Q&A With Quotient CEO Steven Boal

The move to digital grocery shopping is doing more than just moving around fulfillment methods—it’s redistributing, and in many cases, putting new power behind the sales promotion and marketing funds that accompany those sales. Steven Boal founded Quotient Technologies as Coupons.com in 1998. He retired to the board in 2017 only to return as CEO in 2019, succeeding former Safeway executive Mir Aamir at the helm of the Salt Lake City-based digital media and promotions technology company, whose stock has soared along with online grocery in the past year. The following interview, in which Boal discusses a business turnaround and the power of “high octane” digital promotions, is excerpted from a conversation with WGB in late March.

Jon Springer: Can you take us through why you returned as CEO of the company you founded but once departed from?

Steven Boal: I founded the company in 1998, and we were known as Coupons.com for a very long time. I left three-and-a-half years ago and moved to the board. I felt I had left the company in good hands. I had spent a lot of years recruiting a successor, and training, and doing a transition. It didn’t work out as well as we had expected, but not for any nefarious reasons. My successor was hard-working and ethical and brilliant and energetic. But a strategist, not an operator. And as a result, the strategy of the business looked great. The operations of the business really kind of fell to the side.

About 16 months ago at a board meeting, it became obvious that we had to make a change, and I was the obvious person to return. I had left for a reason. For those two years, I had been making wheelchairs for paraplegics, but [Quotient] needed more help.

We convinced Scott Raskin, who’s on my board, to come off and join me as president. I think of us as one super-capable human in two bodies: We have very complimentary skills. We talk three times a day, seven days a week, and have known each other for 17 years. And we spent the last 16 months kind of repairing and rebuilding the business.

What needed to be fixed?

I would say it starts with culture; it needed a lot of attention. I think the team had gotten distracted by the public markets and took a drive-revenue-at-all-costs attitude. So they cut a lot of costs. They took on a bunch of revenue that was not productive, and started building products that weren’t core to our mission.

I’ve always had a philosophy that if we’re not going to be No. 1 one or No. 2 in what we do, we have no right doing it because other people are going to do it better. And we were building products that were never going to be No. 1, 2, 3 or 4. And so I came back into the business, we launched a culture study, we brought in some outside consultants, took a look at the platforms, and killed products I didn’t think were going to be great. We started to focus on what is it about the business that was great, and could be great.

For us, it was all about platform tools and automation. So we set out to rebuild a lot of the infrastructure that we have in the company in a much more scalable, automatic, self-service, sustainable way. And we brought in a new CFO, and a new chief human resources officer, to rebuild our senior leadership team, realigned our go-to-market teams, built a customer success organization. We rebuilt the operations team, and really divided the business up so that there was proper accountability and ownership of each part of the business.

Today, the platforms are rock solid. They’re scalable. We can plug into retailers large and small. We just announced that we’ve signed a retailer in the automotive space. We have said publicly that we have designs on moving into the pet category and into the DIY home improvement category. And we’ve built a bunch of tools and technology kits that allow retailers to really deliver state-of-the-art, retail performance media and promotion platforms to engage with CPGs, move merchandising to digital, reach shoppers in an effective way, and deliver very high ROIs.

We hear a lot from grocery retailers these days about digital ad revenue as a sort of flywheel, a new stream of revenue that they’re plowing back into e-commerce. Can you talk about that from your perspective?

So it started with Amazon, right? Amazon snuck up on everybody. They built an app platform in a very short period of time, generating many billions of dollars of revenue, and several billion dollars of that were CPG dollars.

E-commerce was about 3% or so of grocery pre-pandemic. And Amazon was taking dollars above the index of what they sold. And so large retailers raised their hand and said, "Why aren’t we getting that?" And my answer is very clear: Amazon is forcing spend in digital to merchandise. You need to do the exact same thing, and you have much more to do with it, because you sell 97% of those products.

And you’ve got in-store merchandising programs, and you’ve got the circular, you’ve got your TPRs, you’ve got your shelf talkers, you’ve got your in-store radio, you’ve got cooperative mail. You’ve got endcaps and aisle displays. You’ve got thematic events. If you push that onto the digital platform, not only can you do the exact same things you’re doing historically, but you can optimize them in real time. And then take dollars and reinvest them into the flywheel.

