Episode Transcript — 1-click Loyalty Programs w/ Stuart Arsenault of Smile.io
00:00 Speaker 1: You're listening to the Spend $10K a Day podcast brought to you by the performance marketing experts at MuteSix. This is your source for cutting edge insight into the world of online advertising from the team with more Facebook case studies than any other agency on the planet. Here are your hosts, Steve Weiss and Stewart Anderson.
00:24 Steve Weiss: Alright, everyone, welcome back to another great episode of the Spend $10K a Day podcast, hope everyone is excited for the holiday season coming up and that said, we have an awesome guest here today, we have Stuart Arsenault from Smile.io. Stuart, thanks for joining us, man. I really appreciate you jumping on.
00:44 Stuart Arsenault: Thanks for having me, Steve.
00:45 SW: Yup. So Stuart, before we jump in, tell us a little more about yourself, what's your background, how did you join such a great organization like Smile.io, then we could dig into more the strategy side of how to integrate your rewards into your purchase. Well, how do you integrate your consumer value and really extend that LTV by having a close-knit relationship with your buyers?
01:10 SA: Yeah, sure. I've been at Smile.io for about a year and a half now. I took marketing in school, I worked for a small communications and PR firm, and then I'd actually played soccer with the CEO of, at the time, Sweet Tooth and then became Smile.io and then this cool organization that was growing. And when I joined the company, there's about 20 people. So that's how I got connected because I had played soccer with Mike, about 20 people. I was the second person on the sales team and that team is now six people, our total like customer client-facing team is about I think 12 or 13 people now. And so, now I'm in the role of rewards specialist, which means doing some stuff on the sales side, also we get to touch a little bit of our launch management team and some of our success management team as well.
02:06 SW: Cool. So tell us what Smile.io, the solution it provides for some of the biggest and greatest e-commerce sites. Why would me as an e-commerce brand work with Smile.io? And what are some of the results that you've seen from working with Smile?
02:26 SA: At Smile our job is to build beautiful reward programs for online businesses. And so what that means is we're hooking into all these different e-commerce sites to provide loyalty and reward programs. So that could be a points-based program, it could be a referral program, or a VIP program and really it comes out of sort of this... The e-commerce landscape is really, really good at attracting new customers and new customer acquisition, and that's what you guys do at MuteSix and that's what the podcast is all about is Spend $10K a Day, but we see all these people driving new customer acquisition and not keeping their customers. So it's a pretty greenfield space where we can go into some brands and have like a 2x increase in their customer lifetime value just because we're getting such low-hanging fruit on trying to get those customers to make their second or third purchase.
03:21 SW: What are some of the tactics that... This goes back to a bigger picture of, as a brand how do I integrate a rewards and loyalty program and then number two, what type of brands usually integrate? 'Cause obviously there's some luxury brands who don't... It might not be 100% fit for but it's kind of a two-thumb question is, number one, how do you design a loyalty program for your brand? In your own words. Number two, what type of brands are perfect fits for these type for loyalty/rewards program?
03:56 SA: It's a really good question because historically loyalty programs have been pretty narrow. It's been a point in space rewards program where you're getting points for making a purchase, maybe you're getting points for making account creation too, and then you're spending those points for different rewards in your store. And this narrow view of a rewards program only worked for a subset of all retailers out there. And so, we absolutely fit that mold and we can work with a lot of those retailers and those are the ones that have high repeat purchase rates or very consumable product, something that somebody's buying on a regular basis, but we wanted to expand what that might look like.
04:40 SA: So you mentioned luxury goods. A luxury brand might not want to have points on their store but they still have a need to actually drive repeat purchases and drive brand loyalty. So we're experimenting with things like VIP programs that don't have points at all, just have purely revenue based VIP programs, giving people different experiences and treatments as they're going into these new tiers. I guess I've jumped to the second part of your question before I tackled the first. As far as how you could actually implement the program, that is simple as on some platforms, it's a one-click integration, so that would be like Shopify in big commerce, on things like commerce cloud, like Salesforce Commerce Cloud or three, even Magento, they can use our API and so it's a little bit more involved if it's there.
