Panel: Subscription vs. Transactional: Different Models, Different CRM Strategies?
Senior marketers from Paul Stuart, The Culture Trip, Lucky Vitamin and Dollar Shave Club discuss CRM strategies for subscription vs. transactional models.
The continuous changes in consumer buying and spending habits have forced businesses to really take a look into their revenue models and to try to think about how can they accommodate the new trends in the markets, right? Customers are now demanding for a simple hassle-free and manageable shopping experience.
And one way that companies are answering the need for this convenience is by making the shopping experience more accessible. Right? So we’re seeing online shopping, in-app shopping, shopping at one click of a button, right? Anything that makes sure that the client doesn’t have to get really out of their seat. They’re making purchases from the convenience of their own home, making purchases, sorry, on their way to work.
And they could essentially make purchases while they’re at a beautiful conference the beautiful shore of Tel Aviv. Another way to answer the demand for convenience is the change in revenue models. – [Man] So in recent years, the internet era combined with increasing efficiency of warehousing and postal services has boosted the rise of companies utilizing subscription-based models.
Now, many online retailers now offer a subscription element or auto-ship element like Amazon Subscribe and Save, while other businesses solely devote their business models to subscription-based models. Now, in the last few years, you can see that the ecommerce subscription market has grown 100% year over year, while the largest retailers generating $2.6 billion in 2016 up from $57 million in 2011.
Now it’s estimated that 15% of online shoppers have signed up for one or more subscription services to receive products on a recurring basis frequently on a monthly cadence.
– So this growth has really attracted many established brands to enter the subscription arena. So Sephora is now offering Sephora Play!, which gives customers the ability to receive monthly boxes with five stellar products. Walmart is offering a beauty box which sends a seasonal box to their customers filled with a sample products, of course, all available for full purchases at Walmart and even Lyft, an on-demand transportation company similar to Uber is now actually offering monthly subscriptions to their service only for U.S. clients for now.
So both subscription and transactional models have their benefits and their challenges but whichever model you choose, one thing is for sure, they each require a unique marketing approach.
– So in today’s panel, we’re going to discuss how these two models differ and how some companies are now trying to create some sort of a hybrid between these business models. At this point, so the first panel was all about testosterone. So now we have guest panel of girl power excluding myself. So I’d like to introduce Gloria Synn, you all met earlier from Dollar Shave Club, Stephanie McKay from Lucky Vitamin, Natalie Malevsky from The Culture Trip and Jessica Granata from Paul Stuart.
– So, to kick things off and give the audience a better idea of what things look like on your spectrum of the subscription versus transactional side, it would be great if each of you could introduce yourselves, tell us a little bit about your brand and maybe give us a little bit of a glimpse into what are the main KPIs and goals that your marketing team is working on right now?
Jessica, do you want to start us off? – [Jessica] Sure. So my name is Jessica Granata. I’m head of marketing for Paul Stuart which is a heritage, luxury retailer brand based in New York. We’ve been around for 80 years.
And our KPI is actually, despite the eight decades of being around, getting into CRM is relatively new for us. So, a lot of what I’m doing is actually making benchmarks and if I were to pick out a couple of the KPIs we focus on most, that would be getting new customers to convert for the first time and encouraging repeat visits.
– [Natalie] Hi, my name is Natalie Malevsky. I’m the undercraft of product marketing at Culture Trip. We’re a very high growth startup at the intersection of travel and entertainment. My background is in subscription marketing for Disney and the Wall Street Journal amongst others.
And for Culture Trip really at the moment, our biggest challenge is to transition our focus from monthly unique visitors to monthly actives. So really making that transition just as Jessica said from acquiring new customers and engaging them on a regular basis.
So that actually we can transition from an ad-supported media model to a transactional business model of going down the funnel and helping transact in the travel space. – [Stephanie] I’m Stephanie McKay. I’m the senior manager of email marketing and personalization at Lucky Vitamin. And Lucky Vitamin is a pure play ecommerce store in the health and wellness space.
