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In the old days, competing brands fought for consumer loyalty from the shelves and showrooms of retail stores.
Today, though, the physical retail space is no longer the primary battleground for brands. And increasingly, it’s the enemy.
Just ask Dennis Ngin, chief operating officer of e-commerce strategy and development agency ExpandLab.
“The game is changing,” he says. “Instead of brand versus brand in brick-and-mortar stores, we’re seeing the competition shift to brand versus retailer.”
Instead of using retailers as a middleman, it’s better for brands if they have a way to deal directly with the consumer, he says. “But the biggest struggle we see is with brands trying to establish their following.”
It’s a battle Ngin knows well.
Creating good values
Before launching ExpandLab, Ngin and his 2 partners were in the e-commerce trenches building a business of their own. While attending the University of Florida, they founded an online store specializing in merchandise for sororities and fraternal organizations.
Their chief rivals: campus bookstores.
“When we started in 2006, we were competing against brick-and-mortar stores at universities. So our goal wasn’t to sell to retailers,” Ngin says. “We wanted to reach consumers. The way we did that was by becoming an early adopter of email marketing and using a website to reach our audience.”
Anybody who’s spent time in a college-campus bookstore knows it’s not a place you find a deal. By selling direct to consumers, Ngin’s company could operate on leaner margins and lower prices. To further stretch their dollars, they ignored display and Google ads altogether.
“Collecting emails proved the most cost-effective way of driving revenue,” Ngin says. “We were able to triple our business in a matter of 3 years by grooming our client base.”
He also realized the importance of the customer experience to ensure loyalty.
“The store had to be easy to navigate, the product had to be excellent and affordable, and delivery had to be fast,” he explains. “When those things were in place, we could advertise sales through our email newsletter, and people would pass them on because they wanted to share the experience with others.”
In other words, there was a direct connection between the value provided via email and the experience of being a consumer. It was a lesson that Ngin would carry into his work at ExpandLab.
When a cosmetics company approached ExpandLab about improving their online sales, the first thing Ngin looked at was their approach to email marketing.
“What they were doing was pretty typical. Their initial approach was to send blanket discount emails to everyone on their mailing list,” he says. “They knew the campaign needed to be better optimized to increase their conversion rates, but they weren’t sure how to do it.”
The solution, Ngin knew, lay in collecting and analyzing data of existing customers.
“When your objective is to build a following, it’s worth remembering the 80/20 rule — 80 percent of your business comes from 20 percent of your customers,” Ngin says. “For our cosmetics client, we wanted to reward their existing customers in a way that recognized their unique tastes and interests.”
To do so, ExpandLab developed technology allowing customers to choose free samples as they completed a purchase. These choices were collected over time, resulting in a vast database of consumer preference.
And that’s where MailChimp came in.
Using MailChimp, they followed up with special offers targeted to those specific samples. And instead of sending out a blanket discount, they sent offers on products the customer was interested in.
MailChimp allowed ExpandLab to segment, target, and personalize emails in a way that created a more satisfying experience for its client’s customers. It also provided valuable — and immediate — feedback.
“Even though the cost of segmentation is a lot lower than a Google ad campaign, you get better feedback, and you get it right away,” Ngin says. “This allows you to build better profiles of your customers, and to refine your methods over time.”
Brands selling directly to consumers may already have some of the most important data they need to segment effectively. One of the most powerful ways to segment your audience is by purchasing history, Ngin says: “General demographic data is great, but if your ultimate goal is conversion, then knowing what customers actually buy is much more useful.”
As the results for the cosmetic company’s campaign rolled in, ExpandLab continued to experiment, using A/B testing to refine subject lines, body copy, images, and more. The result has been a long-lasting success.
“Even after several years, our client is still using the free samples module to create personalized experiences for their customers,” Ngin says. “This program inspired a lot of loyalty.”
Dennis outside ExpandLab in Atlanta, Georgia, USA
Data has always played an important role in advertising and sales, but for brands that want to bypass retailers, it’s especially important to have the right analytics tools.
“You have to be able to gather good data,” Ngin says. “What subject lines have the best open rates? Which emails drive the most page views? When do you get the best conversion rates? If you can’t answer those questions, you’re in trouble.”
Just as critical, though, is a willingness to mess up, learn, and refine your methods.
“It’s important to have a process in place to learn from our mistakes. Our clients want results, but for us results are data,” Ngin says. “Results are being able to point to 3 campaigns and say, here’s what we learned. You have to get into the mentality of constant refinement, constant experimentation, and constant growth.”
A data-driven campaign can give customers a more personalized, more rewarding experience — and it can give brands a big advantage over retailers. Ngin, who has worked with clients that range from small businesses to multi-million-dollar giants like Just for Men and Spanx, says this principle hold true no matter the size of the business.
“It doesn’t matter how large your company is. Your objective is to build a following with your customers,” Ngin says. “Your core followers drive your success. Analyzing your data will tell you when you’ve connected with them.”
"Results are being able to point to 3 campaigns and say, here’s what we learned."
Three Ways to Win Over Retail
- Data and analytics. Don’t take data for granted. The big brands are learning that they can collect better and more actionable intelligence by selling online to consumers instead of relying on retailers to provide critical numbers. Look at all of your information and data and study it, Ngin suggests. “You need to learn how to analyze early on, because the more successful you are, the smarter you’ll have to be to appeal to a growing customer base.”
- Control the whole experience. “To build a following, the first hurdle is to just to get someone to order the product,” Ngin says. “But the second hurdle is to keep them.” To do this successfully, Ngin advises that you make sure every part of the experience has the customer in mind. From subscribing to your newsletter to navigating your website to the very act of unpackaging your product, every action taken by the consumer is an experience that could make or break customer loyalty.
- The forward button. Whether it’s a special discount or an appealing way of writing, if you can key in on something shareable in your emails, you’ll help build your following. “Good experiences lead to referrals,” Ngin says. “And with emails, it’s just as easy to forward to 1 person as it is to 10.” Give people something worth distributing, and they’ll do the work for you.
Illustrations by Sarah Neuburger.