05:32 SW: That's interesting so it's really important to differentiate as a brand how you keep communicating with your customers. I wanna talk a little more about the luxury side because there's a lot of brands launching in the luxury space and it's becoming harder and harder to really forge a long-term customer relationship in the luxury market. Can you give me an example of a VIP program that you guys made for a luxury brand? I think that's really interesting 'cause now you're rebranding it something unique, you're making it exclusive. And I think the way that the future of rewards and loyalty programs is more or less around creating new unique experiences.
06:14 SA: Yeah, yeah. We actually have our first pointless, no points involved VIP program that's about to roll out, which makes me mad 'cause I can't say the name of the brand. But we've been doing work with a few luxury retailers right now in that space. The one brand that we work with, it's called United By Blue, they're more of a lifestyle brand, selling really cool apparel products, and they have put together their points program. It's still based on points, but they took the angle of more luxury appeal to the program. And I'll send over the link for the brand that's launching their VIP Only Program so you can include it in the show notes. But there's a really cool community building up around, like the luxury goods space. Lean Luxe, it's a great newsletter. And we're looking at doing more in that area around the luxury world.
07:15 SW: Cool. Awesome. Let's talk a little bit about result. Obviously, you can't share the exact brands that you're integrating on this non-points program, but let's talk a little more about results. Tell us more about some of the actual results from retention, some of the data that you guys have been coming as a solution really helping drive retention revenue from integration to results. Feel free to choose any one you see fit. But love to understand how you guys actually quantify, "This is what we did, we came in, we crushed it."
07:51 SA: Yeah, absolutely. At a high level the biggest result we're always looking at is increases in Customer Lifetime Value, and so we're seeing upwards of 2x increases in the Customer Lifetime Value. But that's a little bit more nebulous so we can get specific with different brands on actual specific metrics that they wanna increase. An example is, we worked with a company called GONGSHOW, which is a lifestyle hockey apparel company. And GONGSHOW wanted to improve account creation because they knew if they got people with accounts, they could re-market to those people better, they could actually get more content in front of them. And so, all they did is just throughout the customer journey, they referenced the rewards program in a bunch of different places and then on the cart page they said to their customers, "Sign off and actually create an account before you check out, or else you'll lose all of these points." Then they've calculated the number of points that they were gonna get. They saw a 77% increase in the number of accounts created versus guest checkouts.
08:53 SA: And then the other piece that we have is a launch campaign. So customers are targeted with all this junk every single day with, "Hey, come for this sale, come for this sale, come for this offer." And what we see is when they can launch a rewards program or when merchants can launch a rewards program, they got a really unique opportunity to communicate with their customers in a positive sense. Without actually asking for anything, they're just saying, "Hey, we're providing this for you because we love you as a customer and we want you to be a part of it." So inkbox, which is a cool temporary tattoo company out of Toronto, they saw $100,000 in new revenue in the first month after their program launched because they were able to really roll it out across all their different channels.
09:37 SW: So there's two very interesting elements that I think are key in developing a rewards program for your brand. I think, number one, understanding what equals a good customer, what equals a valuable customer. I think the hockey brand you mentioned said that a customer that creates an account with us is a great long-term customer, it's gonna increase LTV. Maybe one of the first steps to creating a rewards program is to figure out, what are the traits of your best customers. What are they doing? Are they creating accounts? Are they purchasing once a week? "Purchase from us once a month and you get this reward." What are the traits of your best customers? And I think that's what I learned number one when design is... Correct me if I'm wrong, that's the number one trait is really understand what are the traits of your best customers. Correct?
10:29 SA: Yeah, absolutely. And it's not just the traits but it's what do you want to drive more of, as a retailer. So this point system or a reward system gives you a mechanism or a lever to drive more of different customer actions. So you might really wanna drive more shares on Twitter or more likes on your Facebook page and you'll give more points for those actions to incentivize them for your customers.
10:54 SW: That's a really interesting way of looking at rewards and loyalty. I think that's the easiest way of looking at it, it's taking rewards and loyalty and saying, "You can use this as a flexible way to drive any consumer action that you want that's integrated within to your brand." Let's talk a little more about that brand you just mentioned that drove $100,000 in revenue from rewards. Tell us a little more about that integration from start to finish. I know a lot of people, a lot of our listeners they're always trying to figure out, "Well, what type of tech implementation, what type of strategy around my reward program and my points program? How will users react? How will my customers react?" I think there's a lot of skepticism about this 'cause they don't wanna devalue their brand, and I really wanna dig into a couple specific examples of these and then talk more about the integration side.