Before I go any further, I just want to point out how jealous I am of Jessica’s gold microphone over here. I’m a little sad I took the wrong seat.
– Thank you for pointing that out. I do love it.
– Yeah. I know. So since we are a hybrid of subscription and transactional models, we look at longevity, frequency, AOV, and then future lifetime value. Also, we look at the percentage of live customers as they are to a ratio with the rest of our database because we are growing really rapidly, so we want to at least maintain a steady ratio of live customers as we are growing that database.
We also consider each of these KPIs according to whether a customer is heavily transactional or has subscribed to our auto-ship program, and our auto-ship program is where a customer can choose to receive replenishable goods on a regular cadence, automatically delivered to their door. So what we found is because auto-ship subscribers kind of don’t really have to interact and engage with us in the way that a highly transactional customer would, they’re kind of in a set it and forget it mode.
So they’re probably not contributing as much web traffic as a transactional customer. They’re steadier in their long-term KPIs, but less on the engagement part of the KPIs. Whereas our transactional customers are heavily engaging with us, especially in a promotional way and less steady in their longer-term retention KPIs. –
[Gloria] Hello, again, my name is Gloria Synn, vice president of member strategy and monetization at Dollar Shave Club. Hopefully, you guys know what Dollar Shave Club is by now. I like to describe it as a men’s grooming lifestyle brand where we help men become the best version of themselves, mind and body. In terms of KPIs that our team looks at, I would say, you know, from the member strategy side, we’re always looking to increase LTV, but on the member monetization side, we are held accountable to specific revenue goals for the year that’s being driven by our member base.
And a lot of that’s broken down by various initiatives that we have revenue targets for the year such as holiday gifting, cyber weekend, Fathers’ Day, product launches. And on the flip side, we have more specific cohort-based goals. So goals around what metrics we want to move for new customers within the first 30 days or in terms of churn metrics that we want to improve upon or even reactivation rates of our council members.
And then the last area of KPIs we monitor are our physical product KPIs. So looking at our razor-only cohorts that have started adopting our non-razor products and categories as a percentage as well as, you know, the efficacy of our sampling program, mini-trial kit programs and their ability to migrate customers to purchase full size.
And then just one other KPI I forgot to mention, in terms of, you know, making sure that we’re monitoring for any big movements in acquisition or on the retention space, what we call ARPU, average revenue per user, is a really great metric to make sure you’re moving the needle on the quality of your customers while trying to still hit your revenue goals.
– Thank you. Thank you all for our panelists. So we’re going to cover a few different topics today and you’re going to see the take of each one of our panel members on them. So the first one is retaining new customers, which is relevant not only for, you know, ecommerce brand but also for the gaming clients that we have in the crowd. So we all know that companies spend tremendous amount of resources acquiring customers and offering them sign up promos or competitive pricing.
Now we did an internal research and compared between the two different types of models. Well, it didn’t come out really nice in the slide here but we can see that 63% of transactional members join after the first one compared to 22%. Anyway, there’s a huge drop-off and Stephanie, I’d like to ask the first question, how does your drop-off look like? How do you fight it and how do you entice customers to continue purchasing?
– Yeah, so our strategy is twofold. So first was revamping our welcome series to include a journey for customers that we call risk of one-timers. And then second was automating a personalized replenishment model campaign. So we found that there was a clear pattern where most customers who make a second purchase do so within a really specific time frame. And then once that time frame has passed, there’s a really clear cliff, a giant drop-off where you’re less likely to win them back.
So it’s really important to be able to get that second purchase before that cliff comes around. So what we did was to revamp the welcome series to include relationship and brand building messages up until the point of that cliff when we would then start to send out increasing offers to win that second purchase. And the idea here is so that most customers will go ahead and make that purchase on their own and then if they haven’t, we’re just giving them a little bit of a nudge to make sure that they’re hitting that second purchase before it becomes really difficult to reactivate them.
