Watch Now! Post-Purchase Strategies to Improve Customer Retention
Today's shoppers expect brands to sell on their preferred channels, offer super fast delivery, hassle-free returns, refunds, and replacements all in exchange for loyalty. On January 28th, Skubana, Route, Returnly, LoyaltyLion, and Shipmonk got together to discuss the tools and workflows that will help you deliver a five-star post-purchase experience within the modern multichannel landscape and improve customer retention.
You can watch the recording here and check out the transcript below:
Awesome. Hello, everybody! Thank you for joining. We have an action-packed, nugget-filled webinar for you today. It's all about the post-purchase strategies to improve your customer retention. I think it's an area that not a lot of people are focusing on these days, and that's why we wanted to cull together experts in this space to make this happen.
I'll be moderating it, and I'll have a section in this space; if people have questions, please feel free to put them in the question box. We want this to be as interactive as possible. So, interrupt us if you have a question. Other people may have a question. While we're at it, just throw where you're dialing in from into the chat box; it's always good to know where people are dialing in from. For me, I'm dialing in from Nyack, New York, from my home office; AKA, my man cave. But I would love to hear where other people are dialing in from.
And so, we have an incredible amount of impressive speakers joining us today. I think if everyone can just give an abridged background of their history real quick. For me, Co-Founder and CEO of Skubana. I come from e-commerce; I've been in e-commerce for a decade. I started a D-to-C business called Think Crucial where we manufacture home appliance parts. Also I was on the board, and invested very early on, in something called The Prosper Show, and Amazon Sellers Conference, as well, which was recently acquired, and I wrote a book called Cheaper, Easier, Direct. Going to pass the baton off to Aaron...
Hey! This is Aaron Schwartz from Returnly. Before this, ran an international shipping company called Passport. Before that, I ran a D-to-C brand from 2010 through 2017, called Modify Watches. Part-time advisor, excuse me, very small investor once in a while in the D-to-C space. Yeah. Thanks for having me!
Awesome. This is Andrew Jones from Route. I'm the head of marketing and content here. And before this, I've been in the software-as-a-service space for about six, seven years, but excited to jump into e-commerce.
Hi, there, everyone. I'm Kerri, and I'm a partnerships manager at Loyalty Lion. I've been pretty much living and breathing Loyalty Lion for the past couple of years now; did start off on the sales team, recently moved across to partnerships. Yeah, so, I'm really excited to be on the call today. Thanks for having me.
Hi, I'm Kevin Sides, the chief revenue officer at ShipMonk. I've been here since day one, so from 2,000 square feet, starting off there, till we are today across three locations, so it's been a fun ride, and I'm glad to be here.
Fantastic! Thanks for sharing, everybody. Excited to hear your presentations. Everyone's really worked hard to share and also collaborate on this presentation, so we're going to be covering multi-manage, multi-channel, multi-order, multi-SKU. We'll be talking about everything, really... right now, there's traffic, there's conversion, and then there's retention. We're literally not focusing anything on traffic, nothing on conversion, just solely on retention in today's webinar to really drive future growth and create a fantastic experience.
At the end, we'll have a bonus, so stay tuned. It's going to be an incredible bonus, so you want to make sure you get it and get access to it. So, our premise, really, is that 2020, the customer experience will really be a differentiator for brands going forward, and the relationship is really moving from just purely being a transaction-based relationship to an interaction-based relationship.
So, while I think the competitive modes in the space of D-to-C are becoming a lot smaller, for example, anyone can start a brand; my mother even started talking about Shopify recently, and I was like, "Wow, okay, we're there. We're at that place." So, we believe that as that competitive mode is becoming a lot smaller, now you need to actually do what other people aren't doing, and that's really increasing the lifetime value and creating experience in a platform for your brand. There's always going to be someone that's willing to do it cheaper; you want to be different than what others are doing.
On top of that, I think Amazon really started this, meeting customers and making sure you're setting a really, really high expectation and delivering on those expectations, so, sort of everyone's expecting now for you to be able to download your orders, which is kind of crazy. They want instantaneous feedback from a customer success perspective. They want really fast delivery, they want... and of course, they want loyalty programs, which we're going to get into a bit, and they want flexibility.
So, on top of that, what's really happened, and as I've already talked about this, the barriers to entry of creating a brand are sort of going away, and there's much more reliance on digital advertising, and it's pushing the cost of acquisition up. And it's my believe and my POV that actually, retention can actually alleviate that and help extend your LTV so that you're actually getting a really high ROI on your customers, and there's no impact on your profitability.
So, we're at this point where, like, how do you win if you're doing what everyone else is doing? Today, we're going to see how you can do things a bit differently to run your business in 2020 and beyond, really focusing on retention. One of the brands I wanted to highlight here who I think is incredible is Bombas. They have an incredibly high NPS score; I actually just recently bought the Bombas/Sesame Street collab socks, and they're incredible. I can't stop talking about them, they're super comfortable; the question is, how can you get the same kind of NPS as Bombas? And Bombas has really done a great thing, which is Buy A Pair, Give A Pair, but they also have an incredible post- customer experience.
So, here's an email recently. I got a pair of socks from somebody else in my family, also Bombas, not Sesame Street, that I didn't really love the fit about, and they just wrote saying, "Hey, by the way, no need to return it. All said, give them or donate them to a local organization." I thought that was really beautiful, and on top of that, if you look at this email in itself, it's actually, they don't look at themselves as just customer success, they look at themselves as customer happiness. And I thought that was a really good call-out.
Here is sort of how the emotional connectedness to customers can lift your LTV, so to speak, on those customers. And so, depending on the category that you're in, and the emotional connectivity that they have to your category or to your brand, you can experience a much bigger lift when you build an audience, and you build a platform, and you sort of let people come to you versus you going to find customers. People coming to you and building audience, there's a paradigm shift and a different type of relationship that you have with the customer.
