked a la carte and implement them into my company's marketing, branding, referral program.
Jay Gibb: We're successful when our customers are successful, so we give away all the content. Just in the interest of customer success, right? The more successful they are, the more likely they are to keep their cloudsponge subscription. Right?
Future of CloudSponge
Alex Bond: So kind of before we wrap up, I wanted to know what, where you see the trend moving or the future in terms of how you see. This sort of referral strategy evolving in the next five or 10 years with the growing implementation of of AI in terms of how that software can be used in the digital space, coupled with something like this ability to extrapolate address books. Do you have any sort of opinions on that?
Jay Gibb: There's a couple of things I think that are going the direction it's going in. AI is is absolutely going to be useful for Sorting an address book for, you know, when you're looking at somebody's address book of 2000 contacts, an alphabetized list of people not as useful as something that might be sorted by a I where I can say, Hey, by the way, like, you're on a certain type of website that's got a certain type of clientele.
This is people that match that demographic within your address book. So we're going to put those first. That type of thing is absolutely in our future where, you know, software will start to make really smart suggestions for, you know, who you should be putting in your recipient list based on the context of where you're at and what you've been doing.
And then also like the world beyond email, right? We already support phone numbers for SMS and other communication methods that aren't email as we move along. you know, this journey of social networking and people having usernames in, you know, various apps and platforms and tools and maybe don't always use email as their primary communication channel.
All of those things will, you know, eventually be a part of the address books. There's already fields in your address book right now for social media handles. We see the data like those don't get used. Too often in comparison to email and phone number. Phone number is the one that gets used probably the most, especially with iCloud and Android or Google contacts, right?
And then email addresses are a close 2nd. Email addresses are still very popular and ubiquitous, right? But we're starting to see more and more of those you know, social media handle fields like, you know, Twitter handle fields and things like that being used inside address books. And so we'll get customers and leads coming through asking us, like, hey, can you provide Twitter handles?
And of course, the answer to that is yes. And it's really fun to watch to see what our customers are doing with those extra fields, right? And how they're using those fields for their marketing growth efforts.