Welcome to Unpacking the Digital Shelf where we explore brand manufacturing in the digital age. [inaudible]
Hey everyone. Peter Crosby here from the digital shelf Institute is loyalty. The new CAC, the post-purchase consumer journey represents a multi-stage opportunity to drive loyalty and customer lifetime value deriving greater margin from the investment in David Morin, senior director of retail and client strategy at post-purchase platform provider Narvar joined me to bring to life the various stages of the post-purchase journey and how brands are intensifying their focus to drive trust, transparency, and advocacy, making every customer feel like their most important customer. So, David, thank you so much for joining us on the podcast. I am super appreciative and I can't wait to dig into the space that you and Narvar are in for our listeners today. Yeah.
Thanks Peter for having me, excited to chat.
Okay. So I'd like to start by getting your reaction to a headline and subhead from an article from Jason Bornstein, he's now at 4runner ventures, but he formerly ran acquisition at Bonovos and the headline was your CAC customer acquisition costs doesn't matter. Subhead, the brands of the next decade will win with loyalty, not acquisition. If Jason said that to you at a bar, would you buy him a drink?
Yeah, I think it probably, probably first depends on what bar we're at, but, but, but absolutely I think you know, I love chatting with all different types of experts in the, in the retail industry, especially ones who are starting to carve innovation for how brands should be thinking about both our acquisition channel, which I think acquisitions still plays a huge part, but really more long-term thinking about how loyalty plays a huge part in long-term growth of businesses big and small.
And so tell us a little bit about where Narvar fits into that and particularly, you know, you focus a lot, I think, on, on the direct to consumer space, the sort of the journey over which brands have presumably the most control, right?
Yeah, absolutely. So Norbert today plays a part in almost every stage of what we call the post-purchase journey. So Nora has a variety of products, features and services starting at the time of checkout to better set customer expectation and then everything as the product and shipments make their way to the customer. Of course over the last, I would say three to five years have innovated in the space to keep up to date with new methods of delivery and that retailers and brands are offering and then closing the loop on the returns in as well. So how do you take care of your customer after you actually have shipped a purchase? Does a customer need to make an exchange or make a return? And I think we really view that loyalty is the most critical part to long-term customer lifetime value and that having a positive experience at every step of the post-purchase journey is super critical to have that repeat purchase and loyalty within your customer base.
Now, when you engage with brands that are thinking about this post-purchase stage, how many of them are using customer lifetime value as a measurement when they start with you? Are they, is there a, I don't know if there's a, a generalized sense of, of how that shows up, but how sophisticated are people at that moment and sort of how do you move them through that, that thinking? Yeah. Yeah.
I think, you know, to be super transparent, I think that's still a data point or KPI that we're really excited to work with our retailers to partner on. I often say that having a great customer lifetime value metric is the holy grail of retailer data and especially DTC data. I think admittedly it's still a very new space. You know, I think the headline that you pose is exactly where I see a lot of retailers are today, which was previously hyper-focused on acquisitions, starting to transition their thinking towards loyalty and lifetime value. So I would say, you know, retailers who join us or who have been with us are at various stages of where they are in their own internal journey to measure lifetime value. I would say the most sophisticated retailers that I've worked with and norovirus works with have a nice handle on unifying data sources, across different channels to really have a complete kind of golden picture of a single customer. And then others we know are more fragmented and are working towards having more unified data sets to be able to actually measure it. So I think everyone's on their own journey based on you know, how legacy of a retailer are, they are how legacy their systems are what their core competencies are. But what I do see is more and more retailers come to us or grow with us to really understand why it's important to start thinking about lifetime value today.
And have you found a particular champion for this process? Cause you, you know, so often, you know, you, you you must see it to the people that listened to our podcasts, the folks that are out there creating this sort of e-commerce transformation and, and really driving growth at these companies are, are needing to convince, right. They need to inspire, they need to educate like why companies need to go on these journeys because they're not just a technology purchase. They are really a change management thing. And so who are those people often at, at those companies? And, and what does that process and sort of people investment that you see them going through to kind of start making progress on this side?
Well, I would say the first thing that I always say is one of the most exciting things for me about working at a company like Narvar is you know, we really believe that we were the pioneers in the space of post-purchase. And I only mentioned that as a response to your question, because I think what's really exciting in the industry now is 10 years ago, post-purchase was a relatively new word. People weren't really using it or even thinking about it. And if we flash forward to where we are today, there's so many retailers that we work with who have entire teams and roles with post-purchase and their job title, which I think really speaks to how the importance of taking care of the customer, not only in the acquisition and purchase phase, but what happens after purchase has really grown in importance in terms of who we work with, you know, I think there are a variety of different stakeholders who have inputs and ownership over that metric.