So, on top of that, brand impressions are reinforced in the last mile, and so, really, it's all about we're living in this post-purchase customer experience world where you want to drive loyalty and drive retention everywhere; that is just where Skubana comes in. Just to give you the short skinny on what Skubana does, we're an operations platform, so we pick up really where Bit Commerce or Shopify Plus would leave off, where you can now do order management, inventory, purchase orders and profitability no matter if you have a pop-up shop, or if you're selling on a channel or a marketplace, or if you have a 3PL like, for example, ShipMonk; these are some of the customers that are leveraging Skubana today. They're all on the channel, and we're helping them and empowering their business to drive further success forward.
Really, Skubana comes down to just managing complexity and helping you live where your customer's living, and just being present no matter where they are because, still, e-commerce, let's just say it's 15% of overall sales; that gives you remaining a lot of offline or other places that you could be shopping, or if Amazon is 50% of all product searches today, you want to be where the customer is, and that's playing Monopoly. Being everywhere on the board to win is the way to win Monopoly.
With that being said and talking about LTV, I certainly believe that the strategy of just being D-to-C doesn't suffice in the coming decade. That it's just not... it's viable, but you need to be doing much more than D-to-C to survive, and I think you can take a look at some of the brands that are doing this today that are direct-to-everywhere, say, Honest Company. Or people that are embracing selling in Target, as well. Where there's adjacent customers in the space, that's where they're going to. They're going to where the puck is going, not to where the puck is, and I think that's really the future, is just really being direct-to-everywhere. The problem is understanding the LTV costs across those customers.
So, I like to use examples of brands that are absolutely killing it. I really like Four Sigmatic. I think, by the way, they have a great, organic platform. They have incredible landing pages when it comes to PPC. On top of that, they're really embracing this direct-to-everywhere approach, leaving no channel behind. And it's not really just the channel you're on; it's what you do on the channel. So, Sephora, Amazon, eBay are great channels, but the other channel that I think that they're embracing that I thought was really fascinating was my recent trip to LA, they had a pop-up shop. You went down this alley, and I was like, "Wow, this probably is a much lower cost of acquisition than even just what's happening online today."
Because everyone's going after the same Facebook lookalikes, they've created a small, little presence, it's like mushrooms that are everywhere, because they make this mushroom coffee elixir, and they let you try their coffee and also you can buy it in-store, which is pretty cool. But they let you try it for free, and I was like, "That's really, really cool. They're creating a really awesome experience." It kind of feels like you're in Super Mario... Super Nintendo, Super Mario.
On top of that, by being everywhere, you can essentially now have... you have to be able to analyze your profit per SKU, but also your lifetime value across the different channels that you're selling on. You need to get more efficient with your workflows, and you need to know, "Okay, am I making money in my store?" With your pop-up shop. Could be running on a Square, or Shopify Plus POS integrated into Skubana, or just understanding your profitability across the channels that you're embracing.
So, profit per SKU per channel is becoming incrementally important, especially as you're figuring out where you want to allocate your dollars for further spend. And it's including, like, every fee from Shopify, or every fee from Amazon, or even from your point of sale location. Pretty cool stuff; it rolls up all into the SKU level.
The other thing that I wanted to underline here is that you have to understand the implication from one channel to another. I've recently read an article that said that having a footprint store amplifies post-purchase by about 3X. I thought that was super important. Another stat I had read was Warby Parker is doing $3,000 per square foot, and that's the same as Tiffany's per square foot, but Warby Parker is only selling $99 glasses.
And then lastly, doing things that others aren't doing, say like automating direct mailers after a customer has placed a second purchase so you can actually increase the LTV, the value of that customer, dip back into their wallet, and extract more dollars. A lot of people aren't doing these things. If you're doing them, awesome, kudos, but if you're not, these are things just to think about and nuggets you can look into, and certainly, we're going to get into loyalty in a second.
But again, going after looking into your LTV of your customers and your repeat buying behavior, what percentage of your customers are one-time buyers versus two-time buyers, which are six-time buyers, across channels and comparing those channels, and seeing how they influence each other, it's something that you need to be analyzing in your business if you're omnichannel or multichannel. You also want to make sure that you're monitoring your most frequent customers, and maybe even giving them a direct mailer, or doing other strategies to enhance the relationship with them.
And then, we have a gray screen. I'm not sure what this is. There it is! Okay, great. And then you need just flexible fulfillment. So, to scale, and I think Kevin's going to talk about this, from ShipMonk, to scale today, you need to have the infrastructure in place and the foundation in place, and fulfillment is very, very important. And one of the things I can mention with my own business and my e-commerce business is the fulfillment structure should be scalable and essentially should go up and down based on your revenue, right? So, you don't want stagnant, long leases anymore, or... yeah, long lease, I think, is very important, or having variable employees that maybe in the slow time you would have to cut, or temps. That's the beautiful thing about having a 3PL in place, and it becomes a lot more cost-effective just as you scale.
And just knowing where people are buying your orders from. This was just a map that we were looking at as a percentage of revenue and a percentage of units, where things are shipping from; I know ShipMonk has multiple locations that they allow you to ship from, as well, which is pretty cool. Being able to have a footprint and a tool like Skubana, which can actually tell you and route the orders for you, but also tell you how many to order per warehouse, per location, based on all the channels that you're shipping from. You can even divide the geographic location up.
So, to me, it's all about having underlying infrastructure that gives you a competitive advantage. So, tech stack for me, and all of the things I just mentioned, those are really the ground floor of what you need to be able to compete forward. I'm going to hand it off to Route, so go ahead and take it from here.
Awesome. Thanks, Chad. That was amazing. First off, yeah, just quick reminder, I'm Andrew from Route, and I'm really excited to talk about the rise in post-purchase expectations. And I think Chad's really kind of hit on a bunch of stuff already.
Basically, how do you win in a world where kind of everybody's doing the same thing? And post-purchase is a completely... I wouldn't say neglected, but it is something that people don't look at a lot. Kind of once a merchant or an online retailer does their part, basically serves the customer, gets them to click that Buy button, then it just kind of goes into the ether afterwards.