Look, there are no incremental dollars in our industry. So anybody that says to you, "We’re driving incremental spend by CPGs" are perpetuating a complete fallacy. Where does that extra money come from? It’s not true. What happens is if you spend a million dollars, you expect a certain return on that spend. But if we can improve the return by 40%, 50% or 60%, then some of that spend can go to the retailer who keeps increasing and spinning the flywheel to drive even more. Some even comes to us, for enabling that platform that allows you to drive incremental value.

CPGs might be getting 120%, 130% better. And in some cases, by the way, two or three times better, and so it throws off dollars and yet they’re still getting a much better return. That’s what we've built.

And so those all dollars are all profit dollars, high-octane dollars. There’s lots of terms for it. That allows a low-margin retailer to take pure dollars and put them into growing e-commerce and engagement with shoppers. The reason that’s so valuable is, that if I’m a retailer with a 30% share and I overindex on digital engagement, when there’s national spend going on in the offline world, I’m going to get my 30 share. In the online world, I could get a 50-60 share. And so that’s going to drive more dollars to me, which means I can even drive more share by spending more, to get that flywheel spinning.

Is this something that is going to necessarily leave the smaller guy behind?

There are two schools of thought here. One, the large retailers sort of feel like the small ones are going to get left behind. But what we’re seeing is that the smaller retailers have the ability to punch way above their weight class. And they’re pulling a disproportionate number of extra dollars in their system. And that actually is much better for shoppers, right? At the end of the day, the best thing for shoppers is to have a competitive landscape and not be disadvantaged because they’re not shopping at the biggest retailer.

You’re recently partnered with Ahold Delhaize and Peapod Digital Labs to digitally deliver TPR specials from the circular directly to the shoppers who buy those items.

It’s a fascinating feature. There’s about 2,000 TPRs each week in a normal grocery store. About 4,000 things on sale, and 2,000 that are CPG related. But only a few make it to the book [sales flyer]. And if you look at the cover, typically you’ve got a salty snack, a carbonated beverage of some kind, a meat and a fanatic-thing—whether it’s Halloween candy or Thanksgiving.

I like to think I eat healthier than that, and would rather see an almond milk or something organic, or a recipe idea, but that’s not where the mass of the country is these days.

So what our platform allows you to do is in a retail performance media environment is marry up the TPRs that are on sale that week that nobody will ever see except at the shelf, and putting a message in front of the shopper saying, this is on sale this week, because we know that shopper. One big CPG company said they got a 6.4% sales lift from doing this. That’s pretty dramatic when even a 2% lift would be something. So that’s a big deal.

Where do you see grocery retailing going, given all we’ve been through in the past year?

I would say there’s probably three primary areas of focus. So the first one that goes without saying is omnichannel, right? Large retailer or small, it doesn’t matter. You really need to provide your shoppers with the ability of ordering. And even if it’s not delivered to the home, you should provide to your shoppers the ability to set up their baskets, checkout, and go to the store to pick up.

Number two, when I came back to the company 16 or so months ago, we were really focused on the larger retailers. There Walmart’s on one end. And then there’s about $400 billion [of sales] in the middle, and about $100 billion from the smaller retailers.

We’ve matured our platforms over the past 16 months, and now we’re open for business for all of those retailers. And so now, if you’re a regional, a superregional, a small retailer or a 10-store retailer, you can plug into our network. And it’s as simple as connecting to us and then starting to expose to your shoppers to value. And that starts the flywheel for you. So no retailer is really too small anymore to take advantage of this.

The third thing is a way of thinking about your shoppers. The retailers who engage their shoppers in-store and online the same way are the retailers that do it the best. If I’m a shopper and I go into a digital experience with you as a retailer, whether it’s an app or a website or digital circular, if you’re treating me the same way you treat me in store, I see a brand that I understand.

I recognize your brand. You’re giving me the same opportunity online that you give me in the store. I’m not being disadvantaged because I’m shopping on a different platform. Then my affinity for you gets stronger and stronger and stronger. And what we’re seeing now coming out of this [pandemic], is that there’s a very hybrid kind of shopping. That’s going to be happening in households. We’re going to stabilize at 9% to 12% e-commerce grocery, and go from there. But it’s not that like 9% to 12% of households exclusively buy e-commerce; it’s that we all have experienced it. So maybe I'll buy toilet paper, paper towels, tissues, napkins, online, and I’ll do other things in stores. It all depends on the person. It all depends on the household. And so retailers need to really think about the shopper as not one or the other. Don’t try and make that shopper just an e-commerce shopper. Don’t leave them behind as just a store shopper. Try and recognize that everybody’s going to be shopping across both of those areas.