I would say maybe most common is someone in like a senior level e-commerce role. Who's looking after the holistic e-commerce experience. But there are many retailers who have very targeted teams focused on reverse logistics and measuring how changes to the reverse logistics or returns process can drive. Customer impacts specifically around satisfaction and entire dedicated teams about outbound logistics and how improvements to outbound delivery communication and transparency can always can also impact the customer experience. And then another key point that I would say a team that has an input is also customer insights. So really being able to understand how the programs and changes that are being put in place on the outbound and inbound experiences are actually driving customer response. One of the things that I think is most important today is measuring customer satisfaction. You know, what we know in the industry, both from studies that we've done at Narvar, but also kind of widely available in the industry is that if you can see you know, even the smallest increases in measurable satisfaction, either through seaside or net promoter score or other satisfaction measures, you can actually drive incremental annual increases and overall revenue.
So that's one big thing that we help our retailers measure as well.
So that, that, that must be the part that the case studies that you love to write, right. Which is where you can sort of line up these activities with actual increases in, in revenue and, and and all sorts of all the activities that come along in the post-purchase cycle. And so when you sort of rattled off some stages of the post-purchase funnel, how does how does Narvar fit into those, those various stage? You know, it's sort of a higher level, like how does it fit into those stages? What is it enabling?
Yeah, so a high level, one thing that we focus on with our retailers is how do we help drive satisfaction in each stage of the post-purchase journey in order to drive, repeat purchases and loyalty. So as we look at what's important and driving satisfaction at each stage, that starts at the time of checkout, which is better setting customer expectation about where and when a delivery will arrive and allowing the consumer to have more control over that experience. I often think about that. You know, as Amazon who was one of the first companies who really did that and set expectations with consumers, which is how do you provide an estimated delivery date at the time of checkout? How do you give your customer the flexibility to choose what date is best suited to their need? How do you unlock potentially different avenues for their customer to receive their good?
Is it shipped directly to your home? Do you know, you're not going to be home, so you want to ship it to a nearby convenient pickup point after the order has shipped, then it's really about how do you keep your customer up to date about where your delivery is as it makes the way to the consumer? So we focus on two pieces there. One is having a robust, transparent email communication, and also communication across other channels. SMS communication, push notifications Narvar, we've done a lot of exploration with voice as well with the core goal of having an ultimate transparency in that process. So that customers know exactly where their shipment is and are also able to adjust their expectations if there's any exceptions or unexpected events in that shipment. And then there's also the ability to service customers within a beautifully branded track experience.
You know, I think that's really critical in terms of keeping your customer in a branded environment, being able to really touch your customer at every stage and also reengage your customer with critical information either that will help them with their delivery. So for instance, for electronics retailers, we've seen a lot of retail retailers choose to use those touch points as a way to surface how to marketing content, to really set their customers up for success, success. In health and beauty, we've seen a lot of retailers who use tutorials and things of that nature. So all with the mindset of how do you make sure your customer, once they receive the good has a really positive experience. And then on the, once your customers receive the good there's a whole chain of services around, how do you actually facilitate a digital return? And on that end, one thing that Nava really focuses on is driving speed choice and convenience for consumers. So allowing consumers to choose how they want to return when they want to return and where all with driving again, convenience leading towards ultimate satisfaction.
Yeah. I saw a new piece of research the other day from management consultants, Alvarez and Marsal and retail economics that said by 2025, UK retailers would lose 11 billion in profits due to an increase in online returns. So within that experience, you're talking about, what do you have some case study color that you can bring to what changes can be made that are, that are going to hopefully reduce that 11 billion by a bunch of billion if Narvar does a job, right? Yeah,
Absolutely. You know, I think that data point is a very, very interesting input that we should definitely be having a conversation about, you know, from my mind when I think to back like five, 10 years ago it seems like one of the dominant sentiments in the industry was how do you deflect returns or how do you minimize the cost of returns? I think we were already on the path towards consumers expecting digital returns and convenient returns. And then of course with the onset of the pandemic, I think a lot of the trends that we were already seeing have certainly accelerated, you know, so what we see today is that digital returns are here to stay and that they are are really table-stakes offering for any retailer or brand who is offering e-commerce transactions. So I, I say that because I think that while we know digital returns might be expensive or a place of overhead, I think there's a lot of importance to one making the consumer experience on the returns the easiest, the best, the most full of choice and the convenient. And then also, how do you operationalize that digital returns experience using data using intelligence in order to try to reduce costs as much as possible on the kind of supply chain or operational side,
That's kind of what I'm interested in digging into a little bit more is the, the cross-functional conversations that need to happen in order for, because you can create the best experience in the world, but that the rest of the company kind of needs to go along with delivering that. Do, do you often find that that the process of adopting your platform drive some of those conversations and puts more pressure on that happening? Or are you able to use some like quick wins to sort of show where the opportunities are to save costs or what, what are kind of the, the metrics that drive the adoption of the better returns process? Yeah,
I think again, everyone comes to us with a different stage and their own journey or some retailers come to us who are very much in that change management process. They've had a legacy system in place, whether it was providing a label in the box already, or some other systems that they were using. And that becomes obviously a, a work in first kind of a walk or crawl, walk, run approach where it's like, how do we just kind of meet the, the status quo? And then how do we work with that retailer to unlock additional capabilities and help them see the value? Whereas other retailers come to us, maybe they're a smaller retailer or a newer retailer who really want to make a splash in the space and are really bought into, you know, the, the different functionalities that we offer on the platform to drive convenience.