And then secondly, we have our automated replenishment campaign which goes out to customers based on a model that looks at time since their last order combined with a recommended frequency of reordering. And then it triggers an email showing which items we think that they’ll need to reorder soon and there is no add a coupon offer here.
It’s simply a reminder to stay top of mind and then also to build upon that one-to-one customer experience where we are demonstrating our value and relationship to the customers. As far as auto-ship subscribers go, we don’t start pushing the auto-ship model until they’ve already had two or three purchases and they have an established behavioral affinity to particular brands that are popular in the auto-ship model.
And then we work toward demonstrating for those particular customers who also have a clear, established cadence of frequency of ordering, what kind of benefits that they would be able to gain from joining the auto-ship program and then getting those deliveries regularly without having to think about it and then they can just kind of set it and forget it and then they can keep going on with life and not having to come to the website and think about when they’re going to need to reorder again.
– Okay. Thank you. So, Natalie, based on your experience in both worlds, what is your take on this?
– First of all, this is amazing. I’ve learned so much and we’ll go away and make sure that we do this at Culture Trip. It’s actually really important to us to learn about these kinds of initiatives because we are trending at around 18 million monthly uniques. And it’s a vast audience, as a challenger brand to some extent, as a trendy and cool brand, we have to get those users back in order to establish future credibility for that transactional business element.
So we really need to be looking at metrics such as bounces and how many articles people read. And the other thing that we’re trying to establish in a very data-driven way is to deduce at which stage of their trip planning cycles are our users, our audiences are. So think about it from a perspective of a target market that comes to us for very engaging content.
And the first step for us to do is to get them to read more content. Once they do that, we can drive more depth of engagement by offering them a deeper product and recurring content products such as our newsletter, or even more importantly, our app. And in fact, the way I’m sort of influencing my colleagues and the team to think about the app is that it’s actually a subscription.
It just happens to be for free. But we’re certainly looking at the 30-day retention rate for uninstalls very closely to make sure that once consumers, once our audiences have downloaded that app, our app, they don’t actually uninstall it, that it continues to have this utility. And so I think what is interesting from your experiences that all of this takes immense patience and you have to recognize the user from the first moment they land on your site.
And you have to have this very thoughtful program of increasing the depth of engagement with your services and be quite patient and sensitive about it depending on who your customers are, what their mindset is, and at which stage of their planning cycle they are. So this is all the kinds of activities that a sort of classic customer engagement platform will help with.
– I’d just like to kind of reaffirm what you just said about establishing yourself with content as well as being the expert in this space. This is something we’re also working on. And Gloria, you mentioned earlier in your amazing presentation about if you can establish that you are a place where you are an expert and then you can organically start to bring in more inbound traffic because your team has already spent all this time, right, curating these products.
And then I was just wondering if you had any kind of insight to add there as far as the importance of establishing yourself as a content expert in the space as well.
– Yeah, I mean absolutely, I think for us, especially with a name like Dollar Shave Club, for us to be able to sell products beyond the shave category, we always have to prove to our consumers as well as our members that we are experts in this space and I think our content team really helps us establish that. I think another really interesting way we’re starting to use content is before our big product launches, we’re able to start driving awareness and considerations of the new categories.
You know, for example, we recently launched two-in-one shampoo, conditioner, face and body wash for guys. And, you know, not coincidentally, a month before the product launch, you know, we’re having our team write articles about the convenience of two-in-ones and what type of guy it’s created for. So, again, we’re driving that consideration stage before we actually launch products and at the same time we could see which of our members are engaging with that content but not converting and using all that data to better cater to them, retarget them and make sure, again, we’re creating that curated experience.
So, you know, we’re very careful in protecting the integrity of our content and our content team so that they don’t become marketers. The goal is not to transact, it really is to educate men on how to be their best selves. But, you know, in how we start kind of creating a Venn diagram across content and, you know, our product space is a very delicate balance that we’re trying to maintain in a smart way.
– I also really love the emotional connection that you’re able to establish too by really focusing on the real core messaging of the content because it’s not only funny in, like, a memorable way, but I also really felt a really strong emotional connection even though I’m not the target audience of the final video where they were doing their morning routine and just like the idea of being your best self for who you are with that video, the song playing in the background about like…it was a specific line in it, right?