11:48 SA: Yeah, absolutely. So when inkbox came to us, they were pretty similar to what you just described. They know that there could be some upside but they also were nervous about it because it's like, "Ah, loyalty, I don't know." And so, what they did is, they put together this beautiful landing page on their site. So you went to inkbox.com/pages/reward, you'll see their landing page that they put together, and it does a fantastic job of explaining the program. And then, when they rolled out their program, they just had email campaigns and different messaging that went out to their existing customers, letting them know about their campaign launch and their program launch. And when they came to this page, they had this beautiful experience that clearly it's been how they could level up, how they could earn points, how they actually interacted with the program. And that's the biggest thing that we see is, one, if it doesn't fit your brand, that's gonna kill the program right from the get-go. If it just doesn't fit your brand, if it looks like it's bolted on.
12:54 SA: And the second thing that causes rewards programs to fail is if it isn't intuitive. So if your customer comes to the site and they don't immediately know exactly what they have to do, to actually earn points or to spend their points, they're gonna check out right away. They don't wanna do any work. And so, the best roll outs are the ones that obviously use our solution to the best of its ability and brand it properly, but also build in all those extra things: Build in an email campaign, build in the landing page, build in communication through your social channels, and actually train your support reps on the program, and your customers are gonna have a great experience.
13:33 SW: Awesome. That's really interesting. So number one, what I'm gathering is simplify this process. You don't wanna disrupt the customer from making a purchase. I think that's key is simplify. [chuckle] You don't wanna confuse them 'cause they're on the buy page and you're asking, "You get 400 free points. Click here." Then they go into another page. No, you really, really wanna simplify it. So number one, simplify. Number two, it sounds like you wanna build a full customer journey around getting people integrated into the loyalty program, so maybe a dedicated email with a landing page that you built specifically for this. Maybe even a Facebook campaign, a remarketing campaign, just get people into the loyalty program, maybe your current customers. That could be another really interesting idea. I just think it's really interesting how brands are tackling this retention. Keeping close communication really personalizes customer experience for a number of these different customer experiences. So, it's interesting. Can you talk a little more about the do's and the don'ts of integrating a loyalty program? What do people have to watch out for? What have you seen that's been like, "Wow. They integrated that wrong and this is what happened."? What do people need to watch out for if they're gonna integrate a loyalty program?
15:00 SA: The biggest thing, which we've actually gotten pretty far away from so it doesn't happen too often anymore but when it happens it's a disaster, is if you just give away way too much off the get-go, and you actually do a good job rolling out your program, you're done. Because then your customers love your program because it's been communicated to them really clearly, but it's totally unsustainable. And so now what happens is six months a year down the line, they're gonna have to claw back that program, and you're gonna have some angry customers on your hands. The biggest case study of that is, Birchbox. Obviously, everybody remembers when they had their program, or you can look up just Birchbox loyalty program, and you'll see just so many angry customers because they had this really well put together program, but they were just giving too much away. Setting it up unsustainably, giving away too much is the biggest issue that we see. And then the inverse of that is being too stingy. So if you're not giving anything away, then it's not gonna make any customers mad, but you're just gonna waste your time and money because nobody's gonna actually get involved in the program.
16:09 SW: It's really interesting so don't make too many changes to it. Consumers who are gonna buy and who are part of the loyalty program, they wanna know that there's value in having these points or these loyalties. That's really interesting. Tell us a little more from step one, to step two, to step three, what it goes to integrate Smile.io, if you're a Shopify site? Obviously, did you guys have a Shopify app which is super easy to integrate? Let's go through what that step, what that process looks like.
16:40 SA: Yeah. If we're actually working with a Shopify store that's launching a rewards program, what's gonna happen is they'll install our app, that's gonna get the... We offer it through like a panel interface, where the customer can interact with the program. That'll get the panel installed on their site. They'll sit down then with one of our launch managers to work through their goals for the program. What are they actually looking to drive? What are the metrics they're looking to increase? Is it purely just customer lifetime value, or are they're trying to get some of the advocacy pieces together, too? And then with the launch manager, they'll actually put together this model for their program. "We're giving X amount of points, X percent back," and the launch manager will help them implement that. That takes maybe an hour-long meeting to figure all of that out. And then we've start working on collateral. Designing the actual panel itself, which is the images and choosing the language that you want. We have explainer page templates that they can use, and then often merchants will go and build out some email campaign. We have integrations with Klaviyo, MailChimp and HubSpot, which are three of the big ESPs in the Shopify space. It can build out email communication through that. But, start to finish, we see some Shopify Plus stores rolled out a program in a day or two. Our average time is between one to two weeks to get a program live.