Ultimately I think it's what I always talk to retailers about is first just think about who you are as a consumer and what you're looking for. You know, one thing that we saw a big trend in through the pandemic is a lot of consumers went home. Many consumers don't have a printer at home anymore. Many consumers are using their office printer or we're leveraging their office mailroom to facilitate returns. And so that really drove a business need. So one of the features that we've seen strong adoption is, is what we call printer this returns. So instead of having an actual print of label, providing a digital QR code to a consumer that allows the consumer to take that digital QR code to an approved carrier location and have a label printed for them independent. And we saw some retailers have as high as a 30 to 35% adoption rate and consumers choosing to use that method over other methods.
And then we also saw that it also had immense operational benefits, especially in the pandemic, is that because consumer, we are removing a friction point for consumers to not have a printer because consumers had the knowledge of convenient locations to use those QR codes. They were actually completing the returns faster. And so that those goods were making its way back to the retailer faster, which then eliminates the time that inventory is dead, allowing a retailer to re-introduce that inventory back into their supply chain and sell it again. Hopefully we'll invoicing any markdown. So that's, I think one gray area where we've seen how focusing on customer experience first actually has benefits throughout the entire reverse logistics, operational supply chain as well. Which I think is a new way of thinking for many of our retailers.
So David, I th the stat like that you know, the higher than 30% adoption rate of the digital returns, that that was, that's one of the things that really brings the value of this investment in a strategy for post-purchase to life. For me, what are some of the other sort of top KPIs that people are using to to mark their progress through this journey that you have? And are there any that you can share obviously, without giving away confidential information?
Yeah, of course. You know, I think one retailer that has really grown with us throughout the last, I would say, you know, five to 10 years is Levi's, which is a great partner of Narvar. And they've made a lot of changes over the last 18 to 24 months as we've grown with them. And their turns in specifically they launched printer this returns last year. They also added in proactive returns communication. And so not only were they communicating to their consumers very practically about the status of their outbound shipments, that they were also communicating to their consumers about the status of the return shipments. And so even after the consumer has used the digital QR code, how do you keep your consumer in the loop about where it is in that process making its way back to the retailer? I mentioned them because I think one thing that they've shared with us is that they actually saw a measurable increase in customer satisfaction after they added in those two services. So it really speaks to if you keep your consumer at the forefront of your strategy, as you're building these new post-purchase tools you can really increase immediate satisfaction, which as we talked about before, also, we know will eventually lead to increases in customer lifetime value and annual revenue.
Yeah. That the, the sort of the, the triple threat of trust confidence and loyalty, or maybe loyalty is the result of being able to build the first two. I'm not quite sure where they are. It's a virtual circle. You guys probably have diagrams about it, but I just, I just, I just, you know, any consumer who has gone through a returns process that is not ideal knows what it's like when it just works. And it feels like the company has invested in your longer term relationship. Definitely.
Yeah. You know, again, I always go back to like, what do I want as a consumer? If I think about who some of my favorite retailers are, they're really the ones that have built trust with me through really consistent, reliable, and easy experiences. So one of my favorite retailers that I shop with most frequently is MatchesFashion they are a UK based retailer that really specializes in luxury apparel and accessories. And I go to them not only because they have a really great curation of assortment, which is you know, highly important in today's e-commerce world, but that they also have a super consistent and reliable service model for both the outbound purchase and the returns everything ships in two days, it comes in a super beautiful box and everything is easily returned within two days and refund it quickly. And so over time matches at least with me has built that trust that no matter where I am or when I order, it's going to be the same experience every time. And I think that is a really powerful notion that we try to discuss with our retailers as well as how do you build that connection? How do you build that trust? How do you provide that reliable, convenient, easy, and beautiful experience every time. So that next time your consumer shopping they think of you first because you've had such a great experience.