That says, “If I’m not right for me, how can I be right for anybody else?” And it’s really moving in a way that feels connected to the brand.
– Our favorite tagline is, “We are the most inclusive exclusive brand,” right? We include everyone, but the member experiences you’ll get is so exclusive. But yeah.
– So speaking of member, if we could move on to actually the next phase, which is a nice segue from acquiring those members and to actually retaining those members, right, and prolonging their activity. So we were talking about kind of acquisition costs and we’re talking about if customers don’t really stick around for long enough, then those acquisition costs may actually represent a negative ROI for the business.
Right? And so really successfully predicting that attrition and practically preventing it is really key in making sure that the acquisitions actually prove in terms of lifetime value of those customers, right? So it’s really important to make sure that we’re looking into attrition.
And with this panel, I think it’s especially interesting to take a look at two types of attrition. We’re looking at active attrition of customers in which customers are actively canceling, for example, their subscription, right? This is more representative of subscription brand businesses versus passive attrition, which is more attributed to transactional businesses that customers just stop purchasing.
So Gloria, could you share with us what are the goals at Dollar Shave Club when it comes to proactively retaining your members and what are some of the challenges that you face in doing so?
– Yeah, absolutely. I think I kind of referred to it in the past presentation, but especially compared to my experience in the non-subscription world, in the subscription world what really matters is that you get the right frequency of the box delivery, right? It’s all about getting the right replenishment rates because, you know, that other subscription is when you give them too much stock, they’re gonna cancel.
It doesn’t matter how great your brand is, right? At the same time, if the frequency cadence is off too far, then what happens is they run out and then they literally run out to the store or they go to Amazon and you completely miss your ability to become an integral part of their day-to-day routines for whatever it is that they’re using the services or products that you sell.
So for us, you know, not only having great products, that’s like, you know, like, first step, but making sure we’re delivering at the right cadence is so key to prolonged activity of our member base. So I will say that’s the first thing is something that’s very unique, not unique but very critical for our subscription business. The second thing is, you know, not to talk about onboarding, you know, too much, but onboarding is so important in subscription because there are so many members that come in, they’re set and forget it and you have to make sure during the set it phase, before they forget it, you are, you know, one, really making sure they understand the value propositions of your brand and how to use your site and their settings and features to make sure it’s a experience that will work for them.
You know, at the same time, making sure we’re learning as much about them early on. So we have this thing called member profile and really it’s hard for us to measure distinctly how we’re going to monetize off of it yet. But, you know, we are 100% believer that the more we learn upfront, the better curated experience we can deliver for them that will prolong their tenure with our brand. And then just the last piece is obviously, you know, the, the beyond commerce thing, which is, again, how do you become a brand where they want to visit and engage with you even when they don’t need to buy stuff?
That really helps with retention and LTV and your ability to, again, prolong your relationship with that consumer or that member.
– So you mentioned frequency and overstock as being one of the challenges to your subscription-based model. For us within our auto-ship subscription program, we have such a variety available of items that you could replenish that have a really different cadence for replenishment. So for example, a 30-day vitamin user might not be ready to replenish their giant tub of protein yet.
So I’m just wondering if you’ve encountered the same kind of challenge and what you guys might be doing about it.
– Yeah. I mean, it’s a really interesting challenge. And I think in the subscription world there’s maybe two ways you go about it, right? You have a model where every skew, the customer can set the frequency or you can recommend the frequency like toothpaste, you should be buying one a month versus your beard oil, maybe it’s once a quarter.
But, you know, for Dollar Shave Club, we took the chance and said that’s probably too much for the member to try to figure out and manage. So we took the approach of what we call a restock box, so it’s only the box frequency that you’re managing and we should be able to recommend to you. If you’re a guy that gets two boxes a year, how many toothpastes versus beard oil versus razors do you need based on your individual replenishment rates of the skews and the and the recurrence of that box.