So, it's going to be fun today to talk a little bit about what is post-purchase experience, why that matters, why post... Basically, the three things we're going to cover today, we're going to go over why the post-purchase experience is broken, what is it, why does it matter, and then a couple strategies we can implement today that will help all of our online retailers who are on today to really up their post-purchase experience game.
Post-purchase, as it stands today, is broken. And what we mean by that is it's disjointed. When a customer or shopper checks out, basically the only thing that we as online retailers have been doing for the last two decades, basically since 1994, is, "Thanks for your purchase. Here's your email. Here's your email, or here's your tracking number, hope you get your stuff; if you don't, we have some processes," but really, that's it.
So, it's 2020; what is a post-purchase experience, and how can we optimize that today? So, if you'll jump to the next one...
At Route, in redefining what the post-purchase experience is... and in a second, I'll kind of say what is Route, and I'll actually just start here. Route basically is the premier post-purchase experience platform for online retailers, and this is how we view the post-purchase experience.
We view it in three pillars or three phases. Basically the minute somebody checks out, basically we have three phases: communicate and track, receive and resolve, and engage and reconnect, all with the hopes of increasing customer experience and building brand loyalty. As Chad already mentioned, and basically the gold standard for e-commerce, is increased brand loyalty and increased LTV. That's what we want. We want customers coming back time and time again, and we don't want to have to pay for them time and time again with the increased cost of customer acquisition.
So, as you can see here, in each phase of the post-purchase experience are some key benefits. There's key benefits, key opportunities to take advantage. In that first phase, that Communicate and Track phase, what do we want to do? We want to multiply brand impressions, we want to reduce WISMO calls, we want to reduce the amount of times we have to handle an angry customer because they don't know where their order is, and we want to increase the chance of delivery.
And then moving through to the Receive and Resolve, what do we want to do? We want to reduce support tickets, we want to reduce the amount of times we have to deal with an angry, frustrated customer, we want to expedite claim resolutions if something happens; we want to get them the products they wanted, or at least get a resolution as quickly as possible, and we want to reduce the impact that those refunds or returns.
And then, moving into the Engage and Reconnect section of the post-purchase experience, this is where we want to be, right? We don't want to basically leave it off of, "Great. We gave you an email, or we gave you a tracking number; oh, you had a problem? We resolved it." We want to delight customers enough so that they will engage and reconnect and come back to our store.
How do we do that? Branded engagement increases repeat visits, improves LTV, and reduces CPA. That's what we want. That's how we at Route view the post-purchase experience, and that's basically what we're building today.
This is a pretty basic overview of Route's approach to handling everything you guys just saw. What do we do? We created a holistic post-purchase experience for merchants and their customers. So, where does it start? It starts at checkout. Customers have the opportunity to add Route Plus shipping insurance e or shipping protection, at checkout; then they could use our app to track everything in one place, and it doesn't have to just be from the store, they can track everything they order online. If they included Route Plus insurance and something happened, lost, damaged, stolen, they can file a claim, they can resolve the issues directly in the app, and then we also have branded merchant profile pages to basically re-engage, to close that loop in post-purchase and get those customers back to their store without having to pay for them again.
And these are some of the brands that Route's been working with over the last year, some of the most innovative in the space, and we're super proud to be able to partner with them.
So, kind of the meat of the post-purchase experience: delivery. Delivery is an area of the post-purchase experience that has been completely overlooked for years. You know, merchants and online retailers, you guys go through painstaking efforts to deliver an amazing experience. Source products, build products, optimize your website, optimize for conversion; basically, you want to provide this incredible brand experience for your customers, and then the minute they check out, it feels like you're handing that whole experience over to a stranger, right? Over to a carrier, and say, "Hey, hope this gets there! Hope you guys get it. I hope you take it. Basically, we did all this work and now... all right, it's your job now. It's in your hands."
And as you can see in this slide, it's a big problem. Delivery breakdowns are inevitable. Sometimes you'll hear people say, "Well, shipping loss isn't a thing. We don't deal with shipping loss." Well, as we can see from some stats here, in 2018, 87 billion packages were shipped... we're estimating about a three percent failure rate from CNBC; that's 2.6 billion packages that were lost. This doesn't include damaged or stolen packages, so shipping loss happens. Delivery breakdowns happen, and from some of our proprietary research, we've found that 50% of shoppers have had a problem receiving a package.
That's crazy! That is so, so, so many people who deal with this issue, and as we're going to see in the coming slides, what does that mean? What does that mean when something goes poorly?
So, first off, that last mile drastically impacts shopper sentiment. 73.6 of consumers reported delivery is the most important part of the overall shopping experience. And if you take a step back and really think about it, this totally makes sense, right? If you go in, or if you go to an online store, you're looking to buy products, you buy your product, you love it, or you're excited about it, and then you don't get it, or you get it and it's broken, or whatever, it doesn't matter what happened before. Basically, that last mile is incredibly important to online shoppers.
All right, let's go to the next one. This one's fascinating. Successful delivery, in my opinion, unfairly falls on the merchant. 94% of customers blame the retailer after a delivery goes poorly. Is this fair? Probably not. You know? You didn't cause this. You gave an extremely good experience, you prompted the customer to buy, they bought, and then they didn't get the product or the product was broken, they're going to blame you for that.
So, it's unfair, but the carrier unavoidably becomes an extension of your brand and of your products. Poor delivery drives shoppers away. From some research that Route did just a few months ago and included in some others, other sources including Accenture, we found out that poor delivery literally drives shoppers away. 84% of consumers will not return to an online store after a poor delivery experience. That's wild! That is so, so many people that will literally not return. Shoppers have so many options, we don't need to give them another reason to go to a different store, or to go to a different online retailer.
