The entrepreneur who pioneered “buying for others” marketing is helping retailers by using her knowledge of deep machine learning and psychology.

Dearduck founder Katy Aucoin has created a software as a service (SaaS) recommendation platform that businesses can use to help their customers make informed purchases.  She calls this customized marketing approach BFO or buying for others which makes up 30 percent of all retail sales, according to the National Retail Federation.

That 30 percent can distort the profile of a retail customer, Aucoin explained. Businesses pay money to collect data on a customer’s personal preferences, but it may reflect a customer’s needs to buy for someone else.

“The way it works now we get ads generated on our past internet searches without any understanding of the context behind the purchase—was it for you, or someone else?” Aucoin said. “There has been no easy way to receive recommendations for someone else or to learn all the little things others love.”

Dearduck initially launched as a consumer-facing app for shoppers to discover gifts for their friends. Aucoin pivoted the startup to focus more on the business-to-business or B2B market to give retailers the means to help their customers buy for others.

The retailer would use Dearduck’s front-end toolset to create interactive, white-labeled targeted marketing (say, an engaging poll for you and your friends to preview a retailer’s clothing collection). The customer makes choices and shares the unique online link with friends to discover what preferences they share in common. Retailers can then learn about customer preferences and identify the relationships between shoppers.  

Dearduck’s cloud-based platform collects, stores, and applies preference and network data to automate BFO marketing for retailers via emails with personalized recommendations for the shopper and their friends. Dearduck’s software has increased growth for retailers up to four times by converting a brand’s social followers (and their friends) into high-value customers.

“The way people engage with each unique relationship helps us refine the software’s deep machine learning and continue to grow it into artificial intelligence,” Aucoin said.

Developing this new BFO marketing segment and an AI-powered tool that can offer recommendations based on customer preferences and relationships landed Dearduck on Entrepreneur Magazine’s list of 20 companies investors are watching.

“We’ve created BFO marketing as a new category to help people learn about the people they care about,” Aucoin said. Click To Tweet

“It’s my way of deepening relationships. When you don’t have information about someone’s preferences, we often choose based on our own preferences.”

Buying For Others Makes You Happy

As Dearduck focused on the B2B retail market, Aucoin applied what psychologists have been able to prove—that emotion is a driving force in purchasing decisions. Make the right choice for someone and that happy feeling can reinforce the relationship and make you happier in the process. Emotions—like the feeling that a brand’s values align with one’s own—are the root of consumer preferences for certain brand-name products.

Aucoin’s interest in learning what people enjoy most started when she was a child trying to convince her parents to let her give personalized swag bags to each of her friends coming to Aucoin’s birthday parties. She charged one dollar for a customized tour of her grandparents’ backyard garden based on which flowers each family member seemed to like best.

When she was an information technology consultant working with large retailers like Walmart, Aucoin helped them create internal efficiencies across multiple applications for enhanced customer experience. That got her thinking about the need to learn about customers within a larger context—their buying networks.

By 2015, Aucoin realized that leveraging her background in data analytics with her interest in the psychology of understanding others could help retailers convert a new segment into customers buying for others.

“When people see something that reminds them of a friend, they often buy it—special occasion or not,” Aucoin said. “When in doubt, people don’t buy and that loses retailers an enormous amount of money.”

Helping Businesses Connect to Customers

Aucoin’s clients include the San Antonio Spurs basketball team, online digital resource CultureMap,  and San Antonio’s Pearl Brewery complex of tenants. Pearl Brewery’s chief marketing officer Elizabeth Fauerso has been working with Aucoin to address their challenge in connecting to online followers about many Pearl events without overwhelming people.

“With Dearduck’s expertise, we’ve been able to build thousands of Pearl user profiles and dramatically grow our newsletter subscription base and open rate,” Fauerso said. “We are now able to target events, culinary offerings, and retail experiences based on the personal preferences for thousands of Pearl users.”

Typical marketing emails have an average of 10 to 15 percent open email rate, in contrast to Dearduck’s BFO email open rate of 50 percent or more. Their software platform has helped the Pearl Brewery complex link its restaurant and retail tenants in more meaningful ways by getting the right messaging to the right people.

Aucoin is working on creating a network effect that can boost a retailer’s ability to acquire customers at an exponential rate. By applying the software algorithm to interactions on social media channels, press releases, and email marketing, multiple channels can be used to build upon the company’s relationship with customers via BFO marketing.

“Dearduck is doing innovative work at the intersection of consumer preferences and online relationships,” Fauerso said. “We’ve seen incredible results over the last ten weeks—far exceeding our expectations—especially as it relates to the network effect of growing our customer base.”

Ongoing discussions with global retailers interested in adopting BFO marketing are driving the startup’s rapid growth as the core team of four looks to hire those with strong data science experience.

As for Aucoin, she is participating in the Tech Stars Austin 2019 class and continues to evolve BFO marketing.

“When we started it was about making recommendations for gifts,” Aucoin said. “We have evolved into an engaging tool that helps people learn about others and deepen their relationships.”

Featured image is of Dearduck founder Katy Aucoin. Courtesy photo.