18:07 SW: Yep. That's really, really interesting. Number one, you're talking to an... You sign up, integrate the app. Two, talk to an expert. Literally, you'll explain what the goals are. What about strategy? Does your team help with the strategy aspect of what types of rewards, what type of action should I try and be driving? What have you seen from your experience are the best type of actions that you can drive from these types of campaigns? Whatever you see has been the major wins?
18:40 SA: Yeah, the major wins that we've seen... One really interesting one that's not quite intuitive is, we have an integration with ReCharge which is one of the subscription billing providers on Shopify. When you look at subscription billing, they're trying to fight churn. They have subscribers sign up. They want to make sure that they stay subscribed. And so we've been targeting VIP programs at these churn-points. Running a VIP program based on dollar spend, and then saying, "Okay, at $200 that's where we're losing customers 'cause they've just made their third purchase. They normally don't stick around for the fourth purchase. So let's get them up into the second VIP tier, give them some entry incentives for that, and make them feel just super special for getting into that tier." And we've seen the churn numbers cut down. That's one that is kind of niche and wouldn't be as intuitive. As far as more broadly speaking, the way that we've seen rewards work, you're able to give things like free products which gets people trying out different stuff on your store. But really just the key with reward is you want it to be as simple as possible. We actually integrated right into the checkout experience on Shopify Plus, so they can just slide up the amount of points that they wanna redeem, apply it to their card and they get to use it.
20:04 SW: That's really cool. Interesting. Tell me more about where the loyalty reward program is now, where it's going. Obviously, I'm a member of Frequent Flyer program, American Airlines, Delta, SkyMiles. Those are some of the legacy programs that the history of this loyalty space. What do you think, knowing now how simple it is integrate Smile.io, and how a lot of these brands are leveraging these types of loyalties to both generate new customers, generate shares, generate all these other types of actions, what do you think is the future? Where are we a year from now in this really unique space of loyalty and customer loyalty stuff?
20:48 SA: Yeah. When Smile.io started, it was called Sweet Tooth Rewards at the time and this is back in 2011 on Magento, exclusively. They were on a E-commerce platform called Magento and they literally just said, "There's no way for people to reward their customers, we wanna do that." And they put out this first B1 version of a rewards module on the Magento platform and since that time, since 2011 to now, rewards providers and Smile.io have gotten really good at implementing beautiful, easy to use rewards programs. And so the next step from here, now that we've nailed the, "It's simple, easy to integrate it, easy to get started." The next step from here, we're looking at, one, how do we build out the developer community on top of Smile.io? How do we have somebody who wants the reward for, this random action to be able to build that onto smile, and then have other merchants use that? How do we have all of these different disparate systems that merchants and retailers are using to communicate with one another?
21:56 SA: We launched our first version of Smile Apps with our integrations earlier this year and we're gonna be adding quite a bit to that, so making Smile work with everything that you're using. And the second thing is making it seamless for the customers. We operate through a panel on your store which is very, very integrated and it does look really smooth for the customer but we want to get to the point where it's just absolutely no different, the customers has no idea. They are seamless through the experience of the rewards program and your site.
22:30 SW: Interesting, really interesting. Let's go back to that one point you made about actions. Each reward or each loyalty reward, you wanna get an action or results from it. You're gonna give away 500 points, you wanna get them to do this action. How do you choose which action of your store that you really wanna focus on? How do stores really look at that and say, "I wanna focus on one action or three actions, or five actions?" What have you seen has been the best ways to go about choosing which action you really wanna get the most out of for your businesses? It's gonna make the most meaningful impact?