And finally, on a more positive note, shoppers reward brands that remedy delivery breakdowns. Just as much as shoppers are emotional, they're finicky, if they have a bad experience, they're going to go somewhere else... if the situation is remedied, we found out that 87% of shoppers are more loyal to that brand if they remedied a bad delivery experience.
So, if we want to get back to LTV, returning customers, bad experiences will happen; let's bring them back.
We've gone over the stats: poor delivery experience, bad delivery breakdowns, it's going to drive customers away. What can we do about that? And what can we do about that today?
So, two strategies to improve post-purchase: number one, offer a better tracking experience. Like we covered in the beginning, email's old, it's antiquated, it's not going to go anywhere, but it's 2020 and consumers want a better experience. So, what can we do?
Route's tracking solution, the Route app, will give people the opportunity to visually monitor and visually track their packages from the minute they check out all the way through delivery, giving them that sense of confidence. And they crave that! They crave that mobile experience, and along the way, they're going to be receiving proactive push notifications that's going to give them unmatched transparency in the delivery journey.
And as we can see from these stats, it's just crazy. 23% average open rate on an email, 90% average open rate of a push notification, and we see a 26% increase in average spend when shoppers arrive via push notifications. Awesome final.
Number two, what can we do to mitigate risk? As we can see in that first slide I covered about shipping loss and delivery breakdown, it's going to happen. It's not your fault, for the most part, but it can happen. So, what do we do to mitigate risk?
Route's opt-in or fully coverage shipping insurance will allow customers to shop with more confidence, and if something is lost, stolen, damaged, Route's customer success team will jump into action and handle that for you, and become an extension of your brand, your customer service, and basically remedy that situation and give people a better experience. And the big benefit? They can do it from the app. They can go in there, have a really easy experience, solve the problem, and all that good vibe, all that good equity, goes back to your customers.
All right, final. So, guys, this has been a total pleasure. If you have any questions, you can contact me directly. Route is a completely free option for online retailers. So, if you want to check it out, if you want to schedule a demo, go to Route.com/100 and anybody on this webinar, we're going to be running a special promotion. If you give it a try, we're going to give 100 bucks. It's been a pleasure.
Thanks, Andrew. All right, next up we've got Kevin from ShipMonk.
So, quickly about ShipMonk, I'll give you guys a little context as to what we're looking at. ShipMonk, for those of you that don't know, we're a tech-enabled 3PL so we really look at ourselves as a very software-heavy logistics provider. We focus on not only the front end of the multichannel software solution and integration to other distribution or sales channels; it's also in the back end of the automated portions. We're trying to automate as much as we can with it in robotics and different styles of taking into warehouse and minimize the headcount. Which really leads us to being D-to-C-focused. So, what does that mean? More customizable packaging experiences for these merchants to the end consumer, as well as a more scalable solution throughout the seasons and times of the year.
We currently have three locations: south Florida, Los Angeles, and just outside of... in Pennsylvania, just outside the city, and we'll be opening a fourth later in the year internationally.
The way we look at the whole... the whole concept we look at is, customers need to feel confident that they made the right buying decision, right? And so, there's just times that we like to look at it in the viewpoint of the loyalty. And so, I think the biggest thing, we all know what happens during the conversion with two-day shipping, and that whole Prime syndrome. But it's really coming on post-that, and how fulfillment plays a huge role in that, and its a completely different role than how consumers view that process.
And the big thing is after the sale, customers are evaluating whether the seller or the merchant lived up to the shipping promise, right? Was there a delay? Was something on back order? Did the product get damaged? Is their poor quality in packaging orders? And just creates a sense of dissonance during that process, right? We're a non-expected shipping cost, so we really look at, number one, what would the shipping performance like and to live up to the expectation that they were promised, and you're evaluating.
And then, you're dealing with... that's the first level, and then you're peeling back another layer. "Okay, how do we make them, out of the gate, and make it a memorable experience? Do we do something through branded packaging?" Everyone kind of has seen the popular... you have unboxing videos, and how big that was. So, what can we do during the packaging process? We're going to get into, really, how to make them advocate and bond with the brand. Are there special touches you can do, right? Are there small, little tokens of appreciation you can do to make them really feel appreciated, and grow that brand affinity? And then knowing what kind of products you have, and if there's a returns process, that you need to really go into the fulfillment process whether that be including return label or things like that that I know Aaron will get into a little bit later.
But how does that not only end up on the tech side, but from a fulfillment aspect? So, that's just kind of laying the land of the next few slides. The first thing we kind of mentioned was the branded packaging. So, we look at packaging customization... there's a few different things you have to look at. The obvious one is the outer packaging, right? You have your poly mailers, your bubble mailers, your shipping and mailer boxes. But what we'd like to really look at is, you know, a lot of companies ask, "Should my packaging be branded or not?"
And for us, that's saying, "Hey, there's a happy meeting between something being so sterile, using regular boxes and standard tape and things like that, versus overkill and customizing it too much where it doesn't make even sense for the merchant." So, what we like to do is start in two senses; start with your consumer and create criteria based on your brand. So, what kind of products do that? For example, if you have an adult product or something you might want to lend more discretion when the consumer is opening it? What's the time of year that you're shipping? For example, if you are shipping things for children during the Christmas holidays, you might not want to brand the packaging to spoil that surprise when they're coming home from school and the packaging's outside.
Are there any special requirements or functions that the packaging needs to do? Do you have heat-sensitive products, or do you have fragile products? Really thinking of it like that, and then really factoring in the price and other trade-offs. So, we see a lot of brands coming to us and have these really intricate processes, and sometimes it doesn't make sense to origami-fold tissue paper 72 times, to really accomplish what they're trying to do and make the customer feel.
So, that's something we like to look at up-front and then delve into, "Okay, now, once we have that decided, how do you build the outer packaging? How do you build the inner packaging? Are you an eco-friendly brand that needs to look for sustainable materials? Our air pillows, you want to stay away from plastics. Does it need to be bubble-wrapped?" So, things like that where you want to look into inserts.
