Mike Provance | Innovating in a Highly Regulated Industry

John Corcoran 8:42

Right, right. Now, you work with both the manufacturers and also retailers

Mike Provance 8:54

And retailers as well. They’re both of our customers.

John Corcoran 8:56

So they’re different challenges that you help them with and different solutions that you provide for them. Okay.

Mike Provance 9:01

Yeah, different variations on the same solution, which is finding the right shopper, matching them with the right product and getting them into the store to buy,

John Corcoran 9:09

Okay, and it takes a store

Mike Provance 9:10

meeting either online or walking in the store. So today, it’s either one or both.

John Corcoran 9:15

And take me through some of the ways in which people’s buying habits are changing now that we all have a phone in our hand and other digital devices that we’re using to how our people, you know, how’s that altering the way that people buy a bottle of wine and buy a bottle liquor these days?

Mike Provance 9:32

Well, that’s certainly the biggest source of where technology has had an impact. And I think it’s, it’s to be expected right? shoppers are coming into the stores much more knowledgeable about the brands that they want. Now, that may be more informed by social media or content they see than it is by their own intrinsic desires for it but alcohol As a social product, right, we shop, and we choose or choose our products when we’re buying from a liquor store. Often because of the social impact the social status of it more than this is the one I want to drink. Now we drink for different occasions, and sometimes I buy the bottle I want, sometimes I buy the bottle that I want to give my friend for dinner. And those are going to be often different. But technology is really helping us sort through that it’s also become a price shopping game, right? So people will come in, and they’ll have their phone in their hand, and they’ll have what they can get it for somewhere down the street, but they’re at that store. And so this is where especially for those small liquor retailers, the ability to engage that shopper and sell them becomes a benefit because you can move them to something they might find more interesting. Yeah. And you know that that’s really how retailers are starting to change up their games, which is they’re realizing we can’t just stand behind the checkout and ring people out when they finished, we have to engage in that discovery, helping them think about it.

John Corcoran 11:10

So what are some ways that these smaller retailers can even compete with the larger big-box retailers? power is technology kind of helping to level the playing field for

Mike Provance 11:20

them? Well, you know, even before technology gets involved some of the things that make a local or a small retailer different when you think about a big-box store, whether it’s a Walmart, a Kroger any large grocery store, they will typically carry fewer skews, and they’re only going to carry skews the turnover quickly. So they can, you know, move high velocity inventory through the stores. They’re getting better today and bringing more interesting brands in as well. But still, their buying habits, their buying patterns for choosing products to put on the shelves tend to be driven at a corporate level by what they can move, get the best deals on in, in aggregate, where if I’m a small, you know, liquor retailer, I’m gonna carry many more skews. If I’m thoughtful about how I do that, it gives me a place to develop some expertise. You know, high-end whiskies, high-end Japanese whiskey, maybe it’s, you know, craft beers from around the world, whatever that specialty is, is one way that I can compete. Simply because I can buy in a smaller volume, and attract the right set of customers. Where technology comes in is making that process efficient, right, knowing which products are likely to sell well, which ones aren’t knowing which shoppers are likely to be the right shoppers to try to bring into this into my store. That kind of technology is the kind of technology that Amazon and Kroger and total wine and Walmart have had for years. Those technologies are just starting to become available to retailers today.

John Corcoran 12:59

So is this like, you know, digital advertising or Facebook advertising, Google advertising, that sort of thing, designed to form the local retailer designed to get the shopper back into the store.

Mike Provance 13:13

Those are the channels to reach the shopper on their mobile phone. Right? I mean, you and you reach them on their mobile phone in different ways at different times. If I’m running errands, you know, programmatic ads are going to have more impact because I’ve got my Maps app open or I’ve got a music app open or something else. But if I’m home and scrolling through Instagram, obviously social is the place to get my attention. So those channels and optimizing across those channels is an important piece. But what’s the most important is being able to cut that audience down to just the people like that in a shop, you know, so much money is used efficiently in digital advertising by many companies because they don’t have a starting point of knowing who’s likely to buy the product I’m trying to advertise. And that’s really the part that we focus on is working with retailers and brands to understand your product in these markets. This is that audience that you need to reach and we can now program that into the right channel with the right content to reach you as the shopper with the right call to action.

