#157: How to Create Loyalty in Ecommerce During Economic Downturn

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Claus Lauter: Hello, and welcome to another episode of the E-Commerce Coffee Break podcast. Today we want to talk about Loyality. In times of economic downturn, most people have heard that there is a recession looming there and that the economy is not doing as well as it did. And we wanna find out how e-commerce merchants, Shopify merchants, Can increase the retention of their customers.

And there's different ways to do that. So there can be subscriptions, memberships, bundling, plurality programs and more. So we wanna dive a little bit more into this, and for this, I have some guests on the board, so that's Rakshithaa Mahesh and Hemant Purswani. They are the founders of appstle.com. And appstle.com is a company that helps with retention.

They have different apps on the store. Rakshithaa is by heart, a hardcore business strategist, a former B C G consultant and Exonian. And Hemant is a coder by Heart, soul, and Mind, and also is a former Apple Siri engineer. Both of them are based in Sunnyvale, California, so in the midst of Silicon Valley, and they have a vast experience when it comes to building loyalty your customers.

So let's welcome to the show. Hi, how are you

Rakshithaa Mahesh: guys today? Good, how are you? Thank you for having.

Claus Lauter: Ria, tell me a little bit, , on how important is building loyalty for emergent for a online store?

Rakshithaa Mahesh: I would say critical success factor for any brand.

Starting from some of the largest brands right now, the way they started Amazon or Walmart, but specifically to your introductory point on resolution, I think it's never been more important. . I would say a couple of reasons with first one is with transition, I think disposable incomes across the world, it's reducing.

So how do you still. Keep your brand relevant enough that your customers want to spend with you. So I think it's to do with the product itself, and it's also to do with experience and how good your [00:03:00] customers are made to feel. Do they feel rewarded for sticking to your brand? Plus, is your product relevant enough for them to show that affinity?

Is the experience smooth enough for them to stay with you? So select multiple questions. . So that's I think a key point. And the second thing is not specifically to do with the procession, but to do with the overall. I would say the number of options that are out there for, for customers, take any particular product or service, there's like tens and sometimes going to hundreds of options.

They're like multiple brands and with I would say a global market. It's very easy for people to shop across the globe. Shipping is pretty easy. So given that, how do you ensure that it's your store that people actually pick? So that's, making the whole loyalty or at a broader level, the customer retention aspect, pretty important.

Claus Lauter: I think a very important that you mentioned there, , for a small business, small medium enterprise for brick and mortar store going online. They're not [00:04:00] competing with the other businesses in the area, they're competing with the rest of the world. So that's sort of downside of globalization and, , immersion should keep that in mind.

So when it comes to retention, obviously there, as I said, there's different strategies on building strategy with, , building loyalty with your customer. I wanna dive a little bit more into this. Give me a couple of ideas what I can imagine, , immersion should do or can do to build up this re.

Rakshithaa Mahesh: Sure.

Actually customer retention is also, I would say the primary focus area for abil itself as a brand. So if you see the two products that you mentioned of abil that are currently live abil subscriptions as well as abil memberships, both target this very key element of customer retention. Yes. It's also customer retention and a little bit of wallet share.

So basically getting, a greater share. The customer's wallet, how much they're willing to spend. But more than that, it's about the continuous engagement of the customer, right? Like continuous engagement in the sense that. [00:05:00] How you sustain to be the relevant store for them to go and shop. So those are two, I would say very, very critical strategies and definitely I would, , like to dive into them.

And Abso we also have two other products that are currently in pipeline. Again, targeting the same critical question of customer retention. Going back to spend some time on subscriptions and memberships, , oftentimes we've actually found that a lot of our merchants and sometimes even, , say blog writers and a lot of people that we interact with sort of get confused between the two terms and they sort of mix them.

And I sort of understand that also, like why the confusion exist. because a lot of times membership plans exist as a subscription, right, to subscribe for a membership. But they're still like different in the sense of. The purpose that they're solving. So subscription at the very basic level is just a subscribe and save that Amazon gives.

So let's say any product that you have a use for on a recording basis, it could be something like a [00:06:00] diaper or it could be coffee, or it could be a face wash. So you have the need is not just a one-time. So in those cases, instead of having the customer come and that product, every time that need arises, you create a subscription.

, first of all, from the merchant side, it's easy because it's recurring revenue, right? And it's friction free because every time the customer needs that particular product, they're not going to shop around. So that disturbance or the distraction doesn't exist. This product is continuously coming to their door.

Again, from a customer standpoint, it's the convenience that's super critical. And second thing is oftentimes with the subscription, it always goes with subscribe and save, right? So the discount for being this loyal, , customer. So I would say that is a very, very critical element. And of course with subscriptions, there are a lot of sophistication that we can do.