And then, you're going to look at inserts where there's a lot of ways to really bond with the consumer. So, do you want to include promo cards, or do you want to include return instructions? Do you want to include a packing list? And I think, Chad, you touched on it but, the one I look up to is Four Sigmatic. I think they've done an incredible job because every time I've ordered from them, when I've ordered tees, they've sent me chocolates to try. Then I start ordering chocolates, and they sent me a Christmas book at the holidays. They've done a lot, a lot of work during their logistics to really make... up-sell me for future purchases, as well as just making me feel like something to talk about, and bring the book around about Santa taking shrooms over the holidays. I think that's really, really awesome.
And the other thing is, you know, at the end of the day, like Andrew touched on... that things are bound to get lost or damaged or things like that, so how do we minimize those occurrences, and how do you also make a memorable experience? So, although it might look good, this needs to function, as well, so taking that into account of not just fully from a branding standpoint.
The next big thing is the expectation of getting things sooner, so, there's really five or six ways we look at improving shipping speeds. The number one thing is expedited shipping, which is kind of the obvious, shipping something with the two-day method, which is really great if you have time-sensitive, or you're trying to figure up-selling more expedited shipping methods to the consumer. So, that's one thing that everybody, kind of the obvious.
But then when you pull that back, what are other ways you can improve shipping speed without kind of breaking the bank and paying a premium for those services? The next one is multiple locations leverage your networks. We look at the network of warehouses, and where to put inventory using a tool like Skubana, and see, "Hey, where are you selling to most?" If I put my inventory here, you'll be getting it sooner because the way we divide their shipping zones, kind of the standard rule of thumb is the more zones you cross, the more expensive, the longer it takes. Right?
So, the closer to the customer, the faster and inevitably cheaper to get it there. So, you have to make that assumption of, "Well, how do we split an inventory?" You put it in two warehouses, or three warehouses; can you ship from one, knowing where your products and how quickly you can get them out? So, that's something super important there, as well as you can ship with two-day methods, and we offer a domestic two-day which is a combination of ground methods and two-day methods depending on what zones you're going to, so if a closer zone, you're not overspending on a two-day method where you'd be using the ground or a work-share service that's going to get there in one to two days, but also you can do it for a lot less.
The other thing is same-day picking. This is really huge when it comes to fulfillment. One thing we look at is, it's great to have a two-day method or have your inventory spread across a lot of warehouses, but if you're not able to get it out in that same day or shortly after, you're in a heap of trouble. So, that's one thing to look at as people at the fulfillment center are figuring out where those cut-off times are, how quickly you can ship it, and sometimes you can cut off a day, in the consumer's mind.
And then, you have on the other side of that, is delayed notifications. This is kind of the other side of the coin that's good in some instances. For example, we have merchants that we have same-day picking set up for, but they don't send the tracking information out till the next day. And what that does is that buys them a day, so they could use a two-to-three-day method, and it really cuts down a day in the consumer's eyes of the time they got the tracking information to the time they got the product. So, some things we've seen is they do that, they put a delay on it, and also, the tracking numbers can be updated so it's not in the pre-shipment state before the carrier's scanned it in.
The other thing is this is really good for, say, subscription models where if you know there's a recurring order coming, you can ship the product and then send the confirmation a couple days later, and that's use one of the cheaper economy methods, but also have the appearance that it got there in two days, two to three days.
And then, kind of the last one that we're going to get into in the next slide is packaging improvements. One thing is, you know, especially when you start to customize and you really try to make these really memorable post-purchase experiences to your consumers is, hey, a lot of this, if you start adding a lot of touches at the fulfillment process, it not only slows the process down and it just... something that you've got to be aware of is, as you're continuing to scale, how does that scale? And does it scale well from a price standpoint as well as just a general scalability standpoint?
And I would argue there's a sixth way to improve shipping speed naturally, like forecasting. I know that's what we love about Skubana: forecasting inventory in the right location so you're not running into back orders and having to ship inventory from one of the other warehouses on the other side of the country, having the orders coming directly, just kind of general routing of really leveraging that network.
And then, the last slide here's just a visual representation about the point I talked about a packaging improvement, is really knowing the multiples you're selling your units. If you're selling insert channels, if you're selling packs of four, and your master cases have eight, and it means you're selling the multiples of that, because that's something, too. It's going to save you a lot of money as well as be a lot quicker when you're handling those products.
So, instead of selling six at a time, in this example, where you have to sell one in your pack and then break a pack, you're going to want to sell in multiples of four just depending on how you have your units handled. So, a lot of times, that's just something to think about when you're manufacturing or purchasing a product from your supplier is how is this going to end up, or how many touches it's going to be later on, and does that effect, one, the cost, or inevitably, that post-purchase experience of, can my fulfillment center even do certain things that I'm looking to accentuate during that unboxing experience for my customer?
So, those are all things to think about that really... back to kind of looking at the loyalty loop, and how do we really look into how to... do we accentuate those things during the fulfillment process.
I'm Aaron from Returnly. On a very high level, Returnly, we're a smart returns platform. We've got a bunch of clients you guys know: Everlane, Outdoor Voices, also some major ones, like a Fanatics.
The way to think about us is kind of two different product suites. One is a returns platform, so think a beautiful returns experience, kind of echoing what Andrew said about branded. A branded experience, branded tracking; everything that you would expect from a grade-A brand experience. We give great analytics to our merchants, we allow consumers the opportunity to print a label, kind of the best-in-class returns experience.
The second piece is frankly the thing that I think is most tied to retention, which is our financial technology. We have a massive data science team; our CEO initially at the beginning of his career, was an actuary. The way to think about the impact that Returnly makes for customers, or for our merchants and for their customers, is when you go through a return flow, and you want to exchange a medium for a large, it normally takes a couple of weeks before you get that large because appropriately, a brand will say, "Hey, great, we'd love to send you the large, the correct product. Please send back the medium. We want to make sure that you're not defrauding us."
