One of the biggest trends to be aware of in ecommerce today, is conscious consumerism.
Loyalty Strategy

Cracking the Code for Sustainable eCommerce Growth

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An Executive Interview With Charlie Casey, CEO, LoyaltyLion

The Wise Marketer (TWM): Executives in the loyalty business seem to have varied backgrounds. Can you fill us in on your background? Have you always been in the loyalty marketing industry, or did you start somewhere else?

Charlie Casey (Charlie): I started somewhere very different. I had always wanted to be an entrepreneur. So much so that I started my first business as a young child, selling chicken eggs on the side of the road. However, after spending my final year of university building lists of business ideas rather than revising, I graduated and undertook a placement year at the Foreign and Commonwealth Office. 

I then went on to become a technology consultant at Deloitte with the aim of gaining exposure to as many businesses as possible. But it wasn’t long before I felt pulled back to my passion for entrepreneurship. I wanted to build a successful business, but I wanted it to be something that would help other entrepreneurs solve a significant challenge. A challenge that was only going to get worse over time. The challenge of engaging and retaining customers online.

TWM: Can you quickly tell us about LoyaltyLion?

Charlie: LoyaltyLion is a data-driven loyalty and engagement platform, powering sustainable growth for over ten thousand ecommerce businesses around the world. Brands use LoyaltyLion to create a loyalty program that goes beyond points and rewards, driving greater customer lifetime value, and cost-effective acquisition through better customer relationships.

TWM: Now focusing on the reason for this conversation. eCommerce success and ad spend seemed to have always gone hand-in-hand, but as your new report Community Matters: Crack the ecommerce growth formula details, there is a major shift that is telling us that “there are other ways”, such as building a community of insiders. What do you think are the hottest sparks that have ignited these shifting opportunities?

Charlie: At LoyaltyLion, we believe that we have now entered a new phase of ecommerce — the ‘opt out era’. The last twenty years have been a golden age of ecommerce. Self-service platforms like Shopify, BigCommerce, and others have seen the world of online retail change beyond recognition as ecommerce became accessible to all. It wasn’t just ecommerce that became accessible, but customer data, too. From the introduction of cookies in the 90s to the ever-growing collection of affordable acquisition channels like Facebook, Instagram and TikTok, marketers have been able to unlock and use a treasure trove of customer data. 

Fast forward to today and that window of opportunity is quickly closing as GDPR, iOS updates, and the coming “cookiepocolypse” are all impacting a marketer’s ability to understand and communicate with individuals.

As we try harder and harder to counter this opt out by reaching and acquiring more new customers, those channels that were once affordable are becoming less so. Digital advertising spend is forecast to increase to over 600bn dollars worldwide by 2024. 

As a result, marketers are left bearing all the costs of maintaining footfall, but are unable to collect the data required to deliver the personalized experiences that will keep customers coming back. Enter the Insider Community — the key to building longer-lasting relationships and encouraging customers to continue to share data and opt-in to your marketing. 

TWM: Do you think the past 2 years of Covid madness have altered these trends? Or did they just accelerate them? Was it happening with or without the pandemic?

Charlie: I think the opt-out era was inevitable at some point with or without the pandemic. However, I do believe that the past two years have accelerated things in some ways. Firstly, the pandemic saw more and more offline brands move online alongside swathes of new ecommerce verticals launching. This has left customers receiving more and more marketing messages and in truth, they are overloaded. 

Secondly, with more time on their hands, consumers did a lot more shopping and tested out a lot more brands and as a result their standards became more exacting. They became more and more aware of what they wanted from the brands they shopped with, and less willing to settle for poor experiences.

As consumers became savvier, they were likely to be increasingly concerned about how their data was being used and shared so the opt out era was unavoidable. However, we certainly got there sooner than expected with big players like Apple moving the goal posts along the way.

TWM: Back to your ecommerce report. It groups customers into four very intuitive, self-explanatory categories: lurkers, supporters, drifters, and insiders. The report states that Insiders are the key to community building. Should brands ignore the other 3 groups? If not, what percent of focus should they allocate across the 4 groups?

Charlie: A great question, and absolutely not. The beauty of your Insider Community is that it takes little marketing effort to maintain it. Your community can become a self-sustaining environment that delivers continuous benefits to its members, and this frees up your time to focus on the other groups. 

Lurkers and Drifters certainly shouldn’t be ignored, and can be won over with effective win-back messaging and incentives that nurture these groups towards a next purchase. However, the value you will see from your relationship with these groups versus the effort you have to put in to engage them will be lower. Therefore, I would recommend placing the highest effort on those who are most likely to respond and drive ROI. In this case, that’s your Supporters. 

They already like your brand enough to repeat purchase and engage with your content and marketing messages. They just need a nudge into the top tier where they will start undertaking the activities that are most valuable for your brand such as advocacy and referrals. 

They are also more likely than Drifters or Lurkers to share — or be open to sharing — their data with you. So, with the right integrations, you can demonstrate that you’re using that data responsibly and to drive personalized experiences that turn Supporters into Insiders. For example, personalized loyalty emails that show you understand their individual shopping preferences and behaviors.

This group makes up the biggest chunk of your customer base — typically around 50% of your customers will fall into the Supporter quadrant — so there is significant opportunity to drive greater returns here.