Abil offers a lot of these sophistication. It's for example, tier discount, right? So as a customer is spending more and [00:07:00] more time subscribing and having more and more orders delivered, you can keep increasing the discount that they get. Or you can play around with a shipping cost, multiple, multiple things that you can do.

, but beyond that, the basic one is how do you make your customer's life? So I would say that's one critical thing. And the second one is memberships. So memberships, I would say the best example for it is Amazon's Prime membership, right? It doesn't have anything to do with an actual delivery of a product, but it's about the experience of the delivery, ?

So all prime members pay X amount of dollars to be an Amazon Prime member, and irrespective of how often they shop at Amazon, Any Prime member, whenever they shop, they get easy shipping, they get two re shipping and it's free. Right? And that perk is reserved for just the prime members. So basically, membership is just about creating, I would say, a niche status.

, within any brand or store. And [00:08:00] then giving few special perks just for that niche. I would say status holders, so it could be free shipping, like in the case of Amazon, or it could be, , first look of the first seasonal products that any brand brings. It could also be additional discounts or it can be just like Costco, right?

With Costco, the entire store is only for their members. So it could even be something as exclusive as that. So that's another key strategy. And then we also have the other big portion of customer retention, which is just having sophisticated loyalty programs Could be, , rewards for every time a customer purchases from your store.

And the rewards can be based on. , , the amount that they spend on your store, the frequency of their purchase, and obviously they get rewarded for that through store credit or discounts. Could be multiple things. But, , one underlying thing that I also wanted to mention here since we were also specifically talking about SMBs is that irrespective of which strategy, say N SMB chooses or even [00:09:00] large enterprises, or they can also have multiple of these subscriptions and memberships, the key critical thing is to really know your.

Like, who are your target customer segments or customer segments and what do they really want? So earlier it used to be just about the demographies. What is the gender predominant gender, age, location, and all that. But now I think it's more to do with the psychographics. So what are your customers really going through?

And based on that, what do they feel like and what do they want? So I think knowing. And knowing how it's changing periodically is I think, super important to really hit the nail on any of the strategies that say the merchants pick.

Claus Lauter: Okay. No, that makes perfect sense. , subscriptions are around for a long time, and as I said, can become very complex.

You can offer weekly, monthly subscriptions, different intervals per, , member who I subscribe to your product. I wanna dive a little bit more , in the overall view. So if you have a membership, You probably need to start promoting the membership to your clients. , not [00:10:00] only because of the benefits they will get, but also basically on a day-to-day basis to keep them engaged.

And then throwing in Loyality program and subscription based products give you an idea what merchant should do from the manpower site. So basically, do they need , a membership manager or anything like that, , to keep the ball rolling. What's your experience?

,

[00:11:00]

Hemant Purswani: our membership program is pretty much self-service.

, as of now, Merchant obviously has to promote their membership program via emails, Clavio email, for example, they use to basically send out a blast email to all their customers about membership program. But once they basically provide a signup link after that, their customer sign. And that's about it.

They get setting points or free shipping or a free product, basically something that sort of ensures that they, , stick to the membership program. Similarly for, , subscriptions, what, , we have , it was recently implemented feature, , to basically retain, , subscribers we call it quick actions what basically merchants can do is, let's say if someone has a subscription.

subscriber has already canceled the subscription. They can send out a blast [00:12:00] email. We build a quick action link for our merchants, and they can send out this link to, all the customers who have canceled the subscription and tell them that, if you would, reactivated, you'll get 10% off or get a free product.

Similarly, , there's another feature we recently released. Like if someone is trying to cancel something, cancel a subscription, we basically tell them, would you prefer to pause instead of, , cancellation, , let's say for two cycles or three cycles. There is a feature for, we call it, , getting a feedback from a customer.

It all comes under a part of cancellation management if there are four options, basically merchants can ask customer like, Hey, what are the reason? Like, why are you canceling subscription? Is the subscription cost too high? , benefits are not relevant and all that.

And we have both of these, like these cancellation management is present both in the membership program as well as in the subscription program. Going back to the loyalty, I wanna highlight two stories. And one of them actually happened today in the morning. Like why loyalty is important.

, so today I had a call with a merchant in the morning and they sell something very simple eggs. That's all they. What this merchant [00:13:00] told me that once someone has bought a subscription, they prefer to even, let's say if they come back to their site and they have even one time, , like other products apart from X, they prefer to add those, one time purchase products to their existing subscription instead of going through the entire checkout process.

Why? Because that process is longer. Adding something to the subscription is super easy. It's like one click checkout, so you just add it and that's it. it becomes super duper critical. For that we have upsell and everything that if you would just add any new product to your subscription, , merchant can offer upsell discount and all.