And without fail, that takes a week, two weeks, three weeks, at a very minimum. With Returnly Credit, which I'll go into in a bit, what actually happens is, is we offer the consumer the opportunity to re-buy, AKA to get the correct product, that large in that case, or the blue shoes, or however you want to think about what's going to be changed, before they even start the process of returning the next one.
So, on a very high level, just going to walk through why returns matter, some different returns experiences; there won't be time for Q&A, but obviously happy to chat after the call. I will share my email and obviously, the email of some other folks on our team.
I think most people think about returns as a call center. I certainly did when I was a merchant. Your consumers think about returns as part of their purchase flow. You as a buyer, on any site, are going to look at a return policy, and if you're going to buy a new pair of shoes from a company that you've never purchased from that you saw on Instagram, or wherever you found out about that, even if it was from your best friend or your mom or whoever said, "Oh, you should try these guys out," if they have a $25 re-stocking fee, or it's unclear what happens if you don't like the shoes, you are just going to be less likely to buy upfront.
So, building that correct returns experience really matters. The second piece is if you give somebody a very bad returns experience, even if you have a delightful policy and you show yourself as, "Yeah, we're going to be great," if you don't deliver, no pun intended, on a great returns experience, your customers aren't going to come back. So, if you think about retention, even if you have somebody who loves your brand, if you screw up on the return, it's harder and harder for them to stick around with you.
So, on a high level, there are a bunch of things that you guys all know, so I'm not saying anything too unique here, but effectively, bad experience leads to churn. One way to think about this is if you give a good experience and then the return takes two weeks or three weeks, you're going to get a lot of questions from a customer, "Hey, where's my credit?" Right? So, not only is that going to lead to a bad experience for them, it's going to lead to a costly experience for you and your team.
What's the lesson? Obviously, have a good returns experience, you're going to retain your customers, lower your cost to serve customers. There are some unique things you can do, and it depends on... you know, if you're a sock company, maybe the cost of goods is very low, or you're skincare in a makeup brand where you are unable to re-sell or re-stock products, you could offer something... You're able to offer with Returnly something called Green Returns. Everybody's seen this; it's return-less returns. Amazon certainly offers it, kind of echoing same that Chad before, is Amazon's bringing the industry forward. They have incredible information about you as a customer, and they know if you're returning something after you've bought 60 things, you're probably not somebody who's defrauding them.
So, with Returnly, one of the things that we focus on is enabling our merchants to understand their customers better through our data science team and the algorithm that we run. For example, if you're a brand that wants to offer return-less returns, we can do that on a data-oriented way without putting you as a brand at risk.
Listen, at the end of the day, with my initial company, my D-to-C brand, it was a watch company, and we had extraordinarily high margins, and so if a customer wasn't happy, we would just say, "Hey, keep the product, we'll send you another one. We'll refund you." Basically, we did anything to keep a CSAT score high. And obviously, that's not possible for the vast majority of brands, and if I were to run that company again today, I'd probably be a little bit more strategic in my decision.
So, I think the way to think about it in terms of what's a good returns experience is probably three different stages. There's the old-school way which was like, make a call, have the customer email in; maybe you give them a refund immediately, maybe you email them a label and they print it out. There's the better experience, which is the self-serve returns flow that I've kind of talked about. And there's the best-in-class experience, which is that self-serve return flow, some analytics, and obviously the Returnly Credit.
So, the way to think about the big benefit of this credit piece, and by the way, this is something that you as a brand can choose to do for your customers, right? So, we do it in a data-oriented way to kind of limit fraud, and Returnly bears the risk, but if you're just getting going as a merchant and you can... if a customer's unhappy, and you can just send them the correct product and say, "Please send back the incorrect one," where you guys can afford it, you're at the beginning of your company, you're trying to scale up, you really want to build loyalty, you really want to retain, those are those Wow experiences that really get a customer to stick around, to talk about it, to share it on social media. That was the way I was able to grow my brand initially.
Once you hit a certain scale, if you're Outdoor Voices or Everlane or any of our kind of larger customers, you obviously need to have a data-oriented way to offer credit. So, I think it's a means to that end, but that's kind of where Returnly differentiates.
On a very high level, kind of in summary, a great returns experience builds long-term love, right? And I say "great" and of course, I have a photo of one of our customers' "great"s. That worked out nicely. Listen, the big idea of the business impact is accelerating time to re-purchase and exchange conversion, and when you offer a great experience, and you offer a credit product, and/or just let customers get what they want, AKA get the correct product, before they send back the incorrect one, you have an extremely high satisfaction rating.
So, for us, when a customer, a consumer uses a credit product, it's a 94% CSAT.
On a high level, the objective, kind of everything you would expect: make your consumers happy, right? I always default to that. How do you create that Wow experience for a consumer? I'm a Zappos fanboy, and I think what you're hearing from the different vendors on this call, ourselves included, is, how do we create a great consumer experience? Which obviously create a lower-cost, higher-revenue merchant organization.
So, we think about it like, create that great experience for the customers, create that great experience for you guys, and then certainly, with green returns or just being smarter and making sure that people understand all the different options with returns, we can actually meaningfully impact C02 waste, landfill waste if you do it the right way.
That's it. I know I ran through it. I wanted to be short on time with this. My email's AS@returnly.com. You can reach out to our sales team, email@example.com, and I'll certainly stick around at the end for any questions. Thanks!
Yeah, so, thank you very much for having me on the panel today. As I said, I'm a partnerships manager at Loyalty Lion. Today, I'm going to basically start by talking about what actually drives customer loyalty and lifetime value post-purchase, and this presentation actually really comes off the back of a lot of research that we've done recently into better understanding loyalty from both the merchant and the consumer perspective. So, hopefully you'll go away thinking a lot of this makes sense, but there are also some key takeaways about actions you can take to address those.