So there’s two factors in it, which is the products and your usage rate, but also how often you are getting a replenishment box for us. I mean, that’s our approach, but there’s absolutely different subscription business models out there where you set your cadence per skew but again, like we believe that’s probably a little bit too much for you to manage.
– And that’s really interesting, both with the subscription aspect and on the fact that you all deal with consumables. So Stephanie, Gloria, both of you deal with consumables. So Jessica, I’d like to actually take it on the complete opposite side of the spectrum. Both Paul Stuart sells clothing, which is not consumable, right? So the frequency may change and the expectations from every customer on when they’re expected to purchase a suit may change.
And also you sell to these customers by their need and not based on a subscription or a monthly package. So how do you deal with prolonging activity and making sure that customers come back and continue to purchase from Paul Stuart?
– I think my husband would argue that for me clothing is consumable, first. So I would resurface a couple of other themes that have come up today which are content and value communication. We send out a lot of emails to our customers at all different lifecycle stages and we try to always, before an email goes out, be really sure…we don’t do a lot of promotions actually.
We’re usually focusing on explaining why we sell expensive products. Why? They’re made with, you know, the world’s best materials. They’re using artisanal manufacturing methods from around the world. And our customers are also, you know, C-suite, really wealthy, busy guys, not that we all aren’t very busy, but, you know, is this email, do they care?
Are they going to want to open this email? So we’re brand building and I think in that way, relationship building, every day when we send out these emails. And one element of that, we carry actually quite a variety of products. We weren’t originally like a suiting company, but we have footwear, we have accessories.
We carry just, you know, belts, suspenders, everything, and we’re always trying to focus on different product categories because the more product categories we can introduce to our customers, the bigger our relationship is with them. And then the theory is that the lifetime value is higher as well.
– Oh, next topic. Thanks, everyone. So now we’re going to speak to how you revive churned customers. So [inaudible] mentioned earlier, the different types of attrition and in subscription, unlike transactional, customers consciously stop and cancel the subscription.
And Natalie, I would like to ask how, based on your experience in subscription, how you, in the past, addressed customers who churned.
– Sure. So yeah, churn is really scary. And there’s a data point out there that I’ve come across on the internet, so it must be true, from a subscription consultant who calculated that if your customers churn at 2% to 3%every month, you actually have to grow your business between 25% and 40% per year just to stay in the same place.
So churn is really scary and very expensive. So when it comes to churn, it’s good to understand the reasons for customers churning first before you have a strategy to prevent that churn. And I think it’s true to say that in this classic way, prevention is better than cure.
And in my experience of running these subscription businesses with children’s games at Disney or the Wall Street Journal subscriptions, there is a almost direct correlation between engagement and activity and churns. So if your customers aren’t engaging and reading your product or playing your product, there’s a very high chance they’re going to churn.
And so the first thing to look at for that is how long does it take them to get value out of your products? So when we were doing this for the children’s game, we had a three-day free trial and we were experimenting as should it be three days, should it be seven days, should it be two weeks?
And it’s actually sort of the time to subscribe is a very important indicator of how that engagement is going to be seen later on. But as soon as you see that engagement drops off, this should actually ring alarm bells. So in terms of a strategy for that, again, you prevent that kind of churn by understanding how you can reengage with customers, how can you get them back into your product and to enjoy it, whether it’s to read more in the case of the journal or whether it’s to play more and essentially drive that kind of repeat usage.
In terms of the second aspect of churn is, of course, the service delivery itself. You calld it the value proposition, Gloria. So, I was working at a marketplace just last year where we were a lead generation platform for trades businesses to find new customers and it was a very kind of up and down business.
You know, it was giving me heart palpitations almost on a daily basis because actually there, the challenge was one of service delivery. Now, imagine you log into Netflix tomorrow and there’s only one series to watch or you have your Sky subscription, and you switch on the television and today they say, “Actually there’s only one channel available.”