John Corcoran 14:24

Okay, so dumb question. How do you figure that out? How do you figure out who that person is who’s gonna buy it

Mike Provance 14:30

so the buyers gonna buy we started from a position which really nobody had captured this information before in a systematic way. But we went and built a network of, you know, almost 2000 retailers across the country, local independent retailers, mostly ones who tend to be more progressive wanting to grow their business wanted to bring in new new ideas, and worked with them collected their point of sale data which gave us basically a view of all the receipts of how people shop. And from that basket level data, that receipt level data, we’re able to build models of different shopping behaviors. And those models become the way we identify which audience to target, and then build that with the brand. For the retailer, the content to reach that particular audience.

John Corcoran 15:26

I have a question, how do you know that that doesn’t seem like an easy task? To get 2000 to 3000 retailers nationwide to buy into this vision of this idea that was coming to fruition? How did you sell these companies, many, which I’m sure have limited budgetary constraints, just like any company does, but especially smaller companies? How did you sell them on that idea?

Mike Provance 15:52

Well, first of all, it was understanding that they do live inside this ecosystem of brands and retailers. And so, you know, companies like Nielsen and IRI have, for years been compiling data on big box stores, and in this industry and all consumer packaged goods. But this independent side, you know, imagine those 2000 stores, very different point of sale systems, very different attitudes of the retailers. But what it all came down to is they felt a level of fear about the unknown nature of the future, seeing what Amazon has done with other industries. With the bookstores originally seeing what the impact of a big-box store dropping into the neighborhood has on them, they’ve all experienced that loss of customer, even seeing changes in regulatory conditions that cause them to lose shoppers. As you know, for example, when, you know, several states like Colorado and Kansas changed laws about grocery, what kind of beer the grocery stores could carry, once they could carry full-strength beer, people stopped going to the local liquor store to get beer and beer was the thing that brought them in, and then they picked up all the other products. So there are a lot of things that have been changing in the last five to 10 years for these smaller retailers. And fear is a big motivator to innovate and to change. Yeah. And that that was really the thing that drove it.

John Corcoran 17:27

What gives the small retailers hope to compete against this overwhelming wave of it seems like in many different industries, the larger companies have been winning out and smaller retailers across the country, in different industries have struggled.

Mike Provance 17:47

It’s the same you see in any industry, I think, you know, this is where my academics comes out in me. But when you think about adoption of innovation, there truly is kind of a lifecycle to that. And you’ve got that 13% that are the early adopters, the ones who are willing to take the risks. And once they show it can be done, you start to see others picking it up. So as we went to market, our focus was on not all retailers. But who are the 13%, who know they need to change who have the mindset for change and who are willing to, to do some experiments, see what works. And that, frankly, in any industry is how you, you cause change to occur. You have to break it down into bite-size chunks and then focus on a bite at a time. Right, right.

John Corcoran 18:40

Yeah, and we were talking beforehand about a sweepstakes project that you’ve been working on. Tell us about that.

Mike Provance 18:48

Yeah, this is something we’re just hopefully by the time this airs, we’ll have started a launch test of this, but the notion really was less about the sweepstakes, that was more of the way to get into the market. But what we’re interested in doing is we’ve taken our our ability to look at sales data and turn that into shopper preferences that really get to the psychology of the shoppers buying decision and so we are testing our our models for doing that by serving consumers and getting firsthand from the shoppers How do they think about buying alcohol and how do we map our systems are machine learning and AI-based systems against that hmm

John Corcoran 19:36

any final thoughts for those listening to this on these topics before I wrap up the last my favorite two questions but and any final thoughts on you know the, the changes that are afoot in industry and how it’s a really interesting idea of you know, smaller companies banding together to fight off the larger retailers that are that are shooting. To be taking over

Mike Provance 20:02

The final thoughts I guess I would have is that there’s no better time to start than now, you know, if you’re a retailer thinking about what you can do to help your business survive and grow, you just got to start fighting a little bit at a time. And there’s plenty of different technology providers out there who are now really focused intently on this side of the market. And start with some of them and start talking about how they can change the way you do business. It’s certainly how we think about going into the market with independent retailers and independent brands who sell into that last question. 