So that's one reason why you wanna have this subscription for loyalty. Another is, We have another merchant who sell, these, salad meals for subscription. Now, what this guy told me is, acquisition cost for customer, it's getting, becoming higher. Why? Because , everyone is running Facebook ads.

So first of all, ads are expensive. Second, because of recent algorithm changes in Apple, it's becoming. Very hard to target the right audience. So that means you have to invest a lot more to gain Once you gain customers, you are actually gonna be in lost. If you're just [00:14:00] acquiring those customers for one time, it makes sense only to acquire them for subscription because when they would have recurring orders, that's when you would actually eventually make profit out of them.

So it's super duper I. For them to, target those ads for subscriptions instead of just for one time purchase. I just wanted to highlight these two stories, like why, because of the recent trends, the algorithmic change in Apple, plus the fact that, , it's frictionless to add any new product as a one time purchase to your subscription. First of all, we have that feature. Not every pro, every subscription program has it. We have it like you can add something just for one time recurring. After that, it would be automatically removed from the subscription.

But it makes it super, super easy, especially because for a subscription, shipping is cheaper if merchant. Decides to offer that. So for all those reasons, customers prefer that.

Rakshithaa Mahesh: just one quick thing I wanted to add there. clause on the membership manager, right?

It depends. It depends on how big the store is and how large a membership base their. That a store has and also how diverse that particular membership base is. [00:15:00] Obviously, if a store has a thousands of members, there are different from each other in terms of their expectations and there's like their, the store has multiple membership tiers, so knowing each one of them and seeing what is the response is and whether the members are really happy, and if any changes are needed, yes, probably a membership manager might be needed.

Or even just a product manager I think should be enough. But for any simple store they're just starting out, let's say, has about less than. Maybe 500 members. I think it's totally doable. The reason is also because of the strong analytics a lot of these tools give, , just taking AOL's example, , so Absol has very real-time analytics both for our subscriptions and for our memberships product.

And that'll be the case for the other tools that we release in the future too. So that's real time and it'll clearly give you, so how each of your membership plan is doing. And even within your me. Plan, what is the click create and are members preferring [00:16:00] one product over over the other? So where exactly are they spending more time?

So you get like very, very, I would say in-depth and granular, , analytics, which you can also up level to a high level. , and it's not just this, these, we also make these analytics very easy to consume because we understand that our products are very techy, but our merchants might not be techy. They are business people, and again, they might also not be just pure data people or data analytics, data scientist people.

So we have that in mind when we design. We take like very sophisticated data and make it very, very simple to read. So that should be, I think, more than enough for a store with 500 members. Manage. We don't really need a membership

Hemant Purswani: manager. Okay. Adding Tori's point, , as I was mentioning, like I had this call with merchant today only, and one of the analytics, which is very important to merchants is that because inventory management becomes super critical when someone has subscription program, taking example of these, merchant who's selling eggs, , if there are 65 dozens.

Of eggs that they're [00:17:00] selling. If they have subscribers, 65 subscribers, that means 65 dozen of eggs are gonna be, , they always need to make sure that they have more than that. , because some of those, some of their customers can even buy it as, one time purchase and all.

And we provide that in monthly management that, hey, you would need at least. 65, in this case, , if someone has, let's say double or triple of, two dozen acts, then two, we provide all that inventory and it's, really, , important for them to know this so that, they ensure that they always have inventory to fulfill those items.

I thought the membership management was, , from our perspective. We just basically asked merchants to, , send out emails, but. In terms of the size of the, merchants, you know, we have merchants who have their own e-commerce managers we directly deal with them and, they even have some custom, features.

, they ask us to implement, sometimes even integrations with their internal system. And then we have merchants who are, , pretty much on Shopify and they just need, our standalone membership or subscription program. .

Claus Lauter: Okay. I think that a very good point that you met earlier, Hammond, is that, , the customer lifetime, with [00:18:00] subscriptions is just much, much higher.

Yeah. merchants not necessary break even or make profit with the first sale. So that's quite important. What I think also like the idea that with the subscription you can increase the average order value because people are not buying the subscription product. They just add more. The same goes for the membership.

, Before we come to the end of the eCommerce coffee break, just give me an idea. Membership. Do you charge for the memberships or are membership generally for free? What do merchants do there?

Hemant Purswani: Our pricing is based on the number of memberships that your store would have. So up to 50 members, it's completely free.

After 50 members, , up to then 500 members, , we charge. Pre nominal $10 per month and so on. So it's just based on membership, but features wise is pretty much, , same across all our tiers. Obviously for enterprise, we have some special features. , and same is the case for subscription, , plans as well where, , the pricing is based on, , number of subscriptions, but , a lot apart from it.