So this doesn’t work. This doesn’t work in the subscription business. You have to almost guarantee abundance, whatever it is you’re selling, particularly when it comes to virtual experiences such as entertainment or content, you have to make sure that every time the customer logs in, there’s something to do. And so service delivery becomes incredibly important.
And then finally, just as a sort of third reason to churn, they’re actually natural reasons to churn. And when I was working at Disney, there’s a unique thing that happens to all of us. We all get older. And so the kids grow up. And the key to prevent churn for that is to actually diversify your offering.
So the key to have that long-term customer relationship, whether it’s with the child itself or their families, is to move them from the game that you’ve been selling so far to another product, to the next franchise, to the older title. And this is really about understanding your customer needs and how they mature with your product.
Just because you have that customer doesn’t necessarily mean it’s going to be a lifetime relationship. But it can be a lifetime relationship if you have a catalog of products that you can offer them as they mature with a particular category.
– Thank you. Stephanie, so I think that’s also relevant to your business as well. So the customers change, they get older, they consume more vitamins. How do you treat churned customers?
– Well, from a tactical perspective, we found, at least for our transactional customers, gamification can be a really effective tactic. So something like a deal reveal or some interesting use case for interactivity in an email campaign, something that really drives their interest and engagement straight through to the purchasing funnel. And then after they’ve reactivated, we send a follow up customer appreciation campaign within a few weeks and it serves twofold, which is, again, to stay top of mind and to continue that one-to-one, personalized-journey-based behavior, but also something that you had mentioned earlier which is to really encourage that repeat purchase right after they’ve reactivated to keep them in the funnel – Well, thank you.
So, in the next topic we’re going to discuss the sub-personas in different businesses. So, different businesses can identify different sub-personas. So Gloria talked about earlier in her session about in the subscription business, it’s very hard to distinguish or differentiate between the different percentiles.
You have some percentiles which act more than the lower percentiles but generally compared to transactional businesses, so we can see here the top, the [inaudible] has generated far more significant revenue for the business compared to the top percentiles in a subscription business. So Jessica, in your business, of course, you talked about the more affluent people who purchase more.
Do you have the different VIPs?
– Yeah. We actually have some distinct groups on kind of either end of the spectrum. We have our VIPs who spend…their average transaction value could be 10 or 20 times what it is normally. And we do a couple of different things for this group of customers.
One, it’s very basic, but it works. We recognize them and thank them sometimes with a personal touch from our CEO. And then a few times per year we’ll invite them into our stores for an exclusive shopping evening. And then we have a biannual sale. That’s really our main promotion and they get to preview that sale before everybody else.
So then at the end of the spectrum, we have sales/aspirational shoppers who either can’t or don’t want to buy our products full-price. Those customers are also important to us. And we do a couple of different things with them.
So for Paul Stuart, we don’t traditionally do sales throughout the year, but we still have that sale inventory and we still need to sell through it. So one of the fabulous things that we can do with Optimove is to target messaging, both email and through Facebook, to sale-only shoppers to let them know of the great products that are available in stock in the sale section of our website.
And then with wording we’ve learned through testing that while our regular customer tires quickly of like sale and other similar words, they’re done with that after the first couple of weeks of sale, this other customer is much more receptive to that. So we tailor our wording to our messaging. And then one other final distinction I’ll make is that we have single-channel shoppers, people who’ve either been shopping in our physical stores for sometimes decades and have yet to become an e-commerce shopper with us or maybe at all.
Those people still do exist and they are my customers. And then we have newer, probably mostly younger customers who may not live in a city where we have a store and they shop online. And for us as in with most brands, I think, the multichannel shopper is the one with the longest relationship and highest LTV.
So we have a campaign that goes as a series of three emails to try and get each group to do a trial first purchase on the other channel, the first two emails of which are just content. You know, obviously, if you go into a store, that’s a different experience, you can try things on. You could even have something made to measure. You can have someone help with personal shopping and look coordination.
Online, you know, you can buy a hidden button-down collar shirt made of the finest cotton by the company that’s been doing it for, you know, hundreds of years at 3:30 in the morning if you would like or, you know, kind of check out what our new arrivals are without having to make the trip to the store, etc.