So, yeah, by way of quick introduction for those of you who aren't already familiar with us, we are a data-driven customer loyalty and engagement platform. We're working with over 5,000 merchants worldwide, and we typically see an ROI of 15-to-one for those using the platform. Loyalty Lion, we work across a range of different verticals. You can see some of the examples of the clients that we work with there, but it's really anybody who has the potential for repeat purchases would benefit off the back of a loyalty program. So, you've got Dr. Ax in nutrition there, you've got Lively underwear, et cetera.
Yeah, so, today I'm going to start off by talking about the struggles that people are facing, the challenges people are facing currently. As you can see here, people are focusing on retention purely because it's much cheaper to do so. Bane & Co. found that it's five times cheaper to retain an existing customer than it is to acquire a new one.
But, yeah, not just this, but you can see that lifetime value actually increases the more and more a customer comes to buy from you again. So, after that first purchase, the likelihood of return is only 22%, but this almost doubles after that second purchase. So, the longer you can retain one of your customers, the higher their lifetime value will be.
So, yeah, we wanted to kind of delve into this in a little bit more detail, and even though lifetime value increases as time goes on, we've found that actually less than half of customers feel that emotional connection with the brands that they shop with online, which is obviously problematic because creating an emotional connection is so difficult and it defines what we feel loyalty-wise towards a brand in the first place.
So, yeah, we wanted to delve into what actually drives loyalty post-purchase. As I mentioned, this does come off the back of a certain amount of research that we've done. We identified some key reasons for this, and the first thing that you want to focus on is to create a feeling of accumulation and aspiration for your customers. So, of the people we survey, 74% were motivated by working towards some kind of goal or reward, and 79% were motivated by that feeling of accumulating points that will benefit them later.
So, we've just got a few examples here, and they illustrate that quite nicely. These are going to shoot quite quickly. We've got a fantastic brand here, Lucy & Yak, and they have done this really nicely. Their incentivizing more than just spend, which is the traditional approach to loyalty, but their customers can earn points for lots of different ways of engaging between those purchases. Referring their friends, signing up to the newsletter, liking and following them on social media.
Brayola here is another great example. They actually remind their customers about this feeling of accumulation between purchases via their email. So, you can see here, I've got those 21 points; reminds me to come back, rack up the points and save big.
Another example, we have The Chive. These guys have done a really fantastic job at making that accumulation a little bit competitive. They've actually got a blog called The I-Chive where they rank their customers based on how many points they have. That really adds to the sentiment of gamification and aspiration that you can create with those points there.
And can you do that with Loyalty Lion?
Yeah. So, all of these examples I've shown you so far, they're all using Loyalty Lion. It's a points-based system where you can accumulate points, and The I-Chive have demonstrated that really nicely, what you can do with it.
As well as creating this feeling of accumulation, you want to be able to generate a feeling of exclusivity with your customers. Again, of the people we surveyed, 73% said they were motivated to join a program that offers them exclusive rewards that non-members can't access.
One of the keys ways you can do this is with a tiered-based system. So, I'm not sure how many of you guys listening are part of a tiered-based system, but really, once you've unlocked certain benefits by spending a certain amount or accumulating a certain amount of points, you're part of this VIP community that offers experiential rewards. Maybe that's early access to a new sale, or a new product line; it's just a way to make them feel really special.
So, again, Pulse Boutique here, a fashion brand, and they've created almost a cult following around their loyalty program, and those that are in the third tier with all of these exclusive benefits feel like a really part of the elite group.
You can offer those member-only promotions, as I said. Baseballism, they're giving you an exclusive offer just for being part of their loyalty program. Again, the sales here, Beyond Retro, have done a really fantastic example of that, giving certain tier members early access to those sales. And then number three, as we've talked about accumulation, we've talked about creating a VIP-exclusive community, and the third is all about creating a personalized customer experience.
So, consumers today really want to be recognized for who they are. They don't just want to be part of this massive group that you're spamming. So, they're going to be influenced by personalized offers, personalized product recommendations and promotions. And again, this is something you can achieve with a loyalty program.
Tower London, this example here, they're using their loyalty data to send personalized, targeted emails to their customers. If you can see here, the rewards that they're offering are exclusively targeted to what that particular customer likes to redeem or their purchasing behavior.
So, these are all really good ways to make your customers feel like they know you. Mirenesse, a makeup brand, offers bonus points if you shop from a particular collection or a particular product line. Again, it just shows the customers that you know them and you know what they should want to go and purchase in future.
Okay, so, number four, then, is the necessity for you to create a feeling of trust with your customers. This, again, in e-commerce is incredibly difficult to do because you're not having that one-to-one personal connection that you would have with them in-store. But if you can create that feeling of trust, this is going to do wonders for your brand because the customers are going to be much more likely to be advocates, essentially. They'll recommend you to a friend, et cetera.
So, if we go through a few examples of ways you can do that using the loyalty program as an example. Reviews are a fantastic way to kind of give proof, essentially, social proof that your product is worth purchasing, and you want to incentivize these where possible. What we see a lot of our merchants doing is just giving some points for leaving those reviews, initially, and as soon as that's incentivized, you see an awful lot more people doing it.
And you may even want to take that further, so not just giving them points for a review, but giving them extra points for leaving a review with a photo, so it's really up to you to play around with that. And the second kind of part of that brand advocacy is all centered around referrals. So, people are four times as likely to make a purchase if they have actually been referred by a friend or family member, so make that so easy for them, give them a reason to do it so you can just give them some points every time they make a successful referral. And they can literally just send that across their phone via Facebook Messenger or WhatsApp, really, really simple.
And again, social media is a great way to build that element of trust from your prospective customer. So, if they can go on your page and see that you've got a certain number of likes on Instagram or Facebook, this is all building towards that. If you can incentivize liking you, or using your brand hashtag, this is all adding to that element of trust.
Okay, reason number five is all centered around creating a feeling of brand affinity, and this is one that I can totally connect with. 68% of the people we surveyed said that they were motivated to buy from a brand if that brand shares their values with them, and if they align with social causes that they actually care about. So, I think particularly if we're looking at millennials these days, and the age of ethical e-commerce, people are really starting to associate brands with brands that speak to them. So, if we click through to the next slide, I've got a few examples for you.