There are also like certain features that. , , let's say you won't even need it if, you're not, , selling a lot of [00:19:00] subscription. I'll give an example. We have bulk automations. Merchants need this, let's say if they have, , 10,000 subscriptions and we do have merchants who have even close to a hundred thousand subscriptions and they wanna update something in bulk.

And so this feature is only available in enterprise because if you have 50 subscriptions, it's not as useful. As it is for, so we have also segregated, , features based on their need and, the volume transactions , for the merchant.

Claus Lauter: , is there any kind of homework that a merchant needs to do before they approach you and wanna set up either a membership or a subscription?

Hemant Purswani: No, not really. Obviously if someone, we have merchants who have come to us from other subscription program, and because it's essentially we would have to import their data, from the, other subscription program. And, we tell them that we have this sample file, this is how the data would be.

And we have also sort of created, , you can call it, , channels, like, because we already know what are the other popular subscription programs, and if someone is coming from let's say X, Y, or Z, we know what kind of format data we are gonna get from this channel. So we have already created some tools to automatically convert that data [00:20:00] into what we need.

We have kept it very simple in terms of our UI so that it's easy for especially non-techy, merchants to understand. And we have 24 7 support we have made it very simple and, and documentation is really great. Video tutorials is really great.

if I have to highlight something, it has to be our 24 7 support, that even if someone has any questions like including coming from any other subscription program, it's super duper easy because , we just get on a call with the merchant and explain them like how it's gonna work out. Yeah.

Claus Lauter: Yeah, I think your Shopify ratings speak for themself.

You have like 1,905 star ratings and most of them are highlighting also the support. So that definitely , a big benefit what I can see from there. Where can people find more out about,, your apps?

Rakshithaa Mahesh: piggybacking on what you just said, clause. The Shopify listing page is probably the best place to know more about us.

, it's not just the help dogs and everything that are available to everybody in the public, but our. , reviews are there, the listing page details are there, but more than that, I would say our [00:21:00] demo store is super updated and it has all the key features. It's not a hundred percent all the comprehensive features.

There's just no space to put all the features, but all the important critical. , features are right there. And then our listing page, images, video, everything is pretty up to date. And so I would say that is the best place to know and get some basic understanding of the apps. So apps beyond that. Any questions?

Again, going back to that, , previous question that you had. Do people really need to do homework? I would say not really needed even to know about abil. We are just one ping away. We have 24 7 support, as Hayman mentioned, and pretty much all our merchant success engineers, we actually call them merchant success engineers and order support because their role is not just to fix problems.

Lot of times they take demo calls and they sometimes ought to go on to consult. Our merchants on how they can have a winning subscription journey, how they can provide that to their customers. We share insights, our industry knowledge, a whole set of things. [00:22:00] So it's the complete package of how to make our merchants successful.

So we just a ping away, , and they're very always ready to get onto demo calls. And beyond that, we also have our website again. , I hope we've done a good job. In terms of explaining, , what we do, and again, it's geared towards motions across different sizes and geographies. So I would say those two are the, , biggest things.

And also one of the questions that you had was how much merchants really need to know about subscriptions or memberships? So what we find is most of our merchants know, , What those different functionalities some of them have already been using competition apps for a few years before they migrate, but there's definitely, I would say about 15 to 20% merchants who are trying out subscriptions for the very first time.

And a lot of them, they don't really know if it'll work for their store, for their product category, for their target customers. , they see that subscriptions is accelerating in terms of its growth, so they wanna see if it'll work or not. , for them, and [00:23:00] as well as every other merchant, we actually have a 10 day free trial, right?

So they don't have to pay us anything. Those 10 days when they're trying to, , figure out if subscription is a good fit for their store, for their product. And obviously we do a lot of handholding during the time to walk them through it. For a lot of our merchants, we actually set it up for. Starting from how the widgets need to look at, , where the widgets need to go, how they need to look to go in with their theme.

So we do everything for them. And so yes, there is free trial and also our free plan. , and even beyond that, merchants don't start paying us until they hit $500 in monthly revenue in subscriptions. So until then, we just see them as, a merchant that's learning, that's exploring.

So we want to be there and support them so we don't charge.

Claus Lauter: Okay. No, that makes perfect sense. , with that, obviously the merchant has absolute no risk on trying it out. I, , myself was on the demo store. I think it's very well made, gives a, a quick impression and then obviously with the hand holding, , it makes it even easier.

I will put the links in the show notes, then you just one [00:24:00] click away. , thanks for giving an overview of how to build retention and loyalty for Shopify merchants. I think it's a very important topic that all merchants right now in the economic situation that we are unfortunately in right now.

Shortly look into. Thanks so much for your time. Thank

Rakshithaa Mahesh: you. Thank you. Thanks. Thanks. Talking to you.