John Corcoran 20:40

So I’m a big fan of gratitude. So if you look at your peers or other contemporaries that are doing work today, who do you respect? Who do you admire?

Mike Provance 20:53

But there are several people out there who are many people out there who are doing some great things, I certainly like to see the work that is going into working with the retailers holistically and the brands holistically. There’s a company called Enolytics that is doing some great work with wine and spirits around e-commerce. And as e-commerce becomes a bigger deal. Yeah, I’m excited to see what 750 is doing. I was talking earlier with their CEO, and they’ve taken a different approach to the market, in solving some of the same kinds of problems that we were talking about here. And I think they’ve got some great new ideas coming down the pipe. But you know, I think that in the industry, the technology vendors, the technology providers are really trying to solve difficult problems, I really think that you’ve got to look more broadly, within this industry at other the rest of consumer product goods. And one of our sister companies, a company called Fetch Rewards is they’ve been doing some great innovative work that spans all categories, including beer, wine and spirits. And they’ve been able to make a big impact on the loyalty side effects and really, really reshape that part of the industry. 

John Corcoran 22:23

So, I’m curious if you’re working in this industry, you know, they say the rewards go, are the what it’s what’s the saying the spoils go to the victor, or something like that? Yeah, I think what that means to me is, is you know, if you take on bigger challenges, you get bigger rewards for it. But you’re in this heavily regulated industry with emerging technology that takes a while to break through there ever times when you think to yourself, geez, why am I taking on this is too much.

Mike Provance 22:58

I don’t think I ever look at it that way. Because I spent a lot in most of my career around one regulated industry or another. There are times where I wonder, you know, how big of an impact we have to make to really help the retailers in the brands in this space be successful. I mean, if there are 60,000 retailers, independent retailers, just on the liquor store side in that county restaurants and bars where that’s, you know, orders of magnitude bigger, you know, how do you get big enough to make a meaningful impact for that whole corner of the market? And so there are times where I look at that and go, Well, that’s an enormous challenge. But you know, frankly, that’s what I love about what I do, whether it’s this industry or prior ones, it’s, you know, I like to solve hard problems. And then, that doesn’t always mean creating a unicorn, a lot of times you solve hard problems, only to find there’re more hard problems behind it. So, right. It’s a challenging industry that way, but that’s what makes it fun.

John Corcoran 24:05

Yeah. Final question. So let’s pretend we’re at an awards banquet, much like the Oscars of the Emmys. you’re receiving a Lifetime Achievement Award for everything you’ve done up until this point. And what we all want to know is who do you think, you know, in addition to family friends, who are the mentors, who are the colleagues who are the friends who are the peers, business partners, teachers, professors, who are the people you would acknowledge in your remarks?

Mike Provance 24:30

Yeah, again, again, a long list, but if I pulled a few names, just to highlight a few, I spent, you know, 10 12 years of my life wrestling a whole lot of wrestlers better than me, but I did pretty well. And my coach, John Brody was a huge advocate of mine and really supportive and the thing that he showed me through being that advocate wasn’t about wrestling. It was about determination about persistence, through pain about Focusing on outcomes, all things that I still use today. And yet I don’t have to wrestle anyone today. The reason I got a PhD in the middle of my career mostly had to do with my, you know, interest in understanding how entrepreneurship affects society. But those really stocked early on during my MBA by Rocky DeWitt, who at the time was at Penn State now University of Vermont. And just the way she taught and thought about strategy was fascinating for me. And then, you know, during that PhD, my dissertation Jerry, alias curiata, has a global view of entrepreneurship and innovation, and he can help seed my own thinking about that. So I think about all those and then, you know, of course, I’ve got, you know, along the way many investors and and partners in the growth of these companies that adopt as well, but those I would call the seeds of seeds of inspiration from way back,

John Corcoran 26:07

Mike, 3×3 is the name of the company. Where can people go to learn more about what you do or connect with you?

Mike Provance 26:14

You bet it’s 3×3.us. And it’s really spelled 3×3.us. And I’m simply [email protected]×3.us. So, everyone reach out.

John Corcoran 26:25

Thanks. Hey, Mike, thanks so much for your time. Appreciate it. Thanks.

Outro 26:30

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