And then if those first two emails don’t work, then we do offer a 15% discount as the last email to try and really encourage that first-time conversion.
– You can buy at 3:30 in the morning when you’re jet lagged in Tel Aviv [inaudible]. So you mentioned that your customer base is mainly older gentlemen, Jessica, and to put it gently, no one lives forever. I wish we all could and then we could keep buying from you all the time, but have you ever considered what that means for you with an aging customer base and any kind of tactics you might have considered for acquiring younger customers in your database?
– Yeah. So our customers are aging. They first retire and stop buying tailored clothing and then they buy their last suit and take it to their grave.
– Literally, straight into the grave.
– Or they’re just buying it for the grave.
– Yeah, we overhear some interesting old couples bickering in the store. But yeah, we do need to recruit a younger customer, which for us is not a millennial. It’s more like 40 or so. But, I mean, hey, there’s a lot of data to be gleaned from those older customers.
We can still use lookalike modeling to find the other customers. And even though we skew towards the traditional in terms of our esthetic, we’re still innovating with products just as is happening across fashion right now in terms of performance fabrics, for example, and that’s really important for us to recruit a younger customer as well as delight and interest our core customer.
– Gloria, and I saw you worked in the past at Nordstrom and I know that you encountered potentially some sub-personas through the data. So how did you find them and treat them?
– Yeah, I get really excited about personas because I think it’s such a cool way of humanizing your customer base. And I think my learning what those… there’s different uses of personas. So, at Dollar Shave Club, as Jani noted, our active member base, in our current acts, was slashed two. We don’t have as much diversity of personas yet to really sink our teeth into.
But where we are using personas is on the acquisition space. So, you know, based on men’s attitudes towards grooming, subscription and affinity towards buying online, we found two different distinct personas that our acquisition teams will be using a DMP to try to target.
And that’s what we call the informed subscribers, which are men who are, you know, in subscriptions and willing to try things online and somewhat, you know, open about switching up their grooming routines and products as well as the engaged brand lovers, which are men who understand the importance of brand and become very loyal to brands once they identify with kind of the core value proposition and the products there.
And there’s multiple personas when it comes to men’s attitudes around, again, grooming, subscription and online. So that’s one example of how our acquisition team is using personas to target better consumers to become members. When I was at Gap Inc., I remember Banana Republic had a persona of Ben and Anna.
It was very witty. But, you know, the call I will make there, Ben was kind of that average male consumer, right? The average male customer of Banana Republic and Anna was the average female customer of Banana Republic.
But, you know, I think the danger of personas is what I call the fallacy of the average, right? So if you put like us four panelists and get the average of us, like how well do you really know your customer? So I think with personas you avoid the fallacy of the average, but you can rise above the noise of individuals because how are you going to know every single member that you have?
And I think the place that did it best was when I was at Nordstrom Rack and HauteLook. What we did was we took a look at all of our customers purchase patterns across categories and divisions to understand, based on their purchase behavior, what personas they were. And we had what we call a rack shoe lover because all she did was buy shoes. She was obsessed with shoes.
We had our fashionista mom who we knew she was a mom, not because of third-party data [inaudible] but because she was buying high-end brand names for herself in the women’s department and clothing for her children, so we called her the fashionista mom. And then we had the stock up guy. We didn’t have to look to see if he was a man because all he bought was from the men’s category and nothing else.
And so that helped us humanize our member base for our merchant teams, for our marketing teams, for the rest of the organization. But I think the biggest insights for us was tracking, year over year, how the personas shifted, which personas disappeared, which persona started popping up, and how within the personas that persisted, how they change in terms of quantity and quality.
So we saw in a certain year, our stock up guy, his LTV or his spend increased significantly. And when we went back to our merchant teams, our merchandising teams really started investing a lot more in core men’s categories and brands. So, you know, those are the interesting things that you want to monitor through personas that could drive, you know, very meaningful, actionable insights for the entire organization.