This is Ann Marie Skincare, and they really kind of build upon this idea of this like-minded community into all of their marketing. All around their loyalty programs, it's all about that kind of welcoming them to the community, welcoming them to this idea or this ethical ethos that the brand has.
And if we take Pacifica as an example, back to this idea of ethical e-commerce, which is at the heart of Pacifica's brand, they are communicating this to their customers all the time as they know that this is what their customers care about. So, they actually incentivize customers to sign up to their recycling program, as well. Another really good way for you to just communicate that where possible.
And leading on from that idea, this is another really fantastic brand called Wildish. Instead of offering normal rewards to their customers, what they actually do is you can claim a reward by planting five trees for a charity, or giving some dog booties to a dog charity. Again, just reflecting their customers' beliefs and all tying that back into the brand values there.
Okay, so, those were my top tips, then. Kind of looking at the ways that you can communicate via your loyalty program, or via your loyalty strategies in general to your customers just to build on that further. We'd love to kind of hear what your thoughts were on that. If you wanted to take a look at your business case for a loyalty program, we actually have a business case generator which you can find at that link there. So, yeah, feel free to go check that out just to kind of take a look at our ROI and what that might look like for your brand.
How can people get in touch with you, Kerri?
Yeah, so, you can reach me directly, which is firstname.lastname@example.org, or feel free to reach out to us on our website, as well. We've got a chatbot there that will be able to respond to you.
Awesome, and we're going to be circulating these slides. I know that we're hitting the top of the hour, so I want to be respectful of everyone's time and have a Q&A here. There are some questions that came in; we won't be able to get to everybody, but I promise your questions will be circulated.
There was a question from Dimitri here. He says, "Thank you for bringing all these companies together that build off each other and offer complementary services. Question regarding one such synergy that has to do with returns. So, this is really for Returnly and ShipMonk. ShipMonk recently announced that they would no longer be accepting returns, exchanges that were not in perfect resell condition, which is the vast majority of them..." He was a little bit disappointed by this. "Returnly doesn't sound like they do reconditioning or repackaging for the item to be resold. It seemed like there's a gap here. Is there an opportunity to address this, especially if the business of apparel or footwear where the situation is very prevalent?"
Kevin here. So, yeah, I think Dimitri's a little misunderstood. The way we do it with the returns, inventory before was it's either new or non-re-stockable, and so now we're not allowing anymore. It's just a general non-re-stockable. It has to be in one of five subcategories of non-re-stockable. It has to be something that upon returning gets disposed of, because a lot of times, what was happening is inventory was coming back, it couldn't be added back to inventory because of whatever reason, and it would sit as non-re-stockable, and returns were such an afterthought for everyone.
So, they just accumulate in the warehouse, taking up space in the warehouse and charging customers or our merchants for storage that they weren't using. So, we ended up partnering with Optoro, and what Optoro does is they do a couple things; they liquidate inventory, and they resell it on bulk sites through online arbitrage sellers. So, what they do is package it on sites like Bulk.com and Blink.com.
So, we no longer allow the general non-restock inventory it has to be one of five categories: re-list it through Optoro, dispose of it, donate it, refurbish it, or ship it back to you or your manufacturer monthly. So, it's not that we don't allow non-re-stockable. It's just they have to choose one of the subcategories so it just doesn't stay stagnant in the warehouse.
Great. And Aaron, do you have anything to piggyback on that?
Just a huge fan of Optoro, so that's very exciting to hear, and I think that's the right way, frankly, for a 3PL to do it because receiving a one-off return is a pain in the butt, and when you don't know what to do with it, it's just extraordinarily costly. And so, somebody's going to bear that cost. It sounds like that's actually the right approach.
Awesome. I'm just going to... Loyalty Lion here, "Kerri, how can you measure the success of the loyalty campaign? Is there any data or north-star metrics you should be looking at?"
Yeah, absolutely. When you're looking at the success of a loyalty program, you have to take a look at your retention stats in general. You can take a look at things like your repeat purchase rate, average time to second purchase, and average auto-volume, as well. So, once you've put a loyalty program in place, you want to be taking a look at changes in those metrics to determine how successful the program is and whether you could be making tweaks.
Great. Just last one here in the lightning round; there's a lot more, but we're going to circulate those after the call. Hopefully everyone on the call will just follow up with you individually. Allison from Denver, for Andrew Jones here. "For shoppers who are loyal to a brand, if the brand would fix their delivery issues, should the brand be fixing issues that are customer-caused? For example, the apartment number is missing from the address."
Yeah, that's a good question, and I think I'll kind of piggyback off of what Aaron said earlier, is it totally depends on your business case. You know? It depends on what your margins are, and how important CSAT is. And so, if a customer caused a problem and they haven't done it properly, or if they're a problem customer, that really is up to you. And you kind of have to weight that yourself. Kind of where Route comes in is problems arise, or are going to arise, so let's fix them as often as possible, and we always err on the side of, "Hey, let's offer a better experience no matter what because that's going to increase loyalty over time." But in the end, it does come down to you and how you would handle that situation.
Great. Cool, well, that's a wrap, everybody. I didn't give out my contact details, but my personal email is email@example.com. Also happy to give you a post-purchase audit following this, just sign up on the link below, there, and I'll give you a post-purchase audit to see how you can optimize your business, and I'll just do a tear-down for you. But thank you, everyone, for joining. Thank you, Aaron; thank you, Andrew; thank you, Kerri and Kevin, thank you, Gina, for organizing this.
Thank you all!
Thank you very much!
Thanks, everybody! Grateful you joined.
Matthew Rickerby is the Director of Marketing at Skubana, the leading solution for multichannel, multi-warehouse D2C brands. For the past ten years, he’s covered e-commerce topics ranging from SEO to supply chain management.