23:10 SA: Yeah, so we look at... Obviously, just initially what excites merchants, but then the easiest way is to put it in real dollar terms. If you're giving one point back for a dollar spent, and then 1000 points equal a $10 off coupon, each point is equivalent to one cent. Then when we're talking with the retailers putting it in that real dollar term, makes things much more tangible for the earning side. Instead of saying, "Hey, we're gonna give 200 points for sharing on Twitter." You're gonna say, "Hey, we're giving $2 for a Twitter share." Is that something that you are willing to give up? Is that what sharing on Twitter is worth to you? Or is it worth less or more? And put it in those real dollar terms, makes it a lot easier for us to decide, what are we actually gonna give points for and how many points are we gonna give?
24:01 SW: It's really interesting. Quantifying that, do some customers apply that to the customer acquisition? I wonder if there's a way to actually apply some of those actions. Let's say you're giving $2 back. Do you apply that to the return on ad spend or the ROAS? Do you have people who use Smile.io who are really sophisticated with their data and can really back these different royalty rewards? This CPAs and ROAS.
24:27 SA: We don't have people who are doing that on the acquisition side because Smile's primarily function in post... Like initial customer acquisition. The customer is acquired and then we're trying to get them to make the second and third purchase. Where we do come in from the acquisition point of view is like the second order revenue for the customer. You got someone to come in through a Facebook ad, they made an account, made a purchase, they got involved in the rewards program. We have them making a second and third purchase, and now we're turning them into a brand advocate. And that's where brands really blow up. When they can get those loyal customers to start advocating on their behalf. And that second order revenue has phenomenal implications for the company.
25:13 SW: Got it. Interesting. Interesting. Mainly all focused on e-commerce, everything is centralized, they make... I guess are some of these loyalties, are they integrated into the drip, into the segments of literally if someone makes a purchase, and then I guess some of these reward emails are integrated into the e-commerce flow of the emails. Correct?
25:39 SA: Yeah. If they're using one of our email integrations, then they're getting loyalty data in there. And we even have some more sophisticated brands taking their customer data from Smile and building out ad campaigns on it. You can imagine a third tier customer is probably worth a lot more to you than a first tier customer just to visit there. Taking that third tier data, building the look alike audience in Facebook and running campaigns based on that, I've seen some success too.
26:07 SW: When you say, like third tier, what... Explain that.
26:10 SA: It's like in our VIP programs, it's normally based on a tiered system. What that means is, as somebody earns more points, or spends more on your store, they're gonna move into a new tier of the program where they get different perks and benefits and accelerated earning within the program. If somebody's in the third tier, that means they've probably spent like upwards of $1,000 in a given year. They've probably completed a bunch of your other actions, too. And in short they're a really great customer for you. If you can take a list of say a thousand people that are all in this third tier, those are your power users and your super users on your site and you wanna get more of those people.
26:51 SW: Is there an audience onboarding process between Smile.io and say a Facebook? Can we automatically build in these audiences around all the different tiers of Smile yet? Or is that a feature for the future as well?
27:05 SA: There's not an integration there. It would all be through exporting data from Smile.
27:10 SW: Got it. Okay. Interesting. Just trying to think of other ways to really leverage this data of... You have people, you have specific segments of people who are reaching different tiers. Do you see people advertising the loyalty program directly on Facebook trying to maybe attribute people who are part of the loyalty program all the way back to Facebook as an acquisition source?
27:34 SA: Yeah. I'm working with the... We're working with a brand called Kettle & Fire, right now. If you listen to Tim Barron's podcast, they advertise on there sometimes. And this is one of the ones where I've got to jump in on the launch side which is always fun. And so I was working with their team and what they're really trying to do... It's a subscription-based business. And so what they're trying to do is if somebody comes to the site, and either makes a purchase, doesn't make a purchase, but ultimately doesn't make an account, so using the loyalty program as a way to incentivize them to go create that account. They're entering this whole post purchase flow if they don't create an account, trying to follow them towards that account creation, referencing the loyalty program through the whole way. I don't think we have any ads up running yet, but I wouldn't be surprised if that's something that happens in phase two.
28:25 SW: Interesting. That's really interesting. Alright, cool. Well, I think that's all the questions I have. I think the loyalty spaces and the rewards space are something that I'm always keeping a close eye on because that's what drives retention and allows us to spend more money on the front end to drive a new user acquisition. It's one of the main... Besides just saying, "We do email marketing. We do drip segments." When you have a loyalty program on the back and you're really good at that specific area of retention, then you could go to our Facebook team, or go to MuteSix, or go to Facebook directly and say, "Hey, now I could spend a little bit more to acquire this customer because I'm confident that I could squeeze a lot of juice out of the back end of this customer."