Yeah. It just lowers the risk for the consumer in engaging in another purchase, because you, if you, if you have that confidence in that trust, you know, you're more likely than not to enjoy the product. And if, by some reason you don't, you know, that it won't be a nightmare to try and, and be treated fairly and with with grace. So I, I think that's, that's a really cool example.
Absolutely. I would also say, you know, it was particularly important, I would say in the pandemic, you know, what we know is that as more and more consumers shifted to e-comm over the last 18 months, more and more consumers are trying out new brands and new e-commerce experiences. And so having that really great experience on that first transaction was hypercritical to really inspire the loyalty. And we know that specifically returns can be a big friction point in a novice study that we conducted last year, we found that 76% of first-time customers who had a, what they would rate as either an easy or very easy returns experience said that they would be more likely to shop with that retailer again. And then obviously the inverse would be true as well. And so we know that having that really positive experience at every step of the post-purchase journey is critical to then inspire a customer to purchase again.
Yeah. And not to offer dueling research, but Salsify's did a consumer research this year and 86% of consumers said that they would be willing to pay more, to buy from a brand they trust. And I know that's not like, yeah, I mean, but that's a, a really high number, not like incredibly surprising, but the willing to pay more is the thing that, that really struck me because for many brands direct to consumer is their least profitable channel. Particularly for a lot of our legacy brands that, you know, have been doing business across retailer channels, et cetera, for, for, in some cases, hundreds of years. But in companies that you work with when they invest in the post-purchase cycle, I have you seen that start to improve through through those actions. I
Will be super honest and transparent. I don't know if I have the expertise to comment on the profitability of a wholesale channel versus a direct to consumer channel, but what I can speak to is how, I think there's a very clear shift in the industry to more brands and retailers who might've been historically legacy brands. I'm really focusing on direct selling channels for variety of reasons. I think very publicly over the past 18 months, we've seen brands like Levi's and Nike and Crocs and Underarmour make very public statements about reducing their wholesale partners in an effort to one have more control over their experience and to, to strengthen their direct to consumer channels. You know, someone like Nike, I think, has made a very aggressive stance and towards you know, very publicly saying that that's a goal and that includes not only improving their direct to consumer e-commerce channel, but also really thinking about what the format of physical stores as well. I think that's all in a goal to have more control over the end, to end customer experience more data that they can use about their customers, to know who their customers are, what their customers want and how can they inspire their customers to purchase again, and to really build that brand to consumer trust through transparency experience and options.
Well, so just to close, you know, going back to the top where Jason Bornstein said, the brands of the next decade will win with loyalty, not acquisition, assuming that the sort of, hopefully the post pandemic era that we're in now is kind of a new decade because of so many new practices and, and relationships that have started up with brands and consumers, what as people think about their strategies for 2022, is there a test and learn approach to this you know, either with your platform or without, you know, how do people kind of crawl walk, run to your point where should they focus first in this in this long journey of, of post purchase consumer loyalty? I think
That the first mindset is really just starting to shift the thinking kind of as the article or headline pose is that it's not just about acquisition. It's also about lifetime value and loyalty. And so shifting, I think their strategic thinking to really embrace the concept that, of course, you're always going to want to acquire new customers. Of course you should always be investing in ways to acquire those customers, but really about how do you retain that customer. And that could be as simple as you know, launching one new really valuable touch point within a post-purchase experience. And that could be as robust as deciding that you're going to go big this year in building that direct to consumer channel and, and really owning every step of the way. So I don't know if there's like a first step other than really embracing that mindset first and thinking about what each stage is and the customer journey, how do you improve each of those stages to build the things we talked about, you know management of your own shipments building trust through transparency and reliability and consistency you know, using convenience as a competitive advantage in every step and thinking about those as different tenants of your strategy and how you can make your improvements throughout your own post purchase journey.
Well, David, I really appreciate you coming on and sort of expanding, certainly my vision of what's possible in the post purchase journey. And and we really appreciate you sharing it with the digital shelf Institute audience. Thank you so much. Yeah,
Peter, thanks for having me hope you hope you found it valuable.
Thanks again to David Morgan for joining us genius alert. We've released some new research written for the DSI by Kiri, masters of bobsled marketing that outlines the key drivers of profitability in e-commerce could help you rethink how to drive more profitability now and in the future. Check it out on the researchPage@digitalshelfinstitute.com thanks as always for being part of our community..