– By the way, I’ll take on Ben. Thank you for that.
– All right. So just kind of to finish things up, at the beginning of the session, we talked a little bit about your main KPIs and what goals you’re trying to achieve with your marketing at this point. And it’s obvious that the success of our campaign really depends on what the goals that we set. So we would love it if you guys could kind of talk a little bit about what is successful CRM in your eyes and also if you could give any tips to brands that are considering migrating or creating a hybrid between the different business models, that would be wonderful.
Jessica, do you want to start us off?
– Sure. Well, for us, we maybe skew a little bit different from everyone else because CRM is relatively new for us. So we’re really working…successful CRM for Paul Stuart is trying to translate what has worked for us for 80 years outside of anything online and anything like, highly quantitative and now taking all those tools that we have at our fingertips and bringing it into the modern era and being sure that we are differentiating ourselves with our messaging with really engaging stories and content.
– Do you have any tips in transaction, keeping people young, staying away from the grave?
– How do, how do we Benjamin Button this situation?
– Yes, exactly.
– I think that’s a partnership between our brands.
– So at this stage of Culture Trip’s lifecycle, acquisition is very important to us as well actually. So the focus of our campaigns right now is really mindshare and brand recognition.
So we are actively looking for new audiences and in a very competitive space. And so it’s important to us that Culture Trip is recognized as a brand. But we have a very long view as to the value that we like to offer our audiences.
And so CRM has exceptionally quickly become the top priority for the marketing team. Because as I mentioned earlier, it is incredibly important to drive value for those 18 million uniques that we attract and to make that relationship ever more engaging and ultimately more efficient for those marketing campaigns.
So CRM, for us, is definitely the beginning of a relationship with our audiences and a patient one too. I think this has kind of been my biggest learning in this role, is that it’s the long game used.
You acquire these customers, you get them to engage more, you introduce a new product category to them, and if it happens to be transactional, you make sure that it is delivering value. So that’s kind of my view in this.
– Thank you, Natalie. Stephanie?
– For Lucky Vitamin being in the health and wellness space, it was really, for us, about figuring out who’s living the wellness life. So really the customers who are buying across a lot of categories regularly like home products, supplements, fair-trade foods, cruelty-free beauty, these are the customers that are going to be our VIP customers who are by default going to be displaying all of those KPIs that we really want to model the rest of our customer base after.
So they’re going to have better frequency and recency, better longevity, higher AOV, higher future lifetime value. And it’s really about figuring out how do you incentivize and to encourage those kinds of behaviors within our database to grow our VIPs as well as finding lookalikes that we can acquire into our database who also model those same behaviors.
And as you said earlier, for example, in your presentation about how when you discover that, you know, your VIPs were 7x the value compared to your lower tier customers. So ultimately, I would say that it’s really about defining for your own business model and value proposition what living the life looks like for your ideal customer base.
And then actually cultivating a customer base that models that and then you’ll be able to develop a returning customer who will come back to you again and again.
– Gloria, I’m sure everyone is dying to hear tips from you though, so, I’ll skip over the…
– We’re out of time, though. First…I’ll try to make it quick, but when it comes to campaign analysis, you have to know what type of campaign it is. Right? So quick example is the video, the last video we showed, that is a brand perception campaign where we’re trying to shift perception of our brand. Then the metrics you want to monitor is very different from like the how it works video that had end card of $5 for this, right?
So you have to make sure you upfront know what type of campaign and what metrics you’re trying to move the needle on. That’s number one. And then I think for a successful CRM, you have to make sure you don’t retain the campaign analysis, but you’re really thinking about how you’re going to spread that to the organization, right? Much like the personas, how are you then informing the merchants, informing the acquisition teams?
And, you know, for us right now, it’s a matter of how do we partner across my team and the acquisition team to make sure they are acquiring the right quality of customers to make our jobs easier to increase their lifetime value and retention with us. So to me, those are kind of the big takeaways in terms of campaign analysis.
– So thank you very much, everyone.