Merchandising
Editor’s Note: If you missed the news, Repeat is merging with Stamped. Mike Berardo is guest posting this newsletter to explain the why behind the merger and, in traditional newsletter fashion, all into question some components of brand execution and consumer behavior.
Earlier this summer, Ridge CEO Sean Frank had a viral post about a trip to Kiehl’s.
He went to buy stuff he usually buys—$200 worth—and walked out without paying for it, thanks to loyalty points he didn’t know he had. It was proof, he said, of why he hates loyalty programs.
You might be surprised to hear it from the CEO of a company that sells loyalty software, but Sean has a point: Loyalty can be cannibalistic and it can be useless, like it was for Kiehl’s here.
It’s no secret that many in our industry have grown skeptical of loyalty programs. Sean’s thread is really just someone saying the quiet thing out loud.
The reason for that, I think, is that the loyalty program space began to promise something that wasn’t defensible. Selection bias is a real hurdle in proving a loyalty program’s impact, and many players in the space haven’t wanted to expend the effort to clear it. And I don’t think they’re alone. Plenty of brands don’t want to spend the time necessary to clear that hurdle, either.
Because of that, I think there’s an opportunity for us at Stamped to show Loyalty’s value in another, easier to measure way: Merchandising.
Our core focus is on helping brands using Stamped loyalty to integrate their program offers and rewards into the channels they use to reach their customers.
There are a few reasons for this:
It’s obvious that something can’t impact a customer’s behavior if the customer didn’t know about it. (This is, really, Sean’s point.)
Everyone in our space is used to merchandising offers to their customers. They do it all the time in the form of sales and discount promotions.
The impact of merchandising offers are especially easy to measure when it comes to transaction-based metrics, like conversion rates, average order value and basket size.
Treating loyalty as a merchandising lever means we can’t hide behind the types of selection bias numbers that have frustrated brands. Instead, it means loyalty needs to be measured in the same way as other merchandising levers: It is successful when it impacts a customer’s buying decision.
While the concept of merchandising loyalty is straightforward, the execution of it isn’t always that easy. There’s a reason, after all, that Sean didn’t know he had $100+ in Kiehl’s rewards waiting for him.
This is, in part, one of the reasons I’m most excited about our merger with Repeat.
Repeat allows brands to better personalize communications with customers so that the merchandising that can have an impact stands a better chance of doing so. The product cuts through the messiness of personalization to surface the right product(s), at the right time, in a user-specific way, automated across email, SMS and cart.
As a team, we’re starting to explore this through our data. We’re looking at things like how promotional copy drives purchase behavior and how rewards structures impact metrics like average order value and basket size. We want to be able to answer the question of how you can balance protecting margin while influencing additional spend.
At the heart of that is getting loyalty integrated into a brand’s top channels.
Because without it, you’ll be like Sean and Kiehl’s: getting $200 worth of stuff for $0. Good for the customer maybe, but not good for the brand.
Good one, Mike!