29:05 SA: Absolutely. It's a lot easier to be able to justify spending that 10K a day when you can say, "Hey, I can get $200 out of this customer as opposed to 50 or I can like 2X my ROI."
29:17 SW: It's a form of predictability. I think that's what everyone's looking for. Everyone wants predictable revenue. And predictable revenue is the best thing you could have so, cool. Do you have any questions, any discussions points that we touched on that you'd love to provide a little bit more clarity, a little bit more depth into? Feel free to take the stage before we wrap things up.
29:41 SA: No. I think that was good. I think though, the one piece that's gonna be really interesting is how merchants and retailers are using this data going forward, which I know you touched on. It's not something that a lot of people are actively thinking about, right now. Currently, as we're looking at the average Shopify store that has a rewards program up and running. They are running it. They've seen success with it and they have a data fit in their rewards program. But it'll be interesting as you reference with applications to advertising and applications to different areas, how people actually go and leverage that data over the next year or two.
30:17 SW: Another way to think about it, even building a community around your evangelists. Let's say you have a 20,000, 30,000 people in tier three of your reward program. What if you just build a small social community, whether it's a small group on Facebook or just something to bring all these people, all these like minded people together. And then you have events for those people. Just really starting to think of these as a group. As a group, how do we instead just push new products to them, but how do we unite people and that's something I'm always thinking about.
30:45 SA: Yeah and there's a company called Stormify that did that type of approach with their rewards program. They had a really niche use case for Smile where they didn't wanna roll it out to all of their end customer. They have a subset of their customers called style advisors. Stormify is a brand that does a bunch of stuff for college dorm. They're marketing to women and that 18 to 22 or 23 year old range. And then they're doing like some post college stuff. They wanna do these style advisor programs and it's highly based on these tiers, where as customers interact with a program more, as their style advisors interact with the program more, they get these exclusive experiences. I think they were talking about doing a Facebook group and I've had a few brands talking about doing that. But building the community around the site for your best customers is definitely an angle that you can take with it.
31:44 SW: Really, cool. Alright, cool. First off, I really appreciate you taking some time out of your day to speak on the Spend 10K a Day podcast. To all the listeners out there, I highly recommend checking out Smile.io. You really wanna hike up your retention, COV of customers who purchase your products in your store. Really check them out, consider building a loyalty program. If people have questions about what goes into building a loyalty program or they have questions about any... This is new to a lot of people. Obviously most people are focused on the user acquisition, the customer acquisition side of their business. But they really wanna understand, what goes into building this out? How do I do this in a very delicate way without pissing off my best customers? Do you have any resources? Do you have any... Can they email you directly? Is there any people they should be following etcetera, etcetera. This is a topic that I'm very interested in as well.
32:42 SA: Yeah, so we publish a ton of content. It's all on sub domains on our site, learn.smile.io where all of our ebooks, our case studies, all of our library of in depth guides are. And then blog.smile.io. We publish three times a week on there with relevant loyalty advice. You can absolutely e-mail me directly. That's email@example.com. S-T-U-A-R-T as opposed to your sometimes co-host, Stewart. [chuckle] But absolutely e-mail me directly and that would probably be the best two ways to get resource with us.
33:21 SW: Appreciate your time, Stuart. Thanks so much for taking time outta your day. I know we've been trying to connect for a while and appreciate your shares and golden nuggets and I'm sure we'll get a lot of other people reaching out saying "That's awesome". Trying to learn more about setting up these types of programs.
33:38 SA: Yeah, anytime I'm talking to people in the Shopify space especially and we're talking about paid acquisitions, everyone just says you have to talk to the guys at MuteSix, so it's cool to finally connect.
33:50 SW: That's awesome, man. I really appreciate that. It shows that we're doing a good job. But likewise, if I hear anyone mention the word re-retention, they're coming your way. They're coming over to Smile. [chuckle]
34:01 SA: Awesome.
34:01 SW: Take it easy man.
34:02 SA: Yeah.
34:02 SW: Appreciate it.
34:03 SA: Have a good one.