TWM: Your report details the most motivating factors. For brands just starting out on going beyond traditional tactics, how and where can they start? What factor(s) should they focus on first: Transactional perks, experiential benefits, or brand alignment?

Charlie: Transactional perks will always have a place in a loyalty strategy, but brands that rely too heavily on discounts or rewards based on money off, will find that they are eroding their bottom line — and potentially their brand reputation — over time. 

We know that consumers react very positively to the feeling of exclusivity and the idea that they are receiving VIP treatment, so I would not delay exploring experiential benefits and rewards that promote this feeling.

Many experiential rewards such as early access to sales or new product lines are very cost effective and can be deployed quickly and easily to an entire member base.

However, other experiential rewards such as free or next-day delivery or exclusive access to product bundles can still come at a cost. The best place to start with these is to identify who your most valuable customers are, and ensure they get the most VIP experiences, and work backwards from there. For example, you might offer your top tier program members free next-day delivery, while customers in the tier below can only access free standard delivery, and non-members receive no delivery perk at all. 

This not only ensures that your most valuable customers feel recognized and rewarded for shopping with you but ensures that those who are yet to reach Supporter or Insider status feel that they are missing out on something special, and that there are rewards that are worth working towards on the horizon.

TWM: How can brands track and measure whether their efforts are effectively developing Insiders? Do you have KPIs?

Charlie: Your Insider Community should be managed in the same way as any other marketing activity — with a clear strategy, and clear KPIs outlined from the outset. At LoyaltyLion, we encourage ecommerce brands to think carefully about a wide range of metrics to understand the performance of their community. As you invest more in retention you will see some of your basic loyalty metrics changing.

KPIs around program enrollment and engagement can easily be tracked. For example, LoyaltyLion customer Ozone Coffee saw that their enrollment campaign had great results with 4 in 10 of their customers now program members and those members making up 63% of the brand’s orders.

However, brands can also track the impact of their community on revenue by looking at metrics such as repeat purchase rates and average spend. For example, REN Clean Skincare can see the value of their Insiders via these two stats: they have a 104% higher average order value than regular customers and spend 271% more overall.

If your Insider Community is strong and having a positive impact on your bottom line, then you would hope to have a decrease in your cost per acquisition and a decrease in customer churn. As well as increases in user-generated content and in referral revenue as more and more Insiders recommend you to their friends and family. 

TWM: Stepping back and thinking about the general marketplace, what do you think are the most prevalent trends in consumer behavior to watch today?

Charlie: One of the biggest trends to be aware of in ecommerce today, is conscious consumerism. More and more, shoppers are making purchasing decisions based on what their heart tells them rather than their head, and they are opting to shop with brands who align with their personal values. We’re seeing brands who incorporate value-based incentives such as charitable rewards into their loyalty programs have great success connecting with their customers on a longer-term basis. 

Retailers also need to ensure that they are delivering consistent omnichannel experiences. As the world returns to normal, shoppers are interacting with brands everywhere and on every device. The brands that will win are those who recognize their shoppers everywhere they interact, and allow them to access loyalty programs whether they are shopping online, in-store or via mobile. 

Finally, brands need to be aware of the impact that the cost of living crisis could have on consumer behavior. From cutting down on subscriptions, to increasing the time between their purchases, consumers may start to tighten their belts. As such, brands need to find ways to interact with their customers more in between purchases, with less of a sales agenda. This will help them to achieve an ongoing relationship that ensures when the shopper is ready to buy again, their favorite brands will have inspired them, rather than have caused them to unsubscribe with too many product-related messages. 

TWM: To connect with customers, what do you think has the greatest influence: technology, great marketing copy, or the offer itself? Or is it something else?

Charlie: Every element of a marketing message is important, but the key thing that today’s consumer is looking for is personalization. They want to know that brands recognize them as individuals, and that any data they share with them to help them do that is being used effectively and responsibly.

This makes technology your most powerful weapon when it comes to connecting with customers. With an integrated technology stack, you can ensure that individual and unique loyalty data is being passed into every marketing platform you’re using. From your help desk to your ESP (email service provider) you can access and use data such as points balance, tier status, and available rewards. 

In turn, this means that every marketing message and interaction can be personalized, helping you build stronger and more rewarding relationships with your Insider Community, and drive a greater ROI from each of your marketing channels.

TWM: Planting the soapbox firmly in front of you, what would you like to say to the marketing industry that needs to be heard today?

Charlie: Over the course of the pandemic, we saw the marketing industry adapt, react, and change as never before. Change is predominantly seen as scary and negative, but in this case it was forced upon us, and marketers had no choice but to embrace it. And in ecommerce, we saw brands do some amazing things as a result. From moving entire operations online, to pivoting to online stylist and fitting consultations in a matter of days, brands who adapted became equipped to provide the same personal touch online as they did offline.

I want to see brands continue to do this. If they do, we’ll be one step closer to solving the age-old problem of how to give loyal online customers the same great experiences that they receive when they go in store. We’ll also see more marketers doing the effective thing instead of everything. We should do our best to remain focused on the activities that have the biggest impact, keeping marketing efforts centered on customers with the highest lifetime value, and working with the tools and technologies that create the greatest efficiencies and drive the greatest ROI.

Cracking the Code for Sustainable eCommerce Growth
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